AGRICULTURAL PROGRAM AUDIT

HEARINGS

BEFORE THE

SUBCOMMITTEES ON: 

GENERAL FARM COMMODITIES 

AND RISK MANAGEMENT;

CONSERVATION, ENERGY, AND FORESTRY;

NUTRITION AND HORTICULTURE;

RURAL DEVELOPMENT, RESEARCH, 

BIOTECHNOLOGY, AND FOREIGN AGRICULTURE;

DEPARTMENT OPERATIONS, OVERSIGHT, AND 

CREDIT;

AND

LIVESTOCK, DAIRY, AND POULTRY

OF THE

COMMITTEE ON AGRICULTURE 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

JUNE 24; 

JULY 7, 13, 14, 20, 21, 27, 28; 

SEPTEMBER 8, 13, 2011

Serial No. 112–20

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AGRICULTURAL PROGRAM AUDIT

HEARINGS

BEFORE THE

SUBCOMMITTEES ON: 

GENERAL FARM COMMODITIES 

AND RISK MANAGEMENT;

CONSERVATION, ENERGY, AND FORESTRY;

NUTRITION AND HORTICULTURE;

RURAL DEVELOPMENT, RESEARCH, 

BIOTECHNOLOGY, AND FOREIGN AGRICULTURE;

DEPARTMENT OPERATIONS, OVERSIGHT, AND 

CREDIT;

AND

LIVESTOCK, DAIRY, AND POULTRY

OF THE

COMMITTEE ON AGRICULTURE 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

JUNE 24; 

JULY 7, 13, 14, 20, 21, 27, 28; 

SEPTEMBER 8, 13, 2011

Serial No. 112–20

(

Printed for the use of the Committee on Agriculture 

agriculture.house.gov 

COMMITTEE ON AGRICULTURE 

FRANK D. LUCAS, Oklahoma, Chairman 

BOB GOODLATTE, Virginia, 

Vice Chairman 

TIMOTHY V. JOHNSON, Illinois 

STEVE KING, Iowa 

RANDY NEUGEBAUER, Texas 

K. MICHAEL CONAWAY, Texas 

JEFF FORTENBERRY, Nebraska 

JEAN SCHMIDT, Ohio 

GLENN THOMPSON, Pennsylvania 

THOMAS J. ROONEY, Florida 

MARLIN A. STUTZMAN, Indiana 

BOB GIBBS, Ohio 

AUSTIN SCOTT, Georgia 

SCOTT R. TIPTON, Colorado 

STEVE SOUTHERLAND II, Florida 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

MARTHA ROBY, Alabama 

TIM HUELSKAMP, Kansas 

SCOTT DESJARLAIS, Tennessee 

RENEE L. ELLMERS, North Carolina 

CHRISTOPHER P. GIBSON, New York 

RANDY HULTGREN, Illinois 

VICKY HARTZLER, Missouri 

ROBERT T. SCHILLING, Illinois 

REID J. RIBBLE, Wisconsin 

KRISTI L. NOEM, South Dakota 

COLLIN C. PETERSON, Minnesota, Ranking 

Minority Member 

TIM HOLDEN, Pennsylvania 

MIKE MCINTYRE, North Carolina 

LEONARD L. BOSWELL, Iowa 

JOE BACA, California 

DENNIS A. CARDOZA, California 

DAVID SCOTT, Georgia 

HENRY CUELLAR, Texas 

JIM COSTA, California 

TIMOTHY J. WALZ, Minnesota 

KURT SCHRADER, Oregon 

LARRY KISSELL, North Carolina 

WILLIAM L. OWENS, New York 

CHELLIE PINGREE, Maine 

JOE COURTNEY, Connecticut 

PETER WELCH, Vermont 

MARCIA L. FUDGE, Ohio 

GREGORIO KILILI CAMACHO SABLAN, 

Northern Mariana Islands 

TERRI A. SEWELL, Alabama 

JAMES P. MCGOVERN, Massachusetts 

PROFESSIONAL STAFF

NICOLE SCOTT, Staff Director 

KEVIN J. KRAMP, Chief Counsel 

TAMARA HINTON, Communications Director 

ROBERT L. LAREW, Minority Staff Director 

(II) 

SUBCOMMITTEE ON GENERAL FARM COMMODITIES AND RISK MANAGEMENT

K. MICHAEL CONAWAY, Texas, Chairman 

STEVE KING, Iowa 

RANDY NEUGEBAUER, Texas 

JEAN SCHMIDT, Ohio 

BOB GIBBS, Ohio 

AUSTIN SCOTT, Georgia 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

MARTHA ROBY, Alabama 

TIM HUELSKAMP, Kansas 

RENEE L. ELLMERS, North Carolina 

CHRISTOPHER P. GIBSON, New York 

RANDY HULTGREN, Illinois 

VICKY HARTZLER, Missouri 

ROBERT T. SCHILLING, Illinois 

LEONARD L. BOSWELL, Iowa, Ranking 

Minority Member 

MIKE MCINTYRE, North Carolina 

TIMOTHY J. WALZ, Minnesota 

LARRY KISSELL, North Carolina 

JAMES P. MCGOVERN, Massachusetts 

DENNIS A. CARDOZA, California 

DAVID SCOTT, Georgia 

JOE COURTNEY, Connecticut 

PETER WELCH, Vermont 

TERRI A. SEWELL, Alabama 

MATT SCHERTZ, Subcommittee Staff Director

SUBCOMMITTEE ON CONSERVATION, ENERGY, AND FORESTRY

GLENN THOMPSON, Pennsylvania, Chairman

BOB GOODLATTE, Virginia 

MARLIN A. STUTZMAN, Indiana 

BOB GIBBS, Ohio 

SCOTT R. TIPTON, Colorado 

STEVE SOUTHERLAND II, Florida 

MARTHA ROBY, Alabama 

TIM HUELSKAMP, Kansas 

RANDY HULTGREN, Illinois 

REID J. RIBBLE, Wisconsin 

KRISTI L. NOEM, South Dakota 

TIM HOLDEN, Pennsylvania, Ranking 

Minority Member 

KURT SCHRADER, Oregon 

WILLIAM L. OWENS, New York 

MIKE MCINTYRE, North Carolina 

JIM COSTA, California 

TIMOTHY J. WALZ, Minnesota 

CHELLIE PINGREE, Maine 

MARCIA L. FUDGE, Ohio 

GREGORIO KILILI CAMACHO SABLAN, 

Northern Mariana Islands 

BRENT BLEVINS, Subcommittee Staff Director

SUBCOMMITTEE ON NUTRITION AND HORTICULTURE

JEAN SCHMIDT, Ohio, Chairwoman 

STEVE KING, Iowa 

THOMAS J. ROONEY, Florida 

STEVE SOUTHERLAND II, Florida 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

JOE BACA, California, Ranking Minority 

Member 

CHELLIE PINGREE, Maine 

GREGORIO KILILI CAMACHO SABLAN, 

Northern Mariana Islands 

MATT PERIN, Subcommittee Staff Director

(III) 

SUBCOMMITTEE ON RURAL DEVELOPMENT, RESEARCH, BIOTECHNOLOGY, AND

FOREIGN AGRICULTURE

TIMOTHY V. JOHNSON, Illinois, Chairman 

GLENN THOMPSON, Pennsylvania 

MARLIN A. STUTZMAN, Indiana 

AUSTIN SCOTT, Georgia 

RANDY HULTGREN, Illinois 

VICKY HARTZLER, Missouri 

ROBERT T. SCHILLING, Illinois 

JIM COSTA, California, Ranking Minority 

Member 

HENRY CUELLAR, Texas 

PETER WELCH, Vermont 

TERRI A. SEWELL, Alabama 

LARRY KISSELL, North Carolina 

MIKE DUNLAP, Subcommittee Staff Director

SUBCOMMITTEE ON DEPARTMENT OPERATIONS, OVERSIGHT, AND CREDIT

JEFF FORTENBERRY, Nebraska, Chairman 

TIMOTHY V. JOHNSON, Illinois 

STEVE KING, Iowa 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

KRISTI L. NOEM, South Dakota 

MARCIA L. FUDGE, Ohio, Ranking Minority 

Member 

JAMES P. MCGOVERN, Massachusetts 

JOE BACA, California 

BRANDON LIPPS, Subcommittee Staff Director

SUBCOMMITTEE ON LIVESTOCK, DAIRY, AND POULTRY

THOMAS J. ROONEY, Florida, Chairman 

BOB GOODLATTE, Virginia 

STEVE KING, Iowa 

RANDY NEUGEBAUER, Texas 

K. MICHAEL CONAWAY, Texas 

TIM HUELSKAMP, Kansas 

SCOTT DESJARLAIS, Tennessee 

CHRISTOPHER P. GIBSON, New York 

REID J. RIBBLE, Wisconsin 

KRISTI L. NOEM, South Dakota 

DENNIS A. CARDOZA, California, Ranking 

Minority Member 

DAVID SCOTT, Georgia 

JOE COURTNEY, Connecticut 

TIM HOLDEN, Pennsylvania 

LEONARD L. BOSWELL, Iowa 

JOE BACA, California 

KURT SCHRADER, Oregon 

WILLIAM L. OWENS, New York 

MICHELLE WEBER, Subcommittee Staff Director 

(IV) 

(V)

C O N T E N T S 

Page 

Subcommittee on General Farm Commodities and Risk Management, 

Friday, June 24, 2011

Boswell, Hon. Leonard L., a Representative in Congress from Iowa, opening 

statement .............................................................................................................. 4

Conaway, Hon. K. Michael, a Representative in Congress from Texas, opening 

statement .............................................................................................................. 1

Prepared statement .......................................................................................... 3

Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, opening 

statement .............................................................................................................. 5

Prepared statement .......................................................................................... 6

WITNESS

Murphy, William J., Administrator, Risk Management Agency, U.S. Department of Agriculture, Washington, D.C. .............................................................. 7

Prepared statement .......................................................................................... 9

Supplementary information ............................................................................. 35

Questionnaire .................................................................................................... 37

Subcommittee on Conservation, Energy, and Forestry, Thursday, July 07, 

2011

Holden, Hon. Tim, a Representative in Congress from Pennsylvania, opening 

statement .............................................................................................................. 47

Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, opening 

statement .............................................................................................................. 48

Prepared statement .......................................................................................... 49

Thompson, Hon. Glenn, a Representative in Congress from Pennsylvania, 

opening statement ................................................................................................ 45

Prepared statement .......................................................................................... 46

WITNESSES

Nelson, Bruce, Administrator, Farm Service Agency, U.S. Department of Agriculture, Washington, D.C. ................................................................................... 50

Prepared statement .......................................................................................... 51

Submitted questions ......................................................................................... 99

White, Dave, Chief, Natural Resources Conservation Services, U.S. Department of Agriculture, Washington, D.C. .............................................................. 55

Prepared statement .......................................................................................... 60

Submitted questions ......................................................................................... 103

SUBMITTED MATERIAL

Huntley, Mark G., President, Irrigation Association, submitted letter .............. 97

U.S. Department of Agriculture, questionnaire .................................................... 112

Subcommittee on Nutrition and Horticulture, Thursday, July 07, 2011

Baca, Hon. Joe, a Representative in Congress from California, opening statement ...................................................................................................................... 198

Prepared statement .......................................................................................... 199

Schmidt, Hon. Jean, a Representative in Congress from Ohio, opening statement ...................................................................................................................... 195

Page

VI

Schmidt, Hon. Jean, a Representative in Congress from Ohio, opening statement—Continued

Prepared statement .......................................................................................... 197

Southerland II, Hon. Steve, a Representative in Congress from Florida, prepared statement ................................................................................................... 200

WITNESSES

Pegg, Rayne, Administrator, Agricultural Marketing Service, U.S. Department of Agriculture, Washington, D.C. .............................................................. 201

Joint prepared statement ................................................................................. 204

Bech, Rebecca, Deputy Administrator for Plant Protection and Quarantine, 

Animal and Plant Health Inspection Service, U.S. Department of Agriculture, Washington, D.C. ................................................................................... 203

Joint prepared statement ................................................................................. 204

Supplementary material .................................................................................. 225

SUBMITTED MATERIAL

U.S. Department of Agriculture, questionnaire .................................................... 234

Subcommittee on Rural Development, Research, Biotechnology, and 

Foreign Agriculture, Thursday, July 13, 2011

Costa, Hon. Jim, a Representative in Congress from California, opening statement ...................................................................................................................... 265

Johnson, Hon. Timothy V., a Representative in Congress from Illinois, opening statement ........................................................................................................ 263

Prepared statement .......................................................................................... 264

WITNESSES

Heinen, Suzanne, Acting Administrator, Foreign Agricultural Service, U.S. 

Department of Agriculture, Washington, D.C. .................................................. 267

Prepared statement .......................................................................................... 268

Supplementary material .................................................................................. 297

Submitted questions ......................................................................................... 298

Questionnaire .................................................................................................... 304

Lindborg, Nancy, Assistant Administrator, Bureau for Democracy, Conflict 

and Humanitarian Assistance, U.S. Agency for International Development, 

Washington, D.C. ................................................................................................. 275

Prepared statement .......................................................................................... 277

Supplementary material .................................................................................. 297

Submitted questions ......................................................................................... 298

Questionnaire .................................................................................................... 345

Subcommittee on Department Operations, Oversight, and Credit, 

Thursday, July 14, 2011

Fortenberry, Hon. Jeff, a Representative in Congress from Nebraska, opening 

statement .............................................................................................................. 441

Prepared statement .......................................................................................... 442

Fudge, Hon. Marcia L., a Representative in Congress from Ohio, opening 

statement .............................................................................................................. 443

WITNESS

Nelson, Bruce, Administrator, Farm Service Agency, U.S. Department of Agriculture, Washington, D.C.; accompanied by Jim Radintz, Assistant Deputy 

Administrator, FSA, USDA ................................................................................. 444

Prepared statement .......................................................................................... 445

Supplementary material .................................................................................. 459

Submitted questions ......................................................................................... 464

Questionnaire .................................................................................................... 464

Page

VII

Subcommittee on Conservation, Energy, and Forestry, Wednesday, July 

20, 2011

Fudge, Hon. Marcia L., a Representative in Congress from Ohio, prepared 

statement .............................................................................................................. 488

Holden, Hon. Tim, a Representative in Congress from Pennsylvania, opening 

statement .............................................................................................................. 487

Thompson, Hon. Glenn, a Representative in Congress from Pennsylvania, 

opening statement ................................................................................................ 485

Prepared statement .......................................................................................... 486

Submitted article .............................................................................................. 529

WITNESSES

Tidwell, Thomas, Chief, U.S. Forest Service, U.S. Department of Agriculture, 

Washington, D.C. ................................................................................................. 489

Prepared statement .......................................................................................... 492

Canales, Judy, Administrator, Rural Business-Cooperative Service, U.S. Department of Agriculture, Washington, D.C. ....................................................... 497

Joint prepared statement ................................................................................. 501

Garcia, Juan, Deputy Administrator, Farm Service Agency, U.S. Department 

of Agriculture, Washington, D.C. ........................................................................ 499

Joint prepared statement ................................................................................. 501

SUBMITTED MATERIAL

U.S. Department of Agriculture, response to submitted questions ..................... 530

U.S. Department of Agriculture: 

Forestry Questionnaire .................................................................................... 556

Energy Questionnaire ...................................................................................... 584

Subcommittee on Nutrition and Horticulture, Thursday, July 21, 2011

Baca, Hon. Joe, a Representative in Congress from California, opening statement ...................................................................................................................... 620

Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, opening 

statement .............................................................................................................. 621

Schmidt, Hon. Jean, a Representative in Congress from Ohio, opening statement ...................................................................................................................... 617

Prepared statement .......................................................................................... 619

WITNESS

Rowe, Audrey, Administrator, Food and Nutrition Service, U.S. Department 

of Agriculture, Washington, D.C. ........................................................................ 622

Prepared statement .......................................................................................... 625

Submitted questions ......................................................................................... 661

Questionnaire .................................................................................................... 663

SUBMITTED MATERIAL

Davis, Lisa, Vice President of Public Policy, Feeding America, submitted 

statement .............................................................................................................. 655

Stone, Sam, Vice President, Government Relations, Dairy Farmers of America, Inc., submitted letter and statement ........................................................... 659

Subcommittee on General Farm Commodities and Risk Management, 

Wednesday, July 27, 2011

Boswell, Hon. Leonard L., a Representative in Congress from Iowa, opening 

statement .............................................................................................................. 693

Prepared statement .......................................................................................... 695

Conaway, Hon. K. Michael, a Representative in Congress from Texas, opening 

statement .............................................................................................................. 689

Prepared statement .......................................................................................... 689

Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, opening 

statement .............................................................................................................. 690

Prepared statement .......................................................................................... 692

Page

VIII

McGovern, Hon. James P., a Representative in Congress from Massachusetts, 

prepared statement .............................................................................................. 697

Peterson, Hon. Collin C., a Representative in Congress from Minnesota, prepared statement ................................................................................................... 696

WITNESS

Nelson, Bruce, Administrator, Farm Service Agency, U.S. Department of Agriculture, Washington, D.C.; accompanied by Juan M. Garcia, Acting Deputy 

Administrator for Farm Programs, FSA, USDA ............................................... 698

Prepared statement .......................................................................................... 699

Submitted questions ......................................................................................... 727

Questionnaire .................................................................................................... 727

Subcommittee on Rural Development, Research, Biotechnology, and 

Foreign Agriculture, Thursday, July 28, 2011

Costa, Hon. Jim, a Representative in Congress from California, opening statement ...................................................................................................................... 791

Johnson, Hon. Timothy V., a Representative in Congress from Illinois, opening statement ........................................................................................................ 789

Prepared statement .......................................................................................... 790

WITNESSES

Knipling, Dr. Edward B., Administrator, Agricultural Research Service, U.S. 

Department of Agriculture, Washington, D.C. .................................................. 793

Prepared statement .......................................................................................... 795

Questionnaire .................................................................................................... 832

Jacobs-Young, Ph.D., Chavonda, Acting Director, National Institute of Food 

and Agriculture, U.S. Department of Agriculture, Washington, D.C. ............. 800

Prepared statement .......................................................................................... 801

Questionnaire .................................................................................................... 879

Clark, Dr. Cynthia, Administrator, National Agricultural Statistics Service, 

U.S. Department of Agriculture, Washington, D.C. .......................................... 804

Prepared statement .......................................................................................... 806

Questionnaire .................................................................................................... 929

Unnevehr, Ph.D., Laurian J., Acting Administrator, Economic Research Service, U.S. Department of Agriculture, Washington, D.C. ................................... 809

Prepared statement .......................................................................................... 810

Questionnaire .................................................................................................... 935

SUBMITTED MATERIAL

Biotechnology Industry Organization, submitted statement ............................... 826

Van Arsdall, R. Thomas, Executive Director, National Coalition for Food 

and Agricultural Research, submitted statement ............................................. 823

U.S. Department of Agriculture, response to submitted questions ..................... 828

Subcommittee on Livestock, Dairy, and Poultry, and Foreign Agriculture, 

Thursday, September 08, 2011

Baca, Hon. Joe, a Representative in Congress from California, prepared statement ...................................................................................................................... 944

Cardoza, Hon. Dennis A., a Representative in Congress from California, opening statement ........................................................................................................ 942

Prepared statement .......................................................................................... 943

Peterson, Hon. Collin C., a Representative in Congress from Minnesota, prepared statement ................................................................................................... 943

Rooney, Hon. Thomas J., a Representative in Congress from Florida, opening 

statement .............................................................................................................. 941

Prepared statement .......................................................................................... 942

WITNESSES

Garcia, Juan M., Acting Deputy Administrator for Farm Programs, Farm 

Service Agency, U.S. Department of Agriculture, Washington, D.C.; accompanied by Larry Salathe, Ph.D., Senior Economist, Office of the Chief 

Economist, USDA ................................................................................................. 944

Page

IX

Garcia, Juan M., Acting Deputy Administrator for Farm Programs, Farm 

Service Agency, U.S. Department of Agriculture, Washington, D.C.; accompanied by Larry Salathe, Ph.D., Senior Economist, Office of the Chief 

Economist, USDA—Continued

Prepared statement .......................................................................................... 946

Submitted questions ......................................................................................... 973

Questionnaire .................................................................................................... 997

Coale, Dana, Deputy Administrator for Dairy Programs, Agricultural Marketing Service, U.S. Department of Agriculture, Washington, D.C.; accompanied by Larry Salathe, Ph.D., Senior Economist, Office of the Chief 

Economist, USDA ................................................................................................. 949

Prepared statement .......................................................................................... 950

Submitted questions ......................................................................................... 973

Questionnaire .................................................................................................... 1011

SUBMITTED MATERIAL

National Milk Producers Federation, submitted report ....................................... 974

Supplementary material submitted by the USDA ................................................ 971

Subcommittee on Rural Development, Research, Biotechnology, and 

Foreign Agriculture, Tuesday, September 13, 2011

Costa, Hon. Jim, a Representative in Congress from California, opening statement ...................................................................................................................... 1021

Johnson, Hon. Timothy V., a Representative in Congress from Illinois, opening statement ........................................................................................................ 1019

Prepared statement .......................................................................................... 1020

WITNESSES

Adelstein, Hon. Jonathan S., Administrator, Rural Utilities Service, U.S. Department of Agriculture, Washington, D.C. ....................................................... 1023

Prepared statement .......................................................................................... 1025

Questionnaire .................................................................................................... 1073

Canales, Judith A., Administrator, Rural Business-Cooperative Service, U.S. 

Department of Agriculture, Washington, D.C. .................................................. 1026

Prepared statement .......................................................................................... 1028

Supplementary material .................................................................................. 1055

Submitted report .............................................................................................. 1056

Questionnaire .................................................................................................... 1101

Trevin ̃ o, Tammye H., Administrator, Rural Housing Service, U.S. Department 

of Agriculture, Washington, D.C. ........................................................................ 1032

Prepared statement .......................................................................................... 1034

Questionnaire .................................................................................................... 1117

SUBMITTED QUESTIONS

U.S. Department of Agriculture, response to submitted questions ..................... 1065

(1)

AGRICULTURAL PROGRAM AUDIT 

(EXAMINATION OF THE FEDERAL CROP INSURANCE 

PROGRAM) 

FRIDAY, JUNE 24, 2011

SUBCOMMITTEE ON GENERAL FARM COMMODITIES

AND RISK MANAGEMENT, 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON AGRICULTURE, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 10:02 a.m., in Room 

1300 of the Longworth House Office Building, Hon. K. Michael 

Conaway [Chairman of the Subcommittee] presiding. 

Members present: Representatives Conaway, Neugebauer, 

Schmidt, Austin Scott of Georgia, Crawford, Roby, Huelskamp, Gibson, Hultgren, Hartzler, Schilling, Stutzman, Lucas (ex officio), 

Boswell, McIntyre, Walz, Kissell, David Scott of Georgia, Courtney, 

and Peterson (ex officio). 

Staff present: Tamara Hinton, Kevin Kramp, Matt Schertz, 

Pelham Straughn, Suzanne Watson, Bart Fischer, Liz Friedlander, 

Clark Ogilvie, Anne Simmons, John Konya, and Jamie Mitchell. 

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A 

REPRESENTATIVE IN CONGRESS FROM TEXAS 

The CHAIRMAN. We will call the hearing to order. This hearing 

of the Subcommittee on General Farm Commodities and Risk Management entitled, Agricultural Program Audit: Examination of Federal Crop Insurance Programs, will come to order. We are pleased 

to have before us today the Administrator of the Risk Management 

Agency Bill Murphy. It is appropriate that our first farm bill audit 

hearing focuses on the Federal Crop Insurance program, because 

crop insurance has evolved over 73 years to become a cornerstone 

of U.S. farm policy. It is as important now as ever. Farmers across 

the country are dealing with wild fires, droughts, and I am told, 

extra water in Minnesota, floods. It is also important to observe 

why the Federal Government is involved in crop insurance. That is 

because without Federal involvement, America’s farmers quite simply would not have crop insurance. Without crop insurance, lenders 

would not likely make loans to producers. After all, producers are 

borrowing more money in a single year than many Americans borrow in a lifetime. So if there is ever a role for Federal involvement 

in what would ordinarily be a private market activity, this is a 

prime example. 

2

Still, as essential that Federal crop insurance is to most producers, it has been a long road to get to where we are, and we have 

not yet reached our final destination. Three events helped farm 

crop insurance become what it is today. First, 100 percent private 

sector delivery through a strong agent workforce; second, the 2000 

reform bill that increased producer access to high levels of coverage 

at more affordable prices; and third, the approval of revenue products that help producers cope with production losses and better 

market their crops, while dealing with price volatility. This last improvement was also a private sector innovation. 

With these innovations, participation has more than doubled 

over the past 20 years, and total liabilities protected has increased 

over 600 percent, reaching an expected total of over $100 billion in 

2011. We have witnessed an increase in risk management tools 

available to producers, most notably the revenue products now on 

the market. 

Despite these successes, there are areas where Federal crop insurance must move forward to meet the risk management needs of 

U.S. producers, and this is especially true in the current budget climate. Federal crop insurance must be built upon, or it will wither 

and die because it will fall behind producer needs. For example, it 

is great that we have producers covered at the 70 to 85 percent 

coverage levels, meeting deductibles ranging from 30 down to 15 

percent. These high deductibles grow even larger when coupled 

with artificially low actual production histories, or APHs, that further shrink insurable yields. But for many producers, only low levels of coverage are cost effective. This is true, despite the introduction of enterprise units in the farm bill that help producers buy up 

higher levels of coverage. 

Unfortunately, a lot of time has already been lost. Over the last 

4 years, the Risk Management Agency has taken its focus off the 

task at hand in order to implement cuts to the Federal Crop Insurance program, first made in the 2008 Farm Bill, roughly a $6 billion reduction. And then in the renegotiation of the Standard Reinsurance Agreement, which reduced CBO baseline for ag spending 

by another $6 billion, all of which went to deficit reduction. While 

I was comfortable with the farm bill, I was not sold on the wisdom 

behind the SRA. In any case, we do not yet know the full impact 

of the farm bill and SRA will have on crop insurance. This has created great uncertainty and has preoccupied the time of RMA, and 

thus agents and companies, with issues that are not the primary 

goal of Federal crop insurance, which is to serve producer risk 

management needs. RMA and the industry must pick up where 

they left off and focus on meeting the needs of farmers and ranchers. 

In short, this public-private partnership is necessary. The farmer 

must pay to play. Risk management tools under Federal crop insurance are tailored to producer price and production risks. Lenders 

require and the Federal crop insurance has contributed to deficit 

reduction, and fully complies with the WTO. This is a good deal for 

the farmer, the agents, the companies creating private sector jobs, 

and economic activity, and good for the taxpayer. 

I look forward to hearing from Administrator Murphy on how we 

can make things better. 

3

[The prepared statement of Mr. Conaway follows:]

PREPARED STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE IN

CONGRESS FROM TEXAS

We are pleased to have before us the Administrator of the Risk Management 

Agency, Mr. Bill Murphy. 

It is appropriate that our first farm bill audit hearing focuses on Federal Crop 

Insurance because crop insurance has evolved over 73 years to become a cornerstone 

of U.S. farm policy. It’s as important now as ever. Farmers across the country are 

dealing with wildfires, droughts, and floods. 

It is also important to observe why the Federal Government is involved in crop 

insurance: it’s because without Federal involvement America’s farmers quite simply 

would not have crop insurance. And without crop insurance, lenders would likely 

not make loans to producers. After all, producers are borrowing more money in a 

single year than most Americans will borrow in a lifetime. 

So, if there was ever a role for Federal involvement in what would ordinarily be 

a private market activity, this is a prime example. 

Still, as essential as Federal Crop Insurance is to most producers, it has been a 

long road to get to where we are—and we have not yet reached our final destination. 

Three events helped Federal Crop Insurance become what it is today: First, 100% 

private sector delivery through a strong agent workforce; second, the 2000 reform 

bill that increased producer access to higher levels of coverage at more affordable 

prices; and third, the approval of revenue products that help producers cope with 

production losses and better market their crops while dealing with price volatility. 

This last improvement was also a private sector innovation. 

With these innovations, participation has more than doubled over the past 20 

years and total liabilities protected has increased by over 600%, reaching an expected total of over $100 billion in 2011, and we have witnessed an increase in the 

risk management tools available to producers, most notably ‘‘revenue’’ products. 

Despite these successes, there are areas where Federal Crop Insurance must move 

forward to meet the risk management needs of U.S. producers, and this is especially 

true in the current budget climate. Federal Crop Insurance must be built upon or 

it will wither and die because it will fall behind producer needs. For example, it is 

great that we have producers covered at the 70% to 85% coverage levels, meaning 

deductibles ranging from 30% down to 15%. These high deductibles grow even larger 

when coupled with artificially low actual production histories, or APHs, that further 

shrink insurable yields. But for many producers, only low levels of coverage are cost 

effective. This is true despite the introduction of ‘‘enterprise units’’ in the farm bill 

that helped producer’s buy-up higher levels of coverage. 

Unfortunately, a lot of time has already been lost. Over the last 4 years, the Risk 

Management Agency has taken its focus off of the task at hand in order to implement cuts to Federal Crop Insurance, first made in the 2008 Farm Bill—roughly a 

$6 billion reduction—and then in the renegotiation of the Standard Reinsurance 

Agreement, which reduced the CBO baseline for agriculture by another $6 billion, 

all of which went to deficit reduction. 

While I was comfortable with the farm bill, I was not sold on the wisdom behind 

the SRA. In any case, we do not yet know the full impact the farm bill and the SRA 

will have on Crop Insurance. This has created great uncertainty and has preoccupied the time of RMA, and thus agents and companies, with issues that are not 

the primary goal of Federal Crop Insurance, which is to serve producer risk management needs. RMA and the industry must pick up where they left off and focus 

on meeting the needs of our farmers and ranchers. 

In short, this private-public partnership is necessary. The farmer must pay to 

play. Risk management tools under Federal Crop Insurance are tailored to producer 

price and production risks. Lenders require it. And, Federal Crop Insurance has contributed to deficit reduction and fully complies with the WTO. This is a good deal 

for the farmer, the agents and the companies creating private sector jobs and economic activity, and for the taxpayer. I look forward to hearing from Administrator 

Murphy on how we can make a good thing even better. 

But first I would yield to the Ranking Member of the Subcommittee, Mr. Boswell, 

for any opening remarks he may have.

The CHAIRMAN. I would like to yield to the Ranking Member of 

the Subcommittee, Mr. Boswell, for any comments he may make. 

4

OPENING STATEMENT OF HON. LEONARD L. BOSWELL, A 

REPRESENTATIVE IN CONGRESS FROM IOWA 

Mr. BOSWELL. Well, thank you, Mr. Chairman, and I appreciate 

you having this hearing. I certainly concur with much of what you 

have just said. Pay to play, that is a pretty good little term, and 

I think it rings very true. We will probably talk about some of that. 

I also would like to thank everybody for joining us here today, 

as I look around the gallery and see who is here and the interest 

level seems to remain high. Mr. Murphy, welcome back, too. We 

have had a few conversations. It has been a little while, so maybe 

this is a chance for us to catch up. 

But anyway, I come from a state where we have, as you know, 

92,000 farms and more than 30 million acres in production. It 

sounds like we are having an interruption, doesn’t it? I understand 

challenges of farmers and those in agricultural business face today. 

It is high risk, as you well know. 

When I retired from the Army and returned home to farm, I 

quickly realized that farming had greatly changed over the 20 

years that I was away. Back then, I had always said that in order 

to farm, a producer needs to have access to a bank and a place to 

buy and sell product, and the inputs. Of course, we have gotten 

much more sophisticated over the last years. I got caught right in 

the farm crisis of the late 1970s, early 1980s. After surviving it, 

which I did, and I also was chairing my local place to buy and sell, 

the cooperative, I realized how important a good crop insurance 

agent was to help me manage my risk. I worked with my agent, 

sure that I was never put in the position that I was during the 

1980s farm crisis, because I had an opportunity to do it. 

I share that story because I understand the importance of the 

crop insurance industry, not only in the State of Iowa, but across 

the country. In 2010, 255 million acres were enrolled in crop insurance. Sign up and buy up levels for crop insurance have proven 

that farmers appreciate having additional options to help them 

manage risks; however, certain regions and certain crops are 

underrepresented, we have found. Looking ahead, we need to see 

how we can make the program work for more producers. 

Additionally, I have to say that I am opposed to cutting funding 

to the program. Budgets are tight, but tight budgets do not mean 

we must jeopardize the risk management tools that we have today, 

or put in question when improvements can be made in the future. 

On that note, this Committee has gone a long ways in previous 

years to address sound fiscal management, and the USDA has decreased costs through the renegotiation of the Standard Reinsurance Agreement, SRA. I have been concerned with these cuts and 

the effects this negotiation may have on the relationship between 

farmers and their agents. We must acknowledge that the crop insurance industry is a business, and both the companies and the 

agents need to make a reasonable profit in order to stay in the 

market. 

Just yesterday, I had an unexpected conversation with a senior 

agent in a small town surrounded by agriculture. I won’t name the 

place, but I could if we have a conversation about it. He is concerned. It is time to start thinking about passing the business on, 

and with all the questions, whether it is to family or somebody, to 

5

keep, it is a vital part. It is as important as having the bank and 

the place to buy and sell. That agency is important in that community, is my point. 

So with that in mind, at this hearing I will be submitting a question when we get into question time to you, Mr. Murphy, with the 

request for a written response on this issue. The renegotiation of 

the SRA has left insurance agents in my state and many others 

perplexed, worried sick, I guess, by a direct cap in the SRA on commissions private companies are allowed to provide. To me, this is 

arbitrary and neglects the principle of a free market and the expertise and hard work of insurance agents our farmers rely on. So I 

look forward to the response and working with you to further enhance the crop insurance industry so it provides maximum benefits 

to producers and consumers alike. 

One of the many farm programs we support are highly valued 

crop insurance and must be structured to ensure a free marketplace for insurers and agents across the nation. We are making 

great strides to help the American farmer, and I look forward to 

hearing more about the crop insurance program today. I thank you 

again for your testimony, which will be an essential means for us 

to continue to move forward on the next farm bill. 

So thank you, Mr. Chairman. I yield back. 

The CHAIRMAN. Thank you, sir. I recognize the Chairman of the 

full Committee for any comments he might have. 

OPENING STATEMENT OF HON. FRANK D. LUCAS, A 

REPRESENTATIVE IN CONGRESS FROM OKLAHOMA 

Mr. LUCAS. Thank you, and I would like to thank the Chairman 

and the Ranking Member for holding this first in a series of audit 

hearings to examine programs authorized in the farm bill. 

My goal with these hearings is two-fold. First, I want the Department to present a spending snapshot of farm programs. Our Subcommittees will examine spending trends, confirm whether the 

purposes and goals of the programs we authorize are being met 

successfully. We will look for duplication within issue areas to determine program overlap. We will also examine program eligibility 

and whether those eligibility criteria meet the needs of our constituents. We will scrutinize waste, fraud, and abuse, and look for 

ways to build on the success the Department has already achieved 

in this area of program integrity. In essence, this is what I mean 

by an audit of farm programs. 

The second purpose of these audits is educational in nature. I 

think it is important that our Committee learn just how many programs we authorize in the farm bill, and the amount of money we 

dedicate in each area. I want the Members of our Committee to 

have a holistic view of farm policy before we move forward. Too 

often in the past, Congress has considered a piecemeal approach to 

farm programs, adding layer upon layer while not looking at the 

overall picture to see how these programs interact. We are starting 

with comprehensive audits so we can examine each program within 

the broader context of farm policy. These audits ensure that we are 

operating from the same base of knowledge. We represent states 

ranging from Alabama to Oregon, and the diverse constituencies 

that come with that, so we all have unique priorities for farm polVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00017 Fmt 6633 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
6

icy. But while our priorities may differ, our facts cannot. So these 

audits give all of us the same data to use in decision making. 

Having the best available data will help us better understand 

farm programs so we can navigate the tough, and I mean tough, 

road ahead. I hope that today we can start a dialogue on how to 

root out inefficiencies so we can continue supporting our farmers 

and ranchers while spending, yes, fewer taxpayer dollars. 

It is also important for all of us to understand our priorities from 

the last two farm bills. Before we move forward with new policies, 

we should understand how we got to where we are today. Some of 

the circumstances that shaped past farm bills are still relevant 

today. Others have changed. We all know that this farm bill will 

be developed under a very different fiscal climate than the 2008 

Farm Bill. The simple truth is, we must make some difficult decisions. There are no sacred cows, so to speak, and during these 

tough fiscal times, every program, every title will be on the table. 

This farm bill gives the Committee an excellent opportunity to 

prioritize the programs that are working, fix the programs that are 

broken, eliminate the programs that are duplicative. We will make 

these determinations with the help of these audits, along with the 

input from our constituents. We will start this process today by 

taking a serious look at crop insurance to ensure that our funds are 

utilized economically, and the program delivery is efficient for 

farmers and ranchers. 

As we begin the process of developing the 2012 Farm Bill, I know 

the challenge of doing more with less will be foremost in our minds. 

I believe that we can meet this challenge and develop thoughtful 

policies to keep American agriculture productive and competitive in 

the 21st century. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Lucas follows:]

PREPARED STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN CONGRESS

FROM OKLAHOMA

Good morning. 

I’d like to thank Chairman Conaway for holding the first in a series of audit hearings to examine programs authorized in the farm bill. 

My goal with these hearings is two-fold. First, I want the Department to present 

a spending snapshot of farm programs. 

Our Subcommittees will examine spending trends and confirm whether the purpose and goals of the programs we authorize are being met successfully. 

We will look for duplication within issue areas to determine program overlap. We 

will also examine program eligibility and whether those eligibility criteria meet the 

needs of our constituents. 

And we will scrutinize waste, fraud and abuse, and look for ways to build on the 

success the Department has already achieved in this area of program integrity. In 

essence, this is what I mean by an ‘‘audit’’ of farm programs. 

The second purpose of these audits is educational in nature. I think it is important for our Committee to learn just how many programs we authorize in the farm 

bill and the amount of money we dedicate to each area. 

I want the Members of our Committee to have a holistic view of farm policy before 

we move forward. Too often in the past, Congress has taken a piecemeal approach 

to farm programs, adding layer upon layer while not looking at the overall picture 

to see how these programs interact. 

We are starting with comprehensive audits so that we can examine each program 

within the broader context of farm policy. 

These audits ensure that we are operating from the same base of knowledge. We 

represent states ranging from Alabama to Oregon—and the diverse constituencies 

that come with that—so we all have unique priorities for farm policy. But while our 

7

priorities may differ, our facts cannot. So these audits give all of us the same data 

to use in decision making. 

Having the best available data will help us better understand farm programs so 

that we can navigate the tough road ahead. 

I hope that today, we can start a dialogue on how to root out inefficiencies so we 

can continue supporting our farmers and ranchers while spending fewer taxpayer 

dollars. 

It is also important for all of us to understand our priorities for the last two farm 

bills. Before we move forward with new policies, we must understand how we got 

where we are today. 

Some of the circumstances that shaped past farm bills are still relevant today. 

Others have changed. We all know that this farm bill will be developed under a very 

different fiscal climate than the 2008 Farm Bill. 

The simple truth is that we must make some difficult decisions. There are no ‘‘sacred cows,’’ so to speak, and during these tough fiscal times, every program, in every 

title, will be on the table. 

This farm bill gives the Committee an excellent opportunity to prioritize programs 

that are working, fix programs that are broken, and eliminate programs that are 

duplicative. We will make those determinations with the help of these audits, along 

with input from our constituents. 

We will start that process today by taking a serious look at crop insurance to ensure that our funds are utilized economically and program delivery is efficient for 

our farmers and ranchers. 

As we begin the process of developing the 2012 Farm Bill, I know that the challenge of doing more with less will be foremost in our minds. 

I believe that we can meet this challenge and develop thoughtful policies to keep 

American agriculture productive and competitive in the 21st century.

The CHAIRMAN. Thank you, Mr. Chairman. We have one vote, 

and I thought we would just try to do a rolling vote, but it came 

quicker than I thought it was going to. After—do you have any 

comments, Ranking Member? Okay. 

Why don’t we take a quick break, run across the street, vote, and 

come back? Then all of us will have access to hear you talk, and 

it won’t be as disruptive that way. So we will take—the meeting 

will recess, subject to call of the chair. 

[Recess.] 

The CHAIRMAN. I have one piece of administrative duty, the gentleman from Indiana, Mr. Stutzman, is not a Member of the Subcommittee, but has joined us today or will join us in a moment. I 

have consulted with the Ranking Member, and am pleased to welcome him in joining in questioning of the witness. 

So at this point in time, Mr. Murphy, you have the floor for your 

opening comments. Thank you for being here. 

STATEMENT OF WILLIAM J. MURPHY, ADMINISTRATOR, RISK 

MANAGEMENT AGENCY, U.S. DEPARTMENT OF

AGRICULTURE, WASHINGTON, D.C. 

Mr. MURPHY. Chairman Conaway, Ranking Member Boswell, 

Members of the Subcommittee, as Administrator of the Risk Management Agency, I am pleased to meet with you today to discuss 

the latest developments in RMA, and the progress and challenges 

of the Federal Crop Insurance Program. Along with Secretary 

Vilsack’s leadership, I have the goal to administer the Federal Crop 

Insurance Program in a manner that provides effective risk management services to all farmers and ranchers, regardless of their location or the size of their operation. 

The Secretary and I are aware that in today’s economy, it is important that the program be cost effective and give a fair value for 

8

taxpayers’ dollars. I am proud that I can confidently say that we 

are doing just that. 

Crop insurance has become an integral part of the business life 

of the large majority of American farmers and ranchers. They 

would find it difficult, if not impossible, to continue without the 

protection provided by this part of the farm safety net. Many lenders now require crop insurance coverage in order to make operating 

loans to crop and livestock producers. Many producers use crop insurance as collateral for loans, as well as provide support for forward pricing their crop. 

Today, over 250 million acres of farms and ranches are covered 

by Federal crop insurance, for an overall participation rate exceeding 80 percent for the major crops. The value of insured crops is 

at a record high. In 1994, program liability was less than $14 billion. This year, it will exceed $100 billion. More producers buy 

higher levels of insurance now, and more specialty crop producers 

participate in the program than ever before. 

Our unique and successful relationship with our private partners, 15 insurance companies, and the agents who deal directly 

with farmers and ranchers is the foundation of this program. Producers purchase crop and livestock insurance from an insurance 

agency operating and living in their communities. This relationship 

levers the respective strengths of the public and private sectors. 

The 2011 crop year, with widespread flooding in some areas and 

record drought in others, has been a true test to the crop insurance 

program. My staff and I are closely watching all developments to 

ensure that producers get all the protection provided by their policies. 

The preventive planning coverage available in most policies has 

been of extreme importance this year in areas where standing 

water and water-logged soils have prevented producers from getting into their fields. In drought-stricken areas, the compensation 

provided for reduced yields will be extremely important in helping 

producers to survive until next year. In years like this one, the 

value of this critical safety net is made clear. 

The $6 billion in savings credit created through the renegotiated 

Standard Reinsurance Agreement in 2010 went towards reducing 

the Federal deficit and supporting high priority risk management 

and conservation programs. By containing program costs, these 

changes also ensure the sustainability of the crop insurance program for American farmers and ranchers for years to come. 

RMA’s Comprehensive Information Management System, CIMS, 

is of clear importance to producers. Working with the Farm Service 

Agency, RMA began in 2007 to provide access to over 12,000 users 

of RMA, FSA, and crop insurance companies as the single source 

of RMA and FSA program information for producers, crop acreage, 

and production. The next stage of this information sharing is now 

underway, and the Department’s efforts with cross functional representation from RMA, FSA, NRCS, and NASS one-stop reporting 

for farmers, and standardizing programs across the Department is 

our goal. 

As those of you acquainted with the dairy farmers may be aware, 

the Livestock Gross Margin dairy plan of insurance ran out of 

funding this year. Congress makes $20 million available a year for 

9

all livestock programs, and the popularity of a newly-designed 

dairy program exhausted these funds in March, halfway through 

the fiscal year. We look forward to again funding LGM dairy in the 

new fiscal year. 

RMA continues to make significant progress in preempting fraud, 

waste, and abuse through the expanded use of data mining. RMA, 

FSA, and the crop insurance companies have preempted tens of 

millions of dollars of improper payments through quality control, 

data mining, and other measures. RMA is constantly identifying 

ways to balance competing needs to make our product less susceptible to fraud, while seeking to provide responsive, useful risk protection tools for farmers. 

Again, thank you for the opportunity to participate in this important hearing. I look forward to discussing the Crop Insurance Program with you, and to responding to any questions you may have. 

[The prepared statement of Mr. Murphy follows:]

PREPARED STATEMENT OF WILLIAM J. MURPHY, ADMINISTRATOR, RISK MANAGEMENT

AGENCY, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Chairman Conaway, Ranking Member Boswell, and Committee Members, I am 

pleased to meet with you today to discuss the latest developments in the Risk Management Agency (RMA), the progress and challenges of the Federal crop insurance 

program, and the status of the Standard Reinsurance Agreement (SRA) and its benefits to the agricultural community and the American taxpayer. My staff and I work 

daily to validate the utility of current insurance products—making certain we offer 

the best risk management protection possible for all of America’s farmers and 

ranchers. The agency, along with our fifteen approved crop insurance companies, 

provide risk management tools that are compatible with international trade commitments, create products and services that are actuarially sound and market driven, 

harness the strengths of both the public and private sectors, and reflect the diversity of the agricultural sector. 

Crop insurance is a vital part of the farm safety net and has become an integral 

part of business life for a large majority of American farmers and ranchers. They 

would find it difficult to continue providing the United States and the world with 

an abundant supply of food, fiber and fuel without the protection provided by this 

part of the farm safety net. Many lenders now require crop insurance coverage in 

order to make operating loans to crop and livestock producers, and many producers 

use crop insurance as collateral for the loans. 

There is a unique and successful relationship between RMA and our private partners, the 15 approved insurance companies, and the agents who deal directly with 

farmers and ranchers. Producers purchase Federal crop or livestock insurance from 

insurance agents operating in their communities, who sell the insurance on behalf 

of the 15 insurance companies. This relationship leverages the respective strengths 

of the public and private sectors. The insurance companies provide Federal crop insurance under reinsurance agreements with the Federal Crop Insurance Corporation (FCIC), administered by RMA. 

The 2011 crop year, with widespread flooding in some areas accompanied by severe drought in other areas, has been a test of the crop insurance program. My staff 

and I are closely watching all developments to insure that producers get the protection provided by their policies. The Prevented Planting coverage available in most 

policies has been of extreme importance this year in areas where standing water 

or waterlogged soil prevented producers from getting into their fields until past the 

time for planting. In drought stricken areas, the compensation provided for reduced 

yields will be extremely important in helping producers to survive. In years like this 

one, the value of this critical safety net is made clear. 

Brief History 

Participation in the crop insurance program increased significantly following 

changes enacted in 1994 by Congress. For example, fewer than 100 million acres 

of farmland were insured under the program in 1994. Today, over 250 million acres 

of farm and ranch lands are covered by Federal crop insurance, for an overall participation rate exceeding 80 percent for the major crops. 

10

As the amount of insured acreage has increased, so too has the liability, or value of the insurance in force. In 1994, program liability was less than $14 billion. Industry estimates suggest 2011 program liability could exceed $100 billion. The crop insurance program has seen sustained growth as demonstrated by the increasing proportion of acres insured at buy up levels over the last decade. Today, over 90 percent of all policyholders purchase buy-up levels of coverage. Of note is the significant level of participation by specialty crop producers. The overall participation rate 

for specialty crop producers is about 75 percent, which is fairly comparable to the 

83 percent participation rate for the major program crops. Important fruit, nut and 

vegetable states California (71%), Florida (91%), and Washington (68%) each score 

well in Federal crop insurance program participation. 

This growth has been accomplished in an actuarially sound manner as required 

by Congress and the program is working well. Over the last 2 decades, premiums 

(producer premiums added to premium subsidies) have been sufficient to cover the 

indemnities paid to producers plus a reasonable reserve, as directed by the Federal 

Crop Insurance Act. 

In 2000, Congress enacted the Agricultural Risk Protection Act (ARPA) that expanded the role of the private sector allowing entities to participate in conducting 

research and development of new insurance products and features. With the expansion of contracting authority, RMA can enter into contracts for research and development of new and innovative insurance products. Private entities may also submit 

unsolicited proposals for insurance products to the FCIC Board of Directors (Board) 

for approval. If approved by the Board, these unsolicited insurance products are eligible to receive reimbursement for research, development and maintenance costs, in 

addition to any approved premium subsidies and reinsurance. 

ARPA also removed restrictions on the development of insurance products for livestock. Authority was added to allow the Board to create an expert review panel to 

provide assistance to the Board and RMA in evaluating proposed insurance products 

for feasibility and actuarial soundness. Premium subsidies to farmers were increased to encourage producers to purchase higher insurance coverage levels and to 

make the insurance program more attractive to prospective producers. Throughout 

all of this, RMA has implemented many innovations to keep up with industry advances as well as customer demands. 

Standard Reinsurance Agreement 

On June 10, 2010, USDA released the new reinsurance agreement and announced that $6 billion in savings were created through this action. Two-thirds of this savings went toward paying down the Federal deficit, and the remaining 1⁄3 was used 

to support high priority risk management and conservation programs. By containing 

program costs, these changes also ensure the sustainability of the crop insurance 

program for America’s farmers and ranchers for years to come. 

CIMS & ACRSI 

The 2002 Farm Bill required the Secretary of Agriculture to develop a Comprehensive Information Management System (CIMS) to be used by the Farm Service 

Agency (FSA) and RMA in the farm programs they administer. CIMS was made 

available for use in September 2007. It provides access for over 12,000 users from 

RMA, FSA and the crop insurance companies as a single source of RMA and FSA 

program information for producers, crop acreage and production. The next stage of 

information sharing is now underway with the Acreage/Crop Reporting Streamlining Initiative (ACRSI). This is a Departmental effort with cross functional representation from RMA, FSA, Natural Resources Conservation Service, andNational 

Agricultural Statistics Service. 

The objective of ACRSI is to establish a common USDA framework for producer 

commodity reporting in support of USDA programs and to establish common data 

standards of information used for producer commodity reporting. ACRSI and CIMS 

will facilitate ‘one-stop’ reporting of producer information and greater data sharing 

of data among government agencies. This will provide for greatly improved integrity 

and accuracy of the data collected and reported to USDA. RMA and FSA will be 

able to efficiently identify discrepancies, cases of misreporting, and potential fraud, 

waste, and abuse, thus reducing the potential for improper payments. Furthermore, 

these efforts will save time and money for the government, producers and companies 

by reducing reporting and data management burdens. 

Livestock Products 

ARPA authorized RMA to offer insurance products for livestock producers and 

provided $20 million in funding to cover administrative and operating (A&O) and 

premium subsidy costs for pilot livestock insurance plans each fiscal year. RMA currently reinsures eight livestock products, all of which were developed and submitted 

11

by private parties through the authorities contained in Section 508(h) of the Federal 

Crop Insurance Act. There are two basic insurance models used to offer livestock 

insurance: Livestock Risk Protection (LRP) and Livestock Gross Margin (LGM). LRP 

provides protection against unexpected declines in the price of certain livestock—

feeder cattle, fed cattle, lamb, and swine. LGM provides protection to livestock producers against unexpected increases in feed costs or unexpected declines in prices 

for the insured livestock product. Gross margin is the market value of the insured 

livestock product minus feed costs. As we have noted previously, the $20 million in 

annual funding for all livestock programs was exhausted in March because of the 

increased popularity of LGM-Dairy. Thus, none of the livestock programs are currently available. They will be offered again in Fiscal Year 2012 when an additional 

$20 million in funding becomes available. 

Program Integrity and Data Mining 

In conjunction with the improved quality control requirements in the new SRA, 

RMA Compliance has revised its work plans to reflect a more balanced approach 

between quality assurance and investigating program abuses. In a time of declining 

resources and increased responsibilities, effective internal controls provide a significant cost-benefit compared to identifying and prosecuting program abuse alone. 

RMA is reviewing company operations and internal controls to determine the success of their efforts to address crop insurance program vulnerability concerns. 

RMA continues to make significant progress in preempting fraud, waste and 

abuse through the expanded use of data mining. ARPA directed RMA to employ 

data mining technologies to program compliance and integrity efforts, and provided 

the funding necessary to support these activities. ARPA also provided a role for FSA 

to assist RMA in further program compliance and integrity. RMA subsequently entered into a contract with the Center for Agribusiness Excellence (CAE) at Tarleton 

State University to develop and maintain appropriate data warehousing and data 

mining capabilities. Annually, CAE produces a spot-check list of producers engaging 

in questionable behaviors which is provided to FSA for further investigation. With 

the assistance of FSA offices, RMA and the insurance companies conduct growing 

season spot checks to ensure that claims for losses are legitimate. 

These efforts have been highly successful as the cumulative cost avoidance from 

data mining and related activities from 2001 through 2010 is estimated to be almost 

$840 million, based on our analysis of the changes in loss experience for those people placed on the spot-check list. In light of the success of the spot-check program, 

the new SRA broadens the use of data mining to help direct company efforts at detecting and investigating suspect behaviors. We believe the targeted company reviews enabled by data mining will be more effective and efficient than the random 

review process of previous years. 

While RMA, FSA and the crop insurance companies have preempted tens of millions of dollars of improper payments through quality controls, data mining, and 

other measures, RMA is constantly identifying ways to balance competing needs to 

make our products less susceptible to fraud while seeking to provide responsive, 

useful risk protection to farmers. We still have work to do and improvements to 

make, but we are making good progress in our fight against waste, fraud and abuse 

in the Federal crop insurance program. 

Premium Rates 

One of the most important considerations for the Federal crop insurance program 

is the premium cost for producers. If premium rates are too high, producers will not 

participate in the crop insurance program. If premium rates are too low, actuarial 

performance will deteriorate. RMA continually seeks to improve its premium rating 

methodology and maintain actuarial balance. RMA recently commissioned a comprehensive review of its rating methodology by a panel of outside experts. A preliminary draft of the review was posted for public comment. The final draft, as well as 

the response to public comments, is available on RMA’s website. The review supported RMA’s overall approach to generating premium rates based on historical loss 

experience, and provided a number of recommendations for potential improvements 

that RMA is pursuing. The most critical of these recommendations is for RMA to 

determine if all historical losses should be given the same weight in determining 

current premium rates. Work on the reweighting of historical loss experience is currently ongoing. 

Concept Proposals 

The 2008 Farm Bill provided an alternative for producers and private entities to 

submit to the FCIC Board, proposals for insurance coverage for agricultural commodities not traditionally served, and to improve current insurance coverage. Private entities are authorized to submit Concept Proposals for plans of insurance to 

12

the Board for approval of an advance payment of up to half of their estimated research and development costs to assist them in developing a completed 508(h) insurance product. Completed 508(h) products receive reimbursement of the balance of 

their research and development costs and up to 4 years of maintenance expenses 

if approved by the Board. To date, the Board has received 23 Concept Proposals and 

approved 11 for advance payments totaling approximately $1.7 million. 

Combination Policies (COMBO) 

On March 30, 2010, RMA published the final rule for the Common Crop Insurance 

Policy, commonly known as the COMBO policy, to be effective for the 2011 crop 

year. The COMBO policy combines five plans of insurance into a single plan of insurance. This new policy makes risk management decisions simpler for the producer 

and enhances program efficiency by reducing inconsistencies, duplication, and paperwork. Furthermore, by combining the previous five plans of insurance into a single plan RMA eliminated a primary source of confusion and error in the administration of the Federal crop insurance program. Another benefit of the COMBO policy 

is the use of a single rating and pricing component so all coverage is consistent in 

terms of protection and cost. Similar efforts are underway to combine RMA’s areabased programs (Group Risk Plan—GRP, and Group Risk Income Protection—GRIP) 

into a single plan of insurance. 

Information Technology Modernization 

The Information Technology Modernization (ITM) project, RMA’s technology reengineering initiative, began in earnest in FY 2008, based on funding received in 

the farm bill. Phase I was completed in FY 2010, and included significant achievements to deploy the majority of the actuarial tools required to generate 2011 insurance offers and provide for validation of detailed policy data received from crop insurance companies that is used as the basis for calculation of expense reimbursement and risk sharing between RMA and the companies in accordance with the 

SRA. Accepted data is also used for future rating and publicly generated reports. 

Rollover of the 2011 crop year actuarial data was accomplished and the first filing 

for the 2012 crop year took place on April 30, 2011. 

Phase II development continues and focuses on corporate reporting providing data 

reporting and analysis capabilities. On-demand analysis and standardize reporting 

will be available on multiple years of actuarial, policy, and financial data. The analytical environment has been set up and development has begun on standardized 

reports. ITM Phase II also includes Regional Office Exceptions (ROE) written agreement processing. ITM Phase II is progressing towards scheduled operations in July 

2011. Enhancements to the ITM production system have been implemented for actuarial processes, policy processing, premium calculations, and other Phase I capabilities. 

RMA supports many information technology functions using private contractors. 

The contract for IT services is generally for 5 years and is due to expire in 2011. 

In January 2011, RMA competitively awarded a new contract for IT services until 

2015. Accounting and other corporate reporting capabilities will be implemented in 

the new system as part of this contract, and is scheduled to be complete at the end 

of the calendar year. 

Organic Crops 

RMA continues to move forward in improving crop insurance coverage for organic 

producers so they will have viable and effective risk management options like many 

of the conventional crop programs. Consistent with the 2008 Farm Bill, RMA contracted for research into whether or not sufficient data exists upon which RMA 

could determine a price election for organic crops, and if such data exists, to develop 

a pricing methodology using that data. Also included in the contract was research 

into the underwriting, risk and loss experience of organic crops as compared with 

the same crops produced in the same counties during the same crop years using 

nonorganic methods. Three reports have been completed from this study. 

The first report outlined research into data that exists today that could support 

price elections for various organic crops. The second report outlined a proposed 

methodology for development of a price election for organic cotton, corn and soybeans. The third report presented the results of the contractor’s comparative analysis of loss experience for organic crops and conventional crops that were produced 

in the same counties during the same crop years. 

RMA intends to establish dedicated price elections for organic crops where supported by data and sound economic pricing principles. The first of these organic 

price elections became available for the 2011 crop year. In addition, RMA will continue to capitalize on improved data collection and sharing of organic production 

13

and price data occurring throughout USDA, an initiative to better leverage the resources of all of our agencies to address this important segment of agriculture. 

RMA will continue to evaluate the loss experience of both organic and conventional practices to ensure that premium rating is commensurate with the level of 

risk for each. This includes revising surcharges for those areas or situations that 

merit such consideration. 

Quality Adjustment 

Another area of continued challenge to the program involves providing coverage 

for reduced quality in a harvested crop. RMA provides quality adjustment for many 

crops, based primarily on standards contained in the Official United States Standards for Grain, such as test weight, kernel damage, etc. Wheat, for example, is eligible for quality adjustment when poor quality results in a grade worse than U.S. No. 

4. While producers and the crop insurance companies have been generally supportive of RMA’s quality adjustment provisions, in some instances producers would 

like to see quality adjustment begin when their grain quality loss is not as severe 

as current rules require. Additionally, producers contend that quality adjustments 

in the program do not always reflect what they are actually discounted in the market place. This is most often heard earlier in the harvest season when the extent 

of poor quality is not fully known and grain buyers tend to have more severe discounts. 

One of the challenges for RMA’s organic program is to assure that the availability 

of Federal crop insurance does not inappropriately affect market dynamics, such as 

buyers imposing larger quality discounts and relying on Federal crop insurance to 

make producers whole. Similarly, crop insurance is not meant to provide coverage 

for the marketing errors of producers or for a general deterioration in market conditions—unless, of course, such deterioration is a covered cause of loss. RMA continually strives to provide standard quality discounts that apply to all producers nationwide so everyone is treated equitably and the crop insurance program does not 

promote or become subject to abusive market practices. RMA has continued to work 

with grower associations and others to continually improve the effectiveness of its 

quality adjustment provisions. 

* * * * *

Mr. Chairman, this concludes my statement. Thank you for the opportunity to 

meet with you today. We look forward to working with you and Committee Members 

and will be pleased to provide whatever assistance you may request. I would be 

pleased to answer any questions you and other Members of the Committee may 

have.

The CHAIRMAN. Well thank you, Mr. Murphy, being under the 

wire at the 5 minute mark. I appreciate that. 

The chair reminds Members they will be recognized for questioning in order of seniority of Members who were here at the time 

of the start of the hearing. After that, Members will be recognized 

in order of arrival. I appreciate Members understanding. 

I will now recognize myself for 5 minutes. In my opening statement, and Mr. Boswell, in yours as well, you talked about the importance of the private-public partnership for delivery of crop insurance. From time to time, we hear rumors of—that partnership 

may need to go just totally public, and with the public delivery of 

the system. Are you and your staff committed to this public-private 

partnership, because it sure looks like it works to us. 

Mr. MURPHY. Yes, indeed. In fact, the Secretary reiterated that 

when meeting with one of the trade groups a couple weeks ago in 

his office. There is no doubt in my mind that we are enjoying this 

participation level today, due to that unique relationship with private agents and their companies. 

The CHAIRMAN. All right. You mentioned the importance of your 

information technology improvements. Will you be able to finish all 

of that under the existing budget authorities? 

Mr. MURPHY. We will do the best we can, sir. It is moving along. 

We are having some very good success. I am glad to see we had 

14

it up and running. We were able to bring the COMBO product up 

this year. So it is functioning. I am concerned for the out-years. 

Next year, we don’t have the funding anymore that was provided 

in the farm bill. I am sure I will be up here asking for additional 

funding for that project, but that is of great concern to us. 

The CHAIRMAN. Well, I think it is going to be important, Mr. 

Murphy, that you lay that out for us specifically because we have 

choices to make, and those need to be informed choices. That information has an impact on that, and the Committee needs to understand that. 

Mr. MURPHY. I would like to add that also the more complex our 

programs become, we really need that IT capacity in order to deliver these programs to farmers. 

The CHAIRMAN. Well, also the impact on this budget on FSA and 

their ability to deliver their side of the house is in the same way 

impacted by that. 

At one point in time, speaking of data mining, there were some 

barriers between RMA and FSA data so that the folks at Tarleton 

could not fully exploit everything available. Have those barriers 

been taken down? Is there anything left that we need to do? 

Mr. MURPHY. No, actually we are making a lot of progress. There 

are—continues to be problems between the data between RMA’s 

data and FSA’s. We are actually working through the SURE Program. We are fixing a lot of that data. I think as CIMS comes up 

and running, it will be extremely helpful in identifying where we 

have differences between the two programs——

The CHAIRMAN. But in terms of legal barriers? 

Mr. MURPHY. Oh, no, we are working through that. In fact, FSA 

is just about prepared to publish their new rule, which will provide 

us the flexibility we need. 

The CHAIRMAN. Okay. So there is something in that regard to 

fully exploit that, it benefits all of us. 

Mr. MURPHY. Right. 

The CHAIRMAN. Can you walk us through a little bit about how 

the 508(h) program is working, and maybe some examples currently in the pipeline? 

Mr. MURPHY. Okay. Actually, we have three different ways that 

we can develop programs. One of them is that we can go out and 

contract ourselves for the development. The other way is where the 

private sector actually comes into the board of directors and presents a program. They can go the 508(h) route, which is that they 

bring a fully developed program to the board of directors for approval. Another route with the last farm bill was the concept proposals where folks can actually come into the board of directors, explain what they would like to develop, and then we can get partial 

funding for that development, and then it follows the 508(h) procedure after that. 

It seems we are getting new programs out in the street. That 

seems to be working well to that effect. There are some issues or 

some concerns being raised about some other programs that are 

higher priority that should be done first, but that is just the way 

the system is established. But we are working along at it. 

The CHAIRMAN. All right. The Members know that there is a 

questionnaire that asks about each of the major components. You 

15

sent yours in. I would like to go to the question on page 5, number 

10. It says Utilization (Participation) Data. If you could walk us 

through that, the number of policies stayed exactly the same for 10 

years. Can you just walk across that—those columns and help us 

understand what each one of them means? 

Mr. MURPHY. Okay. I think—actually, I think the next chart is 

much better for looking at the changes over years. 

The CHAIRMAN. Well just tell us what that means. What is the— we talked about $100 billion in coverage out there, but that bottom 

line for—just says $71 billion. 

Mr. MURPHY. Okay, yes. Well that’s actually in 2010 it was in the $70 billion range, $78 billion I think is what it is at right now. 

But with the increase in commodity prices between 2010 and 2011 

is where we expect to see the increase to over $100 billion. 

The CHAIRMAN. Well, we have talked about participation, but the 

number of policies has stayed dramatically the same for that——

Mr. MURPHY. No, it is actually—well, there hasn’t been a lot of 

variation since 2001. 

The CHAIRMAN. Okay. And then the loss ratio and the loss cost 

columns, can you explain them to us real quick? 

Mr. MURPHY. Okay. Loss ratio is just the experience of the program. That is the ratio of premiums to indemnities paid. The good 

story here is that you can see the 10 year average, we are at .837. 

That means for every dollar in premium, we pay out 83¢, so that 

the program is actually performing very soundly at this time. In 

fact, if you go back 20 years, you are still under a dollar loss ratio. 

So we are very proud of the changes in that. 

Loss cost ratio is just a measure of how much of the indemnity—

how much of the liability is being used by the indemnity. We actually use both of these ratios in order to come up with the rates for 

the program. 

The CHAIRMAN. All right, thank you, and I will yield back. Mr. 

Boswell, 5 minutes. 

Mr. BOSWELL. Thank you. 

Again, going to our continuing or running conversation, Mr. Murphy. We found, in our hearings across the country a month ago, 

what we need out there, available to our producers, is affordable, 

and viable crop insurance. I think you are trying very hard to do 

that. I am not—this is extremely important. You think of the high 

cost inputs, and out in cotton country, wheat country, and so on, 

but you know, they like to talk about the price per bushel of corn 

when it is doing well. You never hear any conversation about the 

cost of input, and I think it has become important for all of us on 

this Committee that we ought to be making an issue of that. The 

public out there doesn’t really get the idea of what it costs to put 

that crop in. It is capital intensive and this crop insurance is terribly important. 

So anyway, I want to ask you this question that we referred to, 

and then I will leave it with you. The Risk Management Agency 

has redefined the definition of agent compensation relative to the 

release of the 2011 Standard Reinsurance Agreement. The restrictions outline the acquisition section of the manager’s bulletin on 

agent compensation are very troubling because they restrict an 

agent’s ability to sell his agency or her agency at the full market 

16

value. In many instances, the sales of these family-owned crop insurance agencies are relied upon for retirement income and for future financial planning. In addition, such restrictions will also 

hinder a company’s ability to grow. The only option for company 

expansion will be through the acquisition process, which favors 

large companies over small companies, and will lead to less choice 

for consumers. 

So how does the agency acquisition provision in the 2011 SRA 

improve the Federal Crop Insurance Program and strengthen the 

safety net for farmers and is the RMA willing to revisit this provision to address these concerns? I will give you this in writing as 

well after this is over with, but I would like for you to comment 

on it. 

Mr. MURPHY. Actually, that provision is not in the SRA itself. 

That provision is actually in follow-up procedures that we provided 

after the——

Mr. BOSWELL. Well, let us address the point then. 

Mr. MURPHY. Right. There is nothing in there that restricts the 

sale of an agency. What they are talking about there, and where 

this becomes an issue is if a company buys an agency and then employs the principle of that agency and continues to pay the 

agents—all we are saying there is that that sale, if the principle 

stays involved in that agency as it becomes part of the company, 

is that that counts toward compensation. There is a great concern 

that that particular scheme was being utilized to evade the caps on 

each commission. 

So you know, I want to make clear that there is nothing that restricts it. 

Mr. BOSWELL. Well, at least——

Mr. MURPHY. Okay, that——

Mr. BOSWELL. It limits——

Mr. MURPHY. It limits potential sales. You could say that. 

Mr. BOSWELL. Okay. 

Mr. MURPHY. You could say that. Now this is in a procedure that 

we actually got—we just finished getting comments from the 

agents. We sent it out to the agents to get their comments as well. 

We are incorporating all of that now. We have not issued it yet as 

a final procedure, but——

Mr. BOSWELL. I hope we can have some conversation on that. I 

would look forward to that. Seriously, when I share with you the 

person that I talked to, I didn’t call him. He called me. I talked to 

him for—at any other time during this whole process we have not 

had conversations. 

Mr. MURPHY. I am sure it is because of——

Mr. BOSWELL. But anyway, he comes in with this concern, and 

coming from this individual, as I am sure many others, it is a genuine concern and we need to talk to him about. So I would trust 

you to do that, and if you might give us a few points on how—what 

you might have to say about the pilot program, concerning livestock. 

Mr. MURPHY. The livestock programs? 

Mr. BOSWELL. Yes. 

Mr. MURPHY. Actually, the big news has been the dairy gross 

margin coverage. Historically, we get $20 million a year for the 

17

livestock program since ARPA, since 2000. We have actually only 

been spending about—of that $20 million, about $3 or $4 million 

a year. What changed this year is that the dairy industry requested through the developer of that program to make two 

changes. One of them, to provide a subsidy, which was not in there 

before and is not really in any livestock programs. We do have a 

small one in some of the others, but that is just to offset some additional costs. So there is no true subsidy like we see in the crop programs. They requested a subsidy and they also requested that the 

premium payment be changed from the beginning of the insurance 

period to the end, like the rest of the Crop Insurance Program. The 

developers agreed to that and we sent it—we put it out just 4 

months ago. Growers were extremely interested in the program. 

Like I said, they have used up all of the funding that we had available for dairy, which was about 75 percent of that $20 million. 

Mr. BOSWELL. Thank you. I will do a follow-up later. 

I yield back. 

The CHAIRMAN. Thank you, Mr. Boswell. 

Mr. Neugebauer, 5 minutes. 

Mr. NEUGEBAUER. Thank you, Mr. Chairman. 

Administrator Murphy, this will come of no surprise to you. I 

want to talk about something that has been a big concern of mine 

for a number of years, and that is shallow losses. For some of my 

colleagues that are new to the Committee, basically a lot of producers can purchase an APH policy and get 65, 70 percent coverage, but in many cases if they want to buy up that coverage, 

when you get above that level, the premium becomes extremely expensive. In fact, it is almost a 1:1, a dollar of premium for a dollar 

of benefit. Obviously that makes the economics—so what in many 

cases can happen for our producers, they can have anywhere from 

a 25 to 30, 35 percent loss, and not receive any coverage from their 

policy. You know, obviously there are very few businesses I know 

that can sustain a 30, 35 percent loss in their margin and be profitable. 

So there are a lot of potential solutions to that out there, and 

some have said to offer additional premium support for APH to 

make it more cost effective to buy up. Others have, as you know, 

I have a plan that would provide a supplemental opportunity, 

based on area yield or county yield. 

So what are your thoughts? Do we stick with the APH, or do we 

look at some of these supplemental opportunities? 

Mr. MURPHY. Well, I know the SURE Program that was instituted with the last farm bill was actually supposed to address that, 

and basically utilizing the crop insurance indemnity for an additional payment under—as a disaster payment. I have not gotten 

too involved in SURE. Anecdotally I understand there are concerns 

in different parts of the country, whether it is achieving what it 

was intended to do. You know, how it is actually working day-today, I really am not the best person to talk to, but I would be very 

happy to work with you towards the farm bill and look for 

some——

Mr. NEUGEBAUER. Yes, I think part of the SURE Program is it 

is triggered on a state-wide basis, and you know, Texas is a pretty 

big state, and so you can have one condition in one area of our 

18

state and others. Well, I think that is going to be an important part 

of that, because I think as we begin to look at the basket of safety 

net for producers, price, it doesn’t do you any good to have any 

price safety net if you don’t produce a crop. 

Mr. MURPHY. I think also it requires a disaster declaration in the 

county and the adjacent counties. So if only a small percentage of 

farmers gets hit with a problem, it potentially is not going to trigger the county. 

Mr. NEUGEBAUER. Absolutely, and I want to go on to another 

area. I know that Plains Cotton Growers initiated an effort on cotton seed, pilot program, and I guess this was the first year of that 

program. Can you kind of give us a little thumbnail of how that 

program has worked and the results of that? 

Mr. MURPHY. We haven’t gotten the acreage information in yet. 

That is probably going to be another couple months away, but I can 

tell you anecdotally from our offices down there and the companies 

there, it is extremely popular. This is something that those growers 

are very interested in. That seed is becoming—especially when the 

prices drop, that seed becomes a bigger part of their revenue for 

the year. So it is critical to not only have the lint, but the seed as 

well, get the offset for the seed. 

So from what I understand, the growers are very happy with it. 

We worked with the developers and we actually made it extremely 

simple to administer the program, so I think the agents are happy 

with it. So overall, I think it has been a success. 

Mr. NEUGEBAUER. You know, recently when they renegotiated 

the SRA, I think RMA kind of divided the country into three 

groupings. Group one was Illinois, Indiana, then group two was 

Alabama, soon to be some of the other states, and group three was 

kind of the hodge podge, all the way from Alaska to Nevada to 

Vermont. 

Can you kind of give me some perspective of how those were 

grouped? 

Mr. MURPHY. Okay. The reason we had done that—and that was 

something new we introduced for the first time with this array. In 

the past, the underwriting—the ability to make underwriting gains 

or loss were equal across the country. What we tried to do this 

time, as an effort to try to get that same high level of service we 

see in the Midwest and other parts of the country, we reduced the 

company’s ability to make underwriting gains in the five—what 

normally are referred to as the I States in the Midwest. Actually, 

we increased the opportunity to make underwriting gains in other 

parts of the country, and what—so we just—for the first year in 

2011 we are going through it. I think, from the modeling we have 

so far, it seems to be working. We have talked to agents who were 

saying that actually in some of the parts that historically had low 

commissions—that this is actually making it—more companies are 

becoming interested in getting into these other parts of the country, and that is what we wanted to do. So we wanted to spread that 

competition as well. 

Mr. NEUGEBAUER. Were the premiums different in the 

groupings? 

Mr. MURPHY. Pardon? 

Mr. NEUGEBAUER. Were the premiums different in those——

19

Mr. MURPHY. Only by nature of whatever the experience was for 

those crops, yes. 

Mr. NEUGEBAUER. Nothing to do with groups? 

Mr. MURPHY. No, not from the grower’s standpoint. No, no difference at all. 

Mr. NEUGEBAUER. Thank you, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. Mr. Courtney, from Connecticut. 

Mr. COURTNEY. Thank you, Mr. Chairman. Thank you for holding this hearing. 

Mr. Murphy, I wanted to go back to the dairy pilot program that 

you were talking about earlier. Obviously, the high demand is an 

interesting signal that the interest is there. You know, one of the 

farms in my district that was one of the subscribers to the insurance was sharing with me his experience with it, which you know, 

he has a moderate-sized herd farm. He signed up for it kind of as 

a test run, because looking out on the horizon, it is pretty clear 

that risk insurance is going to be part of the world of that industry. 

His concern obviously was cost, a little bit, which I think a lot 

of the smaller farms are nervous about, but the other issue was the 

complexity of the product. I mean, he was describing to me the system for calculating the monthly premiums, and you know, we are 

pretty comfortable in Connecticut with insurance products——

Mr. MURPHY. Right. 

Mr. COURTNEY.—as you can imagine, but this one was pretty sophisticated. The message was that they got to run a farm. I’m trying to sort of calculate what their payments are. It took some fairly 

difficult and time consuming efforts. 

I wonder if you could walk through about whether that is a complaint that you are hearing, and whether there are ways to address 

it. You know, simplicity is always a good thing. 

Mr. MURPHY. Yes, indeed. You know, I haven’t heard too many 

complaints about that, but it does not surprise me, because it is a 

great Gilmore complex and our normal Crop Insurance Program for 

corn or soybeans or something like that. Because what you are actually doing, you are looking forward into the next 11 months and 

you are comparing the prices of the feed versus the price of the 

milk itself using the futures contract, and that is what makes the 

margin. So you are insuring that margin month to month in the 

out-years. 

So instead of looking at—if I was a corn grower, I am looking at 

one insurance period. When you are actually a dairy farmer, you 

are looking at potentially 11. They have to go out there, so it has 

a great deal of complexity. 

The program has not been evaluated yet. That will probably 

occur within the next couple years. What I encourage is they can 

either send comments in to us and we can share them with the developer, or we can get the address of the developer and the grower 

can go directly to them. But like I said, these—they instituted a 

major change just this year, so I believe they will be open to looking at comments that growers might have, but I think the very nature of that type of a program is going to be more complex than 

something like the corn the guy probably insures already. 

20

Mr. COURTNEY. I mean, is it too soon to say whether people have 

been actually filing claims? 

Mr. MURPHY. Yes, it is. 

Mr. COURTNEY. Okay. 

Mr. MURPHY. Yes, it is too soon now, definitely. But I think it 

certainly shows their concern with the volatility that they have 

been seeing in pricing for the product. And I understand that the 

industry has put forward something very similar, something that 

they would like to see potentially in the farm bill. I have not seen 

what they are suggesting, but I know they have been working on 

a product. 

Mr. COURTNEY. Right. Thank you, Mr. Chairman. I yield back. 

The CHAIRMAN. I thank the gentleman. Before we move to our 

side, the Ranking Member of the full Committee has slipped in. Do 

you have any comments? 

Mr. PETERSON. Yes, thank you, Mr. Chairman. 

I guess what I would like to know, we made these significant 

changes in the farm bill and the SRA. When are you going to have 

solid information about how this actually sorted out? You probably 

don’t have that yet, I assume. 

Mr. MURPHY. No, no. We are already seeing some of the effects, 

Congressman, especially in the area of agent compensation. This 

has been a bit tricky for the companies who try to get through. We 

are doing it new for the first time at cap and how it is implemented. We are exceeding the cap, as no surprise for 2011, with 

the way the commodity prices are going. We are seeing areas like 

California, where commissions had dropped a good deal more than 

we thought they would. The industry, the companies themselves 

have expressed some concern here, so we are going to take a look 

at that to try to even out the pain of reducing the A&O overall in 

the program. Some of the companies are interested in having that 

discussion. 

On the underwriting gains side, all I have seen is some studies 

that have been done on the new underwriting gain potential, underwriting loss potential, and they have not been bad at all, especially with the prices we are seeing this year. Now we are getting 

off to a bad start, and so I guess—I imagine that has the companies nervous. But it is probably going to be, I would say, November 

or December before we have a good handle on what the impacts 

would be on underwriting, gains or losses. 

Mr. PETERSON. Okay. And then how about on the agent situation, the same timeframe? 

Mr. MURPHY. Yes, we are already hearing the concerns from the 

agents on it, and we are already talking to some agents. They are 

coming up with some ideas. We are getting questions, can anything 

be done since this is sort of locked in place? Basically, as long as 

we don’t increase the costs, we do have some flexibility, all right, 

but it would require all the companies to agree to make the change. 

And those discussions will probably just get started within the next 

couple months. 

Mr. PETERSON. So you know, depending on when we actually 

write the farm bill, but say it is next year, we will probably have 

pretty good information? 

21

Mr. MURPHY. Certainly on the A&O side, yes, the administrative 

and operating expense side that would provide the companies, and 

we will have some preliminary information on the underwriting 

gain potential, underwriting loss potential as well. 

Mr. PETERSON. Okay. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Mr. Peterson. 

Mr. Austin Scott, of Georgia, for 5 minutes. 

Mr. AUSTIN SCOTT of Georgia. Thank you, Mr. Chairman, and 

Administrator Murphy, thank you for joining us today. 

Thinking back to when I was a child, I can remember quite vividly my grandfather, who was a producer, telling me that he 

thought the insurance program was the most important thing that 

the Federal Government did for the farmer, and was, quite honestly, maybe the only thing that we would have to do for the farmer if we had it right. I also majored in risk management and insurance at the University of Georgia, which is the best school on the 

face of the Earth, I might add. 

But my question gets back to this. One is I would say, and you 

can check these numbers, while the average loss ratio is 83.7 percent, the total loss ratio over 10 years is even a little better and 

closer to 77 percent, is that——

Mr. MURPHY. Yes. 

Mr. AUSTIN SCOTT of Georgia. So our total loss ratio is even a 

little better than our average loss ratio, because of the years where 

we got hit so hard. I also remember my grandfather talking about 

people who had learned to game the insurance system, if you will, 

and so as we work forward with this insurance program, I want to 

make sure that we have the best program possible for the good 

farmer. It gets back to something you have talked about a little bit 

before and I would like you to expand on. Is somebody whose 

claims ratio—and I know you have talked about it more from the 

standpoint of a discount for consistently good producer——

Mr. MURPHY. Right. 

Mr. AUSTIN SCOTT of Georgia.—but virtually every insurance 

product out there in America is risk-adjusted, based on the conduct 

of the individual. And so, as we go forward with that, would you 

talk with us about your ideas for having somebody who makes multiple claims versus somebody who is not making those claims, 

someone whose loss ratios are out of line, if you will, consistently. 

How do you intend to handle them paying more into the system, 

the risk adjustment there? 

Mr. MURPHY. Okay. Overall, first I will just say that from a 

standpoint of integrity, it is actually imbedded in every function for 

the program. It is critical that we continue to try to do the best we 

can to combat fraud, waste, and abuse. We have some very advanced tools, data mining, which has been very successful, which 

has helped us identify schemes going on. We have some very large 

cases occurring right now with tobacco in North Carolina as a result of the findings of data mining. That is an important tool, so 

that will help us, but you are absolutely right. When you get down 

to the county level of this program, if somebody is abusing that 

program, that county is paying for it. The neighbors are paying for 

it. We rate on a crop county basis in this program, and so as a result, next to data mining, probably the most important tool that we 

22

have in identifying and fighting fraud are neighbors who do not 

want to see their premiums go up because of something somebody 

is doing. 

We keep working more and more. We work very closely with FSA 

on a spot-check list that we use to identify anomalies through data 

mining. FSA spot-checks those through the year. That has been extremely effective. And so I think as long as we try to keep up with 

the new schemes, because as you tighten things up, a certain group 

of people will always look for ways to get money for doing little. 

We will keep addressing that, going forward. 

Mr. AUSTIN SCOTT of Georgia. I think you are right, I mean, with 

what you said. I think my FSA agents could probably predict for 

you who was going to file the claim. 

Mr. MURPHY. Who you need to watch. 

Mr. AUSTIN SCOTT of Georgia. And so could the majority of the 

farmers in the community. And so I guess I hope that we will work 

towards an adjustment in that, and make sure that we are creating 

the program that works for the good producer. And I understand 

that a good producer is going to have some losses. That is just the 

facts of life, but I just hope that you will keep moving down that 

path and keep us informed. And I do, again, want to point out the 

importance, I believe, in the private-public partnership here where 

we are the insurer, but we have private agents out there actually 

handling the insurance product. 

Thank you, I yield back the rest of my time. 

The CHAIRMAN. Thanks, Mr. Scott. 

Mrs. Roby for 5 minutes. 

Mrs. ROBY. Thank you, Mr. Chairman, and thank you, Mr. Murphy, for being with us today. 

Just to build upon what Mr. Scott was talking about, in preparation for this hearing we heard from our folks back home who 

shared similar concerns, that we should be rewarding farmers for 

good performance history with crop insurance, either through lower 

premiums or increased coverage levels. More consideration needs to 

be given to the individual experiences that would not disadvantage 

good producers in a bad county experience situation. 

I want to ask you a specific question about the group risk insurance program. It was very, very popular throughout the South and 

was used pretty heavily in Alabama. And the RMA stops the program in many counties, due to insufficient data. So I want to know 

is RMA currently exploring any avenues that would allow reintroduction of this program, or a similar program in areas that previously lost access to those products? 

Mr. MURPHY. Right. I think there is a two-part answer. One of 

them is I think NASS is working harder with farm groups, realizing the importance of getting this data into NASS. So I think 

there is an emphasis on growers of making sure that everybody in 

the county reports to NASS the correct numbers. 

The second thing we are doing is we are looking at our group 

risk plan, as well as a few other changes to the actual production 

history basis of the program. One of the things we will be looking 

at is perhaps having area group plan participants provide their 

yields every year, that way we would be able to use our own data 

23

instead of having to rely on NASS’s program alone. So we are looking at that as a way to address that. 

Another thing we could do is look at combining districts. That 

gets a little tricky if you have a lot of changes in the geography 

of the area, but that is another thing we can take a look at. But 

we are very aware of that and we are looking at ways that we can 

bring the program back into those counties, as well as expand into 

other counties. 

Mrs. ROBY. Good. Thank you for that. 

I just want to make this as a comment. You can respond if you 

want, but right now under the current rules, in some situations a 

farmer is required to carry a failed crop to harvest, and you know, 

this comes from our groups back home, so they spend more money 

to actually harvest the crop than the crop is going to bring. I just 

want to point that out, that that needs to be addressed. It is detrimental in some situations. 

But I want to go back and—let me see, I have a little bit more 

time. You mentioned in your testimony that lenders now require 

crop insurance coverage in order to make operating loans, and 

many producers use collateral for loans. Can you tell us why crop 

insurance has become so important to the producers in securing financing? 

Mr. MURPHY. I think it is because the grower knows up front 

what his protection is going to be, and the banker knows up front 

that the production is there. It is not only their knowledge of the 

crop insurance, but bankers have become extremely knowledgeable 

of the actual mechanics of the programs, and so they will suggest 

certain types of products that they want the grower to purchase. 

Another thing that they can do is that they can have the indemnity sent to the bank, or make the indemnity payable to both the 

bank and the grower. Now the grower does not always like that, 

but if it helps secure a loan, I think it is a good thing. So it has 

just become something the bank can depend on. Now with the advance of revenue coverage as well as yield coverage, I mean, for a 

grower to be able to go into a banker and say I am guaranteed to 

make this much money per acre, that is pretty powerful source of 

collateral for that bank. So I believe that is why it has become—

we don’t need Congress to take any action during the year. We 

don’t need the Secretary to take action. The program just works, 

and if a grower has a loss, he gets paid. 

Mrs. ROBY. Thank you so much, Mr. Chairman. I yield back. 

The CHAIRMAN. I thank the gentlelady. 

Mr. Schilling for 5 minutes. 

Mr. SCHILLING. Thank you, Mr. Chairman. 

What I wanted to just address—thank you for coming out—duplication and overlapping of services, basically. One of the concerns 

about the duplication of the acreage reporting, including the cost 

of administering and the frustration that it causes our producers. 

Given that many of the producers have multiple farms with differing acres and crop rotations on each farm, it seem the process 

drastically increases the margin of error and creates twice as many 

opportunities for the mistakes. Why can’t we just avoid—I think 

you know where I am going with that. 

24

Mr. MURPHY. Yes, I understand your point exactly, sir, and I am 

very pleased to tell you we are making progress in this area. 

Through the Comprehensive Information Management System, the 

CIMS Program, we are pulling together the acreage reporting dates 

for both FSA and RMA. I think next year, spring crops 2012, will 

see the first dates of that, and they will be in the northern tier of 

the country. That has always been a source of angst to growers out 

there. 

We are working toward, through that same project, a single port 

reporting. If the farmer wants to go to his FSA county office and 

report, why can’t the agent download that information and use it 

himself, and vice versa? If it is a rainy Thursday afternoon, why 

can’t the grower sit and certify at home and have it sent to both 

programs? That is the end goal of the CIMS project. Under Secretary Scuse is the primary proponent of it in the Department, and 

I am happy to say that we are moving very quickly toward that. 

Mr. SCHILLING. Very good. And then just my last—have there 

been any issues in reconciling a crop insurance reduction? We 

talked a little bit about that, so I am going to pass on that. One 

of the things I am a big proponent, like Mr. Scott had indicated, 

is the public-private partnerships. I think those are huge. One of 

the things in the Illinois 17th District where I am from, that is the 

one thing I continue to hear from the farmer is leave our insurance 

alone. But with that, I appreciate your time, sir. 

Mr. MURPHY. Thank you. 

The CHAIRMAN. I thank the gentleman. 

Mr. Crawford, from Arkansas, for 5 minutes. 

Mr. CRAWFORD. Thank you, Mr. Chairman, and thank you, Mr. 

Murphy, for being here. 

Can you provide any insight into differences in participation 

rates between crops and/or regions? For example, in 2010, according to RMA data about 68 percent of rice, particularly in Arkansas, 

acres were insured. By contrast, nearly all of Texas cotton acres 

were insured. Are there unique concerns with certain crops or regions? 

Mr. MURPHY. Actually, there is indeed. I am happy to report that 

we are seeing increases. One of the concerns we often get is between major program crops and specialty crops. We are at 83 percent participation on the major program crops. We have come up 

to 75 percent for specialty crops, so we are seeing progress there. 

I think the introduction of the additional subsidy for enterprise 

units has also been extremely helpful, especially in your area, for 

both rice and cotton down there. It reduces the premium tremendously. Growers have flocked to those programs and we are seeing 

increases there. That alone is not going to solve it. We are seeing 

probably Arkansas, Mississippi, Alabama, that area is where we 

are seeing lower participation than other parts of the country. We 

are actively working with commodity groups down there to try to 

improve the programs. We are looking at the dates in the program 

to make sure that they are the correct dates we should or should 

not be using, such as planting dates, reporting dates, end of insurance dates. We are taking a look at that. We are even getting into 

the policies themselves. We have been having great meetings with 

the rice growers and working at some additional coverage the growVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00036 Fmt 6633 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
25

ers would like to see for downed rice, which results when hurricanes come through the area and they have to deal with the additional costs of harvest. Hopefully that is going to see some progress 

in the next couple years. It has been very successful work between 

us and the group down there. 

So we are using multiple ways to do it. I think it is slowly coming along, I just think we have to keep working with it. Program 

integrity is another big issue. There have been issues with program 

integrity in the past. Farmers have to be convinced that their premium dollars that they are paying out is going only to the legitimate losses. Our compliance office is putting extra effort into that 

area to show that. 

So we are doing a number of things, going forward, and as we 

get into the farm bill, I would be more than happy to work with 

you and your staff in additional ways we could look at increasing 

participation. 

Mr. CRAWFORD. Excellent. I have just got half of my time left 

here, so let me ask you this. Is that flooding that has resulted from 

the Army Corps of Engineers breaching levies along the Mississippi 

and Missouri Rivers an insurable cause of loss under the Federal 

Crop Insurance Program? 

Mr. MURPHY. Yes, it was, and there was some consternation at 

the beginning when the Corps first had decided to intentionally 

breach some of those levies. We worked with the Corps. They provided us with some information of what would happen if they did 

not breach the levies where they did. Additional damage would 

occur to crops downstream, uncontrolled damage where they 

couldn’t tell us what additional damage would occur, especially in 

the northern part, the Missouri levy. The water was actually topping the plugs at the point that they blew them. If a levy is topped, 

the integrity of that structure is compromised severely and will 

probably fail anyway. As we moved further down along the Mississippi, the Corps was able to show that actually if they did not 

breach those levies where they did, the potential for the levies 

alongside with more intensive cropping, higher value cropping 

would be compromised. We were able to make the determination 

up and down the Mississippi River that they were insurable events. 

The companies have been informed. They tell me that they are 

moving loss adjusters in now to start working with the growers 

there. 

Yes, we were able to address all those concerns. 

Mr. CRAWFORD. Excellent. Okay. Real quick, back to rice. You 

covered that pretty well, but I just want to ask, what is the current 

participation rate of rice and buy-up coverage and levels of protection, and how does this participation rate compare to other major 

crops like corn, soybeans, wheat, and cotton? 

Mr. MURPHY. I don’t have that information right with me. I can 

tell you it is lower than you see in the major crops. I will get that 

to you, though. 

[The information referred to is located on p. 35.] 

Mr. CRAWFORD. Any ideas what we can do to increase that? 

Mr. MURPHY. Again, I think it is working with the growers and 

seeing how we can improve that program. I mean, it was the development of revenue coverage that brought in the corn and soybean 

26

growers to the levels we have seen, so program improvements will 

bring in growers, once they believe their risks are being addressed 

by our programs. So I think it is a matter of just continuing to 

work until we get it right. 

Mr. CRAWFORD. Excellent. Thank you, Mr. Murphy. I appreciate 

it, and I yield back. 

The CHAIRMAN. I thank the gentleman. 

Mr. Huelskamp, for 5 minutes. 

Mr. HUELSKAMP. Thank you, Mr. Chairman. I appreciate your 

appearance here today, Mr. Murphy, and I come from a fairly large 

district, and doing town halls across the district, you learn not to 

complain about certain things. You complain about water, in my 

area it is a drought, and in the other end of the district it is flooding. We had both of those. But here consistently is the important 

piece, crop insurance and the product you produce and we will be 

watching that very closely. 

As one proponent noted, that given the situation, this is really 

going to test the program and we are really going to have to perform like we never have before. 

With that in mind, particularly with the—not only the currently 

higher but much more volatile commodity prices, how does that impact, in your mind, and how do you adjust for that and maintain 

the solvency of a program with the type of changes we have seen 

and are likely to see in the next 6 months. 

Mr. MURPHY. Right. Actually, there is a lot of data available for 

us to go back and stress test our rates against historic results of 

the futures market, which we do. In 2008, I think we saw the biggest drop ever for the major commodities on the futures market 

from the beginning of the year to the end of the year. We actually 

ended up with a positive loss ratio nationwide, even though the 

companies probably did a claim on just about every corn or soybean 

policy out there that had revenue. And so we ended up with a positive price. 

We continue to work with—have others review our actuarial rating methods, so we have outsiders look at what we are doing and 

validate or suggest changes, which is done and we incorporate the 

changes. It is a constant work in progress, and I am very happy 

that it has been successful to date. With the commodity prices we 

are seeing today, if a farmer goes ahead and forward contracts his 

price, he has a massive risk and crop insurance is just necessary 

to protect that grower in the event that the price is to drop or go 

considerably higher. 

Mr. HUELSKAMP. I appreciate that. How much room for margin 

of error do you have? I mean, there are suggestions out there with 

the current economic environment with items—whether it is in this 

building or the Federal Reserve, that impact volatility. How much 

margin of error—I mean, 2008 was a year, 2011 might be one for 

the books as well. 

Mr. MURPHY. Yes, indeed. We take volatility into account when 

doing the rating of the program. That is what—in 2008, that is 

what led to such large premium bills for farmers. It wasn’t the 

yield portion of the risk, it was the volatility factor associated with 

the revenue portion of the risk that they saw. So I think we have 

well-addressed the margin of error. Only experience will let us 

27

know, but like I said, we have a lot of data we can go back and 

take a look at, and again, stress test the program, which we do. 

Mr. HUELSKAMP. I appreciate that, and 2008 is a good year—an 

appropriate year to talk about. I think 2011 might be one we talk 

about for many years as well. 

The second question would be—and I had looked through the materials closely and didn’t see this—but as far as taxpayer costs and 

other programs, how does that vary across the crops, and is that 

in the information you provided us? 

Mr. MURPHY. We can provide more information on that. The taxpayer costs of the program changes dramatically on the experience 

that we have for that year. For the last 10 to 20 years, except for 

a little blip in 2002, we have had positive loss ratios, so I think the 

program is well worth the money. The subsidy—the premiums are 

subsidized and average between 60 or 70 percent—60 and 65 percent. So if we have $10 billion in premium this year, well the subsidy is going to be up about $6 billion in the program. So the cost 

goes along with the commodity prices as well. There are a lot of 

variables in the program, the loss ratio, the losses that the companies pick up versus the government, so——

Mr. HUELSKAMP. And the high cost over the last decade would 

have been how much in what year? 

Mr. MURPHY. As far as the total cost of the program? I would 

have to pull that together for you. I can do that, the last 10 years. 

[The information referred to is located on p. 35.] 

Mr. HUELSKAMP. Okay, I appreciate that. 

Thank you, Mr. Chairman. I yield back my time. 

The CHAIRMAN. Thanks, Mr. Huelskamp. 

Mr. Gibson, 5 minutes. 

Mr. GIBSON. Thanks, Mr. Chairman, and I appreciate, Mr. Murphy, you being here today. 

I represent a district in upstate New York, and your agency enjoys a good reputation up there for how quickly you process claims 

and—so given the current climate, the natural disasters that have 

hit across the country, including in my district, we have had flooding along the Hudson River. It mentioned in your assessment 

whether or not you will be able to keep up with the timeliness of 

the pay-outs and is there something about that program that I 

should carry back? I am about ready to meet with all my farmers; 

I have a quarterly panel. So if you want to give me some assessment as to how you think that is going to go, and if there are any 

best practices that you think I should carry back, I would welcome 

them. 

Mr. MURPHY. Okay. Because of the nature of the losses we are 

seeing this year, just about every part of the country is dealing 

with something this year. I don’t think I have ever seen anything 

like it, and I have been with the program for 30 years. A lot depends on how the rest of the year goes, the total amount of claims 

that will have to occur. I have talked to the companies. They feel 

very confident that they have an adequately trained workforce. 

They are moving people around the country, which they routinely 

do to be able to address situations like this. I do believe we will 

be able to make the 30 day turnaround required, once the insured 

signs the claim to the payment of the claim. The companies have 

28

told me that they feel good about it, so I am confident going 

through we will be able—the companies will be able to provide that 

same level of service that growers have become accustomed to. 

Mr. GIBSON. That is encouraging. Is there anything that in this 

period that would be helpful for me to convey to the farmers in 

terms of best practices? 

Mr. MURPHY. If they have a loss, notify their company immediately. That is probably the most important thing you could bring 

back. You don’t want to get into a situation where the company is 

notified late in the year and they don’t have the ability to look at 

that crop. That becomes extremely problematic, so I would say stay 

in touch with your company, stay in touch with your agent. 

Mr. GIBSON. Thanks very much. 

The second area I would like to cover is, like every place else 

around the country, our dairy farmers and beef farmers, the beef 

industry in the 20th, we are having issues with input costs. I am 

curious to get your assessment as the ongoing activities in the Senate with regard to ethanol. Your assessment, how significantly that 

would impact input costs? 

Mr. MURPHY. Okay. Again, that is a little bit out of my area of 

expertise. I usually look toward economists for their advice on it, 

and I will continue to do so. I am happy to report that we do have 

programs for livestock that are gross margin. Basically you are insuring that margin between the price of the finished product and 

the price of the input cost. It has been a slower uptake in cattle 

than we have seen in dairy, but it is an excellent program for times 

like these, so I would encourage growers to take a look at that, if 

they are concerned about both input and future price for their commodity. 

Mr. GIBSON. Thanks very much, Mr. Murphy, and I appreciate 

your being here. 

I yield back. 

The CHAIRMAN. I thank the gentleman. 

Mrs. Hartzler, for 5 minutes. 

Mrs. HARTZLER. Thank you, Mr. Chairman. Thank you, Mr. Murphy, and I would like to echo the comments that have already been 

said here by my farmers. Your part of the farm bill is probably the 

most popular part, and everyone, all of us—I am a farmer, too—

appreciate what you do. 

I wanted to ask regarding the cost—of course, we are looking at 

budget issues now. In Fiscal Year 2010, it says the crop insurance 

costs were $4.7 billion. I just wondered, can you give me kind of 

a rough breakdown of how much of that went to claims and how 

much went to the administrative costs and operating costs? 

Mr. MURPHY. Actually, we are a very small agency. We have less 

than—we have about 500 employees overall, so when you are talking discretionary costs of the program, we are only talking $78 million to $80 million being the overall cost of the program of discretionary. 

The major costs that we see in the program are the producer’s 

subsidy that they get paid, the potential underwriting gains that 

the companies can make on a good year, and then the administrative and operating expense that we provide to the companies in 

order to deliver the program. Crop insurance, unlike private propVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00040 Fmt 6633 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
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erty and casualty insurance, you don’t—the farmers don’t pay that 

in their premium bill. We provide a separate payment to the companies to deliver the program for it. In the negotiation of the 

Standard Reinsurance Agreement, we actually reduced both the potential underwriting gains for the companies, as well as the administrative and operating costs provided to the companies, so we are 

certainly going to see a reduction. Probably the wildcard in the 

whole thing is the premium subsidy, going forward. Like I said, as 

we have seen these record commodity prices, that brings up the 

producer premium subsidy payment. 

Mrs. HARTZLER. But in Fiscal Year 2010, how much money for 

those various things, or maybe you could get that to me later? 

Mr. MURPHY. I can provide that to you on a year basis. I will 

break it out for 2010 and get that up to your office. 

The information referred to is located on p. 36.] 

Mrs. HARTZLER. Yes, that would be fine. 

Another question, we have about an 80 percent crop insurance 

participation, right, on your major crops, and Fiscal Year 2009, 

about $79 billion worth of crops were insured, but yet, the overall 

value of crops in the U.S. that year was $169 billion. So in other 

words, about 53 percent of the value of crop production was actually insured. So how does that reconcile that 80 percent participation rate, and given the price volatility and extreme weather, does 

that concern you? 

Mr. MURPHY. Yes, it always concerns me. There are quite a few 

crops we haven’t reached yet. That is a priority with the Agency, 

to figure out how we can expand coverage to the remaining crops 

out there. Another thing to keep in mind is that our yield guarantees are based on a 10 year average, all right, so that basically 

makes the APH guarantee lower than expectations. If you have 

seen some of the modeling on how yields have been increasing, especially over the last 10 years, so you are going to see a lag with 

the guarantee compared to what expectations of the crops are 

today. I think that adds a lot to it. 

Mrs. HARTZLER. Definitely, that is true. Your testimony states there is only $20 million available annually to cover administrative 

and operating costs and premium subsidy costs for the pilot livestock insurance plans, so can you tell me a little bit about that? 

Are there pilot livestock insurance plans generally available, are 

they limited geographically now? How are they—given the finite resources, are they based on a first come, first served principle to 

sign up? How much would livestock insurance plans cost the government if it was widely available, given its popularity? Three 

questions there. 

Mr. MURPHY. Well, I think there are a couple issues available 

here. I wouldn’t look at livestock programs that we have, such as 

the revenue programs and the dairy program being the only—we 

have a pasture range land forage program out there now, that is 

widely available. We are expanding it as we have the funding to 

do so. That is something I think livestock folks generally participate in. A lot of livestock farmers also grow corn, alfalfa, soybeans. 

They can insure those. 

We only got the authority to actually start insuring livestock in 

the ARPA Act in 2000, so it has been a slow ramp-up. I think ConVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00041 Fmt 6633 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
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gress wanted to limit how much we wrote until they could see the 

experience of the programs. I think that impacts—that is why they 

limited it to $20 million. That is something I think I would be very 

interested in discussing with the Committee as we get into the 

farm bill, taking a look at that and seeing if that is realistic anymore. 

I think cattle guys have been slow to come into the program 

overall. Cattle folks are very independent, as I am sure you are 

aware, if you work with cattle guys out there. It is a different 

breed. I think that is maybe a barrier as well. 

Mrs. HARTZLER. Okay. Thank you very much. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thanks, Mrs. Hartzler. 

Mrs. Schmidt, 5 minutes. 

Mrs. SCHMIDT. Thank you, Mr. Chairman, and thank you, Mr. 

Murphy, for coming today. 

In the last few years of higher commodity prices, and given the 

flooding and drought across the country this year, including the 

flooding in my own district, how do you ensure that farmers claims 

are adjusted, processed, and reviewed in a timely manner, and are 

there ways to speed up that process? 

Mr. MURPHY. Well, the companies themselves who reentered into 

the reinsurance agreement, they are responsible for that part of the 

program. They keep a core of well-trained individuals in claims adjusting on board. When we have a year like this, they bring others 

in the community who have worked in the past on loss adjustment, 

have been farmers themselves or farm managers. They bring them 

on to help to bring their numbers up, and they get it done. Rarely 

do I hear, even in 2008, do I hear concerns that it has taken too 

long to get a claim paid. 

There are some concerns that the audits that have to go on in 

some of these claims, that has been voiced in the past. What I do 

to address that is I do what I can to inform farmers that this whole 

program is predicated on you having records to support your yields. 

Please make sure you have those together, and that way the audit 

will go quicker in the event that the grower is chosen. 

So I think overall the industry is well geared up to address these 

challenges across the nation. I think things will go smoothly, as 

they have in the past. 

Mrs. SCHMIDT. Thank you. Along the same lines, I understand 

that risk sharing between the USDA and the private insurance 

companies is spelled out in the Standard Reinsurance Agreement. 

However, can you please give a general explanation of the risks 

borne by the government and those borne by the insurance companies, and do you think the current arrangement is an appropriate 

balance of risk sharing? 

Mr. MURPHY. Yes, I can do my best. We take a look at, of course, 

the lower the loss ratio of the year, the lower the claims, the more 

the companies assume the risks; the higher it gets, the more the 

government assumes the risks. That is why the government is involved in this program. If there wasn’t a need, we would not be 

here. The industry would be able to handle the problem. They are 

concerned that such a systemic loss would occur in the Midwest 

and the high plains that they would not be able to address it, that 

31

is why we are here. So that is where we put the majority of our 

protection on the higher levels, once you get above $1.20 loss ratio 

where we are paying $1.20 for every dollar we get in. 

What we have seen over the last 10 years, the companies have 

been picking up most of those losses because it has been very good 

loss ratios nationwide. It is a very complex formula in the program, 

but I think generally as the higher the loss ratio is, the more the 

government assumes, the more risk the government assumes. 

I think it is also important that the private reinsurance market 

worldwide participates in this program by taking some of that residual risk after it passes through the SRA, so we actually have 

some of that being sent off into the worldwide international market. 

Mrs. SCHMIDT. Thank you. For several crops, while a large percentage of planted acres are insured, they are insured at a minimum CAT or buy-up coverage levels. Cotton and rice are good examples of this. What can be done to increase coverage for these 

crops? 

Mr. MURPHY. Yes. I think, especially if you look at geographical 

areas, that is where you see the lower amount of coverage. Rice 

growers, especially in the central South, they have wells to get 

their water so they are always going to be able to get water. It is 

a perception of risk. Their big concern is hurricane or disease that 

comes through, and how often that occurs? It is all in perception 

of risk. I think it is just continuing working with the growers, that 

is what we can do? We have not always had high participation in 

corn, soybeans and wheat. It is only by making changes to the program, ensuring that the program addresses their risks that they 

have to deal with that we have seen the participation increase. I 

think it is the same with these other crops. It is just constantly 

working with them. 

Mrs. SCHMIDT. Thank you, and one final—and this is more a personal view. Some of the critics back home that are fiscal hawks 

think that all of this is nonsense and it is not needed. How would 

you address that? 

Mr. MURPHY. I think this year is an excellent example of how important the farm safety net is to farmers out there. Food security 

is a priority with this country. I would say all these programs are 

extremely important. 

Now, I agree the cost of government has gotten high. I think everybody does. We are looking for ways to become efficient and ways 

to reduce the costs to taxpayers, but the farm safety net is critical. 

I would hate to be put in a position where we do not have these 

programs available, and there would be widespread losses across 

the country. 

Mrs. SCHMIDT. Excellent answer, thank you. 

The CHAIRMAN. I thank the gentlelady. 

Mr. Murphy, on the statutory loss ratio is one, I guess, which 

would mean we lose a dollar for every dollar of a premium we put 

in. Right now, it comes to average 83¢ on every dollar. If we push 

that 83¢ up to a dollar, do you think that would increase—would 

that have an impact on participation, getting other people into the 

program by lowering the costs? 

Mr. MURPHY. You mean if you get——

32

The CHAIRMAN. Lower the premium down to that 83¢——

Mr. MURPHY. Yes, I think once you get under—our target loss ratio now over time is $1. Once you start getting below that as 

your target, it starts getting very complex. 

The CHAIRMAN. How do you push it up? How do you get to that 

dollar? 

Mr. MURPHY. You—there are a number of different ways, participation, working with the rate itself. Now, we also have a reserve 

in there, okay, because the law requires we keep a reserve. So even 

though the 83¢ is there, that means we have a 20¢ reserve for future years. 

The CHAIRMAN. Well, let me ask if the—I get that, because you 

are going to have a year like 2 years ago when it was $1.40. If your 

loss ratio was closer to the dollar, would you have greater participation in the program because the premiums would be lower? 

Mr. MURPHY. Yes, I think generally you can say that. 

The CHAIRMAN. Okay. 

Mr. MURPHY. But again, you have to look at the length of time 

you are looking at to do that analysis. When we do rate making, 

we actually use about 30 to 35 years of data. 

The CHAIRMAN. Okay. The reserve is pegged at what? 

Mr. MURPHY. The reserve is just required by statute that we 

have so much money——

The CHAIRMAN. How much? Is that per——

Mr. MURPHY. It doesn’t actually say in the law. We try to stay 

around 10 to 20 percent. 

The CHAIRMAN. Of premium? 

Mr. MURPHY. Of premium reserve in there, yes. That means you 

want to be around 90¢ loss ratio. Once you start getting up above 

90¢, then we would be concerned that we had the correct——

The CHAIRMAN. All right. You never ever hardly hear about actual production histories, I bet. What are you doing to try to—given 

how long it takes those to move and the impact it has, and continued droughts in our part of the world, pushing those down. What 

is on the table? 

Mr. MURPHY. Okay. We are doing a number of different things. 

We are taking a look at the rating itself, and how we weight the 

years. Like I said, we use 30 years of data to rate the program. 

There has been a big issue we have had, especially with soybean 

and corn growers, is how you rate those individual years. I think 

we all now are on the same page, and that is probably the most 

recent years need to be weighted more than the earlier years. We 

are working in that direction. We are trying to adjust the yield 

drag on individual yields. If I am a corn grower in Illinois, 10 years 

ago my yield and my APH, is that really relative to what the expectations are this year? We have movement going on in that, and 

hopefully growers will see some of that progress in 2012. 

So we are doing things like that to try to address it. We are also 

working with growers, manufacturers, how we can incorporate 

some of this GPS technology to improve some of the efficiencies in 

the program. For instance, as a farmer is planting, why can’t that 

information not be sent directly to the agent and start populating 

the acreage database? As I am harvesting and I have a loss, why 

can’t that data start populating a claims form for me? So it is lookVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00044 Fmt 6633 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
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ing at efficiencies like that in the program to make it more—a better product for farmers out there. 

The CHAIRMAN. This may sound a little self-serving. Earlier Mr. 

Scott made some unfounded specious comments about some small 

university in Georgia. Tarleton State has the data mining program. 

Do you know off the top of your head what that value gets pushed 

back to the taxpayers as a result of that work? 

Mr. MURPHY. Sure. We are looking at cost avoidance, since the inception, to now of about $840 million. 

The CHAIRMAN. Versus the cost of——

Mr. MURPHY. Probably—we are $4 million a year, probably $40 

million at the most. 

The CHAIRMAN. Okay. I guess the point being that as we move 

into these austerity programs, I am hopeful that programs that actually—I don’t want to say make money—you say cost avoidance. 

Mr. MURPHY. Exactly. 

The CHAIRMAN. Exactly. Most of the folks out there want to do 

it right, and there are a few that don’t. And so as you—as we trim 

your budget, so to speak, I am hopeful that the data mining issue 

is one that we see value in. It won’t score that way necessarily, because of the way our complex rules work, but that data mining program, wherever it is, is fully exploited, not only in this part of the 

farm bill, but I suspect there is some applications in food stamps 

or SNAP and other programs in which that data mining concept 

could be used and exploited. 

Mr. MURPHY. Yes, indeed. 

The CHAIRMAN. Mr. Boswell, do you have any further questions? 

Mr. BOSWELL. No further questions. 

The CHAIRMAN. Mr. Murphy, thank you. This is one of those rare 

circumstances where we actually got the entire hearing done in a 

reasonable time, in spite of a vote. I have some official words to 

read here somewhere. 

All right. Before we go on, I want to ask the Ranking Member 

if he wanted to say anything. Under the rules of the Committee, 

the record of today’s hearing will remain open for 10 calendar days 

to receive additional materials, supplementary written responses, a 

couple of questions that were asked, from the witness to the questions posed by a Member. 

This hearing on the Subcommittee on General Farm Commodities and Risk Management is adjourned. 

[Whereupon, at 11:38 a.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

34

35

SUPPLEMENTARY MATERIAL SUBMITTED BY WILLIAM J. MURPHY, ADMINISTRATOR, 

RISK MANAGEMENT AGENCY, U.S. DEPARTMENT OF AGRICULTURE

During the June 24, 2011 hearing entitled, Agricultural Program Audit: Examination of Crop Insurance Programs, requests for information were made to William J. 

Murphy. The following are the information submissions for the record. 

Insert 1

Mr. CRAWFORD. Excellent. Okay. Real quick, back to rice. You covered that 

pretty well, but I just want to ask, what is the current participation rate of rice 

and buy-up coverage and levels of protection, and how does this participation 

rate compare to other major crops like corn, soybeans, wheat, and cotton? 

Mr. MURPHY. I don’t have that information right with me. I can tell you it 

is lower than you see in the major crops. I will get that to you, though.

For information on program participation by crop, see spreadsheet entitled, Largest Crops Insured by Federal Crop Insurance, Reinsurance Year 2010, follows.

Largest Crops Insured by Federal Crop Insurance, Reinsurance Year 2010

Crop Liablilty 

Share 

of Liability Premium 

Share 

of Premium Subsidy 

Share 

of Subsidy 

Corn $31,673,245,782 41% $2,854,569,648 38% $1,748,845,970 37%

Soybeans $17,968,268,248 23% $1,746,840,208 23% $1,068,744,370 23%

Wheat $6,426,634,955 8% $1,123,672,475 15% $685,193,684 15%

Cotton $2,986,974,144 4% $488,627,636 6% $319,399,594 7%

Nursery $2,310,476,269 3% $49,806,802 1% $40,080,416 1%

Citrus $2,053,384,518 3% $64,728,939 1% $44,317,648 1%

Rice $1,226,342,119 2% $69,298,862 1% $50,108,540 1%

Grapes $1,049,323,716 1% $46,628,400 1% $33,311,279 1%

Potatoes $962,357,453 1% $81,774,552 1% $54,825,864 1%

Other $10,949,219,926 14% $1,066,169,977 14% $663,500,752 14%

Total All Crops $77,606,227,130 $7,592,117,499 $4,708,328,117

Insert 2

Mr. HUELSKAMP. I appreciate that, and 2008 is a good year—an appropriate 

year to talk about. I think 2011 might be one we talk about for many years as 

well. 

The second question would be—and I had looked through the materials closely and didn’t see this—but as far as taxpayer costs and other programs, how 

does that vary across the crops, and is that in the information you provided us? 

Mr. MURPHY. We can provide more information on that. The taxpayer costs 

of the program changes dramatically on the experience that we have for that 

year. For the last 10 to 20 years, except for a little blip in 2002, we have had 

positive loss ratios, so I think the program is well worth the money. The subsidy—the premiums are subsidized and average between 60 or 70 percent—60 

and 65 percent. So if we have $10 billion in premium this year, well the subsidy 

is going to be up about $6 billion in the program. So the cost goes along with 

the commodity prices as well. There are a lot of variables in the program, the 

loss ratio, the losses that the companies pick up versus the government, so——

Mr. HUELSKAMP. And the high cost over the last decade would have been how 

much in what year? 

Mr. MURPHY. As far as the total cost of the program? I would have to pull 

that together for you. I can do that, the last 10 years.

See worksheet ‘‘Program Expenditures Table’’ that follows. As regards program 

costs by crop, in general those would be roughly proportionate to their share of program liability/premium/subsidy, as provided in the worksheet ‘‘Largest Crops 

Table.’’ It is otherwise difficult number to obtain as only premium subsidy is calculated and directly available on a by-crop basis. We do not directly calculate A&O 

by crop. Underwriting gains/losses are based solely on a state’s underwriting performance, not on that of any individual crop.

36

Other Program Expenditures, Fiscal Years 2001 to 2010

Fiscal Year RMA A&O ARPA & FCIA

Initiatives Interest & Other *

(Million Dollars)

2001 $65.60 $43.78 $0.00

2002 $73.73 $40.68 $0.95

2003 $70.22 $48.61 $0.00

2004 $70.99 $46.22 $35.59

2005 $70.48 $45.23 $0.00

2006 $75.94 $37.51 $0.00

2007 $75.44 $39.61 $0.00

2008 $75.17 $47.79 $0.00

2009 $76.83 $53.37 $0.00

2010 $79.99 $53.05 $0.00

2011 ** $78.84 $68.50 $0.00

* Related to the dissolution of American Growers Insurance Company. 

** Estimated. 

Insert 3

Mrs. HARTZLER. Thank you, Mr. Chairman. Thank you, Mr. Murphy, and I 

would like to echo the comments that have already been said here by my farmers. Your part of the farm bill is probably the most popular part, and everyone, 

all of us—I am a farmer, too—appreciate what you do. 

I wanted to ask regarding the cost—of course, we are looking at budget issues 

now. In Fiscal Year 2010, it says the crop insurance costs were $4.7 billion. I 

just wondered, can you give me kind of a rough breakdown of how much of that 

went to claims and how much went to the administrative costs and operating 

costs? 

Mr. MURPHY. Actually, we are a very small agency. We have less than—we 

have about 500 employees overall, so when you are talking discretionary costs 

of the program, we are only talking $78 million to $80 million being the overall 

cost of the program of discretionary. 

The major costs that we see in the program are the producer’s subsidy that 

they get paid, the potential underwriting gains that the companies can make 

on a good year, and then the administrative and operating expense that we provide to the companies in order to deliver the program. Crop insurance, unlike 

private property and casualty insurance, you don’t—the farmers don’t pay that 

in their premium bill. We provide a separate payment to the companies to deliver the program for it. In the negotiation of the Standard Reinsurance Agreement, we actually reduced both the potential underwriting gains for the companies, as well as the administrative and operating costs provided to the companies, so we are certainly going to see a reduction. Probably the wildcard in the 

whole thing is the premium subsidy, going forward. Like I said, as we have seen 

these record commodity prices, that brings up the producer premium subsidy 

payment. 

Mrs. HARTZLER. But in Fiscal Year 2010, how much money for those various 

things, or maybe you could get that to me later? 

Mr. MURPHY. I can provide that to you on a year basis. I will break it out 

for 2010 and get that up to your office.

See worksheet Program Expenditure table.

Federal Crop Insurance Program Expenditures, Reinsurance Years 2001 to 2010

Reins. Year A&O+LAE Paid 

to AlPs 

Premium 

Subsidy 

Cost Share 

Subsidy 

Premium 

Discount 

Program 

Underwriting 

Gain or 

Loss *

Company 

Share of 

Gains & 

Losses 

Cost of 

Crop

Insurance

Program 

(Million Dollars)

2001 $635.87 $1,781.22 $0.42 $2.81 ¥$10.99 $346.00 $2,755.33

2002 $625.89 $1,737.94 $0.38 $0.00 $1,150.42 ¥$47.31 $3,467.33

2003 $733.66 $2,044.94 $0.37 $0.00 ¥$174.68 $377.85 $2,982.15

2004 $889.42 $2,472.26 $4.22 $0.00 ¥$893.62 $689.43 $3,161.71

2005 $829.25 $2,334.66 $4.11 $0.00 ¥$1,604.41 $914.97 $2,478.58

37

Federal Crop Insurance Program Expenditures, Reinsurance Years 2001 to 2010—

Continued

Reins. Year A&O+LAE Paid 

to AlPs 

Premium 

Subsidy 

Cost Share 

Subsidy 

Premium 

Discount 

Program 

Underwriting 

Gain or 

Loss *

Company 

Share of 

Gains & 

Losses 

Cost of 

Crop Insurance

Program 

2006 $958.58 $2,779.01 $0.00 $0.00 ¥$1,167.48 $818.85 $3,388.95

2007 $1,332.53 $3,812.23 $0.00 $0.00 ¥$3,082.33 $1,572.47 $3,634.89

2008 $2,009.25 $5,678.56 $0.00 $0.00 ¥$1,112.57 $1,095.14 $7,670.38

2009 $1,618.51 $5,424.16 $0.00 $0.00 ¥$3,732.14 $2,297.77 $5,608.30

2010 * $1,367.74 $4,708.61 $0.00 $0.00 ¥$3,409.89 $1,930.38 $4,596.84

Reinsurance Year = July 1 to June 30 of following year. 

* Negative number = program underwriting gain, positive number = program underwriting loss. 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE

1. Program Name 

The Federal crop insurance program is managed by the Risk Management Agency 

(RMA) which is under the Farm and Foreign Agricultural Services mission area of 

the United States Department of Agriculture. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

FCIC was created in 1938, under the Federal Crop Insurance Act (Act), to carry 

out the crop insurance program to help agriculture recover from the combined effects of the Great Depression and the Dust Bowl. The program was started as an 

experiment and was delivered by the FCIC until 1980. During the formative years 

of the program, participation was low and crop insurance activities were limited to 

major crops in the main producing areas. 

The crop insurance program continued to evolve and the Federal Crop Insurance 

Act of 1980 expanded the program and introduced the public-private partnership 

whereby private insurance companies would sell and service Federal crop insurance 

policies reinsured by FCIC. To encourage participation in the expanded crop insurance program, the Act authorized a premium subsidy be paid on behalf of insured 

producers. In 1994 the Federal Crop Insurance Reform Act of 1994 was enacted, 

which introduced the catastrophic risk protection (CAT) level coverage. Producers 

did not pay a premium for CAT coverage and instead paid a small per crop, per 

county administrative fee. The Federal Crop Insurance Reform Act of 1994 introduced the concept of linkage within the program. Linkage required a producer to 

purchase crop insurance at least the CAT level of coverage in order to qualify for 

the benefits of another farm safety net program in an effort to increase participation 

and eliminate the need for competing ad hoc disaster programs. The linkage requirement was eliminated after 2 years, though there have since been numerous 

‘‘linkage’’ requirements for disaster assistance or other farm safety net programs. 

The Federal Crop Insurance Reform Act of 1994 also introduced higher subsidy 

rates for ‘‘buy-up’’ coverage (insurance coverage above the CAT level for which producers pay some portion of the premium), as well as providing authority for revenue 

insurance products. Further, the Federal Crop Insurance Reform Act of 1994 expanded the role of the private sector, allowing entities to participate in research and 

development of new insurance products and features. A process was also created to 

allow private entities to submit unsolicited proposals for insurance products to the 

FCIC Board of Directors (Board) for approval. This allowed the introduction of the 

first revenue products. 

In 1996, the Risk Management Agency (RMA) was created to administer FCIC 

programs and other non-insurance-related risk management and education programs that help support U.S. Agriculture. In 2000, Congress enacted legislation that 

allowed private entities to be eligible for reimbursement of research, development 

and operating costs for their private submitted products approved by the Board. 

This legislation also removed restrictions on the development of insurance products 

for livestock; provided authority for the FCIC Board to create an expert review 

panel to assist the Board in evaluating new insurance products for feasibility and 

actuarial soundness; and significantly increased premium subsidies, by more than 

50 percent, to encourage producers to purchase higher insurance coverage levels, 

and to make the insurance program more attractive to prospective producers. 

38

4. Purpose/Goals 

Federal crop insurance serves America’s agricultural producers through effective, 

market-based risk management tools and solutions to strengthen the economic stability of agricultural producers and rural communities and provides world class agricultural risk management products, tools, education, and outreach. 

5. Success in Meeting Programmatic Purpose/Goals 

In the 2010 crop year, Federal crop insurance was available for approximately 350 

commodities, in over 3,141 counties, covering all 50 states and Puerto Rico. Insured 

acreage in the program exceeded 256 million acres. As the amount of insured acreage has increased, so too has the liability, or value of the insurance in force. In 1994 

program liability was less than $14 billion. Industry estimates suggest that for 2011 

program liability could exceed $100 billion. Of special significance is the level of participation in specialty crops programs. Seventy-five percent of producers are participating, which compares well to the 83 percent participation levels for the major program crops. Important fruit, nut and vegetable states like California (71%), Florida 

(91%), and Washington (68%) each score well in Federal crop insurance program 

participation. 

Many banks now require or at least encourage crop insurance coverage in order 

to make operating loans to producers. Federal crop insurance has become a fact of 

life for many farmers—without which American farmers would find it difficult to 

continue providing America and the world with an abundant supply of food, fiber 

and fuel. The crop insurance program has seen sustained growth as demonstrated 

by the increasing proportion of acres insured at buy up coverage levels over the last 

decade to a record-high of 90 percent. 

The type of coverage being purchased is also shifting to the more comprehensive 

revenue coverage. In 2010, revenue coverage accounted for 65 percent of the insured 

acres, compared to just 33 percent in 2000. In addition, the average coverage level 

(percent of the total crop covered) for buy up insurance has increased to approximately 73 percent for 2010, compared to 68 percent in 2000. Improvements to the 

program have been accomplished in an actuarially sound manner. Over the last 2 

decades, premiums (producer premiums added to premium subsidies) have been sufficient to cover the indemnities paid to producers plus a reasonable reserve. For example, the program’s loss ratio from 1994 through 2010 has averaged about 0.82.

39

6. Annual Budget Authority (FY 2002–FY 2011) 

(dollars in thousands) 

FY 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

A&O $74,232 $70,248 $71,001 $71,468 $76,278 $76,658 $76,121 $77,177 $80,325 $78,842FCIC Fund $2,820,926 $2,910,966 $3,366,433 $2,242,167 $3,295,458 $4,379,256 $4,145,091 $6,765,663 $6,898,215 $6,992,896

Total Authority $2,895,158 $2,981,214 $3,437,434 $2,313,635 $3,371,736 $4,455,914 $4,221,212 $6,842,840 $6,978,540 $7,071,738

The FCIC fund includes Budget Authority only. It does not include carryover balances or offsetting collections. 

7. Annual Outlays (FY 2002–FY 2011) 

(dollars in thousands) 

FY 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

A&O $83,801 $75,849 $71,482 $66,739 $73,824 $79,091 $76,254 $72,799 $78,002 $82,000FCIC Fund $2,946,551 $3,254,184 $3,197,568 $2,883,272 $3,371,615 $3,471,225 $4,074,814 $7,888,892 $4,706,125 $6,989,000

Total Outlays $3,030,352 $3,030,033 $3,269,050 $2,950,011 $3,445,439 $3,550,316 $4,151,068 $7,961,691 $4,784,127 $7,071,000

Outlay amounts differ from Budget Authority due to timing. The general rule of thumb for FCIC outlay spend rates (current year/past year) is 90/10 for ARPA, 

Delivery Expenses, and Underwriting Gains/Losses and 35/65 for Indemnities. For the A&O Account, RMA currently estimates a 90/10 split. 

40

8. Annual Delivery Cost (FY 2002–FY 2011) 

See [following tables] from Explanatory Notes provided to the Congress in recent 

years as part of the President’s annual budget proposal. The pages provided display 

information on program costs including costs associated with program delivery. Note 

that in each case, the earliest fiscal year shown is an actual amount and the other 

2 years are estimates.

Explanatory Notes, President’s Budget Proposal for RMA (FY 2009), p. 22–25

Risk Management Agency

Full Cost By Strategic Objective 

Strategic Objective 2.3: Provide Risk Management and Financial Tools to Farmers and Ranchers 

FY 2007 

($000) 

FY 2008 

($000) 

FY 2009 

($000) 

Program Program Items

Federal Crop Insurance Corporation Fund

Research and Development Program $40,000 $40,000 $40,000

Pilot Programs $21,000 $21,000 $21,000

Policy Consideration and Implementation $3,500 $3,500 $3,500

Premium Program $2,727,720 $3,846,559 $4,100,446

A&O Expenses/Delivery Expenses $1,110,750 $1,479,566 $1,471,876

Risk Management Assistance Program $5,000 $5,000 $5,000

Excess Crop Losses $466,286 ($1,250,534) $936,123

Total $4,374,256 $4,145,091 $6,577,945

Administrative and Operating Expenses

Administrative Costs (direct) $58,369 $62,332 $63,461

Information Technology 17,075 13,716 13,716

Total $75,444 $76,048 $77,177

Performance measure: Increase the normalized value of 

FCIC risk protection coverage provided through FCIC sponsored insurance (in billions)

Performance target: $50.7 $53.7 $54.8

Unit Cost: N/A N/A N/A

Total Program $4,449,700 $4,221,139 $6,655,122

Total FTEs 488 553 553

Explanatory Notes, President’s Budget Proposal for RMA (FY 2010), p. 19–22

Risk Management Agency

Full Cost By Strategic Objective 

Strategic Objective 2.3: Provide Risk Management and Financial Tools to Farmers and Ranchers 

FY 2008 

($000) 

FY 2009 

($000) 

FY 2010 

($000) 

Program Program Items

Federal Crop Insurance Corporation Fund

Agricultural Risk Protection Act Initiatives $42,791 $68,500 $68,500

Premium Program $4,377,350 $6,892,983 $8,837,530

A&O Expenses/Delivery Expenses $1,994,615 $1,621,679 $1,545,767

Risk Management Assistance Program $5,000 $6,000 $6,000

Excess Crop Losses $1,577,759 $967,415 $914,732

Total $7,997,515 $9,556,577 $11,372,529

Administrative and Operating Expenses

Administrative Costs (direct) $61,863 $63,606 $66,754

Information Technology $13,303 $13,571 $13,571

Total $75,166 $77,177 $80,325

Performance measure: Increase the normalized value of 

FCIC risk protection coverage provided through FCIC sponsored insurance (in billions)

Performance target: $53.7 $54.8 $50.7

41

FY 2008 

($000) 

FY 2009 

($000) 

FY 2010 

($000) 

Unit Cost: N/A N/A N/A

Total Program $8,072,681 $9,633,754 $11,452,854

Total FTEs 480 553 568

Explanatory Notes, President’s Budget Proposal for RMA (FY 2011), p. 23–24

Risk Management Agency

Full Cost By Strategic Objective 

Department Strategic Goal: USDA will assist rural communities to create prosperity so they are self sustaining and economically thriving. 

FY 2009

Amount

($000) 

FY 2010

Amount

($000) 

FY 2011

Amount

($000) 

Program Program Items

Federal Crop Insurance Corporation Fund

Agricultural Risk Protection Act Initiatives $47,371 $68,500 $68,500

Premium Program $8,416,173 $7,669,250 $9,040,243

A&O Expenses/Delivery Expenses $1,601,807 $1,567,145 $1,683,633

Risk Management Assistance Program $6,000 $6,000 $6,000

Excess Crop Losses $1,962,597 $1,167,759 $1,204,771

Projected Savings from Negotiations of SRA — — ¥$782,000

Total Costs $12,033,948 $10,478,654 $11,221,147

Administrative and Operating Expenses

Administrative Costs (direct) $63,606 $66,754 $67,493

Information Technology $13,571 $13,571 $15,571

Total Costs $77,177 $80,325 $83,064

FTEs 481 568 568

Performance measure: Increase the normalized value of 

FCIC risk protection coverage provided through FCIC 

sponsored insurance (in billions)

BY Performance $53.7 $54.8 $50.7

Cost per measure (unit cost) N/A N/A N/A

Total for Department Strategic Goal 1

Total Costs for Department Strategic Goal $12,111,125 $10,558,979 $11,304,211

FTEs 481 568 568

Explanatory Notes, President’s Budget Proposal for RMA (FY 2012), p. 23–24

Risk Management Agency

Full Cost By Department Strategic Goal 

Department Strategic Goal: Assist Rural Communities to Create Prosperity so They Are Self-Sustaining, Repopulating, and Economically Thriving. 

FY 2010 FY 2011 FY 2012

Program Program Items

Federal Crop Insurance Corporation Fund (FCIC)

Premium Subsidy $4,089,811 $4,600,900 $3,082,875

Delivery Expenses $1,567,145 $1,325,000 —

Underwriting Gains $1,167,759 $999,496 —

Federal Crop Insurance Act Initiatives $74,500 $68,500 $59,500

Other Authority Withdrawn ($2,352,096) — —

Total Costs $4,547,119 $6,993,896 $3,142,375

Administrative and Operating Expenses

Administrative Costs (direct) $66,045 $66,045 $66,045

Information Technology $14,280 $14,280 $16,280

Total Costs $80,325 $80,325 $82,325

FTEs 501 568 568

42

FY 2010 FY 2011 FY 2012

Performance Measure: The normalized value of:

BY Performance Dollars Dollars Dollars 

Cost per measure (unit cost) $51.9 $52.4 $52.9

Total for Strategic Goal

Total Costs for Priority (program, direct, indirect) $4,627,444 $7,074,221 $3,224,700

FTEs 501 568 568

9. Eligibility Criteria 

In general, anyone producing a crop or livestock for which premium rates have 

been published in the counties actuarial documents is eligible to purchase crop insurance. Basic requirements such as legal competency and being of legal majority 

apply. The person purchasing crop insurance must also have an insurable interest 

in the crop and must provide the required identification number and other required 

data to the agent from whom the policy was purchased. 

Any farmer or rancher can become ineligible to participate in the program. Circumstances that may cause a person to become ineligible include having a delinquent debt, such as unpaid premium or failure to timely repay an indemnity that 

was overpaid. That person again becomes eligible when the debt is resolved. Persons 

who are disqualified, suspended, or debarred under the Act and applicable regulation, are ineligible for crop insurance for the period of disqualification, suspension 

or debarment. Any person who is convicted of violating the controlled substance provisions of the Food Security Act of 1985, as amended, is ineligible for crop insurance 

from the beginning of the crop year of conviction and the 4 subsequent consecutive 

crop years. 

There are no carve-outs in the Federal crop insurance program.

43

10. Utilization (Participation) Data 

Additional Coverage Only 

Reinsurance Year Number of Policies Insured Acres Liability (Value) Premium Claims Payments Loss Ratio Loss Cost 

2001 1.1 million 170.5 million $30.1 billion $2.7 billion $2.9 billion 1.069 0.0972002 1.1 million 176.6 million $30.5 billion $2.7 billion $4 billion 1.485 0.1312003 1.1 million 183.8 million $34 billion $3.2 billion $3.2 billion 1.003 0.0952004 1.1 million 189 million $39.5 billion $4 billion $3.2 billion 0.811 0.0812005 1.1 million 217.7 million $37.2 billion $3.7 billion $2.3 billion 0.609 0.0612006 1 million 213.7 million $45.4 billion $4.4 billion $3.5 billion 0.782 0.0772007 1 million 243.3 million $59.8 billion $6.3 billion $3.4 billion 0.544 0.0572008 1 million 242.2 million $81.1 billion $9.5 billion $8.6 billion 0.909 0.1072009 1.1 million 242.5 million $71.6 billion $8.6 billion $5.2 billion 0.597 0.0722010 1.1 million 236.2 million $71 billion $7.3 billion $4.1 billion 0.565 0.058Maximum 1.1 million 243.3 million $81.1 billion $9.5 billion $8.6 billion 1.485 0.131Minimum 1 million 170.5 million $30.1 billion $2.7 billion $2.3 billion 0.544 0.057Ten-year average 1.1 million 211.6 million $50 billion $5.2 billion $4 billion 0.837 0.084

Catastrophic Coverage Only 

Reinsurance Year Number of Policies Insured Acres Liability (Value) Premium Claims Payments Loss Ratio Loss Cost 

2001 236,669 41 million $6.9 billion $247.7 million $48.9 million 0.197 0.0072002 208,563 38.2 million $6.8 billion $229.5 million $78.7 million 0.343 0.0122003 175,393 33.7 million $227 million $44.1 million 0.194 0.0072004 156,004 31.7 million $241.3 million $95 million 0.394 0.0132005 138,464 28.1 million $236.4 million $81.3 million 0.344 0.0122006 125,786 28.3 million $261.2 million $64.5 million 0.247 0.0072007 120,100 28.3 million $268.4 million $50.6 million 0.188 0.0072008 120,405 30 million $332.7 million $80.4 million 0.242 0.0102009 93,099 22.3 million $305 million $59.3 million 0.194 0.0082010 79,687 20.3 million $262.2 million $39.6 million 0.151 0.006Maximum 236,669 41 million $332.7 million $95 million 0.394 0.013Minimum 79,687 20.3 million $227 million $39.6 million 0.151 0.006Ten-year average 145,417 30.2 million $261.1 million $64.2 million 0.249 0.009

44

11. Duplication or Overlap with Other Programs 

The public-private partnership between RMA and private crop insurance companies for the delivery of subsidized crop insurance is unique. The Federal crop insurance program is different from disaster funding because farmers are contributing to 

the costs of the program through the payment of premium for an actuarially sound 

program. 

12. Waste, Fraud and Abuse 

Waste—The crop insurance program is currently reporting a 4.7 percent average 

error rate in accordance with the Improper Payments Information Act. This rate is 

consistent with the program’s historically reported error rates of between four to six 

percent. While the goal is to continue to reduce crop insurance program errors, the 

closely related private Property and Casualty lines of insurance typically report 

error rates of all types, intentional and unintentional, between 15 and 20 percent. 

RMA recently renegotiated the Standard Reinsurance Agreement (SRA) to include 

targeted quality control reviews to assist in identifying and correcting individual 

and program errors. RMA also is completing an Information Technology Modernization project that has new built in internal controls and checks of data to identify 

and correct data errors before indemnities are paid. Advances in technology will continue to provide opportunities to improve the way we assign insurance guarantees 

and assess loss events that will continue to improve RMA’s ability to limit program 

errors. 

Fraud and Abuse—RMA is in its eleventh year of conducting annual spot checks 

of producers identified through Congressionally authorized data mining as being 

anomalous when compared to their neighbors. Once identified, these producers are 

notified that they will be checked during the year by the Farm Service Agency 

(FSA). RMA has documented that this effort reverses the observed anomalous behavior resulting in a reduction of expected indemnity payments of almost $840 million to date. The 2011 SRA includes an expansion of this effort to include checks 

of an additional tier of producers by their insurance company. 

RMA also dedicates significant resources to assisting USDA’s Office of Inspector 

General (OIG) in investigating and prosecuting criminal program violations and imposing administrative sanctions when indicated. Although RMA continues to believe 

the percentage of producers engaged in criminal behavior is relatively small, these 

producers create a negative impression of the program with the public and as such 

RMA believes the aggressive identification and prosecution of those who abuse the 

program is essential to maintaining program integrity. Currently, RMA is assisting 

OIG and the Department of Justice with identifying violations in the tobacco insurance program that includes criminal activity by a significant number of producers, 

agents, and loss adjusters across several states. The termination of the tobacco 

quota program created vulnerabilities in the tobacco marketing system that left the 

insurance program exposed to abuse. RMA is working to correct these 

vulnerabilities, while identifying those who have taken advantage of them in the interim and prosecuting and sanctioning those persons to the fullest extent of the law. 

13. Effect of Administrative PAYGO 

In 2005, the Office of Management and Budget released Memorandum M–05–13 

(‘‘Budget Discipline for Agency Administrative Actions’’) requiring that for ‘‘any proposed discretionary agency administrative action that would increase mandatory 

spending, the agency must include one or more proposals for other administrative 

actions to be taken by the agency that would comparably reduce mandatory spending’’. This is commonly referred to as ‘‘PAYGO.’’

There have been a number of Administrative PAYGO actions in the crop insurance program. For example, last year’s renegotiation of the Standard Reinsurance 

Agreement generated a significant amount of budgetary savings, $2 billion of which 

was applied to Administrative PAYGO (the remainder was applied to debt reduction). Conversely, a number of crop insurance products have been added or expanded, like the Pasture, Rangeland, and Forage product—a critical product for livestock producers—using Administrative PAYGO offsets. 

(45)

AGRICULTURAL PROGRAM AUDIT 

(EXAMINATION OF CONSERVATION PROGRAMS) 

THURSDAY, JULY 7, 2011

SUBCOMMITTEE ON CONSERVATION, ENERGY, AND

FORESTRY, 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON AGRICULTURE, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 10:04 a.m., in Room 

1300 of the Longworth House Office Building, Hon. Glenn Thompson [Chairman of the Subcommittee] presiding. 

Members present: Representatives Thompson, Goodlatte, Gibbs, 

Southerland, Roby, Huelskamp, Hultgren, Ribble, Noem, Lucas (ex 

officio), Holden, Schrader, Owens, McIntyre, Walz, Pingree, Fudge, 

and Peterson (ex officio). 

Staff present: Brent Blevins, Tamara Hinton, Josh Maxwell, 

Debbie Smith, Lauren Sturgeon, Suzanne Watson, Nona S. Darrell, 

Liz Friedlander, Anne Simmons, John Konya, and Jamie Mitchell. 

OPENING STATEMENT OF HON. GLENN THOMPSON, A 

REPRESENTATIVE IN CONGRESS FROM PENNSYLVANIA 

The CHAIRMAN. Well, good morning, everyone. This hearing of 

the Subcommittee on Conservation, Energy, and Forestry entitled, 

Agricultural Program Audit: Examination of Conservation Programs, will come to order. I will start out with my opening statement. 

I want to welcome everyone to this Subcommittee hearing to examine the farm bill conservation programs. This is one of a series 

of hearings the six Subcommittees of the House Agriculture Committee will be holding to audit farm bill programs in advance of 

writing the next farm bill. Though the current farm bill doesn’t expire until September of 2012, it is important that we begin the review process now. I believe it is imperative that we have a sound 

knowledge base from which to make responsible decisions as we 

address these programs. 

Now, I don’t think I need to remind anyone in this room that we 

face many challenges in drafting the next farm bill. In the current 

fiscal environment, we will be faced with some difficult decisions 

regarding the fate of programs in all parts of the farm bill, including Title II. Moreover, Title II programs, including the Wetlands 

Reserve Program and the Grasslands Reserve Programs do not 

have a budget baseline beyond the expiration of the current farm 

bill. Given the challenging decisions ahead of us and a number of 

46

new faces on the Subcommittee, I think this is an excellent opportunity for everyone to ask questions about specific programs, as 

well as general program delivery and familiarize themselves with 

programs under the Subcommittee’s jurisdiction. 

Congress offered the first conservation programs for farmers and 

ranchers in the 1930s and we have seen a tremendous growth in 

programs since then. The conservation title was first introduced in 

the farm bill in 2002 and the Title was further revised and expanded in the 2008 Farm Bill. 

Today, USDA offers more than 20 separate active land and land 

retirement programs that account for billions in spending annually. 

This hearing gives us the chance to hear directly from those at 

USDA who are responsible for the implementation of conservation 

programs, and we have a chance to learn about these programs and 

to ask questions about how they are implemented and in what 

manner we could improve the delivery in the future. When the 

time comes to make decisions about conservation programs, we will 

all be better placed to do so if we have a thorough understanding 

of how each program operates. 

Our witnesses today will provide information about these various 

programs that we need to move forward in a legislative process. We 

will learn about basic information about the amount of money that 

is being spent on each program, program participation, as well as 

examples of duplication with other programs, and examples of 

waste, fraud, and abuse. 

I want to welcome Chief Dave White of the NRCS and Mr. Bruce 

Nelson, the Administrator of FSA. It is good to see you both. I am 

certainly eager to hear your testimony on these programs. And I 

look forward to working with you both in the months ahead to 

draft aa conservation title that fulfils its core goals while utilizing 

taxpayer dollars in a responsible manner. 

[The prepared statement of Mr. Thompson follows:]

PREPARED STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN CONGRESS

FROM PENNSYLVANIA

Good morning. I want to welcome everyone to the Conservation, Energy, and Forestry Subcommittee hearing to examine farm bill conservation programs. 

This is one of a series of hearings the six Subcommittees of the House Agriculture 

Committee will be holding to audit farm bill programs in advance of writing the 

next farm bill. 

Though the current farm bill does not expire until September of 2012, it is important we begin the review process now. 

I believe it is imperative we all have a sound knowledge base from which to make 

responsible decisions in how we address these programs. 

I don’t think I need to remind anyone in this room that we face many challenges 

in drafting the next farm bill. 

In the current fiscal environment, we will be faced with some difficult decisions 

regarding the fate of programs in all parts of the farm bill, including Title II. 

Multiple Title II programs, including the Wetlands Reserve Program and the 

Grasslands Reserve program, do not have a budget baseline beyond the expiration 

of the current farm bill. 

Given the challenging decisions ahead of us and the number of new faces on this 

Subcommittee, I think this is an excellent opportunity for everyone to ask questions 

about specific programs as well general program delivery and familiarize themselves 

with programs under the Subcommittee’s jurisdiction. 

Congress offered the first conservation programs for farmers and ranchers in the 

1930s and we have seen a tremendous growth in programs since then. 

The conservation title was first introduced to the farm bill in 2002. The title was 

further revised and expanded in the 2008 Farm Bill. 

47

Today, USDA offers more than 20 separate active land and land retirement programs that account for billions in spending annually. 

This hearing gives us the chance to hear directly from those at USDA who are 

responsible for the implementation of conservation programs. 

We will have a chance to learn about these programs and to ask questions about 

how they are implemented and in what manner we could improve their delivery in 

the future. 

When the time comes to make decisions about conservation programs, we will all 

be better placed to do so if we have a thorough understanding of how each program 

operates. 

Our witnesses today will provide information about these various programs that 

we need to move forward in the legislative process. 

We will learn basic information about the amount of money that is being spent 

on each program, program participation, as well as examples of duplication with 

other programs and examples of waste, fraud and abuse. 

I want to welcome Chief Dave White of NRCS and Mr. Bruce Nelson, Acting Administrator of FSA. It is good to see you both and I am eager to hear your testimony 

on these programs. 

I look forward to working with you both in the months ahead to draft a conservation title that fulfills its core goals while utilizing taxpayer dollars in a responsible 

manner. 

I now yield to my friend, the Ranking Member from Pennsylvania, Mr. Holden, 

for his opening statement.

The CHAIRMAN. And I will yield to my friend, the Ranking Member from Pennsylvania, Mr. Holden, for his opening statement. 

OPENING STATEMENT OF HON. TIM HOLDEN, A 

REPRESENTATIVE IN CONGRESS FROM PENNSYLVANIA 

Mr. HOLDEN. Thank you, Mr. Chairman. I would like to thank 

our witnesses and guests for being here this morning. 

This hearing presents an important and timely opportunity for 

Members of this Subcommittee to review the state of USDA conservation programs. The Natural Resources Conservation Service 

and the Farm Service Agency, through the authority of this Committee and the farm bill, currently administer over 20 programs to 

assist producers and landowners who wish to practice conservation 

on agricultural lands. 

These conservation practices have expanded over the years from 

early efforts to reduce high levels of soil erosion and address water 

quality and quantity issues to address other natural resources concerns such as wildlife habitat, air quality, wetlands restoration and 

protection, and energy efficiency. As the economic and regulatory 

pressures have increased in recent years, agriculture producers and 

private forest landowners have come to rely on these farm bill conservation programs to help them stay in business. 

I am concerned that recent reductions in conservation program 

funding is resulting in USDA having to deny producers the tools 

they need to combat these burdens effectively due to insufficient 

funding. Lack of assistance to meet regulatory requirements imposes an unfunded mandate on producers and harms our landowners’ ability to run their businesses and efficiently implement 

conservation practices on their land. 

Bottom line, access to funds is vital and so is the delivery of 

these funds. Whether it is through FSA, NRCS, or a technical service provider, a consistent message we are hearing across the country is that more people are needed in the field to assist producers 

in making land-management decisions and implementing conservation practices. 

48

As we focus on deficit reduction and the streamlining of Federal 

programs, it is important that we ensure USDA remains able to deliver effective conservation programs with fewer resources and respond to the demand for those landowners who depend on them. 

Farmers and ranchers have always been the original stewards of 

the land and continue to be the best advocates for research conservation. 

I look forward to today’s expert testimony and the opportunity to 

listen and learn and ask questions of those responsible for ensuring 

that that remains true in the future. 

Thank you, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. We are also joined in the 

hearing by the Chairman of the Agriculture Committee. I now recognize Chairman Lucas for an opening statement. 

OPENING STATEMENT OF HON. FRANK D. LUCAS, A 

REPRESENTATIVE IN CONGRESS FROM OKLAHOMA 

Mr. LUCAS. Thank you, Chairman Thompson and Ranking Member Holden for holding today’s hearing to examine conservation 

programs. 

During the past two farm bills, I served as Chairman and Ranking Member respectively of the Subcommittee with jurisdiction over 

the Conservation Title. My, aren’t free elections a wondrous thing? 

Both in 2008 and in the 2002 Farm Bill saw exponential growth 

in conservation programs. In 2002, we increased conservation 

spending in the 2002 Farm Bill by $17 billion over 10 years, an 80 

percent expansion that created one of the greenest farm bills in 

history. This legislation increased our commitment to important 

programs like CRP, EQIP, and helped multiply participation in 

conservation practices. 

In the 2008 Farm Bill, we built upon the historic Conservation 

Title by adding $4 billion over 10 years. That Conservation Title 

included new regional and cooperative partnership programs, as 

well as reauthorization and increased funding for existing programs. These programs have created many new ways for producers 

and conservation organizations to achieve shared goals. Farmers 

and ranchers, with the assistance of these programs, have worked 

voluntarily to help reduce soil erosion, increase wetlands, improve 

water quality, and preserve farmland and wildlife habitat. 

However, as we work towards the next farm bill, this Committee 

will be faced with a very different budget situation. Not only will 

the Agriculture Committee have to do our part within the overall 

deficit situation, but as all of us know, we literally have dozens of 

programs, as has been alluded to by the Chairman and the Ranking Member, with no baselines, many under the umbrella of conservation. Conservation is an important element of farm policy. 

Farmers and ranchers make their living off the land and they are 

committed to preserving and protecting it for future generations. 

As lawmakers, we have a responsibility to ensure that conservation policy is effective without being duplicative or too costly. This 

is especially important in the current fiscal environment. Today’s 

audit will help us evaluate our current policy so that we can determine what is working, what needs to be adjusted, and what can be 

49

eliminated. This is a critical step in the process of developing the 

next farm bill. 

I thank all of you for being here and participating today, and I 

can only say that I have the greatest of confidence in the gentlemen from Pennsylvania when we make those tough decisions in the 

coming days, months, and year. 

I yield back the balance of my time, Mr. Chairman. 

[The prepared statement of Mr. Lucas follows:]

PREPARED STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN CONGRESS

FROM OKLAHOMA

Good morning. 

I’d like to thank Chairman Thompson for holding today’s hearing to examine conservation programs. 

During the past two farm bills I served as the Chairman and Ranking Member, 

respectively, for the Subcommittee of jurisdiction for the conservation title. Both the 

2008 and 2002 Farm Bills saw exponential growth in conservation programs. 

In 2002, we increased conservation spending in the 2002 Farm Bill by $17 billion 

over 10 years—an 80 percent expansion that created the greenest farm bill in history. This legislation increased our commitment to important programs like CRP 

and EQIP and helped multiply participation in conservation practices. 

In the 2008 Farm Bill, we built upon the historic conservation title by $4 billion 

over 10 years. That conservation title included new regional and cooperative partnership programs as well as the reauthorization and increased funding of existing 

programs. 

These programs have created new ways for producers and conservation organizations to achieve shared goals. Farmers and ranchers, with the assistance of these 

programs, have voluntarily worked to help reduce soil erosion, increase wetlands, 

improve water quality, and preserve farmland and wildlife habitat. 

However, as we work towards the next bill, this Committee will be faced with a 

very different budget situation. Not only will the Agriculture Committee have to do 

our part within the overall deficit situation, but as all of us know, we literally have 

dozens of programs with no baselines, many under the umbrella of conservation. 

Conservation is an important element of farm policy. Farmers and ranchers make 

their living off the land, and they are committed to preserving and protecting it for 

future generations. As lawmakers, we have a responsibility to ensure that conservation policy is effective without being duplicative or too costly. That is especially important in the current fiscal environment. 

Today’s audit will help us evaluate our current policy so that we can determine 

what is working, what needs to be adjusted, and what can be eliminated. 

This is a critical step in the process of developing the next farm bill, and I thank 

you all for being here today to participate in that process.

The CHAIRMAN. Thank you, Mr. Chairman. 

We are also joined by the Ranking Member for the full Agriculture Committee. Mr. Peterson, any opening remarks, sir? Okay. 

Very good. 

The chair requests that the other Members submit their opening 

statements for the record so that the witnesses may begin their testimony and ensure that there is ample time for questions. 

And I am very pleased to welcome our panel of witnesses to the 

table today. And we have Mr. Dave White, Chief of the Natural Resource Conservation Services, Department of Agriculture; and Administrator Bruce Nelson, Administrator of Farm Service Agency 

with the Department of Agriculture. Gentleman, you are the only 

two witnesses for this panel, so I encourage you to take the time 

that you need. We are not going to be using any lights today for 

your testimony, so I encourage you to take the time that you need 

to cover the information so that we will all benefit. 

And Mr. Nelson, please begin when you are ready. 

50

STATEMENT OF BRUCE NELSON, ADMINISTRATOR, FARM 

SERVICE AGENCY, U.S. DEPARTMENT OF AGRICULTURE, 

WASHINGTON, D.C. 

Mr. NELSON. Mr. Chairman, thank you very much. I am new to 

this so I have to learn how to punch the buttons. 

Mr. Chairman, Ranking Members, Members of the Subcommittee, thank you for the opportunity to discuss the conservation programs administered by the Farm Service Agency here 

today. My testimony will focus on FSA’s conservation programs and 

our collaboration with our conservation partners in ensuring highquality, cost-effective program delivery. And I am especially glad to 

be here on my first occasion with Dave White, who did an outstanding job as State Conservationist in my home State of Montana before becoming Chief of NRCS. 

Let me begin by talking about FSA’s largest conservation program, the Conservation Reserve Program, or CRP. CRP is a voluntary program that provides a cost-effective means to address 

conservation concerns on environmentally sensitive lands. Currently, CRP contains more than 31 million acres and FSA issues 

about $1.7 billion annually in rental payments to CRP participants. 

USDA recently announced the results of general Signup 41, 

which was held this past spring. Of the 3.8 million acres offered, 

2.8 million acres were accepted. With 4.4 million acres of contracts 

expiring on September 30 this year, enrollment is anticipated to 

total 29.9 million acres on October 1. 

The Conservation Reserve Enhancement Program, or CREP, is a 

component of the CRP continuous signup and is a partnership 

among USDA, the tribes, states, and in some cases, private groups. 

CREP agreements address high-priority conservation issues, and in 

total, FSA has 45 CREP agreements in 33 states. 

Another newer component of CRP is a Transition Incentives Program. TIP provided $25 million through 2012 to provide additional 

CRP payments for retiring owners or operators who transition land 

to beginning farmers or socially disadvantaged producers. In turn, 

the new operator must return some or all of the land to production 

using sustainable farming techniques. As of June 30, there were 

506 approved TIP contracts accounting for nearly 73,000 acres. I 

would note for the Committee that those numbers are an update 

from my testimony submitted for the record because 20 additional 

contracts were established in the last 3 weeks of June. 

FSA works closely with NRCS to administer the Emergency Conservation Program, which provides emergency cost-share funding 

and technical assistance to farmers and ranchers to rehabilitate 

damaged farmland. Approximately $90 million has been allocated 

nationwide under ECP for this fiscal year, about $2 million remains available to fulfill an anticipated $134 million in requests, 

leaving a projected shortfall of $132 million. This estimate is also 

a minor update from my testimony submitted for the record. 

FSA also administers several other new conservation programs 

that were created in the 2008 Farm Bill. The Voluntary Public Access and Habitat Incentive Program provides grants to states and 

tribal governments to encourage private landowners to make their 

land available for recreation. Earlier this month, USDA announced 

51

additional grants under this program, bringing in the total number 

of states and tribes participating to 26. 

FSA and NRCS also jointly administer a Grassland Reserve Program, or GRP. GRP participants limit cropping while retaining the 

right to conduct grazing practices and operations. Applications may 

be filed with either NRCS or FSA. Generally, FSA implements 

rental contracts and NRCS administers the easement program. 

Currently, 1.1 million acres are enrolled in GRP at an annual cost 

of approximately $10 million. 

FSA and NRCS are working hard together to make sure farmers 

know their options and have the right technical assistance. I am 

proud to report that the average government cost per enrolled acre 

in inflation-adjusted terms is significantly lower now than in the 

late 1980s, while at the same time, more environmental and conservation benefits are being generated. We have streamlined tasks 

and reduced signup costs by about 30 percent per contract for general signup and 18 percent per contract for continuous signup. 

In closing, we are committed to ensuring that our conservation 

program benefits the agricultural sector as intended by Congress. 

And we look forward to working closely with you to ensure sustainable conservation for agriculture in rural areas. Mr. Chairman, this 

concludes my statement, and I would be happy to answer any questions you or Members of the Subcommittee might have. Thank you 

very much. 

[The prepared statement of Mr. Nelson follows:]

PREPARED STATEMENT OF BRUCE NELSON, ADMINISTRATOR, FARM SERVICE AGENCY, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Mr. Chairman, Ranking Member, and Members of the Subcommittee, thank you 

for the opportunity to discuss the conservation programs administered by the Farm 

Service Agency (FSA). 

FSA’s largest conservation program, the Conservation Reserve Program (CRP), 

which was first authorized by the 1985 Farm Bill, has a long record of accomplishment. CRP is a voluntary program that provides a cost-effective means to address 

many conservation concerns on environmentally-sensitive lands (such as clean air, 

clean water, and wildlife habitat). Currently, CRP contains more than 31 million 

acres of grass, trees, riparian buffers, filter strips, restored wetlands, and high-value 

wildlife habitat. The experience of the 1930’s and economic and societal impacts of 

the ‘‘Dust Bowl’’ demonstrates the importance of protecting our nation’s most environmentally sensitive lands. 

The Transition Incentives Program (TIP) provides up to two additional CRP annual rental payments to a retired or retiring owner or operator of land under an 

expiring CRP contract if the land is sold or leased to a beginning or socially disadvantaged farmer or rancher for the purpose of returning some or all of the land 

to production using sustainable methods. 

FSA also implements several programs that provide emergency conservation assistance to producers. For example, the Emergency Conservation Program (ECP)—

which has been in existence for several decades—provides emergency funding to 

farmers and ranchers to rehabilitate farmland damaged by natural disasters and for 

carrying out water conservation measures in periods of severe drought. 

FSA administers several new programs created by the 2008 Farm Bill. For example, the Voluntary Public Access and Habitat Incentive Program (VPA–HIP) provides grants to states and tribal governments to encourage owners and operators 

of privately held farm, ranch, and forestland to voluntarily make their land available for public access for hunting, fishing, and other wildlife-dependent recreation. 

These grants provide funds to programs administered by state and tribal governments 

FSA and the Natural Resources Conservation Service (NRCS) jointly administer 

the Grassland Reserve Program (GRP), which is a voluntary conservation program 

that emphasizes support for grazing operations, enhancement of plant and animal 

biodiversity, and protection of grassland under threat of conversion to other uses. 

52

FSA also implements non-Conservation Title programs that have conservation effects such as the Biomass Crop Assistance Program (BCAP) and the Emergency Forest Restoration Program (EFRP) both of which require that participants have a conservation plan. 

For FSA’s conservation programs, the agency relies on technical assistance from 

NRCS, the Forest Service, the Fish and Wildlife Service, state fish and wildlife 

agencies, state Forestry agencies, state agricultural and environmental departments, conservation districts, non-governmental organizations, and the private sector. These partners help us with numerous activities, including technical determinations, conservation plan development, engineering design, outreach to farmers and 

ranchers, and monitoring the impacts of conservation programs. 

Today, I will not only discuss these conservation programs in more detail, but will 

also discuss how we work with our many conservation partners, and indicate how 

we are moving forward to ensure high-quality, cost-effective program delivery. 

Conservation Reserve Program 

CRP was authorized by the 1985 Farm Bill with a strong commodity supply control connection. CRP has evolved into a conservation program that increasingly targets environmental need by ranking offers in a general signup according to their environmental benefit and through a continuous signup that focuses on relatively 

small acreages that protect much larger areas such as buffer strips, riparian buffers 

and grass waterways. 

CRP also created the Conservation Reserve Enhancement Program (CREP) which 

leverages scarce Federal dollars with state and non-government organization funds 

to better meet local environmental needs. Under CREP, CRP helps to protect the 

Chesapeake Bay, salmon in the Pacific Northwest, Mammoth Cave in Kentucky and 

Hawaiian coral reefs. More recently, CRP has targeted enrollment of lands to 

achieve the goals of initiatives focused on the conservation of priority fish and wildlife resources such as wetlands, quail, ducks, and longleaf pine. 

CRP provides cost-share assistance and annual rental payments to farmers and 

ranchers to establish long-term (10 to 15 years) conservation cover (such as grass 

or trees) on eligible farmland. Numerous conservation practices are available including filter strips, riparian buffers, wetland restoration and high-value wildlife habitat. Annual rental payments are based on the agricultural rental value of the land, 

and cost-share assistance is provided for up to 50 percent of the participant’s costs 

in establishing approved conservation practices. FSA issues about $1.7 billion annually in rental payments to CRP participants. 

USDA recently announced the results of Signup 41, which was held this past 

spring. Of the 3.8 million acres offered, 2.8 million acres were accepted. Signup 41 

acceptances have no impact on this year’s crop; accepted land currently in crops can 

be harvested normally. For next year, the price impacts of Signup 41 enrollment on 

the price of corn, soybeans, and wheat are estimated to be very modest. With 4.4 

million acres expiring on September 30, 2011, enrollment is anticipated to total 29.9 

million acres on October 1, 2011 (contracts for the recently-accepted 2.8 million 

acres begin on that date). 

A Fiscal Year (FY) 2012 general signup is assumed in the President’s Budget; 

however, no signup dates have been announced. The Secretary is committed to a 

strong CRP program and feels the best way to keep it strong is to accept acres with 

the highest environmental benefit. 

A conservation plan is required for each CRP contract. FSA partners with NRCS 

which makes certain technical eligibility determinations and develops conservation 

plans. FSA is responsible for all program activities, makes compliance determinations, and consults with other Federal agencies such as the U.S. Fish and Wildlife 

Service. FSA also partners with the Forest Service to provide conservation planning 

for participants installing tree practices under CRP and also the Emergency Forestry Conservation Reserve Program (EFCRP). 

The environmental benefits of CRP are substantial. Since the beginning of the 

program, USDA estimates CRP has reduced soil erosion by more than 8 billion tons, 

including an estimated 325 million tons in 2010. On fields enrolled in CRP, nitrogen 

and phosphorus losses were estimated to be reduced by 607 million pounds and 122 

million pounds, respectively, in 2010. In addition, CRP acreage reduces the impacts 

of downstream flood events and recharges groundwater aquifers. 

There are two primary ways for farmers and ranchers to participate in CRP: the 

general signup provisions, such as Signup 41, and continuous signup provisions. 

Under the general signup, producers compete nationally for enrollment during specified periods. Under continuous signup, landowners and operators with eligible lands 

may enroll certain high priority conservation practices, such as restored wetlands, 

filter strips, and riparian buffers, at any time during the year without competition. 

53

1 United States Department of Agriculture, Natural Resources Conservation Service. 2011. Assessment of the Effects of Conservation Practices on Cultivated Cropland in the Chesapeake Bay 

Region. Final Draft. http://www.nrcs.usda.gov/technical/nri/ceap/chesapeakelbay/

index.html. 

In addition to annual soil rental payment and cost-share assistance, many continuous practices are eligible for additional annual and one-time up-front financial incentives. 

Continuous Signup 

The Conservation Reserve Enhancement Program (CREP) is a component of CRP 

continuous signup and is a partnership among USDA, tribes, states and, in some 

cases, private groups. Partners (generally states) generally provide 20 percent of estimated total project costs. CREP agreements address high-priority conservation 

issues of both local and national significance, such as impacts to water supplies, loss 

of critical habitat for threatened and endangered wildlife species, soil erosion and 

reduced habitat for fish populations such as salmon. Enrollment in a state is limited 

to specific geographic areas and practices. In total, FSA has 45 CREP agreements 

with its partner states and organizations spanning areas in 33 states. 

Most CREP agreements are designed to target assistance toward a critical need 

or issue. Iowa’s CREP agreement, for example, focuses on constructed wetlands in 

the Mississippi River basin. These constructed wetlands reduce nitrogen loadings in 

watersheds dominated by tile-drained cropland. They consist of a treatment pool 

and grass buffer, and range in size from 16–70 acres. Monitoring data from the Iowa 

project indicate that these wetlands remove 40–90 percent of the nitrate flowing into 

the wetlands. The cost to reduce nitrogen load by a pound in such situations is projected to be less than $1.38 per year for 50 years. 

As another example, we have CREP agreements with all the states that drain into 

the Chesapeake Bay watershed. Pennsylvania’s CREP agreement, which has the 

most acreage enrolled, provides financial and technical assistance to voluntarily restore wetlands, riparian areas, and grasslands; reduce erosion; and prevent sediment, nitrogen, and phosphorus from reaching the Chesapeake Bay. The Conservation Effects Assessment Program (CEAP) of the Chesapeake Bay estimates that nitrogen loss is reduced by 79 pounds per acre per year from acreage enrolled in 

CRP.1

Farmable Wetlands Program 

The Farmable Wetlands Program (FWP) is another component of CRP that is designed to restore up to one million acres of farmable wetlands and associated buffers 

by improving the land’s hydrology and vegetation. Eligible producers in all states 

restore wetland benefits by planting long-term, resource-conserving covers to improve the quality of water, control soil erosion, and enhance wildlife habitat. Participants must agree to restore the hydrology of the wetlands and to establish vegetative cover, which may include planting bottomland hardwoods, cypress and other appropriate tree or wetland species. FWP practices receive the same benefits as other 

continuous practices such as filter strips and riparian buffers. 

CRP Initiatives 

CRP further targets limited Federal funds by focusing on specific goals such as 

wetlands, longleaf pine, or wildlife. CRP initiatives include:

• Wetlands Initiative. This initiative was created to restore wetlands located within the 100 year floodplain, restore playa lakes and wetland complexes located 

outside the 100 year floodplain, and restore floodplains by establishing bottomland hardwood trees. The initiative provides vital habitat for many wildlife species, filters runoff, improves water quality, and reduces downstream flooding.

• Quail Initiative. This initiative was created because Northern bobwhite quail 

populations have declined due to habitat loss. The 350,000 acre initiative creates early successional grass buffers along agricultural field borders in the 35 

states that encompass the historic ranges of the bobwhite quail. The buffers 

also benefit many other species, such as, grasshopper sparrow, dickcissel, and 

Henslow’s sparrow.

• Longleaf Pine Initiative. The 250,000 acre longleaf pine initiative was developed 

to address the decline of longleaf pine in the Southeast. Its goal is to re-establish longleaf pine stands to benefit wildlife species and protect water quality.

• Duck Nesting Habitat Initiative. This 150,000 acre initiative was designed to restore wetlands and wetland complexes that are located outside the 100 year 

floodplain in the Prairie Pothole Region. It will provide critical habitat and nestVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00065 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
54

ing cover for ducks, sandhill cranes and other wildlife species, while filtering 

runoff, and reducing downstream flooding.

• State Acres for Wildlife Enhancement. This 850,000 acre initiative is designed 

to target high priority wildlife objectives on a state and/or regional level. The 

projects were targeted to create habitat for threatened and endangered species, 

species of special concern, and species of economic interest such as sage-grouse, 

lesser prairie-chicken, and ring-necked pheasant. 

Transition Incentives Program 

Another component of CRP is TIP which was created in the 2008 Farm Bill and 

provides $25 million through 2012 to promote the transition of expiring CRP land 

from a retired or retiring owner or operator to a beginning or socially disadvantaged 

farmer or rancher to return some or all of the land to production using sustainable 

farming techniques. Under TIP, the retired party is eligible to receive annual rental 

payments for up to 2 additional years beyond the contract expiration provided that 

the land is not transitioned to a family member. Certain conservation and land improvement work may begin on the transitioned land during the last year of the CRP 

contract. 

A retired or retiring CRP participant may apply for TIP beginning one year before 

the date of the expiration of the CRP contract through the end of the contract. TIP 

sign-up began on May 17, 2010, and as of June 9, 2011, there were 486 approved 

TIP contracts accounting for nearly 73,000 acres for expected outlays of $6.5 million. 

Emergency Conservation Program 

The Emergency Conservation Program (ECP) provides emergency cost-share funding (generally, up to 75 percent) and technical assistance to farmers and ranchers 

to rehabilitate farmland damaged by natural disasters and for carrying out emergency water conservation measures in periods of severe drought. For land to be eligible the natural disaster must create new conservation problems that, if untreated, 

would impair or endanger the land or materially affect the land’s productive capacity and for rehabilitation matters must be unusual damage for which Federal assistance is required to return the land to productive agricultural use. County FSA committees determine land eligibility based on on-site inspections of damage. Funding 

for this program is appropriated by Congress. 

Timing of ECP assistance is critical to producers facing disasters and FSA and 

NRCS employees work closely at the state and county level to provide efficient and 

timely service. For instance, FSA and NRCS employees in Alabama are working to 

provide assistance to farmers affected by recent tornados. Approximately $67 million 

has been allocated under ECP in FY 2011. FSA currently has approximately $9 million available with more than $167 million in pending or soon to be submitted requests. 

FSA provides technical assistance regarding debris removal, fence restoration, and 

grading and shaping of damaged land and FSA has an agreement with NRCS for 

it to provide technical assistance for practices requiring greater conservation expertise, including restoration of conservation structures and installations as well as 

drought emergency measures. FSA also has an agreement with the Forest Service 

to provide technical assistance for hurricane disasters that affect tree stands. 

Voluntary Public Access—Habitat Incentive Program 

VPA–HIP provides grants to states and tribal governments to encourage owners 

and operators to voluntarily make land available for public access for wildlife-dependent recreation. Funding may be used to expand existing, or create new, public 

access programs, or provide incentives to improve wildlife habitat on enrolled lands. 

USDA announced additional participating states earlier this month, bringing the 

total number of states participating in the program to 25 (plus the Yakima Nation). 

With the expanded participation in FY 2011, the program is expected to have a total 

cost of $50 million. 

Grassland Reserve Program 

FSA and NRCS jointly administer GRP. GRP participants voluntarily limit future 

development and cropping uses of the land while retaining the right to conduct grazing practices and operations related to the production of forage and seeding, subject 

to certain restrictions during nesting seasons. Applications may be filed for a rental 

contract or an easement with NRCS or FSA. Generally, FSA implements rental contracts and NRCS administers easements. NRCS provides all on-the-ground technical 

assistance for easements and rental contracts. Currently, 1.1 million acres are enrolled in GRP, at an annual cost of approximately $10 million. 

55

Moving Forward 

As you can see, FSA’s programs cover a wide variety of conservation and other 

related needs that have evolved over time. For example, CRP has been very effective 

at enhancing habitat for lesser prairie-chicken and sage-grouse both of which are 

candidate species for listing under the Endangered Species Act. CRP also helps producers comply with regulatory actions such as the Chesapeake Bay’s total maximum 

daily load requirements. CRP participation not only promotes the protection of environmentally-sensitive land, but can also help reduce the need for additional regulatory burdens on agricultural producers. 

We are committed to ensuring that conservation programs benefit the agricultural 

sector as intended and protect land, improve water and air quality, and promote 

wildlife habitat. We are also committed to ensuring that we efficiently and effectively manage stewardship over our natural resources. In addition, we work with 

our partners including NRCS and the Forest Service, to ensure compliance with the 

law by thoroughly reviewing producer and land eligibility and needs. 

We are working hard to innovate and improve program efficiency. The average 

government cost per enrolled acre, in inflation-adjusted terms, is significantly lower 

now than in the late 1980’s while, at the same time, more environmental benefits 

are being generated. Further, FSA and NRCS have significantly reduced technical 

assistance costs over the past 10 years. We have made changes that allow the automation of eligibility determinations and further streamlined the tasks necessary to 

implement technical assistance for CRP. Because of these changes, the costs of 

signup activities have been reduced by about 30 percent per contract for general 

signup and 18 percent per contract for continuous signup. 

We are also committed to evaluating CRP outcomes to ensure that we best target 

assistance as we move forward. We undertake monitoring and evaluation work with 

Federal, state, university, and other partners, which provides the sound science to 

effectively administer CRP and other conservation programs. These analytical results have been used to develop new conservation initiatives and resulted in the 

Iowa CREP findings noted earlier. These results are also used to develop environmental goals for the FSA strategic plan and to guide other USDA decision-making. 

Final Thoughts 

In an era of reduced resources, we look forward to working closely with Congress 

to identify and meet critical conservation needs. We also look forward to working 

more closely with not only our inter-agency partners within USDA, but also with 

the private sector and other government agencies. By doing so, we aim to better leverage resources, share ideas, and deliver programs that ensure sustainable conservation activities and programs for agriculture and rural areas.

The CHAIRMAN. Thank you, Mr. Nelson. 

Chief White, begin when you are ready. 

STATEMENT OF DAVE WHITE, CHIEF, NATURAL RESOURCES 

CONSERVATION SERVICES, U.S. DEPARTMENT OF

AGRICULTURE, WASHINGTON, D.C. 

Mr. WHITE. Thank you, Mr. Chairman, Mr. Ranking Member, 

Mr. Lucas, Mr. Peterson, Mr. Goodlatte, distinguished Members of 

this Subcommittee. I am starting to feel a little bit intimidated. I 

wasn’t expecting quite this many Members here. 

Anyway, you have asked me to talk about 15 programs, and I 

have to tell you, I have been studying like a first-semester freshman right before the exam time. Fifteen of them, I am going to 

break them down into three categories for you. One, we are going 

to have the mandatory-funded cost-share programs; then, we will 

have a group of four, the mandatory easement programs; and then 

we will have three discretionary. 

So the eight mandatory cost-share programs, we will just call 

this the big eight. The first one is EQIP, Environmental Quality Incentives Program. This is the workhorse. This is the big kid on the 

block. This is the most lushly funded. This is the main bricks-andmortar conservation cost-share program we have in the United 

56

States of America. Since 2005, about 1⁄4 million contracts have been 

written with farmers, ranchers, and forest landowners in the 

United States of America—1⁄4 million since 2005. It has several 

components to it, some of them I am going to address separately. 

So EQIP is really the biggest program we have. 

The Conservation Stewardship Program is the up-and-coming 

kid. The Conservation Stewardship Program can enroll 12.7 million 

acres a year. We have had two enrollments. We are in the tail end 

of the third enrollment. As of yesterday, the CSP now has about 

35 million acres. We are probably going to get another 3 million 

acres in there. So it is going to be 38 million acres here in a month 

or so. So it is now geographically the largest program. It is a completely different program from the one it replaced, the Conservation Security Program; Stewardship has a nationwide signup. It 

has a focus on additionality. 

Third cost-share program in the big eight, Wildlife Habitat In- centive Program, $85 million a year baseline, frankly, it is very, 

very similar to EQIP in how we operate it. It does have a couple 

of distinct differences. One, it allows you to have a higher costshare rate for long-term enduring contracts. And the second thing 

that is somewhat unique about it is that it has a specific directive 

in there where we are to prioritize the funding for state and national strategic objectives and which we have done. And I will probably go into that later on. 

Fourth program in the big eight, the Agricultural Management 

Assistance, this was actually in part of the credit title. It is only 

in 16 states. Sixteen states that have historically low participation 

in crop insurance is where AMA is offered. Again, it is very similar 

to EQIP. It does have a couple of differences that I would bring forward to your attention. This is a program that is really targeted 

towards smaller specialty crop organic farmers. It has a baseline. 

It is not in the Conservation Title, but it has its own baseline. The 

funding is statutorily split between three agencies. Ten percent of 

the funding goes to the Agricultural Marketing Service, and they 

use that to help pay to transition to organic farming. Forty percent 

of the funding goes to the Risk Management Agency. They use that 

funding to help specialty crops small farmers pay for crop insurance. Fifty percent comes to NRCS and we help develop on-farm 

conservation systems. Two things it does that really are fairly 

unique: one, you can use the funding to install new irrigation systems, which is rather unique; and second, you can use the funding 

to build irrigation reservoirs, which, if you are in a drought, it is 

a pretty big thing. 

Fifth team in the big eight conference is the Agricultural Water 

Enhancement Program, fondly called AWEP. AWEP is a component 

of EQIP. It has its own distinct, separate baseline, which at the 

end of the farm bill will be $60 million. AWEP is focused on water 

conservation, water quality. There are some specific instructions in 

the manager’s report that gives us targeted areas like the Ogallala 

Aquifer, Red River, Upper Mississippi, Eastern Snake Plain Aquifer in Idaho, Bay Delta, California, Puget Sound. And we have put 

funding in all of those areas. A unique thing at AWEP is if you are 

in like an exceptional drought area—I think that is a D3/D4—you 

can use AWEP funds to build irrigation reservoirs. And some of 

57

you may remember Mr. Everett from Alabama, that was a provision that he really wanted to see in this 2008 Farm Bill. 

Number six in the big eight, Conservation Innovation Grants, 

this is a subcomponent of EQIP that does not have a separate 

funding stream. All funding for this comes out of the overall EQIP 

allocation. There are two components to Conservation Innovation 

Grants. CIG A, which is really a grant program, a 50 percent 

matching grant program, and it is designed to take a research finding that is found in the lab that shows promise and how do you 

get that to on-the-ground application in a practical manner for 

farmers and ranchers. This divide between discovery and application is called Death Valley. So the Conservation Innovation Grants, 

Section A, is designed to help you bridge that Death Valley and 

take promising research results and put them on on-the-ground, 

reasonable, technical applications that farmers can use around the 

country. The second part of CIG, Section B is air quality: $37.5 million 

is designated for this subsection and it is to be used around the 

country in areas in air quality attainment areas. There are several 

of them. I was detailed to Senator Harkin in the 2008 Farm Bill 

process. This was brought forward on the Senate side by Senators 

Boxer and Feinstein. Members of this Committee, some of you may 

remember, Mr. Costa, Mr. Cardoza brought it forward. This is designed to help producers upgrade—part of it was to upgrade their 

engines. And when I first heard about it, I scoffed at it. I mocked 

it. I laughed at it. I thought this was the goofiest thing I have ever 

heard of. And then I saw how it was working and I was wrong. I 

was dead, flat, slap wrong. 

I have been to California where the bulk of this funding has 

gone. Central Valley, California, there is not one area in the United 

States of America where farmers are more regulated than they are 

in the Central Valley. And if you like peaches, plums, grapes, raisins, broccoli, carrots, onions, lettuce, it is very important for us to 

keep those producers in business. The Central Valley is like a big 

bowl. Everything that comes in there stays in there. Their air quality concerns are huge. And these guys are going out of business. 

I was on a producer’s farm. His name was Don Cameron, and he 

had 30 irrigation pumps lined up right behind his barn, 30 of them. 

Every single one of them had a hole cut in the block. I was looking 

at a million dollars of irrigation pumps that could maybe be sold 

for scrap metal because they were too polluting for the California 

Air Resources Board. And with this particular section of EQIP, we 

are able to cost-share on a 50–50 basis. They are going from Tier 

0 to Tier 3 engines in the last 2 years. This is astounding. 

And farmers, they are putting in this money, too, where we have 

done about 40 in EQIP; they have done about 40. It has reduced 

emissions with the net effect of removing over 400,000 cars from 

the road in California every single year. We may be at the point 

if we carry this on for a couple more years, we will obviate the need 

for any further regulation of these guys in the Central Valley. 

Number seven in the big eight, Chesapeake Bay Watershed Program, $50 million baseline, I had been up here before talking about 

it. Many of you are extremely familiar with that. Chesapeake Bay 

is ground zero for agriculture and regulation. This is often viewed 

58

as the canary in the coal mine. I am much more bullish on our 

chances than other people, and the Chesapeake Bay Watershed 

Program is really equipping us with some of the resources we need 

in this critical area. 

Rounding out the big eight is not really a program per se, but it 

is a mechanism. It is the Cooperative Conservation Partnership 

Initiative. It is an authority which allows us to use three different 

programs—EQIP, the Wildlife Habitat Incentive Program, and the 

Conservation Stewardship Program—for outside entities like universities and agricultural groups and other partners to designate 

areas where they identify a problem and we focus EQIP, WHIP, 

and CSP resources to solve that identified problem. Right now, we 

have about 164 projects around the country. There is a statutory 

limitation of no more than six percent of EQIP, WHIP, and CSP 

that can be used in CCPI. We are right now at 5.9 percent. So 

there probably won’t be a whole lot more. So that rounds out the 

big eight. 

Now, the big 12, these are all four easement programs. The big 

kid on the block is the Wetlands Reserve Program. In my opinion, 

it is the single biggest reason this country has achieved no net loss 

of wetlands. If you remember George Herbert Walker Bush, Bush 

I, he announced it was going to be the policy of the United States, 

no net loss of wetlands. This program is one of the main reasons 

why that has occurred. There are over 2 million acres right now. 

It is mostly marginal crop land that guys have a hard time making 

money on anyway. And that is one, Mr. Chairman, that you mentioned does not have a baseline, going forward. 

Second one is the Farm and Ranch Lands Protection Program. I 

know that that is critical to Mr. Holden and other Members of this 

Committee. This is a working lands easement program. Essentially, 

you are purchasing development rights. So this farm, this ranch is 

going to stay in agriculture forever. It is not going to be an airport; 

it is not going to be subdivided; it is not going to be little 

ranchettes. It is going to be in agriculture. A lot of changes made 

in 2008 that have made this program better, it will have a baseline 

of about $200 million, going forward. 

Third program, Grassland Reserve Program, this is kind of a hybrid. It blends a little bit of WRP and a little bit of FRPP, but 

again, it is a working lands program. Mr. Nelson very ably described that, so I won’t go into it. And it is jointly administered between our two agencies. 

Number 12 of the big 12 is the Healthy Forests Reserve Program. This is actually located in the Forestry Title. It is a permanent easement program—30 year contract for tribes—to aid in the 

recovery of threatened and endangered species. What is different 

about this is no-year money. We have to work with Fish and Wildlife Service to get people who enrolled into Safe Harbor Agreements. This is really focused on recovery of endangered species. 

Very small, $10 million a year for the last 3 years and will not 

have a baseline, going forward. 

All right. That leaves us with three more programs you wanted 

me to talk about. That would take us to 15. I couldn’t think of a 

sports analogy for that so I am going to give you a bonus program 

to take us to the Sweet 16 shifting from football to basketball. 

59

Number 13 is Resource Conservation and Development created 

in the early 1960s. RC&D really created 501(c)(3) nonprofit organizations whose mission was rural development broadly—natural resource-based rural development. I worked with them all of my career. I have a lot of respect for them. They have done some tremendous work around the country. In the last Bush Administration, 

OMB made an analysis and said it was duplicative, and the last 

few years of the Bush Administration, the Administration recommended it be zeroed out. That was carried forward in the 

Obama Administration and Congress adopted it this year. There is 

zero funding for this program. We are in the process of doing an 

orderly closeout of that. It is a very good program, but I recognize 

the necessity of the hard choices that are being made. 

Number 14 is the Small Watershed Program, which actually is 

two other programs—P.L. 78–534 and P.L. 83–566. These date 

from the 1940s and 1960s. Over that period of time, essentially 

these were flood-control structures. There is also water supply. 

These are the dams that are really flood control. There have been 

about 1,800 projects over that amount of time, over 11,000 structures have been built. Now, when you go back to the 1940s and 

1950s, fast-forward to today, we are in a bit of a fix. These dams, 

structures if you will, most of them were built with a 50 year lifespan. That is not to say that at 51 years they fall down. They are 

perfectly good but they had a design life of around 50 years. These 

structures are reaching the end of their design life. In fact, every 

day for the next 20 years somewhere in the United States of America a watershed dam will reach the end of its design life. That is 

not to say that they are bad at that point in time; it just to say 

their design life is over. 

Which leads me into number 15, which is the Watershed Rehabilitation Program. And I will give a nod to Chairman Lucas, who 

has recognized this and acted very forcefully to establish this particular program. What do you do with these structures? These 

structures are providing about $2 billion in prevented damages 

every year across America. What do you do when they reach the 

end of their design life? What do you do when they need rehabilitation? What do you do when there is a safety issue? And this is a 

mechanism where we can go in and fix these older structures. And 

they don’t have to be at the end of their design life either. In this 

country, urban development has occurred where we have put a little dam out in a farm field. It might be in a city now. A good example of that is Atlanta. We have several watershed projects and Atlanta, as of 2011, is not the Atlanta of 1950. 

So when something like that occurs, we go in and we upgrade 

those structures to high-hazard classifications so adding in those 

extra safety features. There is not one earmark in this program. 

This program is a cost-share 65–35. And NRCS has a little criteria 

where we decide where to work. Number one on the list is human 

health and safety. This had $100 million in the farm bill and I 

think it has $18 million, going forward, in this particular ag budget. 

Bonus program number 16 is another easement program. This is 

a discretionary easement program. This falls under the Emergency 

Watershed Protection Program. It is for flood plain easements. It 

60

allows us after a flood to go in and purchase easements on these 

flood plains where guys are getting washed out all the time. Actually, if you look at it, it really saves us a lot of money because you 

are not paying disaster assistance on that land or crop insurance 

year after year. And if there is flooding in the future, the water can 

spread out, be filtered, ground water recharged, good for wildlife. 

There is a lot going for that program. 

I have talked enough. One thing I would ask you, this is your 

watch. This is going to happen under your control. Forty years 

from now, nine billion new people will be in this world. I have seen 

all kinds of projections for what it is going to take. I have seen 50 

percent increase of production, 70 percent, double production. Any 

way you slice it, we are going to have to increase production. And 

conservation is one of the key ways that we can ensure the future 

that those little Americans who come after us will have the same 

bounty that we enjoy today. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. White follows:]

PREPARED STATEMENT OF DAVE WHITE, CHIEF, NATURAL RESOURCES CONSERVATION

SERVICES, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Mr. Chairman and Members of the Subcommittee, thank you for the opportunity 

to appear before you today to discuss conservation programs administered by the 

Natural Resources Conservation Service (NRCS). 

The NRCS conservation portfolio contains a broad mix of authorities providing 

programs for conservation technical assistance, environmental improvement, stewardship, easements, and water resources. These conservation investments, designed 

by Congress and implemented by USDA, have a proven track record. They are good 

for farmers, ranchers and private forest landowners and they work for all Americans—helping to secure a high quality environment in concert with food security for 

our nation and the world. 

Last year we celebrated 75 years of service to the nation’s farmers, ranchers, and 

other land owners and managers, we looked back at the landmark achievements, 

and continued to make some history of our own. Before providing the Subcommittee 

with details about our conservation programs, I would like to share a few of the benefits that these programs delivered through our long, strong partnership with America’s farmers, ranchers, and private forest landowners. 

Last year (Fiscal Year 2010) was a record year in conservation program delivery. 

Of special note is the Wetlands Reserve Program (WRP). A nationwide emphasis on 

wetlands conservation resulted in a record-setting WRP enrollment of nearly 

273,000 acres, exceeding the next-highest yearly total by more than 58,000 acres 

and nearly doubling our average annual enrollment. And while much work remains 

to be done in completing restoration work associated with these record enrollments, 

more than 129,000 acres of wetlands were created, restored or enhanced in FY 2010. 

While acreage numbers are impressive, the more important outcome is that these 

wetlands are now providing essential habitat for at-risk species, such as the threatened Louisiana Black Bear and the endangered Whooping Crane. The better job we 

do in assisting in keeping candidate and other at-risk species off the List of Endangered and Threatened Wildlife, the greater flexibility our producers have in providing food, feed, and fiber for the nation and the world. 

Voluntary conservation on private lands works! USDA established the Conservation Effects Assessment Project (CEAP) in 2003 to develop a scientific understanding and methodology for estimating the environmental effects of conservation 

practices on agricultural landscapes at national, regional, and watershed scales. 

CEAP is built on partnerships and working collaborations involving Federal agencies inside and outside of USDA, land-grant universities, state agencies, and nonprofit organizations. 

The first CEAP assessments of the effects of conservation practices on cultivated 

cropland were released in FY 2010. Two of the planned 14 regional reports, the 

Upper Mississippi River Basin (UMRB) and the Chesapeake Bay Region CEAP 

Cropland Reports, quantify the great progress farmers have made in reducing sediment and nutrient losses from cropland, while emphasizing a continuing need for 

61

conservation efforts to focus on nutrient management. A few key highlights from the 

UMRB assessment include:

• Voluntary, incentive-based conservation works. Reduced tillage is used on 95 

percent of the cropland—sediment losses are reduced by an estimated 69 percent as compared to a scenario where full conventional tillage is used.

• Nutrient management is the greatest need. Much can be done through expanded adoption of existing practices. About 60 percent of the cropland needs 

improved nutrient management; Timing, rate and method of application are important factors in managing nutrient application.

• Targeting can greatly enhance program effectiveness. Treating the most critical 

acres can have three to five times the effect on sediment and nutrient reduction 

as compared with treating acres with less serious problems.

• Comprehensive conservation planning is essential. Suites of practices that address multiple resource concerns are more effective than single practices.

In FY 2010, NRCS used landscape-scale initiatives to address priority resource 

concerns in working landscapes and watersheds nationwide. Two of these initiatives 

began prior to FY 2010—the Chesapeake Bay Watershed Initiative, supported by 

the statutory Chesapeake Bay Watershed Program in the farm bill and the Great 

Lakes Restoration Initiative, supported by financial assistance transferred from the 

U.S. Environmental Protection Agency and the Great Lakes Restoration Action 

Plan. The other initiatives are the Sage-Grouse, the Longleaf Pine, California BayDelta, Lesser Prairie-Chicken, Mississippi River Basin Healthy Watersheds, New 

England Forestry, and the Migratory Bird Habitat. These initiatives reflect a common objective of using targeted conservation assistance in addressing priority natural resource concerns that are broader than a single state and that will help to 

keep working lands working. 

The Sage-Grouse Initiative (SGI) is a great example of how landscape-scale conservation delivers broad benefits for agriculture. SGI focused conservation delivery 

within habitat core areas to help maintain large and intact grazing lands—important for the sage-grouse and for the rancher. NRCS identified practices that can be 

implemented through the Environmental Quality Incentives Program, the Wildlife 

Habitat Incentive Program, the Grassland Reserve Program and the Farm and 

Ranch Lands Protection Program to increase and protect grouse habitat and populations on 640,000 acres in 11 western states. In FY 2010, NRCS contracted with 

223 ranching operations for a total $18.5 million in financial assistance to remove 

sage-grouse threats and help sustain working ranches. As a result, over 180 miles 

of high-risk fencing near breeding sites were marked or removed, which prevented 

an estimated 800 to 1,000 mortalities through fence collisions in just the first year. 

The SGI also resulted in a landmark agreement that provides regulatory certainty 

to ranchers who take actions to improve sage-grouse habitat on their land. In early 

2010, the U.S. Fish and Wildlife Service (FWS) determined sage-grouse to be a ‘‘candidate’’ species under the Endangered Species Act (ESA), which means listing is 

warranted but precluded by higher listing priorities and positive management actions that address threats to the species need to be taken to prevent listing. NRCS 

and FWS negotiated a first-of-its kind regional agreement that lets landowners 

know the investments they make today to benefit this declining species and the sustainability of their ranching operation by implementing NRCS conservation practices according to the SGI Conference Report can continue should sage-grouse be 

listed at a future date. 

This new conservation approach prioritizes assistance to ensure that the best conservation practices are implemented in the right landscapes for a positive sagegrouse population-level response. The SGI is a perfect example of how conservation 

programs can respond to critical natural resource issues by merging science and program delivery, and targeting practices and geography to make a real difference on 

the landscape for natural resources and for America’s farmers and ranchers. 

NRCS Conservation Programs 

This testimony provides an overview and status for 15 of NRCS’ conservation programs and authorities: 

Environmental Quality Incentives Program 

The Environmental Quality Incentives Program (EQIP) provides financial and 

technical assistance on working lands to help producers address environmental challenges. To meet these challenges, EQIP provides incentives for the application of 

farming and other land use practices that maintain or improve the condition of soil, 

water, air, and other natural resources. The program assists agricultural and 

forestland users in identifying natural resource issues and opportunities to improve 

62

their agricultural operations and provides technical and financial assistance to address them in an environmentally beneficial and cost-effective manner. EQIP-promoted practices meet a variety of environmental and natural resource challenges. 

In FY 2010, EQIP financial assistance obligations by states reached almost $840 

million in 36,500 contracts covering an estimated 13 million acres. In addition to 

regular EQIP projects, these funds also supported projects in resource based initiatives such as air quality, on-farm energy audits, migratory bird habitat, and the 

Mississippi River Basin Initiative, and projects that emphasize environmental protection and agricultural production as compatible goals such as organic production 

and seasonal high tunnels. 

In FY 2010, NRCS provided $37.5 million in financial and technical assistance to 

12 states through the national Air Quality Initiative to help producers meet requirements of the Clean Air Act. Through this initiative, NRCS provides assistance to 

farmers and ranchers to reduce air pollution generated from agricultural operations 

in areas designated by the U.S. Environmental Protection Agency as non-attainment 

areas for ozone and particulate matter. During FY 2010, over 950 contracts supported some 3,800 practices on more than 220,000 acres. In the Central Valley of 

California alone, we estimate that these air quality projects over the past 2 years 

have had the equivalent impact of removing the NOX emissions from 400,000 vehicles from the area’s roads each year. 

In FY 2010, NRCS worked to provide financial assistance to more than 240 producers for on-farm energy audits by offering the Agricultural Energy Management 

Plan through EQIP. In partnership with the private sector and other organizations, 

NRCS is developing technical tools and training to evaluate and reduce agricultural 

energy consumption through implementation of on-farm energy audit recommendations and to help producers adapt plans and practices for better energy efficiency 

and on-farm energy production. 

The Organic Initiative is a nationwide special initiative within EQIP to provide 

assistance to organic producers as well as producers in the process of transitioning 

to organic production. In FY 2010, NRCS obligated nearly $24 million in financial 

assistance to treat 148,000 acres in organic production or in transition to organic 

production. The most often recommended practices include nutrient management, 

cover crop, pest management, conservation crop rotation, and prescribed grazing. 

The FY 2012 President’s budget includes $1.408 billion in mandatory funding for 

financial and technical assistance for the Environmental Quality Incentives Program. 

Agricultural Water Enhancement Program 

The Agricultural Water Enhancement Program (AWEP) is a component of EQIP. 

The purpose of AWEP is to promote improved ground and surface water conservation and water quality by leveraging the Federal Government’s investment in natural resources conservation with services and resources of other eligible partners. 

The AWEP program was specifically created to address serious surface and ground 

water shortages as well as water quality concerns in many agricultural areas. The 

security of the nation’s food supply is dependent upon the continued delivery of 

clean, reliable irrigation water to farms and ranches. 

This is the second year in which AWEP has been implemented and interest from 

the agricultural sector has remained steady. In FY 2010, NRCS obligated $60.8 million in 1,489 new contracts to implement conservation practices on nearly 271,000 

acres of agricultural land. The ability to leverage funding through partnership 

agreements has also remained strong. Partners provided approximately $50.5 million in technical and financial assistance in FY 2010, nearly matching NRCS’ AWEP 

investment. Through AWEP, the agency approved 28 new partner project areas during FY 2010, and continued to provide support for 63 existing project areas approved during FY 2009. Over 1⁄2 of the projects approved in FY 2010 are located 

in the high-priority water quantity concern areas, where conservation practices will 

be applied to conserve scarce water resources. 

The FY 2012 President’s budget includes $60 million in mandatory funding for financial and technical assistance for the Agricultural Water Enhancement Program. 

Conservation Innovation Grants 

Conservation Innovation Grants (CIG) is a component of the Environmental Quality Incentives Program (EQIP) that is intended to stimulate the development and 

adoption of innovative conservation approaches and technologies while leveraging 

Federal investment in environmental enhancement and protection, in conjunction 

with agricultural production. CIG provides grants of up to 50 percent of the total 

project cost on a competitive basis to non-Federal governmental or non-governmental organizations, federally-recognized Indian tribes, or individuals. Applicants 

63

must provide non-Federal funding for at least 50 percent of the project cost, of 

which up to 1⁄2 (25 percent of the total project cost) may come from in-kind contributions. 

CIG has two major components: National and State:

(1) The National Component emphasizes projects that have a goal of providing 

benefits over a large geographic area. These projects may be watershed based, 

regional, multi-state, or nationwide in scope.

(2) The State Component provides flexibility to NRCS State Conservationists to 

target CIG funds to individual producers and smaller organizations that may 

possess promising innovations, but may not compete well on the larger scale of 

the national grants competition.

Funding for CIG is announced each year through a funding notice. CIG funds 

single- or multi-year projects, up to 3 years in length. 

CIG projects have resulted in new technologies and opportunities for producers. 

A 2005 grant helped to demonstrate that precision feeding of dairy cows could facilitate reductions in the protein (nitrogen) and phosphorus being fed to dairy animals 

while maintaining or even improving milk production and possibly improving animal health. Based on the findings from these feeding trials, the Pennsylvania State 

University Cooperative Extension developed the ‘‘Dairy Tool’’ to help farmers identify the greatest opportunities to improve profitability on their farms. 

In FY 2010, NRCS received 388 applications requesting more than $221.8 million. 

NRCS obligated about $18 million through 61 agreements representing 43 states 

and U.S. territories of the Pacific. Grant recipients provide matching funds to CIG 

bringing the total value of the approved projects to more than $35 million. 

Wildlife Habitat Incentive Program 

The Wildlife Habitat Incentive Program (WHIP) provides assistance to improve 

upland and wetland habitats to benefit priority wildlife species, including threatened, endangered and other at-risk species. Focused efforts on habitat for fish and 

wildlife also contribute to more sustainable use of resources. By prioritizing specific 

geographic areas through various efforts at the state level, WHIP is able to target 

financial and technical assistance funds to benefit habitats for specific declining 

wildlife species such as the sage grouse. For example, WHIP funds helped to support a project in Somerset County, Maine, to rebuild a wildlife and nature preserve. 

Following a dam breach in 2000, the landowner committed to reclaiming the land. 

The project is improving the forest stand, planting cover crops, installing nesting 

boxes, among other practices to create open space and nesting, brooding, and 

rearing habitat for the American woodcock, a species of concern, as well as 50 other 

important wildlife species. 

In FY 2010, NRCS obligated almost $63 million in financial assistance in more 

than 4,700 agreements to enroll over one million acres in WHIP. Sixty-eight of these 

contracts valued at over $3.7 million are with American Indian and Alaskan Natives 

participants to benefit habitat for culturally important species. Since the program 

began in 1998, national enrollment has included almost 37,000 agreements on over 

6.5 million acres. 

The FY 2012 President’s budget includes $73 million in mandatory funding for financial and technical assistance for the Wildlife Habitat Incentive Program. 

Agricultural Management Assistance 

NRCS administers the conservation provisions of the Agricultural Management 

Assistance (AMA) program, which provides financial assistance to agricultural producers to address water management, water quality, and erosion control issues by 

incorporating conservation into their farming operations. AMA is available in 16 

states where participation in the Federal Crop Insurance Program is historically 

low: Connecticut, Delaware, Hawaii, Maine, Maryland, Massachusetts, Nevada, New 

Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Utah, Vermont, 

West Virginia, and Wyoming. 

With AMA funds, producers may construct or improve water management structures or irrigation structures; plant trees for windbreaks or to improve water quality; and mitigate risk through production diversification or resource conservation 

practices, including soil erosion control, integrated pest management, or transition 

to organic farming. AMA may provide producers a first-time opportunity to address 

natural resource concerns on their lands. For instance, producers that cannot meet 

Environmental Quality Incentives Program (EQIP) irrigated-land criterion may receive AMA assistance to install irrigation. 

In FY 2010, $6 million was obligated into 429 contracts covering 11,102 acres. 

64

The FY 2012 President’s budget includes $2.5 million in mandatory funding for 

the Agricultural Management Assistance program. 

Chesapeake Bay Watershed Program 

The Chesapeake Bay Watershed Program (CBWP) helps agricultural producers 

improve water quality and quantity, and restore, enhance, and preserve soil, air, 

and related resources in the Chesapeake Bay Watershed through the implementation of conservation practices. These conservation practices reduce soil erosion and 

nutrient levels in ground and surface water; improve, restore, and enhance wildlife 

habitat; and help address air quality and related natural resource concerns. CBWP 

encompasses all tributaries, backwaters, and side channels, including their watersheds, draining into the Chesapeake Bay. This area includes portions of the states 

of Delaware, Maryland, New York, Pennsylvania, Virginia, and West Virginia. 

NRCS implements CBWP through the various natural resources conservation programs authorized by subtitle D, Title XII of the Food Security Act of 1985. In FY 

2010, NRCS implemented CBWP through the Environmental Quality Incentives 

Program (EQIP) and the Wildlife Habitat Incentives Program (WHIP). 

In FY 2010, nearly 2,900 agricultural producers submitted applications to NRCS 

to participate in CBWP. NRCS approved more than 950 contracts for more than 

$33.5 million of financial assistance to treat an estimated 156,700 acres of high priority agricultural land. The balance of CBWP funds authorized in FY 2010 supported technical assistance for the program. The FY 2012 President’s budget includes $50 million in mandatory funding for financial and technical assistance for the Chesapeake Bay Watershed Program. 

Cooperative Conservation Partnership Initiative 

The Cooperative Conservation Partnership Initiative (CCPI) enables the use of 

certain conservation programs along with resources of eligible partners to provide 

financial and technical assistance to owners and operators of agricultural and nonindustrial private forestlands. CCPI is designed to encourage investment in natural 

resource conservation by non-Federal sources, foster coordination with other partners, and achieve high-priority natural resource objectives. 

Under CCPI, NRCS enters into multi-year agreements with eligible partner organizations. Partners eligible to enter into a CCPI agreement with NRCS include federally recognized Indian Tribes, state and local units of government, farmer cooperatives, producer associations, institutions of higher education, and other non-governmental organizations with a history of working cooperatively with producers to address conservation priorities related to agriculture and nonindustrial private 

forestland. 

In order to receive CCPI financial assistance, owners and operators of agricultural 

and nonindustrial private forestlands must participate within a project area defined 

in an approved CCPI agreement and enroll in the Environmental Quality Incentives 

Program (EQIP); Wildlife Habitat Incentive Program (WHIP), or the Conservation 

Stewardship Program (CSP). 

In FY 2010, about $42.3 million was obligated in 279 contracts with producers to 

implement conservation practices on nearly 1.2 million acres of agricultural lands. 

Through CCPI, NRCS approved 51 new partner project areas in FY 2010, and continued to support 110 projects approved during FY 2009. 

CCPI does not receive specific funding. By statute, funding is limited to no more 

than six percent of available program funds (EQIP, WHIP) or acres (CSP). NRCS 

manages resources and allocations between all three programs to assure obligations 

through CCPI will not exceed funding authority. 

Conservation Security Program 

The Conservation Security Program was a voluntary program that provided financial and technical assistance for the conservation, protection, and improvement of 

natural resources on tribal and private working lands. It provided payments for producers who practice good stewardship on their agricultural lands and provided incentives for those who wanted to do more. Under the 2008 Farm Bill, NRCS is not 

authorized to enter into new Conservation Security Program contracts but continues 

to make payments to producers with 5 to 10 year contracts from prior years. 

The FY 2012 President’s budget includes $197 million in mandatory funding for 

the Conservation Security Program. 

Conservation Stewardship Program 

The Conservation Stewardship Program (CSP) encourages agricultural and forestry producers to adopt new conservation measures and maintain existing conservation activities on their operations. CSP provides opportunities to recognize excellent stewards and deliver valuable new conservation. The program helps proVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00076 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
65

ducers identify natural resource problems in their operation and provides technical 

and financial assistance to go beyond existing conservation and deliver new environmental benefits in an environmentally beneficial and cost-effective manner. CSP has 

helped participants take additional steps in conservation, adopting new efficient 

technologies and generating additional environmental benefits. A Pennsylvania 

dairy farm was able to enhance their existing soil improvement efforts based on 

cover crops, diversions, waterways, and strip cropping to incorporate a simple yet 

effective cover crop mix enhancement to further their benchmark level of conservation. Their next step was to upgrade to a high residue vertical tillage implement 

that will increase surface residue and further reduce soil erosion. All of these improvements—increased plant diversity and improved erosion control were made possible through participation in CSP. 

CSP is a voluntary program available through a continuous sign-up process, with 

announced cut-off dates for ranking and funding applications. Applications are evaluated relative to other applications addressing similar priority resource concerns to 

facilitate a competitive ranking process. 

In FY 2010, CSP supported conservation by obligating more than $320 million in 

financial assistance funding. These funds will be used to treat 25,164,328 acres leading to more productive working lands, improved water quality and energy efficiency. 

These are among the many benefits of addressing the natural resource concerns of 

agricultural and forestry producers. 

The FY 2012 President’s budget includes $788 million in mandatory funding for 

financial and technical assistance for the Conservation Stewardship Program to enroll 12 million acres. 

Wetlands Reserve Program 

The Wetlands Reserve Program (WRP) provides technical and financial assistance 

to enable eligible landowners to restore, protect and enhance valuable wetland ecosystems, including associated habitats such as uplands, riparian areas, and 

forestlands. The goal of WRP is to achieve the greatest wetlands functions and values, along with optimum wildlife habitat, on every acre enrolled in the program. 

WRP addresses wetland, wildlife habitat, soil, water and related natural resource 

concerns on private lands in an environmentally beneficial and cost-effective manner. The program achieves solutions to local community issues related to farms, 

ranches, rural lands, and other areas by establishing easements and long-term 

agreements on eligible farmlands and by establishing 30 year contracts on Tribal 

lands. This unique program offers landowners an opportunity to establish, at minimal cost, long-term conservation and wildlife habitat enhancement practices and 

protection. 

During FY 2010, NRCS enrolled a total of 272,762 acres in WRP in 1,414 projects. 

Of these, the majority were in easements (206,094 acres in 951 permanent easements and 61,935 acres in 30 year easements). Also during FY 2010, NRCS restored 

and enhanced 129,082 acres of wetlands that are part of WRP easements and contracts in prior years. 

The FY 2012 President’s budget includes $785 million in mandatory funding for 

financial and technical assistance for the Wetlands Reserve Program and NRCS expects to enroll 271,158 acres. 

Farm and Ranch Lands Protection Program 

The Farm and Ranch Lands Protection Program (FRPP) protects the nation’s 

highly productive agricultural lands by providing matching funds to keep productive 

farm and ranch lands in agricultural uses. Farm and ranch lands enrolled in FRPP 

are protected from threats of conversion to non-agricultural uses, and remain productive and sustainable sources of food, fiber, and feed for the nation. Keeping land 

in agricultural use reduces the amount of urban pollution (nitrogen, phosphorus and 

sedimentation) from land that would otherwise be converted to lawns and impervious surfaces. 

FRPP is helping to achieve landscape scale conservation objectives. In FY 2010, 

nearly 19,000 acres of historic agricultural land, critical wildlife habitat and iconic 

views in Sublette County, WY were protected through an FRPP agreement. The 

Sommers-Grindstone Conservation Project includes four separate conservation easements and public fishing access on nearly 5 miles of the Green River. The agreement is a partnership among landowners, the Wyoming Game and Fish Commission, the Wyoming Stock Growers Agricultural Land Trust, and an extensive list of 

public and private funders, including NRCS. The easement will allow the land to 

remain undeveloped—benefitting cattle and wildlife—and will ensure that the ranch 

passes to another generation of ranchers. The cattle ranches are comprised of hay 

meadows, riparian areas, a diversity of trees, sage-brush, high-grass prairie, and 

66

wetlands. The conservation easements are held by the Wyoming Stock Growers Agricultural Land Trust, and the ranches remain under the ownership and management of the landowners. Additionally, FRPP supports the President’s America’s 

Great Outdoors initiative by preserving the natural landscape features of non-urbanized areas and encouraging the continued agricultural uses of the lands. 

In FY 2010, over 170,000 acres were enrolled in FRPP in 35 states. The average 

size easement enrolled in FY 2010 was 423 acres. 

The FY 2012 President’s budget includes $200 million in mandatory funding for 

financial and technical assistance for the Farm and Ranch Lands Protection Program. 

Grasslands Reserve Program 

The Grasslands Reserve Program (GRP) helps landowners and operators restore 

and protect rangeland, pastureland, and other grassland while maintaining the 

land’s suitability for grazing. Participants voluntarily limit future development and 

cropping uses of the land while retaining the right to conduct common grazing practices and operations related to the production of forage and seeding. 

Limiting development and providing habitat needed by threatened, endangered, 

and other at-risk species, preserves agricultural heritage and green space, provides 

for recreational activities and ensures the nation’s ability to produce its own food. 

For example, five GRP projects in Phillips County, MT have protected nearly 30,000 

acres since 2009. These projects are preserving rural ranching operations while protecting critical wildlife habitat for sage-grouse and other grassland birds. More than 

80 percent of the acres in the five ranches are prime habitat for sage-grouse. During FY 2010, the program obligated and committed $90.3 million of the financial assistance funding allocated to the states and enrolled 335,332 acres in the program. Of the funding provided, approximately 60 percent enrolled GRP easements 

and 40 percent enrolled rental contracts. The FY 2012 President’s budget includes $67 million in mandatory funding for financial and technical assistance for the Grasslands Reserve Program to enroll an 

estimated 203,515 acres. 

Healthy Forest Reserve Program 

Healthy Forest Reserve Program (HFRP) assists landowners in restoring, enhancing, and protecting forest ecosystems to: (1) promote the recovery of threatened and 

endangered species; (2) improve biodiversity; and (3) enhance carbon sequestration. 

HFRP provides financial assistance for specific conservation actions completed by 

the landowner. As funds are made available, NRCS solicits project proposals State 

Conservationists have developed in cooperation with partnering organizations. 

States selected for funding provide public notice of the availability of funding within 

the selected area. 

During FY 2010, NRCS received 164 applications in the 13 states with approved 

projects. Fourteen landowners were enrolled, encompassing 5,583 acres, with financial assistance obligations valued over $6 million. 

The FY 2012 President’s budget includes $9.75 million in mandatory funding for 

the Healthy Forest Reserve Program. 

Watershed Rehabilitation Program 

The purpose of the Watershed Rehabilitation Program is to extend the service life 

of dams and bring them into compliance with applicable safety and performance 

standards or to decommission the dams so that they do not pose a threat to life and 

property. NRCS may provide technical and financial assistance for the planning, design, and implementation of rehabilitation projects that may include upgrading or 

removing the dams. 

Eleven dam rehabilitations were completed in FY 2010, and there are 23 dam rehabilitation projects currently under construction. There is one dam that is being 

decommissioned. Additionally, there were 650 ongoing assessments of high hazard 

dams that provided communities with technical information about the condition of 

their dams and alternatives for rehabilitation for dams that do not meet Federal 

dam safety standards. 

The FY 2011 Final Continuing Resolution provided for $18 million in Watershed 

Rehabilitation funding. The FY 2012 President’s budget does not include funding for 

the Watershed Rehabilitation Program, reflecting the many difficult choices that 

were made in the budget prioritizing process this year. 

Watershed and Flood Prevention Operations Program 

The Watershed and Flood Prevention Operations program authorizes the Secretary of Agriculture to provide technical and financial assistance to entities of state 

and local governments and Tribes (project sponsors) for planning and installing waVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00078 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
67

tershed projects. The Watershed Protection and Flood Prevention Program is available nationwide to protect and improve watersheds up to 250,000 acres in size. Currently there are approximately 300 active small watershed projects throughout the 

country. The Flood Control Act of 1944 is available only in areas authorized by Congress; and these areas cover about 38 million acres in 11 states. 

The FY 2011 Final Continuing Resolution did not include funding to carry out the 

Watershed and Flood Prevention Operations program for the remainder of the fiscal 

year. Further, the FY 2012 President’s budget does not include funding for the Watershed and Flood Prevention Operations Program, including the Watershed Operations (P.L. 78–534) and Small Watersheds (P.L. 83–566). NRCS is in the process 

of conducting an orderly close-out of these programs, ensuring to the maximum extent possible that the highest priority projects are completed with the limited remaining funds. 

Resource Conservation and Development 

The Resource Conservation and Development (RC&D) Program objective is to encourage and improve the capability of state and local units of government and nonprofit organizations in rural areas to plan, develop, and implement programs for resource conservation and development. NRCS provided program administration and 

assistance to RC&D areas and their volunteer nonprofit RC&D Councils. 

The FY 2011 Final Continuing Resolution did not include funding to carry out the 

Resource Conservation and Development program for the remainder of the fiscal 

year. Further, the FY2012 President’s budget does not include funding for the Resource Conservation and Development program. NRCS is in the process of conducting an orderly close-out of its RC&D program operations. The elimination of 

funding, however, does not eliminate RC&D Councils, which may continue to operate and compete for assistance from state, local, and other Federal agencies, private 

organizations, and foundations to carry out specific projects. 

Conclusion 

In conclusion, conservation programs play an essential role in the nation’s food 

security. Conservation helps to make farms and ranches more resilient to risks—

whether from pests, disease, floods, or drought—and helps producers adapt to the 

challenges. Our farmers and ranchers know better than anyone the value of clean 

water, clear air and healthy soil for agricultural production. They know that land 

stewardship secures the future, and they have made incredible strides to protect the 

land they rely on. Through programs such as the Environmental Quality Incentives 

Program and the Conservation Stewardship Program, NRCS builds partnerships 

with farmers, ranchers, and forestland owners to make their operations more sustainable. These conservation efforts improve soil fertility and reduce soil erosion, improve fertilizer use and water use efficiency, reduce energy use, and enhance overall 

productivity. 

These investments in private lands conservation are good for farmers, ranchers, 

and forestland owners-reduced input costs directly help the bottom line, while improved soil and water quality help maintain and even enhance long-term productivity while minimizing regulatory pressures. These same investments in conservation work for all Americans, by contributing to healthy landscapes, healthy communities, and to the food security of our nation and the world. 

Thank you for the opportunity to be here today to discuss the work of NRCS. I 

am happy to answer any questions from the Subcommittee Members.

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ATTACHMENT 1

NRCS Cost-Share Programs 

Program/Initiative 

Agricultural

Management

Assistance Program 

(AMA) 

Agricultural Water 

Enhancement

Program (AWEP) 

Conservation

Stewardship Program 

(CSP) 

Cooperative

Conservation

Partnership Initiative 

(CCPI) 

Chesapeake Bay

Watershed Program 

(CBWP) 

Environmental

Quality Incentives 

Program (EQIP) 

Wildlife Habitat

Incentive Program 

(WHIP) 

Purpose or Goal Provides cost-share assistance to agricultural producers to address issues 

such as water management, water quality, and erosion control by incorporating conservation into their farming operations. 

Provides financial and 

technical assistance to agriculture producers in approved project areas to implement water enhancement activities on ag land for the purpose of conserving surface and ground water and improving water quality. 

Encourages producers to 

address resource concerns in a comprehensive manner by improving, maintaining, and managing existing conservation activities; and undertaking additional conservation activities. 

CCPI is a conservation 

initiative that enables the use of certain conservation programs along with resources of eligible partners to provide financial and technical assistance to owners and operators of agricultural and nonindustrial private forestlands. 

Provides financial and 

technical assistance to agricultural producers to help plan and implement conservation practices that improve water quality and quantity and restores, enhances, and preserves soil, air and related resources. 

Provides financial and 

technical assistance to agricultural producers to help plan and implement conservation practices that address natural resource concerns and for opportunities to improve soil, water, plant, animal, air, and related resources on Tribal land, agricultural land, and nonindustrial private forestland. The program does not include land enrolled in CRP, WRP, or GRP. 

Provides financial and 

technical assistance to develop fish and wildlife habitat on private agricultural land, nonindustrial private forestland, and Tribal lands. All private or Tribal agricultural land is eligible, unless it is currently enrolled in CRP, WRP, HFRP, WBP, EWPP, GRP or a similar program.

Length of agreement/

contract 

1–10 years 1–10 years 5 years Partners enter into multiyear agreements. 

Project start and end 

dates (not to exceed a period of 5 years) 

1–10 years 1–10 years 1–10 years, or a minimum 

of 15 years for agreements for essential plant and animals.

Acreage enrollment level 

in FY 2010

11,102 270,667 25,164,327 1,193,967 156,704 13,034,363 1,054,095

Cost of the program FY 2011 $7.5 m 

FY 2012 $2.5 m per President’s budget 

FY 2011 $74m FY 2012 $60 m 

FY 2011 $600.8 m FY 2012 $787.6 m per 

President’s budget 

Funded from EQIP, 

WHIP, CBWP, and CSP 

FY 2011 $72 m FY 2012 $50 m 

FY 2011 $1.24 b FY 2012 $1.41 b *

FY 2011 $85 m FY 2012 $73 m **

FY 2010 Backlog of applications 767 1,724 6,322 Included in individual program totals 1,355 39,028 3,788Eligible land AMA is available in 16 

states where participation in the Federal Crop Insurance Program is historically low. 

All private or Tribal land 

in agricultural production is eligible. Includes cropland, grassland, and nonindustrial private forestland. 

All private or Tribal agricultural land and nonindustrial private 

forestland is eligible unless it is enrolled in CRP, WRP, or GRP. 

All private or Tribal land 

in agricultural production is eligible. Includes cropland, grassland, and nonindustrial private forestland, but does not include land enrolled in CRP, WRP, or GRP. 

Private and Tribal agricultural land, including 

cropland, grassland, and nonindustrial private forestland but does not include land enrolled in CRP, WRP, or GRP 

All private or Tribal agricultural land is eligible, 

unless it is currently enrolled in CRP, WRP, HFRP, WBP, EWPP, or GRP. Participants must have control of land for the duration of the contract.

69

Does funding expire October 1, 2012 Yes Yes Yes Yes No-year Yes YesPayments Up to 75% or up to 90% 

for historically underserved participants 

Up to 75% or up to 90% 

for historically underserved participants 

Annual payment based on 

level of conservation stewardship; supplemental payment for participants that adopt a resource conserving crop rotation. National average cost not to exceed $18/ac. 

Financial assistance to 

participants for the estimated costs incurred for performing or implementing conservation practices. Up to 75% and up to 90% for historically underserved participants. 

Financial assistance to 

participants for the estimated costs incurred for performing or implementing conservation practices. Up to 75% and up to 90% for historically underserved participants. 

Up to 75% for contracts 

with a duration of 10 years or less; up to 90% for historically underserved participants; and up to 90% for contracts having a duration of at least 15 years.

Producer Responsibilities Develop and follow a plan that describes the conservation and environmental objectives to be 

achieved. Contribute to installation costs. 

Develop and follow a plan 

that describes the conservation and environmental objectives to be achieved. Contribute to installation costs. 

Implement a conservation 

stewardship plan that encourages producers to address resource concerns in a comprehensive manner by installing and adopting additional conservation activities and improving, maintaining, and managing existing activities. 

In order for a producer to 

be considered for financial assistance through a CCPI partner agreement, the land associated with a program application must be located within an approved CCPI project area. Only producers who are eligible for EQIP, WHIP, CBWP, or CSP may receive financial assistance. 

Develop and follow a plan 

that describes the conservation and environmental objectives to be achieved. Contribute to installation costs and perform operation and maintenance during the lifetime of the installed practices. 

Develop and follow a plan 

that describes the conservation and environmental objectives to be achieved. Contribute to installation costs and perform operation and maintenance during the lifetime of the installed practices. 

Develop and follow a plan 

for high quality fish or wildlife habitat. Contribute to the installation costs and perform operation and maintenance during the lifetime of the installed practices.

Appeals Process Non-Title XII Title XII Title XII Title XII Title XII Title XII Title XIIParticipants are subject 

to: 

Adjusted Gross Income 

limitations. 

Reporting requirements of 

the Federal Funding Accountability and Transparency Act of 2006

Adjusted Gross Income 

limitations. 

Reporting requirements of 

the Federal Funding Accountability and Transparency Act of 2006

Highly erodible land and 

wetland compliance. 

Adjusted Gross Income 

limitations. 

Reporting requirements of 

the Federal Funding Accountability and Transparency Act of 2006

Highly erodible land and 

wetland compliance. 

Adjusted Gross Income 

limitations. 

Reporting requirements of 

the Federal Funding Accountability and Transparency Act of 2006

Highly erodible land and 

wetland compliance. 

Adjusted Gross Income 

limitations. 

Reporting requirements of 

the Federal Funding Accountability and Transparency Act of 2006

Highly erodible land and 

wetland compliance. 

Adjusted Gross Income 

limitations. 

Reporting requirements of 

the Federal Funding Accountability and Transparency Act of 2006

Highly erodible land and 

wetland compliance. 

Adjusted Gross Income 

limitations. 

Reporting requirements of 

the Federal Funding Accountability and Transparency Act of 2006

Highly erodible land and 

wetland compliance. 

* EQIP funding authorized in the farm bill is $1.59 b for FY 2011 and $1.75 b for FY 2012. ** WHIP funding authorized in the farm bill for FY 2012 is $85 m. 

70

NRCS Easement Programs 

Program Characteristic Wetlands Reserve Program 

Emergency Watershed

Program—Flood Plain

Easement 

Grassland Reserve Program Farm and Ranch Lands Protection Program Healthy Forest Reserve Program (HFRP) 

Purpose or Goal Restore, protect, or enhance wetlands on eligible lands. The goal 

is to achieve the greatest wetlands functions and values, along with optimum wildlife habitat on every acre enrolled in the program. The program accepts eligible wetlands and associated habitats such as uplands, riparian areas, and forestlands. 

Restore, protect, maintain and enhance the functions of the floodplain; conserve natural values including fish and wildlife habitat, 

water quality, flood water retention, ground water recharge and open space; reduce long-term Federal disaster assistance; and safeguard lives and property from floods, drought, and the products of erosion. 

Restore and protect rangeland, 

pastureland and other grassland while maintaining the land’s suitability for grazing. Program emphasis is on supporting grazing operations, plant and animal biodiversity, and grassland and land containing shrubs or forbs under the greatest threat of conversion. 

Assists with the purchase of conservation easements to protect 

agricultural productivity and related conservation values of the land. 

Restore, protect and enhance forest 

ecosystems to promote the recovery of T&E species; improve biodiversity; and enhance carbon sequestration.

Length of easement/contract Easements: Permanent and 30 

years and maximum allowed under state Law. 

Restoration cost-share agreements: 

generally 10 years; 30 year contracts with Tribes. 

Permanent easements. Easements: Permanent and maximum duration under state Law. 

Contracts: 10 year, 15 year, and 20 

year rental contracts. 

Permanent, unless state law prohibits a permanent easement. Easements: Permanent, 30 year, and maximum allowed under 

state law; 30 year contracts with Tribes; 10 year cost-share agreements.

Acreage enrollment level Numbers through FY10 2,347,128 187,876 1,206,953 809,098 691,860Cost of the program FY09 and 

FY10 obligations (in thousands FA and TA) 

$1,065,850FY11 projection: $611,312

EWP–FPE: $62,567Recovery: $156,480

$147,766 $268,662 $10,143

Backlog of applications as of 

June 10, 2011

2,715 applications 251,915 acres 

2,194 applications 215,920 acres * 

401 applications 209,058 acres 

184 applications 92,365 acres 

150 applications 24,565 acres

Land valuation Lowest of Geographic Area Rate 

Cap, appraisals (seldom used) conducted by certified, general real property appraisers, or landowner offer. 

Geographic Area Rate Cap, appraisals or market analysis. Lowest of Geographic Area Rate Cap, appraisals conducted by certified, general real property appraisers or landowner offer. 

Value based on fair market value less grazing value. 

Appraisals—Fair market value less 

agricultural value. 

Appraisals—Before and After appraisal method.

71

Landowner eligibility Must be a landowner to participate 

in the program. Landowners must comply with Highly Erodible Land and Wetland Conservation provisions of FSA of 1985. 

Adjusted gross income provisions 

apply. 

Registration and reporting requirements of the Federal Funding Accountability and Transparency 

Act of 2006. 

7 year ownership requirement. 

Must be a landowner to participate 

in the program. 

Landowner does not need to comply 

with Highly Erodible Land and Wetland Conservation provisions of FSA of 1985. 

Registration and reporting requirements of the Federal Funding Accountability and Transparency 

Act of 2006. 

Must be a landowner for easement 

participation or be a landowner or have control of eligible land for rental contract participation. 

Must comply with Highly Erodible 

Land and Wetland Conservation provisions of FSA of 1985. 

Adjusted gross income provisions 

apply. 

Registration and reporting requirements of the Federal Funding Accountability and Transparency 

Act of 2006. 

GRP has an option where easements can be acquired through 

eligible entities similar to FRPP. Criteria for determining whether an entity is ‘‘eligible’’ can be found in 7 CFR part 1415. 

Program is implemented through 

eligible entities. Eligible entity requirements found in 7 CFR part 1491. 

Must be a landowner to sell an 

easement to an eligible entity. Participating landowners must comply with Highly Erodible Land and Wetland Conservation provisions of FSA of 1985

Adjusted gross income provisions 

apply. 

Registration and reporting requirements of the Federal Funding Accountability and Transparency 

Act of 2006. 

Must be the landowner of eligible 

land for which enrollment is sought. 

Landowner does not need to comply 

with Highly Erodible Land and Wetland Conservation provisions of FSA of 1985. 

Registration and reporting requirements of the Federal Funding Accountability and Transparency 

Act of 2006.

Land Eligibility Marginal, frequently flooded agriculture lands and associated uplands. 

Note, the term agriculture lands do 

include wooded lands. 

Any floodplain lands damaged by 

flooding at least once within the previous calendar year, or that have a history of repeated flooding (i.e., flooded at least twice within the previous 10 years). While NRCS normally purchases floodplain easements on agricultural lands, on a case-by-case basis NRCS may purchase floodplain easement in rural residential areas in lieu of traditional EWP recovery work if a sponsor is acquiring the underlying land rights and the cost of the recovery work would exceed the easement acquisition costs. In such situations, any structures are then demolished or removed from the easement area. 

Grassland, land that contains forbs 

or shrubland where grazing is the predominant use; or land located in an area that has been historically grassland, forbs, or shrubland, and the land could provide habitat for animal or plant populations of significant ecological; contains historical or archeological resources, or would address issues raised by state, regional, and national conservation priorities. 

Must be privately owned land on a 

farm or ranch and contain at least 50 percent prime, unique, statewide, or locally important farmland, unless otherwise determined by NRCS; contain historical or archaeological resources; furthers a state or local policy consistent with the purposes of the program; and is subject to a pending offer by an eligible entity; 

(2) Must be cropland, rangeland, 

grassland, pastureland, or forestland that contributes to the economic viability of an agricultural operation or serves as a buffer to protect an agricultural operation from development; Must not include forestland on greater than 2⁄3 of the easement 

area. 

Eligible land includes private land 

that contributes to the restoration and enhancement of habitat or otherwise increase the likelihood of recovery for a selected species under section 4 of ESA, candidate species, state listed species or one identified by the Chief for special consideration.

72

NRCS Easement Programs—Continued

Program Characteristic Wetlands Reserve Program 

Emergency Watershed

Program—Flood Plain

Easement 

Grassland Reserve Program Farm and Ranch Lands Protection Program Healthy Forest Reserve Program (HFRP) 

Payments For easement: provides acquisition 

costs; administrative costs associated with acquiring an easement, and restoration costs. 

For 30 year contracts: provides contract payment. Easement payments are generally a 

single payment but may be made in annual payments for no more than 30 years. 

For restoration cost-share agreement: provides restoration costshare assistance. 

Provides acquisition costs; administrative costs associated with acquiring an easement, and restoration costs. Easement payments are made as a 

single payment 

For easement: provides acquisition 

costs; administrative costs associated with acquiring an easement, and restoration costs. 

Easement payments are generally a 

single payment however; landowners may request payment for up to 10 years in equal or unequal amounts. 

For rental contracts: provides annual rental payment. If restoration efforts are necessary, participant can receive cost-share assistance through a restoration 

agreement. 

Provides cost-share assistance to eligible entities to acquire an easement. Single payment or up to five installment payments; first payment at closing followed by four 

annual payments. 

For easement: provides acquisition 

costs; administrative costs associated with acquiring an easement, and restoration costs. 

For 30 year contracts: provides contract payment. Easement and contract payments 

may be made in a single payment or for no more than ten annual payments of equal or unequal size. 

For restoration cost-share agreement: provides restoration costshare assistance.

Special provisions for Indian 

Tribes 

30 year contract enrollment option None None None 30 year contracts

Does funding expire October 1, 

2012

Expires—annual funds No-year funds except for ARRA 

funds which are 2 year funds 

Expires—annual funds Expires—annual funds No-year funds

Appeals process Title XII Non-Title XII Title XII Title XII Non-Title XII 

* Data is still undergoing quality assurance review. 

73

ATTACHMENT 2


1122001.eps
74

The CHAIRMAN. I thank the gentleman. Thank you both for your 

testimony. 

The chair would like to remind Members that they will be recognized for questioning in order of seniority for Members who were 

here at the start of the hearing. After that, Members will be recognized in order of arrival. And I appreciate Members understanding. 

I am going to reserve my time for questioning. 

I now recognize the Chairman of the Agriculture Committee, Mr. 

Lucas, for 5 minutes. 

Mr. LUCAS. Thank you, Mr. Chairman. 

And I do appreciate the presentation you gentlemen have given. 

The challenge this Committee faces as we sit here in preparation 

for a farm bill next year or perhaps if the grand discussions between the President and the leadership of both the House and the 

Senate come about, a rather quicker process where the budget realities are going to come to bite very challengingly. And clearly, it 

is not just going to be the Commodity Title. It will be Conservation. 

It will be all the programs. So I ask my questions in light of the 

Committee’s preparation to make some tough, tough decisions. 

Administrator, how much are we going to spend on CRP this 

year, round numbers? 

Mr. NELSON. Congressman, it is $1.7 billion annual rental payments. 

Mr. LUCAS. Chief, how much are we going to spend on CSP this 

year? 

Mr. WHITE. Around $600 million. 

Mr. LUCAS. Six hundred million dollars. How much on WRP? 

Mr. WHITE. About $611 million. 

Mr. LUCAS. Six hundred eleven million dollars dollars? 

Mr. WHITE. Yes. 

Mr. LUCAS. Okay. And I would take note the Chief is exactly 

right. The Dam Rehabilitation Program is one of those designed to 

be administered strictly on a priority basis established by the Department after review of all the structures, no earmarks, no silly 

games from Congress, a very straightforward way to do things. And 

it has been implemented in that way. 

Chief, could you explain to the Committee for just a moment 

about EQIP and the difference between the approach in EQIP and 

CSP? 

Mr. WHITE. Mr. Lucas, I kind of think of them in two different 

ways. EQIP I think is your bricks and mortar. That is your pipeline. That is your animal facility. That is your fence. That is your 

filter strip. That is your terrace. It is things you put on the ground. 

The Conservation Stewardship Program is more of management-related. It is going to be taking nutrient management and going to 

precision nutrient management. It is going to be taking prescribed 

grazing and advancing that. So it is more of the management. That 

is the way I kind of look at them, sir. 

Mr. LUCAS. So from the perspective of the countryside on CRP, 

if you want to participate in the program, you have to participate 

within the guidelines. If you are accepted, you are signed up for 10 

years. In CSP it is not so much just putting your property into the 

program. You have to adjust your practices to fit the goals of CSP? 

75

Mr. WHITE. Well, there are priority resource concerns that vary 

around the country. Each state kind of, with their state technical 

committee and local workgroups, will design those. CSP is a 5 year 

contract. It is renewable for another 5 years. And to get in you 

have to be meeting a resource concern like soil erosion, water quality, and you have to agree to do another one. There is a lot of 

additionality. In fact, in the 20,000 contracts we had at the end of 

last year, Mr. Lucas, we had about 78,000 to 79,000 new practices 

in there that the producers self-select. So there are things they 

want to do. 

Mr. LUCAS. And I would note to my friends on the Subcommittee 

that as we work through the next farm bill, we also have obligations under WTO, CRP being green-box compliant. CSP, because it 

requires certain practices, it falls in a different category. Just for 

a moment back to the cost of the various programs, at a $1.7 for 

CRP, $600 million approximately for CSP, and you said $550 million for the Wetlands Reserve Program? 

Mr. WHITE. Yes, let me double-check that. 

Mr. LUCAS. Please. And the simple reason I bring that, in times 

of tighter budgets, that looks like a pretty interesting dollar figure 

per acre on WRP compared to the other two. 

Mr. WHITE. It has been averaging about $2,000 an acre. 

Mr. LUCAS. Averaging $2,000 an acre? 

Mr. WHITE. But that is long-term protection as well. 

Mr. LUCAS. And we signed up for how many years on the WRP? 

The length of contract on the WRP? 

Mr. WHITE. WRP is permanent easements, which is the bulk of 

them. It could be 30 year. There is also a provision that was put 

in in 2008 for 30 year tribal contract. And then there is one that 

is not used very much for restoration only, 10 year contracts. 

Mr. LUCAS. Six hundred thirty million dollars on 10 million 

acres. 

Mr. WHITE. Sorry. 

Mr. LUCAS. I will send you some more questions later about that. 

Mr. WHITE. Thank you, sir. 

Mr. LUCAS. And I see my time is about to expire. I would just 

note to the Committee that the challenges we face—the conservation programs are the most popular. They do the most good. They 

are the legacy programs, as our friends here have stated. But the 

budget situation and the grand negotiations going on are going to 

be so tough. We are going to have to make some extremely tough 

decisions in all areas of the farm bill in a lot of things we have 

done historically such as helping our California friends meet their 

emissions standards brings questions to light: Is it appropriate? 

How much should the Federal Government spend to meet state 

standards in comparison to what it does in the rest of the country? 

With that I yield back the time I don’t have. Thank you, Mr. 

Chairman. 

The CHAIRMAN. I thank the Chairman. I now recognize the Ranking Member of the full Agriculture Committee, Congressman Peterson, for 5 minutes. 

Mr. PETERSON. Thank you, Mr. Chairman. 

First of all, Mr. White, I was having a discussion back home this 

last week about CSP, and according to them, the way this is rolled 

76

out that there is not flexibility for the states to set their own priorities, that according to them, they are having to follow national priorities, which do not work in northwest Minnesota. And I heard 

you say that the state technical committees were making these decisions and so forth, but these are from local folks that are on the 

ground saying that the way this has been put together does not 

work for them. There are 25 practices that you can choose from to 

get qualified and only three of the 25 actually work in that part 

of the country. And so they were asking for more flexibility for the 

states. So, if you would check into it, I don’t know what is going 

on exactly. Maybe the state made this decision and they didn’t recognize what was going on. I don’t know. 

Mr. WHITE. There are about 80 or 90 enhancements, there are 

some national priorities, but we do try to fit it so I will have to get 

back to you. 

Mr. PETERSON. Well, for whatever reason, they claim there is 

only like three things on that list that actually work in that part 

of the world. So whatever. 

And Chairman Lucas, you have to, when you go to sign up, you 

have this list of all of these practices that you can pick and some 

of them are worth more than others, but, supposedly, there is flexibility there to make it work on your farm. 

And I would also say on the CRP, I hope that everybody recognizes what is going on. There has been talk out there about CRP. 

But as we go through these signups, we are sorting this out. We 

had 4.1 million acres come out this year, 4.4, million acres something like that. Pardon? 

Mr. NELSON. Congressman, that is 4.4 million acres of contracts 

expiring this year. 

Mr. PETERSON. Right. And they only signed back up 2.9 million 

acres. 

Mr. NELSON. Well, 2.8 million acres, yes. 

Mr. PETERSON. Oh, 2.8 million acres. And I think the number 

was like you had to have 279 EBI or something to get qualified, 

so this is significantly higher than what it has been, and so there 

is a lot of this land out there that is coming back into production 

just as we go through this process. Next year, there are going to 

be 6 million acres coming out. We will probably see a similar kind 

of situation where only 1⁄2 of that is going to get back in. 

I think we have a process set up here that is sorting out the land 

that should be farmed, the land that shouldn’t be farmed, and I 

hope we don’t go off on some tangent where we are doing some 

meat-ax thing where we end up putting a bunch of land back in 

production that is going to cost us crop insurance and disasters and 

other things. So that is just an editorial comment. 

The other thing I am concerned about is with these budget deals 

that were made in the CR and so forth, there has been talk out 

there that I read in news articles that you are not going to be able 

to honor contracts. I just want to make sure that you have enough 

money to—any contract that has been signed that there is sufficient money to actually pay that contract. Is that the case? 

Mr. WHITE. Mr. Peterson, that is the case. We will have enough 

money to fund all of the contracts. 

77

Mr. PETERSON. But you probably have had to cut back on how 

many additional contracts you couldn’t offer because of this? 

Mr. WHITE. Not at this point. 

Mr. PETERSON. Well, I thought they cut back on your appropriation. Didn’t they? 

Mr. WHITE. The biggest cutback we had was in the discretionary 

amounts like RC&D, the Watershed Program, there were reductions in mandatory but they were just kind of the normal CHIMPs. 

They were from the authorized levels. No program actually got 

less. There was maybe some cut in WRP but a cut from the authorized level, we still saw an increase in the actual, at least for EQIP. 

Mr. PETERSON. So you weren’t spending your authorized level? I 

mean just because it has been CHIMPed every year. 

Mr. WHITE. For programs like EQIP, it has generally been 

CHIMPed. 

Mr. PETERSON. So because they have been CHIMPing it every 

year, you guys just don’t spend what was authorized? 

Mr. WHITE. No, sir. We can only spend what is appropriated. 

And this year it will be about $1.4 billion. And I think your authorized level this year is $1.588. 

Mr. PETERSON. Well, I thought they CHIMPed some other programs, too? 

Mr. WHITE. Yes, but I don’t think that anything that is going to 

result in a reduction in contracts to people. 

Mr. PETERSON. So that didn’t change anything out there in terms 

of——

Mr. WHITE. No. The biggest cuts we are dealing with are for discretionary with the RC&D Program, the Watershed, trying to close 

those two. They affect about 400 people, 500 people. We are offering a buyout, early-out offers. No one has lost their job, and for this 

year at least I think we are okay. I guess the biggest thing is WRP 

was capped at 202,000 acres. Last year we enrolled like 270,000 

acres, but that was an unbelievable year. That was the biggest enrollment year in the history of the program. 

Mr. PETERSON. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. I recognize myself for 5 

minutes for questions. 

Both of you mentioned the positive impacts conservation programs are having on restoration efforts in the Chesapeake Bay. 

Does NRCS have specific data on how much nitrogen, phosphorus, 

and sediment has been reduced in recent years, and are there projections for future reductions? 

Mr. WHITE. Yes, sir. Yes, sir, we do. We embarked on this project 

called the Conservation Effects Assessment Project, CEAP. We 

have done one in the Chesapeake Bay and it looked at 2003, 2004, 

2005. So that is kind of the baseline. And I can tell you that voluntary incentive-based conservation is having huge reductions in 

nitrogen, phosphorus and sediment going into the Bay. If you look 

at that 2005–06 baseline and you look at just the conservation we 

put on since that time, we have had like a 15 percent further reduction in phosphorus, like a 17 percent reduction in nitrogen, and 

I cannot remember the figure for sediment, but we can get that to 

78

you. That has just occurred since 2006. So farmers and ranchers 

really are making huge strides in the Chesapeake Bay. 

The CHAIRMAN. Very good. I hear a lot from aspiring young farmers. Some of these folks, frankly, didn’t grow up in a farm family, 

which is very impressive, somebody that wants to go into farming. 

And one of the concerns that I often hear—and I have heard this 

in different parts of the district is that there are often times USDA, 

the programs we are talking about today offers a higher reimbursement or rental rates per acre to put something into a conservation 

program than what those same acres would fetch in an open market. And frankly, I had one farmer that actually had to rent fields 

a long distance from his home when there was adjoining property 

that his business plan he put together, he couldn’t compete with 

the government was the bottom line. Is this something that you 

have heard before? Is this something that we look at, that we monitor the impact of? 

Mr. NELSON. Mr. Chairman, I will learn how to use that talk 

button yet, sir. 

Mr. Chairman, with respect to the CRP program, the 2008 Farm 

Bill, as you know, now requires that the National Agricultural Statistics Service do a survey of cash rental rates in counties around 

the country, and that is used as a basis for setting the CRP rental 

rates. And so we now have a more solid statistical basis for defending those rates than we might have had in the past. 

And just to give you some anecdotal evidence putting CRP rental 

rates in perspective, I come from Chouteau County, Montana, dry 

land wheat farmer out there, hometown is Fort Benton. And I was 

on the farm back in the 1980s when the CRP program got started. 

And the rental rates at that time were about $45 an acre. That is 

the biggest wheat-producing county in the state and we still enrolled about 240,000 acres in CRP. So $45 back in 1986. In the latest Signup 41 in Chouteau County, the average rental rate in county was about $39. And if you take into account the consumer price 

index that a dollar is worth about half now what it was back in 

1986, that means that the real cash rental rates for my friends and 

neighbors there in Chouteau County who participate in CRP, the 

real CRP rental rate is about half now what it was. And I think 

part of that, again, is that because we have a statistic service doing 

that survey out there that we are pegging the CRP rental rates 

closer to the market than perhaps they were in the past. 

The CHAIRMAN. Very good. Thank you. My time has expired. I 

am thinking we will probably get an opportunity for a second 

round. 

So I now recognize the gentleman from Pennsylvania, Mr. 

Holden, for 5 minutes. 

Mr. HOLDEN. Thank you, Mr. Chairman. 

Chief White, you mentioned in your opening statement the 

Chesapeake Bay Program, and you know Mr. Goodlatte and I 

worked hard on the last farm bill with the other Members of this 

Subcommittee and the full Committee to get that program into the 

farm bill. Has the 2011 CR, which cut mandatory spending by $673 

million hindered the ability to implement that program as we envisioned it, due to the regulatory burdens that they were facing. We 

thought it was so important to give them a little extra investment 

79

to deal with what was coming down from EPA. Have you been able 

to do what we asked you to do despite the cuts in 2011? 

Mr. WHITE. Yes, sir. As part of that, the Chesapeake Bay was 

fully funded. It was not CHIMPed or reduced. 

Mr. HOLDEN. We have no idea where the 2012 Appropriation Bill 

is going to end up but we know what the House did. If it ends up 

being around $1 billion in reductions in conservation, do you think 

that will affect the Bay program? 

Mr. WHITE. Yes. Basically, what you will have, Mr. Holden, is 

fewer contracts, less conservation on the land, probably fewer people to do that. 

Mr. HOLDEN. And finally, Chief White, you mentioned farmland 

preservation, and how important it is to the Commonwealth of 

Pennsylvania. In the 2008 Farm Bill, as you mentioned, we had to 

make some changes because we though there were some administrative problems in Pennsylvania specifically. And I was hearing 

everything was going fine, but I have one county in my district, 

Lebanon County, who was complaining about the ability to enter 

into contracts, that there seems to still be some red tape. So this 

really isn’t a question. If you could have you or your staff look into 

it, is there still a problem with getting someone in your agency to 

approve contracts or what the exact problem is? 

Mr. WHITE. It is a problem, Mr. Holden. I take full responsibility 

for it. We have not been as fast as we should have been in getting 

that certified entity process out there. We have advanced how we 

are looking at with Pennsylvania in particular so we hopefully have 

taken care of that problem. But the root cause lies with me and 

hopefully in the next 30 days we will get those rules out there for 

certified entities, which will greatly streamline the process across 

the country. 

Mr. HOLDEN. And you don’t need anything further from us? 

Mr. WHITE. No, sir. 

Mr. HOLDEN. All right. Thank you. 

Mr. WHITE. I have to assume blame for that one. 

Mr. HOLDEN. Thanks, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. I recognize the gentleman from Florida, Mr. Southerland, for 5 minutes. 

Mr. SOUTHERLAND. Thank you, Mr. Chairman. 

Mr. White, I find your testimony refreshing, very honest. You are 

passionate about what you do and thank you. And you as well, Mr. 

Nelson. I know that regarding the issues that I am concerned with, 

it just seems that, Mr. White, you seem to be speaking about quite 

a bit of the things that interest me. 

But I wanted to ask you regarding Longleaf Pine Restoration. I 

am from North Florida——

Mr. WHITE. Yes. 

Mr. SOUTHERLAND.—and obviously Longleaf Pine restoration is 

something that is a great concern to a lot of our landowners there, 

as well as our National Forest there. I understand that the Florida 

NRCS and the Wildlife Habitat Incentive Program has been used 

to assist landowners, increasing planting of Longleaf Pine. Can you 

just elaborate to me? I am still learning about the program. Please 

elaborate a little bit on USDA efforts and the services you are providing for these private landowners. 

80

Mr. WHITE. Thank you, sir. That is a great one. I love the 

longleaf pine. When this nation was settled, we had 90 million 

acres of longleaf pine. It is a gorgeous plant. It is more like a savannah grass underneath, a tree that grew up under frequent fire 

regimes. And now we are down to like 3 million acres. And your 

area from Mr. Goodlatte’s area to yours and swinging across the 

Texas is where the longleaf were. 

We are trying to work with the Forest Service, other agencies 

outside of USDA, private landowners to try to restore that particular forest. And we are using mostly the Wildlife Habitat Incentive Program. And when I talked a little bit about WHIP, I said 

the unique thing, one of the really cool things about it is we have 

a directive there to use the funding for state and national initiatives. This longleaf pine really came from the bottom up. It wasn’t 

from me down. It came from those various states saying we need 

to do something about this. And we are very pleased to cost-share 

with producers to plant trees. 

Another big thing is getting rid of the invasives like an Alabama 

cogongrass and there is just a gob of invasive species out there. 

Well, you know that being from Florida. You are like ground zero 

for that. So it is helping with invasives and helping to reestablish 

this tree. This tree built Williamsburg. It kept the wooden ships 

afloat, built Savannah, straight, long-grain, rot-resistant, a fabulous—it provides habitat for I don’t know how many hundreds of 

different creatures. It is amazing. 

Mr. SOUTHERLAND. Well, thank you. I am going to move on to 

Everglades restoration, a little bit farther down from my neck of 

the woods, but still the Everglades is an important part of our 

state. And I know that WRP is a popular program in Florida, but 

tell me just a little bit because it is farther down, so you understand more about that than I do even thought I still have constituents in my neck of the woods who still reach out to my office. 

Share with me, though, and the Committee how the WRP Wetland Restoration Program, it works down with the—and I know 

that there are private landowners in and around the Everglades 

working with you. Can you shed a little light on that? And, again, 

I am asking because I don’t know as much about the program as 

I perhaps need to. 

Mr. WHITE. Right. I have to be careful what I say here. The Everglades is a very, very ecologically important area and a lot of different entities have done a lot of talk about how important it is to 

restore it and we are doing something about. And this is just private lands, working with ranchers, last year, Mr. Southerland, we 

enrolled the largest contiguous block of land ever enrolled at the 

WRP and it was in the northern Everglades in a place called 

Fisheating Creek. It is going to have a huge, huge positive impact 

on Lake Okeechobee and the Everglades water system. The ranchers are going to work to restore the natural hydrology. We are 

going to work with them to control the invasive species. We are 

going to work with them under compatible use to make sure there 

is still some production. We need that land grazed periodically. 

There were I can’t remember how many landowners in this 26,000. 

It was just very few. They were large landholders——

Mr. SOUTHERLAND. Right. 

81

Mr. WHITE.—but a few years ago, this land probably would have 

been in subdivisions. And now it is going to be restored. The landowners keep the land. They control access to it. I think it is going 

to be a big, big win for the Everglades. And stay tuned for Part 

two. 

Mr. SOUTHERLAND. Thank you very much. 

Mr. WHITE. Yes, sir. 

Mr. SOUTHERLAND. Mr. Chairman, I yield back. 

The CHAIRMAN. I thank the gentleman. I now recognize Ms. Pingree for 5 minutes. 

Ms. PINGREE. Thank you, Mr. Chairman. 

Well, thank you very much for your interesting testimony this 

morning. As one of the new Members of the Committee, I feel like 

much of this is a tutorial for me. And I look forward to continuing 

to learn more about these programs. 

Perhaps my only editorial comment really is sort of meant for us 

generally. I understand the chair of the Committee when he talks 

about the need to make cuts. The deficit issues that we are facing 

in this country and the importance of tightening our budget everywhere that we can. But considering that my other committee happens to be the House Armed Services Committee where we rarely 

think about making cuts and spend far more money on what is an 

essential services, of course, defense, but we also have to think 

about the security around our food systems in this country. And as 

you mentioned earlier this morning, our population is only increasing. The needs that we are going to have for food produced in this 

country I think are only going to grow. And much of what you do 

in the programs that you administer are very critical to that. 

So I thank you for your work, and I certainly will be doing all 

I can as a brand new, highly junior Member of this Committee to 

support many of these programs. And I do hear about them in my 

home state. One question I want to bring forward to you is really 

how one of the programs is administered. And I apologize. I am 

reading off my phone so my lettering is a little strong. 

But in the 2008 Farm Bill, Congress recognized the importance 

of making conservation programs accessible to all farmers, including organic producers and conventional producers interested in 

transitioning to organic. I represent the State of Maine. Organic 

farming has been growing there for a long time but increasingly is 

of great interest on the part of the producers and consumers and 

is one of the areas where farmers have been able to increase their 

profits, which is a wonderful thing for all of us. We have managed 

to increase the amount of farmland in our state, and the average 

age of the farmer is going down. So that also is bucking a national 

trend and I think showing that we can do more to produce our food 

locally. 

But I want to talk about the EQIP program. It has a specific provision to ensure that the program can be accessed by organic and 

transitioning farmers in recognition of both the conservation opportunities here, and I think also because of the historic lack of participation of organic producers in the conservation programs. So I 

am very supportive of the implementation of this provision through 

the Organic Initiative. As I said, it has been popular in Maine with 

82

over $700,000 provided in the fiscal assistance to Maine producers 

in Fiscal Year 2010, which in our small state is actually great. 

But while it has been popular, there have been some barriers to 

implementation. And I hear about this not just in Maine but with 

other producers I talk to about it to around the country. One of 

these barriers includes the unfamiliarity with NRCS with organic 

systems. Can you talk to me a little bit about the training and educational efforts to overcome this and other barriers? And to be a 

little more specific, I have heard that sometimes when a 

transitioning farmer visits a field office, they will find that the person that they are dealing with isn’t well trained in making that 

transition, doesn’t necessarily know how to help them make that, 

that the field guide recommends some pesticides that wouldn’t be 

qualified under organic certification. And again, where I see both 

the environmental but also great economic benefits to farmers who 

have been able to make this transition, get a higher price for their 

products, and also do good conservation work alongside, it seems 

like an important initiative. So can you fill me in on that? 

Mr. WHITE. Ms. Pingree, you are absolutely right. I encountered 

this when I was in Montana. We are a traditional ag agency and 

this has moved us outside of our comfort zone, and it is going to 

take us a while to become more familiar with the organic. I mean, 

we are heck on wheels when it comes to corn, cotton, wheat, soybeans, cows, sheep, stuff like that, but then all of a sudden you are 

talking organic, you go, ‘‘Oh my gosh.’’ So we are doing training for 

our people. We are making some changes at headquarters that is 

going to streamline it and make it more accessible to organic producers. 

What Ms. Pingree is talking about is a section of EQIP that has 

organic the Secretary shall provide us. It is not a ‘‘may,’’ it is not 

a ‘‘maybe,’’ it is ‘‘shall,’’ and we are trying to have the training and 

to equip ourselves to do a better job. 

I had mentioned the Conservation Innovation Grants. We did one 

a couple years ago to a group of sustainable ag organic producers 

who are to look at all our standards and to make sure that we have 

adequately incorporated them. We have put our standards out 

there to try and take care of those kinds of issues. So we are trying 

to make some steps to that. 

As far as funding goes, I set a $50 million limit for that. For $50 

million, we are using about half of it. The rest is rolled back into 

other stuff. But you also need to think you are an AMA state, ag 

marketing, which has some organic in it and also the Conservation 

Stewardship Program has some organic sections in it. In fact, if you 

look at that 35 million acres—twice the size of the State of Maine—

enrolled in a conservation program. Pretty cool. 

Ms. PINGREE. That is great. Well, thank you for your comments. 

I will yield back the time I don’t have. 

The CHAIRMAN. I thank the gentlelady. 

And I now recognize the gentleman from Wisconsin, Mr. Ribble, 

for 5 minutes. 

Mr. RIBBLE. Good morning. I appreciate your testimony this 

morning. And I have a question, actually, for each of you, but I will 

start with Mr. White. 

83

I represent Wisconsin’s 8th Congressional District, which is one 

of the largest dairy-producing districts in the United States. And 

Wisconsin dairy farmers rely pretty heavily on EQIP and use it 

pretty regularly. I am wondering if you can just talk about the current funding allocation for livestock. Do you feel that funding is appropriate and necessary? And then as a follow up, are there structural changes that need to be made to the program to ensure that 

a wide range of producers can benefit from the program? 

Mr. WHITE. Mr. Ribble, Wisconsin? 

Mr. RIBBLE. Yes. 

Mr. WHITE. I got to tell you, when you go to Wisconsin, it does 

your heart good if you are a conservationist, all of those beautiful 

strip crop fields, those small little dairy farms. It is just a fabulous 

part of the world. We do a lot of work with dairy. EQIP has a statutory requirement in it that 60 percent of the funds have to go to 

livestock operations. And we have never had a problem meeting 

that. And frankly, most of that money is beef production and dairy, 

followed by poultry, then swine. I think that it is widely available 

in your state. I know we do a lot of work with animal feeding operations, water quality aspects. I have been there. I have seen some 

of the stuff. I don’t know of any access problems that we have. 

Ms. Pingree mentioned the age of farmers are dropping in her 

state. This Committee actually put into EQIP where five percent 

of the funds have to go to beginning farmers and ranchers and five 

percent has to go to socially disadvantaged producers. So from that 

standpoint, we are trying to make it as broadly applicable as possible, sir. 

Mr. RIBBLE. Are there formulas between larger and smaller producing dairies? 

Mr. WHITE. No, sir. 

Mr. RIBBLE. No, okay. So the size of the dairy doesn’t matter? 

Mr. WHITE. Size-neutral. 

Mr. RIBBLE. Okay. Very good. Thank you. 

Mr. Nelson, as you know, farmers nationwide are facing an everincreasing regulatory burden, particularly from EPA, and I hear 

quite a bit from them regarding EPA. Could you maybe give some 

insight into what USDA programs in your view provide the best assistance for producers as they strive to meet those demands? 

Mr. NELSON. Congressman, I appreciate that question because 

our programs aren’t necessarily always thought of in that context. 

I think they should be because, look, I am a farmer myself, and I 

think it is always good when we have the opportunity as ag producers to have a variety of conservation programs out there that 

we can tailor to our individual needs on our farms and ranches. 

And if we can achieve compliance with other regulations at the national or state level in that manner, that is great. And so I think 

the approach of a partnership between Federal Government, in 

some cases state government, and individual farmers and ranchers 

out there on a voluntary basis to achieve goals like preventing nitrates into the Mississippi river or the Chesapeake Bay, that is a 

great approach and is the kind of public-private partnerships that 

are good for all of us. 

Mr. RIBBLE. Are those partnerships available? Are you working 

in a collaborative effort with producers around the country? 

84

Mr. NELSON. Yes. Virtually all of the programs that both Chief 

White and I have talked about here today are collaborative efforts. 

In some cases, Chief White’s agency works with organizations and 

larger entities. Farm Service Agency, we work with individual agricultural producers on their individual farms. And, for example, the 

Conservation Reserve Enhancement Program, the first area we 

talked about Chesapeake Bay a little bit before and what NRCS is 

doing there. FSA has a Conservation Reserve Enhancement Program area that goes right along, works hand-in-hand with NRCS 

that gives individual producers the opportunity to enroll on a continuous basis on CRP in that area. And that prevents the leaching 

of nitrates into the Bay that is so problematic. 

As a matter of fact, as Mr. White talked about earlier, the assessment that they did earlier that we in FSA worked together 

with them on shows that that effort alone has resulted in reducing 

the levels of nitrogen off every acre down about 79 pounds an acre. 

And I tell you, 79 pounds of nitrogen an acre would grow one heck 

of a lot of winter wheat out in Montana. So it is significant. 

Mr. RIBBLE. All right. Thank you very much. 

The CHAIRMAN. I thank the gentleman. 

I recognize Ms. Fudge from Ohio. 

Ms. FUDGE. Thank you very much, Mr. Chairman. And thank 

you both, gentlemen, for your testimony today. 

Chief White, I do want to follow up on a question that was just 

asked by my colleague. Under EQIP, the 2008 Farm Bill authorized 

increased payments for socially disadvantaged farmers, ranchers, 

and beginning producers. There were also incentives for organic operations. At that time there was a lot of discussion, obviously, 

about these incentives which some may have even called preferences at the time as best I can glean from that. I wasn’t on the 

Committee. I am a new Member. 

A couple of questions. Was there some projection at the time as 

to how many producers would take advantage of these incentives 

and do you know to date how many socially disadvantaged and beginning producers have, in fact, taken advantage of the incentives? 

Mr. WHITE. Thanks, Ms. Fudge. I can get you those numbers on 

how many are doing it. I can tell you we blow away that five percent every year, far beyond, both beginners and socially disadvantaged. And what it essentially means is if you are a beginning 

farmer/rancher, socially disadvantaged, you can get up to 90 percent cost-share or 15 percent above whatever the prevailing rate is 

because rates vary, but a maximum of 90 percent. I can tell you 

it is very popular. You may know Secretary Vilsack has embarked 

on his ‘‘strike force’’ where we are trying to do specific, more targeted outreach to make sure we reach our underserved communities. We are participating in that. My personal feeling is it has 

been extraordinarily successful, ma’am. 

Ms. FUDGE. So then, in fact, you do believe that there has been 

a very positive impact with these programs? 

Mr. WHITE. Oh, yes, ma’am. 

Ms. FUDGE. And is there something that you think we should 

consider changing that would make it—that there would be more 

participation—which at this point I am not sure that you really 

85

need—or include other groups? Do you think there needs to be 

some change in it? 

Mr. WHITE. No, because we view that five percent as a floor, not 

a ceiling. 

Ms. FUDGE. Okay. Thank you. 

Mr. Nelson, Section 2101 of the 2002 Farm Bill provided for use 

of Conservation Reserve Program, CRP, land to be used to grow 

biomass or place wind turbines on that acreage. Businesses in my 

district are working to place wind turbines and to develop other renewable energy solutions. As you know, renewable energy is important for job creation and to sustain our environment. Have businesses and other organizations approached NRCS about using this 

land to grow biomass or to place wind turbines? Do you know? 

Mr. NELSON. I am sorry, ma’am. I wasn’t quite sure your question, but we have implemented the provision of the farm bill with 

respect to the placement of wind turbines on Conservation Reserve 

Program acreage, and what we do in that case is essentially the 

footprint of the wind turbine would be penalty-free take-out of the 

CRP program. So we have implemented that. 

Ms. FUDGE. All right. So have people taken advantage of it? 

Mr. NELSON. Yes. Yes. And we will provide you with some specific figures on that. 

Ms. FUDGE. Okay. 

Mr. NELSON. Be more than happy to. 

Ms. FUDGE. Thank you. I look forward to it. Thank you. 

Mr. NELSON. Thank you. 

Ms. FUDGE. Mr. Chairman, I yield back. 

The CHAIRMAN. I thank the gentlelady and I recognize Mr. 

Hultgren from Illinois for 5 minutes. 

Mr. HULTGREN. Thank you, Mr. Chairman. 

Thank you. I apologize. It is a busy day with a lot of committees 

going on, but I appreciate you being here, appreciate the work that 

you’re doing. 

Question for you: I wonder if I could get a response from both 

of you. Farmers and ranchers continue to face environmental regulations that increase costs and can drive producers out of business. 

We all know that. What program provides the most benefit to producers to assist with these mounting regulations? 

Mr. NELSON. Well, with respect to Farm Service Agency, it is a 

Conservation Reserve Program which is our largest program. And 

that gives individual producers the opportunity to participate in 

things like the continuous signup practices of buffer strips and 

other practices where you enroll very highly environmentally sensitive land that is actually protecting larger acreages. And that 

helps with the individual producer’s compliance with other regulations. And I believe that any time an individual farmer or rancher 

has the opportunity to enter into a partnership with the Federal 

Government or state or local agencies through, again, a voluntary 

program and achieve not only the benefits of that program but 

compliance with other environmental regulations, that is a good 

thing for all of us. 

Mr. WHITE. Mr. Hultgren, from my perspective, four letters: 

EQIP, Environmental Quality Incentive Program. We have a statutory provision in there that says one purpose of the program is to 

86

help producers meet or avoid the need for regulation. And with 

that statement, you have stood NRCS as the shield arm between 

the regulatory agencies and our producers. And you have arrayed 

the strategic forces of 11,000 or 12,000 highly trained technical 

people with billions of dollars at their disposal to help producers 

meet or avoid regulation. And I don’t mean this in a pejorative 

sense, but we take that very seriously. And I could die a happy person if I could turn the regulatory community into the Maytag Repairman. 

Mr. HULTGREN. One of the things that we know is there is a lot 

of overlap and some duplication in programs. I just wonder, with 

overlap and duplication in conservation programs, does it produce 

any challenges for producers who may participate in multiple programs? 

Mr. WHITE. In a word, yes. But go ahead. 

Mr. NELSON. Well, I think there is some duplication but there 

are also complementary programs. And we will look forward to 

working with you as you get into the farm bill and our technical 

folks will provide you with all of the information that we can and 

assistance that we can with respect to the administration of programs and our experience working with producers. 

But one of the things that I would like to emphasize—and again, 

this is coming from a producer point of view—is that it is a good 

thing to have a lot of different alternatives out there, alternatives 

that will work as well in Montana as they will in Florida or in Illinois because some programs that work in some parts of the country 

don’t work in other parts of the country. And the more alternatives 

that individual producers have to voluntarily participate in these 

programs, the more you can tailor and shape them to your individual farming operation. And that gives us a better chance of getting more conservation on the land, which is what the whole thing 

is about. 

So again, we look forward to working with you and providing you 

with any information that we can that will help you in those deliberations, but we also want to make sure that we continue to give 

the full range of options to producers in every part of the country 

to increase the amount of conservation on the land. 

Mr. WHITE. I will just briefly add to that. I agree with what Administrator Nelson has said. It is good to have a full toolbox. But 

that said, in each of your packets, we have provided you with a matrix, and in that matrix it shows side-by-side all the easement programs and it shows side-by-side all the cost-share programs. If you 

are a field person, you have to know the rules for all of them. You 

have to know which you need AGI for, which are HEL-compliant, 

which don’t need it, which are no-year funds, which are one year—

you can see the differences across this matrix and it makes it very 

complex for our people. It makes it complex for our producers. The 

matrix will speak for itself, sir. And I think that while we need 

that toolbox where you have enough implements in there, I don’t 

know that we need as many as we have. 

Mr. HULTGREN. Well, thank you both. My time is up but I do appreciate you being here. I appreciate your answers to questions. I 

look forward to continuing this discussion as we go forward in the 

farm bill. I do think it is important for us to be looking at. I think 

87

it has been kind of a piecemeal approach in the past on this, but 

there are ways we can find more of an understandable and easierto-navigate process that works. I am hoping we can get there with 

that. 

I yield back. Thank you. 

The CHAIRMAN. I thank the gentleman and I recognize Mr. 

Schrader, from Oregon, for 5 minutes. 

Mr. SCHRADER. Thank you, Mr. Chairman. Well, I really appreciate Mr. White’s final comments there because to the uninitiated 

or relatively uninitiated, even though I am a farmer, this is a pretty complex arena with multiple programs. And I have never seen 

an agency yet or a program yet that didn’t think it was pure and 

important in and of itself and does something terribly distinct and 

different than the other program that is very similar and almost 

duplicative to it. So I appreciate the emphasis on that. 

I guess my challenge to both of you, both FSA and NRCS would 

be to look at the outcomes. I mean instead of we as legislators tend 

to come up with brilliant new programs that are going to fit in a 

variety of areas, usually ours, and get us great results, but I think 

to get past that sort of multiplicity of management schemes and 

the duplication that is evident there, maybe we should focus on 

outcomes. Which of these different programs give us the biggest 

bang for the buck? What is the cost per acre of each of these different programs? What relative level of nitrates or phosphates are 

prevented from going in the rivers and streams given the different 

types of programs? What sediment doesn’t occur or does occur as 

a result? That would give us a much more informed input as to 

which programs are the biggest bang for the buck in these tough 

times and doing great work. 

There are probably some other intangible concerns we also want 

to know, but I guess I would really hope this Committee would 

focus on helping the agency develop outcomes that we can measure 

so that all the variety of programs—I don’t care what program you 

use if you get good results. You can go to Tahiti for 2 weeks, I don’t 

care, as long as the air quality and the water quality gets a little 

better as a result of what you are doing. So I just would challenge 

you in that regard. 

A series of comments that I don’t need answers to right now but 

would like at some point a response. The TIP subprogram as part 

of the CRP program, what is the management overlay or duplication or whatever in that regard? It would seem that the ECP program could be duplicative of other disaster relief programs. I just 

need information as to how it is not, why we need this particular 

one for farm and forestland. The VPA–HIP program, while a nice 

program and I am a big fan of hunting and fishing, too—I am not 

sure, given our budget limitations, that is one I would put a whole 

heck of a lot of money in, but I stand to be corrected on that. And 

the idea of having both NRCS and FSA manage the Grassland Reserve Program seems a little cumbersome to me, so I would be curious as to why we have gotten into that area. 

On the positive side, it is nice to see that some of the programs 

that were enacted in the 1930s, 1940s, 1950s, and 1960s are 

transitioning away, not that they are not important but perhaps 

less important than some of the programs that we have identified 

88

for the 21st century. I think that is important but hope that both 

agencies would continue to look at that. 

I guess the big question I have is—I come from Oregon and half 

my state is forestland. And 40 percent of that is private forestland. 

And I think we are missing the mark on our forestland programs. 

The information I have, only six percent of EQIP funding goes to 

forestland, despite increases recently. I recognize the increases. 

Only six percent with the emphasis on carbon sequestration, air 

quality, wildfires, invasive species ruining one of our greatest natural resources that built this country, that has me greatly concerned. And the Beginning Farmer and Rancher Development Program, only three percent is dedicated towards forest stewardship 

and new forestry. 

So I am just very, very concerned that forestry is getting a real 

short end of the stick in these conservation programs in the Agriculture Department and Natural Resources Conservation Service. I 

would hope that we would look at that a little more closely and 

beef those programs up as we get rid of some of the duplication in 

other areas. 

So with that, I yield back, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. 

And I wanted to take the opportunity for a second round for anyone that has questions. I exercise that liberty first for 5 minutes. 

Chief White, you have expressed an interest in having more employees on the farm rather than behind a desk at NRCS offices. 

Can you give us an update on where you are in this process? 

Mr. WHITE. Two items I will cover with you briefly, Mr. Chairman, that I can think of off the top of my head is the Conservation 

Delivery Streamlining Initiative. We are looking at our whole business processes. The outcome goal, we want to eliminate 80 percent 

of the administrative clerical tasks from our field office and free up 

75 percent of their time for direct working with farmers. If we can 

pull this off, Mr. Chairman, it is the equivalent of adding more 

than a thousand people to our workforce. It is going to free up that 

much time. 

The second thing I would add is that I have recently challenged 

our State Conservationists. Hugh Hammond Bennett created this 

agency back in the 1930s. When he retired in 1952, 90 percent of 

the Soil Conservation Service employees were in direct field positions. And by golly, if Hugh Hammond Bennett could do it, why 

can’t we? So I asked the State Conservationists, what are you going 

to have to do in Florida, in Pennsylvania, or wherever you may be 

if we want 90 percent of our technical staff be in direct service to 

producers? And they came back with all kinds of cool ideas. We are 

going to start implementing them, and my hope is that despite any 

budget cuts we can actually end up with more people on those front 

lines providing direct service to producers. 

The CHAIRMAN. Well, I congratulate you for your efforts. I think 

there is many of us that when you are successful, we may want to 

replicate that process across all parts of the Federal Government. 

Mr. WHITE. I am not running for President yet. 

The CHAIRMAN. Okay. And this is just my observation and I may 

be incorrect, but it seems like the last farm bill, in terms of the 

balance between direct technical assistance at what I would call 

89

boots on the ground in programs, there was an emphasis more primarily on programs. And I am concerned that perhaps we skewed 

too far and I just see a lot of value of those boots on the ground, 

those folks that provide the technical assistance to help the farmers make the right decisions, to be that present resource. 

And just to both panelists, I just want to get your perspectives 

on that as we approach the next farm bill. Do you see the 2008 

Farm Bill kind of skewed in that direction, more programs, less 

technical assistance, and should that be something that we should 

move back if not a 50–50 at least more technical assistance? 

Mr. WHITE. Well, I agree with you. And I think the 2008 Farm 

Bill made some clarifications in technical assistance we are finding 

very valuable now. And technical assistance, I mean we talk about 

it, but what does it really mean? There are some books here that 

I brought just in case somebody would ask about TA. Those two 

books at the end are for one animal confined feeding operation, the 

technical documents it took for the design specifications. This right 

here is a 29 head dairy lining a pond, and a separator. This is the 

construction of a 5.3 mile pipeline for a rancher. This is converting 

a flood irrigation system to a sprinkler. 

And if you look at the technical drawings that are throughout 

this, it is absolutely vital that we keep those highly trained men 

and women out there on the land. I have been in this business for 

a long time. I have yet to see a Keebler elf come out and help us 

with this. This is done by highly trained men and women. We need 

to keep them there. We need more boots on the ground. But I will 

also say this, Mr. Chairman. I don’t care whose foot is in that boot. 

And if we can make arrangements with state agencies, conservation districts, nonprofit groups, ag organizations to get the feet in 

those boots, that is what we will do. This past year we took $20 

million—you may have heard of this Strategic Watershed Action 

Teams—we leveraged it, that $20 million, turned into $30 million 

and it gave us, oh gosh, 450 boots on the ground. They are nonFederal, but they are going to be working alongside of us. 

The CHAIRMAN. Very good. Mr. Nelson, any thoughts on this 

issue? 

Mr. NELSON. Well, yes, I think one of the interesting things 

about this discussion is that is points out there are some differences between Farm Service Agency and NRCS. NRCS is a technical agency. And as Chief White said and I think everybody would 

like to have, their folks do best when they are out in the field. They 

arrange conservationists and engineers who are out in the field and 

not in the offices doing paperwork. And so we have already had 

discussions about how we at FSA, which tends to be an administrative agency that is more paperwork-oriented, can actually support 

and help that effort, because in these times when we are tightening 

our belts, we are all going to have to be more efficient in the way 

we do things. 

The challenge for us in FSA is to how we can technologically get 

to the point where we need to be. As you know, we are going 

through a terrible transition from 1970s and 1980s computer technology to 21st century computer technology, and that has been very 

difficult not only on our employees, but it is actually difficult on the 

producers as well. 

90

I was privileged a couple of weeks ago to come up here and be 

part of a demonstration for folks of a project, a long-overdue project 

in the Agency to update our computer systems and our software so 

that we are actually into the 21st century with this MIDAS project. 

And I appreciated everybody’s participation in that because it is 

going to make us a lot more efficient. And it is going to make us 

not only better able to serve producers but produce information in 

response to requests from you folks because I can tell you right 

now that in putting together the answer to these audit questionnaires because of all of the different computer systems we are 

working with in FSA, we had to put word out literally to our county offices across the country in some cases to put this information 

together. That doesn’t make any sense. 

And so this move, like I say, is not only going to be a big help 

to the Agency, it is going to be a big help to you and to our producers as well. So we have to operate more efficiently and we have 

to get to a point where we do more online with our producers so 

that they can sit at home and do their work with not only Farm 

Service Agency but NRCS and other USDA agencies as well, because our producers are in the 21st century but we are not. And 

so we have to catch up with them in this case. And we are working 

hard on that. And again, we really appreciated the opportunity to 

come up here and visit with you about it and look forward to the 

future opportunities to do that. And all of that will help both of our 

agencies. 

Mr. WHITE. Can I respond one more time? I would like to put to 

rest an old canard about the animosity or the conflict or the turf 

battles that occur between NRCS and FSA. We really don’t have 

time for that. Mr. Nelson and I have talked on how we can work 

better together, and our commitment to you is that we will do that. 

And not only are we going to work better together but we are going 

to work better together for the benefit of the American producer 

and for the American taxpayer. 

The CHAIRMAN. And I know we all appreciate that. 

I now recognize the gentlelady from Alabama for 5 minutes of 

questioning. 

Mrs. ROBY. Thank you so much, Mr. Chairman. Thank you both 

for being here. 

Just last Thursday, we held a 2 hour listening session with farmers in Alabama, and I did it in conjunction with our Agriculture 

Commissioner John McMillan, and the number one issue that kept 

coming up over and over again was CRP. And this isn’t the first 

time I have heard it. And for Alabama, this program was definitely 

useful in the beginning, taking marginal lands out of production, 

but as time has gone on and more and more viable land is being 

shifted out of production into longleaf pine. And one of the issues 

that has been discussed is Alabama, it would be much more valuable to have to option of grass, which would make it easier to move 

that land back into production if needed. 

Another issue is that farmers are competing against the Federal 

Government in finding land to rent and oftentimes, the presence of 

the government causes the prices of land to increase drastically. 

And interestingly enough, one of the farmers who participated in 

our listening session last week that brought up and had concerns 

91

about the CRP was a timber owner, and he said that the conversion of cropland to longleaf pine has hurt him because it impacts, 

of course, the price of the timber produced. And so my question to 

both of you is whether Alabama is unique in seeing the usefulness 

of CRP diminishing? Or has CRP served its purpose and is no 

longer needed? And what changes might we make to CRP to ensure 

that much-needed land stays in productive agriculture? 

Mr. NELSON. Well, I appreciate the question because we just, as 

you know, finished with CRP general Signup 41, and I think it is 

important to note that even in this time of high commodity prices 

that producers voluntarily around the country offered 3.8 million 

acres into that program. And so in response to your question, I 

think the producers have shown that there is still great interest in 

participation in CRP, at least around the country. 

Mrs. ROBY. But the people operating the land are not necessarily 

producers because there is so much land that our farmers rent or 

lease to produce, and it is up to the landowner to shift that into 

the CRP program and thus takes that property, then, out of production for those farmers who just want to farm. 

Mr. NELSON. Congresswoman, we would be more than happy to 

visit with you further about this and to provide you with the information about the CRP participation in Alabama. And I think it is 

important to note one other thing, too, that could be affecting this, 

and that is that there was established down in the Gulf Coast and 

Atlantic Coast region and including Florida a national conservation 

priority area for longleaf pine. It does, in fact, give producers additional environmental benefits index points when they go to enroll 

land in the Conservation Reserve Program. And certainly, before 

we will go forward with another general signup, the question of 

whether these conservation priority areas are one that I am sure 

you will look at in Congress and we will certainly look at within 

the Farm Service Agency. So I would look forward to talking further with you about that. 

Mrs. ROBY. Well, as the Ranking Member pointed out, he said 

there is what, 4.1 million acres coming out, but the problem is is 

that it is very, very costly to then convert that property back into 

productive farm use. And so that is a tremendous concern in my 

State of Alabama because of this program. 

Mr. White, do you have anything to add? 

Mr. WHITE. Earlier, when you were out, we had a discussion 

about how wonderful longleaf pines were. NRCS is certainly working with producers on cost-share programs, working lands programs on a voluntary basis for producers who want to do that. Certainly, Alabama is in the belt where those trees were from. 

I guess I hear this from time to time but the beautiful thing 

about voluntary conservation programs, if you don’t want to do it, 

you don’t have to. And I would not want to take the right of someone else away to enter into a voluntary conservation program of 

which the CRP certainly is one. 

Mrs. ROBY. And my time is expired but I just would add to that 

that it is for our farmers, the concern is because of the existence 

of the program, maybe its usefulness has run out because we do 

need to provide for all of those, as you referenced, millions——

Mr. WHITE. Yes, ma’am. 

92

Mrs. ROBY.—of mouths that are going to need to be fed. So that 

is the point of my question. And I appreciate both of you being 

here. And Mr. Chairman, I yield back. 

The CHAIRMAN. I thank the gentlelady. 

I recognize the gentleman from Florida for any additional questions. 

Mr. SOUTHERLAND. Just to kind of follow up on that statement, 

I think one of the challenges of the longleaf pine, as you know, the 

woodpecker issue down there in our area—so when you have one 

agency that is trying to encourage you to come in and help restore—and I agree with everything you said, Chief, about the 

longleaf pine and how beautiful it is, and I think we are doing 

some incredible things down in North Florida, especially with the 

Tall Timbers organization down there. When you assist in helping 

us plant longleaf pine only to have the redheaded woodpecker come 

in, then you will never be able to harvest your timber because of 

regulations. So if they are identified on your property, please believe me, there are many that say as a result of them coming here 

and making them your home, you can’t cut. But that is just a follow-up comment to Mrs. Roby. 

I want to ask a couple questions. I know regarding CRP, you 

know—and again I am learning these programs—but what penalties does a landowner face if he opts out of CRP contract and 

what flexibility is currently available, if any, to allow landowners 

out of a CRP contract? 

Mr. NELSON. Well, I appreciate that question because CRP, 

again, we just went through a general signup, and so the issue has 

been in front of the Department and the country. And the Secretary does have the authority to do penalty-free early-outs——

Mr. SOUTHERLAND. Okay. 

Mr. NELSON.—under CRP. The policy at the present time is that 

if a producer wants to voluntarily opt out of the program that they 

would have to pay back the rental payments that they had received 

and there would be liquidated damages of 25 percent on the rental 

payments they had received and 25 percent liquidated damages on 

any cost-share assistance they had received and possibly interest 

as well. So that is the current policy. 

Mr. SOUTHERLAND. That sounds like that was designed by the 

IRS. 

Mr. WHITE. Mr. Southerland, can I address that? 

Mr. SOUTHERLAND. Sure. 

Mr. WHITE. I am going to take you back a little bit. The guys we 

are cost-sharing with for longleaf pine, they are going to cut that 

thing or projected in, what, 20, 30 years? 

Mr. SOUTHERLAND. No, it is longleaf pine you are looking at closer to 50 years. 

Mr. WHITE. Okay. Well——

Mr. SOUTHERLAND. And that is another issue. You know, there 

are some other crops, certainly, that one could say obviously we 

need to address longleaf pine but maybe some other species that 

we can also plant in order to return an investment for the landowner. 

Mr. WHITE. But I am going to check on that, whether you can 

cut them or not, because I think you can. 

93

Mr. SOUTHERLAND. Well, I know this. I know that we have a National Forest down there and the National Forest because of the 

woodpecker has been turned into basically a national park. And in 

the rural county where having logging operations in these rural 

counties has been shut down because of the woodpecker, and they 

basically have taken a National Forest and made it a national 

park, it is creating economic damage to these communities. And so 

it something very near and dear to my heart. And so I think some 

flexibility there would be good because I do believe that the 

longleaf pine is worth pursuing. I mean it is a great thing. But, 

yes, anything you can check on that, that would be good. 

Mr. WHITE. I will get back to you, sir. 

Mr. SOUTHERLAND. Thank you. 

And my follow-up question, what programs have wildlife components—hold on. My question here is messed up. Let me shift here. 

What percentage of funding under EQIP makes it to the producer? 

Mr. WHITE. About 75 percent. About 20—the numbers vary from 

year to year, sir, but it is normally—the technical assistant generally runs from 20 to 25 percent. 

Mr. SOUTHERLAND. Okay. 

Mr. WHITE. And that is what buys these books that I just 

showed. 

Mr. SOUTHERLAND. I got you. And last, on just a statement on 

the budget cuts, I appreciate your can-do attitude because the 

American people are given a dollar amount that they have to live 

within and they have a can-do attitude that they are going to make 

it work. And I have heard you display that this morning and it is 

refreshing. And so I just want to tell you how much I appreciate 

the way both of you have testified before us this morning. Thank 

you very much. 

Mr. WHITE. Listen, I am an American. I am not going to crawl 

up in a fetal position and cry myself to sleep. 

Mr. SOUTHERLAND. Well, that is not how this country was founded and——

Mr. WHITE. I am going to try to do what I can do. 

Mr. SOUTHERLAND.—and I don’t believe you would. So thank you 

very much. I yield back. 

The CHAIRMAN. The gentleman yields back. And I recognize the 

gentleman from Illinois for any additional questions. 

Mr. HULTGREN. Thank you, Mr. Chairman, just a couple. 

I wondered if you could explain the Conservation Innovation 

Grants. Tell me a little bit more what they are, and also let me 

know, if you would, the success rate for these innovation projects 

eventually becoming adopted conservation practices? 

Mr. WHITE. Yes, sir. I am assuming you are referring to the one 

that is supposed to bridge Death Valley, to take promising research 

and try and figure out how it can be broadly applied to the land. 

We have had some spectacular successes and we have had some 

spectacular failures. I can get you more of a rundown on which is 

which on that, but I think in the area of feed management, we 

have seen some extraordinary results from the University of Washington. Odor control, I think that was Wisconsin Department of Agriculture did some wonderful work on how to do better odor control, 

precision agriculture, water quality. We have had some really good 

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stuff, but we have also had some things that just did not work out. 

And I am trying, frankly, to get my arms wrapped around it better 

and I will have to get back to you on some of this, sir. 

Mr. HULTGREN. Is your sense that most of them are working, 

most of them not working, just to kind of gauge a success rate? Is 

it possible to do that? And again, it is for the Conservation Innovation Grants. 

Mr. WHITE. Maybe 75–25. 

Mr. HULTGREN. Working to not working? 

Mr. WHITE. Yes, and that is kind of an estimate. So can I revise 

and extend my remarks? 

Mr. HULTGREN. Yes. 

Mr. WHITE. Okay. 

Mr. HULTGREN. That would be good. Yes, and if you can let us 

know if there is more feel to that. For me my concern is money that 

is being spent, is it being useful? 

Mr. WHITE. Exactly. 

Mr. HULTGREN. So it is not numbers of success but dollars being 

spent leading to real innovation that is actually being used out in 

the field. 

Mr. WHITE. Got you. 

Mr. HULTGREN. Switching over to the Conservation Stewardship 

Program, what percentage of funds for the Conservation Stewardship Program are used to pay for things farmers already have done 

and how much is used to encourage new practices? 

Mr. WHITE. Okay. The law says you will pay to maintain existing 

and to create additional. We have put an emphasis on the additional. Right now, that annual payment is roughly split 60–40, 60 

percent for new stuff, 40 for the maintenance of existing. 

Mr. HULTGREN. Okay. Kind of wrapping up and getting back to 

the first round of questions. I guess I would like to just get some 

thoughts from you. We talked a little bit about going into the farm 

bill and really looking for ways—certainly, we want options out 

there, but at the same time we don’t want to be tripping over options and having it with limited resources where we are not being 

as effective as we possibly can be. So I wondered, do you think is 

there a more comprehensive way to provide environmental benefits 

to our farmers and ranchers instead of the piecemeal approach that 

Congress has provided over the last 25 years? If you think there 

is, give me some sense of what that would be. 

Mr. WHITE. You go first. 

Mr. NELSON. Well, I think again, as I said earlier, the challenge 

here is to look at all of these programs and figure out ways which 

we absolutely need to do to both operate them more efficiently and 

make them more effective to farmers. But as I also talked about 

earlier, to do that in a way that we don’t take alternatives away 

from farmers and ranchers around the country so that, again, a 

farmer in my State of Montana, your State of Illinois, they are not 

going to need exactly the same thing. 

So it isn’t an easy thing to do, but we need to figure out a way 

to do it because like it or not, we are facing budget challenges here. 

We have had to tighten our belts. You know, I had to do that back 

on the farm. I had to do that when I was in the Governor’s office 

back in Helena. And we are going to have to do it. So, again, the 

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challenge is to figure out a way to become more efficient in the administration of programs, make them more effective for the individual producers, and not take alternatives away so that we can 

continue to make sure our producers in every area in the country 

have the full range of options. And I think all of the programs need 

to be on the table that both agencies are involved with, and we are 

certainly looking forward to working with you on that and providing you our technical assistance and our experience in administration of the programs and working with producers on the best 

ways to do that. 

Mr. WHITE. I think Mr. Nelson said that very well. One of the 

things that we all have to recognize is every program is there for 

a reason. And they have all done some great work and they all 

have a constituent base and we need to respect that as we move 

forward. But your challenge is, in this budget climate, how do you 

increase the efficiency? How do we do a better job and still provide 

the producers with what they need in the area of conservation. 

Mr. HULTGREN. Yes, just in closing, I do think that is our challenge. I think recognition that we want to see results for money 

that is being spent, especially with limited dollars. Programs that 

made sense 10 years ago may not make sense any longer. And I 

get concerned when the focus is more on agenda rather than on 

real results. And so, anyhow, I look forward to working with you. 

I know this is just a first step of a long process that is coming forward. Thank you both. 

I yield back. 

The CHAIRMAN. I thank the gentleman. I thank all Committee 

Members. And Administrator Nelson, Chief White, thank you so 

much for your service and your testimony here today. Your preparation coming in, very well prepared. I think this hearing was very 

informative. Frankly, we have a lot of work to do as we continue 

down the road of preparing for this next farm bill. And as has been 

mentioned many times, these are challenging times with the debt 

and the fiscal situation we are in, but we never should forget that 

as Americans we enjoy, frankly, the most affordable, highest-quality, and safest food supply of anywhere in the world. And the biggest threat to our national security by far would be at whatever 

point we would rely on a foreign country to provide that for us. So 

we are blessed not to be in that position. 

I certainly appreciate the work of FSA and NRCS and the fact 

that you work together, collaboratively. And certainly we look forward to working with you as we continue forward in this process. 

So thank you all so much. 

Under the rules of the Committee, the record of today’s hearing 

will remain open for 10 calendar days to receive additional material and supplementary written responses from the witnesses to 

any question posed by a Member. This hearing of the Subcommittee on Conservation, Energy, and Forestry is adjourned. 

[Whereupon, at 11:56 a.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

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SUBMITTED LETTER BY MARK G. HUNTLEY, PRESIDENT, IRRIGATION ASSOCIATION

July 18, 2011

Hon. GLENN THOMPSON,

Chairman,

Subcommittee on Conservation, Energy, and Forestry 

House Committee on Agriculture, 

Washington, D.C.;

Hon. TIM HOLDEN,

Ranking Minority Member,

Subcommittee on Conservation, Energy, and Forestry 

House Committee on Agriculture, 

Washington, D.C.

Chairman Thompson and Ranking Member Holden:

On behalf of the members of the Irrigation Association, thank you for the opportunity to offer our perspective on USDA’s conservation programs. Our industry appreciates your focus and leadership on this issue, as we believe that the conservation title of the farm bill is important to the long-term viability of U.S. agriculture 

and meeting the demands of our current and future generations, as well as a sound 

and sustainable environment. 

The Irrigation Association is a trade association representing approximately 2,000 

member companies in the irrigation industry. Our members include irrigation product manufacturers, dealers, distributors, contractors and end users in the agricultural and landscape industries. The mission of the Irrigation Association is to promote efficient irrigation technologies, products and services, and our expertise lies 

in ensuring every drop of water applied to a crop is done so in an efficient manner, 

thus leading to more agricultural output per unit of input. 

I would like to begin by discussing the USDA’s Environmental Quality Incentives 

Program. As you know, EQIP is a voluntary conservation program, which provides 

financial and technical assistance to farmers and ranchers who face threats to soil, 

water, air, and related natural resources on their land. Through EQIP, the NRCS 

develops contracts with agricultural producers to implement conservation practices, 

which address on-farm environmental natural resource opportunities and challenges. Even though this program is an incentive program for agricultural producers, this is first and foremost an environmental quality program. For example, 

if an agricultural producer were to invest in more efficient irrigation technologies 

and products; not only would that producer see a decrease in the amount of water 

used to produce the same amount of yield, the producer will also see a decrease in 

run-off (leading to an increase in water quality) and an increase in energy efficiency 

(using the energy embedded in the water used for irrigation in an efficient manner), 

among other recognized environmental benefits. It is our belief that the further 

investment in this environmental quality program is much more effective 

than increased regulations placed on U.S. agricultural producers.

From 1997 to 2010, EQIP has been a strong supporter of promoting efficient irrigation technology and products. During this time, three of the top ten projects funded by EQIP have been focused on irrigation: 

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Top 10 EQIP Funded Projects (1997–2010)

Source: NRCS.

Specific to irrigation projects, EQIP works with the producer, through the technical service provider program, to determine the best technology, design and practices to ensure that every drop of water is being used in the most efficient way possible, while ensuring that the investment makes financial sense for the producer. 

In fact, the Irrigation Association works collaboratively with the NRCS through a 

Memorandum of Understanding that qualifies our certified irrigation designers to 

participate in the TSP program. 

Through these investments in efficient irrigation technologies and products, the 

effects on the environment have been very positive, as we’ve seen documented 

through the USDA’s Conservation Effects Assessment Program. 

Next, I would like to spend a moment discussing some of the challenges currently 

facing American agriculture. 

According to the Global Harvest Initiative, the global population is expected grow 

to more than nine billion people by 2040, an increase of nearly 50 percent from today’s level. In this same time period, global agriculture will be required to double 

its productivity in the face of limited water resources. 

Feeding more than nine billion people will require substantial increases in agricultural output and productivity. Irrigation is one of the most powerful levers of agricultural productivity, so it is no surprise that irrigation comprises a significant 

proportion of the country’s overall water use (37 percent of total water withdrawals 

according to the U.S. Geological Survey 2005 Water Use Report). As more farmers 

seek to leverage the productivity benefits of irrigation, irrigated acreage in the 

United States will continue to grow. Irrigated acreage in the United States has 

more than doubled from 25 million acres in 1950 to over 60 million acres in 2005. 

At the same time farmers are irrigating more acres, they are using less water for 

irrigation. Water use for irrigation has dropped back to 1970 levels (Source: NRCS 

Farm and Ranch Irrigation Survey 2008). The Irrigation Association joins the USGS 

and the Department of the Interior in attributing these decreases in irrigation water 

use to significant increases in on-farm irrigation efficiency. 

As the population continues to increase, regulations and aging infrastructure are 

affecting the amount of water available for irrigation. American farmers are among 

the most productive and innovative in the world. Yet, if United States agriculture 

is to meet this challenge, we must sustain, improve and expand efficiently irrigated 

agriculture. The Irrigation Association recognizes that United States agriculture will 

need to continue increasing productivity to meet the future needs of the growing 

global population, while optimizing the efficient use of natural resources. 

As I mentioned earlier, fostering the adoption of efficient irrigation technologies 

and practices is an effective way to improve agricultural productivity, overall wateruse efficiency and water quality, thus sustaining water resources for future generations. 

In conclusion, the irrigation industry highly values the variety of benefits 

achieved with efficient on-farm water use. We’ve enjoyed our historic partnership 

with the NRCS and look forward to working with the Congress and the NRCS for 

years to come in promoting efficiencies in agricultural production. 


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As the House Committee on Agriculture continues the audit of the USDA, we encourage you to review EQIP, note the positive attributes of the program and continue the promotion of the efficient use of water in agricultural production. 

If you have any questions regarding EQIP or any other irrigation-related issue, 

please contact IA’s Federal Affairs Director John Farner at [Redacted] or [Redacted]. Thank you again for the opportunity to submit comments.

MARK G. HUNTLEY,

John Deere Water, 

President, Irrigation Association. 

SUBMITTED QUESTIONS

Response from Bruce Nelson, Administrator, Farm Service Agency, U.S. Department of Agriculture 

Questions Submitted By Hon. Frank D. Lucas, a Representative in Congress from 

Oklahoma 

Question 1. How many different conservation programs does FSA administer? 

Answer. FSA administers five primary conservation programs including the:

• Conservation Reserve Program (including Conservation Reserve Enhancement 

Program, Farmable Wetlands Program and Transition Incentives Program);

• Emergency Conservation Program (ECP);

• Grassland Reserve Program (GRP);

• Grass Roots Source Water Protection Program; and

• Voluntary Public Access and Habitat Incentive Program (VPA–HIP).

FSA also administers programs under other Titles that support conservation goals 

and purposes including:

• Emergency Forest Restoration Program (EFRP) under the Forestry Title;

• Biomass Crop Assistance Program (BCAP) under the Energy Title;

• Conservation Loan Program under the Credit Title; and

• Debt for Nature under the Credit Title.

Question 2. Do the current criteria to determine the Environmental Benefit Index 

(EBI) for CRP eligibility ensure that the most productive land stays in production 

and the environmentally sensitive land, or highly erodible land, is enrolled? 

Answer. The EBI is used to rank and select offers for enrollment in the general 

signup component of CRP which includes about 26 million acres of the CRP’s 32 million acre enrollment authority. The general signup accepts land based on eligibility 

criteria defined in the CRP statute and the EBI ranking. Before any cropland may 

be considered for general signup enrollment, it must have a recent cropping history 

and meet other eligibility requirements which can be any of the following:

• Highly erodible cropland (i.e., have an erodibility index of 8 or greater);

• Located in a conservation priority area; or

• Under an expiring CRP contract.

Each general signup offer is ranked with the EBI which uses data collected for 

five environmental factors (wildlife benefits, water quality benefits, soil conservation 

benefits, air quality benefits, and enduring benefits) and a cost factor. There is no 

prohibition on enrolling productive land in the CRP and certainly some lands in the 

program are productive, but must have significant environmental benefits to qualify. 

The productivity of the lands in the CRP is reflected in the soil rental rates of the 

lands enrolled. For CRP general signup, the higher the rental rate requested, the 

lower the EBI points for the cost factor, as illustrated in the chart below. 


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1 CREP agreements leverage Federal funding with funding provided by state and local partners whose primary purpose is to target acres for enrollment that will address environmental 

concerns specific to the state. The outcome is that environmental sensitive lands of special significance are enrolled in a CREP project area.

Relationship Between Rental Rate and Cost Factor EBI Score

For general signup, the cost factor serves to discourage enrollment of more productive lands, but if the environmental benefits are sufficiently high, they may be 

accepted. For example, an offer with a rental rate of $150 per acre would get 40 

points for cost, while an offer with a rental rate of $30 per acre would get 108 

points. Thus, the points for the five environmental factors of offers of the more productive land ($150 per acre land) would have to be at least 68 points higher than 

the scores of land with lower productivity ($30 per acre land) to be ranked higher. 

Regarding keeping environmentally sensitive or highly erodible land enrolled, the 

CRP is implemented using two basic approaches: the competitive general signup discussed above and the continuous signup. An assessment of the environmental sensitivity of the lands enrolled under general signup begins with the erodibility index 

(EI). 

Of the general signup acres currently enrolled, 19.9 million acres are categorized 

as HEL (EI≥8) based on the weighted average of the EI of the soils on the contracted fields. The remaining 6.3 million acres are non-HEL. However, ‘‘environmental sensitivity’’ is not based solely on EI. Many non-HEL general signup CRP 

lands may be adjacent to wetlands or streams, overlay at-risk groundwater, or are 

providing significant wildlife benefits, and would be considered environmentally sensitive. 

Continuous signup specifically targets the most environmentally sensitive lands 

and, includes the Conservation Reserve Enhancement Program (CREP),1 wetland, 

conservation buffer, and wildlife initiatives. There are about 5.1 million continuous 

signup acres currently enrolled. 

Question 3. What percentage of acres enrolled in CRP currently have an EBI that 

is low enough that the land could be farmed productively without significant environmental impact? 

Answer. It is likely that much of the land enrolled in CRP can be farmed productively because most were used for crop production prior to enrollment; however, 

whether that land can be farmed without significant environmental impact in not 

clear. HEL lands brought back into production will need a conservation plan (to 

maintain eligibility for commodity program payments). Even with a plan, however, 

many environmental benefits would be lost including air and water quality, sediment, carbon sequestration, and wildlife habitat. In addition, as noted in the response to Question 2, many non-HEL lands are providing significant environmental 

benefits, many of which would be lost if returned to cropping. 

In addition to HEL lands enrolled, non-HEL and continuous signup enrollment 

currently includes:


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2The environmental factors are wildlife, water quality, soil erosion, air quality benefits, and 

the likelihood of benefits enduring after the contract ends. 

• 2.0 million acres of conservation (streamside) buffers

• 2.2 million acre of wetland restoration practices

• 4.2 million acres of Prairie Pothole grass plantings

• 2.6 million acres in state conservation priority areas

• 165,000 acres of Longleaf Pine plantings

• 252,000 acres of volcanic or organic soils highly susceptible to blowing

• 934,000 acres of grass plantings in 1930’s Dust Bowl counties

Since 1990, USDA has ranked the quality of general signup offers using an EBI. 

Doing so helps USDA achieve environmental benefits in a cost-effective manner. 

The EBI is a numeric score resulting from the summation of five environmental indices 2 and a cost factor which is a function of the rental rate requested by the producer. As discussed in Question 2, the lower the rental rate requested, the higher 

the cost factor score. At the time general signup offers were selected, a determination was made that the land was of sufficient environmental sensitivity to be enrolled in CRP. 

The EBI is used to rank CRP offers and provides a numeric score that serves as 

a qualitative measure of environmental benefits relative to cost. It provides information about whether one offer is likely to provide more environmental benefits than 

another. The score provides an indication of environmental sensitivity; however, it 

does not address whether lands could be farmed productively without significant environmental impact. 

CRP is designed as a reserve program to safeguard the nation’s natural resources 

and is a major contributor to increased wildlife populations in many parts of the 

country because enrolled acreage is planted to resource-conserving vegetative covers. 

CRP also protects groundwater and helps improve the condition of lakes, rivers, 

ponds, and streams by reducing water runoff and sedimentation. Another benefit is 

the protection of millions of acres of topsoil from erosion. In addition, CRP sequesters more carbon on private lands than any other federally-administered program. 

Secondary objectives include protecting the nations’ long-run capability to produce 

food and fiber, curbing production of surplus commodities, and providing income 

support for farmers. If it is in the public interest, such as times of emergency, the 

Secretary may authorize CRP acreage to be used for the production of agricultural 

commodities.

Question 4. Do you think the goals of the Farmable Wetlands Program (FWP) are 

consistent with the overall goals of the CRP program? Are the eligibility criteria for 

FWP the same as the overall program? Where do we see the most land being enrolled for FWP? 

Answer. FWP is a voluntary program to restore up to one million acres of 

farmable wetlands and associated buffers by improving the land’s hydrology and 

vegetation. Eligible producers in all states may enroll eligible land in the FWP 

through the Conservation Reserve Program (CRP). The majority of the land enrolled 

in the FWP is located in Iowa, Minnesota, Mississippi, North Dakota, and South Dakota, although enrollment is throughout the nation. 

FWP is consistent with the overall goals of the CRP to improve the quality of 

water, control soil erosion, and enhance wildlife habitat. CRP wetland restoration 

practices utilize multiple buffer-to-wetland ratios and size requirements due to the 

differing underlying purposes of the wetland restoration. Buffer-to-wetland ratios 

and wetland or tract size requirements differ not only within FWP practices but also 

with other CRP wetland restoration practices. 

For example, under the CRP Duck Nesting Habitat wetland restoration practice 

the buffer-to-wetland ratio is 6:1 with no wetland or tract size limitations; however, 

under the FWP Flooded Prairie wetland restoration practice the buffer-to-wetland 

ratio is 4:1, and there is a statutory limitation of 20 acres for the size of the wetland 

and 40 acres for the size of the tract. 

Land eligibility and cropping history requirements are also different under FWP. 

Land enrolled under CRP wetland restoration practices must be cropland with a 

cropping history of 4 out of the previous 6 years. For FWP, cropland enrolled has 

different cropping history requirements and for certain practices the land may be 

marginal pastureland.

Question 5. How much flexibility is allowed for haying and grazing activities? 

Could CRP take on some of the same goals as the Grasslands Reserve Program 

(GRP)? 

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Answer. The CRP authorizing legislation generally prohibits any use of the forage 

including haying and grazing except for managed harvesting, haying or grazing or 

other commercial use in response to a drought or other emergency, routine grazing, 

or prescribed grazing for the control of invasive species. The annual rental payment 

is reduced by an amount commensurate with the economic value of the activity 

which is generally 25 percent. Any haying or grazing must be conducted with an 

appropriate cover management plan. By contrast, the GRP authorizing legislation 

generally requires that a rental contract or an easement permit common grazing 

practices and haying, mowing or harvesting for seed production. 

For CRP to take on some of the same goals as GRP, certain provisions of the CRP 

authorizing legislation would need to be reviewed including:

• Land eligibility,

• Permissible activities for haying and grazing of the land subject to a GRP management plan,

• Enrollment terms with longer contracts and/or easements, and

• Landlord tenant provisions.

Question 6. How successful has the Transition Incentive Program (TIP) been 

under CRP? Is this program being utilized and do you believe this is a successful 

approach to getting workable land back into production? 

Answer. The regulation for the Transition Incentives Program (TIP) was published 

May 14, 2010. The farm bill authorized $25 million for TIP through fiscal year 2012. 

FSA has implemented this program including a TIP Net website which provides 

a web-based tool to connect interested retired or retiring land owners or operators 

with interested beginning or socially disadvantaged farmers or ranchers. 

As of July 31, 2011, there are 575 approved TIP contracts with 85,956.6 acres enrolled. Currently, $7,580,705 in CRP annual rental payments will be issued over the 

next 2 years for TIP to retired/retiring farmers or ranchers.

Question 7. How much is being spent on cost-share assistance for tree thinning 

activities? 

Answer. As of July 7, 2011, FSA had 64 contracts with total payments of $11,366 

for the CRP tree thinning practice.

Question 8. How does the split administration of GRP work, do you think this is 

the best way to administer this program? 

Answer. National leadership for GRP is provided by the Chief, NRCS, and the Administrator, FSA, and their designees. Specific agency responsibilities are detailed 

in a Memorandum of Understanding. 

NRCS and FSA at the national level jointly develop and evaluate program policy 

and direction, monitor program implementation, ensure that GRP information is 

made available to the public, formulate budgets, and coordinate national GRP funding allocations to achieve national program objectives. Obligations are tracked at 

the national level to ensure 60 percent of the funding supports easements and 40 

percent of the funding supports rental contracts over the life of the farm bill. 

FSA has lead responsibility for rental contract administration and financial activities. FSA also provides all of the producer eligibility determinations and implements 

the rental contract enrollment options. NRCS has lead responsibility on conservation planning, technical assistance to owners and operators, and easement administration. National ranking criteria guide the development of state ranking criteria to 

ensure GRP funds are focused on projects that support grazing operations, protect 

grassland from conversion to other uses, enhance plant and animal biodiversity, leverage non-Federal funds and address that state’s program priorities. Priority is 

given to expiring Conservation Reserve Program (CRP) grasslands. 

While shared administration responsibilities for GRP does create some challenges, 

the agencies have worked together to implement this program as efficiently as possible. The Department is always interested in exploring more efficient and effective 

ways to implement our programs and would welcome the opportunity to work with 

you and others to achieve that end.

Question 9. What steps do your respective agencies take to ensure that conservation practices are truly effective? Can you describe the process you use, for example, 

to ensure that measures to prevent streambank erosion are working? 

Answer. We take a number of steps to ensure that conservation practices are 

working—from our science-based technical standards and conservation planning 

process to oversight for practice installation and follow-up to validate performance.

• The planning process used by USDA is site specific and our technically trained 

staff works with the customer to identify the resource problems and plan the 

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right suite of science-based practices to fix the problem (in this case it would 

likely be our shoreline and streambank protection practice).

• Conservation practices are developed by technical experts and undergo thorough 

peer and public review before being finalized and published through a Federal 

Register notice.

• Practices are designed and installed to specifications by technically qualified 

professionals (could be NRCS, State Forester, a third party, or the landowner); 

where engineering is involved there are additional review and approval requirements and authorities.

• Once installed, USDA follows up to ensure that the practice was installed correctly and completely and that it is performing as expected for the intended 

purpose and lifespan.

USDA implements a number of conservation practices that reduce streambank 

erosion and modify the vegetation and hydrology to enhance streambank stability. 

There are numerous examples and case studies that demonstrate that conservation 

practices and systems can improve streambank stability and improve water quality. 

A recent example is Peacheater Creek-Northeast Oklahoma. The area is characterized by poultry and cattle production and the downstream Illinois River and Lake 

Tenkiller had been placed on the 303(d) list for elevated phosphorus levels. Riparian 

area protection along with in-field conservation practices and farmstead improvements were applied. Measured decreases in streambank erosion were among the results, which also included reductions in phosphorus and nutrient loading and improved fish communities. 

In addition to the technical requirements to ensure conservation practice integrity, USDA collects natural resource trend data and conducts short- and long-term 

analyses of the conservation benefits of USDA conservation practices. The National 

Resources Inventory (NRI), for example, provides statistically sound data on natural 

resource status and trends on non-Federal lands, including trends in soil erosion, 

land use change, and wetlands, among others. 

USDA’s Conservation Effects Assessment Project (CEAP) is a multi-agency effort 

to quantify the environmental effects of conservation practices and programs and 

develop the science base for managing the agricultural landscape for environmental 

quality. CEAP literature reviews and assessments document the effects of conservation practices and related environmental benefits. 

Monitoring and evaluation of conservation practice effectiveness in all 43 CREP 

Projects also document the effectiveness of conservation practices applied and the 

public the societal benefits. Another data set developed in partnership with the U.S. 

Geological Survey has quantified the benefits of conservation plantings and habitat 

development to many grassland and waterfowl species in over 12 Great Plain 

States. 

Response from Dave White, Chief, Natural Resources Conservation Services, U.S. Department of Agriculture 

Questions Submitted By Hon. Frank D. Lucas, a Representative in Congress from 

Oklahoma 

Question 1. We have three different easement programs, two without a baseline 

going into the new farm bill. Can you help me understand the differences between 

the three and is it possible to look at ways of combining any of them? Can consolidation be beneficial for program delivery? 

Answer. NRCS administers three easement programs under Title XII of the Food 

Security Act of 1985, as amended, which include the Farm and Ranch Lands Protection Program (FRPP), the Wetlands Reserve Program (WRP), and the Grasslands 

Reserve Program (GRP). NRCS categorizes GRP and FRPP as ‘‘working lands’’ programs and the WRP as an ‘‘environmental restoration and protection’’ program.

• FRPP is used to assist eligible entities to purchase conservation easements that 

prevent conversion of agricultural land to non-agricultural uses. Easements are 

held by the entity and USDA has a ‘‘right of enforcement’’ should the entity be 

unable to fulfill its responsibilities associated with enforcing the terms of the 

easement.

• GRP is used to assist to landowners and operators to protect grazing uses and 

conservation values by conserving and restoring grassland resources on eligible 

private lands through rental contracts, easements, and restoration cost-share 

agreements. GRP prohibits non-agriculture uses of the enrolled land and the 

conversion of grazing lands or grassland to cropland. The U.S. Government 

holds the GRP easements but GRP also offers an option where an eligible entity 

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can either assume title to the GRP easement or receive financial assistance toward the purchase an easement under an arrangement similar to FRPP.

• WRP is used to restore, protect, and enhance wetlands and associated habitats 

on eligible farmlands through easements (permanent and 30 year), 30 year contracts with Tribes, and restoration cost-share agreements. Compatible uses, 

such as haying and grazing, may be permitted if they further the purposes of 

the easement. For example, grazing may be authorized if it was a natural part 

of the ecosystem or is necessary to control invasive species. The United States 

Government holds the WRP easements.

NRCS welcomes the opportunity to work with you in exploring opportunities to 

consolidate programs to achieve efficiencies, while preserving the natural resource 

conservation objectives that these programs were designed to achieve.

Question 2. Could you tell us to your best of your ability what percentage of time 

and funds are used simply on program administration and do you think Congress 

could help the Department out on the administrative side of things by combining 

like programs? 

Answer. While the administrative tasks associated with the farm bill conservation 

programs represent a marginal workload for our field and state offices, these tasks 

are inextricably linked with the successful delivery of these programs. Examples of 

the program administration tasks include establishing a case file, developing participant notifications and issuing correspondence, managing contracts and agreements, 

and performing effective oversight of contracts with producers. For customer service 

and program delivery to be most successful, the technical aspects of program delivery must be interconnected and coordinated with the administrative activities. 

Recognizing the need to reduce the amount of staff time expended in performing 

administrative tasks and the need to strengthen program coordination, NRCS is implementing a Conservation Delivery Streamlining Initiative to more cost-effectively 

deliver our programs and increase the time our field staff has to work with farmers 

and ranchers. The agency is also identifying opportunities to realign workload and 

structure to increase the proportion of our staff that is in direct field service delivery.

Question 3. What unique purpose does the Agricultural Management Assistance 

Program (AMA) program serve and does it share any goals/purposes with other programs? What assistance does the AMA provide to producers that other conservation 

programs do not? 

Answer. AMA provides assistance to agricultural producers to manage risk and 

voluntarily address issues such as water management, water quality, and erosion 

control by incorporating conservation practices into their farming operation. Many 

of these practices are also available through the Environmental Quality Incentives 

Program (EQIP). Even so, AMA provides assistance to producers who have smallacreage or specialty-crop farming operations that do not meet the land eligibility 

guidelines for participation in other programs. For example, AMA provides costshare assistance for irrigation-related practices that may be implemented on land 

that does not have an irrigation history, whereas EQIP will only provide assistance 

for irrigation-related practices on land that has an irrigation history. By helping to 

mitigate the risks associated with these kinds of agricultural enterprises, AMA 

helps agriculture remain a valuable segment of local economies.

Question 4. What programs have wildlife components and what makes the WHIP 

program different than these other programs? Are there ways to incorporate those 

differences into the other programs currently authorized to build on wildlife habitat 

success? 

Answer. While many programs have wildlife components, the Wildlife Habitat Incentive Program (WHIP) is the only conservation program that focuses solely on 

wildlife habitat on private agricultural, nonindustrial private forest, and tribal 

lands. WHIP is also the only conservation program that addresses a wide range of 

aquatic wildlife habitat resource concerns. WHIP is directed by statute to prioritize 

projects that would address issues raised by state, regional, and national conservation initiatives, such as State Wildlife Action Plans or similar wildlife-oriented initiatives. While less direct than WHIP’s authority, the following conservation programs also have wildlife components or contribute to wildlife-related resource concerns:

• The Environmental Quality Incentives Program (EQIP). EQIP participants may 

adopt practices for the benefit of fish and wildlife-related resource concerns on 

working agricultural lands. While EQIP eligibility requires lands to be in agricultural use, WHIP focuses on habitat development. Although projects on publicly owned land are not eligible for WHIP, under certain conditions, such 

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projects may be eligible for EQIP. WHIP has a $50,000 annual payment limitation while EQIP has a $300,000 contract and payment limitation.

• The Conservation Stewardship Program (CSP). CSP offers 31 enhancements 

that benefit wildlife to provide improvements to cover, food, habitat connectivity 

and access to water for terrestrial and aquatic wildlife including rare and declining habitats. In comparison, WHIP provides basic self-sustaining prioritized 

habitats by the implementation of various conservation practices. After the implementation of a complete WHIP conservation plan the land is then eligible to 

participate in CSP to further enhance the land for wildlife. CSP would have to 

add the component of first developing the land for fish and wildlife habitat and 

then enhance the lands.

• The Wetlands Reserve Program (WRP). WRP provides for long-term restoration 

and protection of valuable wetland and associated upland habitat through permanent and 30 year easements, 30 year contracts, and restoration cost-share 

agreements. However, WHIP land eligibility is much broader than WRP providing for habitat development benefiting species beyond those associated with 

wetland habitats. While WHIP allows for contract periods of up to 15 years for 

certain projects, it does not provide an easement option and only provides costshare assistance.

• The Healthy Forest Reserve Program (HFRP). HFRP provides for long-term 

protection and restoration of forestland habitat resources through permanent 

and 30 year easements, 30 year contracts, and restoration agreements in order 

to benefit species with special status such as those listed as threatened or endangered under the Endangered Species Act (ESA), proposed or candidate species for ESA listing, or species of special concern within the state. HFRP is primarily confined to the restoration and protection of forest land resources while 

WHIP eligibility is much broader, providing for habitat development benefiting 

species beyond those associated with forestland habitats. Unlike the various 

HFRP enrollment options, WHIP can only provide long term cost-share contracts.

• The Grassland Reserve Program (GRP). GRP provides for long-term protection 

of grazing uses and related conservation values through conservation easements, rental contracts, and restoration agreements. GRP emphasizes support 

for working grazing operations, enhancement of plant and animal biodiversity, 

and protection of grassland under threat of conversion to other uses. WHIP eligibility is much broader and provides for habitat development benefiting species 

beyond those associated with grassland habitats. While WHIP provides for longterm contracts (15 years), it does not contain rental agreement or easement enrollment options.

• The Conservation Reserve Program (CRP). Under CRP, FSA enters into contracts with agricultural producers to retire highly erodible and other environmentally sensitive land. During the 10 to 15 year contract period, eligible land 

is converted to grass, trees, wildlife cover, or other conservation uses to improve 

soil, air, and water quality and improve wildlife habitat. Participants receive 

annual rental payments and half the cost of establishing conservation covers 

CRP enrolls land to create wildlife habitat. All of the lands eligible for CRP 

could be enrolled in WHIP if they fall within the WHIP priority areas but not 

all lands eligible for WHIP could be enrolled in CRP. While WHIP allows for 

contract periods of up to 15 years for certain projects, it does not provide a rental contract option and only provides cost-share assistance.

USDA welcomes the opportunity to work with the Committee in evaluating opportunities to incorporate the unique elements of WHIP into other programs that have 

wildlife components, while preserving the natural resource conservation objectives 

that those programs are designed to achieve. Features of WHIP that are lacking in 

other programs include: broader land use eligibility; emphasis on wildlife habitat development; ability to undertake aquatic-related habitat measures; and priority for 

projects that support state, regional, and national initiatives.

Question 5. EQIP funding has grown exponentially over the last 10 years, can you 

talk about the backlog and do you think the Department is able to effectively manage the program as the funding has increased? 

Answer. The farm bill increased funding for EQIP by 337 percent from its authorized level of $400 million in 2002 to $1.75 billion authorized for 2012. With this increased level of funding, program participation also increased dramatically. In FY 

2002, producers enrolled 19,682 EQIP contracts at an average contract value of 

$15,700. In FY 2010, we added 36,499 new EQIP contracts at an average contract 

value of $23,000, resulting in about 150,000 active EQIP contracts. Despite the inVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00117 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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crease in participation, demand for program assistance remains high. The number 

of unfunded applications for EQIP at the end of FY 2010 was 7,777. 

While farm bill program participation has increased significantly, the number of 

staff years available to support these programs has not followed suit. Since FY 2002, 

the amount of financial assistance administered by NRCS has increased by 390 percent across all programs while the staff years available to deliver this assistance increased by 10 percent (see following chart). 

The increase in program delivery workload for the field office has created challenges. We recognize that in order to deliver conservation services NRCS needs to 

have adequate ‘‘boots on the ground’’ and we are taking aggressive steps to address 

the increased program workload. These steps include:

• Making improvements to the farm bill technical service provider (TSP) provision 

that will increase the number of technical experts available to assist producers 

with their conservation planning and implementation.

• Implementing a Conservation Delivery Streamlining Initiative (CDSI) that will 

reduce the number of administrative tasks performed by field staff and allow 

them to be working in the field up to 75 percent of the time, and

• Initiating a process to increase the proportion of agency technical staff in direct 

field service delivery positions. 

Change in Program Funding and Staff Years Since 2002

Question 6. What percentage of EQIP funding is carved-out by set asides or subprograms? 

Answer. The 2008 Farm Bill requires the following funding set asides for the Environmental Quality Incentives Program for each of fiscal years 2009 through 2012:

• Socially Disadvantaged Farmers and Ranchers—5 percent

• Beginning Farmer and Ranchers—5 percent

• Cooperative Conservation Partnership Initiative—6 percent

• Air Quality—$37.5 million

• Organic—Payments are authorized to assist organic or transition to organic production, but there is no specified minimum. The NRCS Chief has set aside 

$50,000,000 annually.

• Conservation Innovation Grants—Competitive grants are authorized to stimulate innovative approaches to leveraging the Federal investment in environmental enhancement in concert with agriculture, but there is no specified 

amount. Since 2008, NRCS has set aside between $20 and $30 million annually 

for national CIG awards.

• Livestock—60 percent of EQIP must be obligated to practices related to livestock production.

Question 7. I am concerned that while EQIP receives fewer funds than authorized 

every year, these subprograms do not receive the same cuts. Can you explain if 

these cuts to mandatory spending have any further impact on subprograms? 

Answer. Where the subprograms are provided a percentage of the available funds, 

they receive proportionally the same reductions as the overall program. For subproVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00118 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN

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grams where the statute requires a specific amount of funding, such as the $37.5 

million set aside for air quality (1240H(b)), an overall reduction in EQIP funding 

is absorbed by the general program and may potentially impact other EQIP priorities. For subprograms that are authorized, but no specific funding is set aside, such 

as for the organic initiative, NRCS has discretionary authority to adjust the amount 

of funding as appropriate, so as to avoid adverse impacts to other EQIP program 

priorities.

Question 8. The 2008 Farm Bill included ‘‘bidding down’’ language like that in the 

EQIP program which states: ‘‘If the Secretary determines that the environmental 

values of two or more applications for payments are comparable, the Secretary shall 

NOT assign a higher priority to the application only because it would present the 

least cost to the program.’’ Does this seem like language that makes sense in this 

fiscal environment? 

Answer. The ‘‘bidding down’’ language was incorporated in the 2002 Farm Bill to 

address concerns from agricultural stakeholders that wealthier landowners whose 

main income was from non-agricultural sources were out-competing farmers and 

ranchers for conservation program contracts because they could afford to take less 

Federal cost-share for the installation of practices. As a result, farmers and ranchers 

had a harder time successfully getting in to EQIP. 

NRCS implements this provision in a manner that ensures applications are evaluated and prioritized on the least-cost alternative to achieve the highest environmental benefits and thus NRCS is able to make cost-effective project selections. The 

‘‘bidding down’’ requirement allows EQIP to select projects that achieve the highest 

environmental benefit and treat all applicants in a fair and equitable manner regardless of their financial status.

Question 9. How much money has come out of EQIP to fund the CCPI program? 

Answer. As directed by the 2008 Farm Bill, no more than six percent of the funds 

made available for the Environmental Quality Incentives Program (EQIP) are used 

for the Cooperative Conservation Partnership Initiative (CCPI). EQIP funds made 

available through CCPI go to producers participating in the project, delivered in accordance with the EQIP authorities. The following amounts were obligated in contracts with producers participating in CCPI projects in:

• FY 2010: $70,800,000

• FY 2011: $74,280,000 (estimated)

Question 10. How has the Department used the EQIP program in regards to 

organics and do you think the money used for that purpose is an effective use of 

conservation dollars. What are the comparative environmental benefits? 

Answer. The 2008 Farm Bill included a provision within EQIP intended to assist 

organic producers as well as producers in the process of transitioning to organic production. In FY 2010, NRCS obligated $24 million in contracts with producers to 

treat 148,000 acres in organic production or in transition to organic production. 

The most commonly used practices included:

• Nutrient Management

• Cover Crop

• Pest Management

• Conservation Crop Rotation

• Prescribed Grazing

• Seasonal High Tunnel (interim conservation practice)

Assisting organic producers and those in the transition to organic farming with 

conservation practices furthers EQIP purposes with this new and growing segment 

of the agricultural sector. While many observers interpret organic production alone 

to be the most sustainable form of farming, NRCS has found that there are many 

conservation needs in the organic sector. Helping these operators to integrate conservation approaches in their production system ensures that critical environmental 

benefits are realized by helping organic growers remain economically viable so that 

they may sustain the natural physical, biological, and chemical properties of the soil 

and other natural resources, which is vital to organic production.

Question 11. Congress created the Conservation Security Program (CSP) in the 

2002 Farm Bill. This program was then replaced with the Conservation Stewardship 

Program in the 2008 Farm Bill. Can you discuss the changes that were made to 

the new CSP? 

Answer. The Conservation Stewardship Program reflects many changes from its 

predecessor, the Conservation Security Program. Overall the changes made the program more accessible and accountable and include:

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• Providing continuous nationwide enrollment.

• Establishing an enrollment cap of 12.769 million acres each fiscal year at an 

average cost of $18/acre/year.

• Making nonindustrial private forestland (NIPF) eligible for enrollment while establishing a limit of 10 percent of total acres per year.

• Ensuring that a minimum of 5 percent of acres are dedicated to assist Beginning Farmers or Ranchers and a minimum 5 percent of acres are dedicated to 

assist Socially Disadvantaged Farmers or Ranchers.

• Requiring contract offers to include all eligible land under the effective control 

of the producer.

• Limiting the contract length to 5 years with an opportunity for one renewal for 

a 5 year term.

• Allowing producers to initiate organic certification during the contract period.

• Allowing for annual and supplemental payments.

• Limiting each person or legal entity to $40,000 per year. Contract limitations 

for formal joint operations are $400,000 for the contract period and from 

$40,000 to $80,000 per year.

Question 12. A major issue with CSP was paying farmers for the status quo? How 

much more environmental benefit have we seen from the implementation of the new 

CSP program? What does the new CSP program offer that other working lands programs cannot provide? 

Answer. The Conservation Stewardship Program (CSP) is resulting in agricultural 

producers applying thousands of additional conservation activities on enrolled lands 

in conjunction with maintaining existing stewardship levels, generating sizable environmental benefits to the public. For example, under the 20,567 contracts enrolled 

during FY 2010, participants will apply and maintain an additional 78,947 conservation activities—an average of 3.8 additional activities per contract over all land 

uses in the contract. Additionally, CSP requires a participant to apply at least one 

additional activity for each land use, such as cropland and pasture, in order to be 

eligible to receive payment for the enrollment of that particular land use. An individual contract often has more than one land use, and thus an average of 2.8 additional activities will be applied per land use across all land uses. 

The purpose of other programs is to meet conservation standards while CSP focuses on achieving an additional, higher level of management. This higher level of 

conservation management is achieved through a comprehensive approach to working lands conservation where all of a participant’s eligible land must be enrolled. 

Of the enrolled land, CSP encourages the participant to implement additional conservation activities while maintaining existing conservation activities.

Question 13. What is the Administration’s position on the situation with WRP 

having no baseline and what priority does the Administration put on the continuation of the program. Where should Congress look to fund this program? 

Answer. Demand for WRP continues to be high and WRP has proven itself to be 

a valuable program for meeting the nation’s objectives related to protecting and restoring wetlands on private lands. Over the last 20 years, more than 11,000 private 

landowners have voluntarily enrolled in WRP to restore, protect and enhance wetlands and wildlife habitat on over 2.3 million acres nationwide. Through WRP, 

NRCS, landowners, and many partners work together to achieve long-term benefits 

on a landscape scale that will ensure our wetland resources are available for future 

generations. 

NRCS welcomes the opportunity to work with the Committee in exploring opportunities to achieve efficiencies that would allow funding of WRP while preserving 

the full array of natural resource conservation objectives that the broader suite of 

conservation programs are intended to achieve.

Question 14. In terms of environmental benefits, do you see working lands or 

easement programs providing the biggest bang for the buck? 

Answer. Both program approaches deliver their intended environmental benefits. 

With a variety of program approaches, it is possible for participants to find a conservation path that fits their personal economic situation and environmental objectives. Working land programs offer a valuable tool for assisting producers to address 

natural resource concerns that affect the viability and productivity of their operations. For example, working lands programs can provide technical and financial assistance needed to help producers meet or eliminate the need for regulatory requirements on their operations. These investments—voluntarily shared by the program 

participant—also provide a public benefit such as better water, air, or habitat quality. Some working lands programs, such as the Grasslands Reserve Program or 

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Farm and Ranch Lands Protection Program, offer easements, but ensure that enrolled lands will remain in agricultural uses over the long term—retaining important agricultural lands is a critical component for ensuring food security for the nation. 

Other easement programs emphasize the retirement of sensitive or environmentally significant lands. These conservation easements recognize the rights reserved to private landowners, compensate these landowners for the rights they voluntarily forego, and create valuable enduring environmental benefits for society. For 

example, establishing easements that protect and improve essential habitat can help 

to prevent a candidate species, like the sage-grouse, from being listed. These protections need to be in place for the long-term which an easement program can provide. 

Program approaches also can be used in tandem. For example, land retirement 

easements and working lands programs are valuable tools for addressing hypoxia 

in the Gulf of Mexico. Working lands programs can help producers improve nutrient 

management and reduce potential losses of nutrients into the riverine system, while 

land retirement easement programs can restore and protect wetlands and floodplain 

areas in strategic areas that best trap the nutrients that have left the farm prior 

to reaching the Gulf. Using program approaches together can achieve the landscapescale transformation needed to address larger conservation challenges such as hypoxia or candidate species protection.

Question 15. Do you think the benefit outweighs the cost to the Federal Government when acquiring permanent easements on lands at huge costs during this fiscal 

environment? 

Answer. Conservation easements provide significant and enduring benefits. These 

benefits are increased by ensuring that project location and purpose are part of the 

selection process. NRCS ranks and selects projects based upon several resource concern factors that consider the resource potential of the site itself and its location 

in the watershed. These factors are key to identifying valuable opportunities as the 

quality of any easement project will depend on its location as well as its intrinsic 

attributes. 

While initial easement acquisition costs may appear high, they should be considered in the context of the enduring public benefits. For example, based on the Benefit Cost Analysis for WRP, the estimated value of benefits per acre of permanent 

wetland was $10,935 and the estimated cost was $3,000. This means that the program has a cost benefit ratio of 3.6. This indicates that the value of estimated benefits from wetlands is considerable. 

Easements may also provide benefits through avoided costs. For example, for frequently flooded lands where producers routinely lose crops, the producer typically 

receives crop insurance or disaster payments. Retiring these lands through floodplain easements eliminates the insurance and disaster payments, reduces overall 

damages downsteam from flooding; and improves water quality.

Question 16. Do the carve-outs in the law for certain groups get fully used or do 

you often have to roll those funds back in? 

Answer. The set asides for socially disadvantaged and beginning farmers and 

ranchers, as authorized under the 2008 Farm Bill for the Environmental Quality 

Incentives Program (EQIP) and the Conservation Stewardship Program (CSP), are 

fully used. Each year we have exceeded the funding target goals. In 2010, the funding for these certain groups was:

• EQIP—$57,736,481 or 6.9 percent of total funds obligated in 2,109 contracts for 

socially disadvantaged farmers and ranchers

• EQIP—$ 134,944,240 or 16 percent of total funds obligated in 5,450 contracts 

for beginning farmers and ranchers

• CSP—1,695,890 acres or 6.7 percent of acres in 378 contracts for socially disadvantaged farmers and ranchers.

• CSP—1,038,269 acres or 4.1 percent of acres in 1,496 contracts for beginning 

farmers and ranchers

Question 17. How does regional equity affect the way you run the conservation 

programs and are they a hindrance to getting money to the places that need it the 

most? 

Answer. Regional equity ensures that each state receives an the opportunity for a minimum level of $15 million in aggregate funding under subtitle D programs, excluding the Conservation Reserve Program, Wetlands Reserve Program, and Conservation Security Program. The intent is to ensure that states are able to meet producers’ needs and address priority natural resource concerns. The provision allows 

that funds not obligated in contracts by April 1st of each year may be recalled by 

the Chief to meet demand in other states. While ensuring that a minimum level of 

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funding is provided to all states is an important consideration, the establishment 

of a fixed level may create disharmony should overall program funding be reduced. 

Establishing a proportion of funding rather than a fixed number could create a more 

balanced approach to ensuring that all states receive the mandatory resources needed to achieve conservation objectives.

Question 18. What is the Administration’s opinion on priority areas and do you 

think they match with the priorities of the Administration? Do you feel that funds 

go to these priority areas solely because of their inclusion in the law? 

Answer. Focusing scarce resources on priority issues is an effective method for accelerating progress. NRCS’ Conservation Effects Assessment Project (CEAP) reports 

have documented that risks to natural resource quality may be concentrated in specific areas and treating those can generate disproportionate benefits. The 2008 Farm 

Bill identified a number of priorities:

• geographically based (e.g., Agriculture Water Enhancement Program’s (AWEP) 

Eastern Snake Plain Aquifer, Puget Sound, Ogallala Aquifer, Sacramento River 

watershed, Upper Mississippi River Basin, Red River of the North Basin, and 

the Everglades; Chesapeake Bay Watershed Program; and Conservation Reserve Program priority areas);

• production-oriented (EQIP and CSP organic initiatives);

• producer-focused (Conservation Access for beginning and socially disadvantaged 

producers); and

• resource-specific (EQIP air quality initiative, AWEP’s water quality and quantity focus).

These farm bill priorities align well with Administration priorities for conservation and strengthening rural America. For example:

• The emphasis on serving historically underserved communities mirrors USDA’s 

Strike Force initiative;

• the Administration’s Chesapeake Bay Executive Order further emphasizes the 

priorities outlined in the Chesapeake Bay Watershed Program;

• USDA’s focus on strengthening rural economies is supported by priorities for assisting beginning farmers and ranchers in their conservation needs.

While funds go to these farm bill priorities because of statutory direction, they 

are nonetheless areas of considerable conservation need and deserving of conservation funding irrespective of their establishment as priority areas within the statute.

Question 19. How does the split administration of GRP work, do you think this 

is the best way to administer this program? 

Answer. National leadership for GRP is provided by the Chief, NRCS, and the Administrator, FSA, and their designees. Specific agency responsibilities are detailed 

in a Memorandum of Understanding. 

NRCS and FSA at the national level jointly develop and evaluate program policy 

and direction, monitor program implementation, ensure that GRP information is 

made available to the public, formulate budgets, and coordinate national GRP funding allocations to achieve national program objectives. Obligations are tracked at 

the national level to ensure 60 percent of the funding supports easements and 40 

percent of the funding supports rental contracts over the life of the farm bill. 

FSA has lead responsibility for rental contract administration and financial activities. FSA also provides all of the producer eligibility determinations and implements 

the rental contract enrollment options. NRCS has lead responsibility on conservation planning, technical assistance to owners and operators, and easement administration. National ranking criteria guide the development of state ranking criteria to 

ensure GRP funds are focused on projects that support grazing operations, protect 

grassland from conversion to other uses, enhance plant and animal biodiversity, leverage non-Federal funds and address that state’s program priorities. Priority is 

given to expiring Conservation Reserve Program (CRP) grasslands. 

While shared administration responsibilities for GRP does create some challenges, 

the agencies have worked together to implement this program as efficiently as possible. The Department is always interested in exploring more efficient and effective 

ways to implement our programs and would welcome the opportunity to work with 

you and others to achieve that end.

Question 20. What steps do your respective agencies take to ensure that conservation practices are truly effective? Can you describe the process you use, for example, 

to ensure that measures to prevent streambank erosion are working? 

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Answer. We take a number of steps to ensure that conservation practices are 

working—from our science-based technical standards and conservation planning 

process to oversight for practice installation and follow-up to validate performance.

• The planning process used by USDA is site specific and our technically trained 

staff works with the customer to identify the resource problems and plan the 

right suite of science-based practices to fix the problem (in this case it would 

likely be our shoreline and streambank protection practice.

• Conservation practices are developed by technical experts and undergo thorough 

peer and public review before being finalized and published through a Federal 

Register notice.

• Practices are designed and installed to specifications by technically qualified 

professionals (could be NRCS, State Forester, a third party, or the landowner); 

where engineering is involved there are additional review and approval requirements and authorities.

• Once installed, USDA follows up to ensure that the practice was installed correctly and completely and that it is performing as expected for the intended 

purpose and lifespan.

USDA implements a number of conservation practices that reduce streambank 

erosion and modify the vegetation and hydrology to enhance streambank stability. 

There are numerous examples and case studies that demonstrate that conservation 

practices and systems can improve streambank stability and improve water quality. 

A recent example is Peacheater Creek-Northeast Oklahoma. The area is characterized by poultry and cattle production and the downstream Illinois River and Lake 

Tenkiller had been placed on the 303(d) list for elevated phosphorus levels. Riparian 

area protection along with in-field conservation practices and farmstead improvements were applied. Measured decreases in streambank erosion were among the results, which also included reductions in phosphorus and nutrient loading and improved fish communities. 

In addition to the technical requirements to ensure conservation practice integrity, USDA collects natural resource trend data and conducts short- and long-term 

analyses of the conservation benefits of USDA conservation practices. The National 

Resources Inventory (NRI), for example, provides statistically sound data on natural 

resource status and trends on non-Federal lands, including trends in soil erosion, 

land use change, and wetlands, among others. 

USDA’s Conservation Effects Assessment Project (CEAP) is a multi-agency effort 

to quantify the environmental effects of conservation practices and programs and 

develop the science base for managing the agricultural landscape for environmental 

quality. CEAP literature reviews and assessments document the effects of conservation practices and related environmental benefits. 

Monitoring and evaluation of conservation practice effectiveness in all 43 Conservation Reserve Enhancement Program (CREP) Projects also document the effectiveness of conservation practices applied and the public the societal benefits. Another data set developed in partnership with the U.S. Geological Survey has quantified the benefits of conservation plantings and habitat development to many grassland and waterfowl species in over 12 Great Plain States. 

Questions Submitted By Hon. Martha Roby, a Representative in Congress from Alabama 

Question 1. Representative Terry Everett, who held my seat from 1993–2009 and 

during his tenure on this Committee, was very active in regards to irrigation. During the last farm bill, Representative Everett worked tirelessly in the creation of the 

Agricultural Water Enhancement Program under EQIP. This program has provided 

technical and financial assistance for agricultural water enhancement activities on 

farms. In particular, on-site off-stream reservoir was an initiative that many of our 

farmers were excited about participating in when it was passed into law. 

Unfortunately, the implementation of the program has been difficult to access in 

Alabama due to the requirement that the pond should be on high ground which 

much of our farm land is flat. 

Additionally, Alabama has had difficulty in accessing USDA’s irrigation programs 

due to the traditional lack of historical irrigation. Many of our farmers do not own 

the land that they are farming and therefore it is not cost-effective to build irrigation system. In a recent survey conducted by a team of Alabama Agricultural Experiment Station researchers at Auburn University, six out of ten farmers without irrigation in the state said they would be more likely to install or improve irrigation 

systems if a cost-share or subsidized loan program were available. 

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What can we do to improve EQIP to ensure that farmers are able to find assistance in irrigation? 

Answer. The agency has authority through EQIP and AWEP to provide financial 

and technical assistance to producers for improvements to existing irrigation systems that address water conservation or water quality resource issues. Such assistance may include development of irrigation storage reservoirs, ponds, and in-ground 

dugouts for new sources of water. Although water storage facilities on high ground 

are more ideal as these practices allow for use of less expensive efficient gravity flow 

irrigation, this is not the only alternative that may be available. For locations with 

relatively flat topography, EQIP and AWEP can be used to install water storage facilities along with pumping systems to transport the water to area for application 

of irrigation water. Under AWEP, the 2008 Farm Bill encourages development of 

irrigation storage facilities for areas experiencing drought in accordance with applicable EQIP program rules and on eligible on-farm agricultural land. This includes 

assistance to establish on-farm irrigation storage practices, which may be offstream, but still on eligible land that is either owned or under the control of the 

producer. 

According to the statute, financial assistance through EQIP and AWEP many only 

be provided to achieve a measurable water conservation or water quality environmental benefit. Correspondingly, there is a requirement that EQIP and AWEP program applicants demonstrate irrigation history on cropland as a condition for approval of irrigation system improvements. This standard is in place to help meet the 

statutory requirement to validate a resulting environmental benefit. Demonstration 

of irrigation history, however, is not limited to evidence of in-field irrigation equipment. Producers that may be using other, transportable means to irrigate may document those methods as evidence of irrigation history.

Question 2. As a report that the American Forest Foundation recently produced 

highlights, Alabama is spending quite a bit of its EQIP funds, roughly 17% and 

about 33% of WHIP funds on family forest—this is great, given how heavily forested 

my state is and given many of the forest health and fire challenges we are dealing 

with. What do you think is the reason for my state’s focus on forests, as compared 

with other states, that average about 4% spending on forests? 

Answer. The focus of program assistance on forest related issues in your state is 

reflective of the locally-led process where conservation partners and producers provide recommendations to the agency for the kind and scope of assistance needed. 

Through local work groups and State Technical Committee’s, the State Conservationist is provided latitude to focus program assistance to identified priority natural 

resource concerns. This flexibility allows each State Conservationist to prioritize 

funding on those geographic locations which have significant need for assistance to 

address resource concerns. 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE

1. Program Name 

Conservation Reserve Program (CRP). 

Prepared by the U.S. Department of Agriculture’s (USDA) Farm Service Agency 

(FSA). 

2. Subprograms/Department Initiatives 

FSA enters into contracts with agricultural producers to retire highly erodible and 

other environmentally sensitive land. During the 10 to 15 year contract period, eligible land is converted to grass, trees, wildlife cover, or other conservation uses to improve soil, air, and water quality and improve wildlife habitat. The program was initially authorized by the 1985 Farm Bill and amended by every subsequent farm bill. 

FSA is responsible for overall implementation and has entered into agreements 

for technical assistance with the Natural Resources Conservation Service (NRCS), 

the Forest Service acting on behalf of State Foresters, and other technical service 

providers. Participants receive annual rental payments and half the cost of establishing conservation covers. 

Since the 1985 Farm Bill, CRP has evolved from a program with a commodity 

supply control component to a conservation program that has increasingly focused 

or targeted limited program resources.

General Signup

Producers may offer land for CRP general sign-up enrollment during designated 

signup periods and all offers compete and are ranked against all other offers nationVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00124 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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wide using an Environmental Benefit Index (EBI) which is used to rank offers based 

on a number of environmental factors and cost.

Continuous Signup

Continuous signup targets environmentally-desirable land which could be devoted 

to conservation practices such as filter strips, grass waterways, and other practices 

that protect larger acreages. Offers may be made at any time.

Conservation Reserve Enhancement Program (CREP)

CREP is a state and Federal partnership to address environmental issues of importance to the state and nation. CREP combines state and Federal dollars with 

funding from nongovernment sources and provides a framework for USDA to work 

closely with state, tribal, and local governments to address specific environmental 

issues and goals.

Farmable Wetlands Program (FWP)

FWP is designed to restore up to one million acres of farmable wetlands and associated buffers by improving the land’s hydrology and vegetation. This includes constructed wetlands developed to receive flow for row-crop agriculture drainage systems for the purpose of providing nitrogen removal; land that was devoted to commercial pond-raised aquaculture; and cropland that was subject to the natural overflow of a prairie wetland.

Transition Incentive Program (TIP)

TIP is designed to facilitate the transition of expiring CRP land from a retired 

or retiring owner or operator to a beginning or socially disadvantaged farmer or 

rancher to return the land to production for sustainable grazing or crop production. 

TIP provides annual rental payments for up to 2 additional years after the expiration of the CRP contract to facilitate this transition.

Emergency Forestry Conservation Reserve Program (EFCRP)

EFCRP was designed to help restore and enhance forest resources that were damaged by the 2005 hurricanes. By planting trees, such as longleaf pine and bottomland hardwoods, landowners and operators could enhance wildlife habitat and improve the ability of at-risk land to withstand future storms. Enrollment for EFCRP 

ended in January 2009.

Wetland Restoration Floodplain Initiative

This initiative was designed to restore the functions and values of wetland ecosystems that have been devoted to agricultural use. This 500,000 acre initiative enrolls wetlands and buffers within a 100 year floodplain. These wetlands prevent degradation of the wetland area, increase sediment trapping efficiencies, improve water 

quality, prevent erosion and provide vital habitat for waterfowl and other wildlife.

Wetland Restoration Non-Floodplain Initiative

This initiative restores wetlands and playa lakes, which are shallow, depressional 

wetlands that are located outside a 100 year floodplain. This 250,000 acre initiative 

provides vital habitat for many wildlife species, filters runoff, recharges groundwater supplies and sequesters carbon.

Bottomland Hardwood Initiative

This initiative is designed to restore flood plains through the restoration of primarily bottomland hardwoods. This 250,000 acre initiative improves air and water 

quality and provides carbon sequestration benefits through reduction of greenhouse 

gases as well as increasing wildlife habitat.

Quail Initiative

This 350,000 acre initiative is designed to create habitat for the northern bobwhite quail and other grassland dependent birds. Bobwhite populations have declined with their habitat disappearing due to urbanization, increased grassland cultivation, and succession. This initiative provides successional grass buffers along agricultural field borders.

Longleaf Pine Initiative

This 250,000 acre initiative is designed to restore and re-establish longleaf pine 

stands that benefit wildlife species and protect water quality.

Duck Nesting Habitat Initiative

This 150,000 acre initiative is designed to restore wetlands located outside the 

100 year floodplain in Iowa, Minnesota, Montana, North Dakota, and South Dakota. 

Restoring these wetlands will provide nesting ducks with critical habitat, nesting 

cover, security from predators, and food.

State Acres for Wildlife Enhancement Initiative (SAFE)

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SAFE is an 850,000 acre initiative designed to target high priority state and regional wildlife objectives. SAFE provides the flexibility to meet the specific needs 

of high-value wildlife species in a participating state or region by targeting the restoration of vital habitat. 

3. Brief History 

Title XII of the Food Security Act of 1985, as amended (1985 Farm Bill), authorized CRP to enroll 40 to 45 million acres by 1990 with a primary goal of reducing 

soil erosion on highly erodible cropland. Secondary objectives included protecting the 

nation’s long-run capability to produce food and fiber, reducing sedimentation, improving water quality, fostering wildlife habitat, curbing production of surplus commodities, and providing income support for farmers. 

The Food, Agriculture, Conservation, and Trade Act of 1990 (1990 Farm Bill) extended CRP through 1995 and expanded the types of land eligible for enrollment 

to include lands that could reduce on-site or off-site threats to water quality if removed from production. Following 1990 Farm Bill enactment, FSA adopted new 

rental rates based on soil-specific productivity and developed an EBI to rank offers. 

The Federal Agriculture Improvement and Reform Act of 1996 (1996 Farm Bill) 

re-authorized CRP enrollment through 2002 and set a maximum enrollment of 36.4 

million acres. After 1996 Farm Bill enactment, FSA modified the EBI to include a 

wildlife benefits component. To better target the program, FSA began enrollment of 

selected practices such as filter strips and riparian buffers on a continuous basis 

without competition which included an incentive payment to encourage enrollment. 

In 1997, FSA created CREP which furthered targeting through state-Federal conservation partnerships that address specific state and nationally significant water 

quality, soil erosion, and wildlife habitat concerns related to agriculture. Additional 

incentives are generally provided. An up-front signing payment and a practice incentive payment were established in 2000 to further enhance continuous enrollment, 

including CREP. 

The 2001 agriculture appropriations act authorized FWP which provided for noncompetitive enrollment under continuous sign-up provisions and incentives for up to 

500,000 acres of small non-flood plain wetlands and adjacent uplands in six states 

(Nebraska, Iowa, Minnesota, North Dakota, South Dakota, and Montana). Enrollment was limited to 100,000 acres per state. 

The Farm Security and Rural Investment Act of 2002 (2002 Farm Bill) extended 

CRP enrollment authority through 2007 and increased the enrollment cap by 2.8 

million acres to 39.2 million acres. An administrative requirement that cropland 

must have been recently cropped was added by the 2002 Farm Bill to require that 

cropland must have been cropped or considered cropped in at least 4 of the 6 years 

preceding enactment. The 2002 Farm Bill also generally authorized managed harvesting of forage, expanded FWP from the original six states to all states, and raised 

the enrollment cap to 1 million acres while keeping the 100,000 acre state maximum. 

During 2006, FSA offered CRP participants the opportunity to re-enroll or extend 

contracts set to expire between 2007 and to 2010 on about 28 million acres. FSA 

ranked the acreage based on the EBI score when the land was enrolled. The highest 

ranked were offered new 10 or 15 year contracts. Lower ranking contracts were offered extensions of 2–5 years depending upon the relative ranking. This preserved 

farmers’ ability to protect America’s most sensitive agricultural lands. Holders of 

about 82 percent of expiring contract acres were approved for re-enrollment or extension. 

The 2006 supplemental emergency appropriations act authorized the EFCRP to 

provide assistance to timberland damaged by the 2005 hurricanes. Acreage enrolled 

does not count against the CRP enrollment cap. 

The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) extended CRP 

enrollment authority through September 30, 2012, and required that enrollment be 

no more than 32 million acres beginning October 1, 2009. Other changes included:

• Expansion of practices under FWP;

• 50 percent cost-share for tree thinning activities;

• New payment limitation applicability and adjusted gross income eligibility criteria;

• Updated cropping history to 4 of 6 years between 2002 and 2007;

• Added new routine grazing authority;

• Added TIP; and

• Added authority to exclude continuous and CREP acreage from the 25 percent 

county cropland enrollment limit. 

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4. Purpose/Goals 

CRP’s purpose is ‘‘to assist owners and operators of land to conserve and improve 

the soil, water, and wildlife resources of such land and to address issues raised by 

state, regional, and national conservation initiatives.’’

5. Success in Meeting Programmatic Purpose/Goals 

CRP environmental benefits include:

Total Land Enrolled and Land Enrolled in Certain Categories 

Measure Unit 

Fiscal Year (FY) 

2006 2007 2008 2009 2010

Total Land Enrolled million acres 36.0 36.8 34.6 33.8 31.3

In Buffers million acres 1.84 1.90 2.00 2.01 2.02

Wetlands million acres 2.01 2.06 1.98 1.98 2.05

HEL 1 million acres 25.2 25.5 23.6 22.8 20.5

Reductions (not leaving field or intercepted by buffers)

Sediment million tons 210 216 219 220 220

Nitrogen million lbs 607 623 616 611 607

Phosphorus million lbs 121 124 123 123 122

Greenhouse Gas Reduction (Carbon Dioxide (CO2) equivalent/Year)

CO2 sequestered million metric tons 51 50 48 47 44

Energy and Fertilizer million metric tons 99988

Total million metric tons 60 60 57 55 52

1 HEL means highly erodible land. 

CRP improves water quality.

• CRP reduces the nitrogen and phosphorus leaving a field by runoff and percolation. Using models developed by the Food and Agricultural Policy Research Institute (FAPRI), in FY 2010, 607 million pounds less nitrogen and 122 million 

pounds less phosphorus left fields due to CRP, which accounted for 95 and 86 

percent reductions, respectively, as compared to cropped land conditions in 

2005/2006.

• Grass filters and riparian buffers (partial field enrollments) intercept sediment, 

nutrients, and other contaminants before they enter waterways. FAPRI’s model 

estimates that in 2010, 356 million pounds of nitrogen and 72 million pounds 

of phosphorus were intercepted by 2.0 million acres of CRP buffers, nationally.

• In 2010, grass and tree plantings reduced nitrate loss by 109 million pounds. 

Nitrate is a form of nitrogen that is biologically available to algae. Excess nitrate contributes to the formation of hypoxic zones in the Gulf of Mexico, Chesapeake Bay, and other waters.

• Wetlands restored and constructed by CRP improve water quality by converting 

nitrate/nitrogen into benign atmospheric nitrogen. In 2010, Iowa’s 65 CREP 

constructed wetland projects on 1,808 acres reduced nitrate runoff by nearly 

650,000 pounds.

CRP enhances wildlife habitat. The 31.3 million acres of grass, trees, and wetlands established by CRP benefit numerous wildlife species. Several independent 

studies have identified benefits to multiple bird populations including:

• Prairie Pothole Ducks—Researchers from the U.S. Fish and Wildlife Service 

(USFWS) estimated that the CRP contributed to a net increase of about two 

million additional ducks per year (30 percent increase in duck production) since 

1992 in North Dakota, South Dakota, and Northeastern Montana. Populations 

fluctuate on a year-to-year basis due to differences in precipitation patterns.

• Ringed-Neck Pheasants—Western EcoSystems Technology, Inc., found that, 

in prime pheasant habitat, a four percent increase in CRP herbaceous vegetation was associated with a 22 percent increase in pheasant counts.

• Sage Grouse—The Washington Department of Natural Resources found that 

CRP enrollment was associated with halting a decline (25 percent between 

1970–1988) in sage grouse populations. The study found that a region without 

substantial CRP enrollment had continued sage grouse population decline.

• Northern Bobwhite Quail—Mississippi State University found that quail observations were positively related to CRP enrollment. The quail population response varies by cover and region.

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• Grassland Birds—The CRP was identified as a ‘‘Reason for Hope’’ for grassland birds in the 2009 ‘‘State of the Birds’’ report, which documented serious 

declines in grassland birds. Researchers from the United States Fish and Wildlife Service, U.S. Geological Survey, and the University of Montana found that 

CRP had a large impact on grassland bird populations, including two birds designated as species of continental importance by Partners in Flight.

CRP sequesters carbon. CRP sequesters more carbon on private lands than any 

other federally administered program. In 2010, CRP resulted in the equivalent of 

a 52 million metric ton net reduction in carbon dioxide (CO2) from CO2 sequestration, reduced fuel use, and nitrous oxide emissions avoided from not applying fertilizer. Carbon sequestration helps offset the release of greenhouse gases (GHG) into 

the atmosphere. GHG have been associated with anthropogenic climate change. 

CRP protects and enhances soil productivity. CRP conservation covers reduce erosion and protect soil productivity. By targeting fragile cropland and placing 

these lands into protective conservation covers, the CRP greatly reduces sheet, rill, 

and wind soil erosion. Each year since 2002, CRP reduced soil erosion by 325 million 

tons or more from pre-CRP levels. Since 1986, CRP has reduced more than 8 billion 

tons of soil erosion. (Note: Erosion rates and total sediment provided at the beginning of this section are not comparable measurements because erosion includes the 

rate of soil loss through wind and water erosion.) 

CRP reduces downstream flood damage. CRP lands reduce downstream flood 

damage by helping to reduce peak flows after storm events by holding and slowly 

releasing the storm water. 

FSA is using CRP enrollment data, the USDA soils and natural resource inventories, and cooperative agreements with Federal, state, and other partners to refine 

these performance measures and to estimate the benefits from CRP. For more information see: http://www.fsa.usda.gov/FSA/webapp?area=home&subject=

ecpa&topic=nra. 

Other sources of information related to the topics discussed above include the following:

http://www.fsa.usda.gov/Internet/FSAlFile/factsheetlcrplbennies.pdf

http://www.fsa.usda.gov/FSA/webapp?area=home&subject=ecpa&topic=nra

http://www.fsa.usda.gov/Internet/FSAlFile/ducklreport.pdf

http://www.fsa.usda.gov/Internet/FSAlFile/pheasantlstudy.pdf

http://www.fsa.usda.gov/Internet/FSAlFile/sagelgrouse.pdf

http://www.fsa.usda.gov/Internet/FSAlFile/quaillstudy.pdf

http://www.fsa.usda.gov/Internet/FSAlFile/grasslandlbirdslfws.pdf

http://www.stateofthebirds.org/2009/habitats/game-birds

http://www.fsa.usda.gov/Internet/FSAlFile/fyannual2009.pdf

http://www.fsa.usda.gov/Internet/FSAlFile/606586lhr.pdf

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6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002

Actual 

FY 2003

Actual 

FY 2004

Actual 

FY 2005

Actual 

FY 2006

Actual 

FY 2007

Actual 

FY 2008

Actual 

FY 2009

Actual 

FY 2010

Actual 

FY 2011

Estimated 

Conservation Reserve Program $1,784,665 $1,788,852 $1,798,522 $1,863,004 $1,930,723 $1,948,248 $1,990,178 $1,933,660 $1,910,630 $1,997,496Emergency Forestry Conservation Reserve Program 0 0 0 0 5,500 6,060 9,944 9,881 8,297 9,291

7. Annual Outlays (FY 2002–FY 2011) 

CRP is funded by Commodity Credit Corporation (CCC). Budget authority for CCC programs is based on obligations. Funds that are obligated in one fiscal year may not be disbursed until a succeeding fiscal year or fiscal years. 

FY 2002 Through FY 2011 Outlays 

(Dollars in thousands) 

FY 2002

Actual 

FY 2003

Actual 

FY 2004

Actual 

FY 2005

Actual 

FY 2006

Actual 

FY 2007

Actual 

FY 2008

Actual 

FY 2009

Actual 

FY 2010

Actual 

FY 2011

Estimated 

Conservation Reserve Program $1,785,059 $1,789,258 $1,800,675 $1,828,470 $1,895,872 $1,963,161 $1,990,867 $1,916,468 $1,910,630 $1,997,496Emergency Forestry Conservation Reserve Program 0 0 0 0 5,500 6,060 9,524 9,846 8,297 9,291

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8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Department Strategic Goal: Ensure our National Forests and private working lands are conserved, restored, and made more resilient 

to climate change, while enhancing our resources.

Program Program ItemsConservation

Conservation Reserve Program 974,124 1,990,178 1,872,881 1,910,630 1,997,496Grassroots Source Water Protection Program 1,856 3,687 5,000 5,000 5,000State Mediation Grants 1 526 1,092 1,092 1,092 1,092

Direct Conservation Loans 1 0 0 0 114 1,065

Guaranteed Conservation Loans 1 0 0 0 1278

Other Conservation Payments 2 4,600 3,247 46

¥4 33,334

Administrative Costs (direct) 107,118 240,070 256,932 278,940 278,825Indirect costs 9,773 82,642 63,352 68,779 72,804

Total Costs 1,097,997 2,320,916 2,199,303 2,264,552 2,389,894FTEs 1,228 3,023 2,015 2,928 2,885

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining, repopulating, and economically 

thriving.

Program Program ItemsIncome Support and Disaster Assistance

Emergency Conservation Program 3 149,727.00 128,456.00 0.00 92,459.00 39,719.00

Administrative costs (direct) 776,465.00 683,795.00 694,980.00 744,303.00 753,934.00

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Indirect costs 47,548.00 234,633.00 226,905.00 242,967.00 246,299.00

Total Costs 973,740.00 1,046,884.00 921,885.00 1,079,729.00 1,039,952.00FTEs 8,905.00 8,620.00 9,528.75 8,355.00 8,140.00

Conservation

Emergency Conservation Program 3 0 0 153,044.00 0 0

Administrative costs (direct) 0 0 8,344.00 0 0

Indirect costs 0 0 0 0.00 0

Total Costs 0.00 0.00 161,388.00 0.00 0.00

FTEs 0.00 0.00 0.25 0.00 0.00 1FSA has programs related to supporting the conservation goal that are not part of the specific request. 

2Grassland Reserve Program (GRP) payments are reported by NRCS for budget purposes. FSA administrative costs related to GRP and Voluntary Public Access and Habitat Incentive 

Program are included. 3The information related to the Emergency Conservation Program (ECP) is reported as an emergency program under Goal 1. We have broken out the program information but the administrative costs relate to all programs for the Income Support and Disaster Assistance Goal. 

120

9. Eligibility Criteria 

Eligible Producers

An eligible producer must have owned or operated eligible land for at least 12 

months prior to enrollment. In cases where the land was not acquired to enroll in 

the CRP, a waiver may be authorized.

Eligible Land

Land that may be offered includes cropland that is planted or considered planted 

to an agricultural commodity 4 of the 6 crop years from 2002 through 2007, and 

is physically and legally capable of being planted in a normal manner to an agricultural commodity. 

For continuous signup, land may be certain marginal pasture land.

Additional Cropland Requirements

In addition to cropping history, for general signup, cropland must meet one of the 

following:

• Have a weighted average erosion index of 8 or greater;

• Be expiring CRP acreage; or

• Be located in a national or state CRP conservation priority area. 

10. Utilization (Participation) Data

• Total enrollment of 31.31 million acres in 750,000 contracts on 416,000 farms.

• Consists of 26.2 million acres in 338,000 contracts on 222,000 farms in general 

signup enrollment and 5.0 million acres in 412,000 contracts on 239,000 farms.

CRP Enrollment by State as of April 2011

State Number of 

Contracts 

Number of 

Farms Acres 

Annual Rental

Payments 

($1,000) ($/Acre) 

U.S. 749,913 415,953 31,213,510 1,720,354 55.12

Alabama 9,108 6,488 398,166 18,286 45.93

Alaska 45 28 19,037 671 35.25

Arkansas 5,956 3,289 250,780 14,971 59.70

California 506 390 124,510 4,712 37.84

Colorado 12,744 6,125 2,251,395 74,324 33.01

Connecticut 16 13 163 13 78.44

Delaware 666 349 6,850 754 110.13

Florida 1,318 1,067 56,382 2,262 40.12

Georgia 9,069 6,440 318,782 14,973 46.97

Hawaii 9 9 167 10 57.64

Idaho 5,200 2,960 668,317 29,619 44.32

Illinois 82,044 44,833 1,035,931 118,474 114.36

Indiana 38,168 21,360 286,447 31,196 108.91

Iowa 106,489 53,422 1,673,364 214,169 127.99

Kansas 47,139 26,794 2,738,960 109,973 40.15

Kentucky 17,649 9,459 360,295 40,039 111.13

Louisiana 5,036 3,210 327,661 20,172 61.56

Maine 679 472 17,972 931 51.83

Maryland 6,427 3,518 79,041 10,891 137.78

Massachusetts 4 4 15 3 172.53

Michigan 15,185 8,695 229,140 20,198 88.15

Minnesota 63,002 33,112 1,640,921 110,574 67.39

Mississippi 19,808 12,458 850,134 40,870 48.07

Missouri 36,459 21,063 1,364,524 101,211 74.17

Montana 15,257 5,982 2,863,105 92,025 32.14

Nebraska 28,306 15,872 1,081,185 65,850 60.91

New Hampshire 5 5 58 3 55.46

New Jersey 275 194 2,449 170 69.29

New Mexico 1,978 1,283 453,819 15,221 33.54

New York 2,866 2,032 53,136 3,713 69.87

North Carolina 8,076 5,263 117,457 8,049 68.53

North Dakota 34,254 16,766 2,650,455 95,825 36.15

Ohio 38,008 21,227 343,596 40,952 119.19

Oklahoma 7,500 5,074 861,360 28,902 33.55

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CRP Enrollment by State as of April 2011—Continued

State Number of 

Contracts 

Number of 

Farms Acres 

Annual Rental

Payments 

($1,000) ($/Acre) 

Oregon 4,279 2,253 551,279 28,710 52.08

Pennsylvania 12,115 7,625 220,750 22,729 102.96

Puerto Rico 19 19 2,032 130 63.93

South Carolina 7,649 4,323 159,731 6,129 38.37

South Dakota 31,613 14,790 1,165,373 65,084 55.85

Tennessee 7,321 4,883 205,282 13,775 67.10

Texas 22,107 16,234 3,465,165 124,839 36.03

Utah 875 543 167,952 5,206 31.00

Vermont 384 271 2,875 288 100.18

Virginia 5,839 4,464 63,416 3,760 59.29

Washington 12,406 5,168 1,453,510 81,116 55.81

West Virginia 447 363 5,840 431 73.73

Wisconsin 24,642 15,107 400,679 32,064 80.02

Wyoming 965 653 224,020 6,087 27.17

Not Reported 1 1 28 2 82.00

Note: ‘‘Not Reported’’ includes a contract with a data anomaly. 

11. Duplication or Overlap with Other Programs 

CRP is not a duplicate of other USDA conservation programs. Certain programs 

may share some common eligibility, but each program provides producers a unique 

set of options for the short and long-term management of the farm or ranch. Generally, the same parcel of land cannot be enrolled in more than one program at the 

same time. These programs are complementary because they provide choices for producers in how they voluntarily protect their land and provide conservation benefits 

to their community and beyond. 

CRP enrolls land to create wildlife habitat. All of the lands eligible for CRP could 

be enrolled in Wildlife Habitat Incentive Program (WHIP) if they fall within the 

WHIP priority areas but not all lands eligible for WHIP could be enrolled in CRP. 

CRP and WRP address the restoration and long term conservation of wetland resources. However, CRP is directed primarily to cropland and marginal pastureland, 

and many CRP participants with wetland resources are unwilling to have an easement placed on the land. 

In the case of Grasslands Reserve Program (GRP), most of the land is either native sod or pasture but some cropland may be enrolled into easements or long-term 

contracts. There is some potential overlap of eligible acres in riparian areas near 

streams or rivers, but this gives producers the flexibility to enroll in the program 

that best suits their needs. 

CREP targets specific resource concerns in a state CREP project area while providing additional incentives for enrollment above and beyond what is available 

under continuous CRP and Initiatives. These additional incentives are made possible through USDA and state government partnerships. 

Initiatives and continuous CRP are available nationwide or in certain selected geographic areas. 

Both Environmental Quality Incentives Program (EQIP) and CRP address natural 

resource concerns, the land uses on which the practices are applied generally are 

distinct. There could be minimal overlap where CRP enrolls windbreaks, 

shelterbelts and shallow water impoundments for wildlife. 

There are many examples of FSA and NRCS programs working together to 

achieve conservation goals. For example, in the Chesapeake Bay, combinations of 

land retirement and conservation practices/systems are used to achieve nutrient, 

sediment and other resource objectives. 

12. Waste, Fraud and Abuse 

There has been no extensive Office of Inspector (OIG) or Government Accountability Office (GAO) audit of the program during the past 5 years. Although occasional cases of producer misconduct may have been identified and addressed 

through investigations in the past, we do not have a current audit that indicates 

on-going systemic waste, fraud or abuse. FSA conducts its own internal investigation through its county office review process and through its internal review audit 

122

process. In 2008, 2009 and 2010 the amount of improper payments for CRP was .77 

percent, 1.2 percent, and 1.77 percent, respectively. 

13. Effect of Administrative PAYGO 

Exhibit 1 shows the costs and savings related to USDA’s Administrative PAYGO 

Scorecard. 

1. Program Name 

Emergency Conservation Program (ECP). 

Prepared by USDA’s FSA. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

ECP was authorized by the Agricultural Credit Act of 1978, as amended, to provide financial assistance to agricultural producers to rehabilitate farmlands damaged by natural disaster when new conservation problems have been created that: 

(1) if not treated, will impair or endanger the land; (2) materially affect the productive capacity of the land; (3) represent damage that is unusual in character and is 

not the type that would recur frequently in the same area; and (4) will be so costly 

to rehabilitate that Federal assistance is or will be required to return the land to 

productive agricultural use. Funding is appropriated by Congress. ECP generally is 

funded through periodic supplemental appropriations that remains available until 

expended. 

4. Purpose/Goals 

ECP provides emergency funding and technical assistance for farmers and ranchers to rehabilitate farmland damaged by natural disasters and for carrying out 

emergency water conservation measures in periods of severe drought. 

5. Success in Meeting Programmatic Purpose/Goals 

ECP successfully provides financial assistance to agricultural producers to rehabilitate farmlands damaged by natural disasters. In FY 2010, nearly $54 million 

was allocated to help producers throughout the country address damage from 

drought, floods, hurricanes, wildfire, tornados and other disasters. As of June 20, 

2011, in FY 2011, nearly $65 million (see 2011 allocations table below) has been allocated to assist with similar disasters, including the devastating tornados that have 

hit states such as Alabama, Arkansas, Alabama, Georgia, North Carolina, Pennsylvania, Virginia and others, and floods in Arkansas, California, Colorado, Iowa, Kentucky, Oregon, Minnesota, New York, North Carolina, Tennessee, Virginia, Wisconsin and other states. If funds allocated to a state are not used within a reasonable period of time, the funds are withdrawn and reallocated to meet ECP needs 

elsewhere.

123

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002

Actual 

FY 2003

Actual 

FY 2004

Actual 

FY 2005

Actual 

FY 2006

Actual 

FY 2007

Actual 

FY 2008

Actual 

FY 2009

Actual 

FY 2010

Actual 

FY 2011

Estimated 

Emergency Conservation Program 0 0 $11,929 $150,000 $161,800 $18,000 $204,413 0 0 0

7. Annual Outlays (FY 2002–FY 2011) 

The Emergency Conservation Program (ECP) receives no-year discretionary appropriations. Actual ECP cost-share outlays are made 

when practices are completed. 

FY 2002 Through FY 2011 Outlays 

(Dollars in thousands) 

FY 2002

Actual 

FY 2003

Actual 

FY 2004

Actual 

FY 2005

Actual 

FY 2006

Actual 

FY 2007

Actual 

FY 2008

Actual 

FY 2009

Actual 

FY 2010

Actual 

FY 2011

Estimated 

Emergency Conservation Program $32,365 $46,980 $23,100 $57,123 $88,311 $72,166 $27,730 $71,084 $76,879 $71,000

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8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Department Strategic Goal: Ensure our National Forests and private working lands are conserved, restored, and made more resilient 

to climate change, while enhancing our resources.

Program Program ItemsConservation

Conservation Reserve Program 974,124 1,990,178 1,872,881 1,910,630 1,997,496Grassroots Source Water Protection Program 1,856 3,687 5,000 5,000 5,000State Mediation Grants 1 526 1,092 1,092 1,092 1,092

Direct Conservation Loans 1 0 0 0 114 1,065

Guaranteed Conservation Loans 1 0 0 0 1278

Other Conservation Payments 2 4,600 3,247 46

¥4 33,334

Administrative Costs (direct) 107,118 240,070 256,932 278,940 278,825Indirect costs 9,773 82,642 63,352 68,779 72,804

Total Costs 1,097,997 2,320,916 2,199,303 2,264,552 2,389,894FTEs 1,228 3,023 2,015 2,928 2,885

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining, repopulating, and economically 

thriving.

Program Program ItemsIncome Support and Disaster Assistance

Emergency Conservation Program 3 149,727.00 128,456.00 0.00 92,459.00 39,719.00

Administrative costs (direct) 776,465.00 683,795.00 694,980.00 744,303.00 753,934.00

125

Indirect costs 47,548.00 234,633.00 226,905.00 242,967.00 246,299.00

Total Costs 973,740.00 1,046,884.00 921,885.00 1,079,729.00 1,039,952.00FTEs 8,905.00 8,620.00 9,528.75 8,355.00 8,140.00

Conservation

Emergency Conservation Program 3 0 0 153,044.00 0 0

Administrative costs (direct) 0 0 8,344.00 0 0

Indirect costs 0 0 0 0.00 0

Total Costs 0.00 0.00 161,388.00 0.00 0.00

FTEs 0.00 0.00 0.25 0.00 0.00 1FSA has programs related to supporting the conservation goal that are not part of the specific request. 

2Grassland Reserve Program (GRP) payments are reported by NRCS for budget purposes. FSA administrative costs related to GRP and Voluntary Public Access and Habitat Incentive 

Program are included. 3The information related to the Emergency Conservation Program (ECP) is reported as an emergency program under Goal 1. We have broken out the program information but the administrative costs relate to all programs for the Income Support and Disaster Assistance Goal. 

126

9. Eligibility Criteria 

County FSA committees determine land eligibility based on on-site inspections of 

damage, taking into account the type and extent of damage. For land to be eligible, 

the natural disaster must create new conservation problems that, if untreated, 

would:

• impair or endanger the land;

• materially affect the land’s productive capacity;

• represent unusual damage which, except for wind erosion, is not the type likely 

to recur frequently in the same area; and

• be so costly to repair that Federal assistance is or will be required to return 

the land to productive agricultural use.

Conservation problems existing prior to the applicable disaster are ineligible for 

ECP assistance. 

ECP program participants receive cost-share assistance of up to 75 percent of the 

cost to implement approved emergency conservation practices, as determined by 

county FSA committees. Socially-disadvantaged producers may be eligible for up to 

90 percent cost-share assistance. Individual or cumulative requests for cost-sharing of $50,000 or less per person, per disaster are approved at the county committee level. Cost-sharing from $50,001 

to $100,000 is approved at the state committee level. Cost-sharing over $100,000 

must be approved by FSA’s national office. Further, there is a payment limitation 

of $200,000 per person or legal entity per disaster. 

10. Utilization (Participation) Data 

Since 1978, ECP has provided assistance to help producers on between 2,000 to 

nearly 38,000 farms a year. The wide range of assistance stems from the fact that 

ECP is an appropriated program that is only utilized when needed by farmers and 

ranchers after disasters strike. 

As of June 20, 2011, about $167 million is estimated in unmet ECP needs primarily related to recent natural disasters including flooding, tornadoes, drought, 

and wildfires. 

11. Duplication or Overlap with Other Programs 

Although the Emergency Watershed Protection Program (EWP) and ECP have 

similar goals, generally, ECP is farm level, and EWP is watershed level. Through 

ECP, USDA works directly with farmers to cost-share on practices to restore land 

and return it to production after a natural disaster. Under EWP, USDA works with 

states, counties, or other local sponsors to provide financial assistance to address 

problems caused by natural disasters that affect area wide issues. Sponsors must 

provide a share of the resources to support the project. 

ECP also works in concert with the Emergency Forest Restoration Program 

(EFRP), authorized by the 2008 Farm Bill, Forestry Title, to address all eligible private agricultural land after a natural disaster. EFRP addresses the critical need to 

restore nonindustrial private forestland after a natural disaster such a hurricane or 

tornado. 

12. Waste, Fraud and Abuse 

Although occasional cases of producer misconduct may have been identified and 

addressed through investigations in the past, no current systemic waste, fraud or 

abuse has been identified related to this program. Due to the nature of ECP funding, ECP has been audited often. Most recently, following appropriations under the 

2008 supplemental appropriations act and the 2008 disaster relief and recovery supplemental appropriations act as well as transfer authority provided in the 2009 supplemental appropriations act, OIG conducted the following audits:

a. Review of Emergency Disaster Assistance for 2008 Disasters: Emergency 

Conservation Program, (Audit 03702–1–TE). This audit, which focused on ECP 

assistance to address damages from Hurricanes Ike and Gustav, did not find 

many significant issues.

b. Review of Emergency Disaster Assistance for the 2008 Natural Disasters: 

Emergency Conservation Program (Audit 03702–1–TE). This audit, which focused on ECP assistance to address damage from the 2008 Midwest Floods, had 

a number of findings, which could only be addressed with additional funding 

and staff salary. 

13. Effect of Administrative PAYGO 

None. 

127

1. Program Name 

Voluntary Public Access and Habitat Incentive Program (VPA–HIP). 

Prepared by USDA’s Farm Service Agency. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

VPA–HIP is a competitive grant program authorized by the 2008 Farm Bill. Up 

to $50 million is available through FY 2012. Funding is limited to state and tribal 

governments establishing new public access programs, expanding existing public access programs, and/or enhancing wildlife habitat on lands enrolled in public access 

programs. 

4. Purpose/Goals 

The primary objective of the VPA–HIP is to encourage owners and operators of 

privately-held farm, ranch, and forestland to voluntarily make that land available 

for access by the public for wildlife-dependent recreation, including hunting or fishing, under programs implemented by state or tribal governments. VPA–HIP will 

provide environmental, economic and social benefits including, but not limited to, 

enhanced wildlife habitat, improved wildlife populations, increased revenue for rural 

communities, and expanded opportunities for re-connecting Americans with the 

great outdoors. 

5. Success in Meeting Programmatic Purpose/Goals 

Funding was first obligated under VPA–HIP in 2010. It is too soon to assess the 

success in meeting programmatic goals.

128

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002

Actual 

FY 2003

Actual 

FY 2004

Actual 

FY 2005

Actual 

FY 2006

Actual 

FY 2007

Actual 

FY 2008

Actual 

FY 2009

Actual 

FY 2010

Actual 

FY 2011

Estimated 

Voluntary Public Access and 

Habitat Incentives Program 0 0 0 0 0 0 0 0 $11,756 $21,578

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Outlays 

(Dollars in thousands) 

FY 2002

Actual 

FY 2003

Actual 

FY 2004

Actual 

FY 2005

Actual 

FY 2006

Actual 

FY 2007

Actual 

FY 2008

Actual 

FY 2009

Actual 

FY 2010

Actual 

FY 2011

Estimated 

Voluntary Public Access and 

Habitat Incentives Program 0 0 0 0 0 0 0 0 0 $33,334

129

8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Department Strategic Goal: Ensure our National Forests and private working lands are conserved, restored, and made more resilient 

to climate change, while enhancing our resources.

Program Program ItemsConservation

Conservation Reserve Program 974,124 1,990,178 1,872,881 1,910,630 1,997,496Grassroots Source Water Protection Program 1,856 3,687 5,000 5,000 5,000State Mediation Grants 1 526 1,092 1,092 1,092 1,092

Direct Conservation Loans 1 0 0 0 114 1,065

Guaranteed Conservation Loans 1 0 0 0 1278

Other Conservation Payments 2 4,600 3,247 46

¥4 33,334

Administrative Costs (direct) 107,118 240,070 256,932 278,940 278,825Indirect costs 9,773 82,642 63,352 68,779 72,804

Total Costs 1,097,997 2,320,916 2,199,303 2,264,552 2,389,894FTEs 1,228 3,023 2,015 2,928 2,885

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining, repopulating, and economically 

thriving.

Program Program ItemsIncome Support and Disaster Assistance

Emergency Conservation Program 3 149,727.00 128,456.00 0.00 92,459.00 39,719.00

Administrative costs (direct) 776,465.00 683,795.00 694,980.00 744,303.00 753,934.00

130

Indirect costs 47,548.00 234,633.00 226,905.00 242,967.00 246,299.00

Total Costs 973,740.00 1,046,884.00 921,885.00 1,079,729.00 1,039,952.00FTEs 8,905.00 8,620.00 9,528.75 8,355.00 8,140.00

Conservation

Emergency Conservation Program 3 0 0 153,044.00 0 0

Administrative costs (direct) 0 0 8,344.00 0 0

Indirect costs 0 0 0 0.00 0

Total Costs 0.00 0.00 161,388.00 0.00 0.00

FTEs 0.00 0.00 0.25 0.00 0.00 1FSA has programs related to supporting the conservation goal that are not part of the specific request. 

2Grassland Reserve Program (GRP) payments are reported by NRCS for budget purposes. FSA administrative costs related to GRP and Voluntary Public Access and Habitat Incentive 

Program are included. 3The information related to the Emergency Conservation Program (ECP) is reported as an emergency program under Goal 1. We have broken out the program information but the administrative costs relate to all programs for the Income Support and Disaster Assistance Goal. 

131

9. Eligibility Criteria 

Only states and tribal governments are eligible for Federal VPA–HIP funding. 

States and tribal governments may propose to use VPA–HIP grant funding to expand existing public access programs, create new public access programs, and/or 

provide incentives to enhance wildlife habitat on lands enrolled in state or tribal 

government public access programs. 

10. Utilization (Participation) Data 

States and tribal governments participating in VPA–HIP are Arizona, California, 

Colorado, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Kentucky, Michigan, Minnesota, Montana, Nebraska, New Hampshire, North Dakota, Oregon, Pennsylvania, 

South Dakota, Texas, Utah, Virginia, Washington, Wisconsin, Wyoming and the 

Confederated Tribes and Bands of the Yakama Nation. 

11. Duplication or Overlap with Other Programs 

VPA–HIP is unlike any other USDA program as it specifically targets public access. Incentives for enhancing wildlife habitat under VPA–HIP are limited to those 

private land owners and operators who make land available for public access. The 

Department of Interior Federal Aid in Wildlife Restoration Act makes funds available from an 11 percent excise tax on sporting arms and ammunition through the 

Secretary of Interior to states. Activities eligible under the Landowner Incentive 

Program (LIP) of the USFWS for such funding include acquisition and development 

of access and improvement of wildlife habitat. VPA–HIP has proven complementary 

to state public access program initiated as a result of LIP funding. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Grass Roots Source Water Program (Source Water). 

Prepared by USDA’s Farm Service Agency. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

Source Water is a grant program implemented for State Rural Water Associations 

and is designed to help prevent source water pollution in states through voluntary 

practices installed by producers and other landowners at the local level. 

Source Water uses onsite technical assistance capabilities of each state rural 

water association that operates a source water program in the state. State rural 

water associations deliver assistance in developing source water protection plans 

within watersheds for the common goal of preventing the contamination of drinking 

water supplies. 

Source water is surface and ground water that is consumed by rural residents. 

According to the National Rural Water Association, ground water is the primary 

source of drinking water for some 44,000 communities in the United States. 

Through the program, state rural water associations hire, for every participating 

state, a full-time source water specialist who possesses knowledge and experience 

in rural issues. The technician works with FSA’s state and county leadership, NRCS 

technicians, local leaders, and communities to create operating plans that identify 

priority areas where local pollution prevention efforts are needed most in their respective states. 

This collaboration is intended to result in the development of a source water protection plan that outlines voluntary measures for farmers, ranchers, and local communities that can be installed on their lands to prevent source water pollution. Voluntary measures may range from storing herbicides, pesticides, or other substances 

in more secure containers to relocating waste lagoons. By working at the grassroots 

level, local team members inform and educate participants about source water protection measures that benefit their neighbors and communities. Additionally, the 

plans also establish steering committees to evaluate voluntary practices that have 

been implemented. FSA monitors the overall performance of the program. 

132

4. Purpose/Goals 

Source Water’s goal is to implement source water protection plans in each state 

by assisting small and rural communities in protecting their drinking water resources. There are source water protection plans in 43 states. The ultimate goal of 

the project is to assist public water utilities and the agricultural community in coordinating efforts by taking a proactive approach to maintain and/or improve water 

quality within their source water protection planning areas. 

5. Success in Meeting Programmatic Purpose/Goals 

Between October 1, 2009, and September 30, 2010, source water protection plans 

were completed in 119 communities which provide protection measures for 470 public drinking water sources (415 wells and 55 surface water intakes).

133

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002

Actual 

FY 2003

Actual 

FY 2004

Actual 

FY 2005

Actual 

FY 2006

Actual 

FY 2007

Actual 

FY 2008

Actual 

FY 2009

Actual 

FY 2010

Actual 

FY 2011

Estimated 

Grassroots Source Water Protection Program $0 $0 $0 $0 $3,713 $3,713 $3,687 $5,000 $5,000 $3,577

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Outlays 

(Dollars in thousands) 

FY 2002

Actual 

FY 2003

Actual 

FY 2004

Actual 

FY 2005

Actual 

FY 2006

Actual 

FY 2007

Actual 

FY 2008

Actual 

FY 2009

Actual 

FY 2010

Actual 

FY 2011

Estimated 

Grassroots Source Water Protection Program $0 $0 $0 $0 $3,713 $3,713 $3,687 $5,000 $5,000 $4,242

134

8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Department Strategic Goal: Ensure our National Forests and private working lands are conserved, restored, and made more resilient 

to climate change, while enhancing our resources.

Program Program ItemsConservation

Conservation Reserve Program 974,124 1,990,178 1,872,881 1,910,630 1,997,496Grassroots Source Water Protection Program 1,856 3,687 5,000 5,000 5,000State Mediation Grants 1 526 1,092 1,092 1,092 1,092

Direct Conservation Loans 1 0 0 0 114 1,065

Guaranteed Conservation Loans 1 0 0 0 1278

Other Conservation Payments 2 4,600 3,247 46

¥4 33,334

Administrative Costs (direct) 107,118 240,070 256,932 278,940 278,825Indirect costs 9,773 82,642 63,352 68,779 72,804

Total Costs 1,097,997 2,320,916 2,199,303 2,264,552 2,389,894FTEs 1,228 3,023 2,015 2,928 2,885

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining, repopulating, and economically 

thriving.

Program Program ItemsIncome Support and Disaster Assistance

Emergency Conservation Program 3 149,727.00 128,456.00 0.00 92,459.00 39,719.00

Administrative costs (direct) 776,465.00 683,795.00 694,980.00 744,303.00 753,934.00

135

Indirect costs 47,548.00 234,633.00 226,905.00 242,967.00 246,299.00

Total Costs 973,740.00 1,046,884.00 921,885.00 1,079,729.00 1,039,952.00FTEs 8,905.00 8,620.00 9,528.75 8,355.00 8,140.00

Conservation

Emergency Conservation Program 3 0 0 153,044.00 0 0

Administrative costs (direct) 0 0 8,344.00 0 0

Indirect costs 0 0 0 0.00 0

Total Costs 0.00 0.00 161,388.00 0.00 0.00

FTEs 0.00 0.00 0.25 0.00 0.00 1FSA has programs related to supporting the conservation goal that are not part of the specific request. 

2Grassland Reserve Program (GRP) payments are reported by NRCS for budget purposes. FSA administrative costs related to GRP and Voluntary Public Access and Habitat Incentive 

Program are included. 3The information related to the Emergency Conservation Program (ECP) is reported as an emergency program under Goal 1. We have broken out the program information but the administrative costs relate to all programs for the Income Support and Disaster Assistance Goal. 

136

9. Eligibility Criteria 

States are selected based on a formula that ranks states based on total maximum 

daily loads, impaired waters, total farm acres, and total toxic discharges. 

10. Utilization (Participation) Data 

States participating in Source Water include: Alaska, Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, 

Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Mexico, 

North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Texas, Utah, Vermont, Virginia, Washington, West Virginia, 

Wisconsin, and Wyoming. The 43 participating states were chosen based on objective technical criteria relating to water quality and population. 

11. Duplication or Overlap with Other Programs 

There is no overlap with Rural Development (RD) programs which provide support grants and loans for water and wastewater treatment, distribution, and collection systems. 

The FSA source water program is not a duplication but is complementary of the 

Environmental Protection Agency’s (EPA) source water initiatives. The EPA source 

water program is targeted to compliance of community water supplies with Safe 

Drinking Water Act regulations. FSA authorized source water efforts focuses incorporating the agriculture community into prevention of contamination in source waters through FSA programs such as the CRP and education of the agriculture community and non-governmental entities. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Grassland Reserve Program (GRP). 

Prepared by USDA’s NRCS and FSA. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

GRP was authorized in section 2401 of the 2002 Farm Bill and was reauthorized 

by section 2403 of the 2008 Farm Bill. NRCS and FSA jointly administer this program. Both agencies share policy development, NRCS administers the easements, 

and FSA implements the rental contracts. Funding for GRP comes from the Commodity Credit Corporation (CCC). 

Legislative Changes. The 2008 Farm Bill:

• Increased the acreage that may be enrolled in the program by 1.2 million acres 

during the years 2009 through 2012.

• Provided priority for enrollment of expiring acreage from the Conservation Reserve Program (CRP), limited to ten percent of the total acres enrolled in any 

year.

• Authorized eligible lands to be enrolled into either a permanent easement (or 

maximum allowed under state law); or a 10, 15, or 20 year rental contract.

• Authorized restoration agreements on lands, enrolled under a either a rental 

contract or an easement, to receive up to 50 percent cost-share.

• Expanded the definition of eligible to include land that contains historical or archeological resources and land that addresses state, regional, or national conservation priorities.

• Required a grazing management plan for GRP participants.

• Required that valuation of an easement be at the lower of either an appraisal 

or market survey, a rate set by the Secretary of Agriculture, or the landowner’s 

offer.

• Defined ‘‘eligible entities’’ as units of state, local, or tribal government or nongovernmental organizations that have a charter describing a commitment to 

conserving ranchland, agricultural land, or grassland for grazing and conservation purposes.

137

• Allowed that easements may now be acquired by eligible entities based on a 50 

percent cost-share with the Federal Government.

• Established an annual payment limitation of $50,000 for both rental and restoration agreements.

• Waived a minimum acreage limitation for enrollment.

• Excluded land from the GRP if it is currently enrolled in another conservation 

program or is already protected by an existing easement, contract or deed restriction or is owned by a conservation organization.

• Allowed interested landowners to submit applications under a continuous signup. 

4. Purpose/Goals 

The purpose of the Grassland Reserve Program (GRP) is to assist landowners and 

operators in protecting grazing uses and related conservation values by conserving 

and restoring grassland resources on eligible private lands through rental contracts, 

easements, and restoration agreements. The program emphasizes support for working grazing operations; enhancement of plant and animal biodiversity; and protection of grassland and land containing shrubs and forbs under threat of conversion. 

5. Success in Meeting Programmatic Purpose/Goals 

Montana: GRP Enrollments Support Agency Commitment to Sage Grouse 

Habitat. In Phillips County, Montana, five GRP projects enrolled in the last 2 years 

protect 29,485 acres. These projects help preserve rural ranching operations while 

providing critical wildlife habitat for sage grouse and other grassland birds. The 

USFWS announced this species as a candidate for listing on the Endangered Species 

List. NRCS is taking proactive steps to protect and improve habitat in order to prevent listing of this bird in significant decline. More than 80 percent of the acres in 

these five ranches are prime habitat for of sage grouse. These ranchers have embraced management activities that continue to provide food, clean water, and habitat for mule deer, elk, pronghorn, and a multitude of neo-tropical grassland birds 

and one of the healthiest populations of sage grouse in the nation. 

Pennsylvania: GRP Helps Landowners Manage for Conservation. Conservation-minded landowners are interested in protecting and improving pastures 

for grazing management, while maintaining wildlife habitat for ground nesting 

birds. These landowners see the GRP program as a good fit for their management 

goals. These conservation easements protected nearly 400 acres of grasslands in 

areas subject to increasing development pressure. 

Wyoming: A 2,412 acre GRP easement was placed on land in central Wyoming, 

adjacent to the Medicine Bow National Forest. The upper meadows are used by an 

elk herd. Cows and calves graze during late spring and stay all summer. Good feed 

and water nourish both domestic animals and wildlife, with escape cover on the 

west end of the pasture. During fall and winter, elk cows and bulls spend days on 

the pasture. Pronghorn antelope and mule deer are often seen in the lower elevations. Approximately 25 to 35 sage grouse forage in the lower elevation habitat. 

Sage-Grouse Recovery: USDA provided $2.5 million in GRP financial assistance 

to five western states for Greater Sage-Grouse conservation and recovery on lands 

identified by state wildlife agencies as containing critical sage grouse habitat. The 

funds were used for enrollment of GRP easements on private lands in California, 

Colorado, Montana, Utah and Wyoming, with technical assistance and additional financial assistance provided through state and local partnerships. 

Conservation on the Ground—GRP in Kansas. Kansas has very productive 

native grasslands. During FY 2007, ranchers in Kansas signed 47 GRP conservation 

easements that will protect 22,600 acres of the state’s native grassland. GRP conservation easements are one way to prevent the destruction of the Kansas tall-grass 

prairie. And, Kansas ranchers have demonstrated a keen interest in the program 

by enrolling 22,600 acres in GRP easements that will forever remain in tall-grass 

prairie. 

Washington State protecting historic grazing lands. The Colvin family has 

ranched on their 530 acres family homestead along Scatter Creek in Washington 

State since Ignatius Colvin arrived over the Oregon Trail in the 1850’s. GRP easements allow the current generation of the Colvin family to keep the land as a working ranch in perpetuity. Urban development pressures in western Washington make 

maintaining large tracts of grazing lands very difficult. By granting GRP easements, 

the entire 530 acres grazing area soon will be protected. The contiguous easements 

were funded through Fiscal Year 2004, 2005, and 2009 allocations. The Colvin family’s grazing management plan, developed with NRCS, maintains and enhances native prairie habitat.

138

6. Annual Budget Authority (FY 2002–FY 2011) 

FY Apportionment ($ in millions) 

2002 —

2003 $85

2004 $115

2005 $128

2006 $54

2007 $16

2008 $3

2009 $48

2010 $101

2011 $79

7. Annual Outlays (FY 2002–FY 2011) 

FY Outlays ($ in millions) 

2002 —

2003 $34

2004 $55

2005 $71

2006 $27

2007 $29

2008 $3

2009 $46

2010 $93

2011 $80

NRCS GRP financial assistance (FA) funds support eligibility determinations, 

rental contracts, easement acquisition, and monitoring. FA for easement acquisition 

is obligated when the acres to be placed under easement are enrolled but are not 

expended until the easement has been perfected which is a process that may take 

over a year. Technical Assistance (TA) funds obligated in a given year are used for 

workload generated by the enrollment of new acres and acreage already enrolled. 

The majority of TA funding usually is expended in the year of obligation. FA funding represents the majority of program budget authority.

139

8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:Annual delivery cost for NRCS includes: 

Grassland Reserve Program

Conservation Planning and Technical Consultation 453 155 2,021 2,047 5,880Conservation Implementation 330 203 835 846 2,430Financial Assistance—Program Administration 1,079 445 3,240 3,281 9,425Indirect Costs 1,282 200 520 526 1,512

Sub-total Technical Assistance 3,144 1,003 6,616 6,700 19,247

Financial Assistance—Cost Share & Monetary Incentive 9,843 1,810 41,042 93,408 98,126

Total Costs 12,987 2,813 47,658 100,108 117,373FTEs 21 7 30 28 55

Notes: These numbers are consistent with the published ‘‘Full Cost by Secretary’s Strategic Priorities’’ section of the Explanatory Notes for Fiscal Years 2009 through 2012 President’s 

Budget submissions. In the table above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President’s Budget submission. 

Financial assistance funding is identified on the line titled, ‘‘Financial Assistance—Cost Share and Monetary Incentives.’’ Funds associated with technical assistance are on the remaining four lines. 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Annual delivery cost for FSA includes:Department Strategic Goal: Ensure our National Forests and private working lands are conserved, restored, and made more resilient 

to climate change, while enhancing our resources.

Program Program ItemsConservation

Conservation Reserve Program 974,124 1,990,178 1,872,881 1,910,630 1,997,496Grassroots Source Water Protection Program 1,856 3,687 5,000 5,000 5,000

140

State Mediation Grants 1 526 1,092 1,092 1,092 1,092

Direct Conservation Loans 1 0 0 0 114 1,065

Guaranteed Conservation Loans 1 0 0 0 1278

Other Conservation Payments 2 4,600 3,247 46

¥4 33,334

Administrative Costs (direct) 107,118 240,070 256,932 278,940 278,825Indirect costs 9,773 82,642 63,352 68,779 72,804

Total Costs 1,097,997 2,320,916 2,199,303 2,264,552 2,389,894FTEs 1,228 3,023 2,015 2,928 2,885

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining, repopulating, and economically 

thriving.

Program Program ItemsIncome Support and Disaster Assistance

Emergency Conservation Program 3 149,727.00 128,456.00 0.00 92,459.00 39,719.00

Administrative costs (direct) 776,465.00 683,795.00 694,980.00 744,303.00 753,934.00Indirect costs 47,548.00 234,633.00 226,905.00 242,967.00 246,299.00

Total Costs 973,740.00 1,046,884.00 921,885.00 1,079,729.00 1,039,952.00FTEs 8,905.00 8,620.00 9,528.75 8,355.00 8,140.00

Conservation

Emergency Conservation Program 3 0 0 153,044.00 0 0

Administrative costs (direct) 0 0 8,344.00 0 0

Indirect costs 0 0 0 0.00 0

Total Costs 0.00 0.00 161,388.00 0.00 0.00

FTEs 0.00 0.00 0.25 0.00 0.00 1FSA has programs related to supporting the conservation goal that are not part of the specific request. 

2Grassland Reserve Program (GRP) payments are reported by NRCS for budget purposes. FSA administrative costs related to GRP and Voluntary Public Access and Habitat Incentive 

Program are included. 

141

3The information related to the Emergency Conservation Program (ECP) is reported as an emergency program under Goal 1. We have broken out the program information but the administrative costs relate to all programs for the Income Support and Disaster Assistance Goal. 

9. Eligibility Criteria 

Land is eligible if it is privately owned or Tribal land and it is: (1) grassland that contains forbs or shrubs (including rangeland and 

pastureland) for which grazing is the predominant use; or (2) located in an area that has been historically dominated by grassland, forbs, or shrubs. The land must also have potential to provide habitat for animal or plant populations of significant ecological value if the land is retained in the current use or restored to a natural condition.

10. Utilization (Participation) Data 

Contract Fiscal Year 2010

Rental Contracts Easements 

Dollars

Allocated 

for

Easements 

Technical 

Assistance Number 1 Acres 1 Obligations Number 1 Acres 1

Obligations 

for Due 

Diligence 

and Market 

Analysis 

Total 424 273,516 $29,288,185 144 95,907 $3,232,610 $52,318,210 $3,437,072

1 Numbers currently reported in National Easement Staging Tool (NEST) are undergoing an intense quality assurance review. Numbers are 

subject to change during this process. 

142

11. Duplication or Overlap with Other Programs 

GRP provides for the long-term conservation/preservation of critical grassland resources that are under pressure from conversion. Other long-term conservation programs such as CRP, WRP, and Farm and Ranch Land Protection Program share 

the common objective to enhance and improve the grassland resources through 

short-term (10+ year contracts—CRP) or through the purchase of easements under 

FRPP. Generally, the same parcel of land cannot be enrolled in more than one program at the same time. These programs are complementary because they provide 

choices for producers in how they voluntarily protect their land and provide conservation benefits to their community and beyond. 

These programs share a common goal of restoring and protecting the natural resources benefits of grassland ecosystems to provide wildlife, water quality erosion 

and other natural resource benefits. In some cases, the restoration of the grassland 

resources requires the development of grassland habitat or the development of the 

infrastructure (fences, springs etc.) that will enable the long-term management of 

these resources. In the cases where infrastructure or management changes are 

needed, there may be some overlap with EQIP, Stewardship, and/or WHIP. 

Some of the practices offered through Stewardship to meet the minimum threshold at the end of the contract are also offered through other programs such as EQIP. 

Utilizing Stewardship for this purpose increases the additionality intent and 

uniqueness of the program. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Chesapeake Bay Watershed Program (CBWP). 

Prepared by USDA’s NRCS. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The CBWP was authorized by section 2602 of the 2008 Farm Bill. The Chief of 

NRCS may implement CBWP in the watersheds of all tributaries, backwaters, and 

side channels draining into the Chesapeake Bay. These areas include lands in Delaware, Maryland, New York, Pennsylvania, Virginia, and West Virginia. 

As of 2010, CBWP participants have enrolled nearly 270,000 acres in about 1,800 

agreements in the Chesapeake Bay watershed. 

4. Purpose/Goals 

The purpose of CWBP is to assist producers in implementing conservation activities on agricultural lands in the Chesapeake Bay for the purposes of (1) improving 

water quality and quantity in the Chesapeake Bay watershed and (2) restoring, enhancing, and preserving soil, air, and related resources in the Chesapeake Bay watershed. 

5. Success in Meeting Programmatic Purpose/Goals 

In FY 2010:

• NRCS enrolled over 950 agreements on over 156,000 acres.

• The value of the contracts was over $33.5 million.

• The average agreement size is 164 acres.

• On average, NRCS agreed to reimburse participants approximately $35,000 for 

each long-term agreement.

6. Annual Budget Authority (FY 2002–FY 2011) 

FY Apportionment ($ in millions) 

2002 —

2003 —

2004 —

2005 —

143

6. Annual Budget Authority (FY 2002–FY 2011)—

Continued

FY Apportionment ($ in millions) 

2006 —

2007 —

2008 —

2009 1 $23

2010 $43

2011 $72

1 Chesapeake Bay Watershed Program funding began in FY 

2009. Prior to this time, discretionary funds were received 

through Congressionally designated projects. 

7. Annual Outlays (FY 2002–FY 2011) 

FY Outlays ($ in millions) 

2002 —

2003 —

2004 —

2005 —

2006 —

2007 —

2008 —

2009 1 $3

2010 $23

2011 $41

1 Chesapeake Bay Watershed Program funding began in FY 

2009. Prior to this time, discretionary funds were received 

through Congressionally-designated projects. 

CBWP FA funds are obligated the year a contract is entered into, and this initial 

obligation is applicable to the entire multi-year span of the contract. As the years 

pass, FA for contracted practices is not expended until the practices are installed 

and inspected for quality control by NRCS personnel. For this reason, FA funds tend 

to outlay for multiple years after obligation. TA funds obligated in a given year are 

used for workload generated by the enrollment of new contracts and workload generated by prior year contract implementation. The vast majority of TA funding tends 

to outlay in the year of obligation. FA funding represents the majority of program 

budget authority.

144

8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Chesapeake Bay Watershed Program

Conservation Planning and Technical Consultation — — 209 676 1,234Conservation Implementation — — 1,083 3,501 6,393Financial Assistance—Program Administration — — 727 2,350 4,292Indirect Costs — — 1,228 3,970 7,251

Sub-total Technical Assistance 

— — 3,247 10,497 19,170

Financial Assistance—Cost Share & Monetary Incentive — — 18,595 33,539 52,830

Total Costs — — 21,842 44,036 72,000FTEs — — 25 85 172

Notes: These numbers are consistent with the published ‘‘Full Cost by Secretary’s Strategic Priorities’’ section of the Explanatory Notes for 

Fiscal Years 2009 through 2012 President’s Budget submissions. In the table above, Fiscal Years 2009 and 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President’s Budget submission. 

Financial assistance funding is identified on the line titled, ‘‘Financial Assistance—Cost Share and Monetary Incentives.’’ Funds associated 

with technical assistance are on the remaining four lines. 

145

9. Eligibility Criteria 

Congress provided the authority to deliver CBWP funds through applicable programs in the Chesapeake Bay. Since the purpose of CBWP is similar to the purpose 

of the Environmental Quality Incentives Program (EQIP), CBWP is administered 

using the same programmatic rules as EQIP. 

To participate in CBWP, both the land and the applicant must be eligible. Eligible 

land includes cropland, rangeland, pastureland, private nonindustrial forestland, 

and other farm or ranch lands in the Chesapeake Bay watershed. The land must 

have an identified natural resource concern that poses a serious threat to soil, 

water, air, or related resources by reason of land use practices, soil type, terrain, 

climatic conditions, topography, flooding, saline characteristics, or other natural resource factors or natural hazard. Publicly-owned land is eligible only if: (1) the land 

is under private control for the contract period; (2) is included within the participant’s operating unit; and (3) must have written authorization from the government 

agency that owns the land to apply conservation practices. For irrigation-related 

practices, the land must have a history of actively irrigating the land unit for 2 out 

of the last 5 years. 

Applicants must be an agricultural producer, have control of the land for the life 

of the contract, be in compliance with farm bill provisions (highly erodible land, wetland conservation, protection of tenants and sharecroppers), be within appropriate 

program payment limitations and adjusted gross income requirements, and develop 

an EQIP plan of operations. Applications are accepted year round at local USDA 

Service Centers, but there are application cut-off dates that vary from state to state. 

10. Utilization (Participation) Data 

CBWP Application/Contract Status data include:

Fiscal Year 

Number of Active 

and Completed 

Contracts 

Financial

Assistance

Obligated 

Total Treated 

Acres 

2009 826 $18,592,739 110,327

2010 953 $33,517,624 156,704

Total 1,779 $52,110,363 267,031

11. Duplication or Overlap with Other Programs 

CBWP is a mechanism for focusing funding for maximum impact, is delivered 

through existing programs such as the EQIP, and is focused in the Chesapeake Bay 

watershed and on priorities related to controlling nutrient and sediment and habitat 

conservation. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Watershed Operations Program (Small Watershed). 

Prepared by USDA’s NRCS. 

2. Subprogram/Department Initiatives 

None. 

3. Brief History 

The Watershed Operations programs operate under Public Law 83–566, the Watershed Protection and Flood Prevention Act of 1954, as amended (P.L. 83–566); and 

Public Law 78–534, the Flood Control Act of 1944 (P.L. 78–534). Both of these laws 

authorize the Secretary of Agriculture to install watershed improvement measures 

to reduce flooding, sedimentation, and erosion damage; and improve the conservation, development, utilization, and disposal of water; and advance the conservation 

and proper utilization of land. 

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4. Purpose and Goals 

The program sets out to develop Watershed Project Plans, with specific actions 

and schedules that will meet local sponsor and resource concerns and that are physically, environmentally, socially, and economically defensible. The three general purposes set out in P.L. 83–566 include: (a) Preventing damage from erosion, floodwater, and sediment; (b) Furthering the conservation, development, utilization, and 

disposal of waters; and (c) Furthering the conservation and proper utilization of 

land. The general purposes set out in P.L. 78–534 are (a) Run-off and water-flow 

retardation and (b) Soil-erosion prevention. NRCS provides technical and financial 

assistance to install watershed improvement measures through three means: technical assistance, land treatment measures, and easement and construction measures. 

These programs (P.L. 83–566 & P.L. 78–534) provide for cooperation between the 

Federal Government and the states and their political subdivisions for purposes of:

• Agricultural Water 

Management 

• Watershed Protection • Water Quality Management

• Fish and Wildlife 

• Public Recreation 

• Flood Prevention—

Flood Damage Reduction 

• Municipal & Industrial 

Water Supply 

5. Success in Meeting Programmatic Purpose/Goals 

Program Benefits. Estimates of flood prevention and other annual benefits to the 

environment and communities from P.L. 83–566 and P.L. 78–534 that occurred in 

FY 2010 are shown below. 

Monetary Benefits. Benefits include:

• Agricultural Benefits (not related to flood control): $404 million. Benefits associated with erosion control, animal waste management, water conservation, water 

quality improvement, irrigation efficiency, change in land use, etc.

• Non-Agricultural Benefits (not related to flood control): $899 million. Benefits 

associated with recreation, fish and wildlife, rural water supply, water quality, 

municipal and industrial water supply, and incidental recreation uses, etc.

• Agricultural Flood Protection Benefits: $320 million. This value includes all crop 

and pasture damage reduction benefits as well as all other agricultural damage 

reduction benefits.

• Non-Agricultural Flood Protection Benefits: $434 million. Non-agricultural flood 

damage prevented to roads, bridges, homes, and other structures that exist in 

the floodplain.

Natural Resources Benefits include:

• Acres of nutrient management: 674,283

• Tons of animal waste properly disposed: 4,801,640

• Tons of soil saved from erosion: 90,038,700

• Miles of streams and corridors enhanced, or protected: 54,190

• Acres of lakes and reservoirs enhanced, or protected: 2,518,613

• Acre-feet of water conserved: 1,842,813

• Acres of wetlands created, enhanced, or restored: 279,326

• Acres of upland wildlife habitat created, enhanced, or restored: 9,149,776

Social and Community Benefits:

• Number of people: 48,316,354

• Number of farms and ranches: 181,248

• Number of bridges: 61,678

• Number of public facilities: 3,650

• Number of businesses: 46,583

• Number of homes: 610,983

• Number of domestic water supplies: 27,857

147

6. Annual Budget Authority (FY 2002–FY 2011) 

(Watershed and Flood Prevention Operations, P.L. 78–534, 

and Small Watershed, P.L. 83–566) 

FY Appropriation ($ in millions) 

2002 $106

2003 $109

2004 $86

2005 $75

2006 $74

2007 $9

2008 $30

2009 $24

2010 $30

2011 —

7. Annual Outlays (FY 2002–FY 2011) 

(Watershed and Flood Prevention Operations, P.L. 78–534, 

and Small Watershed, P.L. 83–566) 

FY Outlays ($ in millions) 

2002 $85

2003 $80

2004 $73

2005 $86

2006 $81

2007 $78

2008 $44

2009 $42

2010 $19

2011 $15

Watershed Operations program TA funds generally outlay in the year the funds 

are obligated. The only exception to this is when TA funds are obligated through 

an architecture and engineering services contract to provide planning, design or 

quality assurance inspection during construction. FA funds are obligated after permitting and/or land rights are obtained. Outlays for these funds are generally expended over a fiscal year, but can extend over multi-years for a complex watershed 

operations project or for a project whose contract was awarded toward the end of 

the fiscal year. Given the nature of construction projects, it is possible for outlays 

to carryon for multiple years after the initial appropriation or obligation of the 

funds. Watershed Operations program funds are no-year funds.

148

8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Watershed and Flood Prevention Operations

Conservation Planning and Technical Consultation 771 1,027 3,802 824 824Conservation Implementation 2,514 4,654 18,130 3,827 3,827Financial Assistance—Program Administration 271 337 1,326 280 280Indirect Costs 1,779 4,715 11,876 3,133 3,133

Sub-total Technical Assistance 5,335 10,733 35,134 8,064 8,064

Financial Assistance—Cost Share & Monetary Incentive 3,540 19,057 134,155 21,936 21,936

Total Costs 8,875 29,790 169,289 30,000 30,000FTEs 139 90 94 28 120

Notes: These numbers are consistent with the published ‘‘Full Cost by Secretary’s Strategic Priorities’’ section of the Explanatory Notes for 

Fiscal Years 2009 through 2012 President’s Budget submissions. In the table above, Fiscal Years 2007 through 2010 amounts are actual appropriations; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President’s Budget submission. 

Financial assistance funding is identified on the line titled, ‘‘Financial Assistance—Cost Share and Monetary Incentives.’’ Funds associated 

with technical assistance are on the remaining four lines. 

Fiscal year 2009 includes $145 million in budget authority and associated FTE from the American Recovery and Reinvestment Act of 2009. 

149

9. Eligibility Criteria 

Sponsor: All watershed projects must have at least one outside sponsor which 

must be a state or local organization/agency (i.e., state, city, town, conservancy district, tribal) that has legal authorities to acquire and hold land rights, condemn land 

if necessary, and perform continuing operations and maintenance. The sponsor(s) 

must also be able to raise, expend, and publicly account for funds as these projects 

have a local match or share required. 

Project/Structures: Watershed projects involving an estimated Federal contribu- tion in excess of $5 million for construction, or construction of any single structure 

having a capacity in excess of 2,500 acre-feet of water storage require authorization 

by Congressional Committee. Watershed projects are limited to 250,000 acres and 

cannot include any single structure which provides more than 12,500 acre-feet of 

floodwater detention capacity, or more than 25,000 acre-feet of total capacity. The 

Chief of NRCS authorizes the use of Watershed Operations funds for all other 

projects. 

Federal financial assistance may be applied to installation costs when land treatment measures are installed primarily to achieve environmental and public benefits 

such as surface and ground water quality improvement, water conservation, and 

flood mitigation. The Federal share may not exceed the rate of assistance for similar 

practices under other USDA conservation programs. 

Land treatment measures are installed through project agreements with local 

sponsoring organizations or through long-term contracts between the landowner and 

NRCS. In the first case, the local sponsors arrange for and accomplish the work by 

contract or force account and NRCS makes payments to the local sponsoring organizations as the land treatment measures are installed. In the second case, NRCS contracts directly with landowners. 

10. Utilization (Participation Data) 

At the end of FY 2010, of the 1,757 projects authorized by the Watershed Protection and Flood Prevention Act, NRCS has assisted sponsors complete implementation on over 1,066 watersheds and are implementing works of improvement in 300 

active watershed projects. 

11. Duplication or Overlap with Other Programs: 

The program was not funded under the 2011 Full-Year Continuing Appropriations 

Act. The Agency is in the process of closing out operations. 

Watershed Operations program payments cannot be applied to payments on land 

for the same conservation purposes funded through other USDA conservation programs. 

12. Waste, Fraud and Abuse: 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

The Watershed Rehabilitation Program. 

Prepared by USDA’s NRCS. 

2. Subprogram/Department Initiatives 

None. 

3. Brief History 

The Watershed Rehabilitation Program (P.L. 106–472) is administered by NRCS 

to assist project sponsors with rehabilitation of aging project dams. Only dams installed under P.L. 83–566, the Pilot Watershed Program, P.L. 78–534, or Resource 

Conservation and Development (RC&D) Programs are eligible. This program provides technical and financial assistance to watershed project sponsors in rehabilitating aging dams in their communities. 

4. Purpose/Goals 

The purpose of P.L. 106–472 is to extend the service life of dams and meet applicable safety and performance standards. Priority is given to those structures that 

pose the highest risk to life and property. Projects are eligible when hazard to life 

and property increases due to downstream development and when there is need for 

rehabilitation to extend the planned life of a structure. Watershed Rehabilitation 

Program work can consist of repairing or replacing deteriorated components, repairVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00161 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
150

ing damages from catastrophic events, upgrading the structure to meet state dam 

safety laws, or to decommission a structure. 

5. Success in Meeting Programmatic Purpose/Goals 

The Natural Resources Conservation Service has authorized the rehabilitation of 

162 of these high hazard dams in 22 states as of the end of FY 2010. Many of these 

structures were originally set in rural areas and designed and constructed as ‘‘low 

hazard’’ structures. As a result of land use change and downstream development, 

many of these dams now represent a ‘‘high hazard’’ to surrounding communities. 

These rehabilitated structures are constructed to high hazard standard which provide millions of dollars of flood protection. Through this program, NRCS is making 

sure that the rehabilitation of these dams will not only ensure that these watershed 

dams remain safe and protect the lives of people, property, and infrastructure, but 

continue to provide flood control, recreation and wildlife habitat to the citizenry and 

communities for an additional 50 to 100 years.

6. Annual Budget Authority (FY 2002–FY 2011) 

FY Appropriation ($ in millions) 

2002 $10

2003 $30

2004 $30

2005 $27

2006 $31

2007 $31

2008 $20

2009 $40

2010 $40

2011 $18

7. Annual Outlays (FY 2002–FY 2011) 

FY Outlays ($ in millions) 

2002 $6

2003 $10

2004 $19

2005 $21

2006 $21

2007 $22

2008 $31

2009 $24

2010 $32

2011 $17

The Watershed Rehabilitation Program TA funds are generally expended in the 

year the funds are obligated. The only exception to this is when TA funds are obligated through a services contract to provide planning, design or quality assurance 

inspection during construction. FA funds are obligated after permitting and/or land 

rights are obtained. These funds are generally expended over a fiscal year, but can 

extend over multi-years for a complex dam rehabilitation project or for a project 

whose contract was awarded toward the end of the fiscal year. Given the nature of 

constructions projects, it is possible for outlays to carryon for multiple years after 

the initial appropriation or obligation of the funds. Watershed Rehabilitation Program funds are no-year funds.

151

8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Watershed Rehabilitation Program

Conservation Planning and Technical Consultation 2,573 845 4,739 1,994 1,368Conservation Implementation 2,799 2,972 16,667 7,008 4,805Financial Assistance—Program Administration 1,193 342 1,918 806 553Indirect Costs 10,460 3,135 17,581 7,392 5,070

Sub-total Technical Assistance 17,025 7,294 40,905 17,200 11,796

Financial Assistance—Cost Share & Monetary Incentive 14,284 12,566 49,095 22,961 28,365

Total Costs 31,309 19,860 90,000 40,161 40,161FTEs 113 65 72 82 71

Notes: These numbers are consistent with the published ‘‘Full Cost by Secretary’s Strategic Priorities’’ section of the Explanatory Notes for 

Fiscal Years 2009 through 2012 President’s Budget submissions. In the table above, Fiscal Years 2007 through 2010 amounts are actual appropriations; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President’s Budget submission. 

Financial assistance funding is identified on the line titled, ‘‘Financial Assistance—Cost Share and Monetary Incentives.’’ Funds associated 

with technical assistance are on the remaining four lines. 

Fiscal year 2009 includes $50 million in budget authority and associated FTE from the American Recovery and Reinvestment Act of 2009. 

152

9. Eligibility Criteria 

A dam must be under proper and active maintenance, and only dams installed 

under P.L. 83–566, the Pilot Watershed Program, P.L. 78–534, or RC&D Programs 

are eligible. 

Each project requires a local cooperating sponsor that works closely with NRCS 

to complete the rehabilitation of each dam. Each sponsor must provide thirty-five 

(35) percent of the costs to rehabilitation a dam. Through several means, sponsors 

in these communities contribute their funds through the collection bonds, County 

budgets, state appropriations, state park division, Municipal taxing authority, Watershed taxing authority, and through In-kind technical services. 

11. Duplication or overlap with other programs 

There is no duplication or overlap with other USDA conservation programs. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Healthy Forests Reserve Program (HFRP). 

Prepared by USDA’s NRCS. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

Title V of the Healthy Forests Restoration Act of 2003 (Public Law 108–148) authorized the establishment of the Healthy Forests Reserve Program (HFRP) which 

was reauthorized by the 2008 Farm Bill. 

HFRP provides financial assistance for specific conservation actions completed by 

the landowner. As funds are made available, the NRCS Chief solicits project proposals State Conservationists have developed in cooperation with partnering organizations. States selected for funding provide public notice of the availability of funding within the selected area. HFRP offers four enrollment options:

• 10 year restoration agreement for which the landowner may receive 50 percent 

of the average cost of the approved conservation practices;

• 30 year contract (equivalent to the value of a 30 year easement) for which the 

landowner may receive 75 percent of the easement value of the enrolled land 

plus 75 percent of the average cost of the approved conservation restoration 

practices. This option is available to Indian Tribes only;

• 30 year easement for which the landowner may receive 75 percent of the easement value of the enrolled land plus 75 percent of the average cost of the approved conservation practices; or

• Permanent easement for which landowners may receive 100 percent of the easement value of the enrolled land plus 100 percent of the average cost of the approved conservation practices. 

4. Purpose/Goals 

HFRP assists landowners in restoring, enhancing, and protecting forest ecosystems to: (1) promote the recovery of threatened and endangered species; (2) improve biodiversity; and (3) enhance carbon sequestration. HFRP supports the NRCS 

Mission Goal of Healthy Plant and Animal Communities. 

5. Success in Meeting Programmatic Purpose/Goals 

The following provides examples of HFRP results: 

Oregon: Partnership Protects Working Forest and Enhances Habitat. In FY 2010, 

NRCS partnered with the USFWS and the Oregon Department of Forestry (ODF) 

to provide private landowners the opportunity to create a northern spotted owl 

(NSO) habitat while maintaining a working forest. NSO habitat in the Pacific 

Northwest is an important criterion for defining healthy forests, making HFRP an 

excellent vehicle for this effort. NRCS developed HFRP long term management requirements and sideboards as a supplement to the ODF Forest Stewardship Plan 

on 11 properties being offered for permanent easements. 

The supplements specify the long term management requirements and sideboards 

of each individual property; some properties opted for even-age stand management 

153

and others for the uneven-age stand management regime. The FSP–HFRP supplement recognizes the requirements of a State of Oregon Stewardship Agreement and 

will require that the landowner intends to meet or exceed all Oregon Forest Practices Act standards current at the time of approval including provisions for Riparian 

Management Areas. The information contained in the supplement provides guidance 

and requirements to reach landowner and program goals and objectives. The supplements include area regulation timelines and overall forest management practices for 

thinning, patch cuts, planting, canopy cover requirements and specific management 

regimes for each property. 

NRCS worked closely with USFWS and ODF to ensure consistency among agencies’ requirements while developing the supplements. The supplements use forest 

management to enhance future NSO habitat and maintain existing habitat. NRCS, 

USFWS, and ODF entered into a programmatic Safe Harbor Agreement to provide 

assurances to the landowner if they manage the property according to the Forest 

Stewardship Plan supplement. NRCS develops conservation plans and landowner 

conservation program contracts to implement the conservation practices necessary 

for restoration, enhancement, and management for NSO as planned in the Forest 

Stewardship Plan supplement. NRCS has completed the supplement plans for 11 

properties in western Oregon totaling 1,852 acres of valuable habitat for the endangered NSO on these potential permanent easements. The HFRP work has been an 

excellent demonstration of one-on-one conservation planning resulting in detailed 

landowner decisions while allowing management flexibility for plans that will 

stretch into perpetuity. This has been an excellent model for all nonindustrial forest 

planning.

6. Annual Budget Authority (FY 2002–FY 2011) 

FY Appropriation/Apportionment 

($ in millions) 

2002 —

2003 —

2004 —

2005 —

2006 $2

2007 $2

2008 $2

2009 $10

2010 $10

2011 $10

Note: FY 2006 through 2008 is Discretionary appropriations. FY 2009 through 2011 is the Mandatory apportionments. 

7. Annual Outlays (FY 2002–FY 2011) 

FY Outlays ($ in millions) 

2002 —

2003 —

2004 —

2005 —

2006 —

2007 —

2008 $1

2009 $1

2010 $3

2011 $6

Note: FY 2006 to 2008 is Discretionary funding and Mandatory funding from 2009 to 2011. 

HFRP FA funds support easement acquisition and restoration. Funds are expended when the easement is perfected or the practices necessary for restoration are 

154

installed and verified by NRCS personnel, both processes which may take over a 

year to complete. TA funds obligated in a given year are used for workload generated by the enrollment of new easements and workload generated by easements 

enrolled in prior years. The vast majority of TA funding tends to be expended in 

the year of obligation. FA funding represents the majority of program budget authority.

155

8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Healthy Forests Reserve Program

Conservation Planning and Technical Consultation 19 12 180 187 301Conservation Implementation 21 15 382 398 641Financial Assistance—Program Administration 9 58 459 478 770Indirect Costs 78 66 314 328 529

Sub-total Technical Assistance 127 151 1,335 1,391 2,241

Financial Assistance—Cost Share & Monetary Incentive 2,349 1,835 1,191 6,226 7,509

Total Costs 2,476 1,986 2,526 7,617 9,750FTEs 1 2 5 6 23

Notes: These numbers are consistent with the published ‘‘Full Cost by Secretary’s Strategic Priorities’’ section of the Explanatory Notes for 

Fiscal Years 2009 through 2012 President’s Budget submissions. In the table above, Fiscal Years 2007 and 2008 are the discretionary appropriations. The 2009 and 2010 are actual mandatory obligations; and Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President’s Budget submission. 

Financial assistance funding is identified on the line titled, ‘‘Financial Assistance—Cost Share and Monetary Incentives.’’ Funds associated 

with technical assistance are on the remaining four lines. 

156

9. Eligibility Criteria 

Only privately held land, including acreage owned by an Indian Tribe, is eligible 

for enrollment in HFRP. In addition, to be eligible, the landowner must commit to 

restoring, enhancing, or measurably increasing the likelihood of recovery of a threatened or endangered species or candidates for the Federal or state threatened or endangered species list, and must improve biological diversity or increase carbon sequestration. Land enrolled in HFRP must have a restoration plan that includes 

practices necessary to restore and enhance habitat for species listed as threatened 

or endangered or species that are candidates for the threatened or endangered species list. NRCS provides technical assistance to help owners comply with the terms 

of their HFRP restoration plans. 

Landowners may receive safe harbor assurance for land enrolled in the HFRP 

who agree, for a specified period, to protect, restore, or enhance their land for 

threatened or endangered species habitat. In exchange, landowners avoid future regulatory restrictions on the use of that land under the Endangered Species Act.

10. Utilization (Participation) Data 

Contract Fiscal Year 2010

10 Year 

Restoration 

Agreements 

30 Year 

Easements 

Permanent 

Easements 

Number 1 129

Acres 1 2,747 1,416 1,472

Dollars Obligated $599,988 $882,139 $4,994,249

1 Numbers currently reported in NEST are undergoing an intense quality assurance review. 

11. Duplication or Overlap with Other Programs 

To the extent that these programs each allow for 10 year restoration agreements 

to improve wildlife habitat, there is duplication and overlap with the WHIP program 

and the 10 year restoration agreement portion of HFRP. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Conservation Security Program (Security). 

Prepared by USDA’s NRCS. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The 2002 Farm Bill authorized the Security. Except for existing program contracts, it was replaced by the Conservation Stewardship Program (Stewardship) by 

the 2008 Farm Bill. 

Security is a voluntary program that provides financial and technical assistance 

through 5 to 10 year contracts to promote the conservation and improvement of soil, 

water, air, energy, plant and animal life, and other conservation purposes on Tribal 

and private working lands. 

The Chief of NRCS was authorized to implement Security in all 50 states, the 

Caribbean Area, and the Pacific Basin area. The program provides equitable access 

to benefits to all producers, regardless of size of operation, crops produced, or geographic location. 

4. Purpose/Goals 

Security’s goal is to identify and reward those farmers and ranchers who are 

meeting the highest standards of conservation and environmental management on 

their operations and to support ongoing stewardship of private agricultural lands by 

providing payments for maintaining and enhancing natural resources. 

157

5. Success in Meeting Programmatic Purpose/Goals 

In Fiscal Year 2011, a total of $180,292,191 was expended to cover the obligations 

of 15,031 prior year contracts (2004–2008).

6. Annual Budget Authority (FY 2002–FY 2011) 

FY Apportionment ($ in millions) 

2002 —

2003 $4

2004 $41

2005 $202

2006 $259

2007 $297

2008 $379

2009 $283

2010 $234

2011 $204

7. Annual Outlays (FY 2002–FY 2011) 

FY Outlays ($ in millions) 

2002 —

2003 —

2004 $38

2005 $186

2006 $263

2007 $294

2008 $309

2009 $276

2010 $220

2011 $205

Security’s FA funds are obligated separately for each year of the contract with the 

producer. They are expended during the year of obligation. TA funds obligated for 

a given year are used for workload generated by prior year contract implementation. 

The vast majority of TA funding also are expended in the year of obligation. FA 

funding represents the majority of program budget authority.

158

8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Conservation Security Program

Conservation Planning and Technical Consultation 2,033 2,228 1,264 941 990Conservation Implementation 2,348 2,920 1,657 1,233 1,297Financial Assistance—Program Administration 17,204 11,714 6,647 4,947 5,205Indirect Costs 4,321 27,728 20,315 15,120 13,446

Sub-total Technical Assistance 25,906 44,590 29,883 22,241 20,938

Financial Assistance—Cost Share & Monetary Incentive 268,451 272,461 246,121 199,928 182,468

Total Costs 294,357 317,051 276,004 222,169 203,406FTEs 200 367 220 154 132

Notes: These numbers are consistent with the published ‘‘Full Cost by Secretary’s Strategic Priorities’’ section of the Explanatory Notes for 

Fiscal Years 2009 through 2012 President’s Budget submissions. In the table above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President’s Budget submission. 

Financial assistance funding is identified on the line titled, ‘‘Financial Assistance—Cost Share and Monetary Incentives.’’ Funds associated 

with technical assistance are on the remaining four lines. 

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9. Eligibility Criteria 

• Applicants must have submitted an application applied prior to Oct. 1, 2008.

• Eligible applicants include an individual producer, partnership, association, corporation, estate, trust, other business or other legal entities controlling eligible 

lands. The term producer means an owner, operator, landlord, tenant or sharecropper that shares in the risk of producing any crop or livestock; and must be 

entitled to share in the crop or livestock available for marketing from an agricultural operation.

• An applicant must be in compliance with highly erodible land and wetland conservation provisions, and average adjusted gross income requirements.

• Working lands include cropland, grassland, prairie land, improved pasture, and 

range land, as well as forested land that is an incidental part of an agriculture 

operation. 

10. Utilization (Participation) Data 

Security Dollars Obligated on Active/Completed Contracts data include:

Financial Assistance

Obligated 

Technical Assistance

Obligated 

Total $199,927,828.26 $16,985,614.49

11. Duplication or Overlap with Other Programs 

Because Security is available only for contracts that were entered into prior to the 

enactment date of the 2008 Farm Bill, a producer who receives Security payments 

cannot also receive payments under the Stewardship. 

12. Waste, Fraud and Abuse 

In July 2009, OIG issued an audit report on the Conservation Security Program. 

They noted potential improper payments made to participants that were ineligible 

and participants that received payments for more than one Security contract at a 

time. The audit involved review of 20,653 contracts. Of those contracts, 37 percent 

(7,666) contained errors, mostly minor or technical in nature. Three contracts (less 

than one percent of all the contracts) were found to be fraudulent. Corrective actions 

were taken on all errors and were completed by December 31, 2009. 

To recover the improper payments that were made, NRCS sent demand letters 

and bills to participants. For certain participants, liquidated damages have also 

been assessed. NRCS has recovered $4.618 million to date as result of these corrective actions. To remediate the situation, updated procedures were issued to require 

field verifications prior to funds being obligated. NRCS continues to work to recover 

all improper payments made. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Conservation Stewardship Program (Stewardship). 

Prepared by USDA’s NRCS. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The 2008 Farm Bill authorized Stewardship with an enrollment of 12,769,000 

acres for each fiscal year (FY) for the period beginning October 1, 2008, and ending 

on September 30, 2017. 

The Chief of NRCS makes Stewardship available to all producers, regardless of 

operation size or crops produced, in all 50 states, the District of Columbia, and the 

Caribbean and Pacific Island areas. 

Since it was first funded in 2008, Stewardship has enrolled 20,567 contracts on 

over 25.1 million acres. 

4. Purpose/Goals 

The purpose of Stewardship, as a voluntary program, is to encourage agricultural 

and forestry producers to address resource concerns by: (1) undertaking additional 

conservation activities; and (2) improving and maintaining existing conservation 

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systems. Stewardship provides financial and technical assistance to help land stewards conserve and enhance soil, water, air, and related natural resources on their 

land. 

Stewardship participants receive payments for conservation performance—the 

higher the performance, the higher the payment. It provides two possible types of 

payments. An annual payment is available for installing new conservation activities 

and maintaining existing practices. A supplemental payment is available to participants who also adopt a resource conserving crop rotation. Through 5 year contracts, 

NRCS makes payments as soon as practical after October 1 of each fiscal year for 

contract activities installed and maintained in the previous year. 

5. Success in Meeting Programmatic Purpose/Goals 

In FY 2010:

• NRCS enrolled 20,567 contracts on 25,164,327 acres.

• The value of the contracts is $320,399,890.

• The average contract size is 1,224 acres.

• On average, NRCS agreed to reimburse participants $15,578 for each contract.

6. Annual Budget Authority (FY 2002–FY 2011) 

FY Apportionment ($ in millions) 

2002 —

2003 —

2004 —

2005 —

2006 —

2007 —

2008 —

2009 $10

2010 $469

2011 $601

7. Annual Outlays (FY 2002–FY 2011) 

FY Outlays ($ in millions) 

2002 —

2003 —

2004 —

2005 —

2006 —

2007 —

2008 —

2009 $5

2010 $51

2011 $389

Stewardship’s FA funds are obligated separately for each year of the 5 year contract for installing new or maintaining existing conservation activities. FA funds are 

expended one year after obligation, after NRCS personnel perform a field visit to 

site-verify that the conservation activities are installed and maintained to specifications. TA funds obligated in a given year are used for workload generated by the 

enrollment of new contracts and workload generated by prior year contract implementation. The vast majority of TA funding tends to be expended in the year of obligation. FA funding represents the majority of program budget authority.

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8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Conservation Stewardship Program

Conservation Planning and Technical Consultation — — 398 2,939 3,356Conservation Implementation — — 520 3,849 4,397Financial Assistance—Program Administration — — 2,086 15,440 17,645Indirect Costs — — 6,374 47,187 45,581

Sub-total Technical Assistance — — 9,378 69,415 70,979

Financial Assistance—Cost Share & Monetary Incentive — — — 320,398 529,855

Total Costs — — 9,378 389,813 600,834FTEs — — 75 496 540

Notes: These numbers are consistent with the published ‘‘Full Cost by Secretary’s Strategic Priorities’’ section of the Explanatory Notes for 

Fiscal Years 2009 through 2012 President’s Budget submissions. In the table above, Fiscal Years 2009 and 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President’s Budget submission. 

Financial assistance funding is identified on the line titled, ‘‘Financial Assistance—Cost Share and Monetary Incentives.’’ Funds associated 

with technical assistance are on the remaining four lines. 

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9. Eligibility Criteria 

• Eligible land includes cropland, grassland, prairie land, improved pastureland, 

rangeland, nonindustrial private forestland, and agricultural land under the jurisdiction of an Indian tribe.

• Eligible applicants include individuals, legal entities, joint operations, or Indian 

tribes. Applicants must be the operator of record in the USDA farm records 

management system for the eligible land being offered for enrollment and have 

effective control of the land for the term of the proposed contract.

• Applicants must be in compliance with the highly erodible land and wetland 

conservation provisions requirements and adjusted gross income provisions 

prior to receiving program payments.

Stewardship contract provisions provide:

• A person or legal entity may have more than one Stewardship contract but, for 

all Stewardship contracts combined, may not receive more than $40,000 in any 

year or more than $200,000 during any 5 year period.

• The contract limit is the same as the payment limit except in the case of joint 

operations, for which the contract limit is $80,000 per fiscal year and $400,000 

over the term of the contract period. 

10. Utilization (Participation) Data 

2010 Stewardship Application/Contract Status data includes:

Number of

Active and 

Completed 

Contracts 

Financial

Assistance

Obligated 

Total Treated 

Acres 

Technical

Assistance

Obligated 

Total 20,567 $320,397,871 25,164,327 $59,940,382

11. Duplication or Overlap with Other Programs 

Some of the practices offered through Stewardship to meet the minimum threshold at the end of the contract are also offered through other programs such as EQIP. 

Utilizing Stewardship for this purpose increases the additionality intent and 

uniqueness of the program. 

12. Waste, Fraud and Abuse 

In an effort to implement lessons learned from the 2009 Conservation Security 

Program OIG audit, NRCS undertook an independent inquiry of FY 2010 Conservation Stewardship Program Contracts. The agency reviewed ten random contracts 

from 15 selected states after all states completed a ‘‘Checklist to Address Conservation Stewardship Program O&E Review Findings.’’ The results of the review showed 

inconsistencies in the calculation of additional activity points. To address these matters NRCS has undertaken an extensive follow-up regime with all states providing 

additional guidance, training, written directives and net conferences to alleviate the 

problem. Finally, each new contract entered into must now have a NRCS conservationist field review the operation’s on-the-ground compliance prior to enrollment. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Wetlands Reserve Program (WRP). 

Prepared by USDA’s NRCS. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

Congress first authorized WRP in the 1990 Farm Bill and has reauthorized it 

with little change in the three farm bills since. WRP is a voluntary program that 

provides technical and financial assistance to enable eligible landowners to address 

wetland, wildlife habitat, soil, water and related natural resource concerns on private lands in an environmentally beneficial and cost effective manner. The program 

achieves solutions to local community issues related to farms, ranches, rural lands 

and other areas by establishing easements and long-term agreements on eligible 

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farmlands and establishing 30 year contracts on Tribal lands. Over the last 20 

years, WRP’s voluntary, private lands approach has made it the Federal Government’s private lands wetland restoration and conservation program. Year after year, 

WRP has delivered benefits to both the individuals participating and the American 

public benefitting from the services the WRP wetlands provide. 

4. Purpose/Goals 

The primary purpose of WRP is the restoration, protection and enhancement of 

wetlands and associated habitats for the benefit of wetland-dependent wildlife, with 

an emphasis on migratory birds and special status species. The WRP goal is to 

achieve the greatest wetland functions and values, along with optimum wildlife 

habitat, on every acre enrolled in the program. WRP is most suited for frequently 

flooded agricultural lands, where restoration will maximize habitat for migratory 

birds and other wildlife, and improve water quality. WRP focuses on:

• Enrolling marginal lands that have a history of crop failures or low production 

yields;

• Restoring and protecting wetland values on degraded wetlands;

• Maximizing wildlife benefits;

• Achieving cost-effective restoration with a priority on benefits to migratory 

birds;

• Protecting and improving water quality; and

• Reducing the impact of flood events. 

5. Success in Meeting Programmatic Purpose/Goals 

WRP has become the preeminent Federal private lands program for protecting 

and restoring wetlands. Over the last 20 years, WRP has helped more than 11,000 

private landowners voluntarily restore, protect and enhance wetlands and wildlife 

habitat on over 2.3 million acres nationwide. Currently, about 30 percent of those 

acres are in the restoration process and will require continued conservation assistance in order to reach full restoration. WRP has proven to be a program under 

which NRCS, landowners and many various partners can work together to achieve 

truly cooperative conservation resulting in long-term benefits on a landscape scale 

that will ensure our wetland resources are available for future generations.

6. Annual Budget Authority (FY 2002–FY 2011) 

FY Apportionment ($ in millions) 

2002 $275

2003 $306

2004 $280

2005 $273

2006 $273

2007 $283

2008 $184

2009 $571

2010 $675

2011 $611

7. Annual Outlays (FY 2002–FY 2011) 

FY Outlays ($ in millions) 

2002 —

2003 $98

2004 $231

2005 $205

2006 $234

2007 $154

2008 $249

2009 $131

2010 $278

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7. Annual Outlays (FY 2002–FY 2011)—Continued

FY Outlays ($ in millions) 

2011 $348

WRP TA funds support staff time needed to conduct eligibility determinations, finalize easement transactions, complete restoration designs, develop management 

and maintenance plans, and conduct monitoring of wetlands under easement. WRP 

FA funds support the easement costs paid to the landowner, restoration costs paid 

for implementation of restoration design, and implementation costs for maintenance 

and repairs on existing easements. FA for easement acquisition is obligated when 

the acres to be placed under easement are enrolled but is not expended until the 

easement is perfected, a process that may take years. FA for restoration is obligated 

when contracts are developed based on final restoration designs but is not expended 

until the installation of practices used to restore the wetlands is complete and 

verified by NRCS personnel, which also may occur over several years. TA funds obligated in a given year are used for workload generated by the enrollment of new 

acres and workload generated by acquisition, restoration, and monitoring of prior 

year enrollments which requires the majority of the TA funds obligated in a given 

year. FA funding represents the majority of program budget authority.

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8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Wetlands Reserve Program

Conservation Planning and Technical Consultation 4,346 2,363 2,191 2,558 3,807Conservation Implementation 21,771 12,719 11,791 13,764 20,482Financial Assistance—Program Administration 17,382 11,186 10,370 12,106 18,015Indirect Costs 16,599 6,923 6,418 7,492 11,148

Sub-total Technical Assistance 60,098 33,191 30,770 35,920 53,452

Financial Assistance—Cost Share & Monetary Incentive 187,757 149,758 404,941 594,219 672,647

Total Costs 247,855 182,949 435,711 630,139 726,099FTEs 190 225 191 217 343

Notes: These numbers are consistent with the published ‘‘Full Cost by Secretary’s Strategic Priorities’’ section of the Explanatory Notes for 

Fiscal Years 2009 through 2012 President’s Budget submissions. In the table above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President’s Budget submission. 

Financial assistance funding is identified on the line titled, ‘‘Financial Assistance—Cost Share and Monetary Incentives.’’ Funds associated 

with technical assistance are on the remaining four lines. 9. Eligibility Criteria 

Owners of private and tribal lands are eligible to participate in the WRP. WRP offers a perpetual easement, 30 year easement, or 10 year 

restoration cost-share agreement available to all private and tribal landowners and a 30 year contract option for tribal landowners only. Land is eligible if it contains wetlands that have been degraded primarily as a result of agricultural use and have a high likelihood of successful restoration that will maximize wildlife benefits and wetland functions and values taking cost into consideration. Associated habitats and lands functionally related to the eligible wetlands may also be enrolled if they will contribute significantly to the wetland functions and values or practical administration of the enrolled area. 

166

10. Utilization (Participation) Data 

During the 2008 Farm Bill, WRP has enrolled an average of approximately 215,000 acres on 1,200 projects each year. Since its inception 

in 1992, WRP has enrolled over 2.3 million acres on over 11,000 projects. The majority of enrollments, over 77 percent are perpetual easements, 16 percent are 30 year easements and 30 year contracts with tribes, and the remaining six percent are restoration cost-share agreements.

2010 WRP Number of Agreements and Dollars Obligated data includes: 

30 Year Contracts 30 Year Easements 

Permanent

Easements 

Restoration Cost 

Share Agreement Total Agreements 

Financial

Assistance 

Obligated 

Technical

Assistance 

Obligated 

Acres Number Acres Number Acres Number Acres Number Acres Number 

Total 1,761 4 60,154 425 206,692 954 4,155 31 272,762 1,414 $592,562,106 $28,910,632

Note: Numbers currently reported in NEST are undergoing an intense quality assurance review. Numbers are subject to change during this process. 

167

11. Duplication or Overlap with Other Programs 

There is some potential overlap of the restoration cost-share agreement enrollment option of WRP with WHIP. Because the restoration cost-share agreement enrollment option does not have an associated easement, it provides technical and financial assistance in the form of a cost-share agreement for the implementation of 

wetland restoration. The wetland restoration practices implemented through the 

WRP restoration cost-share agreements would potentially be eligible for cost-share 

under WHIP. The primary benefit of the WRP restoration cost-share agreement that 

sets it apart from WHIP is the length of the agreement. The WRP agreements require the restoration to be maintained for a longer period of time—a minimum of 

10 years after the date the last practice is installed and, in contrast, WHIP agreements can be for one year to a maximum of 10 years. Thus, the WRP restoration 

cost-share agreements provide for a longer term protection of the public investment 

and realization of the public benefits resulting from the restored wetlands. 

CRP land eligibility criteria is more narrow than WRP. The nature of the agreements with landowners is also vastly different. Although there may be some overlap 

of eligible land with the CRP, WRP does not offer enrollment options similar to 

CRP. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Farm and Ranch Lands Protection Program (FRPP). 

Prepared by USDA’s NRCS. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

FRPP was last reauthorized in 2008 Farm Bill. This legislation expanded the purpose of the Farm and Ranch Lands Protection Program from ‘‘protecting topsoil’’ to 

‘‘protecting agricultural use and related conservation values of the land.’’ The program now allows for long term agreements with cooperating entities. Such agreements may be 5 years in duration for certified entities and 3 years for eligible entities that are not certified. The 2008 Farm Bill defines a ‘‘certified entity’’ as an eligible entity with a proven record of acquiring and monitoring conservation easements. 

Entities may submit proposals to protect farm and ranch lands throughout the term 

of the agreement. 

4. Purpose/Goals 

FRPP is a voluntary program that helps farmers and ranchers keep their land 

in agriculture. The program provides matching funds to state, Tribal, or local governments and non-governmental organizations with existing farm and ranch land 

protection programs to purchase conservation easements. 

5. Success in Meeting Programmatic Purpose/Goals 

The following is an example of the benefits of FRPP: 

The 180 acre Carpenter Farm and the 142 acre Sparks Farm in Salem County 

were protected from development with funding from the State Agriculture Development Committee (SADC), Garden State Preservation Trust, and FRPP. The Carpenter Farm has been in agriculture for more than 300 years. Wheat and soybeans 

are the primary crops cultivated on the Sparks Farm. In addition to protecting rich, 

fertile farmland and investing in the agricultural economy of the region, preserving 

these lands also provides a significant environmental benefit. The resulting land 

and waterscape is one of the top areas in the state for waterfowl diversity and has 

been designated an Important Bird Area by New Jersey Audubon.

6. Annual Budget Authority (FY 2002–FY 2011) 

FY Apportionment ($ in millions) 

2002 $50

2003 $100

168

6. Annual Budget Authority (FY 2002–FY 2011)—

Continued

FY Apportionment ($ in millions) 

2004 $112

2005 $112

2006 $74

2007 $74

2008 $97

2009 $121

2010 $150

2011 $175

7. Annual Outlays (FY 2002–FY 2011) 

FY Outlays ($ in millions) 

2002 —

2003 $15

2004 $54

2005 $63

2006 $59

2007 $91

2008 $73

2009 $74

2010 $102

2011 $97

FRPP FA funds are obligated the year parcels are enrolled in the program but 

not expended until easements are closed, which may take several years. TA funds 

obligated in a given year are used for workload generated by the enrollment of new 

parcels and workload generated by parcels enrolled in prior years. The vast majority 

of TA funding tends to be expended in the year of obligation. FA funding represents 

the majority of program budget authority.

169

8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Farm and Ranch Lands Protection Program

Conservation Planning and Technical Consultation N/A 325 336 336 460Conservation Implementation N/A 17 18 18 25Financial Assistance—Program Administration 958 3,704 3,828 3,830 5,248Indirect Costs 2,185 1,615 1,669 1,670 2,289

Sub-total Technical Assistance 3,143 5,661 5,851 5,854 8,022

Financial Assistance—Cost Share & Monetary Incentive 69,940 90,520 112,915 144,042 166,978

Total Costs 73,083 96,181 118,766 149,896 175,000FTEs 24 29 34 29 44

Notes: These numbers are consistent with the published ‘‘Full Cost by Secretary’s Strategic Priorities’’ section of the Explanatory Notes for 

Fiscal Years 2009 through 2012 President’s Budget submissions. In the table above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President’s Budget submission. 

Financial assistance funding is identified on the line titled, ‘‘Financial Assistance—Cost Share and Monetary Incentives.’’ Funds associated 

with technical assistance are on the remaining four lines. 

170

9. Eligibility Criteria 

Individual landowners must apply to and be accepted by the eligible state, tribe, 

or local government or nongovernmental programs to participate in FRPP. As a 

Title XII program, these individual landowners must meet farm bill payment eligibility requirements for adjusted gross income, wetland conservation, and highly 

erodible land conservation. The land to be enrolled in FRPP must meet one of three 

criteria to qualify for consideration: (1) have at least 50 percent prime, unique, or 

important farmland soil; (2) have historic or archeological resources; or (3) support 

the policies of a state or local farm and ranch lands protection program. 

To qualify, farmland must: be part of a pending offer from a state, tribe, or local 

farmland protection program; be privately owned; have a conservation plan for highly erodible land; be large enough to sustain agricultural production; be accessible 

to markets for what the land produces; have adequate infrastructure and agricultural support services; and have surrounding parcels of land that can support longterm agricultural production. Depending on funding availability, proposals must be 

submitted by the eligible entities to the appropriate NRCS State Office during the 

application window. 

10. Utilization (Participation) Data 

2010 FRPP Number of Parcels and Dollars Obligated data includes:

Number of 

Parcels 1 Acres 1

Financial

Assistance

Obligated for 

Easement

Acquisition 

Technical

Assistance 

Obligated 

Total 403 170,412 $144,041,755 $4,425,878

1 Numbers currently reported in NEST are undergoing an intense quality assurance review. Numbers are subject to change during this process. 

11. Duplication or Overlap with Other Programs 

GRP also offers long-term and permanent easements to protect grazing lands from 

conversion to other uses. Lands eligible for GRP are generally eligible for FRPP; 

however, FRPP is more broadly applicable to include cropland or other lands that 

may not be eligible for GRP. 

12. Waste, Fraud and Abuse 

NRCS has uncovered few instances of entity misuse of landowner contributions 

in acquiring easements through FRPP. However, a 2005 OIG audit found that the 

entity coerced landowners into returning some of the proceeds of the sale of the 

easement to the entity, who had claimed these as part of their non Federal match. 

As a result, the entity did not pay the required 25 percent of the purchase price 

for the FRPP easement. In response, NRCS terminated the agreement with the eligible entity and arranged for parcels to be included in a subsequent agreement with 

another eligible entity. Internal controls have been instituted that require landowners to sign a ‘‘Confirmation of Matching Funds’’ to ensure that cooperating entities do not use landowners’ proceeds from the easement acquisition to cover the entities’ contribution. In addition NRCS State Office staff interview landowners to be 

certain that they are not being forced to provide the entity cash match. 

In Wisconsin, the eligible entity misrepresented the source of its funds by certifying that it had not obtained the money from landowners when it had. This resulted in NRCS overpaying on these easements. The Office of General Counsel is 

currently reviewing legal options. As a result of this case, changes were made to 

FRPP policy requiring NRCS State office staff to visit every FRPP parcel and interview every landowner, inform them of FRPP regulations, and confirm the estimated 

easement value, Federal contribution, entity contribution, landowner donation, and 

recommended contribution to stewardship funds before a cooperative agreement is 

signed. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Resource Conservation and Development (RC&D). 

Prepared by USDA’s NRCS. 

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2. Subprograms/Department Initiatives 

None. 

3. Brief History 

RC&D was initiated under the Soil Conservation and Domestic Allotment Act, (16 

U.S.C. 590a–590f), the Bankhead-Jones Farm Tenant Act (16 U.S.C. 1010 and 

1011), and the Food and Agriculture Act of 1962, and is authorized under subtitle 

H, title XV of the Agriculture and Food Act of 1981, (16 U.S.C. 3451–3461), as 

amended. Through the program, RC&D areas establish or improve coordination systems in rural communities, and build rural community leadership skills to more effectively use Federal, state, and local programs for the communities’ benefit. The 

2002 Farm Bill permanently authorized the program. The 2008 Act further 

strengthened the relationship between USDA and RC&D councils. The program 

began with ten pilot areas and grew to 375 areas designated by the Secretary of 

Agriculture. 

A RC&D area is a locally defined multi-county area, sponsored and directed by 

a RC&D Council that carries out the program encouraging natural resource conservation and utilization, accelerated economic development, and/or improvement of 

social conditions where needed to foster a sound local economy. The RC&D Council 

consists of sponsors from the public and private sector that represent a diverse 

cross-section of community interests. Sponsors include county and city governments, 

soil and water conservation districts, sub-state districts, Tribal governments, and 

other interested private organizations in the area. The RC&D program is based on 

grassroots involvement and decision-making. From public meetings to identify community concerns, needs, and problems, the RC&D Council develops an area plan 

that details the goals, objectives, and action items needed to address the local communities’ priorities and concerns. The RC&D Council then collects data about identified problems, develops alternatives, and recommends solutions. Implementation of 

an action item may include one step or a full range of steps, such as problem identification, development of alternatives, plan development, and funding. 

4. Purpose/Goals 

The purpose of the RC&D program is to—

(i) Develop and carry out area plans and projects in designated areas in order 

to conserve, develop, and improve the use of land.

(ii) Develop natural resources.

(iii) Improve and enhance the social, economic, and environmental conditions in 

primarily rural areas of the United States.

(iv) Encourage and improve the capability of state and local units of government, Indian Tribes, nonprofit organizations, and councils.

The mission of the RC&D Program was to make the financial, administrative, 

educational, and technical resources of USDA and other public and private partners 

available to increase the ability of communities to meet their regionally identified 

resource conservation and economic development needs. 

5. Success in Meeting Programmatic Purpose/Goals 

The program has been successful in meeting its purpose and goals. Each year 

RC&D Councils and their partners, with technical assistance from NRCS, help to 

create, retain, and expand businesses and the formation of cooperatives. RC&D 

Council projects create and retain jobs. Each RC&D Council brings in external grant 

funds for direct project implementation into their area. 

RC&D Councils assist farm or ranch operations with agri-tourism activities and 

direct marketing from the field to the consumer via Community Supported Agriculture groups (CSAs), restaurants, commercial stores, or public access farmers markets. 

Efforts to improve natural resources within RC&D areas result in the improvement of wildlife habitat, lakes and other water bodies, and streams. RC&D Councils 

assist animal agricultural operations with water quality projects; assist the construction or rehabilitation of flood control structures; and preserve or protect agricultural land. Over the last 5–8 years, RC&D Councils have begun implementing 

renewable energy projects. 

RC&D Councils hold workshops, tours and seminars nationwide on agriculture, 

aquaculture, forestry and wildlife; and training sessions on leadership development, 

grant writing, business development, nonprofit management and environmental 

education. These educational projects have helped people develop new skills.

172

6. Annual Budget Authority (FY 2002–FY 2011) 

FY Appropriation ($ in millions) 

2002 $48

2003 $51

2004 $52

2005 $51

2006 $51

2007 $51

2008 $51

2009 $51

2010 $51

2011 1 —

1The 2011 Appropriations Act provided no funding for this 

program. Based on authority provided through multiple 

short-term continuing resolutions, a total of $27 million was 

available for this program through April 15, 2011. 

7. Annual Outlays (FY 2002–FY 2011) 

FY Outlays ($ in millions) 

2002 $49

2003 $49

2004 $51

2005 $51

2006 $51

2007 $52

2008 $52

2009 $51

2010 $50

2011 $22

RC&D primarily funded the support of RC&D Coordinators. Given the nature of 

this expense, outlays generally occurred in the year of appropriation and obligation. 

Prior to FY 2009, RC&D funds were no-year funds.

173

8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Resource Conservation and Development

Conservation Planning and Technical Consultation 27,693 21,364 21,364 21,364 21,364Conservation Implementation 21,495 19,355 19,355 19,355 19,355Financial Assistance—Program Administration N/A N/A N/A N/A N/A Financial Assistance—Cost Share & Monetary Incentive N/A N/A N/A N/A N/A Indirect Costs 1,900 10,011 10,011 10,011 10,011

Total Costs 51,088 50,730 50,730 50,730 50,730FTEs 453 440 412 403 423

Notes: These numbers are consistent with the published ‘‘Full Cost by Secretary’s Strategic Priorities’’ section of the Explanatory Notes for 

Fiscal Years 2009 through 2012 President’s Budget submissions. In the table above, Fiscal Years 2007 through 2010 amounts are actual appropriations; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President’s Budget submission. 

Financial assistance funding is identified on the line titled, ‘‘Financial Assistance—Cost Share and Monetary Incentives.’’ Funds associated 

with technical assistance are on the remaining four lines. 

174

9. Eligibility Criteria 

Eligible entities for the RC&D program are nonprofit entities that are established 

by volunteers or representatives of states, local units of government, Indian tribes, 

or local nonprofit organizations specifically to participate in the RC&D program. 

They apply to the Secretary of Agriculture to be designated as a USDA RC&D area. 

The size and configuration of an area must be based on an assessment of rural development needs, institutional arrangements, and the natural resources of the region. Boundaries of an RC&D area are established on a multi-jurisdictional basis 

to make the most efficient use of area plans relating to land conservation, land management, community development, and environmental enhancement. Commonality 

of existing needs and opportunities are important aspects relating to the geographic 

boundaries of the area. The Secretary selects designated areas for assistance on the 

basis of the elements of the RC&D Council’s area plan. 

10. Utilization (Participation) Data 

There are 375 RC&D areas serving 2,696 counties in every state, the Caribbean, 

and the Pacific Basin. Designated areas continue to serve over 85 percent of U.S. 

counties and more than 77 percent of the U.S. population. There are 39 applicant 

areas covering 236 additional counties that have applied for the designation by 

USDA. 

11. Duplication or Overlap with Other Programs 

The Federal support for the program was not funded under the FY 2011 Full-Year 

Continuing Appropriations and agency technical support for the program is being 

closed out. RC&D councils may continue to compete to participate in other programs. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Environmental Quality Incentives Program (EQIP). 

Prepared by USDA’s NRCS. 

2. Subprograms/Department Initiatives 

Agricultural Water Enhancement Program. 

Conservation Innovation Grants (CIG). 

Organics. 

Air Quality Initiative. 

3. Brief History 

EQIP was established in the 1996 Farm Bill and was reauthorized in the 2002 

and 2008 Farm Bills. The Chief of NRCS may implement EQIP in any of the 50 

states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands of the United States, American Samoa, and the Commonwealth of the 

Northern Mariana Islands. 

4. Purpose/Goals 

NRCS is charged with carrying out EQIP in a manner that optimizes environmental benefits and provides:

• Flexible technical and financial assistance to farmers and ranchers that face the 

most serious threats to soil, water, air, and related natural resources;

• Assistance to farmers and ranchers in complying with Federal, state, and local 

environmental regulatory requirements;

• Assistance to farmers and ranchers in making beneficial, cost-effective changes 

to cropping systems, grazing management, manure, nutrient, pest, or irrigation 

management, land uses, or other measures needed to conserve and improve soil, 

water, air, and related natural resources; and

• For the consolidation and simplification of conservation planning and implementation to reduce the administration burden on producers. 

5. Success in Meeting Programmatic Purpose/Goals 

In FY 2010:

• NRCS enrolled almost 36,500 agreements on over 13,000,000 acres.

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• The value of the contracts was over $839 million.

• The average agreement size is 357 acres.

• On average, NRCS agreed to reimburse participants approximately $23,000 for 

each agreement. 

6. Annual Budget Authority (FY 2002–FY 2011) 

EQIP supports CCPI and CIG. These are not appropriated separately or tracked 

separately in the NRCS financial system.

FY Apportionment ($ in millions) 

2002 $200

2003 $695

2004 $975

2005 $1,000

2006 $995

2007 $996

2008 $1,200

2009 $1,067

2010 $1,180

2011 $1,238

7. Annual Outlays (FY 2002–FY 2011) 

FY Outlays ($ in millions) 

2002 $185

2003 $626

2004 $859

2005 1 ¥$531

2006 $771

2007 $815

2008 $953

2009 $943

2010 $1,059

2011 $1,171

1Prior to FY 2005, NRCS advanced funding for the EQIP 

program to FSA. In FY 2005 all obligations from FY 2005 

and prior and the remaining funding to pay those obligations 

came back to NRCS. The negative outlays meant there was 

additional cash available to pay for the EQIP obligations that 

came back to NRCS. 

EQIP FA funds are obligated the year of contract enrollment for the entire multiyear span of the contract. As the years pass, FA for contracted practices is not expended until the practices are installed and inspected for quality control by NRCS 

personnel. For this reason, FA funds tend to be expended over multiple years after 

obligation. TA funds obligated in a given year are used for workload generated by 

the enrollment of new contracts and workload generated by prior year contract implementation. The vast majority of TA funding tends to be expended in the year of 

obligation. FA funding represents the majority of program budget authority.

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8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Enironmental Quality Incentives Program

Conservation Planning and Technical Consultation 27,928 17,315 19,132 20,429 22,277Conservation Implementation 119,171 89,704 99,117 105,837 115,411Financial Assistance—Program Administration 80,152 60,221 66,540 71,051 77,479Indirect Costs 15,460 101,729 112,404 120,025 130,883

Sub-total Technical Assistance 242,711 268,969 297,193 317,342 346,050

Financial Assistance—Cost Share & Monetary Incentive 750,140 924,221 757,389 856,697 833,950

Total Costs 992,851 1,193,190 1,054,582 1,174,039 1,180,000FTEs 2,171 2,313 2,395 2,407 2,872

Notes: These numbers are consistent with the published ‘‘Full Cost by Secretary’s Strategic Priorities’’ section of the Explanatory Notes for 

Fiscal Years 2009 through 2012 President’s Budget submissions. In the table above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President’s Budget submission. 

Financial assistance funding is identified on the line titled, ‘‘Financial Assistance—Cost Share and Monetary Incentives.’’ Funds associated 

with technical assistance are on the remaining four lines. 

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9. Eligibility Criteria 

To participate in EQIP, both the land and the applicant must be eligible. Eligible 

land includes cropland, rangeland, pastureland, private nonindustrial forestland, 

and other farm or ranch lands. The land must have an identified natural resource 

concern that poses a serious threat to soil, water, air, or related resources by reason 

of land use practices, soil type, terrain, climatic conditions, topography, flooding, saline characteristics, or other natural resource factors or natural hazard. Publicly 

owned land is eligible when the land is under private control for the contract period, 

and is included in the participant’s operating unit, and must have written authorization from the government agency to apply conservation practices. For irrigationrelated practices, the land must have a history of actively irrigating the land unit 

for 2 out of the last 5 years. 

Applicants must be an agricultural producer, have control of the land for the life 

of the contract, be in compliance with farm bill provisions (highly erodible land, wetland conservation, protection of tenants and sharecroppers), be within appropriate 

program payment limitations and adjusted gross income requirements, and develop 

an EQIP plan of operations. 

Organics—The Organic Initiative is a nationwide special initiative within EQIP 

to provide assistance to organic producers as well as producers in the process of 

transitioning to organic production. 

Air Quality Initiative—The Air Quality Initiative is a nationwide special initiative 

within EQIP to provide assistance to farmers and ranchers to reduce air pollution 

generated from agricultural operations in areas designated by the EPA as non-attainment areas for ozone and particulate matter. 

10. Utilization (Participation) Data 

EQIP Application/Contract Status data includes:

FY 

Number of Active 

or Completed

Contracts 

Financial

Assistance

Obligated 

Total Treated 

Acres 

2005 49,406 $792,091,721 18,080,499

2006 41,190 $784,849,667 21,115,275

2007 41,700 $781,954,270 17,104,234

2008 48,116 $943,407,338 16,944,359

2009 31,960 $731,099,112 12,003,583

2010 36,499 $838,985,212 13,034,363

Total 248,871 $4,872,387,320 98,282,313

11. Duplication or Overlap with Other Programs 

EQIP is one of the program structures through which CBWP is delivered. CBWP 

has more focused priorities by concentrating on water quality and quantity and only 

in the Chesapeake Bay watershed. 

Although similar to EQIP, WHIP has expanded priorities to support fish and wildlife. 

Although similar to EQIP in implementation, Agricultural Management Assistance (AMA) is limited to 16 statutorily-designated states that have low participation 

in Federal Crop Insurance Programs. There are some practices that can be installed 

through AMA but not EQIP 

Although similar to EQIP, Agricultural Water Enhancement Program (AWEP) focuses on ground and surface water conservation and water quality, and is a component of EQIP. 

Both EQIP and CRP address natural resource concerns, the land uses on which 

the practices are applied generally are distinct. There could be minimal overlap 

where CRP enrolls windbreaks, shelterbelts and shallow water impoundments for 

wildlife. 

12. Waste, Fraud and Abuse 

An audit by the OIG revealed that participant contracts for the Migratory Bird 

Habitat Initiative in one Louisiana Parrish received an increased payment rate for 

the socially disadvantaged designation although those participants were not actually 

in a socially disadvantaged group. It was identified by OIG that staff inadvertently 

selected an incorrect payment schedule. It was recommended to adjust the agency’s 

business tools so that the socially disadvantaged designation indicated by the particVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00189 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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ipant would automatically provide the correct payment rate without staff having to 

manually select various payment schedules for each application. For the improper 

payments, the agency provided each participant with the option to either return the 

overpayment amount or to receive a reduction in future scheduled payments. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Conservation Innovation Grants (CIG). 

Prepared by USDA’s NRCS. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

First authorized in the 2002 Farm Bill and reauthorized by each subsequent farm 

bill, CIG is a voluntary program intended to stimulate the development and adoption of innovative conservation approaches and technologies while leveraging Federal investment in environmental enhancement and protection, in conjunction with 

agricultural production. Under CIG, EQIP funds are used to award competitive 

grants to non-Federal governmental or non-governmental organizations, Tribes, or 

individuals. 

CIG enables NRCS to work with other public and private entities to accelerate 

technology transfer and adoption of promising technologies and approaches to address some of the nation’s most pressing natural resource concerns. CIG will benefit 

agricultural producers by providing more options for environmental enhancement 

and compliance with Federal, state, and local regulations. 

4. Purpose/Goals 

CIG provides grants on a competitive basis to stimulate the development and 

adoption of innovative conservation approaches and technologies while leveraging 

Federal investment in environmental enhancement and protection, in conjunction 

with agricultural production. 

NRCS expects to incorporate innovative technologies and approaches which result 

from CIG into NRCS technical manuals, guides, activities, and references, and to 

transfer these innovations to others in the public sector. CIG projects target innovative on-the-ground conservation, including pilot projects and field demonstrations. 

5. Success in Meeting Programmatic Purpose/Goals 

The following provides examples of CIG project results:

(a) In 2005, the Washington State University was awarded a CIG grant to implement the project titled ‘‘Development and Integration of a National Feed 

Management Education Program and Assessment Tools into a Comprehensive 

Nutrient Management Plan (CNMP)’’ in Washington. The intend of the project 

was to develop a two-tier tool for assessing the impacts of feed management 

practices on whole farm nutrient balance for animal nutritionists and NRCS 

staff and TSP advisors; develop the content of a Feed Management chapter for 

the NRCS Agricultural Waste Management Field Handbook (AWMFH), and develop and implement an education program targeting integration of feed management into a CNMP.

At the end of the project in 2008, the Washington State University (WSU) developed educational materials that are applicable at the national level and provided training for NRCS staff, agricultural professionals, and technical service 

providers (TSP’s) in feed management concepts and practices that minimize import of nutrients to the farm. WSU provided training in the use of computer 

models and software for strategic ration balancing, whole farm nutrient balance, and nutrient excretion estimates based upon feed and animal performance 

inputs, and developed a chapter for the NRCS Agricultural Waste Management 

Field Handbook (AWMFH) on Feed Management. Education materials were 

used to assist with the understanding of the conservation practice standard 

(CPS) code 592 Feed Management, feed management plan development and implementation tools, and a decision aid tool were developed (Feed Nutrient Management Economics software—FNMP$).

Workshops have been conducted in the States of Washington, California, Texas, 

Maryland, Nebraska, Pennsylvania, and Wisconsin. Collaborating states with 

these trainings included: Idaho, Oregon, Virginia, Indiana, Iowa, and MinVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00190 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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nesota. In addition, the national CNMP training program led by Iowa State has 

incorporated our Feed Management project material into their curriculum. Approximately 70 individuals have become certified through the American Registry of Professional Animal Scientists organization to be feed management 

planners.

While the funding for this project has ended, the interest and implementation 

activities are continuing. The project team is available to work with individual 

states with adoption of CPS 592 Feed Management. In addition, the American 

Registry of Professional Animal Scientists continues to provide the exam process for certifying that a nutritionist is qualified to develop a nutrient management plan.

The Feed Management chapter for the AWMFH was completed by September 

2008. In addition, NRCS is converting a decision aid tool called Feed Management Nutrient Planning Economics (FNMP$) from Excel to an Access data base 

format. Efforts to provide training for nutritionists and TSPs will continue.

(b) The World Wildlife Fund, Inc. (WWF), received a CIG grant in 2005 for a 

project titled ‘‘Market-Based Program for Environmental Services on South 

Florida Ranch Lands.’’ The main goal of the project was to engage ranchers, 

public agencies, and public interest groups to design, establish, and install a 

market-based incentive program for phosphorous reduction in the Lake Okeechobee (Northern Everglades) region; monitored and evaluate the environmental benefits (Phosphorous load reduction) achieved by the water management alternatives installed by the livestock producer participants; and design 

a scaled-up version of the pilot incentive program for use on a broader scale and 

communicated results of the field tests through field days, journal articles, 

workshops, and conferences.

When the project was completed in 2006, eight (8) ranching operations located 

within the Northern Everglades—Lake Okeechobee region in south Florida were 

contracted by WWF to developed Water Management Alternatives (WMA’s) on 

formerly drained wetlands that had been converted to pasturelands in an effort 

to retain surface waters and nutrients. Each rancher had different circumstances for which to implement practices and to demonstrate surface water 

retention/water quality benefits. Sizes of the rancher WMA’s ranged from very 

small in-pasture systems of 49 acres to two large systems involving 3,748 and 

2,500 acres respectively. The average size of the eight WMA project areas was 

1,092 acres.

This CIG project has successfully established a foundation for a Payment for 

Environmental Services (PES) program that is locally accepted among livestock 

producers, and local, state and Federal agencies. The eight pilot projects WMA’s 

demonstrated an average of 3 metric tons of phosphorous retained on-site from 

0.5–2.24 acre-feet of water retained within their CIG project areas. As a result 

of this CIG project, the first effective PES program was generated on a large 

regional scale to benefit a globally recognized imperiled ecosystem, the Everglades, and will do so by maintaining agriculture as part of the solution. The 

CIG PES Program offered a previously unrecognized environmental benefit from 

the installation of conservation practices for farm bill participants located within the Northern Everglades—Lake Okeechobee region.

The project titled ‘‘Wisconsin’s Dairy and Livestock Air Emission/Odor Project’’ 

from Wisconsin Department of Agriculture, Trade, and Consumer Protection 

(ATCP) was funded in 2005 to implement best management practices to establish the connection between agricultural ambient air concentrations and odor 

and evaluate various best management practices installed on dairy and other 

livestock operations to reduce odor, ambient air concentrations, and overall environmental impacts; and to test the odor standards developed as part of the 

administrative rule to implement Wisconsin’s Livestock Siting Law.

Wisconsin Department of Agriculture developed and implemented a plan to 

evaluate the odor standards in ATCP 51 LIVESTOCK FACILITY SITING, Wisconsin Administrative Code through odor measurements and the relationship 

with measured ambient air concentrations on six to eight dairy/livestock farms. 

Evaluation installation of a manure digester to produce methane for production 

of electricity was completed. An evaluation of post implementation impacts on 

ambient air concentrations, odors, and water quality was conducted. And results 

were communicated through the Wisconsin Agricultural Stewardship Initiative 

(WASI).

This project provided actual air sampling data associated with the implementation of practices on dairies in the Midwest U.S. This data verified that imperVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00191 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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meable covers are extremely effective at controlling odors and permeable covers 

are considerably effective at controlling odors. This data also emphasized the 

importance of proper design and operation (proper retention time, operational 

reliability, and addition of substrate material) for anaerobic digesters and that 

storage lagoons receiving digested manure may require additional management 

for odors and ammonia. Solids separation with aeration does appear to reduce 

odors (about 25 percent) and hydrogen sulfide, but may increase ammonia emissions. Overall, the project provided some much-needed data regarding the effectiveness of certain odor control practices. Although the data set is somewhat 

limited, it does provide some trends and identification of areas for further 

study.

(c) In 2005, the Chesapeake Bay Foundation received a CIG grant for a project 

titled ‘‘Precision Dairy Feeding to Reduce Nutrient Pollution in Pennsylvania’s 

Waters and the Chesapeake Bay’’ to demonstrate to dairy producers that precision feeding of dairy cows could facilitate reductions in the protein (nitrogen) 

and phosphorus being fed to dairy animals while maintaining or even improving 

milk production and possibly improving animal health.

A total of 66 diverse farms were enrolled in the precision dairy feeding program 

and received technical assistance from the University of Pennsylvania. Forage, 

feed, and feces samples were collected quarterly from these farms and analyzed 

to adjust their rations to more precisely meet the nutrient needs of the dairy 

herds. An additional 33 farms had their forage, feed, and feces sampled and received technical assistance through nutritionists and veterinarians who were 

trained to precisely balance dairy rations by the University of Pennsylvania. 

Dairy producers with their nutritionists regularly adjusted rations to maintain 

and improve production while minimizing manure nutrients.

Based on the finding from these feeding trials, the Pennsylvania State University Cooperative Extension developed the ‘‘Dairy Tool’’ to help farmers identify 

the greatest opportunities to improve profitability on their farms. Feed management is an essential component of this assessment. In addition, several publications related to feed management were prepared by the project participants in 

August 2008. Further the findings from the CIG project were presented at various conferences through display of posters and booths. Also, the Chesapeake 

Bay Foundation created and distributed a brochure entitled ‘‘Feed Efficiency: 

Improving Dairy Production while Cutting Feed Costs’’ to introduce precision to 

13,000 dairy producers who were not participants in the program. Further several workshops and training sessions were conducted in Pennsylvania to 

present the findings and benefits of precision dairy feeding to dairy farmers 

throughout Pennsylvania.

Widespread application of the ‘‘precision dairy feeding’’ techniques that were 

demonstrated and analyzed in this project could be most valuable to NRCS in 

achievement of lower phosphorus and nitrogen loading rates to receiving 

streams and water bodies. This could make an especially beneficial contribution 

to improved water quality in many watersheds with high concentrations of 

dairy animals. Further this feeding technology could aid development acceptable 

alternatives in development of CNMP’s. In addition, improvements in animal 

health through precision dairy feeding would contribute towards addressing 

health issues related to the animal resource.

The findings through this project relating to the evaluation and promotion of 

‘‘precision dairy feeding’’ could the s significant value to NRCS in assisting 

dairy producers with the development and implementation of resource management systems and the achievement of water quality pollutant loading limits. 

6. Annual Budget Authority (FY 2002–FY 2011) 

CIG is not appropriated as a separate program. CIG is an initiative within the 

Environmental Quality Incentives Program and is reported in the immediately preceding Questionnaire. 

7. Annual Outlays (FY 2002–FY 2011) 

CIG is a sub-program of EQIP. Budget Authority and Outlays for CIG are reported as part of EQIP. Since 2004, $125.9 million has been awarded to CIG grant 

recipients. 

8. Annual Delivery Cost (FY 2007–FY 2011) 

CIG is not appropriated separately. It is a subprogram of the EQIP. The program 

delivery costs for CIG are included in the total EQIP delivery cost and are reflected 

in the EQIP table. 

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9. Eligibility Criteria 

CIG is available to all eligible applicants in the 50 states, Caribbean Area (Puerto 

Rico and the Virgin Islands), and the Pacific Islands Area (Guam, American Samoa, 

and the Commonwealth of the Northern Mariana Islands).

10. Utilization (Participation) Data 

FY Number of Applications Number of Grants 

2004 148 40

2005 175 54

2006 199 63

2007 194 50

2008 260 56

2009 391 52

2010 388 58

2011 411 TBD 

11. Duplication or Overlap with Other Programs 

There is no duplication or overlapping with USDA conservation programs. Because the purposes and functions of CIG are unique, CIG payments do not overlap 

with other USDA conservation payments. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Agricultural Water Enhancement Program (AWEP). 

Prepared by USDA’s NRCS. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

AWEP was authorized by the 2008 Farm Bill as a CCC-funded program within 

EQIP. The Chief of NRCS may enter into AWEP partnership agreements with eligible partners who compete through the Request for Proposals process in any of the 

50 states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the 

Virgin Islands of the United States, American Samoa, and the Commonwealth of the 

Northern Mariana Islands. 

4. Purpose/Goals 

The purpose of the AWEP is to promote ground and surface water conservation 

and water quality by helping producers implement agricultural water enhancement 

activities. NRCS is charged with carrying out AWEP in a manner that optimizes 

environmental benefits and encourages the following activities with respect to agricultural land:

• Development of a water quality or water conservation plan, including resource 

condition assessment and modeling;

• Water conservation restoration or enhancement projects, including conversion of 

dryland farming or to producing commodities that are less water intensive;

• Water quality or quantity restoration or enhancement projects;

• Irrigation system improvement and irrigation efficiency enhancement;

• Activities designed to mitigate the effects of drought; and

• Related activities that the Secretary of Agriculture determines will help achieve 

water quality or water conservation benefits on agricultural land. 

5. Success in Meeting Programmatic Purpose/Goals 

In FY 2010, NRCS obligated approximately $60.8 million in 1,489 new contracts 

to implement conservation practices on nearly 271 thousand acres of agricultural 

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lands. Partners provided approximately $50.5 million in technical and financial assistance. Through AWEP, the agency approved 28 new partner project areas during 

FY 2010, and continued to provide support for 63 projects approved during FY 2009. 

Approximately 54 percent of the projects approved in FY 2010 are located in the 

designated high-priority water quantity concern areas. Socially disadvantaged producers received 2.8 percent of all contracts under the program. 

For FY 2011 eight new projects in seven states were approved for a total of $4.7 

million. Producer enrollment currently underway for FY 2011 projects.

6. Annual Budget Authority (FY 2002–FY 2011) 

FY Apportionment ($ in millions) 

2002 $0

2003 $0

2004 $0

2005 $0

2006 $0

2007 $0

2008 $0

2009 $73

2010 $73

2011 $74

7. Annual Outlays (FY 2002–FY 2011) 

FY Outlays ($ in millions) 

2002 $0

2003 $0

2004 $0

2005 $0

2006 $0

2007 $0

2008 $0

2009 $7

2010 $48

2011 $70

AWEP FA funds are obligated the year of contract enrollment for the entire multiyear span of the contract. As the years pass, FA for contracted practices is not expended until the practices are installed and inspected for quality control by NRCS 

personnel. For this reason, FA funds tend to outlay for multiple years after obligation. TA funds obligated in a given year are used for workload generated by the enrollment of new contracts and workload generated by prior year contract implementation. The vast majority of TA funding tends to outlay in the year of obligation. 

FA funding represents the majority of program budget authority.

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8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Agricultural Water Enhancement Program

Conservation Planning and Technical Consultation — — 1,264 1,257 3,757Conservation Implementation — — 4,390 4,367 13,052Financial Assistance—Program Administration — — 3,091 3,075 9,190Indirect Costs — — 2,661 2,648 7,914

Sub-total Technical Assistance 

— — 11,406 11,347 33,913

Financial Assistance—Cost Share & Monetary Incentive — — 60,397 60,813 40,087

Total Costs — — 71,803 72,160 74,000FTEs — — 66 65 223

Notes: These numbers are consistent with the published ‘‘Full Cost by Secretary’s Strategic Priorities’’ section of the Explanatory Notes for 

Fiscal Years 2009 through 2012 President’s Budget submissions. In the table above, Fiscal Years 2009 and 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President’s Budget submission. 

Financial assistance funding is identified on the line titled, ‘‘Financial Assistance—Cost Share and Monetary Incentives.’’ Funds associated 

with technical assistance are on the remaining four lines. 

184

9. Eligibility Criteria 

Eligible partners include: Federally recognized Indian Tribes, states, units of local 

government, agricultural or silvicultural associations or other groups of such producers such as an irrigation association an agricultural land trust, or other nongovernmental organizations with experience working with agricultural producers. 

The Managers’ Report to the 2008 Farm Bill provides direction for the Secretary 

to give priority to producers in six priority areas: The Eastern Snake Plain Aquifer 

region, Puget Sound, the Ogallala Aquifer, the Sacramento River watershed, Upper 

Mississippi River Basin, the Red River of the North Basin, and the Everglades. 

10. Utilization (Participation) Data 

Approximately 46 percent of valid applications were funded during FY 2010. 

Funding the remaining 54 percent of valid applications would require an additional 

$70.4 million. For FY 2011, requirements for continued funding of previous-year 

projects will significantly impact the number of new projects awarded and increase 

the percentage of unfunded applications. This condition is expected to continue to 

impact the number of new applications funded in future years. 

AWEP Application/Contract Status data includes:

FY 

Active or

Completed

Contracts 

Financial

Assistance

Obligated 

Total Acres 

2009 1,704 $60,385,278 488,380

2010 1,489 $60,813,288 270,667

11. Duplication or Overlap with Other Programs 

The Agricultural Management Assistance (AMA) also focuses on ground and surface water conservation and water quality. Although similar to AMA in implementation, AWEP is available nationwide. There are some practices that can be installed 

through AMA but not AWEP. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Cooperative Conservation Partnership Initiative (CCPI). 

Prepared by USDA’s Natural Resources Conservation Service. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

Section 2707 of the 2008 Farm Bill authorized the CCPI as a CCC-funded program. The Chief of NRCS may enter into CCPI partnership agreements with eligible 

partners who compete through the Request for Proposals process in any of the 50 

states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands of the United States, American Samoa, and the Commonwealth of the 

Northern Mariana Islands. 

4. Purpose/Goals 

The purposes of the CCPI are to:

• Address conservation priorities involving agriculture and nonindustrial private 

forestland on a local, state, multi-state, or regional level;

• Encourage producers to cooperate in meeting applicable Federal, state, and local 

regulatory requirements related to production involving agriculture and nonindustrial private forestland;

• Encourage producers to cooperate in the installation and maintenance of conservation practices that affect multiple agricultural or nonindustrial private forest operations; or

185

• Promote the development and demonstration of innovative conservation practices and delivery methods, including those for specialty crop and organic production and precision agriculture producers.

NRCS may make EQIP, Wildlife Habitat Incentive Program (WHIP), and Stewardship program resources available to owners and operators of agricultural and 

nonindustrial private forestlands who are located in an approved CCPI project area. 

5. Success in Meeting Programmatic Purpose/Goals 

In FY 2010, NRCS obligated approximately $42.3 million in 279 new contracts to 

implement conservation practices on nearly 1.2 million acres of agricultural lands. 

Through CCPI, the agency approved 51 new partner project areas during FY 2010, 

and continued to provide support for 110 projects approved during FY 2009. 

For FY 2011 51 new projects were approved for a total of $20 million. Producer 

enrollment currently underway for FY 2011 projects. 

6. Annual Budget Authority (FY 2002–FY 2011) 

CCPI is not appropriated as a separate program. CCPI is a provision for delivering up to six percent of the resources within the WHIP, EQIP, and Stewardship. 

7. Annual Outlays (FY 2002–FY 2011) 

CCPI is not appropriated as a separate program. CCPI is an initiative within 

WHIP, EQIP, and Stewardship resources. 

8. Annual Delivery Cost (FY 2007–FY 2011) 

CCPI is not appropriated separately. It is a provision through which several existing programs may be delivered, including the Environmental Quality Incentives 

Program, Conservation Stewardship Program, and Wildlife Habitat Incentive Program. The program delivery costs for CCPI are included in the delivery costs for 

EQIP, Stewardship, and WHIP and are reflected in the tables for those programs. 

9. Eligibility Criteria 

Eligible partners include: Federally recognized Indian Tribes, states, units of local 

government, agricultural or silvicultural associations or other groups of such producers such as an irrigation association an agricultural land trust, or other nongovernmental organization with experience working with agricultural producers. 

10. Utilization (Participation) Data 

Approximately 42 percent of valid applications were funded during FY 2010. Prior 

year project were funded to approximately 90 percent of the original request. 

2010 CCPI—EQIP Application/Contract Status data includes:

Number of Active 

and Completed 

Contracts 

Financial

Assistance

Obligated 

Total Treated 

Acres 

Total 1,188 $23,234,738 1,080,901

2010 CCPI–WHIP Application/Contract Status data includes:

Number of Active 

and Completed 

Contracts 

Financial

Assistance

Obligated 

Total Treated 

Acres 

Total 106 $654,375 12,549

11. Duplication or Overlap with Other Programs 

CCPI is a provision that is delivered through existing programs, including EQIP, 

Conservation Stewardship Program, and WHIP. CCPI is a way for partners to identify target areas where program funds will be spent. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

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1. Program Name 

Wildlife Habitat Incentive Program (WHIP). 

Prepared by USDA’s NRCS. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

WHIP was first authorized in the 1996 Farm Bill and was reauthorized in the 

2002 and 2008 Farm Bills. The Chief of NRCS may implement WHIP in any of the 

50 states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the 

Virgin Islands of the United States, American Samoa, and the Commonwealth of the 

Northern Mariana Islands. 

4. Purpose/Goals 

The purpose of WHIP is to help participants develop fish and wildlife habitat on 

private agricultural land, nonindustrial private forestland, and Indian land. 

In order to provide direction to the state and local levels for implementing WHIP 

and achieving its objective, NRCS has established the following national priorities:

(i) Promote the restoration of declining or important native fish and wildlife 

habitats.

(ii) Protect, restore, develop, or enhance fish and wildlife habitat to benefit atrisk species.

(iii) Reduce the impacts of invasive species on fish and wildlife habitats.

(iv) Protect, restore, develop, or enhance declining or important aquatic wildlife 

species’ habitats.

(v) Protect, restore, develop, or enhance important migration and other movement corridors for wildlife. 

5. Success in Meeting Programmatic Purpose/Goals 

In FY 2010

• NRCS enrolled over 4,700 agreements on over 1,000,000 acres.

• The value of the contracts was almost $63 million.

• The average agreement size is 223 acres.

• There were 68 contracts valued at over $3.7 million with American Indian and 

Alaska Native Lands.

• On average, NRCS agreed to reimburse participants approximately $13,000 for 

each long-term agreement.

6. Annual Budget Authority (FY 2002–FY 2011) 

FY Apportionment ($ in millions) 

2002 $15

2003 $30

2004 $42

2005 $47

2006 $43

2007 $43

2008 $85

2009 $85

2010 $85

2011 $85

7. Annual Outlays (FY 2002–FY 2011) 

FY Outlays ($ in millions) 

2002 $2

2003 $9

2004 $14

2005 $21

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7. Annual Outlays (FY 2002–FY 2011)—Continued

FY Outlays ($ in millions) 

2006 $27

2007 $31

2008 $44

2009 $53

2010 $58

2011 $63

Please explain changes between budget authority and outlays: 

WHIP FA funds are obligated the year of contract enrollment for the entire multiyear span of the contract. As the years pass, FA for contracted practices is not expended until the practices are installed and inspected for quality control by NRCS 

personnel. For this reason, FA funds tend to outlay for multiple years after obligation. TA funds obligated in a given year are used for workload generated by the enrollment of new contracts and workload generated by prior year contract implementation. The vast majority of TA funding tends to outlay in the year of obligation. 

FA funding represents the majority of program budget authority.

188

8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Wildlife Habitat Incentives Program

Conservation Planning and Technical Consultation 1,310 3,554 2,770 2,733 2,769Conservation Implementation 3,410 7,563 5,895 5,817 5,893Financial Assistance—Program Administration 3,688 9,086 7,083 6,989 7,080Indirect Costs 1,919 6,220 4,849 4,785 4,846

Sub-total Technical Assistance 10,327 26,423 20,597 20,324 20,588

Financial Assistance—Cost Share & Monetary Incentive 32,131 57,080 52,146 62,602 64,412

Total Costs 42,458 83,503 72,743 82,926 85,000FTEs 77 150 128 126 150

Notes: These numbers are consistent with the published ‘‘Full Cost by Secretary’s Strategic Priorities’’ section of the Explanatory Notes for 

Fiscal Years 2009 through 2012 President’s Budget submissions. In the table above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President’s Budget submission. 

Financial assistance funding is identified on the line titled, ‘‘Financial Assistance—Cost Share and Monetary Incentives.’’ Funds associated 

with technical assistance are on the remaining four lines. 

189

9. Eligibility Criteria 

To be eligible for WHIP, the land must be:

• Private agricultural land including cropland, grassland, rangeland, pasture, and 

other land determined by NRCS to be suitable for fish and wildlife habitat development.

• Nonindustrial private forestland including rural land that has existing tree 

cover or is suitable for growing trees.

• Indian land.

» An exception may be made by the Chief in the case of land allotted by the 

Bureau of Indian Affairs or Indian land where there is sufficient assurance 

of control.

Applicants are subject to adjusted gross income provisions and must provide 

NRCS with written evidence of ownership or legal control of the land. 

WHIP plays an important role in implementing a number of NRCS special initiatives.

• Longleaf Pine Initiative. In Alabama, Florida, Georgia, Louisiana, Mississippi, 

North Carolina, South Carolina, Texas, and Virginia, WHIP improved the 

health and extent of the longleaf pine forest ecosystem in ways that benefited 

both the health of the plant community and wildlife habitat. During FY 2010, 

NRCS enrolled over 33,000 acres of longleaf pine forest in almost 400 contracts 

valued at nearly $4.65 million.

• Lesser Prairie Chicken Initiative. WHIP enrolled land in Colorado, Kansas, New 

Mexico, Oklahoma, and Texas to keep this candidate species from being listed 

as threatened and endangered under the Endangered Species Act, while also 

improving grazing and wildlife habitat. During FY 2010, NRCS enrolled over 

98,000 acres in these states in 138 WHIP contracts valued at more than $3.8 

million.

• New England-New York Forestry Initiative. WHIP expanded stewardship opportunities for forestlands and wildlife in the New England States of Connecticut, 

Maine, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont. 

During FY 2010, NRCS enrolled over 48,500 acres in these states in more than 

300 WHIP contracts valued at more than $4.6 million.

• Sage-Grouse Initiative. In 11 states (California, Colorado, Idaho, Montana, Nevada, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming) 

WHIP implemented conservation practices that will reduce threats to sagegrouse habitat; these practices are designed both to keep this candidate species 

from being listed as threatened and endangered and to provide grazing land for 

ranches. During FY 2010, NRCS enrolled almost 90,000 acres in these states 

in 37 WHIP contracts valued at more than $3.8 million. 

10. Utilization (Participation) Data 

Approximately 56 percent of valid applications were funded during Fiscal Year 

2010. Funding the remaining 44 percent would require an additional $44 million. 

WHIP Application/Contract Status data includes:

FY 

Number of Active 

and Completed 

Contracts 

Financial

Assistance

Obligated 

Treated Acres 

2005 3,333 $33,246,702 454,091

2006 2,717 $31,464,158 324,954

2007 2,107 $31,494,465 357,699

2008 3,495 $57,221,029 646,491

2009 3,706 $51,998,722 812,497

2010 4,731 $62,862,480 1,054,095

11. Duplication or Overlap with Other Programs 

WHIP provides for developing, restoring, and enhancing wildlife habitats which 

can also be done under EQIP. EQIP has one national priority in regard to at-risk 

species habitat conservation as does WHIP. However, WHIP has four additional priorities for fish and wildlife. 

EQIP is agriculturally support based while WHIP is fish and wildlife habitat support based. EQIP requires lands to be in production agriculture to be eligible. Lands 

190

can be in agriculture or have the potential to be in agriculture to be eligible for 

WHIP. Public lands connected with eligible lands are eligible for EQIP but not for 

WHIP. 

CRP enrolls land to create wildlife habitat. All of the lands eligible for CRP could 

be enrolled in WHIP if they fall within the WHIP priority areas but not all lands 

eligible for WHIP could be enrolled in CRP. 

12. Waste, Fraud and Abuse 

An audit by the Office of Inspector General (OIG) revealed that participant WHIP 

contracts for the Migratory Bird Habitat Initiative in one Louisiana Parrish received 

an increased payment rate for the socially disadvantaged designation although those 

participants were not actually in a socially disadvantaged group. It was identified 

by OIG that staff inadvertently selected an incorrect payment schedule. It was recommended to adjust the agency’s business tools so that the socially disadvantaged 

designation indicated by the participant would automatically provide the correct 

payment rate without staff having to manually select various payment schedules for 

each application. For the improper payments, the agency provided each participant 

with the option to either return the overpayment amount or to receive a reduction 

in future scheduled payments. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Agricultural Management Assistance (AMA). 

Prepared by USDA’s NRCS. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

AMA was originally authorized under the Agricultural Risk Protection Act of 

2000, Title I, Section 133, Public Law 106–224, on June 22, 2000. This title was 

amended by the 2002 Farm Bill and the 2008 Farm Bill. 

AMA is available in 16 states where participation in the Federal Crop Insurance 

Program is historically low: Connecticut, Delaware, Hawaii, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New York, Pennsylvania, Rhode 

Island, Utah, Vermont, West Virginia, and Wyoming. 

4. Purpose/Goals 

AMA provides financial assistance payments to agricultural producers to voluntarily address issues such as water management, water quality, and erosion control 

by incorporating conservation practices into their farming operations. The Agricultural Marketing Service (AMS) is responsible for using AMA funding for organic certification assistance, and the Risk Management Agency (RMA) is responsible for 

using AMA funds for mitigation of financial risks through assisting producers to 

purchase risk insurance. Funding is authorized at $15 million for FY 2008–2012 

and of the funding made available each fiscal year, not less than 50 percent is to 

be provided to NRCS, 40 percent to RMA, and 10 percent to AMS. 

5. Success in Meeting Programmatic Purpose/Goals 

AMA currently has over 660 contracts in implementation and a continuing backlog of applications that indicates strong support among producers for the program. 

At the end of FY 2010, AMA had a backlog of 767 applications, with an estimated 

contract value of $5.1 million, covering over 9,500 acres. 

AMA provides many producers a first-time opportunity to address natural resource concerns on their lands. For instance, many producers have not been able 

to participate in EQIP because they do not meet the eligibility criterion that land 

must have been irrigated for 2 of the previous 5 years to receive EQIP funding. A 

number of these EQIP-ineligible producers are small-acreage or specialty-crop farming operations that provide high dollar value products to the general public. By 

helping to mitigate the risks associated with these kinds of agricultural enterprises, 

AMA helps agriculture remain a valuable segment of local economies.

191

6. Annual Budget Authority (FY 2002–FY 2011) 

FY Apportionment ($ in millions) 

2002 $0

2003 $0

2004 $14

2005 $14

2006 $5

2007 $5

2008 $8

2009 $8

2010 $8

2011 $8

7. Annual Outlays (FY 2002–FY 2011) 

FY Outlays ($ in millions) 

2002 $0

2003 $0

2004 $2

2005 $7

2006 $6

2007 $7

2008 $5

2009 $5

2010 $6

2011 $6

AMA FA funds are obligated the year of contract enrollment for the entire multiyear span of the contract. As the years pass, FA for contracted practices is not expended until the practices are installed and inspected for quality control by NRCS 

personnel. For this reason, FA funds tend to outlay for multiple years after obligation. TA funds obligated in a given year are used for workload generated by the enrollment of new contracts and workload generated by prior year contract implementation. The vast majority of TA funding tends to outlay in the year of obligation. 

FA funding represents the majority of program budget authority.

192

8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Agricultural Management Assistance

Conservation Planning and Technical Consultation 458 147 150 147 212Conservation Implementation 2,386 457 465 457 659Financial Assistance—Program Administration 940 433 441 433 624Indirect Costs 775 457 141 165 238

Sub-total Technical Assistance 4,559 1,494 1,197 1,202 1,733

Financial Assistance—Cost Share & Monetary Incentive — 5,756 6,181 6,048 5,767

Total Costs 4,559 7,250 7,378 7,250 7,500FTEs 27 9 9 12 33

Notes: These numbers are consistent with the published ‘‘Full Cost by Secretary’s Strategic Priorities’’ section of the Explanatory Notes for 

Fiscal Years 2009 through 2012 President’s Budget submissions. In the table above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President’s Budget submission. 

Financial assistance funding is identified on the line titled, ‘‘Financial Assistance—Cost Share and Monetary Incentives.’’ Funds associated 

with technical assistance are on the remaining four lines. 

193

9. Eligibility Criteria 

Applicants must own or control the land within an identified AMA state and comply with adjusted gross income limitation provisions. Eligible land includes cropland, rangeland, grassland, pastureland, nonindustrial forestland, and other private 

land that produces crops or livestock where risk may be mitigated through operation 

diversification or change in resource conservation practices. 

10. Utilization (Participation) Data 

Approximately 36 percent of valid applications were funded during FY 2010. 

Funding the additional remaining 64 percent of valid applications would require an 

additional $5.1 million. The FY 2010 funded applications covered over 11,000 acres. 

AMA Application/Contract Status data includes:

Fiscal Year 

Number of Active 

and Completed 

Contracts 

Financial

Assistance

Obligated 

Treated Acres 

2005 766 $9,578,046 74,255

2006 275 $3,718,549 13,328

2007 0 $0 0

2008 276 $5,756,087 33,202

2009 214 $6,179,956 13,875

2010 426 $6,048,438 11,102

Total 1,957 $30,942,815 145,762

11. Duplication or Overlap with Other Programs 

The priorities of AMA are the same as for EQIP. There are some practices that 

can be implemented under AMA that cannot be under EQIP. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

(195)

AGRICULTURAL PROGRAM AUDIT 

(EXAMINATION OF SPECIALTY CROP PROGRAMS) 

THURSDAY, JULY 7, 2011

SUBCOMMITTEE ON NUTRITION AND HORTICULTURE, 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON AGRICULTURE, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 2:52 p.m., in Room 

1300 of the Longworth House Office Building, Hon. Jean Schmidt 

[Chairwoman of the Subcommittee] presiding. 

Members present: Representatives Schmidt, Southerland, 

Crawford, Baca, Pingree, and Costa. 

Staff present: Patricia Barr, John Goldberg, Pam Miller, Mary 

Nowak, Matt Perin, Debbie Smith, Keith Jones, John Konya, and 

Jamie Mitchell. 

OPENING STATEMENT OF HON. JEAN SCHMIDT, A 

REPRESENTATIVE IN CONGRESS FROM OHIO 

The CHAIRWOMAN. I would like to thank our witnesses. I am 

sorry for the delay, but at least we got the first set of votes out of 

the way. 

First off, I just want to say thank you to everybody for your patience, and especially to our witnesses for the USDA’s Agricultural 

Marketing Service, and to the Animal and Plant Health Inspection 

Service, or APHIS, for joining us. I look forward to your insight 

and to your testimony. I also want to thank my good friend, Ranking Member Joe Baca, who got an exciting gift from a friend of his 

today. He actually bought the baseball, but—can I brag for you? 

Well, Hank Aaron signed his baseball. Is that like the coolest thing 

in the world? Sorry I had to steal your thunder, but I just am really impressed. So obviously, this is a big day for Mr. Baca. But, 

thank you for joining me in this hearing, it is well known that a 

certain degree of bipartisanship exists in this Committee. It is one 

of the best committees to actually be on because we fight about regional issues, not about Republican versus Democratic. I am really 

glad that he is my friend throughout this whole process. 

As we approach the next farm bill, I look forward to hearing from 

the farming community, the producers, the handlers, everyone from 

around the country. And as Chairman Lucas said and has continued to say, that there has to be a firm understanding of the programs within the framework of the farm bill, because as he has 

said, everything is on the table. So I look forward to hearing from 

196

APHIS and AMS with a general snapshot of the spending of each 

program that they administer. 

I just want to say to Ms. Pegg, I understand you are leaving, so 

I won’t bother you with any leafy green issues today. But we will 

be looking at your testimony and asking questions. We will study 

the financial aspects of these programs and consider whether or 

not the program’s goals are being met, and whether the programs 

are financially prudent. We will join the other Subcommittees in 

looking for instances of program overlap, as well as examples of 

waste, fraud, and abuse. 

An additional benefit to examining programs and their operation 

is the education that members will receive. Many of us do not have 

firsthand knowledge of how each program is administered on a 

daily basis. I appreciate the opportunity to learn what you all do, 

and I am excited to hear your testimony. 

It is our hope that this process of evaluation and education will 

give Members a clear picture of the farm bill as a whole and see 

how well programs are being administered before engaging in policy discussions before the next farm bill. Today’s audit hearing is 

focused specifically on specialty crop programs found in Title X of 

the farm bill, as well as the administration of Section 32 of the Act 

of August 24, 1935. While many programs that affect the specialty 

crop industry are found throughout the farm bill, we will do our 

best to stay focused on Title X. 

USDA’s Agricultural Marketing Service and APHIS are the agencies charged with administering most of the Title X programs. AMS 

also administers a series of grant programs, including the Specialty 

Crop Block Grant Program, which is designed to enhance the competitiveness of fruits and vegetables, tree nuts, dry fruits, horticulture, floriculture, and nursery crops. These grants are widely 

used throughout the states in a variety of ways. I know many in 

Ohio are beneficiaries of and like the flexibility that Specialty Crop 

Block Grant Program provide. 

Creating technical assistance programs throughout the Ohio 

Produce Marketing Agreement has been helpful and beneficial. 

Last July, a grower from a neighboring district appeared before our 

Subcommittee. In his testimony, he stated ‘‘In states like Ohio, we 

do not have existing support programs and systems of technical assistance similar to what other states enjoy. The Specialty Crop 

Block Grant Program is one of the few tools we have to support our 

growers and better realize our specialty crop opportunities.’’ Further, AMS administers research and promotion programs, as well 

as marketing orders and agreements to help stabilize markets for 

specific commodities. One marketing agreement that has received 

a considerable amount of attention is the National Leafy Green 

Marketing Agreement that AMS is considering, and that is currently open for public comment. I look forward to learning how 

AMS is administering Section 32 funds which have supported agricultural commodities like fruits, vegetables, and meats, which are 

not typically covered by mandatory price supports. AMS has the responsibility of administering a wide range of programs, including 

the National Organic Program, which oversees the labeling of products as organic. 

197

In addition to AMS testifying, APHIS will detail their responsibilities in administering the pest and disease programs, including 

the National Clean Plant Network, which propagates pest and disease-free nursery stocks for the industry. As we approach the next 

farm bill, it is imperative that we hear directly from the Department so we can fully understand from your firsthand experience 

what is working and what is not working. Some of the decisions on 

program authorizations and funding levels will be difficult, but 

with proper evaluation, I am confident that we can put together a 

farm bill that meets the goals of food safety and security, rural 

prosperity, and nutritional well-being. 

Again, I look forward to the panel, and to the witnesses from the 

Department and for Ms. Bech and Ms. Pegg for joining us today. 

[The prepared statement of Mrs. Schmidt follows:]

PREPARED STATEMENT OF HON. JEAN SCHMIDT, A REPRESENTATIVE IN CONGRESS

FROM OHIO

Thank you all for coming to this hearing to review specialty crop programs to help 

us prepare for the next farm bill. I thank our witnesses from USDA’s Agricultural 

Marketing Service and Animal and Plant Health Inspection Service for joining us 

today. I look forward to hearing your insightful testimony. 

I also want to thank my friend, Ranking Member Baca, for joining me in holding 

this hearing today. It is well known that a certain degree of comity or bipartisanship exists here on the Agriculture Committee and I look forward to working with 

my friend as we go through this farm bill process. 

As we approach the next farm bill, I look forward to hearing from producers and 

handlers from around the country. But before we begin that process, I agree with 

Chairman Lucas that Members need to have a firm understanding of the programs 

within the framework of the farm bill. 

I look forward to hearing from APHIS and AMS with a general snapshot of the 

spending of each program that they administer. We will study the financial aspects 

of these programs and consider whether or not the programs’ goals are being met 

and whether the programs are financially prudent. 

We will join the other Subcommittees in looking for instances of program overlap 

as well as examples of waste, fraud, and abuse. 

An additional benefit to examining programs and their operation is the education 

that Members will receive. Many of us, do not have firsthand knowledge of how each 

program is administered on a daily basis. I appreciate the opportunity to learn as 

much about individual programs before the farm bill hearings begin. 

It is our hope that this process of evaluation and education will give Members a 

clear picture of the farm bill as a whole and see how well programs are being administered before engaging in policy discussions before the next farm bill. 

Today’s audit hearing is focused specifically on specialty crop programs found in 

Title X of the farm bill as well as the administration of Section 32 of the Act of 

August 24,1935. While many programs that affect the specialty crop industry are 

found throughout the farm bill, we will do our best to stay focused on those in Title 

X. 

USDA’s Agricultural Marketing Service (AMS) and Animal and Plant Health Inspection Service are the agencies charged with administering most of the Title X 

programs. 

AMS also administers a series of grant programs including the Specialty Crop 

Block Grant Program which is designed to enhance the competitiveness of fruits and 

vegetables, tree nuts, dried fruits, horticulture, floriculture and nursery crops. These 

grants are widely used throughout the states in a variety of ways. 

I know many of my Ohio constituents like the flexibility that the Specialty Crop 

Block Grant Program provides producers, creating technical assistance programs 

through the Ohio Produce Marketing Agreement. Last July, a grower from near my 

district appeared before our Subcommittee. In his testimony, he stated ‘‘In states 

like Ohio, we do not have existing support programs and systems of technical assistance similar to what other states enjoy. The block grant program is one of the few 

tools we have to support our growers and better realize our specialty crop opportunities.’’

198

Further, AMS administers research and promotion programs as well as marketing 

orders and agreements to help stabilize markets for specific commodities. One marketing agreement that has received a considerable amount of attention is the National Leafy Green Marketing Agreement that AMS is considering and that is currently open for public comment. 

I also look forward to learning how AMS is administering Section 32 funds, which 

have supported agricultural commodities like fruits, vegetables, and meats, which 

are not typically covered by mandatory price supports. 

AMS has the responsibility of administering a wide range of programs including 

the National Organic Program which oversees the labeling of products as organic. 

In addition to AMS testifying, APHIS will detail their responsibilities in administering the Pest and Disease programs including the National Clean Plant Network 

which propagates pest and disease-free nursery stock for the industry. 

As we approach the next farm bill, it is imperative that we hear directly from the 

Department so we can fully understand from your first-hand experience what is 

working and what is not working. Some of the decisions on program authorizations 

and funding levels will be difficult, but with proper evaluation, I am confident that 

we can put together a farm bill that meets the goals of food safety and security, 

rural prosperity, and nutritional well-being. 

Again, I would like to thank the witnesses from the Department, Ms. Bech and 

Ms. Pegg, for joining us today. I look forward to your testimony and today’ s discussion.

The CHAIRWOMAN. Now I will turn this over to the Ranking 

Member, my good friend, Joe Baca. 

OPENING STATEMENT OF HON. JOE BACA, A 

REPRESENTATIVE IN CONGRESS FROM CALIFORNIA 

Mr. BACA. Good afternoon, and thank you, Madam Chairwoman 

Schmidt for holding this important hearing to examine programs 

that are contained within Title X of the 2008 Farm Bill. I appreciate your bipartisanship in working with these issues. I appreciate 

the little bit of stealing the thunder of Hank Aaron signing this 

autographed ball. As you know, he broke Babe Ruth’s record and 

still holds the record for most home runs right now. Some of us 

who play in the Congressional game, hope we can hit a home run. 

The CHAIRWOMAN. Can I just add that the Cincinnati Reds could 

use some help. Do you think you could come help? 

Mr. BACA. Some of us are willing to come out of retirement. 

Maybe even to play for the Reds. I do appreciate that. Thank you 

very much, Madam Chair. 

Let’s get back to the original topic here. The 2008 Farm Bill was 

historic legislation that included the fundamental improvements to 

the USDA nutrition and farm conservation programs, but perhaps 

none more important that its recognition of specialty crops and organic agriculture. 

Specialty crops now represent nearly 50 percent of the farm gate 

value of the plants based in U.S. agriculture. Organic fruits and 

vegetables now account for over 11 percent of all fruits and vegetable sales in the United States. The availability of fruits, vegetables, and other specialty crops are critical to the health of the 

American consumer, especially as we look at obesity and other 

health-related problems that are impacting us. If we don’t deal 

with that, the additional taxpayer costs will be roughly around 

$197 billion. As we look at alternative fruits and vegetables, we 

need to focus on American products. Let me state that again, we 

need American products grown by American farmers to better ensure the economic well-being of our citizens. 

199

The specialty crops and organic sector were recognized in the 

2008 Farm Bill because they looked to the future in areas like research, conservation, pests and disease management, and expansion of market opportunities. Congress responded to this forward 

thinking with a nearly $3 billion in investment in the future of specialty crops and organic producers. This investment is vital to 

farms across the nation. 

My home State of California is blessed as the nation’s top producer of many fruits, tree nuts, and other crops. California also 

leads the nation in the amount of certified organic cropland with 

over 430,000 acres. As we now know, the 2012 Farm Bill will be 

written during a time of unprecedented fiscal challenges. The question of how to wisely use American’s hard-earned tax dollars will 

never be far from us. We must not lose sight of the fact that any 

farm bill, at its core, is about good public policy. If we are smart, 

the 2012 Farm Bill can save money, improve health and nutrition, 

and strengthen our economy. 

I am convinced that we are on the right policy track with the 

programs that we will be reviewing today. I look forward to working with my colleagues to ensure that the down payment made on 

behalf of specialty crops and organic producers does not go to waste 

in 2012. Again, I want to thank the panelists for their patience in 

waiting for our votes to conclude. I want to, again, thank the 

Chairwoman for holding this hearing. 

With that, I yield back the balance of my time. 

[The prepared statement of Mr. Baca follows:]

PREPARED STATEMENT OF HON. JOE BACA, A REPRESENTATIVE IN CONGRESS FROM

CALIFORNIA

Good afternoon. Thank you Chairwoman Schmidt for holding this important hearing to examine programs that are contained within Title X of the 2008 Farm Bill. 

The 2008 Farm Bill was historic legislation that included fundamental improvements to USDA nutrition and farm conservation programs. 

But perhaps no policy change was more vital than the recognition of specialty 

crops and organic agriculture. 

Specialty crops now represent nearly 50 percent of the farm gate value of plant 

based U.S. agriculture. 

Organic fruits and vegetables now account for over 11 percent of all fruit and 

vegetable sales in the U.S. 

The availability of fruits, vegetables, and other specialty crops is critical to the 

health of America’s consumers. 

And we need American products—grown by American farmers—to better ensure the economic well-being of our citizens. 

The specialty crop and organic sectors were recognized in the 2008 Farm Bill—

because they looked to the future in policy areas, like:

• Research and conservation;

• Pest and disease management; and

• Expansion of market opportunities.

Congress responded to this forward thinking with a nearly $3 billion investment 

in the future of specialty crop and organic producers. 

This investment is vital to farmers across the nation. 

My home State of California is blessed as the nation’s top producer of many fruits, 

tree nuts, and other crops. 

California also leads the nation in the amount of certified organic crop-land—with 

over 430 thousand acres.

As we all know—the 2012 Farm Bill will be written during a time of fiscal challenges. 

We must not lose sight of the fact that any farm bill—at its core—is about good 

public policy.

200

If we are smart—the 2012 bill can save money, improve health and nutrition, and 

strengthen our economy. 

I am convinced that we are on the right policy track with the programs that we 

will be reviewing today. 

I look forward to working with my colleagues to ensure the down payment made 

on behalf of specialty crop and organic producers does not go to waste in 2012. 

Again—I want to thank the Chairwoman for holding this hearing—and thank our 

witnesses for taking the time to help us better understand these programs. I yield 

back.

The CHAIRWOMAN. Thank you very much. The chair would request that other Members submit their opening statements for the 

record so the witnesses may begin their testimony in a timely manner, since we already are an hour delayed. 

[The prepared statement of Mr. Southerland follows:]

PREPARED STATEMENT OF HON. STEVE SOUTHERLAND II, A REPRESENTATIVE IN

CONGRESS FROM FLORIDA

I welcome the opportunity to reauthorize Federal agricultural policies affecting 

American agricultural production in the development of the 2012 Farm Bill. As a 

significant contributor to U.S. farm receipts and balance of trade, it is extremely important that the issues affecting specialty crops play a meaningful role in the farm 

bill. Specialty crops, including fruits, vegetables, nuts, horticultural crops and others, represent over 1⁄3 of gross agricultural cash receipts in the U.S., and hence have 

a significant stake in our nation’s agricultural policy. 

Florida ranks among the top ten states in the nation in agricultural crop value 

and second in the specialty crop production with a wide variety of fruit, vegetable 

and nursery crops grown through the state. The farm bill 5 year farm policy measure should continue and strengthen its emphasis on key areas such as pest and disease, research, as well as giving states the flexibility needed to better address environmental challenges and ensuring critical resources are available to respond to the 

unique needs of specialty crops in most budget efficient manner possible. 

Historically, many Florida agricultural producers—and specialty crop growers 

throughout the country—have chosen to base their economic decisions on the marketplace and have not relied on Federal farm price support programs. However, 

these markets can be very volatile and the industry faces extreme and somewhat 

unique pressures including ever increasing environmental challenges, labor and production costs beyond that of our competitors, subsidized foreign market competition. 

In addition, unprecedented exposure to pests and disease and state-of-the-art agricultural research needs tailored to the needs of fruit and vegetable production is 

also vital. 

Florida is listed by the USDA as the number two high risk state second only to 

California regarding exotic pest and disease introductions pressure. According to the 

Florida Department of Agriculture, costs to combat pests and diseases affecting 

Florida farmers, have easily exceeded $1 billion over the last decade. 

Specialty crop farm bill measures such as the such Pest and Disease Management 

Program ‘‘Section 10201’’, the Specialty Crop Block Grants, the Specialty Crop Research Initiative, and well as marketing, nutrition, and other programs provide valuable opportunities for Florida and U.S. specialty crop industry in American farm 

policy. 

Mindful of the fiscal constraints facing our Federal budget and increasing national 

debt, we must be vigilant within this Committee and working with the U.S. Department of Agriculture to focus valuable Federal resources in those areas with the most 

effective impact to sustain and strengthen specialty crop and agricultural production 

in our nation. I look forward to working with my colleagues toward that end as we 

consider reauthorization of the 2012 Farm Bill.

The CHAIRWOMAN. I am going to begin with introducing our first 

panelist, Ms. Rayne Pegg, who is the Administrator, Agricultural 

Marketing Service, U.S. Department of Agriculture, Washington, 

D.C., and Ms. Rebecca Bech, Deputy Administrator for the Plant 

Protection and Quarantine, Animal and Plant Health Inspection 

Service, U.S. Department of Agriculture, Washington, D.C. 

Ms. Pegg, we will let you begin. 

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STATEMENT OF RAYNE PEGG, ADMINISTRATOR,

AGRICULTURAL MARKETING SERVICE, U.S. DEPARTMENT 

OF AGRICULTURE, WASHINGTON, D.C. 

Ms. PEGG. Thank you very much, Chairwoman Schmidt, Ranking 

Member Baca, and Members of the Subcommittee. Thank you for 

inviting me to appear before you today to provide a comprehensive 

picture of the activities authorized in the Organic Agriculture Title 

X of the farm bill, as well as the activities under Section 32. It is 

our hope that this examination of specialty crop, organic, pest and 

disease management and Section 32 provisions from the last farm 

bill will prove helpful as you begin the next farm bill discussions. 

USDA Agricultural Marketing Service and the Animal and Plant 

Health Inspection Service are the primary agencies with the responsibility for implementing Title X. Rebecca Bech from APHIS is 

here with me today to answer any APHIS-specific questions that 

you might have. 

As you mentioned earlier, AMS administers two grant programs 

that were reauthorized and amended in the 2008 Farm Bill. Specialty Crop Block Grant Program provides funding to states and 

U.S. territories to enhance the competitiveness of specialty crops. 

Specialty crops are defined as fruits and vegetables, tree nuts, 

dried fruits, horticulture, and nursery crops, including floriculture. 

The 2008 Farm Bill provided the following funding levels for the block grants program from CCC funding: $10 million in 2008, $49 

million in 2009, $55 million for 2010 through 2012. In Fiscal Year 

2010, approximately $55 million was awarded for 54 grants, which 

funded a total of 822 different projects. This year’s application 

deadline is July 13. 

The Farmers Market Promotion Program is another AMS grant 

program covered under Title X. This works to help improve and expand domestic Farmers Markets, roadside stands, community-supported agricultural programs—sorry, agriculture tourism activities, 

and other direct producer to consumer market opportunities. The 

2008 Farm Bill extended the Farmers Market Promotion Program 

through 2012, and provided a total of $33 million in CCC funding. 

In 2008, that funding was at $3 million, 2009, $5 million, and in 

2010, it was still $5 million, and for 2011 and 2012, we are going 

up to $10 million in funding. In 2010, with the $5 million funding, 

we funded a total of 81 awards that went to 35 different states. In 

2011, we have notified—we published notice of funding availability 

in June of 2011, and the deadline for applying for those funds was 

last Friday, July the 1st. 

AMS’s Market News disseminates detailed information on marketing conditions for hundreds of agricultural commodities at major 

domestic and international wholesale markets, production areas, 

and ports of entry. Using direct contacts of salespersons, suppliers, 

brokers, buyers, Market News reporters collect, validate, analyze, 

and organize unbiased data on price, volume, quality, and condition, making it available within hours of collection. In the 2008 

Farm Bill, there was specialty crop market news allocation which 

authorized $9 million for each fiscal year, starting in 2008 through 

2012. Although funding was not appropriated, AMS continues to 

carry out specialty crop Market News activities as the agency collects information on current supply, demand, and price for nearly 

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400 domestic and 700 international fruits, vegetables, nuts, ornamental and specialty crops. 

Title X also directed USDA to collect data on production, pricing, and marketing of organic agricultural products, provided $5 million 

in CCC funds, available until expended. Of the $5 million, $3.5 million was directed specifically to AMS. AMS is working to enhance 

Market News systems to expand reporting of organic market prices. 

By the end of 2009, AMS Market News had expanded the daily reporting of organic commodities to include a total of 234 items. 

Marketing orders and agreements serve as tools to help fruit and 

vegetable growers work together to solve marketing problems that 

they cannot solve independently. These programs are designed to 

help balance the availability of quality product with the need of 

adequate returns to producers and demand of consumers. There 

are currently 32 active specialty crop marketing orders and agreements that the agency oversees. 

Authorized by Federal legislation, research and promotion programs, often referred to as check-off programs, are designed to 

strengthen the position of the industry in the marketplace, and to 

maintain and expand domestic and foreign markets. The programs 

are fully funded by the industry. Board members are nominated by 

the industry and appointed by the Secretary. AMS oversees the activities of boards and approves their budgets in order to ensure 

compliance with the legislation. 

There were two research and promotion provisions in the 2008 

Farm Bill. The first made a number of amendments to the Honey 

Research Promotion and Consumer Information Act. As a result of 

those amendments, a Honey Packers and Importers Program became effective in 2008. A final research and promotion provision in 

the last farm bill allowed for the development of a program for 

good agricultural practices and good handling practices under the 

Mushroom Promotion Research and Consumer Information Order, 

as well as reapportioned the membership of the Mushroom Council 

to reflect the shifts in the industry. 

To support organic agriculture, the 2008 Farm Bill authorized 

funding for the National Organic Program at $5 million for Fiscal 

Year 2008, $6.5 million for 2009, $8 million for 2010, $9.5 million 

for 2011, and $11 million for 2012. For the Fiscal Year 2010, Congress appropriated $6.9 million, and the 2011 budget for the program is $6.91 million. In addition the National Organic Certification Cost-share Program makes funds available to states and 

U.S. territories that are interested in providing cost-share assistance to organic producers and handlers certified under the National Organic Program. The 2008 Farm Bill provided $22 million 

in CCC funding for cost-share activities. It also increased the 

amount of reimbursement from $500 to $750. Of the $22 million for 

the program, $6.5 million remains for the Fiscal Year 2011 and 

2012 to be spent. 

To support domestic producers, Section 32 of the Act of August 

24, 1935, authorizes the appropriation for each fiscal year of an 

amount equal to 30 percent of the gross receipts from duties collected under Customs laws of the United States during the preceding calendar year. These funds are specifically used to encourage domestic consumption of non-price supported perishable comVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00214 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
203

modities and reestablish farmers’ purchasing power through a variety of activities. These activities include purchasing commodities, 

removal of surplus commodities from the marketplace for distribution to our Federal nutrition programs, including those programs 

that support the National School Lunch Program as well as food 

banks, diversion programs that bring production into line with demand to assist producers, and disaster assistance. AMS annually 

purchases approximately $1 billion worth of commodities for distribution through various nutrition assistance programs. The 2008 

Farm Bill authorized a spending cap for AMS purchases that has 

since been modified through subsequent appropriations. 

In addition to the 2002 Farm Bill which established that there 

be a minimum of $200 million used for the purchases of fruits and 

vegetables, the 2008 Farm Bill established additional fruit and vegetable purchases for each subsequent year. The minimum purchase 

requirement for the 2011 year for fruits and vegetables is a total 

of $403 million. To make up this purchase, entitlement purchases, 

Department of Defense purchases, and bonus buys can make up 

the total requirement for meeting the minimum fruit and vegetable 

purchasing requirement under the farm bill. 

AMS and APHIS undertake numerous activities to facilitate the 

competitive and efficient marketing of the U.S. agricultural products, as well as to protect and promote U.S. agricultural health. I 

hope that this testimony and subsequent questions and answers 

will prove useful to the Subcommittee as you undertake your work 

on the next farm bill. 

I want to introduce Rebecca Bech, who will add some additional 

comments regarding APHIS’s administration of Title X of the farm 

bill. 

STATEMENT OF REBECCA BECH, DEPUTY ADMINISTRATOR 

FOR PLANT PROTECTION AND QUARANTINE, ANIMAL AND 

PLANT HEALTH INSPECTION SERVICE, U.S. DEPARTMENT 

OF AGRICULTURE, WASHINGTON, D.C. 

Ms. BECH. Well, thank you for inviting me to join Administrator 

Pegg today to talk to you about the specialty crop provisions from 

the 2008 Farm Bill that APHIS continues to implement. 

The Animal and Plant Health Inspection Service is charged with 

protecting American agriculture from foreign pest and disease introductions, and within APHIS, I head up the Plant Protection 

Quarantine Program, which focuses on both plant pests and diseases that can harm our specialty crops, but also our forests and 

natural resources, as well as traditional crops. 

To accomplish that mission, APHIS has developed a robust agricultural safeguarding system, which consists of a set of comprehensive interlocking programs that work together to protect our agricultural resources. 

The 2008 Farm Bill created two programs that take these measures further by targeting specific segments of agriculture and activities that particularly benefit the specialty crops, and I would 

like to thank the Committee for its continued support for these crucial programs. Both the programs, the Plant Pest and Disease 

Management and Disaster Prevention Program, and the National 

Clean Plant Network, have proven to be highly effective and widely 

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supported by stakeholders and industry. Through the Plant Pest 

and Disease Management and Disaster Prevention provision, which 

we refer to as Section 10201 of the farm bill, APHIS is partnered 

with numerous states, tribes, universities, and other community 

partners to strengthen and expand the scope of APHIS’s pest and 

disease prevention activities. Under the program, which is funded 

through the Commodity Credit Corporation, APHIS is allocated $50 

million in Fiscal Year 2011, and as of today, we have funded 317 

projects this year with over 100 cooperators. The agency provided 

$45 million in Fiscal Year 2010, along with $12 million in Fiscal 

Year 2009. This program has been hugely successful and well-supported as we continue to see the positive impact of the various 

2009, 2010, and 2011 projects. 

Because of this influx of farm bill funding, we have been able to 

work with states and industry to eradicate the plum pox virus in 

Pennsylvania, enhance California’s ability to detect dangerous 

pests entering through mail and freight. We have eradicated 13 

separate Mediterranean fruit fly outbreaks without the use of 

emergency funding, and we work with states across the country to 

survey for pests so that we can respond to any pest issues swiftly. 

These are just a few of the success stories that we have seen 

through this effort, but the net effect of these efforts and the many 

partnerships is a demonstrated improvement in USDA’s ability to 

detect and respond to a plant pest or disease outbreak. Detecting 

and responding to a plant pest or disease in the early stage of an 

introduction is a significant cost saving for taxpayers, and can help 

minimize the potentially devastating impact on agriculture. 

The second farm bill program that helps address plant pest and 

diseases is Section 10202, the National Clean Plant Network. The 

network is a partnership of APHIS, the Agricultural Research 

Service, and the National Institute of Food and Agriculture. The 

network works to develop and produce clean propagative material, 

so that should a plant pest or disease strike, clean plant material 

is available to states, private nurseries, and the producers. Essentially, it is like an insurance policy that guarantees that there will 

be fresh stock of disease-free plants. The network is currently comprised of clean plant networks for fruit trees, grapes, citrus, berries, and hops. It includes 18 supported clean plant centers and associated programs located in 14 states. We continue to see broad 

support within the specialty crop industry, and also interest from 

other commodity groups in becoming part of this program. 

I would like to thank you again for the opportunity to testify 

today, and we look forward to working with the Subcommittee as 

you develop the next farm bill. 

Thank you. 

[The prepared statement of Ms. Pegg and Ms. Bech follows:]

JOINT PREPARED STATEMENT OF RAYNE PEGG, ADMINISTRATOR, AGRICULTURAL

MARKETING SERVICE; REBECCA BECH, DEPUTY ADMINISTRATOR FOR PLANT

PROTECTION AND QUARANTINE, ANIMAL AND PLANT HEALTH INSPECTION SERVICE, 

U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Chairwoman Schmidt, Ranking Member Baca, and Members of the Subcommittee, 

thank you for inviting me to appear before you today to provide a comprehensive 

picture of the activities authorized in the Horticulture and Organic Agriculture Title 

of the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill), as well as the 

205

activities under Section 32 of the Act of August 24, 1935 (Section 32). It is our hope 

that this examination of the specialty crop, organic, pest and disease management, 

and Section 32 provisions from the last farm bill will prove helpful as you begin 

work on the next farm bill. 

The Horticulture and Organic Agriculture Title (Title X) of the 2008 Farm Bill 

represents the first time that a farm bill title was devoted exclusively to these two 

sectors. The U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS) and the Animal and Plant Health Inspection Service (APHIS) are the primary agencies with responsibility for implementing Title X. APHIS Deputy Administrator Bech is here with me today to answer any APHIS-specific questions that 

you might have. 

The economic vitality of rural America and the U.S. economy at large depends on 

a competitive, efficient, and productive agricultural system. In order to increase 

prosperity and sustainability in our nation’s agricultural system and rural communities, AMS conducts oversight activities designed to protect producers from unfair 

competition and business practices. AMS assists producers in management and marketing through the development and oversight of national standards for the production and handling of agricultural products. Under the National Organic Program 

(NOP), the agency also develops and oversees the standards of products labeled as 

organic. AMS also supports producers by providing market trend analysis and business and marketing tools to cover hundreds of commodities every day and producing 

information that impacts billions of dollars in agricultural products each year. 

Grant Programs 

The Specialty Crops Competitiveness Act of 2004, as amended by the 2008 Farm 

Bill, defines specialty crops to include fruits and vegetables, tree nuts, dried fruits, 

horticulture and nursery crops, including floriculture. Using this definition, specialty crops accounted for about 20 percent of the $283 billion in U.S. farm cash receipts in 2009. Yet, only about three percent of total crop acres in the U.S. are devoted to specialty crops. 

AMS administers two grant programs that were reauthorized and amended in the 

2008 Farm Bill. The Specialty Crop Block Grant Program provides funding to states 

and U.S. territories to enhance the competiveness of specialty crops. The agency, 

commission, or department responsible for agriculture within each of the 50 states, 

the District of Columbia, the Commonwealth of Puerto Rico, Guam, American 

Samoa, the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana 

Islands is eligible to apply for these grant funds from USDA. The minimum base 

grant each state or U.S. Territory is eligible to receive is equal to the higher of 

$100,000 or 1⁄3 of 1 percent of the total amount of funding made available for that 

fiscal year (FY). 

The 2008 Farm Bill provided the following funding levels for the Specialty Crop 

Block Grant Program from the Commodity Credit Corporation (CCC): $10 million 

in FY 2008, $49 million in FY 2009, and $55 million for each Fiscal Year 2010 

through 2012. In Fiscal Year (FY) 2010, approximately $55 million was awarded for 

54 grants that funded 827 projects, an approximate ten percent increase in the 

number of projects funded the previous year. The application deadline for FY 2011 

awards is July 13, 2011. 

The last farm bill also amended the definition of specialty crop to include horticulture, and added Guam, American Samoa, the U.S. Virgin Islands and the Commonwealth of the Northern Mariana Islands to the list of ‘‘states’’ eligible to apply 

for grants. These changes required AMS to undertake rulemaking that was completed on March 27, 2009, with the publication of the final rule in the Federal Register.

The other AMS grant program reauthorized and amended in Title X of the 2008 

Farm Bill is the Farmers Market Promotion Program (FMPP). This program seeks 

to improve and expand domestic farmers markets, roadside stands, community-supported agriculture programs, agri-tourism activities, and other direct producer-toconsumer market opportunities. The 2008 Farm Bill extended the FMPP through 

2012 and provided $33 million in CCC funds: $3 million in FY 2008, $5 million in 

each Fiscal Years 2009 and 2010, and $10 million in each Fiscal Years 2011 and 

2012. 

The farm bill specified statutorily the categories of farmer-to-consumer direct 

marketing activities eligible for funding under the program. It also required that not 

less than ten percent of the funds used to carry out the program in a fiscal year 

are to be used to support the use of Electronic Benefits Transfers (EBT) at farmers’ 

markets. The 2010 awards were announced in October 2010, and totaled approximately $4.3 million (81 awards in 35 states). A proposed rule that established eligibility and application requirements, the review and approval process, and grant adVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00217 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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ministration procedures, was published in the Federal Register on June 1, 2011. The 

2011 Notice of Funding Availability (approximately $10 million) was published on 

June 3, 2011, with a deadline of July 1, 2011 for submission of grant proposals. 

Market News 

AMS’ Market News disseminates detailed information on marketing conditions for 

hundreds of agricultural commodities at major domestic and international wholesale 

markets, production areas, and ports of entry. Using direct contacts with salespeople, suppliers, brokers, and buyers, Market News reporters collect, validate, analyze, and organize unbiased data on price, volume, quality and condition, making 

it available within hours of collection. 

In the 2008 Farm Bill, there was a Specialty Crops Market News allocation which 

authorized $9 million for each Fiscal Year 2008 through 2012, to remain available 

until expended. Although recent appropriations have not specified specialty crops, 

AMS continues to carry out specialty crops Market News activities as the agency collects information on the current supply, demand and prices on nearly 400 domestic 

and 70 international fruits, vegetables, nuts, ornamental and specialty crops. 

Title X also directed USDA to collect data on the production, pricing, and mar- keting of organic agricultural products and provided $5 million in CCC funds, available until expended. Of the $5 million provided in FY 2008, $3.5 million was directed to AMS. In addition, the bill required a report to Congress within 180 days 

of enactment on the progress made implementing these activities and identifying 

additional production and marketing data needs. The report was delivered to Congress on December 29, 2008. AMS is working to enhance Market News systems to 

expand reporting of organic market prices. By the end of 2009, AMS Market News

had expanded the daily reporting of organic commodities to include 234 items. AMS 

Market News also added an additional section on the advertised specials on organic 

products to the weekly National Fruit and Vegetable Retail Report.

Marketing Orders and Agreements 

Marketing orders and agreements serve as tools to help fruit and vegetable growers work together to solve marketing problems that they cannot solve individually. 

These programs are designed to balance the supply of quality product with the need 

for adequate returns to producers and the demands of consumers. There are currently 32 active specialty crop marketing orders and agreements. 

Marketing orders are typically initiated by producers who have an active role in 

the development of program provisions. Before any program is implemented or 

amended, approval by a 2⁄3 or larger majority by number or volume represented in 

a referendum is required. Local committees of farmers and handlers—appointed by 

the Secretary of Agriculture—administer the orders. 

Marketing orders are binding on all individuals and businesses classified as ‘‘handlers’’ in the geographic area covered by the order. As defined by most agreements 

and orders, a handler is anyone who receives the commodity from producers, grades 

and packs it, transports, or places the commodity in commercial channels. However, 

this definition is ultimately defined by an individual program. Marketing orders are 

distinguished from marketing agreements, in that the agreements are binding only 

on handlers who are signatories of the agreements. Handlers must comply with the 

grade, size, quality, volume, and other requirements established under the specific 

program. 

In the 2008 Farm Bill, Congress directed USDA to add clementines to the list of 

products in Section 8e of the Agricultural Marketing Agreement Act of 1937. Section 

8e provides that whenever a specified domestically produced commodity is regulated 

under a Federal marketing order, imports of the commodity must meet the same 

or comparable product standards as the domestic commodity. However, this provision has not been implemented as the industry has not pursued establishing a Federal clementines marketing order. 

Also, Title X provided for an expedited marketing order for Hass avocados relating 

to grades and standards. The order would become effective within 15 months of the 

date that the Department began the procedures for determining if the order should 

proceed. To date, AMS has not received an industry proposal. 

Research and Promotion 

Research and promotion programs, often referred to as ‘‘check-offs’’, are designed 

to strengthen the position of the industry in the marketplace and to maintain and 

expand domestic and foreign markets. The programs are all fully funded by industry 

assessments and are authorized by Federal legislation. Board or council members 

are nominated by the industry and officially appointed by the Secretary of Agriculture. In order to ensure compliance with the legislation, AMS oversees the activities of the boards or councils and approves their budgets. 

207

There were two research and promotion provisions in the 2008 Farm Bill. The 

first made a number of amendments to the Honey Research, Promotion, and Consumer Information Act. It directed AMS to consider a national research and promotion program for honey packers and importers. AMS received a proposal for the 

packers and importers program, and conducted a referendum on that proposal from 

April 2–16, 2008. In the referendum, 78 percent of those voting, representing 92 percent of the volume of referendum voters, approved the program. The program became effective on May 22, 2008, one day after the final rule was published in the 

Federal Register. The first board meeting took place on September 4, 2008. With the 

approval of this new program, the collection of assessments under the Honey Research, Promotion and Consumer Information Order—authorized under the Honey 

Research, Promotion and Consumer Information Act—was suspended. A termination 

order for that program was published in the Federal Register on April 17, 2009. 

Furthermore, USDA was directed to consider establishing a research and promotion program for domestic honey producers. On July 14, 2009, AMS published a 

proposed rule and solicited comments for a domestic honey producer program. The 

rule and referendum procedures were published on April 12, 2010. The referendum 

was held May 17–June 4, 2010, and resulted in the producers rejecting the domestic 

research and promotion program. 

Another research and promotion provision in the last farm bill allowed for the development of a program for Good Agricultural Practices and Good Handling Practices under the Mushroom Promotion, Research and Consumer Information Order, 

as well as reapportioned the membership of the Mushroom Council to reflect shifts 

in domestic mushroom production. AMS published the final rule implementing these 

provisions in the Federal Register on October 2, 2009. 

Organics 

The Organic Foods Production Act (OFPA) of 1990 required USDA to develop national standards for organically produced agricultural products and to assure consumers that agricultural products marketed as ‘‘organic’’ meet consistent and uniform standards. The National Organic Program (NOP) is a marketing program administered by AMS. 

The 2008 Farm Bill authorized funding for the NOP at $5 million for FY 2008, 

$6.5 million for FY 2009, $8 million for FY 2010, $9.5 million for FY 2011, and $11 

million for FY 2012. For FY 2010, Congress appropriated $6.96 million while the 

FY 2011 funding for NOP is $6.91 million. 

The National Organic Certification Cost-Share Program makes funds available to 

states and U.S. territories that are interested in providing cost-share assistance to 

organic producers and handlers that are certified under the NOP. The 2008 Farm 

Bill provided $22 million in CCC funds, to remain available until expended, for organic cost-share activities, and increased the cost-share reimbursement from $500 

to $750 annually. Also, USDA was directed to submit an annual report to Congress, 

by March 1 of each year, that describes requests by, disbursements to, and expenditures for each state during the current and previous fiscal years, including the number of producers and handlers served. The program made approximately $4.8 million 

available for FY 2010 and approximately $5.2 million is available for FY 2011. 

Section 32

Section 32 of the Act of August 24, 1935 authorizes the appropriation for each fiscal year of an amount equal to 30 percent of the gross receipts from duties collected 

under customs laws of the United States during the previous calendar year. These 

funds are used to encourage domestic consumption of non-price supported perishable 

commodities and to re-establish farmers’ purchasing power through a variety of activities, including: purchases of commodities and removal of surplus commodities 

from the marketplace for distribution to Federal nutrition assistance programs such 

as the National School Lunch Program and diversion programs that bring production in line with demand to assist producers. AMS annually purchases approximately $1 billion in commodities for distribution to various nutrition assistance programs. Section 32 funds are also used to finance the administrative costs associated 

with the purchase of commodities and the development of specifications used for 

food procurement throughout the Federal Government. 

The 2008 Farm Bill directed USDA to make Section 32 specialty crop purchases 

of (in addition to the $200 million required in the 2002 Farm Bill): $190 million for 

FY 2008, $193 million for FY 2009, $199 million for FY 2010, and $203 million for 

FY 2011, and $206 million for FY 2012 and each fiscal year thereafter. AMS purchased $390.3 million in specialty crops in FY 2008, $472.8 million in FY 2009, $511 

million in FY 2010, and plans to purchase $403 million in FY 2011. 

208

The 2008 Farm Bill also required USDA to arrange for an independent study and 

evaluation of the purchasing processes principally devoted to perishable agricultural 

commodities provided in Section 32. The report was released on May 13, 2010. 

Pest and Disease Management 

The mission of protecting American agriculture from foreign pests and disease introduction is among USDA’s most critical. To accomplish that mission, APHIS has 

developed a robust agricultural safeguarding system. While APHIS’ efforts benefit 

all of agriculture, its programs are of particular importance to specialty crops, as 

foreign pest and disease introductions could potentially devastate them. 

The agricultural safeguarding system that APHIS has developed is a set of comprehensive, interlocking programs that work together to protect agriculture. While 

the border inspection function—which was transferred to the Department of Homeland Security’s Customs and Border Protection in 2003—is a critical component, it 

is but one part of the layered system in place, which has programs that begin well 

before products or people reach the border, and continues after their entry. 

The system relies on APHIS’ strength as a science and risk based regulatory 

agency, and the many measures the Agency has developed, including:

• Sound regulatory policies based upon strong science and thorough risk assessments;

• Pre-clearance inspections of commodities in overseas countries before shipment 

to the United States;

• Extensive pest surveillance activities, both here and abroad;

• Inspection of living plants imported through USDA-operated plant inspection 

stations;

• Supervision of fumigation and other pest mitigation treatments when protocols 

require; and

• Robust emergency response activities in the event of significant pest or disease 

introductions.

Together, these multi-faceted activities serve as a safety net that allows all agriculture to succeed. 

APHIS has two programs that take these measures further, by targeting specific 

segments of agriculture and activities that particularly benefit specialty crops. Both 

programs, which were created in the 2008 Farm Bill, have proven to be highly effective, and widely supported by stakeholders and industry. 

The first, section 10201 of the farm bill, Plant Pest and Disease Management and 

Disaster Prevention, is a new program that allows APHIS to partner with numerous 

states, Tribes, universities, and other community partners to strengthen and expand 

the scope of APHIS’ pest and disease prevention activities. Under the program, which is funded through the CCC, APHIS allocated $50 million in FY 2011 to fund 270 projects with over 100 cooperators that prevent the introduction or spread of plant pests and diseases. This follows $45 million in FY 2010 

and $12 million in FY 2009. 

Projects originate as suggestions from hundreds of cooperators throughout the 

country. These projects aim to improve the six key goals of the program:

1. Enhancing plant pest analysis and survey

2. Targeting domestic inspection activities at vulnerable points

3. Enhancing threat identification tools and technology

4. Developing programs to safeguard nursery production

5. Enhancing outreach and education to increase public awareness and support 

of plant pest and disease eradication and control programs

6. Enhancing mitigation capabilities

Projects are evaluated based on how well they align with these goals, the expected 

impact of the project, and their technical approach. 

The program provides strong protection to America’s agricultural and environmental resources, and helps nursery and specialty crop growers flourish. Over the 

last 2 years, Section 10201 projects have played a significant role in many USDA 

successes, such as including the eradication of plum pox in Pennsylvania, minimizing the effect of a Mediterranean fruit fly outbreak in Florida, survey work for 

European grapevine moth in California, national surveys for honeybee pests, and 

methods development work to combat citrus pests. 

The net effect of these efforts and the many partnerships is a demonstrated improvement in USDA’s ability to detect and respond to a plant pest or disease. Detecting and responding to a plant pest or disease in the early stages of an introducVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00220 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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tion is a significant cost savings for taxpayers, and can help minimize the potentially devastating impact on agriculture. 

The second farm bill program that helps address plant pests and disease is Section 10202, the National Clean Plant Network (NCPN). The NCPN is a partnership 

of three USDA Agencies: APHIS, the Agricultural Research Service and the National Institute of Food and Agriculture. It aims to develop and produce clean propagative plant material. Should a plant pest or disease strike, the network could then 

provide clean plant material to states for certified clean plant programs and to private nurseries and producers. Essentially, it is an insurance policy that guarantees 

that there will be fresh stock of disease-free plants. 

NCPN is comprised of commodity-based networks. Commodities that have developed a clean plant network under the auspices of the program are fruit trees, 

grapes, citrus, berries and hops. These five networks include 18 supported clean 

plant centers and associated programs located in 14 states. There has been broad 

support within the specialty crop industry, and other commodities have expressed 

interest in the program as well. The NCPN national stakeholder database has about 

500 people enrolled who expressed specific interest in the program, which includes 

nursery and grower industries, scientists, state regulatory officials, and educators. 

The program has been funded with $5 million in CCC funding each fiscal year from 

2009 to 2012, to remain available until expended. 

Miscellaneous 

The 2008 Farm Bill provided country of origin labeling requirements for honey 

that bears any official certificate of quality, grade mark or statement, continuous 

inspection mark or statement, sampling mark or statement or any combination of 

the certificates, marks, or statements of USDA. An interim rule, which became effective October 6, 2009, established a new regulation addressing country of origin 

labeling for packed honey bearing any official USDA mark or statement and added 

a new cause for debarment from inspection and certification service for honey. The 

final rule was published on January 4, 2011, with an effective date of February 3, 

2011. 

It should be noted that USDA did not implement the 2008 Farm Bill’s Food Safety 

Education Initiatives provision or the Grant Program to Improve Movement of Specialty Crops as no funding was provided by Congress. 

Conclusion 

AMS and APHIS undertake numerous activities to facilitate the competitive and 

efficient marketing of U.S. agricultural products, as well as to protect and promote 

U.S. agricultural viability. These efforts support the overall mission of USDA, which 

is to protect and promote food, agriculture, natural resources and related issues. I 

hope that this testimony and the subsequent questions and answers will prove useful to the Subcommittee as you undertake your work on the next farm bill.

The CHAIRWOMAN. Thank you so much for your testimony, and 

I will remind the Members that just came in, that if you have any 

written statements, you have 5 calendar days to bring them to the 

Committee, and that we will begin questioning in order of who 

came and then by seniority, and so I will begin. 

I would like to start with Specialty Crop Block Grants, probably 

to Ms. Pegg. 

Ms. Pegg, in Fiscal Year 2010, approximately 13 percent of block 

grant funding was used for research. How do states or the USDA 

ensure that there are not duplicative research projects funded with 

both block grants and other research projects? 

Ms. PEGG. This is a good question, because not only regarding research projects but also with the Farmers Market Promotion 

Project, we need to keep this in mind when people make applications. There are two tracks that occur. If a project applies for a 

Farmers Market Promotion Grant or another research grant 

throughout the Department, when that project comes in it is 

shared with the other agencies and divisions to look at if they are 

receiving block grant funds, therefore it may be disqualified. Regarding block grant applications, they will come in and we will review them, and they will have to justify if they are receiving other 

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grant funds, what is the benefit, why do they need this funding, 

and why do they specifically need it for this one component? 

So they have to create a justification or not receive the funding 

at all for that, and that is part of our review process. 

The CHAIRWOMAN. Thank you. Can you elaborate on what activities are considered allowable marketing and promotion activities, 

and allowable education activities under the block grant program? 

Ms. PEGG. There are a number of educational activities. It must 

be for the benefit of specialty crops defined under the farm bill, so 

if it is a marketing program, it must specifically demonstrate that 

it is going to promote specialty crops and not other commodities 

that are not defined. We want to ensure that is the case when 

handing out the dollars, awarding the dollars to each of the recipients. So it can vary from a specific commodity being promoted. 

Education can be, for instance, in Ohio they have done a number 

of projects regarding food safety training for their producers, creating food safety manuals and practices that are specific for their 

specialty crop industry as well as their region. 

So those are some examples there that they have focused on. 

The CHAIRWOMAN. Thank you. When the block grants are made 

to states, how much funding is being used by the states for administration or overhead costs to run the program, and are states required to disclose this information when they are applying for the 

funding? 

Ms. PEGG. Yes, there is already a ten percent cap that they can 

use for administration costs for each state. They must also provide—we go in and do site visits of the states as well as financial 

audits that they provide to the program, and so they will supply 

that to demonstrate that they are meeting that cap. 

The CHAIRWOMAN. Thank you. Can you talk about the process a 

project must undergo to be approved for a grant? 

Ms. PEGG. The process initially starts with a state—each state 

administers it according to what is best for their program, whether 

they have a pool of people that are reviewing the grants and then 

grading them and then making the determination, but the state 

makes the initial determination. They send those recommendations 

to USDA. We review those to make sure that they are in compliance with the statute, that they do support specialty crops specifically, and that there is no other conflicts that may occur regarding 

other funding that may be received before giving the final approval 

for the award funds to go out to the state. 

The CHAIRWOMAN. And is the program set up to favor one type 

of project over another? 

Ms. PEGG. No, not at all. 

The CHAIRWOMAN. Okay. In Section 32, the DOD Fresh Program 

uses Section 32 funds to purchase fresh fruits and vegetables for 

child and other nutrition programs. I understand there has been 

concern over DOD’s administration of this program. Do you think 

it is cost effective and efficient for DOD to make these purchases 

as opposed to AMS that makes the other Section 32 fruit and vegetable purchases? 

Ms. PEGG. This is a question that a number of people have been 

discussing. DOD is effective in certain parts of the United States, 

and we really look to our FNS, our Food and Nutrition Service 

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counterpart as well as those Food Service directors that are dealing 

directly with DOD to see the effectiveness. However, we have been 

discussing with our counterparts regarding if it is not effective, are 

there some other alternatives in which AMS could either administer or the Food Service directors could administer directly. 

So we are looking at other alternatives. We would love to continue the conversation with the Committee at looking at other options for schools. We do think that the DOD model is effective for 

some schools, but we are also open to looking at some other alternatives where it may not be as effective. 

The CHAIRWOMAN. Thank you so much. I will allow Mr. Baca at 

this time to question the panel. 

Mr. BACA. Thank you, Madam Chair. 

Ms. Pegg, we appreciate your insight as we look to determine the 

best policies for specialty crops and organic agriculture in the next 

farm bill. Since first serving on the House Agriculture Committee, 

one of my greatest passions in Congress has been the work of the 

Committee to improve and expand the nutrition programs. Specifically, I am proud of the progress we have made with the SNAP 

Program in the 2008 Farm Bill. Not only did we increase the benefit level, but we also went a long way to remove the stigma associated with food stamps by changing the name of the program and 

switching to debit cards. 

That said, can you update the Subcommittee on AMS’s efforts in 

working with Food and Nutrition Service to ensure the farmers 

markets accept SNAP benefits through debits as a form of payment? Another question, do you have any specific data on the number of farmers markets that currently can accept the SNAP benefits? 

Ms. PEGG. Regarding your question, this has been an important 

topic and one that both my agency as well as Food and Nutrition 

Service have been working on collaboratively to determine what 

are the hurdles that people are facing in terms of getting more 

SNAP benefits into farmers markets. There are a couple programs 

that are working to increase EBT at farmers markets, the accessibility of EBT at farmers markets. That is the Farmers Market Promotion Program, of course. That grant program provides for ten 

percent of the funds. However, in 2010, we saw 30 percent of the 

dollars in the Farmers Market Promotion Program go to support 

EBT transactions in farmers markets. 

We are also working directly with Food and Nutrition Service to 

look at the hurdles. We have developed a handbook to help farmers 

markets, individual stalls in order to help them put in EBT machines, how to administer that effectively, how to make it cost effective, looking at some of those hurdles and providing a handbook 

that gives them some additional tools for making it simpler, so that 

these things are more accessible in more markets. 

We have increased the number of EBTs at farmers markets to 

1,600, and we really hope to improve that over the years as we look 

at some of these issues that they are facing and find new ways to 

address them, so that we are creating more access in more markets 

throughout the United States. 

Mr. BACA. Thank you. 

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In the 2008 Farm Bill, we established a minimum of ten percent 

set aside with FMPP funds to cover electronic benefit transfer 

equipment. This allows folks participating in SNAP to use their 

benefits at farmers markets. I understand since adding this setaside for the program demands for these debit funds has far exceeded the supply. Are you finding this to be the case? How many 

applications have you received that included EBTs, and how many 

have been funded? 

Ms. PEGG. Well, I don’t have the 2011 numbers yet, but when we saw the $5 million in funding of the Farmers Market Promotion 

Program, we saw 30 percent of those funds going to support EBT 

in farmers markets. So that is a clear indication now we are dealing with $10 million in the 2011 year. So we are hopeful that once 

we review all of those applications that we received on July 1, we 

will actually see an increase in the number of applicants for those 

supporting EBT transactions at farmers markets, CSAs, food hubs, 

and so forth. And you are seeing a lot of various entities throughout the nation recognize the need for providing this to their constituency, whether it is Detroit’s food hub, that they recognize that 

they are doing $30,000 a month in sales just for food stamp recipients every month, that they need to be providing this service at 

their food hub. It is one that people are recognizing the need for, 

and therefore they are utilizing Farmers Market Promotion dollars——

Mr. BACA. Let me follow up with another question since you 

mentioned that. Beyond FMPP, what else could we in Congress do 

to ensure that fruit and vegetable farmers selling directing to 

SNAP and WIC customers, can afford to do so. That has been the 

problem. Can they afford to? Costs are going up, the debit card 

amounts have not. The costs of fruits and vegetables is a lot higher. 

Ms. PEGG. Well, this is one that a lot of nonprofits are also addressing, whether they are providing the benefit of double dollars 

specifically to go for fruit and vegetable purchases. A lot of nonprofits have been focused on those pilot programs. I think we have 

to be creative. It is not only those programs within AMS, but 

whether it is Rural Development or other programs throughout 

USDA in terms of how to address this very specific need in creating 

more access of foods for those that are underserved. 

Mr. BACA. Our schools are now doing a lot of the fresh fruits and 

vegetables. That costs a lot. With our school lunch facilities 

downsizing and a lack of funding for these efforts, a lot of needy 

children who need fresh fruits and vegetables, aren’t receiving 

them. 

Ms. PEGG. Yes, it is a very critical issue that we need to think 

about how these different programs can be used to benefit a lot of 

these difficult times and difficult struggles that a lot of local entities are facing right now. 

Mr. BACA. Right. I know that my time has run out. Hopefully in 

the second round I can ask Ms. Bech some questions. 

The CHAIRWOMAN. Thank you, and now, Mr. Southerland, you 

have 5 minutes. 

Mr. SOUTHERLAND. Thank you, Madam Chair. Ms. Bech, I wanted to ask—you may not be aware, but I am from Florida and so 

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obviously in Florida, we have an enormous number of specialty 

crops. I just want to ask you some questions regarding the Specialty Crop Research Initiative, if I could read a brief statement 

here. ‘‘Florida, as many other specialty crop regions of the country, 

are fighting an extremely dangerous threat due to citrus greening’’—which I am sure you are familiar with—‘‘represents an immediate threat to the entire $12.2 billion citrus industry in Florida, 

California, Alabama, Louisiana, and Texas. The specialty crop disease has the ability to kill citrus trees and their fruit within a few 

short years, literally placing the future of citrus production in this 

nation at risk. Citrus ranks nearly first in the nation among crop 

value, among fruit and vegetable specialty crops, according to the 

USDA’s National Agricultural Statistics Services. Timely research 

on citrus greening and its vector, the Asian citrus psyllid, is absolutely essential to ensuring the future of citrus production in this 

country.’’ As you know, Congress authored the Specialty Crop Research Initiative under the farm bill in an effort to meet the critical 

needs of the specialty crop industry by developing and disseminating science-based tools to address needs of specialty crops, including pest and disease management, resistance to pest, and diseases and management strategies in an effort to identify and address threats from pests. This is the type of research need for 

which Congress intended to address through the SCRI, and it 

would be difficult to identify a specialty crop of such major national 

significance that faces more of a devastating risk to the future of 

its existence. Recognizing this dire challenge, domestic citrus growers have self-funded more than $39 million in research annually 

over the past 4 years. Please explain, if you would, why the USDA 

has declined to fund over the last 3 years this devastating disease 

through Specialty Crop Research Initiative Program, as I have 

stated, designed by Congress and intended specifically for the purposes such as these. 

Ms. BECH. Well, we certainly share your concern. Citrus Greening is a very devastating disease. The Specialty Crop Research Program is administered underneath the National Institute of Food 

and Agriculture, which is not my program, and we can get you 

some information about the administering of that particular program. 

For APHIS, I would like to say that we have a Citrus Health Response Program in which part of that funding we set aside for research, and we have worked very closely with the growers and the 

industry down in Florida as well as the rest of the citrus industry 

to try to address the concerns about citrus greening. 

Mr. SOUTHERLAND. I think—and that would be helpful. I will tell 

you, having been there and been on the ground there, no country 

that has ever faced this has ever solved it. It literally wipes out the 

citrus industry. This is an enormous problem, and having met the 

farmers that are there that are funding this, and perhaps not getting the assistance that I think some of the funds were set up to 

aid is bothersome. So I would appreciate that. Thank you very 

much. 

Ms. Pegg, I want to ask a quick question. The Specialty Crop 

Block Grants provide Florida flexibility to meet the unique farming 

challenges of our state, targeting specialty crops including fruits 

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and vegetables and nursery to support projects and marketing research innovation, education, pest disease management, and other 

things. Florida, as I stated, is the second largest recipient based on 

specialty crop production, receiving $24.3 and $4.9 million annually. 

Please comment, just with the time I have remaining, on this 

block grant program which gives the states flexibility to address 

their unique agricultural needs. 

Ms. PEGG. Well, I think you have raised a lot of the points that 

are important to this program. It really is one of the programs that 

is very beneficial to each state and the growers in that state and 

what they are facing. What the projects that Florida may be focused on, whether it is food safety or finding new tomato varieties 

or looking at methyl bromide’s alternatives are really specific to 

those needs of that industry versus what Ohio or even California 

will focus on, which I think is really the success of this program, 

is it is really meeting the unique needs of whatever those producers are facing. I think that is why it has been such a successful 

program and why people really do feel that they are seeing the 

benefits of those dollars. 

Mr. SOUTHERLAND. Madam Chair, I see that I am out of time so 

I will yield back what time I don’t have. 

The CHAIRWOMAN. Thank you. Why don’t we go to Mr. Crawford, 

5 minutes, and then we will go to round two on questions. 

Mr. CRAWFORD. All right, thank you, Madam Chair. 

Last fall, USDA announced that Section 32 funds would be used 

to fund $630 million in disaster assistance. Ms. Pegg, can you cite 

the authority that the Department used to establish such a disaster assistance program under Section 32 funds? 

Ms. PEGG. You know, it is really important under Section 32 to 

look at all the clauses which give us the authority for the different 

activities that we do. So Clause 1 is encourage exportation of agricultural products. Clause 2 is encourage domestic consumption. 

Clause 3 is reestablish farmer’s purchasing power by making payments in connection with normal production of agricultural commodities. In addition, the Secretary also has the authority to direct 

Section 32 funds to be used for special disaster assistance programs, and this is the authority that we used to provide that funding. We provided a total of $270 million in support for those that 

were experiencing the excessive moisture flash flooding disaster in 

the Midwest. 

It is important to note that this authority has not only been used 

in recent years, but you know, in 2007 it was used to help hog producers with the melamine poisoning. It was also used in 2006 to 

help citrus growers with citrus canker in Florida. So it has been 

a tool that many Secretaries have used over the years to help those 

producers that are struggling. There is a number of tools under 

Section 32, not only providing disaster assistance, but whether that 

be bonus buys and so forth. 

Mr. CRAWFORD. Okay. I understand the Commodity Credit Corporation funds were to be used to make up for this shortfall in Section 32 funds. How much CCC funding has been used to make commodity purchases that would have normally been bought with Section 32 funds? 

215

Ms. PEGG. So just to back up a little bit, initially it was announced that $550 million would be used to provide support. We 

didn’t use all of that $550 million; only $270 million was actually 

used in support. So there is roughly, $160 million still available to 

provide, whether it be bonus buy assistance or disaster assistance 

under the Section 32 account. So there are still funds available to 

meet the needs, should anything occur in the remainder of the fiscal year. 

Mr. CRAWFORD. Okay. I understand CCC has a line of credit with 

the Treasury that has to be paid back. Will future Section 32 funds 

have to be used to reimburse the CCC? 

Ms. PEGG. Well, there is the authority to use Section 32 CCC 

funds if we need to, and there—we can consider if we need to, to 

reimburse CCC funds. That has not yet been determined if that is 

necessary at this time. 

Mr. CRAWFORD. Okay. I yield back. Thank you. Thank you, Ms. 

Pegg. 

The CHAIRWOMAN. I would now like to look at pest and disease 

issues, and probably Ms. Bech would be better suited for this, but 

feel free to chime in. 

What is the main conclusion that can be drawn from the 2009 

Annual Pesticide Data Report you just released this spring? That 

would be you, Ms. Pegg. 

Ms. PEGG. Sorry about that, we were—yes. The Pesticide Data 

Report is I think the one you are referring to regarding the residues, and this is a really important report because it is really 

showing us the historical trends in terms of pesticide use throughout the United States. It looks at pesticide usage for all the different commodities primarily consumed in the marketplace. 

So what it is indicating is it is indicating that we are seeing that 

pesticide use over time is reducing. There is a changing in trends 

in terms of pesticide use. Producers are moving to softer chemicals, 

as well as overall, our annual report shows that pesticide residues 

found on foods tested at levels below tolerances established by 

EPA. So you know, as we are always encouraging people to eat 

more fruits and vegetables and to wash them before you do, and 

I think this age-old rule still applies. 

The CHAIRWOMAN. What do you believe the purpose of the 2009 

annual report is, and what value was derived from it, do you believe? 

Ms. PEGG. Pardon, what was the second question? 

The CHAIRWOMAN. What was the value of the program shown in 

the report? 

Ms. PEGG. Well, there are a lot of purposes for it. I mean, not 

only does it help inform EPA in terms of trends that we are seeing 

in terms of usage, there is also value in it in that it is also used 

in discussions with foreign countries when they ask about pesticide 

usage for various commodities to set maximum residue limits. 

What we are seeing the trends is that overall usage is changing, 

and we are using softer chemicals and transitioning from some of 

the older chemicals that were used in previous years. So you are 

seeing some developments in terms of that science and technology, 

and the products that are available in the marketplace. 

216

The CHAIRWOMAN. When consumers hear about residue, they 

might get concerned. I think you have answered the question you 

tell them to wash the fruit, but what advice is there for consumers 

who are still troubled by the newspaper stories warning of the consumption of produce based in this report? 

Ms. PEGG. Well, once again our annual report shows that overall 

pesticide residues found on foods tested are at levels below the tolerance established by EPA, and it also shows us to continue eating 

fruits and vegetables, and wash them before you do. 

The CHAIRWOMAN. All right, and then to go back to Section 32 

again. Does the Department have the ability to operate the DOD 

Fresh Program, or would legislative language be needed for you to 

operate it? 

Ms. PEGG. We do have the authority to operate that program, 

should it be necessary. 

The CHAIRWOMAN. Okay. In your testimony outlines, the required Section 32 specialty crop purchases for each fiscal year, and 

that AMS plans to purchase $403 million in Fiscal Year 2011. Can 

you tell me how much of this you have spent so far? 

Ms. PEGG. Yes. There is the total requirement for fruit and vegetable purchases of the $403 million that you mentioned, and so far 

we have purchased $232 million in fruit and vegetable purchases. 

So we will have to meet that minimum before the end of the fiscal 

year. 

The CHAIRWOMAN. Last fall, the USDA announced that Section 

32 funds would be used to fund $630 million in disaster assistance. 

What authority did the Department use to establish such a disaster 

assistance program using Section 32 funds? 

Ms. PEGG. The authority that we used is the Secretary also has 

the authority to direct Section 32 funds to be used for special disaster assistance programs is the authority that we used. And we 

used a total of $270 million to provide that assistance to sweet potato, rice, soybean, cotton farmers that were experiencing crop loss. 

The CHAIRWOMAN. Has the Department used this authority before? 

Ms. PEGG. Yes, we have used this authority a number of years. 

In 2006, we used it for Florida growers dealing with citrus canker. 

We have used it for the melamine incident with pork producers. So 

we have used it on a number of occasions. 

The CHAIRWOMAN. Okay. And now since I am about out of time, 

first off, Mr. Costa has joined the dais. Do we have unanimous consent that he can ask questions of the panel? Is there agreement? 

Fine. And I think the next 5 minutes goes to the Ranking Member, 

Mr. Baca, and then Mr. Southerland and then Mr. Costa. 

Mr. BACA. Thank you, Mrs. Schmidt. With a constant threat of 

invasive species like the Asian citrus psyllid, and the European 

grapevine moth, pest and disease management is critical to agriculture in my home State of California. Because of this, I am very 

interested in the implementation of Section 10201 of the 2008 

Farm Bill. While I am pleased to know that the pest prevention 

project in California has received approximately $12 million in 

funding for the Fiscal Year 2011, I am concerned regarding APHIS 

prohibition from funding the administration costs associated with 

these projects. Congress has now acted on three separate occasions, 

217

the Recovery Act, the Agriculture Appropriation Bill for 2011, and 

the Agriculture Appropriation Bill for 2012, to provide technical 

correction that allows APHIS to move forward with the administrative funding needed. Do you have any recommendations for how 

these issues can be permanently resolved so that constant funding 

for the program may continue? 

Ms. BECH. Yes, well we share the concern and first, we appreciate Congress passing the temporary fixes. We agree that there 

needs to be a permanent fix, and we believe that the permanent 

fix can be achieved either through the farm bill or another law. We 

would look forward to working with you with language. 

Mr. BACA. Okay. Can you please provide the Subcommittee in 

writing of the USDA’s Office of General Counsel’s opinion on the 

current prohibition and their recommendation as to how to best resolve it? 

Ms. BECH. Well, we would be happy to work with our Office of 

General Counsel to address your request about the opinion, and I 

am no lawyer, but I would be happy to talk a little bit about it. 

We know that according to USDA’s General Counsel and the Department of Justice that the statute provided that the Secretary 

can use the funds, facilities, and authorities of CCC to carry out 

a particular program or activity. However, the funding cap on administrative expenses of the CCC Charter Act continues to apply, 

so we can work with our Office of General Counsel to address your 

requests. 

[The information referred to is located on p. 225.] 

Mr. BACA. Okay, thank you. In 2009, APHIS released a pest and 

disease risk assessment update for 50 states. This update mentioned specific challenges and identified risks and suggestions that 

included county level data that would be helpful in better identifying the risks moving forward. Has the Department released an 

updated risk assessment analysis since October of 2009? If not, can 

you tell me how APHIS plans to refine its interpretation of the pest 

finding and trends, and how would these changes impact partnership among the Federal, state, and industry cooperators? 

Ms. BECH. Well, we initially characterized the states’ risk by applying certain criteria, and we looked at different things such as 

the susceptibility of the state to invasive species, the number of 

ports that they have, as well as things like the impact and the agricultural commodities that are grown in the state. And while we 

did that with consulting our National Plant Board, as well as working with the Specialty Crops Farm Bill Alliance, you can imagine 

when we came out with the assessment that there was some concern about how different states ranked. But we used that—it is not 

a formula-based method that we used to establish the funding of 

the project, so this is only one aspect that we used. But because 

there was some concern, what we have done is we have authorized 

the use of funds for some of the projects working with states to redefine what that assessment process would look like, and we funded two projects with that. We are hoping that they will be completed this year. By the end of the year, we hope to reassess the 

assessment for the risk ranking of the states, and we would be able 

to then look at how that would be implemented. 

218

So the actual impact on it right now I think it really shows that 

we have to work together and that we can employ all the different 

interests to come together to administer the funds. I think it would 

actually support a stronger team-building effort. 

Mr. BACA. Thank you. I know that my time has run out, are 

there any duplicated services that can be consolidated in trying to 

implement this? 

Ms. BECH. The specific risk——

Mr. BACA. Yes, are there duplicated services that we might want 

to consolidate to reduce our costs, and yet still provide these important services? 

Ms. BECH. Well, I think that the risk assessment as well as the 

other things that we look at, and the transparency in which we go 

about looking at the projects and the funding list have served us 

well, and it shows a coordinated effort, especially because a lot of 

the projects that we fund cross multiple states and we look at regional approaches as well. So it is really looking at it nationally as 

well as individually. 

Mr. BACA. Thank you. I know my time has run out, Madam 

Chair. 

The CHAIRWOMAN. Mr. Southerland? 

Mr. SOUTHERLAND. Thank you, Madam Chair. 

Mrs. Bech, I apologize for asking you a question outside of your 

purview here, but obviously we will track that down, because citrus 

greening is terribly important to all of those, especially the Florida 

delegation. 

Moving over to APHIS, could you explain to me, as a new Member, just—and this will be very simple as my only question—just 

elaborate how the USDA assesses risk. Help me understand: I 

know 41⁄2 minutes is not a long time, but give me kind of a kindergartner’s understanding of how that—how it works. How do you go 

after it? 

Ms. BECH. Well, that is a good question, and we can provide you 

with some additional information after this hearing about it. 

Mr. SOUTHERLAND. Okay. 

Ms. BECH. But one of the things we have done is we have really 

created a very collaborative approach with working with the states, 

as well as the industry groups to look at the risk, and as I mentioned earlier, we had a risk assessment that was done, looking at 

the different risks of the states and looking at the kinds of commodities, the impacts, the kinds of invasive species that are coming 

through, such as citrus greening and the Asian——

Mr. SOUTHERLAND. So they are the ones that—I apologize for interrupting, but you are basically put on notice from the states because they have obviously—something has been triggered and they 

see it, so they are doing basically R&D for you? 

Ms. BECH. Well, what the states are doing is we are working together to survey and to look at the pests that are coming in, and 

so we are working as a team to address the threats as they come 

in. 

Mr. SOUTHERLAND. Okay. 

Ms. BECH. And we have been enhancing the surveys that the 

states do, as well as providing traps and lures, things like that. So 

it is really a real partnership. 

219

Mr. SOUTHERLAND. Collaborative effort. Is that—and part of your 

assessment, obviously when you have aid that you can send to the 

states, I mean, is there—do you always take into account the economic impact if those diseases or insects would go unhampered? I 

mean, as far as being able to prioritize, okay, because obviously you 

have a finite resource and you have so many problems. I mean, do 

you prioritize based upon the impact economically, because that is 

a jobs issues to many states. 

Ms. BECH. Yes. Well, we do look at economics but there are other 

factors that weigh in as well, and we try to look at the impact—

like you are a citrus-producing state. Certainly the problems that 

you are facing in Florida impact the other citrus-producing states 

as well, so we take many things into consideration and the impact 

on the commodity itself, yes. 

Mr. SOUTHERLAND. Very good, thank you. And if you could give 

me information, maybe provide it to our office, I would welcome 

that. I would love to learn more about how you go about assessing. 

So thank you. 

I yield back. 

The CHAIRWOMAN. Thank you. Now, Mr. Costa from California. 

Mr. COSTA. Thank you very much, Madam Chairperson, for allowing me to participate with the Subcommittee this afternoon. It 

is an important issue, and I look forward to questioning the witnesses. 

For my colleague from Florida, what we tend to do is look at this 

in terms of risk assessment versus risk management. Your ability 

to manage the risk is based upon your ability to assess the various 

aspects of risk. Then with state agencies and local ag commissioners in California, you make a determination on what resources 

should be placed on the management of the risk, based upon the 

risk assessment that has taken place. 

I would like to ask this question as it relates to APHIS. As you 

know, over the 16 year period from 1995 to 2010, as it relates to 

our ability to export our products abroad, we have had 312, World 

Trade Organization SPS trade concerns that have been raised. Of 

these, 212 trade concerns, I understand, remain unresolved. California, is at the tip of this spear. California uses over 500,000 

phytosanitary export certificates to access those markets. 

My question to you is how APHIS works with all Federal agencies in trying to deal with this backlog? How does it assist the 

USTR on these SPS trade concerns? Ms. Bech, can you address 

that quickly, because I have some other questions. 

Ms. BECH. Okay. Well, I will try to address what APHIS has 

done, but of course, our USTR and others take the lead in——

Mr. COSTA. I know, but I want to understand APHIS’s role. 

Ms. BECH. Yes, so we provide technical support on that, we do 

bilateral agreements with the——

Mr. COSTA. But how well are you helping USTR deal with those 

212 trade concerns? You haven’t been able to come up to speed on 

the risk management side to provide those export certificates. 

Ms. BECH. Well, the export certificates are to meet the trade obligations for the others, and what we do is provide the assessments. 

I believe that might be what you are talking about. However, I 

would like to clarify that there is no backlog of export certificates. 

220

Mr. COSTA. Right. 

Ms. BECH. And we have certainly worked very carefully in shortening the risk assessment, categorizing it into a tiered process to 

look at the priorities to address that——

Mr. COSTA. Can you clarify the link between the pest and the 

disease challenges, how in working with your partners in USDA 

possible trade disruptions and the potential economic losses that 

would occur to our agricultural producers are addressed and hopefully minimized? 

Ms. BECH. Well, I think if I can clarify, if I might ask a clarifying 

question. Are you asking what we are doing with the other USDA 

agencies in addressing the disease impacts on the economics? Then 

we are providing, again, the assessments that go into that economic analysis and working with our Foreign Agriculture Service 

to address those issues. 

Mr. COSTA. Do you have any explanation as to why only 1⁄3 of the 

SPS certificates or trade concerns have been addressed? 

Ms. BECH. Well, I could get further information on it. 

[The information referred to is located on p. 234.] 

Mr. COSTA. Let me, move quickly because my time is expiring. 

I would like your agency to respond to our folks who really rely 

upon you in their ability to get those trade certificates expedited 

so that we can access international markets. 

Ms. BECH. Yes, sir. 

Mr. COSTA. Thank you. 

Ms. Pegg, enjoying Washington? 

Ms. PEGG. Yes, very much so. 

Mr. COSTA. Good. She is a former Californian. We used to interact in the old days. 

The Chairwoman and the Ranking Member were asking you on 

your agency’s various efforts on the USDA school lunch and breakfast programs. How to expand the commodity purchases. You 

talked about the amount of money left in this fiscal year. How 

would you, with your previous experience and background, suggest 

improvements to get healthy fruits and vegetables, and better diets 

into our schools. How would you assess our efforts, thus far, since 

the 2008 Farm Bill, both in California and here in Washington? 

Ms. PEGG. Well, I think the 2008 Farm Bill, because it established those minimums—you know, in previous years, we have exceeded the minimum amount, whether it was the minimum, $399 

million, we have purchased in the $400 to $500 million amount. 

This year, we are seeing a slightly different situation because we 

aren’t getting a number of bonus buy requests because people 

aren’t having oversupply in the marketplace. So that does impact 

some of the products supplied to schools and food banks. 

I think not only is it the collective work of our purchases, it is 

also the food and nutrition standards that they establish, and then 

to schools and what they do with that. I mean, you are seeing a 

lot of schools that are really recognizing how they can change their 

menus to provide more variety, healthier choices for their students, 

and that is not just—it is both including bonus buy, pork buy that 

we may deliver to them, as well as complementing that with a local 

orange to make a citrus pork dish. I mean, really schools are being 

creative to provide more variety in their menus, and I think we are 

221

also developing a lot more programs to assist them in that, whether it is through more training, different services to those food service directors, as well as looking at the menu of items that we purchase directly from our Section 32 account. 

Mr. COSTA. Madam Chairperson, my time has expired. I appreciate the answer. Madam Chairperson, knowing how health conscious you are and how many marathons you run, and having a 

good healthy diet, this is an area that is a constant source of frustration. We see obesity continuing to increase among our young 

people. Our efforts with regard to a better healthy nutrition program in our schools is a step in the right direction. I am just not 

sure if this Subcommittee can continue to examine some new efforts on how we can do a better job. We grow the healthiest, most 

abundant food products anywhere in the world. Our farmers, our 

dairymen, our ranchers, excel in doing this. Trying to get those 

products—those healthy food products in our school lunch and 

breakfast programs is essential to our children 

The CHAIRWOMAN. We are going to have a hearing on that in the 

future, and I invite you to come back, but before we adjourn, I do 

have just two more questions, and looking at the Members here, 

Mr. Baca may have one, and maybe Mr. Costa so we may get out 

here in a quick dash. 

But I want to talk a little bit about block grants. State departments of agriculture have expressed frustration with the timeliness 

of the notice of funds available being published by the Office of 

Management and Budget, the OMB. Any delay in this notice creates pressure on state grant processes, which can discourage grants 

to non-state operated grant requests. What needs to happen to expedite this process? 

Ms. PEGG. Well, we recognize those concerns. Unfortunately, because of the delay in the appropriations bill which gave us the authority to use the funds for administrative functions, that was the 

delay in getting out that notice. So there was part of the reason 

why we had the concern. It also delayed the notice for the farmers 

market promotion and the result of basically a month turnaround 

in receiving applications. So that is one of the issues that we ran 

into this year. We need to look at some solutions in coming years 

to resolve that more quickly so we can be more timely in our announcements and getting those dollars out. 

The CHAIRWOMAN. Thank you. It is our understanding that 

states are required to submit state performance reports after an 

annual agreement is completed. The reports are supposed to detail 

the performance, outcomes, and results of the state block program 

projects. What is the status of these reports, and have states been 

submitting them in a timely manner, and if not, do you know why? 

Ms. PEGG. I can get you a number of how many reports we have 

received. I think one of the important things to know of this is that 

because some projects go over a 3 year period, we have staggering 

of reports so some reports we are still waiting for because the 

project has not yet been completed with the 3 year period that a 

project may go on for. But I think we are current, but I will get 

you a final number of what we currently have and what is still left 

to be received. There are currently 121 reports available. 

222

The CHAIRWOMAN. Thank you. Mr. Baca, do you have any questions? 

Mr. BACA. I do, just a quick question. Earlier, Ms. Pegg, you 

talked about the deadline of July 1st for anyone to submit their 

SCBGD grants. It seems that state departments of agriculture 

have expressed some frustration with the publishing timeline for 

the notice of funds availability. Any delays in this announcement 

creates pressure on the states, which can discourage grant applications. What needs to happen for this process to be expedited? 

Ms. PEGG. Well, just to kind of mention it, what occurred this 

year is the appropriations process, because Congress did not act as 

quickly as needed. We had initially expected but finally reached an 

agreement. We needed language in the appropriations bill that 

would allow us for issuing those funds and using those funds for 

administrative costs, so that was the delay until the budget for 

2011 was approved. That was the delay in getting out the notice. 

So we can talk with you about some options and some language 

that could be included in future pieces of legislation that would assist in getting more timely notices out. 

Mr. BACA. We would love to hear suggestions. Hopefully we can 

work on possible improvements. 

Ms. PEGG. We would be happy to work with you on that. 

Mr. BACA. Just one more question. Several grants supporting the 

farmers market project have been approved under the SCBGP, 

even though the farm bill provides for farmers market promotion 

programs. How are these programs being coordinated? Shouldn’t 

projects related to farmers markets be considered by the farmers 

market promotion program? 

Ms. PEGG. Yes, and this very important that we don’t have a duplication or double-dipping when people are applying. So what occurs is when there is an application for a farmers market under 

the block grant program, in reviewing that application we also send 

that to those that administer the farmers market promotion program, the FISNIT Program, if it is a Rural Development program, 

to ensure that they are also not receiving funds under those grant 

projects. If they are receiving funds, then they must then demonstrate what is the need for why they must receive block grant 

funds. So that is part of our review process to ensure that there 

is no double-dipping. 

Mr. BACA. Does USDA have a follow-up mechanism for state 

oversight to make sure that there is no double-dipping? What are 

the consequences for those that are double-dipping? 

Ms. PEGG. We do have follow-up in terms of the site visits that 

we do to the states, the audits that they are required to provide. 

There are no penalty provisions that I am aware of for the doubledipping, but we would be happy to discuss that with you. 

Mr. BACA. Thank you. Maybe penalties is something to consider. 

If there are no penalties, if I can get away with it, I will get away 

with it. 

Ms. PEGG. Well, we hope that our process does protect from that 

ever occurring, and we hope that—yes, hopefully. We hope that the 

process is stringent enough where both programs are catching 

something, should an entity try to apply for all funds. And I do see 

those—when every grant comes to my desk, I do see the response 

223

of every agency, whether they have applied for MAP or TASC 

funds, FMPP, Rural Development funds, every grant application is 

reviewed upon those and there is a response specific to that grant 

application. 

Mr. BACA. Okay, thank you. With that, I have exhausted my 

time so I yield back. 

The CHAIRWOMAN. Thank you. Mr. Costa, do you any other questions? Thank you. 

Well, I want to thank the panelists, Ms. Pegg and Ms. Bech, for 

being here today, and I wish you luck. 

Ms. PEGG. Thank you. 

The CHAIRWOMAN. This hearing is over. Thank you. 

[Whereupon, at 4:08 p.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

224

225

1The current text of section 11 is attached as Appendix 1. 2 Appendix 2.

SUPPLEMENTARY MATERIAL SUBMITTED BY REBECCA BECH, DEPUTY ADMINISTRATOR

FOR PLANT PROTECTION AND QUARANTINE, ANIMAL AND PLANT HEALTH INSPECTION SERVICE, U.S. DEPARTMENT OF AGRICULTURE

During the July 7, 2011 hearing entitled, Agricultural Program Audit: Examination of Specialty Crop Programs, requests for information were made to Rebecca 

Bech. The following are the information submissions for the record. 

Insert 1

Mr. BACA. Okay. Can you please provide the Subcommittee in writing of the 

USDA’s Office of General Counsel’s opinion on the current prohibition and their 

recommendation as to how to best resolve it? 

Ms. BECH. Well, we would be happy to work with our Office of General Counsel to address your request about the opinion, and I am no lawyer, but I would 

be happy to talk a little bit about it. 

We know that according to USDA’s General Counsel and the Department of 

Justice that the statute provided that the Secretary can use the funds, facilities, 

and authorities of CCC to carry out a particular program or activity. However, 

the funding cap on administrative expenses of the CCC Charter Act continues 

to apply, so we can work with our Office of General Counsel to address your 

requests.

Please see attached memorandum.

December 22, 2008

Memorandum for W. Scott Steele, Director, Office of Budget and Program 

Analysis

From:

MARC L. KESSEMAN,

General Counsel.

Subject:

Opinion re: Use of Commodity Credit Corporation Funds for Salaries and Expenses

Issue: 

This memorandum sets forth the opinion of the Office of the General Counsel regarding when Commodity Credit Corporation (‘‘CCC’’) funds may be used to pay for 

the costs of Federal and state agencies with respect to the implementation of CCC 

programs. 

This opinion has been prepared in response to recent requests for the apportionment of CCC funds for the Healthy Forests Reserve Program (‘‘HFRP’’) and the Agricultural Management Assistance Program (‘‘AMAP’’). In reviewing these requests, 

it has become apparent that clear legal guidance would benefit Department officials 

confronting the question of when CCC funds may be expended for the salaries and 

related administrative costs associated with the implementation of programs that 

Congress has directed to be funded by CCC. 

As a result of amendments to section 11 of the Commodity Credit Corporation 

Charter Act made by section 161(b)(2) of the Federal Agricultural Improvement and 

Reform Act of 1996 (the ‘‘1996 Amendment’’), there are significant limitations on the 

ability of CCC to use its funds for the payment of costs incurred by state and Federal agencies in the administration of CCC programs.1 Generally, as a result of the 

1996 Amendment, CCC may annually use not more than $56,102,727 to reimburse 

Federal and state agencies for costs they incur in the administration of CCC programs. 

The Farm Security and Rural Investment Act of 2002 (the ‘‘2002 Act’’) authorized 

the use of CCC funds to pay for the salaries and related expenses incurred in the 

delivery of a number of specified programs. In response to a request by the Office 

of Management and Budget (‘‘OMB’’), the United States Department of Justice 

(‘‘DOJ’’) opined on the application of section 11 of the CCC Charter Act to specific 

conservation programs authorized by the 2002 Act. We conclude that the analysis 

of the 2003 DOJ opinion 2 applies with full force to the question presented here. 


1122029.eps
226

3Section 1241(c) of the 1985 Act.

As noted in the 2003 DOJ opinion, the mere reference to the use of CCC to carry 

out a program does not supersede the limitations in section 11 of the CCC Charter 

Act. The enactment of the Food, Conservation, and Energy Act of 2008 (the ‘‘2008 

Act’’) again raises the question of the extent to which funds of CCC can be used 

to pay salaries and expenses in carrying out programs where the statute authorizing 

the program provides that CCC funds or authorities will be used with respect to 

such programs. Appendix 3 sets forth a comprehensive list of the provisions of the 

2008 Act that implicate the use of CCC funds in the conduct of programs. 

My office has consulted with OMB before issuance of this opinion and OMB concurs with our conclusions. 

Discussion: 

I. 2002 Act 

After enactment of the 2002 Act, a question arose with respect to the propriety 

of using CCC funds to pay for the technical assistance costs of the Natural Resources Conservation Service relating to several CCC-funded conservation programs. 

Section 1241(a) of the Food Security Act of 1985 (the ‘‘1985 Act’’) had been amended by the 2002 Act to authorize the Secretary to ‘‘use the funds, facilities, and authorities of the Commodity Credit Corporation to carry out’’ seven listed conservation programs. As noted at page 4 of the 2003 DOJ opinion, although these seven 

programs provided for the use of CCC funds for program activities, the provision 

of technical assistance using CCC funds was limited by section 11 of the CCC Charter Act:

We believe that section 1241(a) does not confer on the CCC a source of authority, independent of section 11, for funding technical assistance to the programs 

listed in section 1241(a).

Subsequently, Congress amended the 1985 Act to specify that the use of CCC 

funds to pay for technical assistance, as defined in section 1201(a)(25) of that Act 

would not constitute ‘‘an allotment or fund transfer from the Commodity Credit Corporation for purposes of the limit on expenditures for technical assistance imposed 

by section 11 of the Commodity Credit Corporation Charter Act (15 U.S.C. 714i)’’ 3

with respect to seven programs listed in section 1241(a) of that Act: 

1. The Conservation Reserve Program;

2. The Wetlands Reserve Program;

3. The Conservation Security Program;

4. The Farmland Protection Program;

5. The Grassland Reserve Program;

6. The Environmental Quality Incentives Program; and

7. The Wildlife Habitat Program.

The 2008 Act added the Conservation Stewardship Program to section 1241(a), 

and it is therefore treated the same as the seven programs originally enumerated. 

As a result of this Congressional action, CCC funds have been made available to 

pay salary and related costs in the administration of these eight programs. 

II. 2008 Act 

The 2008 Act contains approximately 30 references to programs that use CCC 

funds in their implementation (see Appendix 3). While the majority of the 2008 Act 

provisions that authorize the use of CCC funds are not independent of section 11, 

the following sections of that Act do provide such independent authority and, therefore, CCC funds may be used for administrative costs without regard to the limitations in section 11:

1. Section 1622—Section 1601 provides that the funds, facilities and authorities 

of CCC shall be used to carry out Title I of the 2008 Act and section 1622 further directs the Secretary of Agriculture to make available $50 million to the 

Farm Service Agency to carry out such title.

2. Section 2510—This section amends Title XII of the 1985 Act by adding a new 

section 12401 to authorize the establishment of the Agricultural Water Enhancement Program. Section 1240I(b) of the 1985 Act specifically provides that 

an agricultural water enhancement program shall be established ‘‘as a part of 

the environmental quality incentives program [EQIP].’’ Because EQIP is one of 

227

the eight programs subject to section 1241(c) of the 1985 Act, CCC funds may 

be used to pay for technical assistance expenses.

3. Section 2605—This section amends Title XII of the 1985 Act by adding a new 

section 1240Q to authorize the establishment of the Chesapeake Bay Watershed 

Program (the ‘‘CBWP’’). Section 1240Q(c) of the 1985 Act provides that: ‘‘The 

Secretary shall deliver the funds made available to carry out this section 

through applicable programs under this subtitle. . . .’’ The reference to ‘‘applicable programs under this subtitle’’ includes those eight programs listed above. 

Because the CBWP is not an independent program but simply an authorization 

to use additional funds of CCC to carry out delineated programs in the Chesapeake Bay Watershed, to the extent the CCC funds are used to carry out one 

of the seven listed conservation programs, CCC funds may be used to pay for 

technical assistance expenses.

4. Section 3106—This section amends section 3107 of the 2002 Act to provide 

that $84 million of CCC funds shall be used to administer the McGovern-Dole 

International Food for Education and Child Nutrition Program. Section 

3107(l)(3) of the 2002 Act provides that funds made available to carry out the 

program may be used to pay related administrative expenses.

5. Section 7410—This section amends section 7405 of the 2002 Act to provide 

that $18 million of CCC funds shall be used to carry out the Beginning Farmer 

and Rancher Development Program in FY 2009 and $19 million in each of the 

2010 through 2012 Fiscal Years. Section 7405(c)(7) of the 2002 Act provides that 

not more than four percent of the funds made available to carry out this program may be used for administrative expenses.

6. Section 9001(a)—This subsection completely revises Title IX of the 2002 Act. 

Included in this revision of Title IX is a new section 9008, containing the authorization for the Biomass Research and Development Board and the associated grant program, which is funded by CCC. The new section 9008(f)(3) of the 

2002 Act specifically authorizes the Secretary to use not more than four percent 

of the funds made available to carry out this program, including the CCC funds, 

for the administration of the authorized activities. 

III. Other Statutory Provisions 

Four additional statutory provisions pre-dating the enactment of the 2008 Act also 

warrant reference in this opinion:

1. Section 1469(a)(3) of the National Agricultural Research, Extension, and 

Teaching Policy Act of 1977;

2. Section 10417 of the Animal Health Protection Act;

3. Section 442 of the Plant Protection Act; and

4. Section 7405(c) of the 2002 Act.

We have determined previously that these four provisions provide authority independent of section 11 of the CCC Charter Act to use CCC funds for salaries and 

related expenses, and we do not amend that determination here. 

Section 1469(a)(3) of the National Agricultural Research, Extension, and Teaching 

Policy Act of 1977 authorizes the Secretary to retain up to four percent of amounts 

made available for agricultural research, extension, and teaching assistance programs under any Act for the administration of those programs. A similar provision 

is set forth in section 7405(c) of the 2002 Act, as amended by section 7410 of the 

2008 Act, with respect to the Beginning Farmer and Rancher Development Program. Section 10417 of the Animal Health Protection Act and section 442 of the 

Plant Protection Act provide for the transfer of funds otherwise available to the Secretary, including CCC funds, for use in eradicating animal and plant pests. 

Conclusion 

With respect to the HFRP and AMAP, although CCC funds may be used to pay 

for salaries and related expenses, the use of CCC funds for these expenses would 

be subject to the limitations of section 11 of the CCC Charter Act. 

Based upon the foregoing analysis, and consistent with the 2003 DOJ opinion, 

CCC funds may be used to pay for salaries and related expenses attendant to programs carried out by Federal and state agencies independent of section 11 only with 

respect to activities authorized by:

1. Section 1469(a)(3) of the National Agricultural Research, Extension, and 

Teaching Policy Act of 1977;

2. Section 10417 of the Animal Health Protection Act;

3. Section 442 of the Plant Protection Act;

228

1See Letter for Susan A. Poling, Associate General Counsel, General Accounting Office, from 

Philip J. Perry, General Counsel, Office of Management and Budget (Sept. 16, 2002). 

4. Section 1241(a) of the 1985 Act;

5. Section 1240I of the 1985 Act;

6. Section 1240Q of the 1985 Act.

7. Section 3107 of the 2002 Act;

8. Section 7405(c)(7) of the 2002 Act;

9. Section 9008 of the 2002 Act; and

10. Section 1622 of the 2008 Act.

This list is, of course, subject to change by Congress; but cannot be amended by 

regulation or other Administrative action. 

Legislative Changes 

If the relevant policymakers decide to seek a legislative change, we stand ready 

to assist with drafting language similar to that adopted in 2003 by Congress to authorize the use of CCC ‘‘program’’ funds for technical assistance costs associated 

with the seven listed programs in section 1241(a) of the 1985 Act. I have attached 

Appendix 4 as one example of an amendment that could be enacted to address this 

matter. 

APPENDIX 1

Sec. 11. COOPERATION WITH OTHER GOVERNMENT AGENCIES.—The Corporation 

may, with the consent of the agency concerned, accept and utilize, on a compensated 

or uncompensated basis, the officers, employees, services, facilities, and information 

of any agency of the Federal Government, including any bureau, office, administration, or other agency of the Department of Agriculture, and of any state, the District 

of Columbia, any territory or possession, or any political subdivision thereof. The 

Corporation may allot to any bureau, office, administration, or other agency of the 

Department of Agriculture or transfer to such other agencies as it may request to 

assist it in the conduct of its business any of the funds available to it for administrative expenses. The personnel and facilities of the Corporation may, with the consent 

of the Corporation, be utilized on a reimbursable basis by any agency of the Federal 

Government, including any bureau, office, administration, or other agency of the Department of Agriculture, in the performance of any part or all of the functions of 

such agency. After September 30, 1996, the total amount of all allotments and fund 

transfers from the Corporation under this section (including allotments and transfers for automated data processing or information resource management activities) 

for a fiscal year may not exceed the total amount of the allotments and transfers 

made under this section in Fiscal Year 1995. 

APPENDIX 2

January 3, 2003

Memorandum for Philip J. Perry, General Counsel, Office of Management 

and Budget

Re: Funding for Technical Assistance for Agricultural Conservation Programs

You have asked us to examine the sources and limits on funding for technical assistance provided for agricultural conservation programs listed in amended section 

1241(a) of the Food Security Act of 1985. See 16 U.S.C.A. 3841(a) (West, WESTLAW 

through Pub. L. 107–313). That provision instructs the Secretary of Agriculture to 

‘‘use the .funds, facilities, and authorities of the Commodity Credit Corporation 

[(‘CCC’)] to carry out,’’ these programs. You have asked us to determine (1) whether 

expenditures on technical assistance for these programs are subject to the annual 

limit that Congress has placed on aggregate transfers of CCC funds to other components of the Department of Agriculture (‘‘USDA’’) under section 11 of the Commodity Credit Corporation Charter Act (‘‘CCC Charter Act’’), 15 U.S.C. 714i (2000), 

and (2) whether the Secretary of Agriculture may draw upon USDA’s appropriation 

for Conservation Operations (‘‘CO’’) to fund technical assistance for these programs. 

Your Office has concluded that the section 11 cap applies to technical assistance 

expenditures for the conservation programs listed in section 1241(a) and that the 

Secretary of Agriculture may draw upon USDA’s CO appropriation to fund technical 

assistance for these programs.1 USDA has concurred in your conclusions on both 

229

2See Letter for Susan A. Poling, Associate General Counsel, General Accounting Office, from 

Nancy S. Bryson, General Counsel, U.S. Department of Agriculture (Sept. 16, 2002). 3See Letter for Senator Tom Harkin, Chairman, Senate Comm. on Agriculture, Nutrition and 

Forestry, from Nancy S. Bryson, General Counsel, U.S. Department of Agriculture (Sept. 24, 

2002) (quoting electronic message communicating the Congressional Budget Office’s conclusion 

that the section 11 ceiling remains ‘‘applicable to the transfers under section 1141(a)’’). 4See Letter for Senator Herb Kohl, Chairman, Subcom. on Agriculture, Rural Development, 

and Related Agencies, Senate Appropriation Comm.; Senator Thad Cochran, Ranking Minority 

Member, Subcom. on Agriculture, Rural Development, and Related Agencies, Senate Appropriation Comm.; and Representative Henry Bonilla, Chairman, Subcom. on Agriculture, Rural Development, FDA & Related Agencies, House Appropriations Comm. from Anthony H. Gamboa, 

General Counsel, U.S. General Accounting Office, Re: Funding for Technical Assistance for Conservation Programs Enumerated in Section 2701 of the farm bill, No. B–29124l (Oct. 8, 2002) 

(available at http://www.gao.gov) (‘‘GAO Letter’’). 5Subsections 1241(a)(1)–(3) instruct the Secretary to use CCC funds, without any dollar-denominated limit, to carry out the Conservation Reserve Program (‘‘CRP’’), 16 U.S.C.A. 3831–

3835a (West, WESTLAW through Pub. L. 107–313); the Wetlands Reserve Program (‘‘WRP’’), 

id. 3837–3837e; and the Conservation Security Program (‘‘CSP’’), id. 3838–3838c. 6Subsections 1241(a)(4)–(7) instruct the Secretary to use CCC funds, up to prescribed annual 

limits, to carry out the Farmland Protection Program (‘‘FPP’’), 16 U.S.C.A. 3837h–3837j (West, 

WESTLAW through Pub. L. 107–313); the Grassland Reserve Program (‘‘GRP’’), id. 3838n–

3838q; the Environmental Quality Incentives Program (‘‘EQIP’’), id. 3839aa–3839aa–9; and the 

Wildlife Habitat Incentives Program (‘‘WHIP’’), id. 3839bb–l. 7See 15 U.S.C. 714b(i) (authorizing CCC to borrow to finance its programs, subject to $30 billion limit on indebtedness). Borrowing from the United States Treasury under authority of section 714b(i) represents the principal source of CCC funding. The CCC repays the loans, thereby 

restoring its borrowing authority, using programmatic revenues (such as loan repayments by 

commodity producers) and annual appropriations. See e.g., Agriculture, Rural Development, 

Food and Drug Administration, and Related Agencies Appropriations Act, 2002, Pub. L. No. 

Continued

points.2 The Congressional Budget Office, addressing only the first point, has also 

concurred.3 The General Accounting Office (‘‘GAO’’), however, has reached contrary 

conclusions: it has determined that the section 11 ceiling does not apply and that 

the CO appropriation is not available.’’ 4

For the reasons set forth below, we conclude that the section 11 cap applies to 

technical assistance expenditures for the conservation programs listed in section 

1241(a) and that the Secretary of Agriculture may draw upon USDA’s CO appropriation to fund technical assistance for these programs. 

I. 

We first address whether the section 11 cap applies to technical assistance expenditures for the conservation programs listed in section 1241(a). 

A. 

In legislation enacted earlier this year, Congress substantially revised section 

1241 of the Food Security Act of 1985 concerning the use of funds transferred from 

the Commodity Credit Corporation (CCC) to finance agricultural conservation programs. See Farm Security and Rural Investment Act of 2002, Pub. L. No. 107–171, 

§ 2701, 116 Stat. 134, 278 (‘‘2002 Farm Bill’’), codified at 16 U.S.C.A. 3841 (West. 

WESTLAW through Pub. L. 107–313). Revised section 1241(a) instructs the Secretary of Agriculture, during Fiscal Years 2002 through 2007, to ‘‘use the funds, facilities, and authorities of the Commodity Credit Corporation to carry out [seven 

specified conservation programs] under subchapter IV [of title 16, chapter 58] (including technical assistance).’’ 16 U.S.C.A. 3841(a). For three of the seven specified 

programs, this authorization to spend CCC funds is not subject to any specific dollar 

limitation, although acreage and eligibility restrictions place some limit on potential 

spending.5 The remaining four, in contrast, are subject to annual spending limits 

specified in section 1241(a).6

The 2002 Farm Bill also revised section 1241 to add an express reference to the 

section 11 limit on the use of CCC funds to meet administrative expenses. Revised. 

section 1241(b) provides that nothing in the new provisions respecting CCC funding 

‘‘affects the limit on expenditures for technical assistance imposed by section 714i 

of Title 15 [i.e., section 11 of the CCC Charter Act].’’ 16 U.S.C.A. 3841(b) (West, 

WESTLAW through Pub. L. 107–313). 

The limit on expenditures that is explicitly preserved in this portion of section 

1241(b) restricts USDA uses of CCC funds. The CCC, a Federal corporation that is 

located within the USDA and managed by a Board of Directors under the supervision of the Secretary of Agriculture, is empowered to obtain funds through borrowing (under a $30 billion line of credit) as well as through direct appropriations 

from Congress.7 Section 11 of the CCC Charter Act authorizes the CCC to allot or 

230

107–76, 115 Stat. 704, 716–17, 729 (appropriating ‘‘such sums as may be necessary to reimburse 

the Commodity Credit Corporation for net realized losses sustained, but not previously reimbursed’’ and specific amounts for overhead expenses of the commodity export guarantee program). Direct appropriations for certain CCC programs, made available through the annual Congressional appropriations process, provide a secondary source of funding. See generally, U.S. 

General Accounting Office, Commodity Credit Corporation: Information on the Availability, Use, 

and Management of Funds, Rep. No. GAO/RCED–98–114, at 1–2 (April 1998) (CCC Funds Report) (describing CCC’s use or ’’line-of-credit’’ financing and direct appropriations). 8We are advised by your Office that under the statutory scheme, including the predecessor 

version of Section 1241, in effect before the 2002 Farm Bill was enacted, OMB and USDA were 

of the view that (or at least acted as if) transfer of CCC funds for technical assistance for EQIP 

and WHIP was independently authorized. Whether or not such a view was permissible under 

the previous statutory scheme, we do nor believe that that view should affect our construction 

of the revised section 1241. It is true that under one canon of construction ‘‘Congress is presumed to be aware of an administrative . . . interpretation of statute: and to adopt that interpretation when it re-enacts a statute without change.’’ Lorillard v. Pons, 434 U.S. 575, 580 

(1978), but that canon plainly does not apply where, as here, a statute has been revised rather 

than merely re-enacted. Further, we note that one critical respect in which section 1241 has 

been revised is the specification that the Secretary shall use the ‘‘authorities’’ of the CCC. 

transfer ‘‘to any bureau, office, administration or other agency of the Department 

of Agriculture . . . any of the funds available to [the CCC] for administrative expenses.’’ 15 U.S.C. 714i, including funds that the CCC raises through borrowing. In 

particular, the section 11 cap provides that: 

After September 30, 1996, the total amount of all allotments and fund transfers 

from the Corporation under this section (including allotments and transfers for 

automated data processing or information resource management activities) for 

a fiscal year may not exceed the total amount of the allotments and transfers 

made under this section in Fiscal Year 1995.

Id. According to OMB’s figures, section 11 allotments and transfers for administrative expenses during Fiscal Year 1995 totaled $56 million. 

B. 

Your Office and GAO have offered competing textual analyses of the question 

whether the section 11 cap applies to technical assistance expenditures for the conservation programs listed in section 1241(a). You both agree that the section 11 cap 

applies only to allotments and fund transfers made by CCC under its section 11 authority. The pivotal point on which your Office and GAO disagree is whether section 

1241(a) gives CCC a source of authority, independent of section 11, for funding technical-assistance to these programs. GAO maintains that section 1241(a) provides 

CCC independent authority; that the technical assistance that CCC funds for the 

conservation programs listed in section 1241(a) is pursuant to this independent authority; and that the section 11 cap therefore does not come into play. Your office, 

by contrast, maintains that section 11 is the sole source of authority for the CCC 

to fund technical assistance by USDA entities for farm conservation programs. 

We believe that section 1241(a) does not confer on the CCC a source of authority, 

independent of section 11, for funding technical assistance to the programs listed 

in section 1241(a). We note in particular that section 1241(a) states that ‘‘the Secretary shall use the funds, facilities, and authorities of the [CCC] to carry out’’ these 

programs. Rather than vesting new authority in CCC, section 1241(a) thus states 

plainly that the Secretary of Agriculture shall use the CCC’s existing ‘‘authorities’’ 

to provide technical assistance to these programs. Beyond invoking section 1241(a), 

GAO does not allege any other authority that CCC has, apart from section 11, for 

funding technical assistance to farm programs. Nor are we aware of any such authority that would operate separately from section 11. We therefore determine that 

insofar as the Secretary is using CCC’s authorities to fund such technical assistance, 

she is relying on CCC’s section 11 authority. 

Our textual analysis is reinforced by section 1241(b), which provides that 

‘‘[n]othing in [section 1241] affects the limit on expenditures for technical assistance 

imposed by [section 11]. ’’ 16 U.S.C.A. § 1241(b). Before the 2002 Farm Bill was enacted, the section 11 cap indisputably applied to technical-assistance funds provided 

to at least two of the programs (CRP and WRP) now listed in section 1241(a).8 If, 

as GAO contends, the effect of section 1241(a) were to remove technical-assistance 

funding of these two programs from the section 11 cap, it would be highly peculiar 

to describe this escape from the section 11 cap merely as not ‘‘affect[ing] the limit 

on expenditures for technical assistance imposed by [section 11].’’ It would be far 

more natural and straightforward for any reference to the section 11 cap to state 

231

9GAO argues that the legislative history of the 2002 Farm Bill supports its reading of section 

1241(a). Because we do not believe that GAO’s reading is permitted by the text of section 

1241(a), we need not consider its account of the legislative history. See, e.g., Barnhill v. Johnson,

503 U.S. 393, 401 (1992). 

simply that expenditures for technical assistance under section 1241 are not subject 

to the section 11 cap. 

By contrast, section 1241(b) is sensibly phrased under our reading of section 

1241(a). With respect to four of the seven programs that it lists, section 1241(a) sets 

forth specific amounts, totaling in the hundreds of millions of dollars each fiscal 

year, that the Secretary is to spend. Because section 1241(a) makes clear that the 

funds expended may be for purposes ‘‘including the provision of technical assistance,’’ section 1241(a), read in isolation, might suggest that, irrespective of section 

11, any portion of these hundreds of millions of dollars could be used for technical 

assistance. Section 1241(b) instead succinctly makes clear that the section 11 cap 

continues to apply. 

We therefore conclude that the section 11 cap applies to technical assistance expenditures for the conservation programs listed in section 1241(a).9

II. 

We now consider whether the Secretary of Agriculture may draw upon USDA’s 

CO appropriation to fund technical assistance for the programs listed in section 

1241(a). 

A. 

Public Law 107–76 contains the Fiscal Year 2002 appropriation for the CO account. It provides in relevant part:

‘‘For necessary expenses for carrying out the provisions of the Act of April 27, 

1935 (16 U.S.C. 590a–f), including preparation of conservation plans and establishment of measures to conserve soil and water (including farm irrigation and 

land drainage and such special measures for soil and water management as 

may be necessary to prevent floods and the siltation of reservoirs and to control 

agricultural related pollutants); operation of conservation plant materials centers; classification and mapping of soil; dissemination of information; acquisition 

of lands; water, and interests therein for use in the plant materials program 

by donation, exchange, or purchase at a nominal cost not to exceed $100 pursuant to the Act of August 3, 1956 (7 U.S.C. 428a); purchase and erection or alteration or improvement of permanent and temporary buildings; and operation and 

maintenance of aircraft, $779,000,000, to remain available until expended (7 

U.S.C. 2209b), of which not less than $8,515,000 is for snow survey and water 

forecasting, and not less than $9,849,000 is for operation and establishment of 

the plant materials centers, and of which not less than $21,500,000 shall be for 

the grazing lands conservation initiative. . . .’’

115 Stat. at 117. This same authority for the CO appropriation applies to the continuing appropriations for Fiscal Year 2003. See Pub. L. 107–229, §§ 101(l), 103, 116 

Stat. 1465–66 (providing continuing appropriations for Fiscal Year 2003); Pub. L. 

107–294, 116 Stat. 2062 (extending continuing appropriations through January 11, 

2003). 

B. 

GAO maintains that the CO appropriation identifies the specific programs that 

it is available to fund and that it does not include the programs listed in section 

1241(a). It also argues that section 1241(a)’s directive that ‘‘the Secretary shall use 

the funds, facilities, and authorities of the [CCC] to carry out the [listed] programs’’ 

should be read to preclude the Secretary from using other funds in support of these 

programs. GAO contends that both a Senate floor colloquy on the 2002 Farm Bill 

and the history of funding of the WRP support its position. See GAO Letter, at 8–

11. 

Your Office maintains instead that the CO appropriation is sufficiently broad to 

authorize funding technical assistance for the conservation programs listed in section 1241(a). You argue further that the legislative history of the CO appropriation 

supports your reading. See OMB Letter, at 2–4. You find further support in what 

you characterize as USDA’s ‘‘longstanding regular practice of using the CO account 

to fund conservation technical assistance.’’ Id. at 4. 

We believe that the CO appropriation may be used to fund technical assistance 

for the conservation programs listed in section 1241(a). The CO appropriation provides funds ‘‘for carrying out the provisions of the Act of April 27, 1935 (16 U.S.C. 

590a–f).’’ Although the programs listed in section 1241(a) are not specifically identiVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00243 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
232

4While funds to cover the losses incurred under this program come directly from the Treasury 

of the United States, expenses related to the administration of the program are within the provisions of section 11 of the CCC Charter Act. 

fied in 16 U.S.C. §§ 590a–590f (2000), section 590a(3) ‘‘authorizes the Secretary to 

cooperate or enter into agreements with, or to furnish financial or other aid to, any 

agency, governmental or otherwise, or any person, subject to such conditions as he 

may deem necessary, for the purposes of this chapter [(chapter 3B)].‘‘ Id. § 590a(3) 

(emphasis added). Further, the express purposes of chapter 3B include ‘‘(1) preservation and improvement of soil fertility; (2) promotion of the economic use and conservation of land; (3) diminution of exploitation and wasteful and unscientific use 

of national soil resources; (4) the protection of rivers and harbors against the results 

of soil erosion in aid of maintaining the navigability of waters and water courses 

and in aid of-flood control; . . . [and] (6) prevention and abatement of agriculturalrelated pollution.’’ Id. § 590g(a) (‘‘declar[ing] . . . the purposes of this chapter’’). 

Therefore, insofar, as the Secretary determines that providing technical assistance 

for the conservation programs listed in section 1241(a) would serve any of these purposes, she may use the CO appropriation to fund such technical assistance. 

We do not read section 1241(a)’s directive that ‘‘the Secretary shall use the funds, 

facilities, and authorities of the [CCC] to carry out the [listed] programs’’ to foreclose 

the Secretary from using the CO appropriation to fund technical assistance for these 

programs. Section 1241(a) does not state that the Secretary shall use only the funds, 

facilities, and authorities of the CCC to carry out these programs. In short, we see 

no statutory bar to the Secretary’s using other funds, in addition to the CCC’s, to 

carry out these programs. 

Because we believe that the text of the CO appropriation clearly authorizes the 

Secretary to use the CO account to provide technical assistance for the conservation 

programs listed in section 1241(a) to promote any of the purposes of chapter 3B, we 

need not address the competing legislative-history arguments that your Office and 

GAO present. Likewise, we see no reason to explore the conflicting accounts of the 

history of funding of the listed programs: even if GAO is correct in its assertion that 

the WRP was not funded out of the CO appropriation before the predecessor version 

of section 1241 was enacted in 1996, that would not bear meaningfully on the question whether the CO appropriation could have been used to fund WRP. 

* * * * *

In sum: The section 11 cap applies to technical assistance expenditures for the 

conservation programs listed in section 1241(a). The Secretary of Agriculture may 

draw upon USDA’s CO appropriation to fund technical assistance for these programs.

M. EDWARD WHELAN III,

Principal Deputy Assistant Attorney General.

APPENDIX 3

Title I—Commodity Programs

Sec. 1601. Administration Generally. 

Sec. 1622. Implementation.

Title II—Conservation

Sec. 2101. Extension of Conservation Reserve Program. 

Sec. 2201. Wetlands Reserve Program. 

Sec. 2301. Conservation Stewardship Program. 

Sec. 2401. Farmland Protection. 

Sec. 2403. Grasslands Reserve Program. 

Sec. 2501. Environmental Quality Incentives Programs. 

Sec. 2510. Agricultural Water Enhancement Program. 

Sec. 2605. Chesapeake Bay Watershed Program. 

Sec. 2606. Voluntary Public Access and Habitat Incentive Program. 

Sec. 2706. Delivery of Technical Assistance. 

Sec. 2801. Agricultural Management Assistance Program. 

Sec. 2803. Small Watershed Rehabilitation Program.

Title III—Trade

Sec. 3016. Food for Peace. 

Sec. 3101. Export Credit Guarantee Program.4

Sec. 3102. Market Access Program. 

Sec. 3104. Cooperator Program. 


1122030.eps
233

5This provision mandated a one time transfer of funds to the Department of Commerce from 

CCC on May 1, 2008. Accordingly, once transferred, these funds lost their identity as funds of 

CCC and are subject to the provisions otherwise applicable to section 312(a) of the MagnusonStevens Fishery Conservation and Management Act.

Sec. 3105. Food for Progress. 

Sec. 3106. McGovern-Dole International Food for Education and Child Nutrition 

Program. 

Sec. 3203. Technical Assistance for Specialty Crops. 

Sec. 3204. Emerging Markets. 

Sec. 3206. Local and Regional Food Aid Procurement Projects.

Title IV—Nutrition

Sec. 4231. Senior Farmers’ Market Nutrition Program. 

Sec. 4307. Survey of Food Purchased by School Food Authorities. 

Sec. 4406. Re-Authorization of Federal Food Assistance Programs.

Title VI—Rural Development

Sec. 6022. Rural Micro Entrepreneur Assistance Program. 

Sec. 6029. Funding of Pending Rural Development Loan and Grant Applications. 

Sec. 6202. Value-Added Agricultural Market Development Program Grants.

Title VII—Research and Related Matters

Sec. 7206. Organic Agriculture Research and Extension Initiative. 

Sec. 7311. Specialty Crop Research Initiative. 

Sec. 7410. Beginning Farmer and Rancher Development Program.

Title VIII—

Sec. 8205. Healthy Forest Reserve Program.

Title IX—

Sec. 9001. Biobased Markets Program. 

Biorefinery Assistance. 

Repowering Assistance. 

Bioenergy Program for Advanced Biofuels. 

Biodiesel Fuel Education Program. 

Rural Energy for America Program. 

Biomass Research and Development. 

Feedstock Flexibility Program for Bioenergy Producers. 

Biomass Crop Assistance Program.

Title X—

Sec. 10106. Farmers’ Market Promotion Program. 

Sec. 10109. Specialty Crop Block Grants. 

Sec. 10201. Plant Pest and Disease Management and Disaster Prevention. 

Sec. 10202. National Clean Plant Network. 

Sec. 10301. National Organic Certification Cost-Share. 

Sec. 10302. Organic Production and Market Data Initiatives. 

Sec. 10404. Market Loss Assistance for Asparagus Producers.

Title XI—

Sec. 11009. National Sheep Industry Improvement Center.

Title XII—

Sec. 12034. Fisheries Disaster Assistance.5

Title XIV—

Sec. 14004. Outreach and Technical Assistance for Socially Disadvantaged Farmers or Ranchers. 

Sec. 14012. Determination on Merits of Pigford Claims. 

APPENDIX 4

Sec. 11. Cooperation With Other Government Agencies.—

(a) IN GENERAL.—

(1) ACCEPTANCE OF SERVICES.—Subject to the limitations under paragraphs 

(2) and (4), and excluding subsections (b) and (c), the Corporation, on behalf of 

an agency of the Department of Agriculture (Department), may accept and utilize, on a compensated or uncompensated basis, services, information, facilities, 

officers, or employees provided by—

(A) another bureau, office, division, agency, or mission area of the Department of Agriculture; 

234

(B) another agency of the Federal Government; or 

(C) a political unit such as a state, the District of Columbia, a territory 

or possession, or a political subdivision of such political unit.

(2) PRIOR AUTHORIZATION.—Prior to receiving funding or other assistance 

under this subsection, an agency of the Department shall have statutory authorization to receive services, information, facilities, officers, or employees covered under paragraph (1) through the Corporation. 

(3) ADMINISTRATIVE EXPENSES.—The Corporation may transfer funds of the 

Corporation to any unit of Federal Government or political unit to assist the 

governmental unit with administrative expenses incurred in the conduct of its 

assistance to the Corporation. The total amount of funds that may be transferred under this section (including transfers for automated data processing or 

information resource management activities) for a fiscal year may not exceed 

$57,000,000.

(b) TRANSFERS.—Notwithstanding subsection (a), the Secretary may, transfer 

funds of the Corporation in accordance with:

(1) A plant or pest emergency under section 442 of the Plant Protection Act 

(7 U.S.C. 7772); 

(2) A livestock emergency under section 10417 of the Animal Health Protection Act (7 U.S.C. 8316); 

(3) Section 1469(a)(3) of the National Agricultural Research, Extension, and 

Teaching Policy Act of 1977 (7 U.S.C. 3315); 

(4) Section 1240I of the Food Security Act of 1985 (16 U.S.C. 3839aa–9); 

(5) Section 1240Q of the Food Security Act of 1985 (16 U.S.C. 3839bb–4); 

(6) Section 1241(a) of the Food Security Act of 1985 (16 U.S.C. 3841(a)); 

(7) Section 7405(c)(7) of the Farm Security and Rural Investment Act of 2002 

(Pub. L. 107–171); 

(8) Section 9008 of the Farm Security and Rural Investment Act of 2002 (Pub. 

L. 107–171); and 

(9) Section 1622 of the Food, Conservation, and Energy Act of 2008 (Pub. L. 

110–246).

(c) ADMINISTRATIVE EXPENSES.—Funds made available under subsection (b) may, 

to the extent authorized in such provisions, be used to pay expenses incurred in the 

administration of such activities. 

Insert 2

Mr. COSTA. Can you clarify the link between the pest and the disease challenges, how in working with your partners in USDA possible trade disruptions 

and the potential economic losses that would occur to our agricultural producers 

are addressed and hopefully minimized? 

Ms. BECH. Well, I think if I can clarify, if I might ask a clarifying question. 

Are you asking what we are doing with the other USDA agencies in addressing 

the disease impacts on the economics? Then we are providing, again, the assessments that go into that economic analysis and working with our Foreign Agriculture Service to address those issues. 

Mr. COSTA. Do you have any explanation as to why only 1⁄3 of the SPS certificates or trade concerns have been addressed? 

Ms. BECH. Well, I could get further information on it.

APHIS does work closely with its Federal partners in addressing any SPS issues 

that arise. The U.S. Trade Representative publishes an annual ‘‘Report on Sanitary 

and Phytosanitary Measures’’ that describes significant barriers to U.S. food and 

farm exports arising from measures that foreign governments apply on the grounds 

that they are necessary to protect human, animal, or plant life or health from risks 

arising from the entry or spread of pests, from plant- or animal-borne pests or diseases, or from additives, contaminants, toxins, or disease-causing organisms in 

foods, beverages, or feedstuffs. 

APHIS and our Federal partners will continue to work with colleagues from 

across the U.S. Government, as well as interested stakeholders, to encourage governments around the world to remove their unwarranted SPS rules to ensure a level 

playing field abroad for U.S. ranch and farm products. 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE

1. Program Name 

Specialty Crop Block Grant Program. 

235

2. Subprograms/Department Initiatives 

Not applicable. 

3. Brief History 

The Specialty Crops Competitiveness Act of 2004 (P.L. 108–465; 7 U.S.C. 1621 

note) authorized appropriations for Fiscal Years 2005–09 to provide assistance for 

specialty crops to all 50 states, the District of Columbia, and the Commonwealth 

of Puerto Rico. Specialty crop block grant funds are meant to enhance the competitiveness of specialty crops. Specialty crops were defined as fruits and vegetables, 

tree nuts, dried fruits, and nursery crops (including floriculture). 

From FY 2006 through FY 2008, the program was funded through appropriations 

which were made available until expended and awarded in the year subsequent to 

the appropriation. The FY 2008 appropriation made $8.44 million available until expended for Specialty Crop Block Grants, which were awarded in FY 2009. After all 

the eligible states submitted their applications by the established deadline of March 

5, 2009, fifty-two U.S. states and territories were awarded SCBGP funds. 

The FY 2008 Farm Bill, Sec. 10109, extended the Specialty Crop Block Grant program (SCBGP–FB) through FY 2012 and provided Commodity Credit Corporation 

funding at the following levels: $10 million in FY 2008, $49 million in FY 2009, and 

$55 million for each of Fiscal Years 2010–2012. These funds are available on an annual basis and must be obligated in the current year. The Act also amended the 

definition of specialty crops by adding horticulture; and added Guam, American 

Samoa, the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana 

Islands to the list of ‘‘states’’ eligible to apply for grants. State grants for each fiscal 

year are a minimum of $100,000 or 1⁄3 of 1 percent of the total amount of available 

funding. AMS completed rulemaking on these farm bill changes with publication of 

the final rule in the Federal Register on March 27, 2009. The final rule requires 

state departments of agriculture to describe their outreach efforts to specialty crop 

producers, including socially disadvantaged and beginning farmers; and to describe 

their efforts to conduct a competitive process to ensure maximum public input and 

benefit. 

4. Purpose/Goals 

The purpose of the Specialty Crop Block Grant Program (SCBGP) is solely to enhance the competitiveness of specialty crops. Specialty crops are defined as ‘‘fruits, 

vegetables, tree nuts, dried fruits, horticulture, and nursery crops (including floriculture).’’

5. Success in Meeting Programmatic Purpose/Goals 

To date, the grant program has awarded over $110 million to fund 2,500 projects 

that benefit the specialty crop industry in all 50 states, the District of Columbia, 

American Samoa, Guam, the Commonwealth of Puerto Rico, and the Commonwealth of the Northern Mariana Islands. These projects have particularly enhanced 

specialty crop efforts in education, research, marketing and promotion, production, 

pest and plant health, and food safety.

6. Annual Budget Authority (FY 2002–FY 2011) 

Fiscal Year No-Year Budget Authority 

($ in thousands) 

Farm Bill Budget

Authority ($ in thousands) 

2006 $6,930 —

2007 6,930 —

2008 8,400 $10,000

2009 — 49,000

2010 — 55,000

2011 — 55,000

7. Annual Outlays (FY 2002–FY 2011) 

Fiscal Year 

Appropriated No-Year

Annual Outlays

($ in thousands) 

Farm Bill Annual Outlays 

($ in thousands) 

2006 — —

2007 $5,147 —

236

7. Annual Outlays (FY 2002–FY 2011)—Continued

Fiscal Year 

Appropriated No-Year

Annual Outlays

($ in thousands) 

Farm Bill Annual Outlays 

($ in thousands) 

2008 8,412 —

2009 7,744 $3,358

2010 44 14,404

2011 YTD 103 19,511

Funds are expended over the lifetime of the grant, typically around 3 years, as the 

grantee incurs costs on the projects.

8. Annual Delivery Cost (FY 2002–FY 2011)

SCBG Farm Bill Funds—Delivery Costs ($ in thousands) 

FY 2008 FY 2009 FY 2010 FY 2011 Est. 

Program Oversight — $328 $637 $667

Staff Years — 3 4 4

Program oversight for Specialty Crop Block Grants was not tracked separately 

until FY 2009.

9. Eligibility Criteria 

The agencies commissions or departments responsible for agriculture within the 

50 states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands are eligible to apply for grant funds directly to the USDA. States may 

have specific or additional application requirements such as: funding priorities, 

deadlines, applicant eligibility criteria, project duration, funding restrictions and 

maximum and minimum grant awards. 

10. Utilization (Participation) Data 

The Specialty Crop Block Grant Program is authorized to distribute funds to the 

56 eligible entities. In FY 2010, all 50 states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, and the U.S. Virgin Islands applied for and received 

funding for 825 projects meant to enhance the competitiveness of specialty crops. 

11. Duplication or Overlap with Other Programs 

The purpose of the Specialty Crop Block Grant Program is to enhance the competitiveness of specialty crops (fruits, vegetables, tree nuts, floriculture and horticulture). A grant program that has a similar purpose is the Specialty Crop Research 

Initiative, which was established to solve critical specialty crop industry issues 

through research and extension activities. 

Each project submitted to the USDA is reviewed to avoid duplication with other 

Federal and state grant programs. In the event that a project has been submitted 

to other Federal and/or state grant programs, the Specialty Crop Block Grant Program requires that the project indicate how Specialty Crop Block Grant Program 

funding will supplement and not duplicate or overlap the purpose of the other funding. 

12. Waste, Fraud, and Abuse 

No reports or findings of waste, fraud and abuse have occurred or been published. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

National Organic Program (NOP). 

2. Subprogram/Department Initiative 

Not applicable. 

237

3. Brief History 

The Organic Foods Production Act (OFPA) of 1990 required USDA to develop national standards for organically produced agricultural products to assure consumers 

that agricultural products marketed as organic meet consistent, uniform standards. 

Farms and handlers of organic foods must be certified by a state or private agency 

that has been accredited by USDA. All agricultural products sold, labeled, or represented as organic in the United States must be in compliance with these regulations. The NOP’s objective is to enforce the mandated requirements. 

To comply with statutory requirements, and meet industry demands, NOP activities consist of the following:

• Develop new standards to accommodate requests from the organic industry;

• Enforce compliance and conduct audits to maintain labeling credibility;

• Operate and update website content, to keep certifying agents and consumers 

informed with the latest developments;

• Respond to public requests for information in a timely manner;

• Provide accreditation of certifying agents;

• Oversee the certifying agents, including foreign-based agents;

• Ensure uniform regulatory decisions by the certifying agents; and

• Investigate complaints of organic standard violations

NOP is responsible for ensuring that organically produced products meet consistent standards. To accomplish that, NOP accredits and ensures the compliance 

of 100 domestic and foreign Accredited Certifying Agents (ACAs). Theses ACAs certify that organic operations are in compliance with USDA standards (regulations). 

Proper training is essential for certifying agents to ensure that regulatory decisions 

are uniform regarding the correct application of the standards. 

4. Purpose/Goals 

The NOP develops, implements, and administers national production, handling, 

and labeling standards in accordance with the Organic Foods Production Act 

(OFPA) of 1990 and regulations in Title 7, Part 205 of the Code of Federal Regulations. OFPA gives NOP the authority to respond to site-specific conditions by integrating cultural, biological, and mechanical practices that foster cycling of resources, 

promote ecological balance, and conserve biodiversity. 

5. Selected Examples of Recent Progress 

• On February 17, 2010, the NOP published the long-awaited access to pasture 

rule to clarify feed and living conditions for livestock production that would 

qualify their milk and meat for USDA organic certification. The rule establishes 

enforceable pasture practice standards to satisfy consumer expectations that ruminant livestock animals graze on pasture during grazing season and are not 

confined.

• In March 2010, the Office of Inspector General (OIG) published an audit report 

on the NOP which recommended that the program further improve administration and strengthens management controls to ensure more effective enforcement 

of program requirements. The report indicated the need to strengthen oversight 

of certifying agents and organic operations to ensure that organic products are 

consistently and uniformly meeting NOP standards. The NOP has completed 13 

out of 14 corrective actions identified in the OIG audit.

• The NOP developed a quality management system and a Quality Manual to 

align the program’s accreditation program with international requirements outlined in ISO 17011. Furthermore, the program initiated a peer review process 

to have its accreditation program assessed by the National Institute of Standards and Technology for compliance with ISO 17011.

• On September 1, 2010, the NOP published the inaugural edition of the NOP 

Program Handbook, designed for those who own, manage, or certify organic operations by providing guidance about the national organic standards and instructions that outline best program practices.

• In October 2010, the NOP published draft guidance on compost and 

vermicompost in organic crop production; wild crop harvesting; outdoor access 

for organic poultry; commingling and contamination prevention in organic production and handling; and use of chlorine materials in organic production and 

handling.

238

• The NOP published a number of rules on the National List of Allowed and Prohibited Substances including materials sunsetting in 2012; adding tetracycline 

and sulfurous acid to the National List; and other National List substances.

• The NOP developed new training seminars on liquid fertilizers, access to pasture, adverse actions procedures, labeling, certification, complaint handling, 

wine labeling, and enforcement procedures. The NOP provided training in Germany, Ghana, California, Colorado, Georgia, New York and Wisconsin.

• The NOP recently held public meetings of the National Organic Standards 

Board in Davis, California and Madison, Wisconsin.

• The NOP established a complaint database to improve the handling of complaints to ensure they are handled in an effective and timely manner.

• Conducted on-site reviews of recognition agreements currently in place with the 

governments of Denmark and Israel.

6. Annual Budget Authority (FY 2002–FY 2011) 

Fiscal Year Budget Authority

($ in thousands) 

2002 $1,640

2003 1,494

2004 1,969

2005 1,975

2006 1,993

2007 2,001

2008 3,127

2009 3,867

2010 6,967

2011 6,919

7. Annual Outlays (FY 2002–FY 2011) 

Fiscal Year Budget Outlays

($ in thousands) 

2002 $1,384

2003 1,341

2004 1,918

2005 1,990

2006 1,807

2007 1,549

2008 2,871

2009 3,298

2010 5,736

2011 YTD 3,375

Explanation: The budget authority may be different from 

outlays due to timing of payments and the accounting process.

239

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in thousands) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Est. 

National Organic Program 1,493 1,413 1,983 1,955 1,883 1,897 3,000 3,575 6,244 6,387Indirect Costs 134 111 156 157 159 160 250 309 517 532

Total Costs 1,627 1,524 2,139 2,112 2,042 2,057 3,250 3,884 6,761 6,919Staff Years 11 13 13 11 13 13 14 19 28 32

Program Indirect costs as reported in the Explanatory Notes. 

9. Eligibility Criteria

Not applicable to this program.

10. Utilization (Participation) Data

Certified Organic Operations:• 27,000 worldwide• Approximately 2⁄3 of USDA certified organic operations are located in the U.S.; 1⁄3 are located in other countries

Acreage: reporting of organic acreage is currently not required by regulations. The USDA Economic Research Service estimated that 

U.S. producers dedicated approximately 4.8 million acres of farmland—2.7 million acres of cropland and 2.1 million acres of rangeland and pasture—to organic production systems in 2008.

11. Duplication or Overlap with Other Programs

There is no duplication with other programs. Certifying agents accredited by the National Organic Program certify eligible agricultural 

processing and handling activities, both domestically and internationally, upon request.

12. Waste, Fraud and Abuse

NOP’s Compliance & Enforcement Division (C&E) is responsible for processing and investigating complaints alleging violations of NOP 

regulations; conducting proactive compliance and outreach activities; and enforcing organic production, handling, and labeling standards. 

240

The NOP is increasing enforcement activities here in the United States and monitoring recognition agreements with foreign countries. The NOP conducted assessments in Egypt, Israel, Hungary, Denmark, China and Ghana. AMS auditors have 

also conducted organic audits in Argentina, Mexico, Costa Rica, Guatemala, Australia, Italy, Germany, and Bolivia. Certified organic operations that are found in 

noncompliance of the NOP organic standards may have their certification suspended 

or revoked. Civil penalties of up to $11,000 per violation are being used for willful 

violations of the standards. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

National Organic Certification Cost-Share Program. 

2. Subprogram/Department Initiative 

National Organic Program/2008 Farm Bill. 

3. Brief History 

The National Organic Certification Cost Share Program (NOCCSP) is open to all 

state agencies in all 50 states, the District of Columbia and the Commonwealth of 

Puerto Rico, Guam, American Samoa, the United States Virgin Islands, and the 

Commonwealth of the Northern Mariana Islands. 

The NOCCSP is authorized under 7 U.S.C. 6523. The 2002 Farm Bill provided 

$5 million for this program. Funding was exhausted before the 2008 Farm Bill made 

additional funds available. Section 10301 of the Food, Conservation and Energy Act 

of 2008 mandated $22 million for the program from CCC funding available until expended. The Act authorizes the Department to provide certification cost-share assistance to producers and handlers of organic agricultural products in participating 

states who receive certification or continuation of certification from a USDA accredited certifying agent. Assistance is provided through participating states. 

4. Purpose/Goals 

Funds under this program are made available to all 50 states, all U.S. Territories, 

the District of Columbia, and Puerto Rico to assist producers and handlers of agricultural products in obtaining certification under the Organic Foods Production Act 

of 1990. Payments are limited to 75 percent of an individual producer or handler’s 

certification costs up to a maximum of $750 annually. 

5. Success in Meeting Programmatic Purpose/Goals 

In FY 2010, nearly $4.8 million was allocated to states to partially reimburse producers and handlers for the cost of organic certification through the National Organic Certification Cost Share Program. The state agencies are responsible for dispersing the allocated funds to producers and handlers. We estimate that these funds 

can assist over 8,000 certified organic operations. Recent efforts by the NOP to increase outreach and training have resulted in significant growth, with at least ten 

states requesting additional funds to meet their unexpected demand. 

6. Annual Budget Authority (FY 2002–FY 2011) 

• $5 million authorized by the 2002 Farm Bill

• $22 million authorized by the 2008 Farm Bill

Fiscal Year Budget Authority

($ in thousands) 

2002 $5,000

2003 —

2004 —

2005 —

2006 —

2007 —

2008 $22,000

2009 —

2010 —

2011 —

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7. Annual Outlays (FY 2002–FY 2011) 

Fiscal Year Budget Outlays

($ in thousands) 

2002 —

2003 $1,820

2004 $1,415

2005 $222

2006 $967

2007 $342

2008 —

2009 $3,446

2010 $4,182

2011 YTD $3,412

Explanation of Variance: To ensure the availability of resources through 2012, a portion of this one-time no-year funding has been made available each fiscal year.

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in thousands) 

FY 2008 FY 2009 FY 2010 FY 2011 Est. 

Program Oversight — $149 $136 $223

Staff Years — 1 1 1

For FY 2002–2007 program oversight was not tracked separately. 

9. Eligibility Criteria 

Producers and handlers who have received certification or a renewal of certification from an accredited certifying agent (ACA) are eligible to participate. 

Certification is the process where a producer or handler is approved by an Accredited Certifying Agent as being in compliance with the NOP regulations and is then 

authorized to sell, label, or represent products as being ‘‘certified organic’’. 

10. Utilization (Participation) Data 

NOCCSP:

• 2008: 4,966 participants

• 2009: 5,436 participants

• 2010: 6,128 participants

• 2011 year to date: 1,341 participants

» (final figures will not be available until January 2012; 2⁄3–3⁄4 of participants 

usually sign up in the fourth quarter of the fiscal year) 

11. Duplication or Overlap with Other Programs 

The U.S. Department of Agriculture (USDA) administers two cost-share programs 

to defray the costs of organic certification. The programs are administered by the 

USDA Agricultural Marketing Service (AMS) National Organic Program (NOP). 

The AMA Program authorizes cost-share assistance to producers of organic agricultural products in states that have a historically low participation rate in the Federal Crop Insurance Program: Connecticut, Delaware, Hawaii, Maine, Maryland, 

Massachusetts, Nevada, New Hampshire, New Jersey, New York, Pennsylvania, 

Rhode Island, Utah, Vermont, West Virginia, and Wyoming. Conversely, the 

NOCCSP is open to state agencies in all 50 the District of Columbia and the Commonwealth of Puerto Rico, Guam, American Samoa, the United States Virgin Islands, and the Commonwealth of the Northern Mariana Islands. In addition, the 

NOCCSP provides cost-share assistance to both producers and handlers. 

The NOCCSP and the AMA are the only Federal programs which provide financial assistance to defray the cost of organic certification. To reduce possible overlap 

between AMA and NOCCSP, producers participating in the AMA program are not 

eligible to participate in the producer portion of the national program. 

12. Waste, Fraud and Abuse 

No reports or finding of fraud or abuse have occurred or been published. 

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13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Farmers Market Promotion Program (FMPP). 

2. Subprograms/Department Initiatives 

Not applicable. 

3. Brief History 

The Farmers Market Promotion Program was created by the 2002 Farm Bill (Section 10605) which amended the Farmer-to-Consumer Direct Marketing Act of 1976 

(7 U.S.C. 3005). This program provides non-construction grants that target improvements and expansion of domestic farmers’ markets, roadside stands, communitysupported agriculture programs, agri-tourism activities, and other direct producerto-consumer market opportunities. That Act authorized appropriations for the program but did not provide funding. From Fiscal Year (FY) 2006 to 2008, appropriations of $1 million were made available each year for this program. The 2008 Farm 

Bill further amended the Farmer-to-Consumer Direct Marketing Act of 1967 and 

provided funding from Commodity Credit Corporation (CCC) for Fiscal Years 2008–

2012: $3 million in FY 2008, $5 million for each of FYs 2009 and 2010, and $10 

million each year of FYs 2011 and 2012. 

4. Purpose/Goals 

The primary objective of the FMPP program is to help eligible entities improve 

and expand domestic farmers markets, roadside stands, community-supported agricultural programs, agri-tourism activities, and other direct producer-to-consumer 

market opportunities. Eligible entities include agricultural cooperatives, producer 

networks, producer associations, local governments, nonprofit organizations, public 

benefit corporations, economic development corporations, regional farmers’ market 

authorities, and tribal governments. 

5. Success in Meeting Programmatic Purpose/Goals 

In the past 3 years, incoming applications for FMPP grants have increased with 

available funding. In Fiscal Year 2011, $10 million is available for the grant program. Some of the program’s accomplishments include the following: 

2010 Accomplishments:

• Approximately 28% of the FY 2010 awards offer further professional development opportunities for farmers to strengthen their business management skills, 

including training in risk management, certification, and good agricultural practices.

• AMS received 509 requests in 2010 from all 50 states and the District of Columbia. The program awarded a total of 81 grants to 35 states for a total of 

$4,099,897.

2009 Accomplishments:

• Provided $4.5 million in competitive grants to nonprofit corporations, regional 

farmers market authorities, Tribal governments, local governments, agricultural 

cooperatives, economic development corporations to expand direct farmer-to-consumer sales.

• Eighty-six projects from 49 states were selected for funding out of the 225 proposals received from 37 states throughout the United States.

2008 Accomplishments:

• Awarded $3,445,000 in support to 85 projects across the country, including 

$385,375 to 18 projects for establishment/expansion of EBT capability.

2007 Accomplishments:

• Provided support to 23 projects across the country with $900,000 in funding, including $328,652 to eight projects for establishment/expansion of EBT capability.

2006 Accomplishments:

• Awarded $900,000 in support to 20 projects across the country, including 

$202,480 to four projects for establishment/expansion of EBT capability.

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6. Annual Budget Authority (FY 2002–FY 2011) 

Fiscal Year Budget Authority

($ in thousands) 

2006 * $1,000

2007 * $1,000

2008 * $4,000

2009 $5,000

2010 $5,000

2011 $10,000

Note: * indicates budget authority from annual appropriations. FY 2008 includes both a $1 million annual appropriation and $3 million 2008 Farm Bill funding. 

7. Annual Outlays (FY 2002–FY 2011) 

Fiscal Year Budget Outlays

($ in thousands) 

2006 —

2007 $300

2008 $772

2009 $2,549

2010 $3,244

2011 YTD $2,789

Funds are expended over the lifetime of the grant, typically 

around 3 years, as the grantee incurs costs of the project. 

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in thousands) 

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 

Est. 

Program Oversight — — $175 $437 $682 $776

Staff Years — — 1 3 4 4

For FY 2006 and 2007 program oversight was not tracked separately. 

9. Eligibility Criteria 

Eligible entities under FMPP are agricultural cooperatives, producer networks or 

associations (added under 2008 Farm Bill); local governments; nonprofit corporations; economic development corporations; regional farmers’ market authorities; and 

Tribal governments. All entities must be owned, operated, and located within one 

of the 50 U.S. or the District of Columbia. 

10. Utilization (Participation) Data 

FMPP has awarded grants for 285 projects. As of June 2011, the Farmers Market 

Promotion Program is currently monitoring 157 active grant awards. 

11. Duplication or Overlap with Other Programs 

Within USDA, there exists a small pool of grant opportunities that are used heavily by small farmers and ranchers due to capacity and other constraints that prevent them from participating in many other programs. Among these are the (1) 

Farmers Market Promotion Program, administered by the Agricultural Marketing 

Service, (2) the Community Food Projects program administered by the National Institute of Food and Agriculture (NIFA, formerly CSREES), and (3) the Risk Management Education and Outreach Partnerships Program, administered by the Risk 

Management Agency. 

FMPP applicants are often consumers of other USDA programs that appear similarly situated, including the Community Food Projects Competitive Grant Program (CFPCGP), administered by National Institute of Food and Agriculture. Since 

1996, the CFPCGP has promoted self-sufficiency and food security in low-income 

communities through community food projects and training and technical assistance 

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projects (T&TA). CFPs unite the entire food system, assessing strengths, establishing linkages, and creating systems that improve self-reliance over food needs. 

T&TA helps successful applicants carry out and evaluate their projects. The 

CFPCGP is designed to: meet the needs of low-income people by increasing access 

to fresher, more nutritious food supplies; increase the self-reliance of communities 

in providing for their own food needs; promote comprehensive responses to local 

food, farm, and nutrition issues; meets specific state, local, or neighborhood food and 

agricultural needs for infrastructure improvement and development; plans for longterm solutions; and create innovative marketing activities that benefit both agricultural producers and low-income consumers. These one-time grants require a dollarfor-dollar match in resources. 

Another program frequently used by FMPP stakeholders is the Education and 

Outreach Partnerships Program housed within the Risk Management Agency. 

This program combines the former ‘‘Commodity Partnerships for Small Agricultural 

Risk Management Education Sessions’’ and the ‘Community Outreach and Assistance Partnerships Program.’’ The purpose of this combined cooperative partnership 

agreements program is to deliver crop insurance education and risk management 

training to U.S. agricultural producers to assist them in identifying and managing 

production, marketing, legal, financial and human risk. The program gives priority 

to: (1) educating producers of crops currently not insured under Federal crop insurance, specialty crops, and underserved commodities, including livestock and forage; 

and (2) providing collaborative outreach and assistance programs for limited resource, socially disadvantaged and other traditionally underserved farmers and 

ranchers. 

12. Waste, Fraud and Abuse 

No reports or findings of waste, fraud or abuse have occurred or been published. 

13. Effects of Administrative PAYGO 

None. 

1. Program Name 

Section 32. 

2. Subprograms/Department Initiatives 

Specialty crop purchase requirements, Fresh Fruit and Vegetable Program. 

3. Brief History 

Section 32 of the Act of 1935 (P.L. 74–320), amended through 7 U.S.C. § 612(c), 

allocated the equivalent of 30% of annual customs receipts to the Secretary of Agriculture. Much of these funds are subsequently transferred to the Food and Nutrition 

Service (FNS) and become part of the budget for USDA’s Child Nutrition Programs; 

with a smaller transfer to Commerce as directed by the Fish and Wildlife Act of 

1956 (16 U.S.C. 742a). 

Funding Availability: The 2008 Farm Bill established an amount to be retained 

for Section 32 activities each year beginning in 2009 at $1.173 billion and increasing 

gradually to $1.322 billion in 2017 and thereafter. The subsequent annual appropriations bills have limited the Section 32 availability to levels lower than authorized in the farm bill. AMS was also directed to transfer all funds in excess of the 

amount identified (after the required transfer to Commerce) to FNS. 

Specialty Crop Purchases: The 2002 Farm Bill established a requirement to purchase at least $200 million in fruits and vegetables, including at least $50 million 

in fresh fruits and vegetables. These purchases were incorporated into entitlement 

purchases for the National School Lunch Program. The 2008 Farm Bill established 

a requirement to purchase additional fruits, vegetables, and nuts (specialty crops) 

each year beginning in 2008 at $190 million and increasing gradually to $206 million in 2012 and thereafter. These additional commodities are distributed through 

any of USDA’s domestic food assistance programs. 

Fresh Fruit and Vegetable Program: The 2008 Farm Bill also required the use of 

Section 32 funds for the Fresh Fruit and Vegetable Program. Under this program, 

FNS distributes funds to schools to purchase fresh produce. 

4. Purpose/Goals 

The purpose is principally to alleviate surplus supplies of commodities by diverting them from normal channels of trade and commerce and increasing utilization 

by low income groups. Most of the funds retained by AMS to carry out Section 32 

are used to purchase non-price supported commodities to meet entitlement needs of 

the child nutrition programs; to purchase additional fruits, vegetables, and nuts for 

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use in domestic nutrition assistance programs; and to relieve market surpluses to 

support agricultural producers. All commodities purchased under Section 32 are distributed by FNS through USDA’s domestic food assistance programs. 

Child Nutrition Entitlement Purchases: AMS purchases non-price supported commodities to help meet the requirements of USDA child nutrition programs. 

Surplus Commodities: AMS purchases non-price supported commodities under 

Section 32 authority based on economic analysis of production costs and market supply. Demand for this support fluctuates with market conditions. 

Disaster Relief: In the event of Presidentially-declared disasters, Section 32 funds 

may be used to provide commodities or replace entitlement commodities. 

5. Success in Meeting Programmatic Purpose/Goals 

AMS has successfully met all Section 32 requirements, including specialty crop 

purchases mandated by the 2002 and 2008 Farm Bills.

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6. Annual Budget Authority (FY 2002–2011) (dollars in thousands) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Est. 

Budget Authority: 

Section 32 Total Budget Authority 995,714 1,460,006 1,287,849 1,180,858 1,523,470 1,463,888 1,095,069 963,530 1,098,000 1,065,000

Specialty Crop Requirements: 

2002 Farm Bill Specialty Crop 

minimum 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000

2008 Farm Bill Specialty Crop 

minimum 190,000 193,000 199,000 203,000Total Specialty Crop requirement 200,000 200,000 200,000 200,000 200,000 200,000 390,000 393,000 399,000 403,000

7. Annual Outlays (FY 2002–2011) (dollars in thousands) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Est. 

Total Outlays: 

Specialty Crops 239,874 279,675 304,712 233,557 246,115 232,391 390,292 472,780 511,128 411,600Other 675,671 999,237 565,847 618,185 1,079,244 467,161 349,399 475,545 575,065 653,400

Section 32 Total Outlays 915,545 1,278,912 870,559 851,742 1,325,359 699,552 739,691 948,325 1,086,193 1,065,000

Section 32 program obligations are outlayed entirely in the current year. Reconciliation upon contract delivery can result in prior year recoveries 

which impact total outlays in this account. 8. Annual Delivery Cost (FY 2002–FY 2011) ($ in thousands) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Est. 

Annual Delivery Cost: 

Commodity Purchases Service a 6,906 11,199 10,266 10,848 28,866 31,146 32,595 31,092 22,276 27,110FTE’s 43 45 38 39 45 47 51 49 54 50

a Beginning in FY 2006, costs for WBSCM, a USDA procurement system, are included. 

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9. Eligibility Criteria 

AMS purchases commodities under authority of Section 32 and on behalf of FNS 

to meet other entitlement needs. The qualification requirements requested as part 

of the application package for a prospective contractor (commodity vendor) are a reexamination and revalidation of established qualification requirements as required 

by the Federal Acquisition Regulations (FAR) Part 9 and are necessary for AMS to 

carry out its procurement mission. A prospective vendor must be determined to be 

qualified by the Contracting Officer prior to submitting offers under an AMS solicitation. There are 142 vendors selling product to USDA. This includes Small, Small 

Disadvantaged, 8(a), HUBZone, Service-Disabled Veteran-Owned, and WomenOwned Businesses. 

10. Utilization (Participation) Data 

Commodities purchased with Section 32 funding are delivered to recipients 

through FNS’ domestic assistance programs, including the National School Lunch 

Program, the Emergency Food Assistance Program, the Food Distribution Program 

on Indian Reservations, the Commodity Supplemental Food Program, and the Nutrition Services Incentive Program. 

11. Duplication or Overlap with Other Programs 

AMS closely coordinates with FNS and FSA to avoid overlap or duplication. 

12. Waste, Fraud, and Abuse 

No reports or findings of waste, fraud or abuse have occurred or been published. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

APHIS Plant Protection and Quarantine Program (PPQ)—Specialty Crop Pest and 

Disease Programs (General). 

2. Subprograms/Department Initiatives 

European Grapevine Moth (EGVM), Light Brown Apple Moth (LBAM), Fruit Fly 

Exclusion and Detection Programs (FFED), Phytophthora ramorum, Citrus Health 

Response Program (CHRP), Pale Cyst Nematode (PCN), Golden Nematode (GN), 

Plum Pox Virus (PPV) and Glassy-winged Sharpshooter (GWSS). Please Note: All 

of the programs listed above, except for EGVM, were funded through the annual appropriations process or access to emergency funding (Commodity Credit Corporation 

or Section 32) and not through the farm bill.

3. Brief History

APHIS’ Plant Protection and Quarantine (PPQ) has been safeguarding agriculture and natural resources from the risks associated with the entry, establishment, or spread of animal and plant pests and noxious weeds to ensure an abundant, high-quality, and varied food supply for more than 30 years. 

4. Purpose/Goals 

APHIS–PPQ safeguards agriculture and natural resources—including specialty 

crops—from the risks associated with the entry, establishment, or spread of animal 

and plant pests and noxious weeds. Fulfillment of its safeguarding role ensures an 

abundant, high-quality, and varied food supply, strengthens the marketability of 

U.S. agriculture in domestic and international commerce, and contributes to the 

preservation of the global environment. 

5. Success in Meeting Programmatic Purpose/Goals

European Grapevine Moth (EGVM)

APHIS is working closely with affected counties, industry, the University of California, and other stakeholders to control EGVM which is a significant pest of grapes 

and other specialty crops that is threatening California’s $3 billion wine/grape and 

stone fruit industry. In 2010 the program was successful in mitigating all grape export crop losses experienced in 2009 due to EGVM. Populations have been significantly reduced in 2011 as compared to 2010; however, several new detections in 

2011 have resulted in the addition of new and expanded quarantine areas.

Light Brown Apple Moth (LBAM)

The LBAM program focuses on the suppression and management of the moth 

therefore reducing its impact on agriculture production and trade of several specialty crops located in California. The program has successfully maintained millions 

248

of dollars worth of specialty crop exports to Mexico and Canada due to regulatory 

requirements that assure our trade partners of pest free commodities.

Fruit Fly Exclusion and Detection Programs (FFED)

The FFED program protects the health and value of American agricultural resources threatened by the establishment of exotic fruit fly populations through (1) 

detection, exclusion, and emergency response activities in the United States; (2) prevention of the spread of Mediterranean fruit flies north of Chiapas, Mexico and 

eventually the United States; and (3) eradication of the Mexican fruit fly in the 

Lower Rio Grande Valley in Texas, Florida, and California. The market value of exotic fruit fly host commodities protected by FFED activities totaled about $6.5 billion in the United States in 2007, with approximately $5.65 billion of that grown 

in California and $612 million in Florida.

Phytophthora ramorum (Sudden Oak Death)

The goal of the Sudden Oak Death Program is to prevent long-distance human 

assisted spread of Phytophthora ramorum in nursery stock and other commodities 

and preventing the establishment of Sudden Oak Death beyond its current range. 

Program certification of nursery stock has reduced Phytophthora ramorum in the 

nursery trade by 97 percent (140 detections in 2004 to less than four in 2010), thereby safeguarding the domestic and international trade in nursery stock, as well protecting the forest products industry.

Citrus Health Response Program (CHRP)

APHIS established the Citrus Health Response Program (CHRP) to sustain the 

citrus industry in the United States, to maintain growers’ continued access to export 

markets, and to safeguard citrus growing states against a variety of citrus diseases 

and pests. The CHRP works closely with regulatory officials in citrus-producing 

states, industry stakeholders, university scientists, and other Federal agencies to 

provide focus to citrus health research, provide domestic citrus industries with production guidelines and best practices for fruit and nursery stock production, and 

identify/implement appropriate survey, diagnostic, and mitigation measures to reduce spread of citrus pests/diseases. The implementation of the CHRP program has 

allowed APHIS and stakeholders to facilitate safe movement of host plants, interstate commerce, and international trade. During the 2007–08 citrus shipping seasons, 17.6 million bushel cartons of fresh citrus fruit moved to non-citrus states, 

while 14.7 million bushel cartons were exported outside the United States. Citrus 

pests threaten just over 1 million commercial acres (137 million trees) with an annual production value for citrus fruit of $2.88 billion (packinghouse door equivalent—2010 NASS Citrus Fruits Summary) not taking into account backyard citrus 

trees that also are affected.

Pale Cyst Nematode (PCN)

The goal of the PCN program is to detect and eradicate cyst nematodes that cause 

significant damages along with impact the export of U.S. potatoes from Idaho. The 

PCN program protects potato farmers and farmland in 36 producing states—1 million acres growing 43 billion pounds worth over $3 billion ($753 million in Idaho) 

and export markets of $1 billion in potatoes and related products.

Golden Nematode (GN)

The goal of the GN program is to detect and control the movement cyst nematodes 

that cause significant damage and impact the export of U.S. potatoes from New 

York. The GN program protects potato farmers and farmland in 36 producing 

states—1 million acres growing 43 billion pounds worth more than $3 billion. 

APHIS has effectively removed areas quarantined for GN in areas of New York 

through a cooperative effort with growers to perform treatments and restrict the 

movement of potentially infested machinery and growing media.

Plum Pox Virus (PPV)

The program’s goal is to eradicate PPV which is a damaging disease of stone fruit. 

APHIS, in coordination with the state and growers of Pennsylvania, successfully 

eradicated PPV from the state in late 2009. PPV is now located only in New York. 

APHIS is working with New York state and growers to survey and place regulatory 

controls in place that will stop the spread and lead to eradication. The U.S. stone 

fruit industry is valued at an estimated $1.4 billion. PPV is considered one of the 

most economically serious virus diseases of stone fruit worldwide. Many varieties of 

peach, plum, apricot and nectarine produce unmarketable fruit or prematurely lose 

their crop when infected with PPV. Commercial stone fruit is the primary host of 

economic importance but a number of alternate hosts have been reported including 

ornamental Prunus and some herbaceous weeds and garden plants.

Glassy-winged Sharpshooter (GWSS)

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The highly cooperative GWSS Program has successfully prevented spread of the 

pest to valuable wine-growing regions of California, and the program’s rapid response methods have been very successful in eliminating outlier outbreaks. Due to 

program control and regulatory activities preventing further spread, the nearly 

800,000 acres of grape production in California is maintained in spite of the GWSS 

being established in 10 of 58 counties. With GWSS present, the vine killing Pierce’s 

disease threatens California’s wine grape, table grape and raisin grape industries, 

valued at approximately $3 billion, and with annual economic impacts of more than 

$61 billion to California’s economy, and more than $120 billion to the U.S. economy.

6. Annual Budget Authority (FY 2002–FY 2011) 

Fiscal Year Appropriated 

Funds 

Commodity Credit 

Corporation Funds Section 32

(Dollars in thousands)

2002 $59,631 $45,953

2003 $108,430 $59,531

2004 $121,686 $47,298

2005 $127,704 $122,094

2006 $129,500 $14,433 $400,000

2007 $129,921 $22,827 $100,000

2008 $137,841 $69,539

2009 $140,360 $0

2010 $150,380 $0

2011 $150,078 $16,922

7. Annual Outlays (FY 2002–FY 2011) 

Fiscal Year Obligations Outlays 

(Dollars in thousands)

Appropriated Funding

2002 $64,295 $53,155

2003 $107,276 $88,268

2004 $119,714 $122,906

2005 $134,785 $128,384

2006 $127,731 $108,424

2007 $130,141 $126,561

2008 $141,526 $125,647

2009 $154,423 $141,505

2010 $172,048 $165,761

2011 (est.) $146,221 (est.) $124,288

Commodity Credit Corporation

2002 $86,259 $58,082

2003 $48,292 $50,794

2004 $46,023 $32,706

2005 $105,827 $49,647

2006 $17,406 $52,724

2007 $29,403 $21,112

2008 $53,044 $49,657

2009 $5,903 $11,161

2010 $22,207 $30,317

2011 (est.) $5,615 (est.) $5,053

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7. Annual Outlays (FY 2002–FY 2011)—Continued

Fiscal Year Obligations Outlays 

(Dollars in thousands)

Section 32

2006 $376,731 $376,731

2007 $107,105 $105,970

2008 $237 $238

APHIS has authority to utilize three different sources of funding. Annual appropriations acts provide appropriations funding as well as access to Commodity Credit 

Corporation funding. Section 32 funding authority, under the Agricultural Marketing Service, was established by Congress to restore farmers’ purchasing power 

in times of natural disaster, either through direct payments to farmers or through 

the Federal Government’s purchase of surplus agricultural commodities. APHIS 

used this authority to make payments to commercial citrus producers who were negatively affected by the spread of citrus canker that resulted from a series of hurricanes that hit Florida in 2004 and 2005. 

Many of the programs included in the Specialty Crop Pests group have no-year 

budget authority. In some years, obligations and outlays may exceed the new budget 

authority for the year due to carryover availability. These programs are cooperative 

efforts with state, local, and industry partners; APHIS provides funding to these entities through cooperative agreements to conduct a portion of the program activities. 

Program partners usually have one year from the date the agreement was signed 

to spend the funds. For this reason (and depending on the timing of the agreement), 

outlays of obligated funds may occur in the next budget year.

251

8. Annual Delivery Cost (FY 2007–FY 2011)

Annual Delivery Cost by Department Strategic Goals (Rev.) 

(On basis of appropriated funds) 

(dollars in thousands) 

Strategic Goal 4—Ensure that all of America’s children have access to safe, nutritious, and balanced meals.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Program Program Items—DiscretionaryFruit Fly Exclusion and Detection

Indirect Costs 4,778 4,824 4,986 5,034 5,024 4,794Program Operational Costs 5,972 6,030 6,232 6,292 6,279 5,992FTEs 479 553 453 529 443 455

Plum Pox

Indirect Costs 176 175 176 176 176 170Program Operational Costs 220 218 220 221 220 212FTEs 5 5 5 5 5 5

Golden Nematode

Indirect Costs 65 64 65 66 66 66Program Operational Costs 81 80 82 83 83 83FTEs 7 7 7 7 7 7

Citrus Health Response Program

Indirect Costs 2,916 2,825 2,831 3,572 3,565 3,572Program Operational Costs 3,646 3,531 3,539 4,466 4,457 4,466FTEs 125 125 125 125 125 125

Glassy-winged Sharpshooter

Indirect Costs 1,930 1,841 1,836 1,839 1,835 1,622Program Operational Costs 2,413 2,301 2,295 2,298 2,294 2,028FTEs 16 16 16 16 16 16

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FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Phytophthora ramorum/Sudden Oak 

Death

Indirect Costs 245 423 424 428 427 406Program Operational Costs 306 529 531 535 534 507FTEs 19 19 19 19 19 19

Light Brown Apple Moth

Indirect Costs 0 79 80 81 80 881Program Operational Costs 0 99 100 101 101 1,101FTEs 0 0 5 5 5 5

Pale Cyst Nematode

Indirect Costs 0 763 664 666 665 497Program Operational Costs 0 953 829 833 831 622FTEs 0 15 15 15 15 15

Critical Invasive Pest Response/Miscellaneous Pests

Indirect Costs 284 34 167 168 168 168Program Operational Costs 355 42 209 210 210 210FTEs 11 4 8 8 8 8

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9. Eligibility Criteria 

Not applicable. 

10. Utilization (Participation) Data

European Grapevine Moth (EGVM)

APHIS is working closely with affected counties, industry, the University of California, and other stakeholders to control EGVM which is a significant pest of grapes 

and other specialty crops that is threatening California’s $2.7 billion wine/grape and 

stone fruit industry. Initial treatment efforts reduced the detections of moths in affected areas from 66,000 in April 2010 to just 20 moths in August 2010.

Light Brown Apple Moth (LBAM)

The LBAM program works with the state and growers of several specialty crops 

located in California. The program has successfully maintained millions of dollars 

worth specialty crop exports to Mexico and Canada due to regulatory requirements 

that assure our trade partners of pest free commodities. The LBAM program did not 

receive funding from the FY 2011 Farm Bill. This program measures performance 

by tracking LBAM spread beyond the generally infested area. In FY 2010, the program found three isolated populations, compared to five in FY 2009.

Fruit Fly Exclusion and Detection Programs (FFED)

The FFED program protects the health and value of American agricultural resources through working with Florida, California, Arizona, and Texas to assure citrus crops are protected from these pests. In FY 2010, APHIS’ long-term performance 

measure for the number of exotic fruit flies outbreaks in the United States had a 

target of two severe outbreaks per year. A severe outbreak is one that spreads beyond its initial area. The program experienced three of these outbreaks in FY 2010, 

but will have them eradicated by October 2011.

Phytophthora ramorum (Sudden Oak Death)

The goal of sudden oak death program is to prevent long-distance human assisted 

spread of Phytophthora ramorum in nurserystock through working with states that 

are affected such as California, Washington, and Oregon along with states who 

might receive potentially infested nursery stock. APHIS works with officials in the 

three states to establish quarantines and require nursery inspections before host 

plants may be shipped interstate. In FY 2010, the program worked with the nursery 

industry to reduce the presence of the disease in the nursery system. It detected 

22 infested nurseries in California, Oregon, and Washington, helping to prevent the 

spread of the disease. APHIS is continuing to support the development, communication, and implementation of best management practices in nurseries to reduce the 

risk of P. ramorum introduction and establishment.

Citrus Health Response Program (CHRP)

APHIS works with the entire U.S. citrus industry sustain the citrus industry in 

the United States while managing pest and disease threats. APHIS works with the 

citrus mutuals, California, Texas, Arizona, and Florida to ensure safe citrus and 

maintain foreign trade markets. During the 2009–2010 shipping season, 12.4 million 

bushel cartons of fresh citrus fruit were exported to foreign markets and 17.9 million bushel cartons were shipped within the United States,

Pale Cyst Nematode (PCN)

The PCN program works with Idaho State and growers in the state to detect and 

eradicate cyst nematodes that cause significant damages along with impact the export of potatoes from Idaho. In FY 2010, the program achieved a 90 percent reduction in viable PCN populations as a result of eradication activities.

Golden Nematode (GN)

The GN program works with New York State and growers to detect and control 

the movement cyst nematodes that cause significant damages along with impact the 

export of U.S. potatoes from New York perform treatments and restrict the movement of potentially infested machinery and growing media. Surveys conducted 

through 2010 allowed from the release of 43,000 acres from regulation, while continuing to prevent the spread of the pest.

Plum Pox Virus (PPV)

The PPV program works with New York State and growers to assure market access for stone fruit is maintained and mitigate the spread to previously infested 

areas. In FY 2010, the program addressed outbreaks in New York and continued 

monitoring for the disease in Pennsylvania and Michigan, after declaring eradication in both states in 2009.

Glassy-winged Sharpshooter (GWSS)

254

The GWSS program works with specialty crop growers and state officials in California particularly the grape and wine industry to mitigate the damages and maintain foreign trade markets. This program has contained GWSS within ten California 

counties where it is established and conducted area-wide management programs in 

major citrus-producing areas to suppress the pest. These programs were highly successful at suppressing GWSS populations and maintaining citrus shipments out of 

the regulated areas. In FY 2010, six GWSS interceptions occurred on nursery shipments, with five egg masses, one nymph, and one adult found among the shipments. 

This data compares to 23 interceptions in FY 2009 with 25 egg masses. These interceptions and egg mass finds prevent the GWSS establishment in non-infested areas, 

where mitigation efforts would be costly and time-consuming. 

11. Duplication or Overlap with Other Programs 

In instances when APHIS and another agency find it within their mission to address a particular pest, APHIS will meet with the other agency to determine the 

most effective combination of skills to address the pest. For instance, APHIS coordinates its Phytophthora ramorum with the Forest Service as the introduction of the 

disease into the National Forest system would be highly disruptive to the Forest 

Service mission. 

12. Waste, Fraud and Abuse 

USDA’s Office of Inspector General recently published an audit, USDA Payments 

for 2005 Citrus Canker Tree Losses, March 2011, which raised concerns over payments through the Canker Lost Production Program and Citrus Canker Tree Replacement Program. APHIS is currently working with OIG to address the concerns 

raised in the report. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Farm Bill Section 10201, Plant Pest and Disease Management and Disaster Prevention. 

2. Subprograms/Department Initiatives 

Not applicable. 

3. Brief History 

The Plant Pest and Disease Management and Disaster Prevention Program was 

authorized in the 2008 Farm Bill and has been implemented by APHIS from 2009 

through 2011. It is funded annually with Commodity Credit Corporation (CCC) 

funding. Funding was set at $12 million in FY 2009, $45 million in FY 2010, and 

$50 million in FY 2011 and beyond. 

4. Purpose/Goals 

The purpose of the Pest and Disease Management and Disaster Prevention Program is for APHIS to partner with states, industry, universities, and other interested groups to prevent the entry of high-consequence plant pests, quickly detect 

those that may enter into the United States, and enhance our emergency response 

capabilities. The program provides strong protection to America’s agricultural and 

environmental resources, and helps nursery and specialty crop growers flourish. 

Projects are organized around six goal areas: enhancing plant pest analysis and 

survey; targeting domestic inspection activities at vulnerable points in the safeguarding continuum; enhancing and strengthening threat identification and technology; safeguarding nursery production; enhancing mitigation capabilities; and conducting outreach and education about these issues. 

5. Success in Meeting Programmatic Purpose/Goals 

Over the last 2 years, Section 10201 projects have played a significant role in 

many USDA and partner successes to protect American agriculture and educate the 

public about the threat of invasive species. These successes include, among many 

others, the eradication of plum pox virus in Pennsylvania and a recent Mediterranean fruit fly outbreak in Florida, surveys for European grapevine moth in California, the 2010 national survey of honey bee pests and diseases, the monitoring of 

high-risk international and domestic pathways for invasive species, applied research 

to combat citrus pests, and the exploration of the feasibility of an audit-based certification system to prevent the movement of infested nursery stock. 

255

Selection was based on project alignment with Section 10201 goals, the expected 

impact of the project, and the technical approach. In addition, the reviewers considered how the suggestions would complement ongoing USDA programs and other 

Section 10201 projects. APHIS made a concerted effort to engage external stakeholders, such as the National Plant Board, Specialty Crops Farm Bill Alliance and 

USDA’s National Institute of Food and Agriculture, Agricultural Research Service 

and U.S. Forest Service, in designing the evaluation criteria for the suggestions.

6. Annual Budget Authority (FY 2002–FY 2011) 

Fiscal Year Budget Authority

(dollars in thousands) 

2009 $12,000

2010 $45,000

2011 $50,000

7. Annual Outlays (FY 2002–FY 2011) 

Fiscal Year Obligations Outlays 

(dollars in thousands)

2009 $11,989 $2,340

2010 $44,881 $11,267

2011 $50,000 (est.) $15,000 (est.) 

Most Section 10201 projects are carried out by APHIS’ partners through cooperative agreements. Most cooperators have one year from the date the agreement is 

signed to spend the funds so the funds are not outlaid in full until the following 

fiscal year.

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8. Annual Delivery Cost (FY 2007–FY 2011)

Annual Delivery Cost by Department Strategic Goals (Rev.) 

(On basis of appropriated funds) 

(dollars in thousands) 

Strategic Goal 4—Ensure that all of America’s children have access to safe, nutritious, and balanced meals.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Program Program Items—MandatoryFarm Bill: 10201—Plant Pest & Disease 

Mgt. & Disaster Prevention

Indirect Costs N/A N/A 582 1,401 2,425 2,425Program Operational Costs N/A N/A 2,947 11,099 12,575 12,575FTEs N/A N/A 1 37 37 37

9. Eligibility Criteria

A 10201 evaluation team made up of government and non-government, stakeholders, and scientific members evaluate the technical factors of the individual suggestions using the evaluation criteria described below. If a suggestion does not address a factor, it will be evaluated as ‘‘Low.’’

Strengths, weaknesses, deficiencies, and reviewer questions will be documented for each suggestion. At the conclusion of the independent 

review period, the entire evaluation team will meet and discuss each technical evaluation factor and agree on a consensus rating for each suggestion. 

FY 2011 suggestions have been rated in the following areas:Criteria 1: Alignment with Section 10201 Goals:The suggestion should clearly identify the goal area to be addressed and explain how the project will further the goals of the farm bill. 

Suggestions should not list more than one of the six goal areas:

1. Enhance plant pest analysis and survey. 

257

2. Target domestic inspection activities at vulnerable points in the safeguarding 

continuum.

3. Enhance and strengthen threat identification and technology.

4. Safeguard nursery production.

5. Conduct outreach and education to increase public understanding, acceptance, and support of plant pest and disease eradication and control efforts.

6. Enhance mitigation capabilities.

Criteria 2: Impact:

The suggestion should clearly address the potential benefits from the proposed activities or deliverables. Emphasis should be placed on projects that will affect highrisk states/areas, address pests of regulatory significance, and/or benefits specialty 

crop producers and minority or underserved communities.

Criteria 3: Technical approach:

The suggestion should discuss the technical approach to be employed, including 

a description of methodology and a summary of the various tasks to be undertaken. 

The suggestion should also highlight the cooperators (states, universities, and others) that will be working together to complete the project and the role each will 

play. 

10. Utilization (Participation) Data 

In FY 2009, APHIS provided funding for 63 projects in 21 states. 

In FY 2010, APHIS provided funding for more than 270 projects. 

In FY 2011, APHIS is providing funding for more than 270 projects with over 100 

cooperators in 50 states. Note: In FY 2011, Section 10201 funding was not available 

until April, but APHIS is working diligently to finalize and implement the spending 

plan. As a result, we anticipate that participant numbers may change. 

11. Duplication or Overlap with Other Programs 

APHIS’ Pest Detection program is funded through an annual budget appropriation. It supports APHIS’ goal of safeguarding U.S. agricultural and environmental 

resources by ensuring that new introductions of harmful plant pests and diseases 

are detected as soon as possible, before they cause significant damage. These efforts 

engage the scientific community, government entities, states, tribes, universities, 

the public, nonprofit entities, and industry. The Cooperative Agricultural Pest Survey (CAPS) program is the principle means of providing funds to all states and 

other cooperators to survey for pests that are not known to be in the U.S., as well 

as some that are of limited distribution and of regulatory concern. Pest-free regions 

are identified that allow the continued export of commodities from particular areas 

of the country. 

Farm Bill Section 10201 complements the Pest Detection program and expands 

upon it by specifically providing funds and technical assistance to specialty crop 

growers, organizations representing specialty crop growers, and state and local 

agencies working with specialty crop growers and organizations for the development 

and implementation of audit-based certification systems and nursery plant pest risk 

management systems, in collaboration with the nursery industry, research institutions, and other entities to address plant pests. This Section also provides funds for 

a threat identification and mitigation program to determine and address threats to 

the domestic production of crops. Risk assessments are being prepared of the potential threat to the agricultural industry of the United States from foreign sources, 

in collaboration with the National Plant Board, and are implementing action plans 

for high consequence plant pests and diseases. 

12. Waste, Fraud and Abuse 

The program is fairly young as it was created in the 2008 Farm Bill. Auditing 

agencies, such as the Office of the Inspector General or the Government Accountability Office, have not conducted audits to date. The program is not aware of any 

instances of waste, fraud, or abuse. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Farm Bill Section 10202, National Clean Plant Network (NCPN). 

258

2. Subprograms/Department Initiatives 

The National Clean Plant Network is coordinated jointly by three USDA Agencies: 

the Animal and Plant Health Inspection Service (APHIS) (quarantine programs), 

Agricultural Research Service (research activities), and National Institute of Food 

and Agriculture (outreach initiatives). In March 2009, the three USDA Agencies 

signed a Memorandum of Understanding laying the foundation for the NCPN at the 

national level and providing direction and guidance for newly forming NCPN specialty crop networks. 

3. Brief History 

The National Clean Plant Network was first provided dedicated funding in the 

2008 Farm Bill. The farm bill provides NCPN with $5 million each year (FY 2009–

2012) for a total of $20 million over 4 years. The NCPN currently funds 18 clean 

plant centers in 14 states focusing on supporting existing state infrastructures. In 

FY 2010/2011, five specialty crops were covered including fruit trees, grapes, citrus, 

berries, and hops. Several new crops are under consideration for the program including potatoes, sweet potatoes, olives, garlic, roses, and other ornamentals. 

4. Purpose/Goals 

NCPN is a collaborative venture, composed of diagnostic, therapeutic and horticultural expertise. NCPN’s goal is to ensure the availability of high quality propagated plant material that is free of plant pests, helping to ensure the global competitiveness of specialty crop producers. The NCPN promotes pest- and disease-free specialty crops, the rapid and safe introduction of new varieties from foreign sources, 

and hygienic U.S. products for export. 

5. Success in Meeting Programmatic Purpose/Goals 

Over the past 2 years, the NCPN has built national, regional and crop-specific 

NCPN governing bodies composed of governmental, University, and industry representatives nationwide. Due to this initiative Clean Plant Centers were revitalized 

and foundation plantings of clean nursery stock expanded. The NCPN is currently 

supporting Clean Plant Network Centers for five specialty crops in multiple states 

including:

• Fruit Tree (Pomes and Stone Fruits): California, South Carolina, and Washington.

• Grape: California, Florida, Missouri, New York, and Washington.

• Citrus: Alabama, Arizona, California, Florida, Louisiana, and Texas.

• Berries (Strawberries, Blueberries, Cranberries, and Cane Fruit): Arkansas, 

North Carolina, and Oregon.

• Hops: centered out of Washington State.

Due to the efforts of these centers, clean plants were provided to nurseries and 

growers to ensure planting sustainability and productivity, and quality of products. 

In 2009, the initial year of funding alone, 161 clean plant accessions consisting of 

fruit tree and grape varieties were released. NCPN continues to contribute to the 

economy by working with U.S. specialty crop producers to generate desirable planting stock, increase yields of healthy, high quality crops, and encourage competitive 

standards for domestic and international trade.

6. Annual Budget Authority (FY 2002–FY 2011) 

Fiscal Year Budget Authority

(dollars in thousands) 

2009 $5,000

2010 $5,000

2011 $5,000

7. Annual Outlays (FY 2002–FY 2011) 

Fiscal Year Obligations Outlays 

(dollars in thousands)

2009 $3,334 $252

259

7. Annual Outlays (FY 2002–FY 2011)—Continued

Fiscal Year Obligations Outlays 

(dollars in thousands)

2010 $6,271 $2,281

2011 $5,300 (est.) $3,000 (est.) 

The Farm Bill of 2008, Section 10202 provides that NCPN funding is —available 

until expended’ (no-year) since it is understood that a certain ‘ramp-up’ was anticipated for this program in its early years. Additionally, the program uses a cooperative agreements process with time built into the calendar for applicants to receive 

feedback from APHIS to enhance their proposals. The program announces recipients 

and signs the agreements near the end of the fiscal year, resulting in outlays that 

lag behind obligations.

260

8. Annual Delivery Cost (FY 2007–FY 2011)

Annual Delivery Cost by Department Strategic Goals (Rev.) 

(On basis of appropriated funds) 

(dollars in thousands) 

Strategic Goal 4—Ensure that all of America’s children have access to safe, nutritious, and balanced meals.

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Program Program Items—MandatoryFarm Bill: 10202—National Clean Plant 

Network

Indirect Costs N/A N/A 242.5 243 243 243Program Operational Costs N/A N/A 258 508 508 508FTEs N/A N/A 1 2 2 2

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9. Eligibility Criteria 

Parties eligible to receive NCPN program funding include Land-Grant Universities, Non Land-Grant Colleges of Agriculture, State Agricultural Experiment Stations, State Governments, and Federal Agencies. 

The following criteria are also considered when providing program support:

• Target Crops: Specialty crops, especially those considered highly restricted due 

to pest pressures

• Clean Plant Centers or Programs: Extant to the extent practicable

• Core Mission: Diagnostics, therapeutics, foundation plantings

• Secondary Mission: Networking and education/outreach

• Performance Goals: Industry focus and consultation 

10. Utilization (Participation) Data 

In FY 2011, NCPN will be focusing its efforts on five specialty crop groups (fruit 

trees, grapes, berries, citrus, and hops) represented by 18 supported clean plant centers or associated programs located in 14 states. Additionally, the NCPN national 

stakeholder database has about 500 persons enrolled as expressing specific interest 

in the program. This includes nursery and grower industries, scientists, state regulatory officials, and educators. 

11. Duplication or Overlap with Other Programs 

We are not aware of any other program with a sufficiently similar mission. 

12. Waste, Fraud and Abuse 

The program is fairly young as it was created in the 2008 Farm Bill. Auditing 

agencies, such as the Office of the Inspector General or the Government Accountability Office, have not conducted audits to date. The program is not aware of any 

instances of waste, fraud, or abuse. 

13. Effect of Administrative PAYGO 

None. 

(263)

AGRICULTURAL PROGRAM AUDIT 

(EXAMINATION OF FOREIGN AGRICULTURE AND FOOD AID 

PROGRAMS) 

WEDNESDAY, JULY 13, 2011

SUBCOMMITTEE ON RURAL DEVELOPMENT, 

RESEARCH, BIOTECHNOLOGY, AND FOREIGN

AGRICULTURE, 

COMMITTEE ON AGRICULTURE, 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON AGRICULTURE, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 10:06 a.m., in Room 

1300 of the Longworth House Office Building, Hon. Timothy V. 

Johnson [Chairman of the Subcommittee] presiding. 

Members present: Representatives Johnson, Stutzman, Scott, 

Hultgren, Hartzler, Schilling, Costa, Cuellar, Sewell, Kissell, and 

McGovern. 

Staff present: Mike Dunlap, Tamara Hinton, John Porter, Debbie 

Smith, Suzanne Watson, Andy Baker, Liz Friedlander, John 

Konya, and Jamie Mitchell. 

OPENING STATEMENT OF HON. TIMOTHY V. JOHNSON, A 

REPRESENTATIVE IN CONGRESS FROM ILLINOIS 

The CHAIRMAN. This hearing of the Subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture entitled, Agricultural Program Audit: Examination of Foreign Agriculture and Food Aid Programs, will now come to order. 

Good morning, and welcome to this hearing to examine our 

trade, food aid and agricultural development programs operated by 

USDA’s Foreign Agricultural Service and the U.S. Agency for International Development. This hearing is part of a series of farm program audits to help us prepare for the next farm bill. When we are 

finished here, I hope that we will all have a better understanding 

of trade and food aid programs both individually and as part of the 

broader picture of foreign policy. Having detailed knowledge of 

these programs will help us make better policy decisions when the 

time comes. 

Today’s hearing builds upon a discussion this Subcommittee had 

on April 7th of this year where we looked at five export programs 

in great detail. At that hearing, we reviewed how the programs are 

being implemented and how our ag policy has enabled the programs to expand our export of U.S. agricultural products. 

264

Along with learning more about our trade programs, we will hear 

testimony describing how our humanitarian assistance is meeting 

acute needs in the areas of crisis. As the largest donor of food aid 

in the world, the United States has been at the forefront of humanitarian assistance. Part of these efforts include agricultural developmental programs which provide technical assistance and training 

to help communities graduate from reliance on food aid. 

In our discussion this morning, we will take a close look at the 

administrative side of our programs, carefully reviewing the delivery costs and progress toward meeting the goals and objectives set 

by the Committee. One of the objectives we have to keep in mind 

for the next farm bill is reducing overall spending while maintaining an effective level of support for critical programs. In every corner of government, we are looking for opportunities to streamline 

processes, ensure Federal programs are delivered with maximum 

impact and with the least cost possible. It is incumbent on the 

agencies to effectively deliver each program in the most efficient 

manner possible. And it is the purview of this Committee to ensure 

that the agencies are fulfilling their responsibility. The current economic and fiscal environment adds urgency to this Committee’s 

oversight responsibilities because it helps prioritize limited funds 

to address our most important needs. 

With us this morning, we have the operational leaders in the 

agencies in charge of implementing our trade, food and development programs. The two agencies represented here today have 

unique capabilities but must act in concert to achieve their objectives. We look forward to hearing how they are coordinating their 

efforts around the world. From the Foreign Agricultural Service, 

we are joined by Acting Administrator Suzanne Heinen, and with 

us from USAID is the Assistant Administrator for the Bureau for 

Democracy, Conflict and Humanitarian Assistance. We appreciate 

all the efforts the agencies have put into compiling a clear outline 

of how the programs are being implemented. I anticipate that the 

conversation this morning will be the beginning of a very frank discussion that will continue throughout the development of the next 

farm bill. 

Thank you both for being here and I look forward to your testimony. 

[The prepared statement of Mr. Johnson follows:]

PREPARED STATEMENT OF HON. TIMOTHY V. JOHNSON, A REPRESENTATIVE IN

CONGRESS FROM ILLINOIS

Good morning, and welcome to this hearing to examine our trade, food aid, and 

agricultural development programs operated by USDA’s Foreign Agricultural Service and the U.S. Agency for International Development. 

This hearing is part of a series of farm program audits to help us prepare for the 

next farm bill. When we are finished here, I hope that we will all have a better understanding of trade and food aid programs both individually and as part of the 

broader picture of farm policy. Having detailed knowledge of these programs will 

help us make better policy decisions when the time comes. 

Today’s hearing builds upon a discussion this Subcommittee had on April 7th of 

this year, where we looked at five export promotion programs in great detail. In that 

hearing, we reviewed how the programs were being implemented, and how our agricultural industry has been able to utilize the programs to expand U.S. agricultural 

exports. 

Along with learning more about our trade programs, we will hear testimony describing how our humanitarian assistance is meeting acute needs in areas of crisis. 

265

As the largest donor of food aid in the world, the U.S. has been at the forefront of 

humanitarian assistance. Part of these efforts includes agricultural development 

programs which provide technical assistance and training to help communities graduate from a reliance on food aid. 

In our discussion this morning we will take a close look at the administrative side 

of our programs, carefully reviewing the delivery costs and progress towards meeting the goals and objectives set by this Committee. 

One of the objectives we must keep in mind for the next farm bill is reducing 

overall spending while maintaining an effective level of support for critical programs. In every corner of government we are looking for opportunities to streamline 

processes and ensure Federal programs are delivered with maximum impact and 

with the least cost possible. It is incumbent upon the agencies to effectively deliver 

each program in the most efficient manner possible. And it is the purview of this 

Committee to ensure the agencies are fulfilling this responsibility. 

The current economic and fiscal environment adds urgency to this Committee’s 

oversight responsibilities because it helps prioritize limited funds to address our 

most important needs. 

With us this morning we have the operational leaders of the agencies in charge 

of implementing our trade, food aid, and development programs. The two agencies 

represented here today have unique capabilities, but must act in concert to achieve 

their objectives. We look forward to hearing how they are coordinating their efforts 

around the world. 

From the Foreign Agricultural Service we are joined by Acting Administrator Suzanne Heinen. With us from USAID is the Assistant Administrator for the Bureau 

for Democracy, Conflict and Humanitarian Assistance. 

We appreciate all of the effort the agencies have put into compiling a clear outline 

of how the programs are being implemented. I anticipate that the conversation this 

morning will be the beginning of a very frank discussion and will continue throughout the development of the next farm bill. I thank both of you for being here today, 

and look forward to your testimony.

The CHAIRMAN. I would then recognize the Ranking Member, Mr. 

Costa, for whatever statement he would like to make. 

OPENING STATEMENT OF HON. JIM COSTA, A 

REPRESENTATIVE IN CONGRESS FROM CALIFORNIA 

Mr. COSTA. Thank you very much, Mr. Chairman. I think that 

our efforts this morning to focus on the rural development research, biotechnology and foreign agriculture assistance is key as 

we continue to focus on expanding our exports for agricultural 

trade as well as our efforts to deal with food aid and development 

in different parts of the world. 

This hearing, Chairman Johnson, I think is appropriate given 

the timing. The audit hearings are an important part of Members’ 

ability in the Subcommittee to focus on the United States Department of Agriculture’s programs that I think as any good subcommittee we need to provide a regular review on. 

Today, the programs that we are looking at, the Foreign Agricultural Service which develops export markets for U.S. agricultural 

products, is important. I think there are a number of reasons why 

this program, as I have seen it implemented in various parts of the 

world, is important. One, it connects America and ag producers and 

value-added ag businesses of all sizes and varieties to the world 

markets. I believe my colleagues here on the Subcommittee who 

come from various parts of the country feel similarly, that nobody 

does it better, to take a title of a song, than our American farmers, 

ranchers and dairymen in terms of the production of high-quality 

foods and fibers at very abundant levels and of the safest level for 

consumers. 

But it also helps open those markets for long term while working 

to expand new markets. It helps promote a free and fair global 

266

trading system. I support free trade as long as it is fair trade, that 

meaning a level playing field. Certainly in the global economy, it 

gives us better access to those markets. It also helps us to resolve 

non-tariff trade barriers, particularly when other countries are trying to use sanitary and phytosanitary standards. I believe this has 

been nothing more than leverage to try to foster trade in a direction that would be more favorable to them, and we all know numerous examples. In the specialty crops, we see that having occurred historically. 

The five market development programs under Title III of the 

farm bill, we will be discussing today, they have unique goals. I 

would like to hear the witnesses explain to us how we are reaching 

those goals and how well they complement each other. Obviously 

we all have different interests from the agricultural regions we represent in the country. Mine is fairly well known, the specialty crops 

in California, some 300, are so much of what we able to export, last 

year almost $38 billion a year at the farm gate in California, farm 

gate being the gross receipts to farmers, ranchers and dairymen. 

So we have a lot of issues that we are focusing on. We know we 

have tight budgets. We know the 2012 Farm Bill will be smaller 

in funding than the 2008 Farm Bill, and so whether it is with the 

FAS program or other related programs, we are going to have to 

figure out how we can be as cost-effective as we possibly can to ensure that we get the best bang for our buck. 

So as we look at that, as we look at examining food aid and development programs also administered by the Foreign Agricultural 

Service and USAID. A couple years ago I was in Sudan and Darfur. 

There are a lot of places around the world where America’s best 

foot forward and our ambassadorial efforts is to provide that aid to 

those most in need. You know, it is estimated by the U.N. that over 

700 million people every night go to bed hungry and we lose 10,000 

children a week as a result of malnutrition. So the USAID program 

I think is really a good effort. 

In conclusion, for over 55 years the United States has provided 

food for emergency food relief to support international developments, and I think we need to talk about how we can build on that 

goodwill that we have been able to provide. I am also reminded 

when we look at the Federal Food Aid Assistance Program of one 

our Presidents, Ronald Reagan, who once said that, and I am paraphrasing, that you can give a person a fish to eat and they will be 

fed for the day, but if you teach them how to fish, and I think that 

analogy holds forward in the food assistance services efforts, then 

they can sustain themselves, and certainly that is a lot of what 

that program, in my view, is all about. 

So I thank you. We look forward to the testimony and the questions from this panel. 

The CHAIRMAN. Thank you, Mr. Costa. 

The chair would request that other Members submit their opening statements for the record so the witnesses can begin their testimony to ensure that there is adequate time for questions. 

We would then welcome our first and only panel of witnesses to 

the table. Our first witness is Ms. Suzanne Heinen, Acting Administrator, Foreign Agricultural Service, USDA, Washington. You 

may proceed. 

267

STATEMENT OF SUZANNE HEINEN, ACTING ADMINISTRATOR, 

FOREIGN AGRICULTURAL SERVICE, U.S. DEPARTMENT OF 

AGRICULTURE, WASHINGTON, D.C. 

Ms. HEINEN. Thank you, Mr. Chairman. 

Mr. Chairman, Members of the Subcommittee, I am very pleased 

to appear today before you to discuss the trade, food aid and capacity-building programs authorized by Congress and administered by 

USDA’s Foreign Agricultural Service. As requested, my written testimony discusses the goals of each program, how the program funds 

are allocated and how the goals for each program are being met. 

FAS attache ́s around the globe, bolstered by cooperative publicprivate partnerships, have assisted U.S. farmers and ranchers in 

achieving record agricultural export sales and have increased food 

security for some of the poorest around the world. In Fiscal Year 

2011, we expect U.S. agricultural exports to reach a record $137 

billion and support over one million American jobs. We expect to 

feed more than 5.2 million hungry people and to build agricultural 

capacity in dozens of countries around the world. Over numerous 

farm bills, Congress has authorized and refined an effective combination of programs. Allow me to expand on how Congress, FAS 

and the U.S. agricultural community complement each other in delivering effective results. 

The largest market development program operated by FAS is 

MAP, the Market Access Program. MAP forms partnerships between nonprofit agricultural trade organizations, cooperatives, nonprofit State Regional Trade Groups and small businesses to share 

the costs of overseas marketing and promotional activities. The 

2008 Farm Bill makes available $200 million for MAP in 2011. 

That amount is more than matched with industry contributions. 

FAS allocates MAP funds through a competitive process which allows applicants to request funding for various FAS programs 

through a single strategically coordinated proposal. This process allows for efficiencies in program delivery while taking full advantage of the complementary nature of the programs provided by 

Congress. In 2011, MAP resources are being used to expand markets for food grains, meat and poultry, seafood, dairy, horticultural 

products and processed products in markets in every corner of the 

globe. 

In addition to generic promotions, MAP has a brand promotion 

component that provides funding to over 600 small companies and 

agricultural cooperatives annually. For example, WildRoots, a 

small healthy snack food company with two production facilities in 

Illinois and one in Nebraska, matched MAP funds to market their 

products in Canada. Export sales rose from zero in 2008 to over $4 

million in 2010. This company buys blueberries from Michigan, 

corn and soy products from Illinois, oats from Nebraska, cranberries from Massachusetts and almonds from California. According to WildRoots, ‘‘without the branded program, we simply would 

never have been able to compete internationally. It has moved our 

business to a new level and has promoted U.S.-based agricultural 

products, creating jobs in an economy that desperately needs 

them.’’

The economic impact of the MAP and Foreign Market Development programs, our second-largest market development program, 

268

is striking. A recent cost-benefit analysis concluded that for every 

dollar invested by government and industry, exports increased by 

$35. 

One of our most compelling challenges in the world is eradicating 

chronic hunger and malnourishment. The food aid and development 

programs administered by USDA and USAID are making a difference in the lives of poor and hungry people. The McGovern-Dole 

school feeding program was established to carry out preschool and 

school food for education programs in foreign countries to improve 

food security, reduce the incidence of hunger and improve literacy 

and primary education, particularly for girls, while also providing 

maternal, infant and child nutrition programs for pregnant women, 

nursing mothers and infants. This year, McGovern-Dole will provide benefits in 15 countries including Nepal, Haiti, Guatemala, 

Burkina Faso and Senegal. Since 2003, the program has supported 

projects in 41 countries and fed up to five million schoolchildren 

each year. USDA and implementing organizations developed graduation plans and we have moved one program into full graduation 

in Moldova and we have progress towards graduation in Kenya, 

Laos and Guinea-Bissau. 

As Administrator of FAS, I am very proud of our efforts in administering the farm bill authorized programs. We look forward to 

providing any support we can as Congress works on the next farm 

bill. 

This concludes my statement, and I look forward to answering 

your questions. 

[The prepared statement of Ms. Heinen follows:]

PREPARED STATEMENT OF SUZANNE HEINEN, ACTING ADMINISTRATOR, FOREIGN

AGRICULTURAL SERVICE, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Mr. Chairman, Members of the Subcommittee, I am pleased to appear before you 

today. I welcome the opportunity to discuss trade, food aid, and capacity building 

programs authorized by Congress and administered by the Foreign Agricultural 

Service (FAS) of the U.S. Department of Agriculture (USDA). As you requested, I 

am pleased to discuss the goals of each program, outline how the program funds 

are allocated, and describe how the goals for each program are being met. The efforts of FAS personnel around the globe, bolstered by cooperative public-private 

partnerships, have assisted U.S. farmers and ranchers in achieving record agricultural export sales and have increased food security for some of the poorest around 

the world. In Fiscal Year 2011, we expect U.S. agricultural exports to reach a new 

record of $137 billion, we expect to feed more than 5.2 million hungry people, and 

we expect to build agricultural capacity in dozens of countries around the world. 

We do much of our work in very close coordination with the U.S. Agency for International Development (USAID). USAID plays an important role in the countries in 

which we work. 

Linking U.S. Agriculture to the World 

FAS is USDA’s lead agency for addressing the challenges and opportunities of the 

dynamic global marketplace by expanding foreign market access for U.S. products, 

building new markets, improving the competitive position of U.S. agriculture, and 

addressing food security and capacity building in foreign countries. FAS has the primary responsibility within USDA for international market development and export 

financing, trade agreements and negotiations, and the analysis and dissemination 

of vital international market intelligence and data to agricultural producers and exporters. FAS also administers food aid programs and mobilizes USDA’s unique resources and expertise in agricultural development activities. 

FAS relies on its global network of agricultural economists, market development 

experts, negotiators and trade specialists in Washington, DC, and its approximately 

100 international offices that cover 156 countries. FAS’ agricultural counselors and 

attache ́s serving at U.S. Embassies are our eyes and ears around the world, proVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00280 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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viding the agricultural expertise to identify and seize opportunities, by capturing 

real-time information on emerging trade and market development issues, and averting problems before they become trade barriers that impede U.S. exports. 

Complementary Market Development Efforts 

Over numerous farm bills, Congress has authorized and refined an effective combination of agricultural market development programs. These programs that are designed to develop markets, facilitate financing of overseas sales, and resolve market 

access barriers dovetail with the FAS mission. We must open, expand, and maintain 

access to foreign markets, where 95 percent of the world’s consumers live. Participants from all corners of the U.S. agricultural community utilize FAS-administered 

trade programs to reach these consumers, complementing Administration efforts to 

open and maintain markets through trade negotiations, diplomacy, and enforcement 

of trade agreements. 

Market Access Program 

The largest market development program operated by FAS is the Market Access 

Program (MAP). The program originally known as the Targeted Export Assistance 

Program was first authorized by Congress in the 1985 Farm Bill. The 1996 Farm 

Bill renamed the program the MAP and established the current statutory prohibitions on the use of MAP funds to promote the products of large companies. 

MAP is a cost-share program that uses funds from USDA’s Commodity Credit 

Corporation (CCC) to aid in the creation, expansion, and maintenance of foreign 

markets for U.S. agricultural products. MAP forms partnerships between nonprofit 

U.S. agricultural trade organizations, U.S. agricultural cooperatives, nonprofit State 

Regional Trade Groups, and small-sized U.S. commercial entities to share the costs 

of overseas marketing and promotional activities, such as consumer promotions, 

market research, and trade show participation. The 2008 Farm Bill makes available 

$200 million of CCC funds for MAP in FY 2011; that amount is matched with industry contributions. Applicants submit MAP proposals to USDA as part of a competitive Unified Export Strategy (UES) process, which allows applicants to request 

funding for various USDA foreign market development programs through a single, 

strategically coordinated proposal. One strength of the UES process is that utilizing 

the complementary nature of the various market development programs is emphasized. 

In addition to generic promotions, MAP has a brand promotion component that 

provides export promotion funding to over 600 small companies and agricultural cooperatives annually. To conduct branded product promotion activities, individual 

companies must provide at least 50 percent of funding. Most small companies and 

agricultural producer cooperatives access market development programming 

through one of the four State Regional Trade Groups (SRTGs)—Food Export Association of the Midwest USA, Food Export USA Northeast, Southern United States 

Trade Association, and Western United States Agricultural Trade Association. The 

SRTGs work closely with the State Departments of Agriculture in their respective 

regions to identify eligible company participants and export opportunities, and then 

bring the two together. In that effort, SRTGs provide small companies with export 

readiness training and organize trade missions, as well as branded programming opportunities to directly access MAP funds for individual company promotions and 

trade show participation. 

WildRoots, a small healthy snack food company, with two production facilities in 

Illinois and one in Nebraska, matched MAP branded funds to market their products 

in Canada. Export sales soared from zero in 2008 to over $4 million in 2010. The 

company buys blueberries from Michigan, corn and soy products from Illinois, oats 

from Nebraska, cranberries from Massachusetts, and almonds from California. According to a WildRoots’ cofounder, ‘‘Without the branded program, we simply would 

never have been able to compete with Canadian producers. It has moved our business to a new level and has promoted U.S.-based agricultural products, creating jobs 

in an economy that desperately needs them.’’ 

Foreign Market Development Program 

The Foreign Market Development (Cooperator) Program (FMD) had its first participants (known as Cooperators) in 1954. FMD is currently authorized by Title VII 

of the Agricultural Trade Act of 1978, which directs the Secretary of Agriculture to 

‘‘establish and, in cooperation with eligible trade organizations, carry out a foreign 

market development cooperator program to maintain and develop foreign markets 

for United States agricultural commodities and products . . .’’ Funding for FMD 

was most recently reauthorized by Congress in the 2008 Farm Bill. 

FMD is a cost-share program that aids in the creation, expansion, and maintenance of long-term export markets for U.S. agricultural products. The current farm 

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bill makes available $34.5 million of CCC funds for FMD this year. The program 

fosters a market development partnership between USDA and U.S. agricultural producers and processors who are represented by nonprofit commodity or trade associations known as Cooperators. Under this partnership, USDA and each Cooperator 

pool their technical and financial resources to conduct overseas market development 

activities that are generic in nature. Activities must contribute to the maintenance 

or growth of demand for U.S. agricultural commodities and generally address longterm foreign import constraints and export growth opportunities. Programs focus on 

matters such as reducing infrastructural or historical market impediments, improving processing capabilities, modifying codes and standards, and identifying new 

markets or new applications or uses for the agricultural commodity or product in 

the foreign market. Twenty-one organizations representing a broad sample of U.S. 

agriculture, including peanuts, sunflower, soybeans, livestock genetics, dry beans, 

wheat, poultry, and rice, benefited from receiving a total of $34.15 million in Fiscal 

Year 2010 through the FMD program. 

Through the FMD program, U.S. sunflower producers’ activities in Spain are paying dividends. To increase awareness of confectionary sunflower seed and build demand in Spain, the National Sunflower Association (NSA) used FMD funding to create and implement an integrated and highly successful marketing program of trade 

advertisements, newsletters, trade shows, seminars, and trade missions. Through 

this work, U.S. sales to Spain reached nearly $270 million, making Spain the top 

market for U.S. confectionary sunflower seeds, and generating jobs in top sunflower 

producing states including Colorado, Kansas, Minnesota, North Dakota, Oklahoma, 

South Dakota, and Texas. 

Economic Impact of MAP and FMD Programs 

The economic impact of the MAP and FMD programs is striking. USDA’s Foreign 

Agricultural Service commissioned a cost-benefit analysis in March 2010 that concluded the programs effectively leveraged private and public sector resources in a 

unique partnership to increase U.S. food and agricultural exports. The analysis concluded for the time period 2002 through 2009 that U.S. food and agricultural exports increased by $35 for every dollar invested by government and industry on 

market development. Additionally, U.S. agricultural exports in 2009 were $6.1 billion higher than they would have been without the increased investment in market 

development. The study also found that an estimated 47 percent of the programs’ 

total trade impact accrued to commodities not receiving market development assistance—a phenomenon known as the ‘‘halo’’ effect. In other words, non-promoted U.S. 

commodities benefited from increased promotion of other U.S. commodities in the 

same market. 

Emerging Markets Program 

The Emerging Markets Program (EMP) provides funding for technical assistance 

activities intended to promote exports of U.S. agricultural commodities and products 

to emerging markets in all geographic regions, consistent with U.S. foreign policy. 

The program is authorized by the Food, Agriculture, Conservation, and Trade Act 

of 1990, as amended, through the end of the current 2008 Farm Bill. Funding is 

set by Congress at $10 million each fiscal year from the Commodity Credit Corporation. 

EMP was specifically designed by Congress to improve market access and develop 

or promote exports of U.S. agricultural commodities and products to low and middle 

income emerging markets through cost-share assistance to eligible applicants for approved technical assistance activities. For this program, Congress defined an emerging market as any country that ‘‘is taking steps toward a market-oriented economy 

through the food, agriculture, or rural business sectors of the economy of the country,’’ and ‘‘has the potential to provide a viable and significant market for United 

States agricultural commodities or products of United States agricultural commodities.’’ EMP resources may be used to support exports of U.S. agricultural commodities and products only through generic activities, not specific brands. The EMP 

statute provides that the Secretary establish a private sector advisory committee to 

provide information and advice to USDA in developing strategies for providing technical assistance and enhancing markets for U.S. agricultural products in developing 

markets. More specifically, EMP Committee members review, from a non-governmental perspective, qualified proposals submitted for funding assistance. The Secretary of Agriculture appoints members to the Committee for 2 year terms. For Fiscal Year 2010, the EMP program supported 83 agricultural export promotion 

projects with funding totaling $8.3 million. 

In 2010, EMP assisted Wisconsin ginseng growers battle counterfeits. For more 

than a decade, the Ginseng Board of Wisconsin (GBW) has struggled with Chinese 

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counterfeiters selling fake Wisconsin Ginseng. With 90 percent of its exports going 

to China, the GBW moved aggressively to regain control of its brand. Using EMP, 

GBW initiated research to develop a technique to detect trace elements of ginseng’s 

valuable root to Wisconsin or where it was grown originally; initial findings are 

promising. 

Technical Assistance for Specialty Crops Program 

The Technical Assistance for Specialty Crops Program (TASC) was authorized by 

Congress in the Farm Security and Rural Investment Act of 2002. The 2008 Farm 

Bill reauthorized the Technical Assistance for Specialty Crops (TASC) Program and 

provided mandatory Commodity Credit Corporation (CCC) funds for the program. 

In FY 2010 the program was funded at $8 million and for FY 2011 and FY 2012 

program funding is set at $9 million. Congress authorized the TASC program to assist U.S. organizations by providing funding for specialty crops projects that address 

sanitary, phytosanitary and related technical barriers that prohibit or threaten the 

export of U.S. specialty crops. Using TASC, USDA has successfully helped U.S. exporters regain market access for millions of dollars of products from almonds to 

spinach. Examples of project activities include seminars and workshops, study tours, 

field surveys, pest and disease research, and pre-clearance programs. TASC proposals are accepted from U.S. nonprofit trade associations, universities, agricultural 

cooperatives, private companies, U.S. Government agencies and state government 

agencies. FAS, which administers the program, provides grant funds as direct assistance to U.S. organizations. Applicant contributions are not required, but are 

strongly encouraged. 

Last year, TASC was instrumental in assisting the U.S. potato exporters in overcoming a Thai phytosanitary protocol that was preventing U.S. exports from certain 

states. Following several months of negotiations between the Thailand Department 

of Agriculture and USDA, the U.S. Potato Board (USPB) used TASC to arrange for 

Thai officials to visit the U.S. and review U.S. seed certification procedures, seed 

cultivation practices and phytosanitary mitigation measures. Following this activity, 

Thailand agreed to additional market access that more than doubles—to fourteen—

the number of states eligible to export seed potatoes to Thailand. Seed potatoes from 

Colorado, Maine, Michigan, Minnesota, Montana, Nebraska, New York, North Dakota, Wisconsin and Wyoming may now be exported to Thailand. FAS estimates 

sales of $250,000 to $500,000 during the first year of Thai market access, while the 

USPB estimates that expanded market access could boost exports to Thailand to $1 

million in 3 to 5 years. 

Another example is U.S. hops exports to Canada. Canada buys more than $18 

million in U.S. hops, which makes it the fifth largest export market for U.S. hops 

producers. In response to limited pesticide tolerances in Canada that potentially 

threatened trade, TASC funds supported U.S. hop industry efforts to work with regulators in Canada in establishing five new hops-related maximum residue levels in 

Canada for pesticides critical to U.S. hop production. The Canadian tolerances were 

set at safe levels that allow U.S. hop growers to apply essential U.S. crop protection 

tools that significantly reduce the risk of shipping hops to Canada. Given that over 

half of U.S. hop production is exported, the setting of pesticide tolerances in one of 

the industry’s most crucial export markets has been vital for this industry. 

Export Credit Guarantee Program 

Starting in 1981, the Export Credit Guarantee Program (GSM–102) was originally 

administered under the Commodity Credit Corporation Charter Act. In the 1990 

Farm Bill GSM–102 became specifically authorized under, and subject to the provisions of, the Agricultural Trade Act of 1978, as amended. It has been continuously 

authorized since that time, but funding levels under the program were most recently 

authorized in the 2008 Farm Bill. The GSM–102 program was developed to expand 

U.S. agricultural exports by making available payment guarantees to encourage 

U.S. private sector financing of foreign purchases of U.S. agricultural commodities 

on credit terms. The payment guarantee issued under GSM–102 is an agreement 

by CCC to pay the exporter, or the U.S. financial institution that may take assignment of the payment guarantee, specified amounts of principal and interest in case 

of default by the foreign financial institution that issued the letter of credit for the 

export sale covered by the payment guarantee. By providing credit guarantees of up 

to 3 years to cover up to 100 percent of loan principal and a portion of the interest, 

the financial risk to U.S. lenders of foreign banks is greatly diminished. As Congress 

intended, the reduced risk in financing under GSM–102 increases export opportunities for U.S. exporters. This reduction in risk is most important for exports to developing countries, where the lack of credit often impedes a U.S. exporter’s ability to 

sell and the buyer’s ability to purchase U.S. agricultural commodities. GSM–102 is 

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an effective response to the short windows of opportunity that U.S. agricultural exporters face when financing trade based on market-based prices and slim margins. 

Applicable law mandates that CCC make available for each fiscal year an amount of credit guarantees equal to the lesser of (a) $5,500,000 or (b) an amount of guarantees that CCC can make available using budget authority for an underlying subsidy 

amount of the sum of $40 million per year plus any unobligated budget authority 

from prior fiscal years. For the last 2 years, the program has operated at a ‘‘negative 

subsidy,’’ meaning that the cash flow into the program has exceeded the funds needed to provide for expected losses. 

From its inception in the early 1980’s through June 2011, exports facilitated through the use of GSM–102 have reached a total of more than $100 billion. In FY 

2010, guarantees covered $3.10 billion in sales that ran the gamut from corn to 

Costa Rica to soybeans to Indonesia and from wheat to Nigeria to wood chips to 

Turkey. During the financial crisis of 2008 and 2009, FAS received a record number 

of applications for GSM–102, attesting to the success of the program in facilitating 

trade finance in times of tightened liquidity. In FY 2011, USDA expects to make 

available the full farm bill-mandated allocation of $5.5 billion in GSM–102 guarantees. These guarantees will facilitate targeting by U.S. agricultural exporters of 

sales to over 100 eligible country destinations. 

Facility Guarantee Program 

Authorized by Congress under the Food, Agriculture, Conservation and Trade Act 

of 1990, the Facility Guarantee Program (FGP) was designed to meet the financing 

needs for the establishment or improvement of facilities in emerging markets that 

would benefit U.S. agricultural exporters. By providing credit guarantees, FGP is 

intended to reduce the financial risk to U.S. lenders of default by foreign banks 

serving as borrowers, thus improving the ultimate buyer’s ability to acquire the agricultural-related infrastructure or services that will enhance U.S. export sales. 

Emerging markets often lack the infrastructure to support increased trade volume. 

Export sales of U.S. equipment or expertise to improve ports, loading and unloading 

capacity, refrigerated storage, warehouse and distribution systems, and other related facilities may qualify for facility guarantees, as long as these improvements 

are expected to increase opportunities for U.S. agricultural exports. 

From its inception, through June 2011, only one transaction has been guaranteed 

under FGP. Prior to the amendments to the statutory authority made in the 2008 

Farm Bill, FGP required U.S. content on any goods guaranteed. The 2008 Farm Bill 

allows for a waiver of the U.S. content requirement, if such goods are unavailable 

or the use of such goods is impracticable. FAS is currently reviewing how to implement this provision. FGP operates as a subset of the GSM–102 Export Credit Guarantee Program and under that authority is subsumed within the same overall limitations on the amount of credit guarantees that CCC may make available. 

Dairy Export Incentive Program 

The Dairy Export Incentive Program (DEIP) was enacted by Congress under the 

Food Security Act of 1985 and most recently reauthorized in the 2008 Farm Bill. 

The program provides a bonus or subsidy on a bid basis to exporters of dairy products. By providing a subsidy on exports of dairy products, Congress intended the 

DEIP to bridge the gap between world market prices and U.S. domestic prices. Commodities eligible under the DEIP are milk powder, nonfat dry milk, butterfat, and 

various cheeses. The authorizing legislation for the DEIP provides that the subsidy 

may be paid in cash or in commodities held by the CCC. As CCC inventories diminished, the DEIP evolved into the sole use of cash payments for the subsidy. The 

DEIP is subject to U.S. export subsidy reduction commitments under the World 

Trade Organization’s Uruguay Round Agreements, and is therefore capped by both 

subsidy level and quantity in accordance with those commitments. 

The DEIP has helped to meet the needs of U.S. exporters and expanding markets 

for U.S. dairy products when world prices are depressed due to the application of 

subsidies by other nations, particularly the European Union. Agricultural economists at FAS continuously monitor the world dairy situation and have the responsibility for recommending issuing allocations under the DEIP as world dairy prices 

dictate. Since 2002, world dairy prices have warranted issuing allocations under the 

DEIP five times. DEIP bonuses were last awarded in Fiscal Year 2010 in an amount 

of $2.37 million. In 2010, the DEIP was used to facilitate U.S. dairy exports around 

the globe, including mozzarella cheese to China and butter to Saudi Arabia. 

International Food Assistance and Development 

One of the most significant and compelling challenges the world faces is eradicating chronic hunger and malnourishment. The food aid and development programs 

administered by USDA’s Foreign Agricultural Service are making a difference in the 

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lives of poor and hungry people. These programs support international assistance 

and development activities that alleviate hunger and improve nutrition, education, 

and agriculture in some of the world’s poorest countries. 

McGovern-Dole Program 

The McGovern-Dole International Food for Education and Child Nutrition Program (McGovern-Dole Program) is authorized by the Farm Security and Rural Investment Act of 2002. Congress established the McGovern-Dole Program to carry 

out preschool and school food for education programs in foreign countries to improve 

food security, reduce the incidence of hunger, and improve literacy and primary education, particularly among girls; and maternal, infant, and child nutrition programs 

for pregnant women, nursing mothers, infants, and children who are 5 years of age 

or younger. Under this program, USDA donates U.S. agricultural products and provides financial and technical assistance for school feeding and maternal and child 

nutrition projects in low-income, food-deficit countries that are committed to universal education. The 2002 Farm Bill provided $100 million of CCC funds for the 

program and authorization of appropriations through 2007. This authorization of appropriations has been extended through FY 2012. In FY 2011, Congress appropriated $199.5 million for the program. In FY 2011, the McGovern-Dole Program 

will provide benefits to beneficiaries in 15 countries, including, Nepal, Haiti, Guatemala, Burkina Faso, and Senegal. 

Since 2003, the McGovern-Dole Program has supported projects in 41 countries 

and has fed up to five million schoolchildren each year. USDA enters into agreements with implementing organizations to carry out activities under the program. 

In progress reports, implementing organizations provide information about the number of children being fed, the increases in attendance, and other benefits that lead 

to improved literacy, better diet, and graduation of the programs. Organizations frequently report gains in attendance of ten percent or more in participating schools. 

USDA and the implementing organizations develop graduation plans to ensure that 

progress is being made toward the goal of having a local entity assume responsibility for the program. The McGovern-Dole Program graduated a school feeding 

project in Moldova, and the Government of Moldova has continued much of the program since the U.S. funding ended. School feeding programs in Kenya, Laos, and 

Guinea-Bissau are nearing full graduation. 

USDA is implementing improvements in program management that will allow for 

more intensive monitoring of results. In FY 2011, USDA released a results framework for implementing organizations that outlined the objectives for the program. 

Organizations will begin reporting against these frameworks in FY 2012, and USDA 

will review the results closely to keep organizations on track. The improvements address a recent GAO recommendation for an improved monitoring process, which we 

agree with and had recognized as appropriate. 

Food for Progress Program 

Authorized by Congress through the Food Security Act of 1985, the Food for 

Progress Program (FFPr) provides commodities on credit terms or on a grant basis 

to developing countries and emerging democracies to assist in the introduction of 

elements of free enterprise into the countries’ agricultural economies. CCC may purchase commodities for use in Food for Progress if the commodities are currently not 

held in CCC inventory. The 2008 Farm Bill extends authority for the program 

through 2012. 

Under FFPr, commodities are provided on a donation basis to foreign governments, private voluntary organizations, nonprofit organizations, cooperatives, or 

intergovernmental organizations. The implementing organizations request commodities and USDA purchases those commodities from the U.S. market. USDA donates 

the commodities to the implementing organizations and pays for the freight to move 

the commodity to the recipient country. In meeting the statutory requirements of 

the program, USDA considers proposals for all developing countries and territories 

with priority consideration given to proposals for countries with: per capita income 

at lower or lower-middle income standards (using World Bank statistics); greater 

than 20 percent prevalence of undernourishment as a proportion of the total population (World Health Organization (WHO) of the United Nations data); and positive 

movement toward freedom, including political rights and civil liberties (as defined 

by Freedom House). Depending on the agreement, the commodities donated through 

FFPr may be sold in the recipient country, and the proceeds used to support agricultural, economic, or infrastructure development programs. Assistance is provided 

through foreign governments, PVOs, nonprofit organizations, cooperatives, and 

intergovernmental organizations. 

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The FFPr allocations for FY 2011 include more than 232,000 metric tons of U.S. 

rice, wheat, vegetable oil, soybean meal, soybean oil, and corn valued at more than 

$143 million. The commodity value for FFPr is not limited, however the statute limits the amount UDSA can pay for non-commodity costs to no more than $40 million 

annually. These donations will reach more than 1.6 million beneficiaries in ten 

countries, including Haiti, Bangladesh, Uganda, Malawi, and Honduras. For example, in FY 2010, Land O’Lakes received an FFPr grant to improve commercial milk 

production, processing and marketing in Tanzania. By the end of the program, the 

gross value of milk produced in Tanzania is projected to increase by $2.1 million. 

The project will also create 180 new dairy sector-related jobs in private sector enterprises. 

P.L. 480 Title I Program 

The P.L. 480 Title I program was authorized by Congress in 1954 to allow 

concessional sales of U.S. agricultural commodities to developing countries. It is now 

authorized under the Food for Peace Act. Commodities provided under this program 

may be sold in the recipient country, and the proceeds may be used to support agricultural, economic, or infrastructure development projects in such country. The primary goals of the Title I program are to provide economic assistance and promote 

food security. Priority is given to countries coping with limited foreign exchange reserves, chronic food shortages, poverty, and underdevelopment in the agricultural 

sector. Past Title I programs have targeted countries with food insecurity, countries 

with limited foreign exchange, and countries working to alleviate poverty and develop their agricultural economies. 

Over the program’s history, USDA made concessional sales in response to requests from foreign governments. Concessional sales were made to governments 

that were facing food insecurity or economic problems or that were working to alleviate poverty and promote economic development. Since Fiscal Year 2006, new 

funding has not been requested or appropriated because demand for food assistance 

using credit financing has fallen and grant programs have become a more appropriate tool for providing food assistance. 

Borlaug Fellowship Program 

The Borlaug Fellowship Program (BFP) was initiated in March 2004 by FAS in 

honor of the late Nobel Laureate Dr. Norman E. Borlaug, an agronomist, humanitarian, and the father of the Green Revolution. Congress provided statutory authorization for the program in the Food, Conservation, and Energy Act of 2008. The BFP 

provides fellowships for scientific training and research in the United States to potential agricultural leaders with the goal of promoting food security and economic 

growth. 

Since its inception in 2004, the Borlaug Fellowship Program has provided agricultural scientific training in the United States for 539 Fellows from 64 countries in 

sub-Saharan Africa, the Middle East, the former Soviet Union, Asia and Latin 

America. Collaborative-research and training have spanned such fields as the plant 

and animal sciences, food safety, agricultural biotechnology, environmental sciences, 

climate change, and food security. Women agriculturalists receive priority consideration in the program and now comprise nearly 50 percent of participants. During 

FY 2011 it is anticipated that the Borlaug Fellowship Program will sponsor approximately 34 individuals from 26 countries. 

The program has facilitated the adoption of modern agricultural practices in targeted countries by strengthening human and institutional capacity through U.S.-

based training. The Borlaug Fellowship Program periodically conducts surveys to 

gather information from alumni about the impact of the fellowship program on their 

work. Responses from Borlaug alumni received in Fiscal Year 2010 overwhelmingly 

reported that their fellowship had a positive impact on one or more aspects of their 

work. Of the 100 surveys received, the Fellows specifically reported that participating in the Borlaug Fellowship Program positively impacted their research (92 

percent), teaching (74 percent), and policy objectives (14 percent), including the 

adoption of one or more new techniques or technologies (52 percent) in their home 

institutions. 

Local and Regional Food Aid Procurement Pilot Project 

The Local and Regional Food Aid Procurement Pilot Project is a 5 year, $60 million pilot project authorized and funded by Congress in the 2008 Farm Bill. Congress authorized the pilot project for the purpose of examining the timeliness and 

efficiency of local and regional procurement (LRP) as a tool to enhance U.S. Government food assistance programs. The 2008 Farm Bill established four requirements 

that USDA has met or is on track to meet in regard to the pilot project. First, a 

study of prior local and regional purchase programs was required. USDA submitted 

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this study to Congress in January 2009. Next, in light of the study, USDA was 

tasked to develop project guidelines. The guidelines were completed in FY 2009. A 

third requirement was to implement field-based projects during FY 2009–FY 2011. 

During this period, six private voluntary organizations and one international organization received funding to undertake 23 field-based projects in 19 different countries. A sample of projects supported by this program include: school feeding in 

Burkina Faso, relief for drought-affected households in Niger, and income-generating opportunities for women in Mali. At this time, all the available funding for 

the field-based projects has been obligated and implementation of the projects will 

be completed by September 30, 2011. The LRP pilot project’s fourth and final requirement, an independent evaluation, is moving forward on time. USDA has a contract with an independent evaluator to begin work on the LRP project evaluation 

and deliver it to Congress as required in May 2012. 

Conclusion 

As Administrator of USDA’s Foreign Agricultural Service, I am proud of our efforts in administering the farm bill authorized trade, food aid, and development programs of the U.S. Department of Agriculture. We look forward to providing any support we can as Congress works on the next farm bill. 

This concludes my statement. I look forward to answering any questions you may 

have. Thank you.

The CHAIRMAN. Thank you, Ms. Heinen. 

We will proceed then to Ms. Nancy Lindborg, Assistant Administrator for the Bureau of Democracy, Conflict, and Humanitarian 

Assistance, U.S. Agency for International Development, Washington, D.C. 

Let me point out that with unanimous consent, unless I hear otherwise, the gentleman from Massachusetts, Mr. McGovern, who is 

not a Member of this Subcommittee, has joined us today. I have 

consulted with the Ranking Member, and we are pleased to welcome him in joining the questioning of witnesses. 

STATEMENT OF NANCY LINDBORG, ASSISTANT

ADMINISTRATOR, BUREAU FOR DEMOCRACY, CONFLICT 

AND HUMANITARIAN ASSISTANCE, U.S. AGENCY FOR

INTERNATIONAL DEVELOPMENT, WASHINGTON, D.C. 

Ms. LINDBORG. Thank you, Chairman Johnson and distinguished 

Members of the Subcommittee. I appreciate very much the opportunity to be here today to talk about the important subject of food 

aid programs and those under Title II of the Food for Peace Act in 

the farm bill. 

For over 57 years, USAID Food for Peace programs have allowed 

the United States to offer a helping hand to those in need. Original 

recipients of food assistance include countries like France and Belgium in the post-World War II era and more recent graduates like 

India, who are now our friends, allies and trading partners. With 

Congress assistance, we have built over the years an enduring legacy that reflects the generosity of the American people and recognizes the importance of food security to our national security. 

Through the years, I have encountered many individuals from 

around the world, as I am sure you have, whose lives have been 

profoundly altered by offering that important assistance at a critical time in their lives. I remember well the farmer I met in southern Serbia who greeted me warmly with thanks for the Truman 

eggs he had received or my senior colleague at USAID who grew 

up in India with food assistance. 

The USAID’s Office of Food for Peace provides assistance as part 

of the Food for Peace Act and is responsible for both emergency reVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00287 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
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lief and development food aid programs using donated U.S. agricultural commodities. These programs allow us to provide emergency 

assistance in response to both natural disasters, such as droughts 

or floods, as well as in complex, protracted crises like Sudan. In 

2010, these Title II emergency programs enabled us to provide critical assistance to 46.5 million people in need in 27 countries around 

the world, helping us to alleviate malnutrition and hunger. In 

Pakistan, as you recall, epic flooding that began last year put millions of people in danger. We were quickly able to move U.S. commodities from pre-positioned warehouses, able to move our shipping routes, and allow our NGO and U.N. partners to borrow from 

Title II commodities already in the region. As a result, we were 

able to provide urgently needed food assistance to flood survivors 

quickly. 

Similarly, in the aftermath of the Haiti earthquake, we were able 

to get food to more than three million people desperately in need. 

In those critical early days, we moved food that was already on the 

ground in Haiti. We purchased 3,000 tons of American rice and we 

dispatched over 14,000 tons of food aid from pre-positioned stocks 

in Texas to reach earthquake survivors in one day. 

Today, we are looking at a very serious drought in the Horn of 

Africa. We have the lowest levels of rainfall in that region in 60 

years. This has resulted in severe food insecurity, water shortages, 

failed crops, and dying livestock, with 11 million people estimated 

to be in need. Of particular concern are the 800,000 Somali refuges 

arriving at camps in Ethiopia and Kenya with global acute malnutrition rates well above the emergency threshold. We were alerted about this impending drought last fall through our early warning systems. We began pre-positioning food stocks and have since 

been able to move food into the region to reach an estimated 4.2 

million people. We remain very concerned about this drought, are 

working with our international partners, but make no mistake that 

our food aid has made a critical difference in the lives of millions. 

The Horn is one of the best illustrations of why we are also focusing on helping people move from food aid to more sustainable 

productivity. We can’t stop droughts and floods from happening but 

we can enable farmers to be more productive and people to be more 

resilient. We do that with our development food aid, also part of 

Title II, which focuses on the most food-insecure countries where 

stunting rates are the highest and where people live on less than 

$1.25 per day. We know that getting the right nutrition to children 

under 2 can make the difference in a lifetime of a well-developed 

brain and the kind of opportunities that they deserve, and we know 

that agricultural productivity can help families sustainably provide 

for themselves. 

We work with U.S. non-governmental organizations, the World 

Food Programme and other U.N. partners to implement development food aid programs in 21 countries to assist eight million people, address chronic malnutrition, boost agricultural productivity 

and build resiliency. Globally, the Presidential Feed the Future Initiative has a mission to sustainably reduce hunger and poverty and 

ultimately enable people to move from food assistance to long-term 

food security. Our Title II programs complement and reinforce this 

initiative. Working across the U.S. Government and in close partVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00288 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
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nership with USDA, we are working to build the resiliency of vulnerable populations and to enable people to move into the sustainable productivity that will help them feed themselves. The Horn of 

Africa is a good example of where we are working to bring all of 

our resources to bear in meeting the challenges of repeated drought 

through both our emergency, our development and our Feed the 

Future resources. 

Our food aid has never been more important. As mentioned, 

somewhere between 700 million and a billion people go to bed hungry every night, and 3.5 million children each year die from malnutrition. The impacts of climate change, the severe weather 

events that we are seeing combined with densely populated urban 

centers are making people ever more vulnerable. At the same time, 

we are seeing rising food prices. We are working hard to increase 

effectiveness and efficiency and improving the quality of our food 

products. As you hold farm bill discussions where budgets are 

tight, food is more scarce and prices are high, we are seeking maximum flexibility to ensure that we can make the strategic choices 

for maximum impact. 

Thank you again for the support from this Committee, and we 

are very proud to have played a part in the extraordinary story of 

Title II food aid. Thank you. 

[The prepared statement of Ms. Lindborg follows:]

PREPARED STATEMENT OF NANCY LINDBORG, ASSISTANT ADMINISTRATOR, BUREAU

FOR DEMOCRACY, CONFLICT AND HUMANITARIAN ASSISTANCE, U.S. AGENCY FOR

INTERNATIONAL DEVELOPMENT, WASHINGTON, D.C. 

Introduction 

Thank you Mr. Chairman and distinguished Members of the Committee. I appreciate the opportunity to be here today to address the important subject of food aid 

programs in Title II of the Food for Peace Act. I will discuss the programs administered by the U.S. Agency for International Development (USAID), the importance 

of the programs to U.S. national security and to our moral values, some of the major 

accomplishments of the programs, and the challenges and concerns we face today. 

For over 57 years, the USAID Food for Peace program has allowed the United 

States to live up to our historic mission to help alleviate hunger around the world. 

With Congress’s assistance, we have fed billions of the world’s neediest people—perhaps the largest and longest-running expression of humanity ever seen in the world. 

Some of the countries that have received Title II assistance have become self-sufficient or even food exporters and international donors themselves. While we can look 

back on this unique American achievement with pride, we must also look forward 

and address the challenges facing us in this century. There are many. 

Under the Food for Peace Act, USAID has responsibility to administer Titles II, 

III, and V of the Trade portion of the farm bill. The Office of Food for Peace is 

tasked with managing programs under Title II of the Food for Peace Act, which consists of donating U.S. agricultural goods for emergency relief and development. It 

is administered through grants to U.S. nongovernmental organizations and the 

United Nations World Food Program. 

Emergency Response 

Title II emergency programs aim to address two forms of emergencies—natural 

disasters such as floods or droughts, and complex emergencies characterized by a 

combination of natural disaster, conflict, and insecurity. 

In FY 2010, Title II emergency programs helped 46.5 million food-insecure people 

in 27 countries by alleviating malnutrition and hunger. In FY 2010, our emergency 

programs accounted for over 3⁄4 of our base funding. 

In Pakistan, when epic flooding first began last year, Food for Peace sourced U.S. 

commodities from prepositioned warehouses, altered shipping routes, and allowed 

partners to borrow from Title II commodities already in the region to assure a timely response. 

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In the aftermath of the Haiti earthquake, we were able to pull over 6,500 tons 

from food aid already on the ground, purchased over 3,000 tons of American rice, 

and dispatched over 14,000 tons of food aid from prepositioned stocks in Texas to 

reach survivors. 

In FY 2011, USAID has already provided significant food assistance to the 

drought emergency affecting the Horn of Africa, particularly Ethiopia and Somalia, 

where more than ten million people require emergency assistance. This prolonged 

drought has resulted in severe food insecurity conditions, water shortages, and 

acute malnutrition rates above emergency thresholds, particularly among Somali 

refugees arriving at camps in Ethiopia and Kenya. The rate of new arrivals has significantly increased in recent weeks, with thousands of Somali refugees arriving 

weekly at refugee camps along the border, including the Dadaab refugee camp in 

northeastern Kenya. Humanitarian agencies operating in border areas and camps 

report that individuals are arriving in dire condition, requiring immediate life-saving support. The situation will deteriorate further without increased international 

attention. Even as we have provided more than $300 million in four countries to 

respond to the drought, we are working with other donors to help secure their contributions. Make no mistake, however, the Title II program, with the American flag 

prominently displayed, is making a difference for refugees and drought-affected populations in the Horn today. 

U.S. food aid has been critical in supporting millions of displaced persons in 

Darfur and Sudanese refugees in Chad and elsewhere, as well as saving lives, protecting livelihoods, and promoting the reintegration of returning populations in 

South Sudan. 

These are just a few of the examples of the live-saving work of our emergency 

response program. 

Development Food Aid 

We are also focusing our development food aid programs in the most food insecure countries, where stunting rates are highest and people live on less than $1.25 per 

day. We have reduced the number of countries we work in with development food 

aid by 25 percent since 2008 in order to focus and concentrate our resources for 

greater impact. The programs address chronic malnutrition, boost agricultural productivity and incomes, and help build resiliency. Targeted to disaster-prone areas, 

the program helps people to withstand the next drought or flood so they do not have 

to rely on emergency aid in the future. 

In FY 2010, our U.S. nongovernmental organization (NGO) partners implemented 

development food aid programs in 21 countries to benefit some eight million people. 

In Bangladesh, a country of 156 million people, 45 percent of the population does 

not meet the minimum food requirements. Approximately 37 percent of children 

under five are underweight, and over 48 percent suffer from stunting. Three Title 

II partners aim to assist over 580,000 households in some of the poorest and most 

marginalized communities over the course of their multi-year development programs. One program has already reduced stunting by 28 percent in targeted communities. They have also provided business training for more than 6,000 female entrepreneurs and increased incomes by 128 percent, among other successes. 

Globally the President’s Feed the Future initiative has a mission to sustainably 

reduce hunger and poverty. It aims to link highly productive geographic zones to 

more vulnerable areas, helping to increase labor opportunities for households, 

strengthen value chains, and increase rural jobs. Our Title II development programs 

complement and reinforce this initiative. Through these programs, and in combination with USAID’s other governance, development, and disaster mitigation programs, we aim to build the resiliency of the vulnerable populations we serve. 

Title III—Food for Development 

USAID also has responsibility for Food for Development (Title III), although funds 

have not been requested or appropriated for this program for more than a decade. 

USAID is authorized to donate agricultural commodities to a recipient country and 

to fund the transportation to the point of entry in the recipient country. These commodities may be monetized in least-developed countries’ domestic markets and the 

revenue generated from their sale used to support and implement economic development and food security programs in those countries. 

Title V—Farmer to Farmer Program 

The John Ogonowski and Doug Bereuter Farmer-to-Farmer Program (Title V) provides voluntary technical assistance to farmers, farm groups, and agribusinesses in 

developing and transitional countries to promote sustainable improvements in food 

security and agricultural processing, production, and marketing. The program relies 

on the expertise of volunteers from U.S. farms, land-grant universities, cooperatives, 

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private agribusinesses, and nonprofit farm organizations to respond to the local 

needs of host-country farmers and organizations. 

In FY 2010, implementing agencies fielded 522 volunteers from 48 states and the 

District of Columbia. Volunteer assignments focused on technology transfer, organizational development, business and enterprise development, financial services, and 

environmental conservation. Volunteers worked at various levels of the commodity 

production and marketing chain, including rural services and input supply, on-farm 

production, storage and processing, and marketing. 

Trends and Concerns 

Tonight, nearly one billion people will go to bed hungry and 3.5 million children 

will die this year of malnutrition. And unfortunately, these numbers may only get 

worse. Food prices are projected to remain high for at least the next several years. 

Thus, the U.S. commodities that are at the heart of our food aid programs—wheat, 

corn, sorghum, beans, vegetable oil—are projected to become more valuable over the 

next few years. It is difficult to predict where commodity prices will go in the long 

term. 

The impacts of climate change and other extreme weather events, combined with 

the growth of densely populated urban centers in areas vulnerable to natural disasters, are increasing the risk of large-scale displacement, damage and death due to 

natural disasters. In addition, the number of people displaced from conflict or violence has increased from 17.4 million in 1997 to 27.5 million in 2010, and displacements are increasingly prolonged. 

As Title II costs per metric ton have tripled, from a low of $390 per ton in 2001 

to a current high of $1,180 per ton for FY 2011, we expect to ship and program less 

Title II food aid in Fiscal Year 2011 than we did during Fiscal Years 2009 and 2010 

for equivalent amounts of funding. 

In this regard, we are strongly concerned about the Fiscal Year 2012 Title II 

budget of $1.03 billion passed by the House. At this funding level, approximately 

$590 million of Title II would be available for emergency programs in FY 2012, 

given the requirement to provide a minimum level of Title II funding for development food aid programs, which must increase by $25 million each year (regardless 

of appropriations levels). In FY 2012, the development food aid requirement is $450 

million. The House cut for Title II would require reductions in the largest emergency food aid programs, to include Ethiopia, Sudan, Haiti, Somalia, Afghanistan, 

and Pakistan. 

It should be underscored that Title II food assistance is extended to people in need 

regardless of the political regime they live under and the actions of their countries’ 

leaders, provided that adequate access and monitoring of the food aid is allowed. 

Such a policy is a long and proud American tradition that spans Administrations 

and one that the Administration continues. 

Monetization 

While Title II provides funds for transport and distribution of commodities, our 

partners also need cash to fund other components of development food aid programs. 

Private voluntary organizations often monetize the Title II development food aid, 

selling locally and using the proceeds to implement activities that are part of the 

broader Title II program, such as training agricultural extension workers. But there 

are limits to the extent this can be done, and as recently recommended by the Government Accountability Office (GAO), we need to be very careful that monetization 

does not have negative effects on local markets and production. 

We have taken note of the recent GAO report on monetization. As food assistance 

is becoming an increasingly precious resource, we need to make sure that every food 

aid dollar counts in a world where hunger is increasing. The use of monetization 

has to be targeted more effectively. 

As part of the Feed the Future Initiative, the Administration has requested cash 

to fund integrated community development efforts that would otherwise be 

resourced through Title II via monetization. The community development fund 

would be especially useful when monetization is not an appropriate tool. 

We recognize that monetization practices can be improved, and we will consider 

ways to continue to improve market analyses and monitoring and evaluation of 

monetization as well as the returns we get on monetized food. 

In this regard, USAID continues to manage a project to help ensure Title II programs comply with the Bellmon Amendment, which requires that adequate storage 

facilities be available in a recipient country upon arrival of a commodity to prevent 

spoilage or waste, and that distribution of the commodity in the recipient country 

will not result in substantial disincentive or interference with domestic production 

or marketing in that country. The Bellmon Estimation for Title II (BEST) Project 

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is conducting independent market analyses to ensure that these requirements are 

met. Studies have already been completed for a number of countries, which are posted on the USAID public website. 

My colleague from the U.S. Department of Agriculture (USDA) will be sharing 

with you information on their programs. We work closely with USDA on programming and commodity procurement. We are working to assure that we regularly exchange solicitations for future activities, that field-based staff increase collaboration, 

and that our monetization activities are well coordinated. 

More Efficient and Effective Food Assistance 

Let me also mention several other measures we have taken to make Title II assistance more effective and efficient to assist the most vulnerable populations overseas. 

For more effective decision making on emergency food aid allocations, and to better link early warning and response to emergencies, we developed a new Famine 

Early Warning System Network resource (FEWS NET)—the Food Assistance Outlook Briefing—which provides warning of food assistance needs 6 months in the future. These predictions are critical because of the time required to purchase and 

ship in-kind food aid from the United States. Already this system has allowed us 

to preposition commodities near the Eastern Horn of Africa to provide quick delivery 

of commodities in response to severe droughts. 

Globally, we have expanded our prepositioning to six sites, allowing us to maintain a continuous flow of vital food aid and in some cases reduce our response time 

significantly. 

As you know, Administrator Rajiv Shah has embarked on a USAID Forward reform effort that prioritizes evidence-based programming. As a reflection of our commitment to understand and improve impact we are undertaking a number of steps 

including:

• Adding monitoring and evaluation technical experts to our field team;

• Offering workshops and training to partners on monitoring and evaluation;

• Refining indicators to better measure our effectiveness; and

• Conducting research to better capture and summarize results and make recommendations for improved programming. 

Food Aid Quality 

Looking ahead, I want to mention a new initiative underway to improve the overall quality of our in-kind food aid. 

Just 3 months ago, in partnership with Tufts University, we released a 2 year 

food aid quality review produced in close consultation with private sector stakeholders, nongovernmental organizations, and leading nutritionists. We recognize 

and are grateful to Congress for their support in this effort. The review identified 

several ways to better match the nutritional quality of the food USAID provides to 

help children reach their maximum potential. Nutrition science now tells us that if 

a child does not receive certain basic nutritional requirements in the first 1,000 days 

of life his or her brain will never fully develop and he or she can never reach his 

or her full intellectual potential. 

We are targeting young children and their mothers in our food programs, and we 

will now have a panoply of products better suited to meet their nutritional needs. 

We will improve the micronutrient fortification of vegetable oil and milled grains 

and are working on development of a new blended product for preventing malnutrition in children from 6 months to 2 years. New products will also include new emergency bars, biscuits, and pastes that can quickly be distributed to displaced, malnourished populations. Together with our partners in academia, industry and other 

stakeholders, we are developing the next generation of food aid commodities. 

At the International Food Aid and Development conference in June, we had an 

opportunity to discuss in detail the findings of the report and to continue the exchange with both our domestic and international food aid partners about how we 

can move forward together on this important agenda. 

Broader Food Aid Reform 

As expressed earlier, to allow us to address these challenges we will need to continue to seek improvements in the effectiveness and efficiency of the food aid systems, as well as broader reform. The farm bill represents the greatest opportunity 

to address the need for broader food aid reform, to enable us to be more responsible 

stewards of this important national resource. 

The multiple legislative mandates for Title II in the Food for Peace Act create a 

number of operational difficulties and hinder the effectiveness of Title II. For examVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00292 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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ple, 75 percent of development commodities must be processed, fortified or bagged. 

It is very difficult to meet this requirement, forcing USAID to make less than optimal product selections—leading to supply- rather than demand-driven programming. Other mandates instruct USAID to:

• Monetize at least 15 percent of development food aid;

• Increase by $25 million per year the value of development programs, up to no 

less than $450 million in Fiscal Year 2012;

• Provide no less than 1.875 million metric tons of development food aid annually. 

(This is an unrealistic sub-minimum that would require close to the full Title 

II annual budget to meet.)

There are other technical requirements that are distinct and separate from the 

Title II food aid program, including cargo preference and the ‘‘Great Lakes’’ setaside statutory requirement, where clarifying language in legislation would allow 

Title II to be free from such restrictions. 

Congress will hold the forthcoming farm bill discussions in a context where budgets are tighter than ever, food is scarcer, and prices are high. In light of these challenges, we will be seeking maximum flexibility to assure that we can make strategic 

choices that yield maximum impact. We seek your support to reduce the complex 

and inefficient directives that hamper our programming choices and minimize our 

flexibility. 

Conclusion 

Food aid programs are complex, and the problems and issues that Title II food 

aid must address are increasingly complex. USAID believes that the area for greatest convergence of our interests is in ensuring what we have long held as a basic 

principle: that the right food should get to the right people at the right time, while 

doing no harm. As we look ahead, let me assure you that USAID remains committed 

to its role in supplying food aid to vulnerable people. With the support from Congress, we have fought and won many battles in the fight against hunger and malnutrition. Our programs have fed billions of the world’s neediest people, averted 

famines, and helped countries lift themselves out of poverty and dependence. 

Assisting in this effort are our partners. USAID has forged tremendously important partnerships with private voluntary organizations, as well as the UN World 

Food Program, to meet the food assistance needs of people around the world. Their 

teams have carried out their mission successfully and often at great personal risk. 

We recognize both their commitment and their sacrifice, including the many humanitarian aid workers who have lost their lives while assisting others. Those partnerships are strong, and continue into the future. 

We would also like to acknowledge our important partners in the agriculture sector—the farmers (businessmen), grain elevator operators, truckers, bargemen, 

freight forwarders, port operators, carriers, and others—who form an unbroken 

chain of humanity stretching from this country’s fertile fields to hungry families half 

a world away. 

As we reflect back on the enduring legacy that Food for Peace has had over the 

last 57 years, we should be proud of the impact we have had on those we have assisted and those who remember the American food that helped them and their families in times of need. 

I would again like to thank you for the support the Agriculture Committee has 

given to assist USAID in addressing food security needs abroad, demonstrating to 

the world the great heart of the American people. We should all be proud to have 

played a part in the extraordinary story of Title II food aid. Thank you.

The CHAIRMAN. Thank you for your testimony. 

Let me ask first of Ms. Heinen, what is the total amount, total 

dollar amount that FAS has spent on salaries and expenses out of 

the CCC since Fiscal Year 2009? 

Ms. HEINEN. I would say approximately $3 million. In the last 

year, we were given permission to use the program money instead 

of the CCC funds. I am trying to make a distinction here between 

the CCC Section 11 money and the program funds, and in the last 

2 years we have used some program funds, a small amount. Previous to that we used about $2 million a year out of Section 11 

funds. 

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The CHAIRMAN. How does that figure in Fiscal Year 2009 compare to the figure 2 years before, Fiscal Year 2007? 

Ms. HEINEN. In Fiscal Year 2007, I believe we were able to cover 

our expenses for running the programs out of our appropriated salaries and expenses. 

The CHAIRMAN. Both the Fiscal Year 2011 Continuing Resolution 

and our Fiscal Year 2012 appropriation bill give authority for FAS 

to use mandatory program funds for salaries and expenses. Could 

you detail for this Committee how much of the program funds are 

being used for costs including, not exclusive but including technical 

assistance, salaries, expenses for the program which receive mandatory funding and are operated by FAS? 

Ms. HEINEN. In the MAP program, I believe we have used about 

$2 million a year out of the program funds since we had permission 

to use program funds, about $300,000 under the FMD program, 

and even smaller amounts for the smaller programs, TASC, EMP. 

The CHAIRMAN. Would you acknowledge that that is a fairly 

unique, not totally unique but a fairly unique arrangement in 

terms of funding? 

Ms. HEINEN. In our food assistance programs, we also use that 

authorization, type of authorization to fund the salaries of people 

who we use to administer the programs, so it is unique for us in 

the last couple of years but looking across programs in the U.S. 

Government, we do not believe that this is unique. 

The CHAIRMAN. Well, in the structure of how you are funding 

various objectives, what are you doing, what are you specifically 

doing to save money for the United States Government? 

Ms. HEINEN. One way that we think is effective in saving the 

government money is our unified export strategy. We have one program, an electronic system that we have put in place where program participants apply for any of the programs that they want to 

use through one single entry point. This saves us time in evaluating between programs, and it also minimizes the number of people that we need to administer the programs because each program, each proposal and each program is matched with the most 

appropriate program that Congress has authorized for us to use. In 

our food aid programs, we have also gone to electronic-type systems 

to expedite and provide more transparency to the program delivery. 

The CHAIRMAN. Let me just ask quick question of Ms. Lindborg. 

In your agency’s response to the annual delivery cost for Public 

Law 480, Title II, you gave us a figure of about $730 per metric 

ton. This number doesn’t really tell us very much about the cost 

of implementing that program, Public Law 480. Could you describe 

in the limited time that you have in a little more detail the individual elements of this figure such as how much of the program delivery cost is salaries, how much is administrative expenses, indirect costs, shipping, storage and monitoring? 

Ms. LINDBORG. Mr. Chairman, I would be delighted to get you 

that information in a written form. It is a complex list. It does include our ocean freight, inland freight, internal shipping and handling in our Section 202(e) funds. We do continually seek to find 

the most effective way possible to ship our food. As you may be 

aware, there was an independent study done recently Cornell University that indicated that the taxpayers pay an extra $140 million 

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a year because of some of the commodity cargo preferences approaches. 

[The information referred to is located on p. 297.] 

The CHAIRMAN. I have a few more philosophical questions later 

but I defer to the distinguished Ranking Member from California, 

Mr. Costa. 

Mr. COSTA. Thank you again, Mr. Chairman. 

Ms. Lindborg, as you know, current law requires the submission 

of the international aid report by the USDA and USAID by April 

1st. It is my understanding that that information has not been provided on the type and the impacts of the programs that have been 

conducted from the previous year, and I would like to know when 

we are going to get it and what has been the delay. 

Ms. LINDBORG. Thank you, and our apologies for the delay. It is 

in its final stages, and I understand you will be receiving it very, 

very soon. 

Mr. COSTA. All right. 

Ms. Heinen, the first question deals with the Technical Assistance for Specialty Crops, which as I noted in my opening statement 

is very important to those who grow specialty crops around the 

country but certainly in California. The 2008 Farm Bill authorized 

funding at $4 million in Fiscal Year 2008, increasing incrementally, 

as I understand it, for 2011 and 2012. How has this increased 

funding been allocated? 

Ms. HEINEN. As I mentioned, we have one portal for administering our funds but we do have a special assistance for the specialty crops of $9 million. We take applications from cooperators 

who work with us——

Mr. COSTA. Can you give us some idea of which countries, which 

commodities, which examples have worked best? 

Ms. HEINEN. Probably any kind of horticultural crop that you can 

name has applied for these funds. Anyone who applies and meets 

the criteria does receive funds, and we work with applicants to ensure that they have the proper applications. 

Mr. COSTA. I mentioned earlier how sometimes phytosanitary 

standards are used. Has TASC been effective in breaking down 

technical food or animal restrictions? 

Ms. HEINEN. Absolutely. Just yesterday, I was talking with the 

Almond Board, and they told me that they use their TASC funds 

to change some standards that were going to impede their access 

to the Indian markets, saving them about $250 million in exports. 

We have used them to face problems with changing sanitary standards in countries around the globe—Mexico, China, pretty much everywhere. 

Mr. COSTA. Well, I want to go on to some other questions, but 

you did hit my sweet spot. Someone must have tipped you off. I 

grow almonds. 

A recent economic analysis conducted by Global Insight, I am 

told, incorporating the multi-year impact of market development 

expenditures from these programs from 2002 to 2009 indicated that 

for every dollar invested, there were $35 in agricultural export 

gains. I think that is a significant statistic, and 13 times greater 

than the average savings that the taxpayers would see from funding the program. The Market Access Program that you spoke of in 

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your comments has a number of areas that I think are very important that I would like to continue in the reauthorization of the 

farm bill. It is under question by some the need to have both the 

Foreign Market Development Program and the Market Access Program. Some are arguing that they are both branded generic commodities while one program only promotes generic commodities. 

Why do we need to have two programs? Can we combine them? 

Ms. HEINEN. Both programs I think serve different functions 

really. The Foreign Market Development really looks at more longterm things like trade servicing, which is necessary when you are 

trying to——

Mr. COSTA. But we have tight budgets and I think you are going 

to have to——

Ms. HEINEN. I understand. 

Mr. COSTA.—think out of the box, because this will be something 

that the full Agriculture Committee will have to consider next year. 

The food assistance effort to promote market development efforts 

by the private sector, how does the USDA ensure that Federal 

funds for market promotion are not displacing these funds? 

Ms. HEINEN. How does market promotion funds not displace——

Mr. COSTA. From the private sector that otherwise would be 

spent for overseas promotion. 

Ms. HEINEN. We match funds with the private sector. Our——

Mr. COSTA. Can we leverage better? 

Ms. HEINEN. Can we leverage better? The private sector is spending more than $1.50 for every dollar we put in now and in 

some cases and in some industries much more than that. Can we 

ask them to do more? Yes, we could ask them to do more. In some 

cases, it may be difficult for new entrants into programs but I 

think that they have shown their commitment to investing their 

own funds and their own time into this effort. 

Mr. COSTA. Mr. Chairman, my time has expired, but I have some 

additional questions that I am going to want to focus with the 

panel as it relates to a host of our trade-related assistance efforts. 

I think there is really value added for all the reasons that were 

stated before, and as we look at the reauthorization of the farm 

bill, I think we need to make sure that when we talk about fair 

trade and giving American agriculture the ability to access these 

markets, that we need to ensure that we are as effective as we possibly can. 

The CHAIRMAN. Thank you, Mr. Costa. 

I would recognize then the gentleman from Indiana, Congressman Stutzman. 

Mr. STUTZMAN. Thank you, Mr. Chairman, and thank you, 

ma’am, both of you ladies for being here today. I will direct my 

questions first of all to Ms. Heinen. 

Secretary Vilsack has said that record agricultural exports 

should help support more than one million jobs across the country. 

Does FAS have any statistics on how many private sector jobs are 

created due to trade promotional programs? 

Ms. HEINEN. Yes, Congressman. Our research indicates that for 

every billion dollars in exports, 8,400 jobs are generated in the 

United States. So we believe that it is very important to the rural 

economy especially. 

285

Mr. STUTZMAN. Okay. Very good. A recent press release by the 

USDA stated that overseas shipments of agricultural products have 

totaled $75 billion in the first 6 months of the fiscal year. Do you 

know what is the percentage of trade promotion programs within 

the $75 billion? 

Ms. HEINEN. It is difficult to exactly say which ones but we do 

know where we have interceded in markets that have made a difference. We have recently concluded some programs in Algeria, for 

example, that opened up $43 billion in dairy exports or possibility 

for dairy exports. We recently concluded agreements with, or met 

the standards using some of these funds and partnership with agricultural community to meet a deadline that would have prohibited 

about $150 million worth of our trade and plant products into Vietnam. The combination of our program, our partnership with the ag 

community and our agricultural attache ́s overseas, we can trace 

and we can give you some information later if you would like to see 

some of the activities and programs that we know have made a significant difference in the export numbers. 

Mr. STUTZMAN. Sure, I would be very interested in that. 

[The information referred to is located on p. 297.] 

Ms. Lindborg, what is the total amount spent on ocean freight 

for food aid before the MARAD reimbursements? 

Ms. LINDBORG. We spend—the annual delivery cost is about $730 

per metric ton, and that is inclusive of a variety of costs including 

the internal transport shipping and handling and the 202(e) costs, 

and we are happy to give you a more detailed breakout. 

Mr. STUTZMAN. Okay. Yes, that would be helpful as well. And 

then also, could you describe the number of countries you are focusing on with your development programs and then also how do you 

choose which countries you are focused on? 

Ms. LINDBORG. Sure. As I mentioned, our development programs, 

we work with our NGO partners in those countries that have the 

people who live on less than $1.25 per day, and we are working in 

21 countries right now to assist about eight million people, and we 

focus particularly on those who are most in need and address 

chronic malnutrition, particularly in children under 2, and seek to 

improve agricultural productivity to create pathways out of the 

need for continued assistance. 

Mr. STUTZMAN. How do you choose which development project 

should move forward? I mean, if you see a malnutrition program, 

I mean, there are a variety of places that you could obviously be 

involved. How do you—is it people that approach you, you approach 

them? 

Ms. LINDBORG. Obviously we can’t be everywhere in the world 

with the needs globally. We choose our countries on the basis of 

where there are unmet needs, where we are able to make a difference with the communities and populations we are serving and 

where we have a trusted partner who is able to demonstrate results. 

Mr. STUTZMAN. And could you elaborate on some of those locations? 

Ms. LINDBORG. On where we are currently doing those programs? 

Mr. STUTZMAN. Yes. 

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Ms. LINDBORG. Certainly. And another criteria that we are increasingly looking at is, are there ways that with that program we 

can leverage our other assistance programs, either through the 

Feed the Future Initiative or other of our aid programs. So, for example, in countries like Sudan, we are currently working, as that 

new nation is born, to work with farmers and women to improve 

their ability to move from what has been several decades of food 

assistance to growing crops that can feed the families and sustain 

them more productively. Oftentimes there are also components of 

increased water sanitation that are so important, so one important 

aspect of these programs is that they are able to work across a variety of sectors in a particular community. 

Mr. STUTZMAN. Thank you. 

Mr. Chairman, I yield back. 

The CHAIRMAN. Thank you. 

The chair would recognize the gentleman from North Carolina, 

Congressman Kissell. 

Mr. KISSELL. Thank you, Mr. Chairman, and we certainly do welcome our witnesses here today. 

Ms. Heinen, I read today where our trade deficit is approaching 

a 3 year high, so we obviously welcome exports of any kind, especially in agriculture. As the Ranking Member said, nobody does it 

better than what we do. I asked this question in a previous hearing 

where we were also talking about agriculture exports. We know 

food prices are rising worldwide, and we are not immune from that 

ourselves here in the United States, and it does affect our families. 

So what are some internal controls that we might use as we try 

to increase the exports that we are not in some way creating supply and demand problems that would cause our prices to go up 

here in and our families to suffer for something that maybe we 

could use internally that we don’t have to export? 

Ms. HEINEN. Congressman, thank you for the question. We believe—we monitor the market very closely but we believe that we 

can satisfy both markets. Currently, our agricultural industry does 

depend largely on exports. Twenty-five to 30 percent of our crop is 

exported. And in some cases, some industries are even more dependent on the export market where 95 percent of the consumers 

are located. We work hard in agriculture to increase productivity 

so that we can continue to feed our own people at reasonable 

prices, prices that they have come to expect. We think it is important to look outside as well to ensure that our farmers have outlets 

for their product, and we don’t have to spend a lot to support prices 

in this country. So we are in kind of a new epoch where the prices 

are much higher but we think it is important to continue to raise 

our productivity and to be a reliable supplier for our important customers overseas. 

Mr. KISSELL. Well, I appreciate that and very much support the 

export aspect of agriculture. It is very important that we have 

these markets and the things you are doing there. We appreciate 

also just keeping an eye on the supply and demand at home to kind 

of balance that too. You are talking about the need to increase our 

productivity, and there is another hearing this Committee had recently on biotech, and we haven’t made a lot of progress in the last 

few years in introducing new products. Ms. Lindborg, as we look 

287

to move some of our product overseas, do we find resistance in 

terms of some of the genetically altered foods that we are growing 

here with great success and the seeds that would offer solutions to 

some of the drought areas and other problem areas? Are we finding 

resistance to these moves? 

Ms. LINDBORG. Different countries have different policies, as you 

know, regarding the GMO crops. We are clearly concerned about 

ensuring that our food can reach those who need it the most in a 

timely manner, and believe that we are able to consistently do that 

by focusing where we can make the most difference. 

Mr. KISSELL. Well, one of the things our hearing pointed out once 

again is that in the last few years, we haven’t been able to get 

many of these new ideas moved forward but we have a pretty clean 

history in terms of these genetically altered materials being proven 

to be safe. I know different parts of the world are resistant to this 

but hopefully this is something we can also use these needs and 

demands to translate to more of these foods being available and 

helping these folks with drought-resistant seeds and things like 

this solve their own problems as you talked about. Mr. Chairman, 

I yield back. 

The CHAIRMAN. Thank you. 

The chair would recognize the gentleman from Georgia, Mr. 

Scott. 

Mr. SCOTT. Thank you, Mr. Chairman, and I will be asking to be 

excused shortly because of an Armed Services Committee meeting, 

so I will be brief. 

Ms. Heinen, Ms. Lindborg, thank you for joining us today, and 

I will stick to one question and one comment, if you will, one promotion, maybe. What can you tell me about the President’s outlook 

for trade and the role that the USDA will play in that? I mean, 

one of my primary concerns is that USDA will not have the role 

in agricultural trade relationships going forward that it currently 

does if we follow through with his initiative. Can you speak to that 

briefly? 

Ms. HEINEN. Sure. As you know, OMB is in charge of this process to look at efficiencies in government, but we did meet with 

them and we did explain our programs and why we exist as we do. 

Of course, we want to be helpful and we want to find efficiencies 

but in going through the process, which I did myself, I was more 

and more convinced of the importance of having the Department of 

Agriculture maintain this role. We work very close with our regulatory partners in USDA to solve some of the SPS and some of the 

other kinds of unique issues with agriculture. There are certification issues, there are port regulatory—there are just a whole 

range of issues. 

In addition, our reporting overseas is really critical to our baseline products of supply and demand all around the world, and that 

is part of a process every month that we go through to determine 

where the needs are, where the markets are, and it is important 

to supporting our farm community here. We think that we have 

found one agency that can do a great deal in all the different aspects of trade and so we would like to maintain those efficiencies 

as we have. Of course, also our legislation, our trade programs are 

all centered with CCC, which is with the Secretary of Agriculture, 

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so that is another issue that we would have to look at if we were 

going into a combined trade agency. The report, as we hear now, 

is probably—or suggestions from the report due in September, so 

we will wait to evaluate the suggestions that they have come up 

with at that time. 

Mr. SCOTT. My experience has been that if you are not from the 

farm, you really don’t understand agriculture. My fear is that we 

have somebody outside of the USDA handling the trade for agriculture, that we simply won’t get an effective trade agreement. 

Ms. Lindborg, I am going to leave this for you. This is a product 

that I came across. It is a mother-administered nutrition aid, and 

UNICEF is using this. It is essentially a peanut butter paste for 

malnourished children, and they are headed out of North Carolina. 

It is manufactured in Fitzgerald, Georgia. It is a charitable organization put together by missionaries but it is three packs a day for 

a malnourished child. It is packaged in a manner so that it would 

last for 2 years no matter what the climate it is in. I will have a 

staff member bring you the information, the fact sheet on it, but 

if you don’t mind, I would appreciate if you would look at it and 

just speak with me at your convenience over the next couple of 

weeks about this product and see if we can establish a relationship. 

I think it would be a very cost-effective way for you to help achieve 

some of your goals. Thank you. 

Ms. LINDBORG. Thank you, Congressman. I would just note that 

improving the food quality is one of our number one goals to ensure 

that the right kind of nutritional foods are available to those critical first thousand days, so I look forward to talking to you further. 

Mr. SCOTT. That is what it is designed for. Thank you. 

The CHAIRMAN. The chair would recognize the gentleman from 

Massachusetts, Mr. McGovern. 

Mr. MCGOVERN. Well, thank you, Mr. Chairman. I want to thank 

you and the Ranking Member for allowing me to sit in on this Subcommittee hearing. My interest for being here is that I care very 

deeply about our food aid programs, and I appreciate very much 

both USDA and USAID for a lot of the incredible work that you 

are doing as we speak. I think the Feed the Future Initiative is a 

good initiative because it connects all the dots and comes up with 

a comprehensive plan to not only deal with the issue of hunger but 

to deal with the issue of sustainability. Too often in this country, 

we are expending billions and billions of dollars responding to 

emergencies that probably could have been prevented or could have 

been better prepared for. And so in the long run, that will save us 

a great deal of money. 

But I was concerned during the debate on the ag appropriations 

bill that a lot of these programs like the McGovern-Dole program—

and I should state for the record that I am not the McGovern in 

the McGovern-Dole program, although I am one of the primary authors of the bill. It is George McGovern and Robert Dole. But programs like that, which are designed to make sure that every child 

in the world gets at least one nutritious meal a day in a school setting, and Food for Peace came under attack. I realize that we are 

in tough budgetary times but I think a lot of my colleagues on both 

sides of the aisle don’t quite appreciate the benefits of these programs. Yes, none of them are perfect and they could be better run. 

289

I cosponsored a request to GAO to do an audit and analysis of both 

McGovern-Dole and Food for Peace with Don Payne of New Jersey. 

There are some suggestions there that I know both USDA and 

USAID have enthusiastically embraced, which is good because we 

are always trying to improve the program. But there are American 

jobs that are created as a result of these programs, not just in 

farms but in trucking and in inspection, and on and on and on and 

on. But I also think it also fulfills a moral obligation we have to 

be proud of this global effort to end hunger. I am worried because 

hunger is one of those things that doesn’t seem to be getting better. 

We are getting to the point where there is close to a billion people 

in the world who are hungry, and I am worried that in the Fiscal 

Year 2011 Continuing Resolution and in the appropriations bill, we 

have made some cutbacks. Obviously we are making some tough 

choices but I don’t see that as saving money because it creates a 

whole bunch of other problems—more refugees, more health costs, 

more emergencies. And this is more than a humanitarian issue, it 

is a national security issue. I always remind people that protesters 

in Egypt that were protesting, food was one of the reasons why 

they were protesting. 

And so I would appreciate if you could help me with a couple 

questions. One, the impacts of cutting back on these programs, 

even though we have tough budgetary times, what are the costs? 

The other thing is, some of the recommendations in some of the reports that have been requested talk about putting greater emphasis on better nutrition, which costs a little bit more. How do you 

deal with that dilemma of trying to increase the standards in terms 

of nutrition for hungry people around the world but at the same 

time dealing with the costs? 

But I think we need to do a better job of helping quantify for 

Members of Congress that a little bit of investment up front saves 

you a lot in the future. The one final thing is, what are we doing 

to try to encourage our global partners to step up to the plate and 

be as generous as we are on some of these issues? 

Ms. LINDBORG. First of all, I thank you for your tireless advocacy 

for the hungry around the world. It makes an extraordinary difference, and please know that we very much share your concern, 

both with ensuring that we are able to continue to play the leadership role that we do in providing food to those who are most in 

need, doing it in the most cost-effective way and doing it in partnership with others. We have worked closely to encourage emerging donors such as Brazil to be able to join us in provision of food 

where the needs are far greater than any one nation can do alone, 

in particular in places like the Horn where we have 11 million currently in need. We have indeed looked hard at how to improve our 

effectiveness and efficiency of how we provide food assistance as 

well as improving our monitoring and evaluation systems, and continue to appreciate good suggestions on how to improve that. 

On the food quality issue, thanks to the support of this Committee, we have spent 2 years working with Tufts University to 

look very closely at what is the nutritional composition that most 

meets the needs of children under 2. When I was in Kansas City 

at the International Food Aid Conference about a month ago, we 

launched that study. We are working in partnership with industry, 

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shippers, growers and our NGO partners to look not just at what 

is the composition, what is the nutritional elements of the food, but 

how do we target that more effectively. We believe that that is ultimately the most cost-effective thing, cost-effective approach that we 

can take in ensuring that in those critical 2 years, children are able 

to get the nutrition they need. Thank you. 

The CHAIRMAN. The chair would recognize the gentleman from Illinois, Mr. Schilling. 

Mr. SCHILLING. Thank you, Chairman. 

I guess this could be for both of you or just one. I also have to 

excuse myself because I need to go after this question to the House 

Armed Services Committee meeting. Many of our programs utilize 

public and private partnerships with nonprofit organizations to implement individual projects. What is the process your agency uses 

to evaluate and approve the administrative costs for each project? 

How often does your agency reevaluate these guidelines? What is 

the average indirect support cost allowed as a percentage of the 

grant or agreement? 

Ms. HEINEN. We have a number of programs, I think 13 under 

this title, so we have some different criteria. Under our market promotion programs, we have an open opportunity each year for cooperators and those who want to participate to put in proposals. 

We evaluate those and allocate the funds through a single process. 

In the case of our food assistance programs, each year we meet 

with the private voluntary organizations of interest. We explain to 

them what we will be looking for in programs including what are 

our priority countries are for that year, which change. That is because we can’t hit all the countries all the years. We give them 

guidelines for what we want in the way of proving and results, and 

we continue to refine this process each year to try to make it more 

efficient and more effective. 

Mr. SCHILLING. Very good. 

Ms. LINDBORG. We have, with our NGO partners, particularly 

working on development food aid programs, we have an open competitive process and we work very closely in advance of the guidelines being issued with our NGO partners, and then review with 

some very specific guidelines and goals of the proposals when we 

receive them. Through the course of those projects, we have people 

on the ground or visiting those programs to do close monitoring 

and evaluation, again in processes that we develop in partnership 

with the NGOs. 

Mr. SCHILLING. Very good. Thank you very much. With that, I 

yield back. 

The CHAIRMAN. The Chairman would recognize the lady from 

Alabama, Ms. Sewell. 

Ms. SEWELL. Thank you, Mr. Chairman. I wanted to welcome our 

witnesses here today. 

I guess my question has to do with an industry that is very dear 

and near to my heart and to the district that I represent in Alabama, and that is catfish. I wanted to just ask you, Ms. Heinen, 

if you could tell me a little bit about what I could expect as far as 

future opportunities when it comes to catfish in foreign markets. 

Specifically, as you know, the Food Safety Inspection Service actually asked for comments on definition of what is catfish. I personVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00302 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
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ally, like most of my catfish farmers, want a broader definition of 

catfish to ensure that we don’t have any fraudulent markets of catfish. Could you please speak to what has been done by FAS to help 

ensure that catfish farmers and growers like those located in my 

district are able to tap into new foreign markets and expand their 

market share? 

Ms. HEINEN. Yes. As you probably know, the comment period has 

closed now on the catfish definition, so we await FSIS’s answers on 

those. The Catfish Institute is one of our cooperator groups that we 

work with every year to try to develop markets. I think this year 

they received MAP funds in excess of $300,000. Primarily, we look 

to the industry to give us what they think are their primary market issues and primary forward-looking markets, but we also use 

our people overseas to try to find markets and opportunities for different products that may be in demand. 

I think our greatest success with catfish has been close to home 

in Canada, which is true for many of our agricultural commodities. 

Canada is our second largest market now, but we are definitely 

working with them to try and look at new opportunities. One of the 

things that we encourage is that different cooperators work together to find ways that they might have synergies that they can 

help the other entrants in new markets where they have complementary products. So we are in close contact. We also have a regional trade organization in the South, so they work also with some 

of the individual smaller companies that might be involved in the 

catfish industry. 

Ms. SEWELL. I know that you are quite aware that the President 

signed a Executive Order recently for government reform and reorganization, and I really wanted to talk to you a little if you could 

speak to the pros and cons of any type of reorganization within 

FAS and how that would impact farmers. 

Ms. HEINEN. Well, certainly if we can find efficiencies, that is an 

advantage for the taxpayer. It is possible in a broader trade agency, maybe we would get more funding. On the other hand, we are 

a little bit afraid that we would be overwhelmed by larger agencies 

that might take more of the funding. We are concerned that we 

would lose a lot of our analysis capability that we think it is important both for supporting farm programs in the United States and 

for informing our farmers about what are the market opportunities 

overseas. We believe very much that our attache ́s provide a unique 

service to America’s farmers and ranchers because agriculture exports is more than just promoting agriculture, it is port entry, it 

is knowing the people, it is having insights into the regulations and 

knowing when they are going to change and knowing how that 

minor word might destroy an opportunity for a U.S. product because of the way our industry might be structured and things like 

that. So we see some downside risks with really having a close cooperator partnership with the industry and one that can really inform us well of when things are changing overseas that might have 

impact and have to weigh that heavily against what efficiencies 

might be gained by having a single agency for trade. 

Ms. SEWELL. Thank you. 

The CHAIRMAN. I would now call on the Ranking Member, Mr. 

Costa, who has a follow-up question or so. 

292

Mr. COSTA. To both our witnesses, I would like to refocus on 

some comments that were made earlier regarding the Doha round 

proposal. There is discussion about putting some of the items developed during the Doha round into a Harvest Plus package. I hope 

you are familiar with that. That would be agreed upon by World 

Trade Organization members at the December ministerial meeting. 

Among those identified for inclusion of this package is the export 

competition pillar, I am told, for agriculture in the 2008 draft modalities, which includes food aid. That is why I think both of you 

I would like to have respond. For the USDA, Ms. Heinen, what 

would the impact be of the December 2008 draft food aid tax for 

the Food for Progress Program under these circumstances? 

Ms. HEINEN. Thank you, Congressman. Well, in general at this 

point, I don’t think that we see a package for early harvest that 

we think would be advantageous to the United States but of course 

we are open to continuing that discussion. 

Mr. COSTA. I am told that under point 12 of the proposal that 

the language is a problem and it is not acceptable. Do you concur? 

Ms. HEINEN. On the monetization issue, we think that we would 

have to make some significant changes in our program, yes. 

Mr. COSTA. And what would be the impact, Ms. Lindborg, of the 

2008 language on the Food for Peace programs? Are you familiar 

with that? 

Ms. LINDBORG. Yes, I am. We are working closely with USTR 

and of course USDA to ensure that our emergency food aid programs are not unduly constrained. As it is currently framed——

Mr. COSTA. As it is currently framed, the monetization, I am 

told, to support ag development activities that support mother nutrition programs would be impacted. 

Ms. LINDBORG. Monetization would be constrained. Emergency 

food aid under the U.N. is currently protected, and we want to ensure that NGOs are as well in their ability to deliver assistance. 

Ms. HEINEN. If I might add, we do not think that the McGovernDole program would be affected at this point. 

Mr. COSTA. I share my colleague, Congressman McGovern’s concern because as I said, anecdotally, I think all of us have traveled 

abroad and seen the impact and the benefits of these programs. We 

are also mindful of the fact that there are challenges to getting the 

food to those who need it most, and clearly this is something that 

I want to work with my colleague, Congressman McGovern, and 

others on as we address the 2012 Farm Bill. 

Let me finally ask one more question, Ms. Heinen. The Subcommittee held a hearing in April examining the export programs. 

I referred to in my earlier questions, the Market Access Program 

in particular. I suggested to the USDA at that time, but I also 

think it is worth revisiting again today based upon the comments 

that some have made regarding the Market Access Program. Some 

have criticized it as a subsidy or corporate welfare. Those of us who 

are familiar with the program I think have a different view. Could 

you please explain to the Subcommittee Members your own take on 

the benefits of the Market Access Program? 

Ms. HEINEN. Yes, Congressman. When the program was originally authorized by Congress, there were not constraints on the 

size of companies and I think that there were some recipients that 

293

people thought didn’t need the assistance, but that has been 

changed in subsequent farm bills and so that now the monies go 

to nonprofit organizations, cooperatives that benefit the whole 

range of farming who represent a broad group of farmers. 

Mr. COSTA. And give us a greater opportunity to access those 

markets to establish that fair trade that isn’t always a two-way 

street. 

Ms. HEINEN. Absolutely. They use these monies to look at barriers, sanitary, phytosanitary barriers, many communication barriers, all sorts of things, getting even on shelves in supermarkets, 

the kinds of things that can make the difference for consumers’ 

choice. 

Mr. COSTA. Thank you. 

The CHAIRMAN. Mr. McGovern, do you have a second round of 

questions? 

Mr. MCGOVERN. Briefly, Mr. Chairman, because my commentary, 

my question was so long, Ms. Heinen, I didn’t get a chance to allow 

you to respond, but just to clarify a couple things for the record, 

in terms of administrative costs for the programs we are talking 

about in terms of food aid, I mean, are they higher than other administrative costs in other agencies or are they about the same? I 

mean, how would you classify the administrative costs of some of 

these programs? 

Ms. LINDBORG. We continually seek the flexibility that enables us 

to make the most cost-effective choices in moving the food because 

we do think it is so important that we have the ability to provide 

emergency food assistance to those in need. 

Mr. MCGOVERN. My understanding is that these programs are 

pretty well run by independent analysis, and sometimes there is 

this perception out there that all we need to do is cut more overhead here and staff here. I mean, part of the reason why you need 

adequate staff is because we are asking for you to do more monitoring and to deliver things more effectively, and that does require 

additional oversight and additional staff. 

Ms. LINDBORG. Absolutely, and we take the monitoring and evaluation very seriously, and you had asked earlier about how to 

quantify the impact, and I would say that we are very concerned 

that at a time where the needs are rising around the world, some 

of the projections for next year would leave us with less than half 

of the funding that we currently have to meet the needs of emergency food aid. 

Mr. MCGOVERN. Which means that thousands or tens of thousands or millions of people will not be able to get food? 

Ms. LINDBORG. Yes. Since 2008, we have served 140 million people globally. The average varies from year to year but it would be 

in the magnitude of 11 million people who we would not be able 

to reach. 

Mr. MCGOVERN. Go ahead. 

Ms. HEINEN. If I could just add that we are working closely with 

USAID and we are coordinating more to try and find efficiencies, 

but this is kind of an inherently risky proposition in many places 

that you are providing food aid, so those costs do go up. We are 

also working hard with the industry in the United States, which 

we think has a very important part to play in the provision of food 

294

aid and in helping us find better ways to package, better ways to 

deliver, better ways to serve the hungry of the world. 

Mr. MCGOVERN. Let me just say with regard to the McGovernDole program, I mean, again, I was one of the primary authors of 

that program although I am not related to the guy that it is named 

after, but that is a program that I really have been impressed with 

in terms of its ability to respond to some of the suggestions, whether it is through internal audits or whether it is through the Government Accountability Office to try to find ways to continue to improve and to be more effective and more cost-effective, if you will, 

but to reach more people. I think both within USAID and within 

USDA, I mean, that has been the case, and we need to make it 

clearer to people as to why these programs are so important and 

why they save us money, why they save lives, and why they are 

in our national security interest. I mean, there is not an actual constituency out there to tell Members, please continue to vote for a 

robust food aid budget for international food aid programs. So I appreciate your efforts in both agencies and I want to continue to 

work with you and make them even better. I think we need to do 

a better job of lifting this issue up and I think USAID and the Secretary of State and Secretary Vilsack have done a really good job 

with Feed the Future. People need to know more about that. I 

thank you both. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Let me just conclude by a specific and a general 

question and then we will bring the hearing to a close. 

Ms. Heinen, in regard to the Borlaug Fellowship Program, you 

have highlighted that that program has provided training opportunities for participants from a number of countries, I think you said 

64 countries in areas like biotechnology. Could you expand for us 

on what types of training the Borlaug fellows receive and how that 

training can be utilized to build regulatory capacity in their home 

countries? 

Ms. HEINEN. Yes, Congressman. The Borlaug Fellowship Program, of course named after the Nobel Laureate, Norman Borlaug, 

is helping to bring science to countries that have not invested in 

science in the past, and we have good examples of bringing scientists here for 4 or 5 months and they go back and they bring new 

technologies to their countries. We have examples where they have 

passed new laws that can provide for pilot technology, where they 

can do better testing for aflatoxins; that ruins crops and poisons 

people in some of these developing countries. So we find it to be 

a very effective program to bring our science to the developing 

world so that they can participate in feeding their people. 

The CHAIRMAN. Let me just ask one concluding question that is 

neither intended as either mean-spirited or politically correct, and 

I am sure every district in the country, in my district, people in 

Taylorville, Illinois, will ask me, we have a fiscal crisis, huge national debt, and we have hungry people here at home. How do 

these programs that the two of you implement and analogous programs in our government not only benefit the people for whom they 

are intended but how do they benefit people here in Taylorville, Illinois, or in Boston, Massachusetts? 

295

Ms. HEINEN. We have of course two kinds of programs. We think 

directly our programs that help exports are bringing jobs to those 

communities, bringing new opportunities to those communities, 

and so we think there is a very direct benefit. As far as our food 

assistance programs and helping countries overseas, as they can 

take care of themselves better, we think our costs for conflict and 

our costs for feeding the rest of the world will be reduced. As we 

make our farmers more efficient, we keep food prices down for our 

consumers here at home, so in those three ways I believe our programs are very helpful to your communities. 

The CHAIRMAN. Well, thank you, Members of the Committee. 

Thank you, Mr. McGovern, in particular for your courtesy of being 

with us today. We greatly enjoyed and benefited from your presence. 

Under the rules of the Committee, the record of today’s hearing 

will remain open for 10 calendar days to receive additional material and supplementary written responses from the witnesses to 

any questions posed by a Member. 

This hearing of the Subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture is adjourned. 

[Whereupon, at 11:23 a.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

296

297

SUPPLEMENTARY MATERIAL SUBMITTED BY SUZANNE HEINEN, ACTING ADMINISTRATOR, FOREIGN AGRICULTURAL SERVICE, U.S. DEPARTMENT OF AGRICULTURE

During the July 13, 2011 hearing entitled, Agricultural Program Audit: Examination of Foreign Agriculture and Food Aid Programs, a request for information was 

made to Suzanne Heinen. The following is the information submission for the 

record. 

Insert 

Mr. STUTZMAN. Okay. Very good. A recent press release by the USDA stated 

that overseas shipments of agricultural products have totaled $75 billion in the 

first 6 months of the fiscal year. Do you know what is the percentage of trade 

promotion programs within the $75 billion? 

Ms. HEINEN. It is difficult to exactly say which ones but we do know where 

we have interceded in markets that have made a difference. We have recently 

concluded some programs in Algeria, for example, that opened up $43 billion 

in dairy exports or possibility for dairy exports. We recently concluded agreements with, or met the standards using some of these funds and partnership 

with agricultural community to meet a deadline that would have prohibited 

about $150 million worth of our trade and plant products into Vietnam, so the 

combination of our program, our partnership with the ag community and our 

agricultural attache ́s overseas, we can trace and we can give you some information later if you would like to see some of the activities and programs that we 

know have made a significant difference in the export numbers. 

Mr. STUTZMAN. Sure, I would be very interested in that.

We recently examined the impact and effectiveness of foreign market development 

programs administered by FAS. In 2010, Global Insight, Inc., a private economic 

and financial analysis research firm, updated a cost-benefit analysis of two costshare programs (the Market Access Program [MAP] and Foreign Market Development Program [FMD]). The analysis showed that for every dollar that the government and industry invested on market development activities an additional $35 of 

U.S. food and agricultural exports was generated. Global Insight’s report concluded 

that U.S. agricultural exports in 2009 were $6.1 billion—or six percent—higher than 

they would have been without the increased investment in market development. 

Market development program investments can pay immediate dividends, such as 

new sales at trade shows and on trade missions as I discussed in my testimony. The 

investments can also build markets that result in years of sustained sales. For example, in Nigeria, a 10 year combined U.S. Wheat Associates and USDA investment 

of MAP and FMD funds exceeding $2.5 million resulted in increased U.S. wheat 

sales of over $750 million in FY 2010—a 265 percent increase over 2001 sales. 

Through close public-private partnerships, USDA and American producers can 

achieve real increases in market share and exports. 

SUPPLEMENTARY MATERIAL SUBMITTED BY NANCY LINDBORG, ASSISTANT ADMINISTRATOR, BUREAU FOR DEMOCRACY, CONFLICT AND HUMANITARIAN ASSISTANCE, 

U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

During the July 13, 2011 hearing entitled, Agricultural Program Audit: Examination of Foreign Agriculture and Food Aid Programs, a request for information was 

made to Nancy Lindborg. The following is the information submission for the record. 

Insert 

The CHAIRMAN. Let me just ask quick question of Ms. Lindborg. In your agency’s response to the annual delivery cost for Public Law 480, Title II, you gave 

us a figure of about $730 per metric ton. This number doesn’t really tell us very 

much about the cost of implementing that program, Public Law 480. Could you 

describe in the limited time that you have in a little more detail the individual 

elements of this figure such as how much of the program delivery costs is salaries, how much is administrative expenses, indirect costs, shipping, storage and 

monitoring? 

Ms. LINDBORG. Mr. Chairman, I would be delighted to get you that information in a written form. It is a complex list. It does include our ocean freight, 

inland freight, internal shipping and handling in our Section 202(e) funds. We 

do continually seek to find the most effective way possible to ship our food. As 

you may be aware, there was an independent study done recently Cornell University that indicated that the taxpayers pay an extra $140 million a year because of some of the commodity cargo preferences approaches.

298

* There was no response from the witness by the time this hearing went to press. 

Table containing information follows:

FY10 Title II Food for Peace Title II Associated Costs (to date) for FY 2010

Commodities $798,162,595 37.5%

Ocean Freight $431,097,863 20.3%

Inland Freight $196,838,908 9.2%

Section 202(e) $221,143,220 10%

Internal Transport, Shipping, Handling $445,827,166 21%

Personal Service Contractors $12,057,640 1%

Miscellaneous $23,523,963 1%

Total $2,128,651,355 100%

Note: Amounts reflect obligated to date. Miscellaneous includes technical assistance, Famine Early Warning 

System (FEWS), office space, International Food Relief Partnership (IFRP), information technology (IT), etc.

SUBMITTED QUESTIONS

Response from Suzanne Heinen, Acting Administrator, Foreign Agricultural Service, U.S. Department of Agriculture * 

Questions Submitted By Hon. Timothy V. Johnson, a Representative in Congress 

from Illinois 

Question 1. Ms. Heinen, your testimony states that applicant contributions are not 

required in the Technical Assistance for Specialty Crops program when the grant 

funds are awarded, but contributions are strongly encouraged. What percentage of 

approved projects provide contributions? What type of contributions are generally 

provided? Do you think it would be helpful to require applicants to provide a contribution? 

Question 2. USDA has announcement changes in the Market Access Program and 

Foreign Market Development Program, yet we have not seen any revisions in proposed changes. Have you heard from cooperators about those proposed changes? Do 

you plan to put forward an updated proposal after hearing from market participants’ recommendations? 

Question 3. Ms. Heinen, could you please elaborate for the record the unique characteristics and functions of each of our export promotion programs, and the distinct 

role each program plays in the creation, expansion, and maintenance of international markets for U.S. agricultural products? Do you see any overlap or duplication in what these programs are designed to achieve? 

Question 4. How much funding will be used this year from all sources for purchasing commodities from local or regional suppliers for food aid with U.S. program 

funds? What are your primary food safety and quality challenges when purchasing 

locally? 

Question Submitted By Hon. Collin C. Peterson, a Representative in Congress from 

Minnesota 

Question. How has USDA/FAS participated in the OMB-directed study related to 

trade reorganization of the Federal Government? How would USDA administered 

programs for market development and export credit guarantees be affected if they 

were merged into a larger, more broadly focused trade agency? 

Response from Nancy Lindborg, Assistant Administrator, Bureau for Democracy, Conflict and Humanitarian Assistance, U.S. Agency for International Development 

Questions Submitted By Hon. Timothy V. Johnson, a Representative in Congress 

from Illinois 

Question 1. How much funding will be used this year from all sources for purchasing commodities from local or regional suppliers for food aid with U.S. program 

funds? What are your primary food safety and quality challenges when purchasing 

locally? 

Answer. The Emergency Food Security Program (EFSP) was launched in April 

2010. It is managed by USAID’s Office of Food for Peace (FFP). EFSP provides 

grants for the local or regional procurement of food commodities, or the use of cash 

or vouchers for the purchase of food in response to an emergency overseas. In fiscal 

year 2011, $300 million in International Disaster Assistance appropriated through 

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the State, Foreign Operations Appropriations Act was used for the Emergency Food 

Security Program. As stated in the USAID International Emergency Food Assistance Annual Program Statement (APS), locally and regionally procured commodities 

under the EFSP must meet safety and quality standards. For local and regional procurement, bulk grains, legumes, and pulses must meet recipient country food safety 

standards. If the recipient country does not have food safety guidelines for grains, 

legumes, and pulses, then awardees must adhere to the Codex Alimentarius Recommended International Code of Practice. All other food products, including processed foods, fortified blended foods, and enriched foods, also must comply with the 

Codex Alimentarius Recommended International Code of Practice. Since the Emergency Food Security Program was started, USAID has not received any complaints 

regarding commodity safety or quality.

Question 2. Ms. Lindborg, in your testimony you mentioned the $450 million setaside for development funds. Could you provide additional details on how this provision may impact your ability to meet humanitarian needs? 

Answer. Under the Food for Peace Act, USAID must provide a minimum level of Title II funding for development food aid programs, which must increase by $25 million each year (regardless of appropriations levels). In FY 2012, this development 

food aid requirement is $450 million. The House-passed FY 2012 agriculture appropriations bill contained $1.032 billion for Title II, which would include the $450 million requirement for development food aid. USAID would have approximately $580 

million remaining for emergency programs in FY 2012. Compared to the FY 2012 

Title II emergency request of $1.240 billion, this would be a cut of $660 million in 

emergency food aid. During FY 2008–2010, USAID programmed approximately $1.8 

billion annually in Title II emergency resources.

Question 3. Ms. Lindborg, the 2008 Farm Bill provided additional authorities for 

prepositioning food aid to address urgent needs and reduce costs. How much have 

you spent on these warehousing sites? Is there a cost difference if the warehouse 

is empty? 

Answer. Since FY 2008, USAID has spent a total of approximately $12.9 million 

for overseas pre-positioning of Title II commodities. The pre-positioned warehouses 

only cost money when USAID has cargo situated within them. USAID does not hold 

leases on these warehouses. Rather, USAID is billed for usage.

Question 4. Ms. Lindborg, your testimony mentioned your policy to swiftly respond 

to any instances of fraud, waste, and abuse. Do you feel the monitoring and evaluation of programs by your agency staff is adequate to avoid instances of fraud in the 

first place? 

Answer. USAID’s Office of Food for Peace (FFP) is fully committed to Administrator Shah’s USAID Forward reforms that promote improved monitoring, evaluation, and transparency of food assistance programs. In part thanks to the additional 

flexibility provided in the 2008 Farm Bill, FFP has increased the number of monitoring and evaluation field staff stationed throughout the world to provide increased 

oversight and monitoring assistance to Title II awardees. Awardees report quarterly 

on lost and damaged commodities; and FFP is currently implementing a series of 

commodity management workshops to ensure that Title II awardees appropriately 

monitor the receipt and distribution of Title II food aid.

Question 5. For FY 2010, could you please elaborate on the specific cost components under P.L. 480 Title II, including: 

The average cost and range of costs per delivered metric ton (MT) for emergency 

food aid. 

Answer. The average costs per delivered MT for Title II emergency food aid during 

FY 2010 was $954. This includes awards made to both U.S. non-governmental organizations (NGOs) and the World Food Program (WFP). The figure includes commodity costs, shipping costs, and awardee implementing costs, such as internal 

transport, storage, and handing (ITSH), and section 202(e) administrative costs.

Question 5a. How much of P.L. 480 Title II funding was implemented by the 

World Food Program (WFP), and how much was implemented by U.S. non-governmental organizations (NGO)?

Answer. USAID awarded WFP $1,224,533,600 of Title II emergency resources in 

FY 2010. A combination of U.S. based and non-U.S. based NGOs were awarded 

$298,017,200 of Title II emergency resources. USAID also awarded NGOs 

$401,015,000 for the implementation of Title II development food assistance programs.

Question 5b. Is there a difference in the delivered cost per metric ton between 

what the WFP implemented and that which NGOs implemented? What criteria does 

USAID use to determine whether to provide funding through WFP or an NGO? 

300

Answer. WFP’s global average delivered cost per metric ton is $145.88 higher than 

NGO implemented programs. This variation is primarily a factor of commodity and 

freight price volatility, program locations, and programming considerations (ration 

mix, beneficiary targeting, distribution timing and methodology), rather than a 

measure of the operational efficiency of WFP or NGO partners. 

While each country context is different, the main factors considered when making 

funding decisions are:

➢ Timing—When must the food be called forward in order to reach beneficiaries 

on time? Will there be significant pipeline breaks at critical periods (such as the 

hunger season) that require assistance be sent now?

➢ Nature of the needs—What are the main factors indicating a food security 

emergency (acute malnutrition rates, significant crop losses, etc.)? What is the 

extent or severity of the emergency/food insecurity in the country or area in 

question?

➢ Appropriateness—Which or what combination of tools/resources (i.e., EFSP or 

Title II) are most appropriate to address the needs?

➢ Constraints—Are there other factors (e.g., host government policies, implementing partner capacity, or USG policy concerns) that should influence USAID 

support?

➢ Operational Capacity—Is the organization that submitted the appeal or proposal to USAID capable of carrying out the program?

301

Question 5c. For the WFP emergency programs, please show a breakout of average cost per metric ton of the following components: commodity, ocean freight, inland transportation, storage, handling, direct costs, any other specified costs, and the 7% overhead allowed for WFP 

indirect support costs. Do these costs include all costs associated with delivering the food to the recipient, as well as reporting and monitoring? 

Answer.

FY 2010 WFP Emergency Programs 

MT Total Emergency Commodity Price Ocean freight Inland freight ITSH 202(e) 

Total 1,283,900 $1,224,533,700 $458,435,400 $188,087,700 $106,131,300 $367,167,100 $104,712,200Average $953.76 $357.06 $146.50 $82.66 $285.98 $81.56Percent of Total Cost 37% 15% 9% 30% 9%

The above table breaks down the cost of Title II emergency programs implemented by WFP into the following components: commodity

price; ocean freight; inland freight; internal transportation, storage, and handling (ITSH); and section 202(e). Cost does include monitoring and evaluation. Please note that commodity and freight prices fluctuate throughout the year, and that not all programs incur inland freight costs. Section 202(e) funds include direct and other specified costs as described in the Food for Peace Act. WFP’s direct support costs and other direct operational costs are covered through both ITSH and section 202(e) funds. The seven percent overhead allowed for WFP indirect support costs are reflected in the 202(e) expense category.

Question 5d. When NGOs partner with WFP to deliver food aid to particular populations, do NGOs bear some of those costs? Answer. WFP establishes sub-agreements with its NGO partners, which may include what costs may be reimbursed as a result of these 

partnerships.

Question 5e. Could you explain how the WFP seven percent overhead rate was determined? Answer. WFP’s financial regulations are governed by its Executive Board. Comprising 36 State Members of the United Nations or Member Nations of the Food and Agriculture Organization, including the United States, the Executive Board establishes the overhead rate.Question 5f. For the NGO-implemented emergency programs, please show a breakout of average cost per metric ton of the following components: commodity, ocean freight, inland transportation, storage, handling, direct costs, any other specified costs, and the negotiated indirect cost recovery (NICRA). 

302

NGO Emergency Programs 

MT Total Emergency Commodity Price Ocean freight Inland freight ITSH 202(e) 

Total 368,890 $297,888,100 $120,412,400 $51,400,500 $27,830,400 $63,413,800 $34,831,000Average $807.53 $326.42 $139.34 $75.44 $171.90 $94.42Percent of Total Cost 40% 17% 9% 21% 12%

The above table breaks out the cost of NGO implemented emergency programs into the following components: commodity price; ocean

freight; inland freight; internal transportation, storage, and handling (ITSH); and section 202(e). Please note that commodity and freight prices fluctuate throughout the year, and that not all programs incur inland freight costs. Section 202(e) funds include direct and other specified costs as described in the Food for Peace Act. Indirect costs, determined by each NGO’s negotiated indirect cost rate agreement (NICRA), are included in section 202(e) funds.

Question 5g Could you please explain how NICRA is determined? Do these costs include all costs associated with delivering the food to 

the recipient and reporting and monitoring? Does it include any other activities beyond food distribution? 

Answer. Each NGO negotiates its indirect cost rate with one government agency that has been assigned cognizance. Usually the cognizant 

government agency is that agency which has the largest dollar volume of contracts with the firm or organization. The resulting NICRA is binding on the entire government. The NICRA contains both final rates for past periods and provisional (billing rates) for current and future periods. The Office of Food for Peace (FFP) does not apply NICRA rates to ITSH costs, equipment purchases, or sub-awards valued at greater than $25,000. Some examples of indirect costs are office space rental, utilities, and clerical and managerial staff salaries.

Question 5h What was the average cost per metric ton for the Title II non-emergency programs? Could you please show a breakout of the 

average cost per metric ton of the following components: commodity, ocean freight, inland transportation, storage, handling, direct costs, any other specified costs, and the associated NICRA? 

FY10 Title II Development Programs 

MT Total Development Commodity Price Ocean freight Inland freight ITSH 202(e) 

Total 500,150 $401,015,000 $171,694,400 $78,582,600 $27,466,800 $52,347,100 $70,924,100Average $801.79 $343.29 $157.12 $54.92 $104.66 $141.81Percent of Total Cost 43% 20% 7% 13% 18%

303

The above table breaks out the cost of NGO implemented development programs into the following components: commodity price; ocean 

freight; inland freight; internal transportation, storage, and handling (ITSH); and section 202(e). Please note that commodity and freight prices fluctuate throughout the year, and that not all programs incur inland freight costs. Section 202(e) funds include direct and other specified costs as described in the Food for Peace Act. Indirect costs, determined by each NGO’s NICRA, are paid through section 202(e) funds. 

304

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE—U.S. 

DEPARTMENT OF AGRICULTURE

1. Program Name 

P.L. 480 Title I. 

2. Subprograms/Department Initiatives 

N/A. 

3. Brief History 

The P.L. 480 Title I program was authorized in 1954 to allow concessional sales 

of U.S. agricultural commodities to developing countries. It is now authorized under 

the Food for Peace Act. The U.S. Department of Agriculture and the recipient country enter into an agreement, which may provide that the commodities may be resold by the recipient country and the proceeds used to support agricultural, economic, or infrastructure development projects. Since Fiscal Year 2006, new funding 

has not been requested or appropriated because demand for food assistance using 

credit financing has fallen and grant programs have been a more appropriate tool. 

4. Purpose/Goals 

Title I provides for government-to-government sales of agricultural commodities 

to developing countries under long-term credit arrangements. The primary goals of 

the Title I program are to provide economic assistance and promote food security. 

Priority is given to countries coping with limited foreign exchange reserves, chronic 

food shortages, poverty, and underdevelopment in the agricultural sector. Past Title 

I programs have targeted countries with food insecurity, countries with limited foreign exchange, and countries working to alleviate poverty and develop their agricultural economies. 

5. Success in Meeting Programmatic Purpose/Goals 

The Title I program account has not received funding since 2006. Over the program’s history, USDA made concessional loans in response to requests from foreign 

governments. Concessional loans were made to governments that were facing food 

insecurity or economic problems or that were working to alleviate poverty and promote economic development.

6. Annual Budget Authority (FY 

2002–FY 2011) ($ in Millions) 

FY BA 

2002 $146

2003 $140

2004 $132

2005 $117

2006 $64

2007 $3

2008 $3

2009 $3

2010 $3

2011 $3

7. Annual Outlays (FY 2002–FY 2011) 

($ in Millions) 

Please explain changes between 

budget authority and outlays.

FY Outlays a

2002 $182

2003 $88

2004 $121

2005 $116

2006 $66

305

FY Outlays a

2007 $60

2008 $27

2009 $25

2010 $17.4

2011 $16

aDoes not include subsidy reestimate. 

Not all payments (outlays) are made during the year in which budget authority 

is made available. Outlays could be made up to 5 years after the appropriation is 

received. Most payments are made by the third fiscal year after the appropriation. 

For most sales agreements under Title I, CCC will pay ocean freight charges only 

to the extent of the difference between U.S.-flag rates and foreign-flag rates when 

U.S.-flag vessels are required to be used in order to meet cargo preference requirements. The difference in rates is known as the ocean freight differential and those 

costs are included the outlays above. 

8. Annual Delivery Cost (FY 2002–FY 2011) 

To the best of the Department’s ability, please outline costs associated with delivery of program, including FTE’s, technical assistance, software, etc.

FY Annual Cost 

FTEs 

FTE Tech. Assist. 

2007 $3.4 0.166 3.373

2008 $2.7 0 2.680

2009 $2.7 0 2.736

2010 $2.8 0 2.812

2011 $2.8 (est.) 0 2.806

9. Eligibility Criteria 

Title I does not have a strict set of eligibility criteria, which allows the program 

to be flexible and to provide needs-based assistance. Although Title I concessional 

sales may be made to private entities, the vast majority have been made to sovereign governments. When making funding decisions, USDA considers food security, 

economic, and financial needs. 

10. Utilization (Participation) Data 

In 2006, USDA funded two Title I concessional sales to two sovereign governments (Peru and the Philippines). 

11. Duplication or Overlap with Other Programs 

The Food for Peace Act contains several titles, including Title II (administered by 

the U.S. Agency for International Development). However, Title I and Title II avoid 

overlap because they have distinct missions and goals. Title II programs target 

highly vulnerable populations in very poor countries through food security interventions and humanitarian assistance (including direct distribution). Title I, on the 

other hand, assists sovereign governments with broader economic needs and agricultural development. 

12. Waste, Fraud and Abuse 

FAS is proactive in monitoring Title I for any indications of waste, fraud or abuse. 

FAS has not found any systemic problems in Title I. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

McGovern-Dole International Food for Education and Child Nutrition Program. 

2. Subprograms/Department Initiatives 

N/A. 

306

3. Brief History 

The McGovern-Dole International Food for Education and Child Nutrition Program (McGovern-Dole Program) was authorized by the Farm Security and Rural Investment Act of 2002. Named in honor of Ambassador and former Senator George 

McGovern and former Senator Robert Dole for their efforts to encourage a global 

commitment to school feeding and child nutrition, the program replaced the pilot 

Global Food for Education Initiative, which fed nearly seven million children during 

2001–2002. Since 2003, the McGovern-Dole Program has supported projects in 41 

countries and fed 4–5 million children each year. The 2002 Farm Bill provided $100 

million of Commodity Credit Funds for the program and an authorization of appropriations through 2007. This authorization of appropriations has been extended 

through FY12. In FY 2011, Congress appropriated $199.1 million for the program. 

4. Purpose/Goals 

Congress established the McGovern-Dole Program to carry out preschool and 

school food for education programs in foreign countries to improve food security, reduce the incidence of hunger, and improve literacy and primary education, particularly with respect to girls; and maternal, infant, and child nutrition programs for 

pregnant women, nursing mothers, infants, and children who are 5 years of age or 

younger. Under this program, the U.S. Department of Agriculture (USDA) donates 

U.S. agricultural products and financial and technical assistance for school feeding 

and maternal and child nutrition projects in low-income, food-deficit countries that 

are committed to universal education. 

5. Success in Meeting Programmatic Purpose/Goals 

USDA enters into agreements with implementing organizations to carry out 

projects under the McGovern-Dole Program. In progress reports, implementing organizations provide information about the number of children being fed, the increases 

in attendance, and other benefits that lead to improved literacy, better diet, and 

graduation of the programs. Organizations frequently report gains in attendance of 

ten percent or more in participating schools. Teachers indicate that children are 

more attentive, have more energy, and will attend school for the whole day. 

One example is a program with International Partnership and Human Development in Guinea-Bissau. Activities include the provision of nutritious meals, nets and 

medicines to reduce malaria, and furniture for the schools. Infrastructural improvements are also underway for the school buildings and water and sewage systems. 

IPHD is focused on graduating or transferring responsibility for the program and 

is providing training and other support to build the country’s capacity. The program 

contributed to a 15 percent increase in school enrollment and an 11 percent reduction in absenteeism and dropout rates during the first 2 years. The children have 

more incentive and desire to attend school. Parents and local community members 

are realizing the benefits of education, and PTA participation is on the rise. The 

government has taken notice of IPHD’s successful strategy, and the Ministry of 

Education has stationed one of its top officials in its offices. 

USDA and the implementing organizations develop graduation plans to ensure 

that progress is being made toward the goal of having a local entity assume responsibility for the program. The projects in 41 countries are at different stages in 

achieving graduation. The McGovern-Dole Program graduated a school feeding 

project in Moldova, and the Government of Moldova has continued much of the program since the U.S. funding ended. School feeding programs in Kenya, Laos, and 

Guinea-Bissau are nearing full graduation. 

USDA is implementing improvements in program management that will allow for 

more intensive monitoring of results to ensure that implementing organizations are 

contributing to the desired results. In FY 2011, USDA released results frameworks 

that outlined the objectives for the program and the desired results. Organizations 

will begin reporting against these frameworks in FY 2012, and USDA will review 

the results closely to keep organizations on track or to make course corrections.

6. Annual Budget Authority (FY 

2002–FY 2011) ($ in Millions) 

FY BA 

2002 $0

2003 $100

2004 $50

2005 $87

307

6. Annual Budget Authority (FY 

2002–FY 2011) ($ in Millions)—

Continued

FY BA 

2006 $98

2007 $99

2008 $99

2009 $85

2010 $210

2011 $199.5

7. Annual Outlays (FY 2002–FY 2011) 

($ in Millions) 

Please explain changes between 

budget authority and outlays.

FY Outlays 

2002 $0

2003 $100

2004 $43

2005 $93

2006 $91

2007 $96

2008 $91

2009 $104

2010 $83

2011 $2

Not all payments (outlays) are made during the year in which budget authority 

is made available. Outlays could be made up to 5 years after the appropriation is 

received. Most payments are made by the third fiscal year after the appropriation 

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in Millions) 

To the best of the Department’s ability, please outline costs associated with delivery of program, including FTE’s, technical assistance, software, etc.

FY Annual Cost FTE 

2007 $1.000 8

2008 $1.500 12

2009 a $3.000 13

2010 a $2.300 13

2011 a $3.500 (est.) 13 (est.) 

aSource: Explanatory Notes Available Funds Table. Includes direct administrative 

costs but does not include miscellaneous indirect costs. 

9. Eligibility Criteria 

By statute, eligible entities are ‘‘private voluntary organizations, cooperatives, 

intergovernmental organizations, governments of developing countries and their 

agencies, and other organizations.’’ Under regulations, to be eligible to participate 

in the McGovern-Dole Program an organization must have the capacity to implement, monitor, and report on an award; experience working in the targeted country; 

an adequate financial framework to carry out the program; representation in the 

United States; and an operating financial account in the proposed target country. 

In addition, USDA publishes an annual list of McGovern-Dole priority countries in 

order to focus its resources where they are most needed. Priority countries must 

have a per capita income below $3,945; have a child growth stunting rate greater 

than 20 percent; have adult literacy rates below 80 percent; have government comVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00319 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
308

mitment to education; be free of civil conflict; and have USDA post coverage (to facilitate monitoring). 

10. Utilization (Participation) Data 

In FY 2010, the McGovern-Dole Program provided $174.1 million to 23 organizations to implement school feeding and nutrition programs, assisting 4.3 million 

beneficiaries in 18 countries. Approximately $3.5 million was used to cover administrative costs and an additional $10 million was allocated to fund the Micronutrient 

Fortified Food Aid Products Pilot, as required by Congress. The remaining $21.9 

million was rolled into FY 2011 to support programs in Haiti and Afghanistan, 

which were announced October 1, 2010. 

In FY 2011, the McGovern-Dole Program will provide $198 million to eight organizations in 15 countries to implement school feeding and nutrition programs, assisting 3.59 million beneficiaries. A detailed table of the FY 2011 is attached. 

11. Duplication or Overlap with Other Programs 

The McGovern-Dole Program’s purpose and goals do not overlap with those of 

other USDA food assistance programs. The U.S. Agency for International Development’s Title II program also provides school feeding in emergency situations. The 

McGovern-Dole Program provides school feeding over a longer period with a goal of 

graduating the program by having the government or other entities in the recipient 

country assume responsibility for the program. 

12.Waste, Fraud and Abuse 

The Foreign Agricultural Service (FAS) closely monitors the McGovern-Dole Program to ensure that participating organizations carry out agreements in accordance 

with program regulations. In recent years, financial, programmatic and compliance 

controls have been strengthened to identify and address any problematic issues or 

potential violations. FAS has also increased monitoring at the field level and invested in information systems to better implement program controls. Where any indications of waste, fraud and abuse have been found, FAS has been aggressive in 

pursuing corrective action, including criminal prosecution, to secure the recovery of 

funds and prevent recurrence. However, vigorous monitoring and oversight procedures have kept such indications to a minimum, and FAS has not found any systemic problems in the McGovern-Dole Program. The FAS Compliance staff routinely 

reviews McGovern-Dole Program agreements to document compliance and to ensure 

the effectiveness of FAS’s internal controls. The McGovern-Dole Program also is frequently audited by both the USDA Office of Inspector General and the Government 

Accountability Office, each of which provides detailed reports and recommendations 

for improvement. The most recent GAO report was released on May 19, 2011 (GAO–

11–544). Finally, the McGovern-Dole Program is included in the Commodity Credit 

Corporation’s annual audit, and is subject to additional government-wide oversight 

and reporting requirements as well, including the Improper Payments Information 

Act of 2002. 

13. Effect of Administrative PAYGO 

None. 

ATTACHMENT

Fiscal Year 2011

Fiscal Year 2011 McGovern-Dole International Food for Education and 

Child Nutrition (McGovern-Dole) 

McGovern-Dole Program: Approved Fiscal Year 2011 Allocations 

Country Participant/Commodity * Beneficiaries Est. Value 

(Million $) 

Bangladesh World Food Program/Wheat 350,000 $30.0

Burkina Faso Catholic Relief Services/Bulgur, 

Cornmeal, Lentils, Vegetable 

Oil 

130,000 $13.5

Congo International Partnership for 

Human Development/Beans, 

Dehydrated Potatoes, Milled 

Rice, Vegetable Oil 

110,000 $14.0

309

Fiscal Year 2011 McGovern-Dole International Food for Education and 

Child Nutrition (McGovern-Dole)—Continued

McGovern-Dole Program: Approved Fiscal Year 2011 Allocations 

Country Participant/Commodity * Beneficiaries Est. Value 

(Million $) 

Guatemala SHARE/Beans, Milled Rice, 

Soybean Meal, Vegetable Oil 

160,000 $23.0

Guinea-Bissau International Partnership for 

Human Development/Beans, 

Dehydrated Potatoes, Milled 

Rice, Vegetable Oil 

110,000 $16.0

Laos World Food Program/Corn Soy 

Blend, Milled Rice, Vegetable 

Oil 

250,000 $10.0

Mali Catholic Relief Services/Milled 

Rice, Peas, Vegetable Oil 

180,000 $18.0

Nepal World Food Program/Vegetable 

Oil, Wheat 

270,000 $6.0

Nicaragua Food for the Poor/Beans, Nonfat Dry Milk, Milled Rice, 

Textured Soy Protein, Vegetable Oil 

100,000 $12.5

Afghanistan World Vision/Milled Rice, Peas, 

Vegetable Oil 

80,000 $11.9

Haiti Haiti Vision/Beans, Milled Rice, 

Vegetable Oil 

30,000 $4.5

Haiti World Food Program/Lentils, 

Milled Rice, Vegetable Oil 

250,000 $6.0

Kenya World Food Program/Bulgur, 

Corn Soy Blend, Peas, Vegetable Oil 

650,000 $9.4

Liberia World Food Program/Bulgur, 

Peas, Vegetable Oil 

350,000 $6.4 

Malawi World Food Program/Corn Soy 

Blend 

300,000 $8.3 

Senegal Counterpart International/

Bulgur, Lentils, Vegetable Oil 

270,000 $8.5

Total McGovern-Dole Program Allocations 3,590,000 $198.0

1. Program Name 

Local and Regional Food Aid Procurement Projects. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The USDA Local and Regional Food Aid Procurement Pilot Project (USDA LRP 

Project) is a 5 year, $60 million pilot authorized and funded by Congress in Section 

3206 of the Food, Conservation, and Energy Act of 2008 (Farm Bill) for the purpose 

of examining the timeliness and efficiency of local and regional procurement (LRP) 

as a tool to enhance U.S. Government food assistance programs. The LRP pilot provides cash grants for the purchase of food from surplus-producing areas in the country or region to respond to a natural disaster or other food crisis. 

4. Purpose/Goals 

The goal of the USDA LRP Project is to produce an independent evaluation of 

field based LRP projects, which will help inform Congressional discussions regardVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00321 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
310

ing the future use of local and regional procurement in U.S. Government food assistance programming. The evaluation is specifically to examine: the benefits to local 

agriculture; the impact on markets and consumers; the period of time required for 

procurement and delivery; quality and safety assurances; and implementation costs. 

5. Success in Meeting Programmatic Purpose/Goals 

To achieve the goal of the USDA LRP, the authorizing law established four objectives that have been met or are on course to be met.. The first objective required 

a study of prior local and regional purchases, which USDA completed and submitted 

to Congress in January 2009. The second objective called for development of project 

guidelines, and these were completed in FY 2009. The third objective concerned implementing field-based projects during FY 2009–2011. All available funding for the 

projects has been obligated, and implementation will be completed by September 30, 

2011. The fourth objective called for an independent evaluation of the project to be 

completed by June 2012. USDA has contracted with Management Services International has to conduct the evaluation.

6. Annual Budget Authority (FY 

2002–FY 2011) ($ in Millions) 

FY BA 

2002 $0

2003 $0

2004 $0

2005 $0

2006 $0

2007 $0

2008 $0

2009 $5

2010 $25

2011 $25

7. Annual Outlays (FY 2002–FY 2011) 

($ in Millions) 

Please explain changes between 

budget authority and outlays.

FY Outlays 

2002 $0

2003 $0

2004 $0

2005 $0

2006 $0

2007 $0

2008 $0

2009 $0

2010 $1

2011 $39

Not all payments (outlays) are made during the year in which the program agreement is entered into. Outlays could be made up to 5 years after the project is implemented. Most payments are made by the third fiscal year. 

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in Millions) 

To the best of the Department’s ability, please outline costs associated with delivery of program, including FTE’s, technical assistance, software, etc.

311

FY 

Annual Cost FTE 

Section 11 & 

General

appropriations 

Admin. Cost 

Prog. Funds 

for Admin. 

Support 

FTE Tech Assist 

2007

2008

2009 a $.3 1 1

2010 a $1.0 2 1

2011 a $0 $1.6 2 (est.) 1

aSource: Explanatory Notes Available Funds Table. Includes direct administrative 

costs but does not include miscellaneous indirect costs. 

This program began in FY 2009. 

Beginning in FY 2009, Section 103 of the American Recovery and Reinvestment 

Act (ARRA) exempts program funds used to pay authorized administrative costs 

from counting against the CCC section 11 cap. In FYs 2010 and 2011 Appropriations Act provisions continued to allow program funds to be used for administrative 

costs. 

9. Eligibility Criteria 

By statute, private voluntary organizations and international organizations are eligible. 

10. Utilization (Participation) Data 

During FY 2009 to FY 2011, six private voluntary organizations and one international organization (the World Food Program) received funding. The participants 

implemented 23 projects in 19 different countries. About 1.7 million beneficiaries received assistance. 

11. Duplication or Overlap with Other Programs 

While the pilot aspect of the USDA LRP Project is unique the individual emergency response field-based projects funded under the USDA LRP Project can be 

similar to projects funded by USAID’s Food for Peace Office (FFP) under the Emergency Food Security Program. The USDA LRP Project team actively shares information, and collaborates, with FFP to avoid duplication or overlap with their programs. 

In addition to the emergency response projects, the USDA LRP Project allows for 

funding of projects that focus on the development of suppliers in recipient countries. 

USAID’s program funds emergency response projects only. 

12. Waste, Fraud and Abuse 

None identified. 

13. Effect of Administrative PAYGO 

None.

312

ATTACHMENT

USDA Local and Regional Procurement Project Funding Allocations FY 2009–2011

FY Organization Recipient Country Program Type Awards Funding Available Admin. Total Unobligated 

1 2009 WFP Mali Development $1,049,752 2 2009 WFP Malawi Development $1,700,0013 2009 WFP Tanzania Development $2,000,185

FY 2009 Sub-total $4,749,938 $5,000,000 $250,062 $0

4 2010 Mercy Corps Niger Emergency $4,577,747 5 2010 Land O’Lakes Bangladesh Development $2,619,9196 2010 CRS Guatemala Emergency $1,751,2057 2010 CRS Mali Development $106,0988 2010 CRS Benin Development $1,278,6949 2010 CRS Burkina Faso Development $985,965

10 2010 IRD Cambodia Development $710,13811 2010 Land O’Lakes Zambia Development $3,624,01712 2010 WFP Mali Development $1,104,90613 2010 Fabretto Nicaragua Development $675,14714 2010 WFP Congo, Republic of Emergency $2,449,12815 2010 WFP Cameroon Emergency $819,88516 2010 WFP Chad Emergency $3,107,000

FY 2010 Sub-total $23,809,851 $25,000,000 $1,178,000 $12,149

17 2011 World Vision Uganda Development $3,965,025 18 2011 WFP Cameroon Emergency $2,180,80819 2011 UMCOR Zimbabwe Emergency $1,623,17720 2011 WFP Mozambique Emergency $3,498,791 21 2011 WFP Pakistan Emergency $5,719,963 22 2011 CRS Niger Emergency $4,465,632 23 2011 World Vision Kenya Emergency $1,871,750

FY 2011 Sub-total $23,325,146 $25,000,000 $1,573,000 $101,854

Total Funded $51,884,934 $55,000,000 $3,001,062 $114,004

313

1. Program Name 

Food for Progress. 

2. Subprograms/Department Initiatives 

N/A. 

3. Brief History 

The Food for Progress (FFPr) program was authorized by the Food for Progress 

Act of 1985. Most recently, it was reauthorized through 2012 in the 2008 Farm Bill. 

Since 1985, FFPr has provided donated U.S. agricultural commodities to developing 

countries and emerging democracies committed to introducing and expanding free 

enterprise in their agricultural sectors. Donated commodities are typically ‘‘monetized’’ (or sold on the local market), and the proceeds are used to support agricultural development activities. 

4. Purpose/Goals 

The FFPr program uses the food resources of the United States to support market-based agricultural development to improve agricultural productivity and to expand trade of agricultural products in food-deficit developing countries and emerging democracies. 

5. Success in Meeting Programmatic Purpose/Goals 

During FY 2010, the FFPr program funded 12 programs in 11 countries. These 

programs are reaching approximately 3,985,000 beneficiaries through agricultural 

development activities including construction of irrigation systems, agricultural production training, microfinance, and dairy value chain development. For example, 

Land O’Lakes received an FFPr grant to improve commercial milk production, processing and marketing in Tanzania. By the end of the program, the gross value of 

milk produced in Tanzania is projected to increase by $2.1 million. The project will 

also create 180 new dairy sector-related jobs in private sector enterprises.

6. Annual Budget Authority (FY 

2002–FY 2011) ($ in Millions) 

FY BA 

2002 $126

2003 $137

2004 $138

2005 $122

2006 $131

2007 $147

2008 $155

2009 $216

2010 $146

2011 $192

7. Annual Outlays (FY 2002–FY 2011) 

($ in Millions) 

Please explain changes between 

budget authority and outlays.

FY Outlays 

2002 $202

2003 $203

2004 $113

2005 $93

2006 $154

2007 $120

2008 $219

2009 $155

2010 $117

314

FY Outlays 

2011 $189

Not all payments (outlays) are made during the year in which the program agreement is entered into. Outlays could be made up to 5 years after the program is implemented. Most payments are made by the third fiscal year. 

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in Millions) 

To the best of the Department’s ability, please outline costs associated with delivery of program, including FTE’s, technical assistance, software, etc.

FY 

Annual Cost FTE 

Section 11 & 

General

appropriations 

Admin. Cost 

Prog. Funds 

for Admin. 

Support 

FTE Tech Assist 

2007 $2.1 3 4.62

2008 $0 0 4.62

2009 a $0.009 1 4.62

2010 a $2.1 2 4.62

2011 a $0 $3.4 (est.) 5 4.62

aSource: Explanatory Notes Available Funds Table. Includes direct administrative 

costs but does not include miscellaneous indirect costs. 

For FY 2009 and FY 2010, Section 103 of the American Recovery and Reinvestment Act (ARRA) exempted CCC program funds used to pay authorized administrative costs for FFPr from counting against the cap on CCC funds used to pay for salaries and administrative costs imposed by Section 11 of the CCC Charter Act. The 

Department of Defense and Full-Year Continuing Appropriations Act of 2011 continued the exemption from the CCC section 11 cap for CCC funds used to pay authorized administrative costs of FFPr. 

9. Eligibility Criteria 

Consistent with CFR 1499.3, to be eligible to participate in the FFPr program an 

organization must have: the capacity to implement, monitor, and report on an 

award; experience working in the targeted country; an adequate financial framework to carry out the program; representation in the United States; and an operating financial account in the proposed target country. Additionally, USDA publishes an annual list of FFPr priority countries in order to focus its resources where 

they are most needed. Priority countries must: have a per capita income below 

$3,945; have a malnutrition rate greater than 20 percent; be ranked free or partly 

free by Freedom House; and have USDA post coverage (to facilitate monitoring). 

10. Utilization (Participation) Data 

In FY 2011 the FFPr program will fund 13 projects reaching approximately 

1,678,000 beneficiaries. A table of the FY 2011 allocations is attached. 

11. Duplication or Overlap with Other Programs 

Food for Progress is similar in scope to the Multi-year Assistance Programs 

(MYAPs) funded under Title II of the Food for Peace Act (administered by USAID). 

Both programs monetize agricultural commodities to support development activities. 

However, these programs complement and do not duplicate one another because of 

their difference in mission. Title II programs target highly vulnerable populations 

in very poor countries through food security interventions. FFPr, on the other hand, 

works to promote private sector agricultural development in emerging democracies. 

Additionally, these programs further avoid overlap by coordinating closely to ensure 

that their different activities complement and do not duplicate one another. 

12. Waste, Fraud and Abuse 

FAS closely monitors all food aid programs to ensure that participating organizations carry out agreements in accordance with program regulations. In recent years, 

financial, programmatic and compliance controls have been strengthened to identify 

and address any problematic issues or potential violations. FAS has also increased 

monitoring at the field level and invested in information systems to better impleVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00326 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
315

ment program controls. Where any indications of waste, fraud and abuse are found, 

FAS has been aggressive in pursuing corrective action, including criminal prosecution, to secure the recovery of funds and prevent recurrence. However, vigorous 

monitoring and oversight procedures have kept such indications to a minimum, and 

FAS is not aware of any systemic problems in FFPr. The FAS Compliance staff routinely reviews FFPr agreements to document compliance and to ensure the effectiveness of FAS’s internal controls. In FY2010 Compliance reviewed $330,471,030 across 

all FAS programs and disallowed $227,159, which was returned by participants. The 

FFPr program also is frequently audited by both the USDA Office of Inspector General and the Government Accountability Office, each of which provides detailed reports and recommendations for improvement. Finally, FAS programs are subject to 

the same oversight and documentation requirements common to all USDA programs, including the Improper Payments Information Act. 

13. Effect of Administrative PAYGO 

None. 

ATTACHMENT

Fiscal Year 2011

Fiscal Year 2011 Food for Progress (FFPr) 

Food for Progress: Fiscal Year 2011 Allocations 

Country Participant/Commodity * Beneficiaries Est. Value 

(Million $) 

Bangladesh Small Enterprise Assistance 

Funds/Wheat 

13,200 $17.5

Bangladesh Winrock International/Wheat 411,600 $4.3

Benin Partners for Development/Soybean Oil, Rice 30,000 $5.5

Burkina Faso International Relief and Development/Rice 213,840 $8.6

Haiti FINCA International/Wheat 148,500 $6.1

Haiti Inter-American Institute for Cooperation on Agriculture/Soybean Oil, Wheat † 126 $8.5

Honduras Government of Honduras/Corn, 

Wheat, Soybean Meal 

36,000 $11.0

Kenya TechnoServe/Wheat 10,090 $14.8

Liberia Land O’Lakes/Rice, Vegetable 

Oil 

11,650 $16.6

Malawi Land O’Lakes/Wheat, Soybean 

Oil 

564,542 $18.1

Philippines Catholic Relief Services/Soybean Meal 64,648 $13.9

Uganda Mercy Corps/Wheat 83,200 $11.2

Uganda National Cooperative Business 

Association/Soybean Oil 

90,215 $12.0

Total 1,677,611 $148.1

* Commodities and tonnages are subject to change, pending negotiation of food aid 

agreements with program participants. 

† Grant will improve inspection facilities, estimated to benefit six million people in 

the agricultural sectors of Haiti and the Dominican Republic. 

1. Program Name 

Bill Emerson Humanitarian Trust (BEHT). 

2. Subprograms/Department Initiatives 

N/A. 

316

3. Brief History 

The trust was originally authorized by the Agricultural Act of 1980 as the Food 

Security Wheat Reserve and the BEHT was later established in 1998 by the Bill 

Emerson Humanitarian Trust Act. The 2002 Farm Bill extended the authority 

through 2007, and the 2008 Farm Bill extends the authority through Fiscal Year 

2012. The BEHT complements the traditional P.L. 480 food aid programs, particularly Title II. The trust can be replenished only through open market purchases (requiring either appropriations or transfer of P.L. 480 funds as reimbursement for 

prior releases) or by designation of Commodity Credit Corporation stocks of eligible 

commodities. Cash held in the BEHT may be used to purchase commodities to meet 

emergency food needs overseas. By statute, the funds and commodities held in the 

trust shall be made available on a determination by the USAID Administrator that 

funds available for emergency needs under Title II for a fiscal year are insufficient 

to meet emergency needs. The trust has undergone significant transformation over 

the years and has evolved from being an all-wheat reserve to an all-cash reserve 

today. The trust currently holds $311 million in cash. 

4. Purpose/Goals 

The purpose of the trust is to meet humanitarian food needs in developing countries by using BEHT assets during periods of tight supply to meet unanticipated 

emergency food aid needs. 

5. Success in Meeting Programmatic Purpose/Goals 

Assets from the BEHT are used to meet unanticipated emergency food aid needs 

on an as-needed basis. They were used most recently in 2008 to avoid famine in the 

Democratic Peoples’ Republic of Korea (North Korea).

6. Annual Budget Authority (FY 

2002–FY 2011) ($ in Millions) 

FY BA 

2002 $175

2003 $212

2004 $0

2005 $377

2006 $0

2007 $0

2008 $266

2009 $7

2010 $0

2011 $0

7. Annual Outlays (FY 2002–FY 2011) 

($ in Millions) 

FY Outlays 

2002 $175

2003 $212

2004 $0

2005 $377

2006 $0

2007 $0

2008 $188

2009 $83

2010 $0

2011 $0

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in Millions) 

To the best of the Department’s ability, please outline costs associated with delivery of program, including FTE’s, technical assistance, software, etc.

317

FY Annual Cost FTEs 

2007 $.1 1

2008 $.1 1

2009 $.1 1

2010 $0 0

2011 $0 0

9. Eligibility Criteria 

Any country in need of P.L. 480 title II emergency food aid from the United States 

is eligible. USAID requests the release of BEHT assets. 

10. Utilization (Participation) Data 

There are currently no countries (or beneficiaries) that are receiving food under 

the BEHT. 

11. Duplication or Overlap with Other Programs 

The BEHT is the only emergemny food reserve program of the U.S. Government 

for international assistance. 

12. Waste, Fraud and Abuse 

There have not been any instances of waste, fraud, or abuse, including overpayments, which USDA or other government agencies have determined to be problems. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Export Credit Guarantee Program, GSM–102. 

2. Subprograms/Department Initiatives 

N/A. 

3. Brief History 

Currently authorized by Congress under section 202 of the Agricultural Trade Act 

of 1978, as amended, the GSM–102 program of the Commodity Credit Corporation 

(CCC) was developed to expand U.S. agricultural exports by making available payment guarantees to encourage U.S. private sector financing of foreign purchases of 

U.S. agricultural commodities on credit terms. The program has been in continuous 

operation since 1981. 

4. Purpose/Goals 

By providing credit guarantees of up to 3 years that cover 98 percent of loan principal and a portion of the interest, the financial risk to U.S. lenders (banks or exporters) of foreign banks is greatly diminished. This reduced risk in financing increases export opportunities in primarily developing countries, where the lack of 

credit impedes an exporter’s ability to sell and a buyer’s ability to acquire U.S. agricultural commodities. 

5. Success in Meeting Programmatic Purpose/Goals 

From inception through June 2011, exports facilitated through the use of the program have reached $100 billion. During the financial crisis of 2008 and 2009, the 

program experienced record applications, attesting to its value in facilitating trade 

finance in times of tightened liquidity.

Fiscal Year Guarantees Issued

($ billions) 

2002 $2.93

2003 $2.54

2004 $2.93

2005 $2.17

2006 $1.36

2007 $1.44

2008 $3.12

2009 $5.36

318

Fiscal Year Guarantees Issued

($ billions) 

2010 $3.10

2011 * $5.4

* Full year (est.). 

6. Annual Budget Authority (FY 2002–FY 2011) 

Applicable law mandates that CCC make available for each fiscal year an amount 

of credit guarantees equal to the lesser of (a) $5,500,000 or (b) an amount of guarantees that CCC can make available using budget authority for an underlying subsidy 

amount of the sum of $40 million per year plus any unobligated budget authority 

from prior fiscal years. For the last 2 years, the program has operated at a ‘‘negative 

subsidy,’’ meaning that the cash flow into the program has exceeded the funds needed to provide for expected losses. 

7. Annual Outlays (FY 2002–FY 2011) 

Under Credit Reform legislation, budget authority is reflective of the ‘‘subsidy’’ or 

estimated level of yearly funding provisioned to cover the expected losses incurred 

by the government on issuance of a direct loan or guarantee—not the dollar value 

of the loans disbursed or guaranteed. Since 2010, the GSM–102 program has operated with a negative subsidy—meaning that the cash flows into the program are in 

excess of the funds needed to provision for expected losses. 

8. Annual Delivery Cost (FY 2002–FY 2011) 

To the best of the Department’s ability, please outline costs associated with delivery of program, including FTE’s, technical assistance, software, etc.

A separate appropriation of $6.8 million (FY 2011) is used to cover the salaries 

and other administrative costs of the program (S&E). An additional $1.6 million (FY 

2011) of Commodity Credit Corporation funds is used to maintain the program’s information technology support for web interface, system of records and database to 

preserve claims status and pursue recoveries from defaulting parties. 

9. Eligibility Criteria 

Please explain who is eligible for participation in this program. Also list any special considerations (for example priority areas or carve-outs for certain eligible producers). 

All potential participants—exporters, U.S. financial institutions, foreign banks 

and countries can participate—provided they are not suspended, debarred or otherwise prohibited from participation in U.S. Government programs. In addition, exporters must have an office in the United States; U.S. financial institutions must 

be regulated; and foreign banks are subject to extensive individual financial review 

to determine creditworthiness. By law, credit guarantees cannot be issued to any 

country that cannot adequately service the debt associated with particular export 

sales. 

10. Utilization (Participation) Data 

Please provide the number of participants in the program. If there is a backlog, 

please explain that as well. Where appropriate, please include additional information, such as the number of acres enrolled in the program. 

At this time, 159 foreign banks have approved credit lines and 52 U.S. banks are 

approved for participation. Exporters who have been issued guarantees by year are 

shown below.

Fiscal Year 

Number of

Participants

(exporters) 

2002 116

2003 110

2004 90

2005 91

2006 74

2007 64

2008 59

2009 77

319

Fiscal Year 

Number of

Participants

(exporters) 

2010 77

2011 76

11. Duplication or Overlap with Other Programs 

If the purpose/goals or mission of this program are similar to those of other programs, please list those other programs along with an explanation. 

In establishing guidelines for the program, Congress saw the need to offer U.S. 

Government supported finance options that are responsive to the financing needs 

of exporters of U.S. agriculture and the unique way their products are traded on 

international markets. GSM–102 evolved to respond efficiently and quickly to the 

short windows of opportunity available on products traded on market-based prices 

and slim margins as compared to industrial and other goods. GSM–102 is a niche 

program that complements other U.S. Government trade finance programs. 

12. Waste, Fraud and Abuse 

Please provide examples of waste, fraud, and abuse including overpayments that 

the Department or other government agency has determined is a problem and how 

the Department is combating such problems. 

USDA is proactive in reviewing this program and its participants. Where there 

is any indication of waste, fraud and abuse, the Department is aggressive in investigating those incidents. At this time we have no confirmed evidence of waste, fraud 

and abuse under GSM–102. This program has fully implemented, documented and 

tests at least annually its internal controls in accordance with both, OMB Circular 

A–123, which implements requirements of the Federal Managers’ Financial Integrity Act of 1982, and the Improper Payments Information Act of 2002 (IPIA). 

13. Effect of Administrative PAYGO 

See PAYGO table attached.

320

ATTACHMENT

Administrative PAYGO Scorecard 

(In Millions of Dollars) 

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Savings: 

GSM–102 implementation of risk based approach (FAS/GSM) (139.0) (139.0) (139.0) (139.0) (139.0) RMA Terminations not previously counted (RMA/Crop Ins.) (4.6) (23.0) (23.4) (23.7) (24.1) Forest Service Increase Timber and Payment to State Receipts (FS/KV) (51.0) 2008 $2 CRP Maintenance Reduction—present & future (FSA/CRP) (0.1) (0.6) (24.6) (28.7) (31.6) 2009 Reduction in CRP Maintenance payments (FSA/CRP) (43.6) (1.5) 2010 CRP Modification (Duck, Quail, SAFE/Reduction in bottomland 

hardwood) (FSA/CRP) 0.0 0.0 0.0 0.0 0.0 (2.9) 

Crop Insurance Standard Risk Agreement (RMA/Crop Ins.) (2,000.0) 

Costs: 

Title XIX Treatment Facilities (FNS/SNAP) 3.0 4.0 6.0 6.0 6.0Forest Service Change in K–V Trust Fund Spending (FS/KV) 51 18Factor Removal (RMA/Crop Ins.) 0.4 2.7 8.3RMA Crop Expansions (RMA/Crop Ins.) 0.6 12.8CCC Section 4 Limit (FSA/CCC) 7.5 10.8 6.9 5.3Food Aid Commodity Swaps (FSA/CCC) 77.0 60.0 111.0 67.0Federal Base Acre reinstatement (FSA/Direct and Countercyclical) 5.0Wetlands Incentives (FSA/CRP) 7.8 14.6 17.3 19.2 20.8CREP Incentives (FSA/CRP) 0.7 2.3 7.3 9.5 10.8ACRE Sign-up extension (FSA/ACRE) 30.02009 CRP extensions (FSA/CRP) 19.0July 2009 Increase in minimum dairy prices (CCC/Dairy Product Price 

Support) 7.0

RMA—PRF–RI in MT (Board Approved) (RMA/Crop Ins.) 4.6 23.0 23.4 23.7 24.1CRP Initiatives (FSA/CRP) 500.0Crop Insurance Initiatives (FSA/Crop Ins.) 1,500.0

Available Savings (128.5) (29.2) (65.7) (17.6) (0.0) 0.0 0.0 (0.0) 0.0 (2.9) 

321

1. Program Name 

Market Access Program. 

2. Subprograms/Department Initiatives 

N/A. 

3. Brief History 

The Market Access Program (MAP), previously known as the Market Promotion 

Program, is administered by the Foreign Agricultural Service and uses funds from 

the Commodity Credit Corporation (CCC). The Targeted Export Assistance Program 

was originally authorized in the Food Security Act of 1985 and was subsequently 

reauthorized and renamed as the Market Promotion Program in the 1990 Farm Bill. 

The 1996 Farm Bill renamed the program as MAP and established a prohibition on 

the use of MAP funds to promote the products of large companies. Today, only small 

companies and agricultural cooperatives may promote their brands with MAP funding. MAP funding was re-authorized through 2012 by the 2008 Farm Bill. 

4. Purpose/Goals 

Goals of the MAP are to encourage the creation, expansion, or maintenance of foreign agricultural export markets. Under the MAP, the CCC enters into agreements 

with eligible participants to share the cost of certain overseas marketing and promotion activities. MAP helps United States commercial entities conduct brand promotion activities including advertising, trade shows, in-store demonstrations, and 

trade seminars. Under MAP, program participants are reimbursed for their expenses in carrying out approved promotional activities. 

5. Success in Meeting Programmatic Purpose/Goals 

MAP applications undergo a competitive review process based on criteria as specified in the MAP regulations and an annual Federal Register announcement. Funds 

are awarded to applicants that demonstrate effective performance based on a clear, 

long-term strategic plan. FAS also considers the extent to which a proposed project 

targets markets with the greatest growth potential. The FAS allocates funds in a 

manner that effectively supports the strategic decision making initiatives of the 

Government Performance and Results Act (GPRA) of 1993. In 2007, FAS commissioned a cost-benefit analysis of USDA’s market development programs with an 

independent economic analysis firm, Global Insight Inc., and recently received the 

results of an update of that study. The study reported that U.S. agricultural exports 

were $6.1 billion higher in 2009, compared to what they would have been without 

the increased investment in market development. Every dollar of increased investment in the MAP and FMD resulted in $35 in exports.

6. Annual Budget Authority (FY 

2002–FY 2011) ($ in Millions) 

FY BA 

2002 $100

2003 $110

2004 $125

2005 $140

2006 $200

2007 $200

2008 $200

2009 $200

2010 $200

2011 $200

7. Annual Outlays (FY 2002–FY 2011) 

($ in Millions) 

Please explain changes between 

budget authority and outlays.

322

FY Outlays 

2002 $97

2003 $103

2004 $124

2005 $139

2006 $158

2007 $184

2008 $179

2009 $219

2010 $202

2011 $207

Not all payments (outlays) are made during the year in which the program agreement is entered into. Outlays could be made up to 5 years after the project is implemented. Most payments are made by the third fiscal year. 

8. Annual Delivery Cost (FY 2002–FY 2011) 

To the best of the Department’s ability, please outline costs associated with delivery of program, including FTE’s, technical assistance, software, etc.

FY 

Annual Cost FTE 

Section 11 

Admin. Cost 

Prog. Funds 

for Admin. 

Support 

FTE Tech Assist 

2007 $2 5 1

2008 $2 5 1

2009 a $0 $1.75 5 1

2010 a $0 $2.10 5 1

2011 a $0 $2.1 (est.) 5 1

aSource: Explanatory Notes Available Funds Table. Includes direct administrative 

costs but does not include miscellaneous indirect costs. 

For FY 2009 and FY 2010, Section 103 of the American Recovery and Reinvestment Act (ARRA) exempted CCC program funds used to pay authorized administrative costs for MAP from counting against the cap on CCC funds used to pay for salaries and administrative costs imposed by Section 11 of the CCC Charter Act. The 

Department of Defense and Full-Year Continuing Appropriations Act of 2011 continued the exemption from the CCC section 11 cap for CCC funds used to pay authorized administrative costs of MAP. 

9. Eligibility Criteria 

To participate in the MAP, an applicant must be a nonprofit U.S. agricultural 

trade organization, a nonprofit state regional trade group (SRTG), a U.S. agricultural cooperative, or a state government agency. In addition, small-sized U.S. commercial entities may receive MAP funding to promote their branded products. To 

conduct branded product promotion activities, individual companies must provide at 

least 50 percent of funding. For generic promotion activities, trade associations and 

others must meet a minimum ten percent match requirement. 

10. Utilization (Participation) Data 

For FY 2011 there were 70 applicants competing for $200 million in program 

funding. Attached is a chart of FY 2011 Market Access Program allocations. 

11. Duplication or Overlap with Other Programs 

MAP is complementary to other FAS/USDA market development programs whereby funding is made available to address priority, market-specific issues or to undertake activities not already serviced by or unsuitable for funding under other FAS 

marketing programs, such as the Foreign Market Development Program, the 

Emerging Market Program, the Technical Assistance for Specialty Crops Program, 

and the Quality Samples Program. 

323

12. Waste, Fraud and Abuse 

FAS is proactive in monitoring its programs for any indications of waste, fraud 

and abuse. Where such indications are found, FAS has been aggressive in pursuing 

corrective action, including criminal prosecution, to secure the recovery of funds and 

prevent recurrence. For example, in 2006 an incarceration and ongoing restitution 

payments were secured for fraud involving MAP funds. However, vigorous monitoring and oversight procedures have kept such indications to a minimum, and FAS 

is not aware of any systemic problems in MAP. The FAS Compliance staff routinely 

reviews MAP agreements to document compliance and to ensure the effectiveness 

of FAS’s internal controls. FAS programs also are audited by both the USDA Office 

of Inspector General and the Government Accountability Office, each of which provides detailed reports and recommendations for improvement. Finally, FAS programs are subject to the same oversight and documentation requirements common 

to all USDA programs, including the Improper Payments Information Act. 

13. Effect of Administrative PAYGO 

None. 

ATTACHMENT

Fiscal Year 2011

Fiscal Year 2011 Market Access Program Program Allocations (MAP) 

MAP Participant Allocation 

AHEC, APA, SEC, SFPA * $8,568,725

Alaska Seafood Marketing Institute $4,326,996

American Biomass Trade Cooperative $145,000

American Peanut Council $2,414,321

American Seed Trade Association $90,419

American Sheep Industry Association $381,466

American Soybean Association $4,465,558

Blue Diamond Growers/Almond Board of California $3,079,916

Brewers Association Inc. $385,015

California Agricultural Export Council $993,079

California Asparagus Commission $114,709

California Cherry Advisory Board $743,127

California Cling Peach Board $353,475

California Fresh Tomato Growers/Florida Tomato Committee $505,603

California Kiwifruit Commission $184,268

California Pear Advisory Board $378,267

California Prune Board $3,339,658

California Strawberry Commission $789,070

California Table Grape Commission $3,494,622

California Tree Fruit Agreement $2,053,685

California Walnut Commission $4,614,261

Cherry Marketing Institute $259,988

Cotton Council International $20,234,954

Cranberry Marketing Committee $1,767,921

Distilled Spirits Council $211,127

Florida Department of Citrus $4,937,966

Food Export Association of the Midwest USA $10,919,428

Food Export USA Northeast $8,152,605

Georgia Pecan Growers $200,000

Ginseng Board of Wisconsin $209,597

Hawaii Papaya Industry Association $173,027

Hop Growers of America $177,301

Intertribal Agriculture Council $741,009

National Association of State Departments of Agriculture $2,750,562

National Confectioners Association $1,685,845

National Hay Association $32,445

National Potato Promotion Board $4,870,824

National Renderers Association $831,676

324

Fiscal Year 2011—Continued

Fiscal Year 2011 Market Access Program Program Allocations (MAP) 

MAP Participant Allocation 

National Sunflower Association $1,218,250

National Watermelon Promotion Board $254,406

New York Wine and Grape Foundation $376,215

Northwest Wine Promotion Coalition $805,130

Organic Trade Association $435,293

Pear Bureau Northwest $3,632,830

Pet Food Institute $1,601,375

Raisin Administrative Committee $2,677,594

Southern United States Trade Association $5,831,384

Sunkist Growers, Inc. $3,107,359

Texas Produce Export Association $95,654

The Catfish Institute $335,605

The Popcorn Board $319,607

U.S. Apple Export Council $685,480

U.S. Dairy Export Council $4,529,746

U.S. Dry Bean Council $1,150,793

U.S. Grains Council $8,621,582

U.S. Hide, Skin & Leather Association $140,228

U.S. Livestock Genetics Export, Inc. $1,097,601

U.S. Meat Export Federation $16,261,732

U.S. Wheat Associates $6,798,051

USA Dry Pea and Lentil Council $1,122,955

USA Poultry and Egg Export Council $5,461,208

USA Rice Federation/U.S. Rice Producers Association $3,758,042

Washington Apple Commission $5,199,788

Washington State Fruit Commission $1,192,087

Welch Foods, Inc. $907,824

Western Pistachio Association/Cal-Pure Pistachios Inc. $770,497

Western United States Agricultural Trade Association $10,859,171

Wine Institute $5,585,230

Reserve $5,589,768

Total Available FY 2011 Funding $200,000,000 

* American Hardwood Export Council, APA—The Engineered Wood Association, 

Softwood Export Council, Southern Forest Products Association. 

1. Program Name 

Technical Assistance for Specialty Crops (TASC). 

2. Subprograms/Department Initiatives 

N/A. 

3. Brief History 

The Farm Security and Rural Investment Act of 2002 authorized the TASC program and authorized the use of $2 million of Commodity Credit Corporation (CCC) 

resources in each fiscal year (FY) from 2002 through 2007. The Food, Conservation, 

and Energy Act of 2008 continued the TASC program through 2012. The 2008 Farm 

Bill authorized the TASC program at $4 million in FY 2008, $7 million in FY 2009, 

$8 million in FY 2010, and $9 million for FY 2011 and FY 2012. 

4. Purpose/Goals 

The legislation calls for the TASC program to assist U.S. organizations by providing funding for projects that address sanitary, phytosanitary (SPS) and related 

technical barriers that prohibit or threaten the export of U.S. specialty crops. 

325

5. Success in Meeting Programmatic Purpose/Goals 

The TASC review and allocation process is especially thorough with each proposal 

undergoing both a sufficiency check for adherence to program regulations and policy 

and content review by three reviewers from different divisions. Further, FAS has 

several application and reporting requirements to assure program effectiveness. 

When submitting proposals, applicants must include performance measures and objectives in their applications as evaluation criteria. FAS also requires quarterly and 

final project reports and a final financial report that fully describes and analyzes 

the effectiveness of each project. Future awards are contingent upon successful completion of the project and acceptance of performance and financial reports. The 

TASC program has successfully funded research for developing pest mitigations, 

technical visits by foreign officials to observe industry export practices, and export 

preclearance programs that have assisted in addressing SPS barriers to trade. Many 

of these projects would not likely have taken place without TASC program assistance.

6. Annual Budget Authority (FY 

2002–FY 2011) ($ in Millions) 

FY BA 

2002 $2

2003 $2

2004 $2

2005 $2

2006 a $2

2007 $1

2008 $4

2009 $7

2010 $8

2011 $9

a An additional $0.6 million was made 

available through FAS direct appropriations. 

7. Annual Outlays (FY 2002–FY 2011) 

($ in Millions) 

Please explain changes between 

budget authority and outlays.

FY Outlays 

2002 $0

2003 $1

2004 $2

2005 $2

2006 $2

2007 $1

2008 $1

2009 $2

2010 $3

2011 $7

Not all payments (outlays) are made during the year in which the program agreement is entered into. Outlays could be made up to 5 years after the project is implemented. Most payments are made by the third fiscal year. 

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in Millions) 

To the best of the Department’s ability, please outline costs associated with delivery of program, including FTE’s, technical assistance, software, etc.

326

FY 

Annual Cost FTE 

Section 11 & 

General 

Admin. Cost 

Prog. Funds 

for Admin. 

Support 

FTE Tech Assist 

2007 $.1 1 .29

2008 $.1 1 .29

2009 a $0 $0.1 1 .29

2010 a $0 $.03 1 .29

2011 a $.2 (est.) $.4 (est.) 1 .29

aSource: Explanatory Notes Available Funds Table. Includes direct administrative 

costs but does not include miscellaneous indirect costs. 

For FY 2009 and FY 2010, Section 103 of the American Recovery and Reinvestment Act (ARRA) exempted CCC program funds used to pay authorized administrative costs for TASC from counting against the cap on CCC funds used to pay for salaries and administrative costs imposed by Section 11 of the CCC Charter Act. The 

Department of Defense and Full-Year Continuing Appropriations Act of 2011 continued the exemption from the CCC section 11 cap for CCC funds used to pay authorized administrative costs of TASC. 

9. Eligibility Criteria 

Any U.S. organization, including, but not limited to, U.S. Government agencies, 

state government agencies, nonprofit trade associations, universities, agricultural 

cooperatives, and private companies are eligible to receive TASC funding. The term 

‘‘specialty crop’’ is defined as all cultivated plants and the products thereof produced 

in the United States except wheat, feed grains, oilseeds, cotton, rice, peanuts, sugar, 

and tobacco. 

10. Utilization (Participation) Data 

To date, for Fiscal Year 2011, funding has been allocated to 26 organizations for 

32 TASC projects. In a typical year, between 25 and 35 projects are funded. Attached is a chart of FY 2010 TASC Program allocations. 

11. Duplication or Overlap with Other Programs 

TASC does not duplicate other programs. TASC is an excellent tool that facilitates 

USDA and the horticultural industry working in partnership with USDA to resolve 

sanitary and phytosanitary barriers and successfully maintaining and increasing export market opportunities for U.S. horticultural products. 

12. Waste, Fraud and Abuse 

FAS is not aware of any examples of waste, fraud, and abuse in this program, 

including overpayments that the Department or other government agency has determined is a problem. FAS program areas closely monitor all agency agreements to 

ensure that participants carry out activities in accordance with program regulations. 

In addition, the FAS Compliance staff routinely reviews FAS agreements agencywide to document compliance, and to ensure that FAS maintains sufficient internal 

controls. Further, FAS programs are audited by both the USDA Office of Inspector 

General and the Government Accountability Office, each of which provides detailed 

reports and recommendations for improvement. Finally, FAS programs are subject 

to the same oversight and reporting requirements common to all USDA programs, 

including testing of transactions under the Improper Payments Improvement Act. 

Together these internal and external monitoring and evaluation practices serve to 

catch and correct instances of waste, fraud, and abuse before they result in loss of 

public funds. 

13. Effect of Administrative PAYGO 

None. 

327

ATTACHMENT

Fiscal Year 2011

Fiscal Year 2010 Technical Assistance for Specialty Crops (TASC) Program 

Allocations 

Participant Project Title Amount 

Almond Board of California European Union Health and Port Authorities Seminar and Tour $24,750

Bryant Christie, Inc. Maximum Residue Level Database Funding for Specialty Crops and Hawaiian Papayas $450,662

California Citrus Quality 

Council 

California Navel Valencia Exports to Korea Program, Korea Inspectors’ Visit $124,562

California Department of 

Food and Agriculture 

Minimizing Trade Barriers through Field Surveys 

for the European Grapevine Moth 

$500,000

California Dried Plum 

Board 

Retaining Export and Food Security of U.S. Specialty 

Crops: Low-Emission Methyl Bromide Fumigation 

for Quarantine and Pre-Shipment Uses 

$1,458,772

California Fig Advisory 

Board 

Encourage Japanese Government To Allow Potassium Sorbate Treatment on High-Moisture Figs $100,000

California Grape and Tree 

Fruit League 

To Develop Efficacy Data Through a Pilot Systems 

Approach for Peach Twig Borer for U.S. Stone 

Fruit to Australia 

$54,388

California Pistachio Export Council Improve Navel Orange Worm Control in Pistachios 

To Overcome Sanitary and Phytosanitary Barriers 

in Major Export Markets 

$1,195,500

California Specialty Crops 

Council 

Global Maximum Residue Levels Engaging Specialty 

Crops in Priority Setting, Planning, and Compliance 

$98,000

California Strawberry 

Commission 

Spotted Wing Drosophila Impacts in Strawberry Exports $46,989

California Table Grape 

Commission 

Post-Harvest Control of Light Brown Apple Moth on 

Fresh Grapes 

$90,000

California Table Grape 

Export Association 

Australian Phytosanitary Preclearance Program $150,000

California Walnut Commission Development of Technical Brochures $66,836

Citrus Research Board of 

California 

Mortality of Asian Citrus Psyllid, Diaphorina Citri, 

in California Citrus During Packaging and Export 

to Australia 

$216,303

Florida Citrus Packers Determination of Canker Survival and Transmission 

via Canker-Blemished Fruit Relative to International Market Access 

$489,447

Florida Fruit and Vegetable Association Management, Maintenance, and Expansion of the 

U.S.-Canada Pesticide Harmonization Database 

$389,464

Georgia Peach Council/

South Carolina Peach 

Council 

Export of Fresh, Systems-Protected Georgia and 

South Carolina Peaches to Mexico 

$240,000

Indian River Citrus 

League 

Best Post-Harvest Handling Practices to Assure 

Canker-Free Fresh Citrus Fruit Exports 

$120,000

Northwest Horticultural 

Council 

Changing India’s Phytosanitary Access Requirements for Pacific Northwest Cherries; OFM Monitoring and Verification at Origin Program for the 

Export of Peaches and Nectarines to Mexico; Study 

of Potential Health Effects Associated with the 

Use of Wax Coatings on Produce 

$66,060

Rutgers University, IR–4 

Project 

Actions To Facilitate Global Maximum Residue Levels for Priority Use on Specialty Crops $627,199

U.S. Apple Export Council Apple Maggot and Other Pests of Concern—Identification Treatment Methodologies and Data Collection $158,122

328

Fiscal Year 2011—Continued

Fiscal Year 2010 Technical Assistance for Specialty Crops (TASC) Program 

Allocations 

Participant Project Title Amount 

USDA, Agricultural Research Service Classical Biological Control of the Invasive White 

Peach Scale on Papaya in Hawaii; Phosphine Fumigation Treatment for Post-Harvest Inspect Control on Lettuce; Evaluating the Efficacy of Systems 

Approach Components for the Western Cherry 

Fruit Fly 

$155,710

USDA, Animal and Plant 

Health Inspection Service (APHIS) 

Development of Irradiation Treatment for High-Impact Invasive Species and Evaluation of Commodity Tolerance to Irradiation Treatments $175,000

USDA, APHIS, Center for 

Plant Health Science 

and Technology 

(CPHST) 

Development of Infrastructure and Capacity for U.S. 

Export Specialty Crops Irradiation Treatments 

$165,000

USDA, APHIS, Plant Protection and Quarantine 

and CPHST 

A Prototype Electronic Identification Resource To 

Support Agricultural Commodity Trade: California 

Table Grapes 

$133,907

Washington State Department of Agriculture Establishment of Japan ‘‘Import Tolerance’’ Maximum Residue Level for Bifenezate in Red Raspberries $38,000

Total $7,334,671

Foreign Agricultural Service (November 2010). 

1. Program Name 

Emerging Markets Program (EMP). 

2. Subprograms/Department Initiatives 

N/A. 

3. Brief History 

The original 1990 legislation authorized an annual program to promote U.S. agricultural exports by providing technical assistance to emerging democracies. The program, which was referred to as the Emerging Democracies Program, initially focused on central and eastern Europe and the former Soviet Union. In 1996, legislation refocused the program on all emerging markets (defined as countries that 

USDA determines have the potential to provide viable and significant markets for 

U.S. agricultural products). Funding is made available for programming through 

three channels: (1) the Central Fund, the principal means of funding, made available through a public announcement; (2) the Technical Issues Resolution Fund 

(TIRF), to address technical barriers to those issues that are time sensitive and are 

strategic areas of longer term interest; and (3) the Quick Response Marketing Fund 

(QRMF), to assist with short-term time-sensitive marketing opportunities. 

4. Purpose/Goals 

EMP helps improve market access and develop or promote exports of U.S. agricultural commodities and products to emerging markets. Through cost-share assistance 

to eligible applicants, EMP funds may be approved for generic technical assistance 

activities and projects that assess the food and rural business systems needs of such 

markets and identify and carry out specific opportunities and projects to enhance 

the effectiveness of those systems. Emerging markets are defined as those individual target countries or regional country groupings with per capita income of less 

than $11,115 (the current ceiling on upper middle income economies as determined 

by the World Bank) and populations greater than one million. The program is not 

intended for projects targeted at end-user consumers. 

5. Success in Meeting Programmatic Purpose/Goals 

The EMP review and allocation process is especially thorough with each proposal 

undergoing both a sufficiency check for adherence to program regulations and policy 

and content review by no less than five reviewers. Further, FAS has several application and reporting requirements to assure program effectiveness. When submitting 

329

proposals, applicants must include performance measures and objectives in their applications as evaluation criteria. FAS also requires a final project report and financial report that fully describes and analyzes the effectiveness of each project. The 

final 15 percent of a participant’s funding is withheld until an acceptable final report is approved by FAS. Future awards are contingent upon successful completion 

of the project and acceptance of performance and financial reports. The EMP program has successfully funded assessments of the food and agricultural business systems of emerging markets for many agricultural commodities including vitamin-enriched rice in El Salvador and seed potatoes in Egypt. Further, EMP funds have 

been used to train emerging market importers or provide technical assistance on the 

use and high quality nature of U.S. agricultural products. These projects would not 

likely have taken place without EMP program assistance.

6. Annual Budget Authority (FY 

2002–FY 2011) ($ in Millions) 

FY BA 

2002 $10

2003 $10

2004 $10

2005 $10

2006 $10

2007 $4

2008 $10

2009 $10

2010 $9

2011 $10

7. Annual Outlays (FY 2002–FY 2011) 

($ in Millions) 

Please explain changes between 

budget authority and outlays.

FY Outlays 

2002 $2

2003 $14

2004 $5

2005 $6

2006 $10

2007 $9

2008 $17

2009 $3

2010 $9

2011 $7

Not all payments (outlays) are made during the year in which the program agreement is entered into. Outlays could be made up to 5 years after the project is implemented. Most payments are made by the third fiscal year. 

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in Millions) 

To the best of the Department’s ability, please outline costs associated with delivery of program, including FTE’s, technical assistance, software, etc.

330

FY 

Annual Cost FTE 

Section 11 & 

General 

Admin. Cost 

Prog. Funds 

for Admin. 

Support 

FTE Tech Assist 

2007 $0.6 2 0.39

2008 $0.6 2 0.39

2009 a $0 $0.1 2 0.39

2010 a $0 $0.3 2 0.39

2011 a $0.4 $0.8 (est.) 2 0.39

aSource: Explanatory Notes Available Funds Table. Includes direct administrative 

costs but does not include miscellaneous indirect costs. 

For FY 2009 and FY 2010, Section 103 of the American Recovery and Reinvestment Act (ARRA) exempted CCC program funds used to pay authorized administrative costs for EMP from counting against the cap on CCC funds used to pay for salaries and administrative costs imposed by Section 11 of the CCC Charter Act. The 

Department of Defense and Full-Year Continuing Appropriations Act of 2011 continued the exemption from the CCC section 11 cap for CCC funds used to pay authorized administrative costs of EMP. 

9. Eligibility Criteria 

Any U.S. private or public entity with a role or interest in the exports of U.S. agricultural commodities or products is eligible to participate in the Emerging Markets 

Program. Preference is given to proposals indicating significant support and involvement by private industry. Proposals are considered from research and consulting organizations only as long as they can demonstrate evidence of substantial participation by U.S. industry. For-profit entities are also eligible, but may not use program 

funds to conduct private business, promote private self-interests, supplement the 

costs of normal sales activities, or promote their own products or services beyond 

specific uses approved for a given project. 

10. Utilization (Participation) Data 

For FY 2011 to date, FAS has evaluated 59 proposals from the private sector and 

72 proposals from the public sector. Through the course of eight tranches, FAS has 

approved funding for 41 private sector and 34 public sector projects obligating 

$9,923,737. In a typical year, between 75 and 100 projects are awarded funded. Attached is a chart with a complete list of FY 2010 EMP allocations. 

11. Duplication or Overlap with Other Programs 

EMP is complementary to other USDA/FAS market development programs whereby funding may be approved to address priority, market-specific issues or to undertake activities not already serviced by or are unsuitable for funding under other 

FAS market development programs, such as the Foreign Market Development Program (FMD) and Market Access Program (MAP). 

12. Waste, Fraud and Abuse 

FAS is proactive in monitoring its programs for any indications of waste, fraud 

and abuse. Where such indications are found, FAS has been aggressive in pursuing 

corrective action, including criminal prosecution, to secure the recovery of funds and 

prevent recurrence. However, vigorous monitoring and oversight procedures have 

kept such indications to a minimum, and FAS is not aware of any systemic problems in EMP. The FAS Compliance staff routinely reviews EMP agreements to document compliance and to ensure the effectiveness of FAS’s internal controls. FAS 

programs also are audited by both the USDA Office of Inspector General and the 

Government Accountability Office, each of which provides detailed reports and recommendations for improvement. Finally, FAS programs are subject to the same 

oversight and documentation requirements common to all USDA programs, including the Improper Payments Information Act. 

13. Effect of Administrative PAYGO 

None. 

331

ATTACHMENT

Fiscal Year 2011

Fiscal Year 2010 Emerging Markets Program Allocations (EMP) 

Market Activity Title Amount 

Bangladesh Cotton USA Technical Assistance Initiative in Bangladesh for the Cotton Council International $200,000

Brazil Brazil Craft Beer School Seminars for the Brewers 

Association 

$30,000

Brazil Market Feasibility Study of Brazil for the Alaska 

Seafood Marketing Institute 

$15,041

China Food Consumption in China’s Second-Tier Cities: 

The New Frontier for U.S. Agricultural Export Opportunities for the University of Florida 

$468,600

China Exporting U.S. Dairy Genetics to China for Cooperative Resources International $277,632

China Hotel, Restaurant, and Institutional Sector Development for USDA/Foreign Agricultural Service/

Chengdu 

$212,000

China Distributor Development Program for Emerging City 

Markets for USDA/Foreign Agricultural Service 

$183,000

China Global Food Safety Forum: China Exchange for the 

GIC Group 

$174,431

China Phase Three of the China Moon Cake Project for the 

California Agricultural Export Council 

$120,000

China Fresh Produce in China: Identifying Logistic Constraints and Consumer Trends for SIAM Professionals, LLC $101,011

China Turkey Market Development in China—Expanding 

Demand for U.S. Turkey in China by Increasing 

its Use in Local Cuisine for the Minnesota Department of Agriculture 

$90,000

China China Familiarization Tour of Organic Farms, Retail, and Processors for the Organic Trade Association $90,000

China China Pecan Project for the Georgia Pecan Growers 

Association$70,800

China Implementation of Science-based Principles in Risk 

Management for USDA/Foreign Agricultural Service 

$52,560

China Assessment of Exports of Hawaii Fresh and Processed Agricultural Products to China Markets 

Under a Memorandum of Understanding with the 

Chinese Ministry of Commerce, Beijing International Brand Management Center for the Hawaii Department of Agriculture 

$79,818

China China Beer Distributors Education Program for the 

Brewers Association 

$35,000

China China Food Safety Law Training for USDA/Foreign 

Agricultural Service 

$27,406

China Reverse Trade Mission of Chinese Tanneries for the 

U.S. Hide, Skin and Leather Association 

$14,400

Egypt Food and Drug Administration Middle East and 

North Africa Food Safety Workshop for Regulators 

for USDA/Foreign Agricultural Service 

$4,690

El Salvador U.S. Rice Market Research for the U.S. Rice Producers Association $31,000

Ghana Ghana Lake Volta Soy in Aquaculture Program for 

the American Soybean Association 

$96,475

Global Emerging Markets Exploratory Market Research To Identify Opportunities and Launch Preliminary Trade Servicing, 

Education, and/or Promotional Activities in 

Emerging Markets for the U.S. Apple Export 

Council 

$259,000

332

Fiscal Year 2011—Continued

Fiscal Year 2010 Emerging Markets Program Allocations (EMP) 

Market Activity Title Amount 

Global Emerging Markets Exporting Genomic-Proven U.S. Dairy Genetics, Enhancing Producer Product Knowledge, Demonstrating U.S. Genomic Sire Proofs and the New 

Generation of Dairy Sires for Cooperative Resources International 

$206,100

Global Emerging Markets Global Pesticide Tolerance Initiative for U.S. Specialty Crops: Technical and Policy Guidance to 

Emerging Markets for USDA/Foreign Agricultural 

Service 

$196,770

Global Emerging Markets Technical Support for U.S. Seed Potato Exports, Introduction of Cut Seeds to Foreign Markets for the 

National Potato Promotion Board 

$195,000

Global Emerging Markets Foreign Country Audits of U.S. Red Meat Facilities 

for the U.S. Meat Export Federation 

$184,400

Global Emerging Markets Worldwide Market Development for the Northwest 

Wine Promotion Coalition 

$60,000

Global Emerging Markets Access and Benefit Sharing for Genetic Resources 

Used in U.S. Food and Agriculture Exports for 

USDA/Foreign Agricultural Service 

$55,566

Global Emerging Markets Translations of Foreign World Trade Organization 

Sanitary and Phytosanitary and Technical Barriers to Trade Notifications for USDA/Foreign Agricultural Service 

$52,000

Global Emerging Markets Advancing U.S. Positions on Pesticide Regulatory 

Standards for USDA/Foreign Agricultural Service 

$9,880

Guatemala U.S. Rice Market Research for the U.S. Rice Producers Association $31,000

India India Food Safety Seminars for USDA/Foreign Agricultural Service $89,175

India Reverse Trade Mission for Retailers and Wholesalers 

from India for the Produce Marketing Association 

$75,438

India India Export Market Opportunity Assessment and 

Familiarization Tour for the Organic Trade Association 

$75,000

India India Retail Education Activities Reverse Mission 

Retail Training Seminars for the Pear Bureau 

Northwest 

$60,000

India India Pecan Project for the Georgia Pecan Growers 

Association 

$55,200

Indonesia Indonesia-U.S. Partnership: Agricultural Technology 

and Investment Forum for the Texas A&M Norman Borlaug Institute 

$51,000

Indonesia Technical Assistance for the Republic of Indonesia’s 

National Agency for Drug and Food Control to 

Better Understand the U.S. System To Ensure the 

Safety of Processed Foods for USDA/Foreign Agricultural Service 

$41,014

Indonesia Product Introduction, Care and Handling, and Merchandising Technique Seminars for Fresh Sweet 

Cherries for the Washington State Fruit Commission 

$14,000

Iraq Trade Mission to Iraq for USDA/Foreign Agricultural 

Service 

$137,352

Jamaica U.S. Technical and Regulatory Orientation for Jamaican Food Import Authorities for USDA/Foreign 

Agricultural Service/Dominican Republic 

$17,676

Malaysia Agricultural Biotechnology Outreach to Malaysian 

Officials for USDA/Foreign Agricultural Service/

Kuala Lumpur 

$130,535

Malaysia Technical Workshop on Coated Foods Applications 

for the USA Dry Pea and Lentil Council 

$56,086

333

Fiscal Year 2011—Continued

Fiscal Year 2010 Emerging Markets Program Allocations (EMP) 

Market Activity Title Amount 

Mongolia 2010 Microbiology and International Residue Training Seminars for International Government Laboratory Officials for USDA/Foreign Agricultural 

Service/Beijing 

$21,650

Mongolia Food Safety and Inspection Service Meat and Poultry Inspection Seminar for USDA/Foreign Agricultural Service/Beijing $21,650

Nigeria, Senegal, Cameroon Increasing Access to U.S. Soy Products in Nigeria, 

Senegal, and Cameroon for the American Soybean 

Association 

$250,000

Pakistan U.S. Soy Food Product Promotion in Pakistan for the 

American Soybean Association 

$152,224

Pakistan Opening Pakistan to U.S. Dairy and Genetics for 

World Wide Sires, Ltd. 

$111,755

Philippines Philippines Agricultural Biotechnology Regulatory 

Outreach for USDA/Foreign Agricultural Service/

Manila 

$63,584

Poland Second Phase of Market Development in Poland for 

California Almonds for the Almond Board of California 

$100,000

Regional: Asia-Pacific Economic Cooperation 

(APEC) 

APEC High-Level Policy Dialogue Workshop on Approaches and Tools To Promote Investment in Agricultural Biotechnology for USDA/Foreign Agricultural Service $153,936

Regional: APEC APEC Export Certification Roundtable for USDA/

Foreign Agricultural Service 

$108,800

Regional: APEC APEC High-Level Policy Dialogue on Agricultural 

Biotechnology for USDA/Foreign Agricultural 

Service 

$187,174

Regional: Caribbean Basin Central American Microbiological Standards Program for USDA/Foreign Agricultural Service $142,356

Regional: Caribbean Basin Maintaining Access for U.S. Exports to the Caribbean for USDA/Foreign Agricultural Service $96,270

Regional: Caribbean Basin Caribbean Food Safety Program for USDA/Foreign 

Agricultural Service 

$93,300

Regional: Central America-Dominican Republic 

Free Trade Agreement 

(CAFTA–DR) 

Food Safety Standard-Setting Training for Participants in CAFTA–DR for USDA/Foreign Agricultural Service $97,400

Regional: Latin America Furthering Approvals of Genetically Engineered 

Plants Through Promotion of Data Transportability for the International Life Sciences Institute 

Research Foundation 

$413,785

Regional: Latin America U.S. Outreach Effort To Influence Negotiation by 

Parties to the Cartagena Protocol for Biosafety for 

USDA/Foreign Agricultural Service 

$157,378

Regional: Latin America Inter-American Institute for Cooperation on Agriculture 

Workshop for Latin America Countries on the Annex 

(LLP Annex) to the Codex Guideline for the Conduct of Food Safety Assessment of Foods Derived 

from Recombinant-DNA Plants for USDA/Foreign 

Agricultural Service 

$72,140

Regional: Latin America Promotion of Consumer-Oriented Agricultural Products for Latin America through the International 

Supermarket Management Class for IGA International, Inc. 

$56,462

Regional: Latin America, 

Caribbean Basin 

Western Hemisphere Codex Delegates’ Colloquium 

for USDA/Foreign Agricultural Service 

$103,310

Regional: Latin America, 

Caribbean Basin 

Enhancing Latin American and Caribbean Participation in Codex for USDA/Foreign Agricultural Service $100,000

334

Fiscal Year 2011—Continued

Fiscal Year 2010 Emerging Markets Program Allocations (EMP) 

Market Activity Title Amount 

Regional: Southeast Asia Southeast Asia Fruit and Vegetable Consumer 

Trends, Preferences Research for the Washington 

Apple Commission 

$223,218

Regional: Southeast Asia Increasing Understanding of U.S. and International 

Flavor Safety Evaluation Processes for the Flavor 

and Extract Manufacturers Association 

$137,850

Regional: Southeast Asia Baking with Pea Flour in Southeast Asia for the 

USA Dry Pea and Lentil Council 

$63,573

Regional: Southeast Asia Nutritional and Technical Information on Dry Beans 

for Southeast Asian Buyers for the U.S. Dry Bean 

Council 

$46,820

Regional: Southeast Asia Second Phase of U.S. Dairy in Selected Asian Bakery 

Markets Project for the California Milk Advisory 

Board 

$37,667

Russia Review of U.S. Poultry Slaughter and Cold Storage 

Facilities for the USA Poultry and Egg Export 

Council 

$120,000

Russia Russia Retail Education Activities Reverse Mission 

Retail Training Seminars for the Pear Bureau 

Northwest 

$87,200

Russia Research To Identify Opportunities and Launch 

Trade Servicing, Education, and Promotion in Russia for the California Prune Board 

$70,000

Russia U.S.-Russia Bilateral Consultative Mechanism on 

Biotechnology Technical Exchange Meeting for 

USDA/Foreign Agricultural Service 

$26,342

South Africa, Mauritius, 

Zimbabwe, Mozambique 

Southern Africa Biotechnology Outreach for South 

Africa, Mauritius, Zimbabwe, and Mozambique for 

USDA/Foreign Agricultural Service/Pretoria 

$109,265

Sri Lanka Prospecting for U.S. Feedstuff and Soymeal Sales in 

Sri Lanka for the Iowa Soybean Association 

$84,206

Sri Lanka Biotechnology Training for Senior Level Sri Lankan 

Officials for USDA/Foreign Agricultural Service 

$5,000

Thailand Thailand Importer Developer Program for the Southern United States Trade Association $185,535

Thailand Technical Support to U.S. Frozen Potato Tariff Reduction Efforts in Thailand for the National Potato 

Promotion Board 

$84,235

Thailand Restrictive Labeling Requirements for Alcoholic Beverages to Thailand for USDA/Foreign Agricultural 

Service 

$36,450

Turkey Biotech Speakers for Istanbul Seminar and Public 

Outreach for USDA/Foreign Agricultural Service/

Ankara 

$38,680

Turkey U.S. Dairy Genetics to Turkey, Overcoming Unjustifiable Regulatory Barriers for the National Association of Animal Breeders $22,551

Turkey Expanding Indiana Hardwood Exports in Turkey for 

the Indiana State Department of Agriculture 

$20,900

Vietnam Vietnamese Wet Blue Buyers Team to the United 

States for the Leather Industries of America 

$32,450

Total $8,361,172

Foreign Agricultural Service (November 2010). 

1. Program Name 

Foreign Market (Cooperator) Development Program. 

2. Subprograms/Department Initiatives 

N/A. 

335

3. Brief History 

The Foreign Market (Cooperator) Development Program (FMD), also known as 

the Cooperator program, is administered by the Foreign Agricultural Service and 

uses funds from the Commodity Credit Corporation (CCC). FMD’s first participants 

entered into agreements with FAS in 1954 The program is currently authorized by 

Title VII of the Agricultural Trade Act of 1978. Funding for FMD was reauthorized 

through 2012 by the 2008 Farm Bill. 

4. Purpose/Goals 

The purpose of the program is to create, expand, and maintain foreign markets 

for U.S. agricultural commodities and products through cost-share assistance. FMD 

benefits U.S. farmers, processors, and exporters by assisting their organizations in 

maintaining or increasing market share in existing markets by addressing long-term 

foreign market import constraints and by identifying new markets or new uses for 

the agricultural commodity or product in the foreign market. Overseas promotions 

focus on generic U.S. commodities, rather than brand-name products, and are targeted toward long-term development. Projects under the Cooperator Program are 

jointly funded by the U.S. Government and industry groups. 

5. Success in Meeting Programmatic Purpose/Goals 

FMD applications undergo a competitive review process based on criteria as specified in the FMD regulations and an annual Federal Register announcement. Funds 

are awarded to applicants that demonstrate effective performance based on a clear, 

long-term strategic plan. The FAS also considers the extent to which a proposed 

project targets markets with the greatest growth potential and a program effectiveness time line against which results can be measured at specific intervals using 

quantifiable product or country goals. The FAS allocates funds in a manner that effectively supports the strategic decision making initiatives of the Government Performance and Results Act (GPRA) of 1993. In 2007, FAS commissioned a cost-benefit analysis of USDA’s market development programs with an independent economic analysis firm, Global Insight Inc., and recently received the results of an update of that study. The study analyzed the impact of the increase in foreign market 

development investment that took place under the 2002 Farm Bill through 2009. 

The study reported that U.S. agricultural exports were $6.1 billion higher in 2009, 

compared to what they would have been without the increased investment in market development. Every dollar of increased investment in the MAP and FMD resulted in $35 in exports.

6. Annual Budget Authority (FY 

2002–FY 2011) ($ in Millions) 

FY BA 

2002 $34

2003 $34

2004 $34

2005 $34

2006 $34

2007 $34

2008 $34

2009 $34

2010 $34

2011 $34

7. Annual Outlays (FY 2002–FY 2011) 

($ in Millions) 

Please explain changes between 

budget authority and outlays.

FY Outlays 

2002 $31

2003 $32

336

FY Outlays 

2004 $37

2005 $36

2006 $36

2007 $36

2008 $33

2009 $36

2010 $32

2011 $37 (est.) 

Not all payments (outlays) are made during the year in which the program agreement is entered into. Outlays could be made up to 5 years after the project is implemented. Most payments are made by the third fiscal year. 

8. Annual Delivery Cost (FY 2002–FY 2011) 

To the best of the Department’s ability, please outline costs associated with delivery of program, including FTE’s, technical assistance, software, etc.

FY 

Annual Cost FTE 

Section 11 & 

General Appropriations 

Admin. Cost 

Prog. Funds 

for Admin. 

Support 

FTE Tech Assist 

2007 $0.3 1 0.29

2008 $0.3 1 0.29

2009 a $0.3 1 0.29

2010 a $0 $0.3 1 0.29

2011 a $0 $0.4 1 0.29

aSource: Explanatory Notes Available Funds Table. Includes direct administrative 

costs but does not include miscellaneous indirect costs. 

For FY 2009 and FY 2010, Section 103 of the American Recovery and Reinvestment Act (ARRA) exempted CCC program funds used to pay authorized administrative costs for FMD from counting against the cap on CCC funds used to pay for salaries and administrative costs imposed by Section 11 of the CCC Charter Act. The 

Department of Defense and Full-Year Continuing Appropriations Act of 2011 continued the exemption from the CCC section 11 cap for CCC funds used to pay authorized administrative costs of FMD. 

9. Eligibility Criteria 

To participate in the FMD program an applicant must be a nonprofit U.S. trade 

organization. An applicant must agree to contribute resources to its proposed promotional activities. The contribution must be at least 50 percent of the value of resources provided by CCC for activities conducted under the project agreement. 

10. Utilization (Participation) Data 

For FY 2011 there were 22 applicants competing for $34.5 million in appropriated 

funding. Attached is a chart of FY 2011 Foreign Market Program Development allocations. 

11. Duplication or Overlap with Other Programs 

FMD is complementary to other FAS/USDA market development programs whereby funding to address priority, market-specific issues or to undertake activities not 

already serviced by or unsuitable for funding under other FAS marketing programs, 

such as the Market Access Program, the Emerging Market Program, the Technical 

Assistance for Specialty Crops Program, and the Quality Samples Program. 

12. Waste, Fraud and Abuse 

FAS is not aware of any examples of waste, fraud, and abuse in this program, 

including overpayments that the Department or other government agency has determined is a problem. FAS program areas closely monitor all agency agreements to 

ensure that participants carry out activities in accordance with program regulations. 

In addition, the FAS Compliance staff routinely reviews FAS agreements agencyVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00348 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
337

wide to document compliance, and to ensure that FAS maintains sufficient internal 

controls. Further, FAS programs are audited by both the USDA Office of Inspector 

General and the Government Accountability Office, each of which provides detailed 

reports and recommendations for improvement. Finally, FAS programs are subject 

to the same oversight and reporting requirements common to all USDA programs, 

including testing of transactions under the Improper Payments Improvement Act. 

Together these internal and external monitoring and evaluation practices serve to 

catch and correct instances of waste, fraud, and abuse before they result in loss of 

public funds. 

13. Effect of Administrative PAYGO 

None. 

ATTACHMENT

Fiscal Year 2011

Fiscal Year 2011 Foreign Market Development Program (FMD) 

Cooperator Allocation 

AHEC, APA, SEC, SFPA * $2,796,545

American Peanut Council $628,631

American Seed Trade Association $219,486

American Sheep Industry Association $161,354

American Soybean Association $6,648,054

Cotton Council International $4,532,356

Leather Industries of America $135,224

Mohair Council of America $8,808

National Hay Association $80,110

National Renderers Association $837,791

National Sunflower Association $252,192

North American Millers Association $23,833

U.S. Dairy Export Council $595,464

U.S. Dry Bean Council $103,611

U.S. Grains Council $4,386,866

U.S. Hide, Skin and Leather Association $98,092

U.S. Livestock Genetics Export, Inc. $670,213

U.S. Meat Export Federation $1,612,357

U.S. Wheat Associates $5,033,535

USA Dry Pea and Lentil Council $157,319

USA Poultry and Egg Export Council $1,262,021

USA Rice Federation $1,457,865

Reserve $2,798,273

Total Available FY 2011 Funding $34,500,000 

* American Hardwood Export Council, APA—The Engineered Wood Association, 

Softwood Export Council, Southern Forest Products Association. 

1. Program Name 

Facility Guarantee Program. 

2. Subprograms/Department Initiatives 

N/A. 

3. Brief History 

Authorized by Congress under section 1542 of the Food, Agriculture, Conservation 

and Trade Act of 1990 to meet the financing needs for the establishment or improvement of facilities or the provision of services in emerging markets that would primarily benefit the export of U.S. agricultural commodities. 

338

4. Purpose/Goals 

By providing credit guarantees consistent with the Organisation for Economic Cooperation and Development’s (OECD) ‘‘Arrangement on Officially Supported Export 

Credits’’, for loan tenors of up to 10 years, the financial risk to U.S. lenders (banks 

or exporters) of foreign banks is greatly diminished. This reduced risk in financing 

increases export opportunities in those emerging markets where the lack of credit 

impedes an exporter’s ability to sell and a buyer’s ability to acquire agriculture-related infrastructure or services that will primarily enhance sales of U.S. agricultural 

commodities. 

5. Success in Meeting Programmatic Purpose/Goals 

From inception through June 2011, only one transaction has been guaranteed. 

Prior to the 2008 Farm Bill statutory amendments, FGP required U.S. content on 

any goods guaranteed. The 2008 Farm Bill, however, allowed for a ‘‘waiver’’ of U.S. 

content requirement if such goods were unavailable or the use of such goods is not 

practicable. The program also requires a determination of downstream benefit to the 

export of U.S. agricultural commodities. As the FGP program is required to adopt 

a premia structure consistent with the OECD Arrangement on Officially Supported 

Export Credits, capital goods programs offered by the U.S. Export-Import Bank 

were more attractive, as exporters did not need to develop rational trade arguments 

for the downstream benefits to U.S. agriculture. In light of the waiver provision for 

U.S. content, we are reviewing ways to use such authority with as little impact on 

U.S. manufacturing concerns as possible. FGP operates as a subset of the GSM–102 

Export Credit Guarantee Program and under that authority is subsumed within the 

same overall limitations on the amount of credit guarantees that CCC may make 

available, which is now effectively capped in each fiscal year at $40 million of annual budget authority for ‘‘subsidy.’’ FGP subsidy estimates, because of much longer 

average loan tenors, have been historically higher than those of the GSM–102 program, which in turn requires an evaluation of the best way for USDA to satisfy immediate demand for credit guarantees. 

6. Annual Budget Authority (FY 2002–FY 2011) 

Applicable law mandates that CCC make available for each fiscal year an amount 

of credit guarantees (both GSM–102 and FGP) equal to the lesser of (a) $5,500,000 

or (b) an amount of guarantees that CCC can make available using budget authority 

for an underlying subsidy amount of the sum of $40 million per year plus any unobligated budget authority from prior fiscal years. 

7. Annual Outlays (FY 2002–FY 2011) 

N/A. 

8. Annual Delivery Cost (FY 2002–FY 2011) 

To the best of the Department’s ability, please outline costs associated with delivery of program, including FTE’s, technical assistance, software, etc.

FGP delivery costs fall under the separate appropriation of $6.8 million (FY 2011) 

used to cover the salaries and other administrative costs (S&Es) of the Export Credit Guarantee Program (GSM–102). The program’s information technology support 

for web interface, system of records and database are included in the overall costs 

to maintain the Export Credit Guarantee program information technology. 

9. Eligibility Criteria 

Please explain who is eligible for participation in this program. Also list any special considerations (for example priority areas or carve-outs for certain eligible producers). 

All potential participants—exporters, U.S. financial institutions, foreign banks 

and countries—can participate provided they are not suspended, debarred or otherwise prohibited from participation in U.S. Government programs. Loan terms will 

be in accordance with OECD guidelines. In addition exporters must have an office 

in the United States, U.S. financial institutions must be regulated and foreign 

banks are subject to extensive individual financial review to determine creditworthiness. By law, credit guarantees cannot be issued to any country that cannot adequately service the debt associated with particular export sales. 

10. Utilization (Participation) Data 

Please provide the number of participants in the program. If there is a backlog, 

please explain that as well. Where appropriate, please include additional information, such as the number of acres enrolled in the program. 

From inception through June 2011, only one transaction has been guaranteed. 

339

11. Duplication or Overlap with Other Programs 

If the purpose/goals or mission of this program are similar to those of other programs, please list those other programs along with an explanation. 

The Export Import Bank offers very similar programs—but is absolutely limited 

to the guarantee of U.S. origin capital goods and U.S. services Ex-Im’s primary mission is to expand the export of the U.S. capital goods or services, while the primary 

mission of the FGP is to enhance the export of U.S. agricultural commodities. 

12. Waste, Fraud and Abuse 

Please provide examples of waste, fraud, and abuse including overpayments that 

the Department or other government agency has determined is a problem and how 

the Department is combating such problems. 

USDA is proactive in reviewing this program and its participants. Where there 

is any indication of waste, fraud and abuse, the Department is aggressive in investigating those incidents. This program when operational will fully implement, document and test at least annually its internal controls in accordance with both, OMB 

Circular A–123, which implements requirements of the Federal Managers’ Financial 

Integrity Act of 1982, and the Improper Payments Information Act of 2002 (IPIA). 

13. Effect of Administrative PAYGO 

N/A. 

1. Program Name 

Dairy Export Incentive Program (DEIP). 

2. Subprograms/Department Initiatives 

3. Brief History 

Authorized by Congress under Sec. 153 of the Food Security Act of 1985, the program provides a bonus or subsidy on a bid basis to exporters of eligible dairy products (butterfat, nonfat dry milk, whole milk powder and various cheeses). The payments may be made in cash or in commodities held by the Commodity Credit Corporation (CCC). Initially, the program provided the bonuses ‘‘in-kind’’ from surplus 

stocks of dairy products held by CCC. This ‘in-kind’ payment was replaced by the 

issuance of ‘‘generic certificates’’ redeemable for any inventory held by the CCC. As 

inventories diminished, the program evolved into the sole use of cash payments for 

the subsidy. As this program provides an export subsidy, it is subject to the subsidy 

reduction commitments of the United States under the Uruguay Round Agreements 

of the World Trade Organization (WTO). The program is therefore subject to both 

budget and quantity limits in accordance with those reduction commitments. 

4. Purpose/Goals 

By providing a subsidy on exports of eligible dairy products, an amount intended 

to bridge the gap between world market prices and the U.S. domestic price, DEIP 

enables exporters to meet the lower world market prices, often influenced by the application of subsidies by other exporting countries—primarily the European Union 

(EU). 

5. Success in Meeting Programmatic Purpose/Goals 

The program has been very successful in meeting the needs of exporters and expanding markets for U.S. dairy products when world prices are depressed due to 

the application of subsidies by other countries. This was most evident leading up 

to and during the implementation period of the Uruguay Round subsidy reduction 

commitments. At that time, the EU was aggressively subsidizing dairy exports. Almost 250,000 metric tons of dairy products were exported under DEIP in Fiscal 

Year 1995 and $162 million in bonus payments were committed under DEIP in Fiscal Year 1993. 

6. Annual Budget Authority (FY 2002–FY 2011) 

This is a mandatory program with spending capped by our commitments under 

the WTO Uruguay Round Agreements. These are product specific and follow:

Dairy Product Budgetary Cap ($Mil) Quantity Cap (MT) 

Nonfat dry milk $82.46 68,201

Butterfat $30.49 21,097

Cheese $3.63 3,030

340

Dairy Product Budgetary Cap ($Mil) Quantity Cap (MT) 

Other (whole milk powder) $0.021 34

Total $116.601 N/A 

7. Annual Outlays (FY 2002–FY 2011) 

Please explain changes between budget authority and outlays:

Fiscal Year Subsidy Awarded 

($Mil) Quantity (MT) 

2002 $54.62 86,473

2003 $32.52 86,155

2004 $2.68 48,498

2005 0 0

2006 0 0

2007 0 0

2008 0 0

2009 $18.89 50,886

2010 $2.37 4,811

2011 0 0

The budget authority is restricted to the budgetary limits of our subsidy reduction 

commitments under the Uruguay Round Agreements. DEIP is designed to meet, not 

set, world market prices. Years where there has been limited use of DEIP reflect 

the United States’ competitiveness in the world market without the need for a subsidy. This condition exists today. 

8. Annual Delivery Cost (FY 2002–FY 2011) 

To the best of the Department’s ability, please outline costs associated with delivery of program, including FTE’s, technical assistance, software, etc.

Delivery costs are a function of collateral duty when the program is operating. 

When not operating, program delivery costs are estimated at 0.10 FTE—largely a 

function of closing outstanding performance issues. When operational, USDA estimates that no more than two FTE equivalents are utilized to operate the program. 

In fiscal 2010, the program operated for one month and estimated delivery costs 

were under $40,000. In 2011, estimated delivery costs are under $10,000. The software costs for the program are under $1,000 per year. 

9. Eligibility Criteria 

Please explain who is eligible for participation in this program. Also list any special considerations (for example priority areas or carve-outs for certain eligible producers). 

All potential exporters of U.S. dairy products can participate provided they have 

an agent in the United States and they are not suspended, debarred or otherwise 

prohibited from participation in U.S. Government programs. 

10. Utilization (Participation) Data 

Please provide the number of participants in the program. If there is a backlog, 

please explain that as well. Where appropriate, please include additional information, such as the number of acres enrolled in the program. 

To date 115 exporters of dairy products have participated in DEIP since inception. 

The following is a list of the number of participants for the period 2002–2011:

Fiscal Year Participants 

2002 17

2003 12

2004 4

2005 0

2006 0

2007 0

2008 0

341

Fiscal Year Participants 

2009 17

2010 12

2011 0

11. Duplication or Overlap with Other Programs 

If the purpose/goals or mission of this program are similar to those of other programs, please list those other programs along with an explanation. 

None. 

12. Waste, Fraud and Abuse 

Please provide examples of waste, fraud, and abuse including overpayments that 

the Department or other government agency has determined is a problem and how 

the Department is combating such problems. 

USDA is proactive in reviewing this program and its participants. Payments are 

not made until the exporters provide appropriate export documentation that is reviewed for compliance with program requirements. Where there is any indication of 

waste, fraud and abuse, the Department is aggressive in investigating those incidents. At this time we have no confirmed evidence of waste, fraud or abuse under 

DEIP. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

The Cochran Fellowship Program. 

2. Subprograms/Department Initiatives 

N/A. 

3. Brief History 

The Cochran Fellowship Program was established in September 1984 and was authorized in section 1543 of the Food, Agriculture, Conservation, and Trade Act of 

1990, as amended. The program provides short-term agricultural fellowships in the 

United States for senior and mid-level specialists and administrators working in 

such areas as agricultural trade and policy, agribusiness development, management, 

animal, plant, and food sciences, extension services, and agricultural marketing. 

Since its start the Cochran Fellowship Program has trained over 14,300 international participants from 123 countries. 

4. Purpose/Goals 

The purpose of the Cochran Fellowship Program is to provide agricultural fellowships to individuals from middle-income countries, emerging markets and emerging 

democracies. By statute, the goals are for participants to gain knowledge and skills 

through training that will: ‘‘(1) assist eligible countries to develop agricultural systems necessary to meet the food and fiber needs of their domestic populations; and 

(2) strengthen and enhance trade linkages between eligible countries and agricultural interests in the United States.’’

5. Success in Meeting Programmatic Purpose/Goals 

The more than 14,000 Cochran alumni comprise an impressive network of agricultural specialists that have both enhanced food security in their home countries and 

strengthened trade linkages with the United States. Alumni include the current 

President of Albania and several Ministers of Agriculture from different regions of 

the world. The Cochran Fellowship Program can play an important role in resolving 

agricultural trade issues. For example, in March 2011 the Minister of Agriculture 

in Iraq lifted the import ban of U.S. livestock genetics shortly after a Cochran training demonstrated the quality of U.S. bovine genetics to three Iraqi agricultural specialists. A Cochran Fellow from China trained in U.S. food retailing practices in 

1996 now runs a high-end supermarket chain in Shanghai that carries nearly 3000 

American products with annual sales of $44 million.

342

6. Annual Budget Authority (FY 

2002–FY 2011) ($ in Millions) 

FY BA 

2002 $4

2003 $5

2004 $4

2005 $4

2006 $4

2007 $4

2008 $3

2009 $5

2010 $5

2011 $3

7. Annual Outlays (FY 2002–FY 2011) 

($ in Millions) 

FY Outlays 

2002 $4

2003 $4

2004 $5

2005 $3

2006 $4

2007 $5

2008 $4

2009 $3

2010 $5

2011 $3 (est.) 

Not all payments (outlays) are made during the year in which budget authority 

is made available. Outlays could be made up to 5 years after the appropriation is 

received. Most payments are made by the third fiscal year after the appropriation. 

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in Millions) 

To the best of the Department’s ability, please outline costs associated with delivery of program, including FTE’s, technical assistance, software, etc.

FY Annual Cost FTEs 

2007 5.2 14

2008 4.0 12

2009 2.6 12

2010 4.9 12

2011 4.5 (est.) 13 (est.) 

These funds not only support personnel cost, but participants’ travel and training 

cost. 

9. Eligibility Criteria 

The Cochran Fellowship Program is open to the staff of agribusinesses, government departments, universities, and other agricultural organizations. In their own 

countries, applicants may be private agricultural producers, managers, technicians, 

scientists, specialists, professors, administrators, and/or policy makers from both the 

public and private sectors. Country eligibility includes middle-income countries, 

emerging democracies, and emerging markets. 

10. Utilization (Participation) Data 

Between 2002 and 2010 the program provided fellowships to 5835 individuals 

from 107 countries. During FY 2011 it is anticipated that the Cochran program will 

343

sponsor approximately 425 individuals from 60 countries. The yearly totals are as 

displayed below:

Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Number of Cochran Fellows 969 853 864 501 551 706 520 395 476 425

11. Duplication or Overlap with Other Programs 

The Cochran Fellowship Program distinguishes itself from 1031 other project 

grants listed in the Catalog of Federal Domestic Assistance through its targeted audience, scope of training, approach and goals. Fellows from middle-income and countries in transition are strategically targeted, based on self-identified agricultural 

needs in their own countries and the priorities of FAS’s strategy. Candidates are 

often mid-level professionals—from both the public and private sector—and receive 

specialized training related to trade capacity or market access needs. Cochran’s 

short-term training for 2 to 3 weeks differs from other fellowship programs that are 

year-long (or longer) programs (Fulbright, Humphrey, USAID-sponsored development assistance scholarships) or targeted to academia (Borlaug, Faculty Exchange 

Program, Agricultural Research & Development (AWARD) Fellowship Program—

USAID). 

12. Waste, Fraud and Abuse 

All funding for the Cochran Fellowship Program is obligated according to FAS 

agency-wide fund control procedural and policy guidance. Obligations are recorded 

on a timely basis in agency and departmental financial systems to ensure that program implementation can proceed in order to meet program objectives over the required timeline. A separate accounting code is established for each discrete Cochran 

training, ensuring that all expenditures are tied to a specific country and/or training 

focus. Each training budget is reviewed and modified by program staff to ensure 

that the amounts expended are appropriate. In addition, Federal travel guidelines 

are adhered to regarding lodging and per diem, as well as daily salary rates. Federal 

regulatory requirements relating to administration, cost principles and audits are 

included with each cooperative agreement. Reconciliation of all obligations and expenditures is performed at various intervals to be sure official accounting records 

are accurate. Timely reviews of unliquidated balances are performed based on OMB 

Circular A123, Management and Accountability Act. 

FAS is proactive in monitoring the Cochran program for any indications of waste, 

fraud and abuse. FAS has not found any systemic problems in the Cochran Program. 

13. Effect of Administrative PAYGO 

N/A. 

1. Program Name 

The Borlaug International Agricultural Science and Technology Fellowship Program (Borlaug Fellowship Program). 

2. Subprograms/Department Initiatives 

N/A. 

3. Brief History 

The Borlaug Fellowship Program (BFP) was initiated in March 2004 in honor of 

the late Nobel Laureate Dr. Norman E. Borlaug, an agronomist, humanitarian, and 

the father of the Green Revolution. Congress provided statutory authorization for 

the program in the Food, Conservation and Energy Act of 2008 (7 U.S.C. 3319j). The 

BFP provides fellowships for scientific training and research in the United States 

to potential agricultural leaders from eligible countries to promote food security and 

economic growth. Since its inception in 2004, the BFP has enhanced the scientific, 

regulatory and agribusiness knowledge and skills of over 500 Borlaug Fellows from 

64 developing countries. 

4. Purpose/Goals 

The Borlaug Fellowship Program helps developing countries strengthen food security and improve agricultural productivity by providing U.S.-based scientific training 

and collaborative research opportunities to visiting scientists, policymakers, and 

university faculty. Training for Borlaug Fellows increases their scientific knowledge 

and promotes long-term collaboration with mentors at U.S. land-grant universities, 

USDA and other government agencies, and international research centers. The proVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00355 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
344

gram also strives to help developing countries strengthen agricultural practices 

through the transfer of new science and agricultural technologies, including those 

related to production, processing and marketing; addresses obstacles to the adoption 

of technology, such as ineffective policies and regulations; and promotes the extension of knowledge gained by Fellows to ‘‘users and intermediaries in the marketplace.’’

5. Success in Meeting Programmatic Purpose/Goals 

The program has facilitated the adoption of modern agricultural practices in targeted countries by strengthening human and institutional capacity through U.S.-

based training. The Borlaug Fellowship Program periodically conducts surveys to 

gather information from Borlaug alumni about the impact of the fellowship program 

on their work. Responses from Borlaug alumni received in Fiscal Year 2010 overwhelmingly reported that their fellowship had a positive impact on one or more aspects of their work. Of the 100 surveys received, the Fellows specifically reported 

that participating in the Borlaug Fellowship Program positively impacted their research (92 percent), teaching (74 percent), and policy objectives (14 percent), including the adoption of one or more new techniques or technologies (52 percent) in their 

home institutions. For example, A 2008 African Woman in Science Borlaug Alumnus 

trained in dairy management and nutrition reported that her training resulted in 

significant increases in milk production and calf births at the Kakoma Estate, a medium size Malawian dairy cooperative enterprise, where she is managing director. 

A Borlaug Alumnus from Romania with the University of Agricultural Science in 

Timisoara, Romania, reported that the lab experience he gained through his 2006 

Fellowship allowed him to spearhead a research program at his home institution in 

applied microbiology and biofuels.

6. Annual Budget Authority (FY 

2002–FY 2011) ($ in Millions) 

FY BA 

2004–2006 $2

2007 $2

2008 $2

2009 $2

2010 $2

2011 $1.5 

7. Annual Outlays (FY 2002–FY 2011) 

($ in Millions) 

FY Outlays 

2004–2006 $2

2007 $2

2008 $2

2009 $2.3

2010 $2.1

2011 $1.5 (est.) 

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in 

Millions) 

FY Annual Cost FTEs 

2007 $1.400 4

2008 $.974 6

2009 $1.625 6

2010 $1.785 8

2011 $1.500 (est.) 8 (est.) 

345

These funds support personnel cost and participants’ travel and training cost such 

as training at Texas A&M University and Prairie View A&M University. 

9. Eligibility Criteria 

Individuals, who specialize in agricultural education, research and extension, from 

the public and private sectors in developing countries that are eligible for U.S. economic assistance. 

10. Utilization (Participation) Data 

Since 2004, the Borlaug Fellowship Program has trained Fellows from 64 countries in sub-Saharan Africa, the Middle East, the former Soviet Union, Asia and 

Latin America to receive scientific agricultural training in the United States. Collaborative-research and training have spanned such fields as the plant and animal 

sciences, food safety, agricultural biotechnology, environmental sciences, climate 

change, and food security. Women agriculturalists receive priority consideration in 

the program and now comprise nearly 50 percent of participants. During FY 2011 

it is anticipated that the Borlaug Fellowship Program will sponsor approximately 

34 individuals from 26 countries. The yearly totals are displayed below:

Year 2004–2006 2007 2008 2009 2010 2011

Number of Borlaug Fellows 268 94 66 63 48 34

11. Duplication or Overlap with Other Programs 

There is no duplication or overlap with other Federal programs. 

12. Waste, Fraud and Abuse 

All funding for the Borlaug Fellowship Program is obligated according to FAS 

agency-wide fund control procedural and policy guidance. Obligations are recorded 

on a timely basis in agency and departmental financial systems to ensure that program implementation can proceed in order to meet program objectives over the required timeline. A separate accounting code is established for each discrete Borlaug 

training, ensuring that all expenditures are tied to a specific country and/or training 

focus. Each training budget is reviewed and modified by program staff to ensure 

that the amounts expended are appropriate. In addition, Federal travel guidelines 

are adhered to regarding lodging and per diem, as well as daily salary rates. Federal regulatory requirements relating to administration, cost principles and audits 

are included with each cooperative agreement. Reconciliation of all obligations and 

expenditures is performed at various intervals to be sure official accounting records 

are accurate. Timely reviews of unliquidated balances are performed based on OMB 

Circular A123, Management and Accountability Act. 

13. Effect of Administrative PAYGO 

None. 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE—U.S. 

AGENCY FOR INTERNATIONAL DEVELOPMENT

1. Program Name 

Food for Peace Act/USAID Title II, III, and V. 

2. Subprograms/Department Initiatives 

A. Title II: Emergency and Private Assistance Programs

Under Title II, USAID provides emergency food aid to address needs arising from 

natural disasters, such as floods or droughts, and complex emergencies often characterized by insecurity and population displacement. USAID also provides development food aid as part of multi-year, development (non-emergency) programs integrated with USAID strategies to address the underlying causes of chronic food insecurity.

B. Title III: Food for Development

Title III is a USAID-administered program for enhancing food security and supporting long-term economic development in least-developed countries. USAID is authorized to donate agricultural commodities to a recipient country and funds the 

transportation to the point of entry in the recipient country. These commodities may 

be sold on the domestic market and the revenue generated from their sale is used 

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to support and implement economic development and food security programs. Funds 

have not been requested or appropriated for Title III for more than a decade.

C. Title V: Farmer to Farmer Program

The John Ogonowski and Doug Bereuter Farmer-to-Farmer Program provides voluntary technical assistance to farmers, farm groups, and agribusinesses in developing and transitional countries to promote sustainable improvements in food security and agricultural processing, production, and marketing. The program relies on 

the expertise of volunteers from U.S. farms, land-grant universities, cooperatives, 

private agribusinesses, and nonprofit farm organizations to respond to the local 

needs of host-country farmers and organizations. 

3. Brief History 

On July 10, 1954, President Dwight D. Eisenhower signed the Agricultural Trade 

Development Assistance Act—or Public Law (P.L.) 480—into law. Since that day, 

the lasting benefits President Eisenhower envisioned have come to pass. The more 

than 120 million metric tons of American food the United States has sent overseas 

over the past 57 years under Title II, the largest part of P.L. 480, have kept billions 

of people overseas from hunger, malnutrition, and starvation. 

Early in his Administration, President John F. Kennedy underlined the importance of P.L. 480 to the United States—and the rest of the world—by renaming it 

‘‘Food for Peace’’ and placing it in the newly created U.S. Agency for International 

Development. ‘‘Food is strength, and food is peace, and food is freedom, and food 

is a helping hand to people around the world whose good will and friendship we 

want,’’ Kennedy said. Since its inception, Food for Peace has adapted several times 

to accommodate changing needs around the world. Programs currently focus primarily on sub-Saharan Africa and Asia. Despite these changes, the objectives have 

remained the same: fighting hunger and malnutrition and promoting sustained economic growth and development. 

For over 57 years, the Food for Peace program has brought hope and nourishment 

to the hungry corners of the world. Over three billion people in over 150 countries 

have benefited directly from our food. 

Upon reaching its destination, the food is used in a variety of ways, and always 

for the people most vulnerable to the effects of hunger: children under age 5, pregnant women, the elderly, and the poorest families in a community. During an emergency in which people face threat of imminent starvation, food—wheat, sorghum, 

corn and other commodities—are distributed to save their lives. If the symptoms of 

extreme malnutrition have already appeared, a nutritionally fortified ration with 

blended, fortified, and processed food is provided. In less dire circumstances, food 

can be used to compensate people for work, such as building roads or repairing 

water and irrigation systems. In turn, these projects help protect communities from 

future hunger by providing them access to local markets for their produce, keeping 

them healthy, and improving their harvests. 

Title II programs have an immediate impact of protecting lives and maintaining 

consumption levels, while also contributing to longer-term impacts, including enhancing community and household resilience to shocks, helping people build more 

durable and diverse livelihood bases (enhancing assets, resources, and infrastructure), and enhancing the capabilities of individuals through improvements in health, 

nutrition and education. 

Title V, the Farmer-to-Farmer Program, exemplifies this U.S. helping hand in 

food aid. Since the program’s inception in 1985, over 12,000 volunteer assignments 

have been completed in over 80 countries. Over one million farmer families (representing about five million people) have directly benefitted from the Farmer-toFarmer Program. Volunteers help host individuals and organizations build local institutions and linkages to resolve local problems and have provided direct handson training to over 80,000 people. Approximately 43 percent of all individuals 

trained by Farmer-to-Farmer volunteers are women. Under the current program, 15 

organizations are providing volunteer services in 25 core countries. Current programs field approximately 600 volunteers per year. 

4. Purpose/Goals 

The Food for Peace Act, as the statute has been renamed, states the following 

with respect to the programs authorized under the Act:

It is the policy of the United States to promote its foreign policy by enhancing 

the food security of the developing world through the use of agriculture commodities and local currencies accruing under this Act to:

(1) Combat world hunger and malnutrition and their causes; 

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(2) Promote broad-based, equitable and sustainable development, including 

agricultural development; 

(3) Expand international trade; 

(4) Foster and encourage the development of private enterprise and democratic participation in developing countries; and 

(5) Prevent conflicts.

The Farmer-to-Farmer Program goal is to help promote agricultural sector growth 

and food security in developing countries and to increase international understanding of the United States and U.S. development programs by involving American citizens in people-to-people exchanges for work on agricultural development. 

5. Success in Meeting Programmatic Purpose/Goals

Title II: Emergency and Private Assistance (Development) Programs

Administered by the USAID Office of Food for Peace in the Bureau for Democracy, Conflict, and Humanitarian Assistance, in FY 2010, Title II programs (emergency and development (non-emergency)) provided more than 2.1 million tons of 

commodities, with a program cost of approximately $1.9 billion, to assist approximately 55 million people in 46 countries. 

For more information on Food for Peace Title II program accomplishments, please 

see attached text from the FY 2010 International Food Assistance Report (Attachment B), as well as the FY 2007–2009 International Food Assistance Reports (attached).

Title V: Farmer to Farmer Program

The USAID Bureau for Food Security administers this program. In FY 2010, implementing agencies fielded 522 volunteers from 48 states and the District of Columbia. The top five states providing volunteers were: California (58 assignments), 

Wisconsin (50 assignments), North Carolina (28 assignments), Florida (25 assignments), and Minnesota (19 assignments). Of these assignments, 433 were completed 

by men (83 percent) and 89 by women (17 percent). In FY 2010, 522 volunteer assignments focused on technology transfer (68%), organizational development (12%), 

business/enterprise development (17%), financial services (2%), and environmental 

conservation (1%). Volunteers worked at various levels of the commodity production 

and marketing chain, including: rural services and input supply (35%), on-farm production (40%), storage and processing (14%), and marketing (11%). 

See attached examples (Attachment C) of the program’s successes in meeting the 

goals and purposes. 

6. Annual Budget Authority (FY 2002–FY 2011) 

For USAID’s annual budget authority (FY 2002–2011), please see Attachment A.

7. Annual Outlays (FY 2002–FY 2011) 

For USAID’s annual Title II outlays (FY 2002–2011), please see Attachment A.

8. Annual Delivery Cost (FY 2002–FY 2011) 

The annual average Title II delivery cost (FY 2002–FY2011) is $730 per metric 

ton. 

9. Eligibility Criteria 

Those eligible for Title II emergency resources are:

• A private voluntary organization or cooperative that is, to the extent practicable, registered with the USAID Administrator, or

• A Public International Organization (PIO), such as the U.N. World Food Program.

Pursuant to section 402 of the Food for Peace Act, this includes U.S. and nonU.S. nonprofit organizations. 

Title V, the Farmer-to-Farmer Program, is implemented by U.S. private voluntary 

organizations, cooperatives, and universities. During FY 2010, eleven private voluntary organizations and four universities participated in the program. 

10. Utilization (Participation) Data 

Food for Peace (Title II) assisted the following number of beneficiaries in FY 2008 

through FY 2010:

FY Emergency Development 

2008 37.9 million 7.6 million 

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FY Emergency Development 

2009 55 million 7.1 million 

2010 46.5 million 7.9 million 

During FY 2010, the Farmer to Farmer Program (Title V) provided assistance to 

455 local organizations (cooperatives, farmer groups, agribusinesses, rural financial 

organizations and others), directly assisting 34,080 people. The program provided 

training to 16,853 people. 

11. Duplication or Overlap with Other Programs 

Food for Peace Title II is the largest USG international food aid program and the 

only program with a primary responsibility for emergency food assistance. Title II 

development programs are integrated into country level strategic plans and as such 

are designed to complement other mission development objectives. Emergency food 

aid complements food security programs by addressing the most vulnerable populations. 

At the country level, the Farmer-to-Farmer Program (Title V) generally works 

with and through partners’ programs. Frequently, these partners’ programs are 

other on-going USAID agricultural and rural development projects. Implementing 

private voluntary organization country program arrangements and USAID country 

Missions collaborate to ensure coordination with national development efforts and 

on-going programs. Coordination and sustainability are ensured through working 

closely with local host organizations on their farm and business development efforts. 

12. Waste, Fraud and Abuse 

The USAID Office of Food for Peace works aggressively to avoid waste, fraud, and 

abuse, and works closely with the USAID Office of Inspector General (OIG) to review Title II, III or V audit findings and respond accordingly with management decisions and actions, as applicable. 

13. Effect of Administrative PAYGO 

N/A.

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ATTACHMENT A

Budget Authority and Outlays—Title II 

Total Funding Availability 

(in Hundred Millions) 

FY 2002 

Final 

FY 2003 

Final 

FY 2004 

Final 

FY 2005 

Final 

FY 2006 

Final 

FY 2007 

Final 

FY 2008 

Final 

FY 2009 

Final 

FY 2010 

Final 

FY 2011 

To Date 

Appropriations 958.8 1,809.6 1,185.0 1,413.0 1,488.5 1,664.7 2,060.9 2,320.9 1,840.0 1,497.0

Base Enacted 863.8 1,192.2 1,185.0 1,173.0 1,138.5 1,214.7 1,210.9 1,225.9 1,690.0 1,497.0Supplemental Appropriations 95.0 * 617.4 0.0 240.0 350.0 450.0 850.0 1,095.0 150.0 0.0

Outlays ** 922.0 1,063.0 1,535.0 1,339.0 1,294.0 2,550.0 2,618.5 2,013.0 1,639.0 N/A 

* $69 million was legislated to be transferred to the Bill Emerson Humanitarian Trust. ** as reported in the President’s annual budget appendix. 

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ATTACHMENT B

Excerpts from FY 2010 International Food Assistance Report 

U.S. International Food Assistance Overview 

U.S. international food assistance has long played a critical role in responding to 

global food insecurity. This tradition continued in FY 2010, with the USG providing 

more than 2.5 million metric tons (MT) of commodities to more than 65 million 

beneficiaries in 73 countries worldwide. Current U.S. international assistance programs stretch from sub-Saharan Africa to the former Soviet Union and from Latin 

America and the Caribbean to south Asia. These programs have been adaptable and 

flexible as food needs have evolved around the world. 

Expanded Prepositioning of Commodities 

USAID announced a major expansion of its global food aid prepositioning system 

in Fall 2010. USAID awarded contracts for six prepositioning sites, in the United 

States (Texas), Sri Lanka, Djibouti, Kenya, South Africa, and Togo. 

USAID’s prepositioning system operates as part of a modern supply chain management system. When food aid is needed somewhere, USAID first uses commodities from the global prepositioning system—either in warehouses or in transit to 

them—and then reorders commodities to replace them. This process allows USAID 

to maintain a continuous flow of vital food aid in response to emergencies. Food aid 

supplies are stockpiled in or near regions of the world with historically high emergency food aid needs. This system allowed USAID to respond to the floods in Pakistan, for example, by dispatching food aid from its prepositioning warehouse in 

Djibouti. 

Response to Disasters in Haiti and Pakistan 

The continued need for humanitarian food assistance was demonstrated throughout FY 2010, particularly in response to the earthquake in Haiti and the floods in 

Pakistan. 

After the devastating earthquake in Haiti in January, USAID was the driving 

force in rapidly expanding the food aid response to assist Haitians in need. 

USAID’s abilities to divert over 6,500 tons of food aid already on the ground as 

part of ongoing programs, as well as to purchase 3,564 tons of commercial rice of 

U.S. origin in Haiti with assistance from USDA, were critical to jump-starting the 

large-scale distributions. USAID also dispatched 14,550 tons of food aid from USAID 

prepositioned stocks in Texas. After the initial emergency food response, USAID 

transitioned to more targeted distributions to vulnerable groups (e.g., women and 

children under 5) assisting approximately three million beneficiaries. 

After the July floods in Pakistan, USAID dispatched peas and vegetable oil from 

USAID’s prepositioning site in Djibouti and contributed approximately $130 million 

of Title II and Emergency Food Security Program (EFSP) resources to the World 

Food Program (WFP) to ensure food distributions at the start of the floods. With 

an additional USAID contribution of $90 million at the end of 2010, WFP worked 

to assist more than seven million flood-affected people. 

Contribution of Food Aid to Feed the Future 

USAID and USDA continue to improve the management of the food aid programs 

and to link the programs to the Feed the Future Initiative. USAID and USDA have 

increased coordination at both the headquarters and field levels to ensure that the 

programs supported country-led strategies and a whole-of-government approach. 

Both USAID and USDA have required applicants for development food aid programs 

to demonstrate how proposed projects would support country-led investment plans. 

Monitoring and evaluation (M&E) are an increasingly important component of 

program management. USDA and USAID continue to review and update indicators 

so that, where appropriate, results of food aid programs can be reported against the 

Feed the Future Strategic Results Framework. 

Bellmon Estimation for Title II (BEST) Project 

The USAID BEST Project continues to conduct independent market analyses to 

ensure that USAID complies with the Bellmon Amendment, which requires that 

adequate storage facilities be available in a recipient country upon arrival of a commodity to prevent spoilage or waste, and that distribution of the commodity in the 

recipient country will not result in substantial disincentive or interference with domestic production or marketing in that country. The USAID BEST Project has conducted 13 independent market analyses to ensure that these requirements are met. 

Studies can be found at http://www.usaid.gov/ourlwork/humanitarianlassistance/ffp/bellmonana.html. 

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New Famine Early Warning Tool 

To better link early warning and response to emergencies, USAID developed a 

new Famine Early Warning System Network (FEWS NET) resource—the Food Assistance Outlook Briefing—which provides warning of potential food assistance 

needs 6 months in the future. These predictions are critical because of the time required to purchase and ship in-kind food aid from the United States. This tool also 

creates evidence-based analysis that is useful to USAID and national decision-makers as they take measures to respond to potential food insecurity. This monthly outlook can be found at www.fews.net.

USAID’s Famine Early Warning Systems Network (FEWS NET) 

USAID’s Famine Early Warning Systems Network exemplifies the U.S. commitment to anticipating and responding to humanitarian vulnerabilities and crises. 

Using interagency agreements with the U.S. Geological Survey, National Aeronautics and Space Administration, National Oceanic and Atmospheric Administration, and USDA, FEWS NET continues to monitor, collect and analyze, and disseminate critical data and information on conditions of food availability and access in 

the most food insecure countries. FEWS NET provides decision-makers in the U.S. 

Government, host country governments, and a variety of other regional and international partners timely, unbiased, and insightful early warning and vulnerability 

information. FEWS NET information products can be found at www.fews.net. 

In response to rising needs for more and better food security monitoring information in countries not covered by a FEWS NET presence, and where global drivers 

of food security are ever more present, USAID, through FEWS NET, defined, tested, 

and is currently implementing an innovative non-presence-based ‘‘remote monitoring’’ strategy. This strategy uses FEWS NET partners to assist in the identification and early warning of significant changes in food availability and food access 

that might potentially lead to a food security crisis. Sectoral monitoring priorities 

for remote monitoring include weather and climate, crop condition and output, food 

markets and trade, and livelihoods. Data to monitor these priority areas is gathered 

from FEWS partners NOAA, NASA, USDA and the USGS, as well as satellite imagery and in-country sources. 

FEWS NET also uses remote monitoring for some countries where direct monitoring does not occur. This light form of monitoring has already provided important 

evidence for decision-making in Yemen, where it challenged the accuracy of nutritional surveys in the north, and in Tajikistan where it provided important context 

for understanding the limited food security implications of a drop in remittances to 

the country. 

Monitoring and Evaluation (M&E) 

In 2010, through its cooperative agreement with the Food and Nutrition Technical 

Assistance project (FANTA), USAID’s Office of Food for Peace launched DiscussionTIIME, a free e-mail listserv and website where Food for Peace Title II monitoring 

and evaluation practitioners can learn from each other and have access to technical 

expertise. The listserv and website are geared especially to those practitioners in the 

field working on USAID Title II development and emergency assistance programs. 

The goals of Discussion-TIIME are to promote the professional development of development and emergency food assistance M&E staff; to help introduce new staff to 

Title II M&E and to keep experienced staff abreast of emerging issues; and to improve the quality of Title II M&E. 

Food Aid Quality 

In December 2010, USAID’s Office of Food for Peace issued a draft report with 

recommendations for public comment from a 2 year Food Aid Quality Review 

(FAQR). The review, a collaborative effort undertaken with Tufts University Friedman School of Nutrition, and in consultation with industry, PVOs, technical experts, 

UN agencies, and others, aimed to identify ways to better match the nutritional 

quality of Title II food aid with the nutritional requirements of vulnerable populations overseas. 

Given new understandings in nutrition science and the importance of nutrition 

during the 1,000 days between a child’s conception and 2 years of age, the review 

identified the need to focus on the nutritional requirements of older infants, young 

children, and pregnant and lactating women. The recommendations focused on:

• Reformulating fortified, blended foods by enhancing micronutrient content and 

adding animal protein to improve both absorption and growth;

• Improving both composition and use of fortified vegetable oil;

• Improving fortified cereals used in general food distributions;

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• Using ready-to-use products when appropriate;

• Modifying programming guidance so that the quality improvements can be used 

more cost-effectively to achieve specific nutritional outcomes; and

• Changing the processes used to approve new products, develop specifications, 

procure, and monitor the use of food aid commodities.

The final report will be issued in April 2011. The implementation of these recommendations should dramatically enhance the nutritional impact of food aid rations in both emergency and development settings. 

Technical Capacity Building 

In 2010, USAID awarded a Technical and Operational Performance Support 

(TOPS) Program to advance networking among Title II emergency and development 

partners through training and information sharing on best practice and lessons 

learned. The near term priorities of TOPS are commodity management, nutrition 

and food technology, social and behavior change, and gender equity. TOPS works 

closely with and complements the work of FANTA, which is engaged in a number 

of important research studies on issues such as household dietary diversity and developing exit strategies that will inform future programming guidance. 

Gender 

During 2009–2010, USAID, with the support of the FANTA, led a process to develop a framework that will enable Food for Peace to enhance its focus on gender 

integration into Title II programs. The review and consultative process, as well as 

recommendations that emerged, are summarized in Occasional Paper #7 Gender Integration in USAID/DCHA Office of FFP Operations. This Occasional Paper is located at www.fantaproject.org. Some key recommendations include developing comprehensive guidelines specific to gender and food security for effective monitoring 

and evaluation of Title II programming, strengthening staff competencies on gender 

integration in food security, and supporting pilot efforts to determine how best to 

empower women in food assistance programming. 

Program Descriptions and Fiscal Year 2010 Accomplishments 

2. Title II: Emergency and Private Assistance (Development) Programs:

Administered by the USAID Office of Food for Peace in the Bureau for Democracy, Conflict, and Humanitarian Assistance (DCHA), in FY 2010, Title II programs 

(emergency and development) provided more than 2.1 million MT of commodities, 

with a program cost of approximately $1.9 billion, to assist approximately 55 million 

people in 46 countries. 

Title II programs focus to reduce food insecurity in vulnerable populations and 

improve resiliency to shocks—an essential first step toward household self-sufficiency and economic independence. In support of this approach, Title II development 

programs incorporate many activities to strengthen local capacity to respond to natural disasters.

a. Title II: Emergency Programs:

Title II emergency programs aim to address two forms of emergencies: natural 

disasters, such as floods or droughts, and complex emergencies characterized by a 

combination of natural disaster, conflict, and insecurity. All of these elements pose 

substantial programmatic and operational challenges in responding effectively to the 

needs of food-insecure populations. 

In FY 2010, Title II emergency programs provided more than 1.6 million MT of 

emergency food aid, with a program cost of more than $1.5 billion, to help alleviate 

malnutrition and hunger in 27 countries. In all, Title II emergency programs 

reached approximately 46.5 million food-insecure people in 27 countries in FY 2010.

Food for Peace Title II: Emergency Program Highlights:

Ethiopia: Throughout the first 9 months of 2010, most regions experienced normal to above normal rainfall, thus improving the overall food security situation, 

even resulting in suspension of emergency distributions in the south as of September. However, in parts of the Amhara, Afar, Oromiya, Tigray, Gambella, and Somali regions the rains also brought devastating floods and related mudslides that 

destroyed crops and displaced people, requiring emergency food rations. In FY 2010, 

the bulk of Title II assistance, totaling more than $319 million, was in the form of 

relief food assistance to flood victims, primarily distributed through WFP and a relief consortium led by Catholic Relief Services (CRS). 

USAID also continued its support of the Government of Ethiopia’s Productive 

Safety Net Program (PSNP), by providing approximately $132 million of food assistance through PVO partners to chronically food insecure populations. In exchange for 

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food (or cash) transfers, beneficiaries of the PSNP engage in public works projects 

such as soil and water conservation, water development, and rural feeder road construction and maintenance, in order to address the underlying factors for food insecurity in the beneficiary communities—mainly lack of availability, access to, and 

utilization of food resources. As one example, CRS undertook public works projects 

for water development, including excavation of more than 27,000 m3 for ponds, 88 

km of irrigation canals, and more than 7,000 km of trenches for pipelines. Programs 

also included crop and livestock management training, training community focal 

persons on child malnutrition, and training in agribusiness skills, among others. 

Niger: Due to severe drought, Niger’s 2010 harvest could meet less than a quarter of the country’s annual food requirements. A Niger household food security survey in early 2010 estimated that 3.3 million people in Niger, representing approximately 22 percent of the overall population, would be highly or extremely food insecure and require emergency food assistance to meet basic food needs through September 2010. As a result, in 2010 the Government of Niger launched a large humanitarian intervention to prevent the worst effects of the food crisis. 

Beginning in November 2009, based on early warning of the crisis, USAID or- dered U.S. food aid for a FY 2010 total of $48.8 million, or approximately 46,000 

MT, which it distributed through WFP and two PVOs. In addition, USAID made three awards, totaling $26.8 million, under the EFSP 

to complement the Title II assistance already given. These grants helped assist 1.7 

million individuals affected by drought by providing beneficiaries with locally purchased food and vouchers for the purchase of food in local markets. This EFSP program gave USAID and its partners the flexibility to fill a critical food aid gap in 

response to emergency food aid needs in Niger. 

Continued food assistance will be needed in 2011 in order to address the high 

acute malnutrition rates and to build capacity within Niger’s agricultural sector to 

be able to prevent and respond to future crises.

b. Title II: Private Assistance Programs (Development):

In FY 2010, 16 awardees implemented 42 Title II development food aid programs 

in 21 countries. Approximately 500,000 MT of food assistance, valued at more than 

$400 million, was used to support programs that benefited more than 7.9 million 

people.

Food for Peace Title II: Development Program Highlights:

Guatemala: Guatemala has the highest national level of chronic malnutrition in 

the Western Hemisphere and one of the highest in the world. Food insecurity is 

most severe in the highlands and some areas in the east where drought is recurrent 

and many people eke out a living on non-irrigated subsistence agriculture. 

The USAID Guatemala Food Security Program is one of the largest Title II food 

security programs in the Western Hemisphere. It coordinates with other USAID 

programs in health, local governance, enterprise and trade as well as with Government of Guatemala entities, international organizations and PVOs to reduce food insecurity among at-risk Guatemalans. 

In target municipalities with the highest chronic childhood malnutrition, the program integrates income generation and maternal/child health interventions that reduce food insecurity while improving the family’s livelihood and health. USAID implementing partners use food aid rations for targeted supplementary feeding for 6 

to 36 month old children and pregnant/lactating women, while they work with families to improve and diversify agricultural production (i.e., soil management and conservation practices), micro-enterprise, and marketing activities that augment farm 

income sources. In just one program implemented by SHARE, more than 450 farmers were supported with micro-loans, technical assistance, and commercial relationships in order to develop their market access. Using food for work, activities are underway to improve infrastructure in food insecure areas, to ease communities’ access 

to markets, and to lower business transaction costs. Through these initiatives, 

USAID reaches approximately 400 communities and helps 56,000 families each 

year. 

Liberia: Seven years after the end of the conflict in Liberia, the country is on 

the road to recovery. Yet threats remain to Liberia’s food security, including residual effects of the war, population displacement, limited infrastructure, and poor 

sanitation and water quality. Countrywide, 30 percent of children are stunted, and 

19 percent are underweight. With its agricultural capacity severely diminished by 

the conflict, Liberia is working to rebuild its agricultural sector, with the aim to 

transition from food aid to market-driven development. 

Building upon the successes of the Catholic Relief Services-led Liberia Integrated 

Assistance Program supported by USAID, which ended in 2010, USAID awarded 

ACDI/VOCA $40 million over 5 years to implement the Liberian Agricultural UpVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00365 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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grading, Nutrition and Child Health (LAUNCH) project to reduce food insecurity. 

The project will build the technical and business management skills of Liberian 

farmers, as well as work to prevent malnutrition through interventions at the 

household, community and facility levels. This will be complemented by Opportunities Industrialization Centers International’s (OICI) program Health, Agriculture 

and Nutrition Development for Sustainability (HANDS) in two of the most food insecure counties of Liberia, Grand Geddeh and River Ghee. Combined, these projects 

aim to assist over 300,000 Liberians in the first year of the awards. 

Uganda: The hunger situation in Uganda has generally improved over the last 

several years. However, hunger challenges remain in distinct areas, with the northeastern Karamoja region considered the most food insecure. The combination of frequent natural disasters, gun violence, severe environmental degradation, extreme 

poverty, poor hygiene, and other factors has eroded people’s capacity to cope with 

repeated shocks. One particular population vulnerable to food insecurity is displaced 

persons returning to their land, who may not have the agricultural inputs necessary 

to begin farming again. 

To respond to the chronic food insecurity, USAID has given multi-year development awards to ACDI/VOCA and Mercy Corps. In 2010, USAID allocated $25 million to assist more than 320,000 individuals. 

Projects undertaken in 2010 have included improving agricultural yields, creating 

food producer groups and women’s gardening groups, improving sanitation and hygiene through construction of latrines and water wells, and opening of access roads 

to assist farmers in taking their products to market. As just two examples, in 2010 

Mercy Corps established 95 new producer groups in the Kitgum and Pader districts, 

and 54 km of road were constructed in these same districts using food for work. Together with other initiatives, these projects take a holistic approach to addressing 

food insecurity. 

In addition, USAID awarded $15 million of emergency assistance to WFP in 2010 

for drought-stricken areas and refugee assistance. 

Bangladesh: In a country of 156 million people, 45 percent of the population does 

not meet their minimum food requirements. Approximately 37 percent of children 

under 5 are underweight, and over 48 percent suffer from stunting. 

In 2010, USAID contributed $42 million of Title II development funds, amounting 

to 94,340 MT of food aid, to develop the agricultural sector, improve maternal and 

child health and nutrition, strengthen livelihoods and entitlements, empower 

women, increase disaster preparedness, and other initiatives. Three Title II partners 

in Bangladesh—CARE, ACDI/VOCA, and Save the Children—aim to assist over 

580,000 households in some of the poorest and most marginalized communities over 

the course of their multi-year development programs. As one example, CARE’s 

Strengthening Household Ability to Respond to Development Opportunities 

(SHOUHARDO) program has already reduced stunting by 28 percent in targeted 

communities. It has also provided business training for over 6,000 female entrepreneurs, and increased income by 128 percent, among other successes.

c. International Food Relief Partnership:

In November 2000, the U.S. Congress passed the International Food Relief Partnership (IFRP) Act. The law, which was renewed and extended under the 2008 

Farm Bill, enables USAID to award grant agreements to eligible U.S. nonprofit organizations to produce and stockpile shelf-stable, prepackaged commodities. 

Through the IFRP program, commodities are made available to eligible nonprofit 

U.S. organizations and international organizations for transportation, delivery and 

distribution in emergency food aid relief programs. 

In FY 2010, FFP awarded approximately $8.9 million in Title II IFRP production 

and distribution grants. Over the course of the FY, 24 IFRP distribution grants 

were awarded to 17 U.S.-based nonprofit organizations. IFRP awardees distributed 

commodities to over 312,415 beneficiaries in 17 countries. 

The organizations that received grants in FY 2010 to transport and distribute the 

commodities were: Food for the Hungry, ADRA, Amigos Internacionales, Batey Relief Alliance, Church of Bible Understanding, CitiHope International, Counterpart 

International, Cross International, Evangelical International Ministries, International Partnership for Human Development, International Relief Teams, Medical 

Missionaries, Nascent Solutions, Planet Aid, Project Concern International, Resource and Policy Exchange, and World Help.

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Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity, Recipient, and Tonnage—Fiscal Year 2010

Country Awardee Commodity Recipients (000s) Metric Tons Total Cost (000s) 

Africa

Burundi WFP Cornmeal, Corn Soy Blend, Vegetable Oil, Yellow Peas 3 3,240 $3,578.1Cameroon WFP Rice 81 3,350 $4,550.1Central African Republic WFP Cornmeal, Corn Soy Blend, Yellow Split Peas 1,538 3,830 $5,953.1Chad WFP Cornmeal, Corn Soy Blend, Rice, Sorghum, Vegetable 

Oil, Wheat, Wheat Flour, Yellow Split Peas 

5,614 70,310 $98,217.6

Democratic Republic of 

the Congo (DRC) 

WFP Cornmeal, Corn Soy Blend, Vegetable Oil, Yellow Split 

Peas 

445 59,280 $85,699.3

Djibouti WFP Corn Soy Blend, Rice, Wheat Flour, Yellow Peas 365 2,040 $2,128.7Ethiopia CARE Vegetable Oil, Wheat, Yellow Split Peas 31 290 $125.2

CRS Corn Soy Blend, Sorghum, Vegetable Oil, Wheat, Yellow Split Peas 24 227,870 $126,796.9

REST Vegetable Oil, Wheat, Yellow Split Peas 696 45,730 $23,544.6

SCF Vegetable Oil, Wheat, Yellow Split Peas 215 11,080 $9,027.6

WFP Corn Soy Blend, Pinto Beans Vegetable Oil, Wheat, 

Yellow Split Peas 

644 324,200 $230,048.1

Kenya WFP Cornmeal, Corn Soy Blend, Sorghum, Vegetable Oil, 

Wheat Flour, Yellow Split Peas 

2,121 109,840 $101,975.4

Madagascar WFP Sorghum, Yellow Peas, Yellow Split Peas 1,501 5,630 $4,511.6Niger CRS Bulgur, Corn Soy Blend, Great Northern Beans, Lentils, Vegetable Oil 194 8,060 $8,909.9

CPI Corn Soy Blend, Rice, Vegetable Oil 42 2,310 $2,851.9

WFP Bulgur, Corn Soy Blend, Lentils, Rice, Sorghum, Vegetable Oil 13 20,340 $36,974.5

Republic of Congo WFP Rice, Vegetable Oil, Yellow Split Peas 195 2,980 $4,793.8Rwanda WFP Corn, Cornmeal, Corn Soy Blend, Pinto Beans, Vegetable Oil 537 2,980 $4,167.2

356

Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity, Recipient, and Tonnage—Fiscal Year 2010—

Continued

Country Awardee Commodity Recipients (000s) Metric Tons Total Cost (000s) 

Somalia WFP Corn Soy Blend, Sorghum, Vegetable Oil, Yellow Split 

Peas 

4 18,650 $15,002.6

Sudan NPA Lentils, Sorghum, Vegetable Oil 123 2,660 $5,493.0

WFP Corn Soy Blend, Lentils, Sorghum, Vegetable Oil, Yellow Split Peas 49 315,840 $270,162.3

Tanzania WFP Cornmeal, Corn Soy Blend, Green Split Peas, Vegetable Oil 198 5,950 $6,051.2Uganda WFP Corn Soy Blend, Cornmeal, Pinto Beans, Sorghum, 

Vegetable Oil, Yellow Split Peas 

3,837 15,530 $15,334.5

Zimbabwe CRS Bulgur, Pinto Beans, Vegetable Oil, Yellow Split Peas — 6,460 $22,713.9

WFP Bulgur, Sorghum, Vegetable Oil, Yellow Peas, Yellow 

Split Peas 

11 24,470 $38,428.8

WVUS Unspecified Commodities 

— — $18,308.3

Sub-Total Africa 18,481 1,292,920 $1,145,348.2

Asia/Near East

Afghanistan WFP Wheat, Wheat Flour, Vegetable Oil 29 43,810 $42,630.3 Algeria WFP Great Northern Beans, Lentils, Rice, Vegetable Oil, 

Wheat Flour 

125 6,550 $6,212.6

Laos WFP Rice 175 3,280 $3,342.7 Nepal WFP Garbanzo Beans, Rice, Vegetable Oil, Yellow Split 

Peas 

549 4,620 $4,130.3 

Pakistan WFP Rice, Vegetable Oil, Wheat Flour, Yellow Split Peas 43 110,210 $96,850.8 Philippines WFP Rice, Vegetable Oil 3 15,200 $15,757.8 Sri Lanka WFP Lentils, Vegetable Oil, Wheat, Wheat Flour, Yellow 

Split Peas 

4 22,230 $17,821.5 

357

Yemen WFP Great Northern Beans, Pinto Beans, Vegetable Oil, 

Wheat, Wheat Flour, Yellow Split Peas 

995 13,880 $12,699.7

Sub-Total Asia/Near East 1,923 219,780 $199,445.7

Central Asia

Tajikistan SCF Lentils, Vegetable Oil, Wheat Flour 90 5,970 $9,817.1

Sub-Total Central Asia 90 5,970 $9,817.1

Latin America/Caribbean

Colombia WFP Pinto Beans, Rice, Vegetable Oil, Wheat Flour 1,590 8,260 $9,057.8Ecuador WFP Lentils, Vegetable Oil, Wheat Flour 19 820 $814.3Guatemala CRS Corn Soy Blend, Pinto Beans, Rice, Vegetable Oils 207 4,440 $7,404.4

SCF Corn Soy Blend, Pinto Beans, Rice, Vegetable Oil 10 3,190 $7,436.7

WFP Black Beans, Corn Soy Blend, Vegetable Oil 470 2,090 $2,572.1

Haiti ACDI/VOCA Bulgur, Corn Soy Blend, Yellow Peas 150 2,430 $3,184.3

CRS Bulgur, Corn Soy Blend, Green Peas, Pinto Beans, 

Vegetable Oil 

128 18,000 $19,563.6

WFP Black Beans, Corn Soy Blend, Pinto Beans, Rice, Vegetable Oil, Yellow Peas 6 64,490 $85,066.8

WVUS Bulgur, Corn Soy Blend, Lentils, Pinto Beans, Vegetable Oil 10 30,400 $32,839.8

Sub-Total Latin America/Caribbean 2,590 134,120 $167,939.8

Worldwide Total 23,084 1,652,790 $1,522,550.8

Source: Metric tonnage and total cost values derived from FFP Final Budget Summary Report, January 11, 2011. Awardees listed as approved in cooperative agreements. Commodity types and recipients derived from Food for Peace Information System report, January 3, 2011. 

Recipient values are reflective of commodity rations and are derived separately from program beneficiary totals. Recipient values reported as zero or low typically are due to either monetization of commodities (thus no recipients), or the late distribution of commodities carried over from the previous fiscal year that prevented reporting. 

Table does not include IFRP awardees. See page 14 for a list of awardees and page 38 for the country list. 

358

Appendix 5: USAID Title II Development Activities: Summary Budget, Commodity, Recipient and Tonnage—Fiscal Year 2010

Country Awardee Commodity Recipients (000s) Metric Tons Total Cost (000s) 

Africa

Burkina Faso CRS Bulgur, Cornmeal, Lentils, Rice, Vegetable Oil 103 8,920 $12,957.5Burundi CRS Bulgur, Cornmeal, Corn Soy Blend, Vegetable Oil, 

Wheat, Yellow Peas 

430 12,690 $7,510.8

Chad Africare Bulgur, Wheat Flour Bread 27 4,840 $5,675.0Democratic Republic of 

the Congo 

ADRA Cornmeal, Green Peas, Wheat 20 12,660 $4,991.1

FHI Cornmeal, Vegetable Oil, Wheat 24 12,310 $5,577.2

MCI Cornmeal, Vegetable Oil, Wheat, Yellow Split Peas 87 10,150 $5,006.1

Ethiopia CARE Lentils, Vegetable Oil, Wheat, Yellow Peas 185 18,490 $13,072.0

CRS Bulgur, Corn Soy Blend, Rice, Vegetable Oil, Wheat, 

Yellow Split Peas 

224 25,040 $14,981.8

FHI Vegetable Oil, Wheat, Yellow Peas 187 18,840 $11,662.6

REST N/A 

— — $3,239.4

SCF–UK * Lentils, Vegetable Oil, Wheat, Yellow Peas 557 32,660 $19,159.1 

Liberia ACDI Bulgur, Corn Soy Blend, Rice, Vegetable Oil, Wheat, 

Yellow Split Peas 

106 8,150 $8,427.4

OICI Rice, Soybeans, Soy Flour, Wheat Flour 208 7,100 $6,572.8

Madagascar CRS Corn Soy Blend, Rice, Sorghum, Vegetable Oil 260 14,340 $17,111.0Malawi CRS Corn Soy Blend, Crude Vegetable Oil, Pinto Beans, 

Wheat, Vegetable Oil 

29 17,190 $18,000.1

Mali Africare Bulgur, Vegetable Oil 32 1,650 $2,434.5

CRS Bulgur, Corn Soy Blend, Green Split Peas, Vegetable 

Oil 

72 4,800 $7,806.1

Mauritania CPI Bulgur, Corn Soy Blend, Lentils, Vegetable Oil, Wheat 62 7,820 $5,000.1Mozambique ADRA Wheat — 10,000 $4,042.8

FHI Wheat — 8,820 $3,413.6

SCF Wheat — 17,480 $7,309.0

WVUS Wheat — 12,740 $4,789.9

Niger Africare Bulgur, Corn Soy Blend, Red Beans, Rice 40 4,510 $4,054.6

359

Counterpart Corn Soy Blend, Rice, Vegetable Oil 5 3,380 $3,754.1

CRS Bulgur, Rice 16 7,260 $7,191.3

Sierra Leone ACDI/VOCA Corn Soy Blend, Rice, Vegetable Oil, Wheat Flour 10 10,800 $11,999.9Sudan ADRA Lentils, Vegetable Oil 47 2,030 $30,293.1Uganda ACDI/VOCA Corn Soy Blend, Wheat, Vegetable Oil 504 20,010 $16,046.4

MCI Corn Soy Blend, Cornmeal, Green Split Peas, Wheat, 

Vegetable Oil 

8 10,170 $8,953.6

Zambia CRS Bulgur, Lentils 10 930 $7,254.2

Sub-Total Africa 3,253 325,780 $278,287.1

Asia/Near East

Afghanistan WVUS Rice, Vegetable Oil, Wheat Flour, Yellow Peas 2,233 10,290 $15,500.0Bangladesh ACDI/VOCA Lentils, Vegetable Oil, Wheat 45 19,270 $9,000.0

CARE Wheat — 57,010 $23,000.0

SCF Vegetable Oil, Wheat, Yellow Split Peas 174 18,060 $10,000.1

India CRS Bulgur, Vegetable Oil 125 7,000 $3,733.7

Sub-Total Asia/Near East 2,577 111,630 $61,233.8

Latin America/Caribbean

Guatemala 

CRS Corn Soy Blend, Crude Vegetable Oil, Pinto Beans, 

Rice, Vegetable Oil 

26 5,760 $5,773.5

MCI Corn Soy Blend, Crude Vegetable Oil, Pinto Beans, 

Rice, Vegetable Oil 

102 9,490 $9,458.8

SCF Corn Soy Blend, Crude Vegetable Oil, Pinto Beans, 

Rice, Vegetable Oil 

12 4,890 $4,733.1

SHARE Corn Soy Blend, Crude Vegetable Oil, Pinto Beans, 

Rice, Vegetable Oil 

16 4,960 $5,034.4

Haiti ACDI/VOCA Bulgur, Corn Soy Blend, Wheat Flour, Vegetable Oil, 

Yellow Peas 

43 8,040 $10,125.2

CRS Bulgur, Corn Soy Blend, Green Peas, Vegetable Oil, 

Wheat Flour 

90 11,610 $10,498.7

360

Appendix 5: USAID Title II Development Activities: Summary Budget, Commodity, Recipient and Tonnage—Fiscal Year 2010—

Continued

Country Awardee Commodity Recipients (000s) Metric Tons Total Cost (000s) 

WVUS Bulgur, Corn Soy Blend, Lentils, Vegetable Oil, Wheat 

Soy Blend 

127 17,990 $15,870.4

Sub-Total Latin America 416 62,740 $61,494.1

Worldwide Total 6,246 500,150 $401,015.0

Source: Metric tonnage and total cost values derived from FFP Final Budget Summary Report, January 11, 2011. Awardees listed as approved in cooperative agreements. Commodity types and recipients derived from Food for Peace Information System report, January 3, 2011. 

Recipient values are reflective of commodity rations and are derived separately from program beneficiary totals. Recipient values reported as zero or low typically are due to either monetization of commodities (thus no recipients), or the late distribution of commodities carried over from the previous fiscal year that prevented reporting. 

361

ATTACHMENT C

Farmer to Farmer Program Examples of Success in Meeting Programmatic 

Purpose/Goals 

Mr. El-Feki’s wife, Neamat, who milks the cows and cares for the calves, is also 

following the recommendations to produce clean milk. The income from the milk 

production is used to purchase all the grocery needs for the family. Neamat is now 

confident that her family and especially her grandchildren now always have access 

to clean, healthy milk. 

Volunteer Unites Two Agribusiness Groups 

The Carrot Growers Association (CAGA) is an organization of vegetable producers 

at Ashanti-Mampong in the Sekyere West District of the Ashanti Region of Ghana. 

The association was established in 2007 with a membership of 50 farmers. CAGA 

members produce 5,000 bags of carrots each week and market their produce in 50 

kg bags in the retail market. Oftentimes the members are exploited with low prices 

from the market women. The leadership of the association lacked adequate knowledge of how associations should operate to function as a business entity. An organizational development volunteer, Diana Lilla, worked with CAGA to develop a strategic business plan with step-by-step implementation procedures for the association. 

Diana also trained the leadership on methods to improve services rendered to their 

members.

Diana Lilla with members of CAGA.

With the lobbying efforts of the volunteer, CAGA was able to secure 100 acres of 

land from the local chief, Nana Osei Bonsu, for the farmers to expand their activities. Diane also succeeded in uniting CAGA with a sub association, the carrot marketing association, to form the Carrot Growers and Marketers Association. This 

combination will further increase services available to members of the new association. The increased opportunity to access services through the association enticed 

more farmers to enroll as members of the group, and the membership has grown 

from 50 to 211 farmers. 

Volunteer Introduces a New Product to Improve Children’s Health and Nutrition in Rural Mali 

Malnutrition threatens the life of many Malian children. With 72% of the country living off of less than $1/day, many families do not have access to nutritious food 

to feed their children. In turn, these children are underweight and lethargic, and 

some even face the inevitable—death. 

In order to provide nourishment for Malian people and to cut the import costs on 

milk and dairy products, the Government of Mali sought to develop local milk production and collection points. The government accomplished this by creating milk 

centers throughout the country to produce higher concentrations of fresh milk and 

to meet the demand for fresh milk during the dry season. While this venture was 

very successful, producers and retailers were faced with the problem of spoilage due 

to the short shelf life of fresh milk. For this reason, the FtF program created a volunteer assignment for the Women’s Local Milk Stockist Cooperative and recruited 

Dr. Poul Hansen for his first visit in September 2009. Hansen introduced new technologies, which enabled the cooperative to handle excess milk and develop new products. 

Returning to Mali just one year later in August 2010, Hansen was asked to focus 

on infant yogurt to supplement infant milk for newborn orphans and infants who 

are in need of alternative feeding. Hansen visited with many of the women members 


1122002.eps
362

of the Women’s Local Milk Stockist Cooperative around the city of Bamako to assess 

their potential and provide a tailor-made, hands-on, technical training. He taught 

the co-op members how to process clean and safe regular yogurt, infant yogurt, as 

well as Indian ‘‘paneer’’ cheese using a thermometer, particular yogurt cultures, and 

an incubator. Hansen also talked with the co-op members about necessary hygiene 

and sanitation measures. He went door-to-door to see many of the members at work 

in their own households, to determine if they were putting what they learned into 

practice. Now, the members of the cooperative are able to produce the yogurt on 

their own and can supplement their children’s diet with this important source of nutrition.

Dr. Hansen provides hands-on training to women processors in the hygiene 

and sanitation measures of preparing child.

Hansen’s assignment received extensive radio and TV coverage for everyone to follow. At the end of the training sessions, the President of the Cooperative, Dana 

Niangadou, proclaimed, ‘‘This is what we’ve been talking about—some new ideas to 

make a difference! Now with this new infant formula, the nutrition and health status of our children in need will change for the better, as will the income of women 

processors.’’

‘‘We wasted a lot of resources on many different training modules and, so far, 

none of them compares to the hands-on Volunteer Technical Assistance we received 

thanks to the USAID funded Farmer-to-Farmer Program,’’ notes coordinator Moussa 

Diabate during the closing ceremony. 

Dr. Hansen’s last words to Mr. Diabate just before departing Mali summed up his 

commitment to the FtF Program, ‘‘This is, with no doubt, the best assignment I’ve 

ever had in all my life, and I would appreciate Winrock/Mali recruiting me once 

more to transfer some other important technologies wherever needed.’’ 

Reducing Post Harvest Losses and Increasing Food Security 

Nigerian Farmers Learn to Make New Nutritional Products 

Fifty percent of the population in Kaduna State, Nigeria is living in poverty. 

Many farmers depend on crops such as yam as both an income source as well as 

an important nutrition source for their families. Nevertheless, despite reasonable 

productivity, many families still struggle to feed their children. 

During the dry season, fresh yams do not last long. Without proper post harvest 

processing and preservation techniques, farmers face the double consequences of 

having to discard leftover yam and living with food insecurity during several months 

of the year. 

Fortunately, for a group of farmers in Kaduna State, this is no longer a problem. 

After identifying the need for post-harvest processing and preservation training, 

Land O’Lakes, engaged international agriculture and food science expert, Dr. 

Ramana Govin, to provide assistance. Dr. Govin worked with Nehemiah Foundation 


1122003.eps
363

International, a local service provider working with 5,250 farmers in four Nigerian 

states, and a selected group of 65 farmers in Kaduna, to provide training and technical assistance on yam processing. He demonstrated methods for washing, slicing, 

drying, and pounding the yam into flour. He also showed the farmers how to apply 

the same techniques to cassava.

Farmers in Kaduna State practice making yam flour for the first time.

These techniques reduce post-harvest losses and increase the number of months 

that families have a reliable food source. Instead of leaving leftover yam to rot, 

farmers can process the yam into flour, which can be used throughout the year. Immediately after the training, farmers already started realizing the benefits of what 

they had learned. After the first day of the training, one farmer went home, dug 

some yams, and processed the yams to make flour, just as Dr. Govin had demonstrated. He brought the flour to the workshop the next day and stated, ‘‘I never 

believed it was possible because of how simple the method seemed, until I tried it 

myself.’’

Emmanuel Nehemiah of the Nehemiah Foundation states, ‘‘Dr. Govin’s assignment was successful. Before he came, the farmers did not have any method of processing and preserving yam. The methodologies used are so simple yet the farmers 

didn’t know about it before now. It has been very effective for them and beneficial. 

Many of them are right now processing and preserving their yams with the new 

method and they are happy about it.’’ 

The impacts of this assignment go beyond the 65 farmers who directly participated. Immediately after Dr. Govin’s training, the farmers met with Nehemiah 

Foundation and decided to appoint trainers who will go out and train others in 

nearby villages. One month later, 25 of these trainers are now branching out into 

rural communities and offering instruction in indigenous languages on Dr. Govin’s 

techniques to additional farmers, enabling even more people to improve their family’s food security. 

ATTACHED REPORTS

U.S. International Food Assistance Report 2007—January 2008

Under Public Law 480, Section 407(f), ‘‘the President shall prepare an annual report concerning the programs and activities implemented under this law for the preceding fiscal year.’’ As required, this report is hereby submitted to Congress.

This Report May Be Ordered From:

USAID Development Experience Clearinghouse 

8403 Colesville Road, Suite 210

Silver Spring, MD 20910–6368

Telephone: (301) 562–0641

Fax: (301) 588–7787

URL: http://www.dec.org/

Table of Contents 

Executive Summary 

Introduction 

I. Food Security 

II. U.S. International Food Assistance

A. Public Law 480


1122004.eps
364

1 All costs represent commodities plus freight and distribution.

P.L. 480 Title I: Trade and Development Assistance 

P.L. 480 Title II: Emergency and Non-Emergency Assistance 

P.L. 480 Title III: Food for Development 

P.L. 480 Title V: John Ogonowski Farmer-to-Farmer Program

B. Section 416(b) of the Agricultural Act of 1949: Surplus Commodities 

C. Food for Progress 

D. McGovern-Dole International Food for Education and Child Nutrition Program 

E. Bill Emerson Humanitarian Trust

III. Appendices

Appendix 1: List of Abbreviations 

Appendix 2: List of Partner Organizations 

Appendix 3: USDA Title I Program: Food for Progress Grants—Fiscal Year 2007

Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity, 

andTonnage—Fiscal Year 2007

Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, Commodity,Recipient, and Tonnage Tables—Fiscal Year 2007

Appendix 6: USDA Food for Progress Program—CCC-funded Grants—Fiscal Year 

2007 

Appendix 7: McGovern-Dole International Food for Education and Child Nutrition 

Program—Fiscal Year 2007: Donations by Country and Cooperating Sponsor 

Appendix 8: Public Law 480 Title II Congressional Mandates—Fiscal Year 2007

Appendix 9: Countries with Approved U.S. Food Assistance Programs—Fiscal 

Year 2007

Executive Summary 

The United States is committed to the goal of global food security through its 

international food assistance and other foreign assistance programs. In Fiscal Year 

(FY) 2007, the United States provided more than $2.1 billion of food aid to 78 developing countries, reaching tens of millions of people worldwide. The following summary shows U.S. food assistance allocated by legislative authority for FY 2007.1

Program Tonnage (MT) U.S. Dollars

(Millions) 

P.L. 480 Title II * 2,127,804 $1,870

Subtotal P.L. 480 Title II 2,127,804 $1,870

Food for Progress: 

Title I-funded 23,210 $17

CCC-funded 240,630 $113

Subtotal Food for Progress 273,840 $130

Section 416(b) ** 5,000 $20

Subtotal 416(b) 5,000 $20

Food for Education 103,230 $99

Subtotal Food for Education 103,230 $99

Bill Emerson Humanitarian Trust — —

Farmer-to-Farmer (FTF) — $10

Subtotal Bill Emerson and FTF — $10

365

2 Updated as of April 21, 2008. 

Program Tonnage (MT) U.S. Dollars

(Millions) 

Grand Total 2,509,874 $2,129

* Values provided for P.L. 480 Title II include $25 million in 202(e) for WFP, $16 

million in general contribution to WFP, $20 million in freight overruns. These costs 

are offset by $201 million in funding adjustments ($192.3 million of carry-in and 

$9.6 million in MARAD reimbursements). 

** Commodities shipped in FY 2007 were associated with prior year agreements on 

an ‘‘as available’’ basis. There was no new 416(b) programming approved in FY 

2007. 

Over the course of FY 2007, USAID and USDA international food assistance programs have proven increasingly responsive to global efforts at reducing food insecurity and targeting those most in need. By responding to assessment and situational 

information, focusing on reducing risk and vulnerability, targeting the poorest of the 

poor, and better integrating individual programs into larger—often international—

efforts, the U.S. Government aims to improve the effectiveness of aid and to reach 

global targets for reducing hunger, malnutrition and poverty. 

This aid is essential in emergency situations, including the ongoing crisis in 

Sudan. In FY 2007, more than 354,630 MT of USAID Title II commodities, valued 

at $356 million, were provided to an estimated 6.4 million beneficiaries in Sudan 

alone. Meanwhile, in Zimbabwe, 88,900 MT of emergency food assistance helped almost 700,000 people cope with the dual burdens of a deteriorating economic situation and poor agricultural performance. Finally, recognizing the importance of linking development opportunities within a relief setting, Ethiopia’s Productive Safety 

Net Program continued to implement activities that targeted both chronic and acute 

malnutrition, to the benefit of over seven million individuals. In all, over 32 million 

people benefited from emergency food aid activities provided through Title II.2

At the same time, USAID non-emergency programs continued to focus on increasing agricultural production, and supporting programs to address health, nutrition, 

HIV and others aimed at investing in people. Special emphasis is placed on combating the root causes of hunger and malnutrition, and interventions are often 

multi-sectoral in nature as a result. Over the course of the year, more than 8.6 million people in 26 countries benefited from USAID Title II non-emergency food assistance. 

USDA Title I, 416(b), and Food for Progress programs provided commodities to 

food-insecure populations through The World Food Programme (WFP), private voluntary organizations (PVOs) and foreign governments. These resources supported a 

variety of food security objectives in developing countries, such as humanitarian assistance, HIV mitigation, and agricultural and rural development. In FY 2007, 

USDA continued the McGovern-Dole International Food for Education and Child 

Nutrition Program, providing commodities for school feeding as well as nutrition 

programs for mothers, infants, and children under 5, positively impacting the lives 

of more than 3.3 million beneficiaries. 

Introduction 

Since the passage of P.L. 480 in 1954, U.S. international food assistance programs 

have evolved to address multiple objectives. The most recent changes came with the 

Farm Security and Rural Investment Act of 2002. The ‘2002 Farm Bill’ restated the 

objectives that guide U.S. food assistance programs. These objectives are:

• Combat world hunger and malnutrition and their causes;

• Promote broad-based, equitable, and sustainable development, including agricultural development;

• Expand international trade;

• Develop and expand export markets for U.S. agricultural commodities;

• Foster and encourage the development of private enterprise and democratic participation in developing countries; and

• Prevent conflicts. 

366

3 USAID Policy Determination Number 19, April 1992.

U.S. International Food Assistance 

The U.S. international food assistance program is established by several legislative authorities implemented by two Federal agencies. USAID administers Titles II, 

III, and V of P.L. 480. USDA administers Section 416(b) of the Agricultural Act of 

1949, Title I of P.L. 480, Food for Progress, and McGovern-Dole International Food 

for Education and Child Nutrition. The list below provides a brief description of 

each activity.

1. P.L. 480: Agricultural Trade Development and Assistance Act of 1954

(Food for Peace)—the principal mechanism for U.S. international food assistance.

• P.L. 480 Title I: Trade and Development Assistance—concessional 

sales of U.S. agricultural commodities to developing countries and private entities.

• P.L. 480 Title II: Emergency and Development Assistance—direct donation of U.S. agricultural commodities for emergency relief and development.

• P.L. 480 Title III: Food for Development—government-to-government 

grants of agricultural commodities tied to policy reform.

• P.L. 480 Title V: Farmer-to-Farmer (FTF) Program—voluntary technical assistance to farmers, farm groups and agribusinesses.

2. Section 416(b) of the Agricultural Act of 1949—overseas donations of 

surplus food and feed grain owned by the USDA Commodity Credit Corporation 

(CCC).

3. Food for Progress Act of 1985—commodity donations available to emerging democracies and developing countries committed to the introduction or expansion of free enterprise in their agricultural economies.

4. McGovern-Dole International Food for Education and Child Nutrition Program (authorized in the 2002 Farm Bill)—donations of U.S. agricultural products, as well as financial and technical assistance, for school feeding and maternal and child nutrition projects in low-income countries.

5. Bill Emerson Humanitarian Trust (originally authorized by the Agricultural Trade Act of 1980)—food reserve administered under the authority 

of the Secretary of Agriculture. This reserve is available to meet emergency humanitarian food needs in developing countries, allowing the United States to respond to unanticipated food crises. 

I. Food Security 

Defining a Long-Term Global Strategy 

U.S. international food assistance has long played a critical role in responding to 

global food insecurity. This tradition continued in FY 2007, with the U.S. Government providing over 2.5 million metric tons of commodities. The implementing programs have also evolved to reflect greater understanding of (and a focus on addressing) the causes of famine, food emergencies, and large-scale hunger around the 

world. In the 1990 Farm Bill, for example, food security was narrowly defined as 

dependent primarily on the availability of food at the national level. It was broadened in a 1992 policy paper to begin to address distribution and nutritional quality, 

calling for ‘‘all people at all times [to] have both physical and economic access to 

sufficient food to meet their dietary needs for a productive and healthy life.’’ 3 This 

definition includes three elements judged essential to achieving food security, and 

forms the basis for much of the U.S. Government’s international food assistance activity: 

• Food availability: sufficient quantities of food from household production, 

other domestic output, commercial imports or food assistance.

• Food access: adequate resources to obtain appropriate foods for a nutritious 

diet, which depends on income available to households and on the price of food.

• Food utilization: a diet providing sufficient calories and essential nutrients, 

potable water and adequate sanitation, as well as household knowledge of food 

storage and processing techniques, basic principles of nutrition and proper child 

care and illness management.

In recent years, attention has focused on the continued challenges that hamper 

efforts at reducing global food insecurity. Progress has been uneven across the deVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00378 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
367

4 ‘‘Foreign Assistance: Various Challenges Impede the Efficiency and Effectiveness of U.S. 

Food Aid’’ (GAO–07–560) (April 2007).

veloping world, with some countries in all regions gaining and others losing ground. 

International food assistance programs also face increasingly frequent and severe 

natural and man made disasters with growing humanitarian demands on both U.S. 

and international humanitarian assistance resources. 

Improving the Efficiency and Effectiveness of International Food Assistance 

In April 2007, the Government Accountability Office (GAO) issued a report entitled ‘‘Foreign Assistance: Various Challenges Impede the Efficiency and Effectiveness of U.S. Food Aid.’’ 4 This report captured the results of extensive assessments 

of U.S. Government international food assistance programs and contained recommendations for USAID and USDA to improve the efficiency and effectiveness of 

their food aid programs. Since the document was released, USAID and USDA have 

taken a number of steps to address the issues highlighted in the report. These include: 

• expanding monitoring of food aid in the two largest, most complex emergency 

programs (Sudan and Zimbabwe) and formally requesting that Congress provide 

authority to use Title II to support monitors for non-emergency programs;

• reviewing how to improve food aid logistics by awarding a contract for an independent review of various logistics options and exploring long-term maritime 

service contracts;

• improving assessments by collecting and starting to index PVO assessment tools 

to expand utility; and

• updating food aid specifications by issuing a solicitation for an independent review of the nutritional quality and cost effectiveness of food aid commodities.

FY 2007 saw increased inter-agency cooperation between USAID and USDA in 

several critical actions. In an effort to make the Food Aid Consultative Group 

(FACG) more consultative, USDA and USAID spearheaded the creation of an Executive Committee (EXCOM), providing leadership for the overall agenda and critical 

discussion points for FACG members. EXCOM is composed of two representatives 

from USAID, USDA, the commodities industry and PVOs, plus observers from the 

transportation industry. 

USAID and USDA also began collaborating on a comprehensive review of food aid 

specifications and products, including: a thorough initiation of contracting procedures; an evaluation of USDA product specifications; and a review of options on nutritional quality and cost effectiveness of commodities currently provided as food aid, 

in order to ensure that the food meets the nutritional requirements necessary to address beneficiaries’ needs. 

USAID’s Famine Early Warning System (FEWS NET) 

Saving lives and preventing famine are key objectives of the U.S. Government. 

FEWS NET is a USAID-funded activity that collaborates with international, national and regional partners to monitor, collect and disseminate critical data on conditions of food availability and access, as well as the environmental and socioeconomic hazards that lead to food insecurity and famine. The goal of FEWS NET 

is to inform efforts to manage the risk of food insecurity through the provision of 

timely and analytical early warning and vulnerability information, so that decision 

makers have ample time to prepare and take preventive action. In 2007, FEWS 

NET had 23 offices that covered 25 countries.

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5 ACDI/VOCA, Adventist Development & Relief Agency International (ADRA), Africare, American Red Cross, CARE, Catholic Relief Services (CRS), Counterpart International (CPI), Food 

for the Hungry (FHI), Land O’Lakes, Inc. (LOL), Mercy Corps International (MCI), Opportunities Industrialization Centers International (OICI), Project Concern International (PCF), Save 

the Children Federation (SCF) and World Vision, Inc. (WV). 6This report is available at http://www.usaid.gov/ourlwork/humanitarianlassistance/ffp/

pepfarlconceptual.pdf. 

FEWS NET exemplifies the U.S. commitment to anticipating and responding to 

humanitarian vulnerabilities and crises. FEWS NET has interagency agreements 

with U.S. Geological Survey (USGS), National Aeronautics and Space Administration (NASA), National Oceanic and Atmospheric Administration (NOAA) and USDA 

that provide information to the U.S. Government, local governments and a variety 

of other regional and international partners to assist in averting famine. 

Food for Peace’s Institutional Capacity Building Grants 

FFP’s Institutional Capacity Building grants (ICBs) give PVOs funds to build 

their organizational capacity. This pertains to both headquarters and field management of Title II programming. ICB grants allow groups to enrich their knowledge, 

enhance their Title II program management and practices, and better serve their 

communities. Currently, the funds are used for training, travel, workshops, assessments, equipment, tool development and activities that enable each organization to 

strengthen itself from within and also to mentor and to partner with other Title II 

PVOs and/or sub-recipients. The 14 participating organizations began their programs in FY 2004 and will conclude at the end of FY 2008.5

To capitalize on positive achievements and capture projects already in development, FFP has encouraged the grantees to focus on exit strategies and how to preserve the results of their success. Additionally, FFP created an index that captures 

all of the tools that have been developed by the PVOs using ICB funds. The index 

will be distributed to the PVOs and be posted in two online databases. 

In FY 2007, FFP conducted extensive reviews of the grantees’ mid-term evaluations, annual performance reports, annual work plans and plans for a final evaluation. Following these reviews, the findings, common themes and suggested areas for 

greater focus and attention in the future were noted and shared with grantees. For 

example, grantees were encouraged to prioritize their ICB activities and increase 

linkages to Title II programs for greater impact. In addition, the findings stressed 

the importance of capturing lessons learned and success stories, to both enhance 

and foster program performance and innovation. 

A Conceptual Framework for Integrating Food Aid and HIV Programs 

In many countries, there is a complex interface between chronic food insecurity 

and HIV. While there is already close collaboration between FFP P.L. 480 Title II 

food aid and the President’s Emergency Plan for AIDS Relief (PEPFAR) programs, 

in mid-FY 2007, FFP and PEPFAR developed a Conceptual Framework to establish 

and facilitate a programmatic continuum to address the nutrition, dietary supplementation and food security needs of HIV-infected and -affected populations.6

The Conceptual Framework, to be implemented in 2008, provides guidance to target 

Title II food aid and to increase collaboration and joint programming with PEPFAR 


1122005.eps
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7Total value equivalent. Metric tonnage equivalent is 84%. 

8 Updated as of April 21, 2008. 

where possible. For example, FFP and PEPFAR are mapping program locations so 

as to identify priority areas, gaps, and develop a clearer vision of coverage needs, 

and working to determine standardized eligibility and exit criteria. 

II. U.S. International Food Assistance Program Descriptions and Fiscal 

Year 2007 Accomplishments 

A. Public Law 480

The primary mechanism of U.S. international food assistance is the Agricultural 

Trade Development and Assistance Act of 1954 (P.L. 480), commonly known as Food 

for Peace.

1. P.L. 480 Title I: Trade and Development Assistance

The P.L. 480 Title I authority provides funding for both a concessional sales program, supporting Trade and Development, and for the Food for Progress grant program, supporting Agricultural Development in emerging democracies. In FY 2007, 

no new concessional sales agreements were made. 

The USDA-administered Food for Progress Program, authorized under the Food 

for Progress Act of 1985, assists developing countries, particularly emerging democracies ‘‘that have made commitments to introduce or expand free enterprise elements in their agricultural economies through changes in commodity pricing, marketing, input availability, distribution, and private sector involvement.’’ The program authorizes the Commodity Credit Corporation (CCC) to carry out the sale and 

exportation of U.S. agricultural commodities on credit terms or on a grant basis, 

with the use of either CCC financing or P.L. 480 Title I funds. Grants under the 

Food for Progress program are awarded to governments or PVOs, nonprofit agriculture organizations, cooperatives, intergovernmental organizations or other private entities.

a. P.L. 480 Title I: Food for Progress Highlights

In FY 2007, P.L. 480 Title I funding provided 23,210 MT in Food for Progress assistance, with an estimated value of $17 million. The summaries below provide examples of Title I-funded Food for Progress agreements signed in FY 2007.

• Afghanistan: USDA donated 8,210 MT of soybean oil to the Government of the 

Islamic Republic of Afghanistan. The government will sell the oil and use the 

proceeds to finance agricultural and rural development activities with the objective of alleviating poverty, creating employment and promoting economic and 

agricultural development. This will be accomplished through support for higher 

education, rural extension services, plant and animal disease diagnostics and 

control, food safety and natural resource management.

• Ethiopia: USDA donated approximately 15,000 MT of wheat to the Government of Ethiopia to replenish the grain stocks of the Ethiopian Food Security 

Reserve Agency, which provides assistance to food-insecure Ethiopians in times 

of crisis.

2. P.L. 480 Title II: Emergency and Non-Emergency Assistance

More than 85% of U.S. international food aid is used to respond to emergency situations and to implement development projects under Title II, administered by the 

USAID Office of Food for Peace in the Bureau for Democracy, Conflict, and Humanitarian Assistance.7 In FY 2007, approximately $1.87 billion, or 2.13 million MT of 

commodities, was administered under Title II. In the process, FFP partnered with 

cooperating sponsors (CSs) to implement activities in 64 countries worldwide. These 

programs benefitted over 40 million people.8

The focus of Title II programs is to reduce food insecurity in vulnerable populations. This focus on vulnerability to food insecurity targets improving resiliency 

to shocks, an essential first step for household self-sufficiency and economic independence. In support of this strategy, as well as USAID’s overarching goal of saving 

lives and reducing suffering, many Title II emergency programs encompass a number of development-relief transition activities. Similarly, the non-emergency development portfolio incorporates activities to strengthen local capacity to respond to famine, natural disasters and complex emergencies, as well as to provide safety nets 

in some cases.

a. P.L. 480 Title II: Emergency Programs

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9Does not include IFRP programming. See page 11 for details. 

10 Updated as of April 21, 2008.

Title II emergency programs aim to address two forms of emergencies: natural 

disasters, such as floods or droughts; and complex emergencies characterized by a 

combination of natural disaster, conflict and insecurity, a collapse in civil society 

and/or political stability. All of these elements pose substantial program and operating challenges in responding effectively to the needs of food-insecure populations. 

In FY 2007, Title II emergency programs provided 1.5 million MT of emergency 

food aid, at a cost of $1.4 billion, to help alleviate malnutrition and hunger in 30 

countries.9 In all, Title II emergency programs reached approximately 32.2 million 

food-insecure people in FY 2007.10

P.L. 480 Title II: Emergency Program Highlights

C–SAFE/Zimbabwe:

C–SAFE is the Consortium for the Southern Africa Food Security Emergency, and 

includes the PVO organizations World Vision, CARE and Catholic Relief Services 

(CRS). During FY 2007, the Consortium operated under exceedingly difficult circumstances that included crop failure, drought, the world’s highest rate of inflation 

and extreme logistical difficulties. Although the food security situation in Zimbabwe 

continued to deteriorate, C–SAFE worked to prevent a further decline of the nutritional situation among its 688,000 beneficiaries. 

In FY 2007, FFP provided 88,900 MT of food to C–SAFE for distribution in 

Zimbabwe. Utilizing six distinct feeding programs, C–SAFE carried out short-term 

food transfers through interventions including food for assets (FFA), safety net feeding, food support for the chronically ill, supply of subsidized food to urban markets, 

emergency school-based feeding and institutional feeding.

WFP/Sudan:

As in previous years, Title II emergency activities played a key role in the prevention of famine in Darfur, Sudan. In FY 2007, FFP provided 50 percent of WFP’s 

Sudan appeal, representing more than 67 percent of all contributions received by 

WFP from all donors. Sizable and timely contributions from FFP ensured that WFP 

was able to meet 100 percent of its prepositioning targets for Darfur and Southern 

Sudan in 2007. This achievement prevented WFP from having to airlift any commodities to the region, lowering program cost and ensuring timely commodity deliveries during the most critical time of the year. In total, WFP reached more than 

3.1 million people in Darfur with food assistance during the critical hunger gap from 

July–September 2007, and met, on average, more than 92 percent of its monthly 

target caseload in Darfur throughout all of 2007—despite rampant insecurity and 

regular attacks on humanitarian staff. 

Additionally, Title II emergency assistance was provided to more than 170,000 

newly displaced persons fleeing violence in Eastern Chad in 2007, while continuing 

to meet the needs of over 232,000 refugees from Darfur.

Productive Safety Net Program/Ethiopia:

Working in one of the world’s most food-insecure countries, Ethiopia’s Productive 

Safety Net Program (PSNP) represents an innovative approach toward combating 

both chronic and acute malnutrition. Taking into account the short- and long-term 

challenges faced by food-insecure households, the program attempts to simultaneously stabilize incomes—thus preventing the sale of assets during hunger periods—and to increase community productivity through public works projects such as 

soil and water conservation. 

In FY 2007, donor coordination with the Government of Ethiopia (GOET) continued to be a vital part of the success of the PSNP. The program reached approximately 7.3 million beneficiaries in chronically food-insecure households. These beneficiaries received food (45 percent of beneficiaries) or cash (55 percent of beneficiaries) in return for participating in public works programs in their communities 

during the 6 months of the year between harvest and planting season. Results to 

date have been promising. 

During the year, work centered on establishing graduation criteria for the 2008 

PSNP cycle and discussions on an increase of the wage rate. Donor/GOET working 

groups have also established guidelines for pilot PSNP programs for pastoralist 

areas that will roll out in 2008 in Afar, parts of Oromiya, and selected zones of Somali Region. In FY 2007, USAID contributed 244,310 MT worth—to eight cooperating sponsors implementing the PSNP: CARE, CRS, FHI, Relief Society of Tigray 

(REST), SCF, SCF–UK, WV and WFP.

b. P.L. 480 Title II: Non-Emergency Programs

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The P.L. 480 Title II development (non-emergency) food aid program constitutes 

the single largest source of USAID funding in promoting long-term food security in 

such areas as:

1. Agriculture and Natural Resource Management activities.

2. Health and household nutrition activities.

3. Education, Humanitarian Assistance, and Microenterprise.

In FY 2007, 16 cooperating sponsors implemented 78 Title II non-emergency activities in 26 countries. Approximately 594,840 MT, valued at $348 million, of food 

assistance was used to support programs that benefited an estimated 8.6 million 

people.

P.L. 480 Title II: Non-Emergency Program Highlights

The examples below illustrate the breadth of Title II non-emergency food resources implemented by cooperating sponsors as well as how these activities have 

helped in allaying food insecurity and fostering self-sufficiency.

World Vision/Uganda:

World Vision’s Development Assistance Program for Gulu and Kitgum districts of 

northern Uganda combats high rates of food insecurity prevalent in that region. In 

FY 2007, two main areas of programming were health and nutrition monitoring and 

agricultural technology and practices. Activities included 82 nutritional and hygiene-focused training sessions, with almost 2,500 beneficiaries, mothers and foster 

parents participating. Additionally, using improved seeds and technology, a total of 

228,335 tree seedlings were raised at central demonstration nurseries and community tree planting groups. The community nurseries scaled up production by 150 

percent compared with FY 2006.

Catholic Relief Services (CRS)/Malawi:

In Malawi, CRS aims to reduce food insecurity of vulnerable populations by improving agricultural techniques and practices. In FY 2007, the Improving Livelihoods through Increased Food Security (I–LIFE) DAP program focused on improving 

program quality and scale by fine-tuning strategies and realigning interventions 

based on lessons learned over its first 2 years of implementation. The program delivered 13,360 MT of commodities and achieved success across all indicators and results beyond set targets. For example, agricultural production increased due to improved agriculture practices, use of quality seeds and increased uptake of winter 

cropping through small-scale irrigation. As a result, almost 95 percent of beneficiaries planted improved crop varieties, representing an impressive (91 percent increase from almost 50 percent last year) adoption of sound agricultural practices. 

The value of agricultural production per vulnerable household for the 2 seasons was 

equivalent to $402.87—a 113 percent increase in income per vulnerable household 

from the previous fiscal year.

Save the Children Federation (SCF)/Bangladesh:

During FY 2007, SCF’s Jibon-O-Jibika program assisted more than 2.8 million 

beneficiaries in the Division of Barisal, Bangladesh. Focusing on enhancing household food security, the program matches critical health and nutrition interventions 

alongside activities such as homestead gardening, vulnerability mapping, emergency 

preparedness planning and basic health education services. Some of the greatest impact was demonstrated in the health sector: Jibon-O-Jibika pioneered one-stop service delivery to ensure antenatal care, expanded program for immunization (EPI) and 

growth monitoring and promotion (GMP) in combined outreach sessions through 

joint planning with the Ministry of Health and PVOs. Combining immunization and 

growth monitoring interventions resulted in outcomes that often exceeded program 

targets: GMP sessions reached 100 percent coverage (101 percent of goal achieved) 

and EPI coverage went up from 87 percent in FY 2005 to 99 percent during FY 2007 

(115 percent of goal achieved). SCF delivered 65,440 MT at an approximate value 

of $10 million.

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11 Represents IFRP organizations with program agreements in FY 2007. These organizations 

include: Amigos Internacionales, Batay Relief Alliance, Bless the Children, CRS, Center for 

International Health, Child Life International, Church of Bible Understanding, CitiHope International, Convoy of Hope, Coprodeli, Evangelistic International Ministry, Fabretto Children’s 

Foundation, Family Outreach, Feed the Children, Haiti Vision, Healing Hands International, 

Hope Education Foundation, International Crisis Aid, International Partnership for Human Development, International Relief and Development, Inc., International Relief Teams, Legacy 

World Missions, Medical Missionaries, Nascent Solutions, NOAH Project, OICI, PCI, Project 

Hope, Resource & Policy Exchange, Salvation Army World Service, Share Circle and Uplift 

International.

Food Assistance in the Fight against HIV

HIV-affected populations often cite food as one of their greatest needs. HIV 

can cause and worsen food insecurity and malnutrition among infected and affected populations, including orphans and vulnerable children (OVCs). In particular, the infection affects metabolism and causes wasting, especially in more 

advanced stages and in the absence of anti-retroviral therapy (ART). Food insecurity can also lead people to adopt livelihood strategies that increase the risk 

of HIV transmission. During FY 2007, there was increased recognition of the 

interrelationship between food and nutrition security and HIV. During the 

year, FFP partners continued to provide support to HIV-infected and -affected 

food-insecure families in a number of countries including Ethiopia, Ghana, 

Kenya, Rwanda, Uganda and Malawi. In addition, FFP and the PEPFAR collaborated on a conceptual framework for joint work in HIV and Food Security. 

Beginning a new program focusing on the reintegration of Internally Displaced Persons in Northern Uganda, ACDI/VOCA worked with The AIDS Service Organization to develop a client eligibility survey for direct food support. In 

the first year of this effort, 13,400 beneficiaries were identified to receive food 

supplements designed to support their care. A number of these beneficiaries 

have since improved their health enough to be incorporated into agricultural 

activities and 2⁄3 of these families no longer need to receive food supplementation. 

During FY 2007 programming in Malawi, the I–LIFE consortium reached 

more than 9,000 households who hosted orphans or had chronically ill household members. With the inclusion of these vulnerable households in a range of 

development activities such as home gardening, irrigation and Village Savings 

and Loans groups, beneficiaries were able to improve their livelihood capacities 

to a level where they could graduate from food assistance. In a partnership 

with PEPFAR and UNICEF, meanwhile, I–LIFE supported home-based care for 

the chronically ill, and staff were trained to improve program quality. 

c. International Food Relief Partnership 

In an effort to expand and diversify P.L. 480’s sources of food aid commodities and 

FFP’s current base of implementing partners, the U.S. Congress created the International Food Relief Partnerships (IFRP) Initiative in November 2000. This initiative enables USAID to award grant agreements to eligible U.S. nonprofit organizations to produce and stockpile shelf-stable, pre-packaged commodities. Through the 

IFRP program, commodities are made available to eligible nonprofit U.S. organizations and international organizations for transportation, delivery, and distribution 

in emergency food aid relief programs.

In FY 2007, the Office of Food for Peace awarded approximately $7 million in 

Title II IFRP supplier and distribution grants. The program’s primary supplier, 

Breedlove Dehydrated Foods, produced a micronutrient-fortified, dried vegetable 

soup mix which is used as a meal supplement for humanitarian relief operations 

overseas. Over the course of the year, 32 nonprofit U.S.-based organizations distributed the commodity to beneficiaries in 32 countries.11 A list of these countries is 

provided in Appendix 9.

3. P.L. 480 Title III: Food for Development

The P.L. 480 Title III program is a USAID-administered tool for enhancing food 

security and supporting long-term economic development in the least-developed 

countries. The U.S. Government donates agricultural commodities to the recipient 

country and funds their transportation to the point of entry in the recipient country. 

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These commodities are sold on the domestic market and the revenue generated from 

their sale is used to support and implement economic development and food-security 

programs. Funds were not appropriated for Title III in FY 2007.

4. P.L. 480 Title V: John Ogonowski Farmer-to-Farmer Program

The Farmer-to-Farmer (FTF) Program provides voluntary technical assistance to 

farmers, farm groups and agribusinesses in developing and transitional countries, 

in an effort to promote sustainable improvements in food processing, production and 

marketing. The program relies on the expertise of volunteers from U.S. farms, landgrant universities, cooperatives, private agribusinesses and nonprofit farm organizations to respond to the local needs of host-country farmers and organizations. In 

general, these volunteers are not overseas development professionals, but rather individuals who have domestic careers, farms and agribusinesses, or are retired persons who want to participate in development efforts. Typically, volunteers spend 

about 20 to 30 days in the host country. 

The FTF Program was initially authorized by Congress in the 1985 Farm Bill and 

funded through Title V of Public Law 480. It was re-authorized by the 2002 Farm 

Bill to operate from FY 2004 until FY 2008. The Program has been renamed the 

John Ogonowski Farmer-to-Farmer Program to honor the pilot on American Airlines 

Flight 11 that crashed into the World Trade Center in New York City on September 

11, 2001.

P.L. 480 Title V: FTF Highlights

During FY 2007, USAID provided $10.1 million for FTF programs of eight cooperating sponsors. The FTF programs funded 734 volunteer assignments (up from 690 

volunteers in FY 2006) in 37 countries. Volunteers provided developing country organizations with technical assistance services which directly benefited over 148,700 

women and men in FY 2007. The following examples illustrate the types of activities 

undertaken by the program:

Improving Quality of Products for Export/El Salvador:

In order to assist El Salvadoran dairy farmers and processors with preparing 

their products to market abroad, a FTF volunteer with more than 50 years of experience in processing cheeses in Wisconsin, traveled to El Salvador to share his 

knowledge with local cheese industries. Working with managers, technicians, and 

owners of various cheese factories, the volunteer helped demonstrate improved 

cheese and yogurt formulations and processes. Such techniques will enable cheese 

manufacturers to develop new high-value products and reinvent traditional ones for 

high-end markets abroad. Manufacturers in Agrosania, for example, have improved 

the flavor of their Monterey Jack cheese, while in La Salud they are now using bean 

gum to improve their cream cheese and fresh cheese.

Introduction of New Products and Techniques/Moldova:

In Moldova, a FTF volunteer introduced the idea of growing seedless watermelons 

to the ‘‘AgroAccess’’ Vegetable Marketing Cooperative, and a survey confirmed the 

market viability of the unique product. Cooperative members were trained in appropriate soil mixes, tray preparation, seeding, and optimal conditions for greenhouse 

growing of healthy seedlings. Even though hail in July 2007 affected 50 percent of 

the planned yield, local farmers plan to expand cultivation of seedless watermelons 

to 15,000 (an increase from 1,200) seedlings and a drip-irrigation system. New crops 

and progressive production methods are creating new opportunities and generating 

higher incomes for many hard-working farmers.

Farmer-to-Farmer Volunteer 

Assignments: FY 2007

Angola 6

Ethiopia 26

Ghana 24

Guinea 6

Kenya 13

Malawi 13

Mali 9

Mozambique 10

Nigeria 17

South Africa 30

Uganda 25

Zambia 13

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Farmer-to-Farmer Volunteer 

Assignments: FY 2007—Continued

Subtotal Africa 192

Bolivia 4

El Salvador 22

Guatemala 20

Guyana 25

Haiti 23

Honduras 30

Jamaica 22

Nicaragua 12

Peru 3

Subtotal Latin America/Caribbean 161

Armenia 17

Azerbaijan 19

Belarus 16

Georgia 19

Moldova 27

Russia 92

Ukraine 35

Subtotal Europe/Eurasia 225

Bangladesh 9

India 16

Indonesia 8

Kazakhstan 22

Kyrgyzstan 41

Nepal 22

Tajikistan 25

Turkmenistan 11

Vietnam 2

Subtotal Asia/Near East 156

Total 734

B. Section 416(b) of the Agricultural Act of 1949: Surplus Commodities 

The Agricultural Act of 1949 authorizes the donation by USDA of surplus food 

and feed grain owned by the CCC. Section 416(a) authorizes surplus food assistance 

to be distributed domestically, and surplus food shipped to developing countries for 

assistance programs is covered under Section 416(b). Surplus commodities acquired 

by the CCC as a result of price-support operations may be made available under 

Section 416(b) if they cannot be sold or otherwise disposed of without disrupting 

price-support programs or at competitive world prices. These donations are prohibited from reducing the amounts of commodities traditionally donated to domestic 

feeding programs or agencies, from preventing the fulfillment of any agreement entered into under a payment-in-kind program, or from disrupting normal commercial 

sales.

1. Section 416(b): Surplus Commodities Highlights

During FY 2007, USDA provided approximately 5,000 MT of non-fat dry milk and 

associated freight, valued at $20 million. All of these shipments were associated 

with prior year agreements whereby USDA would provide milk in FY 2007 only if 

surplus commodity became available. There was no new programming in FY 2007 

under this program. 

C. Food for Progress 

The USDA-administered Food for Progress Program, authorized under the Food 

for Progress Act of 1985, assists developing countries, particularly emerging democracies ‘‘that have made commitments to introduce or expand free enterprise elements in their agricultural economies through changes in commodity pricing, marketing, input availability, distribution, and private sector involvement.’’ The program authorizes the CCC to carry out the sale and exportation of U.S. agricultural 

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commodities on credit terms or on a grant basis, with the use of either CCC financing or P.L. 480 Title I funds. Agreements for Food for Progress are awarded to governments or PVOs, nonprofit agriculture organizations, cooperatives, intergovernmental organizations or other private entities. 

The 2002 Farm Bill extended the authority for the Food for Progress Program to 

provide assistance in the administration and monitoring of food assistance programs 

to strengthen private-sector agriculture in recipient countries through FY 2007. The 

CCC is authorized to use $15 million for administrative costs under the grants and 

$40 million for transportation expenses.

1. CCC-funded Food for Progress Highlights

In FY 2007, CCC funding financed the purchase and shipment of 250,630 MT of 

commodities to 13 countries, with an estimated value of $113 million. The summaries below provide examples of CCC-funded Food for Progress agreements signed 

in FY 2007.

• Bolivia: USDA donated 11,500 MT of wheat to Food for the Hungry International (FHI), for use in Bolivia. FHI will sell the wheat and use the proceeds 

to establish: supply chains for higher value agricultural products; develop commodity-producer associations and micro-enterprises; increase agricultural productivity and post-harvest system efficiency; improve access to financial services; and, create strategic alliances with public and private sector organizations 

in Bolivia. The program will directly benefit 2,500 farmers and 2,500 households indirectly.

• Mozambique: USDA donated 21,060 MT of wheat to TechnoServe (TS), a private voluntary organization, for use in Mozambique. TS will sell the wheat in 

Mozambique and use the proceeds to carry out development work in the poultry 

industry. TS will expand capacity for poultry farmers, train poultry industry 

and related government agencies in bio-security and disease prevention, and 

provide matching grants to large-scale processors to help upgrade facilities. TS 

will also provide marketing services to promote improved market access and 

work with government ministries to improve analysis of policy, regulatory and 

administrative issues impacting the poultry industry.

• Niger: USDA donated 5,600 MT of agricultural commodities, including rice and 

soy-fortified bulgur to International Relief and Development, Inc. (IRD) for use 

in Niger. IRD will sell the rice in Niger and use the proceeds to help pastoralists reconstitute goat herds, expand water sources for animals, develop pasture 

reserves, increase vegetable production, and build capacity of local NGOs. This 

program also includes a food for work (FFW) component, in which 1,600 MT of 

soy-fortified bulgur will be distributed to workers participating in the water 

source expansion and pasture development activities.

• Nicaragua: USDA donated 15,000 MT of wheat and 1,000 MT of crude 

degummed soybean oil to FINCA International for use in Nicaragua. FINCA 

will sell the commodities and use the proceeds over a 3 year period to increase 

loan capital and microfinance services to micro-entrepreneurs in agriculture-related businesses. This program will directly benefit 8,415 farmers and indirectly 

benefit 37,867 family members. 

D. McGovern-Dole International Food for Education and Child Nutrition 

Program 

An estimated 120 million children around the world do not attend school, due in 

part to hunger or malnourishment. The majority of them are girls. Following the 

success of the Global Food for Education Initiative, created in July 2000, the United 

States has demonstrated its continued commitment to education and child nutrition 

with the 2002 Farm Bill’s authorization of the McGovern-Dole International Food 

for Education and Child Nutrition Program (FFE) through FY 2007. 

Modeled on the U.S. Government’s school meals program, the program is named 

in honor of former Senators George McGovern and Robert Dole for their tireless efforts to promote education and school feeding. The FFE program uses U.S. commodities and financial assistance to provide incentives for children to attend and remain 

in school, as well as to improve child development through nutritional programs for 

women, infants and children under 5. In its inaugural year, FFE provided 119,320 

MT of commodities, worth $93.1 million, to support programs implemented by WFP 

and PVOs in 20 countries. In FY 2007, the FFE program provided more than 

103,000 MT of commodities to support child nutrition and school feeding programs 

in 15 countries, the total value of which was over $98 million. The following are examples of new FFE programs that were funded in FY 2007:

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• Mozambique: USDA donated 23,670 MT of corn-soy blend and rice to Joint Aid 

Management (JAM) for a child education program in Mozambique. From 2007 

to 2009, JAM will implement school feeding for 220,000, 242,000 and 271,000 

beneficiaries respectively, construct 610 school warehouses and kitchens, and 

provide a tri-annual take-home incentive ration for 16,000, 19,000 and 21,000 

girls, respectively, and 20,000 orphans and vulnerable children. Complementary 

projects under this program include water and sanitation improvements, the 

provision of 180 water wells, and a school gardens initiative in 45 schools. All 

of these projects include community and student education activities on nutrition, sanitation and health.

• Liberia: USDA donated 600 MT of vegetable oil, rice and beans to Visions in 

Action (VIA) for a school feeding program in Liberia. During 2007 and 2008, 

VIA will use the resources in a comprehensive program which covers many aspects of education. VIA will improve the quality of the primary school education 

environment in community schools in underprivileged areas by: paying teachers 

supplemental salaries; providing needed school supplies, benches and textbooks; 

building new schools in underserved areas; and, providing seeds and tools for 

school gardens. The program aims to increase student continuation and promotion by providing monthly take-home rations to students with high attendance levels, and to improve the overall quality of education by establishing a 

teacher training certificate program for primary school teachers at centers run 

by the Ministry of Education. Finally, the program includes the goal of improving student nutrition and health through educational posters, the organization 

and implementation of nutrition workshops, and a take-home ration to teachers 

who incorporate health and nutrition into the school curriculum.

• Cambodia: USDA donated 11,130 MT of commodities to the WFP for a school 

feeding program in Cambodia. WFP will use the vegetable oil and peas as part 

of a larger, internationally-sponsored program that provides hot lunches at 

schools with the aim of increasing school enrollment and attendance rates and 

reducing dropout rates in primary schools. The program also provides takehome rations to girls during the last three grades of primary school, to encourage parents to keep their daughters in school until completion. WFP’s school 

feeding program also provides community support to women’s groups, Parent 

Teacher Associations and School Canteens Management Committees. 

E. Bill Emerson Humanitarian Trust 

Although the Bill Emerson Humanitarian Trust (BEHT) is not a food aid program, it is a valuable resource that can be used to respond to unforeseen humanitarian food crises in developing countries. The Emerson Trust is a food reserve of 

up to 4 million MT of wheat, corn, sorghum, and rice administered under the authority of the Secretary of Agriculture. When an unanticipated emergency arises 

that cannot be met with P.L. 480 resources, the Secretary of Agriculture may authorize the release of commodities from the reserve in order to meet those immediate needs. Each year, 500,000 MT may be released, plus up to another 500,000 

MT that was not released in prior years. 

The reserve was originally authorized by the Agricultural Trade Act of 1980 as 

the Food Security Wheat Reserve and was later broadened to include a number of 

other commodities. In 1998 the reserve was renamed the Bill Emerson Humanitarian Trust and was reauthorized through 2007 under the 2002 Farm Bill. In FY 

2007, the Emerson Trust held 900,000 MT of wheat; however, no commodities were 

released. 

III. Appendices

Appendix 1: List of Abbreviations 

BEHT Bill Emerson Humanitarian Trust 

CCC Commodity Credit Corporation 

CS cooperating sponsor 

C–SAFE Consortium for Southern Africa Food Security Emergency 

DAP Development Assistance Program 

EPI Expanded Program for Immunization 

EXCOM Executive Committee (for the FACG) 

FAC Food Aid Convention 

FACG Food Aid Consultative Group 

FEWS NET Famine Early Warning System Network 

FFA food for assets 

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Appendix 1: List of Abbreviations—Continued

FFE McGovern-Dole International Food for Education and Child Nutrition 

Program (formerly Global Food for Education Initiative) 

FFP Office of Food for Peace (USAID) 

FFP/W Food for Peace Washington Office 

FFW Food for work 

FTF Farmer-to-Farmer Program of P.L. 480, Title V 

FY fiscal year 

GAO Government Accountability Office 

GMP Growth monitoring promotion 

HBC Home-based care 

HIV Human Immunodeficiency Virus 

ICB Institutional Capacity Building 

IDPs Internally Displaced Persons 

IFRP International Food Relief Partnership 

I–LIFE Improving Livelihoods through Increased Food Security 

MARAD Maritime Administration 

MT metric ton 

NASA National Aeronautics and Space Administration 

NGO non-governmental organization 

NOAA National Oceanic and Atmospheric Administration 

OVC Orphans and Vulnerable Children 

P.L. 480 U.S. Public Law 480

PEPFAR President’s Emergency Plan for AIDS Relief 

PLWHA People Living with HIV 

PSNP Productive Safety Net Program (Ethiopia) 

PVO private voluntary organization) 

UN United Nations 

USAID U.S. Agency for International Development 

USDA U.S. Department of Agriculture 

USGS U.S. Geological Survey 

WFP United Nations World Food Programme 

Appendix 2: List of Partner Organizations 

The following organizations implemented U.S. Government food assistance programs in 

Fiscal Year 2007:

ACDI/VOCA Agriculture Cooperative Development International/ Volunteers in 

Overseas Cooperative Assistance 

ADRA Adventist Development and Relief Agency International, Inc. 

Africare Africare 

AI Amigos Internacionales 

ARC American Red Cross 

BRA Batay Relief Alliance 

BC Bless the Children 

Caritas Caritas 

CARE Cooperative for Assistance and Relief Everywhere, Inc. 

CBU Church for Bible Understanding 

CIH Center for International Health 

Citihope Citihope International 

CLI Child Life International 

CH Convoy of Hope 

Coprodeli Coprodeli 

CPI Counterpart International 

CRS Catholic Relief Services 

EFSRA Ethiopian Food Security Reserve Agency 

EIM Evangelistic International Ministry 

FCF Fabretto Children’s Foundation, Inc. 

FO Family Outreach 

FHI Food for the Hungry International 

FINCA FINCA International 

FTC Feed the Children 

GOAF Government of Afghanistan 

GOB Government of Bangladesh 

GOET Government of Ethiopia 

378

Appendix 2: List of Partner Organizations—Continued

Haiti Vision Haiti Vision 

HHI Healing Hands International 

HEF Hope Education Foundation 

ICA International Crisis Aid 

IPHD International Partnership for Human Development 

IRD International Relief and Development, Inc. 

IRT International Relief Teams 

JAM Joint Aid Management 

LOL Land O’Lakes 

LWM Legacy World Missions 

MM Medical Missionaries 

MCI Mercy Corps International 

Nascent Nascent Solutions 

NOAH NOAH Project 

NPA Norwegian People’s Aid 

OICI Opportunities Industrialization Centers International 

PCI Project Concern International 

PH Project Hope 

PRISMA Asociacio ́n Bene ́fica PRISMA 

REST Relief Society of Tigray 

RPX Resource & Policy Exchange 

Salvation Army Salvation Army World Service 

SCF Save the Children Federation 

SCF–UK Save the Children UK 

Share Circle Share Circle 

SHARE SHARE Guatemala 

TASO The AIDS Service Organization 

TS TechnoServe 

Uplift Uplift International 

VIA Visions in Action 

WFP United Nations World Food Programme 

WS World Share 

WVI World Vision International, Inc. 

UNDP United Nation Development Program 

UNICEF United Nations Children’s Fund 

Appendix 3: USDA Title I Program: Food for Progress Grants—Fiscal Year 2007

Title I Programs 

Food for Progress Grants 

Country Sponsor Tonnage 

(MT) 

Africa

Ethiopia GOET 15,000

Subtotal Africa 15,000

Near East

Afghanistan GOAF 8,210

Subtotal Near East 8,210

Total 23,210

Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity, and 

Tonnage—Fiscal Year 2007

Country Cooperating 

Sponsor Commodities Recipients * (000s) 

Metric 

Tons 

Total Cost 

(000s) 

Africa

Burkina Faso WFP Corn Soy Blend, Veg. Oil 668.5 2,500 $2,280.9

Burundi WFP Cornmeal, Corn Soy Blend, Veg. Oil, Yellow Peas, Yellow Split Peas 2.5 11,380 $10,071.5

Cameroon WFP Bagged Corn, Corn Soy Blend, Red 

Beans, Veg. Oil 

30.0 970 $797.8

379

Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity, and 

Tonnage—Fiscal Year 2007—Continued

Country Cooperating 

Sponsor Commodities Recipients * (000s) 

Metric 

Tons 

Total Cost 

(000s) 

Central African 

Republic 

WFP Corn Soy Blend, Cornmeal, Green Peas, 

Veg. Oil, Yellow Split Peas 

204.0 14,860 $14,149.0

Chad WFP Corn Soy Blend, Soft White Wheat, Sorghum (bulk), Sorghum (bagged), Veg. 

Oil, Yellow Split Peas 

1,000.1 37,270 $37,735.6

Congo 

(Brazzaville) 

WFP Rice (bagged), Veg. Oil, Yellow Split Peas 308.5 1,220 $1,196.8

Congo (DRC) FHI Corn Soy Blend, Cornmeal, Green Peas, 

Veg. Oil 

— 5,350 $6,175.4

WFP Corn Soy Blend, Cornmeal, Lentils, Veg. 

Oil, Yellow Peas, Yellow Split Peas 

3,368.3 28,470 $31,662.2

Coˆte d’Ivoire WFP Cornmeal 922.5 6,810 $5,000.1

Djibouti WFP Corn Soy Blend, Lentils, Wheat Flour 57.2 1,350 $994.9

Ethiopia CARE Corn Soy Blend, Hard Red Winter 

Wheat, Veg. Oil 

545.3 25,280 $12,700.4

CRS Bulgur, Corn Soy Blend, Hard Red Winter Wheat, Lentils, Rice (Bagged), Veg. 

Oil 

449.9 17,480 $9,375.7

FHI Green Peas, Green Split Peas, Hard Red 

Winter Wheat, Veg. Oil, Yellow Peas 

802.9 17,110 $8,945.6

WFP Corn Soy Blend, Hard Red Winter 

Wheat, Veg. Oil, Yellow Peas, Yellow 

Split Peas 

7.0 195,940 $101,916.5

REST Green Peas, Hard Red Winter Wheat, 

Veg. Oil 

952.6 67,610 $33,453.5

SCF Hard Red Winter Wheat 89.1 3,970 $1,684.3

SCF–UK Green Peas, Hard Red Winter Wheat, 

Lentils, Yellow Peas, Yellow Split Peas 

835.8 19,270 $9,472.8

WV Corn Soy Blend, Hard Red Winter 

Wheat, Veg. Oil, Yellow Peas 

210.3 6,880 $3,988.2

Guinea WFP Bulgur, Veg. Oil, Yellow Split Peas 1,234.7 1,760 $1,519.4

Kenya WFP Bulgur, Corn Soy Blend, Cornmeal, 

Green Split Peas, Veg. Oil, Wheat 

Flour, Yellow Split Peas 

961.1 112,429 $80,870.0

Lesotho WV Cornmeal, Pinto Beans, Veg. Oil, Yellow 

Peas, Yellow Split Peas 

138.7 12,040 $14,605.0

Liberia WFP Bulgur, Corn Soy Blend, Veg. Oil, Yellow 

Split Peas 

1,330.7 10,700 $9,146.7

Madagascar WFP Green Peas, Pinto Beans, Rice , Sorghum 337.5 6,460 $4,563.0

Mali WFP Cornmeal, Veg. Oil, Yellow Split Peas 740.0 4,390 $4,138.9

Mauritania WFP Corn Soy Blend, Hard Red Winter 

Wheat, Soft White Wheat, Soy-Fortified Sorghum Grits, Wheat Soy 

Blend, Veg. Oil 

254.0 4,890 $3,510.9

Niger WFP Corn Soy Blend, Veg. Oil 2.9 6,890 $5,763.1

Rwanda WFP Corn Soy Blend, Cornmeal, Veg. Oil, Yellow Peas 1,085.0 3,260 $2,996.3

Somalia CARE Corn Soy Blend, Lentils, Sorghum, Veg. 

Oil 

460.0 13,250 $10,289.2

WFP Corn, Corn Soy Blend, Hard Red Winter 

Wheat, Sorghum, Veg. Oil, Yellow 

Peas, Yellow Split Peas 

4.3 36,740 $25,016.8

Southern Africa 

Region 

WFP Black Beans, Bulgur, Corn Soy Blend, 

Cornmeal, Kidney Beans, Lentils, Pink 

Beans, Pinto Beans, Red Beans, Sorghum, Veg. Oil, Yellow Peas, Yellow 

Split Peas 

5,534.0 122,915 $102,601.3

Sudan ADRA Lentils, Sorghum, Veg. Oil 83.5 780 $774.0

CARE Corn Soy Blend, Lentils, Sorghum, Veg. 

Oil 

164.3 3,550 $2,625.6

WFP Corn Soy Blend, Lentils, Sorghum, Veg. 

Oil 

12.2 341,070 $339,805.9

NPA Lentils, Sorghum, Veg. Oil 196.8 9,230 $12,938.7

Tanzania WFP Corn Soy Blend, Cornmeal, Pinto Beans, 

Veg. Oil, Yellow Split Peas 

580.0 14,210 $11,731.3

Uganda WFP Black Beans, Corn Soy Blend, Cornmeal, 

Kidney Beans, Pinto Beans, Sorghum, 

Veg. Oil, Yellow Split Peas 

10.5 64,210 $44,413.7

Zambia WFP Sorghum 67.0 1,330 $795.0

Zimbabwe WV Bulgur, Cornmeal, Great Northern 

Beans, Sorghum, Veg. Oil 

10.0 88,920 $95,800.7

Sub-Total Africa 23,661.8 1,322,744 $1,065,506.7

Asia/Near East

Afghanistan WFP Green Peas, Soft White Wheat, Veg. Oil 6.6 89,250 $59,996.0

East-Timor WFP Corn Soy Blend, Red Beans, Veg. Oil 165.0 2,290 $2,171.6

Lebanon WFP Red Hard Winter Wheat — 700 $444.2

Nepal WFP Garbanzo Beans, Lentils, Rice, Veg. Oil 333.2 6,470 $6,056.3

Sri Lanka WFP Lentils, Soft Red Winter Wheat, Veg. Oil, 

Wheat Flour 

1,423.9 24,200 $14,085.9

Syria WFP Lentils, Rice, Veg. Oil 30.0 820 $644.2

380

Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity, and 

Tonnage—Fiscal Year 2007—Continued

Country Cooperating 

Sponsor Commodities Recipients * (000s) 

Metric 

Tons 

Total Cost 

(000s) 

West Bank/Gaza WFP Garbanzo Beans, Veg. Oil, Wheat Flour 665.0 27,090 $19,487.7

Sub-Total Asia/Near East 232,623.7 23150,820 23$102,885.9

Latin America

Colombia WFP Green Peas, Lentils, Veg. Oil 725.0 4,830 $4,858.4

El Salvador WFP Pinto Beans, Veg. Oil 470.0 160 $176.9

Guatemala WFP Pinto Beans, Veg. Oil 470.0 240 $263.0

WS Corn Soy Blend, Pinto Beans, Rice, Veg. 

Oil 

58.8 1,100 $1,057.7

Honduras WFP Pinto Beans, Veg. Oil 470.0 260 $286.9

Nicaragua WFP Pinto Beans, Veg. Oil 470.0 210 $229.5

Sub-Total Latin America 2,663.8 6,800 $6,872.4

Unallocated Preposition plus Unallocated — 52,600 $36,501.2

Pending Approval — — $183,233.8

Funding Adjustments (IFRP, PSCs, Prepositioning and CSB Mitigation) — — $42,000.0

Worldwide Total 28,949.3 1,532,964 $1,437,000.0

Source: Tonnage, Values and 202(e) totals derived from FFP Preliminary Final Budget Summary Report, January 2008. Commodities and Recipients derived from Food for Peace Information System report, January 9, 2008. 

Note: Values include commodities plus freight. Recipients listed as approved in cooperative agreements. 

* Recipient values are reflective of commodity rations and are derived separately from program beneficiary totals. 

Table does not include International Food Relief Partnership activities. See page 11 for specific details. 

Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, Commodity, 

Recipient, and Tonnage Tables—Fiscal Year 2007

Country Cooperating 

Sponsor Commodities Recipients * (000s) 

Metric 

Tons 

Total Cost 

(000s) 

Africa

Burkina Faso Africare Defatted Soy Flour, Pinto Beans, Potato 

Flakes, Rice, Soy-Fortified Bulgur, Veg. 

Oil 

7.0 5,710 $4,914.3

CRS Lentils, Soy-Fortified Bulgur, Soy-Fortified Cornmeal, Rice, Veg. Oil 356.8 14,760 $11,693.9

Chad Africare Rice, Wheat Flour — 4,120 $3,722.4

Ghana ADRA Soy-Fortified Bulgur 2,667.0 400 $1,926.0

CRS Corn Soy Blend, Northern Spring Wheat, 

Soy-Fortified Bulgur, Soy-Fortified Sorghum Grits, Veg. Oil, 

204.8 22,070 $12,075.8

OICI Northern Spring Wheat, Soy-Fortified 

Bulgur, Soy-Fortified Sorghum Grits, 

Veg. Oil, Wheat Soy Blend 

4.0 9,580 $4,107.3

Guinea OICI Green Peas, Soy-Fortified Cornmeal, Veg. 

Oil 

10.7 2,330 $2,494.9

Kenya ADRA Corn Soy Blend, Green Peas, Hard Red 

Winter Wheat, Soy-Fortified Bulgur, 

Veg. Oil 

79.1 7,120 $2,569.6

CARE Corn Soy Blend, Hard Red Winter 

Wheat, Veg. Oil, Yellow Split Peas 

4.5 5,960 $2,145.0

FHI Corn Soy Blend, Green Split Peas, Hard 

Red Winter Wheat, Soy-Fortified 

Bulgur, Veg. Oil 

8.8 6,960 $2,844.5

Liberia CRS Bulgur, Hard Red Spring Wheat, Lentils, 

Rice, Veg. Oil, Wheat Flour 

17.9 9,170 $6,998.4

Madagascar ADRA Corn Soy Blend, Crude De-Gummed Veg. 

Oil, Hard Red Winter Wheat, Rice, 

Veg. Oil 

12.4 8,620 $4,707.7

CARE Corn Soy Blend, Crude De-Gummed Veg. 

Oil, Great Northern Beans, Rice, Veg. 

Oil 

68.2 11,700 $6,607.4

CRS Corn Soy Blend, Crude De-Gummed Veg. 

Oil, Great Northern Beans, Hard Red 

Winter Wheat, Rice, Veg. Oil 

65.4 8,870 $5,494.5

Malawi CRS Corn Soy Blend, Cornmeal, Crude DeGummed Veg. Oil, Pinto Beans, Veg. 

Oil 

21.4 13,360 $15,000.1

Mauritania CPI Corn Soy Blend, Hard Red Winter 

Wheat, Veg. Oil, Yellow Split Peas 

25.3 9,510 $3,849.5

Mozambique ADRA Hard Red Winter Wheat, Northern 

Spring Wheat 

— 5,290 $1,967.1

Africare Hard Red Winter Wheat, Northern 

Spring Wheat 

— 3,230 $1,187.6

381

Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, Commodity, 

Recipient, and Tonnage Tables—Fiscal Year 2007—Continued

Country Cooperating 

Sponsor Commodities Recipients * (000s) 

Metric 

Tons 

Total Cost 

(000s) 

CARE Hard Red Winter Wheat, Northern 

Spring Wheat 

— 7,720 $2,743.2

FHI Hard Red Winter Wheat, Northern 

Spring Wheat 

— 5,920 $2,143.6

SCF Hard Red Winter Wheat, Northern 

Spring Wheat 

— 4,720 $1,841.9

WV Hard Red Winter Wheat, Northern 

Spring Wheat 

— 22,970 $8,177.1

Niger Africare Rice, Soy-Fortified Bulgur 19.0 3,280 $3,334.3

CRS Rice, Soy-Fortified Bulgur 40.5 6,040 $4,650.6

Rwanda ACDI/VOCA Corn Soy Blend, Soy-Fortified Bulgur, 

Veg. Oil 

2.0 2,930 $4,337.5

CRS Bulgur, Corn Soy Blend, Veg. Oil 26.9 2,940 $3,101.2

WV Corn Soy Blend, Soy-Fortified Bulgur, 

Veg. Oil 

5.9 2,760 $4,015.8

Senegal CPI Corn Soy Blend, Lentils, Potato Flakes, 

Rice, Soy-Fortified Bulgur, Veg. Oil 

44.1 6,560 $4,832.1

Sierra Leone CARE Bulgur, Hard Red Winter Wheat, Kidney 

Beans, Rice, Veg. Oil 

30.4 14,290 $9,734.4

Uganda ACDI/VOCA Corn Soy Blend, Hard Red Winter 

Wheat, Veg. Oil 

21.2 14,650 $9,579.2

SCF Corn Soy Blend, Hard Red Winter 

Wheat, Lentils, Soy-Fortified Cornmeal, Veg. Oil 

4.9 4,800 $3,534.5

WV Hard Red Winter Wheat — 2,510 $1,262.3

Zambia CRS Bulgur, Hard Red Winter Wheat, Lentils, 

Sorghum 

5.3 8,410 $6,807.7

LOL Northern Spring Dark Wheat — 4,500 $3,044.3

Sub-Total Africa 3,753.6 263,760 $167,445.7

Asia/Near East

Bangladesh CARE Hard Red Winter Wheat, Soft Red Winter Wheat, Soft White Wheat, Veg. Oil, 

Yellow Split Peas 

129.7 65,440 $25,567.4

SCF Hard Red Winter Wheat, Soft White 

Wheat, Veg. Oil, Yellow Split Peas 

160.0 24,760 $10,040.0

India CARE Green Peas, Veg. Oil — 22,060 $16,531.4

CRS Bulgur, Veg. Oil 718.0 21,410 $14,506.4

Indonesia CARE Green Split Peas, Northern Spring Dark 

Wheat, Veg. Oil 

15.3 1,870 $1,837.8

CRS Corn Soy Blend, Lentils, Northern Spring 

Dark Wheat, Veg. Oil 

93.0 2,940 $1,568.8

MCI Green Split Peas, Northern Spring Dark 

Wheat, Veg. Oil 

26.1 3,670 $3,322.2

SCF Northern Spring Dark Wheat, Veg. Oil 52.0 3,430 $2,895.0

WV Green Split Peas, Hard White Wheat, 

Northern Spring Dark Wheat, Veg. Oil 

37.2 2,580 $1,327.5

Sub-Total Asia/Near East 1,231.1 148,160 $77,596.5

Central Asia

Tajikistan CARE Lentils, Veg. Oil, Wheat Flour 47.6 5,660 $8,477.6

Sub-Total Central Asia 47.6 5,660 $8,477.6

Latin America

Bolivia ADRA Corn Soy Blend, Green Peas, Lentils, 

Soy-Fortified Bulgur, Wheat Flour 

17.7 6,330 $4,079.4

CARE Corn Soy Blend, Green Peas, Lentils, 

Soy-Fortified Bulgur, Wheat Flour 

7.9 8,320 $5,391.3

FHI Corn Soy Blend, Green Peas, Lentils, 

Soy-Fortified Bulgur, Wheat Flour 

15.8 8,960 $5,704.1

SCF Corn Soy Blend, Green Peas, Lentils, 

Wheat Flour 

31.6 7,520 $4,874.2

Guatemala CRS Corn Soy Blend, Crude De-Gummed Veg. 

Oil, Pinto Beans, Rice, Veg. Oil 

84.0 5,220 $3,971.8

SCF Corn Soy Blend, Crude De-Gummed Veg. 

Oil, Pinto Beans, Rice, Veg. Oil 

12.7 4,630 $3,534.4

WS Corn Soy Blend, Crude De-Gummed Veg. 

Oil, Pinto Beans, Rice, Veg. Oil 

12.7 5,940 $4,488.8

Haiti CARE Hard Red Winter Wheat, Lentils, SoyFortified Bulgur, Veg. Oil, Wheat Soy 

Blend 

46.2 11,316 $5,048.3

CRS Cornmeal, Crude De-Gummed Veg. Oil, 

Hard Red Winter Wheat, Lentils, SoyFortified Bulgur, Veg. Oil, Wheat Soy 

Blend 

227.5 21,421 $12,008.0

SCF Hard Red Winter Wheat, Lentils, SoyFortified Bulgur, Veg. Oil, Wheat Soy 

Blend 

127.1 12,567 $5,787.4

382

Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, Commodity, 

Recipient, and Tonnage Tables—Fiscal Year 2007—Continued

Country Cooperating 

Sponsor Commodities Recipients * (000s) 

Metric 

Tons 

Total Cost 

(000s) 

WV Hard Red Winter Wheat, Lentils, SoyFortified Bulgur, Veg. Oil, Wheat Soy 

Blend 

53.1 24,036 $9,514.9

Honduras ADRA Corn Soy Blend, Northern Spring Wheat, 

Red Beans, Rice, Veg. Oil 

10.9 9,220 $3,835.0

CARE Corn Soy Blend, Red Beans, Rice, Veg. 

Oil 

1.5 120 $86.3

SCF Corn Soy Blend, Northern Spring Wheat, 

Red Beans, Rice, Veg. Oil 

5.3 8,555 $3,637.3

WV Corn Soy Blend, Kidney Beans, Northern 

Spring Wheat, Red Beans, Rice, Veg. 

Oil 

8.4 10,555 $5,169.0

Nicaragua ADRA Corn Soy Blend, Lentils, Northern Spring 

Wheat, Rice, Veg. Oil 

1.9 8,500 $3,490.8

CRS Corn Soy Blend, Lentils, Northern Spring 

Wheat, Rice, Veg. Oil 

8.5 6,650 $2,672.9

PCI Corn Soy Blend, Lentils, Northern Spring 

Wheat, Rice, Veg. Oil 

11.0 6,440 $2,490.5

SCF Corn Soy Blend, Cornmeal, Crude DeGummed Veg. Oil, Lentils, Northern 

Spring Wheat, Rice, Veg. Oil 

6.4 6,520 $2,584.5

Peru ADRA Crude De-Gummed Veg. Oil — 1,630 $2,131.1

PRISMA Crude De-Gummed Veg. Oil — 410 $3,138.2

Caritas Inc. Crude De-Gummed Veg. Oil — 2,400 $3,138.2

Sub-Total Latin America 690.2 177,260 $94,273.3

Pending Approval — — $706.9

Worldwide Total 5,722.6 594,840 $348,500.0

Source: Tonnage, Values and 202(e) totals derived from FFP Preliminary Final Budget Summary Report, January 2008. Commodities and Recipients derived from Food for Peace Information System report, January 9, 2008. 

* Recipient values are reflective of commodity rations and are derived separately from program beneficiary totals. 

Note: Values include commodities plus freight. Recipients listed as approved in cooperative agreements. 

Appendix 6: USDA Food for Progress Program—CCC-funded Grants—Fiscal Year 2007

Country Cooperating 

Sponsor 

Tonnage

Donated (MT) 

Africa

Kenya LOL 

WOCCU 

25,000

26,610

Liberia ACDI 10,000

Madagascar LOL 

CRS 

12,450

6,190

Malawi PAI 10,000

Mozambique TS 

PAI 

GOMZ 

IRD 

21,060

10,000

4,500

5,600

Niger GONI 17,000

Tanzania FINCA 20,000

Subtotal Africa 168,410

Europe and Eurasia

Armenia WFP 

ATG 

920

2,500

Azerbaijan VRF 10,800

Georgia IRD 15,000

Subtotal Europe and Eurasia 29,220

Latin America and the Caribbean

Bolivia FFTH 11,500

El Salvador GOEL 15,500

Nicaragua FINCA 16,000

Subtotal Latin America and the Caribbean 43,000

Worldwide Total 240,630

383

Appendix 7: McGovern-Dole International Food for Education and Child Nutrition 

Program—Fiscal Year 2007: Donations by Country and Cooperating Sponsor 

Country Cooperating 

Sponsor 

Tonnage

Donated (MT) 

Africa

Benin CRS 480

Congo (Brazzaville) IPHD 6,300

Guinea WFP 11,460

Guinea-Bissau IPHD 4,710

Kenya WFP 14,350

Liberia VA 600

Madagascar CARE 3,190

Malawi WFP 8,280

Mali CRS 7,380

Mozambique JAMGT 5,890

Senegal CPI 3,240

Subtotal Africa 65,880

Asia

Cambodia SM 1,750

Cambodia WFP 11,130

Pakistan WFP 7,170

Subtotal Asia 17,300

Latin America and the Caribbean

Guatemala FFTP 10,060

Guatemala SHARE 6,500

Nicaragua GLIM 740

Subtotal Latin America and the Caribbean 20,050

Grand Total 103,230

Appendix 8: Public Law 480 Title II Congressional Mandates—Fiscal Year 2007

Minimum Subminimum Monetization Value-added Bagged in 

United States 

FY 2007 Target 2,500,000 1,875,000 15.0% 75.0% 50.0%

Status September 2007 2,573,215 682,353 74.3% 44.8% 54.8%

Minimum: Total approved metric tons programmed under Title II. Metric ton grain equivalent used to report against target.

Subminimum: Metric tons for approved non-emergency programs through PVOs and community development organizations and 

WFP. Metric ton grain equivalent used to report against target.

Monetization: Percentage of approved Title II programs that are monetization programs.

Value-added: Percentage of approved non-emergency programs that are processed, fortified, or bagged.

Bagged in U.S.: Percentage of approved non-emergency bagged commodities that are whole grain to be bagged in the United States. 

Source: USAID Bureau for Democracy, Conflict, and Humanitarian Assistance, Office of Food for Peace, FY 

2007Preliminary Budget Summary Overview, January 9, 2008. 

Appendix 9: Countries with Approved U.S. Food Assistance Programs—

Fiscal Year 2007

Title I (0 countries)

Title III (0 countries)

CCC-Funded Food for Progress (13 countries)

Armenia Azerbaijan Bolivia El Salvador 

Georgia Kenya Liberia Madagascar 

Malawi Mozambique Nicaragua Niger 

Tanzania

Title I-Funded Food for Progress (2 countries)

Afghanistan Ethiopia

Title II * (64 countries)

Afghanistan Angola † Armenia † ** Azerbaijan 

Bangladesh Benin Bolivia Burkina Faso 

Burundi Cambodia † ** Cameroon † Cape Verde 

Central African Rep. † Chad Colombia Congo (Brazzaville) † **

Congo (DRC) † Coˆte d’Ivoire Djibouti Dominican Rep. † **

384

Appendix 9: Countries with Approved U.S. Food Assistance Programs—

Fiscal Year 2007—Continued

East Timor Ecuador † ** El Salvador † ** Ethiopia †

Gambia Ghana † Guatemala † Guinea †

Haiti † Honduras † India † Indonesia †

Kenya † Kosovo † ** Kyrgyzstan † ** Lebanon 

Lesotho Liberia Madagascar Malawi †

Mali Mauritania Mozambique Nepal 

Nicaragua † Niger Peru † Philippines † **

Romania † ** Rwanda Senegal Sierra Leone 

Somalia South Africa † ** Sri Lanka Sudan 

Swaziland † Syria Tajikistan † ** Uganda †

Uzbekistan † ** West Bank/Gaza Zambia † Zimbabwe †

Food for Education (15 countries)

Benin Cambodia Congo (Brazzaville) Guatemala 

Guinea Guinea-Bissau Kenya Liberia 

Madagascar Malawi Mali Mozambique 

Nicaragua Pakistan Senegal

Farmer-to-Farmer (37 countries)

Angola Armenia Azerbaijan Bangladesh 

Belarus Bolivia El Salvador Ethiopia 

Georgia Ghana Guatemala Guinea 

Guyana Haiti Honduras India 

Indonesia Jamaica Kazakhstan Kenya 

Kyrgyzstan Malawi Mali Moldova 

Mozambique Nepal Nicaragua Nigeria 

Peru Russia South Africa Tajikistan 

Turkmenistan Uganda Ukraine Vietnam 

Zambia 

* Represents Title II programs with commodities approved in FY 2007, or that remain active with resources 

allocated in the prior fiscal year. 

† Represents IFRP programs with commodities approved in FY 2007, or that remain active with resources allocated in the prior fiscal year. 

** Title II countries served by IFRP programming only. 

U.S. International Food Assistance Report 2008

Under Food for Peace Act Section 407(f)(1)(A), ‘‘Not later than April 1 of each fiscal year, the Administrator [of USAID] and the Secretary [of Agriculture] shall 

jointly prepare and submit to the appropriate committees of Congress a report regarding each program and activity carried out under this Act during the prior fiscal 

year.’’ As required, this report is hereby submitted to Congress.

385

USAID-supported school feeding program for refugee children from Coˆte 

d’Ivoire in Liberia, October 2007. Photo by Anne Shaw, USAID.

This Report May Be Ordered From:

USAID Development Experience Clearinghouse 

8403 Colesville Road, Suite 210

Silver Spring, MD 20910–6368

Telephone: (301) 562–0641

Fax: (301) 588–7787

URL: http://www.dec.org/

Table of Contents 

Executive Summary 

Introduction 

I. Food Security 

II. U.S. International Food Assistance

A. Food for Peace Act

Food for Peace Title I: Trade and Development Assistance

Food for Peace Title II: Emergency and Private Assistance Programs

Food for Peace Title III: Food for Development

Food for Peace Title V: John Ogonowski and Doug Bereuter Farmer-to-Farmer 

Program

B. Section 416(b) of the Agricultural Act of 1949: Surplus Commodities 

C. Food for Progress 

D. McGovern-Dole International Food for Education and Child Nutrition Program 

E. Bill Emerson Humanitarian Trust

III. Appendices

Appendix 1: List of Abbreviations 

Appendix 2: List of Grantees 

Appendix 3: USDA Title I Program: Food for Progress Grants—Fiscal Year 2008

Appendix 4: Food for Peace Title II Emergency Activities: Summary Budget, Commodity and Tonnage—Fiscal Year 2008

Appendix 5: Food for Peace Title II Non-Emergency Activities: Summary Budget, 

Commodity, Recipient and Tonnage Tables—Fiscal Year 2008

Appendix 6: Bill Emerson Humanitarian Trust: Summary Budget, Commodity, 

Recipient and Tonnage Tables—Fiscal Year 2008 


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1 All costs represent commodities plus freight and distribution.

Appendix 7: USDA Food for Progress Program—Commodity Credit Corporationfunded Grants by Country and Commodity—Fiscal Year 2008

Appendix 8: McGovern-Dole International Food for Education and Child Nutrition 

Program—Fiscal Year 2008: Donations by Country and Commodity 

Appendix 9: Food for Peace Title II Congressional Mandates—Fiscal Year 2008

Appendix 10: Countries with Approved U.S. Food Assistance Programs—Fiscal 

Year 2008

Executive Summary 

The United States is committed to the promotion of global food security through 

its international food assistance and other foreign assistance programs. In Fiscal 

Year (FY) 2008, the United States provided more than $2.8 billion from U.S. food 

aid programs to developing countries, reaching tens of millions of people worldwide. 

The following summary shows U.S. food assistance allocated by legislative authority 

for FY 2008.1

Program Metric Tons Total Cost (000) 

Food for Peace Title II 2,306,110 $2,350,693.3

Bill Emerson Humanitarian Trust 323,820 $265,781.5

Food for Progress 220,890 $166,000

Section 416(b) — —

Food for Education 86,860 $99,000

Farmer-to-Farmer — $10,000

Grand Total 2,937,680 $2,891,474.8

Over the course of FY 2008, the United States Agency for International Development (USAID) and the United States Department of Agriculture (USDA) international food assistance programs have proven increasingly responsive to global efforts at reducing food insecurity and targeting those most in need. By responding 

to assessment and situational information, focusing on reducing risk and vulnerability, targeting the poorest of the poor and better integrating individual programs 

into larger—often international—efforts, the U.S. Government aims to improve the 

effectiveness of aid and to reach global targets for reducing hunger, malnutrition 

and poverty. 

This aid is essential in emergency situations, which in FY 2008 included a regional drought in the Horn of Africa, exacerbated by conflict in Somalia and Kenya; 

an ongoing crisis due to conflict and displacement in Sudan and the Democratic Republic of the Congo; drought in Afghanistan; hyperinflation and poor harvests in 

Zimbabwe; hurricanes in Haiti; and a cyclone in Burma. In all, approximately 43 

million people in 38 countries benefited from emergency food aid activities provided 

through Food for Peace Title II programs. 

At the same time, USAID non-emergency programs continued to focus on increasing agricultural production and supporting programs to address health, nutrition, 

HIV and others aimed at investing in people. Special emphasis is placed on combating the root causes of hunger and malnutrition. Over the course of the year, 

more than 7.2 million people in 28 countries benefited from USAID Title II nonemergency food assistance. 

Food for Progress and McGovern-Dole International Food for Education and Child 

Nutrition programs, both implemented by USDA, provided commodities to food-insecure populations through the World Food Program (WFP), private voluntary organizations (PVOs) and foreign governments. These resources supported a variety of 

food security objectives in developing countries, such as agricultural sector development, rural development, humanitarian assistance, HIV mitigation programs, school 

feeding and maternal and child health programs. In FY 2008, USDA’s McGovernDole International Food for Education and Child Nutrition Program provided commodities for in-school feeding, take-home rations to keep girls enrolled in school, as 

well as nutrition programs for mothers, infants and children under age 5, positively 

impacting the lives of more than 2.6 million beneficiaries.

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Student eating U.S.-provided school lunch in Kyrgyzstan. Photo by Mercy 

Corps. 

Introduction 

Since the passage of Public Law 480 (the Agricultural Trade Development and Assistance Act of 1954, renamed the Food for Peace Act in 2008), U.S. international 

food assistance programs have evolved to address multiple objectives. The most recent changes came with the Food for Peace Act of the Food, Conservation, and Energy Act of 2008. Commonly known as the 2008 Farm Bill, the Food, Conservation, 

and Energy Act of 2008 restated the objectives that guide U.S. food assistance programs. These objectives are:

• Combat world hunger and malnutrition and their causes;

• Promote broad-based, equitable and sustainable development, including agricultural development;

• Expand international trade;

• Foster and encourage the development of private enterprise and democratic participation in developing countries; and

• Prevent conflicts. 

U.S. International Food Assistance 

The U.S. international food assistance program was established by several legislative authorities implemented by two Federal agencies. USAID administers Titles II, 

III and V of the Food for Peace Act. USDA administers Section 416(b) of the Agricultural Act of 1949, Title I of the Food for Peace Act, Food for Progress, and 

McGovern-Dole International Food for Education and Child Nutrition Program. The 

list below provides a brief description of each activity.

1. Food for Peace Act (formerly the Agricultural Trade Development 

and Assistance Act of 1954)—the principal mechanism for U.S. international 

food assistance.

• Title I: Economic Assistance and Food Security—concessional sales of 

U.S. agricultural commodities to developing countries and private entities.

• Title II: Emergency and Private Assistance Programs—direct donation of U.S. agricultural commodities for emergency relief and development.

• Title III: Food for Development—government-to-government grants of 

agricultural commodities tied to policy reform.

• Title V: John Ogonowski and Doug Bereuter Farmer-to-Farmer 

(FTF) Program—voluntary technical assistance to farmers, farm groups and 

agribusinesses.


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2 USAID Policy Determination Number 19, April 1992.

2. Section 416(b) of the Agricultural Act of 1949—overseas donations of 

surplus food and feed grain owned by the USDA Commodity Credit Corporation 

(CCC).

3. Food for Progress Act of 1985—commodity donations available to 

emergingdemocracies and developing countries committed to the introduction or 

expansion of freeenterprise in their agricultural economies.

4. McGovern-Dole International Food for Education and Child Nutrition Program—donations of U.S. agricultural products, as well as financial 

and technical assistance, for school feeding and maternal and child nutrition 

projects in low-income countries.

5. Bill Emerson Humanitarian Trust—food reserve administered under the 

authority of the Secretary of Agriculture. This reserve is available to meet 

emergency humanitarian food needs in developing countries, allowing the 

United States to respond to unanticipated food crises. Under the 2008 Food for 

Peace Act, the Administrator of USAID oversees release and use of these funds.

A USAID-supported World Food Program initiative in eastern Sri Lanka 

assisted these conflict-affected children in FY 2008. Photo by Kathryn 

Schein, USAID. 

I. Food Security 

Defining a Long-Term Global Strategy 

U.S. international food assistance has long played a critical role in responding to 

global food insecurity. This tradition continued in FY 2008, with the U.S. Government providing more than 2.8 million metric tons (MT) of commodities. The programs have also evolved to reflect greater understanding of—and a focus on addressing—the causes of famine, food emergencies and large-scale hunger around the 

world. In the Food, Agriculture, Conservation, and Trade Act of 1990, for example, 

food security was narrowly defined as dependent primarily on the availability of 

food at the national level. It was broadened in a 1992 policy paper to begin to address distribution and nutritional quality, calling for ‘‘all people at all times [to] 

have both physical and economic access to sufficient food to meet their dietary needs 

for a productive and healthy life.’’ 2 This definition includes three elements judged 


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essential to achieving food security and forms the basis for much of the U.S. Government’s international food assistance activity: 

• Food availability: sufficient quantities of food from household production, 

other domestic output, commercial imports or food assistance.

• Food access: adequate resources to obtain appropriate foods for a nutritious 

diet, which depends on income available to households and on the price of food.

• Food utilization: a diet providing sufficient calories and essential nutrients, 

potable water and adequate sanitation, as well as household knowledge of food 

storage and processing techniques, basic principles of nutrition and proper child 

care and illness management.

In recent years, attention has focused on the continued challenges that hamper 

efforts at reducing global food insecurity. International food assistance programs 

also face increasingly frequent and severe natural and manmade disasters with 

growing humanitarian demands on both U.S. and international humanitarian assistance resources. 

Food Price Crisis Response 

In FY 2008, prices of major food commodities increased significantly worldwide, 

pushing an estimated 40 million more people into hunger, according to the United 

Nations Food and Agriculture Organization. This brought the total population of undernourished people to an estimated 963 million in 2008. Multiple factors contributed to higher food prices, including low world grain stocks, poor harvests in traditional exporting countries and food export controls. 

In response, President George W. Bush in April 2008 directed the Secretary of Agriculture to draw down on the Bill Emerson Humanitarian Trust, a U.S. food reserve of up to 4 million MT of commodities, to meet emergency food aid needs 

abroad. With this action, USAID provided emergency food aid to Afghanistan, Ethiopia, Kenya and Zimbabwe.

Unloading corn-soy blend at the port in Djibouti for delivery to Ethiopia, 

January 2008. Photo by Suzanne Poland, USAID.

In addition, President Bush in May 2008 asked Congress for $350 million in supplemental FY 2008 funding for Title II emergency food aid. Congress in June 2008 

appropriated $850 million in the Supplemental Appropriations Act of 2008 for additional Title II emergency food aid for FY 2008. On June 30, 2008, President Bush 

signed the Supplemental Appropriations Act. Within days, USAID and USDA colVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00401 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN

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laborated to expedite commodity procurement procedures to ensure rapid arrival of 

lifesaving assistance where it was needed most. This significant U.S. Government 

response to the food price crisis enabled delivery of substantial and timely food aid. 

The Supplemental Appropriations Act of 2008 included $200 million in development assistance funding in FY 2009 to help developing countries address the international food crisis. As required under the Act, the Secretary of State submitted a 

report to the Committees on Appropriations within 45 days of enactment on the proposed uses of the funds. As noted in that report, U.S. Government strategy targets 

increasing food productivity in sub-Saharan Africa—where the world’s food needs 

are greatest—focusing on countries where significant expansion of food production 

is feasible and then reducing barriers to the movement and procurement of food 

throughout sub-Saharan Africa. 

The development assistance funds are being used largely to support urgent agricultural and trade measures to address high food prices. These include actions to 

increase agricultural productivity; alleviate transportation, distribution and post 

harvest supply-chain bottlenecks; and promote sound market-based principles. Development assistance funds are also being used to support local and regional procurement of food simultaneously to meet emergency humanitarian needs and address urgent measures to improve markets for African smallholder farmers. 

USAID Food Security Task Force 

In April 2008, then-USAID Administrator Henrietta H. Fore established a USAID 

Food Security and Food Price Increase Task Force responsible for coordinating 

USAID policy and new programs, developing a new USAID food security strategy 

and interacting with interagency and multilateral groups and initiatives related to 

the impact of global food price increases on the most vulnerable. 

In addition to coordinating additional emergency assistance in response to the 

global food price increases, the Task Force served as a coordination point for information sharing and joint planning among USAID bureaus and with other government agencies on food security and food price increase impacts. 

Title II Food Security Programming Frameworks 

Title II non-emergency food aid programs are increasingly being initiated with development of a comprehensive framework indicating how Title II resources could be 

targeted, programmed and integrated with other resources to reduce food insecurity 

among vulnerable populations. These Food Security Programming Frameworks define objectives, approaches, geographic foci and institutional partnerships for effective use of U.S. Government resources to reduce food insecurity. The frameworks 

inform country-specific guidance to grant applicants developing new non-emergency 

proposals, and support integration of various U.S. Government resources dedicated 

to reducing food insecurity. 

Local and Regional Procurement of Food Aid 

The ability to procure food aid commodities locally (in the country where the food 

aid is needed) and regionally (in a country in the same region where food aid is 

needed) offers an exceptional opportunity to meet humanitarian needs in an efficient 

and timely fashion, fill pipeline gaps prior to the arrival of food shipped from the 

United States and increase the total amount of lifesaving food aid U.S. assistance 

resources can provide. 

Local and regional procurement also has the potential to strengthen and expand 

commercial markets, stimulate local and regional food production and economies, 

and ultimately, reduce emergency food aid requirements. 

For several years, the Administration has requested from Congress the authority 

to use up to 25 percent of Title II funds for the local or regional purchase of food 

aid commodities to assist people threatened by a food security crisis. 

The 2008 Food for Peace Act authorized and directed the Secretary of Agriculture 

to implement a 5 year, $60 million pilot local and regional purchase program for 

food aid. 

Improving the Effectiveness and Efficiency of International Food Assistance 

In August 2008, Food for Peace (FFP) issued a Request for Information (RFI) on 

Increasing the Effectiveness and Efficiency of Title II Food Aid Program Management. The RFI sought information from potential grantees as to their interest, priorities and capacities to participate in or undertake Cooperative Agreements to increase the effectiveness and efficiency of Title II food aid programs. The purpose of 

the Cooperative Agreements is to improve the FFP program technical and operational procedures and to promote best practices through coordination and delivery 

391

of capacity building and technical assistance for current and prospective Title II food 

aid grantees and programs worldwide. 

The principal objectives of the proposed Cooperative Agreements are:

1. Identify best practices in FFP program management and capacity building;

2. Design and undertake training in best practices in program management and 

capacity building;

3. Communicate and disseminate information on best practices in program management and capacity building; and

4. Strengthen the coordination and collaboration among current and prospective 

Title II grantees. 

Monitoring and Oversight 

The 2008 Food for Peace Act gave FFP the flexibility and the mandate to improve 

oversight of non-emergency programs. As a result, FFP is implementing a number 

of steps, including increasing food aid staff levels in the field, with 12 additional 

staff in chronically highly food-insecure countries. This will enhance monitoring capability to anticipate emergency needs. 

FFP is helping Missions and governments to plan and implement in-depth food 

security assessments as they relate to the programming of Title II non-emergency 

resources. Working with Missions, governments and other stakeholders, FFP is applying assessment results to prepare food security strategies that define objectives, 

approaches and institutional partnerships for effective use of Title II non-emergency 

resources to reduce food insecurity. 

In addition, FFP is expanding the Layers monitoring system, which uses handheld computers to collect and analyze program information from a random sample 

of program sites. Once the data are collected, Layers generates a report on the performance of grantees in implementing Title II programs. A wide variety of issues 

can be evaluated, ranging from the conditions of storage in commodity warehouses 

and record keeping for commodity losses, to the quality of services delivered by Title 

II grantees. Layers is currently utilized in Ethiopia, Haiti and Madagascar, and will 

be expanded to other countries that receive Title II non-emergency assistance, including Guatemala, Mali and Uganda. 

FFP is also analyzing lessons learned when programs end. Factors that lead to 

success in sustaining program benefits after Title II non-emergency food assistance 

has ended are being examined, with the goal of deriving recommendations for effective Title II non-emergency exit strategies. 

FFP has launched a 3 year pilot project to help USAID comply with the Bellmon 

Amendment, which requires that adequate storage facilities would be available in 

a recipient country upon arrival of a commodity to prevent spoilage or waste, and 

that distribution of the commodity in the recipient country will not result in substantial disincentive or interference with domestic production or marketing in that 

country. The Bellmon Estimation for Title II (BEST) Project is conducting independent market analyses to ensure that these requirements are met. Studies have 

already been completed and published for Malawi and Madagascar, and more are 

underway. 

Finally, FFP is offering training in the field on monitoring and evaluation for nonemergency program grantees to help them harmonize impact and output indicators 

and design baseline assessments. 

USAID’s Famine Early Warning Systems Network 

Saving lives and preventing famine are key objectives of the U.S. Government and 

the international community. The Famine Early Warning Systems Network (FEWS 

NET) is a USAID-funded activity that collaborates with international, national and 

regional partners to monitor, collect and disseminate critical data on conditions of 

food availability and access, as well as the environmental and socioeconomic hazards that lead to food insecurity and famine. The goal of FEWS NET is to manage 

the risk of food insecurity through the provision of timely and analytical early warning and vulnerability information, so that decision makers have ample time to prepare and take preventive action. 

In 2008, FEWS NET covered 20 countries in Africa, Central America, Central 

Asia and the Caribbean. Its reporting products, maps, data and satellite imagery 

are posted to the website www.fews.net, which receives an average of approximately 

20,000 page hits per month. 

To more closely track changes in food prices, FEWS NET in FY 2008 launched 

a monthly ‘‘Price Watch’’ publication that reports on staple food prices in key markets in urban and town centers in food-insecure countries. This price information 

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provides advance warning to better target U.S. food aid resources to the most vulnerable. 

FEWS NET exemplifies the U.S. commitment to anticipating and responding to 

humanitarian vulnerabilities and crises. FEWS NET has interagency agreements 

with the U.S. Geological Survey, National Aeronautics and Space Administration, 

National Oceanic and Atmospheric Administration and USDA that provide information to the U.S. Government, host country governments and a variety of other regional and international partners to assist in averting famine.

A demonstration garden in Lira District, northern Uganda, where VEDCO, 

a local partner of USAID grantee ACDI/VOCA, instructs farmers on improving agricultural production practices. Photo by Anne Shaw, USAID. 

A Conceptual Framework for Integrating Food Aid and HIV Programs 

FFP and the Office of the U.S. Global AIDS Coordinator, which leads implementation of the President’s Emergency Plan for AIDS Relief (PEPFAR), continued to 

work together during 2008, increasing their coordination to address the links between nutrition and HIV. In Uganda, for example, USAID supported a proposal to 

develop a food-by-prescription policy (supplementary or therapeutic food is provided 

according to clinical assessment) that included FFP grantees with a focus on the 

most food-insecure areas in the country. In Haiti, USAID has developed a proposal 

for umbrella funding to support organizations that work to reduce food insecurity 

among HIV-affected families. This strategy, developed by the health team, working 

together with FFP and other offices within the mission, provides the possibility of 

a best practice and will offer PVOs access to funds for livelihood activities to support 

HIV-affected families. 

Food Aid Quality Review 

Over the last 15 years, USAID has conducted a number of reviews of its processed 

and fortified foods, making some adjustments in the formulations. Recently, USDA 

has also looked at the foods on the FFP commodity list and is in the process of updating its specifications and quality control for those foods. 

Continuing emphasis in the Food for Peace Act on the importance of micronutrients and FFP’s experience with the use of foods in preventing malnutrition in children under age 2 have encouraged a much deeper review of the food aid basket. 

FFP issued a Request for Proposals (RFP) in FY 2008 to review the role of food 

aid commodities in meeting beneficiaries’ nutritional needs. In FY 2009, FFP awarded a contract to carry out this review, which will examine the nutritional needs of 

FFP’s current beneficiary populations and the commodities currently available to 


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meet those needs. In addition, the contract will use a consultative process to reach 

out to the many FFP grantees in order to arrive at a consensus on needed reformulations and/or the development of new foods not currently available. As part of this 

contract, any recommendations for reformulation or new foods will be accompanied 

by the description of the process necessary to test and evaluate the efficacy and effectiveness of these foods. 

II. U.S. International Food Assistance 

Program Descriptions and Fiscal Year 2008 Accomplishments 

A. Food for Peace Act 

The primary mechanism of U.S. international food assistance is the Agricultural 

Trade Development and Assistance Act of 1954 (P.L. 480, renamed the Food for 

Peace Act in 2008).

1. Title I: Trade and Development Assistance

The Title I authority provides funding for both a concessional sales program, supporting Trade and Development and for the Food for Progress grant program, supporting agricultural development in emerging democracies. In FY 2008, no new 

concessional sales agreements were made. 

The USDA-administered Food for Progress Program, authorized under the Food 

for Progress Act of 1985, assists developing countries, particularly emerging democracies ‘‘that have made commitments to introduce or expand free enterprise elements in their agricultural economies through changes in commodity pricing, marketing, input availability, distribution and private sector involvement.’’ The program 

authorizes the Commodity Credit Corporation (CCC) to carry out the sale and exportation of U.S. agricultural commodities on credit terms or on a grant basis, with the 

use of either CCC financing or Food for Peace Title I funds. Grants under the Food 

for Progress program are awarded to governments or PVOs, nonprofit agriculture 

organizations, cooperatives, intergovernmental organizations or other private entities.

a. Title I: Food for Progress Highlights

In FY 2008, Food for Progress Title I funding provided 10,900 MT in assistance, 

with an estimated value of $13 million. The summaries below provide examples of 

Title I-funded Food for Progress agreements signed in FY 2008.

• Tajikistan: USDA donated 6,570 MT of wheat flour and 300 MT of vegetable 

oil to WFP for use in its Protracted Relief and Recovery Operation. In 

Tajikistan, WFP works to prevent hunger among chronically food-insecure 

households in marginalized geographic areas during the lean period through 

vulnerable group feeding and food for work activities; to promote education 

through the provision of hot meals in primary schools and take-home rations 

for girls in secondary schools; to rehabilitate malnourished children and pregnant and lactating women through the provision of supplementary food and to 

meet the basic food needs of tuberculosis patients; and to support government 

capacity building in managing national food assistance programs.

• East Timor: USDA donated approximately 1,600 MT of corn-soy blend, 850 MT 

of kidney beans, 900 MT of rice and 260 MT of vegetable oil to WFP for use 

in its Protracted Relief and Recovery Operation. In East Timor, WFP is carrying 

out three main activities: maternal and child health, school feeding and emergency preparedness and response. These activities aim to improve the nutritional status of the most vulnerable population groups during critical times of 

their lives; the potential for agricultural production; and the access to and utilization of schools as a means for human capacity development.

2. Title II: Emergency and Private Assistance Programs

In FY 2008, more than 3⁄4 of U.S. international food aid was used to respond to 

emergency situations and to implement development projects under Title II, administered by the USAID Office of Food for Peace in the Bureau for Democracy, Conflict, and Humanitarian Assistance. In FY 2008, Title II programs (emergency and 

non-emergency) and contributions from the Bill Emerson Humanitarian Trust provided more than 2.6 million MT of commodities, with a program cost of more than 

$2.6 billion, to assist approximately 56 million people in 49 countries worldwide. 

The focus of Title II programs is to reduce food insecurity in vulnerable populations. This focus on vulnerability to food insecurity targets improving resiliency 

to shocks, an essential first step for household self-sufficiency and economic independence. In support of this strategy, the non-emergency development portfolio inVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00405 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
394

corporates some activities to strengthen local capacity to respond to natural disasters.

a. Title II: Emergency Programs

Title II emergency programs aim to address two forms of emergencies: natural 

disasters, such as floods or droughts, and complex emergencies characterized by a 

combination of natural disaster, conflict and insecurity. All of these elements pose 

substantial program and operating challenges in responding effectively to the needs 

of food-insecure populations. 

In FY 2008, Title II emergency programs and contributions from the Bill Emerson 

Humanitarian Trust provided more than 2.2 million MT of emergency food aid, with 

a program cost of more than $2.2 billion, to help alleviate malnutrition and hunger 

in 39 countries. In all, Title II emergency programs reached approximately 43 million food-insecure people in FY 2008.

Food for Peace Title II: Emergency Program Highlights

Horn of Africa

Approximately 19 million people in Ethiopia, Somalia, Kenya and Djibouti needed 

emergency food assistance in FY 2008 because of a regional drought, with several 

conflicts in the Horn of Africa. FFP responded with more than 1 million MT of food 

aid, valued at nearly $853 million, which helped to avert a humanitarian catastrophe. This response included 735,140 MT of food aid for Ethiopia, valued at $561.5 mil- lion; 211,320 MT for Somalia, valued at $197.4 million; 87,300 MT for Kenya, valued at $91.3 million; and 2,360 MT for Djibouti, valued at $2.7 million. 

In Somalia, despite sustained periods of drought and civil conflict, the robust food 

aid response by FFP helped to stave off significant mortality and mass migration.

Emergencies in Urban Settings

While the majority of the world’s food-insecure population resides in rural 

areas, low-income urban populations are vulnerable to market-induced food security shocks, as occurred in 2008 with the rise of food prices worldwide. The 

urban poor are particularly vulnerable to price increases because such a large 

portion of their income goes to purchasing food. 

In 2008, FFP published Emergencies in Urban Settings: A Technical Review 

of Food-Based Program Options. This review, which emerged from a workshop 

with private voluntary organizations and World Food Program experts, is a programming manual that will improve targeting and delivery of food aid to those 

most impacted by rising food prices. It compares program options when food aid 

is determined to be an appropriate response to an emergency—including targeted household food distribution, food for work, food for training, ‘‘wet’’ feeding, and community-based management of acute malnutrition programs. 

In Ethiopia, donors including USAID are working with the Government of Ethiopia to mitigate the effects of recurrent cycles of drought and food shortages through 

the innovative Productive Safety Net Program (PSNP), which targets 7.2 million of 

the country’s most food-insecure people. These recipients receive cash and/or food 

transfers on a predictable basis that allow them to withstand the worst periods of 

food shortages without selling their assets. In return, they provide labor for local 

public works projects during the 6 months of the year between harvest and planting 

season. These projects have resulted in the development and protection of thousands 

of water sources, such as springs, hand-dug wells and water harvesting structures, 

making water available for human and animal consumption as well as irrigation. 

They have also provided 33,000 kilometers of rural access roads and the construction of community facilities such as farmer training centers, health posts and 

schools. PSNP participants withstood the effects of the 2008 drought much better 

than non-beneficiaries who might have received aid, but on a less predictable basis. 

In Kenya, FFP provided nearly 55 percent of WFP emergency resources that assisted up to one million Kenyan marginal farming and pastoralist families affected 

by drought as well as approximately 300,000 internally displaced Kenyans during 

calendar year 2008. The United States is the single largest donor to WFP for its 

emergency operation in Kenya.

Sudan

USAID continues to be the world’s leading donor of food assistance to Sudan, having provided more than $1.5 billion in food assistance since the Darfur crisis began 

395

in 2004. The United States contributed approximately half of WFP’s Sudan appeals 

for 2008 and 2009, by far the largest contribution from any donor. Timely contributions from FFP helped WFP ensure a continued flow of assistance during the critical 

hunger period from June to September. Despite rampant insecurity, WFP met, on 

average, more than 93 percent of its monthly target caseload in Darfur throughout 

2008.

Loading USAID food in Port Sudan for World Food Program distribution in 

Sudan, May 2008. Photo by Tyler Beckelman, USAID.

b. Title II: Private Assistance Programs (Non-Emergency)

The Food for Peace Title II development (non-emergency) food aid program constitutes one of the largest sources of USAID funding in promoting long-term food 

security in such areas as:

1. Agriculture and Natural Resource Management activities;

2. Health and household nutrition activities; and

3. Education, Humanitarian Assistance and Microenterprise.

In FY 2008, 20 grantees implemented 92 Title II non-emergency activities in 28 

countries. Approximately 341,280 MT of food assistance, valued at more than $354 

million, was used to support programs that benefited more than 7.2 million people.


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Preventing Malnutrition in Children Under Two Approach (PM2A)

The USAID-funded Food and Nutrition Technical Assistance (FANTA) grantee and its partners, the International Food Policy Research Institute and Cornell University, together with FFP grantee World Vision, recently completed 

the evaluation of a new approach to supplementary feeding in Haiti. 

Instead of providing food only as part of the recuperation of malnourished 

children, the PM2A targets all children from 6 to 24 months with food supplementation and provides mothers with a supplement as well from pregnancy 

until the baby is 6 months old. Receipt of the food requires the mother’s participation in improved health and nutritional services, which include a Behavior 

Change Communications program oriented toward improving family nutritional 

status and how the infant and young child is cared for. A careful evaluation in 

Haiti documented that the PM2A was both successful and cost effective in reducing chronic malnutrition (stunting), wasting and underweight in Haiti when 

compared with a similar maternal and child health and nutrition program that 

used the traditional food aid approach of providing supplementary feeding only 

to already malnourished children as part of their recuperation. 

As a result of this study, World Vision and the other two grantees in Haiti 

are scaling up the use of the PM2A approach to the entire population of Haiti 

benefiting from FFP non-emergency support. World Vision has also incorporated the use of the PM2A approach into its new multi-year program beginning in FY 2008 in Afghanistan. 

See: Marie T. Ruel, et al. ‘‘Age-based Preventive Targeting of Food Assistance 

and Behavior Change and Communication for Reduction of Childhood Malnutrition in Haiti: A Cluster Randomized Trial.’’ The Lancet 371 (Feb. 16, 2008): 

588–595. 

Food for Peace Title II: Non-Emergency Program Highlights

The following examples illustrate the breadth of Title II non-emergency food resources implemented by grantees as well as how these activities have helped in allaying food insecurity and fostering self-sufficiency.

Burkina Faso

Africare, a USAID grantee, was awarded the Government of Burkina Faso’s highest honor in 2008 for the achievements of its Zondoma Food Security Initiative, 

which reached all 104 villages in the northern province of Zondoma, a highly foodinsecure region. Africare was the only PVO to receive the award, Chevalier de 

l’Ordre National. Funded through Title II of the Food for Peace Act, the initiative 

benefited 160,000 people by promoting diversified crop production and employment 

opportunities, improving household nutrition, educating about HIV/AIDS prevention 

and providing nutritional support to HIV/AIDS-affected households. Food security in 

Zondoma province is threatened by factors including low rainfall, high levels of infant morbidity and out-migration of workers.

Bangladesh

USAID contributed 64,500 MT of commodities valued at $47.8 million to nonemergency Title II programs in Bangladesh in FY 2008. 

Save the Children Federation has been implementing a Title II development program called Jibon-O-Jibika (Life and Livelihoods) in three coastal districts of southcentral Bangladesh since October 2004. The program includes interventions to increase household food availability and access, enhance maternal and child health 

and nutrition and improve community disaster preparedness. The selected costal 

areas are considered highly vulnerable due to high malnutrition rates and their geographical location in the cyclone belt of Bangladesh, which means they are constantly threatened by natural disasters. An assessment of disaster preparedness 

and response conducted in the Jibon-O-Jibika areas of operation in FY 2008 found 

that cyclone warning awareness has increased substantially during the course of the 

program’s activities. Nearly 100 percent of inhabitants in the areas had received cyclone warning messages prior to Cyclone Sidr in November 2007, a significant improvement from 2005, when a baseline assessment showed that warnings were 

reaching only 19 to 51 percent of households in the targeted communities. As a result of improved cyclone warning, many households successfully evacuated before 

Cyclone Sidr, and some were able to use cyclone shelters in their communities. 

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A 5 year program implemented by CARE—Strengthening Household Ability to 

Respond to Development Opportunities (SHOUHARDO)—is reaching more than 

407,000 vulnerable households in 2,205 villages and 137 urban slums with activities 

aimed at sustainably reducing chronic and transitory food insecurity. One significant SHOUHARDO activity is a flood early warning system called the Climate Forecast Application in Bangladesh, which is being developed by a consortium including 

the Georgia Institute of Technology, the National Center for Atmospheric Research 

and the Asian Disaster Preparedness Center. The first tier of this system, which 

provides a 10 day warning of impending floods, was completed, tested and handed 

over to the Bangladesh Water Development Board in FY 2008. Test results indicated a reliability level of more than 90 percent.

Haiti

USAID contributed 44,400 MT of Title II non-emergency food aid valued at $34.2 

million to Haiti in FY 2008. USAID’s grantees in Haiti work with the poorest of the 

poor to increase food production, improve health and nutrition, increase livelihoods 

and household incomes, and provide a food safety net for the most vulnerable people 

in the population. FFP’s non-emergency programs were critical in a year when Haiti 

was hit by dramatic food and fuel price increases and three hurricanes in quick succession. 

In addition to providing support for agricultural activities and emergency food distribution following the hurricanes, ACDI/VOCA developed an early warning system 

to monitor slow-onset disasters in 34 communities in southeastern Haiti, collecting 

rainfall and food price data in order to mitigate the effects of drought and price 

shocks. 

Catholic Relief Services trained 525 farmers in soil and water conservation techniques and nursery management, and helped farmers establish 36 demonstration 

plots in southwestern Haiti to evaluate improved varieties of bean, corn and cassava. 

Non-emergency programs in Haiti also included activities that promoted maternal 

and child health. World Vision fully vaccinated nearly 7,500 children under age 5, 

provided prenatal and postnatal health services for more than 6,500 women, and 

provided an average of nearly 22,000 monthly food rations to approximately 88,000 

children, pregnant and lactating women, and people living with AIDS.

Primary school students Jayrin Mun ̃ oz Videa, left, and Carla Antonieta 

Maradiaga, right, eating lunch provided by International Food Relief Partnership grantee Fabretto Children’s Foundation at Mama ́ Margarita School 

in Somoto, Nicaragua. Photo: Rafael I. Merchan, Fabretto Children’s Foundation.

c. International Food Relief Partnership


1122016.eps
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In November 2000, the U.S. Congress passed the International Food Relief Partnership (IFRP) Act. This law enables USAID to award grant agreements to eligible 

U.S. nonprofit organizations to produce and stockpile shelf-stable, pre-packaged 

commodities. Through the IFRP program, commodities are made available to eligible nonprofit U.S. organizations and international organizations for transportation, 

delivery and distribution in emergency food aid relief programs. 

In FY 2008, the Office of Food for Peace awarded approximately $8 million in 

Title II IFRP supplier and distribution grants. The program’s primary supplier, 

Breedlove Dehydrated Foods, produced a micronutrient-fortified, dried vegetable 

soup mix which is used as a meal supplement for humanitarian relief operations 

overseas. Over the course of the year, 30 IFRP distribution grants were awarded 

to 27 nonprofit U.S.-based organizations, which distributed the commodity to beneficiaries in 30 countries. A list of these countries is provided in Appendix 2, List of 

Grantees.

3. Title III: Food for Development

The Food for Peace Title III program is a USAID-administered tool for enhancing 

food security and supporting long-term economic development in the least-developed 

countries. The U.S. Government donates agricultural commodities to the recipient 

country and funds their transportation to the point of entry in the recipient country. 

These commodities are sold on the domestic market and the revenue generated from 

their sale is used to support and implement economic development and food-security 

programs. Funds were not appropriated for Title III in FY 2008.

4. Title V: John Ogonowski and Doug Bereuter Farmer-to-Farmer Program

The John Ogonowski and Doug Bereuter Farmer-to-Farmer (FTF) Program provides voluntary technical assistance to farmers, farm groups and agribusinesses in 

developing and transitional countries to promote sustainable improvements in food 

processing, production and marketing. The program relies on the expertise of volunteers from U.S. farms, land-grant universities, cooperatives, private agribusinesses 

and nonprofit farm organizations to respond to the local needs of host-country farmers and organizations. Volunteers are recruited from all 50 states and the District 

of Columbia. In general, these volunteers are not overseas development professionals, but rather individuals who have domestic careers, farms and agribusinesses 

or are retired persons who want to participate in development efforts. Typically volunteers spend about 20 to 30 days in the host country. 

The FTF Program was initially authorized by Congress in the Food Security Act 

of 1985 and funded through Title V of the Agricultural Trade Development and Assistance Act of 1954. The U.S. Congress authorized the current FY 2009–2013 phase 

of the FTF Program in the 2008 Food for Peace Act, designating it the ‘‘John 

Ogonowski and Doug Bereuter Farmer-to-Farmer Program’’ in honor of Ogonowski, 

one of the pilots killed on September 11, 2001, and former Congressman Bereuter, 

who initially sponsored the program.

Title V: FTF Highlights

Farmer-to-Farmer Volunteer Assignments: FY 

2008

Angola 5

Ethiopia 22

Ghana 6

Guinea 7

Kenya 14

Malawi 11

Mali 5

Mozambique 6

Nigeria 1

South Africa 37

Uganda 22

Zambia 12

Subtotal Africa 148

Bolivia 1

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Farmer-to-Farmer Volunteer Assignments: FY 

2008—Continued

El Salvador 8

Guatemala 7

Guyana 17

Haiti 25

Honduras 13

Jamaica 32

Nicaragua 4

Peru 1

Subtotal Latin America—

Caribbean 

108

Armenia 18

Azerbaijan 16

Belarus 17

Georgia 8

Moldova 31

Russia 81

Ukraine 49

Subtotal Europe-Eurasia 220

Bangladesh 9

India 4

Indonesia 2

Nepal 5

Kazakhstan 20

Kyrgyzstan 33

Tajikistan 21

Turkmenistan 18

Vietnam 1

Subtotal Asia-Near East 113

Total 589

During FY 2008, USAID provided $9.8 for FTF programs of eight implementing 

agencies. The FTF programs funded a total of 589 volunteer assignments in 37 

countries. Volunteers provided developing country host organizations with technical 

assistance services with an estimated value of more than $6.3 million. Volunteer efforts helped hosts mobilize $11.3 million in grants and loans. In addition, volunteers 

provided direct formal training to 22,822 beneficiaries (of which 45 percent were 

women). The following examples illustrate the types of activities undertaken by the 

FTF program:

FTF volunteer Larry Swalheim helps strengthen the cooperative and lifts 

members’ spirits:

In April 2008, FTF volunteer Larry Swalheim visited the Farmer Cooperative in 

Ukraine to work with its members on cooperative service development. As the Chief 

Executive Officer of Landmark Cooperative in Wisconsin, Mr. Swalheim is very familiar with a diverse set of products and services, including animal feed production, 

petroleum marketing and sales of fertilizer and seeds. During his work with the 

Farmer Cooperative, Mr. Swalheim was able to draw on his extensive experience to 

teach the cooperative’s members methods of strengthening their organization and 

improving services to farmer members. During his assignment, Mr. Swalheim conducted seven seminars in six towns.

FTF Volunteer Strengthens Broiler Processing Value-chain in Bangladesh:

Bangladesh Broiler Processing Center (BBPC), an agro-enterprise of BRAC, the 

largest PVO in Bangladesh, was established as a semi-automatic broiler processing 

facility in 2003 in Tongi/Gazipur, near Dhaka. BBPC faced numerous challenges—

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lack of hygienic processing; lack of adequate freezing, storage and transportation facilities; and inefficient cooling and refrigeration systems. 

In May 2005 and September 2006, the FTF Program fielded Dr. Omar Oyarzabal, 

a highly experienced broiler processing specialist, to help improve BBPC’s processing facilities and upgrade staff technical and management capabilities. Based on 

his recommendations, BBPC instituted many important modifications to the plant’s 

technical facilities to bring about tangible improvements in the entire broiler processing value chain. Notable among them were:

• Installed a new blast freezing system to significantly enhance carcass freezing 

efficiency;

• Improved air-conditioning of the processing and grading spaces to maintain 

room temperatures below 15° Celsius;

• Upgraded freezer and chiller rooms to allow more space to hold the processed 

products before refrigeration; and

• Improved maintenance of chill tanks and made changes in the practices of carcass storage.

In 2008, an analysis was conducted to determine the impact of the FTF volunteer 

assistance. It was found out that as an outcome of these important improvements, 

production of processed broiler meat has increased by 63 percent (from 80 MT/

month to 130 MT/month) as of August 2008; monthly gross value of sales has increased by 128 percent (from $148,235 to $338,382); and monthly average net income has increased by 97 percent (from $16,471 to $32,500). 

B. Section 416(b) of the Agriculture Act of 1949: Surplus Commodities 

The Agricultural Act of 1949 authorizes the donation by USDA of surplus food 

and feed grain owned by the CCC. Section 416(a) authorizes surplus food assistance 

to be distributed domestically and surplus food shipped to developing countries for 

assistance programs is covered under Section 416(b). Surplus commodities acquired 

by the CCC as a result of price-support operations may be made available under 

Section 416(b) if they cannot be sold or otherwise disposed of without disrupting 

price-support programs or at competitive world prices. These donations are prohibited from reducing the amounts of commodities traditionally donated to domestic 

feeding programs or agencies, from preventing the fulfillment of any agreement entered into under a payment-in-kind program or from disrupting normal commercial 

sales. 

In FY 2008, no commodities were made available by CCC, and consequently, no 

donations were made under the program. 

C. Food for Progress 

The USDA-administered Food for Progress Program, authorized under the Food 

for Progress Act of 1985, assists developing countries, particularly emerging democracies ‘‘that have made commitments to introduce or expand free enterprise elements in their agricultural economies through changes in commodity pricing, marketing, input availability, distribution and private sector involvement.’’ The program 

authorizes the CCC to carry out the sale and exportation of U.S. agricultural commodities on credit terms or on a grant basis, with the use of either CCC financing 

or Food for Peace Title I funds. Agreements for Food for Progress are awarded to 

governments or PVOs, nonprofit agriculture organizations, cooperatives, intergovernmental organizations or other private entities. 

The 2008 Farm Bill extended the authority for the Food for Progress Program to 

provide assistance in the administration and monitoring of food assistance programs 

to strengthen private-sector agriculture in recipient countries through FY 2012. The 

CCC is authorized to use $15 million for administrative costs under the grants and 

$40 million for transportation expenses.

1. CCC-funded Food for Progress Highlights

In FY 2008, CCC funding financed the purchase and shipment of 199,600 MT of 

commodities to 15 countries, with an estimated value of $162 million. The summaries below provide examples of CCC-funded Food for Progress agreements signed 

in FY 2008.

• Afghanistan: USDA donated 12,500 MT of wheat to Roots of Peace (ROP), a 

PVO, for use in Afghanistan. ROP will use proceeds from the sale of the wheat 

in Afghanistan to assist approximately 14,400 farmers expand horticultural production in Afghanistan. ROP aims to accomplish this by helping plant new orchards and providing extension support for fruit and nut tree farmers; expanding grape production by establishing grape vine nurseries, upgrading vineyards 

401

through trellising and providing extension support for grape farmers; providing 

post-harvest training, services and facilities to farmers; providing training to 

farmers in literacy, numeracy, business, marketing and financial management; 

and establishing a line of credit with a local financial institution to provide 

loans to eligible farmers and merchants. Fruits and nuts are among the most 

valuable agricultural exports of Afghanistan. The opportunity to expand horticultural production by converting existing irrigated grain fields into high market-value fruit and nut production represents the most practical way of increasing farm incomes and focusing production away from illicit crops.

• Ethiopia: USDA donated 20,000 MT of wheat to ACDI/VOCA, a PVO, for use 

in Ethiopia. Proceeds from the sale of the wheat will be used to develop the animal feed industry, thereby increasing profitability for smallholder livestock 

owners and pastoralists. Activities include feed formulation and manufacturing, 

feedlot management and forage production and strengthening the feed distribution channel. The program will benefit more than 72,000 livestock owners, including 53,300 cooperative member farmers and 19,300 pastoralists. Approximately half of Ethiopia’s population lives in poverty, while another 15 percent 

is extremely susceptible to poverty as a result of drought and other shocks. 

With an estimated 40.9 million cattle and 37 million sheep and goats, the livestock sector is one of Ethiopia’s key agricultural industries, contributing 30 to 

35 percent of agricultural gross domestic product and 15 to 18 percent of total 

export earnings and employs a third of Ethiopia’s rural population.

• The Gambia, Guinea-Bissau and Senegal: USDA donated 4,500 MT of vegetable oil to International Relief and Development, Inc. (IRD), a PVO, for use in 

The Gambia, Guinea-Bissau and Senegal. Lying within the drought-prone Sahel 

region, these countries have fragile ecosystems and unstable climates and the 

regional effects of protracted civil conflict increases vulnerability to food insecurity. IRD will sell the vegetable oil in The Gambia and use the proceeds to assist cashew farmers in The Gambia, southern Senegal and northern GuineaBissau. Activities include capacity building of cashew farmer associations, increasing the productivity and quality of cashews, adding value through processing and increasing local consumption of cashews. IRD seeks to increase yield 

by 60 percent and farmer income by 50 percent; 100,000 farmers will benefit 

from this program.

• Honduras: USDA donated 8,800 MT of soybean meal to TechnoServe, a PVO, 

for use in Honduras. TechnoServe will sell the commodity in Honduras and use 

the proceeds to assist 750 smallholder farmers diversify production by integrating jatropha with other high-value products like fine cocoa, roots and tubers 

and dairy. The program will help agribusinesses access export markets, raise 

incomes for smallholder farmers, reforest degraded lands, rehabilitate soils and 

reduce erosion and supply the demand for raw materials to produce competitively priced biodiesel. Over 3 years, small producers in the program will earn 

$3 million in incremental annual sales, improving living standards for 4,000 

rural poor. Despite the fact that Honduras has made important gains in liberalizing its economy (it is ranked as having one of the most open economies in 

Central America and has favorable year-round growing conditions) Honduran 

agricultural producers remain mired in poverty, with nearly 70 percent of the 

rural population engaged in subsistence farming. Per capita income is $1,121 

and 63 percent of the population lives in poverty.

• Niger: USDA donated 2,410 MT of vegetable oil to Catholic Relief Services 

(CRS), a PVO, for use in Niger. CRS will sell the commodity and use the proceeds over 3 years to carry out a program to increase production, processing and 

marketing of sesame, okra, onion and other vegetables in approximately 60 villages, all in the western region of the country. The project will enhance private 

sector development and give producers the ability to support their financial 

needs through the sale of locally grown agricultural commodities in national 

and international markets. The project will assist 8,000 recipients directly and 

benefit another 32,000 indirectly. 

D. McGovern-Dole International Food for Education and Child Nutrition 

Program 

An estimated 120 million children around the world do not attend school, due in 

part to hunger or malnourishment. The majority of them are girls. Following the 

success of the Global Food for Education Initiative, created in July 2000, the United 

States has demonstrated its continued commitment to education and child nutrition 

with the 2008 Farm Bill’s re-authorization of the McGovern-Dole International Food 

for Education and Child Nutrition Program (FFE) through FY 2012. 

402

Modeled on the U.S. Government’s school meals program, the FFE program is 

named in honor of former Senators George McGovern and Robert Dole for their tireless efforts to promote education and school feeding. The FFE program uses U.S. 

commodities and financial assistance to provide incentives for children to attend and 

remain in school, as well as to improve child development through nutritional programs for women, infants and children under age 5. In FY 2008, the FFE program 

provided more than 125,500 MT of commodities to support child nutrition and 

school feeding programs in 17 countries, the total value of which exceeded $99 million. The following are examples of new FFE programs that were funded in FY 

2008:

• Bangladesh: Bangladesh has the third-highest number of hungry poor in the 

world after India and China. The estimated gross enrollment rate of pre-primary children (aged 4–5 years) in Bangladesh is 23 percent for boys and 26 percent for girls, which is low in comparison to other Asian countries in the region. 

Additionally, economic hardship forces parents to keep their children at home 

for domestic and paid work. To increase relief in this region, USDA signed an 

FFE agreement with WFP to donate 30,000 tons of wheat. WFP will directly 

distribute the wheat in the form of fortified biscuits to 350,000 students. In addition to direct feeding, this program will include activities to enhance awareness of nutrition and education issues among children, parents, teachers and 

School Management Committees; de-worming; hygiene, sanitation and nutrition 

counseling; and HIV/AIDS education.

• Ethiopia: Food insecurity is very prevalent in Ethiopia and is demonstrated by 

widespread chronic malnutrition resulting from inadequate dietary intake, inadequate health infrastructure and limited access to education. As a result, Ethiopia has one of the most nutritionally deprived populations in the world and 

the large number of children not in school is linked to physical and psychological impairments resulting from malnutrition in early childhood. Though improvement has been observed in the past in regard to enrollment, the enrollment rate in emerging pastoralist regions such as Somali and Afar is still very 

low, with 30.3 percent and 21.9 percent respectively, compared to the national 

average gross enrollment rate of 85.8 percent. To help ease this situation, 

USDA donated 7,020 MT of corn-soy blend and 1,600 MT of vegetable oil to 

WFP, which will use the food to feed 160,000 students in pastoralist regions.

• Guatemala: Guatemala is a post-conflict, poor, multi-ethnic nation with a population of 12 million. According to UNICEF, 31.5 percent of the adult population is illiterate, rising to 73 percent in the rural Mayan highlands where 

Asociacio ́n SHARE deGuatemala (SHARE) will implement an FFE program. 

USDA donated 280 MT of vegetable oil, 560 MT of dark-red kidney beans, 560 

MT of milled rice and 2,400 MT of soybean meal for use in Guatemala. SHARE 

will sell the soybean meal locally and use the remainder of commodities to provide daily meals for 72,300 teachers and children. Take-home rations will benefit another 18,000 students. In addition to food provisions, the program will 

provide training for teachers, educational materials and infrastructure improvements. SHARE will also support approximately 300 schools with the supplies 

and training necessary to implement school gardens. The harvest from these 

gardens will provide additional complementary and nutritious foods for the 

daily school snack and will teach students the importance of caring for the environment and working as a team.

• Laos: The United States is committed to helping Laos end the threat posed by 

unexploded ordnance and improve education for Laotian children in the districts 

of Mahaxy, Boualapha and Ngommalat and in Khammouane Province. Since 

2006, with the assistance of the Humpty Dumpty Institute (HDI) and IRD, 

USDA has provided 1.3 million nutritious mid-morning snacks of corn soy blend 

and more than 45,000 take-home rations to the children and teachers who 

maintain a monthly school attendance rate of 80 percent. As a result of this 

school-feeding program, school enrollment is up 21 percent for girls and 13 percent for boys. Over 450 teachers have received training and 110 schools have 

implemented vegetable gardens, rehabilitation projects, health-education programs and school kits (pencils and notebooks) distributions. In addition, the 

Mines Advisory Group removed more than 2,220 items of unexploded ordnance 

and cleared approximately 200,000 square meters of land and roads. This land 

is now safe for agriculture and travel for school children and the community.

• Kyrgyzstan: With Kyrgyzstan’s independence after the fall of the Soviet Union 

in 1991 came the collapse of most social services, including the education system. Nationwide, primary school enrollment has dropped ten percent since 

403

1991. Further, many families cannot afford the unofficial costs of a primary or 

preschool education, such as school meals and textbooks and elect to send only 

their sons, not their daughters, to school. As a result, school attendance for girls 

has dropped to nearly ten percent lower than for boys. USDA and Mercy Corps 

International (MCI) signed an FFE agreement for 200 MT of wheat flour, 150 

MT of rice and 150 MT of soybean oil to implement a 12 month school feeding 

program in all 40 rural regions of the Kyrgyz Republic. The program’s goal is 

to empower communities and government toward sustained, improved educational achievement in schools in the most underserved educational institutions, through food distribution to 30,000 students. Additionally, MCI will undertake school infrastructure projects and provide educational grants to school 

children.

• Mozambique: Mozambique has more than 1.5 million orphans, close to 400,000 

of whom are AIDS orphans. Many of these children face grave difficulties in 

surviving, often making school attendance impossible because they are needed 

for income generation, food production or care for their siblings. USDA signed 

an FFE agreement with Joint Aid Management (JAM), a PVO, for the donation 

of 2,100 MT of corn-soy blend and 3,790 MT of milled rice. JAM will use the 

commodities to provide a daily nutritional meal to 113,000 students and takehome rations to 16,000 girls and 2,200 cooks. JAM’s program also includes 

training seminars and infrastructure development, as well as the establishment 

of school gardens.

• Rwanda: Chronic food insecurity, frequent drought and structural poverty seriously reduce opportunities for children in many parts of Rwanda to complete 

primary education. Lack of food prevents many children from enrolling in 

school, forces them to be frequently absent and reduces their learning ability 

and academic performance. Although primary net enrollment has increased 

from 73 percent in 2002 to 92 percent in 2005, pupil to teacher ratios have increased and the availability of teaching and learning materials and infrastructure has not kept pace with enrollment. As a result, examination pass rates 

have declined and the primary completion rate has stagnated. To combat this, 

USDA signed an FFE agreement with WFP to donate 18,360 MT of cornmeal, 

4,860 MT of beans and 1,620 MT of vegetable oil. WFP will directly distribute 

these commodities to 300,000 students in 12 food-insecure, drought-prone districts in the eastern and southern provinces of Rwanda that show low overall 

rates of primary enrollment and low attendance of schoolchildren. WFP will also 

conduct school infrastructure projects and supply kitchen equipment, health related equipment and agricultural tools to schools. 

E. Bill Emerson Humanitarian Trust 

The Bill Emerson Humanitarian Trust (BEHT) is a food reserve designed to hold 

up to 4 million MT of wheat, corn, sorghum and rice administered under the authority of the Secretary of Agriculture. When an unanticipated emergency arises that 

cannot be met with Food for Peace Act resources, the Secretary of Agriculture may 

authorize the release of commodities from the reserve in order to meet those immediate needs. Each year, 500,000 MT may be released, plus up to another 500,000 

MT that was not released in prior years. 

The reserve was originally authorized by the Agricultural Trade Act of 1980 as 

the Food Security Wheat Reserve and was later broadened to include a number of 

other commodities. In 1998, the reserve was renamed the Bill Emerson Humanitarian Trust. 

In FY 2008, USDA converted wheat in the trust into cash. 

III. Appendices

Appendix 1: List of Abbreviations 

BBPC Bangladesh Broiler Processing Center 

BEHT Bill Emerson Humanitarian Trust 

CCC Commodity Credit Corporation 

CSB Corn Soy Blend 

FEWS NET Famine Early Warning System Network 

FFE McGovern-Dole International Food for Education and Child Nutrition 

Program (formerly Global Food for Education Initiative) 

FFP Office of Food for Peace (USAID) 

Food for Peace Act U.S. Food for Peace Act (formerly P.L. 480) 

FTF Farmer-to-Farmer Program of Food for Peace Act, Title V 

FY Fiscal year 

404

Appendix 1: List of Abbreviations—Continued

HIV Human Immunodeficiency Virus 

IFRP International Food Relief Partnership 

MT Metric ton 

PEPFAR President’s Emergency Plan for AIDS Relief 

PM2A Preventing Malnutrition in Children Under Two Approach 

PSC Personnel Services Contract 

PSNP Productive Safety Net Program (Ethiopia) 

PVO Private voluntary organization 

RFI Request for Information 

RFP Request for Proposal 

UNICEF United Nations Children’s Fund 

USAID U.S. Agency for International Development 

USDA U.S. Department of Agriculture 

WFP United Nations World Food Program 

Appendix 2: List of Grantees 

The following grantees implemented U.S. Government food assistance programs in Fiscal 

Year 2008:

ACDI/VOCA Agriculture Cooperative Development International/Volunteers in 

Overseas Cooperative Assistance 

ADRA Adventist Development and Relief Agency International, Inc. 

Africare Africare 

CARE Cooperative for Assistance and Relief Everywhere, Inc. 

CNFA Citizens’ Network for Foreign Affairs 

CPI Counterpart International 

CRS Catholic Relief Services 

FFPI Food for the Poor, Inc. 

FHI Food for the Hungry International 

Florida A&M Florida A&M University 

GoA Government of Afghanistan 

GLIM Global Impact, Inc. 

HDI The Humpty Dumpty Institute 

IPHD International Partnership for Human Development 

IRD International Relief and Development, Inc. 

LOL Land O’Lakes 

LWM Legacy World Missions 

MCI Mercy Corps International 

NOAH NOAH Project 

NPA Norwegian People’s Aid 

OICI Opportunities Industrialization Centers International Partners of the 

Americas 

PCI Project Concern International 

PFD Partners for Development 

REST Relief Society of Tigray 

ROP Roots of Peace 

SCF Save the Children Federation 

SCF–UK Save the Children UK 

SHARE SHARE Guatemala 

TAMU Texas A&M University 

TS TechnoServ 

UMCOR United Methodist Committee on Relief 

VSU Virginia State University 

WFP United Nations World Food Program 

Winrock Winrock International 

WVUS World Vision US

The following organizations served as grantees with the Title II-Funded International Food 

Relief Partnership in Fiscal Year 2008:

ACT ACTS International 

AI Amigos Internacionales 

BRA Batay Relief Alliance 

BC Bless the Children 

405

Appendix 2: List of Grantees—Continued

CRS Catholic Relief Services 

CIH Center for International Health 

CBU Church for Bible Understanding 

Citihope Citihope International 

CH Convoy of Hope 

Coprodeli Coprodeli 

CPI Counterpart International 

EIM Evangelistic International Ministry 

FCF Fabretto Children’s Foundation 

Feed the Children Feed the Children 

Haiti Vision Haiti Vision 

IRD International Relief and Development/Cambodia 

IRT International Relief Teams 

JAM Joint Aid Management 

MM Medical Missionaries 

Nascent Nascent Solutions 

PA Planet Aid 

PCI Project Concern International 

PH Project Hope 

Salvation Army Salvation Army World Service 

SERV Serv Ministries 

RPX The Resource and Policy Exchange 

Uplift Uplift International 

WH World Help 

Appendix 3: USDA Title I Program: Food for Progress Grants—Fiscal Year 2008

Country Grantee Commodity Beneficiaries 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Asia/Near East

Tajikistan WFP Vegetable Oil, Wheat Flour 65 6,870 $7,998

East Timor WFP Vegetable Oil, Rice, Beans, Corn Soy 

Blend 

36.2 3,610 $4,987.3

Sub-Total Asia/Near East 101.3 10,480 $12,985.3

Worldwide Total 101.3 10,480 $12,985.3

Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity and 

Tonnage—Fiscal Year 2008

Country Grantee Commodity Recipients * 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Africa

Burkina Faso WFP Corn Soy Blend, Vegetable Oil 1,337 2,160 $2,599.80

Burundi WFP Corn (bagged), Yellow Peas, Vegetable 

Oil 

2.7 7,380 $8,241.20

Central African 

Republic 

WFP Cornmeal, Corn Soy Blend, Vegetable 

Oil, Yellow Split Peas 

597 7,490 $10,122.40

Cameroon WFP Cornmeal, Corn Soy Blend, Red Beans, 

Vegetable Oil 

85 4,830 $5,136.70

Chad WFP Cornmeal, Corn Soy Blend, Rice 

(bagged), Sorghum (bulk), Vegetable 

Oil, Yellow Split Peas 

1,590.10 49,970.00 $60,925.90

Democratic Republic of the 

Congo 

FHI — — — ** $2,041.50

WFP Cornmeal, Corn Soy Blend, Green Peas, 

Green Split Peas, Pinto Beans, Vegetable Oil, Yellow Split Peas 

13.4 42,940 $68,969.10

Djibouti WFP Corn Soy Blend, Lentils, Vegetable Oil, 

Wheat Flour 

137.2 2,360 $2,735.00

Ethiopia CARE Hard Red Winter Wheat, Lentils, Sorghum (bulk), Vegetable Oil, Yellow 

Split Peas 

904.8 36,620 $29,309.40

CRS Bulgur, Corn Soy Blend, Hard Red Winter Wheat, Rice (bagged), Sorghum 

(bulk), Vegetable Oil, Yellow Split 

Peas 

615.9 116,570 $83,563 

FHI Green Peas, Hard Red Winter Wheat, 

Sorghum (bulk), Vegetable Oil, Yellow 

Split Peas 

580.3 37,890 $28,482.30

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Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity and 

Tonnage—Fiscal Year 2008—Continued

Country Grantee Commodity Recipients * 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

REST Hard Red Winter Wheat, Sorghum 

(bulk), Vegetable Oil, Yellow Peas, 

Yellow Split Peas 

1,767.40 100,270 $75,147.90

SCF Green Split Peas, Hard Red Winter 

Wheat, Vegetable Oil 

254.6 9,150 $8,056.50 

SCF–UK Hard Red Winter Wheat, Lentils, Sorghum (bulk), Vegetable Oil, Yellow 

Split Peas 

863.2 54,800 $42,364.20

WFP Corn Soy Blend, Green Peas, Hard Red 

Winter Wheat, Lentils, Sorghum 

(bulk), Vegetable Oil, Wheat Flour, 

Yellow Peas, Yellow Split Peas 

350 266,960 $202,638.40

WVUS Hard Red Winter Wheat, Vegetable Oil, 

Yellow Peas 

200.9 10,660 $8,692.60

The Gambia WFP Rice (bagged) 13.5 680 $577.00

Kenya WFP Bulgur, Cornmeal, Corn Soy Blend, Vegetable Oil, Wheat Flour, Yellow Split 

Peas 

1,357.00 61,230.00 $64,633.30

Liberia WFP Bulgur, Vegetable Oil 767 1,460 $1,741.60

Mali WFP Corn Soy Blend 210 1,540 $1,647.40

Mauritania WFP Corn Soy Blend, Hard Red Winter 

Wheat, Soft Red Winter Wheat, Vegetable Oil 

678.8 11,620 $11,552.30

Mozambique WFP Cornmeal 5.5 3,190 $2,793.40

Niger WFP Cornmeal, Corn Soy Blend, Rice 

(bagged), Vegetable Oil 

5.8 11,080 $13,060.80

Rwanda WFP Cornmeal, Corn Soy Blend, Kidney 

Beans, Pinto Beans, Vegetable Oil 

1,627.50 3,340 $3,830.40

Somalia CARE Corn Soy Blend, Lentils, Sorghum 

(bulk), Vegetable Oil, Yellow Peas 

369.6 81,030 $70,606.00

WFP Corn Soy Blend, Green Peas, Green Split 

Peas, Lentils, Sorghum (bulk), Vegetable Oil, Yellow Peas, Yellow Split 

Peas 

17.8 130,290 $126,793.80

Sudan ADRA Lentils, Sorghum (bagged), Vegetable Oil 44.1 730 $994.80

CARE Lentils, Sorghum (bagged), Vegetable Oil 14 1,500 $1,466.90

CRS Corn Soy Blend, Lentils, Sorghum 

(bagged), Vegetable Oil 

146.3 3,950 $5,782.20

NPA Lentils, Sorghum (bulk), Vegetable Oil 208.2 7,140 $9,795.90

WFP Lentils, Sorghum (bulk), Vegetable Oil, 

Yellow Split Peas 

49.6 395,090 $494,876.80

Tanzania WFP Cornmeal, Corn Soy Blend, Green Peas, 

Sorghum (bagged), Soy Fortified Cornmeal, Yellow Peas 

733.8 16,900 $14,562.10

Uganda WFP Corn Soy Blend, Cornmeal, Pinto Beans, 

Sorghum (bagged), Sorghum (bulk), 

Vegetable Oil, Yellow Split Peas 

10.9 47,850 $46,283.30

Zambia WFP Green Split Peas, Sorghum (bagged), 

Sorghum (bulk), Yellow Split Peas 

91 3,090 $2,806.10

Zimbabwe WFP Bulgur, Green Peas, Pinto Beans, Sorghum (bulk), Vegetable Oil, Yellow 

Peas 

2,234.50 47,900.00 $58,603.80

WVUS Bulgur, Cornmeal, Sorghum (bulk), Vegetable Oil, Yellow Peasv 10.1 42,010.00 $45,261.30

Sub-Total Africa 17,894.50 1,621,670 $1,616,695.10

Asia/Near East

Afghanistan WFP Green Split Peas, Hard Red Winter 

Wheat, Soft White Wheat, Vegetable 

Oil, Wheat Flour, Wheat Flour Bread, 

Yellow Peas 

44.6 141,930.00 $144,843.20

Algeria WFP Corn Soy Blend, Yellow Split Peas, Vegetable Oil, Wheat Flour Bread 125 5,940 $6,816.10

Bangladesh CARE Hard Red Winter Wheat, Yellow Split 

Peas, Vegetable Oil 

39 9,290 $5,967.10

SCF Hard Red Winter Wheat, Yellow Split 

Peas, Vegetable Oil 

17.5 8,810 $7,948.90

WFP Soft Red Winter Wheat (bulk), Vegetable 

Oil, Rice (bagged), Rice (bulk), Yellow 

Split Peas 

38.9 22,350.00 $17,295.60

Burma WFP Corn Soy Blend, Garbanzo Beans, Rice 

(bagged), Vegetable Oil 

1,749 23,640 $28,063.00

East Timor WFP Rice (bagged), Vegetable Oil 105 1,040 $1,150.00

Iraq WFP Navy Beans, Vegetable Oil, Wheat Flour 1,500 17,500 $23,761.60

Nepal WFP Garbanzo Beans, Lentils, Rice (bagged), 

Vegetable Oil, Yellow Split Peas 

328.4 15,830 $18,832.80

Pakistan WFP Soft Red Winter Wheat, Vegetable Oil 132 2,450 $2,551.20

Sri Lanka WFP Hard Red Winter Wheat (bulk), Lentils, 

Soft White Wheat (bulk), Vegetable 

Oil 

5.7 31,360 $28,562.90

Syria WFP Bulgur, Lentils, Navy Beans, Vegetable 

Oil 

1,086 11,520 $14,031.60

407

Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity and 

Tonnage—Fiscal Year 2008—Continued

Country Grantee Commodity Recipients * 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Yemen WFP Green Peas, Hard Red Winter Wheat, 

Kidney Beans, Rice (bagged), Wheat 

Flour 

115.5 2,540.00 $2,201.30

Sub-Total Asia/Near East 5,286.60 294,200 $302,025.30

Central Asia

Tajikistan WFP Wheat Flour 590.8 180 $173.30

Sub-Total Central Asia 590.8 180 $173.30

Latin America

Colombia WFP Green Peas, Lentils, Pinto Beans, Vegetable Oil, Wheat Flour 2,315 7,680 $10,628.60

Ecuador WFP Hard Red Winter Wheat (bagged) 11.7 1,020 $892.90

Haiti CRS Corn Soy Blend, Cornmeal, Lentils, Sorghum (bagged), Soy Fortified Bulgur, 

Vegetable Oil, Yellow Peas 

765 7,880 $10,327.70

WFP Corn Soy Blend, Pinto Beans, Rice 

(bagged), Vegetable Oil, Yellow Peas 

1.4 20,060 $25,001.80

WVUS Cornmeal, Corn Soy Blend, Lentils, Soy 

Fortified Bulgur, Vegetable Oil, Yellow 

Peas 

294 8,720 $10,002.20

Nicaragua CRS Corn Soy Blend, Red Beans, Rice 

(bagged), Vegetable Oil 

5 660 $1,699.40

WFP Corn Soy Blend, Rice (bagged) 80 2,760 $3,294.50

Sub-Total Latin America 3,472.10 48,780 $61,847.10

Funding Adjustments (IFRP, PSCs, Prepositioning and CSB Mitigation) — — $15,664.20

Worldwide Total 27,244 1,964,830 $1,980,740.80

Source: Tonnage, Values and Section 202(e) totals derived from FFP Preliminary Final Budget Summary Report, March 11, 2009. Commodities and Recipients derived from Food for Peace Information System report, February 16, 2009. 

Note: Values include commodities plus freight. Recipients listed as approved in cooperative agreements. 

* Recipient values are reflective of commodity rations and are derived separately from program beneficiary totals. 

** Some programs receive Section 202e and/or ITSH funds without receiving commodities in the same FY. Table 

does not include IFRP activities. See page 18 for specific details. 

Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, Commodity, 

Recipient and Tonnage Tables—Fiscal Year 2008

Country Grantee Commodity Recipients * 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Africa

Burkina Faso Africare Potatoes (flakes), Rice (bagged) 0.8 2,850 $2,929.8

CRS Lentils, Rice (bagged), Soy Fortified 

Bulgur, Soy Fortified Cornmeal, Vegetable Oil 

253.4 7,620 $7,094

Burundi CRS Corn Soy Blend, Soy Fortified Bulgur, 

Soy Fortified Cornmeal, Hard Red 

Winter Wheat (bulk), Vegetable Oil 

58.4 5,510 $4,947.6

Chad Africare Soy Fortified Bulgur, Wheat Flour Bread 20.5 3,410 $4,454.7

Democratic Republic of the 

Congo 

ADRA Cornmeal, Hard Red Winter Wheat 

(bulk), Vegetable Oil 

14.4 4,910 $3,490

FHI Cornmeal, Hard Red Winter Wheat 

(bulk), Vegetable Oil 

2.8 3,650 $3,108.3

MCI Cornmeal, Hard Red Winter Wheat, 

Vegetable Oil 

5 3,180 $3,192.1

Ethiopia CARE Hard Red Winter Wheat, Vegetable Oil, 

Yellow Split Peas 

24.9 3,210 $3,627.1

CRS Bulgur, Corn Soy Blend, Hard Red Winter Wheat, Lentils, Rice (bagged), Vegetable Oil 45 5,610 $6,314.4

FHI — — — ** $500

REST — — — ** $768

SCF Green Split Peas, Hard Red Winter 

Wheat, Vegetable Oil 

76.3 3,650 $4,639.8

SCF–UK Hard Red Winter Wheat, Vegetable Oil, 

Yellow Split Peas 

53.7 6,370 $7,372.4

Ghana CRS Corn Soy Blend, Soy Fortified Bulgur, 

Soy Fortified Sorghum Grits, Vegetable Oil 

223.5 5,650 $4,736.7

OICI Soy Fortified Bulgur, Hard Red Winter 

Wheat (bulk) 

2.5 2,840 $2,209.5

408

Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, Commodity, 

Recipient and Tonnage Tables—Fiscal Year 2008—Continued

Country Grantee Commodity Recipients * 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Guinea OICI Cornmeal, Green Peas, Vegetable Oil 4.3 1,850 $2,992.8

Kenya ADRA Corn Soy Blend, Dark Northern Spring 

Wheat (bulk), Vegetable Oil 

50.3 4,280 $3,571.9

CARE Corn Soy Blend, Dark Northern Spring 

Wheat (bulk) 

5 3,590 $3,096.8

FHI Corn Soy Blend, Dark Northern Spring 

Wheat (bulk), Green Split Peas, Soy 

Fortified Bulgur, Vegetable Oil 

10.6 3,210 $2,753.4

Liberia CRS Bulgur, Lentils, Vegetable Oil 36.5 2,730 $7,672.5

Madagascar ADRA Corn Soy Blend, Rice (bagged), Vegetable Oil 9.9 1,540 $5,615.8

CARE Corn Soy Blend, Great Northern Beans, 

Rice (bagged), Vegetable Oil 

14 1,550 $5,766.5

CRS — — — ** $368.8

Malawi CRS Cornmeal, Corn Soy Blend, Hard Red 

Winter Wheat (bulk), Pinto Beans, 

Vegetable Oil 

8.3 17,120 $17,874.4

Mali Africare — — — ** $990

CRS — — — ** $989.7

Mauritania CPI Corn Soy Blend, Hard Red Winter 

Wheat (bulk), Lentils, Vegetable Oil 

32.3 7,610 $4,962.2

Mozambique ADRA Hard Red Winter Wheat (bulk) — 6,440 $4,039.5

FHI Hard Red Winter Wheat (bulk) — 5,430 $3,359.4

SCF Hard Red Winter Wheat (bulk) — 11,580 $7,502.4

WVUS Hard Red Winter Wheat (bulk) — 7,490 $4,964.6

Niger Africare Corn Soy Blend 11.5 480 $3,024.5

CPI — — — $2,534.0 **

CRS — — — $7,262.1 **

Rwanda ACDI/VOCA Corn Soy Blend, Soy Fortified Bulgur, 

Vegetable Oil 

2.6 1,930 $3,396.3

CRS Bulgur, Corn Soy Blend, Vegetable Oil 26 2,370 $3,143.3

WVUS Corn Soy Blend, Soy Fortified Bulgur, 

Vegetable Oil 

22.8 2,910 $4,810.5

Senegal CPI Corn Soy Blend, Lentils, Rice (bagged), 

Soy Fortified Bulgur, Vegetable Oil 

33.3 5,160 $4,070.2

Sierra Leone CARE Bulgur, Green Peas, Vegetable Oil 32.4 3,450 $6,948.5

Uganda ACDI/VOCA Corn Soy Blend, Hard Red Winter 

Wheat, Vegetable Oil 

42 23,350 $17,576.6

CRS — — — ** $350

MCI Cornmeal, Corn Soy Blend, Hard Red 

Winter Wheat, Vegetable Oil 

2.4 3,740 $3,498.2

SCF Corn Soy Blend, Hard Red Winter 

Wheat, Lentils, Soy Fortified Cornmeal, Vegetable Oil 

4.5 3,980 $3,423.5

WVUS Hard Red Winter Wheat — 2,100 $1,517.4

Zambia CRS Bulgur, Lentils, Sorghum (bulk) 15 1,710 $5,431.5

LOL Hard Red Winter Wheat — 3,760 $3,689.2

Sub-Total Africa 1,144.90 187,820 $206,580.9

Asia/Near East

Afghanistan WVUS Rice (bagged), Vegetable Oil, Wheat 

Flour 

11.5 6,820 $9,886.1

Bangladesh CARE Hard Red Winter Wheat, Hard Red Winter Wheat (bulk), Soft White Wheat, 

Soft White Wheat (bulk), Vegetable 

Oil, Yellow Split Peas 

103.3 50,740 $36,857.9

SCF Hard Red Winter Wheat, Hard Red Winter Wheat (bagged), Soft White Wheat 

(bulk), Vegetable Oil, Yellow Split 

Peas 

113 13,760 $10,961.5

India CARE — — — ** $6,872.8

CRS Bulgur, Vegetable Oil 555.1 6,730 $6,611.0

Sub-Total Asia/Near East 782.9 78,050 $71,189.3

Latin America

Bolivia ADRA — — — ** $1,905.3

CARE — — — ** $300.0

FHI Corn Soy Blend, Green Peas, Lentils, 

Soy Fortified Bulgur 

47.4 770 $3,215.4

SCF Corn Soy Blend, Green Peas, Lentils 39.4 780 $3,564.7

Guatemala CRS Corn Soy Blend, Pinto Beans, Rice 

(bagged), Vegetable Oil 

66 3,470 $4,625.7

SCF Corn Soy Blend, Pinto Beans, Rice 

(bagged), Vegetable Oil 

12.8 3,500 $4,628.3

SHARE Corn Soy Blend, Pinto Beans, Rice 

(bagged), Vegetable Oil 

16.4 3,810 $4,627.3

Haiti ACDI/VOCA Corn Soy Blend, Hard Red Winter 

Wheat, Lentils, Soy Fortified Bulgur, 

Vegetable Oil 

2 6,380 $5,050.5

409

Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, Commodity, 

Recipient and Tonnage Tables—Fiscal Year 2008—Continued

Country Grantee Commodity Recipients * 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

CRS Corn Soy Blend, Hard Red Winter 

Wheat (bulk), Lentils, Soy Fortified 

Bulgur, Vegetable Oil 

35.2 16,175 $11,729.8

WVUS Corn Soy Blend, Hard Red Winter 

Wheat (bulk), Lentils, Soy Fortified 

Bulgur, Vegetable Oil 

202 21,845 $17,456.8

Honduras ADRA Corn Soy Blend, Northern Spring Wheat 

(bulk), Red Beans, Rice (bagged), Vegetable Oil 

45.1 3,770 $3,532.1

SCF Corn Soy Blend, Northern Spring Wheat 

(bulk), Red Beans, Rice (bagged), Vegetable Oil 

5 3,660 $3,265.2

WVUS Corn Soy Blend, Red Beans, Rice 

(bagged), Vegetable Oil 

8.7 2,250 $3,352.9

Nicaragua ADRA Corn Soy Blend, Lentils, Northern 

Spring Wheat (bulk), Rice (bagged), 

Vegetable Oil 

26.3 2,200 $2,268.2

CRS Corn Soy Blend, Lentils, Northern 

Spring Wheat (bulk), Rice (bagged), 

Vegetable Oil 

7.1 2,290 $2,385.3

PCI Corn Soy Blend, Lentils, Northern 

Spring Wheat (bulk), Rice (bagged), 

Vegetable Oil 

4 2,310 $2,363.0

SCF Corn Soy Blend, Northern Spring Wheat 

(bulk) 

34 2,200 $2,247.6

Sub-Total Latin America 551.4 75,410 $76,518.1

Worldwide Total 2,479.20 341,280 $354,288.3

Source: Tonnage, Values and Section 202(e) totals derived from FFP Preliminary Final Budget Summary Report, March 11, 2009. Commodities and Recipients derived from Food for Peace Information System report, February 16, 2009. 

* Recipient values are reflective of commodity rations and are derived separately from program beneficiary totals. 

** Some programs receive Section 202(e) and/or ITSH funds without receiving commodities in the same FY. 

Note: Values include commodities plus freight. Recipients listed as approved in cooperative agreements. Some 

programs received Section 202e and/or ITSH funds without receiving commodities. 

Appendix 6: Bill Emerson Humanitarian Trust: Summary Budget, Commodity and 

Tonnage—Fiscal Year 2008

Country Grantee Commodity Recipients * 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Africa

Ethiopia WFP Corn Soy Blend, Sorghum (bulk), Vegetable Oil 3.8 83,380 59,982.1

Kenya WFP Cornmeal, Corn Soy Blend, Vegetable 

Oil, Yellow Split Peas 

1.2 14,990 17,246.5

Zimbabwe WFP Green Peas, Pinto Beans, Vegetable Oil 2,232.2 12,510 18,155.8

WVUS Bulgur, Cornmeal, Sorghum (bulk), Vegetable Oil, Yellow Peas 4.1 49,080 54,275.9

Sub-Total Africa 2,241.3 159,960 149,660.3

Asia/Near East

Afghanistan WFP Hard Red Winter Wheat, Vegetable Oil, 

Yellow Peas 

6.6 15,590 22,405.3

North Korea MCI Corn (bulk), Corn Soy Blend, Soy Beans 

(bulk), Vegetable Oil 

941.2 38,000 23,583.6

WFP Corn (bulk), Soft White Wheat 5.7 110,270 70,132.3

Sub-Total Asia/Near East 953.5 163,860 116,121.2

Worldwide Total 3,194.8 323,820 265,781.5

Source: Tonnage, Values and Section 202(e) totals derived from FFP Preliminary Final Budget Summary Report, March 11, 2009. Commodities and Recipients derived from Food for Peace Information System report, March 

20, 2009. 

Note: Values include commodities plus freight. Recipients listed as approved in cooperative agreements. 

* Recipient values are reflective of commodity rations and are derived separately from program beneficiary totals. 

410

Appendix 7: USDA–CCC Funded—Food for Progress Grants—Fiscal Year 2008

Country Grantee Commodity Beneficiaries * 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Africa

Ethiopia ACDI/VOCA Wheat 72.6 20,000 $12,656.1

The Gambia Regional IRD Vegetable Oil 800 4,500 $10,000

Malawi PA Wheat 252.2 10,000 $5,590

Mozambique PA Wheat, Textured Soy Protein 145.5 20,070 $9,161.1

TS Wheat 12 10,530 $3,832.9

LOL Wheat 787.2 15,600 $11,883.1

Liberia MC Soybean Oil 28.5 2,360 $5,321.8

Niger IRD Soy Fortified Bulgur 

Vegetable Oil 

92.4 1,000

2,500

$6,841

CRS Vegetable Oil 10.5 2,410 $5,836.2

Senegal CPI Vegetable Oil 194 4,260 $7,427.1

Tanzania PFD Wheat 36 15,750 $13,210.5

Sub-Total Africa 2,431 108,980 $91,759.9

Asia/Near East

Afghanistan ROP Wheat Flour 101.4 12,500 $10,233.8

GoA Soybean Oil — 5,500 $10,312.5

Mongolia MCI Wheat 1,594.6 25,000 $13,750

Sub-Total Asia/Near East 1,696 43,000 $34,296.3

Europe

Armenia UMCOR Soybean Meal 126.5 6,000 $4,402.5

Sub-Total Europe 126.5 6,000 $4,402.5

Latin America

Bolivia PCI Lentils 

Peas 

Wheat 

50.8 500

500

15,370

$9,418.2

Guatemala TAMU Soybean Meal 25.4 15,000 $9,975

Honduras TS Soybean Meal 4.1 8,800 $5,588

Nicaragua PCI Wheat 24.5 12,340 $6,771.4

Sub-Total Latin America 104.7 52,510 $31,752.6

Worldwide Total 4,358.2 210,490 $153,050.2

* Beneficiary figures are both direct and indirect. 

Appendix 8: McGovern-Dole International Food for Education and Child Nutrition 

Program—Fiscal Year 2008 Donations by Country and Commodity 

Country Grantee Commodity Beneficiaries

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Africa

Cameroon CPI Beans, Milled Rice, Vegetable Oil 25 1,130 $3,900

Chad WFP Cornmeal, Vegetable Oil 194.2 4,290 $4,800

Democratic Republic of the Congo IPHD Rice, Pinto Beans, Soybean Oil 70.2 3,970 $600

Ethiopia WFP Corn Soy Blend, Vegetable Oil 160.4 3,910 $4,300

Kenya WFP Bulgur, Corn Soy Blend, Green Split 

Peas, Vegetable Oil 

1,100 10,700 $9,900

Malawi WFP Corn Soy Blend 437.2 6,280 $6,500

Mozambique JAM Milled Rice, Wheat Soy Blend 281 8,510 $6,800

Rwanda WFP Pinto Beans, Corn Meal, Vegetable Oil 300 8,280 $8,300

Senegal CPI — — — ** $100

Sierra Leone CRS Bulgur, Corn Soy Blend, Lentils, Vegetable Oil 29.5 1,260 $2,900

Sub-Total Africa 2,597.5 48,330 $54,400

Asia/Near East

Bangladesh WFP Bulk Wheat 350 11,500 $7,800

Cambodia IRD Small Red Beans, Soybean Oil, Canned 

Salmon, Corn Soy Blend 

25.6 620 $1,300

Laos HDI Black Turtle Beans, Canned Salmon, 

Corn Soy Blend, Milled Rice, Vegetable 

Oil 

13.4 660 $3,700

WFP Canned Salmon, Corn Soy Blend, Rice, 

Vegetable Oil 

50 2,240 $3,100

Pakistan WFP Vegetable Oil 259.0 4,690 $9,900

Sub-Total Asia/Near East 698.0 19,710 $25,800

411

Appendix 8: McGovern-Dole International Food for Education and Child Nutrition 

Program—Fiscal Year 2008 Donations by Country and Commodity—Continued

Country Grantee Commodity Beneficiaries

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Central Asia

Kyrgyzstan MCI Milled Rice, Soybean Oil, Wheat Flour 30.0 500 $2,500

Sub-Total Central Asia 30.0 500 $2,500

Latin America

Guatemala SHARE Corn Soy Blend, Dark Red Kidney Beans, 

Milled Rice, Soybean Meal, Vegetable 

Oil 

82.8 7,240 $7,600

FFPI Rice, Light Red Kidney Beans, Textured 

Soy Protein, Soybean Oil, Buckwheat 

Groats, Yellow Corn, Nonfat Dry Milk, 

Canned Salmon 

210.0 10,200 $7,800

Nicaragua GLIM Small Red Kidney Beans, Corn Meal, 

Milled Rice 

13.0 880 $1,200

Sub-Total Latin America 305.8 18,320 $16,600

Worldwide Total 3,631.3 86,860 99,300

** Senegal CPI—provision of cash in FY 2008 to support multi-year agreement. Commodities were supplied in 

previous year. 

Source: Commodities, Tonnage and Values derived from McGovern-Dole Food for Education signed agreements 

and final budgets. 

Note: Values include commodities plus freight. Beneficiaries listed as approved for direct distribution in cooperative agreements. 

Appendix 9: Food for Peace Title II Congressional Mandates—Fiscal Year 2008

Minimum Subminimum Monetization Value-added Bagged in 

United States 

FY 2008 Target 2,500,000 1,875,000 15.0% 75.0% 50.0%

Status as of September 2008 2,695,133 379,029 66.3% 47.6% 27.2%

Minimum: Total approved metric tons programmed under Title II. Metric ton grain equivalent used to report against target.s0

Subminimum: Metric tons for approved non-emergency programs through PVOs and community development organizations and 

WFP. Metric ton grain equivalent used to report against target.

Monetization: Percentage of approved Title II programs that are monetization programs.

Value-added: Percentage of approved non-emergency programs that are processed, fortified, or bagged.

Bagged in U.S.: Percentage of approved non-emergency bagged commodities that are whole grain to be bagged in the United States. 

Source: USAID Bureau for Democracy, Conflict and Humanitarian Assistance, Office of Food for Peace, FY 2008 

Preliminary Budget Summary Overview, March 11, 2009. 

Appendix 10: Countries with Approved U.S. Food Assistance Programs—

Fiscal Year 2008

Title I (0 countries)

Title I—Funded Food for Progress (2 countries)

East Timor Tajikistan

CCC-Funded Food for Progress (15 countries)

Afghanistan Armenia Bolivia Ethiopia 

The Gambia Guatemala Honduras Liberia 

Malawi Mongolia Mozambique Nicaragua 

Niger Senegal Tanzania

Title II * (48 countries)

Afghanistan Algeria Bangladesh Bolivia †

Burkina Faso Burma Burundi Cameroon †

Central African Republic Chad Colombia Democratic Republic of 

the 

Congo Djibouti East Timor Ecuador 

Ethiopia The Gambia Ghana Guatemala †

Guinea Haiti † Honduras † India †

Iraq Kenya † Liberia Madagascar 

Malawi † Mali Mauritania Mozambique 

Nepal Nicaragua † Niger Pakistan 

Rwanda Senegal † Sierra Leone Somalia 

Sri Lanka Sudan Syria Tajikistan †

412

Appendix 10: Countries with Approved U.S. Food Assistance Programs—

Fiscal Year 2008—Continued

Tanzania † Uganda † Yemen Zambia 

Zimbabwe †

Title II-Funded International Food Relief Partnership (26 countries)

Angola Bolivia Cambodia Cameroon 

Democratic Republic of 

the 

Congo * Dominican Republic El Salvador 

Ethiopia * Georgia Guatemala Haiti 

Honduras India Indonesia Kenya 

Kyrgyzstan Malawi Nicaragua Peru 

Philippines Senegal South Africa Tajikistan 

Tanzania Uganda Zimbabwe

Title III (0 countries)

Title V—Farmer-to-Farmer (37 countries)

Angola Armenia Azerbaijan Bangladesh 

Belarus Bolivia El Salvador Ethiopia 

Georgia Ghana Guatemala Guinea 

Guyana Haiti Honduras India 

Indonesia Jamaica Kazakhstan Kenya 

Kyrgyzstan Malawi Mali Moldova 

Mozambique Nepal Nicaragua Nigeria 

Peru Russia South Africa Tajikistan 

Turkmenistan Uganda Ukraine Vietnam 

Zambia

Bill Emerson Humanitarian Trust (5 countries)

Afghanistan Ethiopia Kenya North Korea 

Zimbabwe

Food for Education (17 countries)

Bangladesh Cambodia Cameroon Chad 

Congo, Republic of the Ethiopia Guatemala Kenya 

Kyrgyzstan Laos Malawi Mozambique 

Nicaragua Pakistan Rwanda Senegal 

Sierra Leone 

† Represents Title II programs with commodities approved in FY 2008, or that remain active with resources 

allocated in the prior fiscal year. 

* Represents IFRP programs with commodities approved in FY 2007, or that remain active with resources allocated in the prior fiscal year. 

413

U.S. International Food Assistance Report 2009

Cover photo: USAID. 

Transmittal to Congress 

Under Food for Peace Act Section 407(f)(1)(A), ‘‘Not later than April 1 of each fiscal year, the Administrator [of USAID] and the Secretary [of Agriculture] shall 

jointly prepare and submit to the appropriate committees of Congress a report regarding each program and activity carried out under this Act during the prior fiscal 

year.’’ As required, this report is hereby submitted to Congress. 


1122017.eps
414

April 2010

A USAID-supported World Food Program initiative in eastern Sri Lanka. 

USAID.

This report may be found online:

USAID Development Experience Clearinghouse 

Telephone: (202) 712–0579

URL: http://www.dec.org/ and at http://www.usaid.gov

Table of Contents 

Executive Summary 

Introduction 

I. U.S. International Food Assistance

A. Bellmon Estimation for Title II (BEST) Project 

B. Title II Non-emergency Food Security Country Frameworks 

C. USAID’s Famine Early Warning Systems Network (FEWS NET) 

D. Monitoring and Evaluation (M&E) 

E. Food Aid Quality 

F. Food and Nutrition Technical Assistance (FANTA) Project 

G. Preventing Malnutrition in Children Under Two Approach (PM2A)

II. Program Descriptions and Fiscal Year 2009 Accomplishments

A. Food for Peace Act

1. Title I: Economic Assistance and Food Security 

2. Title II: Emergency and Private Assistance Programs 

3. Title III: Food for Development 

4. Title V: John Ogonowski and Doug Bereuter Farmer-to-Farmer (FTF) Program

B. Section 416(b) of the Agricultural Act of 1949: Surplus Commodities 

C. Food for Progress 

D. McGovern-Dole International Food for Education and Child Nutrition Program 

E. Bill Emerson Humanitarian Trust (BEHT) 

F. Local and Regional Food Aid Procurement Pilot Project (PPP)

III. Appendices

Appendix 1: List of Abbreviations 

Appendix 2: List of Awardees 


1122018.eps
415

1 All costs represent commodities, freight, and distribution. Beneficiary totals for USAID represent beneficiaries reached in FY 2009. Beneficiary totals for USDA represent planned beneficiary totals associated with the FY 2009 award.

Appendix 3: USDA Title I Program: Food for Progress Grants—Fiscal Year 2009 

Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity, 

Recipient and Tonnage—Fiscal Year 2009 

Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, Commodity, Recipient and Tonnage—Fiscal Year 2009 

Appendix 6: USDA–CCC Funded—Food for Progress Grants—Fiscal Year 2009 

Appendix 7: McGovern-Dole International Food for Education and Child Nutrition 

Program—Fiscal Year 2009 Donations by Country and Commodity 

Appendix 8: Bill Emerson Humanitarian Trust: Summary Budget, Commodity, 

Recipient and Tonnage—Fiscal Year 2009 

Appendix 9: Local and Regional Procurement Pilot Program—Fiscal Year 2009 

Appendix 10: Food for Peace Title II Congressional Mandates—Fiscal Year 2009 

Appendix 11: Countries with U.S. International Food Assistance Programs under 

the FFP Act—Fiscal Year 2009

Executive Summary 

The United States is committed to the promotion of global food security through 

its international food assistance and other foreign assistance programs. In Fiscal 

Year (FY) 2009, the United States provided more than $2.9 billion of food assistance 

to developing countries approximately 2.8 million metric tons, reaching over 70 million people worldwide. The following summary shows U.S. food assistance, by legislative authority, for FY 2009.1

Program Metric Tons Total Cost (000) 

Food for Progress Title I 14,300 $22,000.0

Food for Peace Title II 2,396,314 $2,552,061.6

Food for Development Title III — —

Farmer-to-Farmer Program Title IV — $12,500.0

Section 416(b) — —

Food for Progress CCC 274,230 $215,816.6

McGovern-Dole 126,523 $168,414.8

Procurement Pilot Project — $4,750.0

Bill Emerson Humanitarian Trust 21,000 $5,638.4

Grand Total 2,832,367 $2,981,181.4

More than one billion people—nearly 1⁄6 of the world’s population—suffer from 

chronic hunger. It is a crisis with devastating and far-reaching effects. Hunger 

weakens immune systems and stunts child development. Half of all child deaths in 

the developing world are related to undernutrition. Chronic hunger and undernutrition primarily result from poverty—people who are poor often simply cannot afford 

to buy food. Hungry families spend over half their income to buy the food they need 

to survive. Food often cannot travel from surplus to deficit regions within and across 

countries because of poor roads, barriers at borders and checkpoints along the way. 

Without enough food, adults struggle to work and children struggle to learn, making 

sustainable economic development difficult to achieve. 

Ensuring global food security will only become more challenging in the future as 

demand for food is projected to increase by 50 percent over the next 20 years. Increased demand will come primarily from population growth in the developing world 

and income growth in middle-income countries. Growth in agricultural productivity, 

which is already lagging globally, also faces increasing threats from climate change, 

scarce water supplies, and competition for energy resources from industry and urbanization. 

Addressing these issues will require a whole-of-government approach, and the 

U.S. Agency for International Development (USAID) and the U.S. Department of 

Agriculture (USDA) have been working closely with the U.S. State Department and 

other U.S. Government agencies to develop the Administration’s new Global Hunger 

and Food Security Initiative, ‘‘Feed the Future.’’ The focus and coordination promoted in this initiative will strengthen all U.S. Government (USG) food security 

programming, including USG food assistance. By targeting the poorest of the poor 

and better integrating food aid programs into larger—often multilateral—efforts, 

416

USAID and USDA food assistance programs are aiming to improve the effectiveness 

of food aid and increase its contribution to global targets for reducing hunger, malnutrition and poverty.

Children receiving USAID-supported food aid in Sudan. USAID. 

Introduction 

Since the passage of Public Law 480 or the Agricultural Trade Development and 

Assistance Act of 1954, U.S. international food assistance programs have evolved to 

address multiple objectives. The most recent changes came with the Food for Peace 

Act of the Food, Conservation, and Energy Act of 2008. Commonly known as the 

2008 Farm Bill, the Food, Conservation, and Energy Act of 2008 restated the objectives that guide U.S. food assistance programs. These objectives are to:

• Combat world hunger and malnutrition and their causes;

• Promote broad-based, equitable and sustainable development, including agricultural development;

• Expand international trade;

• Foster and encourage the development of private enterprise and democratic participation in developing countries; and

• Prevent conflicts. 

U.S. International Food Assistance. 

The U.S. international food assistance program was established by several legislative authorities and is implemented by two Federal agencies. USAID administers Titles II, III and V of the Food for Peace Act. USDA administers Section 416(b) of 

the Agricultural Act of 1949, Title I of the Food for Peace Act, Food for Progress, 

the McGovern-Dole International Food for Education and Child Nutrition Program, 

and the Local and Regional Food Aid Procurement Pilot Project. The list below provides a brief description of each activity.

1. Food for Peace Act.

• Title I: Economic Assistance and Food Security—concessional sales of 

U.S. agricultural commodities to developing countries and private entities.

• Title II: Emergency and Private Assistance Programs—direct donation 

of U.S. agricultural commodities for emergency relief and development.

• Title III: Food for Development—government-to-government grants of agricultural commodities tied to policy reform.

• Title V: John Ogonowski and Doug Bereuter Farmer-to-Farmer (FTF) 

Program—voluntary technical assistance to farmers, farm groups and agribusinesses.

2. Section 416(b) of the Agricultural Act of 1949—overseas donations of 

surplus food and feed grain owned by the USDA Commodity Credit Corporation 

(CCC).


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3. Food for Progress Act of 1985—commodity donations or concessional financing available to emerging democracies and developing countries committed 

to the introduction or expansion of free enterprise in their agricultural economies.

4. McGovern-Dole International Food for Education and Child Nutrition Program—donations of U.S. agricultural products, as well as financial 

and technical assistance, for school feeding and maternal and child nutrition 

projects in low-income countries.

5. Bill Emerson Humanitarian Trust—food reserve administered under the 

authority of the Secretary of Agriculture. This reserve is available to meet 

emergency humanitarian food needs in developing countries, allowing the 

United States to respond to unanticipated food crises. Under the 2008 Food for 

Peace Act, the Administrator of USAID oversees the release and use of these 

funds.

6. Local and Regional Food Aid Procurement Pilot Project (PPP)—local 

and regional purchase of commodities to help meet urgent food needs due to 

food crises and disasters. This program was authorized as a 5 year pilot program under the 2008 Farm Bill.

Beneficiaries of a USAID-supported food aid activity in Malawi. USAID. 

I. U.S. International Food Assistance 

U.S. international food assistance has long played a critical role in responding to 

global food insecurity. This tradition continued in FY 2009, with the USG providing 

more than 2.8 million metric tons (MT) of commodities to more than 70 million 

beneficiaries and 73 countries worldwide. 

In recent years, attention has focused on the continued challenges that hamper 

efforts at reducing global food insecurity. The Administration’s new Global Hunger 

and Food Security Initiative, ‘‘Feed the Future,’’ has been designed to begin to address these challenges, including those faced in our food assistance programs. Starting in FY 2010, coordinated efforts promoted by the initiative will strengthen all 

USG food security programming. USAID and USDA have already made significant 

improvements to better target and monitor their food aid programs through a series 

of new initiatives. USAID’s Food for Peace (FFP) office’s recent 3 year pilot Bellmon 

Estimation for Title II (BEST) Project collects and analyzes data and information 

from USAID, USDA, and other sources to better inform the need, targeting, and potential use of food aid commodities. FFP’s recent adoption of the Preventing Malnutrition in Children Under Two Approach (PM2A) builds on research-based successes from targeting this beneficiary category, and improves the cost effectiveness, 

design and content of such programs. The recent hiring of additional FFP nonemergency (development) food aid program field monitors, meanwhile, increases 


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FFP’s ability to analyze, monitor and respond to food security and food aid concerns. 

FFP and USDA are also funding efforts aimed at improving the nutritional quality 

and content of food aid to better serve and respond to the specific needs of food aid 

beneficiaries. 

A. Bellmon Estimation for Title II (BEST) Project 

The BEST Project conducts independent market analyses to ensure that FFP complies with the Bellmon Amendment, which requires that adequate storage facilities 

be available in a recipient country upon arrival of a commodity to prevent spoilage 

or waste, and that distribution of the commodity in the recipient country will not 

result in substantial disincentive or interference with domestic production or marketing in that country. The BEST Project is conducting independent market analyses to ensure that these requirements are met. Using the results of these analyses, 

FFP, USDA, and other food aid partners are better able to target food aid most fully 

to those countries and beneficiaries in need. A number of studies have already been 

completed and can be found at http://www.usaid.gov/ourlwork/humanitarianlassistance/ffp/bellmonana.html. 

B. Title II Nonemergency Food Security Country Frameworks 

In FY 2009, FFP continued to develop Food Security Programming Frameworks 

(FSPF) that define objectives, approaches, geographic foci and institutional partnerships for effective use of Title II nonemergency resources to reduce food insecurity. 

The FSPFs provide country-specific guidance to partners developing new Title II 

multi-year nonemergency assistance proposals (MYAPs). During FY 2009, FFP and 

respective Regional Bureaus and Missions developed FSPFs for Bangladesh, 

Burkina Faso, Liberia and Sierra Leone. The FSPFs provide a broad overview of 

contextual factors and cross-cutting issues that promote or constrain food security 

programming in the country; identify the determinants of food insecurity and the 

geographic distribution of food insecurity and malnutrition, including areas of greatest food insecurity, risks and vulnerabilities; describe existing policies, strategies, 

initiatives, and programs related to reducing food insecurity in the country; and 

identify priority objectives, program areas, activities, partners, and geographic foci 

for Title II food security programs. A number of FSPFs have already been completed 

and can be found at http://www.usaid.gov/ourlwork/humanitarianlassistance/

ffp/countryspec.html. 

C. USAID’s Famine Early Warning Systems Network (FEWS NET) 

USAID’s Famine Early Warning Systems Network (FEWS NET) exemplifies the 

U.S. commitment to anticipating and responding to humanitarian vulnerabilities 

and crises. Using interagency agreements with the U.S. Geological Survey, National 

Aeronautics and Space Administration, National Oceanic and Atmospheric Administration and USDA, FEWS NET continues to monitor, collect and disseminate critical 

data on conditions of food availability and access. FEWS NET provides decision 

makers in the USG, host country governments, and a variety of other regional and 

international partners timely and analytical early warning and vulnerability information. FEWS NET information products can be found at www.fews.net. 

In response to rising needs for more and better food security monitoring information in additional countries where food security could become a significant problem, 

in FY 2009 USAID, working with FEWS NET, defined and tested a nonpresencebased monitoring strategy, referred to as the ‘‘remote monitoring’’ initiative. This 

strategy prioritizes the identification and early warning of significant changes in 

food availability and food access that might potentially lead to a food security crisis. 

Sectoral monitoring priorities for the remote monitoring include weather and climate, crop condition and output, food markets and trade, and a livelihood food security framework for each country. 

Using a minimal number of on-the-ground visits and focusing heavily on FEWS 

NET’s existing global monitoring resources and building and sustaining collaborations and partnerships with organizations already established in each country, 

FEWS NET developed methods, tools and agreements that promote a continuous 

stream of monitoring data from three remote monitoring pilot countries: Yemen, 

Tajikistan and Burundi. 

D. Monitoring and Evaluation (M&E) 

The renewed Monitoring and Evaluation (M&E) emphasis within FFP ensures 

that Title II resources are being used effectively and efficiently to achieve the best 

possible food security outcomes, and that food aid program staff continually learn 

from past experiences to improve program implementation. 

In this regard, FFP continued its practice of delivering 4 to 5 day M&E workshops 

to newly awarded Multi-Year Assistance Program (MYAP) partners in order to imVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00430 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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prove the quality of Title II M&E data, as well as USG staff charged with monitoring those programs. The workshops help improve the design of program results 

frameworks, baselines, and M&E plans, and ensure that required indicators from 

FFP and Missions are included in partner M&E plans and that data are collected 

in a consistent manner. The workshops also strengthen Mission and partner knowledge of Title II programs and reinforce their understanding of M&E procedures. 

Workshops have now been held in Mali and in Mozambique (for 16 newly awarded 

MYAPs), as well as in Ethiopia, Madagascar, and Malawi. Additional workshops 

will be held as new MYAPs are awarded in FY 2010, for Bangladesh, Burkina Faso, 

Liberia, Sierra Leone and South Sudan. 

FFP also released updated guidance that describes the key M&E responsibilities 

of MYAP awardees and potential awardees, providing additional detail to existing 

M&E policies. This guidance can be found at http://www.usaid.gov/ourlwork/humanitarianlassistance/ffp/ffpib.html. In addition, during FY 2009, FFP held a 

technical assistance workshop on food aid commodity management for Title II 

awardees. Held in the field, in Maputo, Mozambique, the workshop provided a 

hands-on component that included observations of commodity management activities at a seaport. Participants also learned the general tenets of Title II commodity 

management from a field perspective. The training strengthened the capacity of 

Title II partners to properly manage commodities within their own programs, and 

to improve commodity management practices among local sub-awardees. 

USDA initiated efforts in FY 2009 to improve results-oriented management for its 

food aid programs. USDA has worked with grantees and results-oriented specialists 

to develop specific objectives and measures for the programs. Grant agreements 

completed in FY 2009 included more specific measures to gauge the success of the 

programs. USDA is continuing work in this area to define objectives and to develop 

monitoring and evaluation procedures that will be used in administering the programs. USDA plans to fully incorporate results-oriented management in the programs by FY 2011. 

E. Food Aid Quality 

In FY 2009, FFP awarded Tufts University’s School of Nutrition a contract to examine the nutritional needs of food aid beneficiaries and the commodities currently 

available to meet those needs in the context of total available food resources. The 

beneficiaries studied include orphans and vulnerable children, pregnant and lactating women, students in grades K–8, food-insecure adolescents and adults, and 

people living with HIV.

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A mother and child with their food aid ration in Ghana. USAID.

As part of their study, technical briefing papers will be produced on the following 

topics:

• Review of past recommendations and their implementation to date;

• Enrichment and fortification in USAID activities and in Title II commodities;

• Recommendations to improve Title II enrichment and fortification formulations; 

and

• Food aid and nutritional support for people living with HIV.

A final report will include an expanded executive summary of the findings and 

recommendations of all four briefing papers, and recommendations for next steps 

and implementation of these recommendations. It will also include a description of 

a process for periodic and ongoing review of the nutritional quality of Title II food 

aid commodities. 

Furthermore as part of this review, FFP and Tufts developed and maintain a public, interactive website (www.foodaidquality.org) to serve as a general space for information about the Food Aid Quality Review project, including summaries of meetings and presentations, as well as draft documents and preliminary recommendations for comment. On the site, there is also a discussion forum on topics related 

to the Food Aid Quality Review project, where those in the community are invited 

to participate by commenting on or starting their own discussion topic. 

F. Food and Nutrition Technical Assistance (FANTA) Project 

Under the USAID supported FANTA Project-2, FFP continued to publish a number of Title II relevant publications, guides and tools to support Title II partners 

and USAID and USDA staff in strengthening knowledge in food security and nutrition activities. A list of the publications can be found at www.fantaproject.org/

focus/foodaid.shtml.

One of the persistent challenges to Title II nonemergency programs is to assure 

that the impacts they achieve are sustained after the program has ended. All Title 

II nonemergency programs are now required to incorporate an ‘‘exit strategy’’ that 

aims at sustaining program impact. However, little guidance exists on how to implement successful exit strategies. To address this gap, FFP, with the help of Tufts 

University through FANTA Project-2, is developing guidance on the design of such 


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strategies. For that purpose, a set of studies is being conducted in several countries 

where Title II nonemergency programs are ending. 

Each country study protocol calls for a review of Title II awardees’ planned exit 

strategies and their implementation of that strategy during the final MYAP year, 

followed by a qualitative review one year after the MYAP has ended, as well as indepth qualitative and quantitative assessments 2 years after exit to assess the extent to which the impacts of the MYAP were maintained or improved, and to understand factors of success or failure in the specific exit strategies that were used. 

G. Preventing Malnutrition in Children Under Two Approach (PM2A) 

The Preventing Malnutrition in Children Under Two Approach (PM2A) is a foodassisted program aimed at reducing the prevalence of child malnutrition by targeting a package of health and nutrition interventions to all pregnant women, mothers of children 0–23 months and children under 2 in food-insecure program areas, 

regardless of nutritional status. Because they are the most nutritionally-vulnerable 

members of the population, the program targets everyone in these groups to protect 

children from malnutrition and its long-term consequences, including diminished 

psychomotor skills, work capacity, intelligence and income. PM2A integrates best 

practices in maternal and child health and nutrition (MCHN) programming and 

combines them with food assistance. USAID now strongly encourages Title II partners that submit MYAP proposals to design their MCHN intervention on the basis 

of preventive actions. In FY 2009, utilizing Title II resources, USAID awarded 

PM2A MYAPs for Guatemala and Burundi. 

II. Program Descriptions and Fiscal Year 2009 Accomplishments 

A. Food for Peace Act

1. Title I: Economic Assistance and Food Security

The Title I authority of the Food for Peace Act provides funding for both a 

concessional sales program, supporting trade and development and for the Food for 

Progress grant program, supporting agricultural development in emerging democracies. The primary objective of the concessional sales component is to provide food 

assistance to targeted developing countries in order to promote economic growth. By 

gradually reducing the concessionality of support and eliminating ocean freight financing, the program is intended to assist in the recipient country’s transition from 

aid to commercial trade. There were no Title I-funded concessional sales programs 

active in FY 2009. 

Title I resources were used to support the Food for Progress grant program in FY 

2009, providing 14,300 MT in assistance to two countries, Burundi and the Central 

African Republic, with an estimated value of $22 million. Additional information on 

Title I-funded activities is included in the Food for Progress section of this report.

2. Title II: Emergency and Private Assistance Programs

More than 3⁄4 of U.S. international food aid was used in FY 2009 to respond to 

emergency situations and to implement development projects as part of the Title II 

program. Administered by the USAID Office of Food for Peace in the Bureau for 

Democracy, Conflict, and Humanitarian Assistance (DCHA), in FY 2009, Title II 

programs (emergency and nonemergency) provided more than 2.3 million MT of 

commodities, with a program cost of approximately $2.6 billion, to assist approximately 61 million people in 61 countries. 

The focus of Title II programs is to reduce food insecurity in vulnerable populations, and improving resiliency to shocks is an essential first step toward household self-sufficiency and economic independence. In support of this strategy, the 

nonemergency development portfolio incorporates many activities to strengthen local 

capacity to respond to natural disasters.

a. Title II: Emergency Programs

Title II emergency programs aim to address two forms of emergencies: natural 

disasters, such as floods or droughts, and complex emergencies characterized by a 

combination of natural disaster, conflict, and insecurity. All of these elements pose 

substantial programmatic and operational challenges in responding effectively to the 

needs of food-insecure populations. 

In FY 2009, Title II emergency programs provided more than 1.9 million MT of 

emergency food aid, with a program cost of more than $2.1 billion, to help alleviate 

malnutrition and hunger in 38 countries. In all, Title II emergency programs 

reached approximately 54 million food-insecure people in FY 2009.

Food for Peace Title II: Emergency Program Highlights

422

Pakistan: With fighting between government forces and militants in Pakistan’s 

North-West Frontier Province on the rise, the number of internally displaced persons (IDPs) increased exponentially in early 2009, with estimated figures growing 

from several hundreds of thousands to over two million in mere months. As the 

number of IDPs grew—reaching as many as 2.2 million by the end of May 2009—

so did the level of Title II assistance. In all, FFP provided 62,730 MT of food aid 

to the World Food Program (WFP) in FY 2009, valued at $55 million, to help meet 

the needs of Pakistan’s IDP population. Importantly, FFP was able to meet the demands of a rising IDP population by using prepositioned commodities (see box on 

following page) and ship diversions to expedite the transport, arrival, and distribution of U.S. food aid. Moreover, as security conditions improved and IDPs began to 

return to their places of origin, FFP continued to provide assistance to IDPs and 

returnees, serving as an important safety net until their livelihoods could be restored.

U.S. food aid being prepared for distribution at an IDP camp in Pakistan. 

USAID.

Ethiopia: In FY 2009, FFP continued to support the Government of Ethiopia’s 

Productive Safety Net Program (PSNP) by providing an estimated $120 million of 

food assistance through its nongovernmental organization (NGO) partners to chronically food insecure beneficiaries. In exchange for food (or cash) transfers, beneficiaries of the PSNP carry out public works projects such as soil and water conservation, community road construction and rehabilitation, small-scale irrigation, 

and school and health post renovation and construction, among others. The food and 

cash transfers prevent the depletion of household assets (such as the sale of livestock or the eating of the next season’s seeds), and the public works projects create 

community assets, such as roads and health posts.


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Beehives being distributed to a youth group in Ethiopia as part of an income generating activity. FHI.

In addition to support for the PSNP, Food for Peace provided over $266 million 

of relief food assistance through WFP and Catholic Relief Services (CRS) to droughtaffected beneficiaries. These people can normally meet their own food requirements. 

However, because of successive seasons of insufficient rain and inadequate harvests, 

they required emergency food assistance.

Prepositioning Warehousing 

USAID’s warehouse program supports the strategic prepositioning of Food for 

Peace commodities by increasing the number of warehouses from two up to five 

in regions that show historic need or are situated along trade routes. Under the 

new program, the Agency expects to store packaged and bulk food commodities, 

as needed, in at least five warehouses throughout Africa, in South Asia, and 

within the United States. 

Prepositioning warehouses are an integral part of USAID’s food aid program. 

They offer USAID the capability to significantly reduce transit times of food 

commodities in the midst of a crisis. 

USAID uses prepositioning sites to maintain a continuous flow of vital food 

aid. The Agency stores commonly needed commodities in the prepositioning 

warehouses and, as needs arise, ships the food directly from the warehouse to 

the region in need. 

Expansion of the USAID prepositioning program was made possible by new 

authorities provided by Congress in the 2008 Farm Bill. 

b. Title II: Private Assistance Programs (Nonemergency)

The Food for Peace Title II development (nonemergency) food aid program constitutes one of the largest sources of USAID funding in promoting long-term food 

security in such areas as:

• Agriculture and Natural Resource Management activities;

• Health and household nutrition activities (e.g., MCHN including PM2A); and

• Education, Humanitarian Assistance, and Microenterprise.

In FY 2009, 19 awardees implemented 78 Title II nonemergency programs in 31 

countries. Approximately 474,350 MT of food assistance, valued at more than $370 

million, was used to support programs that benefited more than seven million people.

Food for Peace Title II: Nonemergency Program Highlights

Guatemala: High levels of malnutrition are especially harmful for children under 

the age of 2, who can experience life-long impairments in their physical and cognitive development. In the northern department of Alta Verapaz in Guatemala, 

more than 60 percent of children under 5 are chronically malnourished, while infant 

and maternal mortality rates are among the worst in the country. To improve food 

security in Alta Verapaz, FFP provided Mercy Corps International (MCI) 3,370 MT 


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of food aid in FY 2009, valued at $7.6 million, to implement a program using the 

Preventing Malnutrition in Children Under Two Approach. Working in tandem with 

government health counterparts and FANTA for operations research support, MCI 

provided food assistance to 227,000 Guatemalan children under 2 and malnourished 

children under 5, as well as nursing and pregnant mothers in the Alta Verapaz, 

Pete ́n and Quiche ́ regions. In addition, by the end of the PM2A program in Guatemala in FY 2013, health providers will have increased their capacity to plan for 

community health needs, and program beneficiaries are expected to have improved 

their nutritional status and access to sustainable, quality health care. 

Liberia: While Liberia continues on its path to recovery and development after 

decades of poor governance and civil war, high rates of chronic malnutrition persist. 

As part of the U.S. President’s Food Security Response Initiative (PFSRI), FFP allocated 4,860 MT of food aid commodities in FY 2009, valued at $6.3 million, for nonemergency assistance in Liberia. Using these resources, CRS and over a dozen international and domestic NGOs are working with 35,380 beneficiaries in 24 districts 

to improve agricultural production, infrastructure and emergency preparedness. The 

program also aims to improve the management of childhood illnesses, rehabilitate 

malnourished children, and provide life skills education for children and adolescents 

impacted by HIV.

A father and son bringing home their USAID food aid ration in Tajikistan. 

USAID.

Focusing on building the capacity of local NGOs to manage food security activities 

and interventions, CRS’s program made significant achievements in FY 2009. One 

activity in the remote area of Nyor-Diaply—rehabilitating community fish ponds left 

dormant due to the war and providing associated training—led to the rehabilitation 

of 21 fish ponds by seven community-based organizations. Eleven of the ponds produced 1,084 kg of tilapia and catfish, from which community members were able to 

feed themselves and sell the rest for a profit of USD $650. The fish farming groups 

involved plans to save a portion of the profits and expand their fish farming activities in the community. 

Uganda: Following decades of civil insecurity and successive seasons of poor rains 

and harvests, northern and northeastern Uganda remain highly food insecure. As 

part of a Title II-funded MYAP, ACDI/VOCA and its sub-grantees are implementing 

activities in 17 rural districts in northern and eastern Uganda. Using 19,850 MT 

in food aid in FY 2009, valued at $12.7 million, ACDI/VOCA provided over 116,000 

beneficiaries with food assistance, agricultural training and support, income generation services and grants, and activities in health, nutrition, and hygiene. Using the 


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support provided, the 1,955 farmer savings groups formed under the program 

amassed a cumulative savings of $162,668 in 2 years. In addition, the program focuses extensively on People Living with HIV/AIDS (PLWHA). In addition to food aid 

provided, in FY 2009, 96,970 PLWHAs, including their families, were provided with 

income generating grants, agricultural support, and other support services upon 

graduation from direct food distributions.

c. International Food Relief Partnership

In November 2000, the U.S. Congress passed the International Food Relief Partnership (IFRP) Act. The law, which was renewed and extended under the recent 

farm bill, enables USAID to award grant agreements to eligible U.S. nonprofit organizations to produce and stockpile shelf-stable, prepackaged commodities. Through 

the IFRP program, commodities are made available to eligible nonprofit U.S. organizations and international organizations for transportation, delivery and distribution 

in emergency food aid relief programs. In FY 2009, FFP awarded approximately $8.6 million in Title II IFRP production 

and distribution grants. As part of the production grant, Breedlove Dehydrated 

Foods produced a vitamin-fortified, dried vegetable soup mix that is prepared and 

used as meals, predominantly in institutional settings. Over the course of the FY, 

30 IFRP distribution grants were awarded to 23 nonprofit U.S.-based organizations. 

IFRP awardees distributed the commodity to over 90,000 beneficiaries in 23 countries. 

The organizations that received grants in FY 2009 to transport and distribute the 

commodities were: ACTS International; Amigos Internacionales; Batey Relief Alliance; Catholic Relief Services; Center for International Health; Children’s Hunger 

Fund; Church of Bible Understanding; CitiHope; Convoy of Hope; Coprodeli USA; 

Counterpart International; Cross International; Evangelistic International Ministries; Fabretto Children’s Foundation; Feed the Children; Food for the Hungry; 

Haiti Vision; International Partnership for Human Development; International Relief and Development; International Relief Teams; Nascent Solutions; Project Concern International; Resource and Policy Exchange; and World Help.

3. Title III: Food for Development

The Food for Peace Title III program is a USAID-administered tool for enhancing 

food security and supporting long-term economic development in the least-developed 

countries. The USG donates agricultural commodities to the recipient country and 

funds their transportation to the point of entry in the recipient country. These commodities are sold on the domestic market and the revenue generated from their sale 

is used to support and implement economic development and food-security programs. Funds were neither requested nor appropriated for Title III in FY 2009.

4. Title V: John Ogonowski and Doug Bereuter Farmer-to-Farmer (FTF) 

Program

The John Ogonowski and Doug Bereuter FTF Program provides voluntary technical assistance to farmers, farm groups, and agribusinesses in developing and transitional countries to promote sustainable improvements in food processing, production, and marketing. The program relies on the expertise of volunteers from U.S. 

farms, land-grant universities, cooperatives, private agribusinesses, and nonprofit 

farm organizations to respond to the needs of host-country farmers and organizations. Volunteers are recruited from all 50 states and the District of Columbia. In 

general, these volunteers are not overseas development professionals but rather individuals who have domestic careers, farms, and agribusinesses or are retired persons who want to participate in development efforts. Typically, volunteers spend 

about 20 to 30 days in the host country. 

The FTF Program was initially authorized by Congress in the Food Security Act 

of 1985 and funded through Title V of the Agricultural Trade Development and Assistance Act of 1954. The U.S. Congress authorized the current FY 2009–2013 phase 

of the FTF Program in the 2008 Food for Peace Act, designating it the ‘‘John 

Ogonowski and Doug Bereuter Farmer-to-Farmer Program’’ in honor of Ogonowski, 

one of the pilots killed on September 11, 2001, and former Congressman Bereuter, 

who initially sponsored the program. 

During FY 2009, USAID provided $12.5 million for FTF programs. Over approximately 6 months of active implementation during the fiscal year, 218 volunteer assignments were completed in 23 countries, strengthening 163 host organizations—

cooperatives, farmer associations, agribusinesses, and NGOs—and directly assisting 

10,533 persons, including training 5,951 persons. Approximately 35 percent of FTF 

beneficiaries were female. Importantly, new FTF programs were implemented in 20 

core countries, developing 5 year work plans for 41 country projects, focusing on agVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00437 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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ricultural productivity and value-chain development for dairy, horticulture, staple 

food crops, aquaculture, and other commodities. Four special projects were launched, 

involving new implementing organizations and targeting special issues such as 

avian influenza prevention, organic coffee production, and food security.

Farmer-to-Farmer Volunteer 

Assignments: FY 2009

Africa

Angola 4 

Egypt 18 

Ethiopia 1 

Ghana 13 

Kenya 16 

Malawi 15 

Mali 5 

Mozambique 12 

Nigeria 13 

Tanzania 12 

Uganda 10

Sub-Total Africa 119

Latin America/Caribbean

Bolivia 1 

Dominican Republic 4 

Guyana 5 

Haiti 7 

Jamaica 7 

Nicaragua 12 

Peru 2

Sub-Total Latin America/Caribbean 38

Europe/Eurasia

Belarus 5 

Georgia 23 

Moldova 15

Sub-Total Europe/Eurasia 43

Asia/Near East

Lebanon 16

Tajikistan 2

Sub-Total Asia/Near East 18

Worldwide Total 218

Title V: FTF Program Highlights

427

FTF-supported green pepper producer women’s group in El Salvador. 

USAID.

Egypt: The Four Thousand Tons per Day Program, a USAID Global Development 

Alliance (GDA) activity in Egypt, targets over 8,000 smallholder farmers to help 

them to become reliable and profitable suppliers for both local processors and export 

markets. FTF volunteers provide invaluable technical and training assistance 

through the program. For example, in FY 2009, volunteers provided technical assistance to farmer groups in the Nubariya region, and introduced new technologies for 

managing soil fertility, irrigation water use, and seedling production. One of the 

beneficiaries, a smallholder tomato producer in the region, almost doubled his yield 

from the previous year as well as his net income, in part from savings incurred from 

lower production costs. Using some of the proceeds generated, his household plans 

to purchase small livestock and rent additional land to increase the area under cultivation next season. 

B. Section 416(b) of the Agricultural Act of 1949: Surplus Commodities 

The Agricultural Act of 1949 authorizes the donation by USDA of surplus food 

and feed grain owned by the CCC. Section 416(a) authorizes surplus food assistance 

to be distributed domestically, and surplus food donated to developing countries for 

assistance programs is covered under Section 416(b). Surplus commodities acquired 

by the CCC as a result of price-support operations may be made available under 

Section 416(b) if they cannot be sold or otherwise disposed of without disrupting 

price-support programs at competitive world prices. In FY 2009, no commodities 

were made available by CCC for use in the 416(b) program and, consequently, no 

donations were made under the program. 

C. Food for Progress 

The USDA-administered Food for Progress Program, authorized under the Food 

for Progress Act of 1985, assists developing countries, particularly emerging democracies ‘‘that have made commitments to introduce or expand free enterprise elements in their agricultural economies through changes in commodity pricing, marketing, input availability, distribution and private sector involvement.’’ The program 

authorizes the CCC to carry out the sale and exportation of U.S. agricultural commodities on credit terms or on a grant basis, with the use of either CCC financing 

or Title I funds. Agreements under the Food for Progress Program are awarded to 

governments or private voluntary organizations (PVOs), nonprofit agricultural organizations, cooperatives, intergovernmental organizations or other private entities. 


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The 2008 Farm Bill extended the authority for the Food for Progress Program to 

provide assistance in the administration and monitoring of food assistance programs 

to strengthen private-sector agriculture in recipient countries through FY 2012. The 

CCC is authorized to use $15 million for administrative costs under the grants, and 

$40 million for transportation expenses. 

In FY 2009, CCC funding financed the purchase and shipment of 274,230 MT of 

commodities to 14 countries, with an estimated value of $216 million. In total, the 

Food for Progress Program—through CCC and Title I funding—provided over $238 

million in food assistance in FY 2009, which supported the purchase and shipment 

of 288,530 MT of commodities.

Food for Progress Program Highlights

Afghanistan: As part of the USG’s long-term commitment to help Afghanistan 

rebuild after years of war, USDA provided 25,000 MT of monetized wheat—valued 

at $12.1 million—to Shelter for Life International (SFL) to implement programs that 

combat food insecurity. SFL is rehabilitating irrigation systems, building storage facilities, facilitating information sharing, and extending credit to local farmers. 

Through training and the technical support provided, increases are expected in agricultural productivity, local markets will be made more accessible, and grain mills 

will be improved. 

Bangladesh: Although having made great strides in meeting the food needs of 

its growing population, Bangladesh remains among the poorest and most densely 

populated countries in the world. Approximately 50 percent of the total population 

live in poverty, 34 percent live on less than $1 per day, and over 52 percent of children under 5 years of age face severe malnutrition. To combat these problems, Cornell University is using the proceeds from 4,850 MT of monetized crude degummed 

soybean oil—valued at $10.5 million—to implement programs that fight poverty in 

the region. Specifically, Cornell is providing training and micro-loans to small farmers to enhance agricultural production technology in liming, bedding, and arsenic 

management. It is also improving the capacity of national agricultural institutions, 

NGOs, and input suppliers to provide technical support and infrastructure development to farmers. The goals of the program are to increase crop productivity of the 

farms assisted by Cornell’s program by 40 percent and expand incomes of local 

farmers by 25 percent. 

Burundi: Burundi has a high population density and very limited natural resources, with 90 percent of Burundians dependent on subsistence farming. Despite 

recent improvements in the political and security landscapes, food insecurity persists after more than a decade of civil war. High food prices are also impacting vulnerable people in both rural and urban areas. To mitigate food security challenges, 

Food for Progress funding was provided to WFP to support the recovery process in 

six provinces characterized by high levels of food insecurity. Using 3,500 MT of corn, 

2,250 MT of yellow split peas, and 1,500 MT of vegetable oil, WFP provided general 

food distribution and support for vulnerable groups, carried out school feeding, and 

implemented activities aimed at asset creation, skills training, and improved nutrition. These activities reached approximately 65,000 beneficiaries in 2009. 

Dominican Republic: Food insecurity and malnutrition are most widely seen in 

the underserved sugar cane farming communities (bateyes) in the Dominican Republic where access to farming and agricultural production is limited. The Batey Relief Alliance (BRA) is implementing programs designed specifically to address the 

pressing needs of millions in the Dominican Republic, especially in the bateyes. BRA 

is monetizing 1,250 MT of crude degummed soybean oil and is using the proceeds 

to implement program activities that address some of the country’s food needs. 

Using $2 million in Food for Progress resources over the life of the program, BRA 

is improving the region’s agricultural productivity by establishing new agricultural 

cooperatives where BRA will provide credit and train local farmers in agricultural 

management. Through a Food for Work program, farmers and farm families will assist in the construction of storage facilities and irrigation systems for improved crop 

management, help repair roads for improved market access, and assist with repairs 

to latrines, schools, and homes for improved sanitary and health conditions among 

agricultural populations. The objectives of the program are to increase agricultural 

production by 20 percent and decrease crop losses by 20 to 25 percent. Income and 

food sales are planned to increase by 20 percent, and beneficiary access to markets 

is expected to increase by 35 percent. Finally, the program may provide 1,400 people 

with access to potable and clean water. 

Ethiopia: Ethiopia is among the most underdeveloped countries in the world, 

ranking 171 of 177 countries in the 2009 United Nations Human Development 

Index. Malnutrition is rampant, affecting an estimated 50 percent of the population. 

The World Council of Credit Unions (WOCCU) is using proceeds from 23,000 MT 

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of monetized hard red winter wheat provided through the Food for Progress program to implement activities that address food insecurity in the areas of Tigray, 

Amhara, and Oromia. The program, valued at $13.8 million, is developing a supportive commercial environment for agriculture by providing technical assistance on 

productivity, post-harvest handling, and marketing strategies to farmer members of 

existing rural credit unions. Infrastructure such as storage facilities, irrigation systems, access roads, bridges, basic sanitation facilities, and other support projects 

will improve through the support of community self-help activities. Finally, WOCCU 

is strengthening community-based agricultural credit unions in order to expand 

credit and micro-loans to local farmers. These activities are hoped to increase output, yields, and income for local farmers by 30 percent by the end of the 4 year program. 

Malawi: Over 1⁄2 of Malawi’s 13.6 million inhabitants live in poverty, with 30 to 

50 percent of the population at risk of food insecurity. To support sustainable economic and agricultural development, USDA provided the Foundation for International Community Assistance International (FINCA) 10,000 MT of hard red 

spring wheat to implement programs aimed at reducing food insecurity. The total 

value of FINCA’s grant for FY 2009 equaled $8.5 million. Using the proceeds from 

the monetization of the wheat, FINCA is expanding microfinance services to agribusiness entrepreneurs in rural areas as well as conducting social and economic assessments to determine the influence of loans on household welfare and agriculturerelated businesses. Moreover, training and support is provided to local farmers to 

promote long-term sustainable agricultural growth. These activities will contribute 

toward the following objectives: increase individual business sales and income for 

loan recipients by ten percent annually and increase access to tools, equipment, inputs, marketing opportunities, and financial services for rural clients by 15 percent. 

Philippines: While experiencing a period of economic growth and decreasing poverty rates nationwide, poor agricultural practices, natural disasters, and conflict 

have prevented sustainable development in the Mindanao provinces of the Philippines. In response, USDA provided a Food for Progress grant valued at $5.7 million to CRS in FY 2009. CRS is monetizing 9,000 MT of soybean meal provided 

through the program and will use the proceeds to implement activities aimed at increasing food production and reducing poverty in selected Mindanao provinces. The 

program will focus on: enhancing technical support to farmers; increasing post-harvest capacity; improving post-harvest practices; increasing crop diversification for 

cash crops; and linking farmers to financial institutions and markets. This agreement will build upon the successes of CRS/Philippines’ ongoing USDA-assisted 

Small Farms and Marketing Program, which has been implemented in five pilot 

sites throughout Mindanao. CRS’s objectives are to increase farm incomes of resource-poor farmers by an average of 50 percent, provide agricultural extension and 

marketing services for 10,000 farmers, and increase rice, cacao, and coffee production. 

Senegal: To combat high rates of poverty and malnutrition in Senegal, USDA 

provided a Food for Progress grant in FY 2009 to the National Cooperative Business 

Association (NCBA) totaling $8.3 million. NCBA is using proceeds from 4,200 MT 

of monetized crude degummed soybean oil to implement programs aimed at 

strengthening producer organizations, enhancing millet production, improving market linkages, and increasing access to financial services. Training programs include 

financial management, efficient production and processing methods, marketing 

strategies, and business development. NCBA is also distributing improved seeds locally, promoting conservation farming, establishing information systems for farmers, 

and providing a range of financial services and financial training opportunities for 

producer groups and processors. Over 9,000 people are benefiting from this assistance. 

D. McGovern-Dole International Food for Education and Child Nutrition 

Program 

An estimated 120 million children around the world do not attend school, due in 

part to hunger or malnourishment. The majority of them are girls. Following the 

success of the Global Food for Education Initiative, created in July 2000, the USG 

has demonstrated its continued commitment to education and child nutrition with 

the 2008 Farm Bill’s reauthorization of the McGovern-Dole International Food for 

Education and Child Nutrition Program (McGovern-Dole Program) through FY 

2012. 

Modeled after the USG’s school meals program, the McGovern-Dole Program is 

named in honor of former Senators George McGovern and Robert Dole for their tireless efforts to promote education and school feeding. The McGovern-Dole Program 

uses U.S. commodities and financial assistance to provide incentives for children to 

430

attend and remain in school, as well as to improve child development through nutritional programs for women, infants, and children under age 5. In FY 2009, the 

McGovern-Dole Program provided more than 126,523 MT of commodities to support 

child nutrition and school feeding programs in 18 countries, the total value of which 

exceeded $168 million.

Schoolgirls taking part in a McGovern-Dole-supported WFP program in 

Bangladesh. USDA.

McGovern-Dole Program Highlights

Cambodia: Decades of war and internal strife continue to impede Cambodia’s 

economic growth. Low per capita Gross Domestic Product (GDP) in combination 

with high inflation in recent years has had major implications for the country’s largest economic sector—agriculture—where poor farming practices, inadequate irrigation systems, and unfavorable market conditions already hamper development, with 

negative impacts on food security and nutrition. In response, International Relief 

and Development (IRD) is using 1,930 MT of USDA-donated commodities to meet 

the following goals: increase school enrollment by 29 percent, expand attendance by 

20 percent, and raise the continuation rate to 86 percent in 51 schools in Kampong 

Chhanang Province over the 3 years of the program. IRD will provide nutritious onsite meals and take-home rations to girls, to students who complete the sixth grade, 

and to high performing teachers. Program activities will reach 31,100 students, 200 

teachers, and 1,300 families. In addition to meals provided, each targeted school will 

have active health and nutrition education programs to combat the province’s high 

malnutrition rates more effectively. 

Guatemala: While the country suffers from high rates of malnutrition nationwide, high rates are especially pronounced in rural areas. In areas such as the central and northwestern highlands, they run as high as 80 percent. With the goal of 

increasing the nutritional and educational status of children in targeted areas of the 

rural Mayan highlands, the McGovern-Dole Program donated 13,780 MT of commodities to Asociacio ́n SHARE de Guatemala (SHARE) in FY 2009. Targeting approximately 385 schools in these areas, SHARE’s program includes direct feeding, 

the provision of take-home rations, establishing and training members of Parent 

Teacher Associations (PTAs), developing school infrastructure, promoting capacity 

building of indigenous organizations, and establishing school gardens for educational and nutritional purposes. Through this program, SHARE will directly reach 

over 70,000 students and 2,300 teachers each year. The program’s targets are to increase enrollment by 17 percent and attendance by 19 percent. In addition, the promotion rate is expected to rise to 79.5 percent. 

Liberia: With a fractured economy and few services available following years of 

civil war and poor governance, Liberia remains one of the poorest countries in the 

world. Upwards of 40 percent of children under 5 years old suffer from malnutrition 

and more than 1⁄3 of the population lives on less than $1 per day. Life expectancy 


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is a mere 45 years, and the adult literacy rate is 52 percent. With the Government 

of Liberia’s renewed focus on economic development and food security, IRD is implementing a 3 year McGovern-Dole Program-funded program in five counties in Liberia: Montserrado, Grand Bassa, Maryland, Grand Kru, and River Gee. Each year, 

program activities will directly benefit 30,000 students and 600 teachers, and indirectly reach 25,000 families through a combination of direct feeding, health/nutrition activities, HIV/AIDS education, school resource and infrastructure improvements, and the building of sustainability through PTAs, school farms, and youth 

clubs. The program also provides school supplies and printed materials that support 

literacy and numeracy to targeted schools. The program is focused on increasing 

total enrollment by 30 percent and attendance by 44 percent. 

Pakistan: Nutrition and education remain priorities in Pakistan, where malnutrition rates average 37 percent for children under 5 and the national literacy rate is 

55 percent. The McGovern-Dole Program has been providing assistance to WFP 

since 2005, offering female beneficiaries in targeted food-insecure districts access to 

development opportunities through three primary activities. The first focuses on improving enrollment, attendance, and retention rates among girls at targeted primary 

schools. The second focuses on pregnant mothers, who are provided with quality 

health services during pre- and post-natal periods. Lastly, WFP supports asset creation and livelihood improvement activities to improve the socioeconomic condition 

of rural women and their families. WFP has reached over 6.4 million Pakistanis 

since 2005 and received $7 million in McGovern-Dole Program support in FY 2009. 

During that year, WFP continued to build upon program successes that included an 

increase in the completion rate of 22 percent for females in targeted schools and an 

increase in enrollment of over 450 percent for females in targeted schools between 

2005 and 2008. In that same time period, deliveries by trained birth attendants increased from 51 percent to 93 percent and in 2008, 234,066 women received routine 

health services. Furthermore, the number of families with access to clean drinking 

water increased by ten percent in 2008. 

Uganda: The Karamoja region of Uganda is one of the country’s most vulnerable 

areas, where malnutrition and lack of education remain pressing issues. Only 18 

percent of men and six percent of women are literate and only an estimated 33 percent of children are enrolled in school, based on 2007 statistics. In FY 2009, the 

McGovern-Dole Program granted WFP 5,680 MT of commodities, a donation valued 

at $19 million, for 3 years of support to assist the government in improving the cognitive performance of primary school children in the region. WFP provided school 

meals to students in both day and boarding schools and allocated take-home rations 

to girls achieving 80 percent attendance per term. The objectives of the program are 

to increase total enrollment by 30 percent and attendance for girls and boys by 23 

percent and 11 percent, respectively, above 2008 levels. Importantly, the Government of Uganda plans to gradually integrate itself into program administration and 

activities to ensure program sustainability. 

E. Bill Emerson Humanitarian Trust (BEHT) 

The Bill Emerson Humanitarian Trust (BEHT) is a reserve of commodities and 

cash that is used to meet unanticipated food aid needs. The BEHT can hold wheat, 

rice, corn, and sorghum in any combination, but the only commodity ever held has 

been wheat. USDA has recently sold the remaining wheat in the trust (about 

915,000 MT) so that currently the BEHT holds only cash—$315 million. The cash 

would be used by USDA to purchase U.S. food products when USAID determines 

it is needed for emergency food aid. 

The 2008 Farm Bill reauthorizes the BEHT through FY 2012 and allows the Secretary of Agriculture to invest the funds from the trust in low-risk, short-term securities or instruments so as to maximize its value. 

FFP used $5.6 million of BEHT resources in FY 2009, which was converted into 

21,000 MT of food aid commodities, to respond to declining food security conditions 

in North Korea. 

F. Local and Regional Food Aid Procurement Pilot Project (PPP) 

The USDA Local and Regional Food Aid Procurement Pilot Project (PPP) was authorized as a pilot program under the 2008 Farm Bill. The primary objective of the 

project is to use local and regional purchase to help meet urgent food needs due to 

food crises and disasters quickly. The goal is to protect against a decline in food consumption, save lives, and reduce suffering. In FY 2009, $4.75 million was allocated 

for programming in three countries, of which $2.73 million was used for local and 

regional procurement of commodities and $2.02 million for associated costs including 

inland transportation and storage and handling. All three pilot programs in FY 

2009 in Malawi, Mali, and Tanzania were implemented by WFP.

432

PPP Program Highlights:

Malawi: Ranking 160 of 177 countries in the United Nations 2009 Human Development Index, with half of its 12 million citizens living below the poverty line and 

20 percent of the population extremely poor, Malawi proved an ideal candidate for 

PPP assistance in FY 2009. USDA provided WFP with funding support from the 

PPP to address the food needs of households that are at risk of hunger and poverty. 

In addition to providing food to vulnerable groups, WFP specifically focuses on procuring food including cereals, pulses, and corn-soy blend, from smallholder farmer 

groups through pro-smallholder tendering practices. Through this process, WFP 

hopes to strengthen the engagement of smallholders and small/medium-scale traders in the markets, stimulate agricultural production and cohesion within 

smallholder farmer organizations, and raise smallholder/trader income levels. Support provided through the PPP in Malawi will provide food to 24,999 households, 

or an estimated 124,995 beneficiaries, for approximately 3 months. 

Mali: A landlocked Sahelian country with a poverty rate of over 59.3 percent, 

Mali suffers from high levels of food and nutritional insecurity that is most pronounced in rural areas. As part of PPP, USDA provided almost $1.1 million to WFP 

to assist with their Country Program and Protracted Relief and Recovery Operation 

(PRRO). Under these programs, WFP provides support for basic education, rural development, and food security. Specifically, the programs include nutrition interventions among children aged 6 to 59 months, food assistance for vulnerable groups, 

and communication activities on nutritional information. Support provided through 

the PPP in Mali will provide food to 28,000 pregnant and lactating women for 6 

months and to 15,000 people through food for work/food for training activities for 

3 months. 

Tanzania: While Tanzania is one of Africa’s more politically stable countries, the 

country is categorized as a low-income and food-deficit country, with almost 80 percent of its total population dependent on subsistence agriculture for their livelihood. 

In FY 2009, USDA provided WFP $2 million in PPP resources to assist with their 

Country Program and PRRO in Tanzania. Under the Country Program, WFP provides support to HIV/AIDS-affected households, implements food for asset creation 

activities, and provides supplementary feeding to vulnerable children and lactating 

and pregnant women. The PRRO, meanwhile, provides basic food needs to refugees 

and the most vulnerable Tanzanians living in northwestern Tanzania. Activities 

under this program enable poor communities to acquire livelihood skills to build resilience to future shocks and support education, health care, and agricultural services. Support provided through the PPP in Tanzania will provide food to over 

125,000 beneficiaries, including refugees, for one to 5 months. 

III. Appendices

Appendix 1: List of Abbreviations 

BCC Behavior Change Communication 

BEHT Bill Emerson Humanitarian Trust 

CCC Commodity Credit Corporation 

CSB Corn Soy Blend 

FANTA Food and Nutrition Technical Assistance 

FEWS NET Famine Early Warning System Network 

FFP Office of Food for Peace (USAID) 

FSPF Food Security Programming Framework 

FTF Farmer-to-Farmer Program of Food for Peace Act, Title V 

FY Fiscal year 

GDA Global Development Alliance (USAID) 

GDP Gross Domestic Product 

GHFSI Global Hunger and Food Security Initiative 

GOE Government of Ethiopia 

HIV Human Immunodeficiency Virus 

HPSC Health Practices, Strong Communities 

IDP Internally Displaced Person 

IFRP International Food Relief Partnership 

ITSH Internal Transportation, Storage and Handling 

M&E Monitoring and Evaluation 

MCHN Maternal and Child Health and Nutrition 

MDG Millennium Development Goal 

MT Metric ton 

MYAP Multi-Year Assistance Program 

NGO Nongovernmental Organization 

433

Appendix 1: List of Abbreviations—Continued

PEPFAR President’s Emergency Plan for AIDS Relief 

PFSRI President’s Food Security Response Initiative 

PLWHA People Living with HIV/AIDS 

PM2A Preventing Malnutrition in Children Under Two Approach 

PPP Procurement Pilot Project 

PRRO Protracted Relief and Recovery Operation 

PSNP Productive Safety Net Program 

PTA Parent Teacher Association 

RFI Request for Information 

RFP Request for Proposal 

UNICEF United Nations Children’s Fund 

USAID U.S. Agency for International Development 

USDA U.S. Department of Agriculture 

USG U.S. Government 

WFP World Food Program 

Appendix 2: List of Awardees 

The following awardees implemented U.S. Government food assistance programs in Fiscal 

Year 2009:

ACDI/VOCA Agriculture Cooperative Development International/Volunteers in 

Overseas Cooperative Assistance 

ACTS ACTS International 

ADRA Adventist Development and Relief Agency International, Inc. 

Africare Africare 

AI Amigos Internacionales 

BRA Batey Relief Alliance 

CARE Cooperative for Assistance and Relief Everywhere, Inc. 

Caritas Caritas 

CBU Church of Bible Understanding 

CH Convoy of Hope 

CHF Children’s Hunger Fund 

CHOUF Cooperative Housing Foundation 

CIH Center for International Health 

Citihope Citihope International 

Coprodeli Coprodeli USA 

CPI Counterpart International 

Cross Cross International 

CRS Catholic Relief Services 

CU Cornell University 

EIM Evangelistic International Ministries 

FCF Fabretto Children’s Foundation 

Feed the Children Feed the Children 

FFTP Food for the Poor 

FHI Food for the Hungry International 

FINCA Foundation for International Community Assistance International 

GDR Government of the Dominican Republic 

GIROA Government of the Islamic Republic of Afghanistan 

GoPK Government of Pakistan 

HV Haiti Vision 

IPHD International Partnership for Human Development 

IRD International Relief and Development 

JAM Joint Aid Management 

LOL Land O’Lakes 

MCI Mercy Corps International 

Nascent Nascent Solutions 

NCBA National Cooperative Business Association 

NPA Norwegian People’s Aid 

OICI Opportunities Industrialization Centers International 

PAI Planet Aid International 

PCI Project Concern International 

PRISMA Asociacion Benefica Prisma 

REST Relief Society of Tigray 

RI Relief International 

434

Appendix 2: List of Awardees—Continued

ROP Roots of Peace 

RPX Resource and Policy Exchange 

SCF Save the Children Federation 

SCF–UK Save the Children UK 

SFL Shelter for Life International 

SHARE Asociacio ́n SHARE de Guatemala 

TNS TechnoServ 

UMCOR United Methodist Committee on Relief 

WH World Help 

WFP World Food Program (United Nations) 

WOCCU World Council of Credit Unions 

WVUS World Vision US 

Appendix 3: USDA Title I Program: Food for Progress Grants—Fiscal Year 2009

Country Grantee Commodity Beneficiaries 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Africa

Burundi WFP Corn, Vegetable Oil, Yellow Split Peas 65 7,250 $10,000.0

Central African 

Republic 

WFP Cornmeal, Corn Soy Blend, Vegetable 

Oil, Yellow Split Peas 

65 7,050 $12,000.0

Sub-Total Africa 130 14,300 $22,000.0

Worldwide Total 130 14,300 $22,000.0

Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity, 

Recipient and Tonnage—Fiscal Year 2009

Country Grantee Commodity Recipients * 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Africa

Burundi WFP Cornmeal, Corn Soy Blend, Vegetable 

Oil, Yellow Peas 

2 3,720 $4,101.7

Cameroon WFP Cornmeal, Vegetable Oil, Yellow Peas 170 4,690 $4,868.5

Central African 

Republic 

WFP Cornmeal, Corn Soy Blend, Kidney 

Beans, Rice, Vegetable Oil 

367 3,430 $5,431.4

Chad WFP Cornmeal, Corn Soy Blend, Sorghum, 

Vegetable Oil, Yellow Peas, Yellow 

Split Peas 

1,746 100,950 $138,482.2

Coˆte d’Ivoire WFP Cornmeal, Corn Soy Blend, Pinto Beans, 

Vegetable Oil 

2 4,980 $6,608.1

Democratic Republic of the 

Congo 

WFP Cornmeal, Corn Soy Blend, Pinto Beans, 

Vegetable Oil, Yellow Split Peas 

328 72,080 $111,654.1

Ethiopia CARE Vegetable Oil, Wheat, Yellow Split Peas, 

Lentils 

202 19,180 $13,188.5

CRS Corn Soy Blend, Peas, Sorghum, Vegetable Oil, Wheat 26 168,790 $92,987.3

SCF Vegetable Oil, Wheat, Yellow Split Peas 161 21,230 $17,887.6

SCF–UK Lentils, Vegetable Oil, Wheat, Yellow 

Split Peas 

628 46,170 $30,230.8

WFP Corn Soy Blend, Pinto Beans, Sorghum, 

Vegetable Oil, Wheat, Yellow Split 

Peas 

587 249,410 $173,740.5

Kenya WFP Cornmeal, Corn Soy Blend, Green Split 

Peas, Vegetable Oil, Wheat Flour, Yellow Split Peas 

3,910 125,610 $133,722.8

Rwanda WFP Cornmeal, Pinto Beans, Vegetable Oil, 

Corn Soy Blend 

705 2,430 $2,932.9

Somalia CARE Corn Soy Blend, Vegetable Oil, Sorghum 123 14,200 $11,195.5

WFP Corn Soy Blend, Lentils, Sorghum, Vegetable Oil, Yellow Peas, Yellow Split 

Peas 

17 142,440 $112,242.0

Sudan ADRA * — — — $332.7

CRS Corn Soy Blend, Lentils, Sorghum, Vegetable Oil 243 5,130 $8,678.4

NPA Lentils, Sorghum, Vegetable Oil 197 2,860 $6,234.0

WFP Lentils, Sorghum, Vegetable Oil, Yellow 

Split Peas 

47 476,360 $532,202.5

Tanzania WFP Cornmeal, Corn Soy Blend, Pinto Beans, 

Vegetable Oil 

512 9,480 $9,718.7

Uganda WFP Corn Soy Blend, Cornmeal, Pinto Beans, 

Sorghum, Vegetable Oil, Yellow Peas, 

Yellow Split Peas 

1,943 19,520 $18,546.1

Zimbabwe WFP Bulgur, Pinto Beans, Sorghum, Vegetable Oil, Yellow Peas 9 96,340 $92,487.3

435

Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity, 

Recipient and Tonnage—Fiscal Year 2009—Continued

Country Grantee Commodity Recipients * 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

WVUS Bulgur, Cornmeal, Sorghum, Vegetable 

Oil, Yellow Peas 

4 92,370 $73,397.0

Sub-Total Africa 11,928 1,681,370 $1,600,870.6

Asia/Near East

Afghanistan WFP Corn Soy Blend, Green Peas, Wheat, 

Vegetable Oil 

16 62,190 $59,509.7

Algeria WFP Beans, Corn Soy Blend, Rice, Vegetable 

Oil, Wheat Flour 

125 6,470 $6,880.3

Georgia WFP Kidney Beans, Vegetable Oil, Wheat 

Flour Bread 

100 1,550 $1,840.9

Nepal WFP Lentils, Rice, Vegetable Oil, Yellow Split 

Peas 

550 7,450 $8,793.0

Pakistan WFP Vegetable Oil, Wheat Flour, Yellow Split 

Peas 

1,207 62,730 $55,386.7

Philippines WFP Rice 2 1,480 $1,855.0

Sri Lanka WFP Lentils, Vegetable Oil, Wheat 2,352 38,550 $28,727.8

West Bank/Gaza WFP Garbanzo Beans, Vegetable Oil, Wheat 

Flour 

1,030 21,430 $20,715.4

Yemen WFP Beans, Wheat 72 3,900 $2,432.0

Sub-Total Asia/Near East 5,454 205,750 $186,140.8

Central Asia

Tajikistan SCF Vegetable Oil, Wheat Flour, Yellow Peas 70 4,090 $6,091.1

Sub-Total Central Asia 70 4,090 $6,091.1

Latin America/Caribbean

Colombia WFP Green Peas, Lentils, Pinto Beans, Vegetable Oil, Wheat Flour 1,590 8,660 $11,046.4

Haiti CARE Lentils, Bulgur, Vegetable Oil 49 870 $1,495.5

CRS Bulgur, Vegetable Oil, Yellow Peas 14 910 $2,478.0

WFP Corn Soy Blend, Pinto Beans, Rice, Vegetable Oil, Yellow Peas 1,603 16,110 $21,253.4

WVUS Bulgur, Corn Soy Blend, Lentils, Vegetable Oil, Yellow Peas 52 2,000 $3,040.0

Sub-Total Latin America/Caribbean 3,309 28,550 $39,313.3

Funding Adjustments (Program Support Costs, Prepositioning, and 

Unallocated Resources) 

— — $333,553.4

Worldwide Total 20,760 1,919,760 $2,165,969.2

Source: Metric tonnage and total cost values derived from FFP Preliminary Final Budget Summary Report, November 24, 2009. Awardees listed as approved in cooperative agreements. Commodity types and recipients derived 

from Food for Peace Information System reports, December 4, 2009 and November 13, 2009, respectively. Recipient values are reflective of commodity rations and are derived separately from program beneficiary totals. 

* Some programs receive Section 202(e) and/or ITSH funds without receiving commodities in the same FY. 

Table does not include IFRP awardees. See page 14 for a list of awardees and page 38 for the country list. 

Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, Commodity, 

Recipient and Tonnage Tables—Fiscal Year 2009

Country Grantee Commodity Recipients 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Africa

Burkina Faso Africare Bulgur, Pinto Beans, Rice, Soy Flour, 

Vegetable Oil 

21 2,390 $3,498.1

CRS Bulgur, Cornmeal, Lentils, Rice, Vegetable Oil 214 8,460 $9,807.8 

Burundi CRS Bulgur, Corn Soy Blend, Vegetable Oil, 

Wheat,Yellow Peas 

59 20,900 $16,013.8 

Chad Africare Bulgur, Wheat Flour Bread 99 5,680 $8,110.5

Democratic Republic of the 

Congo 

ADRA Cornmeal, Green Peas, Vegetable Oil, 

Wheat 

21 5,410 $4,654.5 

FHI Cornmeal, Vegetable Oil, Wheat 3 5,100 $4,465.7 

MCI Cornmeal, Vegetable Oil, Wheat, Yellow 

Split Peas 

3 6,020 $5,223.1

Ethiopia CRS Bulgur, Corn Soy Blend, Rice, Vegetable 

Oil, Wheat, Yellow Split Peas 

192 25,080 $17,066.5 

FHI Green Peas, Wheat 195 19,690 $12,368.4 

REST Vegetable Oil, Wheat, Yellow Peas 755 46,070 $25,485.7

SCF–UK * — — — $3,526.8

Ghana OICI Bulgur, Vegetable Oil, Wheat 7 4,990 $4,500.0 

436

Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, Commodity, 

Recipient and Tonnage Tables—Fiscal Year 2009—Continued

Country Grantee Commodity Recipients 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Guinea OICI Cornmeal, Green Peas, Vegetable Oil 14 1,400 $2,500.9 

Liberia CRS Rice — 4,860 $6,300.9

Madagascar ADRA — — — $71.2

CRS Corn Soy Blend, Rice, Sorghum, Vegetable Oil 135 3,640 $16,186.1

Malawi CRS Corn Soy Blend, Pinto Beans, Wheat, 

Vegetable Oil 

34 25,230 $18,963.0

Mali Africare Bulgur, Vegetable Oil 37 1,600 $2,821.2

CRS Bulgur, Corn Soy Blend, Green Split 

Peas, Vegetable Oil 

63 5,120 $8,755.2

Mauritania CPI Bulgur, Corn Soy Blend, Lentils, Vegetable Oil, Wheat 99 7,140 $5,000.1

Mozambique ADRA Wheat — 8,830 $3,974.9

FHI Wheat — 8,640 $3,654.2 

SCF Wheat — 16,550 $7,454.8 

WVUS Wheat — 11,540 $4,968.0

Niger Africare Red Beans, Rice 14 3,400 $4,486.7

Counterpart Corn Soy Blend, Rice, Vegetable Oil 12 3,400 $3,038.5 

CRS Bulgur, Rice 23 6,340 $6,568.7

Rwanda ACDI/VOCA Bulgur, Corn Soy Blend, Vegetable Oil 3 1,010 $1,415.8

CRS Bulgur, Corn Soy Blend, Vegetable Oil 26 1,810 $2,130.3 

WVUS Bulgur, Corn Soy Blend, Vegetable Oil 49 2,570 $3,815.5 

Senegal CPI Bulgur, Corn Soy Blend, Lentils, Potato 

(flakes), Rice, Vegetable Oil 

43 3,600 $3,355.1 

Sierra Leone CARE Bulgur, Vegetable Oil, Wheat, Yellow 

Split Peas 

27 9,460 $7,850.5

Uganda ACDI/VOCA Corn Soy Blend, Wheat, Vegetable Oil 42 19,850 $12,748.6

MCI Corn Soy Blend, Cornmeal, Green Split 

Peas, Wheat, Vegetable Oil 

8 10,170 $8,446.1 

Zambia CRS Bulgur, Lentils 15 1,710 $8,002.2

Sub-Total Africa 2,212 307,660 $257,229.4

Asia/Near East

Afghanistan WVUS Rice, Vegetable Oil, Wheat Flour, Yellow 

Peas 

138 8,190 $13,500.0

Bangladesh CARE Vegetable Oil, Wheat, Yellow Split Peas 228 50,100 $21,582.9

SCF Vegetable Oil, Wheat, Yellow Split Peas 180 18,320 $8,445.4

India CARE * — — — $6,000.0

CRS Bulgur, Vegetable Oil 422 8,200 $7,465.5

Sub-Total Asia/Near East 968 84,810 $56,993.8

Latin America/Caribbean

Guatemala CRS Corn Soy Blend, Pinto Beans, Rice, Vegetable Oil 85 4,310 $4,556.2

MCI Corn Soy Blend, Pinto Beans, Rice, Vegetable Oil 16 3,370 $7,614.7 

SCF Corn Soy Blend, Pinto Beans, Rice, Vegetable Oil 12 5,540 $5,534.7 

SHARE Corn Soy Blend, Pinto Beans, Rice, Vegetable Oil 17 4,110 $4,337.6

Haiti ACDI/VOCA Bulgur, Corn Soy Blend, Wheat, Vegetable Oil, Yellow Peas 44 17,710 $8,679.6

CRS Bulgur, Corn Soy Blend, Green Peas, 

Vegetable Oil, Wheat 

91 13,930 $10,297.9 

WVUS Bulgur, Corn Soy Blend, Lentils, Vegetable Oil, Wheat, 107 31,490 $16,522.5

Honduras ADRA Corn Soy Blend, Red Beans, Rice, Vegetable Oil 36 330 $1,310.1

SCF Corn Soy Blend, Red Beans, Rice, Vegetable Oil 5 650 $2,451.9 

WVUS Corn Soy Blend, Rice, Vegetable Oil 4 440 $2,008.8

Sub-Total Latin America 418 81,880 $63,314.0

Worldwide Total 3,597 474,350 $377,537.2

Source: Metric tonnage and total cost values derived from FFP Preliminary Final Budget Summary Report, November 24, 2009. Awardees listed as approved in cooperative agreements. Commodity types and recipients derived 

from Food for Peace Information System report, December 4, 2009. Recipient values are reflective of commodity 

rations and are derived separately from program beneficiary totals. 

* Some programs receive Section 202e and/or ITSH funds without receiving commodities in the same FY. 

Appendix 6: USDA–CCC Funded—Food for Progress Grants—Fiscal Year 2009

Country Grantee Commodity Beneficiaries * 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Africa

Ethiopia WOCCU Wheat 37 23,000 $13,750.0

437

Appendix 6: USDA–CCC Funded—Food for Progress Grants—Fiscal Year 2009—

Continued

Country Grantee Commodity Beneficiaries * 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Malawi FINCA Wheat 21 10,000 $8,520.0

PAI Wheat 325 30,000 $26,620.0

Mozambique PAI Wheat 145 20,000 $8,746.0

Niger IRD * — — — $416.7

CRS * — — — $255.7

Senegal NCBA Soybean Oil 9 4,200 $8,330.0

Africare Soybean Meal 15 16,500 $9,830.0

Uganda FINCA Wheat 25 15,000 $9,200.0

Sub-Total Africa 577 118,700 $85,668.4

Asia/Near East

Afghanistan GIROA * — — — $73.7

SFL Wheat 30 25,000 $12,100.0

ROP ** Wheat Flour 14 — $4,472.8

GIROA Soybean Oil 70 10,600 $17,500.0

Bangladesh CU Soybean Oil 829 4,850 $10,490.0

Mongolia MCI/CHOUF * — — — $1,703.5

Pakistan WFP *** — — —$13,283.0

GoPk Wheat 

Soybean Oil 

2,700 

—

50,000 

6,800

$30,800.0

—

Philippines CRS Soybean Meal 10 9,000 $5,660.0

ACDI/VOCA Soybean Meal 23 13,200 $10,500.0

LOL Soybean Meal 22 9,730 $8,699.9

Sub-Total Asia/Near East 3,698 129,180 $115,283.0

Europe

Armenia WFP * — — — $15.6

UMCOR * — — — $143.2

Sub-Total Europe — — $158.8

Latin America/Caribbean

Bolivia PCI * — — — $1,216.5

Dominican Republic BRA Crude Vegetable Oil, Vegetable Oil 8 1,350 $1,990.0

GDR Wheat — 25,000 $11,500.0

Sub-Total Latin America/Caribbean 8 26,350 $14,706.5

Worldwide Total 4,283 274,230 $215,816.6

* Represents prior year agreements with costs incurred in FY 2009. 

** Represents part of an FY 2008 award billed in FY 2009. 

*** Represents internal distribution costs only, no commodity costs. 

Appendix 7: McGovern-Dole International Food for Education and Child Nutrition 

Program—Fiscal Year 2009 Donations by Country and Commodity 

Country Grantee Commodity Beneficiaries 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Africa

Angola JAM Corn Soy Blend 200 14,400 $29,500.0

Cameroon CPI Beans, Rice, Vegetable Oil 28 1,130 $2,850.0

Chad WFP Cornmeal, Vegetable Oil 104 4,440 $5,504.1

Ethiopia WFP Corn Soy Blend, Vegetable Oil 160 3,910 $5,343.2

Guinea-Bissau IPHD Beans, Dehydrated Potatoes, Rice, Vegetable Oil 105 9,020 $18,300.0

Kenya WFP Bulgur, Rice, Vegetable Oil, Yellow Split 

Peas 

1,100 11,900 $9,488.7

Liberia IRD Soy Flour, Soy Protein Isolate, Wheat 135 7,260 $8,800.0

WFP Beans, Rice, Vegetable Oil 3 243 $170.4

Malawi WFP Corn Soy Blend 400 5,520 $6,084.8

Mozambique JAM Rice, Wheat Soy Blend 271 9,270 $7,800.0

Niger RI Corn Soy Blend, Rice, Vegetable Oil 25 9,600 $13,200.0

Rwanda WFP Beans, Cornmeal, Vegetable Oil 300 8,020 $8,832.3

Sierra Leone CRS Bulgur, Corn Soy Blend, Lentils, Vegetable Oil 55 1,330 $2,850.0

Uganda WFP Corn Soy Blend, Cornmeal, Vegetable 

Oil 

245 5,680 $19,000.0

Sub-Total Africa 3,131 91,723 $137,723.5

Asia/Near East

Bangladesh WFP Wheat 350 14,490 $5,315.5

Cambodia IRD Beans, Canned Salmon, Corn Soy Blend, 

Soybean Oil 

25 1,260 $1,230.0

438

Appendix 7: McGovern-Dole International Food for Education and Child Nutrition 

Program—Fiscal Year 2009 Donations by Country and Commodity—Continued

Country Grantee Commodity Beneficiaries 

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Laos WFP Canned Salmon, Corn Soy Blend, Rice, 

Vegetable Oil 

100 2,010 $2,886.6

Pakistan WFP Vegetable Oil 300 5,410 $7,000.0

Sub-Total Asia/Near East 775 23,170 $16,432.1

Latin America/Caribbean

Guatemala FFTP Beans, Corn, Rice, Salmon, Soybean Oil 260 3,660 $6,000.0

SHARE Beans, Corn Soy Blend, Rice, Soybean 

Meal, Vegetable Oil 

72 7,970 $8,259.2

Sub-Total Latin America/Caribbean 332 11,630 $14,259.2

Worldwide Total 4,238 126,523 $168,414.8

Appendix 8: Bill Emerson Humanitarian Trust: Summary Budget, Commodity, 

Recipient and Tonnage—Fiscal Year 2009

Country Grantee Commodity Recipients

(000s) 

Metric 

Tons 

Total Cost 

(000s) 

Asia/Near East

North Korea MCI Corn 941.2 21,000 $5,638.40

Sub-Total Asia/Near East 941.2 21,000 $5,638.40

Worldwide Total 941 21,000 $5,638.4

Source: Metric tonnage and total cost values derived from FFP Preliminary Final Budget Summary Report, November 24, 2009. Awardees listed as approved in cooperative agreements. Commodity types and recipients derived 

from Food for Peace Information System report, December 4, 2009. Recipient values are reflective of commodity 

rations and are derived separately from program beneficiary totals. 

Appendix 9: Local and Regional Procurement Pilot Program—Fiscal Year 2009

Country Awardee Total Cost 

(000s) 

Malawi WFP $1,700

Mali WFP $1,050

Tanzania WFP $2,000

Sub-Total Africa $4,750

Worldwide Total $4,750

Appendix 10: Food for Peace Title II Congressional Mandates—Fiscal Year 2008

Minimum Subminimum Monetization Value-added Bagged in 

United States 

FY 2009 Target 2,500,000 1,875,000 15.0% 75.0% 50.0%

Status as of November 2009 2,824,033 535,195 58.1% 53.9% 25.9%

Minimum: Total approved metric tons programmed under Title II. Metric ton grain equivalent used to report against target.

Subminimum: Metric tons for approved nonemergency programs through PVOs and community development organizations and 

WFP. Metric ton grain equivalent used to report against target.

Monetization: Percentage of approved Title II programs that are monetization programs.

Value-added: Percentage of approved nonemergency programs that are processed, fortified, or bagged.

Bagged in U.S.: Percentage of approved nonemergency bagged commodities that are whole grain to be bagged in the United States. 

Source: FFP Preliminary Final Budget Summary Report, November 24, 2009. 

Appendix 11: Countries with U.S. International Food Assistance Programs 

under the FFP Act—Fiscal Year 2009

Title I (0 countries)

Title I-Funded Food for Progress (2 countries)

Burundi Central African Republic

Title II (54 countries)

Afghanistan Algeria Bangladesh Bolivia *

439

Appendix 11: Countries with U.S. International Food Assistance Programs 

under the FFP Act—Fiscal Year 2009—Continued

Burkina Faso Burma * Burundi Cameroon 

Central African Republic Chad Colombia Coˆte d’Ivoire 

Democratic Republic of 

the Congo 

Djibouti Ecuador * Ethiopia 

Gambia * Georgia Ghana Guatemala 

Guinea Haiti Honduras India 

Indonesia * Iraq * Kenya Lesotho *

Liberia Madagascar Malawi Mali 

Mauritania Mozambique Nepal Nicaragua *

Niger Pakistan Peru * Philippines 

Rwanda Senegal Sierra Leone Somalia 

Sri Lanka Sudan Syria * Tajikistan 

Tanzania Uganda West Bank/Gaza Yemen 

Zambia Zimbabwe

Title II-Funded International Food Relief Partnership (23 countries)

Bolivia * Cambodia Cameroon Central African Rep. 

Dominican Republic El Salvador Ethiopia Georgia 

Guatemala Haiti Honduras Kenya 

Kyrgyzstan Laos Lesotho Malawi 

Namibia Nicaragua Peru Senegal 

Tajikistan Uganda Uzbekistan

Title III (0 countries)

Title V—Farmer-to-Farmer (23 countries)

Angola Belarus Bolivia Dominican Republic 

Egypt Ethiopia Georgia Ghana 

Guyana Haiti Jamaica Kenya 

Lebanon Malawi Mali Moldova 

Mozambique Nicaragua Nigeria Peru 

Tajikistan Tanzania Uganda

CCC-Funded Food for Progress (14 countries)

Afghanistan Armenia Bangladesh Bolivia 

Dominican Republic Ethiopia Malawi Mongolia 

Mozambique Niger Pakistan Philippines 

Senegal Uganda

Food for Education (18 countries)

Angola Bangladesh Cambodia Cameroon 

Chad Ethiopia Guatemala Guinea-Bissau 

Kenya Laos Liberia Malawi 

Mozambique Niger Pakistan Rwanda 

Sierra Leone Uganda

Bill Emerson Humanitarian Trust (1 country)

North Korea

Procurement Pilot Project (3 countries)

Malawi Mali Tanzania 

* Active program(s) funded in previous fiscal year(s). 

(441)

AGRICULTURAL PROGRAM AUDIT 

(EXAMINATION OF USDA FARM LOAN PROGRAMS) 

THURSDAY, JULY 14, 2011

SUBCOMMITTEE ON DEPARTMENT OPERATIONS, 

OVERSIGHT, AND CREDIT, 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON AGRICULTURE, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 2:00 p.m., in Room 

1300, Longworth House Office Building, Hon. Jeff Fortenberry 

[Chairman of the Subcommittee] presiding. 

Members present: Representatives Fortenberry, Crawford, 

Fudge, McGovern, Baca, and Owens. 

Staff present: Tamara Hinton, Brandon Lipps, Josh Maxwell, 

John Porter, Debbie Smith, Pelham Straughn, Heather Vaughan, 

Liz Friedlander, Anne Simmons, Suzanne Watson, John Konya, 

and Jamie Mitchell. 

OPENING STATEMENT OF HON. JEFF FORTENBERRY, A 

REPRESENTATIVE IN CONGRESS FROM NEBRASKA 

The CHAIRMAN. The Subcommittee on Department Operations, 

Oversight, and Credit hearing entitled, Agricultural Program 

Audit: Examination of USDA Farm Loan Programs, will come to 

order. 

I would like to welcome our guests. Good afternoon. Thank you 

for joining us here at the fifth farm bill audit hearing. These audits 

help Members of the Agriculture Committee gather data on farm 

programs so that we can evaluate each of them for effectiveness 

and efficiency. Having accurate and comprehensive information on 

current farm policy will help us develop the next farm bill in an 

integrated fashion so we can best serve America’s farmers and 

ranchers. 

We are joined today by Bruce Nelson. Mr. Nelson is the Administrator of the Farm Service Agency. The Farm Service Agency administers several loan programs that ensure that farmers, ranchers 

and rural businesses have access to the credit they need to purchase and maintain their operations. 

It is difficult to imagine an industry that is more reliant on credit and access to capital than farming and ranching. Farm equipment can run upwards of $1⁄2 million. Combines cost more than 

most homes, especially here on Capitol Hill. And the cost of land 

can be prohibitive in and of itself. For beginning farmers with no 

credit history, obtaining a loan can be impossible. 

442

My district is home to a growing community of farmers who raise 

food specifically for local farmers markets and other emerging food 

retailers. With little historical data on farmers producing for new 

markets, commercial credit institutions are sometimes reluctant to 

offer them credit. Farm Service Agency loan programs ensure that 

new farmers have access to the credit they need to get started. 

It isn’t only the new farmers that need access, however. All farmers operate in a risky environment subject to volatile swings in 

both weather patterns as well as commodity prices. The swings and 

the effect on farm income can cause commercial credit markets to 

tighten. The Farm Service Agency loans ensure that farmers don’t 

lose access to credit during such difficult times. 

Today we will hear how the Farm Service Agency administers its 

loan programs and how these programs are received in the countryside. 

I don’t think I need to remind anyone here that we are operating 

in a challenging fiscal environment. Today’s audit will help us 

prioritize the programs that are most valuable to America’s farmers and ranchers while making the most efficient use of the taxpayer dollar. 

Mr. Nelson, thank you for joining us today, and I look forward 

to hearing your testimony and learning how we may actually improve our loan programs. 

[The prepared statement of Mr. Fortenberry follows:]

PREPARED STATEMENT OF HON. JEFF FORTENBERRY, A REPRESENTATIVE IN

CONGRESS FROM NEBRASKA

Good afternoon. Thank you all for joining us here today at the fifth farm bill audit 

hearing. 

These audits help Members of the Agriculture Committee gather data on current 

farm programs so that we can evaluate each of them for effectiveness and efficiency. 

Having accurate and comprehensive information on current farm policy will help us 

develop the next farm bill in an integrated fashion, so that we can better serve 

America’s farmers and ranchers. 

We are joined today by Bruce Nelson, the Administrator of the Farm Service 

Agency. 

The Farm Service Agency administers several loan programs that ensure farmers, 

ranchers and rural businesses have access to the credit they need to purchase and 

maintain their operations. 

It’s difficult to imagine an industry more reliant on credit and access to capital than farming and ranching. Farm equipment can run upwards of $1⁄2 million. Combines cost more than most homes. It’s cheaper to buy a house on Capitol Hill than 

it is to buy certain cotton pickers. And the cost of land can be prohibitive in and 

of itself. 

For beginning farmers with no credit history, obtaining a loan can be impossible. 

My district is home to a growing community of farmers who raise food specifically 

for local farmers’ markets and other emerging food retailers. With little historical 

data on farmers producing for new markets, commercial credit institutions are 

sometimes reluctant to offer them credit. Farm Service Agency loan programs ensure that new farmers have access to the credit they need to start farming. 

It isn’t only new farmers that need access to credit; however. All farmers operate 

in a risky environment, subject to volatile swings in both weather patterns and commodity prices. These volatile swings and the effect on farm income can cause commercial credit markets to tighten. The Farm Service Agency loans ensure that farmers don’t lose access to credit during difficult times. 

Today we will hear how the Farm Service Agency administers its loan programs 

and how these loans are received in the countryside. 

I don’t think I need to remind anyone here that we are operating in a challenging 

fiscal environment. Today’s audit will help us prioritize the programs that are most 

valuable to America’s farmers and ranchers, while making the most efficient use of 

taxpayer dollars. 

443

Mr. Nelson, thank you for joining us today. I look forward to hearing your testimony and learning how we might improve our loan programs.

The CHAIRMAN. With that, I would also like to recognize our 

Ranking Member, Ms. Fudge, from Ohio, for any opening commentary she might have. 

OPENING STATEMENT OF HON. MARCIA L. FUDGE, A 

REPRESENTATIVE IN CONGRESS FROM OHIO 

Ms. FUDGE. Thank you very much, Mr. Chairman, and thank you 

for holding this hearing to review the Farm Service Agency credit 

programs. This hearing is a good complement to the information we 

gathered during the April hearing on national credit conditions. 

The testimony offered and questions asked today will help move us 

a step closer to understanding and addressing credit concerns for 

producers in the next farm bill. 

So I am pleased to have the opportunity to both listen to and ask 

questions of Mr. Nelson again. Thank you, sir. 

As I mentioned in April, I represent Cleveland and many of its 

eastern suburbs. So there are not a lot of farms in my district. 

However, the farmers who grow food close to my district are very 

important to me. Like many urban communities, Cleveland is one 

of the largest food deserts in the nation. Fresh fruits and vegetables are not plentiful or affordable in my district. Many of my constituents depend on food banks, and my food banks depend on locally grown produce. 

Thankfully, farmers markets and urban gardening are becoming 

more prevalent. Many people are struggling to make ends meet 

during these hard economic times, so these outlets are vital considering the high cost of fruits and vegetables. 

With that said, I am concerned about the soundness and adequacy of the credit extended to farmers by the FSA and how that 

affects the affordability and availability of food in urban areas like 

Cleveland. 

Additionally, I look forward to learning how agricultural lenders 

are responding to some of the developments I see in our cities and 

suburban areas like the increased interest in locally produced foods 

and the real problem of food deserts. I want to ensure that FSA 

is meeting the needs of young and innovative producers who can 

fill these gaps. 

Finally, I want to make sure that FSA is reaching out to minority farmers with adequate and equal credit. This has been a difficult and ongoing problem at USDA, and although progress appears to have been made, it is our responsibility to ensure that 

both the structure and the implementation of FSA programs is fair. 

Sufficient and unbiased access to credit is critical for successful 

farming and ranching operations of all sizes in all states and 

locales. 

So again, welcome to our witness. I look forward to hearing your 

testimony. 

Thank you very much, Mr. Chairman. I yield back. 

The CHAIRMAN. We are also joined today by the gentleman from 

New York, Mr. Owens, who is not a Member of this Committee, but 

who in consultation with the Ranking Member, we are happy to 

have on the panel for questions later. 

444

Mr. OWENS. Thank you very much. I appreciate it, Mr. Chairman. 

The CHAIRMAN. We move now to our witness. Mr. Bruce Nelson 

is the Administrator of the Farm Service Agency, and he is accompanied by Mr. Jim Radintz, the Assistant Deputy Administrator of 

the Farm Service Agency. 

Mr. Nelson, please begin. 

STATEMENT OF BRUCE NELSON, ADMINISTRATOR, FARM 

SERVICE AGENCY, U.S. DEPARTMENT OF AGRICULTURE, 

WASHINGTON, D.C.; ACCOMPANIED BY JIM RADINTZ,

ASSISTANT DEPUTY ADMINISTRATOR, FSA, USDA 

Mr. NELSON. Mr. Chairman and Members of the Committee, 

thank you for the opportunity to discuss credit conditions in rural 

America. I am Bruce Nelson, Administrator of the Farm Service 

Agency, and today I look forward to giving you an overview and an 

update of FSA’s farm loan programs. 

Farmers and ranchers who are unable to obtain commercial credit can turn to FSA’s Farm Loan Program. While we have been 

known as the lender of last resort by some, we have really become 

the lender of first opportunity to many in rural America. FSA assists farmers through both direct and guaranteed loan programs. 

Direct loans are made and serviced by FSA employees, and direct 

loans are not intended to be a permanent source of credit; rather, 

they are intended to help borrowers transition to commercial credit. Guaranteed loans are made and funded by a commercial lender. 

FSA guarantees up to 95 percent of the loan principal and interest, 

and guaranteed lenders are then accountable for loan servicing 

under this guarantee. 

FSA farm loan programs are discretionary programs funded 

through annual appropriations, and because the vast majority of 

these loans are repaid, FSA loans carry a low cost for the taxpayer. 

Last year, for example, $155 million in appropriations supported 

over $5.2 billion in loans, and as of June 30 of this year, $124.8 

million in Fiscal Year 2011 appropriations have supported more 

than $3.9 billion in lending. 

As in recent years, demand for loans has remained quite high. 

While higher commodity prices have benefited some producers, rising input costs such as feed, fuel, and fertilizer have remained 

high. In addition, as land prices continue to rise, commercial lenders in many regions are maintaining tight credit standards in general. All of these factors contribute to continuing demand for FSA 

loans. 

Term limits on FSA loans have also affected credit availability. 

Federal statute presently limits borrowers with guaranteed operating loans to 15 years of eligibility. This has been suspended in 

the past, but the latest suspension expired on December 31 of last 

year, making about 4,500 guaranteed loan borrowers ineligible for 

further guaranteed loans as a result. 

We at FSA are always working to improve the way we administer and service loans. In Fiscal Year 2010, I am proud to report 

that the loss rate in the Direct Loan Program fell to 1.2 percent, 

its second lowest level since 1986. The direct loan delinquency rate 

stood at 5.6 percent in Fiscal Year 2010, its lowest point in 2 decVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00456 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
445

ades. And the direct loan foreclosure rate stood at just 1⁄10 of 1 percent last year. 

While working to keep trouble loan numbers low, we are also 

able to graduate more than 2,000 direct loan borrowers to a guaranteed loan last year. This is a very important progress because 

helping farmers build relationships with their community lenders 

is a key step in establishing their future success in agriculture. 

We are also processing loans more quickly than ever before. This 

improvement is largely due to modernized IT systems which help 

our field office staff to deliver our programs more efficiently. Support in Congress for these critical infrastructure improvements has 

made these great strides and service possible, and I am grateful for 

that support. 

Finally, I would like to speak on the issue of equal access to our 

loans. 

Secretary Vilsack has been extremely clear that improper treatment of those that USDA and FSA serve will not be tolerated. 

Under this Secretary’s leadership, FSA has improved processing of 

civil rights complaints, and we have requested an external analysis 

of our field office program delivery. Our team here in Washington 

and across the country shares my commitment and Secretary 

Vilsack’s commitment to equal access and opportunity for all those 

customers that FSA serves. 

Mr. Chairman and Members of the Subcommittee, again thank 

you for allowing me to share this snapshot of FSA loan activities 

with you, and I am available to answer your questions now or at 

anytime in the future. 

Thank you very much. 

[The prepared statement of Mr. Nelson follows:]

PREPARED STATEMENT OF BRUCE NELSON, ADMINISTRATOR, FARM SERVICE AGENCY, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Mr. Chairman and Members of the Subcommittee, thank you for the opportunity 

to appear before you to provide an update on the credit conditions rural America 

now faces and the current status and operations of the farm loan programs at the 

Farm Service Agency (FSA). 

Credit Conditions 

The farm economy strengthened in 2010. However, farm income, especially net 

farm income, is very unevenly distributed. Much of the improvement in farm economic conditions is driven by higher commodity prices. While higher prices have 

been beneficial for some crop producers, they have also resulted in higher feed costs 

which are squeezing profits among livestock and dairy producers. 

A combination of higher commodity and energy prices is significantly increasing 

the amount of capital required to finance agricultural production. Crop-related expenses grew 77 percent between 2002 and 2008, and are expected to rise by 9.5 percent in 2011. Livestock expenses increased by 64.4 percent between 2002 and 2008, 

and are forecast to increase by 6.8 percent in 2011. These higher production costs 

increase the demand for operating credit, increase financial leverage, and strain liquidity. 

Recent Federal Reserve Surveys indicate commercial lenders in most regions are 

continuing to maintain stringent credit standards. Concerned that a combination of 

factors may be pushing farmland values quite high, the Federal Deposit Insurance 

Corporation has issued guidance to its examiners to scrutinize farm loans more rigorously, particularly in financial institutions with a concentration of farm lending. 

The combination of high feed and other input costs, increased operating capital 

needs, and a continued high level of loan scrutiny by lenders means some farmers 

are still being denied commercial credit. 

FSA Farm Loan Programs. Family farmers who are denied commercial credit due 

to lender standards, but are otherwise creditworthy, can turn to the farm loan proVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00457 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
446

grams administered by FSA. The Agency assists farmers through direct and guaranteed farm loans. Direct loans are made and serviced by FSA; agency employees provide supervision and technical assistance to direct loan borrowers. Direct loans are 

not intended to be a permanent source of credit and borrowers agree to obtain commercial credit and refinance their FSA debts when they are able to do so. 

Guaranteed loans are made, funded and serviced by a commercial lender. FSA 

typically guarantees up to 90 percent of the loan principal and interest. FSA employees must evaluate and make a credit decision on all guaranteed loans. Guaranteed lenders must retain at least the non-guaranteed portion of the loan in their 

portfolio and are accountable for loan servicing under the FSA guarantee. 

Funding. FSA farm loan programs are discretionary programs funded through annual appropriations. In accordance with the Federal Credit Reform Act of 1990 (as 

amended), appropriations for FSA farm loans are based on the projected total cost 

of loans when they are made. Federal budget resources are able to be significantly 

leveraged through the loan programs. In Fiscal Year (FY) 2010, for example, $155.3 

million in appropriations supported $5.29 billion in direct and guaranteed FSA 

loans. 

Loan Demand. Activity in FSA’s farm loan programs indicates that a significant 

number of farmers continue to be unable to obtain commercial credit under current 

conditions. Farm loan program demand is usually a reflection of financial conditions 

in the farm economy: when the over-all farm economy is strong, farm loan activity 

declines; during times of financial stress in the farm economy, demand for FSA’s 

loans rises. This makes sense, since a basic requirement to qualify for the loan programs is to be unable to meet the criteria for commercial credit. 

In early FY 2009, loan demand surged to levels that had not been seen since the 

early 1980s. Demand for farm loan program assistance in FY 2009 and FY 2010 

reached its highest levels since FY 1985. Demand has continued at, and in some 

programs increased above, those near-record FY 2009 levels (Chart 1). Use of the 

guaranteed farm ownership program in FY 2010 reached an all-time high. FY 2010 

direct operating and farm ownership obligations nearly doubled compared to FY 

2008 levels. Application activity in FY 2011 reflects demand levels similar to the 

higher levels of FY 2009 and FY 2010. The demand for new loans in FY 2011 is 

in addition to the credit provided through the $7.97 billion in direct loans and 

$10.35 billion in guaranteed loans outstanding in the FSA portfolio at the beginning 

of the fiscal year To manage the increase demand, FSA has proposed shifting budget 

authority from the guaranteed operating loan interest assistance program, where 

demand is down, to the direct operating loan program and the guaranteed farm 

ownership loan program, where a shortfall is expected. On June 27, 2011 Secretary 

Vilsack signed letters to the Chairmen and Ranking Members of the appropriate 

Appropriations Subcommittees of the House and Senate, advising them of the proposed transfer. The planned transfer will fund the approved and pending applications for direct operating loans and provide adequate guaranteed ownership funding 

for the remainder of FY 2011. Some, but not all of the unfunded direct ownership 

loans will be funded from other transfers that are required by law in August and 

September. 

Over the past 2 years, an unusually high number of direct operating loan applications have been received from new customers. Normally, about 20 percent of direct 

operating loan applications in any given year are from farmers who do not have 

FSA loans. Since 2009, over 40 percent of direct operating loan applications have 

been from farmers who are not FSA borrowers. As of July 7, 2011, 44 percent of 

the direct operating loans made in FY 2011 were to customers who did not have 

existing FSA operating loans. 

Performance and Portfolio Conditions 

Farm loan programs continue to emphasize the importance of processing applications in a timely manner. Between FY 2001 and FY 2011, farm loan programs reduced its direct loan application processing timeframes by 11.5 days (31 percent), 

and reduced guaranteed loan processing timeframes by 2 days (ten percent). As of 

March 30, 2011, the average time from application receipt to final decision for direct 

loans was 27.8 days, and for guaranteed loans, 9.4 days. It is remarkable that even 

though loan demand has surged, there has not been a noticeable deterioration in 

application processing time. This is a testament to the dedication of FSA field staff 

and the effectiveness of the Information Technology (IT) solutions farm loan programs has deployed. 

As of June 30, 2011, the FSA direct loan portfolio consisted of $8.14 billion owed 

by 70, 937 borrowers, while the guaranteed portfolio consisted of $10.86 billion owed 

by 34,832 borrowers. The quality of our portfolio has continued to improve, with 

447

foreclosure and loss rates falling while borrower ‘‘graduation’’ to commercial loans 

has increased. 

Loss Rates. In FY 2010, losses in the direct loan program fell to their second lowest level since 1986—just 1.2 percent (Chart 2). Losses for FY 20l0 in the guaranteed loan program were 0.6 percent, (Chart 2). 

Delinquency Rates. As with losses, the direct loan delinquency rates have been at 

historic lows for the past 2 decades at 5.9 percent for FY 2010 (Chart 3). This is 

the result of steady and dramatic decreases, from a 23.8 percent delinquency rate 

in FY 1995. The decrease was facilitated by expanded authority, since 1996, to offset 

delinquent borrowers’ loan obligations with their Federal payments, salaries and income tax refunds. In the guaranteed program, the FY 2010 delinquency rate was 

1.69 percent, the second lowest since 1995 (Chart 3). 

Foreclosures. Foreclosure rates continue to be very low in the direct loan program. 

In 2010, FSA completed 64 foreclosures. This represents less than 1⁄10 of 1 percent 

of the agency’s direct loan caseload of 70,905 (as of September 30, 2010). The extremely low foreclosure rate is the result of the use of all available servicing tools 

and a structured review process to ensure that all options to assist the borrower 

have been exhausted before a foreclosure action is started. 

Inventory Properties. Inventory farm properties those that have come into government ownership through voluntary conveyance or foreclosure are also at historic 

lows, with just 86 farms totaling 10,900 acres in FY 2010 (Chart 4). In 1995, FSA 

held nearly 1,800 farms totaling 598,000 acres. Many of those inventory properties 

were sold to established and beginning farmers, providing those individuals with 

prime opportunities to expand or create new operations. 

Graduation Rates. Federal law requires FSA to ‘‘graduate’’ its borrowers to commercial credit when they have made sufficient progress to be able to qualify for 

loans from other lenders. They are assisted by the agency in refinancing their direct 

loans with FSA guaranteed loans from commercial lenders. Some 2,221 direct loan 

borrowers were able to graduate in FY 2010. 

Equitable Treatment and Participation 

Secretary Vilsack has been extremely clear that improper and inequitable treatment of individuals the United States Department of Agriculture (USDA) and FSA 

serve will not be tolerated. On April 21, 2009, the Secretary announced several actions in a comprehensive approach to ensure fair and equitable treatment of USDA 

employees and constituents. These actions included an initiation of several improvements in processing civil rights complaints, requesting an external analysis of program delivery by USDA service center agencies, and 90 day suspension of FSA farm 

foreclosures, which has provided us time to ensure that all producers have received 

their statutory protections. In FY 2010, while FSA received more than 48,000 loan 

applications, more than 4,000 loan servicing requests, and tens of thousands of applications for various farm commodity, support, and disaster programs, the Assistant Secretary for Civil Rights received only 37 civil rights complaints related to FSA 

programs. While this is the lowest number of FSA civil rights complaints received 

since records have been kept, it is our goal to further reduce this number. 

I, along with all members of the FSA management team, remain fully committed 

to providing to equal access and opportunity for all those FSA serves. I will closely 

monitor the operations of farm loan programs and all other FSA programs to assure 

that our producers, program applicants, and employees receive fair and equitable 

treatment. I want to update you on a few key activities dealing with these important issues. 

Program participation. An examination of the composition of FSA’s loan portfolio 

indicates that FSA finances socially disadvantaged farmers at a much higher rate 

than that groups’ proportion of the farm population (Chart 5). FSA has significantly 

increased the amount of loan funds provided to socially disadvantaged applicants. 

Between 1995 and 2010, the FSA direct loan caseload for socially disadvantaged 

borrowers increased from 3,260 to 14,840. Between 1997 and 2010, the FSA guaranteed loan caseload for socially disadvantaged borrowers increased from 1,730 to 

2,998. 

In the 2008 Farm Bill, Congress re-affirmed the focus for FSA programs on beginning farmers and ranchers. FSA continues to strive to reach more beginning farmers 

and ranchers and has increased the amount of loan funds provided to beginning 

farmers and ranchers. The FSA direct loan caseload for beginning farmers increased 

from 3,474 in 1995 to 27,111 borrowers in 2010. Guaranteed caseloads for beginning 

farmers and ranchers were first reported in 1997. The FSA guaranteed loan caseload for beginning farmers increased from 3,617 in 1997 to 9,477 borrowers in 2010. 

IT Modernization. Farm loan programs has also implemented modern, Web-based 

systems to manage the loan application, approval and funding process. This system 

448

provides real-time management data on application activity and allows the Agency 

to better cope with funding problems and act quickly when necessary. For example, 

when the Agency received supplemental funding in the American Revitalization and 

Recovery Act, over 2,000 farmers were waiting for desperately needed direct operating loans to pay 2009 planting and other farming expenses. When funds were 

made available to FSA, the Agency was able to process obligations overnight, and 

funds began flowing into farmers’ bank accounts only 3 days later. I am proud to 

say that FSA was one of the first agencies in the government to get recovery dollars 

flowing to those who desperately needed it. The modern, web-based IT systems in 

place for farm loan programs, such as the Direct Loan System (DLS) and the Program Funds Control System (PFCS), were a key factor in our ability to provide such 

timely service. 

This past year we have completed the final phase of moving all automated farm 

loan systems to the Web. With the completion of this project, duplicate data collection is eliminated and farm loan services are being delivered even more efficiently 

This project allows our employees to conduct USDA business from any location 

where there is broadband, WiFi or dial-up Internet access. This allows us to conduct 

business with producers at locations and times convenient to them. Additionally, 

this information is stored on a centralized server allowing employees to quickly access portfolio information and provide real time management reports. FLP staff no 

longer relies on antiquated operating environments for program delivery. 

In addition to the business plan and loan accounting systems, other IT systems 

have been developed and implemented which also enhance the efficiency of FSA employees. Agency appraisers have recently been provided state of the art agricultural 

software that allows collateral valuations to be done more expeditiously, which facilitates faster access to capital for loan applicants. Automated Web-based systems 

have been developed for program oversight, including Farm Loan Programs Risk Assessment (FLPRA) and the District Director Oversight System (DDORS), which help 

to ensure the integrity of FSA’s farm loan programs. 

Conclusion 

Through modernization efforts, maintaining focus on program objectives, and the 

hard work and dedication of FSA employees, FSA farm loan program staff has made 

great strides in improving program performance. Loan failures and losses have declined which is a strong indication that the program mission of helping farmers become successful is being accomplished. At the same time, increased assistance to 

small, beginning, and socially disadvantaged farmers, reflects remarkable success as 

well. 

However, we continue to face challenges. Government resources are increasingly 

limited and the agriculture production landscape is changing. It will require every 

bit of innovation, management expertise, and determination that we can muster to 

maintain the efficiency and efficacy of farm loan programs over the next several 

years. 

We are experiencing a unique set of conditions in the credit and banking sectors, 

and to a large extent, in agriculture. These changes pose significant barriers and 

challenges to the groups that FSA farm loan programs are intended to assist. These 

issues create major challenges for the agency as well, since the success of the program depends on those whom the programs are intended to serve. To keep pace 

with these changes, we look forward to working with you to continue efforts to modernize our delivery systems, and to refine and adjust program requirements and operations to maximize the opportunities for our nation’s small, beginning, and socially disadvantaged farmers and ranchers. 

Because of our rural delivery system and experienced loan officers, FSA’s farm 

loan programs staff is well positioned to continue providing high quality delivery of 

existing programs and new initiatives to assist small, beginning, and socially disadvantaged family farmers. We look forward to working with this Subcommittee to 

address the challenges we face in accomplishing this worthwhile mission to 

strengthen family farmers and rural America. 

Thank you for allowing me to share our Department of Agriculture perspective 

as you seek to address this important issue. I am available to answer your questions 

now or at any time in the future. 

449

CHARTS

Chart 1

Total All Loans 

Comparison of Obligations 

(in Billion Dollars)

Chart 2

Farm Loan Programs Loss Rates 

10 Year Trend


1122006.eps 1122007.eps
450

Chart 3

Farm Loan Programs Dollar Delinquency Rate 

10 Year Trend

Chart 4

Farm Loan Programs Inventory Property


1122008.eps 1122009.eps
451

Chart 5

FY 2010 Borrower Case Load by Race 

(As Compared to 2007 Ag Census Data) 

Percent of 

2007 Ag

Census

Population 

Percentage of 

FY 2010

Direct

Caseload 

Percent of 

Population 

being served 

by FSA

Direct Farm 

Loans 

Percentage of 

FY 2010 

Guaranteed 

Caseload 

Percent of 

Population 

being served 

by FSA

Guaranteed 

Farm Loans 

White 96.45 89.15 2.99 95.53 1.56

Black 1.40 3.10 7.18 0.53 0.60

Asian/Hawaiin 0.57 0.89 5.00 2.21 6.05

Amer Ind./AI Nat. 1.58 3.46 7.07 1.58 1.57

Hispanic * N/A 3.31 N/A 0.11 N/A 

Other N/A 0.10 N/A 0.04 N/A 

Hispanic Americans are not a separate category within the 2007 Census of Agriculture; therefore, no reliable comparison can be established. 

452

The CHAIRMAN. Thank you, Mr. Nelson. 

Let me begin with the questions, then I will turn to our Ranking 

Member. 

Let’s talk about this issue of the term of the guaranteed loan. 

There seems to be—let’s just unpack that further as to the policies 

that led to the 15 year term, and suspension of the term so that 

it could be extended into much longer periods of time. Yet that has 

to be held in comparison with wanting people to move actually 

away from this type of product, this type of guarantee, particularly 

if they are in a successful situation. 

So what do you anticipate emerging in this regard? 

Mr. NELSON. Mr. Chairman, I really appreciate your question because it gives an opportunity not only to talk about the issue of 

possibly extending the term limits, but it gives me an opportunity 

to emphasize that the vast majority of FSA borrowers do stay within the term limits. 

For example, for our operating loans, the average time of participation of our borrowers is between 51⁄2 and 6 years. And for the 

farm ownership loans, it is about 12 years. So again, I think it is 

important to have on the record the fact that, again, the vast majority of the borrowers stay within the term limits. 

But I am a farmer from out in Montana. My family has been 

there for about 100 years on the place that my grandparents homesteaded. And like a lot of families, most of the farmers and ranchers around the country are in business for 40 or 50 years, and it 

is likely that in that 40 to 50 year period that you are going to 

have 10 or 15 or 20 bad years because of, for example, low commodity prices or disaster situations that are beyond the control of 

the individual producer. 

Now, we have recognized, as you mentioned in your opening 

statement, that there are inherent risks in agriculture that are beyond the control of individual producers, and it is why the ag safety 

net was created in the first place. And we have also realized that 

if you have enough hard years that affect enough producers, you 

can actually affect the food security of the nation. 

So what I would ask you to consider on term limits is some flexibility so that we at FSA can look at the individual borrower on a 

case-by-case basis and determine whether or not the fact that that 

producer may need to have a term extension is because of factors 

beyond their control, again because of low commodity prices or disaster situations, or whether it was something that was within the 

producer’s control. And in the case where it was something that 

happened to them because of situations beyond their control or factors beyond their control, we ought to have the flexibility to look 

at extending the term, but where it was something that was clearly 

within the producer’s control, then we probably shouldn’t. 

The CHAIRMAN. How is this balanced with the dual responsibility 

the agency has to graduate farmers to the commercial loan market? 

Mr. NELSON. Well, I believe that always ought to be our objective 

and, as I mentioned in my statement, we were proud to graduate 

over 2,000 borrowers last year, and that needs to become the intention and continue to be the intention. 

The CHAIRMAN. What percent is that of the overall program? 

453

Mr. NELSON. We have about 70,000, I believe, borrowers in the 

Direct Loan Program. So that was 2,000 of 70,000, and we will 

make sure that we clarify those numbers if I don’t have it right, 

Mr. Chairman. 

The CHAIRMAN. Okay. With that, I will turn to our Ranking 

Member for any questions she may have. 

Ms. FUDGE. Thank you very much, Mr. Chairman. I have just a 

few quick questions. 

Mr. Nelson, in the district I represent, instead of having the traditional farmers obviously, we have young innovators and creative 

entrepreneurs who are growing gardens on rooftops or on abandoned lots and turning them into thriving farms. And there are 

many who garden indoors because we have very harsh winters in 

Ohio, which I am sure you know. And we encourage this kind of 

gardening. 

So while they aren’t your garden variety farmers, they do consider themselves farmers and do need financial assistance. Under 

your rules, are these producers qualified for FSA loans? 

Mr. NELSON. That is another good question because again, there 

is an impression out there that because our loan program is agricultural in nature that that means it is strictly rural in nature. 

That is not the case because our agricultural loans are available for 

producers whether they are in the middle of a city, or in the suburbs, or out in the rural countryside. 

And so this is a good opportunity to help get the word out about 

that because we do have examples in the Farm Service Agency of 

having made loans around the country for just the type of roof-type 

gardens that you are talking about, for small apiaries that are in 

or near cities, and also for community-sponsored agriculture, CSA, 

so that we can help local producers create the food networks to 

supply food to food deserts like your hometown of Cleveland. 

Now, the Department of Agriculture has started on a ‘‘Know 

Your Farmer—Know Your Food’’ Program and I like that, as a 

dryland wheat farmer from Montana, because that helps get the 

word out to the American people about the importance of agriculture. It is a program designed to make them understand and appreciate farmers and ranchers. But also in the situation you are 

talking about, it is a program designed to help link up those local 

producers with local markets. 

Now, one thing I will say, though, is we are pretty new to urban 

areas, and so we could certainly use some help from you folks in 

terms of how better to serve the agricultural producers in our cities. 

Ms. FUDGE. And I appreciate that because you are saying to me 

that you are trying to find ways to work with the very people that 

we are talking about. And I would like to at some point talk to you 

further about that because I think it is very important. And I am 

glad to see that you are taking the initiative to find ways to work 

with that particular population of farmers. So I thank you. 

My last question is can you give us just a brief update on how 

the reduced funding in the Continuing Resolution will affect credit 

programs. And specifically, how has FSA been able to weather the 

cuts to the Agriculture Credit Insurance Fund of some $430 some 

454

odd million and to the Farm Assistance Fund of another $44 million. 

Mr. NELSON. Under the 2011 Appropriations Act, and I am going 

to turn this over to Jim in a minute, we were given the authority 

to transfer funds. And so pursuant to that authority, back on June 

27 Secretary Vilsack did notify the appropriators of our intention 

to transfer funds from the Guaranteed Interest Assist Program, 

where there wasn’t as much demand, into the Direct Operating 

Loan Program. And we anticipate that if that transfer goes 

through, which we haven’t heard any issues that the appropriators 

have had with it, that we will be able to cover our direct operating 

loan demand. 

We also do have a backlog on the farm ownership side, and there 

are target designations that will come off some of our loans in August and September that will free up those funds to hopefully cover 

our farm ownership approved loans out there. 

Jim, do you have anything to add to that. 

Mr. RADINTZ. I just would clarify that while we will be able to 

use some of those transfers late in the year to address some of the 

backlog, there will be some folks with approved direct ownership 

loans that won’t be funded until fiscal 2012 because even with the 

transfers we just have more demand than we will be able to have 

funding for. 

Ms. FUDGE. Thank you so much. Mr. Chairman, I yield back. 

The CHAIRMAN. I thank the Ranking Member. I should inform 

the Members of the Committee that votes have been called. I think 

if we can all aggressively manage time we might be able to get 

through, each Member will have a question if it is kept at about 

2 minutes. So with that I will turn to Mr. Crawford. 

Mr. CRAWFORD. Okay. Real quick. Mr. Nelson, I understand that 

by law emergency loans offered by the SBA are not available to 

farmers although they once were back in the 1980s and that 

change was made in 1986 because some viewed that as a degree 

of overlap. At this time, the loan structure of SBA loans is actually 

a lot more favorable than FSA, giving SBA borrowers lower interest rates, longer periods of maturity and higher loan amounts. I am 

wondering if there is any way we can model the FSA emergency 

loans after the SBA loans to get those more favorable rates and 

terms. 

Mr. NELSON. Congressman Crawford, I am going to turn that 

over to Mr. Radintz because my experience in history with Farm 

Service Agency lending program is that we work together with the 

Small Business Administration. And so in emergency situations, if 

there is a Secretarial designation, FSA emergency loans are triggered for farmers and ranchers along with SBA assistance to the 

Main Street businesses that are also adversely affected by the natural disaster. 

If you are suggesting modeling the Farm Service Agency Loan 

Program more after SBA, we would be happy to look at that and 

advise you, our technical experts, within FSA during your consideration of the farm bill debate and see where we may be able to improve things. 

455

By the way, Congressman, I did appreciate the opportunity to 

come up and visit with you about the Farm Storage Facility Loan 

Program that day. Thank you again for the invitation. 

Mr. CRAWFORD. You bet. 

Mr. RADINTZ. Regarding the Emergency Loan Program and comparing it with Small Business Administration disaster recovery 

loans, there are a couple of factors. We could lower the interest 

rates. That is a decision that the Secretary would need to make. 

But of course any change in the interest rates of the loan programs 

would have some budgetary impact for us. 

The other conditions, rates and terms and so forth, would require 

some statutory modification, and that is something that we could 

certainly work with the Committee on. 

Mr. CRAWFORD. Gentlemen, thank you. I yield back. 

The CHAIRMAN. Thank you. 

Mr. McGovern is recognized. 

Mr. MCGOVERN. Thank you, and I will be brief. 

I am new to the Agriculture Committee, but I have a district 

similar to Ms. Fudge. I represent a primarily urban-suburban district. And I am particularly interested in, as I mentioned to your 

predecessor, who was here not too long ago, that I am particularly 

interested in reaching out to smaller and medium-sized farms and 

smaller producers as well as speciality crop producers. 

And I assume that you think that in most regions of the country 

there continues to be a need for the FSA to provide credit. 

And then my second question is how does participation in your 

programs vary across types of producers as well as in various areas 

of the country? Are there certain parts of the country where FSA 

plays a bigger role than commercial credit? 

Where I am from, what I hear constantly from these farmers, 

who I didn’t know existed until I got on the Agriculture Committee, 

is that it is a challenge for them to access credit because of their 

proximity to an urban area. 

And I would just appreciate your comments on those. 

Mr. NELSON. Well, Congressman, I appreciate that, again in response to Congressman Fudge’s question earlier, we are challenged 

in the Farm Service Agency with going beyond our traditional customers out there. And we look forward to working with you to better reach folks in urban areas and around urban areas because, 

again, this is an agricultural program. It is not a rural program. 

It is supposed to serve agricultural producers everywhere in the 

country. And with respect to smaller producers, in fact most of our 

borrowers are on the small end of the spectrum. If you look at the 

gross sales and the equity positions and the net income positions 

of our borrowers, we loan primarily to folks on the small end of the 

producer spectrum. And that makes sense because those are with 

the emphasis on beginning farmers, for example, most people aren’t 

going to start out big. 

And so again we would look forward to working with you to try 

to develop ways to reach folks out there. And I look forward to 

those conversations and, during your consideration of the farm bill, 

what we can do in that to help. 

456

Mr. MCGOVERN. I appreciate it. Just my final point, are there 

certain parts of the country where FSA plays a bigger role than 

commercial credit? 

Mr. NELSON. If your question is do we play a bigger role than 

commercial credit, I will have to get back to you on that. I can answer the question about where we historically have our most loans, 

and that is we have our most loans in the most intensely agricultural parts of the country, which is the Midwest primarily over to 

the Missouri River. And again, our challenge is to reach out beyond 

those traditional constituencies. 

So I would turn it over to Mr. Radinitz to see if he has anything 

to add. And we would look forward to providing you with more detailed information. 

[The information referred to is located on p. 459.] 

Mr. MCGOVERN. I appreciate your offer to work with us and I 

look forward to working with you. It sounds like the issue is that 

we just need to get to know each other better rather than there is 

any kind of barrier from getting help. 

Mr. NELSON. No barriers. Looking forward to it. 

Mr. MCGOVERN. Thank you. 

The CHAIRMAN. Mr. Owens, you are recognized. 

Mr. OWENS. Mr. Nelson, first I want to thank you obviously for 

being here today, but you also were a great deal of help to me in 

a conversation we had about 2 weeks ago regarding the potential 

for SBA loans for people in my district affected by dramatic flooding. 

I want to ask, in your testimony there was appended several 

graphs and one is entitled, Farm Loan Programs Loss Rates 10 

Year Trend. Very interesting to me because we are looking at direct 

loan loss rates and guaranteed loan loss rates. When they blend together they are about .9 percent. 

Would it be fair to say that you compare quite favorably with 

commercial bank loan loss rates? 

Mr. NELSON. I am going to have to defer that question to Mr. 

Radintz because I don’t know of the commercial loss rates, Congressman. 

Mr. OWENS. Thank you. 

Mr. RADINTZ. In our Guaranteed Loan Program, the loss rates 

are somewhat marginally higher than commercial rates but again 

these are loans made by commercial lenders with an FSA guarantee, so the rates are somewhat close. The loss rates in the Direct 

Loan Program are somewhat higher. I would say probably maybe 

double. But again we are talking about the difference between 

maybe 3⁄4 of a percent for commercial lender versus 11⁄2 to 2 for a 

direct loan, and remember these are borrowers that direct lenders 

won’t even take the risk. So they are very high-risk borrowers, and 

we are still able to keep our loss rates fairly comparable, at least 

tracking with commercial lenders. 

Mr. OWENS. Thank you very much. I yield back. 

The CHAIRMAN. Mr. Baca of California. 

Mr. BACA. Thank you very much, Mr. Chairman. 

Let me ask this question. I am pleased that Secretary Vilsack 

and President Obama are committed to turning the page when it 

comes to civil rights at USDA. Unfortunately, the loan discriminaVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00468 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
457

tions of the past are still often associated with USDA today. Can 

you please speak to the Subcommittee a little bit more regarding 

the Farm Service Agency’s effort to eliminate discrimination once 

and for all in all U.S. loan programs? 

And I am going to ask a second question. Given the discrimination suits of various groups such as the African Americans, 

Latinos, Native Americans, and female farmers, is there more that 

Congress can do when we look at the next farm bill to ensure equitable access to credit for everyone in rural America? 

Mr. NELSON. Well, I appreciate that comment and question, Congressman, because it gives me the opportunity to reemphasize not 

only——

The CHAIRMAN. Mr. Nelson, if you could suspend for one moment. There are 2 minutes left in the vote, just to inform you all. 

I will continue the hearing for another moment or two, and then 

we may proceed afterward but if you need to leave it is okay. 

Mr. NELSON.—to the President and Secretary’s commitment to 

making sure that we are serving everyone, and I believe that the 

Farm Loan Program numbers of Farm Service Agency since 1995 

to 2010 bear out with, for example, we are—in the Direct Loan Program since 1995, we have increased the number of direct loan SDA 

borrowers from 3,260 to almost 15,000. That is a 41⁄2-fold increase. 

In the Guaranteed Program, we have more than doubled them. 

And I want to emphasize that overall those are good loans because those folks are keeping up their end of the bargain and in 

that period of time——

Mr. BACA. I don’t think I am questioning the good loans. I just 

wanted to make sure there is no discrimination, that there is an 

equitable distribution. 

Mr. NELSON. I appreciate that, Congressman. And that is absolutely what we are committed to. Absolutely. 

Mr. BACA. Thank you. 

The CHAIRMAN. Mr. Baca, do you think you need to proceed with 

further questioning after the vote? 

Mr. BACA. No, Mr. Chairman. Thank you. 

The CHAIRMAN. Well, gentlemen, you have come at an awkward 

time, but it is always awkward up here. I apologize. 

Under the rules of the Committee the record of today’s hearing 

will remain open for 10 calendar days to receive any additional 

supplementary material and written responses from you from any 

questions posed by the Members. 

The hearing of the Subcommittee on Department Operations, 

Oversight, and Credit is adjourned. 

[Whereupon, at 2:35 p.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

458

459

SUPPLEMENTARY MATERIAL SUBMITTED BY BRUCE NELSON, ADMINISTRATOR, FARM

SERVICE AGENCY, U.S. DEPARTMENT OF AGRICULTURE

During the July 14, 2011 hearing entitled, Agricultural Program Audit: Examination of USDA Farm Loan Programs, a request for information was made to Bruce 

Nelson. The following is the information submission for the record. 

Insert 

Mr. MCGOVERN. . . . Just my final point, are there certain parts of the country where FSA plays a bigger role than commercial credit? 

Mr. NELSON. If your question is do we play a bigger role than commercial 

credit, I will have to get back to you on that. I can answer the question about 

where we historically have our most loans, and that is we have our most loans 

in the most intensely agricultural parts of the country, which is the Midwest 

primarily over to the Missouri River. And again, our challenge is to reach out 

beyond those traditional constituencies. 

So I would turn it over to Mr. Radinitz to see if he has anything to add. And 

we would look forward to providing you with more detailed information.

While overall the total share of debt provided through direct and guaranteed programs is less than 10%, there are localized regions where farmers are more dependent on FSA loan programs. 

Specifically, regions where FSA loan programs are more important include the 

Mississippi Delta, Southeastern Coastal Plains, New England, Southern & Northern 

High Plains, and the Inter-mountain west (see Attachment 1). 

In many of the counties within these regions, FSA appears to serve over half of 

the indebted farmers through either the direct or guaranteed credit programs. 

Since FSA tends not to be the primary credit source in most situations (i.e., Provides <50% of an individual farmer’s credit), the share of farmers served provides 

a better picture of FSA’s market presence than the market share of total debt. 

The share of farmers served can be examined by comparing the number of FSA 

borrowers with the number of indebted farmers. The Census of Agriculture provides 

data on the number of farmers with interest expense by county. In developing this 

measure, farmers with less than $500 of interest expense per year were excluded, 

as it was judged that these observations likely represented interest expense on accounts payable and not loans. The number of FSA borrowers was determined based 

on year-end 2010 to reflect the most recent data. 

Thus, market penetration by county was estimated as:

No. of farmers with either a direct or Guaranteed FSA loan in 2010

No. of farmers with over $500 of interest expense in 2007 (Census of Ag) 

Since the numerator and denominator represent two different time periods, this 

is a proxy rather than a measure for market penetration. The Census of Agriculture 

is collected only once every 5 years and is the only county-level data available on 

farm indebtedness. Still, debt levels do not change dramatically from year-to-year, 

and counties with high numbers of indebted farmers in 2007 are likely to have high 

numbers of indebted farmers in 2010. Note that if a farmer held both a direct and 

guaranteed loan, they were counted only once. 

There were 222 counties with over 100 borrowers through either the direct or 

guaranteed loan programs. Most were in Wisconsin (19), Oklahoma (18), Minnesota 

(17), Louisiana (15), Nebraska (14), Iowa (13), Texas (12), and North Dakota (12) 

(see Attachment 2). 

There were 147 counties where the number of Farm Loan Program (FLP) borrowers in 2010 was over half the number of indebted farmers in 2007. Many of the 

borrowers were either in Texas or the Mississippi Delta, with Louisiana holding the 

highest (21) number of borrowers, followed by Arkansas (14), Texas (14) and Tennessee (5) (see Attachment 3). 

There are also areas with few farmers, but FSA tends to be a relatively important 

source of credit. This includes West Virginia, northern Michigan, northern Wisconsin, Long Island, and areas of New England. 

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ATTACHMENTS

Attachment 1

Total FSA Loan Program Borrowers (2010)/Total No. of Farms With >$500 

of Int. Exp (2007)

Attachment 2

Counties With 100 or More FSA Farm Loan Borrowers 

County, State 

FSA

Financed 

Farmers *

County, State 

FSA

Financed 

Farmers *

Lafayette, Wisconsin 504 Merced, California 126

Grant, Wisconsin 406 Morehouse, Louisiana 126

LeFlore, Oklahoma 316 Washita, Oklahoma 126

Yakima, Washington 285 Tripp, South Dakota 126

Seneca, Ohio 276 Dodge, Wisconsin 126

Marshall, Minnesota 263 Nemaha, Kansas 125

Green, Wisconsin 261 Avoyelles, Louisiana 125

Hale, Texas 260 Pointe Coupee, Louisiana 125

Polk, Minnesota 252 Cedar, Nebraska 125

Franklin, Louisiana 250 Cuming, Nebraska 125

Conway, Arkansas 247 Ward, North Dakota 125

Washington, Arkansas 234 Jackson, Oklahoma 125

Wood, Ohio 234 Dunklin, Missouri 124

Delaware, Iowa 229 Bottineau, North Dakota 124

Hancock, Ohio 224 Crawford, Ohio 124

Richland, Louisiana 221 Haywood, Tennessee 124

West Carroll, Louisiana 219 Shawano, Wisconsin 124

Otter Tail, Minnesota 217 Clay, Minnesota 123

Vernon, Wisconsin 217 Brookings, South Dakota 123

Sanilac, Michigan 214 Vermilion, Illinois 122

Clinton, Iowa 212 Renville, Minnesota 122

Vermilion, Louisiana 212 Custer, Oklahoma 122

McCurtain, Oklahoma 212 Day, South Dakota 121

Dubuque, Iowa 209 Desha, Arkansas 120

Manitowoc, Wisconsin 209 Pondera, Montana 120

Lancaster, Pennsylvania 208 Crockett, Tennessee 120


1122033.eps
461

Counties With 100 or More FSA Farm Loan Borrowers—Continued

County, State 

FSA

Financed 

Farmers *

County, State 

FSA

Financed 

Farmers *

La Salle, Illinois 203 Wharton, Texas 120

Clark, Wisconsin 202 Graves, Kentucky 119

Lincoln, Nebraska 201 Sibley, Minnesota 119

Clayton, Iowa 195 Holt, Nebraska 119

Buchanan, Iowa 195 Chautauqua, New York 119

Huron, Michigan 193 Okanogan, Washington 119

Malheur, Oregon 189 Faribault, Minnesota 117

Aroostook, Maine 183 Beadle, South Dakota 117

Gage, Nebraska 182 Swisher, Texas 117

Putnam, Ohio 179 Emery, Utah 117

Caddo, Oklahoma 178 Colusa, California 116

Monroe, Wisconsin 177 Morrow, Ohio 116

Sutter, California 175 Cross, Arkansas 115

St. Landry, Louisiana 175 Labette, Kansas 115

Walsh, North Dakota 174 Duplin, North Carolina 115

Lonoke, Arkansas 173 Craig, Oklahoma 115

Tuscola, Michigan 173 Hockley, Texas 115

Stearns, Minnesota 171 Terry, Texas 115

Addison, Vermont 168 Acadia, Louisiana 114

Kittson, Minnesota 165 Shiawassee, Michigan 114

Traill, North Dakota 163 Thayer, Nebraska 114

Jackson, Iowa 162 Washington, New York 114

Phillips, Arkansas 161 Sanpete, Utah 114

Pembina, North Dakota 161 Grady, Oklahoma 113

Grant, North Dakota 159 Rockingham, Virginia 113

Carroll, Iowa 158 Marion, Oregon 112

Charles Mix, South Dakota 158 Matagorda, Texas 112

Sandusky, Ohio 157 Weld, Colorado 111

Marathon, Wisconsin 155 Warren, Illinois 111

Fond Du Lac, Wisconsin 154 Fayette, Iowa 111

Hancock, Illinois 153 Catahoula, Louisiana 111

Hillsdale, Michigan 151 Sheridan, Nebraska 111

Grant, Washington 151 Shelby, Illinois 110

Bingham, Idaho 150 Pulaski, Kentucky 110

Murray, Minnesota 150 Richland, Illinois 109

Cavalier, North Dakota 150 Stephenson, Illinois 109

Parmer, Texas 150 Kiowa, Oklahoma 109

Lubbock, Texas 150 Meade, South Dakota 109

Jefferson Davis, Louisiana 149 Polk, Wisconsin 109

Roseau, Minnesota 149 Sumner, Kansas 108

Lyon, Iowa 148 Nowata, Oklahoma 108

Hopkins, Texas 148 Lamb, Texas 108

Franklin, Vermont 148 Mississippi, Arkansas 107

Knox, Nebraska 147 Grant, Indiana 107

Dodge, Nebraska 147 Richland, Montana 107

Minidoka, Idaho 146 Cass, North Dakota 107

Harmon, Oklahoma 146 Umatilla, Oregon 107

Iowa, Wisconsin 146 Union, South Dakota 107

Hutchinson, South Dakota 145 Orleans, Vermont 107

Sauk, Wisconsin 145 Trempealeau, Wisconsin 107

Sioux, Iowa 144 Lee, Arkansas 106

Garfield, Oklahoma 143 Meeker, Minnesota 106

Dawson, Nebraska 142 Stoddard, Missouri 106

Oconto, Wisconsin 142 Kay, Oklahoma 106

Buena Vista, Iowa 141 Dane, Wisconsin 106

Reno, Kansas 139 Colquitt, Georgia 105

Haskell, Oklahoma 139 Carroll, Arkansas 104

East Carroll, Louisiana 138 Poinsett, Arkansas 104

Madison, Louisiana 138 Knox, Illinois 103

Chicot, Arkansas 137 Adams, Illinois 103

Stanislaus, California 137 Harrison, Kentucky 103

Okmulgee, Oklahoma 136 Barry, Missouri 103

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Counties With 100 or More FSA Farm Loan Borrowers—Continued

County, State 

FSA

Financed 

Farmers *

County, State 

FSA

Financed 

Farmers *

Saluda, South Carolina 136 Otoe, Nebraska 103

Mitchell, Georgia 134 Stutsman, North Dakota 103

Greene, Illinois 134 Hawaii, Hawaii 102

Concordia, Louisiana 134 Winneshiek, Iowa 102

Spink, South Dakota 134 Ottawa, Ohio 102

Washington, Kansas 133 Beckham, Oklahoma 102

Grand Forks, North Dakota 133 Bryan, Oklahoma 102

Douglas, South Dakota 133 Nacogdoches, Texas 102

Franklin, Washington 132 Falls, Texas 102

Tensas, Louisiana 131 Twin Falls, Idaho 101

Gratiot, Michigan 131 Lyon, Minnesota 101

San Joaquin, California 130 Nobles, Minnesota 101

Hardin, Ohio 130 Scotts Bluff, Nebraska 101

Barron, Wisconsin 130 Butler, Nebraska 101

Iowa, Iowa 129 Herkimer, New York 101

Lenawee, Michigan 129 Emmons, North Dakota 101

Lac Qui Parle, Minnesota 129 Fulton, Illinois 100

St. Lawrence, New York 129 Christian, Kentucky 100

Cassia, Idaho 128 Plymouth, Massachusetts 100

Breckinridge, Kentucky 128 Norman, Minnesota 100

Redwood, Minnesota 128 Custer, Nebraska 100

Fresno, California 127 Choctaw, Oklahoma 100

Morton, North Dakota 127 Outagamie, Wisconsin 100

* Total Number of Farmers With Either a Direct or Guaranteed FSA Loan in FY 

2010. 

Attachment 3

Counties Highly Dependent on FSA Lending 

(50%+ of all farmers using FSA financing) 

County, State 

FSA

Financed 

Farmers *

Percent of 

all Farmers 

Financed 

by FSA **

County, State 

FSA

Financed 

Farmers *

Percent of 

all Farmers 

Financed 

by FSA **

Graham, Arizona 29 54.72% Daniels, Montana 76 50.00%

Phillips, Arkansas 161 100.00% Nance, Nebraska 90 53.89%

Chicot, Arkansas 137 100.00% Dawes, Nebraska 97 53.01%

Lee, Arkansas 106 100.00% Frontier, Nebraska 76 51.70%

Desha, Arkansas 120 94.49% Hayes, Nebraska 63 51.22%

Conway, Arkansas 247 88.21% Hidalgo, New Mexico 32 50.00%

St. Francis, Arkansas 83 72.81% Martin, North Carolina 71 78.02%

Lonoke, Arkansas 173 72.69% Bertie, North Carolina 66 67.35%

Cross, Arkansas 115 72.33% Tyrrell, North Carolina 17 65.38%

Monroe, Arkansas 64 70.33% Northampton, North Carolina 74 60.66%

Prairie, Arkansas 99 69.72% Sioux, North Dakota 80 78.43%

Ashley, Arkansas 77 62.60% Traill, North Dakota 163 66.80%

Woodruff, Arkansas 63 58.88% Pembina, North Dakota 161 64.14%

Mississippi, Arkansas 107 54.87% Grant, North Dakota 159 63.60%

Poinsett, Arkansas 104 54.45% Steele, North Dakota 86 56.95%

Martin, Florida 84 88.42% Seneca, Ohio 276 62.73%

Baker, Georgia 54 96.43% Hancock, Ohio 224 59.89%

Mitchell, Georgia 134 79.76% Wood, Ohio 234 57.07%

Pulaski, Georgia 33 70.21% Sandusky, Ohio 157 55.67%

Terrell, Georgia 44 65.67% Ottawa, Ohio 102 54.55%

Lee, Georgia 42 63.64% Harmon, Oklahoma 146 100.00%

Calhoun, Georgia 36 54.55% Greer, Oklahoma 87 50.58%

Colquitt, Georgia 105 53.57% Haskell, Oklahoma 139 50.18%

Marion, Georgia 25 52.08% Saluda, South Carolina 136 100.00%

Miller, Georgia 48 50.00% Barnwell, South Carolina 67 94.37%

Butte, Idaho 64 68.09% Marlboro, South Carolina 59 92.19%

Minidoka, Idaho 146 59.35% Dillon, South Carolina 59 88.06%

Cassia, Idaho 128 51.00% Clarendon, South Carolina 93 75.00%

Greene, Illinois 134 63.21% Williamsburg, South Carolina 82 72.57%

Saline, Illinois 59 51.75% Lee, South Carolina 58 63.74%

Grant, Indiana 107 53.77% Darlington, South Carolina 58 50.43%

Logan, Kansas 60 54.55% Douglas, South Dakota 133 70.00%

Pratt, Kansas 86 51.19% Bennett, South Dakota 83 60.14%

Fulton, Kentucky 41 65.08% Jackson, South Dakota 86 59.31%

Hickman, Kentucky 65 56.52% Shannon, South Dakota 53 58.89%

463

Counties Highly Dependent on FSA Lending—Continued

(50%+ of all farmers using FSA financing) 

County, State 

FSA

Financed 

Farmers *

Percent of 

all

Farmers 

Financed 

by FSA **

County, State 

FSA

Financed 

Farmers *

Percent of 

all

Farmers 

Financed 

by FSA **

Richland, Louisiana 221 100.00% Custer, South Dakota 53 56.99%

Vermilion, Louisiana 212 100.00% Potter, South Dakota 57 55.34%

West Carroll, Louisiana 219 100.00% Jones, South Dakota 39 54.17%

Concordia, Louisiana 134 100.00% Haakon, South Dakota 76 51.35%

Madison, Louisiana 138 100.00% Crockett, Tennessee 120 100.00%

Pointe Coupee, Louisiana 125 100.00% Haywood, Tennessee 124 90.51%

East Carroll, Louisiana 138 100.00% Tipton, Tennessee 97 70.80%

Tensas, Louisiana 131 100.00% Dyer, Tennessee 80 50.63%

St. Martin, Louisiana 47 95.92% Lake, Tennessee 13 50.00%

St. Landry, Louisiana 175 88.83% Hale, Texas 260 95.94%

Morehouse, Louisiana 126 88.73% Baylor, Texas 58 75.32%

Acadia, Louisiana 114 86.36% Parmer, Texas 150 73.17%

Jefferson Davis, Louisiana 149 86.13% Swisher, Texas 117 73.13%

Iberia, Louisiana 55 82.09% Wilbarger, Texas 95 67.38%

Franklin, Louisiana 250 78.86% Terry, Texas 115 64.25%

Caldwell, Louisiana 44 74.58% Reeves, Texas 29 61.70%

Catahoula, Louisiana 111 70.25% Refugio, Texas 29 61.70%

Avoyelles, Louisiana 125 63.78% Briscoe, Texas 46 54.12%

Evangeline, Louisiana 70 61.95% Hockley, Texas 115 53.49%

lberville, Louisiana 26 57.78% Crosby, Texas 68 51.91%

St. Mary, Louisiana 18 56.25% Matagorda, Texas 112 50.91%

Aroostook, Maine 183 72.33% Dawson, Texas 86 50.00%

Hancock, Maine 18 64.29% Cottle, Texas 36 50.00%

Presque Isle, Michigan 33 52.38% Garfield, Utah 37 94.87%

Kittson, Minnesota 165 70.51% Piute, Utah 52 83.87%

Mahnomen, Minnesota 76 57.14% Emery, Utah 117 82.39%

Humphreys, Mississippi 77 90.59% San Juan, Utah 53 79.10%

Jasper, Mississippi 95 84.07% Wayne, Utah 46 64.79%

Calhoun, Mississippi 90 66.67% Beaver, Utah 50 59.52%

Sunflower, Mississippi 86 61.43% Carbon, Utah 27 50.94%

Quitman, Mississippi 49 59.76% Addison, Vermont 168 63.88%

Tallahatchie, Mississippi 76 58.02% Franklin, Vermont 148 58.73%

Webster, Mississippi 30 56.60% Nicholas, West Virginia 29 63.04%

Washington, Mississippi 76 56.30% Monroe, West Virginia 94 57.67%

Newton, Mississippi 76 51.01% Roane, West Virginia 64 50.79%

Dunklin, Missouri 124 59.05% Lafayette, Wisconsin 504 77.90%

Pemiscot, Missouri 67 53.17% Ashland, Wisconsin 35 66.04% 

Richland, Montana 107 54.04% Bayfield, Wisconsin 60 57.69%

Pondera, Montana 120 51.50%

* Total Number of Farmers Indebted for Either a Direct or Guaranteed FSA Loan in 2010. 

** As share of farmers in the county with >$500 int. in 2007 Census. 

States with FSA Dependent Counties 

State Counties 

Louisiana 21

Texas 14

Arkansas 14

Mississippi 9

Georgia 9

South Dakota 8

South Carolina 8

Utah 7

Tennessee 5

Ohio 5

North Dakota 5

North Carolina 4

Nebraska 4

Wisconsin 3

West Virginia 3

Oklahoma 3

Montana 3

Idaho 3

Vermont 2

Missouri 2

Minnesota 2

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States with FSA Dependent 

Counties—Continued

State Counties 

Maine 2

Kentucky 2

Kansas 2

Illinois 2

New Mexico 1

Michigan 1

Indiana 1

Florida 1

For additional explanation of rationale behind development of these tables, please 

refer to document fsaconcentration.docx. 

SUBMITTED QUESTIONS

Response from Bruce Nelson, Administrator, Farm Service Agency, U.S. Department of Agriculture 

Questions Submitted By Hon. Collin C. Peterson, a Representative in Congress from 

Minnesota 

Question 1. On the term limits for guaranteed borrowers issue, can you provide 

us a breakdown of how many producers have been using the program for more than 

15 years and how many borrowers for each year beyond the 15th? 

Answer. FSA currently has 4,558 borrowers who have received loans through the 

guaranteed operating loan program or a combination of the direct and guaranteed 

operating loan programs for more than 15 years. An additional 1,503 borrowers will 

only be able to utilize the program for one more year and another 2,189 borrowers 

will only be able to utilize the program for two more years.

Question 2. The 2008 Farm Bill reestablished a separate conservation loan program at FSA. Can you tell us how much interest there was in the program before 

the funding for FY11 got cut in the continuing resolutions? Did you get any money 

out the door? 

Answer. Since the implementation of the Conservation Loan program in August 

2010, FSA has approved and funded 231 direct conservation loans totaling 

$16,351,101 and three guaranteed loan requests totaling $703,500. 

Question Submitted By Hon. William L. Owens, a Representative in Congress from 

New York 

Question. As you may know, two types of business structures that are increasingly 

common among family farms do not qualify for loans through FSA. Today many 

family farms have both a farm ownership LLC and farm operating LLC to facilitate 

ownership of multiple family members. This may be done for liability protection and 

to facilitate the transfer of a farm business between generations. However, because 

the operator of the farm does not own the farm, the farm is not eligible for a loan. 

Farms operating with an embedded entity structure to facilitate estate planning are 

also currently ineligible for an FSA guarantee. In your view, is access to credit 

through FSA for family farms with these business structures an issue that needs 

to be addressed? 

Answer. Current statute prevents operators with multiple or embedded entities 

from receiving a loan guarantee through FSA. Removing this statutory restriction 

would allow FSA to assist family farms using more complex organizational structures, such as multiple or embedded entities. USDA is available to provide technical 

assistance to Members on this or any other statutory matter. 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE

1. Program Name 

Farm Ownership Loan (FO). 

Prepared by the U.S. Department of Agriculture’s (USDA) Farm Service Agency 

(FSA). 

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2. Subprograms/Department Initiatives 

Through its nationwide network of service centers, often in geographically isolated 

areas with few private or commercial lenders, FSA provides agricultural financing 

to small and family size farmers and ranchers for farm ownership purposes, including costs associated with acquiring or enlarging a farm or ranch or to make a down 

payment of a farm or ranch; make capital improvements to a farm owned by the 

applicant, for construction, purchase or improvement of farm dwellings, service 

buildings or other facilities and improvements essential to the farming operation; 

promote soil and water conservation and protection; pay loan closing costs; and to 

refinance a bridge loan under specific and limited conditions. 

FO loans are sub-categorized by targeted funding type, i.e., regular interest rate 

eligible; limited resource rate; Socially Disadvantaged Applicant; and Beginning 

Farmer and/or Beginning Farmer Socially Disadvantaged Applicant. There is no 

limited resource Guaranteed FO loan. 

In addition to the aforementioned FO loan types, FSA offers two other subprograms under the main FO umbrella: Participation FO and Beginning Farmer Down 

Payment loans. Each of these sub-categories are further identified by targeting Socially Disadvantaged FO loan applicants by ethnicity and gender to broaden and ensure availability of limited appropriations for all members of the agricultural community. For example, an FO loan application can be funded as ‘‘Direct FO—Beginning Farmer Down Payment—Socially Disadvantaged—Gender.’’

Direct FO—Participation

A Direct FO Participation loan is made as part of a joint financing arrangement 

and the amount of FSA’s loan does not exceed 50 percent of the total amount financed. In such arrangements, an applicant may obtain financing from a commercial lender, a state program, or the seller of a farm. The other lender’s portion of 

the loan may be guaranteed by FSA. Utilization of this program allows FSA to extend credit to more farmers than the Agency would be able to finance if the farmer 

relied solely on FSA Direct or Guaranteed loan funding.

Direct FO—Beginning Farmer Down Payment

Down Payment FO loans are used to partially finance the purchase of a family 

farm by an eligible Beginning Farmer or Socially Disadvantaged Applicant. This is 

the only FSA loan program that requires the loan applicant to provide a minimum 

downpayment of five percent of the purchase price of the farm. Additional limitations specific to the Beginning Farmer Down Payment FO loan is that the maximum 

FSA loan amount is not tied to the statutory limitations. Rather, Down Payment 

loans may not exceed 45 percent of the lessor of: (1) the purchase price; (2) the appraised value of the farm to be acquired; or (3) $500,000. Financing provided by FSA 

and all other creditors must not exceed 95 percent of the purchase price. Any financing provided by eligible lenders may be guaranteed by FSA.

Direct FO—Socially Disadvantaged Applicant (SDA)

A Socially Disadvantaged loan applicant is not a program type; rather it distinguishes a specific funding source. Therefore, the loan process and all loan requirements are identical for SDA applicants to those for non-SDA applicants. To be eligible for SDA loan consideration, the applicant must belong to a socially disadvantaged group whose members have been subject to racial, ethnic or gender prejudice, 

which includes American Indians or Alaskan Natives, Asians, Blacks or African 

Americans, Native Hawaiians or other Pacific Islanders, Hispanics, and women. 

Loan applicants must voluntarily provide his or her ethnicity, race and gender on 

the loan application. If an applicant does not voluntarily provide this information, 

targeted funding will not be available. Direct FO assistance for SDA applicants is 

available for all FO purposes and authorities.

Guaranteed FO

An FSA Guaranteed FO loan is a contract between the loan applicant and commercial lender that allows for the extension of financial credit for a period not to 

exceed 40 years. FSA guarantees the loan against possible loss up to 95 percent 

principal and interest.

Guaranteed—Beginning Farmer/Rancher

Beginning farmer loans are targeted to loan applicants who have not operated a 

farm or ranch for more than 10 years and do not own real farm property, directly 

or indirectly, which does not exceed 30 percent of the median acreage of the farms 

in the county where the property is located. FSA guarantees the loan against possible loss up to 95 percent of principal and interest.

Guaranteed—Socially Disadvantaged Applicant

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A Socially Disadvantaged loan applicant is not a program type; rather it distinguishes a specific funding source. To be eligible for SDA loan consideration, the applicant must belong to a socially disadvantaged group whose members have been 

subject to racial, ethnic or gender prejudice, which includes American Indians or 

Alaskan Natives, Asians, Blacks or African Americans, Native Hawaiians or other 

Pacific Islanders, Hispanics, and women. FSA issues a guarantee that protects the 

lender against possible loss up to 95 percent of principal and interest.

3. Brief History

The Farm and Rural Development Act, as amended, Subtitle B, Sections 311–317, 

Public Law 92–419, 7 U.S.C. 1942 enabled operators of not larger than family 

farms, through the extension of credit and supervisory assistance, to make efficient 

use of their land, labor, and other resources, and to establish and maintain financially viable farming and ranching operations. 

Title III of the Agricultural Act of 1961, The Consolidated Farm and Rural Development Act (CONACT), as amended, through Public Law 109–171, Feb. 8, 2006, 

provided a major overhaul and expansion of farm lending authorities. 

The 1978 Agriculture Credit Act changed existing programs by authorizing farm 

loans to family corporations, cooperatives, and partnerships as well as to individuals; changed the interest rate for farm ownership loans so that the rate is now 

based on the cost of borrowing to the government; and limited resource farmers and 

limited resource rates were identified and established. 

The Food Security Act of 1985 (December 23, 1985) made major changes in farm 

loan eligibility and provided protections for borrowers undergoing serious financial 

difficulty. Loan eligibility was expanded to include ‘‘joint operators’’ and persons related by blood or marriage. 

Targeted participation rates for Direct and Guaranteed FO loans are found in the 

Agricultural Credit Act of 1987 (January 6, 1988), Section 355 of the CONACT. 

FO Down Payment loans were authorized through the Agricultural Credit Improvement Act of 1992 (October 29, 1992), Section 310E of the CONACT. Section 

246(b)(2) of this same Act contains the authorities for targeted funds to beginning 

farmers. This Act also provided for the inclusion of women in the definition of Socially Disadvantaged Applicants. 

Through the Federal Agriculture Improvement and Reform (FAIR) Act of 1995 

(April 4, 1996), Public Law 104–127, farm lending programs were reauthorized, 

placing new restrictions on loan purposes and the length of time borrowers are eligible for new credit assistance. This law also established the targeted funding for beginning farmers. 

In Fiscal Year 1988, FSA was given authority to offer FO–SDA loans. 

4. Purpose/Goals 

The basic objective of the FO loan program is to provide credit and management 

assistance to eligible farmers and ranchers to become owner-operators of familysized farms or to continue such operations when credit is not available elsewhere. 

FSA’s farm ownership loan assistance enables family-farm operators to procure land 

and to improve their living and financial conditions so that they can graduate fully 

to commercial credit. 

FSA direct loans facilitate the provision of credit, which can help support low 

farm family incomes, assist minority and beginning farmers, or help farmers adopt 

new technology that will make their farming operations more economical. FSA has 

the responsibility of providing credit counseling and supervision to its direct borrowers by making a thorough assessment of the farming operation. The Agency 

helps applicants evaluate the adequacy of the real estate and facilities, machinery 

and equipment, financial and production management, and the farmer’s goals. FSA 

assists the applicant in identifying and prioritizing areas needing improvement in 

all phases of the operation. An FSA official then works one-on-one with the farmer 

to develop and to help strengthen the identified areas that ultimately result in the 

farmer’s graduation to commercial credit. 

Because special skills may be needed to evaluate farm loans, and because much 

farm production occurs in geographically isolated areas that have few lenders, some 

farmers may face less competitive markets for their loans that can result in higher 

rates, less favorable terms, and/or no access to loan funds. Farmers may have trouble demonstrating their credit worthiness to lenders because of the economic uncertainties of production agriculture as well. This can be particularly true for beginning 

farmers, women, and minorities, as they typically operate smaller farms, have less 

equity, or lack a sufficient credit or production histories. To address these issues, 

each year FSA allocates a share of loan funding for use by beginning farmers and 

socially disadvantaged, including racial, ethnic minorities, and women farmers, who 

467

by statute are deemed more likely to have problems accessing needed credit than 

other high-risk family-sized farm borrowers. 

The Guaranteed Loan Program plays an important role in facilitating the extension of credit to farmers, not only through collaboration with partner lenders but 

also with FSA’s Direct Loan Program. Often times a borrower’s credit needs are met 

through a combination of a Guaranteed loan and an FSA direct loan. For example, 

a Farm Ownership loan will be made by a commercial lender with an FSA guarantee to purchase farmland and the borrower will also obtain a direct operating loan 

from FSA to cover annual operating expenses. 

The ‘‘credit gaps’’ which farm loan guarantees are designed to fill are associated 

with farm businesses that usually have debt burdens and/or repayment capacities 

that do not meet private sector lending standards. These high-risk farms might fail 

to meet industry standards due to a lack of production or credit history, limited equity, being a start-up business, defined as 10 or less years of farming experience, 

or by being able to offer only single purpose collateral. Another factor limiting access 

to capital is that some farm production occurs in geographically isolated areas that 

tend to have fewer lenders specializing in agricultural lending. As a result, farmers 

may face limited competition loans in these areas, which can result in higher interest rates, unfavorable loan terms, and/or a shortage of loan funds. By reducing the 

lenders’ exposure to risk, the 90 to 95 percent guarantee provided lenders on eligible 

farm loans allows farmers to obtain loans to finance annual operating expenses, 

equipment, livestock, and farmland purchases and improvements. 

5. Success in Meeting Programmatic Purpose/Goals 

FSA has been very successful in accomplishing its long-term performance goals 

for the Farm Ownership Loan Program. Loss rates, delinquency rates, and lending 

to beginning farmers, minorities, and women have all shown significant long-term 

progress. 

Reduce First Year Delinquency Rates on New Loans: The 1st year delinquency 

rate is calculated based on the number of new loans issued in the previous calendar 

year and is primarily and indicator of credit quality. The formula is the total number of delinquent first year loans plus any first year loans restructured divided by 

the total number of loans issued in the previous calendar year. Note: Data reported 

is for all Direct FO and Operating Loans (OL) loans, Guaranteed loans are not included.

Fiscal Year Actual

Performance 

2007 7.4%

2008 6.2%

2009 10.5%

2010 9.2%

2011

Increase Lending to Minorities, Woman, and Beginning Farmers and Ranchers:

FSA establishes annual performance goals to increase its lending to beginning and 

socially disadvantaged farmers. Performance is measured by calculating the percentage of total loan obligations in a given fiscal year that are issued to farmers in the 

targeted groups. Note: Data reported is for all Direct and Guaranteed FO and OLs.

Fiscal Year Actual

Performance 

2007 40.7%

2008 43.2%

2009 41.0%

2010 37.7%

2011

Reduce the Average Processing Time for Direct and Guaranteed Loan Applications:

A core component of FSA’s mission is to provide an economic safety net for America’s farmers and ranchers. Therefore, it is important that financial assistance is 

provided timely when the need arises. The average processing time is calculated 

from the date of application receipt until the date a loan decision is made. Note: 

Data reported includes the average processing time for FO and OL loans.

468

Program Category Fiscal Year Actual

Performance 

Direct FO 2007

2008

2009

2010

2011

27.0 days 

27.8 days 

29.9 days 

30.8 days

Guaranteed FO 2007

2008

2009

2010

2011

12.6 days 

8.6 days 

8.75 days 

10.24 days 

Decrease Delinquency Rates for Direct and Guaranteed Loans: A low delinquency 

rate indicates that borrowers are experiencing greater success in meeting their financial obligations, which is an indicator of greater financial strength and viability. 

The Direct Delinquency rate is calculated by dividing the amount delinquent by the 

unpaid principal plus unpaid interest held by all Direct loan borrowers. The loan 

delinquency rate performance measure for FSA Guaranteed loans is calculated by 

taking the total amount past due, as reported by lenders nationwide on form FSA–

2248, ‘‘Guaranteed Farm Loan Default Status Report’’, divided by the total amount 

outstanding on all guaranteed loans nationwide.

Program Category Fiscal Year Actual

Performance 

Direct FO 2007

2008

2009

2010

2011

7.1%

6.5%

6.3%

5.9%

Guaranteed FO 2007

2008

2009

2010

2011

1.32%

1.18%

1.69%

1.69%

Decrease the Loss Rate for Direct and Guaranteed Loans: Low loss rates indicate 

that borrowers are experiencing greater success in meeting their financial obligations, which is an indicator of financial strength and economic viability. The Direct 

Loss rate is calculated by dividing the amount of losses processed during the fiscal 

year by the amount of unpaid principal at the beginning of the fiscal year. The 

Guaranteed Loss rate is calculated by dividing the amount of losses processed during the fiscal year by the amount unpaid principal at the beginning of the fiscal 

year.

Program Category Fiscal Year Actual

Performance 

Direct FO 2007

2008

2009

2010

2011

2.3%

1.6%

0.8%

1.1%

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Program Category Fiscal Year Actual

Performance 

Guaranteed FO 2007

2008

2009

2010

2011

0.30%

0.33%

0.39%

0.58%

6. Annual Budget Authority (FY 2002–FY 2011) 

See Attachment 1.

7. Annual Outlays (FY 2002–FY 2011) 

See Attachment 2.

8. Annual Delivery Cost (FY 2002–FY 2011) 

See Attachment 3.

9. Eligibility Criteria 

The eligibility criteria for all FO loan applicants include the following:

• Have no disqualifying convictions for controlled substances, including drug trafficking and possession;

• Possess the legal capacity to incur the obligation of the loan

• Be a citizen of the United States, a United States non-citizen national, or a 

qualified alien under applicable Federal immigration laws;

• Have an acceptable credit history demonstrated by debt repayment;

• Have not caused the Agency a loss by receiving debt forgiveness;

• Have not received debt forgiveness or incurred a loss to the government relating 

to a guaranteed loan loss;

• Have the inability to obtain credit elsewhere, with or without an FSA guarantee;

• Not be in delinquent status on any Federal debt, excluding debt under the Internal Revenue Code of 1986 at the time of loan closing;

• Have no outstanding unpaid judgments obtained by the United States in any 

court, excluding those filed as a result of action in the United States Tax 

Courts;

• May not be ineligible due to disqualification resulting from Federal Crop Insurance violation(s) according to 7 CFR 718;

• Have sufficient farm managerial ability as demonstrated by a combination of 

education, on-the-job training, and farming experience;

• Must agree to meet borrower training requirements, if FSA determines the 

training to be necessary for success; and

• Be the owner-operator or tenant-operator of a family farm or ranch.

The loan eligibility criterion for an FO loan to a Socially Disadvantaged Applicant, 

including women, includes all general eligibility requirements outlined above. As 

stated previously, a Socially Disadvantaged loan only specifies a funding source. 

Therefore, the loan process and all loan requirements are identical for SDA applicants to those for non-SDA applicants. Loan applicants must voluntarily provide his 

or her ethnicity, race, and gender on the loan application to qualify for the targeted 

funding. 

Specific to the Direct FO loan program is the requirement that the applicant, or 

one or more members constituting a majority interest of an entity applicant, must 

have participated in the business operations of a farm or ranch for at least 3 years 

out of the 10 years prior to the date the application is submitted. The factors to determine participation in the business operations of a farm are similar to those for 

determining adequate farming experience necessary to ensure a reasonable prospect 

of success. 

The Direct FO program also has term limits attached to it. To meet the programspecific eligibility requirement, the loan applicant must: (1) meet the definition of 

a beginning farmer; (2) have not had a Direct FO loan outstanding for more than 

a total of 10 years prior to the date the new FO loan is closed; or (3) have never 

received a Direct FO loan. 

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10. Utilization (Participation) Data

Program Loan Funds Use (dollars in millions) 

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 *

Direct FO 303 382 560 702 425

Guaranteed FO 949 1,170 1,272 1,605 1,456

* As of June 30, 2011. 

11. Duplication or Overlap with Other Programs 

FSA Guaranteed Farm Loan Program serve separate purposes and are generally 

not duplicative with other Federal and state credit programs. While other Federal 

or state credit programs are available to family farm businesses, these programs 

lack national scope, are focused on narrow market segments, and are not specifically 

designed to serve high-risk farm businesses. FSA’s Direct Farm Loan Program 

serves high-risk farmers with similar purposes, but this program is designed to assist even less creditworthy borrowers; those unable to obtain credit, even with a 

Federal loan guarantee. Studies of the economic profiles of both Direct and Guaranteed program participants indicate the two delivery systems serve different highrisk borrower segments. In addition, the FSA Direct Loan Program is narrower in 

scope because of the more limited funding and is more highly targeted to underserved market segments of beginning start-up farm operations and socially disadvantaged borrowers. 

Across other Federal agencies, the Small Business Administration (SBA), and 

USDA’s Rural Business Service (RBS) provide loan guarantee programs that may 

serve agriculture. The RBS loan guarantee programs do not duplicate those of FSA 

because they serve agribusiness and value-added farm enterprises. The SBA programs are not designed to meet specialized agricultural needs and participating 

SBA lenders’ program delivery is geographically limited. In FY 2007, SBA accounted 

for only 3.5 percent of all federally guaranteed loans made to farmers, with FSA 

accounting for the remainder. Many SBA agricultural loan guarantees are made to 

farms that would not meet FSA eligibility requirements. Overlap between FSA and 

SBA was mostly limited to poultry and nursery farms. 

Some state governments also provide farm loan guarantees, but funding and geographic coverage for such programs is limited. The National Council of State Agricultural Finance Programs indicates that only 18 states have an established loan 

guarantee program. However, only four states have programs that are actively providing loan guarantees to farmers. State programs typically target specific purposes, 

such as value-added or single-purpose livestock facilities, have limited or sporadic 

funding, or limited geographical availability, hence seldom duplicating FSA loan objectives. Again, eligibility criteria and intended purposes differ significantly from 

FSA Direct and Guaranteed Loan Programs, and funding can be sporadic. A more 

common type of state financing assistance is provided through ‘‘Aggie Bonds,’’ which 

are tax exempt bonds, issued by states under specific eligibility requirements. 

12. Waste, Fraud and Abuse 

FSA has a robust internal controls program for its farm loan programs, which 

consists of OMB Circular A–123 reviews, Farm Loan Program Risk Assessments, 

the County Operations Review program, Lender Reviews, and National Office Loan 

Origination File Reviews. Additionally, farm loan programs are subject to periodic 

audit and review by the Office of Inspector General and the Government Accountability Office. No material weaknesses related to fraud, waste, and abuse have been 

identified through these processes for many years. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Emergency Loan (EM). 

Prepared by the U.S. Department of Agriculture’s (USDA) Farm Service Agency 

(FSA). 

2. Subprograms/Department Initiatives 

Emergency loans may be categorized as being a: (1) real estate physical loss; (2) 

chattel physical loss; or (3) a production loss.

Real Estate Physical Loss

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EM loan funds for real estate physical losses may only be used to repair or replace 

essential property damaged or destroyed as a result of a disaster for purchasing real 

estate, if authorized; establishing a new site for a farm dwelling and service buildings outside of a flood or mudslide area; soil and water conservation, land and water 

resource placement and land and water development when existing structures are 

damaged or destroyed during the disaster.

Chattel Physical Loss

EM loan funds may be used for chattel physical losses only to repair or replace 

essential property damaged or destroyed as a result of a disaster to purchase livestock or farm equipment; repair or replace household contents damaged by the disaster; pay the costs to restore perennials which produce an agricultural commodity; 

pay family living expenses and farm operating expenses for farmers and ranchers 

suffering from livestock losses or losses to stored crops held for sale; or for refinancing farm-related debts caused by the designated or declared disaster.

Production Loss

Production losses to agricultural commodities are eligible for FSA EM loan assistance to pay costs associated with reorganizing the farm or ranch; to pay annual operating expenses; pay costs associated with Federal or state-approved standards 

under the Occupational Safety and Health Act of 1970 (19 U.S.C. 655 and 667); pay 

essential family living expenses; or refinance farm debt which resulted from the designated or declared disaster. 

3. Brief History 

Federal Farm Loan Act of 1916—Emergency crop and seed loans. 

Disaster Loan Act of 1949—Emergency farm loans. 

Rural Development Act of 1972, Section 321 of the CONACT—Emergency Loan 

Program. 

Title III of the Agricultural Act of 1961, The Consolidated Farm and Rural Development Act (CONACT), as amended, through Public Law 109–171, Feb. 8, 2006. 

4. Purpose/Goals 

EM loans are made to eligible loan applicants who have incurred substantial financial losses from a natural disaster or quarantine. These disasters may be either 

Presidential declarations or declared by the Secretary of Agriculture. 

5. Success in Meeting Programmatic Purpose/Goals 

Performance in the EM program is consistent with other farm loan programs in 

terms of loan processing timeliness, delinquency rates, and losses. These results are 

especially noteworthy considering the very high risk nature of these loans, as they 

are issued to borrowers who have suffered financial losses resulting from natural 

disaster. 

6. Annual Budget Authority (FY 2002–FY 2011) 

See Attachment 1.

7. Annual Outlays (FY 2002–FY 2011) 

See Attachment 2.

8. Annual Delivery Cost (FY 2002–FY 2011) 

See Attachment 3.

9. Eligibility Criteria 

Emergency loans may be made to farmers and ranchers who:

• Own or operate land located in a county declared by the President or designated 

by the Secretary of Agriculture as a primary disaster area or quarantine area. 

All counties contiguous to the declared, designated, or quarantined primary 

counties also are eligible for emergency loans. A disaster designation by the 

FSA administrator authorizes emergency loan assistance for physical losses 

only in the designated and contiguous counties;

• Are established family farm operators and have sufficient farming or ranching 

experience;

• Are citizens or permanent residents of the United States;

• Have suffered at least a 30 percent loss in crop production or a physical loss 

to livestock, livestock products, real estate or chattel property;

• Have an acceptable credit history;

• Are unable to receive credit from commercial sources;

472

• Can provide collateral to secure the loan;

• Have repayment ability; and

• Submit applications within 8 months of the county’s disaster or quarantine designation date.

In addition to eligibility criteria, FSA loan requirements are different from those 

of other lenders. Some of the more significant differences are borrowers must keep 

acceptable farm records, must operate in accordance with a farm plan developed 

with the local FSA staff, may be required to participate in a financial management 

training program, and may be required to obtain crop insurance. 

All emergency loans must be fully collateralized. The specific type of collateral 

may vary depending on the loan purpose, repayment ability and the individual circumstances of the applicant. If applicants cannot provide adequate collateral, their 

repayment ability may be considered as collateral to secure the loan. A first lien is 

required on property or products acquired, produced or refinanced with loan funds. 

Loans for crop, livestock, and non-real estate losses are normally repaid within 

one to 7 years, depending on the loan purpose, repayment ability and collateral 

available as loan security. In special circumstances, terms of up to 20 years may 

be authorized. Loans for physical losses to real estate are normally repaid within 

30 years but, in certain circumstances, may be extended up to a maximum of 40 

years. 

10. Utilization (Participation) Data

Program Loan Funds Use (dollars in millions) 

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 *

Emergency 75 44.9 30.4 35.5 29

* As of June 30, 2011. 

11. Duplication or Overlap with Other Programs 

The FSA Farm Loan Programs serves separate purposes and is generally not duplicative with other Federal and state credit programs. While other Federal or state 

credit programs are available to family farm businesses, these programs lack national scope, are focused on narrow market segments, and are not specifically designed to serve high-risk farm businesses. FSA’s EM program serves an even higher-risk farmer who have suffered financial setback resulting from natural disasters. 

Some state governments also provide farm loan assistance but funding and geographic coverage is limited. Emergency assistance, if available, would be only available on an ad hoc basis. 

12. Waste, Fraud and Abuse 

FSA has a robust internal controls program for its farm loan programs, which 

consists of OMB Circular A–123 reviews, Farm Loan Program Risk Assessments, 

the County Operations Review program, Lender Reviews, and National Office Loan 

Origination File Reviews. Additionally, farm loan programs are subject to periodic 

audit and review by the Office of Inspector General and the Government Accountability Office. No material weaknesses related to fraud, waste, and abuse have been 

identified through these processes for many years. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Operating Loan (OL). 

Prepared by the U.S. Department of Agriculture’s (USDA) Farm Service Agency 

(FSA). 

2. Subprograms/Department Initiatives 

Through its nationwide network of service centers, often in geographically isolated 

areas with few private or commercial lenders, FSA provides agricultural financing 

to small and family size farmers and ranchers for farm operating costs, including 

costs associated with reorganizing a farm to improve its profitability; farm equipment and other chattel purchases; family and annual farm operating expenses; refinancing farm related debts; land and water development, and other farm needs. 

Federally regulated lenders with experience in agricultural lending are eligible to 

473

participate in the FSA Guaranteed Farm Loan Program as Standard, Certified, or 

Preferred Lenders, depending upon their experience and level of participation.

Direct OL

An annual OL is designed to finance farm operating expenses, family living expenses, or small purchase costs that are repayable within one year or a maximum 

of 18 months. The maximum number of years a farmer may receive annual direct 

OL assistance is 7 years, which may be consecutive or non-consecutive. There is no 

limit on the number of loans closed in a single year. On a case-by-case basis, it is 

possible for farmers and ranchers to be granted a one-time waiver for an additional 

2 years of direct loan assistance. This limitation is not applicable if the farm or 

ranch is subject to the jurisdiction of an Indian tribe. 

A term OL is designed to finance costs associated with reorganizing a farm, such 

as changing enterprises, production practices, marketing methods or purchasing 

shares in value-added processing and marketing cooperatives; land and water development; and other similarly related farm expenses. Term Operating loans allow for 

an extended repayment period not to exceed 7 years. The maximum number of years 

a farmer may receive term direct OL assistance is 7 years, which may be consecutive or non-consecutive. There is no limit on the number of loans closed in a single 

year. On a case-by-case basis, it is possible for farmers and ranchers to be granted 

a one-time waiver for an additional 2 years of direct loan assistance. This limitation 

is not applicable if the farm or ranch is subject to the jurisdiction of an Indian tribe.

Direct OL—Limited Resource

A limited resource Direct OL is designed to assist family farmers and ranchers 

unable to develop a farm business plan with a positive cash flow and reasonable 

prospects for loan repayment using FSA’s regular interest rates. A limited resource 

interest rate is intended to reflect an interest rate below FSA’s regular interest rate 

during periods of otherwise high interest rates. Limited resource loans are available 

for all OL loan purposes and authorities with repayment periods from one to 7 years 

depending upon the loan purpose, type of security and repayment ability. Limited 

resource farmers and ranchers are expected to graduate to FSA’s regular rates and 

terms upon achieving stronger financial solvency. The maximum number of years 

a farmer may receive term Direct OL limited resource assistance is 7 years, which 

may be consecutive or non-consecutive. There is no limit on the number of loans 

closed in a single year. On a case-by-case basis, it is possible for farmers and ranchers to be granted a one-time waiver for an additional 2 years of direct loan assistance. This limitation is not applicable if the farm or ranch is subject to the jurisdiction of an Indian tribe.

Direct OL—Rural Youth

Rural Youth loans are utilized to finance modest, income-generating, agriculturerelated educational projects while participating in 4–H Clubs, Future Farmers of 

America, or similar organizations. Applicants must be between the ages of 10 to 20 

years. Youth loan funds may be used only to pay the expenses associated with the 

approved project. A 4–H club advisor, vocational teacher, county extension agent or 

other organizational sponsor is required for supervision and technical assistance, 

and parental consent must be obtained.

Direct OL—Beginning Farmer/Rancher

Beginning farmer loans are targeted to loan applicants who have not operated a 

farm or ranch for more than 10 years and do not own real farm property, directly 

or indirectly, which does not exceed 30 percent of the median acreage of the farms 

in the county where the property is located. Beginning farmer loan recipients are 

often required to participate in production and financial management training in an 

effort to ensure success of the operation by providing the guidance and technical 

support necessary. Beginning farmer loans are available for all OL purposes and authorities with repayment periods from one to 7 years depending upon the loan purpose, type of security and repayment ability. The maximum number of years a beginning farmer may receive Direct OL assistance is 10 years. This limitation is not 

applicable if the farm or ranch is subject to the jurisdiction of an Indian tribe.

Direct OL—Socially Disadvantaged Applicant (SDA)

A Socially Disadvantaged loan applicant is not a program type; rather it distinguishes a specific funding source. Therefore, the loan process and all loan requirements are identical for SDA applicants to those for non-SDA applicants. To be eligible for SDA loan consideration, the applicant must belong to a socially disadvantaged group whose members have been subject to racial, ethnic or gender prejudice, 

which includes American Indians or Alaskan Natives, Asians, Blacks or African 

Americans, Native Hawaiians or other Pacific Islanders, Hispanics, and women. 

474

Loan applicants must voluntarily provide his or her ethnicity, race and gender on 

the loan application. If an applicant does not voluntarily provide this information, 

targeted funding will not be available. Direct OL assistance for SDA applicants is 

available for all OL purposes and authorities with repayment periods from one to 

7 years depending upon the loan purpose, type of security and repayment ability. 

The maximum number of years a farmer may receive term Direct OL limited resource assistance is 7 years, which may be consecutive or non-consecutive. There is 

no limit on the number of loans closed in a single year. On a case-by-case basis, 

it is possible for farmers and ranchers to be granted a one-time waiver for an additional 2 years of Direct loan assistance. This limitation is not applicable if the farm 

or ranch is subject to the jurisdiction of an Indian tribe.

Guaranteed OL

An FSA Guaranteed Line of Credit is a contract between the loan applicant and 

commercial lender that allows for the extension of financial credit where the loan 

principal may fluctuate throughout the term of the contract. The term of the contract may not extend beyond 5 years. FSA issues a guarantee that protects the lender against possible loss up to 95 percent principal and interest. 

An FSA Guaranteed Operating term loan is a contract between the loan applicant 

and commercial lender that allows for the extension of financial credit for a period 

not to exceed 7 years. FSA guarantees the loan against possible loss up to 95 percent principal and interest.

Guaranteed OL—Beginning Farmer/Rancher

Beginning farmer loans are targeted to loan applicants who have not operated a 

farm or ranch for more than 10 years and do not own real farm property, directly 

or indirectly, which does not exceed 30 percent of the median acreage of the farms 

in the county where the property is located. FSA guarantees the loan against possible loss up to 95 percent of principal and interest.

Guaranteed OL—Socially Disadvantaged Applicant

A Socially Disadvantaged loan applicant is not a program type; rather it distinguishes a specific funding source. To be eligible for SDA loan consideration, the applicant must belong to a socially disadvantaged group whose members have been 

subject to racial, ethnic or gender prejudice, which includes American Indians or 

Alaskan Natives, Asians, Blacks or African Americans, Native Hawaiians or other 

Pacific Islanders, Hispanics, and women. FSA issues a guarantee that protects the 

lender against possible loss up to 95 percent of principal and interest.

Guaranteed OL—Interest Assistance

FSA’s Interest Assistance program is intended to assist family farmers and ranchers who have low production or who are suffering the effects of a natural disaster 

or adverse economic conditions. This is helpful to beginning farmers who traditionally face difficulties in obtaining access to private credit programs. In exchange for 

reimbursing a commercial lender four percentage points on the Guaranteed OL, the 

commercial lender reduces the interest rate charged to the farmer by that amount, 

thus allowing the farmer a greater opportunity to accrue farm assets and become 

financially viable. FSA also issues a guarantee that protects the lender against possible loss up to 95 percent of principal and interest. 

3. Brief History 

The Farm and Rural Development Act, as amended, Subtitle B, Sections 311–317, 

Public Law 92–419, 7 U.S.C. 1942 enabled operators of not larger than family farms 

through the extension of credit and supervisory assistance, to make efficient use of 

their land, labor, and other resources, and to establish and maintain financially viable farming and ranching operations. 

Title III of the Agricultural Act of 1961, The Consolidated Farm and Rural Development Act (CONACT), as amended, through Public Law 109–171, Feb. 8, 2006, 

provided a major overhaul and expansion of farm lending authorities. 

Congressional appropriations are the sole source of funding for FSA’s Direct loan 

program. Funding for this program was initially authorized through Title III of the 

Consolidated Farm and Rural Development Act of 1961 (CONACT), as amended, 

and amended by every subsequent farm bill. 

The Rural Development Act of 1972 (August 20, 1972), Section 311(b)(1) of the 

CONACT, established the use of the guarantee provisions for commercial lenders 

and authorized the Rural Youth loan program, and has been amended in every subsequent farm bill. Loan authorities provided within this Act initially authorized 

FSA’s Guaranteed loan program, which also has been amended by each subsequent 

farm bill. 

475

The 1978 Agriculture Credit Act changed existing programs by authorizing farm 

loans to family corporations, cooperatives, and partnerships as well as to individuals; changed the interest rate for farm ownership loans so that the rate is now 

based on the cost of borrowing to the government; and limited resource farmers and 

limited resource rates were identified and established. 

The Emergency Agricultural Credit Act of 1984 (April 10, 1984) increased the 

maximum repayment period for rescheduled or consolidated loans and allowed for 

borrowers to have their loan changed to a limited resource loan, if qualified. This 

Act also permitted interest rates on operating loans that are deferred, consolidated, 

rescheduled or re-amortized to be set at the original rate or current rate, whichever 

is lower and required a target of 20 percent of operating funds to be targeted to 

limited resource borrowers. 

The Food Security Act of 1985 (December 23, 1985) made major changes in farm 

loan eligibility and provided protections for borrowers undergoing serious financial 

difficulty. Loan eligibility was expanded to include ‘‘joint operators’’ and persons related by blood or marriage. 

The targeting of direct and guaranteed Operating Loan funds to Socially Disadvantaged Applicants was initially authorized in the Food, Agriculture, Conservation and Trade Act of 1990 (November 28, 1990), Section 355 of the CONACT. The 

inclusion of women as Socially Disadvantaged farmers occurred in the Agricultural 

Act of 1992, Section 355 of the CONACT. 

Targeted direct and guaranteed Operating Loan funds to Beginning Farmers and 

Ranchers were authorized through the Agricultural Credit Improvement Act of 

1992, Section 346(b)(2) of the CONACT, and as amended in every subsequent farm 

bill. 

Through the Federal Agriculture Improvement and Reform (FAIR) Act of 1995 

(April 4, 1996), Public Law 104–127, farm lending programs were reauthorized, 

placing new restrictions on the purposes for which loans can be used and the length 

of time borrowers are eligible for new credit assistance. This law also established 

the targeted funding for beginning farmers. 

Section 806 of the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999 (Public Law 106–277), amended the maximum Guaranteed loan 

limits for farm operating loans in Section 305 and 313 of the CONACT. Beginning 

in Fiscal Year 2000, this cap is adjusted annually if the ‘‘Prices Paid by Farmers 

Index’’, as compiled by the National Agricultural Statistics Service for the 12 month 

period ending in August of year exceeds the value for the 12 month period ending 

August 31, 1996. 

4. Purpose/Goals 

FSA direct loans facilitate the provision of credit, which can help support low 

farm family incomes, assist minority and beginning farmers, or help farmers adopt 

new technology that will make their farming operations more economical. FSA has 

the responsibility of providing credit counseling and supervision to its direct borrowers by making a thorough assessment of the farming operation. The Agency 

helps applicants evaluate the adequacy of the real estate and facilities, machinery 

and equipment, financial and production management, and the farmer’s goals. FSA 

assists the applicant in identifying and prioritizing areas needing improvement in 

all phases of the operation. An FSA official then works one-on-one with the farmer 

to develop and to help strengthen the identified areas that ultimately result in the 

farmer’s graduation to commercial credit. 

Because special skills may be needed to evaluate farm loans, and because much 

farm production occurs in geographically isolated areas that have few lenders, some 

farmers may face less competitive markets for their loans that can result in higher 

rates, less favorable terms, and/or no access to loan funds. Consequently, farmers 

may face a competitively limited market for their loans that can result in higher 

rates, unfavorable terms, and a shortage of loan funds. Farmers may have trouble 

demonstrating their credit worthiness to lenders because of the economic uncertainties of production agriculture as well. This can be particularly true for beginning 

farmers, women, and minorities, as they typically operate smaller farms, have less 

equity, or lack a sufficient credit or production histories. To address these issues, 

each year FSA allocates a share of loan funding for use by beginning farmers and 

socially disadvantaged, including racial, ethnic minorities, and women farmers, who 

by statute are deemed more likely to have problems accessing needed credit than 

other high-risk family-sized farm borrowers. 

The Guaranteed Loan Program plays an important role in facilitating the extension of credit to farmers, not only through collaboration with partner lenders but 

also with FSA’s Direct Loan Program. Often times a borrower’s credit needs are met 

through a combination of a Guaranteed loan and an FSA direct loan. For example, 

476

a Farm Ownership loan will be made by a commercial lender with an FSA guarantee to purchase farmland and the borrower will also obtain a direct operating loan 

from FSA to cover annual operating expenses. 

The ‘‘credit gaps’’ which farm loan guarantees are designed to fill are associated 

with farm businesses that usually have debt burdens and/or repayment capacities 

that do not meet private sector lending standards. These high-risk farms might fail 

to meet industry standards due to a lack of production or credit history, limited equity, being a start-up business, defined as 10 or less years of farming experience, 

or by being able to offer only single purpose collateral. Another factor limiting access 

to capital is that some farm production occurs in geographically isolated areas that 

tend to have fewer lenders specializing in agricultural lending. As a result, farmers 

may face limited competition loans in these areas, which can result in higher interest rates, unfavorable loan terms, and/or a shortage of loan funds. By reducing the 

lenders’ exposure to risk, the 90 to 95 percent guarantee provided lenders on eligible 

farm loans allows farmers to obtain loans to finance annual operating expenses, 

equipment, livestock, and farmland purchases and improvements. 

Current program measures and targets, which cover FY 2007–2011, were established in FY 2006 by the Farm Loan Programs Goal Working Group. The group, 

which was comprised of FSA senior managers and stakeholders, considered numerous factors when developing the performance targets, including past program performance and economic forecast for the agricultural sector. Out-year targets for the 

loss and delinquency goals may not seem overly ambitious, on the surface, given the 

current performance levels. However, it is important to note that both losses and 

delinquencies are at historically low levels. The historical loss rate covers a longterm period and reflects the high-risk nature of agricultural operations, where success often depends upon circumstances beyond the control of lenders and borrowers. 

The historic loss rate is a more accurate gauge of the cyclical nature of agriculture 

and is a more relevant comparison than measuring against the extremely low losses 

attained in recent years. 

It must be understood that FSA’s loan program was designed to provide access 

to capital for those farmers who cannot obtain credit with or without a guarantee, 

equating to an extremely high probability of loss. The long-term measures focus on 

an outcome of keeping losses and delinquency low but not so low as to no longer 

meaningfully reflect the purpose of the program. FSA’s goals for Fiscal Years 2007 

through 2011 are as follow: 

Loan Making: (1) reduce first year delinquency rates on new loans; (2) increase 

lending to minorities, women and beginning farmers and ranchers; (3) reduce the 

average processing time for direct loans; and (4) reduce the average processing time 

for Guaranteed loans. 

Loan Servicing: (1) decrease the delinquency rate on direct loans; (2) decrease the 

loss rate for direct loans; (3) decrease the loss rate on guaranteed loans and (4) decrease the delinquency rate of Guaranteed loans. 

Measures for loss and delinquency rates are valuable in two respects. First, they 

are indicators of the financial well being of borrowers. Second, they are indicators 

of the overall quality of the FSA underwriting standards and loan servicing. 

Regarding the measure to ‘‘increase the percentage of beginning farmers, minorities, and women financed by FSA,’’ FSA continues to provide increased levels of assistance to these targeted groups. Measurement of this goal was revised in 2002 to 

be a more outcome-oriented indicator of FSA success in providing credit assistance 

to these historically underserved groups. This performance is noteworthy, given the 

relatively low numbers of farmers in the targeted groups in the U.S. farm sector. 

An external factor that could impact progress and accomplishment of these measures includes widespread or prolonged natural disasters that can significantly reduce farm production and, therefore, reduce net income. Also, substantial inflation 

in farm expenses or depressed commodity prices could have a similar effect. If economic conditions deteriorate in the agricultural sector, rural lending institutions 

contract their delivery of capital, which increases demand for FSA Farm Loan Programs. Such conditions reduce borrower repayment ability, increase delinquencies 

and losses, and reduce the ability of direct borrowers to obtain guaranteed credit. 

Such an event would also dramatically increase workload of Service Center employees, hindering the ability to provide needed assistance to producers in a timely manner. To mitigate these factors, FSA encourages farmers to use various risk management practices such as crop insurance, and marketing tools, such as forward contracting. 

5. Success in Meeting Programmatic Purpose/Goals 

FSA has been very successful in accomplishing its long-term performance goals 

for the Operating Loan Program. Loss rates, delinquency rates, and lending to beVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00488 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
477

ginning farmers, minorities, and women have all shown significant long-term 

progress. (See specifications on page 467.) 

6. Annual Budget Authority (FY 2002–FY 2011) 

See Attachment 1.

7. Annual Outlays (FY 2002–FY 2011) 

See Attachment 2.

8. Annual Delivery Cost (FY 2002–FY 2011) 

See Attachment 3.

9. Eligibility Criteria 

The eligibility criteria for the Operating Loan—Annual, Operating Loan—Term, 

Operating Loan—Limited Resource applicants and Beginning Farmers is as follows:

• Have no disqualifying convictions for controlled substances, including drug trafficking and possession;

• Possess the legal capacity to incur the obligation of the loan;

• Be a citizen of the United States, a United States non-citizen national, or a 

qualified alien under applicable Federal immigration laws;

• Have an acceptable credit history demonstrated by debt repayment;

• Have not caused the Agency a loss by receiving debt forgiveness;

• Have not received debt forgiveness or incurred a loss to the government relating 

to a guaranteed loan loss; and

• Have the inability to obtain credit elsewhere, with or without an FSA guarantee;

• Not be in delinquent status on any Federal debt, excluding debt under the Internal Revenue code of 1986 at the time of loan closing;

• Have no outstanding unpaid judgments obtained by the United States in any 

court, excluding those filed as a result of action in the United States Tax 

Courts;

• May not be ineligible due to disqualification resulting from Federal Crop Insurance violation(s) according to 7 CFR 718;

• Have sufficient farm managerial ability as demonstrated by a combination of 

education, on-the-job training and farming experience;

• Must agree to meet borrower training requirements, if FSA determines the 

training to be necessary for success; and

• Be the owner-operator or tenant-operator of a family farm or ranch.

The loan eligibility criterion for an Operating Loan to a Socially Disadvantaged 

Applicant, including women, includes all general eligibility requirements outlined 

above. As stated previously, a Socially Disadvantaged loan only specifies a funding 

source. Therefore, the loan process and all loan requirements are identical for SDA 

applicants to those for non-SDA applicants. Loan applicants must voluntarily provide his or her ethnicity, race and gender on the loan application to qualify for the 

targeted funding. 

Rural Youth loan eligibility criteria include all general eligibility requirements except a youth loan applicant does not need to demonstrate managerial ability, is not 

subject to borrower training requirements, does not need to operate a farm, and is 

not subject to OL term limits for loan assistance. 

10. Utilization (Participation) Data

Program Loan Funds Use (dollars in millions) 

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 *

Direct OL 600 629.1 1,226.4 1,242.3 917

Guaranteed OL 

(unsubsidized) 

917 1,032 1,235 1,510.1 1,015.2

Guaranteed OL 

(interest assistance) 

271 175 149.7 181.5 52.1

* As of June 30, 2011. 

478

11. Duplication or Overlap with Other Programs 

The FSA Guaranteed Farm Loan Program serves separate purposes and is generally not duplicative with other Federal and state credit programs. While other 

Federal or state credit programs are available to family farm businesses, these programs lack national scope, are focused on narrow market segments, and are not specifically designed to serve high-risk farm businesses. FSA’s Direct Farm Loan Program serves high-risk farmers with similar purposes, but this program is designed 

to assist even less creditworthy borrowers; those unable to obtain credit, even with 

a Federal loan guarantee. Studies of the economic profiles of both Direct and Guaranteed program participants indicate the two delivery systems serve different highrisk borrower segments. In addition, the FSA Direct Loan Program is narrower in 

scope because of the more limited funding and is more highly targeted to underserved market segments of beginning start-up farm operations and socially disadvantaged borrowers. 

Across other Federal agencies, the Small Business Administration (SBA), and 

USDA’s Rural Business Service (RBS) provide loan guarantee programs that may 

serve agriculture. The RBS loan guarantee programs do not duplicate those of FSA 

because they serve agribusiness and value-added farm enterprises. The SBA programs are not designed to meet specialized agricultural needs and delivery by participating SBA lenders’ program delivery is geographically limited. In FY 2007, SBA 

accounted for only 3.5 percent of all federally guaranteed loans made to farmers, 

with FSA accounting for the remainder. Many of SBA agricultural loan guarantees 

are made to farms that would not meet FSA eligibility requirements. Overlap between FSA and SBA was mostly limited to poultry and nursery farms. 

Some state governments also provide farm loan guarantees, but funding and geographic coverage for such programs is limited. The National Council of State Agricultural Finance Programs indicates that only 18 states have an established loan 

guarantee program. However, only four states have programs that are actively providing loan guarantees to farmers. State programs typically target specific purposes, 

such as value-added or single-purpose livestock facilities, have limited or sporadic 

funding, or limited geographical availability, hence seldom duplicating FSA loan objectives. Again, eligibility criteria and intended purposes differ significantly from 

FSA Direct and Guaranteed Loan Programs, and funding can be sporadic. A more 

common type of state financing assistance is provided through ‘‘Aggie Bonds,’’ which 

are tax exempt bonds, issued by states under specific eligibility requirements. 

12. Waste, Fraud and Abuse 

FSA has a robust internal controls program for its farm loan programs, which 

consists of OMB Circular A–123 reviews, Farm Loan Program Risk Assessments, 

the County Operations Review program, Lender Reviews, and National Office Loan 

Origination File Reviews. Additionally, farm loan programs are subject to periodic 

audit and review by the Office of Inspector General and the Government Accountability Office. No material weaknesses related to fraud, waste, and abuse have been 

identified through these processes for many years. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Indian Tribal Land Acquisition Program (ITLAP). 

Prepared by the U.S. Department of Agriculture’s (USDA) Farm Service Agency 

(FSA). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

ITLAP was authorized by 5 U.S.C. 301 and 25 U.S.C. 

4. Purpose/Goals 

Some Indian reservation allotments are co-owned by hundreds of people. This is 

because with the passing of each generation, there are an increasing number of 

heirs who have inherited undivided interests in the same allotments. This increase 

in co-ownership, or fractionation, often renders the consolidation of title into one 

owner nearly impossible. There are limited sources of funding to consolidate 

fractionated interest. FSA’s ITLAP extends credit to Indian Tribes or Tribal corporations which do not qualify for standard commercial loans to purchase land within 

their own reservation or Alaskan community. 

479

5. Success in Meeting Programmatic Purpose/Goals 

The ITLAP program has been successful in meeting the programmatic purpose. 

The amount appropriated each year limits the program benefits because the funding 

available is insufficient to meet the needs of the Tribes interested in participating 

in the program. 

6. Annual Budget Authority (FY 2002–FY 2011) 

See Attachment 1.

7. Annual Outlays (FY 2002–FY 2011) 

See Attachment 2.

8. Annual Delivery Cost (FY 2002–FY 2011) 

See Attachment 3.

9. Eligibility Criteria 

Native American Tribes must meet the following eligibility requirements to be eligible for an ITLAP loan:

• The Tribe must show credit from other sources is not available to purchase the 

real estate.

• The land must be located within the Tribe’s reservation for use by the members 

of the Native American tribe or Tribal Corporation.

• A feasibility plan for the use of lands and a method of repayment of the loan 

funds must be provided.

• The Tribe must be in good standing with all Federal Agencies and not subject 

to a judgment lien against the Tribe’s property due to a debt to the United 

States.

• The Tribe must not have received a write-down on any other loans within the 

past 5 years.

• The amount of the loan funds must not exceed the market value of the land 

determined by the current appraisal. 

10. Utilization (Participation) Data 

Since 2000, seven loans valued at a total of $2.88 million have been made through 

ITLAP. 

11. Duplication or Overlap with Other Programs 

The Bureau of Indian Affairs’ Indian Land Consolidation Pilot Program, which 

began in 1999, is a result of Congressional Acts and Supreme Court decisions that 

sought to remedy problems associated with fractional land. 

12. Waste, Fraud and Abuse 

There has been no known instance of waste, fraud or abuse. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Boll Weevil Eradication Loan Program. 

Prepared by the U.S. Department of Agriculture’s (USDA) Farm Service Agency 

(FSA). 

2. Subprograms/Department Initiatives 

There are no subprograms or department initiatives for the Boll Weevil Eradication Loan program. 

3. Brief History 

USDA has been involved with Boll Weevil Eradication since the 1970’s through 

the USDA Animal and Plant Health Inspection Service (APHIS), the Agency that 

initially funded the program along with the member states. The Boll Weevil Eradication Loan Program was authorized by 5 U.S.C. 301; 7 U.S.C. 1989 and Public Law 

104–180, 110 Stat. 1569, to essentially provide the full funding needed to complete 

the eradication of the boll weevil. The first Boll Weevil Eradication Loan was made 

by FSA in 1997, and since that time the boll weevil has been successfully eradicated 

from most states. 

480

4. Purpose/Goals 

Through the use of FSA’s loan authorities, this loan program serves two primary 

objectives: reducing pesticide requirements of cotton producers and increasing overall cotton production in the United States. The FSA Boll Weevil Eradication Loan 

program is a supplemental program to the USDA/APHIS Boll Weevil Eradication 

program and differs only in that FSA administers a Boll Weevil Eradication Loan 

program and APHIS offers Federal grants as well as provides technical assistance 

and program oversight. 

The goal of the Boll Weevil Eradication Loan Program is to support APHIS and 

farmer eradication efforts at minimal cost. 

5. Success in Meeting Programmatic Purpose/Goals 

The Boll Weevil Eradication Loan program has been very successful in meeting 

its programmatic purpose. The reduction in the number of boll weevils has greatly 

reduced the amount of pesticides used by cotton producers. At one time, cotton 

growers applied more than 41 percent of all insecticides in agricultural use, regularly spraying their cotton as many as 15 times a season. In contrast, since the establishment of the Boll Weevil Eradication Loan Program, annual pesticide applications have been reduced to nearly zero. The program has no delinquent accounts 

and no losses with minimal administrative program cost. 

6. Annual Budget Authority (FY 2002–FY 2011) 

See Attachment 1.

7. Annual Outlays (FY 2002–FY 2011) 

See Attachment 2.

8. Annual Delivery Cost (FY 2002–FY 2011) 

See Attachment 3.

9. Eligibility Criteria 

An eligible applicant must:

• Meet all requirements prescribed by APHIS to qualify for cost-share grants;

• Have the appropriate charter and legal authority as a nonprofit corporation or 

state organization specifically organized to operate the boll weevil eradication 

program in any state or region (Individual producers are not eligible for loans);

• Possess the legal authority to enter into contracts, including debt instruments;

• Operate in an area in which producers have approved a referendum authorizing 

producer assessments and in which an active eradication or post-eradication 

program is underway or scheduled to begin; and

• Have the legal authority to pledge producer assessments as security for loans 

from FSA. 

10. Utilization (Participation) Data 

Ten states have benefited from the Boll Weevil Eradication Loan program; obtaining a total of 49 loans for a total of $992,412,496. At present, only two states remain 

active in this program with a total outstanding debt of slightly more than 

$61,000,000. 

11. Duplication or Overlap with Other Programs 

There is no known duplication with other programs beyond the APHIS grant program for Boll Weevil Eradication. As stated earlier the APHIS program was supplemented by the FSA loan program in order to provide full funding to the eradication 

initiative. 

12. Waste, Fraud and Abuse 

FSA has a robust internal controls program for its farm loan programs, which 

consists of OMB Circular A–123 reviews, Farm Loan Program Risk Assessments, 

the County Operations Review program, Lender Reviews, and National Office Loan 

Origination File Reviews. Additionally, farm loan programs are subject to periodic 

audit and review by the Office of Inspector General and the Government Accountability Office. No material weakness related to fraud, waste, and abuse have been 

identified through these processes for many years. 

13. Effect of Administrative PAYGO 

None.

481

Attachment 1

Appendix I: ACIF Historical Program Subsidy Budget Authority and Loan Levels 

($ in Millions) 

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

ACIF 

Annual Subsidy Budget Authority 190 248 198 144 151 148 153 241 156 155

Direct Loan Level 

Farm ownership 147 169 142 272 275 303 382 560 702 474Farm operating 611 690 610 556 641 600 629 1,056 1,220 1,049Emergency disaster 25 96 30 24 51 75 46 30 36 66Indian tribe land acquisition 2 0 2 0 0 0 0 0 0 4Boll weevil eradication 100 99 98 83 22 6 100 100 0 100Indian Highly Fractionated Land N/A N/A N/A N/A N/A N/A 0 0 0 0Conservation N/A N/A N/A N/A N/A N/A 0 0 5 11Farm Operating ARRA N/A N/A N/A N/A N/A N/A 0 170 22 0

Total Direct Loan Levels 885 1,054 882 935 989 984 1,157 1,916 1,985 1,704

Direct Loan Appropriated Subsidy 

Farm ownership 4 20 31 15 14 13 17 36 29 33Farm operating 55 119 88 56 64 70 80 125 58 64Emergency disaster 3 19 4 3 6 9 5 4 1 7Indian tribe land acquisition 0 0 0 0 0 0 0 0 0 0Boll weevil eradication 0 0 0 0 0 0 0 0 0 0Seed cotton 0 0 N/A N/A N/A N/A N/A N/A N/A N/A Indian Highly Fractionated Land N/A N/A N/A N/A N/A N/A 0 0 0 0Conservation N/A N/A N/A N/A N/A N/A 0 0 0 0Farm Operating ARRA N/A N/A N/A N/A N/A N/A 0 20 1 0

Total Direct Loan Subsidy 62 158 123 74 84 92 102 185 89 104

Guaranteed Loan Level 

Farm ownership 1,161 1,231 1,103 1,027 949 965 1,171 1,273 1,606 1,906

482

Attachment 1—Continued

Appendix I: ACIF Historical Program Subsidy Budget Authority and Loan Levels 

($ in Millions) 

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Farm operating, unsubsidized 1,548 1,013 951 885 937 918 946 1,235 1,510 1,498Farm operating, subsidized 511 418 278 283 272 272 135 150 182 65Conservation N/A N/A N/A N/A N/A N/A 0 0 0 1

3,220 2,662 2,332 2,195 2,158 2,155 2,252 2,658 3,298 3,470

Guaranteed Loan Appropriated Subsidy 

Farm ownership 5 9 6 5 5 6 5 4 6 7Farm operating, unsubsidized 54 32 34 27 28 23 23 31 35 35Farm operating, subsidized 69 49 35 38 34 27 23 21 26 9Conservation N/A N/A N/A N/A N/A N/A 0 0 0 0

128 90 75 70 67 56 51 56 67 51

Attachment 2

ACIF Historical Program Outlays 

($Millions) 

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

ACIF 

Direct Loan Subsidy Outlays Farm ownership 5 17 30 15 13 9 19 30 28 33Farm operating 56 109 87 56 61 70 77 107 67 64Emergency disaster 28 18 4 3 5 7 5 4 1 7Indian tribe land acquisition 0 0 0 0 0 1 0 0 0 0Boll weevil eradication 0 0 0 0 0 0 0 0 0 0Indian Highly Fractionated Land N/A N/A N/A N/A N/A N/A 0 0 0 0

483

Conservation N/A N/A N/A N/A N/A N/A 0 0 0 0Farm Operating ARRA N/A N/A N/A N/A N/A N/A 0 18 2 0

Total Direct 89 144 121 74 79 87 101 159 98 104

Guaranteed Loan Subsidy Outlays 

Farm ownership 5 9 6 5 4 5 4 4 5 7Farm operating, unsubsidized 48 32 33 28 28 35 23 30 35 9Farm operating, subsidized 63 49 31 37 34 15 18 21 25 35Conservation N/A N/A N/A N/A N/A N/A 0 0 0 0

Total Guaranteed 116 90 70 70 66 55 45 55 65 51

Attachment 3

Department Strategic Goal: Assist rural communities to create prosperityso they are self-sustaining, repopulating, and economically thriving.

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsFarm Loans

Direct Farm Ownership Loans 12,712 16,990 35,560 28,675 26,520Direct Farm Operating Loans 70,147 79,959 124,545 58,889 47,500Guaranteed Farm Ownership Loans 5,599 4,955 4,200 5,942 5,559Guaranteed Farm Operating Loans 27,379 23,341 20,645 25,529 23,902Guaranteed Farm Operating Loans, unsub. 22,666 22,908 30,754 35,338 35,126Emergency Disaster Loans 8,891 5,135 4,323 1,314 6,000Indian Tribe Land Acquisition Loans 0 0 0 0 0

Boll Weevil Eradication Loans 114 0 0 0 0

Indian Fractionated Land Loans 0 0 0 0 793Direct Conservation Loans 0 0 0 0 0Guaranteed Conservation Loans 0 0 0 0 0

484

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Loan Cost Expenses 7,920 7,920 7,920 7,920 7,920Individual Development Account Grants 0 0 0 0 0Administrative costs (direct) 243,993 277,206 305,903 309,848 304,655Indirect costs 2 146,791 23,979 4,214 4,273 8,518

Total Costs 1 546,212 462,393 538,064 477,728 466,493

FTEs 2,809 2,752 2,923 2,804 2,804

Performance Measure: Maintain or reduce avg processing time for direct and guaranteed loans.

Direct Loans (# of days): 27.00 27.80 33.50 30.80 32.50Guaranteed Loans (# of days): 12.60 8.50 13.50 13.25 13.00

Performance Measure: Increase % of beginning farmers, racial and ethnic minority farmers, and women farmers financed by FSA.

Percent: 15.90% 16.22% 17.40% 19.90% 18.00%

1For loan programs reflects subsidy budget authority to support loan levels. 2 Indirect costs include a small amount related to State Mediation Grants. 

(485)

AGRICULTURAL PROGRAM AUDIT 

(EXAMINATION OF USDA ENERGY AND FORESTRY 

PROGRAMS) 

WEDNESDAY, JULY 20, 2011

SUBCOMMITTEE ON CONSERVATION, ENERGY, AND

FORESTRY, 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON AGRICULTURE, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 

1300, Longworth House Office Building, Hon. Glenn Thompson 

[Chairman of the Subcommittee] presiding. 

Members present: Representatives Thompson, Goodlatte, Gibbs, 

Southerland, Roby, Huelskamp, Hultgren, Ribble, Holden, 

Schrader, Owens, McIntyre, Costa, Walz, Pingree, and Sablan. 

Staff present: Patricia Barr, Brent Blevins, Tamara Hinton, Josh 

Maxwell, Mary Nowak, Debbie Smith, Lauren Sturgeon, Heather 

Vaughan, John Konya, Nona Darrell, Liz Friedlander, Anne Simmons, and Jamie Mitchell. 

OPENING STATEMENT OF HON. GLENN THOMPSON, A 

REPRESENTATIVE IN CONGRESS FROM PENNSYLVANIA 

The CHAIRMAN. Good morning, everyone, this hearing of the Subcommittee on Conservation, Energy, and Forestry, entitled, Agricultural Program Audit: Examination of USDA Energy and Forestry Programs, will come to order. 

We will start with opening statements. I want to welcome everyone to today’s hearing to audit the USDA energy and forestry programs. 

Today we will hear from USDA about the farm bill programs administered under the energy and forestry titles. As with each farm 

audit we are holding, we will learn basic information about programs as well as whether any programs are duplicative. The first 

energy title was created in the 2002 Farm Bill, and it was designed 

to help develop feedstock for renewables fuels and to assist farmers 

and ranchers with energy efficiency. 

The 2008 Farm Bill expanded the energy title and committed 

more than a billion dollars in mandatory funding to help foster the 

development of advanced biofuels. 

Many of these programs, such as the Biomass Crop Assistance 

Program, were created with the purpose of fostering the creation 

of the next generation of advanced biofuels by developing dedicated 

energy crops. Other programs, like the Rural Energy for America 

486

Program, were expanded to better assist rural America’s producers 

and small businesses to implement energy efficiency measures and 

renewable energy systems. 

As we consider these programs and to what extent they have fulfilled their purpose, we must be aware that we face a significant 

challenge in the next farm bill. Thirty-seven programs in the farm 

bill do not have a budget baseline beyond the expiration of the current farm bill, including every program in the energy title. 

For those of you who are not familiar with the Congressional 

budgeting process, this means that none of the energy title programs have mandatory funding beyond the expiration of the 2012 

Farm Bill. Therefore, if we wish to see any of these programs continue into the future in their current form, we will be faced with 

the challenge of finding funding elsewhere. 

Now that will be challenging in these fiscal times as we are looking for ways to cut spending and make government more efficient. 

It is not as simple as reallocating funds from one title to another 

when the 37 programs I mentioned previously are spread through 

12 titles of the farm bill. 

In addition to energy, we will also examine USDA forestry programs today. The Committee shares jurisdiction of forestry matters 

with the Natural Resources Committee. 

Our Committee’s jurisdictions over forestry is focused on state 

and private forestry and landowner assistance programs, forestry 

research as well as oversight of the Forest Service. The forestry 

title is one of the smaller titles of the farm bill but no less important. 

Several Members of the Subcommittee, including me, have 

forestlands in their districts and appreciate the important relationship the Forest Service maintains with rural America. Though 

most of the forestry programs have a permanent authorization, it 

is important for us to review these programs to ensure that they 

are being carried out in a manner consistent with their purpose. 

I want to welcome our panel of witnesses from USDA. The Subcommittee looks forward to hearing your testimony and your 

thoughts on the programs we are examining today, and I look forward to working with you all in the future as we craft the next 

farm bill. 

[The prepared statement of Mr. Thompson follows:]

PREPARED STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN CONGRESS

FROM PENNSYLVANIA

Good morning. I want to welcome everyone to today’s hearing to audit USDA energy and forestry programs. 

Today, we will hear from USDA about the farm bill programs they administer 

under the energy and forestry titles. 

As with each farm audit we are holding, we will learn basic information about 

the programs, as well as whether any programs are duplicative. 

The first energy title was created in the 2002 Farm Bill. It was designed to help 

develop feedstocks for renewable fuels and to assist farmers and ranchers with energy efficiency. 

The 2008 Farm Bill expanded the energy title and committed more than $1 billion 

in mandatory funding to help foster the development of advanced biofuels. 

Many of these programs, such as the Biomass Crop Assistance Program, were created with the purpose of fostering the creation of the next generation advanced 

biofuels by developing dedicated energy crops. 

487

Other programs, like the Rural Energy for America Program, were expanded to 

better assist rural America’s producers and small businesses to implement energy 

efficiency measures and renewable energy systems. 

As we consider these programs, and to what extent they have fulfilled their purpose, we must be aware that we face a significant challenge in the next farm bill. 

Thirty seven programs in the farm bill do not have a budget baseline beyond the 

expiration of the current farm bill, including every program in the energy title. 

For those of you who are not familiar with the Congressional budgeting process, 

this means that none of the energy title programs have mandatory funding beyond 

the expiration of the 2012 Farm Bill. 

Therefore, if we wish to see any of these programs continue into the future in 

their current form, we will be faced with the challenge of finding funding elsewhere. 

That will be challenging in these fiscal times, as we are looking for ways to cut 

spending and make government more efficient. 

It is not as simple as reallocating funding from one title to another when the 37 

programs I mentioned previously are spread through 12 titles of the farm bill. 

In addition to energy, we will also examine USDA forestry programs today. 

The Committee shares jurisdiction of forestry matters with the Natural Resources 

Committee. 

Our Committee’s jurisdiction over forestry is focused on state and private forestry 

and landowner assistance programs, forestry research, as well as oversight of the 

Forest Service. 

The forestry title is one of the smaller titles of the farm bill, but no less important. 

Several Members of this Subcommittee, including me, have forestlands in their 

district, and appreciate the important relationship the Forest Service maintains 

with rural America. 

Though most of the forestry programs have a permanent authorization, it is important for us to review these programs to ensure that they are being carried out 

in a manner consistent with their purpose. 

I want to welcome our panel of witnesses from USDA. The Subcommittee looks 

forward to hearing your testimony and your thoughts on the programs we are examining today. 

I look forward to working with you all in the future as we craft the next farm 

bill. 

I now yield to the gentleman from Pennsylvania, Mr. Holden, for his opening 

statement.

The CHAIRMAN. I now yield to the gentleman from Pennsylvania, 

Mr. Holden, for his opening statement. 

OPENING STATEMENT OF HON. TIM HOLDEN, A 

REPRESENTATIVE IN CONGRESS FROM PENNSYLVANIA 

Mr. HOLDEN. Thank you, Mr. Chairman. 

I would like to thank our witnesses and guests for being here 

this morning. This hearing presents an important opportunity for 

Members of the Subcommittee to review the state of USDA energy 

and forestry programs. The Farm Service Agency, Rural Development and U.S. Forest Service, through the authority of this Committee, currently administer the energy and forestry titles and programs contained in the 2008 Farm Bill. 

This bill expanded many of the renewable energy programs originally authorized in the 2002 bill and introduced many new provisions intended to ensure that agriculture played an important role 

in moving this country towards energy independence. 

This Committee crafted a bill to encourage a move toward advanced biofuels by promoting research, development and demonstration of biomass-based renewable energy and by providing 

over $1 billion in investments needed to show a promising but fragile industry that we are committed to renewable energy production. 

Implementation of many of these energy title programs, however, 

has been slow, leading to uncertainty in an industry we intended 

488

to strengthen and support. In addition, the energy title does not 

have mandatory money for these programs after the 2008 Farm 

Bill expires. This leaves this Committee and the agencies before us 

today in a difficult situation during a difficult fiscal environment. 

Similarly the forestry title, which impacts forestland management in the 155 National Forests and 20 grasslands in the National Forest System does not have any mandatory funding. To ensure the Forest Service continues to meet the needs of present and 

future generations, we must ensure that forestry title policies are 

efficient and accessible. 

It is important for us to find out today which programs have 

been implemented and are accomplishing our goal of a well-managed agency dedicated to forest stewardship. We must all work together to make certain taxpayer dollars are being spent wisely and 

as intended if we are to sustain healthy, diverse and productive 

forests and expand domestic production of renewable energy to decrease our dependence on foreign oil. 

I look forward to hearing from our witnesses today and yield 

back my time, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. 

The chair would request that other Members submit their opening statements for the record so that the witnesses may begin their 

testimony and to ensure there is ample time for questions. 

[The prepared statement of Ms. Fudge follows:]

PREPARED STATEMENT OF HON. MARCIA L. FUDGE, A REPRESENTATIVE IN CONGRESS

FROM OHIO

Thank you Chairman Thompson and Ranking Member Holden, for convening today’s hearing and thank you Mr. Tidwell, Ms. Canales, and Mr. Garcia for educating 

us on energy and forestry provisions of the farm bill. As a new Member of this Committee, I appreciate these opportunities to learn some substance about the issues 

that will be relevant for the next iteration of the farm bill. 

I am particularly interested in the USDA’s renewable energy research programs, 

and specifically, the Biodiesel Fuel Education Program. On one hand, the price of 

commodities like petroleum and oil have shot up over the past decade, so it is important for the U.S. as a nation to explore cheaper, cleaner, renewable fuel sources. 

There are institutions and organizations in my district that are blazing the path for 

new energy technology and this program represents a great funding opportunity for 

them and similar institutions across the country. Moreover, being able to use biomass to produce cleaner, renewable fuel will have a positive effect on the economy 

and make it less expensive for food producers to provide the fresh and nutritious 

foods that people depend on both here and abroad. 

I am also interested in the Urban and Community Forestry Program as I represent an urban district. Scientific evidence of green spaces has been mounting for 

some time now. For example, One tree can remove 26 pounds of carbon dioxide from 

the atmosphere annually, equaling 11,000 miles of car emissions. Plants have been 

shown to reduce the urban heat island effect, i.e., where buildings, asphalt, and concrete absorb solar radiation and then reemit it as heat, causing the air temperature 

of the city to rise, directly by shading heat absorbing surfaces, and indirectly 

through evaporative cooling. Green spaces can also reduce noise pollution, by dense 

screens of trees and shrubs, and can even cleanse partially-treated wastewater. I 

have worked on awareness around childhood obesity and youth fitness, so programs 

that make the outdoors safer and more inviting are certainly of interest to me. 

Again, I thank the Chairman for holding today’s hearing and I look forward to 

hearing from our witness.

The CHAIRMAN. I am pleased to welcome our panel of witnesses 

to the table today. First, we have Mr. Tom Tidwell, Chief of the 

U.S. Forest Service, U.S. Department of Agriculture; Ms. Judy 

Canales, Administrator of the Rural Business Cooperative Service, 

489

USDA; and Mr. Juan Garcia, Deputy Administrator of the Farm 

Service Agency. 

Chief Tidwell, begin when you are ready. 

STATEMENT OF THOMAS TIDWELL, CHIEF, U.S. FOREST

SERVICE, U.S. DEPARTMENT OF AGRICULTURE,

WASHINGTON, D.C. 

Mr. TIDWELL. Thank you. 

Mr. Chairman, Members of the Subcommittee, I want to thank 

you for the opportunity to be here in front of you today to discuss 

the forestry title of the farm bill. 

The Forest Service not only manages 193 million acres of National Forest, but we also work with our partners across the country to help manage over 750 million acres of our nation’s forests. 

Two-thirds of our nation’s forests, over 500 million acres, are in 

non-Federal ownership. Over ten million families own forests. 

Our nation’s forests are a primary source of clean water, clean 

air, wildlife habitat and recreational settings. They are also the key 

component of America’s rural landscape, supporting our healthy 

rural communities and economies and supporting well-paying jobs. 

Forests are a key part of our rural economies. In fact, roughly 

75 million acres of forests belong to working farms with over 

900,000 jobs nationwide that rely on our private forests. The programs we will talk about today help keep America’s forests working, keeps them productive, rather than having our forests go to 

some other use, like some form of development. 

The Forest Service, primarily through our state and private forestry programs, we provide technical assistance and cost-share financial assistance to landowners to help conserve and enhance the 

benefits from our nation’s forests. 

These programs are delivered by our expanding network of partners centered around the state forestry agencies. These efforts are 

a key part of Secretary Vilsack’s ‘‘All Lands’’ vision for the nation’s 

forests. 

This Federal investment, it leverages the capacity of our state 

foresters and their partners to manage the state and private lands 

to continue to produce the ecological, social and economic benefits 

that the American people rely on. 

In the 2008 Farm Bill, it placed an increased emphasis on forestry and forest landowners. For the first time, the farm bill set 

priorities for private forest conservation to conserve and manage 

our working forest landscapes for multiple values and uses, to protect forests from threats and to enhance the public benefits from 

our private forests. 

Furthermore, the 2008 Farm Bill requires each state and territory to develop an assessment of the forest resource conditions and 

develop a long-term forest research strategy to address the threats 

and identify the resources that are needed. 

The resulting forest action plans, really a nationwide strategy, 

are a long-term plan for how we should prioritize our limited resources to achieve our national conservation goals. These action 

plans address the primary threats facing the nation’s forests, including changing ownership of private forestlands, forest fragmentation, water quality and quantity issues, increasing urbanizaVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00501 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
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tion and increasing amounts of the wildland/urban interface that 

we have to deal with during fire seasons, and also addresses the 

effects from the changing climate, wildfire, and invasive species. 

I don’t have to have point out what we have been seeing in this 

country this year, as far as the devastating natural disasters that 

have been occurring with the floods, the tornadoes and the 

wildfires and in the drought that this country has been experiencing across the entire southern tier of this country. 

There are about 325 million acres of private forests that are currently at risk from a catastrophic wildfire; 58 million acres are at 

risk of being overtaken by insect and disease and invasive species; 

and urban development could swallow another 57 million acres of 

forests by 2030. 

It is essential that we work together, the various agencies, our 

state partners, so that we can help to address these issues across 

not only the public lands but also our private forested lands, so 

that we can ensure that the generations to come will have the 

same benefits that we have enjoyed from our nation’s forests. 

The Forest Service, we administer a number of programs that 

are authorized by the farm bill. These programs are not mandated 

funding programs, but they do receive discretionary appropriations 

each year. The first is our Forest Health Management Program. 

This is a program that helps to identify and project where we are 

going to see the next insect, disease and invasive outbreaks that 

are going to occur. 

It provides the information that not only we rely on the public 

lands, but also our private landowners rely on this information so 

that they know where we need to be moving forward to be able to 

address the next threat. 

Some of the invasives that we are dealing with are the emerald 

ash borer, the Asian longhorn beetle, dealing with sudden oak 

death and hemlock wooly adelgid. 

Our next program is our Cooperative Fire Assistance, and there 

are two parts of this. The State Fire Assistance, this program provides matching Federal assistance for our fire management activities with our states, including to help make sure that the states are 

prepared; they have their plans in place; they are able to provide 

the training, not only to their personnel but also to our rural volunteer fire departments; and then also it provides funding for hazardous fuel treatments. 

The second part is with our Volunteer Fire Assistance Program, 

which is focused on our volunteer fire departments across this 

country, to be able to make sure they have the technology and 

equipment that they need to be able to respond. 

Volunteer rural fire departments, they represent really the first 

line in dealing with wildland fire. They provide nearly 80 percent 

of initial attack on wildland fires in the United States since almost 

2⁄3 of all wildland fires in this country are on non-Federal lands. 

Our next program is the Forest Stewardship Program. This program delivers forestry technical assistance to individual forest 

landowners to help them to be able to develop a management plan 

for their lands. This is focused on the individual landowners that 

not always will have the access to the technology, the access to the 

expertise, to really understand what they should be doing, what 

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they need to be doing on their lands to make sure that we can sustain the forests that are on their lands. 

Since the authorization of this in 1990, the Forest Stewardship 

Program has provided funding for more than 330,000 forest management plans, covering 38 million acres nationwide and has 

reached more than five million private forest landowners. 

Our next program is the Urban and Community Forestry Program. With 80 percent of Americans now living in our cities and 

our towns, this program has really made a difference to help the 

communities understand the benefits of having tree cover in our 

urban settings. Some of the things that we are doing is with our 

i-Tree program, which is a Web-based program that allows not only 

cities and communities but also individuals to be able to use that 

program to actually see where planting trees on their property, 

where to place trees on their property, will significantly reduce the 

amount of energy that they are using. And also with our communities, we have had some great success with the cities using this 

program to actually be able to reduce the costs of having to deal 

with storm water runoff because of an increase in their forest cover 

within their cities. 

Our next program is the Forest Legacy Program. This is a program that helps us to protect environmentally important private 

forest areas that are threatened by conversion to non-forest or to 

development. We work with willing landowners to provide a conservation easement to ensure that that private landowner can stay 

on their land and that we can continue to have productive working 

forestlands. 

In addition to these programs, the 2008 Farm Bill authorized 

four new programs that are administered by the Forest Service. 

The first is the Community Forest and Open Space Conservation 

Program that allows us to work with our tribal governments, local 

governments and qualified nonprofit entities so that they can acquire private forestland that is threatened by conversion and nonforest uses and establish community forests that provide access 

and community benefits. 

The next is the Pest and Disease Revolving Loan Fund that provides loans to local government to finance the purchase of equipment that is needed for management to address disease or pest-infested trees. 

Our Community Wood Energy Program provides the states and 

local governments with grants to develop community wood energy 

plans to either acquire or to upgrade community wood energy systems. But this is primarily focused on universities, medical service 

areas, that we are trying to encourage expansion of biomass plants 

that deal with much larger areas instead of just individual offices 

or individual schools. 

And then the last is our Forest Biomass for Energy Program that 

directs the Forest Service to conduct a competitive research and development program to encourage the use of forest biomass for energy. 

In conclusion, sound management of our nation’s forestlands is 

important to all Americans. Once again, there are over 500 million 

acres of non-Federal forestland in the United States. Our recent research has shown that every year, large areas are lost to developVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00503 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
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ment sprawl. The majority of the acres at risk, more than 430 million acres, are owned by individual families. And some of these private forest owners, they just lack the financial and technical resources to be able to hold on to their lands and manage their forests effectively. The farm bill programs offer the opportunity for 

those folks to be able to stay on their land, to be able to continue 

to have productive, working forested farms and ranches. 

I want to thank you for the opportunity to be here to discuss the 

Forest Service’s farm bill programs, and I am happy to answer any 

questions that you may have today. 

[The prepared statement of Mr. Tidwell follows:]

PREPARED STATEMENT OF THOMAS TIDWELL, CHIEF, U.S. FOREST SERVICE, U.S. 

DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Mr. Chairman and Members of the Committee, thank you for the opportunity to 

appear before you today to discuss the Forestry Title of the farm bill. 

The Forest Service not only manages the 193 million acres of National Forests, 

but also works with partners across the country to help manage all 750 million 

acres of our nation’s forests. Two thirds of our nation’s forests, over 500 million 

acres, are in non-Federal ownership. These state, private and tribal forests comprise 

about 20 percent of our nation’s land base. Management practices on these lands 

impact everyone, both socially and economically, as well as affecting the natural environment. The nation’s private forests are a key component of America’s rural landscapes, stimulating healthy rural communities and economies, and supporting wellpaying jobs. 

The Forest Service, primarily through its State and Private Forestry Programs, 

provides both technical assistance and cost-share financial assistance to landowners 

and resource managers to help conserve and enhance the benefits from our nation’s 

forests and protect them from harm. These State and Private Forestry Programs are 

delivered by an ever expanding network of partners centered around the State Forestry agencies. As a result, we work where Federal, state, and local interests intersect. We also work closely with a variety of Federal agencies helping them deliver 

their programs to benefit America’s forests and the American people. These efforts 

are a key part of Secretary Vilsack’s ‘‘All Lands’’ vision for our nation’s forests. This 

Federal investment leverages the capacity of State Foresters and their partners to 

manage state and private lands and produce ecological, social and economic benefits 

for the American people. 

2008 Farm Bill: State-Wide Assessments and Strategies for Forest Resources 

The 2008 Farm Bill contained an increased focus on forestry and forest landowners. For the first time, the farm bill set priorities for private forest conservation: 

(1) conserving and managing working forest landscapes for multiple values and 

uses; (2) protecting forests from threats; and (3) enhancing public benefits from private forests (section 8001). To help ensure success in focusing on these priorities, 

section 8002 of the 2008 Farm Bill required each state and territory, by June 2010, 

to develop an assessment of the forest resource conditions within its boundaries and 

develop a long-term forest resource strategy to address threats and describe necessary resources. All states and territories submitted these Assessments to the Forest Service by the deadline and they now represent the first-ever ‘‘strategic plan’’ 

for the nation’s forests. The resulting Statewide Assessments and Strategies, or Forest Action Plans, provide an analysis of forest conditions and trends and delineate 

priority landscape areas in each state and territory. They offer practical, long-term 

plans for focusing state, Federal and other resources on priorities that will be most 

effective in achieving national conservation goals. 

The approach for developing these plans varied widely among states and territories, reflecting differences in the way that national, state, and local priorities came 

together, the differing challenges each faced, and the resources available to tackle 

those challenges. Many states engaged in wide-ranging stakeholder involvement 

processes and involved a variety of partners in establishing their priorities. They 

used an ‘‘All Lands’’ approach that considered all forestland within their boundaries, 

regardless of ownership. The primary trends and threats facing the nation’s forests, 

as revealed in the Forest Action Plans, include changing ownerships of private 

forestlands, forest fragmentation, water quality and quantity issues, increasing urVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00504 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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banization, increasing amounts of Wildland Urban Interface areas, and the effects 

of climate change, wildfire, and invasive species. Each of these issues intertwines 

with the others. Cooperation and coordination across jurisdictional boundaries are 

clearly needed to address these issues, most of which can only be addressed meaningfully at a landscape level. By focusing on priority outcomes that address landscape-scale issues, the Forest Action Plans provide a tool to guide investments that 

will conserve, protect, and enhance our forests. 

2008 Farm Bill: Forestry Programs 

To achieve the priorities of conserving, protecting and enhancing the nation’s forests, the Forest Service administers a number of programs through its State and 

Private Forestry Deputy Area that are authorized by the farm bill. Many of these 

programs stem from older laws, like the 1911 Weeks Act, the 1924 Clarke-McNary 

Act, and the Cooperative Forestry Assistance Act of 1978. However, in recent years, 

these laws have most often been amended in the farm bill and new private 

forestland programs administered by the Forest Service have been authorized. Also, 

Forest Service programs authorized by the farm bill are funded through discretionary appropriations each year. 

This testimony provides an overview and status for six of the Forest Service programs, as well as the forestry programs housed in the Natural Resources Conservation Service and Farm Service Agency. 

Forest Health Management—Federal and Cooperative Lands: The Forest 

Health Management (FHM) program is truly all-lands. It is made up of two components: Forest Health Protection on Federal lands and Forest Health Protection on 

Non-Federal lands. Funding for these components come in both the State and Private and Wildland Fire Management appropriations. The FHM program provides insect, disease, and invasive plant survey and monitoring information and technical 

and financial assistance to prevent, suppress, and control outbreaks threatening forest resources. FHM utilizes science, active land management, and technology transfer expertise to restore and sustain forest landscapes—across urban, private, state, 

Tribal, and Federal forests. Recently completed Forest Action Plans have, in many 

cases, identified forest health as a key state priority. These Plans are being used 

to help guide priorities at the national and regional levels. The technical and financial assistance that FHM provides help to ensure that forests remain healthy and 

resilient by minimizing impacts of native and invasive insects and diseases, and 

invasive plants. 

The FHM program works collaboratively with other agencies, especially the Animal and Plant Health Inspection Service (APHIS), to combat several damaging 

invasive pests, such as emerald ash borer, Asian long horned beetle, sudden oak 

death, and hemlock woolly adelgid. FHM also plays an active role in international 

activities. Many of the current forest health issues regarding invasive and exotic insects and diseases are directly related to the international arena. During Fiscal 

Year (FY) 2010, FHM specialists were involved in approximately 50 internationalrelated activities in 17 countries, including biological control of invasive insects, providing training in bark beetle management and identification, and technology transfer for aerial survey detection. 

In FY 2010, FHM received $78 million in funding for this work on Federal lands 

and $60 million in funding for this work on non-Federal lands. Over the last 3 

years, FHM has protected almost 4 million acres of Federal and non-Federal lands 

from invasive and native pests. 

The President’s FY 2012 Budget proposes $118.9 million for Forest Health Management. 

Cooperative Fire Assistance—State Fire Assistance: The State Fire Assistance (SFA) program provides matching financial assistance through partnership 

agreements to State Foresters for all fire management activities including preparedness activities, planning, training, hazardous fuel treatments, and the purchase and 

maintenance of equipment. Funds provide financial assistance, technical training, 

and equipment to ensure that Federal, state, and local fire agencies can deliver a 

coordinated response to wildfire. The emphasis is on improving fire planning, initial 

attack capabilities, and use of the Incident Command System and wildland fire techniques training for local fire agencies. This program also supports programs such 

as the Smokey Bear fire prevention campaign, Firewise, and Ready, Set, Go! Funds 

are provided in both the State and Private and Wildland Fire Management appropriations. We emphasize funding in areas that have developed or are developing 

Community Wildfire Protection Plans (CWPPs), FEMA hazard mitigation plans, or 

other collaboratively developed hazard mitigation plans. Recipients of SFA funds are 

required to provide a 50 percent cost-share match, which leverages the amount of 

work that is completed with SFA funds. 

494

In FY 2010, the agency received $110 million in SFA funds for this work, which 

were used, in part, to train almost 15,000 firefighters across the county and conduct 

over 19,000 prevention and education programs. In the past 3 years, this program 

has assisted over 13,000 communities at risk from wildland fire in developing management plans and provided funding for over 660,000 acres of hazardous fuels treatments near communities. 

The President’s FY 2012 Budget proposes $78.8 million for State Fire Assistance. 

Cooperative Fire Assistance—Volunteer Fire Assistance: Originally authorized in Title IV of Public Law 921–419, ‘‘The Rural Development Act of 1972,’’ the 

Volunteer Fire Assistance (VFA) program provides Federal financial, technical, and 

other assistance to State Foresters and other appropriate officials to organize, train 

and equip fire departments in rural communities (population of 10,000 or less) to 

suppress fires. A department may buy fire equipment, pay for training or training 

materials, or cover the cost of department incorporation, as long as the funds are 

matched. Volunteer fire departments receiving VFA funds are required to provide 

a 50 percent cost-share match. Funds are provided in both the State and Private 

and Wildland Fire Management appropriations. 

Volunteer fire departments play a major role in suppressing wildfires on Federal 

lands. Rural Fire Departments represent the first line of defense in coping with fires 

and other emergencies in rural areas and rural communities. They provide nearly 

80% of initial attack on wildland fires in the United States. These departments are 

charged with the protection of lives, homes and business investments in rural America. Their presence enhances rural development opportunities and economic vitality, 

thereby improving standards of living in rural areas. 

The Forest Service and the Department of the Interior land management agencies 

have entered into cooperative agreements with many rural volunteer fire departments for the purpose of protection of both communities and natural resources. A 

level of fire protection is attained that would be impossible without such cooperation. Interagency agreements provide a cost-effective means of enhancing fire protection. 

In FY 2010, the agency received $15.7 million in VFA funds. These funds were 

used to train over 9,000 firefighters in rural areas and helped to expand or create 

18 fire departments in rural communities. In the past 3 years, the program has assisted almost 38,000 volunteer fire departments. The President’s FY 2012 Budget proposes $13.4 million for Volunteer Fire Assist- ance. Forest Stewardship Program: The Forest Stewardship Program is the only 

Forest Service program focused on private forestland management. The program delivers assistance by leveraging a national network of forestry technical assistance 

providers and programs. Because of this unique role—and since most of America’s 

forests are privately owned—the Forest Stewardship Program is central to addressing forest resource management issues. Individual forest landowners are assisted 

within the context of forest resource management issues that cross boundaries and 

encompass multiple ownerships and jurisdictions. The Forest Stewardship Program 

plays a fundamental role in keeping forests as forests, preparing forest landowners 

for forest products and ecosystem services markets, qualifying them for incentive 

programs, and maintaining jobs and diverse forest products markets in rural communities. Since its authorization in 1990, the Forest Stewardship Program has provided funding for more than 330,000 comprehensive forest management plans covering 38 million acres nationwide and has reached more than five million private 

forest landowners through a variety of technical and educational assistance programs. 

In FY 2010, the agency received $29.4 million in Forest Stewardship funds. These 

funds were used to conduct landowner education programs for almost 230,000 landowners and fund almost 15,000 new or revised Forest Stewardship Plans. In FY 

2010, over 1.8 million acres of nonindustrial private forestland was being managed 

sustainably under Forest Stewardship Management Plans. 

The President’s FY 2012 Budget proposes $29.4 million for the Forest Stewardship program. 

Urban and Community Forestry Program: The Urban and Community Forestry Program (U&CF) fosters the creation of healthier, more livable urban environments across the nation by promoting benefits of tree cover in urban areas and communities, encouraging maintenance of trees and community forests, and expanding 

research and education efforts intended to improve the understanding of trees’ economic, environmental, social and psychological, and energy conservation benefits. 

With 80% of Americans living in cities, suburbs and towns, there are strong environmental, social, and economic cases to be made for the conservation of green 

spaces to guide growth and revitalize city centers and older suburbs. The Urban and 

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Community Forestry Program is helping to improve the condition and extent of the 

100 million acres of community trees and forests in cities, suburbs, and towns where 

people live, work and play. 

All Americans benefit from the multitude of services that the urban tree canopy 

provides, including improved human health and wellbeing, green jobs, energy conservation, improved air and water quality, carbon sequestration, recreation, and 

wildlife habitat. Urban and Community Forestry also provides support and funding 

for cutting-edge technologies and information, such as the ‘‘i-Tree’’ suite of local decision support tools that include urban forest benefits assessment, pest detection 

and storm response protocols. In FY 2010, the Forest Service received $30.4 million in Urban and Community 

Forestry funds. These funds were used to assist over 7,000 communities reaching 

a total of 177 million people. In the past 3 years, the program has helped over 

21,000 communities. 

In FY 2012 the President’s Budget includes $32.4 million for the Urban and Community Forestry program. 

Forest Legacy Program: The Forest Legacy Program (FLP) protects environmentally important private forest areas that are threatened by conversion to nonforest uses. In partnership with participating states, private landowners, and other 

conservation partners the FLP works to identify important forestlands and protect 

them for future generations. The FLP provides the opportunity for the continuation 

of traditional forest uses, including forest management activities and outdoor recreation. Using conservation easements and fee-simple purchases, FLP gives priority 

to lands that have important scenic or recreational values, riparian areas, fish and 

wildlife values, and other ecological values. Family forest owners and timber companies currently face increasing pressure to sell, subdivide, and develop their land. 

This program provides financial incentives to help private landowners stay on their 

land to conserve their forests, thereby protecting outdoor recreation opportunities, 

fish and wildlife habitat, water quality and resource-based economies. The program 

operates on a ‘‘willing buyer-willing seller’’ basis and is a non-regulatory, incentivebased land conservation program. 

Funds for the FLP program are provided through the Land and Water Conserva- tion Fund. In FY 2010, the agency received $78.96 million in FLP funding. Since 

its inception, the program has protected over 2 million acres of important forest 

from conversion. 

In FY 2012, the President’s Budget includes $135 million for the Forest Legacy 

program. 

In addition to these programs, the 2008 Farm Bill authorized four new programs 

administered by the Forest Service, which are in various stages of implementation.

1. Community Forest and Open Space Conservation Program: This program, authorized under Section 8003 of the 2008 Farm Bill, directs the Forest 

Service to provide grants to Tribal governments, local governments, and qualified nonprofit entities to acquire private forestland that is threatened by conversion to non-forest uses, and establish community forests that provide accessible 

community benefits. The benefits include public recreation, improvement of environmental health, economic activity, and forest-based educational programs. 

This program received $500,000 in funding in FY 2010 and $1 million in FY 

2011. The Forest Service is still in the process of finalizing the regulations for 

this program. The agency engaged in government-to-government consultation 

with tribes during a 145 day period, and conducted a 60 day public comment 

period, which ended on March 7, 2011. The Forest Service analyzed comments 

received during both processes and prepared final regulations for the program. 

The final regulation is planned for publication in the Federal Register later this 

year.

2. Pest and Disease Revolving Loan Fund: The Pest and Disease Revolving 

Loan program was authorized in section 10205 of the 2008 Farm Bill. The program is authorized to provide loans to local governments to finance the purchase of equipment needed for the management of diseased or pest-infested 

trees. The agency has implemented an interim procedure to help address pest 

and disease issues, using its existing grant authorities to make grants to the 

states, which in turn, make grants available to local governments.

3. Community Wood Energy Program: Section 9013 of the 2008 Farm Bill 

directs the Forest Service to establish the Community Wood Energy Program. 

This program authorizes appropriations of $5 million per year for fiscal years 

from 2009 through 2012 for a grant program to provide state and local governments up to $50,000 to develop community wood energy plans. Competitive 

grants could also be available to acquire or upgrade community wood energy 

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systems that primarily service public facilities owned or operated by the governmental entity and that use woody biomass as the primary fuel. To date, this 

program has not been funded.

4. Forest Biomass for Energy Program: Section 9012 of the 1008 Farm Bill 

directs the Forest Service to conduct a competitive research and development 

program to encourage use of forest biomass for energy. The agency’s Research 

and Development Deputy Area would administer this program. To date, this 

program has not been funded.

Biomass Commercial Utilization Grant Program: The agency also implements a program, the Biomass Commercial Utilization Grant Program, that authorizes grants to an owner or operator of a facility that uses biomass for wood-based 

products or other commercial purposes, to offset the costs incurred to purchase biomass. Section 203 of the Health Forests Restoration Act provided an authorization 

of appropriations for this program through Fiscal Year 2008. Through appropriations acts, the agency has provided $5 million of hazardous fuels funds for the biomass utilization grants each year since 2005. From 2005 to 2010, the grants have 

focused on assisting businesses and communities with the production, delivery, and 

utilization of wood residues. The Forest Service has provided grants for equipment 

such as grinders, harvesters, new trucking methods, energy production facilities, 

roundwood manufacturing, and production of wood shavings for animal bedding 

markets. In FY 2010, 13 biomass grant awards were made to small businesses and 

community groups in six states. In 2011, the emphasis was changed to focus on engineering design, permitting, and other preconstruction work for wood energy facilities. Grants for biomass utilization have totaled over $30 million to 123 grant recipients in 21 states since 2005. 

2008 Farm Bill: Cultural and Heritage Cooperation 

Subtitle B, Cultural and Heritage Cooperation Authority applies specifically to the 

Forest Service’s interactions and capacity for cooperation with federally recognized 

Indian tribes. Section 8106, ‘‘Prohibition on Disclosure,’’ exempts certain information 

received by the agency from the Tribes from disclosure under the Freedom of Information Act. Other provisions in Subtitle B relate to reburial of human remains and 

cultural items, temporary closures for traditional and cultural purposes, and gathering of forest products by Tribes. 

In addition to the Forest Service, USDA’s Natural Resource Conservation Service 

(NRCS) and Farm Service Agency (FSA) also have forestry programs authorized in 

the 2008 Farm Bill. 

Natural Resources Conservation Service—Forestry Activities 

USDA’s NRCS assists private forest owners in managing the nation’s nonindustrial private forests through technical and financial assistance. NRCS has a longterm combined objective for forestland with an expected outcome of healthy 

forestlands that are productive, diverse, resilient, and provide a wide range of ecosystem services. During the past 3 years, about 4.7 million acres of private 

forestland have received conservation treatment through NRCS assistance. 

In 2010, the Environmental Quality Incentives Program (EQIP) authorized under 

the Conservation Title of the farm bill, provided about $51 million (about six percent 

of total EQIP funding) to private forest owners to improve forest health. This level 

of assistance has steadily increased since enactment of the 2008 Farm Bill. Conservation practices funded by EQIP include forest health treatments, tree planting 

and reforestation activities, and plan development to help guide the stewardship of 

forestlands into the future. So far in FY 2011, EQIP has funded 1,443 new forest 

management plans. Additionally, over 20 percent of the FY 2010 funds under the 

Wildlife Habitat Incentive Program (WHIP) have supported wildlife habitat improvement on private forestlands with special emphasis in the Longleaf Pine Ecosystem Restoration Initiative in the southeast and the New England/New York Forestry Initiative. 

The Conservation Stewardship Program (CSP) takes a different approach than 

other programs by encouraging existing good stewards to continue and expand their 

forest management. In the past 2 years, about 2.1 million acres of nonindustrial private forestland were enrolled in CSP. The most popular CSP forest practices include 

prescribed burning, forest stand improvement, and building shelters and structures 

for wildlife. Additionally the Cooperative Conservation Partnership Initiative (CCPI) 

component of EQIP, WHIP, and CSP program funds were leveraged with resources 

from state and local governments and conservation organizations in seven focused 

forested landscapes with projects ranging from restoring salmon spawning grounds 

to reducing sediment loss from timber harvesting operations. 

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Through the Healthy Forests Reserve Program (HFRP), NRCS assists landowners 

in restoring, enhancing, and protecting forest ecosystems to: (1) promote the recovery of threatened and endangered species; (2) improve biodiversity; and (3) enhance 

carbon sequestration. Participants may enroll in HFRP through restoration agreements, contracts, and easements depending on their objectives. An FY 2010 HFRP 

project in Oregon is working to increase Northern Spotted Owl habitat while maintaining a working forest. The effort is a partnership between NRCS, the U.S. Fish 

and Wildlife Service, the Oregon Department of Forestry and 11 private landowners. 

The project includes long-term plans for stand management and provides the landowners with assurances that if they manage their property in accordance with the 

plan, they will avoid future regulatory restrictions on the use of that land under 

the Endangered Species Act. In FY 2010, over 5,600 acres were enrolled in 13 states 

for about $6.5 million in financial assistance. 

Farm Service Agency—Forestry Activities 

USDA’s Farm Service Agency (FSA) implements the Emergency Forest Restoration Program (EFRP), a program that provides payments for nonindustrial private 

forestland to carry out emergency measures to restore land damaged by a natural 

disaster. Funding for EFRP is by appropriations. For FY 2010, $18 million was 

made available by supplemental appropriations. 

To be eligible for EFRP, nonindustrial private forestland must have existing tree 

cover (or had tree cover immediately before the natural disaster occurred and is 

suitable for growing trees). EFRP program participants may receive financial assistance of up to 75 percent of the cost to implement approved emergency forest restoration practices. A payment limitation of $500,000 per person or legal entity applies 

per disaster. 

EFRP program participants may implement emergency forest restoration practices including emergency measures necessary to repair damage caused by a natural 

disaster to natural resources on nonindustrial private forestland and to restore forest health and forest related resources on the land. 

Conclusion 

In conclusion, sound management of our nation’s forestlands is important to all 

Americans. There are over 500 million acres of non-Federal forestland in the United 

States and recent research has shown that every year, large areas are lost to development and sprawl. The majority of the acres at risk, more than 430 million acres, 

are owned by families and individuals. Some of these private forest owners lack the 

financial and technical resources to hold on to and manage their forests effectively. 

Farm bill programs offer protection for forests and support for these working landscapes by directing technical support and resources to these forest landowners—

helping to keep working forests intact, providing quality jobs in rural America, and 

keeping privately-owned forestlands together for future generations. 

The Forest Service’s State and Private Forestry Deputy Area administers these 

programs through robust partnerships with states, private landowners, and other 

partners. These programs and partnerships help private landowners and rural communities care for their forests, strengthen local economies, and maintain a high 

quality of life. 

Thank you for the opportunity to be here today to discuss the Forest Service’s 

farm bill programs. I am happy to answer any questions from the Subcommittee 

Members.

The CHAIRMAN. Thank you, Chief. 

Administrator Canales, go ahead and proceed whenever you are 

ready. Thank you. 

STATEMENT OF JUDY CANALES, ADMINISTRATOR, RURAL 

BUSINESS COOPERATIVE SERVICE, U.S. DEPARTMENT OF 

AGRICULTURE, WASHINGTON, D.C. 

Ms. CANALES. Chairman Thompson, Ranking Member Holden, 

and Members of the Subcommittee, thank you for the opportunity 

to review Rural Development’s energy programs, accomplishments 

in creating jobs and building a cleaner, more secure, more sustainable and domestically produced energy sector for future generations. 

498

The mission of Rural Development’s Rural Business Service programs is to enhance the quality of life for rural Americans by providing leadership in building competitive businesses. We provide 

funding opportunities for the development and commercialization of 

renewable energy sources to change the way people power their 

homes, businesses and industries. 

We meet these goals by providing financial and technical assistance to businesses and cooperatives located in rural communities 

and establishing strategic alliances and partnerships that leverage 

public, private and cooperative resources to create jobs and stimulate rural economies. 

Through USDA’s Rural Business Service, four title IX programs 

are implemented to assist the agriculture sector in finding energy 

solutions and helping rural residents and communities access renewable energy systems and to use energy more efficiently. These 

four programs are section 9003, the Biorefinery Assistance Program; section 9004, the Repowering Assistance Program; section 

9005, the Advanced Biofuel Payment Program; and section 9007, 

the Rural Energy for America Program, REAP. 

The section 9003 Biorefinery Assistance Program provides muchneeded assistance in the development of new and emerging technologies to develop advanced biofuels. 

My agency, Rural Business Service, is currently reviewing ten 

applications totaling over $1 billion in funding requests. Through 

the section 9004 Repowering Assistance Program, we will provide 

payments to biorefineries who switch from using fossil fuels to 

using renewable biomass to produce heat or power for their facilities. We are currently reviewing applications at this moment. 

The section 9005 Advanced Biofuels Payment Program provides 

payments to eligible producers to support and expand the production of advanced biofuels. To date, almost $30 million in assistance 

payments have been provided to 141 advanced biofuel producers. 

The section 9007 Rural Energy for America Program, REAP, is the 

longest running renewable energy program that Rural Business operates. In Fiscal Year 2010, we provided 2,400 grants and loan 

guarantees, totaling $159 million in support of energy audits and 

energy efficiency and renewable energy projects, including projects, 

such as windmills, methane digesters and geothermal systems. 

REAP provides an immediate impact and engages all types of 

communities. 

For example, the Menard family, a farming couple located in 

New York, received a $31,000 grant for a solar electric generating 

system. The system has already saved this farm and this family 

over $11,000 in electric costs. 

Since the signing of the 2008 Farm Bill, our renewable energy 

programs have invested over $460 million in biorefineries and renewable energy and energy efficiency systems. 

Through Fiscal Year 2010, over 6,100 awards were made, saving 

or generating enough energy to support 2.3 million households for 

a year. These programs are distinct and unique in the Federal Government. There are no other programs that solely support cellulosic 

and advanced biofuel production or the conversion of biorefinery 

power systems to renewable energy. 

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REAP is also unique, creating a multitude of methods to support 

the energy sector. 

The USDA Rural Business Service, my agency, is the only Federal agency that is focused and dedicated to promoting rural communities and businesses in rural communities. Our field office 

structure reaches out to the poorest, most rural counties in America, providing Federal support to businesses who will not receive financial aid from any other source. 

We are the leader in promoting the creation and expansion of renewable energy in rural areas. 

Advancing biomass and biofuel production, which has the potential to create jobs, is one of the many ways we are looking to rebuild and revitalize rural America. By producing renewable energy, 

especially biofuels, America’s farmers, ranchers and rural communities have the ability to be help ensure our nation’s energy security, environmental security and economic security. 

In conclusion, thank you for your time, Mr. Chairman, and Members of the Subcommittee. We at the USDA Rural Business Service 

are committed to promoting renewable energy in rural communities 

through our grants, our loan guarantees and payment programs. 

I will be happy to respond to questions from the Committee. 

Thank you. 

The CHAIRMAN. Thank you, Administrator. 

Deputy Administrator Garcia, go ahead and proceed whenever 

you are ready. 

STATEMENT OF JUAN GARCIA, DEPUTY ADMINISTRATOR, 

FARM SERVICE AGENCY, U.S. DEPARTMENT OF

AGRICULTURE, WASHINGTON, D.C. 

Mr. GARCIA. Chairman Thompson, Ranking Member Holden, 

Members of the Subcommittee, thank you for the opportunity to appear before you today. My name is Juan Garcia, Acting Deputy Administrator for Farm Programs at the Farm Service Agency. My remarks will focus on FSA’s energy programs. 

As part of the Energy Policy Act of 2005, Congress created the 

first renewable fuel standard calling for 7.5 billion gallons of corn 

starch ethanol in our national fuel supply by 2012. When Congress 

modified the renewable fuel standard in 2007, it increased the 

biofuel targets to 36 billion gallons by 2022. 

It has taken more than 20 years to introduce just over 10 billion 

gallons of biofuels, but now the nation must achieve 20 billion gallons more biofuels in half the time. 

Meeting this goal means growing new crops in greater quantities. 

Some of these crops will take several years from establishment to 

maturity before they can be harvested and will be used in facilities 

that may not yet be completed. 

Producers growing these new crops are subject to greater risks 

in the establishment, production and marketing of the biomass 

crops, as compared to the production of conventional crops. 

The 2008 Farm Bill created a program designed to jump start 

the establishment of bioenergy crops and reduce the risk to producers. This is a Biomass Crop Assistance Program, BCAP, which 

offers incentives to farmers, ranchers and forest landowners to esVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00511 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
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tablish, maintain and harvest a dedicated energy crop for heat, 

power, biobased products and fuels. 

Two types of assistance are available under BCAP. First, establishment costs and annual payments may be available to producers 

who enter into contracts with FSA to produce eligible crops within 

approved project areas. Participants may receive up to 75 percent 

of the establishment costs for perennial crops and annual payments 

for up to 5 years for non-woody crops or up to 15 years for woody 

crops. 

Second, matching payments may be available to producers for 

the collection, harvest, storage and transport of eligible biomass to 

qualified facilities that produce heat, power, biobased products or 

advanced biofuels from that biomass. 

In July 2009, FSA issued a notice of funds availability for the 

matching payments portion of the BCAP program, issuing the first 

payment in August of 2009. FSA published a proposed rule in February of 2010 to implement the full program. After review of over 

24,000 comments, the final rule for BCAP was published on October 27, 2010, and FSA began accepting applications for BCAP 

project areas. 

Earlier this year, FSA began the sign up for Iowa farmers seeking matching payments for the delivery of crop residues to a qualified biomass conversion facility located in South Dakota. FSA also 

announced the first BCAP project area, comprising of 39 contiguous 

counties in Missouri and Kansas that proposed the enrollment of 

up to 50,000 acres of native grasses, including switchgrass from 

manufacturing into pellet fuels. And, last month, FSA announced 

four more BCAP project areas, in Arkansas, Missouri, Ohio and 

Pennsylvania, designated to grow giant Miscanthus, a sterile hybrid warm-season grass intended for bioenergy conversion. 

On April 14 of this year, funding for BCAP was legislatively reduced from $432 million to $112 million that must be obligated by 

the end of this fiscal year. In order to meet this timeframe, FSA 

announced that BCAP project area proposals must be submitted no 

later than May 27 of this year. 

Interest in BCAP has been significant. FSA received 41 project 

proposals from 21 states where project area sponsors requested an 

estimated $1 billion to enroll more than 1.5 million acres in dedicated energy crops over 5 to 15 years. FSA soon will announce a 

final project area selection for Fiscal Year 2011. 

In addition to BCAP, the 2008 Farm Bill also authorizes the establishment of the Feedstock Flexibility Program. This program 

was authorized to prevent the accumulation of government-held 

sugar stocks that otherwise can impede price recovery, by allowing 

USDA to sell the surplus sugar to bioenergy producers as a fuel 

feedstock. 

Domestic sugar demand has increased significantly and is expected to remain strong relative to supplies in Fiscal Years 2011 

and 2012. USDA does not anticipate an immediate need for the 

Feedstock Flexibility Program. 

Mr. Chairman and Members of the Subcommittee, this concludes 

my remarks. I will be prepared to answer any questions that you 

may have. Thank you. 

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[The joint prepared statement of Ms. Canales and Mr. Garcia follows:]

JOINT PREPARED STATEMENT OF JUDY CANALES, ADMINISTRATOR, RURAL BUSINESS

COOPERATIVE SERVICE; JUAN GARCIA, DEPUTY ADMINISTRATOR, FARM SERVICE

AGENCY, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Chairman Thompson, Ranking Member Holden, and Members of the Subcommittee, our nation today faces pressing challenges to increase our energy security, decrease our dependence on imported oil, protect and improve our environment, 

and create new jobs and new opportunities that will strengthen our economy. In the 

face of these challenges, renewable energy offers an enormous opportunity for all 

Americans but especially for agriculture and rural America to help build a cleaner, 

more secure, more sustainable, and domestically-produced energy sector for future 

generations. Advancing the development and deployment of renewable energy is a 

high priority for the Obama Administration, as it has been for bipartisan champions 

in Congress for many years. USDA has been and remains a proud partner in these 

efforts. We appreciate the opportunity to appear before you today to discuss USDA’s 

energy programs which contribute to an energy policy that reduces our dependence 

on imported oil, protects our environment, and promotes jobs and economic growth 

in the United States. 

This testimony will review the Title IX (Energy Title) programs from the 2008 

Farm Bill and will also provide additional information on some of the ways in which 

other agencies and programs contribute to the overall USDA energy portfolio. 

Renewable Energy at USDA 

USDA has a longstanding commitment to supporting the research and development and commercialization of renewable energy resources. While there are urban 

and suburban sources of renewable energy, renewable energy is largely rural energy—produced in rural areas and moved to more urban areas where the majority 

of the energy users live. 

USDA support for biofuels and bioenergy is an important part of a much broader 

commitment to a cleaner and greener future which has included investment in 

biofuels, biomass to energy, wind, solar, geothermal, hydroelectric power and energy 

efficiency, as well as basic scientific research into second and third generation 

biofuels and biomass to power. USDA recognizes that environmentally responsible 

renewable energy and energy conservation provide opportunities for economic 

growth and prosperity across rural America and the nation as a whole. We are 

working to ensure that our programs meet and exceed the challenge of promoting 

sustainable economic growth and prosperity. 

USDA programs support the entire supply chain of renewable energy production, 

from feedstock research and development through to the consumer, drawing on the 

established expertise, funding, and staff from a dozen USDA agencies and offices 

as follows:

• Rural Development • Office of the Chief Economist 

• Farm Service Agency • Departmental Management 

• National Institute of Food and Agriculture • Natural Resources Conservation 

Service 

• Agricultural Research Service • Forest Service 

• National Agricultural Statistics 

Service 

• Foreign Agricultural Service 

• Agricultural Marketing Service 

• Economic Research Service 

USDA is working within the Department and with other Federal departments and 

organizations on furthering renewable energy and energy efficiency; efforts include 

but are not limited to, the following intra/intergovernmental agreements, councils, 

working groups, and boards. USDA organizes all energy-related efforts internally 

through the USDA Energy Council to lead the Department in policy development, 

and the USDA Energy Council Coordinating Committee to coordinate activities and 

perform duties assigned by the Secretary and the Energy Council. USDA along with 

the Department of Energy (DOE) co-chairs the Biomass Research and Development 

Board (BR&D Board) which coordinates the government-wide research initiative 

and activities for the purpose of promoting the use of biobased products, power and 

biofuels. Members of the board also include the National Science Foundation, Environmental Protection Agency (EPA), Department of the Interior, Department of DeVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00513 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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fense, Department of Transportation and the Office of Science and Technology Policy. The BR&D Technical Advisory Committee is a group of approximately 30 individuals from industry, academia, and state government, and is responsible for providing guidance to the BR&D Board on the technical focus of the Biomass Research 

and Development Imitative. Additionally, President Obama established the Biofuels 

Interagency Working Group (BIWG) co-chaired by the Secretaries of Agriculture and 

Energy, and the Administrator of the EPA, which works closely with the BR&D 

Board in undertaking its work. The BIWG will develop the nation’s first comprehensive biofuel market development program. 

Farm Bill Energy Programs 

The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) provided over $1 billion of mandatory funding during a 5 year period to support a comprehensive 

approach to energy efficiency and renewable energy development in rural America. 

The 2008 Farm Bill reauthorized, expanded, and/or modified existing programs, and 

created new programs and initiatives to promote advanced biofuels production. The 

bill supports farm, small rural business, and community renewable energy systems; 

promotes production, marketing, and processing of biofuel feedstocks other than 

those using corn starch; and expands research, education, and demonstration programs for advanced biofuels. It also expanded programs for Federal procurement of 

biofuels and bio-refinery repowering projects and established USDA as the lead 

agency for coordination of Federal biobased energy efforts. The Title IX (Energy 

Title) programs were designed to increase America’s energy security, improve the 

environment, and strengthen rural economies through development and production 

of renewable energy and the creation of sustainable green jobs. The Obama Administration and USDA are committed to these objectives. 

Additional USDA Energy Programs and Efforts 

Outside of the Energy Title programs, USDA has made significant progress in assisting farmers, forest landowners, rural businesses and communities, rural residents, agricultural producers and the nation responding to energy related issues and 

opportunities. These range from fundamental scientific research to the development 

and commercialization of new technologies. They include outreach and education, 

technical assistance programs, financial support for infrastructure, and the adoption 

of biobased and energy-saving products and volunteer biobased product labeling by 

USDA itself. We support more energy efficient farming and sustainable feedstock 

production and management techniques; geothermal facilities; solar and wind farms; 

current and advanced bioenergy production supply chains; and biochemical and 

genomics research crucial to furthering the advancement of these technologies in the 

future. USDA also supports modernization of the rural electric grid through smart 

grid technologies, renewable energy development, as well as renewable energy 

transmission to move renewable electricity to markets. 

Rural Development 

Rural Development consists of three agencies, the Rural Business Service (RBS), 

the Rural Utility Service (RUS), and the Rural Housing Service, with RBS and the 

RUS managing renewable energy programs. Within Rural Development, only RBS 

operates programs created under the Energy Title of the farm bill. 

The mission of Rural Development’s Rural Business Service (RBS) programs is to 

enhance the quality of life for rural Americans by providing leadership in building 

competitive businesses including sustainable cooperatives that can prosper in the 

global marketplace. We meet these goals by investing financial resources and providing technical assistance to businesses and cooperatives located in rural communities and establishing strategic alliances and partnerships that leverage public, private, and cooperative resources to create jobs and stimulate rural economic activity. 

The RBS mission is unique in the Federal Government. There is no other Federal 

agency that focuses only on promoting rural communities and businesses. Our field 

offices reach out to the poorest, most rural counties in America, providing Federal 

support to businesses who might otherwise not receive financial aid from any other 

source. 

Energy Programs 

RBS implements four Energy Title programs to assist the agriculture and energy 

sectors in finding energy solutions and helping rural residents, rural small businesses, and communities to access renewable energy systems and to use energy 

more efficiently. We provide funding opportunities in the form of payments, grants, 

and loan guarantees for the development and commercialization of renewable energy sources including wind, solar, geothermal, hydrogen, ocean waves, hydroelectric, biomass, and advanced biofuel (ethanol, biodiesel, methane gas, etc.) to 

503

change the way people power their homes, businesses, and industries. By making 

renewable energy sources commercially viable, we are also helping to create sustainable opportunities for wealth, new jobs, and increased economic activity in rural 

America. 

RBS has been a leader in promoting the creation and expansion of renewable energy in rural areas. Since the enactment of the 2008 Farm Bill, the renewable energy programs authorized under the Energy Title have invested over $460 million 

in biorefineries and renewable energy and energy efficiency systems through mandatory funding for grants, loan guarantees, and assistance payments. Through 2010, 

over 6,100 awards were made, saving/generating close to 28 billion kWh of energy 

or supporting approximately 2.3 million households for a year. These programs provide an immediate impact and affect all walks of life. Take for example, Gary and 

Connie Menard, a dairy farming couple in Mooers, New York. They received a 

$31,162 grant from USDA which covered 25 percent of the cost of a 12.6 kilowatt 

solar electric generating system that featured a system to track the sun for maximum output. The system has generated over 85,000 kilowatt-hours of electricity to 

date and has already saved the farm over $11,000 in electric costs. 

The three Energy Title programs that RBS administers for the sole purpose of 

promoting biofuels are distinct and unique in the Federal Government. There are 

no other programs that’s sole purpose is to support the processing of advanced 

biofuel production, as is the case for the Biorefinery Assistance program and the Advanced Biofuel Payment Program respectively. The Repowering Assistance Program 

is the only program of its kind, providing support to biorefineries to convert their 

power systems to renewable energy. 

Rural Energy for America Program (REAP) 

REAP is the longest running renewable energy program that RBS operates. Initially authorized under the 2002 Farm Bill, the program was reauthorized and expanded in the 2008 Farm Bill. REAP provides grants and loan guarantees for renewable energy and energy efficiency to support a multitude of methods to support 

the energy sector in rural America. The President’s Budget for Fiscal Year (FY) 

2012 requested $37 million to support a program level of $45 million in 2012 in addition to the $165 million in mandatory program level funding to support $210 million in program activity. In FY 2011 RBS has $75 million in mandatory and discretionary funding to support a program level of $113 million in funds which will be 

awarded to many of the over 3,000 applications that were received. In FY 2010, the 

program provided 2,400 grants and loan guarantees totaling $159 million in support 

for energy audit projects, and energy efficiency and renewable energy projects that 

ranged from biofuels to wind, solar, geothermal, anaerobic digesters, hydroelectric, 

and biomass projects. 

Four categories of program assistance are available through the REAP:

(1) The REAP Renewable Energy Systems/Energy Efficiency Improvement 

Grants Program is designed to assist farmers, ranchers and rural small businesses that are able to demonstrate financial need. All agricultural producers, 

including farmers and ranchers, who gain 50 percent or more of their gross income from the agricultural operations are eligible. Small businesses that are located in a rural area can also apply. Rural electric cooperatives may also be eligible to apply.

(2) The REAP Energy Audit and Renewable Energy Development Assist Grants 

Program is available to eligible entities which include a unit of state, tribal, or 

local government; institutions of higher education; rural electric cooperatives; or 

a public power entity. The program is designed to assist farmers, ranchers, and 

rural small businesses.

(3) The REAP Feasibility Study Grants Program is designed to assist agriculture producers (including farmers and ranchers) and rural small businesses. 

All agricultural producers who gain 50 percent or more of their gross income 

from the agricultural operations are eligible. Small businesses that are located 

in a rural area can also apply. Rural electric cooperatives may also be eligible 

to apply.

(4) The REAP Guaranteed Loan Program has recently established a new definition for eligible applicants. All agricultural producers or rural small businesses 

are eligible to apply. Agricultural producers must gain 50 percent or more of 

their gross income from their agricultural operations. An entity is considered a 

small business in accordance with the Small Business Administration (SBA) 

small business size standards NAICS code. Most lenders are eligible, including 

national and state-chartered banks, Farm Credit System banks and savings and 

loan associations. Other lenders may be eligible if approved by USDA.

504

This program supports a wide range of small businesses, and technologies can 

range from wind turbines, to methane digesters, to geothermal systems. For example, in Altura Minnesota, Pork and Plants of Altura was awarded a $16,250 grant 

to build a renewable energy system. The grant provided sufficient incentive to motivate Pork and Plants to utilize corn and pellets to provide the heat needed for their 

greenhouses eliminating the need for approximately 40,000 gallons of liquid propane 

gas per year. 

Biorefinery Assistance Program 

The Biorefinery Assistance Program (Section 9003) provides loan guarantees to 

assist in the development of new and emerging technologies to develop advanced 

biofuels. An Interim Rule was published on February 14, 2011, the Notice of Funds 

Available (NOFA) was published March 11, 2011, and the application window closed 

July 6, 2011. RBS received thirteen applications, requesting over $1.3 billion in requested funding. We are currently reviewing the applications and identifying loans 

that may range up to $250 million. 

The Biorefinery Assistance program is the only Federal program that provides 

support exclusively to advanced biofuel biorefineries. Eligible applicants include individuals, entities, Indian tribes, units of state or local government, farm cooperatives, farmer coop organizations, associations of agricultural producers, National 

Labs, Institutions of higher education, rural electric cooperatives, public power entities, or various consortia of any of those entities. 

Repowering Assistance Program 

The Repowering Assistance Program (Section 9004) provides payments to biorefineries who switch from using fossil fuels to produce heat or power from renewable 

biomass. These biorefineries must have been in existence at the time the 2008 Farm 

Bill was passed. An Interim Rule was published on February 11, 2011 and a NOFA 

was published on March 11, 2011, and the application window closed on June 9, 

2011. 

This program can provide payments to a biorefinery existing before June 2008 

based on the quantity of fossil fuel the biorefinery is replacing, the percentage reduction in fossil fuel used by the biorefinery, and the cost effectiveness of the renewable biomass system, economic benefit to the community, and the potential to improve the quality of life in rural America. 

Bioenergy Program for Advanced Biofuels 

The Advanced Biofuel Payment Program, formerly the Bioenergy Program for Advanced Biofuels (Section 9005) provides payments to eligible producers to support 

and expand the production of advanced biofuels. Only one producer per refinery is 

eligible to apply. To date, almost $30 million in assistance payments have been provided to 141 advanced biofuel producers. On February 11, 2011, an Interim Rule 

was published and incorporated a notice of contract proposals (NOCP) for the 2010 

funding in the amount of $80 million. A second NOCP for $85 million was published 

on March 11, 2011 for the FY 2011 funding; applications for funding were required 

to be submitted to RBS by May 10, 2011. This program is vital in supporting existing biofuel infrastructure and a crucial support to help us meet the mandated Renewable Fuel Standard (RFS2) which calls for 22 billion gallons of advanced biofuels 

by 2022. An example is Indiana Flex Fuels which received $3,600 in FY 2010. Though relatively small in capacity—a 5 million gallon a year plant—the FY 2010 payment 

and future payments in FY2011 will provide a financial incentive to biorefineries 

such as this, which will provide them with a necessary step towards meeting the 

nation’s renewable energy needs. 

Performance 

In 2009 and 2010, USDA assisted nearly 4,000 rural small businesses, farmers, 

and ranchers save energy and improve their bottom line by installing renewable energy systems and energy efficiency solutions that have the potential of producing 

or saving a projected 4.67 billion in kilowatt hours—enough energy to power 390,000 

American homes for a year. USDA is the among the largest supporters of biofuels 

in the nation and our programs are essential in ensuring a stable market structure 

that creates jobs and meets our nation’s energy needs and goals. 

Farm Service Agency 

Biomass Crop Assistance Program (BCAP) 

The Energy Title of the 2008 Farm Bill also authorized BCAP which is implemented by the Farm Service Agency (FSA). BCAP provides financial assistance to 

owners and operators of agricultural and nonindustrial private forestland who volVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00516 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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unteer to establish, produce and deliver eligible crops for conversion to bioenergy 

or bio-based products. Such Commodity Credit Corporation (CCC) funds as necessary were authorized for BCAP. However, subsequent appropriations bills have 

limited the availability of funding. 

There are two types of assistance available under BCAP. First, establishment and 

annual payments may be available to producers who enter into contracts to produce 

eligible crops on lands within approved BCAP project areas. Generally, crops that 

receive payment under the Commodity Title (e.g., corn, wheat, rice, soybeans) and 

noxious weeds or invasive species are not eligible for payments. Producers may receive up to 75 percent of the establishment costs of a perennial crop and annual 

payments for up to 5 years for non-woody crops or up to 15 years for woody crops. 

Second, matching payments may be available to producers for the collection, harvest, storage and transport of eligible biomass to qualified facilities that produce 

heat, power, bio-based products, or advanced biofuels from that biomass. To qualify 

for payment, the biomass must be an eligible material that also is collected or harvested directly from the land before transport to the facility, in accordance with an 

approved conservation or forest stewardship plan. Woody biomass must not have a 

previously existing market and must also be removed to reduce forest fire threats, 

disease or insect infestation, or to restore ecosystem health. 

In July 2009, FSA issued a NOFA for the matching payments portion of the 

BCAP program and issued the first payment in August 2009. In February 2010, the 

authority for payments under the NOFA ended and FSA published a proposed rule 

to implement the full BCAP program. The final rule for BCAP was published in October 2010 and FSA began accepting applications for BCAP Project Areas. 

Early this year, FSA began the sign-up period for farmers seeking matching payments for the delivery of crop residues to qualified biomass conversion facilities located in Iowa and South Dakota. Also this spring, FSA announced the first BCAP 

Project Area comprised of 39 contiguous counties in Missouri and Kansas for the 

enrollment of up to 50,000 acres of native grasses, including switchgrass, for manufacturing into pellet fuels. Just last month, FSA announced four more BCAP project 

areas in Arkansas, Missouri, Ohio, and Pennsylvania to grow giant Miscanthus 

which is a sterile hybrid warm-season grass to be converted into bioenergy. Any 

project area, as part of the project proposal package, must be compliant with the 

National Environmental Policy Act (NEPA), compliance includes environmental 

screening, reviews, and may include an environmental assessment or impact statement at cost to the project sponsor(s). The 2011 Full Year Continuing Resolution limited funding for BCAP to $112 million. On April 20, 2011, FSA announced that BCAP Project Area proposals must be 

submitted no later than May 27, 2011, to be considered for FY 2011 funding. Demand for BCAP funding is significant: FSA received 41 project area proposals from 

21 states requesting an estimated $1 billion to enroll more than 1.5 million acres 

in dedicated energy crops. FSA soon will announce the final project area selection 

for FY 2011. 

Feedstock Flexibility Program (FFP) 

The 2008 Farm Bill also established the FFP. Typically, the CCC nonrecourse 

loan program offers sugarcane and sugar beet growers the opportunity to forfeit 

their sugar loan collateral to CCC as full satisfaction of the loan with growers keeping the loan proceeds. CCC later dispenses the forfeited sugar into the marketplace 

by sale or donation. FFP was authorized to prevent the accumulation of government-held sugar stocks that otherwise can impede price recovery by instead allowing CCC to sell the surplus sugar to bioenergy producers as a fuel feedstock. Compared to expectations during the 2008 Farm Bill, however, domestic sugar demand 

has increased significantly and is expected to remain strong relative to supplies in 

FY 2011 and FY 2012. While FSA does not anticipate an immediate need for FFP 

during this period, the proposed rule to implement this program has been drafted 

and will be published soon. 

National Institute of Food and Agriculture (NIFA) 

As the USDA’s extramural research and education arm, NIFA has a number of 

programs that support fundamental and applied research into renewable energy and 

contribute to the USDA role in pursuing our nation’s energy security. 

Biomass Research and Development Initiative (BRDI) 

The Energy Title of the 2008 Farm Bill reauthorized the BRDI competitive grants 

program which is a joint effort between USDA and the Department of Energy (DOE) 

to support the development of a biomass-based industry in the United States. The 

objectives of the program are to promote the development of: (a) technologies and 

processes necessary for abundant commercial production of biofuels at prices comVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00517 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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petitive with fossil fuels; (b) high-value bio-based products to enhance the economic 

viability of biofuels and biopower, to serve as substitutes for petroleum-based feedstocks and products, and to enhance the value of coproducts produced using the 

technologies and processes; (c) a diversity of economically sustainable domestic 

sources of renewable biomass for conversion to biofuels, bioenergy, and bio-based 

products. Projects supported through this program must take into account a life 

cycle perspective that takes into account the environmental, economic and social implications of the proposed technologies. The program has been effective in developing multi-institutional and multi-disciplinary consortia to increase technology 

transfer and commercialization. 

Biodiesel Fuel Education Program 

The Biodiesel Education program (Section 9006) was created to help the biodiesel 

industry grow by providing technical information about this new fuel to a broad 

spectrum of U.S. consumers and producers. This program is operated through cooperation between the Office of the Chief Economist (OCE) and NIFA. Education 

materials and outreach activities deliver information on the environmental benefits 

of biodiesel, and expert guidance is provided on producing biodiesel, maintaining 

fuel quality, and insuring fuel safety. Since the Program began in 2003, the U.S. 

biodiesel industry has grown from just a few firms to over 150 firms today. Awareness of biodiesel among Americans has increased markedly over the past 10 years—

consumer awareness of biodiesel has grown from 27 percent in 2003 to 86 percent 

today. At the onset of the Program, many engine manufacturers were apprehensive 

about using biodiesel, but now nearly 60% of U.S. manufacturers support the use 

of biodiesel blends in at least some of their equipment. While the Program has been 

a major success, education is needed more than ever, with the biodiesel industry 

ramping-up to meet record production levels, set by the RFS2 mandates. 

Agriculture and Food Research Initiative (AFRI) 

AFRI is NIFA’s flagship extramural competitive grants program and has a Sustainable Bioenergy Challenge Area which seeks to facilitate the establishment of regional systems for the sustainable production of bioenergy and biobased products. 

This challenge area funds projects that contribute significantly to reducing the national dependence on foreign oil; have net positive social, environmental, and rural 

economic impacts; and are integrated with existing agricultural systems. The development of regional bioenergy systems will result in viable commercial options that 

can be rapidly deployed to produce advanced biofuels as well as value-added coproducts to diversify product options, reduce risks, and bridge to full scale advanced 

biofuel production. A priority of this challenge area is to foster coordinated plans 

for developing regional systems for the sustainable production and distribution of 

bioenergy and biobased products with net positive social, environmental, and economic effects. It is expected that the Regional Bioenergy Coordinated Agricultural 

Projects (CAPS) will network with and leverage existing efforts within USDA, university research, education, and extension, other Federal agencies, and the private 

sector, and take multidisciplinary and transdisciplinary approaches. 

Another priority in the Sustainable Bioenergy Challenge Area is to develop the 

bioenergy workforce. The field of bioenergy and biobased products holds potential 

for new technologies and entrepreneurial opportunities that may substantially 

change regional rural economies. This emerging bio economy will demand a new 

workforce and will challenge institutions to produce graduates who have the multidisciplinary and problem solving framework to meet this demand. This new economy will require a trained and competent skill set that meets workforce needs all 

along the bio-energy value chain encompassing a wide range of technical, educational, socioeconomic, and scientific competencies. Projects supported through this 

program are stimulating the K–12 and baccalaureate and master’s level education 

system to produce students who are science and math based independent thinkers 

and investigators, steeped in interdisciplinary coursework who can identify solutions 

to problems and opportunities, work creatively in teams and present solutions in a 

clear and concise manner, and who have an interest in America’s bio-energy and 

bio-based products future. 

Sun Grant Initiative Program (SGI) 

Authorized under the Research Title of the farm bill, SGI began 10 years ago with 

support from USDA to harness the capacities of the land-grant universities to develop bioenergy and biobased products through regional collaboration, coordinated 

through five regional Sun Grant Centers. With support from USDA/NIFA, DOE and 

the Department of Transportation (DOT) the SGI has over 130 field studies on biomass feedstocks currently underway with locations in more than 75 percent of the 

states in the nation. SGI research has been a catalyst for attracting industry investVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00518 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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ments that have resulted in formation of new businesses and creation of new jobs 

in the bioenergy sector. For example, in the South East SGI Region, SGI supported 

projects that led to the DuPont-Danisco joint venture partnership with the University of Tennessee and Genera Energy to open a demonstration scale facility producing lignocellulosic ethanol. Over 7,000 acres of switchgrass are in production and 

under contract to support this demonstration conversion facility, which is being utilized to develop a commercial scale facility by 2013 that has a production capacity 

of 25–50 million gallons of ethanol. In the North Central Region, Sun Grant-supported research led to DuPont-Danisco deciding to locate a cellulosic ethanol production facility in Iowa. Similar collaborations are underway in each SGI Region with 

Sun Grant-supported research leading to commercialization of new feedstock varieties for production of advanced biofuels. 

Plant Feedstock Genomics Program 

DOE’s Office of Biological and Environmental Research has teamed up with 

NIFA’s Agriculture and Food Research Initiative to fund projects that accelerate 

plant breeding programs and improve biomass feedstocks by characterizing the 

genes, proteins, and molecular interactions that influence biomass production. DOE 

and USDA initiated this competitive grant program in 2006 to support fundamental 

research in biomass genomics. Ultimately, the research seeks to develop and demonstrate environmentally acceptable crops and cropping systems for producing large 

quantities of low-cost, high-quality biomass feedstocks. Specific focus areas include: 

elucidating the regulation of genes, proteins, and metabolites to for improved productivity, processing, or growth characteristics in marginal environmental conditions, such as drought or salt tolerance; developing novel technologies to facilitate 

the analysis and manipulation of cell wall structure and composition for both breeding and basic research; using genomic approaches that lead to the identification of 

genetic markers enabling more efficient plant breeding or manipulation; and enhancing fundamental knowledge of the structure, function, and organization of plant 

genomes leading to improved biomass characterization. 

Agricultural Research Service (ARS) 

ARS is USDA’s principal intramural research arm and conducts basic research to 

support the commercial production of dedicated feedstocks for the making of advanced biofuels and bioenergy. The research is focused on four primary objectives: 

increase biomass production efficiency to improve grower profits and reduce biorefinery transaction costs; optimally incorporate biomass and other dedicated feedstocks into existing agriculture-based systems; address the uncertainties of expanded feedstock production up-front to avoid negative impacts on existing markets 

and ecosystem services; and develop and find new ways to utilize value-added coproducts to economically enable commercially preferred biorefining technologies. Region-based production systems are being developed for dedicated energy crops including perennial grasses, oil crops, energy cane, and biomass sorghum. 

ARS bioenergy research is conducted through the regional USDA Biomass Research Centers, which include the Forest Service, and is coordinated with NIFA’s 

AFRI Sustainable Bioenergy Coordinated Agricultural Projects (CAP) grant program, and the USDA–DOE jointly-funded BRDI grants. ARS also partners with the 

DOE Plant Feedstock Genomics for Bioenergy competitive grant programs. These 

combined efforts are done in partnerships with universities, other Federal agencies, 

states, and private companies and are designed to help accelerate the commercial 

development of biofuels, biopower, and other bio-based products from dedicated feedstocks produced on our nation’s farms. 

Economic Research Service 

The Economic Research Service (ERS) conducts rigorous and objective research on 

the economic and environmental implications of agriculture-based bioenergy production. ERS research on bioenergy focuses on how policy and market developments affect commodity markets, land use, the environment, rural development, and consumers. Core objectives include: examining the relationships between bioenergy production and farm and retail food prices; developing long-term projections of domestic 

and international agricultural markets, taking account of changing policies, and 

macroeconomic events that affect markets for biofuels; examining the effect of 

biofuel production on rural employment and wealth creation; and analyzing the effect of increased biofuel production on environmental quality and use of scarce natural resources. 

ERS research on bioenergy is being enhanced by expanding the capabilities of inhouse economic models, geo-spatial analysis tools, budget generators for dedicated 

energy crops, and by establishing partnerships with universities and other Federal 

agencies. ERS works in conjunction with the National Agricultural Statistics Service 

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(NASS) to collect and analyze unique data on farm characteristics and production 

practices from the Agricultural Resource Management Survey. NASS data on agriculture is essential at every stage of infrastructure development, from the initial 

policies that drive basic research, to the establishment of markets and feedstock 

production needed to sustain this new industry. 

Departmental Management 

Biobased Markets Program 

The Energy Title of the 2008 Farm Bill established the Biobased Markets Program, known as the BioPreferred® Program, and USDA is the lead agency responsible for its implementation. This biobased products program helps to create green 

jobs in rural communities, adds value to agricultural commodities, decreases environmental impacts, and reduces our dependence on imported oil. USDA’s goal is to 

increase Federal procurement of biobased products government-wide and develop 

government and public markets through a voluntary labeling program. 

USDA has promulgated BioPreferred® program guidelines and six rounds of regulations designating categories of biobased products for preferred Federal procurement. As a result, there are now 50 designated product categories. A seventh designation rule with 14 product categories should be promulgated later this month. 

When Round seven is published, 64 categories and almost 9,000 products will be approved for preferred Federal procurement. USDA initiated a voluntary labeling program earlier this year; over 430 products from 150 companies have been certified 

to carry the USDA Certified Biobased label to date. In FY 2010, 88 percent of all 

applicable USDA contracts included biobased clauses or purchases, up from 80 percent in FY 2008 and 84 percent in FY 2009. In addition, there are over 20,000 

biobased products and the number and types of products continue to grow. 

Natural Resources Conservation Service (NRCS) 

NRCS formally identified energy as a resource concern in 2010 and substantial 

efforts are being made to enhance the Agency’s capacity to work with producers in 

conserving energy. All of the Agency’s conservation practice standards were evaluated for their potential contribution to address energy resource concerns and many 

were revised to incorporate energy as a purpose for performing the conservation 

practice. Training efforts are underway to ensure that agency employees are prepared to assist customers with energy conservation efforts. A series of agriculturefocused energy fact sheets have been issued and more are under development. In 

addition, the suite of producer-focused web-based Energy Estimators for animal 

housing, irrigation, nitrogen, and tillage are being updated to reflect recent information and technologies. These tools provide a simple way for producers to evaluate 

potential savings from implementing energy conservation practices. 

Environmental Quality Incentives Program (EQIP) 

The Environmental Quality Incentives Program (EQIP), administered by NRCS, 

has been helping producers in addressing natural resource concerns since 1996. 

Conservation practices and systems implemented under EQIP have helped producers to achieve environmental objectives, and in some cases to have a beneficial 

effect on energy resources. For example, producers have reduced energy use through 

conservation tillage, which requires fewer passes over a field; irrigation water management that conserves water and saves energy; and improved nutrient management, which can include adoption of anaerobic digesters. Manure from the anaerobic 

digesters provides a reliable level of nitrogen fertilization and can be used to replace 

commercial fertilizer. When stored and handled properly, animal manure loses less 

nitrogen and can be applied with confidence. NRCS can provide information and 

considerations for designing and constructing appropriate manure handling facilities. Methane produced by the manure can allow biogas generators to produce electricity and heat that producers can use onsite. Also, the potential exists to sell the 

excess electricity to a local electric grid. 

The Conservation Title of the 2008 Farm Bill added energy conservation as a purpose of EQIP and authorized the NRCS administered program to be used for conservation plans that further energy conservation and other purposes of the program. 

The conservation practice associated with plan development under this authority is 

known as a ‘‘conservation activity plan’’ (CAP). Two Agricultural Energy Management Plan (AgEMP) CAPs have been developed for energy conservation, one focusing on operation headquarters and one focusing on farm landscape energy conservation. 

These AgEMPs for the farm headquarters and farm landscape contain the onfarm energy audit that establishes a baseline of total energy consumption of the 

farm or ranch operation and also provides recommendations of energy conservation 

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and efficiency measures that the producer can prioritize and implement on their agricultural working lands. For FY 2011 and as of June 15, 2011, NRCS has planned 

364 AgEMPs for headquarters and landscape energy audits, obligating $715,761 in 

financial assistance funds. Another 133 AgEMP headquarters audits have been completed, with producers receiving $237,489 in financial assistance payments. 

The actual benefits from an on-farm energy audit (AgEMP) to the producer and 

the environment are achieved fully when the on-farm energy audit recommended 

measures are implemented. Four states are already using conservation practice 

standard 374 for On-Farm Equipment Efficiency Improvements to accelerate implementation. As of June 3, 2011 there were 20 planned and four completed contracts 

that included this conservation practice standard, totaling nearly $580,000. 

Conservation Stewardship Program (CSP) 

NRCS offers financial assistance to producers to enhance their conservation activities, through the CSP including energy conservation. In FY 2011, there are seven 

CSP enhancements for energy, ranging from fuel use reduction and renewable energy use to on-farm landscape energy audits and variable frequency drive motors. 

In FY 2010, program participants applied fuel use reduction on over 206,000 acres 

and added more than 6,500 systems or units using renewable energy, such as solar 

powered electric fence charging systems and renewable energy powered pumping 

plants. 

Conservation Innovation Grants (CIG) 

NRCS also encourages energy technology innovation and conservation through 

Conservation Innovation Grants (CIG). Through this competitive process, NRCS 

awards grants to demonstrate innovative technologies for more effectively managing 

natural resources while leveraging Federal resources. CIG enables NRCS to work 

with other public and private entities to accelerate technology transfer and adoption 

of promising technologies and approaches to address some of the nation’s most 

pressing natural resource concerns. 

In FY 2010, over $5.5 million was awarded for 12 projects working in 29 states 

to demonstrate innovative energy technologies or programs that range from on-farm 

energy audits to anaerobic digester technologies and sustainable biomass production. Of this, nearly $1⁄2 million was awarded in two grants for innovative energy 

conservation projects. By comparison, between FY 2004 and FY 2009, there were 

four national CIG grants for innovative energy conservation projects totaling 

$1,361,109. 

Conclusion 

As these USDA programs and efforts show, in addition to its environmental, energy security, and national security implications, renewable energy is an important 

source of jobs, economic growth, and tax revenue in rural communities across the 

country. USDA recognizes that environmentally responsible renewable energy and 

energy conservation provide opportunities for economic growth and prosperity across 

rural America and the nation as a whole. We are working to ensure that our programs meet and exceed the challenge of promoting economic growth and prosperity. 

Thank you, again Mr. Chairman and Members of the Subcommittee. With your 

help, we look forward to continuing to create jobs and build a cleaner, more secure, 

more sustainable, and domestically-produced energy sector.

The CHAIRMAN. Thank you, Mr. Garcia. 

The chair would like to remind Members that they will be recognized for questioning in the order of seniority of Members who 

were here at the start of the hearing, and after that, Members will 

be recognized in order of arrival. I appreciate the Members’ understanding. 

I am going to proceed with my 5 minutes of questions. 

Now, my first question is directed to Chief Tidwell. 

Chief, the 2008 Farm Bill required each state to conduct a statewide assessment of forest resource conditions, threats, trends, priorities to receive Federal forestry assistance funds. What is the status of this assessment? 

Mr. TIDWELL. Thank you. All of the states and the territories 

have completed their assessments and developed their forest action 

plans. 

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The CHAIRMAN. And the Forest Service, where are you in terms 

of analysis of that? 

Mr. TIDWELL. Well, we are looking at that for a couple of opportunities to help establish the priorities about where is the best 

place in this country to be using the funds. And it really helps the 

states that they can identify their priorities and where is the best 

place for us to use our limited funds. 

We are also seeing that we have—we are seeing states starting 

to work together with their neighboring states to be able to put together their proposals as to their requests for funding. 

The other key part of this, too, is it is going to be, it is going to 

be very beneficial, as we move forward with doing the forest planning on our National Forests and grasslands, these assessments, 

these action plans, are going to be a key part of the information 

that we are going to use as we move forward with revising our forest plans. 

The CHAIRMAN. All right. In your testimony, you have identified, 

obviously, a very important issue, invasive species. And one much 

your predecessors, Chief Bosworth, once suggested that invasive 

species are one of the main threats to healthy forests. 

What are your suggestions on altering the structure and financing programs related to invasive species in our forestlands? 

Mr. TIDWELL. Well, with our Forest Health Program, I believe it 

is essential for us to be able to deal with the invasives that we 

have currently and the invasives that are going to be coming into 

this country. 

That program provides the ability for our states to be able to conduct the surveys, be able to monitor the infestations so we can do 

the best job that we can to either stop, eradicate these infestations 

or at least be able to deal with them. Without this program, I think 

it would be very difficult for us to be able to track and monitor this, 

especially on a national scale. This program allows us to be able 

to look beyond the borders, beyond the private land borders, beyond state borders, and I believe provides an efficiency that could 

not be duplicated if, say, each state was having to do this on their 

own. 

The CHAIRMAN. I appreciate that. 

Administrator Canales, thanks for your overview on the energy 

titles—and the energy title. Specifically I want to look at Section 

9003, the Biorefinery Assistance Program. How many awards have 

been made through the Biorefinery Assistance Program for the construction of new biofuel facilities and how many of these were for 

commercial cellulosic facilities? 

Ms. CANALES. Thank you, Mr. Chairman. 

Our first award was made in 2010, and that project is in Georgia. Our second award was made for three separate projects during 

this fiscal year, in January of this year. Those were all conditional 

commitments, and those are involving projects to occur in Florida, 

Mississippi and Alabama. So, those projects are not under way at 

this point in time. 

The CHAIRMAN. Just for clarification, because I think that is 

helpful for all of us here as we prepare to look at this title within 

the next farm bill, how does the Biorefinery Assistance Program 

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differ from the programs administered by the Department of Energy that fund the construction of renewable fuel facilities? 

Ms. CANALES. They defer—or they differentiate because these 

technologies are all first of a kind. They are not off-the-shelf technologies and, most importantly, in regard to USDA, there is some 

element usually of a relationship to agriculture. What we are trying to drive at is gaining the opportunity to get this loan guarantee 

to try and drive private-sector dollars into the rural communities 

predominantly. 

Each one of those projects all have some sort of feedstock that 

has some agriculture tie, and also, frankly, our experience has been 

in operating a loan guarantee program that is different from Department of Energy. 

The CHAIRMAN. Okay. Thank you. 

Now I recognize Mr. Holden for 5 minutes. 

Mr. HOLDEN. Thank you, Mr. Chairman. 

Mr. Garcia, as you know, there has been a lot of and anxiety regarding the implementation of this BCAP program. Can you tell 

me now that it has been implemented what the process was like, 

how did you approve projects and did you work with other agencies 

during that process? 

Mr. GARCIA. Thank you, Mr. Holden. 

I would start off by saying that the BCAP program has been a 

challenge to administer. It is a very new program. It is a pioneering program that FSA is charting new territory that we had 

never explored before. FSA historically has been working with the 

conventional crop production, and this new energy program we 

were just not very familiar with. So we did take the time to consult 

with other agencies. 

Mr. HOLDEN. What agencies did you consult with? 

Mr. GARCIA. With other USDA agencies, such as Agricultural Research Service, Animal and Plant Health Inspection Service, that 

were involved already with some research on these energy crops. 

And, therefore, we started establishing the program provisions for 

this program. 

We have set a structure here a few months ago since we were 

approved for the $112 million that I mentioned earlier. We have set 

a structure, and we have involved expertise from other USDA 

agencies in order to come up with a process to review the project 

proposals at hand. We received over 40 proposals, and we expect 

to make a decision on those proposals within the month. 

Mr. HOLDEN. And you have mentioned four projects that have recently been approved, and you mentioned one in Pennsylvania. 

What crop is that plant using, and where in Pennsylvania? 

Mr. GARCIA. That particular project involves Miscanthus, which 

is a new energy crop. It is planted through rhizomes, and it involves over 250,000 acres of establishment in Pennsylvania, Ohio, 

Arkansas and Missouri. 

Mr. HOLDEN. So it is in western Pennsylvania. 

Mr. GARCIA. I am sorry? 

Mr. HOLDEN. The location. 

Mr. GARCIA. Excuse me, may I confer? 

Mr. HOLDEN. Just curious. That is okay. 

Mr. GARCIA. It is in western Pennsylvania. 

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Mr. HOLDEN. Thank you. 

Ms. Canales, the Georgia facility, that is operational now; correct? 

Ms. CANALES. It has been, sir. 

Mr. HOLDEN. And how long was it in operation? 

Ms. CANALES. About 3 months. 

Mr. HOLDEN. And what is its feedstock? 

Ms. CANALES. Biomass, woody biomass. 

Mr. HOLDEN. And the other projects, I think you said, Florida, 

Mississippi and Alabama, is that correct? 

Ms. CANALES. Yes, sir. 

Mr. HOLDEN. You said that was conditional, conditional on financing. 

Ms. CANALES. Well, conditional commitment is a part of our due 

diligence process and that is the review. And so the part about finance is to ensure that their bank, because the applicant is actually the bank. The applicant is the bank for the loan guarantee, 

and so, yes, it is the formalization of financing. 

Mr. HOLDEN. And what was the exposure on the Georgia project 

for the loan guarantee? 

Ms. CANALES. I apologize, I am sorry? 

Mr. HOLDEN. The Georgia project, how much was that project? 

Ms. CANALES. Well, $80 million was going to be total, but we 

sent $50 million. It was two phases, $50 million and then $30 million would have been the second phase. 

Mr. HOLDEN. Okay. 

Mr. Tidwell, you know from the Energy Independence and Security Act, this Committee is very concerned about the definition of 

biomass.

What types of challenges are you facing on forestlands with that 

definition and several other definitions that are not consistent in 

trying to manage the forestlands? 

Mr. TIDWELL. The challenge that we are having in America now 

is to be able to get the restoration work done on our National Forests, which includes the removal of not only saw logs but also the 

removal of a lot of smaller diameter material to reduce the biomass. 

We need to look for every opportunity we have to be able to encourage the use of that material for beneficial use, whether it is 

any type of biomass utilization or for wood energy. 

So, as far as we think about definitions, we want to make sure 

that they are flexible and that they will encourage the restoration 

work that needs to be done on these lands. And so that is the thing 

that we are interested in. It is just having a flexibility in there so 

that this small-diameter material that doesn’t really have any use, 

that we can be able to find ways to encourage that to be used for 

beneficial use instead of having to pay someone to just pile it up 

in the woods and then burn it and put smoke in the air. 

Mr. HOLDEN. My time has expired, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. 

I now recognize the gentleman from Wisconsin, Mr. Ribble, for 

5 minutes. 

Mr. RIBBLE. Thank you, Mr. Chairman. 

513

And thank you to the panel for spending some time with us this 

morning. 

Chief Tidwell, I am from Wisconsin, and the Chequamegon 

Nicolet National Forest is in my district. But the forest plan is not 

being fully implemented, and it is hurting our local communities, 

particularly small rural communities, particularly in northeast 

Wisconsin, and, quite frankly, our state as a whole. 

I am also concerned very much about how it is affecting what 

once was a very vibrant timber industry in Wisconsin. 

What are the barriers to fully implementing your plan? 

Mr. TIDWELL. A forest plan lays out the desired conditions and 

lays out the expectation of what can be produced off these lands. 

A forest plan itself doesn’t establish any targets along those 

lines, so it more is a document that allows. There is no question 

that we need to do more work, not only in your state but across 

the country, to be able to do more restoration work. The things that 

we are focused on to be able to build some efficiencies is to be able 

to look at much larger landscapes. 

We used to look at projects that were sometimes 500 acres, 

maybe 1,000 acre projects. What we are now doing is moving forward to be able to look at much larger landscapes, things like 

50,000 acres, 100,000 acres at a time. Do the analysis on that so 

that we can move forward with the restoration work. 

The other key component of this is to be able to have a long-term 

contract in place so that purchaser knows that not only do they 

have work this year but they are going to have work next year and 

the year after, and that is through our Stewardship Contracting 

Program that I am hopeful we will be able to continue to be able 

to have that program. 

That is going to be a key element, to be able to encourage folks 

to make additional investments and for us to be able to actually 

increase the amount of work that we need to do in our forests. 

Mr. RIBBLE. Okay, thank you. I would encourage you to move 

with as much haste as you possibly can. I mean, it is a constant 

problem for us, and the problem has lasted a long time. And at 

some point, we have to stop saying we are working it, we are 

studying it, we are analyzing it and finally get something moving. 

There is just a lot of frustration back home. 

Along a similar line and staying with our forests here, recently 

the Ninth Circuit Court overturned an EPA regulation and ruled 

for the first time that forest roads are point sources and that using 

them for timber harvesting requires Federal permitting. 

Earlier this year, I joined many of my colleagues, including my 

friend, Mr. Schrader, in sending a letter to the EPA raising some 

concerns in response to this decision. Given your experience, can 

you tell us whether or not best management practices work or 

whether or not they are affecting—or whether or not they are effective at maintaining water quality? 

Mr. TIDWELL. Well, I am definitely aware of the court decision 

that you are referring to. 

You know, our experience with our best management practice is 

that when we followed those, that they do provide the right restrictions in place to ensure clean water. There is no question that—

514

in fact, I have never met anyone that wasn’t supportive of providing clean water. 

So I think it is—that is very important. 

You know, the best management practices that we use on our 

National Forest System lands along, with the environmental assessments that have to be completed before we do any of our work, 

I do believe that we are doing a good job to be able to minimize 

any impact to clean water. 

It is essential that, as we move forward, that we be able to find 

a way to, of course, provide for clean water, and best management 

practices has been one tool that we have been using in the past. 

It is also my experience that at least every state that I have 

worked in does also have best management practices. There is a 

difference between the states, but it has been a very good approach 

in the past. 

Mr. RIBBLE. But what is the permitting requirement—what type 

of impact is it going to have on the Department’s ability to conduct 

restoration work? 

Mr. TIDWELL. Well, we would have to see what process was put 

into place. 

You could design a permitting process that would not necessarily 

have any impact, it would be another step. Until that decision is 

made and we actually see what process would be put into place, I 

probably can’t answer that. But I tell you I am confident that the 

work that we are currently doing, following the best management 

practices, will provide for clean water. 

And so if there is a permit process in place that we will be able 

to meet that requirement. 

Mr. RIBBLE. Okay. Thank you very much. 

Thank you, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. 

The chair now recognizes the gentleman from Minnesota, Mr. 

Walz, for 5 minutes. 

Mr. WALZ. Thank you, Mr. Chairman, and the Ranking Member 

for holding this audit and this hearing, and thank you all for being 

here with us. 

I would like to talk just a little bit, Ms. Canales, on the REAP 

program, it is obviously very important in Minnesota. I am deeply 

concerned with the zeroing out of this program at a time when 

America’s security is dependent on us becoming energy independent. I have seen what that program does in Minnesota, creating literally thousands of jobs, dozens of large and smaller 

projects, creating energy independence at home. 

And it strikes me that we are caught in a false dichotomy here 

that we are going to figure out how to grow our economy either by 

cuts or by spending increases. And I think the problem is we continue to try and divide up that pie as we are missing the most obvious answer here is grow the pie. And growing the pie on energy 

is what is happening in southern Minnesota. 

So I wanted to ask you just a couple of questions about this. 

The critics of REAP claim—and as it was zeroed out—I wanted 

to thank my colleague from Nebraska, Mr. Fortenberry, who is also 

on this Committee, for getting a little bit of money back in this proVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00526 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
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gram—that it is duplicative, that it, once again, we are trying to 

squeeze efficiencies, which all of us agree on. 

Can you explain the unique nature of the REAP program and 

why, at least my constituents, I would argue, consider it to be highly effective and a great return on our dollar? If you could help me 

understand that a little bit. 

Ms. CANALES. Thank you, sir, and, yes, there has been a considerable amount of activity in your State of Minnesota and the Rural 

Energy for America Program, REAP, is a program that I believe is 

the closest to the consumer, that is something that I have always 

put forward because of the fact the that it goes back to the fundamentals. 

For us, it is businesses in rural America, and it is also producers. 

They are business owners, farmers are business owners. Therefore, 

it is an opportunity for them to become energy efficient. It is an 

opportunity for them to also generate fuel energy. I have seen it 

myself, a methane digester, where a group of dairy farmer operations can come together—you have that on the East Coast; you 

have that certainly in your area in middle America, and you have 

it in the West Coast—in which the livestock produces waste, and 

that waste can go towards energy production. 

So this program has also been a growing program because it is 

a business opportunity, and we do not finance the entire project. 

There is a contribution; this is all leveraging. 

So it is a Federal incentive for that private business owner to determine whether this makes good business sense for me. It has just 

become something that has gained a lot of attraction that has people trying to reduce their energy costs for their business purposes. 

Mr. WALZ. Well, I would mention that, too. I know that looking 

at the statistics here with Minnesota, trailing only Iowa in this, 

that it is about $5.8 million in grant amounts, but that the amount 

we leverage is over $16 million, contributing to $24 million in 

growth, job creation and all of that. 

My question is, if we are trying to go save money in the budget, 

is defunding REAP in your opinion the best way to try to figure 

out how to save money? 

Ms. CANALES. Sir, what we have found is that this is a program 

that brings in, draws in, additional funding. So with that Federal 

seed dollar, be it a grant dollar or, also a loan guarantee, what we 

do is try and engage more banks to do lending in rural America. 

So that becomes a very important product for that bank. 

Farm Credit Administration and numerous banks throughout the 

United States are seeing that this loan guarantee is an attractive 

product for them. Then they can take on that particular loan so 

that brings in its private financing mechanism using that government incentive. 

Mr. WALZ. Well, I appreciate that. As my time is winding down, 

I would just, on BCAP and things, as we move to the next generation, I am a strong supporter that we are getting there. I have a 

small company called Easy Energy Systems in our district that is 

working on what I think is the future on biofuels, not the large 100 

million gallon static plants, but a mobile 1 million gallon plant that 

has already been sold to India, that we are able to plop down and 

fuel small villages on tapioca remains or whatever the product 

516

might be as the biomass. And I am just fearful now we are on the 

cusp of that, that this absolute zeroing out and decimating energy, 

energy products, is going to end those types of things. 

Mr. Garcia, I will wait till my time comes back around to hear 

a little on BCAP, so thank you. 

The CHAIRMAN. I thank the gentleman. I recognize the gentleman from Florida, Mr. Southerland, for 5 minutes. 

Mr. SOUTHERLAND. Thank you, Mr. Chairman. 

Mr. Tidwell—well, first of all, thank you to all of you for appearing before us today. 

My question is regarding, I would like to ask you, Mr. Tidwell, 

tell me, I think I heard just a few moments ago you make the 

statement that a forest plan doesn’t establish harvest targets; is 

that correct? 

Mr. TIDWELL. That is correct. 

Mr. SOUTHERLAND. So and I think in your written testimony, the 

Forest Service manages 190 million acres of National Forest; is 

that correct? 

Mr. TIDWELL. That is correct. 

Mr. SOUTHERLAND. And you have no established targets established for the National Forest? 

Mr. TIDWELL. We have targets every year based on the budget 

that we receive, and that produces—and then we are—we do have 

a target every year. 

Mr. SOUTHERLAND. Okay. Well, in one particular National Forest 

in my district, we have a six percent mortality rate and a 3.5 percent harvest rate. Is that acceptable? 

Mr. TIDWELL. No, I believe we need to be doing more work on 

that forest and almost every forest in this country. 

Mr. SOUTHERLAND. And what kind of work? 

Mr. TIDWELL. We need to be able to get in there and do work to 

restore the health of these forests. 

Mr. SOUTHERLAND. No, wait a second. Restoration, okay if you 

have a mortality rate of six percent and you have wood that is rotting——

Mr. TIDWELL. Right. 

Mr. SOUTHERLAND. Do you need to study that a little more? 

Mr. TIDWELL. No, no. We need to do—when I talk about restoration, it is actually to go out there and remove the biomass from the 

landscape, whether it is the disease, infected trees, to thin out the 

stands so that they are more resilient to be able to deal with the 

stresses, whether it is insect and disease, whether it is an invasive, 

whether it is fire. Those are the things, why we need to be able 

to do more work on the landscape to make sure these forests—we 

maintain the forest health, that these forests are resilient to the 

stressors that we are dealing with today. 

Mr. SOUTHERLAND. But, sir, what you are telling me is not, in 

reality, happening. 

What you are saying that you need to do, you have forests—I 

mean, you have companies that are dying on a vine that want to 

get in these National Forests that the Services have basically 

turned into national parks now. This Administration speaks a lot 

about helping rural communities. Well, the rural communities in 

my district, they just want to work. They want to work. 

517

And so I hear a lot about restoration. I hear a lot about studies. 

I hear a lot about planning. Just let the people go in and do what 

you just said, under testimony, needs to happen. Why is that not 

happening? 

Mr. TIDWELL. Well, actually, over the last year, we treated over 

3 million acres. 

Mr. SOUTHERLAND. Three million of 193 million acres that you, 

really, that is like throwing an ice cube at the sun. 

Mr. TIDWELL. Well, it is the most that we have treated in many 

years. 

Mr. SOUTHERLAND. The most, so we have been incompetent for 

many, many, many years. 

Mr. TIDWELL. No, I disagree. I respectfully disagree with that. I 

do acknowledge that we need to be doing more work on the landscape. We need to be able to find ways so that that we can do larger projects, that we can have more long-term contracts in place 

that encourage the infrastructure, to be able to do this work. 

So I agree with you we need to be doing more work. That is one 

of the things that we are looking for. 

Mr. SOUTHERLAND. And that is all the American people, Mr. Tidwell, are wanting to do, more work. But I think, and I respectfully 

disagree with you, because I know people that are losing everything they have, everything, sir, everything, and they don’t want 

to hear about the studying, the analysis, the restoration plans; they 

want to restore. 

Because I also know that if you want to restore a healthy forest, 

you have to go in and you have to thin it. And down in the South, 

we invented controlled burning. We understand fire. You talk about 

burn it and just put smoke in the air; that has a good purpose for 

a healthy forest. And it just bothers me that there is stonewalling, 

I believe, because if you have 193 million acres and you do not 

have a harvest plan and a harvest target, that tells me that you 

are not, you are not managing properly. 

And the statistics, the data, the raw data supports what I just 

stated. 

Mr. TIDWELL. I agree with you we need to be doing more work. 

Every National Forest has a, basically, we do set a cap of what is 

sustainable, about how much biomass can be removed off of that 

National Forest over a 10 year period, that is kind of the cap based 

on the planning. The amount of work——

Mr. SOUTHERLAND. For the American people, when you say biomass, just for the American people, are you talking about wood? 

Mr. TIDWELL. Yes. 

Mr. SOUTHERLAND. Okay, let’s just say wood, timber. Okay. You 

don’t have to make it go into biomass? 

Mr. TIDWELL. No, when I am talking about biomass, it includes 

the saw logs, the material that is used for pulp and paper. It is also 

the smaller residual material that also needs to be removed. 

In addition to the prescribed burning that we have to do, especially in our southern forests, where we actually do more burning 

there than any parts of the country. 

Mr. SOUTHERLAND. Well, you can tell I am passionate about this, 

okay, because there is a sense of urgency. Because when I go home, 

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thing they own, I don’t see that when I come to Washington, D.C., 

and I represent them, sir. And I just think we should be doing better. We do agree on that. 

Mr. TIDWELL. I do agree with you. 

Mr. SOUTHERLAND. I yield back. 

The CHAIRMAN. I thank the gentleman. 

I now recognize the gentlelady from Maine, Ms. Pingree, for 5 

minutes. 

Ms. PINGREE. Thank you, Mr. Chairman. 

Thank you for your testimony this morning. It has been very interesting, and I appreciate the work that you have been doing for 

us and briefing us on all of this. 

Ms. PINGREE. Ms. Canales, thank you for your background and 

interesting information. 

I just have a couple of questions from my own district in Maine. 

One is, there seems to be considerable opportunity to support development of small-scale, cellulosic-based biofuel systems. Such systems could take advantage of waste biomass at smaller scales, 

avoiding the economic dilemma posed by hauling low-grade materials long distances and providing a mechanism to address local energy needs. The idea is it is just more efficient and it could solve 

some of the problems of areas. How might the existing USDA programs be tailored to pursue this opportunity? 

Ms. CANALES. Thank you, and I have visited your state as well, 

Representative. And indeed between the beauty, you have the natural resources that could be utilized for some of these programs. 

Of course, your office works very closely with our state office and 

State Director Virginia Manuel, who is there in Maine—what I 

would advise is that for prospective businesses who want to engage 

in these programs is to work very closely with our state offices. 

That is part of our delivery system. 

In regards to what you are describing, you do not have to be a 

large-scale business. In fact, predominantly and certainly regarding 

the Rural Energy for America Program, it is small business ownership. And those projects can be $100,000, $500,000, a million dollars, just depending on what the needs are for that particular business. So I would just offer to you that that is part of how we would 

proceed with what you just described. 

The other part to it is that I would advise strongly in working 

with local leadership, we can work with them to do an energy assessment. People need to know what do we have available? Every 

community has potential feedstock. That is how we also pursue 

this. 

We have an energy coordinator that is designated in every state 

for rural development; and that energy coordinator is also dedicated to working specifically on these programs. The next step 

would be working with you to provide information to these business 

owners to see what best suits their needs. 

Ms. PINGREE. Great. Thank you. 

We do enjoy working with Virginia Manuel, and she does a great 

job for our state. And I do think she is very open to thinking of 

ways to help some of our small producers and do things that allow 

people to use the Program in ways that allow for less transporVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00530 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
519

tation and a variety of things. So I would be happy to work with 

you more on that. 

Mr. Garcia, I just want to talk briefly about the pellet industry, 

which is something that is of interest in our state. We have the 

most oil dependent state in the nation and a lot of seniors and a 

lot of people in rural areas who are very interested in renewable 

energy and who deal every year with our cold temperatures and expensive fuel costs, and so we are always looking for ways to do 

more with that. And I have a question around that. 

Given that our pellet industry plays a major role in reducing 

heating oil consumption, is the production of wood pellets from the 

removal of excess low-value woody biomass being provided adequate support under programs like BCAP for the purposes of 

incentivizing these types of best forest management purposes? 

Mr. GARCIA. Thank you for your question. 

I may have to get back to you with that to the Subcommittee. 

That will probably take some research on our part, but we will be 

more than happy to provide you with that information. I apologize 

for not having that information readily available to answer your 

question. 

But as far as the Farm Service Agency, we are working closely—

under the BCAP Program through matching payments—through 

the matching payment portion of the BCAP Program and also looking at the particular project proposals that could result in the development of fuel pellets to help our energy situation out there. 

Ms. PINGREE. Great, and I am happy to get together with you on 

that. It is a growing industry in our state; and, obviously, wood and 

wood products and the management of our forests is a big issue for 

us. But this is also a growing fuel product, and we want to do everything we can to help our industry and also help our residents 

afford the cost of fuel. 

Thank you for your work. 

I yield back. 

The CHAIRMAN. Thank you. 

I recognize the gentlelady from Alabama, Mrs. Roby, for 5 minutes. 

Mrs. ROBY. Thank you, Mr. Chairman, and I apologize for jumping up and down. 

Mr. Tidwell, for just a minute, your testimony highlights a number of programs that are important to private forest owners, like 

the almost 400,000 family forest owners in my home State of Alabama. And while I understand the value of these programs, another key program that is incredibly important for both the conservation and forest products industry in Alabama is the Forest Inventory and Analysis Program; and it helps us understand the conditions and the trends in our forests, where we have insect and disease threats, how much fiber we have in our forest products. Are 

you making progress with FIA? Have you fully implemented this 

program as directed by the previous farm bill? 

Mr. TIDWELL. We are making progress. And our FIA Program is 

just essential, especially to the private landowners, to be able to 

understand what is occurring not only on their land but throughout 

their state. It helps industry to be able to make decisions about 

where to make investments. It is really essential for us as we, 

520

when folks are asking us about is this a place for maybe an opportunity for a pellet facility, we have that data. We can actually show 

how much material that needs to be removed off of both the private 

land and also our public land. So we are making progress. 

A few years ago, we expanded the frequency—increased the frequency of reading the plots here in the eastern part of the state 

because of the level of change that we are seeing. So we have made 

some shifts in the program, and we are close to having it fully implemented. 

I expect in the future, though, that there will be more and more 

of a request for us to increase the frequency of reading our plots 

across the entire United States. So that is one of the things we are 

looking at, is how to build more efficiencies into this program with 

an anticipation that is going to be probably a need for more current 

data than we currently provide. 

Mrs. ROBY. Thank you so much. 

Mr. Chairman, I yield back. 

The CHAIRMAN. I thank the gentlelady. 

Now I recognize the gentleman from Oregon, Mr. Schrader, for 

5 minutes. 

Mr. SCHRADER. Thank you, Mr. Chairman. 

Mr. Tidwell, how is the Forest Service responding to some of the 

attacks from EPA on the use of woody biomass, the boiler MACT 

fiasco that went down and this Ninth Circuit Court decision that 

Congressman Ribble referred to? How are we responding to talk 

about the good things biomass should and could be doing for a 

healthy forest? 

Mr. TIDWELL. We are working with the EPA and all the Federal 

agencies to make sure that everyone understands the importance 

of being able to restore these forests and whether it is the saw log 

material or the small diameter, the residual material that needs to 

be removed. And we want to make sure that if there are any procedures or policies that are put into place that they actually encourage and allow for that restoration work. So whether it is with air 

quality——

Mr. SCHRADER. But EPA is going the opposite way, obviously. 

How aggressive are you in talking to Ms. Jackson and company 

over there? 

Mr. TIDWELL. Well, we meet with that staff on a variety of issues 

and—whether it is air quality or clean water concerns—to be able 

to offer options about how we can move forward to ensure that—

of course, we want clean air and clean water but to be able to do 

it in a way that we can do the restoration work that needs to occur 

to prevent some of the long-term impacts to either clean air or 

clean water. 

For instance, the amount of emissions that occur off of these 

large wildfires. We have so many examples now where when we go 

into a forest and we do the restoration work around our communities, to do the thinning, to remove a significant amount of the 

large trees and some of the smaller trees, so that when a fire burns 

through an area—and fires will continue to occur—that the severity of the wildfire is much less. 

Mr. SCHRADER. So if I may—I have a limited amount of time—

I appreciate that. I just ask you to be more aggressive and more 

521

public in some of your pronouncements to make sure that there is 

a level playing field here within the Administration on what is 

going on. 

My other point: It would seem to me that AFRI and Agricultural 

Research Service are not getting the same play in the President’s 

budget. He talks about innovation, excellence, education, out-competing the rest of the world, out-innovating the rest of the world. 

During the Recovery Act, there were lot of increases that I approved of and research and development projects, but ag seemed to 

fall short. Why is that? 

Mr. TIDWELL. I can respond to what we did though the Recovery 

Act, and we had a significant amount of funds that went to doing—

restoring the forests, both our National Forests and on our private 

lands through our states. 

Mr. SCHRADER. I am talking about research. I am talking about 

active research, actually. 

Mr. TIDWELL. And even within——

Mr. SCHRADER. They didn’t see the increase the rest of the research budgets did. 

Mr. TIDWELL. Yes, well, with our research budget, what we are 

focused on is continuing to do the work, whether it is in our wood 

products lab to develop new products that we can use to encourage 

more utilization of wood, to deal with the invasives. We currently 

have the largest research department, when it comes to conservation, in the world. So we are just continuing that work. 

And we feel that the budget request that we have submitted reflects the work that needs to be done to be able for us to continue 

all of our research programs that are essential to be able to deal 

with the threat, whether it is invasives or to develop new use of 

wood products in this country. 

Mr. SCHRADER. Thank you. I just, again, urge you to be a little 

more aggressive for your share of the pie, if you will. 

I am a little concerned with the Healthy Forest Reserve Program. You referred to Oregon’s northern spotted owl habitat setasides as a success. It has been, actually, quite the opposite, not 

just on private land but on our public lands. We found that the 

large set-asides of public lands have not improved the sustainability or viability of the northern spotted owl; and, in fact, they 

continue to decline. The remarks in the audit that this is a success 

alarmed me greatly. 

Some of the more recent proposals are to actually set aside more 

land. In other words, it did not work the first time; we will just 

double down on failure and see if we can get the same result. There 

has been a lot of documentation that competition with other owls 

is really the main problem. So I would ask you to look at that a 

little bit. 

And, frankly, on the stewardship program, I would urge you to 

look at that as something you can use within the Forest Service 

itself, on Forest Service land, not just private lands but national 

Forest Service lands. Set-aside trusts, programs that you talked 

about, I think that can actually do a great deal to break down the 

barriers between the environmental community and the timber 

community and have healthy forests at the end of the day. 

Mr. TIDWELL. Thank you. 

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Mr. SCHRADER. Thank you, sir. 

I yield back. 

The CHAIRMAN. I thank the gentleman. 

I just want to make Members aware that we have done so well 

taking the 5 minutes I think we will be able to get, with the few 

folks who are here, another round of questions in, if you have such. 

At this point, I recognize the gentleman from New York for 5 

minutes. 

Mr. OWENS. Thank you, Mr. Chairman. I will be brief. I have a 

cold, and I am having some trouble speaking. 

I don’t have a National Forest in my district, but I have the Adirondack Park. And we have a number of businesses that are developing biofuels and are attempting to move in that direction. What 

I would like to know is, when you look across the spectrum of the 

programs that the Federal Government provides, what would be 

the three programs that you would emphasize and like to see funded to enhance the growth of biofuels? And is there anyway in which 

we can direct biofuels growth to local delivery? That is allowing 

this funding to deliver that energy to the local communities. Anybody can take a shot at this. 

Ms. CANALES. Congressman, indeed, the goal and what the President and Secretary Vilsack have put forward is that the development of these biorefineries would occur throughout the United 

States. Our goal right now is to do four in the next 2 years, and 

we are on our way. 

Again, this is new. You know, I describe it as it has not been a 

silver bullet yet in the sense of where these businesses and what 

is going on in our country. But what you have just described is exactly the case in the sense of taking advantage of what the feedstock would be. 

For example, the one that I mentioned in Florida, is relying on 

agriculture waste. The one in Georgia is relying on—he did not 

want us to use ‘‘woody’’ biomass, but it is wood. And that would 

be something that would be in your area as well, too. The notion 

is that these biorefineries can be developed and dispersed throughout the United States and can benefit and utilize whatever is derived from that region. 

But, also, the important thing about this is that it brings in financing that in the past may not have previously existed. Because 

when you do put these projects together it does require, not only 

this loan guarantee but private equity—private investment; and 

that is an important draw for our rural areas. 

Mr. OWENS. Thank you. 

Mr. TIDWELL. If I could add to that, our Community Wood Energy Program provides the assistance and the technology to communities so that they understand the benefits and the options that 

they may have to be able to develop a proposal so they can pursue. 

And what we are finding is so essential when it comes to utilization of biomass or bioenergy is that it is the transportation costs 

that are often the limiting factor. And so that the more of these facilities that we can build across the country and scale them for 

what is needed either for that community or for that facility, that 

is where I think where we will really start to see the expansion of 

this infrastructure. 

523

The other key program that we have is our Forest Biomass for 

Energy Program that directs a competitive process for research and 

development to be able to continue to expand the knowledge that 

we currently have with what is working but also to be able to continue to provide more efficiencies and how to really convert biomass into energy. 

Those are two key programs that I feel that are very beneficial, 

not only the direct benefits to the community but also when it 

comes to the research. It is just essential that we continue to move 

forward to be able to understand how we can make these operations more efficient. 

Mr. OWENS. Thank you. 

Ms. CANALES. If I may add, on the Rural Energy for America 

Program, section 9007, there is an opportunity for a grant for feasibility studies so that the first steps can be taken to determine is 

there that viability for that particular type of a business, this biorefinery. So there are initial steps. And those are first, important 

investments so that you can get all of your information together, 

including the financing that I mentioned that, of course, is critical. 

Mr. OWENS. Thank you. 

Mr. Chairman, may I have one additional question? 

The CHAIRMAN. Yes. 

Mr. OWENS. I also have Fort Drum in my district. I am wondering, are you working with DOD at all to see how biomass can 

be utilized to take military installations off the grid and enhance 

national security in that way? 

Ms. CANALES. We have entered—the U.S. Department of Agriculture has entered into a Memorandum of Understanding with the 

Department of Navy so that there can be what you have just described, an opportunity to put together projects. This one happens 

to be related to Hawaii, but it is not limited only to that state. We 

are seeing the sort of initial steps in that direction, but it is geared 

towards trying to get a project that would be able to develop new 

biorefineries so that it can go towards aviation fuel and other types 

of fuel that are being used by the military. 

So there is a definite interest, and there has been communication 

to that effect. 

Mr. OWENS. Thank you very much. 

I yield back. 

The CHAIRMAN. I thank the gentleman. 

With the witnesses’ indulgence—we have been pretty efficient 

with everybody’s time—I would like to see if there is an opportunity for one more questioning round for the Members that remain here. I will take the liberty of starting that. 

Chief Tidwell—or any of the witnesses can comment—recently, 

Secretary Vilsack announced a new green building initiative responding to several Members of this Committee’s request whether 

the USDA was going to start using more wood—frankly, the original green building material—in its buildings, recognize all credible 

green building rating systems, other than just LEED, and invest in 

research into the better use of wood products. 

Real quick, can you give us some idea of where is this initiative 

and what steps you have taken to date following this announcement? 

524

Mr. TIDWELL. Following that announcement, I sent a directive 

out to all of our units that, as we move forward with any new 

building construction, renovating facilities, that we look first to 

using wood. It has always been something that we always wanted 

in our facilities. 

In addition to that, we are making sure that everyone is aware 

of the latest developments that are coming out of our forest products lab. For instance, they are working on developing more of a 

laminated beam system that can be used with some of the smaller 

diameter wood so that we can encourage construction besides single-family homes using wood. In Europe, often, they go four, five 

stories high with wood construction. We want to be able to show 

folks that that is a good construction, it is solid, and to be able to 

actually move forward and develop some mills that can actually 

produce these laminated beams. 

And the other thing is just, to move forward, that we want our 

buildings to be, of course, certified, be energy efficient, but to be 

able to work with the certification programs out there so that they 

fully recognize the benefits of wood. I agree with you. It is the 

original green building material. 

The CHAIRMAN. Thank you. 

As I prepare myself for the farm bill, one of the things that was 

created in the 2008 Farm Bill—and I haven’t really seen anything 

on it—the Forest Service, as part of the farm bill there was a 

branch created, International Forestry, and I really know nothing 

about that. Can you give us a quick snapshot of what that is, what 

it has become, what it does? 

Mr. TIDWELL. Our international program is a relatively small 

staff. But what they do, they work with other countries. We are 

currently working with 88 other countries to help countries understand the benefits of sustainable forestry, to deal with the illegal 

logging so that there is less impact on our markets, to be able to 

deal with invasives, to be able to make sure that other countries 

understand the problems with the wood material they are shipping 

to this country or any country, about the issue with invasives, to 

be able to work together. 

The other key program they have is dealing with migratory 

birds, to make sure that countries are providing habitat for birds 

that migrate out of this country, that, no matter what habitat we 

provide here, if the birds head south, for instance, and there is no 

habitat there, we are going to loose those populations, and then we 

will have to continue to deal with those issues in this country. 

Those are kind of three of the main programs that we are working on right now. The majority of the funding for our international 

programs comes from USAID and through the State Department. 

But it is really just essential work that we are doing that really 

has direct benefits not only to the markets but direct benefits to 

sustainable forestry worldwide. 

The CHAIRMAN. That was helpful. Thank you. 

Staying on the international perspective, as part of the last farm 

bill there was a soft wood lumber imports provision within the 

farm bill that looked at establishing an agreement implementation 

that required declaration of lumber imports and fees paid. Do you 

know the status of that initiative? 

525

Mr. TIDWELL. Mr. Chairman, I am not. I will have to get back 

to you on that one. 

The CHAIRMAN. That is fine. I would appreciate it if you would 

do that. 

I wanted to—I can’t hardly go through a farm bill hearing without at least touching on the Allegheny National Forest at least 

once. That is where I am from. I just love the place. 

This one has to do—as you know, the ANF is in the district, and 

oil and gas production was certainly critically important to my constituents in the communities well before it was a National Forest 

in 1923. And despite attempts by some to block this production 

over the years, the bottom line is that the mineral rights in the forest—I believe it is over 93 percent, 92 percent—are privately held. 

In recent weeks, I have been hearing a lot of concern from my 

constituents about the unreasonably long periods of time before the 

Forest Service issues notices to proceed. These notices should be 

generated within 60 days, but they have grown—and I have actually a quote from an article I will submit for the record by a county 

commissioner—from 4 to 7 months as one of the county commissioners said. 

[The information referred to is located on p. 529.] 

The CHAIRMAN. In addition to the delays, the Forest Service has 

also issued a letter to Shell Western Exploration and Production 

which prohibits any ANF groundwater for the company’s natural 

gas drilling and production operations. 

Can you explain the delays of notices to proceed and why the 

Forest Service has taken this change after a pretty good partnership since 1923? All of a sudden, in 2011, we have this turnaround 

prohibiting the use of groundwater. 

Mr. TIDWELL. With the processing of the permits, we are actually 

making progress. We are not to where we would like to be as far 

as the length of time. But I think even a year or 2 years ago it was 

taking more like 5 to 51⁄2 months. We are now down to an average 

of 4 months. We processed 690 permit applications last year. 

One of the things that is occurring is the number of applications 

is significantly increasing. So it is one of the things we are going 

to have to look at to be able to find a way to add some more capacity to that force to be able to deal with this influx of additional applications. 

The issue with groundwater is not part of the process application. It is more of a concern about the groundwater and the quality 

of that groundwater. And so it is one of the things we need to continue to move forward with and look at some other options, or to 

make sure that we are providing that there won’t be impacts to the 

quality of that groundwater. 

This is a new issue that has recently come forward that we 

weren’t dealing with with the previous permits. It is one where we 

are going to have to work with the industry and work with the applicants to be able to find a way to be able to move forward with 

those. 

The CHAIRMAN. I also encourage you to work with other partners 

and stakeholders, the Department of Environmental Protection in 

Pennsylvania, agencies like the Susquehanna River Basin CommisVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00537 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
526

sion, who I think really have their arms wrapped around the water 

issue and have a lot of confidence in it. 

And, finally, I will close with just a request. This is a joint request. My colleague from Florida was going to try to make it back, 

so a joint request from Mr. Southerland and myself. 

If you could have some folks at the Forest Service take a look at 

the Apalachicola National Forest and, frankly, report back on why 

that Florida National Forest is only really at what appears to be 

15 percent of production of the actual forest plan for millions of 

board feet harvesting. I think that would be very helpful. I know 

the gentleman from Florida would appreciate it; and, obviously, it 

is something I would be interested in looking at myself. 

And, with that, I recognize the gentleman from Oregon for the 

final line of questioning here. 

Mr. SCHRADER. I appreciate that, and I will try not to keep everyone. 

You mentioned—Chief Tidwell, you mentioned at one point the 

need to do restoration work on a landscape scale to really be effective and deal with it, I assume, on a watershed-type basis, that 

sort of thing. And you also mentioned dealing with it in terms of 

long-term contracts to provide, I assume, some certainty; and your 

comments were probably more geared toward private landowners. 

Why couldn’t we do the same thing on public forestland? Why 

couldn’t we have that? Are we pursuing that at all? I would be interested in who in your agency deals with that. 

Mr. TIDWELL. Yes, we actually are doing that on the National 

Forest to take these—it is more of a landscape scale approach. And, 

ideally, when we even do our assessment, it also factors in the 

work that is being done on adjacent private forested lands, to be 

able to look at it together. But there is just no question, we have 

to look at much larger areas than we ever have in the past, and 

we can have some opportunities there. 

You know, in your state—I will use an example down in areas 

of Arizona we have an initiative to look at four forests, and we are 

doing the analysis on 750,000 acres with one environmental impact 

statement. That would allow us to be able to go forward and do 

work over at least the next 10 years. That is an example of what 

we need to do in all of our states and across the country. 

And I will tell you today we have the support to do this work. 

A lot of these initiatives are being strongly supported by the environmental community. Our conservation groups are there with the 

industry. They recognize that we need to be doing more of this 

work on the landscape. 

That is why I remain optimistic that we are going to be able to 

move forward and do significantly more work on the landscape, 

produce more jobs, produce more wood, not only for our mills but 

also for other biomass uses. 

Mr. SCHRADER. I appreciate that, and if there is an opportunity 

I would love to get a visit from somebody in your office on what 

you are doing and how we might work with you more closely in Oregon on that. 

The last comment, regards outcomes. I am a big outcome measure fan. We are spending a lot of money in these budgets. I appreciate the level of contacts you are making with different private 

527

landowners and acres treated and this and that, but I would like 

to see, if it is at all possible, that the Forest Service set some targets. Given the amount of money we have, I think it is an important criteria. Given the amount of money we have or don’t have, 

here is how much land we can effectively treat or not treat at any 

given time. 

And here are our goals: This much reduction in pest infestation 

in an acreage given this amount of money, talking about wildfire 

suppression, doing better in terms of acres burned or what have 

you, given the type of fire severity year it might be. For water quality, if we are investing in all of these things to reduce runoff, what 

sort of improvements are we getting in these local areas? 

A lot of times I think we concentrate on lots of inputs and lots 

of outputs, but we don’t get down to what outcomes we are actually 

trying to get at. And I would be very interested in a discussion 

with your agency about that. 

Mr. TIDWELL. We will be glad to come up and visit with you and 

provide not only the scale of the issues we are dealing with but also 

what we expect we can accomplish in Fiscal Year 2011, what we 

expect to accomplish in Fiscal Year 2012, and also be able to show 

what we actually accomplished. Because we do have targets that 

we set with all of our programs every year. Those are tracked 

throughout the year, and at the end of the year that is how we basically determine our level of performance. And we would be glad 

to show that information to you. 

Mr. SCHRADER. Thank you very much. I appreciate you all coming here. 

I yield back. 

The CHAIRMAN. I thank the gentleman. 

I want to thank our witnesses for being here, joining us today, 

your preparation and your testimony and, frankly, your leadership 

within the agencies that you lead and your level of collaboration 

and teamwork with this group. We have a lot of work ahead of us 

as we look at the 2012 Farm Bill and the specific titles within that 

farm bill that are within the responsibility of this Subcommittee. 

So thank you so much for all of that. 

Under the rules of the Committee, the record of today’s hearing 

will remain open for 10 calendar days to receive additional material and supplementary written responses from the witnesses to 

any question posed by a Member. 

This hearing of the Subcommittee on Conservation, Energy and 

Forestry is adjourned. 

[Whereupon, at 11:29 a.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

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SUBMITTED ARTICLE BY HON. GLENN THOMPSON, A REPRESENTATIVE IN CONGRESS

FROM PENNSYLVANIA

THE TIMES OBSERVER

Driller says USFS not living up to ruling 

County commissioners discuss court filing 

July 19, 2011

By BRIAN FERRY

According to oil and gas developers, the U.S. Forest Service is taking too long to 

process proposals for development on the Allegheny National Forest. 

In a document filed Friday with the U.S. District Court of Western Pennsylvania, 

the Pennsylvania Independent Oil and Gas Association (PIOGA) asked why the Forest Service should not be held in contempt of court. 

‘‘USFS is in violation of this court’s Dec. 15, 2009, order requiring USFS to process oil and gas development proposals in the ANF in accordance with procedures 

established in United States v. Minard Run Oil Co.,’’ according to the document. 

‘‘USFS has failed to comply with the Minard Run procedures and has instead engaged in a pattern of interference with the lawful efforts of PIOGA members to develop their ANF oil and gas estates.’’

Warren County Commissioner John Bortz offered testimony in the hearings that 

led to Judge Sean McLaughlin’s December preliminary injunction against a settlement that had the effect of dramatically decreasing new drilling on the forest. 

Bortz brought up the new development at the commissioners’ work session on 

Monday. 

‘‘There are already rules on the books as to how this works,’’ Bortz said. 

In the past, the Forest Service set a period of 60 days as a reasonable time for 

addressing areas of concern and issuing notice to proceed. 

‘‘That 60 day period has grown from 4 months to 7 months,’’ Bortz said Monday. 

The delay ‘‘impacts the developers’ ability to create and sustain jobs’’ as well as to 

access the property they have rights to. 

The length of time isn’t the only problem PIOGA members are claiming. 

‘‘There has been a long-standing history that oil and gas producers would have 

access to surface water’’ necessary for development operations, Bortz said. 

‘‘In addition to the increasingly lengthy delays in USFS’s processing of drilling 

proposals, USFS has issued a letter prohibiting SWEPI LP (Shell Western Exploration and Production), a PIOGA member, from using any ANF groundwater for 

SWEPI’s natural gas drilling and production operations,’’ according to the document. 

‘‘USFS has refused to negotiate with SWEPI at all . . . when such water use by 

oil and gas developers has been commonplace for decades in the ANF.’’

The right to ‘‘drill for and use water’’ from the property ‘‘for the purpose of operating the said premises for oil and gas . . .’’ was reserved when the title to the mineral estate changed hands, according to the document. 

The wells in question are Marcellus Shale natural gas wells, according to the document. 

Such wells generally require millions of gallons of water for hydraulic fracturing. 

The amount of water is not an issue, according to the document, because the 

‘‘Kane water-flood operation in the ANF uses, and has used for the past 4 decades, 

10,000 barrels of water a day, year round, from ANF groundwater wells. Such longstanding, large-scale operations undermine any USFS assertion that the use of ANF 

groundwater by mineral estate owners is ‘unprecedented.’ ’’

‘‘Minard Run forbids USFS, the owner of the subordinate surface estate, from imposing such a burdensome condition on SWEPI, the owner of the dominant mineral 

estate,’’ according to the document. ‘‘Recent actions and inactions by USFS have become so egregious that PIOGA is compelled to seek further relief from this court.’’

‘‘USFS has violated this court’s order . . . and should be found in contempt,’’ according to the document. 

‘‘It’s going to be interesting to see how that plays out,’’ Commissioner Terry Hawk 

said. 

‘‘The outcome of this does hold in the balance jobs in Warren County,’’ Bortz said. 

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SUBMITTED QUESTIONS

Response from U.S. Department of Agriculture 

Questions Submitted By Hon. Glenn Thompson, a Representative in Congress from 

Pennsylvania 

Question 1. Rural Energy for America Program (REAP): The Rural Energy 

for America Program (REAP) assists small rural businesses and producers with renewable energy and energy efficiency projects. Recently, USDA included ethanol 

blender pumps as an eligible project? How do blender pumps fit in with the goals 

of the program? Can blender pumps be financed through other USDA programs? 

Answer. The agency clarified that flex-fuel delivery systems, including blender 

pumps, are one of many eligible purposes under REAP. The statute makes it the 

program’s responsibility to promote biofuel infrastructure. Blender pumps are a critical part of that infrastructure as the final step necessary to reach the consumer. 

No separate funds are designated for flex-fuel projects. REAP is a competitive grant 

and loan guarantee program in which renewable energy systems and energy-efficiency improvement projects must compete on their own merits against eligible 

projects for available funds. REAP is not the only RBS program that can fund blender pumps; the Business and Industry Guaranteed Loan program also has blender 

pumps as an eligible activity.

Question 2. Rural Energy for America Program (REAP): Most Rural Energy 

for America (REAP) projects seem to be located in the Midwest. What challenges 

are preventing the REAP program from being implemented nationally? 

Answer. While the REAP program has been largely utilized by applicants in Midwest states, it is a national program. Changes made in the NOFAs for 2008, 2009, 

and 2010 and subsequent REAP Interim Rule have modified scoring and project criteria. These changes, as well as the implementation of State allocations, were made 

to increase the diversity and geography of the projects selected, and we have already 

seen a positive change in the geographic distribution of REAP awards. In the first 

3 years of the program, 24 states received awards for 2003, 27 for 2004, and 32 for 

2005. In the most recent 3 years (not counting 2011, which is still being processed), 

41 states received awards for 2008; 49 states as well as Puerto Rico and the Western Pacific received awards for 2009; and 48 states and Puerto Rico received awards 

for 2010.

Question 3. Bioenergy Program for Advanced Biofuels (Section 9005): Could 

you identify what types of feedstocks are being used in the biofuels facilities that 

are receiving payments in the Bioenergy Program for Advanced Biofuels? 

Answer. The types of feedstocks used by facilities receiving payments for FY 2010 

include:

• Agricultural waste seed

• Agricultural crops (sorghum, wheat starch)

• Animal fat

• Dairy waste/manure

• Ethanol (from other than corn kernel starch)

• Fatty acids

• Food processing waste

• Grasses

• Greases (white, yellow)

• Mixed substrates waste

• Municipal waste

• Oils (canola, crude corn, cottonseed, glycerin, palm, soybean, sunflower seed, 

waste or used vegetable, other)

• Poultry fat

• Tress (pine, other)

• Wood waste (sawdust, chips, pallets)

Question 4. Duplication: During the conservation title audit we learned that several conservation programs can fund energy efficiency projects. What programs outside of the energy title does USDA administer that may fund renewable fuel projects 

or renewable energy and energy efficiency projects? 

For example, can the Business and Industry (B&I) loan program or Value-Added 

Grant program accomplish some of the same goals as many of the energy title proVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00542 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
531

grams? If not, what changes could be made to existing programs outside of the energy title to accomplish the same goals? 

Answer. There are four other programs within USDA under which certain types 

of energy projects may be financed. These are the Value-Added Producer Grant 

(VAPG) program, Community Facilities, Business and Industry Program, and the 

Environmental Quality Incentives Program (EQIP). FSA farm loans could also be 

used for some of the projects, and Forest Service also has some authorities for energy related projects. 

The project eligibility category related to renewable energy under the VAPG program was set by the 2008 Farm Bill and states that a Value-Added Agricultural 

Product is ‘‘a source of farm- or ranch-based renewable energy, including E85 fuel.’’ 

Thus, the VAPG program can provide funds to a limited set of energy-related 

projects where an agricultural commodity is used to generate renewable energy on 

a farm or ranch owned or leased by the independent producer that produces the agricultural commodity. On-farm generation of energy from wind, solar, geothermal, 

or hydro sources are not eligible for VAPG. 

Because of the differences in eligible entities and eligible projects, there is little 

overlap with the Community Facility (CF) program. Eligible entities under the CF 

program are: public bodies (e.g., municipalities, counties, districts), nonprofit corporations and associations, and Federally recognized Indian tribes in a rural area. 

Eligible projects are generally activities associated with the construction, enlargement, extension, or improvement to ‘‘essential community facilities providing essential services.’’ Essential community facilities are ‘‘those public improvements requisite to the beneficial and orderly development of a community operated on a nonprofit basis.’’ 

While some entities eligible for the CF program would also be eligible under the 

Section 9003 program, the type of projects funded under the Section 9003 program 

would not likely qualify as an eligible CF project. Further, Community Facilities is 

a grant program, while the Section 9003 is a guaranteed loan program, and grants 

would be an insufficient source of funds for the construction of biorefineries. Thus, 

there is little likelihood of overlap between these two programs. 

For the Section 9004 program, the eligible entity must be a biorefinery. Further, 

the types of projects that qualify for the Section 9004 program would likely not qualify for the CF program. Thus, there is no overlap with the CF program. 

While some entities might be eligible for both the CF program and the Section 

9005 program, there would be no overlap because the CF program would not make 

any payments for the production of advanced biofuels. 

For the Section 9007 Program, for the renewable energy system and energy efficiency improvement portion, the eligible entities are agricultural producers and 

rural small businesses. These entities are also eligible for renewable energy system 

feasibility studies. Given the difference in eligible entities, there is little, if any, 

overlap with the CF program. For energy audits and renewable energy development 

assistance under Section 9007, eligible entities include units of state, tribal, and 

local governments, land grant colleges and universities, rural electric cooperatives, 

public power entities, and instrumentalities of state, tribal, and local governments. 

Thus, there is some overlap in eligible entities. However, it is unlikely that energy 

audits or Renewable Energy Development Assistance (REDA) would meet the 

project eligibility requirements for CF. 

The Business and Industry (B&I) Program provides guaranteed loans to a wide 

range of projects, including energy projects. There have been a number of projects 

financed under the B&I Program that may have been able to have been financed 

under REAP if the assistance requested did not exceed 75 percent of eligible project 

costs. 

The NRCS has traditionally offered financial assistance for a variety of conservation practices that also promote energy conservation as a secondary benefit, such 

as reduced tillage. NRCS initially expanded these energy efforts offering assistance 

for on-farm energy audits. Currently, NRCS is retooling its conservation practice 

standards and adding new standards with an increased emphasis on energy conservation implementation. In 2012, NRCS will offer financial assistance for many 

items identified in the on-farm energy audits such as lighting, ventilation, airflow 

and milk harvesting. 

Beyond these few programs, REAP does not overlap or duplicate of any other 

USDA program.

Question 5. Biomass Crop Assistance Program: The intent of the Biomass 

Crop Assistance Program (BCAP) is to help producers establish dedicated energy 

crops. To date, how many acres of dedicated energy crops have been created from 

the program? How much has been spent through BCAP to date to get these acres? 

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Answer. As of August 22, 2011, nine project areas have been designated, spanning 

across 168 counties in 10 states (AR, CA, KS, MO, MT, OK, OH, OR, PA, and WA). 

These nine project areas target the sign up of 117,184 acres in FY 2011 alone. 

Overall the project sponsors requested that these nine project areas target a fullenrollment of 834,000 acres. 

Approximately, 17,000 acres have been signed up since the sign ups began on:

• May 9, 2011 (Project Area 1);

• June 20, 2011 (Project Areas 2 through 5); and

• August 8, 2011 (Project Areas 6 though 9).

In addition, approximately 14,000 acres have been offered and are in the phase 

of having conservation plans developed before approval occurs. Approximately $82 million has been allocated for the sign up of acres in these nine project areas. The $82 million supports production over a period of five year 

for herbaceous crops and nine years for the woody crop. The allocations are as follows:

Project Area Allocation Break Down 

Project Area 1 (sponsor Show Me Energy Cooperative) $18 million 

Project Area 2 to 5 (sponsor MFA Oil Biomass & Aloterra Energy) $18.25 million 

Project Area 6 (sponsor Beaver Biodiesel) $.37 million 

Project Area 7 (sponsor Abengoa Bioenergy) $6.2 million 

Project Area 8 (sponsor AltAir Fuels) $20 million 

Project Area 9 (sponsor ZeaChem Inc.) $18.82 million

Total $ 81.6 million 

The nine project areas target the establishment of four different energy crops: native grasses, miscanthus, camelina, and hybrid poplar. 

The intended conversion products are as follows: jet fuel drop-in; biobased products; bio-ethanol; biodiesel; and fuel pellets.

Question 6. Biomass Crop Assistance Program: When creating the BCAP program in the 2008 Farm Bill, Congress set two primary components. The first was 

establishment of a new supply of energy crops and annual payments to farmers to 

grow these perennial biomass crops. The second allows matching payments to producers and forest landowners to offset the costs of collecting, harvesting, storing and 

transporting of eligible biomass materials. From a fiscal standpoint, the program 

was initially scored at $70 million over 4 years, yet the actual spending in FY 2010 

was over $240 million. Can you talk more on the differences in the way the program 

was initially administered to the way it is currently? Has USDA followed the purposes of BCAP that Congress initially set forth? 

Answer. USDA’s administration of BCAP is in accordance with the statutory requirements set forth by Congress. The intent of BCAP is to provide a financial incentive to farmers and forest landowners to produce new supplies of biomass or to 

collect existing supplies of biomass for the purpose of heat, power, bio-based products or liquid biofuels. For new biomass, BCAP provides establishment and annual 

payments to producers. For the collection and delivery of existing biomass, BCAP 

provides matching payments to producers. 

Initial funding for the matching payment component of BCAP began with a Notice 

of Funding Availability (NOFA) operating from June 11, 2009 to February 3, 2010, 

which, as directed by statute, provided that:

• ‘‘The Secretary shall make a payment for the delivery of eligible material to a 

biomass conversion facility to a person with the right to collect or harvest eligible 

material . . . at a rate of $1 for each $1 per ton provided by the biomass conversion facility in an amount equal to not more than $45 per ton.’’;

• ‘‘The Secretary shall use the funds, facilities and authorities of the Commodity 

Credit Corporation, including the use of such sums as are necessary, to carry out 

this section.’’;

• ‘‘The term ‘biomass conversion facility’ means a facility that converts or proposes 

to convert renewable biomass into heat, power, biobased products or advanced 

biofuels’’;

• ‘‘The term ‘eligible material’ means renewable biomass’’;

• ‘‘The term ‘renewable biomass’ means . . . any organic matter that is available 

on a renewable or recurring basis from non-Federal land . . . including . . . 

trees and . . . wood waste and wood residues.’’

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The NOFA generated important information from stakeholders on issues not fully 

addressed in statute, including when BCAP incentives are successful, when they 

may not be, or when incentives require additional policy clarifications. In light of 

funding limitations enacted in July 2010, USDA set tougher restrictions by which 

materials qualify for matching payments. These conditions, outlined in the final 

BCAP regulation on October 27, 2010, are that eligible materials qualify for payment based on the sequence of collection, harvest, storage, transportation and delivery; meaning the eligible material must be collected or harvested directly from the 

land, before transport and delivery (not ‘‘collected or harvested’’ after transport and 

delivery by separating from a higher value material); must be collected or harvested 

in accordance with an approved conservation, forest stewardship or equivalent plan; 

and if a woody eligible material outside of BCAP project areas it must also be a byproduct of preventive treatments removed to reduce forest fire threats, reduce disease or insect infestation, or to restore ecosystem health, and cannot have a preexisting market. Of course even if the material is eligible, matching payments may 

not be available if other program needs exhaust the available funding. 

As reflected in the cost-benefit analysis conducted by Farm Service Agency (FSA) 

and issued with the publication of the final BCAP regulation, these conditions substantially reduce future outlays on matching payments compared to the expenditure 

baseline of FY 2010.

Question 7. Forest Resource Coordinating Committee: The 2008 Farm Bill 

established the Forest Resource Coordinating Committee (FRCC) to coordinate nonindustrial private forestry activities within the Department of Agriculture and with 

the private sector in order to effectively address national priorities for private forest 

conservation, clarify individual agency responsibilities and provide advice on the allocation of Cooperative Forestry Assistance Act funds. Discussions on and off the 

Hill are underway regarding the next farm bill; yet, the FRCC has not yet been established. When does USDA intend to stand up the FRCC? 

Answer. To be clear, the 1990 Farm Bill created the FRCC, it has been operational in the past, and it was amended by the 2008 Farm Bill. Applications have 

been received to fill vacant positions on the committee. Upon completion of background checks, members will be appointed to the committee by the end of the calendar year.

Question 8. Partnering with NRCS on Conservation Programs: Clearly, 

while the USFS and state forestry agencies don’t directly implement the farm bill’s 

conservation programs, you play an important role in providing basic landowner 

education, outreach, and technical assistance that helps landowners implement conservation practices. In your opinion, do you think there are areas for improvement, 

where NRCS could work better with the USFS and state forestry agencies to implement these programs, especially in light of the fact that forestry is still only a small 

component of many of the conservation programs? 

Answer. Since enactment of the 2008 Farm Bill, with the coordination of the Joint 

Forestry Team, the Forest Service, NRCS, State Foresters and Conservation Districts have successfully worked together to better assure that landowner assistance 

program efforts and investments are coordinated and complementary. Several states 

have entered into agreements that clearly define complimentary partner agency 

roles and this has resulted in more efficient use of resources, better customer service 

and more impact on the ground. It has become especially clear that much more can 

be accomplished where NRCS conservation program cost-share dollars are focused 

on forest management practice implementation, and complemented with Forest 

Stewardship Program forestry expertise and planning assistance delivered through 

state forest agencies and their already existing network of partners and cooperators. 

Through the Forest Stewardship Program, state forestry agencies can continue to 

function as the technical experts with respect to forestry, enabling more landowners 

to qualify for and participate in NRCS cost-share programs such as the Environmental Quality Incentives Program (EQIP) and assuring quality forest management 

projects are being funded.

Question 9. Delivery of Technical Assistance: In the last farm bill, some 

changes were made to streamline the delivery of technical assistance under the conservation programs, and I believe the intent was to allow third-parties, like state 

forestry agencies and consulting foresters, to help with the delivery of technical assistance. Do you see progress on this issue? Do you think we are using these foresters as much as possible in efforts to improve efficiencies and streamline the programs? 

Answer. Much progress has been made on this issue. The 2008 Farm Bill recognizes Forest Stewardship Plans as meeting applicant management plan requirements for EQIP. By operating under the Forest Stewardship Program, state service 

534

foresters and private consultants are not required to become NRCS Technical Service Providers (TSPs) in order to provide forestry planning expertise. In 2011, the 

Forest Service, National Association of State Foresters, NRCS and the American 

Tree Farm System adopted a national Forest Stewardship Plan template that is recognized by all parties as fulfilling the management plan requirement for forest landowner access to a variety of assistance and incentive programs, including internationally recognized third party certification. In this way, the network of forestry 

expertise that is supported by the Forest Stewardship Program is more fully leveraged. The Forest Stewardship Program is serving increasingly as a ‘‘gateway’’ 

through which landowners can gain access to a variety of forestry assistance and 

programs including USDA cost-share, state tax abatement, forest certification and 

emerging ecosystem service and renewable energy markets.

Question 10. Beginning Forest Owners: In the last farm bill, several programs 

were included to address the education and assistance needs of beginning farmers 

and ranchers, helping them understand good farming practices, how to set up their 

businesses, etc. Do you see a similar need for forest owners? Are there a lot of beginning forest owners as well? 

Answer. Of the 11 million forest owners in the U.S., 1.5 million are over 75 years 

of age and control 46.9 million acres of forest. In the next 10–15 years, we can expect these 46.9 million acres (20% of all the private forest land in the U.S.) to be 

passed on to heirs, be sold to developers, or change hands in some other way. This 

means that beginning landowners will likely increase in number and will continue 

to need help with forest management through programs like Forest Stewardship. 

This also means that succession planning is very important. However, we still see 

families struggling to understand tax laws and estate planning and it is clear that 

more continued assistance is necessary for this essential planning process. There are 

a number of educational programs that help landowners with potentially difficult 

discussions with their families about passing land to heirs.

Question 11. Forest Legacy Program: There are several programs that have not 

been funded within the Forest Legacy Program. Given the period in which these 

programs have not been funded, do you see the necessity in keeping them or does 

this give us some leeway in order to consolidate programs without interrupting program delivery? 

Answer. The Forest Legacy Program (FLP) is substantially different from the 

other farm bill land easement programs, and consolidation of programs, if it included FLP, would substantially alter FLP program delivery. FLP has different primary partners, uses different land protection tools, uses different financial assistance mechanisms, selects projects through a different and nationally consistent 

process, and has different program requirements. In addition, the Forest Service has 

substantial oversight of FLP and it fits very well within the mission of the agency. 

FLP is implemented through state agencies, with only governmental units holding 

title to the land or conservation easements. This relationship allows the Forest Service to have substantial oversight of not just completing projects, but ensuring the 

forests are conserved and well managed. 

Through FLP, land is protected by both fee-simple land acquisition and permanent conservation easements. In the other farm bill land protection programs, land 

is protected through short-term contracts or permanent conservation easements, and 

not fee-simple land acquisition. 

FLP projects are selected through a two-step competitive process resulting in high 

quality projects that are supported locally and are nationally significant. First, 

states identify and rank projects working with the State Forest Stewardship Coordinating Committees. Second, a national panel evaluates and ranks each project based 

on national criteria—importance, threatened, and strategic. The result is a list of 

ranked projects included in the President’s budget request. Consolidating FLP with 

other farm bill programs would eliminate this well supported, transparent process. 

In the 2008 Farm Bill, states were required to complete state-wide forest assessments and resource strategies to identify the important forests within the state, and 

threats to those forests. These forest assessments are critical for integrating Cooperative Forestry Assistance Act programs as well as focusing the State and Private 

Forestry funding resources into well defined priority areas. Through these state assessments, FLP is integrated with the other Cooperative Forestry Assistance Act 

programs. Consolidating FLP with other farm bill programs would most likely remove the integration between FLP and these forest assessments and the other Cooperative Forestry Assistance Act programs.

Question 12. Mr. Tidwell, as you may be aware, 35 years ago the EPA adopted 

a regulation which defined forest management, including forest roads as ‘‘nonpoint’’ 

sources to be managed through state best management practices. For 35 years 

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states have worked with stakeholders on all sides to develop programs that meet 

local needs The 9th Circuit recently overturned this regulation and ruled for the 

first time that forest roads are point sources and using them for timber harvest requires a Federal permit. 

What are the challenges that could arise from a Federal permitting program? 

Describe any potential negative environmental effects associated with these challenges. 

Answer. There are many unknowns related to the character and requirements of 

a potential ‘‘Federal permitting program ’’for forestry roads. Depending upon the actual requirements of the permit program, obtaining permits could be a substantial 

burden for the Forest Service and other public or private forest landowners. On private working lands, new regulatory requirements could increase the cost of forest 

ownership. On National Forest System lands, permitting requirements could result 

in only marginal increases in water quality-related benefits due to the current use 

of Best Management Practices (BMPs) on such lands. 

If the regulatory requirements of a new permitting process were substantial, increased costs could serve as a disincentive for private forest landowners to maintain 

forest cover and result in loss of forests to non-forest uses (e.g., commercial or residential development) which have potentially far greater impacts to water quality. 

Additionally, depending on the nature of the regulatory system, permitting requirements would require the Forest Service to devote personnel time, resources and 

funds to satisfying permitting requirements. This could divert limited resources 

away from the Forest Service’s management activities on National Forest System 

lands. Finally, there could be large variations among the permits developed by the 

various permitting authorities, which could mean different requirements for both 

permitting and road management in different states. This variability amongst permits would further increase the costs and personnel time to the Forest Service of 

managing forest roads and complying with a permit program. 

On public lands, the Forest Service currently implements BMPs and associated 

monitoring to limit the environmental impacts associated with logging road utilization, in particular those impacts related to water quality. The BMP approach has 

been successful in addressing water quality concerns and controlling the dispersed 

and relatively low impact sources of non-point source pollution associated with forestry activities. Any permits developed for forestry roads would likely require the 

implementation of the same BMPs which are already being implemented by the Forest Service on National Forest Systems lands. Thus, depending on the regulatory 

regime, permit requirements may not provide any additional benefits to water quality nor improve the environmental outcomes. 

Questions Submitted By Hon. Tim Holden, a Representative in Congress from Pennsylvania 

Question 1. TIDWELL: I understand that the programs contained in the forestry 

title of the farm bill have permanent authorizations. Can you tell me if there is anything that would need to be done, any authority, that would need to be considered 

for inclusion in the next farm bill debate? Or is it your opinion that we would not 

need to include a forestry title in the next farm bill given the permanent authorizations? 

Answer. A Forestry Title in the next farm bill could further define and strengthen 

the complementary relationship between the Forest Service and NRCS to support 

successful participation of private forest landowners in NRCS and other USDA conservation cost-share programs, particularly by reaffirming the important role the 

Forest Stewardship Program plays in facilitating technical assistance for private 

landowners not only in managing their forest lands, but also in implementing farm 

bill conservation programs.

Question 2. TIDWELL: As most of us here know, the Energy Independence and Security Act contained a definition of biomass that caused many of us here in Congress some concern. That definition does not, among other things, allow the removal 

of woody biomass on Federal lands. Are there any studies or reports on how 

much woody biomass is on Federal lands? Do you currently remove woody 

biomass from Federal lands? If so, how much do you remove and how do 

you do it? Is it an invasive process? 

Are there any studies or reports on how much woody biomass is on Federal lands?

Answer. There are several key studies and reports on how much woody biomass 

is on Federal lands as well as other forest lands.

1. The Forest Inventory and Analysis Program (FIA) of the USDA Forest Service (Smith and others 2004). The plot data indicate current stand conditions on 

all timberland, including all Federal lands in the U.S. These analyses are based 

536

on the interim updated FIA inventory of the 2000 Resources Planning Act 

(RPA) projections (USDA Forest Service 2007). The website link is: http://

fia.fs.fed.us/.

2. The Department of Energy/USDA Billion-Ton Report examines the nation’s 

capacity to produce a billion dry tons of biomass resources annually for energy 

uses without impacting other vital U.S. farm and forest products, such as food, 

feed, and fiber crops. The study provides industry, policymakers, and agricultural community with county-level data and includes analyses of current U.S. 

feedstock capacity and the potential for growth in crops and agricultural products for clean energy applications. The biomass resources identified in the report could be used to produce clean, renewable biofuels, biopower, or bioproducts. USDA Forest Service lands are included in the analysis except for biofuel 

production since it is disallowed under EISA, 2007. The website link is:

http://energy.gov/articles/department-energy-releases-new-billion-ton-studyhighlighting-opportunities-growth.

3. The USDA Forest Service has completed 20 coordinated resource offering protocol (CROP) studies across the agency. CROP was developed by Oregon-based 

Mater Engineering for the U.S. Forest Service to increase investment in Federal 

forest landscapes in bio-based projects through inter-agency coordination and 

levelization of sustainable annual biomass offering. The CROP protocol requires 

Federal resource managers within a defined landscape to (a) specifically identify

biomass removal they believe they can perform each year for the next five 

years (not what’s inventoried); (b) coordinate their 5 year resource offering with 

other Federal agencies included in the same CROP landscape; and (c) levelize

the supply offering within the CROP landscape to provide higher risk reduction 

to both land managers and investors. The website is: www.crop-usa.com.

Do you currently remove woody biomass from Federal lands? If so, how much do 

you remove and how do you do it?

Answer. Yes, we remove woody biomass from Federal lands. USDA Forest Service 

utilizes the residual woody biomass from forest health restoration, hazardous fuels 

reduction, insect and disease infected areas, wildfires, wildlife habitat improvement 

and watershed restoration activities. 

The annual target is 2.7 million green tons, which we have exceeded each year. 

The removal of woody biomass is a mechanical method utilizing small to medium 

sized specialized harvesting equipment adapted for small diameter trees. The low 

to no value of woody biomass dictates this type of mechanical treatment for economic efficiency. This generally occurs after a timber sale, salvage, stewardship contract or pre-commercial thinning operation. (See following table).

Table for Annual Woody Biomass Utilization Million Green Ton Target 

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Target 1.7 1.7 1.7 2.7 2.7 2.7 2.7 2.7

WB–E 1.7 1.7 1.7 2.91 2.34 3.12 3.31

WB–SC 0.74

Target—Is the annual national green ton target. 

WB–E—Woody Biomass for Energy Purposes. 

WB–SC—Woody Biomass from Stewardship Contracting. 

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Green Tons Accomplishment

The mechanical treatment of the residual is not an invasive process. In general, 

it actually helps the future of the existing trees to have better growing conditions 

in the form of increased sunlight, higher soil moisture, and greater nutrient allowance. Of course, there are variations due to local environmental, spatial and temporal conditions.

Question 3. TIDWELL: Pest infestation is a common problem for our forests. What 

are you doing to battle pest infestation? Where are the biggest problems now? How 

much, on average, does it cost to treat a forest? 

Answer. Battling forest insect and disease infestations involves a multi-agency coordinated approach that, depending on the particular pest, its status, and resources 

available, may include one or more of the following actions: prevention, monitoring 

and detection, eradication, and control and management. To respond effectively to 

infestations, the Forest Service works in close cooperation with APHIS, the agency 

with overall regulatory responsibility for invasive pests, as well as state departments of forestry and agriculture. 

Currently, the Forest Service has activities focused on significant pest problems 

across the country including: western bark beetle prevention and safety in the West, 

gypsy moth—slow the spread and eradication in the East, southern pine beetle prevention in the South, and invasive plants nationwide. Aerial surveys conducted by 

the Forest Service and state partners indicated that tree mortality occurred on over 

9.2 million acres in 2010. Most of this mortality was caused by bark beetles attacking conifer trees in the western U.S. Other emerging pest and disease problems that 

the Forest Service is addressing include: emerald ash borer, thousand cankers disease, Asian longhorned beetle, hemlock woolly adelgid, and white pine blister rust. 

The cost to treat a given forest varies greatly depending upon many factors including: the size of the infested forest, the response approaches employed (listed 

above), the effective tools and methods available, and the biology of the pest.

Question 4. TIDWELL: What programs and authorities do you rely on to battle pest 

infestation and invasive species? How do you fund activities related to the removal 

of pest infestation and invasive species? 

Answer. The program and authority that the USDA Forest Service relies on to respond to insect and disease infestations is the Cooperative Forestry Assistance Act 

of 1978 (as amended), SEC. 8. [16 U.S.C. 2104]. Some pests have a specific program 

to address the issue, like the Slow-The-Spread Program for Gypsy Moth. USDA Forest Service insect and disease activities are funded through annual appropriations. 

Funds are used to support insect and disease activities on all forested lands in the 

U.S., including National Forest System, other Federal, and state and private lands. 

Activities on state and private lands are commonly funded on a cost-share basis 

with partners to address a prioritized response to a particular insect or disease.

Question 5. TIDWELL: Has the FS conducted any analysis on the topic of markets 

for carbon sequestration? If so, what do you think is the potential for forest landowners to sell carbon sequestered by their forests and forestry projects? 

Answer. Individual Forest Service scientists have participated in the development 

of the FASOM economic model which was used by the EPA to model the impacts 

of the proposed cap-and-trade legislation in 2009 and 2010 which projected opportunities for carbon offsets. The Forest Service will also be projecting future forest carVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00549 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN

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bon changes under various scenarios as part of the forthcoming 2010 Resource Planning Act assessment. In addition, the forest inventory data collection and scientific 

studies done by Forest Service Research & Development program provides the 

foundational basis for many of the assessments done by other agencies and external 

groups on forest carbon and bioenergy opportunities, including the EPA’s annual 

National Greenhouse Gas Inventory, and DOE’s recently released ‘‘Billion Ton 

Study Update.’’ The Forest Service also developed the CVAL tool to evaluate the 

costs and benefits of carbon sequestration contracts for managed forests on the Chicago Climate Exchange. 

The potential for forest landowners to sell carbon will be highly dependent on the 

price of carbon, as well as the requirements, rules and methodologies used for implementing and reporting forest carbon projects. The potential for forest landowners to 

benefit from a carbon market could be minimal or large depending on the program 

design. 

At this point there are more opportunities for private landowners to sell carbon 

sequestered by their forests and forestry projects in the voluntary carbon market 

than within a regulatory market, although the California cap-and-trade program, 

now scheduled to begin compliance obligations in 2013, may create new opportunities. 

Small acreage forest landowners face challenges to participating in the voluntary 

carbon market. While there is no minimum acreage to qualify/enroll, start-up and 

ongoing costs are generally too substantial, and revenues too slight, on small parcels 

to produce an economically viable project. The Climate Action Reserve has developed ‘‘Guidelines for Aggregating Forest Projects’’ with the understanding that individual transaction costs on small parcels can make market participation untenable, 

and aggregating projects on smaller landholdings can reduce barriers to entry. However, some aggregation companies may have their own minimum parcel size requirements.

Question 6. TIDWELL: Currently there are several voluntary markets for forest carbon projects. Do you know what forestry practices are eligible for market participation and what the carbon price is? 

Answer. All carbon credits purchased outside of an existing regulatory compliance 

obligation are considered part of the voluntary carbon market. Within the voluntary 

carbon market, carbon credits may be purchased in an exchange or purchased 

‘‘Over-The-Counter’’ (OTC) through direct buyer and seller exchanges, a broker or 

retail storefront. Voluntary forest carbon projects are governed by a variety of carbon offset standards or protocols. 

Eligible forestry practices vary between protocols. Three commonly used protocols 

for voluntary forest carbon projects in the U.S. are the Climate Action Reserve 

(CAR), Verified Carbon Standard (VCS), and the American Carbon Registry (ACR). 

Climate Action Reserve (CAR)—

Eligible Forestry practices:

• Reforestation—A Reforestation Project involves restoring tree cover on land that 

is not at optimal stocking levels and has minimal short-term (30 years) commercial opportunities.

• Improved Forest Management—An Improved Forest Management Project involves management activities that maintain or increase carbon stocks on forested land relative to baseline levels of carbon.

• Avoided Conversion—An Avoided Conversion Project involves preventing the 

conversion of forestland to a non-forest land use by dedicating the land to continuous forest cover through a conservation easement or transfer to public ownership.

Verified Carbon Standard (VCS)—

Eligible Forestry practices:

• Afforestation, Reforestation and Revegetation (ARR)—Eligible ARR activities 

are those that increase carbon sequestration and/or reduce GHG emissions by 

establishing, increasing or restoring vegetative cover (forest or non-forest) 

through the planting, sowing or human-assisted natural regeneration of woody 

vegetation.

• Improved Forest Management (IFM)—Eligible IFM activities are those that increase carbon sequestration and/or reduce GHG emissions on forest lands managed for wood products such as sawtimber, pulpwood and fuelwood by increasing biomass carbon stocks through improving forest management practices.

• Reducing Emissions from Deforestation and Degradation (REDD)—Eligible 

REDD activities are those that reduce net GHG emissions by reducing deforestVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00550 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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ation and/or degradation of forests. Deforestation is the direct, human-induced 

conversion of forest land to non-forest land. Degradation is the persistent reduction of canopy cover and/or carbon stocks in a forest due to human activities 

such as animal grazing, fuelwood extraction, timber removal or other such activities, but which does not result in the conversion of forest to non-forest land 

(which would be classified as deforestation).

American Carbon Registry (ACR)—

Eligible Forestry practices:

• Afforestation/Reforestation (AR)—defined as activities to increase carbon stocks 

by establishing, increasing and restoring vegetative cover through the planting, 

sowing or human-assisted natural regeneration of woody vegetation.

• Improved Forest Management (IFM)—defined as activities to reduce GHG emissions and/or enhance GHG removals, implemented on lands designated, sanctioned or approved for forest management (i.e., production of sawtimber, pulpwood, and fuelwood).

• Reducing Emissions from Deforestation and Degradation (REDD)—defined as 

the reduction in GHG emissions from the avoided conversion of forest to nonforest use (e.g., to cropland, grassland, settlement, or development) or avoided 

degradation of forests remaining as forests.

• Forest Carbon Projects with a Biomass Energy Component—Forest carbon activities may include a biomass energy component if they provide biomass fuel 

for electricity generation, heating, or transportation fuels.

• Note: Urban forestry activities that meet the forest definition could qualify as 

AR, IFM or REDD depending on the specific activity.

Prices vary between protocol standards and within the standards depending on 

project types. Within the voluntary carbon market in 2010, the average price was 

$6 per metric ton of CO2 equivalent (tCO2e).

Question 7. TIDWELL: Funding is a concern for us all these days. The Forestry title 

does not have any mandatory spending, but it is mostly all appropriated funds. Is 

the appropriated money mainly used for wildfire management? What percentage of 

your total appropriated dollars is for wildfire? How much does that leave for other 

forestry programs like the Forest Legacy or other important programs? Do you think 

there is a good balance between money spent on wildfire and other programs? 

Answer. In FY11, approximately 40% of all appropriated funds for the Forest 

Service support wildland fire programs to include the Hazardous Fuels Treatment 

Program, Preparedness, and Suppression. All of the wildland fire programs support 

the objective of the Forest Service to sustain the health, diversity, and productivity 

of the nation’s forests and grasslands to meet the needs of present and future generations. Fires in recent years have become larger and more difficult to control due 

to a variety of factors, including climate change, persistent drought, increasingly 

hazardous fuels conditions, and the increased development in the Wildland Urban 

Interface. Current budget levels for the wildland fire programs are essential to ensure adequate resources are available to conduct emergency suppression operations 

while allowing for other critical Forest Service activities to continue.

Question 8. TIDWELL: In the 2008 Farm Bill, we made sure that forestry was explicitly mentioned in some of the conservation programs to ensure forest landowner 

participation. What is the extent of your involvement with these types of programs 

and do you communicate with NRCS on these types of programs? 

Answer. The 2008 Farm Bill has resulted in a much more effective working partnership between the Forest Service and NRCS, particularly with regards to getting 

more private forest landowners enrolled in conservation programs. Leaders from our 

agencies and other partners, including the National Association of State Foresters 

and the National Association of Conservation Districts, have developed and implemented creative strategies to make these programs much more accessible to private 

forest landowners.

Question 9. TIDWELL: In the last farm bill, as you mention, Congress set a number 

of priorities for private forest conservation—conserving working lands, protecting 

forests from threats, and enhancing public benefits. In your opinion, how are we 

doing with each of those priorities, are we accomplishing the needed work through 

the programs that the USFS administers? 

Answer. The Forest Service is accomplishing needed work through its State and 

Private Programs in these three priority areas. As of FY 2011, the agency is in its 

fourth year of implementing a progressive strategy (known as ‘‘Redesign’’) to focus 

and prioritize funds and resources to better shape and influence forest land use on 

a scale, and in a way, that optimizes public benefits from trees and forests for curVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00551 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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rent and future generations. The Redesign competitive effort focuses almost $20 million each year on novel, landscape-scale projects that are selected competitively. 

These projects have accomplished outcomes in all three of these priorities—and in 

FY 2010 leveraged almost $24 million in partner dollars and in-kind contributions. 

In addition to the competitive projects funded as part of ‘‘Redesign’’, each State 

and Private Forestry program area contributes to conserving working lands, protecting forests from threats, and enhancing public benefits. Since the 2008 Farm 

Bill was passed, over $2 billion has been invested by the U.S. Forest Service to address the three national priorities (including funding from State and Private Forestry; Research; Wildland Fire Management; and funding resulting from the American Recovery and Reinvestment Act). 

Since 2008, over 62 million acres were under management plans, treated, or protected through FS programs and over two million landowners were assisted or educated through FS programs. The work accomplished by State Forestry Agencies in 

developing the Statewide Forest Resource Assessments (Forest Action Plans) to 

identify and prioritize national, regional and state forest management goals across 

all ownerships, has become the foundation for agencies and partners to work together.

Question 10. TIDWELL: The Southern Forests Futures Project offers some longterm, science-based analysis about the future of timber production in the Southeast. 

Using this data, please elaborate on the study’s conclusion that timber demand is 

the primary limiting factor in expansion of timber markets. 

Answer. The Southern Forest Futures Project (Futures Project) examines the history and potential future of timber markets in the Southeast using forest inventory 

and timber market data along with projection models. The South is the woodbasket 

of the United States, providing nearly 60 percent of the nation’s timber products—

the South alone produces more timber than any other country in the world. Private 

landowners, who manage nearly 90 percent of the South’s timberlands and have invested heavily in their forest lands, produce more than 90 percent of the harvested 

timber. Strong timber markets bring income and jobs to rural areas. Strong markets 

also provide strong incentive to keep working forests intact, thereby protecting other 

resource values including water and wildlife. 

The Futures Project highlights the strong growth in timber production that occurred in the region from the 1960s to the late 1990s and examines the potential 

for future growth as well as decline. Timber production peaked in the late 1990s 

and has since declined, signaling structural changes in timber markets. These production declines are most clearly related to changes in demand. Beginning in 1998, 

pulpwood harvesting for the paper industry declined as paper production capacity 

fell in the South. Beginning in 2007, demand for softwood solid wood products fell 

precipitously due to the housing recession. Solid wood products such as plywood and 

lumber are strongly linked to housing markets, and housing starts in 2010 were 

only 25 percent of their 2005 values. 

In spite of these declines in demands since 1998, private landowners have continued to invest in forest establishment and management. Declines in harvests, coupled with this ongoing investment, have expanded the potential supply in the region, especially for softwood pulpwood. In sum, supply potential has grown while demands for timber have declined. The Futures Project’s projections of timber supply 

indicate that the region has the capacity to produce as much as 70 percent more 

timber than was produced in 2005, in effect, supporting a return to market growth 

rates observed in the 1990s. The key uncertainty and the limiting factor in determining the extent of future timber markets will be recovery and growth in demand 

for these products. In the near term, demand growth will depend on the recovery 

of the housing market. Long term projections hinge on future demands from paper 

industries and the potential emergence of demands for wood in the production of 

bioenergy. 

While housing has traditionally been a cyclical industry and would be expected 

to recover in the next few years, demands for paper-based products are tied to processing capacity and general economic growth. Declines in the capacity of the paper 

industry through mill closures may limit the growth potential from this sector. The 

Futures Project concludes that the greatest potential for expansion in timber demand would come in the form of new demands for wood in the production of bioenergy. These new demands would, in turn depend on the development of new technologies and on Federal and state energy policies aimed at expanding bioenergy production. 

541

Roundwood Production in the U.S. South, All Products, 1953 to 2008

Source: Southern Forest Futures Project.

The ‘‘other’’ category includes hardwood sawtimber and fuelwood. 

Real Stumpage Prices in the U.S. South By Product, 1977 to 2008

Source: Southern Forest Futures Project.

Question 11. TIDWELL: You mention in your testimony the essential assistance to 

private forest owners that is delivered through the Forest Stewardship Program—

you’re only program focused on private forestland management. You talk about the 

accomplishments in FY 2010 with the program—how does this compare with previous years? Are you and your state forestry agency partners reaching more landowners with these programs, if so, how many? And are we reaching the same landowners or new landowners with this program, since the number of family forest 

owners in the U.S. continues to grow—from 9 million in 2000 to 11 million owners 

in 2011. 


1122049.eps 1122050.eps
542

Answer. The Forest Stewardship Program has for several years been transitioning 

from a first-come first served approach to a much more strategic and place-based 

approach to delivering technical assistance to private forest landowners. This approach began with the Forest Stewardship Program Spatial Analysis Project that 

assisted all states in identifying forest resource management priority areas and implementing innovative tactics for engaging landowners and communities in those 

places. Tactics include social marketing campaigns targeted at landowners that are 

less inclined to seek assistance. 

More recently, Forest Stewardship Program managers from across the country 

have developed a ‘‘Landscape Stewardship Approach’’ that includes the development 

of landscape-scale Forest Stewardship Plans for multiple landowners. All of these 

actions are attempts to have a greater cumulative impact on pressing resource management concerns while involving more landowners with the same level of investment. 

In 2010, there were 19.7 million acres under current Forest Stewardship Plans, 

of which 89% is being actively managed based on monitoring. Approximately 15,000 

new Forest Stewardship Plans, covering about 1.9 million acres were created that 

same year. While this level of accomplishment has been fairly consistent the past 

few years, the total number of landowners benefitting from a variety of technical 

and educational assistance activities supported by the program has declined sharply 

because of state forestry agency budget constraints. 

All Forest Stewardship accomplishments are tracked spatially with respect to priority landscapes and underlying resource management concerns.

Question 12. CANALES: There is no more funding for any of the energy title programs after the expiration for the 2008 Farm Bill. Would you be able to handle 

some energy title project activity under any of the other rural development programs? For example, would the Rural Development B&I program be able to fund 

some types of activities currently covered by the REAP program? Please provide a 

comprehensive answer covering each energy title program and whether or not it 

could be covered by another USDA program. 

Answer. None of RBS’s energy programs could be fully encompassed by currently 

existing, funded programs. Please see the following programmatic breakouts on the 

9003, 9004, 9005, and 9007 programs. 

Sec. 9003, Biorefinery Assistance Program: The Biorefinery Assistance Program is 

not a duplicate of any other USDA program. There are no other programs that have 

the sole purpose of funding biorefineries involved in advanced biofuel production, 

and that involve the private sector on each transaction. While the eligibility criteria 

for the Business and Industry (B&I) Guaranteed Loan program would allow the 

funding of biorefineries, the maximum loan that can be guaranteed under the B&I 

guaranteed loan program is $25 million, which is essentially too small for these 

types of projects, and thus it is unlikely that anyone would seek to utilize the B&I 

program. The Biorefinery Assistance Program can guarantee loans up to $250 million. 

Sec. 9004, Repowering Assistance Program: The Repowering Assistance Program 

is not a duplicate of any other USDA program. There are no other USDA programs 

that could support these types of projects. 

Sec. 9005, Advanced Biofuel Payment Program: The Advanced Biofuel Payment 

Program is not a duplicate of any other USDA program. There are no other programs that provide payments to biofuel producers to promote advanced biofuels. 

Sec. 9007, Rural Energy for America Program: There are four other programs 

within USDA under which certain types of energy projects may be financed. These 

are the Value-Added Producer Grant (VAPG) program, Community Facilities, Business and Industry Program, and the Environmental Quality Incentives Program 

(EQIP).

Question 13. CANALES: In preparation for this hearing we attempted to find 

project information for several programs and we were not entirely successful. It appears USDA announces project information to the public via press releases, but 

there is not an online database that allows the public to easily access what has been 

funded and for what amount. How does USDA make this available to the public? 

Can you please provide the Committee with a breakdown of what projects have been 

funded under each program, and for how much? 

Answer. At this time, there is no public database. USDA uses press releases as 

the mechanism for making this information available to the public, however USDA 

is working on such a mechanism in the form of an energy map which we expect 

to release in the near future.

543

Section 9003—Guaranteed Loan Awards and Obligations 

(FY 2009 through 2011) (program level amounts) 

State Project 

Fiscal Year 

2009 a 2010 2011

Alabama Coskata b $87,850,000

Florida Ineos $75,000,000

Georgia Range Fuels $80,000,000

Michigan Freemont $12,750,000

Mississippi Enerkem b $80,000,000

New Mexico Sapphire $54,500,000

Totals $80,000,000 $54,500,000 $255,600,000

a A loan guarantee application for $25 million was approved for SoyMor Biodiesel, 

LLC, Minnesota, on June 10, 2009. However, the $25 million was deobligated because SoyMor’s lender no longer qualified as an eligible lender and SoyMor was unable to obtain a new lender. bThe agency is working to close the loan. 

Section 9004—Repowering Assistance

Of the nine applications, seven were selected to participate. These seven projects 

were eligible for approximately $18 million. As of August 25, 2011, only one awardee, Lincolnway Energy, LLC, has accepted the offer for $1.9 million.

Section 9005—Advanced Biofuel Payment Program

All of the projects funded under this program produce an eligible advanced 

biofuel. The following table presents the companies that received payments for FY 

2009 production, the amount of payment received, and the type of advanced biofuel 

produced. For FY 2009 production, a total of $30 million was paid. For FY 2010, 

a total of $80 million will be paid within the next several weeks. While some of the 

companies that received payments for FY 2009 production will also receive payments for FY 2010 production, there are a number of companies that will be receiving payments for FY 2010 that did not participate in the program for FY 2009 production.

Section 9005 Payments for FY 2009 Production 

State Company Amount of 

Payment Biofuel Type 

AL Athens Biodiesel, LLC $2,261.11 Biodiesel Mechanical 

AR Arkansas Soyenergy Group $538.63 Biodiesel Trans Esterification 

AR Futurefuel Chemical Company $929,013.18 Biodiesel Trans Esterification 

AR Pinnacle Biofuels Inc. $34,250.89 Biodiesel Trans Esterification 

AZ Pinal Energy, LLC $2,280,865.06 Ethanol Production 

CA American Biodiesel, Inc. $6,753.89 Biodiesel Trans Esterification 

CA Energy Alternative Solutions, 

Inc. 

$7,280.20 Biodiesel Trans Esterification 

CA Imperial Valley Biodiesel $3,409.83 Biodiesel Trans Esterification 

CA Imperial Western Products, Inc. $93,971.09 Biodiesel Trans Esterification 

CA New Leaf Biofuel, LLC $4,432.73 Biodiesel Trans Esterification 

CA Yokayo Biofuels, Inc. $14,168.45 Biodiesel Trans Esterification 

FL Agri-Source Fuels, LLC $12,11347 Biofuel From Waste Products 

FL Bio Fuel Consultants Of NA $3,418.69 Biofuel From Waste Products 

FL G2 Energy $3,670.67 Landfill Gas 

FL Suwannee Farms LLC $530.94 Anaerobic Digester 

GA Alterra Bioenergy Of Middle 

Georgia LLC 

$905.47 Biodiesel Trans Esterification 

GA American Proteins, Inc. $32,935.57 Anaerobic Digester 

GA Down To Earth Energy LLC $1,062.62 Biodiesel Trans Esterification 

GA Middle Georgie Biofuels $159.47 Biodiesel Trans Esterification 

GA Nittany Biodiesel $335,855.02 Biodiesel Trans Esterification 

GA The Edge Group Inc. $8,167.17 Biofuel From Waste Products 

GA U.S. Biofuels Inc. $181,114.96 Biodiesel Trans Esterification 

HI Pacific Biodiesel, Inc. $14,760.78 Biofuel From Waste Products 

544

Section 9005 Payments for FY 2009 Production—Continued

State Company Amount of 

Payment Biofuel Type 

IA Blackhawk Biofuels LLC $258,309.90 Biodiesel Trans Esterification 

IA Central Iowa Energy LLC $194,810.82 Biodiesel Trans Esterification 

IA Iowa Renewable Energy, LLC $369,351.71 Biodiesel Trans Esterification 

IA Maple River Energy LLC $16,613.40 Biodiesel Trans Esterification 

IA Renewable Energy Group, Inc. $1,422,147.46 Biodiesel Trans Esterification 

IA Riksch Biofuels LLC $10,401.22 Biodiesel Trans Esterification 

IA Sioux Biochemical, Inc. $23,808.92 Biodiesel Trans Esterification 

IA Western Dubuque Biodiesel, 

LLC 

$432,622.85 Biodiesel Trans Esterification 

IA Western Iowa Energy $508,985.44 Biodiesel Trans Esterification 

ID Coeur D’alene Fiber Fuels $347,484.17 Pellets 

IL Archer Daniels Midland Company $656,639.35 Biodiesel Trans Esterification 

IL CNF Holdings Inc. $466.17 Biodiesel Trans Esterification 

IL Hunter Haven Farms Inc. $633.83 Anaerobic Digester 

IL Incobrasa Industries, Ltd. $205,444.3 Biodiesel Trans Esterification 

IL Nova Biosource Fules Inc. $408,824.32 Biodiesel Trans Esterification 

IL Valley Energy Inc. $4,717 Biodiesel Trans Esterification 

IN E Biofuels LLC $283,043.86 Biofuel From Waste Products 

IN Indiana Flex Fuels, LLC $8,806.07 Biofuel From Waste Products 

IN Kingsbury Energy Group $17,861 Biofuel From Waste Products 

IN Louis Dreyfus Agricultural Industries LL $1,431,051.17 Biofuel From Waste Products 

IN T and M Limited Pasrtnership $52,355.96 Anaerobic Digester 

KS Arkalon Ethanol, LLC $1,131,062.87 Ethanol Production 

KS Bonanza Bioenergy, LLC $454,050.13 Ethanol Production 

KS East Kansas Agri-Energy LLC $58,833.32 Ethanol Production 

KS Emergent Green Energy, Inc. $2,900.33 Biofuel From Waste Products 

KS ESE Alcohol $30,163.97 Biofuel From Waste Products 

KS Healy Biodiesel, Inc. $9,005.83 Biofuel From Waste Products 

KS Kansas Ethanol, LLC $1,176,781.75 Ethanol Production 

KS Nesika Energy LLC $177,527.30 Ethanol Production 

KS Prairie Horizon Agri-Energy, 

LLC 

$1,406,332.35 Ethanol Production 

KS R–3 Energy, LLC $19.42 Biofuel From Waste Products 

KS Reeve Agri Energy Inc. $256.471.36 Ethanol Production 

KS Trenton Agri Products LLC $223,165.92 Ethanol Production 

KS Western Plains Energy LLC $1,447,782.85 Ethanol Production 

KY Griffin Industries, Inc. $29,464.47 Biofuel From Waste Products 

KY Owensboro Grain Company LLC $401,187.10 Biodiesel Mechanical 

ME Corinth Wood Pellets, LLC $301,588.30 Pellets 

ME Maine Woods Pellet Company, 

LLC 

$394,417.68 Pellets 

MI Hillside Farms, LLC $1,353.14 Anaerobic Digester 

MI Michigan Biodiesel LLC $2,340.02 Glycerin 

MI Scenic View Dairy, LLC $17,427.01 Anaerobic Digester 

MN Cargill Inc. $459,245.09 Biodiesel Trans Esterification/Anaerobic Digester 

MN Chippewa Valley Ethanol Coop 

LLP 

$14, 597.35 Ethanol Production 

MN Corn Plus, LP $311,080.39 Ethanol Production 

MN FUMPA Biofuels $43,985.30 Biodiesel Trans Esterification 

MN MN Soybean Processo $964,669.83 Biodiesel Trans Esterification 

MN Riverview LLP $6,810.11 Anaerobic Digester 

MN West River Dairy LLP $8,312.80 Anaerobic Digeste 

MO Abengoa Bioenergy Corporation $213,891.03 Ethanol Production 

MO Global Fuels LLC $23,444.64 Biodiesel Trans Esterification 

MO Mid-America Biofuels, LLC $917,614.99 Biodiesel Trans Esterification 

MO Natural Biodiesel Plant LLC $45,888.35 Biodiesel Trans Esterification 

MO Paseo Cargill Energy LLC $406,424.07 Biodiesel Trans Esterification 

MO Prairie Pride, Inc. $228,017.78 Biodiesel Trans Esterification 

MO Show Me Energy Cooperative $75,863.50 Pellets 

MS Greenlight Biofuels LLC $31,943.50 Biofuel From Waste Products 

545

Section 9005 Payments for FY 2009 Production—Continued

State Company Amount of 

Payment Biofuel Type 

MS Scott Petroleum Corporation $181,084.93 Biofuel From Waste Products 

MT Earl Fisher Bio Fuels LLP $586.66 Biodiesel Mechanical 

MT Huls Dairy Inc. $1,041.68 Anaerobic Digester 

NC Blue Ridge Biofuels, LLC $3,992.71 Biofuel From Waste Products 

NC North American Bio-Energies $7,076.24 Biodiesel Mechanical 

NC Piedmont Biofuels Industrial, 

LLC 

$13,148.21 Biodiesel Mechanical 

NC Triangle Biofuels Industries, Inc. $15,601.05 Biodiesel Mechanical 

NE Ag Processing Inc. $612,434.67 Biodiesel Trans Esterification 

NE Chief Ethanol Fuel Inc. $2,294,606.51 Ethanol Production 

NE Kluthe, Daniel W. $295.10 Anaerobic Digester 

NE Northeast Nebraska Biodiesel 

LLC 

$9,264.65 Biodiesel Trans Esterification 

NV Bently Biofuels Company $14,207.54 Biofuel From Waste Products 

NY Aurora Ridge Dairy, LLC $215.36 Anaerobic Digester 

NY MST Production Ltd $140,533.52 Anaerobic Digester 

NY Sunnyside Farms Inc. $491.81 Anaerobic Digester 

NY TMT Biofuels LLC $2,946.83 Biofuel From Waste Products 

OH American Ag Fuels, LLC $923.99 Biodiesel Trans Esterification 

OH Arlington Energy LLC $2,898.58 Biodiesel Trans Esterification 

OH Bridgewater Dairy LLC $3,458.97 Anaerobic Digester 

OK ECOGY Biofuels LLC $85,057.55 Biodiesel Trans Esterification 

OK High Plains Bioenergy, LLC $561,818.35 Biodiesel Trans Esterification 

OR Beaver Biodiesel LLC $600.36 Biodiesel Trans Esterification 

OR Green Fuels Of Oregon $1,097.06 Biodiesel Trans Esterification 

OR Sequential-Pacific Biodiesel $17,127.18 Biodiesel Trans Esterification 

OR Stahlbush Island Farms, Inc. $1,254.23 Anaerobic Digester 

PA Lake Erie Biofuels, LLC dba 

Hero BX 

$275,742.88 Biodiesel Mechanical 

PA Middletown Biofuels LLC $29,861.04 Biodiesel Mechanical 

PA Soyenergy Inc. dba Custom 

Fuels Inc. 

$5,767.93 Biodiesel Mechanical 

TN Sunsoil, LLC 4,794.46 Biodiesel Trans Esterification 

TX Beacon Energy (Texas) Corporation $118,437.54 Biofuel From Waste Products 

TX Double Diamond Energy, Inc. $14,856.36 Biofuel From Waste Products 

TX Green Earth Fuels Of Houston, 

LLC 

$509,386.90 Biodiesel Trans Esterification 

TX Levelland/Hockley County Ethanol, LLC $737,202.90 Ethanol Production 

TX New Energy Fuels, LLC $9,250.30 Biofuels From Waste Products 

TX RBF Port Neches, LLC $99,993.77 Biodiesel Trans Esterification 

TX Texas Green Manufacturing 

LLC 

$951.79 Biofuels From Waste Products 

TX White Energy, Inc. $1,022,026.02 Ethanol Production 

VA Chesapeake Custom Chemical 

Corporation 

$21,211.41 Biofuel From Waste Products 

VA Red Birch Energy $11,227.32 Biofuel From Waste Products 

VA Virginia Biodiesel Refinery LLC $39,803.87 Biofuel From Waste Products 

VT Audet’s Cow Power $1,247.45 Anaerobic Digester 

VT Berkshire Cow Power LLC $3,594.20 Anaerobic Digester 

VT David and Cathy Montagne $999.79 Anaerobic Digester 

VT Gervais Family Farms $284.36 Anaerobic Digester 

VT Green Mountain Dairy LLC $1,565.74 Anaerobic Digester 

VT Neighborhood Energy LLC $416.51 Anaerobic Digester 

VT Westminster Energy Group LLC $445.78 Anaerobic Digester 

WA Farm Power Rexville LLC $1,902.09 Anaerobic Digester 

WA FPE Renewables, LLC $11,915.35 Anaerobic Digester 

WA GDR Power LLC $27,562.43 Anaerobic Digester 

WA Gen-X Energy Group Inc. $363,356.61 Biodiesel Trans Esterification 

WA Imperium Grays Harbor LLC $333,674.58 Biodiesel Trans Esterification 

WA Inland Empire Oilseeds LLC $13,664.11 Biodiesel Trans Esterification 

WA Qualco Energy $2,658.18 Anaerobic Digester 

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Section 9005 Payments for FY 2009 Production—Continued

State Company Amount of 

Payment Biofuel Type 

WA Standard Biodiesel USA Inc. $5,490.93 Biofuel From Waste Products 

WA Whole Energy Fuels Corporation $18,181.28 Biodiesel Trans Esterification 

WI Badger Biodiesel, Inc. $329,523.89 Biodiesel Trans Esterification 

WI Best Biodiesel Cashton LLC $10,486.83 Biodiesel Trans Esterification 

WI Bio Blend Fuels $3,369.82 Biodiesel Trans Esterification 

WI Buckeye Ridge Renewable Power 

LLC 

$17,937.12 Anaerobic Digester 

WI Clover Hill Dairy, LLC $2,338.79 Anaerobic Digester 

WI Double S Dairy $759.05 Anaerobic Digester 

WI Gordondale Farms $581.18 Anaerobic Digester 

WI Green Valley Dairy LLC $9,777.25 Anaerobic Digester 

WI Grotegut Dairy Farm, Inc. $1,819.40 Anaerobic Digester 

WI Holsum Dairies, LLC $11,752.76 Anaerobic Digester 

WI Lake Breeze Dairy LLC $653.16 Anaerobic Digester 

WI Norm E. Lane, Inc. $3,862.16 Anaerobic Digester 

WI NORSWISS Digester, LLC $19,671.00 Anaerobic Digester 

WI Pagel’s Ponderosa Dairy, LLC $3,488.53 Anaerobic Digester 

WI Quantum Dairy, LLC $2,931.02 Anaerobic Digester 

WI Stargest Power, LLC $19,843.11 Anaerobic Digester 

WI Statz Brothers, Inc. $2,497.90 Anaerobic Digester 

WI Sun Power Biodiesel, LLC $15,433.46 Biodiesel Trans Esterification 

WI Walsh Bio Fuels, LLC $11,351.95 Biodiesel Trans Esterification

$29,999,999.34

Section 9007—Rural Energy For America Program

The following tables provide summaries of the funds provided by type of project 

for FY 2009 and FY 2010. The agency is currently in the process of making awards 

for FY 2011, but those have not yet been finalized.

Section 9007 Awards for FY 2009

Technology Biomass Type

Description 

Number of 

Projects 

Grant 

Amount Loan Amount 

Biomass 49 $7,431,859 $17,372,569

Anaerobic Digester 14 $4,117,368 $6,619,198

Biodiesel Production 7 $674,096 $1,341,692

Solid Fuel Production 5 $843,936 $754,679

Thermal Conversion 23 $1,796,459 $8,657,000

Energy Efficiency 1,099 $27,857,621 $18,252,122

Geothermal 47 $881,279 $229,599

Hybrid 4 $180,916 $133,996

Hydropower 4 $464,432 $600,000

Solar 166 $5,994,685 $3,399,253

Wind 116 $8,171,188 $17,471,490

Total 1,485 $50,981,980 $57,459,029

Section 9007 Awards for FY 2010

Technology Biomass Type

Description 

Number of 

Projects 

Grant 

Amount Loan Amount 

Biomass 56 $11,006,140 $20,751,392

Anaerobic Digester 19 $6,042,676 $14,010,621

Biodiesel Production 6 $830,708 $3,485,000

Ethanol Production 1 $500,000 $—

Solid Fuel Production 16 $3,185,031 $2,110,771

Thermal Conversion 14 $447,725 $1,145,000

547

Section 9007 Awards for FY 2010—Continued

Technology Biomass Type

Description 

Number of 

Projects 

Grant 

Amount Loan Amount 

Energy Efficiency 1,830 $47,692,866 $22,280,851

Geothermal 40 $1,094,551 $292,000

Hybrid 4 $58,817 $—

Hydropower 4 $684,849 $5,000

Solar 294 $13,296,957 $8,356,177

Wind 147 $10,092,796 $21,313,084

Total 2,375 $83,926,976 $72,998,504

Question 14. CANALES: Have you consulted with the DOE in the operation of the 

USDA loan guarantees? How would you say that the USDA program differs from 

the DOE program? Do they overlap? 

Answer. We coordinate with the Department of Energy (DOE) using their environmental reviews when available for Biorefinery Assistance projects, and we work 

with DOE grant recipients where we provide guarantee loans to build biorefineries 

that will help to end our dependence on foreign sources of petroleum. The USDA 

works closely with DOE to provide the best energy expertise to our field staff and 

ensure that all of our project loans and grants are placed in accordance with the 

highest professional standards. 

There is overlap with DOE’s Title 17 program. Title 17 can fund biorefineries just 

like the Section 9003 Program. However, Title 17 can be used for any type of energy 

production, including biorefineries producing any type of biofuel, while the Section 

9003 Program is solely for the purpose of providing support for the creation and expansion of advanced biorefinery facilities producing advanced biofuels.

Question 15. CANALES: Can you please give us a breakdown of all the projects that 

have received assistance under this program? Have there been any losses to the government associated with this program to date? If so, why and for how much? 

Answer. The following table presents all of the advanced biofuel biorefineries for 

which funds have been obligated as of August 22, 2011. Of these projects, loan note 

guarantees have been issued for Range Fuels, Freemont Community Digester, and 

Ineos; for the other projects, RBS has obligated the funds, but has not yet issued 

the loan note guarantees.

Section 9003—Guaranteed Loan Awards and Obligations 

(FY 2009 through 2011) (program level amounts) 

State Project 

Fiscal Year 

2009 a 2010 2011

Alabama Coskata b $87,850,000

Florida Ineos $75,000,000

Georgia Range Fuels $80,000,000

Michigan Freemont $12,750,000

Mississippi Enerkem b $80,000,000

New Mexico Sapphire $54,500,000

Totals $80,000,000 $54,500,000 $255,600,000

a A loan guarantee application for $25 million was approved for SoyMor Biodiesel, 

LLC, Minnesota, on June 10, 2009. However, the $25 million was deobligated because SoyMor’s lender no longer qualified as an eligible lender and SoyMor was unable to obtain a new lender. bThe agency is working to close the loan. 

As of August 22, 2011, the agency has not paid a loss, although Range Fuels 

ceased operation in January.

Question 16. CANALES: This was a new program for RD to implement. What have 

been the biggest hurdles to clear during implementation? Do you have any recommendations for changes to the program to make it more attractive? 

Answer. USDA’s Rural Business Service has many different loan and grant programs and has had extensive experience creating and implementing new programs. 

548

Implementing individual programs did not pose significant challenges. RBS’s largest 

hurdle was the large number of new programs that had to be created in a timely 

manner utilizing our scarce staff resources. 

We do not have any statutory recommendations at this time.

Question 17. CANALES: Did interest in the Repowering program pick up after you 

made changes to the way it operates by recognizing that plants weren’t able to get 

credit as easily as when the program and the rules were written? 

Answer. Yes, the Repowering Assistance Program received additional applications 

through the most recent NOFA.

Question 18. CANALES: There was a solicitation sent out for applications for this 

program during the spring. When do you think you expect to make an announcement or reward? 

Answer. The Rural Business Service is currently in the process of reviewing applications. Any announcements will be made in the coming months.

Question 19. CANALES: Why was the decision made to use REAP for your blender 

pump initiative when REAP is already oversubscribed? Could you have done blender 

pumps under other RD programs? Or could DOE have done them under the Clean 

Cities Program? 

Answer. The agency made flex-fuel delivery systems one of many eligible purposes 

under REAP. No separate funds are committed (designated) for flex-fuel projects. 

REAP is a competitive grant and loan guarantee program in which renewable energy systems and energy-efficiency improvement projects must compete on their own 

merits against all others for available funds. As stated in the preamble to the Interim Rule for REAP:

‘‘The inclusion of flexible fuel pumps that dispense blended liquid transportation 

fuel as an important new component of the Federal government’s strategy for 

encouraging the use of renewable fuels. Section 9007(a)(2) authorizes the agency 

to fund parts of renewable energy systems as well as renewable energy systems 

in whole. The agency has determined that a flexible fuel pump is a uniquely 

critical aspect of a biofuel renewable energy system defined as the conversion 

of the biomass through the dispensing of the biofuel to a vehicle. The policy rationale for the agency to include flexible fuel pumps in REAP is to address a 

barrier that the agency has determined impedes the broader use of biofuels as 

a liquid transportation fuel in the United States. For example, one major aspect 

of this barrier derives from two scenarios. The first is one of an insufficient 

availability of higher ethanol-blend fuels in the market place that discourages 

Americans from purchasing flexible fuel vehicles that can burn such higher ethanol-blend fuels and does not provide a sufficient level of higher ethanol-blend 

fuel to supply the existing flexible fuel vehicle fleet to fully take advantage of 

the fleet’s ability to consume additional biofuel. The second is one of an insufficient number of flexible fuel vehicles on the road to encourage fuel station owners to expend the capital necessary to install flexible fuel pumps in response 

to market forces. By allowing REAP to provide financing through grants and 

loan guarantees to encourage the installation of flexible fuel pumps in rural 

areas, the agency believes it can help overcome this barrier. The agency acknowledges that there are other similar biofuel examples, including barriers to 

biodiesel. The agency recognizes that REAP is designed to address a variety of 

renewable energy and energy efficiency goals. With the inclusion of flexible fuel 

pumps for REAP funding, the agency will ensure that it will not ignore the 

other important goals and purposes of the program.’’

To create a viable biofuel system, many Federal partners are necessary. RBS’s efforts do not duplicate the Business and Industry Guaranteed loan program or DOE’s 

Clean Cities program, rather it compliments them by providing additional support 

in rural communities to expand biofuel infrastructure.

Question 20. CANALES: Can you please give us a breakdown of REAP project funding? Please breakdown by state allocations and the kinds of projects being funded 

(i.e., wind, solar, digesters). 

Answer. The following table presents REAP funding for grants and guaranteed 

loans for FY 2010 by state:

State Grant Amt. Loan Amt. Number 

Alabama $1,096,161 $593,791 13 

Alaska $254,123 $— 17 

Arizona $502,333 $— 7 

Arkansas $999,604 $44,813 44 

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State Grant Amt. Loan Amt. Number 

California $1,417,328 $406,000 28 

Colorado $474,562 $95,000 12 

Connecticut $71,745 $63,500 3 

Delaware $70,293 $— 4 

Florida $125,000 $— 2 

Georgia $3,319,908 $1,567,179 78 

Hawaii $427,891 $232,200 8 

Idaho $976,692 $1,500,000 34 

Illinois $4,266,170 $2,434,970 141 

Indiana $3,786,132 $1,531,118 114 

Iowa $20,126,175 $24,055,933 559 

Kansas $818,573 $148,345 37 

Kentucky $1,440,948 $1,355,629 46 

Louisiana $679,276 $1,000,000 6 

Maine $534,569 $1,667,781 5 

Maryland $747,994 $— 13 

Massachusetts $425,725 $1,588,613 17 

Michigan $2,194,168 $391,131 60 

Minnesota $5,799,265 $2,237,408 226 

Mississippi $666,153 $— 30 

Missouri $1,986,417 $5,810,917 56 

Montana $603,367 $10,200 6 

Nebraska $2,834,914 $3,031,260 157 

Nevada $213,748 $— 5 

New Hampshire $218,683 $409,997 5 

New Jersey $1,234,253 $783,887 17 

New Mexico $340,883 $600,000 2 

New York $1,780,633 $1,219,487 76 

North Carolina $2,705,082 $926,000 101 

North Dakota $718,526 $530,684 22 

Ohio $5,461,997 $7,029,505 85 

Oklahoma $268,938 $136,152 15 

Oregon $1,256,736 $81,093 38 

Pennsylvania $1,647,086 $867,065 25 

Puerto Rico $159,773 $— 3 

South Carolina $823,532 $923,521 11 

South Dakota $1,768,333 $1,629,277 40 

Tennessee $1,694,612 $1,658,691 43 

Texas $1,114,006 $— 24 

Utah $172,091 $— 8 

Vermont $1,806,685 $3,710,252 41 

Virginia $759,922 $— 8 

Washington $676,887 $1,386,500 6 

West Virginia $355,860 $254,000 8 

Wisconsin $2,103,224 $1,086,605 69

Total $83,926,976 $72,998,504 2,375 

The following table provides a summary of the funds provided by type of project 

for FY 2010.

Technology Biomass Type

Description 

Number of 

Projects 

Grant 

Amount 

Loan 

Amount 

Amount

Leveraged 

Biomass 56 $11,006,140 $20,751,392 $78,783,920

Anaerobic Digester 19 $6,042,676 $14,010,621 $34,730,610

Biodiesel Production 6 $830,708 $3,485,000 $11,923,618

Ethanol Production 1 $500,000 $— $4,254,000

Solid Fuel Production 16 $3,185,031 $2,110,771 $24,434,653

Thermal Conversion 14 $447,725 $1,145,000 $3,441,040

Energy Efficiency 1,830 $47,692,866 $22,280,851 $131,286,333

Geothermal 40 $1,094,551 $292,000 $10,729,094

Hybrid 4 $58,817 $— $201,106

Hydropower 4 $684,849 $5,000 $11,956,530

Solar 294 $13,296,957 $8,356,177 $46,462,233

Wind 147 $10,092,796 $21,313,084 $25,935,674

550

Technology Biomass Type

Description 

Number of 

Projects 

Grant 

Amount 

Loan 

Amount 

Amount

Leveraged 

Total 2,375 $83,926,976 $72,998,504 $305,354,890

Question 21. CANALES: An integral part of helping ag producers and rural small 

businesses determine whether there are energy efficiency gains to be made in their 

operations is an energy audit. Can you share with the Committee what your agency 

is doing to ensure that there are enough folks available across the country to help 

carry out energy audits in rural areas and on ag operations? 

Answer. REAP provides grants to fund energy audits. The REAP Energy Audit 

and Renewable Energy Development Assistance Grant provides grant assistance to 

entities that will assist agriculture producers and small rural businesses by conducting energy audits and providing information on renewable energy development 

assistance. Eligible entities include: state, tribal, local government or their instrumentalities, land grant colleges, universities and other institutions of higher learning, rural electric cooperatives and public power. A Notice of Funds Available for 

$2.4 million in funding to conduct Energy Audits and Renewable Energy Development Assistance was published in the Federal Register on May 27, 2010. To date, 

REAP has provided approximately $5.3 million in grants that have enabled approximately 4,900 energy audits.

Question 22. CANALES: The Appropriations Committee sent you a strong message 

by zeroing out the mandatory farm bill funding as well as not providing any discretionary funding for REAP, and the House passed bill ended up with $2.3 million 

as a result of two amendments. What do you attribute to the cuts? 

Answer. RBS understands that Congress works to appropriate funding based on 

their priorities and constraints.

Question 23. CANALES: Can REAP continue to be all things to all people in terms 

of doing both energy efficiency as well as renewable energy production? Is it better 

at doing some types of projects than others and are there some projects that can’t 

be done anywhere else? Bottom line, as we’re discussing which energy title programs to continue or not, what would you say REAP’s role should be, keeping in 

mind the criticisms that have come about how the program has been operated? 

Answer. REAP serves both of the important purposes you outline. In 2010 alone, 

the REAP program provided $84 million in grants and $73 million in loans for 2,375 

projects. We do not have any recommendations to statutory eligibility at this time.

Question 24. GARCIA: Can you explain how FSA works with other agencies on program implementation? For example, who else does FSA consult in selecting the 

project areas and making sure the selection is in compliance with other regulations? 

Does FSA work with NRCS or ARS? If so, what are the responsibilities of these 

other agencies? 

Answer. Contributing agencies within USDA include the Natural Resources Conservation Service (NRCS), U.S. Forest Service (USFS) and State Foresters, Rural 

Development (RD) Rural Business Services (RBS), Agricultural Research Service 

(ARS), Agricultural Marketing Service (AMS), Office of Energy Policy and New 

Uses, Animal and Plant Health Inspection Service (APHIS), Foreign Agricultural 

Service (FAS), National Agricultural Statistics Service (NASS), National Institute of 

Food and Agriculture (NIFA). 

These collaborations allowed FSA to assemble a national review team for project 

area proposals analysis of all aspects related to bioenergy production. For example, 

APHIS and NRCS provide information on crop invasiveness and management policy 

and implementation; NASS provides soil survey data for the basis of land rental 

rates; ARS and USFS provides expertise on crops and current USDA energy and 

measurement analysis tools and research; and RD and RBS provides input on conversion facility processes and business models. 

Cooperation also was provided by the Department of Interior Bureau of Land 

Management; Department of Energy and its National Laboratories, such as the National Renewable Energy Laboratory (NREL), Idaho National Laboratory, and Oak 

Ridge National Laboratory. 

Questions Submitted By Hon. Martha Roby, a Representative in Congress from Alabama 

Question 1. GARCIA: Alabama Forestry Commission’s (AFC) forest damage assessment due to the April 2011 tornadoes shows forested acres damaged at 204,590, 

stumpage value for damaged timber at over $266 million on timber volumes in excess of 12 million tons of wood. To put this in perspective, the volume of timber destroyed would provide fiber to six medium size pulp and paper mills for one year. 

551

Much of this volume will not be salvaged resulting in significant reforestation costs and extreme risk of catastrophic fires. The AFC requested $66 million through Farm Service Agency’s (FSA) Emergency Forest Restoration Program 

(EFRP) but they will receive 5% or roughly $3.3 million of what was requested. Mississippi received less storm damage but received 11.8% of their original request. 

Alabama’s share of EFRP funding needs to be increased, what is FSA’s plan to 

make this happen? Can other FSA funds be found and shifted to help this state. 

Answer. EFRP requests are processed in the order that they are received and allocations are made based on a standard formula. Additional funds may be requested; 

however, no EFRP funds are currently available to provide additional EFRP financial or technical assistance to states and counties. At this time, FSA does not have 

any other funding sources that can be used to address unfunded EFRP requests, 

which total over $49 million in the following states: Alabama, Arkansas, Georgia, 

Massachusetts, Mississippi, North Carolina, Ohio, Tennessee, Texas, and Virginia. 

The only funding provided thus far for EFRP was $18 million under the Supplemental Appropriations Act of 2010.

Question 2. GARCIA: United States Forest Service funding for Cooperative State 

and Private Forestry has steadily declined over the past few years. Other State Forestry agency funding sources have seen similar declines. As states prioritize focus 

areas in their Forest Action Plans they need enhanced flexibility to shift Federal 

funding between programs? 

What is the USFS’s position on this need and what changes could be made to provide states with this increased flexibility? 

Answer. The agency understands the key role that Forest Action Plans play in 

providing states the ability to prioritize their use of Federal funds. A continued effort to assist states in meeting this need can give flexibility. FS has worked with 

the State Foresters to implement State and Private Redesign, in which 15% of the 

net available funds (not including earmarks and national commitments) in the Forest Health Management—Cooperative Lands, State Fire Assistance, Forest Stewardship, and Urban and Community Forestry programs are distributed to states for 

cross-cutting, high-priority projects. 

Questions Submitted By Hon. Gregorio Kilili Camacho Sablan, a Delegate in Congress from Northern Mariana Islands 

Question 1. CANALES: I understand it took awhile to implement the Rural Energy 

programs. As a delegate of one of the territories, I am concerned that USDA has 

not been proactive in extending its programs to the territories despite its broad authority given by Congress under P.L. 96–597. When making energy program allocations for the states, did you consider the territories in your allocation plan? 

Answer. Yes. The REAP program allocates funds to the territories, as it does 

every state in the United States. The other three RBS energy programs (i.e., Biorefinery Assistance Program, Repowering Payment Program, and the Advanced 

Biofuel Payment Program) do not have state allocations. All eligible entities, including those in the territories, either compete for funds (Biorefinery Assistance Program, Repowering Program) or are eligible for payments (Advanced Biofuel Payment 

Program) if eligible.

Question 2. CANALES: An integral part of helping agricultural producers and rural 

small businesses determine whether there are energy efficiency gains to be made 

in their operations is an energy audit. I understand that energy audits are done for 

mainland producers, can you share with the Committee what your agency is doing 

to ensure that there are folks to help carry out energy audits for producers in the 

territories? 

Answer. RBS has an assigned Energy Coordinator who works with the western 

pacific area. REAP provides grants to fund energy audits The REAP Energy Audit 

and Renewable Energy Development Assistance Grant provides grant assistance to 

entities that will assist agriculture producers and small rural businesses by conducting energy audits and providing information on renewable energy development 

assistance. Eligible entities include: state, tribal, local government or their instrumentalities, land grant colleges, universities and other institutions of higher learning, rural electric cooperatives and public power. A Notice of Funds Available for 

$2.4 million in funding to conduct Energy Audits and Renewable Energy Development Assistance was published in the Federal Register on May 27, 2010. To date, 

REAP has provided approximately $5.3 million in grants that enables approximately 

4,900 energy audits. No applications have been received and, thus, no awards for 

energy audits have been made to Western Pacific territories. 

552

Question Submitted By Hon. Chellie Pingree, a Representative in Congress from 

Maine 

Question 1. CANALES: Can REAP be modified to enable more support for small 

scale biomass combined heat and power (CHP) unit demonstration projects? 

As you know, the Community Wood Energy Program (CWEP) authorized a new 

program to provide state and local governments with matching grants of up to 

$50,000 to develop community wood energy plans and to fund a program of competitive grants to acquire community wood energy systems (that use woody biomass as 

the primary fuel) for public facilities. In the 2008 Farm Bill, this program was authorized appropriations of $5 million annually for FY 2009–12. Do you support 

CWEP and do you believe that the USDA has an important role to play in getting 

pilot projects deployed in heating schools, hospitals, and municipal/county buildings? 

Answer. To the extent that a CHP unit demonstration project meets the definition 

a pre-commercial technology, REAP can assist such project. Such projects must compete for available program funds with other eligible projects. 

Regarding CWEP, RBS supports this Forest Service program as authorized under 

the 2008 Farm Bill. RBS defers to the Forest Service in answering the question concerning the importance of this program with regard to pilot projects. Also, the Forest Service supports this program, and has requested full funding ($5 million) for 

this program in both FY 2011 and FY 2012. However, no money has been appropriated to date.

Question 2. GARCIA/TIDWELL: There appears to be considerable opportunity to support the development of small scale cellulosic based biofuel systems, such as combined heat and power (CHP) units, in homes and businesses. Such systems could 

take advantage of waste biomass at smaller scales, avoiding the economic dilemma 

posed by hauling low grade materials long distances and provide a mechanism to 

address local situations. How might existing USDA programs be tailored to pursue 

this opportunity? 

Answer. A lot depends on the availability of funds and competing program needs. 

BCAP matching payments are designed to assist with transportation costs of existing biomass that otherwise may be uneconomically retrievable. Examples of such 

biomass include crop residues remaining on the field after harvest, or forest residues where removal is cost-prohibitive outside of a certain geographic range. Collecting these types of biomass may provide additional public policy benefits beyond 

energy purposes alone, such as the removal of invasive, diseased, or forest fire fuel 

materials, providing an alternative disposal method to the burning of discarded orchard and forest materials, or allowing further improvements to forest ecosystem 

health. In 2009, qualified facilities for BCAP matching payments included more 

than 30 schools and universities that consumed biomass for their CHP operations. 

By comparison, BCAP project areas are designed for the development of new supplies of biomass. The selection of BCAP project areas considers the average distance 

of a facility from its biomass supply. For example, five BCAP project areas support 

herbaceous materials that can be densified through conversion methods such as 

torrefaction, pelletizing, compression or dehydration. The resulting product may be 

either a fuel pellet or briquette that cost-effectively can be transported and marketed to smaller scale combined heat and power (CHP) operations. 

BCAP project areas also are selected in consideration of certain criteria provided 

by the 2008 Farm Bill, which include the ability of the local producer to take ownership in the biomass-to-bioenergy operations and the commitment a biomass conversion facility makes to the producers in a project area. Several selected BCAP project 

areas involve the cooperation of farmer cooperatives, and facility ownership is locally based. 

BCAP complements other Federal and state programs that are aimed at increasing renewable sources for heat and power, such as the USFS Fuel for Schools Program or State Renewable Portfolio Standards (RPS). BCAP allows a diversity of 

feedstocks to support these programs. 

USDA is very supportive of developing appropriately scaled biomass projects to 

meet the needs of regional and local situations to make them economically viable; 

reducing haul distances is one important variable to address. The Secretary’s office 

initiated an effort across the multiple agencies in USDA focused on Wood to Energy 

as part of ‘‘Building a Forest Restoration Economy’’. Four categories of work items 

have been identified to achieve this goal:

(a) Supply—Reliability, predictability are crucial; Stewardship Contracting is a 

critical tool for Federal land managers to address supply, this authority expires 

in 2013. Most forestland in the USA is owned by ‘‘families’’ and there is a critical need to be able to coordinated sources across ownerships in a geographic 

553

area. Support for developing business arrangements to assure supply from these 

diverse landowners is needed.

(b) Social Infrastructure—this includes having expertise in technical, financial, 

business, workforce and social acceptability to implement projects. Integrated 

program delivery needs to recognize the importance and support of all of these 

elements and requires close working relationships with private businesses and 

nongovernmental organizations.

(c) Agency Culture—Agencies have traditional modes of operation, legislative 

and regulatory direction. Sometimes these create barriers to implementing biomass energy systems holistically. The Secretary’s office is working through 

these barriers to expand wood to energy. Cross training between agencies is 

being carried out as part of this initiative.

(d) Opportunities—Through the Secretary’s focus several areas for project development have surfaced and are being developed. Examples include the focus on 

rural businesses, agricultural operations dependent upon expensive fuel oil, propane and electric energy for heat. Rural Development has programs (RUS, 

REAP, etc.) that are being leveraged against National Forest wood supply from 

stewardship contracting and we are working to expand those efforts. Projects 

that take advantage of economies of scale, such as supplying heat and power 

to food processing plants, wood manufacturing, cement and other high energy 

using businesses offer significant opportunities.

Question 3. GARCIA/CANALES: How have BCAP and other energy programs helped 

to promote small scale Thermoelectric or thermal energy systems that use woody 

or other biomass? And, are there ways that BCAP, other sections of the Energy title, 

or partnerships with agencies like DOE could help promote Thermal energy systems 

that use woody biomass? 

Answer. BCAP is designed to encourage the production of dedicated bioenergy 

feedstocks to help us meet the goals of the Federal Renewable Fuels Standard and 

state-level renewable electricity standards. Because facilities that convert biomass 

into energy also must demonstrate long term feedstock supply commitments to attract private capital investment, the risk mitigation provided by BCAP can help bioenergy entrepreneurs seeking to leverage public or private financial assistance. 

Many of the thermal production units often are retrofits. The facility is retrofitted 

by the installation of a turbine alongside a boiler to capture lost heat. The capture 

of the lost heat enables a closed loop system allowing a facility to produce heat and 

power, often in the form of steam. The RD programs can support these retrofits and 

the facilities can apply for BCAP matching payments for their eligible waste materials consumed for conversion to thermal power.

Question 4. GARCIA/TIDWELL: Given that the pellet industry plays a major role in 

reducing heating oil consumption, is the production of wood pellets from the removal 

of excess low value woody biomass being provided adequate support under programs 

like BCAP for the purposes of incentivizing these types of best forest management 

practices? 

Answer. BCAP matching payments may provide opportunities for the manufacture 

of wood pellets from so-called ‘‘excess low value woody biomass,’’ but insufficient 

funds are available for matching payments in FY 2011. Also, conditions vary by region and may require further review to ensure that incentives are provided to feedstocks not otherwise used for existing markets; removed directly from the land in 

accordance to a forest stewardship or equivalent plan; are by-products of preventative treatments that are removed to reduce hazardous fuels, to reduce or contain 

disease or insect infestation, or to restore ecosystem health; and if harvested or collected on Federal lands, are done in accordance with the requirements for oldgrowth maintenance, restoration, and management direction provided by 16 U.S.C. 

6512 for Federal lands. 

Achieving good forest management practices by providing an economic use for the 

low value material is an important goal, therefore it is important to put the use of 

wood for energy into that broader context. Wood pellets are one form of fuel, along 

with chipped or ground wood; they each have an important niche within the energy 

market place. In parts of the country where an integrated wood products industry 

exists, higher value products such as lumber, paper, and wood composites can help 

cover the cost of the forest treatment. The pellet and chip wood fuel producers are 

a component of an integrated industry that can effectively use the low value material. They are lacking adequate markets/demand for their product more so than 

enough incentives for more production of their product. Therefore the expansion of 

demand for their products is the more important factor. Thus, providing incentives 

554

to replace heating oil, propane and electric resistance heat would help increase the 

demand. 

In parts of the country without an integrated industry, the need for incentives to 

transport biomass is much higher, along with the increased demand for the products. A longer term solution for these regions is the need to develop a woody biomass based energy production sector. The net result will be better forest management results on the land as the wood being removed has an economic value. As an 

example, there are many USDA facilities in remote areas of the U.S. utilizing either 

propane or oil for thermal energy. Some of these facilities are leased from General 

Services Administration (GSA) that develop and construct the leased buildings for 

USDA and other Federal agencies. Creating the demand for high efficiency thermal 

energy could be developed at the inception of the leased building. The end result 

could be a constructed building using renewable energy such as pellets or chips thus 

increasing the demand for these products. In addition, this would assist the USDA 

and GSA in meeting Executive Order 13514 increasing the use of renewable energy.

Question 5. CANALES: Conservation programs are vitally important, but if forest 

owners don’t also have markets for their products—whether they are traditional 

wood markets, energy markets, or markets for services like water or hunting and 

fishing—they will have a hard time staying on the land and keeping their land forested. What is USDA doing on this front to help forest owners participate in existing 

markets and open up new markets? For example, is USDA’s biobased labeling program adequately supporting the need for creating new markets for wood products? 

And, is there adequate funding to help develop, maintain and improve long-term domestic markets for the broad range of potential wood-based products? 

Answer. USDA appreciates the opportunity to discuss the role of the BioPreferred® program in creating new markets for wood products. The legislative history 

of the BioPreferred program authorized under section 9002 of the Farm Security 

and Rural Investment Act of 2002 (FSRIA), as amended by the Food, Conservation, 

and Energy Act of 2008 suggests Congress intended to use this program to speed 

the development of new markets for biobased products, rather than to support mature markets for products. As described in the conference report accompanying 

FSRIA, the purpose of the biobased markets program ‘‘. . . is to stimulate the production of new biobased products and to energize emerging markets for those products.’’

USDA believes that the widespread labeling of mature market products could negatively affect the entry of new biobased products into market segments in which mature products already have significant market shares. The exclusion of mature market products from the voluntary labeling program is consistent with the exclusion 

of such products from the Federal procurement preference program. As Senator 

Harkin stated in comments on USDA’s proposed labeling rule:

Clearly, the objectives of the BioPreferred labeling program are not served by 

granting the label to every product that is made of biobased materials. For example, paper or wood products, such as wood furniture, do not fall within the 

intent, purpose, and goals of the statute creating the BioPreferred labeling program because the market for paper and wood products is established and functioning, and consumers have sufficient information to make buying decisions regarding paper and wood products without their being included in the BioPreferred labeling scheme.

However, USDA’s BioPreferred program makes every attempt to include new 

wood products (employing technologies coming into existence after 1972) in this 

USDA program. The BioPreferred program works in cooperation with the U.S. Forest Products Research Lab in Madison, Wisconsin to identify and certify new industrial products made from wood for both the federally procurement preference and 

label parts of the program. One of the recent products receiving the USDA certified 

biobased product label is a new wood product.

Question 6. TIDWELL/GARCIA: Since the major predisposing factor for the beetle infestations of the West has been the lack of management and resultant overstocked 

stands, what steps are being taken to address this situation and prevent its reoccurrence? And, what is being done to develop sustainable markets and delivery infrastructure to prevent such problems from occurring elsewhere in the U.S.? 

Answer. BCAP matching payments may provide opportunities for the removal of 

beetle-infected biomass, but insufficient funds are available for this programmatic 

assistance in FY 2011. 

The bark beetle epidemic has affected over 41 million acres from 1997–2009 in 

the western U.S. This is a function of several converging factors—a multi-year severe drought that weakened trees; years of fire suppression which evolved over time 

555

as more people moved into remote areas, which necessitated protecting property and 

lives; large expanses of relatively homogenous stands of older, mature lodgepole 

pine, created from the intensive harvesting of the 1880s and 1890s for railroads and 

the mining industry providing extensive suitable beetle habitat; and warming winters which have allowed beetles to survive winters that in the past, reduced population sizes. 

In response to this record outbreak the Forest Service has developed a ‘‘Western 

Bark Beetle Strategy’’ focusing on three goals: safety (mitigating risk to people and 

property from falling trees along roads and trails), recovery (helping affected forests 

recover their proper ecological function) and resilience (thinning forest stands so 

they are more resilient in the future). The plan was put together to outline the importance of the issue. Currently the FS treats about 250,000 acres per year in beetle 

country and has the capacity to increase this by 2.5 fold. As the epidemic dies down 

the agency will focus on creating more resilient forests and heterogeneous landscapes that can sustain bark beetle attacks better in the future.

Question 7. TIDWELL: On Limited Owners with Management Plans: Less than 5% 

of forest owners nationwide have some sort of management plan. This is troubling 

since we know that almost 2⁄3 of the nation’s forests are privately owned, so we rely 

on these forests to be healthy and supply every Americans with clean water, air, 

wildlife habitat, forest products we use every day, and recreational opportunities. 

Do you see this as a problem and if so how are you addressing this problem? 

Answer. Yes, this is a major challenge for us. We cannot effectively address landscape-scale resource management concerns, without getting private forest landowners. We continue, through the Forest Stewardship Program, to develop and implement innovative tools for reaching and involving more landowners in active forest 

management. Through our Landscape Stewardship Approach, we have begun to develop multi-landowner landscape-scale Forest Stewardship Plans that will foster 

landowner communities of interest and create economies of scale for traditional forest products and emerging ecosystem service markets. We continue to work with 

states as they implement their State Forest Action Plans, to leverage new place and 

community based partnerships. 

We are also developing SMART—a web-based Stewardship Mapping and Reporting Tool. Using this tool, landscape concerns and strategies for addressing them are 

inherited by individual Forest Stewardship Plans. In this way, not only will efficiencies be gained in assisting more landowners, but these landowners will then, in 

aggregate, have a more significant and lasting impact on some of our most pressing 

resource management concerns including insect pest and disease infestations and 

the threat of wildfire.

Question 8. TIDWELL: Communities in Maine and across New England—indeed in 

places across the country such as Montana and California—have embraced acquisition of threatened forestland by local governments as a conservation strategy. The 

2008 Farm Bill authorized a new 50–50 matching grant program, the Community 

Forest and Open Space Conservation Program, to help local governments, tribes, 

and local nonprofits to create more of these locally-owned and managed community 

forests. This would seem to fit well into your vision of forest protection across all 

boundaries—Federal, state, local and private. 

But, it seems like the program has been slow to emerge from rulemaking and 

move into actual grant making since passage of the last farm bill. Can you provide 

an update on where this program stands in terms of establishment through rulemaking, and how you envision it contributing to the agency’s forest conservation objectives? 

Answer. I am pleased to report that the final regulation is in its last stages of 

review, and we hope to publish the final regulation this Fall. Once published, we 

will move forward with soliciting applications, and grant the available funds 

(through FY10 and FY11, we have $1.5 million of available funds). 

This new program fits well within our nation’s forest conservation objectives. 

Through this program, communities and Indian tribes can sustainably manage forests community forests for many public benefits, including recreation, income, wildlife habitat, stewardship demonstration sites for forest landowners, and environmental education.

Question 9. TIDWELL: How could the Healthy Forests Reserve Program (HFRP) be 

structured to achieve the goals of maintaining working forests, protecting important 

public benefits, and compensating private landowners for maintaining these public 

benefits on their land? 

Answer. As currently authorized, the Healthy Forest Reserve Program (HFRP) as 

administered by the NRCS, targets the protection and restoration of forests to assist 

in the recovery of threatened and endangered species. If HFRP was broadened to 

556

maintain working forests, protect important public benefits, and compensate landowners for those public benefits, then the program would largely look like the existing Forest Service’s Forest Legacy Program. Currently, these programs have complementary purposes, with limited overlap. 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE—FORESTRY

1. Program Name 

Volunteer Fire Assistance Program. 

2. Subprograms/Department Initiatives 

The VFA program is split into two subprograms, VFA–SPVF and VFA–SPS3. 

VFA–SPVF funds are focused to address critical preparedness needs for firefighter 

safety, increased initial attack capability, and training. An emphasis is placed on 

funding areas that have developed or are developing Community Wildfire Protection 

Plans, FEMA hazard mitigation plans, or other collaboratively developed hazard 

mitigation plans. 

The program allocates funding based on acres of forestland to be protected and 

the number of fire departments serving communities with populations under 10,000 

in each state. This part of the program is funded through State and Private Forestry appropriations. 

VFA–SPS3 funds provide financial assistance, technical assistance, training, and 

equipment to ensure that Federal, state, and local fire agencies can deliver a coordinated response to wildfire. The emphasis is on improving fire planning, initial attack capabilities, adopting the National Incident Management System (NIMS) and 

wildland fire techniques training for local fire agencies 

Funds are allocated on the basis of risk from catastrophic fires to communities 

in the Wildland Urban Interface, the number of acres to be protected, and the number of volunteer fire departments serving communities of less than 10,000 inhabitants. Forest Service Regions, the Northeastern Area, and the International Institute of Tropical Forestry receive a fixed percent which they allocate to states and 

Territories. This part of the program is funded through Wildland Fire Management 

appropriations. 

3. Brief History 

VFA (formerly Rural Community Fire Protection) was first authorized in 1972 as 

an amendment to the Rural Development Act and was first funded in 1975. 

4. Purpose/Goals 

The VFA program provides Federal financial, technical, and other assistance to 

State Foresters and other appropriate officials to organize, train and equip fire departments in rural areas and rural communities to suppress fires. A rural community is defined as having 10,000 or less population. A department may buy fire 

equipment, pay for training or training materials, or cover the cost of department 

incorporation, as long as the funds are matched. VFA funds are granted on a 50/

50 matching basis. 

Volunteer fire departments also play a major role in suppressing wildfires on Federal lands. The Forest Service and the Department of the Interior land management 

agencies have entered into cooperative agreements with many rural volunteer fire 

departments for the purpose of protection of both communities and natural resources. 

5. Success in Meeting Programmatic Purpose/Goals 

The VFA program has been highly successful in assisting volunteer fire departments in rural areas with training, purchasing equipment and building capacity. 

The assistance provided to these volunteer fire departments greatly benefits state 

and Federal land management agencies through their increased capacity and capabilities to assist with suppression of wildland fires. Detailed information on the 

number of departments assisted, training provided, and departments created or expanded is provided in Question 10.

557

6. Annual Budget Authority (FY 2002–FY 2011): dollars in thousands 

BFY 

2002

BFY 

2003

BFY 

2004

BFY 

2005

BFY 

2006

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011

Volunteer Fire Assistance 5,105 5,478 5,056 5,987 6,409 6,112 6,229 6,404 7,003 6,758National Fire Plan—Volunteer Fire Assistance 8,342 8,186 8,222 11,959 9,288 9,285 9,306 9,059 9,026 9,357

* Excludes Transfers and Recoveries; includes carryover and supplementals. 

7. Annual Outlays (FY 2002–FY 2011): dollars in thousands 

BFY 

2002

BFY 

2003

BFY 

2004

BFY 

2005

BFY 

2006

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011

Volunteer Fire Assistance 4,117 3,900 5,120 4,400 8,069 6,776 6,002 5,550 6,248 4,901National Fire Plan—Volunteer Fire Assistance 4,619 6,468 7,818 7,471 7,899 6,652 7,498 7,759 8,431 5,953

Outlays are actual disbursements. Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were appropriated in that fiscal year and fiscal years prior. This is a 

standard practice for grants programs because grants generally cover a 5 year period and grantees may draw down that grant over that entire period. 8. Annual Delivery Cost (FY 2002–FY 2011) Direct and Indirect Costs 

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011 

Est. 

Volunteer Fire Assistance 00000National Fire Plan—Volunteer Fire Assistance 0 0 0 0 0

558

9. Eligibility Criteria 

The program is limited to volunteer fire departments in rural areas with a population of 10,000 or less. Applicants must be able to provide a cost-share match of 

50 percent of the grant amount.

10. Utilization (Participation) Data 

FY 2008 FY 2009 FY 2010

Volunteer fire departments assisted 13,977 10,637 13,235

Volunteer firefighters trained 23,000 24,000 22,700

Volunteer fire departments created or expanded 240 500 44

11. Duplication or Overlap with Other Programs 

VFA works in concert with the State Fire Assistance program. The Volunteer Fire 

Assistance program is duplicative of the Department of the Interior’s Rural Fire Assistance Program. However, the Rural Fire Assistance Program has been proposed 

for termination due to the duplication. The Department of Homeland Security also 

administers programs that partially overlap with some VFA activities, including 

training and the purchase of equipment, though DHS programs are provided nationwide and not focused on rural communities. 

12. Waste, Fraud and Abuse 

There have been no documented cases of waste, fraud or abuse in this program. 

13. Effect of Administrative PAYGO 

Not applicable. 

1. Program Name 

Woody Biomass Utilization. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

This grant program started in 2005 to treat hazardous fuels near communities 

threatened by wildland fire. It is not part of the farm bill. From 2005–2010 the 

grants have focused on assisting businesses and communities with the production, 

delivery and utilization of wood residues. Projects have ranged from equipment such 

as grinders, harvesters and new trucking methods to energy production facilities, to 

roundwood manufacturing and production of wood shavings for animal bedding markets. In 2011 the emphasis was changed to focus on engineering design, permitting 

and other preconstruction work for wood energy facilities. 

4. Purpose/Goals 

It has focused on utilization of wood residues from forest treatments designed to 

reduce wildfire hazard.

559

5. Success in Meeting Programmatic Purpose/Goals 

Six Year Summary of the Woody Biomass Utilization Grant Program—Table 1

Year Pre-Applications Full Application Number Funded States Funded Tribes Funded 

2005 159 44 19 12 12006 87 37 16 9 12007 93 36 26 13 12008 92 35 17 9 12009 109 43 28 12 12010 192 34 13 5 1

Total 732 229 119

— 5

Total Woody Biomass Utilization Grants Awarded by FS Region—Table 2

Region 1234568 9/NA 10

Total 2005–10 13 18 31 9 17 20 5 6 0

The Forest Service provided $30.3 million towards the projects. 

Total Woody Biomass Utilization Grants Accomplishments—Table 3

Year Dollar Amount (millions) Leveraged Funding (millions) % of grants awarded to priority NFs Green tons removed and utilized 

2005 $4.3 $16 15/19= 79% 93,8562006 $4.2 $9 14/16=88% 120,9002007 $6.2 $5 15/26=58% 438,8772008 $4.2 $11 12/17=71% 535,0172009 $7.2 $10 25/28=89% 283,0762010 $4.2 $9 13/13=100% 516,215

560

6. Annual Budget Authority (FY 2002–FY 2011) ($ in Millions) 

$5 million/yr 2005–2011. Authorization was through the Healthy Forest Restoration Act for FY 2005–FY 2008. Since 2008, the program has been funded by annual 

appropriations. 

7. Annual Outlays (FY 2002–FY 2011) ($ in Millions) 

Outlays have been consistent with the authority. 

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in Millions) 

The program has been delivered through technical assistance provided by Forest 

Service regional program managers and partners generally with nonprofit economic 

development organizations or state extension personnel. 

9. Eligibility Criteria 

Businesses, state, tribal and local governments with an emphasis on use of woody 

biomass from National Forest system lands. 

10. Utilization (Participation) Data 

See Table 1 above. To date, 119 grants have been provided to approximately 115 

grantees. 

11. Duplication or Overlap with Other Programs 

There are other Federal programs that support woody biomass development; however, this is the only program focused specifically on reducing hazardous fuels and 

utilizing that biomass material as a higher value product. Rural Development’s 

Rural Energy for America Program is focused on multiple kinds of renewable energy; it is not specific to woody biomass. Rural Development also has the Community Facilitates Program. That program provides small grants and guaranteed loans 

for multiple different kinds of community facilities. In limited cases, it has been 

used for community biomass heating systems. FSA’s Biomass Crop Assistance Program is focused on assisting with the costs of transporting materials. 

12. Waste, Fraud and Abuse 

To date, only one ARRA grantee has been identified as problematic by an OIG 

audit. There were some accounting procedures and record keeping that was suspect. 

These issues have been resolved since the accounting issues were not accepted as 

allowable expenses. 

13. Effect of Administrative PAYGO 

Not applicable. 

1. Program Name 

Community Forest and Open Space Conservation Program (Community Forest 

Program—CFP). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The CFP is authorized by Section 8003 of the Food, Conservation, and Energy Act 

of 2008, which authorizes the Forest Service to provide financial assistance grants 

to Tribal governments, local governments, and qualified nonprofit entities to acquire 

and establish community forests that provide public benefits to communities. The 

CFP program is the first funded Forest Service program for which tribes are eligible 

to compete. 

The Forest Service engaged tribes in the regulation making process through a 145 

day tribal consultation period, which concluded at the end of a 60 day public comment period on March 7, 2011. The Forest Service analyzed comments received during both processes and prepared final regulations for the program. The final regulation is undergoing departmental clearance to be published in the Federal Register

this year. 

4. Purpose/Goals 

The purpose of the program is to assist communities and tribes in acquiring 

forestland that would provide public recreation, environmental and economic benefits, and forest-based education programs. The program also protects forestland that 

has been identified as national, regional, or local priority for protection. 

561

5. Success in Meeting Programmatic Purpose/Goals 

Since the program was enacted, the Forest Service has received strong support 

from conservation nonprofit organizations, local and state governments, Indian 

tribes, and private citizens to implement this program. The Forest Service believes 

once the regulations are published, the program will be successful in meeting the 

programmatic purposes and goals for this program. 

6. Annual Budget Authority (FY 2002–FY 2011) ($ in Millions) 

This program received $500,000 in appropriations in FY 2010 and $1,000,000 in 

FY 2011. 

7. Annual Outlays (FY 2002–FY 2011) ($ in Millions) 

This program has not had any outlays because the agency is still in the rulemaking phase. Once the final rule is complete, the agency will implement a competitive grant program. When projects are selected to receive funding as part of this 

process, outlays will begin. 

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in Millions) 

None. 

9. Eligibility Criteria 

A request for applications (RFA) has not yet been issued, but according to the 

statue, grants under this program will be awarded to eligible entities to acquire private forestland, to be owned in fee simple, that—

(A) are threatened by conversion to non-forest uses; and

(B) provide public benefits to communities, including—

(i) economic benefits through sustainable forest management;

(ii) clean water and wildlife habitat;

(iii) benefits from forest-based educational programs, including vocational 

education programs in forestry;

(iv) benefits from serving as models of effective forest stewardship for private 

landowners; and

(v) recreational benefits, including hunting and fishing 

10. Utilization (Participation) Data 

Not applicable at this time. 

11. Duplication or Overlap with Other Programs 

This program complements the Forest Legacy Program and the Urban and Community Forestry Program. CFP and FLP each engage unique partners and utilize 

different tools for land protection. While a few projects may align with the intent 

of both programs, most projects will qualify for only one. Unlike U&CF, CFP is a 

land protection program, which provides another tool to those entities that have 

demonstrated a sustained commitment to community forestry. 

12. Waste, Fraud and Abuse 

There are no examples or occurrences of waste, fraud, and abuse in Community 

Forest Program. 

13. Effect of Administrative PAYGO 

Not applicable. 

1. Program Name 

Forest Health Management—Forest Health Protection. 

2. Subprograms/Department Initiatives 

Forest Health—Federal Lands. 

Forest Health—Cooperative Lands. 

Forest Health—National Fire Plan Federal Lands. 

Forest Health—National Fire Plan State Lands. 

3. Brief History 

The Forest Health Management (FHM) program provides insect, disease, and 

invasive plant survey and monitoring information and technical and financial assistance to prevent, suppress, and control outbreaks threatening forest resources. FHM 

utilizes science, active land management, and technology transfer expertise to reVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00573 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
562

store and sustain forest landscapes—across urban, private, state, Tribal, and Federal forests. Recently completed State Forest Resource Assessments have, in many 

cases, identified forest health as a key state priority. These Assessments are being 

used to help guide priorities at the national and regional levels. 

Prevention, detection, and suppression of native and non-native insects, disease, 

and invasive plant outbreaks make forest landscapes—and the communities that depend on them—more resilient to climate change and other abiotic factors. The technical and financial assistance FHM provides helps ensure that forests remain 

healthy and resilient by minimizing impacts of native and nonnative invasive insects and diseases, and invasive plants. Healthy forests which maintain their tree 

cover contribute to carbon sequestration processes. They also are a major force in 

the moderation of local and regional climates, as well as the conservation of high 

quality water and other resources. In addition, FHM works on facilitating assisted 

tree migration efforts and gene conservation that involve reforestation and 

afforestation in those areas where species have been identified as vulnerable to climate change. 

4. Purpose/Goals 

Protect trees, forests, wood products, and grasslands on Federal and state lands 

from invasive pests, diseases, and plants in cooperation with National Forest System, other Federal departments on other Federal lands, and with state foresters, or 

equivalent state officials, subdivisions of states, agencies, institutions, organizations, 

or individuals on non-Federal Lands. 

5. Success in Meeting Programmatic Purpose/Goals 

Acres protected on all lands:

FY 2008 1,303,420

FY 2009 1,383,804

FY 2010 1,258,512

563

6. Annual Budget Authority (FY 2002–FY 2011): dollars in thousands 

BFY 

2002

BFY 

2003

BFY 

2004

BFY 

2005

BFY 

2006

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011

Forest Health—Federal Lands 50,504 54,632 57,776 54,236 57,940 56,279 58,968 59,399 57,282 64,650National Fire Plan—Forest Health—Federal 

Lands 9,144 8,783 16,014 14,892 19,249 17,974 16,596 19,899 20,752 23,182

* Excludes Transfers and Recoveries; includes carryover and supplementals. 

BFY 

2002

BFY 

2003

BFY 

2004

BFY 

2005

BFY 

2006

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011

Forest Health—Cooperative Lands 28,499 33,601 52,496 48,428 53,241 51,217 48,567 50,866 48,573 50,142National Fire Plan—Forest Health—Cooperative 

Lands 5,100 9,914 10,347 12,007 10,755 10,647 10,586 10,685 11,428 13,003

* Excludes Transfers and Recoveries; includes carryover and supplementals. 

7. Annual Outlays (FY 2002–FY 2011): dollars in thousands 

BFY 

2002

BFY 

2003

BFY 

2004

BFY 

2005

BFY 

2006

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011

Forest Health—Federal Lands 46,009 45,449 54,554 54,085 47,631 52,112 51,473 48,668 52,328 38,119National Fire Plan—Forest Health—Federal 

Lands 5,531 5,083 10,303 14,476 13,248 15,520 14,138 13,176 20,755 11,133

BFY 

2002

BFY 

2003

BFY 

2004

BFY 

2005

BFY 

2006

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011

Forest Health—Cooperative Lands 11,683 18,296 31,407 36,665 46,427 49,748 43,998 46,934 46,377 30,084

564

BFY 

2002

BFY 

2003

BFY 

2004

BFY 

2005

BFY 

2006

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011

National Fire Plan—Forest Health—Cooperative 

Lands 3,164 2,738 4,788 8,327 12,399 9,414 10,998 11,011 9,630 6,895

Outlays are actual disbursements. Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were appropriated in that fiscal year and fiscal years prior. This is a 

standard practice for grants programs because grants generally cover a 5 year period and grantees may draw down that grant over that entire period. 8. Annual Delivery Cost (FY 2002–FY 2011): dollars in thousands 

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011 

Est. 

Forest Health—Federal Lands (Indirect) 6,943 5,090 4,901 4,985 4,985Forest Health—Federal Lands (Direct) 6,774 5,850 6,5450 6,592 5,074National Fire Plan—Forest Health—Federal Lands (Indirect) 1,075 1,155 1,112 1,229 1,229National Fire Plan—Forest Health—Federal Lands (Direct) 3,602 2,896 1,486 1,626 2,770Forest Health—Cooperative Lands (Indirect) 775 723 696 797 797Forest Health—Cooperative Lands (Direct) 756 596 930 1,053 1,192National Fire Plan—Forest Health—Cooperative Lands (Indirect) 249 229 221 399 399National Fire Plan—Forest Health—Cooperative Lands (Direct) 244 327 295 527 585

565

9. Eligibility Criteria 

Cooperative Lands and National Fire Plan State Lands funding is sent to State 

Foresters; landowner eligibility is determined by state partners. 

10. Utilization (Participation) Data 

The Forest Service does not collect this data. 

11. Duplication or Overlap with Other Programs 

No. 

12. Waste, Fraud and Abuse 

There are no documented cases of waste, fraud or abuse in this program. The 

USDA OIG did complete an audit on the Invasive Species program in 2010. The 

agency is working to implement the OIG’s Recommendations. 

13. Effect of Administrative PAYGO 

Not applicable. 

1. Program Name 

Forest Legacy Program. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The Forest Legacy Program (FLP) was authorized in the Food, Agriculture, Conservation, and Trade Act of 1990. Initially only the four Northern Forest states 

(Maine, New Hampshire, Vermont, and New York) and Washington were eligible to 

participate. Congress appropriated funds for the program in Fiscal Year 1992. 

Initially, only the Federal Government was authorized to hold title to lands or interests in lands. This changed with the 1996 Farm Bill. The 1996 Farm Bill amended the Forest Legacy Program, to include the State Grant Option. This allowed 

states as well as the Federal Government to acquire FLP tracts and conservation 

easements. In the 20 years since authorization, participation in the FLP has expanded to 49 states and four U.S. territories. 

The Federal Government may fund up to 75% of project costs, with at least 25% 

coming from private, state, or local sources. 

4. Purpose/Goals 

The purpose of the FLP is to protect environmentally important private forest 

areas that are threatened by conversion to non-forest uses. In partnership with participating states and the Forest Service, FLP works to identify important forestlands 

and protect them for future generations. The FLP provides the opportunity for the 

continuation of traditional forest uses, including forest management activities and 

outdoor recreation. Using conservation easements and fee-simple purchases, FLP 

gives priority to lands that have important scenic or recreational values, riparian 

areas, fish and wildlife values, and other ecological values. 

5. Success in Meeting Programmatic Purpose/Goals 

More than 2.2 million acres have been conserved by the FLP.

566

6. Annual Budget Authority (FY 2002–FY 2011): dollars in thousands 

BFY 

2002

BFY 

2003

BFY 

2004

BFY 

2005

BFY 

2006

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011

Forest Legacy 65,000 69,941 70,813 65,240 70,870 63,746 61,984 60,903 75,960 56,363

* Excludes Transfers and Recoveries; includes carryover and supplementals. 

7. Annual Outlays (FY 2002–FY 2011): dollars in thousands 

BFY 

2002

BFY 

2003

BFY 

2004

BFY 

2005

BFY 

2006

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011

Forest Legacy 29,604 25,730 51,684 54,018 61,989 53,041 53,966 54,252 60,714 47,422

Outlays are actual disbursements. Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were appropriated in that fiscal year and fiscal years prior. This is a 

standard practice for grants programs because grants generally cover a 5 year period and grantees may draw down that grant over that entire period. 

Also, it often takes multiple years for real estate transactions to close. 

8. Annual Delivery Cost (FY 2002–FY 2011): dollars in thousands 

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011 

Est. 

Forest Legacy (Indirect) 304 297 286 384 384Forest Legacy (Direct) 363 372 382 504 363

567

9. Eligibility Criteria 

All states and territories of the United States are eligible to participate in the 

Program. To enter the Program states must first conduct an analysis and identify 

areas, known as Forest Legacy Areas (FLAs) where the state will target their efforts. Only lands within these FLAs are eligible to enter the FLP. In the past, this 

analysis was referred to as the Assessment of Need and was only tied to the FLP. 

Now this analysis is part of the Statewide Forest Resource Assessment and Strategy. This document identifies priority areas for all State and Private Forestry Programs. 

Each year participating states submit projects to the Forest Service for consideration for funding. A panel of six Forest Service representatives and four participating state representatives score all projects submitted according to National Scoring Guidance. This scoring guidance is provided to the states to assist them in developing their project applications. The national panel meets in January to finalize 

a prioritized project list. This prioritized project list is then submitted to the Office 

of Management and Budget and is released as part of the President’s Budget. 

10. Utilization (Participation) Data 

2.2 million acres are now part of the FLP. Not all funds are expended in the same 

year that those funds are appropriated. This is because land acquisition is often a 

lengthy and complicated process. Projects are funded through grants to states. 

These grants have an initial 2 year period. This can be extended up to 5 years. 

11. Duplication or Overlap with Other Programs 

There are no other programs with the sole purpose of identifying and permanently 

protecting environmentally important forestlands. The FLP differs from the agency’s 

and Department of the Interior’s Land Acquisition program in that it does not provide for acquisition of lands within the National Forest System or on Department 

of Interior lands. It differs from other easement programs, like conservation programs funded by the Natural Resources Conservation Service, because those are focused on protecting wetlands, wildlife habitat, and highly erodible cropland, not forests. 

12. Waste, Fraud and Abuse 

We are not aware of any instances of waste, fraud or abuse. USDA OIG did complete a report on the Forest Legacy Program in 2011. The agency is working to implement the OIG’s Recommendations. 

13. Effect of Administrative PAYGO 

Not applicable. 

1. Program Name 

Forest Stewardship Program. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The Forest Stewardship Program was authorized with the 1990 Farm Bill to encourage the long-term stewardship of ‘‘nonindustrial’’ private forestland, by assisting 

landowners to more actively manage their forest and related resources. During the 

program’s early years, the Forest Service worked through state agency partners to 

build technical assistance delivery capacity and establish related programs. In recent years, the Program has employed new geospatial technologies and innovative 

planning tools, to become more focused and strategic, enabling the Forest Service 

to work more effectively on private forests and to better coordinate with state as 

well as National Forest lands. These coordinated efforts address pressing landscapescale resource management concerns such as fire, water quality, forest products and 

renewable energy supply. 

4. Purpose/Goals 

The Forest Stewardship Program is the only Forest Service program focused on 

private forestland management. The program delivers assistance by leveraging an 

effective national network of forestry technical assistance providers and programs. 

Because of this unique role—and since most of America’s forests are privately 

owned—the Forest Stewardship Program is essential to addressing any important 

forest resource management issue. Individual forest landowners are assisted within 

the context of forest resource management issues that cross boundaries and encomVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00579 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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pass multiple ownerships and jurisdictions. The Forest Stewardship Program plays 

a fundamental role in keeping forests as forests, preparing forest landowners for forest products and ecosystem services markets, qualifying them for incentive programs, and maintaining jobs and diverse forest products markets in rural communities. 

5. Success in Meeting Programmatic Purpose/Goals 

Since being authorized by the 1990 Farm Bill, the Forest Stewardship Program 

has:

• Served as the primary, most extensive (in reach and scope) private forest owner 

assistance program in the U.S.

• Successfully created and helped sustain a vast, effective network of forestry 

technical assistance providers and programs.

• Provided more that 330,000 comprehensive forest management plans covering 

more than 38 million acres nationwide.

• Reached more than five million forest landowners through a variety of technical 

and educational assistance programs.

• Established strong and effective partnerships with State Foresters, Conservation Districts and many other partners to provide for broader forest landowner 

participation in USDA conservation programs.

569

6. Annual Budget Authority (FY 2002–FY 2011): dollars in thousands 

BFY 

2002

BFY 

2003

BFY 

2004

BFY 

2005

BFY 

2006

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011

Forest Stewardship 34,128 35,630 34,119 52,988 36,978 42,517 31,667 30,522 29,369 35,941

* Excludes Transfers and Recoveries; includes carryover and supplementals. 

7. Annual Outlays (FY 2002–FY 2011): dollars in thousands 

BFY 

2002

BFY 

2003

BFY 

2004

BFY 

2005

BFY 

2006

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011

Forest Stewardship 33,024 32,398 33,328 35,313 43,604 40,873 38,345 30,103 29,502 20,720

Outlays are actual disbursements. Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were appropriated in that fiscal year and fiscal years prior. This is a 

standard practice for grants programs because grants generally cover a 5 year period and grantees may draw down that grant over that entire period. 8. Annual Delivery Cost (FY 2002–FY 2011): dollars in thousands 

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011 

Est. 

Forest Stewardship (Indirect) 870 1,066 1,027 914 914Forest Stewardship (Direct) 1,907 1,230 1,371 1,209 1,123

570

9. Eligibility Criteria 

Essentially any private forest landowner is eligible to participate in the Forest 

Stewardship Program. However, the program strives, through its delivery partners, 

to reach landowners who might not otherwise have access to forest management information and assistance. Program outreach and extension activities are also focused on priority landscapes, such as those identified in State Forest Action Plans, 

where management is most likely to address pressing resource management concerns—or support the growth of local forest dependent markets and economies. 

10. Utilization (Participation) Data 

The following table details program utilization and participation for the past 3 

years:

2008 2009 2010

Number of landowners receiving assistance 149,260 145,976 132,348

Number of landowner education programs conducted 723,155 569,968 229,959

New or revised Forest Stewardship Plans (acres covered) 1,747,812 2,076,278 1,840,255

New or revised Forest Stewardship Plans (number of 

plans) 14,231 15,949 14,764

Base NIPF acres in Important Forest Resource Areas 315,309,885 315,220,112 438,202,042

Acres covered by current Forest Stewardship Plans 

(cumulative) 18,823,374 18,627,113 19,721,990

Acres in Important Forest Resource Areas covered by 

current Forest Stewardship Plans 8,088,291 8,559,798 9,180,010

11. Duplication or Overlap with Other Programs 

This program is not duplicative with others. It is the only Forest Service program 

focused on private forestland management and it often works in concert with the 

USDA Conservation Title programs. 

12. Waste, Fraud and Abuse 

There are no documented cases of waste, fraud or abuse in this program. 

13. Effect of Administrative PAYGO 

Not applicable. 

1. Program Name 

Urban and Community Forestry. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

For over 30 years, U&CF has provided assistance to cities, suburbs and towns, 

where more than 80% of Americans live, to improve the health of our urban and 

community forests for the benefit of all. The Urban and Community Forestry Program (U&CF) has some of the broadest authorities and mandates in the Agency to 

improve trees and forests across public and private lands where people live. All 

Americans benefit from the multitude of services that the urban tree canopy provides: improved human health and wellbeing, green jobs, energy conservation, improved air and water quality, carbon sequestration, recreation, and wildlife habitat. 

Urban and Community Forestry also provides support and funding for cutting-edge 

technologies and information, such as the ‘‘i-Tree’’ suite of local decision support 

tools that include urban forest benefits assessment, pest detection and storm response protocols. 

4. Purpose/Goals 

The Urban and Community Forestry Program promotes the benefits of tree cover 

in urban areas and communities; encourages maintenance of trees and community 

forests; and expands research and education efforts intended to improve the understanding of trees’ economic, environmental, social and psychological, and energy conservation benefits. Technology advancements, such as i-Tree, educate communities 

about the local, tangible ecosystem services that trees provide and encourage the 

linkage of urban forest management activities with environmental quality and community livability. 

571

5. Success in Meeting Programmatic Purpose/Goals 

The Urban and Community Forestry Program uses the Community Accomplishments Reporting System (CARS) as a database to track state performance accomplishments and financial assistance provided to communities.

FY 2008 7,139 communities assisted, 177 million people

FY 2009 6,853 communities assisted, 173 million people

FY 2010 7,102 communities assisted, 177 million people

572

6. Annual Budget Authority (FY 2002–FY 2011): dollars in thousands 

BFY 

2002

BFY 

2003

BFY 

2004

BFY 

2005

BFY 

2006

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011

Urban 37,908 39,726 39,955 49,607 32,023 31,404 29,063 33,505 30,377 35,225

* Excludes Transfers and Recoveries; includes carryover and supplementals. 

7. Annual Outlays (FY 2002–FY 2011): dollars in thousands 

BFY 

2002

BFY 

2003

BFY 

2004

BFY 

2005

BFY 

2006

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011

Urban 33,363 31,504 34,106 35,727 38,208 34,562 39,576 27,529 29,513 22,188

Outlays are actual disbursements. Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were appropriated in that fiscal year and fiscal years prior. This is a 

standard practice for grants programs because grants generally cover a 5 year period and grantees may draw down that grant over that entire period. 8. Annual Delivery Cost (FY 2002–FY 2011): dollars in thousands 

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011 

Est. 

Urban (Indirect) 804 677 652 705 705Urban (Direct) 958 924 871 931 844

573

9. Eligibility Criteria 

The Urban and Community Forestry Program is available to State Foresters or 

equivalent state agencies, interested members of the public, private nonprofit organizations and others. All states as well as the District of Columbia, Puerto Rico, the 

United States Virgin Islands, the Commonwealth of the Northern Mariana Islands, 

American Samoa and Guam, and other territories and possessions of the United 

States are eligible. To fully qualify for support from the U&CF Program, states (including Washington D.C. and the U.S. affiliated islands) are required to maintain 

the following elements: Urban and Community Forestry Program Coordinator, Volunteer/Partnership coordination, an Urban and Community Forest Council, and 

state program strategic plan (5 year). 

The Program is delivered through a continually expanding partnership network 

of state forestry agencies, local governments, nonprofit groups, the private sector, 

community organizations, volunteers, other Federal agencies, and other Forest Service programs. State forestry agencies are the primary partner in program delivery 

of financial, technical and educational assistance to communities. Their efforts include assisting communities to establish vital, sustainable urban forestry programs. 

10. Utilization (Participation) Data 

The Urban and Community Forestry Program uses the Community Accomplishments Reporting System (CARS) as a database to track state performance accomplishments and financial assistance provided to communities. UCF Program performance is measured on an annual basis by tracking the percentage of U.S. population living in communities that are ‘‘Managing’’ or ‘‘Developing’’ programs to plant, 

protect, and maintain their urban and community forestry trees and forests (as compared to total U.S. population living in communities). Communities ‘‘managing’’ programs have received state assistance to achieve all the following national performance measures: management plans, professional staff, ordinances/policies, and a 

local advisory group. Communities with ‘‘developing’’ programs have received state 

assistance to achieve at least one, but less than four of the national performance 

measures.

FY 2008 7,139 communities assisted, 177 million people

FY 2009 6,853 communities assisted, 173 million people

FY 2010 7,102 communities assisted, 177 million people 

11. Duplication or Overlap with Other Programs 

This program is not duplicative with other programs. 

12. Waste, Fraud and Abuse 

There are no documented cases of waste, fraud or abuse in this program. 

13. Effect of Administrative PAYGO 

Not applicable. 

1. Program Name 

State Fire Assistance (SFA). 

2. Subprograms/Department Initiatives 

The SFA program is split into two subprograms, SFA–SPCF and SFA–SPS2. 

SFA–SPCF funds are used to address critical preparedness needs for firefighter 

safety, increased initial attack capability, and training. An emphasis should be 

placed on funding areas that have developed or are developing Community Wildfire 

Protection Plans (CWPPs), FEMA hazard mitigation plans, or other collaboratively 

developed hazard mitigation plans. This is funded in the State and Private Forestry 

appropriation. 

SFA–SPS2 funds designated for community protection on priority landscapes shall 

only be used on priority landscapes identified in state assessments. The funds shall 

only be used for hazardous fuel reduction projects adjacent to communities at risk 

with an emphasis on biomass utilization in locations with existing biomass utilization infrastructure. The funds will be allocated 60 percent to the Western States, 

25 percent to the Southern States, and 15 percent to the Northeastern States. This 

is funded in the Wildland Fire Management appropriation. 

3. Brief History 

SFA (formerly Rural Fire Prevention and Control) has been funded annually since 

1911 to provide technical and financial assistance to states to improve wildfire protection capabilities. 

574

4. Purpose/Goals 

The SFA program provides matching financial assistance through partnership 

agreements to State Foresters for all fire management activities including preparedness activities, planning, training, hazardous fuel treatments, and the purchase and 

maintenance of equipment. Funding enables state and local fire protection organizations to be effective first responders for initial attack on wildland fires and to respond effectively to all types of disasters. 

5. Success in Meeting Programmatic Purpose/Goals 

The SFA program has been very successful in meeting its purposes and goals. Additional communities at risk have been able to develop Community Wildfire Management Plans (CWPPs) and to complete hazardous fuels reduction projects. Detailed information on the number of communities assisted, acres treated and CWPPs 

developed in provided in the response to Question 10.

575

6. Annual Budget Authority (FY 2002–FY 2011): dollars in thousands 

BFY 

2002

BFY 

2003

BFY 

2004

BFY 

2005

BFY 

2006

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011

State Fire Assistance 27,106 27,566 36,089 36,077 63,108 34,751 33,846 37,211 39,147 35,891National Fire Plan—State Fire Assistance 57,056 66,252 76,176 57,587 50,007 50,802 50,535 58,452 77,611 69,239

* Excludes Transfers and Recoveries; includes carryover and supplementals. 

7. Annual Outlays (FY 2002–FY 2011): dollars in thousands 

BFY 

2002

BFY 

2003

BFY 

2004

BFY 

2005

BFY 

2006

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011

State Fire Assistance 23,581 50,194 17,477 36,490 47,860 41,543 35,213 31,723 33,438 25,621National Fire Plan—State Fire Assistance 19,492 34,632 41,477 45,455 44,416 37,061 43,813 47,403 37,924 39,885

Outlays are actual disbursements. Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were appropriated in that fiscal year and fiscal years prior. This is a 

standard practice for grants programs because grants generally cover a 5 year period and grantees may draw down that grant over that entire period. 8. Annual Delivery Cost (FY 2002–FY 2011): dollars in thousands 

BFY 

2007

BFY 

2008

BFY 

2009

BFY 

2010

BFY 

2011 

Est. 

State Fire Assistance (Indirect) 736 648 761 805 805State Fire Assistance (Direct) 877 839 1,016 1,064 845National Fire Plan—State Fire Assistance (Indirect) 62 45 30 22 22National Fire Plan—State Fire Assistance (Direct) 73 58 40 29 86

576

9. Eligibility Criteria 

State Forestry Agencies.

10. Utilization (Participation) Data 

FY 2008 FY 2009 FY 2010

Communities directly assisted with management 

plans, risk assessments, etc. 5,960 5,565 1,524

Hazardous fuels reduction or mitigation projects conducted 8,149 6,743 3,499

Acres treated to reduce hazardous fuels (direct Federal grant only) 292,804 179,544 156,804

Acres treated to reduce hazardous fuels (leveraged 

through Federal funding) 165,028 335,055 290,504

Communities at Risk covered by CWPP or equivalent 4,629 5,567 5,757

11. Duplication or Overlap with Other Programs 

State Fire Assistance works in concert with the Volunteer Fire Assistance Program, which is limited to rural communities of 10,000 people or less. The State Fire 

Assistance program is duplicative of the Department of the Interior’s Rural Fire Assistance Program. However, that program has been proposed for termination due to 

duplication. The Department of Homeland Security also administers programs that 

partially overlap with some SFA activities, including training and the purchase of 

equipment, though DHS programs are provided nationwide and not focused on rural 

communities. 

12. Waste, Fraud and Abuse 

There have been no documented cases of waste, fraud or abuse in this program. 

13. Effect of Administrative PAYGO 

Not applicable. 

1. Program Name 

Healthy Forests Reserve Program (HFRP), prepared by USDA’s Natural Resources Conservation Service (NRCS). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

Title V of the Healthy Forests Restoration Act of 2003 (Public Law 108–148) authorized the establishment of the Healthy Forests Reserve Program (HFRP) which 

was reauthorized by the 2008 Farm Bill. 

HFRP provides financial assistance for specific conservation actions completed by 

the landowner. As funds are made available, the NRCS Chief solicits project proposals State Conservationists have developed in cooperation with partnering organizations. States selected for funding provide public notice of the availability of funding within the selected area. HFRP offers four enrollment options:

• 10 year restoration agreement for which the landowner may receive 50 percent 

of the average cost of the approved conservation practices;

• 30 year contract (equivalent to the value of a 30 year easement) for which the 

landowner may receive 75 percent of the easement value of the enrolled land 

plus 75 percent of the average cost of the approved conservation restoration 

practices. This option is available to Indian Tribes only;

• 30 year easement for which the landowner may receive 75 percent of the easement value of the enrolled land plus 75 percent of the average cost of the approved conservation practices; or

• Permanent easement for which landowners may receive 100 percent of the easement value of the enrolled land plus 100 percent of the average cost of the approved conservation practices. 

4. Purpose/Goals 

HFRP assists landowners in restoring, enhancing, and protecting forest ecosystems to: (1) promote the recovery of threatened and endangered species; (2) imVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00588 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
577

prove biodiversity; and (3) enhance carbon sequestration. HFRP supports the NRCS 

Mission Goal of Healthy Plant and Animal Communities. 

5. Success in Meeting Programmatic Purpose/Goals 

The following provides examples of HFRP results: 

Oregon: Partnership Protects Working Forest and Enhances Habitat. In FY 2010, 

NRCS partnered with the USFWS and the Oregon Department of Forestry (ODF) 

to provide private landowners the opportunity to create a northern spotted owl 

(NSO) habitat while maintaining a working forest. NSO habitat in the Pacific 

Northwest is an important criterion for defining healthy forests, making HFRP an 

excellent vehicle for this effort. NRCS developed HFRP long term management requirements and sideboards as a supplement to the ODF Forest Stewardship Plan 

on 11 properties being offered for permanent easements. 

The supplements specify the long term management requirements and sideboards 

of each individual property; some properties opted for even-age stand management 

and others for the uneven-age stand management regime. The FSP–HFRP supplement recognizes the requirements of a State of Oregon Stewardship Agreement and 

will require that the landowner intends to meet or exceed all Oregon Forest Practices Act standards current at the time of approval including provisions for Riparian 

Management Areas. The information contained in the supplement provides guidance 

and requirements to reach landowner and program goals and objectives. The supplements include area regulation timelines and overall forest management practices for 

thinning, patch cuts, planting, canopy cover requirements and specific management 

regimes for each property. 

NRCS worked closely with USFWS and ODF to ensure consistency among agencies’ requirements while developing the supplements. The supplements use forest 

management to enhance future NSO habitat and maintain existing habitat. NRCS, 

USFWS, and ODF entered into a programmatic Safe Harbor Agreement to provide 

assurances to the landowner if they manage the property according to the Forest 

Stewardship Plan supplement. NRCS develops conservation plans and landowner 

conservation program contracts to implement the conservation practices necessary 

for restoration, enhancement, and management for NSO as planned in the Forest 

Stewardship Plan supplement. NRCS has completed the supplement plans for 11 

properties in western Oregon totaling 1,852 acres of valuable habitat for the endangered NSO on these potential permanent easements. The HFRP work has been an 

excellent demonstration of one-on-one conservation planning resulting in detailed 

landowner decisions while allowing management flexibility for plans that will 

stretch into perpetuity. This has been an excellent model for all nonindustrial forest 

planning.

6. Annual Budget Authority (FY 

2002–FY 2011) 

FY Funding (dollars 

in thousands) 

2002 —

2003 —

2004 —

2005 —

2006 —

2007 —

2008 —

2009 $9,750

2010 $9,750

2011 $9,750

Note: Healthy Forests Reserve Program began Mandatory funding in 2009. 

7. Annual Outlays (FY 2002–FY 2011) 

FY Outlays ($ in

millions) 

2002 —

578

7. Annual Outlays (FY 2002–FY 

2011)—Continued

FY Outlays ($ in

millions) 

2003 —

2004 —

2005 —

2006 —

2007 —

2008 —

2009 $1

2010 $3

2011 $6

Note: Healthy Forests Reserve Program began Mandatory funding in 2009. 

HFRP FA funds support easement acquisition and restoration. Funds are expended when the easement is perfected or the practices necessary for restoration are 

installed and verified by NRCS personnel, both processes which may take over a 

year to complete. TA funds obligated in a given year are used for workload generated by the enrollment of new easements and workload generated by easements 

enrolled in prior years. The vast majority of TA funding tends to be expended in 

the year of obligation. FA funding represents the majority of program budget authority.

579

8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan: 

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 

Program Program ItemsHealthy Forests Reserve Program

Conservation Planning and Technical Consultation 19 12 180 187 301Conservation Implementation 21 15 382 398 641Financial Assistance—Program Administration 9 58 459 478 770Indirect Costs 78 66 314 328 529

Sub-total Technical Assistance 127 151 1,335 1,391 2,241

Financial Assistance—Cost Share & Monetary Incentive 2,349 1,835 1,191 6,226 7,509

Total Costs 2,476 1,986 2,526 7,617 9,750FTEs 1 2 5 6 23

Notes: These numbers are consistent with the published ‘‘Full Cost by Secretary’s Strategic Priorities’’ section of the Explanatory Notes for 

Fiscal Years 2009 through 2012 President’s Budget submissions. In the table above, Fiscal Years 2007 through 2010 amounts are actual; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President’s Budget submission. A copy of this section is an addendum to the Questionnaire. 

Financial assistance funding is identified on the line titled, ‘‘Financial Assistance—Cost Share and Monetary Incentives.’’ Funds associated 

with technical assistance are on the remaining four lines. 

580

9. Eligibility Criteria 

Only privately held land, including acreage owned by an Indian Tribe, is eligible 

for enrollment in HFRP. In addition, to be eligible, the landowner must commit to 

restoring, enhancing, or measurably increasing the likelihood of recovery of a threatened or endangered species or candidates for the Federal or state threatened or endangered species list, and must improve biological diversity or increase carbon sequestration. Land enrolled in HFRP must have a restoration plan that includes 

practices necessary to restore and enhance habitat for species listed as threatened 

or endangered or species that are candidates for the threatened or endangered species list. NRCS provides technical assistance to help owners comply with the terms 

of their HFRP restoration plans. 

Landowners may receive safe harbor assurance for land enrolled in the HFRP 

who agree, for a specified period, to protect, restore, or enhance their land for 

threatened or endangered species habitat. In exchange, landowners avoid future regulatory restrictions on the use of that land under the Endangered Species Act. 

10. Utilization (Participation) Data

Contract Fiscal Year 2010

10 Year

Restoration

Agreements 

30 Year Easements Permanent

Easements 

Number 1 129

Acres 1 2,747 1,416 1,472

Dollars Obligated $599,988 $882,139 $4,994,249

1 Numbers currently reported in NEST are undergoing an intense quality assurance review. 

11. Duplication or Overlap with Other Programs 

To the extent that these programs each allow for 10 year restoration agreements 

to improve wildlife habitat, there is duplication and overlap with the WHIP program 

and the 10 year restoration agreement portion of HFRP. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

Not applicable. 

1. Program Name 

Emergency Forest Restoration Program (EFRP). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The Food, Conservation, and Energy Act of 2008 added EFRP which is intended 

to provide emergency disaster assistance for nonindustrial private forestland similarly to assistance provided for farm land by the Emergency Conservation Program. 

4. Purpose/Goals 

EFRP was authorized by the 2008 Farm Bill to provide financial assistance to 

owners of nonindustrial private forestland to carry out emergency measures to restore land that has been damaged by a natural disaster. 

5. Success in Meeting Programmatic Purpose/Goals 

A 2010 supplemental appropriation provided $18 million to be available until expended. Over $15 million has been allocated which reserves funding for errors, omissions, and appeals and technical assistance. There are unfunded requests of approximately $23.6 million.

581

6. Annual Budget Authority (FY 2002–FY 2011) 

Funding was appropriated by the 2010 Supplemental Appropriations Act. Funding for this program was obligated starting in FY 

2011. 

FY 2002 Through FY 2011 Budget Authority for Farm Service Agency Conservation Programs 

(Dollars in thousands) 

BFY 

2002 

Actual 

BFY 

2003 

Actual 

BFY 

2004 

Actual 

BFY 

2005 

Actual 

BFY 

2006 

Actual 

BFY 

2007 

Actual 

BFY 

2008 

Actual 

BFY 

2009 

Actual 

BFY 

2010 

Actual 

BFY 

2011 

Est. 

Emergency Forest Restoration Program 0 0 0 0 0 0 0 0 18,000 0

7. Annual Outlays (FY 2002–FY 2011) 

The EFRP is a discretionary program account. 

FY 2002 Through FY 2011 Budget Authority for Farm Service Agency Conservation Programs 

(Dollars in thousands) 

BFY 

2002 

Actual 

BFY 

2003 

Actual 

BFY 

2004 

Actual 

BFY 

2005 

Actual 

BFY 

2006 

Actual 

BFY 

2007 

Actual 

BFY 

2008 

Actual 

BFY 

2009 

Actual 

BFY 

2010 

Actual 

BFY 

2011 

Est. 

Emergency Forest Restoration Program 0 0 0 0 0 0 0 0 18,000 0

8. Annual Delivery Cost (FY 2007–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining, repopulating, and 

economically thriving.

582

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsIncome Support and Disaster Assistance

Emergency Forest Restoration Program 0 0 0 18,000

9. Eligibility Criteria 

Land that is eligible under EFRP includes NIPF land or which all of the following are true:

• is physically located in a county or portion of a county that has been approved for EFRP• has existing tree cover (or had tree cover immediately before the natural disaster and is suitable for growing trees)• has damage to natural resources caused by a natural disaster that, if not treated, would impair or endanger the natural resources on 

the land and would materially affect future use of the land. 

583

10. Utilization (Participation) Data 

Over $15 million in requests have been funded since the November 2010 publication of the EFRP rule in the Federal Register.

EFRP Allocations 

State Other—Winds Wildfire Tornado Total 

AL $3,310,000 $3,310,000

AR $2,000,000 $2,000,000

GA $844,000 $844,000

ID $726,000 $726,000

MN $620,000 $620,000

MS $6,631,900 $6,631,900

NH $551,900 $551,900

OH $80,000 $84,000 $164,000

VT $140,000 $34,000 $174,000

Total $1,497,900 $0 $13,523,900 $15,021,800

There are 33 requests for which funds are not available totaling $23.6 million for 

EFRP as of July 12, 2011. Requests are from Alabama, Georgia, Mississippi, North 

Carolina, Tennessee, and Virginia due to April southeastern tornados, and Massachusetts and Ohio for June tornados.

EFRP Unfunded Requests as of July 12, 2011

State Counties Amount

Requested 

MS Attala, Clarke, Monroe, Neshoba, Newton $1,750,000 

NC Bertie $500,000 

MS Choctaw, Noxubee, Webster, Winston $3,255,741 

NC Person $15,000 

AL Elmore, Fayette, Lawrence, Tallapoosa $1,600,000 

GA Jasper, Morgan $176,100 

NC Johnston $10,000 

AL Limestone $100,000 

MS Lafayette $50,000 

GA Bartow, Cherokee, Gordon, Harris, Pickens $740,000 

GA Floyd, Polk $600,000 

GA Catoosa, Dade, Walker $1,830,000 

NC Harnett $50,000 

NC Cumberland $350,000 

GA Spalding $500,000

MS Alcorn, Tishomingo $55,000 

OH Fulton $8,250 

TN Bledsoe $100,000 

NC Lee $50,000 

AR Hot Springs $60,000 

NC Jackson $10,000 

AL Colbert $75,000 

TN Marion, Sequatchie $600,000 

TN Greene, Washington $125,000 

TN Johnson $150,000 

AL Washington $5,000 

TN Bradley, Hamilton, Rhea $5,000,000 

MA Hampden, Worcester $4,400,000 

VA Smyth, Washington $600,000 

AR Johnson $250,000 

MS Lafayette $463,812 

584

EFRP Unfunded Requests as of July 12, 2011—Continued

State Counties Amount

Requested 

NC Caldwell $18,500 

TN McMinn $65,000

Total $23,562,403

11. Duplication or Overlap with Other Programs 

There are no other current programs that duplicate or overlap the EFRP. The 

Conservation Reserve Program implemented the Emergency Forestry Conservation 

Reserve Program to restore land impacted by the 2005 hurricanes. The Emergency 

Conservation Program restores farmland impacted by Natural disaster but does not 

address nonindustrial forestland 

12. Waste, Fraud and Abuse 

No waste fraud or abuse has been documented at this time. 

13. Effect of Administrative PAYGO 

Not applicable. 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE—ENERGY

1. Program Name 

Biobased Markets Program (BioPreferred® program—Section 9002). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

Section 9002 of the Farm Security and Rural Investment Act (2002 Farm Bill) and 

Section 9002 of the Food, Conservation, and Energy Act (2008 Farm Bill) established a Federal procurement preference and voluntary label for biobased products. 

As defined in the 2008 Farm Bill, a biobased product is ‘‘. . . determined by the 

Secretary to be a commercial or industrial product (other than food or feed) that is 

composed, in whole or in significant part, of biological products, including renewable 

domestic agricultural materials and forestry materials, or an intermediate ingredient or feedstock.’’ Biobased products include such industrial products as cleaners, 

lubricants, biopolymers, building materials, insulation, roof coatings, fuel additives, 

and other sustainable industrial materials made from agricultural commodities. 

4. Purpose/Goals 

The mission of the BioPreferred® program is to develop and expand markets for 

biobased products through (1) preferred Federal procurement of biobased products 

government-wide and (2) a voluntary labeling program to raise consumer awareness 

and stimulate biobased product acquisition in the commercial sector. 

5. Success in Meeting Programmatic Purpose/Goals 

To date, USDA has promulgated BioPreferred® program guidelines and six rounds 

of regulations designating categories of biobased products for preferred Federal procurement. As a result, there are now 50 designated product categories. A seventh 

designation rule with 14 product categories should be promulgated later this month. 

When Round 7 is published, 64 categories and almost 9,000 products will be approved for preferred Federal procurement. USDA promulgated the voluntary labeling rule earlier this year; and over 430 products from 150 companies have been certified to carry the USDA Certified Biobased label to date. In FY 2010, 88 percent 

of all applicable USDA contracts included biobased clauses or purchases, up from 

80 percent in FY 2008 and 84 percent in FY 2009. In addition, there are over 20,000 

biobased products and the number and types of products continue to grow.

585

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

CCC Transfer 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 2,000,000 2,000,000 2,000,000

Note: $2,000,000 was transferred from CCC annually to Departmental Management beginning in FY 2009 when Departmental Management

took over the program from the Office of the Chief Economist. 7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Outlays (1,000,000) (1,000,000) (1,000,000) (1,000,000) (1,000,000) (1,000,000) (1,000,000) (2,000,000) (2,000,000) (1,626,015)Balance ————————— 373,985

Note: Outlays as of July 12, 2011

8. Annual Delivery Cost (FY 2002–FY 2011) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

OCE BA Transfer 420,000 890,000 900,000 992,000 883,000 850,000 650,000 810,000 657,000 657,000Outlays (420,000) (890,000) (900,000) (992,000) (883,000) (850,000) (650,000) (810,000) (657,000) (629,563)

Balance ————————— 27,437

Note: A one-time transfer of $810,000 in BA was made from the Office of the Chief Economist in FY 2009. Outlays as of July 12, 2011. 

586

9. Eligibility Criteria 

Private companies ranging from very small businesses to very large businesses, 

which make and/or distribute biobased products, are eligible to participate in the 

BioPreferred® voluntary labeling program. Federal agencies are required to participate in the Federal procurement preference program. 

10. Utilization (Participation) Data 

Over 1,600 companies currently participate in the BioPreferred® program. Approximately 150 companies have products certified for the USDA Certified Biobased 

label. 

11. Duplication or Overlap with Other Programs 

There are no other programs that share the mission of the BioPreferred® program. 

12. Waste, Fraud and Abuse 

There have been no Office of Inspector General or Government Accountability Office audits of the program conducted on the BioPreferred® program in the last 5 

years. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Biorefinery Assistance Program (Section 9003). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The Biorefinery Assistance Program is authorized under Section 9003 of the Farm 

Security and Rural Investment Act of 2002 (2002 Farm Bill) as amended by Section 

9001 of the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill). Through 

the 2008 Farm Bill, the Secretary of Agriculture is directed to make available:

• Grants to assist in paying the costs of the development and construction of demonstration-scale biorefineries to demonstrate the commercial viability of one or 

more processes for converting renewable biomass to advanced biofuels; and

• Guarantees for loans made to fund the development, construction, and retrofitting of commercial-scale biorefineries using eligible technology.

Because the 2008 Farm Bill and subsequent appropriations bills do not provide 

any funds for the grant portion of the program, only the guaranteed loan portion 

has been implemented to date. 

As described below, the Biorefinery Assistance Program was initially implemented 

through a series of notices published in the Federal Register while a rule was being 

developed. 

The Agency initiated that Biorefinery Assistance Program with the issuance of a 

Notice of Funds Availability (NOFA) on November 20, 2008. This NOFA announced 

the acceptance of applications for loan guarantees and the availability of $75 million 

of mandatory budget authority in Fiscal Year 2009 to support loan guarantees. In 

response to this November 20, 2008, NOFA, a loan guarantee was approved for Sapphire Energy for $54.5 million, in conjunction with a $50 million grant from the Department of Energy (DOE). In addition, a Loan Note Guarantee was issued on July 

19, 2011, for a $12.8 million loan guarantee to Fremont Community Digester. 

On May 6, 2010, the Agency issued another NOFA requesting applications for Fiscal Year 2010 funds of up to $150 million in budget authority. In response to this 

NOFA, the Agency issued three conditional commitments to INEOS New Plant Bioenergy, LLC, for $75 million, Enerkem Corporation for $80 million, and Coskata, 

Inc., for $87.85 million. 

On April 16, 2010, USDA published a proposed rule on which the public was afforded the opportunity to comment. Comments were received from 42 commenters, 

yielding 352 individual comments on the proposed rule, which were grouped into 

categories based on similarity. Commenters included biorefinery owner/operators, 

community development groups, industry and trade associations, investment banking institutions, Rural Development personnel, and individuals. The Agency reviewed the comments and based, in part, on those comments developed an Interim 

Rule, which was published on February 14, 2011. 

587

Following the publication of the Interim Rule, the Agency issued a NOFA on 

March 11, 2011, announcing the availability of approximately $129 million in mandatory budget authority for Fiscal Year 2011. This level of funding supports $463 

million in available program level. 

A NOFA of Application Deadline was published on June 6, 2011, extending the 

period of time for acceptance of applications for Fiscal Year 2011 program funds 

until July 6, 2011. The Agency is reviewing 11 applications requesting almost $1 

billion in loan guarantee support.

Farm to Fly Project

In an effort to reach the Renewable Fuel Standard (RFS2) annual renewable fuel 

volume targets, culminating in an overall level of 36 billion gallons in 2022, USDA 

is examining air transportation fuel as a key component in achieving the mandate. 

Twenty-one (21) million gallons of the RFS2 mandate will come from advance 

biofuels other than corn kernel starch ethanol, which has nearly reached the 15 billion gallons allowed under RFS2. 

The purpose of this effort is to support the Administration’s plan to meet the 

RFS2 by identifying barriers associated with availability of aviation biofuel commercialization and provide recommendations on how to best overcome these barriers. 

The project seeks to develop a program to fund and install commercial-scale biofuel 

production that will provide aviation grade fuel.

USDA/Department of Navy Hawaii Project

The Department of the Navy (DON) plans to reduce its reliance on foreign oil to 

meet its energy needs and views the use of advanced biofuels as an important pathway to reach its energy security goals. The USDA and the DON have signed a 

Memorandum of Understanding (MOU) outlining the mutual effort to support the 

use of advanced biofuels and other forms of renewable energy. The State of Hawaii 

has been selected as a pilot for the development of a model for future mutual support for accomplishing the DON’s energy goals. 

4. Purpose/Goals 

The 2008 Farm Bill identifies the purpose of this program as: ‘‘the development 

of advanced biofuels, so as to—

(1) Increase the energy independence of the United States;

(2) Promote resource conservation, public health, and the environment;

(3) Diversify markets for agricultural and forestry products and agriculture 

waste material; and

(4) Create jobs and enhance the economic development of the rural economy.’’

The program also supports Presidential Energy Independence and Security Goals:

» To Develop and Secure America’s Energy Supplies

» To Provide Consumers with Choices to Reduce Costs and Save Energy, and

» To Innovate Our Way to a Clean Energy Future. 

5. Success in Meeting Programmatic Purpose/Goals 

To date, a total of $415.1 million has been obligated in loan guarantee authorities 

to leverage an estimated $1.5 billion in total project costs toward the construction 

and retrofitting of commercial scale advanced biofuel facilities. 

When operational, these facilities are expected to produce 113 million gallons of 

advanced biofuels, generate 24.6 million kilowatts hours of renewable electricity, 

and reduce green house gas emissions by an estimated 0.6 million metric tons of 

carbon dioxide. 

6. Annual Budget Authority (FY 2002–FY 2011) ($ in Millions) 

Funding Levels: 

The 2008 Farm Bill provided $75 million (budget authority) in FY 2009 and $245 

million in FY 2010 for commercial-scale biorefinery loan guarantees. The farm bill 

also authorized discretionary funding of up to $150 million per year starting in FY 

2009 and continuing through FY 2012 for both demonstration and commercial scale 

biorefineries. 

7. Annual Outlays (FY 2002–FY 2011) ($ in Millions) 

The Biorefinery Assistance Program was enacted under the 2008 Farm Bill. Thus, 

there were no annual outlays in Fiscal Years 2002 through 2008. Annual outlays 

for Fiscal Years 2009 through 2011 are shown below.

588

FY 2009

Actual 

FY 2010

Actual 

FY 2011

Est. 

0 $27,000,000 $23,000,000

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in Millions) 

As noted above, the Biorefinery Assistance Program was enacted under the 2008 

Farm Bill. Thus, there were no annual delivery costs in Fiscal Years 2002 through 

2008. Annual delivery costs for Fiscal Years 2009 through 2011 are shown below.

FY 2009 

Amount (000) 

FY 2010 

Amount (000) 

FY 2011 

Amount (000) 

Direct administrative costs $474 $261 $261

Indirect administrative costs $233 $671 $671

9. Eligibility Criteria 

Being a guaranteed loan program, the Biorefinery Assistance Program has eligibility requirements for both borrower and lenders; it also identifies when an otherwise eligible borrower would be considered ineligible. Of these requirements, only 

those for eligible borrowers are specified in the 2008 Farm Bill.

A. Borrower Eligibility

Eligible borrowers. To be eligible, a borrower must meet the requirements the 

following requirements:

(1) The borrower must be one of the following:

(i) An individual; 

(ii) An entity; 

(iii) An Indian tribe; 

(iv) A unit of State or local government; 

(v) A corporation; 

(vi) A farm cooperative; 

(vii) A farmer cooperative organization; 

(viii) An association of agricultural producers; 

(ix) A National Laboratory; 

(x) An institution of higher education; 

(xi) A rural electric cooperative; 

(xii) A public power entity; or 

(xiii) A consortium of any of the above entities.

(2) Each borrower must have, or obtain before loan closing, the legal authority necessary to construct, operate, and maintain the proposed facility 

and services and to obtain, give security for, and repay the proposed loan.

The Biorefinery Assistance Program also identifies certain conditions under 

which a borrower will be considered ineligible for a guarantee. These are if the 

borrower, any owner with more than 20 percent ownership interest in the borrower, or any owner with more than three percent ownership interest in the 

borrower if there is no owner with more than 20 percent ownership interest in 

the borrower:

(1) Has an outstanding judgment obtained by the U.S. in a Federal Court 

(other than U.S. Tax Court), 

(2) Is delinquent on the payment of Federal income taxes, 

(3) Is delinquent on a Federal debt, or 

(4) Is debarred or suspended from receiving Federal assistance.

B. Lender Eligibility

(1) An eligible lender is any Federal or state chartered bank, Farm Credit 

Bank, other Farm Credit System institution with direct lending authority, 

and Bank for Cooperatives. These entities must be subject to credit examination and supervision by either an agency of the United States or a state. 

Credit unions subject to credit examination and supervision by either the 

National Credit Union Administration or a state agency, and insurance 

companies regulated by a state or national insurance regulatory agency are 

also eligible lenders. The National Rural Utilities Cooperative Finance CorVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00600 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
589

poration is also an eligible lender. Savings and loan associations, mortgage 

companies, and other lenders as identified in 7 CFR 4279.29(b) are not eligible. 

(2) The lender must demonstrate the minimum acceptable levels of capital specified in paragraphs (c)(2)(i) through (c)(2)(iii) of this section at the 

time of application and at time of issuance of the loan note guarantee. This 

information may be identified in Call Reports and Thrift Financial Reports. 

If the information is not identified in the Call Reports or Thrift Financial 

Reports, the lender will be required to calculate its levels and provide them 

to the Agency.

(i) Total Risk-Based Capital ratio of ten percent or higher; 

(ii) Tier 1 Risk-Based Capital ratio of six percent or higher; and 

(iii) Tier 1 Leverage Capital ratio of five percent or higher.

(NOTE: These three terms have the meaning given them under applicable Federal Deposit Insurance Corporation regulations.)

(3) The lender must not be debarred or suspended by the Federal Government. 

(4) If the lender is under a cease and desist order from a Federal agency, 

the lender must inform the Agency. The Agency will evaluate the lender’s 

eligibility on a case-by-case basis given the risk of loss posed by the cease 

and desist order. 

(5) The Agency, in its sole determination, will approve applications for 

loan guarantees only from lenders with adequate experience and expertise, 

from similar projects, to make, secure, service, and collect loans approved 

under this subpart. 

10. Utilization (Participation) Data 

To date, seven projects have been approved for Biorefinery Assistance guaranteed 

loans. Of the seven approved projects, one project entered into servicing and one 

project was de-obligated:

» Range Fuels, Inc. (cellulosic ethanol)—$80 million guaranteed loan approved 

1/16/09. Loan closed on 2/10/10. On January 3, 2011, Range Fuels failed to 

make the scheduled payment for principal and interest on the Bonds. Range 

Fuels is current on deferred principal/interest only payments and working to 

find additional partners with capabilities of financial support. The Agency is reviewing a plan from the Lender outlining the potential transfer/sale.

» SoyMor Biodiesel, LLC (waste corn oil/distillers syrup from ethanol facilities)—$25 million application approved on 6/10/09. On September 1, 2010, RD 

received letter from (American Bank) stating the lender no longer qualifies as 

an eligible lender, having fallen below the minimum acceptable levels of capital. 

SoyMor was unable to obtain a new lender. The $25 million was de-obligated 

on 3/2/10.

» Sapphire Energy (algae to advanced aviation fuel)—$54.5 million guaranteed 

loan approved 12/03/2009. Agency continues to work with Lender to close the 

loan.

» Freemont Community Digester (anaerobic digester/will process community 

waste, mostly food and beverage; has a contractual arrangement to sell waste 

CO2)—$12.75 million loan guarantee approved 10/15/2010. Loan closed; Agency 

issued a loan note guarantee on July 19, 2011.

» Enerkem Corporation (Cellulosic Ethanol)—$80 million guaranteed loan approved 1/4/2011.

» INEOS New Planet BioEnergy, LLC (Cellulosic Ethanol)—$75 million guaranteed loan approved 1/4/2011. Agency continues to work with Lender to close 

the loan.

» Coskata, Inc. (Cellulosic Ethanol)—$87.85 million guaranteed loan approved 

6/3/2011. Agency continues to work with Lender to close the loan. 

11. Duplication or Overlap with Other Programs 

The Biorefinery Assistance Program is not a duplicate of any other USDA program. There are no other programs that have the sole purpose of funding biorefineries involved in advanced biofuel production, and that involve the private sector 

on each transaction. 

590

12. Waste, Fraud and Abuse 

The Biorefinery Assistance Program is a new program enacted with the 2008 

Farm Bill. No Office of Inspector (OIG) or Government Accountability Office (GAO) 

audit of the program was conducted in the past 5 years. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Repowering Assistance Program (Section 9004). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The Repowering Assistance Program is authorized under Section 9004 of the 

Farm Security and Rural Investment Act of 2002 (2002 Farm Bill) as amended by 

Section 9001 of the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill). 

Through the 2008 Farm Bill, the Secretary of Agriculture is directed to ‘‘make payments to any biorefinery that meets the requirements of this section for a period 

determined by the Secretary.’’ The 2008 Farm Bill provided $35 million over the life 

of the 2008 Farm Bill. 

As described below, the Repowering Assistance Program was initially implemented through a series of notices published in the Federal Register while a rule 

was being developed. 

The Agency initiated that Repowering Assistance Program with the issuance of 

a Notice of Funds Availability (NOFA) on June 12, 2009. This NOFA announced the 

acceptance of applications and the availability of $20 million to make payments for 

the conversion of biorefinery heating and power systems to renewable biomass. On 

May 6, 2010, the Agency issued a NOFA releasing another $8 million in budget authority for FY 2010. 

On April 16, 2010, USDA published a proposed rule on which the public was afforded the opportunity to comment. Comments were received from eight commenters, yielding 30 individual comments, which were grouped into similar categories. Commenters included biorefinery owner/operators, Rural Development personnel, trade associations, and individuals. The Agency reviewed the comments and 

based, in part, on those comments developed an Interim Rule, which was published 

on February 11, 2011. 

Following the publication of the Interim Rule, a NOFA was published on March 

11, 2011, to announce the availability of approximately $25 million in assistance 

payments. 

4. Purpose/Goals 

The purpose of the program as encouraging eligible biorefineries that use fossil 

fuels to produce heat or power to operate the biorefinery to replace such fossil fuels 

with renewable biomass. 

The program also supports Presidential Energy Independence and Security Goals:

» To Develop and Secure America’s Energy Supplies;

» To Provide Consumers with Choices to Reduce Costs and Save Energy; and

» To Innovate Our Way to a Clean Energy Future. 

5. Success in Meeting Programmatic Purpose/Goals 

One applicant, Lincolnway Energy, LLC, received an award of $1.9 million in response to the FY 2009 funding notice. Two applications, which were recently received, are pending with the Agency and total $5.5 million. Thus, to date, approximately $7.5 million of the available $35 million for the program may be expended. 

The amount of energy that would be replaced at these three projects is: 983,436 

dekatherms; 1,696,678 dekatherms; and 2,050 kilowatt hours per day. 

6. Annual Budget Authority (FY 2002–FY 2011) ($ in Millions) 

Funding Levels: 

The 2008 Farm Bill provided $35 million to remain available until expended. The 

2008 Farm Bill also authorizes additional discretionary funding of up to $15 million 

per year, from FY 2009 through 2012. To date, no discretionary funds have been 

appropriated.

591

FY 2009 through FY 2011

Repowering Assistance Payments 35,000,000

7. Annual Outlays (FY 2002–FY 2011) ($ in Millions) 

The Repowering Assistance Program was enacted under the 2008 Farm Bill. 

Thus, there were no annual outlays in Fiscal Years 2002 through 2008. In addition, 

although the Agency has approved one application for payment, no outlays in Fiscal 

Years 2009 through 2011 have yet to be made. 

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in Millions) 

Because they are both Energy Assistance Payments, the Agency tracks the 

Repowering Assistance Program and the Advanced Biofuel Payment Program together. Thus, the Agency does not have information on Annual Delivery Cost per 

program. The following table presents the Annual Delivery Cost for both program 

combined. Please note that because these two programs were initiated with the 2008 

Farm Bill, there are no delivery costs from Fiscal Years 2002 through 2008.

Energy Assistant Payments: 

Repowering Assistance Payments & Bioenergy Program for Advanced 

Biofuels Payments 

2009 2010 2011

Program Level $0 $20,503 $85,000

Budget Authority 0 20,503 85,000

Administrative Costs (Direct) 418 261 248

Administrative Costs (Indirect) 196 671 639

Total Costs 614 21,435 85,887

Note: These numbers are consistent with the published ‘‘Full Cost by Secretary’s 

Strategic Priorities’’ section of the Explanatory Notes for Fiscal Years 2009 through 

2012 President’s Budget submissions. In the table above, Fiscal Years 2007 through 

2010 amounts are actual; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 

President’s Budget submission. 

9. Eligibility Criteria 

As stated in the authorizing statute: ‘‘To be eligible to receive a payment under 

this section, a biorefinery shall demonstrate to the Secretary that the renewable biomass system of the biorefinery is feasible based on an independent feasibility study 

that takes into account the economic, technical and environmental aspects of the 

system.’’ The Interim Rule requires the applicant to submit a such feasibility study 

that has been conducted by an independent qualified consultant, who has no financial interest in the biorefinery. 

The authorizing statute also requires that the biorefinery at which the repowering 

project is to be implemented must have been in existence on or before June 18, 2008 

(the date of the 2008 Farm Bill). 

The Interim Rule also includes additional criteria for an applicant to be eligible 

for this program, as described below.

(1) TIMELY COMPLETE APPLICATION SUBMISSION. To be eligible for this program, the applicant must submit a complete application within the application 

period. 

(2) MULTIPLE BIOREFINERIES. Corporations and entities with more than one 

biorefinery can submit an application for only one of their biorefineries. However, if a corporation or entity has multiple biorefineries located at the same 

location, the entity may submit an application that covers such biorefineries 

provided the heat and power used in the multiple biorefineries are centrally 

produced. For example, a corporation or entity may make one application, that 

application may include multiple projects, so long as they are served by one 

repowering project. Example of an acceptable application: Three plants use process heat from a single Repowering Project located on the plant site. Example of 

an unacceptable application: Two plants owned by the same entity are located 

10 miles apart and each is powered by a different system in which the applicant 

proposes two separate Repowering Projects to replace the two existing systems.

592

(3) COST-EFFECTIVENESS. The application must be awarded at least minimum 

points (at least five points) for cost-effectiveness. 

(4) PERCENTAGE OF REDUCTION OF FOSSIL FUEL USE. The application must be 

awarded at least minimum points (at least five points) for percentage of reduction of fossil fuel use. 

(5) FULL PROJECT FINANCING. The applicant must demonstrate that it has sufficient funds or has obtained commitments for sufficient funds to complete the 

repowering project taking into account the amount of the payment request in 

the application.

In addition, a project is not eligible for this program if it is using feedstocks for 

repowering that are feed grain commodities that received benefits under Title I of 

the Food, Conservation, and Energy Act of 2008. This ineligibility provision is included to prevent payment to a feedstock that is an underlying commodity that received a payment under Title I. 

10. Utilization (Participation) Data 

Since the program’s inception, the Agency received ten applications for repowering 

assistance. The current disposition of these applications is as follows:

• 1 applicant has accepted the conditional commitment

• 2 applicants are currently under review

• 4 applicants were issued conditional commitments, but elected to withdraw 

their applications

• 1 applicant accepted, but did not proceed with project implementation

• 2 applicants were determined to be ineligible 

11. Duplication or Overlap with Other Programs 

The Repowering Assistance Program is not a duplicate of any other USDA program. In addition, the Repowering Assistance Program does not duplicate any other 

Federal program, based on our understanding of those programs. 

12. Waste, Fraud and Abuse 

The Repowering Assistance Program is a new program enacted with the 2008 

Farm Bill. No Office of Inspector (OIG) or Government Accountability Office (GAO) 

audit of the program was conducted in the past 5 years. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Advanced Biofuel Payment Program (Section 9005). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The Advanced Biofuel Payment Program is authorized under Section 9005 of the 

Farm Security and Rural Investment Act of 2002 (2002 Farm Bill) as amended by 

Section 9001 of the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill). 

Through the 2008 Farm Bill, the Secretary of Agriculture is directed to ‘‘make payments to eligible producers to support and ensure an expanding production of advanced biofuels.’’

As described below, the Advanced Biofuel Payment Program was initially implemented through a series of notices published in the Federal Register while a rule 

was being developed. 

The 2008 Farm Bill provided $55 million in funding for 2009. A Notice of Contract 

Proposals (NOCP) for $30 million to make payments to biorefineries for the production of advanced biofuels (other than corn kernel starch) was published in the Federal Register on June 12, 2009. In December 2009, the Agency made payments to 

141 producers totaling $14.7 million for FY 2009 awards. A NOCP was published 

on March 12, 2010, making the remaining funding from the 2009 NOCP of $15.2 

million available; the application window closed on June 15, 2010. On August 18, 

2010, the Agency issued another notice in the Federal Register that rescinded the 

March 12, 2010, notice to allow previously excluded advanced biofuel producers (i.e.,

those that did not meet the rural area and citizenship requirements) to apply for 

and receive Fiscal Year 2009 program funds. Payments for Fiscal Year 2009 were 

made in August and December, 2010. 

593

On April 16, 2010, USDA published a proposed rule on which the public was afforded the opportunity to comment. Comments were received from 1,090 commenters yielding over 165 individual comments, which were grouped into similar 

categories. Commenters included Members of Congress, Rural Development personnel, trade associations, state agencies, universities, environmental organizations, 

and individuals. The Agency reviewed the comments and based, in part, on those 

comments developed an Interim Rule, which was published on February 11, 2011. 

A NOFA was published simultaneously with the interim rule to announce $80 

million in payment assistance to eligible producers for FY 2010 production. A second 

notice was published to extend the application deadline until May 6, 2011. A NOFA 

to announce $85 million in payment assistance for FY 2011 was published on March 

11, 2011. The Agency is currently reviewing the payment requests. 

4. Purpose/Goals 

The 2008 Farm Bill identifies the purpose of the program as providing payments 

to producers to support and expand production of advanced biofuels (refined from 

sources other than corn kernel starch.) 

The program also supports Presidential Energy Independence and Security Goals:

» To Develop and Secure America’s Energy Supplies

» To Provide Consumers with Choices to Reduce Costs and Save Energy, and

» To Innovate Our Way to a Clean Energy Future 

5. Success in Meeting Programmatic Purpose/Goals 

To date, all funds made available under this program have been either distributed 

or are to be distributed once final payment calculations have been made. 

6. Annual Budget Authority (FY 2002–FY 2011) 

Funding Levels: 

The 2008 Farm Bill provides mandatory funding of $55 million in FYs 2009 and 

2010, $85 million in FY 2011, and $105 million in FY 2012. Additionally, the 2008 

Farm Bill authorizes discretionary funds of up to $25 million per year, from FY 

2009 to 2012.

2009 2010 2011

Advanced Biofuel Payment Program $55 million $55 million $85 million 

7. Annual Outlays (FY 2002–FY 2011) 

The Advanced Biofuel Payment Program was enacted under the 2008 Farm Bill. 

Thus, there were no annual outlays in Fiscal Years 2002 through 2008.

2009 2010 2011

Advanced Biofuel Payment Program $0 $18,547,000 $136,000,000

Note: Outlays are not a one to one correlation with Budget Authority. Some programs disburse over numerous years. Undisbursed balances are carried forward for 

future year outlays. 

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in Millions) 

Because they are both Energy Assistance Payments, the Agency tracks the 

Repowering Assistance Program and the Advanced Biofuel Payment Program together. Thus, the Agency does not have information on Annual Delivery Cost per 

program. The following table presents the Annual Delivery Cost for both programs 

combined. Please note that because these two programs were initiated with the 2008 

Farm Bill, there are no delivery costs from Fiscal Years 2002 through 2008.

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Energy Assistant Payments: 

Repowering Assistance Payments & Bioenergy Program for Advanced 

Biofuels Payments 

2009 2010 2011

Program Level $0 $20,503 $85,000

Budget Authority 0 20,503 85,000

Administrative Costs (Direct) 418 261 248

Administrative Costs (Indirect) 196 671 639

Total Costs 614 21,435 85,887

Note: These numbers are consistent with the published ‘‘Full Cost by Secretary’s 

Strategic Priorities’’ section of the Explanatory Notes for Fiscal Years 2009 through 

2012 President’s Budget submissions. In the table above, Fiscal Years 2007 through 

2010 amounts are actual; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 

President’s Budget submission. 

9. Eligibility Criteria 

As provided in the authorizing statute, to receive a payment under this program, 

the applicant must be an ‘‘eligible producer,’’ which means a producer of advanced 

biofuels. In addition, to receive a payment under this program, an eligible producer 

must meet any other requirements of Federal and state law (including regulations) 

applicable to the production of advanced biofuels. In addition, the Interim Rule 

states that public bodies and educational institutions are not eligible for this program. 

The Interim Rule also has eligibility requirements specific to the biofuel. For an 

advanced biofuel to be eligible, each of the following conditions must be met, as applicable. Notwithstanding the provisions for biofuel eligibility, flared gases are not 

eligible.

• The advanced biofuel must meet the definition of advanced biofuel and be produced in a state;

• The advanced biofuel must be a solid, liquid, or gaseous advanced biofuel;

• The advanced biofuel must be a final product; and

• The advanced biofuel must be sold as an advanced biofuel through an arm’s 

length transaction to a third party.

The Interim Rule also identifies conditions under which an otherwise eligible producer will be determined to be ineligible. These conditions are, if the producer:

• Refuses to allow the Agency to verify any information provided by the advanced 

biofuel producer under this subpart, including information for determining applicant eligibility, advanced biofuel eligibility, and application payments;

• Fails to meet any of the conditions set out in this subpart, in the contract, or 

in other Program documents; or

• Fails to comply with all applicable Federal, state, or local laws.

The Agency will determine an applicant’s eligibility for participation in this Program. 

10. Utilization (Participation) Data 

In FY 2010, 141 payments were disbursed providing $18.5 million in advanced 

biofuel assistance. In FY 2011, 122 payments have been disbursed to provide $11.5 

million in advanced biofuel assistance. A total of $30 million in advanced biofuels 

payment assistance has been disbursed to date. 

11. Duplication or Overlap with Other Programs 

The Advanced Biofuel Payment Program is not a duplicate of any other USDA 

program. In addition, the Advanced Biofuel Payment Program does not duplicate 

any other Federal program, based on our understanding of those programs. 

12. Waste, Fraud and Abuse 

The Advanced Biofuel Payment Program is a new program enacted with the 2008 

Farm Bill. No Office of Inspector (OIG) or Government Accountability Office (GAO) 

audit of the program was conducted in the past 5 years. 

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13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Biodiesel Fuel Education Program (Section 9006). 

2. Subprograms/Department Initiatives 

Section 9004 of the Farm Security and Rural Investment Act of 2002 authorized 

competitive grants to educate governmental and private vehicle operators, and the 

public about the benefits of biodiesel fuel use. Section 9001 of the 2008 Farm Bill 

reauthorized the program and renumbered its authorization statute as section 9006 

of the 2002 Act. 

The Secretary of Agriculture delegated this authority to the Department’s Chief 

Economist, who in turn formed the Biodiesel Education Oversight Committee to direct the program. The Committee includes members from USDA’s Foreign Agricultural Service, Rural Development, Office of Energy Policy and New Uses, National 

Institute of Food and Agriculture (NIFA), and the Department of Energy. The Committee established the initial guidelines and goals of the Program, manages the 

grant selection process, and monitors the progress of the Program. 

3. Brief History 

The 2002 Farm Bill authorized funding of $1 million per year from FY 2003 

through FY 2007 for competitively awarded education grants. With guidance from 

NIFA, which has extensive experience in implementing grant programs and rule 

making, the oversight committee drafted a request for proposals, which was submitted to the Office of General Counsel for clearance in January 2003. A notice of 

request for applications and the proposed rule were issued in the Federal Register

July, 2003. The final rule was issued September, 2003. The oversight committee selected a panel of experts from within and outside government to review the proposals, identify eligible applicants, and make recommendations to awarding officials. 

Two continuation grants were awarded; one to the National Biodiesel Board (NBB) 

and the other to the University of Idaho to implement the Program through FY 

2007. 

Funding was reauthorized by Section 9006 of the 2008 Farm Bill for each fiscal 

year from 2008 through 2012. Once again with the help of NIFA, the oversight committee drafted a request for applications that was posted in August 2008. A panel 

of expert reviewers was selected by the committee to review the applications that 

were submitted. Two continuation grants were awarded; one to the National Biodiesel Board (NBB) and the other to the University of Idaho to implement the Program through FY 2012. 

4. Purpose/Goals 

The purpose of the Program is to provide education to the public, government, and 

private entities on the benefits of biodiesel use. Education raises the awareness of 

the benefits of using biodiesel, resulting in a rise in consumer demand. Increasing 

the use of biodiesel will help the U.S. diversify its transportation fuel supply and 

develop new domestic sources of energy. The program includes the following goals:

• Identify and document the benefits of biodiesel, including environmental and 

economic benefits

• Enhance current efforts to collect and disseminate information

• Coordinate with other biodiesel programs to avoid redundancy and leverage resources

• Create a nationwide networking system that delivers consistent information

• Help insure fuel quality, fuel safety, and consumer confidence 

5. Success in Meeting Programmatic Purpose/Goals 

Biodiesel production was minimal in the United States when this program began 

in 2003, but thanks to Federal and state policy initiatives, including the Biodiesel 

Education Program, the industry has grown rapidly. Awareness of biodiesel among 

Americans has increased markedly since the Biodiesel Education Program began in 

2003—consumer awareness of biodiesel has grown from 27 percent to 86 percent. 

Much progress has been made over the past several years in garnering auto, engine 

and equipment manufacturers support for the use of biodiesel. At the onset of the 

Biodiesel Education Program, most engine manufacturers were apprehensive about 

using biodiesel, but now nearly 60% of U.S. manufacturers support the use of biodiesel blends in at least some of their equipment. 

596

The Program helped the biodiesel industry grow by providing information to a 

broad spectrum of consumers and producers, including government fleet managers, 

truckers, petroleum marketers, automobile companies, and health groups. Education 

materials have been developed, including biodiesel technical reports to help users 

better understand the fuel properties of biodiesel, e.g., lower greenhouse gas emissions compared to petroleum diesel. In addition, public radio and television programs demonstrating the benefits of biodiesel have been broadcasted nationally. The 

current grantees (the National Biodiesel Board and the University of Idaho) have 

become information clearing houses for biodiesel and have national reputations in 

providing expert guidance on producing biodiesel, maintaining fuel quality, and insuring fuel safety. Program funds have been used for organizing national conferences, conducting technical workshops, and developing partnerships with stakeholders, such as, biodiesel producers, engine manufacturers, health organizations, 

environmental groups, and State Department of Transportation Offices.

597

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

Biodiesel 

Education Program 0 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Annual Outlays 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

Biodiesel 

Education Program 0 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000

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8. Annual Delivery Cost (FY 2002–FY 2011) 

The cost to NIFA for administering the program is $40,000 per year. 

9. Eligibility Criteria 

Eligible entities are nonprofit organizations, institutions of higher learning that 

have demonstrated knowledge of biodiesel production, use, and distribution. Qualified entities have demonstrated the ability to conduct educational and technical support programs. 

10. Utilization (Participation) Data 

Two continuation grants were awarded in 2003 to conduct the program through 

2007; and two continuation grants were awarded in 2008 to conduct the program 

through 2012. 

11. Duplication or Overlap with Other Programs 

The Biodiesel Education Program is not a duplicate of other USDA programs. 

12. Waste, Fraud and Abuse 

There have been no Office of Inspector General or Government Accountability Office audits of the program conducted on the Biodiesel Fuel Education Program in 

the past 5 years. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Rural Energy for America Program (Section 9007). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

Section 9006, Title IX, of the Farm Security and Rural Investment Act of 2002 

(2002 Farm Bill) established the Renewable Energy Systems (RES) and Energy Efficiency Improvements (EEI) Program. On October 5, 2004, the Agency proposed a 

loan and grant program for renewable energy systems and energy efficiency improvements under Section 9006 of the 2002 Farm Bill. Based on comments received, 

the Agency developed a final rule, which was promulgated on July 18, 2005. This 

rule established the RES and EEI program for making grants, loan guarantees, and 

direct loans to farmers and ranchers (agricultural producers) and to rural small 

businesses to purchase renewable energy systems and make energy efficiency improvements. Funds were never authorized for the direct loan program, such that the 

Agency never implemented the direct loan portion of the program. 

Subsequent to the 2002 Farm Bill, Congress passed the Food, Conservation, and 

Energy Act of 2008 (2008 Farm Bill), which amended Title IX of the 2002 Farm Bill. 

Under the 2008 Farm Bill and Section 9007 of the amended 2002 Farm Bill, the 

Agency was authorized to continue providing to agricultural producers and rural 

small businesses loan guarantees and grants for the development and construction 

of RES and EEI projects. In addition to the current set of renewable energy projects 

eligible for funding (i.e., bioenergy, anaerobic digesters, electric geothermal, direct 

geothermal, solar, hydrogen, and wind), the 2008 Farm Bill expanded the program 

to include two new renewable energy technologies: hydroelectric and ocean energy. 

Further, the 2008 Farm Bill authorized the Agency to provide grants specifically for 

energy audits, renewable energy development assistance, and RES feasibility studies. 

As provided in the 2008 Farm Bill, the expanded program is referred to as the 

Rural Energy for America Program (REAP), which continues the Agency’s assistance 

to the adoption of both renewable energy systems and energy efficiency improvements through Federal Government loan guarantees and grants. 

REAP has been operating since 2005 under 7 CFR part 4280, subpart B, and, 

since the 2008 Farm Bill, through a series of Federal Register notices implementing 

the provisions in the 2008 Farm Bill for RES feasibility studies, energy audits, and 

renewable energy development assistance. For the RES feasibility studies, these notices were published on May 26, 2009 (74 FR 24769) and August 6, 2010 (75 FR 

47525). 

A Notice of Solicitation of Applications (NOSA) soliciting applications for about 

$2.2 million in grants for Energy Audits and Renewable Energy Development Assistance was published in the Federal Register on March 11, 2009. A NOSA for the 

599

remaining portion of the $60 million available for FY 2009 was published in the 

Federal Register on May 26, 2009. This funding was used for guaranteed loans and 

grants for a wide range of energy efficiency improvements and renewable energy 

systems and feasibility studies. 

The Agency published a NOSA to solicit applications for the purchase of renewable energy systems and to make energy efficiency improvements in the Federal 

Register on April 26, 2010. A separate Notice of Funding Availability (NOFA) for 

$2.4 million in funding to conduct Energy Audits and Renewable Energy Development Assistance was published in the Federal Register on May 27, 2010. 

An Interim Rule was published on April 14, 2011. The Interim Rule established 

a consolidated REAP program by including each part of the program in a single subpart. The Agency also published on April 14, 2011, a NOFA announcing the availability of $70 million in mandatory budget authority for FY2011 grants and guaranteed loans for renewable energy systems (including flexible fuel pumps) and energy 

efficiency improvements. A NOFA announced an additional $5 million in REAP discretionary budget authority is pending.

Flex Fuel Infrastructure Project

The Rural Business and Cooperative Service (RBS) launched the FY11 REAP program making Flexible Fuel Pumps Eligible for funding through an annual notice of 

funding availability (NOFA). Dispensers, tanks, components and labor are eligible 

project costs. The application window closed for energy programs on June 15th and 

for feasibility support on June 30th. 

The purpose of this effort is to support the investment, and infrastructure necessary to implement a nationwide biofuels industry. The scope of the project is to 

establish the necessary infrastructure for ethanol fuel by supporting the development and deployment of flex fuel pumps to meet increasing demand.

Anaerobic Digesters/Dairy Innovation Center Initiative

The Anaerobic Digesters Project Team has, with the help of EPA’s AgStar, developed a complete list of USDA programs that can be used to support the Dairy MOU 

Agreement. 

The Anaerobic Digester team is currently reviewing Renewable Energy System 

applications and Feasibility grant applications under REAP and awards should be 

delivered in the coming months. The purpose of this project is to embark on a campaign to promote the development of anaerobic digesters on dairy farms. The scope 

of the project is to focus on applying REAP funding for anaerobic digesters and digester feasibility studies to fulfill the 2009 Memorandum of Understanding (MOU) 

between Dairy Innovation Center and USDA. 

4. Purpose/Goals 

The purpose of the renewable energy system and energy efficiency improvements 

portion of the program is to provide financial assistance, in the form of loan guarantees and grants, to agricultural producers and rural small businesses to purchase 

and install renewable energy systems and make energy-efficiency improvements. 

REAP funds can be used for renewable energy systems including wind, solar, biomass, geothermal sources, or that produce hydrogen from biomass or water using 

renewable energy, and ocean and hydroelectric source technologies. Energy-efficiency projects typically involve installing or upgrading equipment to significantly 

reduce energy use. 

The purpose of the Energy Audits, and Renewable Energy Development Assistance portion of REAP is to provide financial assistance to such entities as units of 

state, tribal, and local governments and land-grant colleges and universities, among 

others, in the form of grants, to assist agricultural producers and rural small businesses to become more energy efficient; and to use renewable energy technologies 

and resources. 

The purpose of the Feasibility Studies portion of REAP is to provide assistance, 

in the form of grants, to an agricultural producer or rural small business to conduct 

a feasibility study for a project for which assistance may be provided under 

REAP.The program also supports Presidential Energy Independence and Security 

Goals:

» To Develop and Secure America’s Energy Supplies

» To Provide Consumers with Choices to Reduce Costs and Save Energy, and

» To Innovate Our Way to a Clean Energy Future

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5. Success in Meeting Programmatic Purpose/Goals 

Energy Division, Energy Investments, Fiscal Years 2003–10, with Performance Measures 

7/14/2011

Fiscal 

Year Projects 

Guaranteed 

Loans Only 

(millions) 

Combination 

Guaranteed 

Loans and 

Grants

(millions) 

Grant 

Only

(millions) 

Jobs 

SavedCreated Businesses Assisted 

Energy 

Saved/Generated (1,000 

kWh) 

Btu

Equivalent * 

(1,000 Btu) 

GHG

Reduced ** 

(metric tons 

of CO2) 

2003 114 $21.2 736 108 974,320 3,324,517 979,4082004 163 $22.7 411 186 503,645 1,718,507 642,5992005 158 $10.1 $22.2 289 103 589,771 2,012,381 611,4552006 412 $24.2 $21.2 1,357 285 997,133 3,402,359 1,303,9512007 436 $47.5 $18.1 $10.8 2,122 331 1,956,390 6,675,479 1,968,5252008 764 $0 $30.2 $19.6 1,797 537 2,438,378 8,320,092 2,642,6652009 1,557 $8.5 $76.8 $26.6 5,894 2,922 1,407,832 4,803,523 1,589,5702010 2,400 $9.7 $98.4 $51.1 2,311 5,107 2,958,404 9,508,310 3,255,490

Totals 6,004 $99.9 $223.5 $196.0 14,917 9,579 11,825,872 39,765,167 12,993,664

* 1 kWh = 3,412.1416 Btu. ** No CO2 was sequestered with these activities. 

6. Annual Budget Authority (FY 2002–FY 2011) ($ in Millions) 

Funding Levels: The 2008 Farm Bill provides mandatory allocations of $55 million for FY 2009, $60 million for FY 2010, and $70 million for FYs 2011 and 

2012. The 2008 Farm Bill also authorizes additional discretionary funds of up to $25 million per year, from FY 2009 through 2012. The 2010 Appropriation Act provided $39 million in funding for grants and loan guarantees in addition to the $60 million of farm bill mandatory funding. 

Funds Available in FY 2011: $70 million in mandatory authority 

$5 million in discretionary authority 

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7. Annual Outlays (FY 2002–FY 2011) ($ in Millions) 

2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Target 

$16,416,000 $16,821,000 $26,685,000 $59,578,000 $76,000,000

Note: Actual disbursements percentages based on obligation. 

8. Annual Delivery Cost (FY 2002–FY 2011) 

Business and Cooperative Programs 

Full Cost by Department Strategic Goal 

Strategic Goal: Assist Rural Communities to Create Prosperity so They Are Self-Sustaining, Repopulating and Economically Thriving. 

Program Items 2007 Amount ($000) 2008 Amount ($000) 2009 Amount ($000) 2010 Amount ($000) 2011 Amount ($000) 

Rural Energy for America Loans and Grants

Program Level 2 $49,806 $333,644 $524,664 $66,238 $7,877

Budget Authority 35,748 60,000 128,130 39,325 4,990Administrative Costs (Direct) 1,127 1,172

Administrative Costs (Indirect) 2,897 3,014

S&E 6,931 8,999 9,782

Total Costs 42,679 68,999 137,912 43,349 9,176FTEs 62 80 84 34 34

Performance measure: 

mKWH produced (in Millions) 

Target: 680 1,725 3,029 1,183 148Cost per Measure (unit cost) 62.76 40.00 45.53 36.64 62.00

Rural Energy for America Loans and Grants—Mandatory 

Program Level 2 $93,088 $109,200

Budget Authority 56,959 70,000Administrative Costs (Direct) 1,690 1,758

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Program Items 2007 Amount ($000) 2008 Amount ($000) 2009 Amount ($000) 2010 Amount ($000) 2011 Amount ($000) 

Administrative Costs (Indirect) 4,346 4,521

Total Costs 62,995 76,279

2Guaranteed Renewable Energy Loans and Grants funding contingent on farm bill for FY 2009. 

Notes: These numbers are consistent with the published ‘‘Full Cost by Secretary’s Strategic Priorities’’ section of the Explanatory Notes for 

Fiscal Years 2009 through 2012 President’s Budget submissions. In the table above, Fiscal Years 2007 through 2010 amounts are actual; Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President’s Budget submission. 

603

9. Eligibility Criteria 

Under REAP, there are applicant eligibility and project eligibility criteria for each 

of the grant programs, while there are borrower eligibility, lender eligibility, and 

project eligibility for the guaranteed loan program.

Renewable Energy System or Energy Efficiency Improvement Grant

Applicant Eligibility. As required by the authorizing statute, to receive a Renewable Energy System or Energy Efficiency Improvement Grant under this subpart, 

an applicant must be an agricultural producer or rural small business. 

Project Eligibility. For a renewable energy system or energy efficiency improvement project to be eligible to receive a RES or EEI grant under this subpart, the 

proposed project must meet the following criteria, as applicable:

• The project must be for the purchase of a renewable energy system or to make 

energy efficiency improvements. Energy efficiency improvements to existing renewable energy systems are eligible energy efficiency improvement projects.

• The project must be for a pre-commercial or commercially available, and 

replicable technology.

• The project must have technical merit.

• The facility for which the project is being proposed must be located in a rural 

area in a state if the type of applicant is a rural small business, or in a rural 

or non-rural area in a state if the type of applicant is an agricultural producer. 

If the agricultural producer’s facility is in a non-rural area, then the application 

can only be for renewable energy systems or energy efficiency improvements on 

integral components of or that are directly related to the facility, such as 

vertically integrated operations, and are part of and co-located with the agriculture production operation.

• The applicant must have a place of business in a state.

• The applicant must be the owner of the project and control the revenues and 

expenses of the project, including operation and maintenance. A third-party 

under contract to the owner may be used to control revenues and expenses and 

manage the operation and/or maintenance of the project.

• Sites must be controlled by the agricultural producer or rural small business 

for the financing term of any associated Federal loans or loan guarantees.

• Satisfactory sources of revenue in an amount sufficient to provide for the operation, management, maintenance, and debt service of the project must be available for the life of the project.

• For the purposes of this subpart, only hydropower projects with a rated power 

of 30 megawatts or less are eligible. The Agency refers to these hydropower 

sources as ‘‘small hydropower,’’ which includes hydropower projects commonly 

referred to as ‘‘micro-hydropower’’ and ‘‘mini-hydropower.’’

• The project has demonstrated technical feasibility.

In addition to these requirements, no renewable energy system or energy efficiency improvement, or portion thereof, can be used for any residential purpose, including any residential portion of a farm, ranch, agricultural facility, or rural small 

business. However, an applicant may apply for funding for the installation of a second meter or provide certification in the application that any excess power generated by the renewable energy system will be sold to the grid and will not be used 

by the applicant for residential purposes.

Renewable Energy System or Energy Efficiency Improvement Guaranteed Loan

Borrower Eligibility. To receive a Renewable Energy System or Energy Efficiency 

Improvement Guaranteed Loan, a borrower must meet the same requirements as 

for the RES/EEI grant program. 

Project Eligibility. The requirements are the same as for RES/EEI grants except 

that guaranteed loan funds may be used for necessary capital improvements to an 

existing renewable energy system. In addition, the grant provision concerning residential purposes does not apply. 

Lender Eligibility. An eligible lender is any Federal or state chartered bank, Farm 

Credit Bank, other Farm Credit System institution with direct lending authority, 

Bank for Cooperatives, or Savings and Loan Association. These entities must be 

subject to credit examination and supervision by either an agency of the United 

States or a state. Eligible lenders may also include credit unions provided, they are 

subject to credit examination and supervision by either the National Credit Union 

Administration or a state agency, and insurance companies provided they are reguVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00615 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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lated by a state or national insurance regulatory agency. Eligible lenders include the 

National Rural Utilities Cooperative Finance Corporation.

Renewable Energy System Feasibility Study Grants

Applicant Eligibility. As required by the authorizing statute, to be eligible for a 

renewable energy system feasibility study grant, the applicant must be an agricultural producer or a rural small business. In addition, the Interim Rule requires the 

applicant to be the prospective owner of the renewable energy system for which the 

feasibility study grant is sought. 

Project Eligibility. Only renewable energy system projects that meet the requirements specified in this section are eligible for feasibility study grants under this 

subpart. The project for which the feasibility study grant is sought shall:

• Be for the purchase, installation, expansion, or other energy-related improvement of a renewable energy system located in a state;

• Be for a facility located in a rural area if the applicant is a rural small business, 

or in a rural or non-rural area if the applicant is an agricultural producer. If 

the agricultural producer’s facility is in a non-rural area, then the feasibility 

study can only be for a renewable energy system on integral components of or 

directly related to the facility, such as vertically integrated operations, and are 

part of and co-located with the agriculture production operation;

• Be for technology that is pre-commercial or commercially available, and that is 

replicable;

• Not have had a feasibility study already completed for it with Federal and/or 

state assistance; and

• The applicant has a place of business in a state.

Energy Audit and Renewable Energy Development Assistance Grants

Applicant Eligibility. To be eligible for an energy audit grant or a renewable energy development assistance grant, the applicant must meet each of the following 

criteria:

• The applicant must be, as required by the authorizing statute, one of the following:

» A unit of state, tribal, or local government;

» A land-grant college or university, or other institution of higher education;

» A rural electric cooperative;

» A public power entity; or

» An instrumentality of a state, tribal, or local government.

• The applicant must have sufficient capacity to perform the energy audit or renewable energy development assistance activities proposed in the application to 

ensure success. The Agency will make this assessment based on the information 

provided in the application.

• Each applicant must have, or obtain, the legal authority necessary to carry out 

the purpose of the grant.

Project Eligibility. To be eligible for an energy audit or a renewable energy development assistance grant, the grant funds for a project must be used by the grant 

recipient to assist agricultural producers or rural small businesses located in a state 

in one or both of the purposes specified in paragraphs (a) and (b), and must also 

comply with paragraphs (c) through (e), and, if applicable, paragraph (f).

(a) Grant funds may be used to conduct and promote energy audits that meet 

the requirements of the energy audit as defined in this subpart.

(b) Grant funds may be used to conduct and promote renewable energy development assistance by providing to agricultural producers and rural small businesses recommendations and information on how to improve the energy efficiency of their operations and to use renewable energy technologies and resources in their operations.

(c) Energy audit and renewable energy development assistance can be provided 

only to a facility located in a rural area unless the owner of such facility is an 

agricultural producer. If the facility is owned by an agricultural producer, the 

facility for which such services are being provided may be located in either a 

rural or non-rural area. If the agricultural producer’s facility is in a non-rural 

area, then the energy audit or renewable energy development assistance can 

only be for a renewable energy system or energy efficiency improvement on integral components of or directly related to the facility, such as vertically inteVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00616 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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grated operations, and are part of and co-located with the agriculture production operation.

(d) The energy audit or renewable energy development assistance must be provided to a recipient in a state.

(e) The applicant must have a place of business in a state.

(f) For the purposes of this subpart, only small hydropower projects are eligible 

for energy audits and renewable energy development assistance. Per consultation with the U.S. Department of Energy, the Agency is defining small hydropower as having a rated power of 30 megawatts or less, which includes hydropower projects commonly referred to as ‘‘micro-hydropower’’ and ‘‘mini-hydropower.’’

10. Utilization (Participation) Data 

Since its inception, utilization of REAP has grown each year, except in 2008 when 

fewer funds were made available to the program. Program utilization and growth 

are illustrated in the following figures and table.

REAP Utilization—Fiscal Years 2003–2010

Fiscal 

Year Projects Guaranteed Loans Only 

Combinations

Grants and

Guaranteed 

Loans 

Grant Only Grant

Totals 

2003 114 $21,707,233 $21,707,347

2004 163 $22,692,325 $22,692,488

2005 158 $10,100,000 $22,237,267 $32,337,425

2006 412 $24,158,882 $21,209,435 $45,368,729

2007 436 $47,500,000 $18,114,430 $10,782,434 $76,397,300

2008 764 $0 $30,172,387 $19,633,418 $49,806,569

2009 1,557 $8,451,638 $76,782,101 $26,625,502 $111,860,797

2010 2,400 $9,675,613 $98,395,192 $51,117,265 $159,190,470

Total 6,004 $99,886,133 $223,464,110 $196,004,879 $519,361,125

Note: All numbers in this table represent Program Level. 

11. Duplication or Overlap with Other Programs 

There are four other programs within USDA under which certain types of energy 

projects may be financed. These are the Value-Added Producer Grant (VAPG) program, Community Facilities, Business and Industry Program, and the Environmental Quality Incentives Program (EQIP). 

The project eligibility category related to renewable energy under the VAPG program was set by the 2008 Farm Bill and states that a Value-Added Agricultural 

Product is ‘‘a source of farm- or ranch-based renewable energy, including E85 fuel.’’ 

Thus, the VAPG can provide funds to a limited set of energy-related projects—where 

an agricultural commodity is used to generate renewable energy on a farm or ranch 

owned or leased by the independent producer applicant that produces the agricultural commodity. On-farm generation of energy from wind, solar, geothermal, or 

hydro sources are not eligible for VAPG. Because of the differences in eligible entities, there is little overlap with the Community Facility program. 

The Business and Industry (B&I) Program provides guaranteed loans to a wide 

range of projects, including energy projects. There have been a number of projects 

financed under the B&I Program that could have been financed under REAP. 

While NRCS also offers energy audits through the EQIP, the agencies have entered into an agreement to avoid duplication by cross-checking the locations and recipients of energy audits. 

Beyond these few programs, REAP does not overlap or duplicate of any other 

USDA program. The Department of Energy’s Energy Efficiency and Renewable Energy program offers financial assistance for biorefineries, geothermal technologies, 

hydrogen technologies, solar, wind, and hydropower. The focus of these programs is 

mainly on research and development for these technologies (e.g., to improve the efficiency of power generated through wind). With regard to biorefineries, USDA/RBS 

through its guaranteed loan program has co-funded several biorefinery projects that 

use DOE grant funds, however these programs work in a complementary manner 

to provide support for this nascent industry. 

606

12. Waste, Fraud and Abuse 

No Office of Inspector (OIG) or Government Accountability Office (GAO) audit of 

the program was conducted in the past 5 years. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Biomass Research and Development Initiative Program (BRDI). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

Section 9001(a) of the Food, Conservation, and Energy Act of 2008 (FCEA) (Pub. 

L. 110–246), re-authorized the Biomass Research and Development Initiative 

(BRDI) competitive grants program by amending section 9008 of the Farm Security, 

and Rural Investment Act of 2002 (2002 Farm Bill), as amended, (Pub. L. 107–171) 

(7 U.S.C. 8108). Collaboration between DOE and USDA on BRDI is directed under 

section 9008(e)(1) of the 2002 Farm Bill, as amended. 

4. Purpose/Goals 

Both DOE and USDA have been given responsibility to support the development 

of a biomass-based industry in the United States. The objectives of this responsibility are specified in section 9008(e) of FSRIA, as amended, which requires the development of: (a) technologies and processes necessary for abundant commercial production of biofuels at prices competitive with fossil fuels; (b) high-value bio-based 

products to enhance the economic viability of biofuels and biopower, to serve as substitutes for petroleum-based feedstocks and products, and to enhance the value of 

coproducts produced using the technologies and processes; (c) a diversity of economically sustainable domestic sources of renewable biomass for conversion to biofuels, 

bioenergy, and bio-based products; and (d) use of waste streams to reduce environmental footprint or impact, niche, opportunity to improve economics of conversion 

processes and enhance the economic viability of the production facility. The 2002 

Farm Bill then stipulates several programmatic requirements that are intended to 

help ensure that goals (a)–(d) above are accomplished. These requirements include:

• Distribution of funding among three technical areas (minimum 15% of funds per 

area):

» Feedstock Development

» Biofuels and Biobased Product Development

» Biofuels Development Analysis

• Cost Share: 20% of total project costs for Research and Development and 50% 

for Demonstration projects

• Multi-institution and multi-disciplinary consortia awards

• Geographic distribution of awards 

5. Success in Meeting Programmatic Purpose/Goals 

USDA has executed the BRDI Program as prescribed by 2002 Farm Bill and subsequently the Program is meeting the research, development, and demonstration 

needs of the emerging market. The BRDI Program has always maintained the minimum 15% distribution of program funds across the three legislated technical areas 

as shown in Table 1.

Table 1. Funding Distribution by Technical Area FY 2003–2010

Technical Area Distribution Distribution % Distribution 

Feedstock Development $35,625,430 27%

Biofuels and Bioproduct Development $73,646,642 56%

Biofuels Development Analysis $23,241,965 18%

The trend in funding distribution, as shown in Figure 1 is toward a convergence 

of emphasis on both feedstock development and appropriate conversion technologies. 

BRDI has the flexibility to allow the balance of investment to shift toward technical 

607

challenges of increasing importance in the market. The availability and 

densification of biomass is key to the growing bioeconomy. 

Figure 1. Trends in Technical Area Investment

The BRDI Program has also been effective in developing multi-institutional and 

multi-disciplinary consortia awards, as required in the legislation, as a means of increasing technology transfer and commercialization. Over its 8 year history, BRDI 

awards have averaged over four collaborating organizations per award. In FY 2010, 

BRDI awards averaged over six collaborating organizations as the Program now allows larger and more comprehensive grant opportunities. The Program also supports a diversity of types of organizations in terms of project leaders and project collaborators. Table 2 demonstrates that while BRDI project leadership is dominated 

by Academia and Small Business, the Program fosters balanced collaboration among 

different types of organizations, indicating a high level of interdisciplinary work.

Table 2. Project Lead and Collaborator Type Distribution (2002–2010) 

Project Lead 

Type * 

Collaborator 

Type †

NGO 12% 17%

Academia 43% 28%

Small Business 29% 27%

Industry 9% 11%

Federal 7% 13%

State 1% 4%

* distribution based on funding amount. 

† distribution based on the count of collaborator types. 

BRDI awardees have contributed 32% of total program funding as cost-share since 

the program’s inception in 2002. BRDI program funds have been used to leverage 

over $61 M over the life of the Program. 

Program awards have also been geographically diverse. Each year the Program 

touches more than 18 states and in FY 2010 there were three states per award. The 

Program is beginning to be effective in creating extremely dynamic regional and national consortia to address our nation’s energy demand. Figure 2 illustrates the geographic distribution of BRDI awards. 


1122027.eps
608

Figure 2. BRDI Geographic Distribution FY 2002–2010

Biomass Research and Development Initiative 

Geographical Distribution of Grant Awards FY 2002–2010

Map created by Gregory Sixt, USDA–NIFA.

Since FY 2009, USDA has placed increased emphasis on technology commercialization by offering larger and more comprehensive grants that are intended to 

allow awardees to address challenges throughout the life-cycle of their technologies. 

In the early years of the BRDI Program, grants were more focused and intended 

to address specific technical challenges and new product development issues. 

The Program now requires awardees to develop new products and technologies in 

the context of the supply chain and target markets; therefore, projects must address 

all three technical areas. Additionally, the program has adopted an overarching 

theme of sustainability, requiring awardees to address the environmental, economic 

and social implications of the technology throughout its life cycle. The intent of larger, comprehensive projects is to move technologies to commercialization more quickly, and to ensure the technologies have a positive impact on markets, the environment, and rural development.

Examples of successful projects:

Adding Value to Commercial Polymers through the Incorporation of Biomass Derived Chemistries (Iowa Corn Promotion Board)

• The BRDI Program supported projects to develop isosorbide-based polymers in 

FY 2002 and again in FY 2006.

• The Iowa Corn Promotion Board has been developing this technology not only 

in collaboration with USDA, but also with DOE, General Electric, and others.

• Several major end-users and customers are working to commercialize the technology and have had success in developing isosorbide as a replacement for 

bisphenol A, in the epoxy market, and as an additive for PET hot fill bottles.

Biomass Gasification: A Comprehensive Demonstration of a CommunityScale Biomass Energy System (University of Minnesota—Morris)

• The project team constructed the Morris Gasification Plant to generate combined heat and power for the University and the Morris community using locally sourced biomass.

• The project overcame significant technological barriers in testing and selecting 

the appropriate feedstocks to power the community. The project tested corn stover, corn cobs, prairie grass, soybean residue, wheat straw, and wood each with 

appropriate densification techniques. Corn cobs were determined to be the most 

viable and sustainable feedstock for the Morris community.


1122028.eps
609

• Emissions permits and appropriate densification technology will be secured by 

the Fall of 2011 to initiate ongoing gasification plant operation.

• The University and its partners developed an extensive outreach and education 

component to the project, which includes a web-portal that reports real-time facility performance monitoring so that students and the community can access 

information and understand their energy usage on a daily basis. The project 

also generated an undergraduate Renewable Energy curriculum, three K–12 

modules, 14 student research projects, 32 conference presentations, and over 

200 community and regional presentations.

Evaluation of the feasibility of sustainably achieving President’s Biofuel 

production goals (University of California—Santa Barbara)

• University of California-Santa Barbara is designing a dynamic tool to evaluate 

the feasibility of meeting renewable fuel production goals in a sustainable manner.

• Tool embodies an innovative combination of scenario development, system dynamics modeling, Geographic Information System (GIS), Life Cycle Costing 

(LCC) and Life Cycle Assessment (LCA).

• Results have been used to inform the United Nations Environmental Program 

(UNEP), International Panel for Sustainable Resources, Biofuel Working Group 

report, ‘‘Towards Sustainable Production and Use of Resources: Assessing 

Biofuels.’’

» http://www.unep.fr/scp/rpanel/pdf/assessinglbiofuelslfulllreport.pdf

» http://www.unep.org/Documents.Multilingual/Default.asp?

DocumentID=599&ArticleID=6347&l=en&t=long

(in thousands of dollars) 

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

6. Annual Budget Authority * 20,000 28,000 30,000

7. Annual Outlays

8. Annual Delivery Cost 

* In addition to mandatory funding, $35M/yr is authorized for appropriation FY 2008–2012 

Note: This program has only been operated in its current form starting in FY 

2009. 

9. Eligibility Criteria 

Eligible entities per section 9008(e)(5) of the 2008 Farm Bill, as amended (7 

U.S.C. 8108(e)(5)) include: (A) an institution of higher education; (B) a National Laboratory; (C) a Federal research agency; (D) a state research agency; (E) a private 

sector entity; (F) a nonprofit organization; or (G) a consortium of two or more entities described in subparagraphs (A) through (F). 

10. Utilization (Participation) Data 

Since 2003 the BRDI Program has been one of the most competitive Federal grant 

programs. The annual success rate (of applications funded) has always been less 

than 5%, In fact, in FY 2009 USDA and DOE received over 800 pre-applications and 

made nine awards; a success rate of 1%. In FY 2010, the Program success rate remained low at 1.6%. While the low success rate indicates that there is tremendous 

demand for Biomass energy research, development, and demonstration, the competition through NIFA’s rigorous peer-review process has ensured projects of extraordinary quality. 

11. Duplication or Overlap with Other Programs 

There is no duplication or overlap with other programs. BRDI supports projects 

in the applied/developmental and demonstration phases of development. 

12. Waste, Fraud and Abuse 

There have been no Office of Inspector General or Government Accountability Office audits of the program conducted on the Biomass Research and Development Initiative Program in the past 5 years. 

13. Effect of Administrative PAYGO 

None. 

610

1. Program Name 

Feedstock Flexibility Program (FFP—Section 9010). 

2. Subprograms/Department Initiatives 

The Feedstock Flexibility (or ‘‘sugar-to-ethanol’’) Program (FFP) was first authorized under the 2008 Farm Bill. USDA has not implemented this program because 

the sugar market conditions required for its operation have not yet occurred. FFP 

requires the Commodity Credit Corporation (CCC) to purchase domestic sugar when 

U.S. supplies are large and forfeitures are threatened under the sugar price support 

loan program. Under the FFP, CCC will sell the surplus sugar to bioenergy producers for use as a fuel feedstock. However, the U.S. sugar market has been undersupplied since the program was authorized. Domestic sugar prices have been significantly above the program support level and there has been no threat of price support loan forfeitures, preempting program operation. The FFP language also includes a prohibition on the sale of CCC sugar for human consumption. 

3. Brief History 

CCC operated a sugar for ethanol program in the early 2000s as one of many outlets for the million-ton CCC sugar inventory acquired when the sugar market 

crashed in 2000. FSA sold 10,000 tons of sugar to the highest-bidding ethanol producers in multiple auctions. All of the purchasers mixed sugar into corn prior to fermentation. Ethanol producers only bid an average of 4¢ per pound for the sugar, 

which the CCC had acquired at an average of 22¢ per pound. These ethanol producers bid less than the energy value of the sugar, citing the experimental nature 

of the process, the lack of a guaranteed future supply, the requirement of a material 

handling investment and other factors. In addition, the CCC sold over a hundred 

thousand tons for human consumption in 2003, when prices were at higher levels, 

at almost no loss to the CCC. (Sales for human consumption are no longer an option 

under the FFP language, as noted above.) 

4. Purpose/Goals 

The purpose of the FFP is to prevent the accumulation of government-held stocks 

of sugar that impede price recovery. This was the situation after the sugar market 

crash of 2000, when ending stocks were over 20 percent of annual use, with CCC 

owning more than half of that total. Normal carryover is 14–15 percent of annual 

use. 

5. Success in Meeting Programmatic Purpose/Goals 

Not applicable, as there has been no need to activate the program. 

6. Annual Budget Authority (FY 2002–FY 2011) ($ in Millions) 

Not applicable. 

7. Annual Outlays (FY 2002–FY 2011) ($ in Millions) 

Outlays are zero over the FY 2002–FY 2011 time horizon, for the reasons discussed above. 

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in Millions) 

Delivery costs are zero over the FY 2002–FY 2011 time horizon, for the reasons 

discussed above. 

9. Eligibility Criteria 

The FFP regulation is under development. 

10. Utilization (Participation) Data 

The FFP has not been implemented. 

11. Duplication or Overlap with Other Programs 

No overlap anticipated. 

12. Waste, Fraud and Abuse 

The FFP has not been implemented. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Biomass Crop Assistance Program (BCAP—Section 9011). 

611

2. Subprograms/Department Initiatives 

BCAP has two components:

• Establishment and annual payments for production of new biomass crops 

(Project Areas); and

• Matching payments for the collection, harvest, storage and transportation 

(CHST) of existing biomass. 

3. Brief History 

BCAP was authorized by the 2008 Farm Bill. On June 11, 2009, a Notice of Funds 

Availability (NOFA) was published to make available matching payments for the 

collection, harvest, storage, and transportation of eligible material for conversion to 

bioenergy at biomass conversion facilities. The 2008 Farm Bill provides ‘‘such sums 

as necessary’’ for BCAP. However, subsequent appropriation acts have capped the 

amount of funding available. The Department of Defense and Full-Year Continuing 

Appropriations Act of 2011, enacted on April 14, 2011, limits funding for BCAP to 

$112 million in FY 2011. 

In February 2010, a proposed rule was published in the Federal Register which 

also terminated the NOFA. Over 24,000 comments were received. 

On October 27, 2010, a final rule was published and by January 2011, three qualified biomass conversion facilities were approved and matching payments for herbaceous materials were authorized. 

For the project area component of BCAP, proposals could be submitted beginning 

October 27, 2011. With the enactment of funding limitations on April 14, 2011, FSA 

announced on April 20, 2011 that project proposals could be submitted no later than 

May 27, 2011, to be considered for FY 2011 funding. Over 40 project area proposals 

were received by the deadline. The proposals outlined projects that would support 

the establishment and production of 1.5 million acres of dedicated energy crops requesting more than $1 billion. The range of feedstock proposed included camelina, 

algae, short rotation woody crops, grasses, energy cane, kenaf, and sweet sorghum. 

The first approved project area is located in a thirty-nine county area in central 

and western Missouri and eastern Kansas and supports the establishment of mixtures of perennial native grasses and forbs, such as Switchgrass, Big Bluestem, Illinois Bundleflower and Purple Prairie Clover. Additionally, the project allows enrollment of existing suitable stands of native grasses, legumes and forbs; existing native 

grass stands can be located on expired Conservation Reserve Program (CRP) fields. 

The target enrollment for 2011 is 20,000 acres of cropland and other agricultural 

land with targeted crops within the approved area surrounding the biomass conversion facility. When fully enrolled, this project area may have up to 50,000 acres, producing roughly 3 tons of biomass per acre per year, or a total of 150,000 tons per 

year from land enrolled in BCAP contracts. FSA has allocated about $15 million for 

implementation of this project area in FY 2011. 

Other project areas will support production of the perennial Miscanthus giganteus

(Giant Miscanthus) for energy biomass. Only the planting of rhizomes of the ‘‘Illinois Clone,’’ a sterile cultivar of Giant Miscanthus, is authorized for these project 

areas. 

One of the projects is located within Clay, Craighead, Greene, Jackson, Lawrence, 

Mississippi, Poinsett, and Randolph counties in the State of Arkansas. FSA has allocated about $5.2 million for implementation of this project area in FY 2011. The target for enrollment in FY 2011 is 5,588 acres. This biomass may be used to produce 

pellets that may be co-fired. 

Another project area is located within Audrain, Boone, Callaway, Cole, Cooper, 

Howard, Moniteau, Monroe, and Randolph counties in the State of Missouri. FSA 

has allocated about $3.5 million for implementation of this project area in FY 2011. 

The target for enrollment in FY 2011 is 3,000 acres. 

Another project area is located within Barry, Christian, Dade, Jasper, Lawrence, 

Newton, and Stone counties in the State of Missouri. FSA has allocated about $5.9 

million for implementation of this project area in FY 2011. The target for enrollment 

in FY 2011 is 5,250 acres. 

The remaining project area is located within Ashtabula, Geauga, Lake, and Trumbull counties in the State of Ohio, and Crawford, Erie, and Mercer counties in the 

State of Pennsylvania. FSA has allocated about $5.7 million for implementation of 

this project area in FY 2011. The target for enrollment in FY 2011 is 5,344 acres. 

4. Purpose/Goals 

BCAP provides financial assistance to owners and operators of agricultural and 

nonindustrial private forestland to establish, produce, and deliver biomass feedstocks under two types of assistance:

612

• Establishment and annual payments to produce eligible biomass crops on contract acres within approved BCAP project areas, and

• Matching payments for the delivery of eligible material to qualified biomass 

conversion facilities by eligible material owners. Qualified biomass conversion 

facilities produce heat, power, biobased products, or advanced biofuels from biomass feedstocks. 

5. Success in Meeting Programmatic Purpose/Goals 

BCAP is the only energy program that is dedicated to the expansion of the diversity of cellulosic feedstock for commercial conversion. The program has demonstrated, through project area proposal submission and designations and matching 

payment distribution, that the demand for such diversity and feedstock support exists. 

BCAP made over $250 million in matching payments to eligible material owners 

in FY 2009 and FY 2010 for the supply of biomass to over 400 biomass conversion 

facilities for the generation of heat, power, biobased products and advanced biofuels 

under the NOFA. The biomass supply was predominantly woody materials. 

During FY 2011, about $2.65 million has been allocated to help support producers 

who supply herbaceous materials (corn crop residues) to three qualified biomass conversion facilities. Additionally, the allocation of $35 million for the designated five 

project areas, will support the establishment and production of up to 250,000 acres 

dedicated energy crops for conversion to an advanced biofuel. The remaining funding of about $75 million is expected to be allocated by September 30, 2011. 

BCAP has generated support and incentives for numerous biomass conversion facilities to enhance their bioenergy output, much of which has been accomplished 

through facility retrofits and entrepreneurial startups. Project area designations 

have strengthened numerous cooperatives and bioenergy startups and expanded the 

diversity of available long term feedstocks. 

The expansion of project area designations in FY 2011 may assist many states in 

meeting Renewable Electricity mandates. BCAP incentives for conversion to liquid 

biofuels have encouraged the submission of proposals for drop-in fuel production and 

various advanced biofuels.

613

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority for Farm Service Agency Conservation Programs 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Est. 

Biomass Crop Assistance Program 0 0 0 0 0 0 0 25,015 244,075 112,000

7. Annual Outlays (FY 2002–2011) 

Budget authority for CCC programs is based on obligations. Funds that are obligated in one fiscal year may not be disbursed until a succeeding fiscal year or fiscal years. 

FY 2002 Through FY 2011 Outlays for Farm Service Agency Conservation Programs 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Est. 

Biomass Crop Assistance Program 0 0 0 0 0 0 0 2,147 248,202 112,000

8. Annual Delivery Cost (FY 2002–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan:Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining, repopulating, and 

economically thriving. 

614

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsIncome Support and Disaster Assistance

Price Support and Marketing Assistance Loans 11,286,100 9,509,047 8,290,909 6,313,263 6,095,604Loan Deficiency Payments 173,751 6,036 148,553 191,647 36,565Direct Payments 3,957,175 4,821,206 4,176,795 4,898,085 4,950,410Countercyclical Payments 3,158,554 359,064 1,213,300 902,584 131,848ACRE Payments 0 0 0 0 446,633Milk Income Loss Contract Payments 157,850 2,153 769,900 181,527 173,000Tobacco Payments 955,495 954,817 1,130,095 954,091 960,000Other Direct Payments 25,695 29,768 84,375 103,432 80,504NAP Payments 126,951 73,989 40,700 98,745 116,873Crop Disaster Assistance 58,591 1,281 114,828

¥109 0

Livestock Indemnity Program 198 2 1,716 91,825 77,000

Emergency Livestock Assistance 664 25 1,926

¥403 0

Emergency Conservation Program 149,727 128,456 0 92,459 39,719

Biomass Crop Assistance 0 0 248,202 1 199,000

Emergency Forest Restoration Program 0 0 0 18,000Tree Assistance Program 1,973 1,010 68 90 0CCC Interest Expenditures 648,627 140,936 2,856 10,426 16,635Dairy Indemnity Program 181 144 651 162 200Emergency Forestry Conservation Program 6,302 12,717 7,854 8,297 9,291USDA Supplemental Assistance, appropriated 0 0 83,814 295,600 295,600FSA Disaster Assistance, appropriated 0 2,541,733 0 0 0Reforestation Pilot Program 0 794 794 800 800Agricultural Disaster Relief Trust Fund 0 0 6,000 1,573,278 1,926,134Aquaculture Grants (123317) 0 0 48,500 39,942 0Farm Storage Facility Loans 548 0 12,500 0 0

Administrative costs (direct) 776,465 683,795 694,980 744,303 753,934Indirect costs 47,548 234,633 226,905 242,967 246,299

Total Costs 21,532,395 19,501,606 17,058,019 16,991,214 16,574,049

615

FTEs 8,905 8,620 9,529 8,355 8,140

1 BCAP funding for Fiscal Year 2011 was subsequently capped at $112 million by the Department of Defense and Full-Year Continuing Appropriations Act of 2011, Public Law 112–10. 

9. Eligibility Criteria

Project Areas and ProducersProject areas are established based on proposals submitted to FSA by either a group of producers or an entity that converts biomass to 

heat, power, a biobased product or an advanced biofuel. 

Producers within a designated BCAP project area may apply to enroll land into the program and receive assistance to grow eligible biomass crops. Biomass must be established, produced and harvested or collected according to an approved conservation, forest stewardship, or 

equivalent plan to ensure that soil, water and other resource concerns are adequately addressed on the enrolled land.

Matching PaymentsMatching payments provide payments to eligible material owners at a rate of $1 for each $1 per dry ton paid by a qualified biomass conversion facility (BCF), in an amount up to $45 per dry ton. An eligible material owner may be a producer of an eligible crop or a person or 

entity with the legal right to collect or harvest eligible material. Matching payments may be made to eligible material owners for a maximum of 2 years. 

To qualify for a matching payment, the biomass must be an eligible material that also is collected or harvested directly from the land before transport to the facility, in accordance to an approved conservation or forest stewardship plan, and if woody biomass, must not have a 

previously existing market, and must also be a removal to reduce forest fire threats, disease or insect infestation, or to restore ecosystem health.

10. Utilization (Participation) Data

To date, three BCF’s have been qualified from the 141 BCF applications submitted for qualification. These three qualified BCF’s convert 

herbaceous materials. 

Approximately 105 eligible material owner applications for matching payments have been approved and more than $1.5 million in matching payments have been disbursed. FSA has allocated $2.65 million to the states where these eligible material suppliers are located. Of the 138 pending BCF applications to become qualified for matching payment purposes, a sample of 47 BCF applications provides evidence of an estimated quarterly supply rate of more than 1 million dry tons of woody biomass. The matching payment estimates for the approximate 1 million dry tons is over $45 million. As of May 27, 2011, project area sponsors have submitted 46 project area proposals:• Five of the project proposals have been reviewed and approved (see table below); and• Forty-one project proposals were forwarded from state FSA offices on June 24, 2011, and are under review at the National FSA office. 

616

Five project areas have been designated as follows:

Project Area 

Name Location 

Number 

of

Counties 

Eligible 

Crop 

Targeted 

FY 2011 

Acreage 

Enrollments 

Targeted 

Acreage 

Total 

Currently 

Enrolled 

Acreage 

Acreage 

Offers 

Pending 

Project Area 1 Kansas, Missouri 39 Warm season 

grasses.

20,000 50,000 1 7,500 7,000 to 8,000

Project Area 2 Arkansas 8 Giant 

Miscanthus.

5,588 50,000 (2) * 0

Project Area 3 Missouri 

(Columbia).

9 Giant 

Miscanthus.

3,000 50,000 (2) * 619

Project Area 4 Missouri (Aurora) 7 Giant 

Miscanthus.

5,250 50,000 (2) * 1,707

Project Area 5 Ohio, 

Pennsylvania.

7 Giant 

Miscanthus.

5,344 50,000 (2) * 219

Totals 3 66 39,182 250,000 7,500 10,545

1Sign up for Project Area 1 began on May 9, 2011 and acreage offers pending are undergoing the 

development of required conservation plans. 2Sign up for Project Areas 2 through 5 began on June 20, 2011 and acreage offers pending are 

undergoing the development of required conservation plans. 3Four counties in Project Areas 1 and 3 overlap: Boone, Callaway, Cooper, and Howard. 

The total number of acreage targeted for producer signup in the five Project 

Areas:

• 39,182 acres for FY 2011.

• 250,000 acres at full-production-sign up.

The estimated yield of biomass, at full project performance:

• Project Area 1 is 3 tons per acre, 150,000 tons annually; and

• Project Areas 2 through 5 is 10 to 12 tons per acre, 2.4 million tons annually. 

11. Duplication or Overlap with Other Programs 

BCAP complements other state and Federal programs that support biomass conversion facility infrastructure by supporting the production of crops and materials 

that these facilities convert. In addition, the program’s achievements help support 

the Renewable Fuel Standards Program by providing states with output to meet 

state renewable mandates and encourage renewable registrations. 

12. Waste, Fraud and Abuse 

Occasional cases of producer misconduct may have been identified and addressed 

through investigations; no current systemic waste, fraud, or abuse has been identified related to this program. 

The Office of Inspector General (OIG) in December 2010 provided the following 

recommendations in a Fast Report pursuant to the review of BCAP matching payments administered in FY 2009 and FY 2010 in the States of California, Maine, Alabama, and Missouri:

• Develop a program handbook setting forth policies and procedures governing 

program administration;

• Develop forms specifically tailored to facilitate day-to-day administration and 

capture relevant program data; and

• Develop a data system with applied edit checks and a designed structure to facilitate data validation, management reporting, and data analysis.

BCAP responded to these recommendations and provided the following adjustments to the program for FY 2011:

• Release of the 1–BCAP Handbook with a second amendment in May 2011;

• Development of the forms BCAP–10 and BCAP–11 which track the tracts and 

fields where harvest and collection occurs and conservation, forest stewardship 

or equivalent plans are required via technical service agreements with NRCS 

and a developing agreement with USFS and State Foresters; and

• A web based system was designed to automate the new forms, moving away 

from the previously used System 36 or Conservation, Reporting, and Evaluation 

System (CRES). 

13. Effect of Administrative PAYGO 

None. 

(617)

AGRICULTURAL PROGRAM AUDIT 

(EXAMINATION OF TITLE IV NUTRITION PROGRAMS) 

THURSDAY, JULY 21, 2011

SUBCOMMITTEE ON NUTRITION AND HORTICULTURE, 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON AGRICULTURE, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 10 a.m., in Room 

1300, Longworth House Office Building, Hon. Jean Schmidt [Chairwoman of the Subcommittee] presiding. 

Members present: Representatives Schmidt, King, Southerland, 

Lucas (ex officio), Baca, Pingree, Sablan, Peterson (ex officio), and 

McGovern. 

Staff present: Tamara Hinton, Brandon Lipps, Pam Miller, Mary 

Nowak, Matt Perin, Heather Vaughan, Liz Friedlander, Keith 

Jones, Lisa Shelton, John Konya, and Jamie Mitchell. 

OPENING STATEMENT OF HON. JEAN SCHMIDT, A 

REPRESENTATIVE IN CONGRESS FROM OHIO 

The CHAIRWOMAN. Good morning. Thank you all for being here 

today. 

I especially want to thank Ms. Audrey Rowe, the Administrator 

of the USDA’s Food and Nutrition Service, for joining us and enlightening me, and I look forward to a great working relationship. 

I also want to thank my good friend Ranking Member Baca in 

joining me in holding this hearing today. It is well known that a 

certain degree of comity and bipartisanship exists here on the Agriculture Committee, and I look forward to working with my friend 

as we go through this farm bill process. 

This hearing on nutrition programs in Title IV of the farm bill 

is part of a series of audits of farm programs. We are holding these 

audits to gather information and data on each of the programs we 

operate, and to give all the Committee Members a chance to learn 

more about how each program fits into the broader picture of farm 

policy. We will be looking at how programs use their funds, how 

effectively they serve their stakeholders, and whether there is duplication or waste that can be eliminated. 

These audits are very critical for every farm bill program, but 

perhaps nowhere more so than the nutrition title. The USDA’s 

Food and Nutrition Service is the agency charged with administering Title IV nutrition programs. Major programs they administer are the Supplemental Nutrition Assistance Program, commonly referred to as SNAP; the Emergency Food Assistance ProVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00629 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
618

gram, commonly referred to as TEFAP; the Commodity Supplemental Food Program, CSFP; the Fresh Fruit and Vegetable Program, FFVP; the Senior Farmers Market Nutrition Program, 

SFMNP; and the Food Distribution Program on Indian Reservations, FDPIR. FDPIR, if you want to call it that. 

Two weeks ago this Subcommittee heard from AMS and APHIS 

about how they operate Title X Specialty Crop Programs. I enjoyed 

the review of how the programs are being administered and operated today. Likewise, I look forward to hearing from FNS with a 

general snapshot of the spending of each program that they administer. We will study the financial aspects of these programs and 

consider whether or not the programs’ goals are being met and 

whether the programs are financially prudent. 

More than 75 percent of the Agriculture Committee’s budget goes 

to nutrition programs, which serve a broad range of people 

throughout our country. The largest of our nutrition programs is 

the SNAP Program. SNAP provides assistance to low-income 

households to supplement food budgets. Although it is administered by the USDA’s Food and Nutrition Service, each state has a 

great deal of flexibility in how the program is implemented. SNAP 

has become an integral part of our country’s overall social support 

system for families in need. It is, in fact, the fourth largest needstested program in our country. 

The size and scope of SNAP has dramatically increased over 

time. Participation in SNAP has risen by nearly 70 percent, from 

26 million in 2007 to more than 44 million as of April 2011, and 

I think there is a direct correlation with our economic recession 

and this dramatic growth, although there might be some other reasons. This increase is due to the economy, the stimulus bill, and 

less strict eligibility requirements. 

The SNAP Program is designed to adjust to the needs of our population, increasing when more people need food assistance and decreasing when the economy improves. However, this dramatic 

growth has strained our resources. The average monthly benefit 

was $226 in 2008. Today it is $289. That is a 27 percent increase. 

In total, we spent $33 billion on SNAP in 2007, but we are on pace 

to more than double that to more than $69 billion in Fiscal Year 

2011. Sixty-nine billion dollars is a substantial sum, and given our 

current budget situation, we have a responsibility to examine 

whether we can reduce the amount without compromising the integrity of the SNAP Program. 

I look forward to hearing Administrator Rowe’s testimony on the 

quality control system that FNS has in place to ensure accuracy in 

payments and target fraud. The program is there to help those 

truly in need, and it is unfortunate when abuses like this occur. I 

plan to look into the program more to see how we can stop abuse 

and fraud in the program. Of particular interest to me is how FNS 

works with other agencies in the Federal Government to monitor, 

investigate, conduct, and prosecute those traffickers. 

As I listen to our witness today, I encourage my fellow Members 

to consider how we can find savings in these programs while continuing to provide nutrition assistance to our families in need. 

619

Ms. Rowe, I look forward to your testimony, and I hope to learn 

how we can make our nutrition assistance program more effective 

and efficient. 

[The prepared statement of Mrs. Schmidt follows:]

PREPARED STATEMENT OF HON. JEAN SCHMIDT, A REPRESENTATIVE IN CONGRESS

FROM OHIO

Good morning, and thank you all for being here today. I especially want to thank 

Ms. Audrey Rowe, the Administrator of USDA’s Food and Nutrition Service, for joining us. 

I also want to thank my friend, Ranking Member Baca, for joining me in holding 

this hearing today. It is well known that a certain degree of comity or bipartisanship exists here on the Agriculture Committee and I look forward to working with 

my friend as we go through this farm bill process. 

This hearing on nutrition programs in Title IV of the farm bill is part of a series 

of audits of farm programs. 

We’re holding these audits to gather information and data on each of the programs we authorize, and to give all of the Committee Members a chance to learn 

more about how each program fits into the broader picture of farm policy. 

We will be looking at how programs use their funds, how effectively they serve 

their stakeholders, and whether there is duplication or waste that can be eliminated. 

These audits are critical for every farm bill program, but perhaps nowhere more 

so than the nutrition title. 

USDA’s Food and Nutrition Services is the agency charged with administering 

Title IV nutrition programs. 

The major programs they administer are the Supplemental Nutrition Assistance 

Program (SNAP), the Emergency Food Assistance Program (TEFAP), the Commodity Supplemental Food Program (CSFP) the Fresh Fruit and Vegetable Program 

(FFVP), the Senior Farmers Market Nutrition Program (SFMNP), and the Food Distribution Program on Indian Reservations (FDPIR). 

Two weeks ago this Subcommittee heard from AMS and APHIS about how they 

operate title X specialty crop programs. I enjoyed the review of how the programs 

are being administered and operated today. 

Likewise, I look forward to hearing from FNS with a general snapshot of the 

spending of each program that they administer. We will study the financial aspects 

of these programs and consider whether or not the programs’ goals are being met 

and whether the programs are financially prudent. 

More than 75 percent of the Agriculture Committee’s budget goes to nutrition programs, which serve a broad range of people throughout the country. 

The largest of our nutrition programs is the Supplemental Nutrition Assistance 

Program, or SNAP for short. 

SNAP provides assistance to low-income households to supplement food budgets. 

Although it is administered by USDA’s Food and Nutrition Service, each state has 

a great deal of flexibility in how the program is implemented. 

SNAP has become an integral part of our country’s overall social support system 

for families in need. It is, in fact, the fourth-largest needs-tested program in the 

country. 

The size and scope of SNAP has dramatically increased over time. Participation 

in SNAP has risen by nearly 70 percent—from 26 million in 2007 to more than 44 

million in April of 20 11. 

This increase is largely due to the economy, the stimulus bill, and less strict eligibility requirements. The SNAP program is designed to adjust to the needs of our 

population; increasing when more people need food assistance and decreasing when 

the economy improves. 

However, this dramatic growth has strained our resources. The average monthly 

benefit was $226 in FY 2008. Today it is $289. That’s a 27% increase. In total, we 

spent $33 billion on SNAP in FY 2007, but are on pace to more than double that 

to nearly $69 billion in FY 2011: $69 billion is a substantial sum, and given our 

current budget situation, we have a responsibility to examine whether we can reduce that amount without compromising the integrity of the SNAP program. 

I look forward to hearing Administrator Rowe’s testimony on the Quality Control 

system that FNS has in place to ensure accuracy in payments and target fraud. The 

program is there to help those truly in need, and it’s unfortunate when abuses like 

this occur. 

620

I plan to look into the program more to see how we can stop abuse and fraud 

of the program. Of particular interest to me is how FNS works with other agencies 

in the Federal Government to monitor, investigate, combat, and prosecute traffickers. 

As we listen to our witness today, I encourage my fellow Members to consider how 

we can find savings in these programs while continuing to provide nutrition assistance to families in need. 

Ms. Rowe, I look forward to your testimony, and I hope to learn how we can make 

our nutrition assistance more effective and efficient.

The CHAIRWOMAN. And with that, I will now turn to the Ranking 

Member, Mr. Baca, for opening remarks. 

OPENING STATEMENT OF HON. JOE BACA, A 

REPRESENTATIVE IN CONGRESS FROM CALIFORNIA 

Mr. BACA. Thank you very much, and good morning to all of you. 

And thank you, Chairwoman Schmidt, for holding this hearing. 

And thank you, Audrey Rowe, for being here this morning. I would 

also like to welcome our Chairman from the Agriculture Committee 

for being here this morning, Frank Lucas. 

As a legislator, a husband, a father, and a grandfather, the effectiveness of Federal nutrition programs is of the utmost importance 

to me. Throughout my years serving on the Agriculture Committee, 

I have worked to build a bipartisan record that links the importance of nutrition and health. 

In 2007, we held a hearing that demonstrated the importance of 

food stamp benefits to the overall health and long-term success of 

children. Then in the 2008 Farm Bill, we provided record funding 

for safety net programs like SNAP and TEFAP for food banks. We 

also worked to promote healthy eating by funding new pilot programs and expanding the Fresh Fruit and Vegetable Snack Program to all 50 states. 

In July of 2008, the Subcommittee heard testimony on the economic costs of poor nutrition in the United States. We learned that 

hunger costs our country $90 billion a year in lost work productivity. So we have to look at the balance of costs and benefits. 

We also learned that poor participation in nutrition programs 

means lost revenues for our local communities and counties. When 

people use the SNAP Program, money and sales tax goes right 

back to the community. With a record number of participants— up 

from 26 million to 44 million people—it is clear that this is a result 

of the economic situation that we are in right now. 

I know many of the individuals who are on the program don’t 

want to be on it. They want to be sustaining themselves. I know 

because I personally was on food stamps myself at one point. I 

know there are times when we have no choice; when you have to 

feed your family, and put food on the table. 

So we have established a clear body of evidence linking the ties 

between the Federal nutrition programs, health, and the economic 

well-being of our communities. Make no mistake, in these tough 

times, the Federal nutrition programs are the safety net between 

hunger and health for millions of Americans. 

In my home of San Bernardino County, California, we face an 

unemployment rate of 17 percent countywide. Programs like SNAP, 

WIC, and TEFAP are putting food on the table for many of my 

neighbors. 

621

Despite economic stress, nutrition programs continue to meet the 

needs of our constituents. This speaks to the basic strength of these 

programs. But nothing is perfect, and especially in these difficult 

times, we must to work to make these programs as effective and 

efficient as possible. And there must be accountability so we can 

stop fraud. 

As we prepare for the 2012 bill, I am committed to working with 

all of my colleagues to strengthen and improve Federal nutrition 

programs. 

I want to thank, again, our witness, Audrey Rowe, for being here 

this morning. I look forward to hearing your testimony. 

I yield back the balance of my time. 

The CHAIRWOMAN. Thank you. 

The CHAIRWOMAN. And before I ask our Chairman of our Agriculture Committee if he would like to have some opening remarks, 

I would like to ask for unanimous consent to have the gentleman 

from Massachusetts, Mr. McGovern, who is not a Member of this 

Subcommittee but has joined us today, to allow him to sit here and 

take part in this process. Do I have unanimous consent? Thank 

you. 

Mr. Lucas. 

OPENING STATEMENT OF HON. FRANK D. LUCAS, A 

REPRESENTATIVE IN CONGRESS FROM OKLAHOMA 

Mr. LUCAS. Thank you, Madam Chairman, and I would like to 

thank both you, Chairwoman Schmidt, and Ranking Member Baca 

for holding this hearing, and I would also like to welcome Administrator Rowe to the Subcommittee today. 

I believe that we would be holding these audits regardless of the 

time period in which we will be writing the next farm bill. With 

14 separate titles covering a variety of programs ranging from nutrition to forestry, it is important for all of us to understand why 

our current policies are structured as they are. We also need to 

know how our separate programs work together to form a comprehensive framework to support America’s farmers, ranchers, and 

consumers. These audits are meant to develop a deeper knowledge 

of agricultural policy so our Committee Members are better able to 

develop the next farm bill. 

But in our current fiscal climate, the audits have taken on greater significance. There are proposals for billions and even trillions 

of dollars’ worth of cuts to get our fiscal house in order. The farm 

bill programs will not be spared the chopping block. 

Considering that farm and nutrition programs together make up 

less than three percent of the national budget—yes, less than three 

percent of the national budget—large cuts will be challenging. This 

Committee is charged with supporting our country’s agricultural 

industry and ensuring that our consumers have a safe, high-quality, and affordable food supply. To meet that responsibility, we 

must ensure we have well-designed farm programs that can function efficiently in the face of budget cuts. 

As Chairman Schmidt mentioned, nutrition programs make up 

more than 75 percent of farm bill spending. The SNAP Program is 

the largest of these programs. In 2008, we worked to improve the 

integrity of the nutrition assistance under SNAP, but there is still 

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room for improvement. For instance, many states are using broadbased categorical eligibility which makes most, if not all, households categorically eligible for SNAP if they receive any noncash 

Temporary Assistance for Needy Families benefit. And of the 42 

states that have adopted broad-based categorical eligibility, only 

one state has imposed an asset limit. That means there is no limit 

on the amount of assets a household can hold while still receiving 

nutrition assistance. Categorical eligibility is meant to simplify program administration, but I know that it also raises some questions 

about whether we are really targeting the families most in need. 

Certainly, we shouldn’t be sacrificing the integrity of this program for the ease of administration. We all need to eat, and when 

families fall on hard times, SNAP is a valuable resource that helps 

ensure that no one goes hungry. In the current economic environment, we need to ensure that SNAP benefits are going to those 

families that truly need support. 

I am concerned that the broad-based categorical eligibility increases opportunities for waste, fraud, and abuse. We are spending 

more than twice the amount of SNAP now than we were in 2007. 

Program participation has nearly doubled in that time. We have a 

responsibility to ensure that the $69 billion we are spending on nutrition assistance is being properly used and is helping the people 

it is meant to help. That is exactly the type of information we need 

to gather in these audits. 

Are the Title IV programs being targeted effectively? Are the taxpayers dollars being spent properly? Are there areas that we can 

streamline or eliminate? It won’t be easy, but we need to find savings throughout all the farm bill programs. 

I look forward to learning more about the Food and Nutrition 

Service’s perspective on these challenges, Administrator Rowe, and 

again, I thank you for your testimony here today, and yield back 

the balance of my time, Madam Chairwoman. 

The CHAIRWOMAN. Thank you, Mr. Chairman. 

And I would ask other Members to submit their opening statements for the record so that our witness may begin her testimony 

and that there is great time, ample time for questions. 

So, with that, I would like to introduce Ms. Audrey Rowe, who 

is the head of this program. And you come from Connecticut via 

Washington, D.C., so you have great experience. And having said 

that, I want to give you the microphone. 

STATEMENT OF AUDREY ROWE, ADMINISTRATOR, FOOD AND 

NUTRITION SERVICE, U.S. DEPARTMENT OF AGRICULTURE, 

WASHINGTON, D.C. 

Ms. ROWE. Good morning, and thank you, Madam Chairwoman, 

Ranking Member Baca, other Members of the Committee. It is indeed an honor and an opportunity to appear here before you today 

to discuss the progress we have made since enactment of the Food, 

Conservation, and Energy Act of 2008, also known as the farm bill. 

I want to begin by commending the Committee on the last farm 

bill. This strong legislation, passed by wide margins in the House 

and the Senate, reflects the Committee’s long-standing bipartisanship. No matter who holds the gavel, you have consistently worked 

across the aisle and with the Administration to make nutrition proVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00634 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
623

grams successful. USDA appreciates this commitment and is committed to administering the bill in accordance with the intent and 

the vision of the Congress. 

Achieving ongoing success in the program under your jurisdiction 

is at the heart of reauthorization, an opportunity for Congress and 

the Administration to take stock of the last farm bill and find potential improvements to pursue and enact. 

As Administrator of the Food and Nutrition Service, I bring 20 

years of state government and private-sector experience in human 

service policy, fiscal management and accountability, program design, and service delivery, with a focus on vulnerable populations, 

low-income, children and youth. That background frames my thinking about USDA’s nutrition programs and their mission to reduce 

hunger and improve diets. 

Roughly one in four Americans currently participate in these programs over the course of a year. The programs work together as 

a safety net to ensure that whatever challenges we face due to economic disruption, national disaster, disease, or disability, we can 

meet our basic nutritional needs. 

These programs are vitally important today. Even as signs 

emerge that the economy is beginning to improve, families continue 

to struggle with the aftermath of the worst economic downturn 

since the Great Depression. This dynamic fuels record demands for 

programs like SNAP, with roughly 45 million Americans participating as of this past April. 

You may wonder who are these 45 million people. The answer 

may surprise you. In SNAP, half of all clients are our children; one 

in six households have elderly members; one in five have one or 

more disabled people. These are hardworking Americans who may 

be facing furloughs or underemployment, and who need resources 

to put food on their table until they can get back on their feet. 

Again, that mission, the FNS mission, has never been more important. 

The farm bill improves access and accountability in the Supplemental Nutrition Assistance Program, also known as SNAP; the 

Fresh Fruit and Vegetable Program; the Food Distribution Program on Indian Reservations; the Commodity Supplemental Food 

Program; the Emergency Food Assistance Program; the Senior 

Farmers Market Nutrition Program. While my written statement 

addresses each one of these programs, I will focus my oral remarks 

primarily on SNAP, the largest Federal program. 

Formerly known as Food Stamps, SNAP received its new name 

as part of the 2008 Farm Bill. SNAP is our nation’s front line of 

defense against hunger, providing low-income individuals and families an electronic benefit debit card to buy food at authorized 

stores. Its flexible, responsive structure is central to its success. 

When the economy takes a downturn, more families struggle, 

and more tend to become eligible for SNAP. When they apply, 

SNAP responds to make sure they do not go hungry until they get 

back on their feet. As the economy improves, fewer families are eligible and apply, and our investment tends to decrease, a hallmark 

of an efficient and an effective program. Congress has maintained 

this key feature throughout many previous farm bills. 

624

As SNAP provides food to participants, it also provides economic 

benefits to communities across the nation. Our research shows that 

for every $5 in new SNAP benefits, it generates as much as $9 in 

economic activity. Every time a family uses SNAP to put healthy 

food on the table, it benefits the store, the employees where the 

purchase was made, the truck driver who delivered the food, the 

warehouses that stored it, the plant that processed it, and, of 

course, the farmer who produced the food. 

SNAP’s success also extends to integrity, which relies on a cooperative partnership between FNS and the states that operate the 

program. SNAP’s quality control system is part of a payment accuracy approach which uses state bonuses and sanctions to achieve 

continuous and sustained improvement. This approach delivers real 

results for taxpayers. 

Payment accuracy in SNAP has increased to over 96 percent, an 

all-time high, even as participation has increased to record levels. 

Payment errors are less than half what they were 10 years ago, reducing improper payments by $3.3 billion. 

FNS is also responsible for authorizing the over 200,000 retailers 

that accept SNAP and monitoring them for compliance with program rules. The program is designed to operate through normal 

channels of trade, and the overwhelming majority of businesses 

and benefits are redeemed in responsible grocery businesses that 

play by the rules. 

That said, the agency takes any noncompliance very seriously. 

We have made major strides in reducing trafficking, the sale of 

SNAP benefits for cash, which is an illegal activity punishable by 

criminal prosecution. Over the last 15 years, our aggressive surveillance and enforcement have helped to reduce the prevalence of trafficking down to about one percent. The 2008 Farm Bill provided 

new anti-trafficking tools, including the authority to disqualify recipients for such activities as selling food purchased with SNAP 

benefits or dumping contents of returned deposit bottles in order to 

get cash, as well as new sanctions for noncompliant retailers. 

We must also ensure that the program promotes healthy eating. 

The N in SNAP is for Nutrition, and it is essential that we make 

use of its great reach to reduce the risk of diet-related disease. Almost every American’s diet is in need of improvement, and the 

SNAP-specific nutrition strategies mandated by Congress and administered by FNS reinforce efforts to foster healthy diets across 

the general population. 

Let me turn briefly to the Emergency Food Assistance Program, 

TEFAP, which provides food and administrative funds to state 

agencies to local emergency feeding organizations such as food 

banks, soup kitchens, and food pantries. They play a critical part 

in the hunger safety net. The farm bill increased funds for TEFAP 

food to $250 million annually, indexed to inflation in future years. 

While USDA provided the authorized funding for SNAP, market 

conditions have limited the availability of surplus food beyond this 

amount in recent years. USDA will provide more surplus food to 

the program should it become available. USDA also published a 

farm bill rule in 2009 to streamline operations by making TEFAP 

state plans permanent. 

625

Let me conclude by thanking you again for this opportunity and 

reiterating that the nutrition assistance mission has never been 

more important. The Administration is committed to maximizing 

transparency, access, accountability, and integrity, and Secretary 

Vilsack has directed the Department to provide all Americans with 

the excellence they deserve from our government. I am personally 

committed to ensuring that we live up to those expectations as we 

manage these programs to meet the needs of eligible families and 

individuals who rely on them during challenging economic times. 

Let me mention in closing that in my career I have never held 

a job at the state level where budgets were not tight, so it is not 

a new experience for me to face an extremely tight Federal budget 

and consideration of significant program changes. Reauthorization 

allows us to carefully assess the impact of potential changes so we 

can preserve our successes while meeting new challenges and improving performance, and in that light, I am happy to review these 

programs and answer your questions. 

I have with me a number of staff people who I may call on from 

time to time. As I mentioned to some of you, I am in my fourth 

month in the position of Administrator. I want to give you the best 

information that I possibly can, so I have brought the resources to 

make sure we can do that. 

[The prepared statement of Ms. Rowe follows:]

PREPARED STATEMENT OF AUDREY ROWE, ADMINISTRATOR, FOOD AND NUTRITION

SERVICE, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Madam Chairwoman, Ranking Member Baca, and Members of the Committee, 

thank you for the opportunity to be here today to discuss the United States Department of Agriculture’s (USDA) nutrition programs and the progress we have made 

since enactment of the Food, Conservation and Energy Act of 2008—the 2008 Farm 

Bill. 

I want to begin by commending the Committee for its hard work in crafting the 

2008 Farm Bill. I understand that this Committee had to go through a lot of hardfought battles and make some really tough decisions, and the end result was a 

strong, bipartisan piece of legislation that passed by overwhelmingly large margins 

in both the House and Senate. We understand how hard it was to accomplish that 

task, and the Food and Nutrition Service at USDA is strongly committed to ensuring that the legislation is administered in accordance with the intent and vision of 

Congress. 

I also want to express my appreciation for the bipartisan approach that this Committee has taken over the years when it comes to supporting USDA nutrition assistance programs. No matter which party holds the gavel, there has always been a 

shared commitment to working across the aisle and with the Administration to ensure that these programs are successful. 

The goal of ensuring success in the programs under your jurisdiction is at the 

heart of the 5 year reauthorization cycle for farm bill programs, which offers Congress and the Administration a great opportunity to take stock of where we are at 

today, what we did in the last farm bill, and what we need to do in this farm bill 

to get where we need to be. Like you all, we in the Administration appreciate very 

much the political and budgetary climate in which we find ourselves as the reauthorization process gears up. Federal programs are under heightened scrutiny right 

now. Members of Congress, the public, and this Administration all want to know 

that scarce resources are being used wisely. 

I understand that context as the Administrator of the Food and Nutrition Service, 

where I am responsible for the operations of the Federal nutrition assistance programs. I bring with me over 20 years of experience in both state government and 

the private sector working in human services policy development, fiscal management, program design, service delivery and marketing with a particular focus on 

vulnerable populations, low income women, children and youth. That background inevitably shapes and guides my thinking about administering USDA nutrition programs, which work both individually and in concert with one another to reduce and 

626

prevent hunger and improve the diets of children and low-income households. While 

about one in four Americans currently participate in Federal nutrition programs 

over the course of a year, these programs are a critical safety net for every American, designed to ensure that, whatever other challenges they face due to economic 

disruption, natural disaster, or personal challenges such as disease and disability, 

they need not experience food insecurity and hunger. 

We see the vital importance of these programs today. Even as signs emerge that 

the economy is beginning to recover, families across the country continue to struggle 

with the aftermath of 3 years of recession. The unemployment rate is down substantially from the recent peak of 10.1 percent in since October 2009, but remained unacceptably high at 9.2 percent as of June. Census Bureau figures shows that the 

poverty rate in 2009 was 14.3 percent, the highest rate since 1994. There were 43.6 

million people in poverty in 2009—the largest number in the 51 years for which poverty estimates are available. 

And demand for the nutrition assistance programs remains extremely high. In 

April 2011, 44.6 million people received SNAP benefits. Participation in the school 

meals programs remains at near-record levels, with about 32 million children receiving a meal through the school lunch program on an average school day, and two 

out of three served free or at reduced price. 

Who are today’s nutrition assistance clients? The answer may surprise you. In 

SNAP, about half of all clients are children, and about 3⁄4 of benefits go to households with at least one child. Nearly 1⁄3 of participants are in households that include elderly people or people with disabilities. And the SNAP clientele has undergone a major shift in its focus from welfare to work over time. Many are hardworking families who may be facing furloughs or underemployment in these difficult 

times. All need assistance with money for food until they can get back on their feet. 

These sobering statistics underscore the fact that the nutrition assistance programs have never been more important to our nation. Title IV of the 2008 Farm 

Bill resulted in changes that improved access and accountability in many of these 

programs, including the Supplemental Nutrition Assistance Program (SNAP), the 

Fresh Fruit and Vegetable Program (FFVP), Food Distribution Program on Indian 

Reservations (FDPIR), the Commodity Supplemental Food Program (CSFP), the 

Emergency Food Assistance Program (TEFAP), and the Senior Farmers Market Nutrition Program (SFMNP). In my statement I will describe our progress in implementing these changes as I review some of the key issues facing our programs 

today. 

I also want to underscore at the outset my strong focus on proper management 

of resources—a fundamental strategy in ensuring both program access and integrity. Secretary Vilsack has charged all the USDA mission areas to ensure our services are accessible and properly administered; to work collaboratively with our partners; and to seek opportunities for efficiency and effectiveness in all our programs. 

Additionally, Undersecretary Concannon recently testified before the Senate that 

Americans deserve excellence from their government. That is not just a slogan. The 

leadership team at USDA Food, Nutrition and Consumer Services takes that charge 

seriously when it comes to effective accountability in the nutrition assistance programs. We are committed to a long-term, sustained effort, working closely with our 

program partners, and my team and I are seeking every opportunity to build on our 

successes with new strategies to tackle the challenges that remain. I believe that 

we can improve accountability without compromising service to those in need, and 

we look forward to working with you in this effort. 

Supplemental Nutrition Assistance Program (SNAP) 

Let me begin with SNAP—the largest and most widely used nutrition program 

authorized in the farm bill, the former Food Stamp Program, which received its new 

name as part of the 2008 Farm Bill, supplements the food purchasing power of low 

income individuals and families by providing an electronic debit card which is used 

at authorized stores. Benefits are 100 percent federally-financed, while administrative costs are shared between Federal and state governments. 

One of the most important aspects of SNAP is that it is structured to respond 

quickly to the needs of the hardest-hit households, based on national eligibility 

standards. Benefits flow into communities as economic conditions worsen, providing 

an economic boost even as they meet the nutrition needs of low-income people. Research shows that every $5 in new SNAP benefits generates as much as $9 in economic activity. Every time a family uses SNAP benefits to put food on the table, 

it benefits the store and the employees where the purchase was made, the truck 

driver who delivered the food, the warehouses that stored it, the plant that processed it, and the farmer who produced the food. 

627

I raise this in part to underscore that while this flexible, responsive program 

structure leads the program to expand when need is greatest, it also causes program 

participation, and expenditures, to contract as conditions improve and needs lessen. 

We see this dynamic at work in SNAP. When the economy takes a downturn, more 

families struggle, and more families look to SNAP until they can get back on their 

feet. When that happens, the program responds to make sure that families do not 

go hungry. The opposite is also true though. As the economy improves, and more 

Americans find jobs, fewer families need the program in the first place. When that 

happens, our investment tends to decrease. This efficient and effective aspect of 

SNAP is one of the keys to its success. 

State agencies are responsible for the administration of the program according to 

national standards set by Federal law and regulations. Applicants must meet certain financial, non-financial and citizenship or immigration status requirements, including gross and net income tests, and resource limits. States have the flexibility 

to modify some of these requirements to align SNAP with their Temporary Assistance for Needy Families (TANF) policies. Forty-two state agencies have implemented an optional policy called broad-based categorical eligibility (BBCE), which 

allows states to utilize their TANF income and resource limits for their SNAP applicants, providing administrative simplification for states, and allowing the same 

gross income and resource policy to apply for both programs. 

The SNAP eligibility and certification changes made in the 2008 Farm Bill were 

implemented quickly after passage starting on October 1, 2008 by all states via an 

implementation memorandum; a proposed rule which promulgates these provisions 

into regulation was published in the Federal Register in May, and the comment period closed July 5. A final rule is expected to be published by the end of this calendar year. These changes were important for program access and integrity. 

With regard to work requirements, able-bodied adults without dependents 

(ABAWDs) between 18 and 50 who do not have any dependent children can get 

SNAP benefits only for 3 months in a 36 month period if they do not work or participate in a workfare or employment and training program other than job search. This 

requirement is waived in some locations in accordance with unemployment rates 

and job availability triggers determined by the Department of Labor. With some exceptions, all adults participating in SNAP between 16 and 60 must register for 

work, accept suitable employment, and take part in an employment and training 

program to which they are referred by the local office. Failure to comply with these 

requirements can result in disqualification from the program. 

It is worth noting in this regard that a large proportion of SNAP households are 

working families. In fact, the primary source of income among SNAP participants 

has shifted from welfare to work over time. For these working poor households, 

SNAP provides an important resource to see them through tough economic times. 

In cooperation with FNS, each state agency is responsible for monitoring and improving its administration of SNAP. As a part of this requirement, SNAP’s Quality 

Control System is used to measure the accuracy of the states’ certification process. 

The Quality Control system is part of a payment accuracy approach which uses bonuses and sanctions to encourage states to continuously improve performance. This 

approach has helped to deliver real results, and payment accuracy in SNAP is at 

an all-time high—over the last decade participation among eligibles has gone from 

57% to 66%, while payment errors have gone from 8.91% to a record-low of 3.81%. 

Over 98 percent of those receiving SNAP benefits are eligible to receive benefits; the 

overall payment accuracy in FY 2010 was 96.19 percent. Payment error rates are 

less than half what they were 10 years ago, which has reduced improper payments 

by $3.3 billion. That said, any error is too much, and for that reason we do not intend to rest on this success. The President’s November 2009 Executive Order directed all agencies to further rein in improper payments while making sure that 

those eligible for government assistance continue to have access to these programs, 

and we are working with states to meet his ambitious goals for ongoing improvement. 

SNAP Retailer Operations 

Our program responsibilities do not end once the benefits have been issued; SNAP 

must also manage the program so that benefits are used effectively and with integrity. FNS authorizes retailers to accept and redeem SNAP benefits in accordance 

with Federal statute and regulations, monitors them through ongoing systems analysis and undercover on-site investigations, and manages an administrative review 

of those firms that contest a disqualification or civil money penalty. Over 220,000 

retailers are currently authorized to redeem SNAP benefits through electronic benefit transfer (EBT). EBT works like a debit transaction—SNAP participants scan 

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count on the card. Eighty-three percent of all SNAP transactions happen at super 

markets, super stores, and large grocery stores, while the majority of the stores authorized are smaller stores. 

FNS is also responsible for monitoring participating retailers for compliance with 

SNAP rules. The sale or purchase of SNAP benefits for cash is called trafficking, 

an illegal activity punishable by criminal prosecution. Over the last 15 years, FNS 

has aggressively implemented a number of measures to reduce the prevalence of 

trafficking in SNAP from about four percent down to its current level of about one 

percent. Despite this significant decline in trafficking USDA continues to implement 

aggressive measures to improve program integrity and to detect and stop fraud. 

SNAP uses a fraud detection system, the Anti-Fraud Locator for Electronic Benefit 

Transfer Transactions (ALERT), to monitor electronic transaction activity and identify suspicious retail grocers for analysis and investigation. FNS also works closely 

with its state and Federal partners to investigate and prosecute trafficking. 

The 2008 Farm Bill provided some significant tools for SNAP in this area including revised definitions of trafficking that provide for disqualification of recipients for 

such activities as selling food purchased with SNAP benefits, and dumping contents 

of return deposit bottles in order to get cash; as well as new sanction authority for 

non-compliant retailers. These provisions are in various stages of implementation, 

but all provided strong tools to deal with misuse and abuse of program funds. 

SNAP and Food Choices 

We are also charged with ensuring that the program does all that it can to promote good nutrition and reduce or prevent obesity among its clients. As we all know, 

the ‘‘N’’ in SNAP is for nutrition, and it is essential that we make use of its great 

reach to promote better nutrition and reduce the risk of diet-related disease. 

It is important to recognize in this context that almost every American’s diet is 

in need of improvement. Virtually all of us eat too few whole grains, dark green and 

orange vegetables, and too much fat and added sugar. Our SNAP-specific nutrition 

strategies must complement and reinforce efforts directed to foster healthy diets 

across the general population. 

The 2008 Farm Bill codified nutrition education as a component of the program. 

Recently, the Healthy, Hunger-Free Kids Act (HHFKA) of 2010 reformed the nutrition education component of SNAP (known as SNAP-Ed) to provide for a focus on 

obesity prevention and nutrition education, expanding reach and providing states 

increased flexibility. FNS has spent the months since the passage of the HHFKA 

meeting with state partners, nutrition education providers, public health officials, 

universities, the Health and Human Services’ Center for Disease Control and Prevention, the White House Task Force on Childhood Obesity, and others to get input 

into the implementation of this important provision. A rule is scheduled to be published in January 2012. 

As this Committee knows, some have suggested that SNAP rules should restrict 

the use of benefits so that only ‘‘healthy’’ foods can be purchased. USDA has long 

held a preference for strategies to support and encourage healthy choices rather 

than restricting access to particular foods. Congress has also preferred this approach, and most recently spoke to this issue in the 2008 Farm Bill by authorizing 

and funding a demonstration and rigorous evaluation of the impact of financial incentives at the point of sale on purchases of fruits and vegetables. We have been 

working carefully to design and implement this project—the Healthy Incentives 

Pilot—to maximize the chance of its success, and to ensure that, whatever the results, the test will provide clear evidence that will support policy decisions made by 

Congress and the Administration. Operations will begin in Massachusetts later this 

year. 

The Department is also working to increase the number of farmers’ markets that 

accept SNAP benefits. These outlets help introduce low-income households to a variety of fresh and nutritious foods, and expand opportunities for small farmers. Our 

goal is to authorize an additional 200 farmers or farmers’ markets and increase redemptions by $750,000 each year. In addition, a number of farmers’ market incentive projects work in coordination with SNAP by providing privately-funded bonus 

dollars to clients for purchases made with SNAP benefits. 

We think that these positive and proactive strategies are the most effective way 

for USDA and its partners to address the challenges of poor diets and obesity. We 

look forward to working with the Committee to advance and strengthen these strategies into the future. 

Let me turn now to the other nutrition assistance programs authorized under the 

farm bill. 

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Fresh Fruit and Vegetable Program (FFVP) 

The Fresh Fruit and Vegetable Program (FFVP) provides free fresh fruits and 

vegetables in elementary schools with high percentages of children receiving free 

and reduced price school meal benefits to help children develop positive dietary habits during their formative years. FFVP began as a pilot program authorized by the 

2002 Farm Bill, operating in 25 schools in each of four states and seven schools in 

one Indian Tribal Organization (ITOs). Following nationwide expansion under the 

2008 Appropriations Act, the 2008 Farm Bill permanently authorized FFVP and increased its funding from $40 million in 2008 to $150 million in 2011. USDA was 

able to get this increased funding out timely, and is working to publish a regulatory 

proposal on the program in the near future. The 2008 Farm Bill also mandated and 

funded an evaluation to assess the impact of the FFVP on fruit and vegetable consumption. The project is underway, and we expect the results to be available in 

2012. 

Food Distribution Program on Indian Reservations (FDPIR) 

The Food Distribution Program on Indian Reservations (FDPIR) was first authorized in 1977 as an alternative to SNAP for low-income households living on Indian 

reservations, and was subsequently expanded to include American Indians living in 

other approved areas near reservations or in Oklahoma. The program provides a 

monthly package of USDA Foods, including fresh fruits and vegetables, to participating households. Households may not participate in FDPIR and SNAP in the 

same month. FDPIR currently serves about 77,000 individuals each month. 

The 2008 Farm Bill directed USDA to study the nutritional quality of the FDPIR 

food package. Our review concluded that the package provides a nutritious variety 

of foods, and sufficient calories to meet the energy needs of most sedentary individuals and many moderately active children. While as for American diets in general, 

there is room for improvement in the quantities of fruits, vegetables, low-fat dairy 

products and whole grains, the nutritional content of the package is considerable. 

Individuals consuming FDPIR foods in the quantities provided would achieve a 

Healthy Eating Index score, which measures consistency with the Dietary Guidelines, of 81 out of 100, considerably better than Americans in general (58 out of 100) 

and SNAP participants (52 out of 100). 

The 2008 Farm Bill also authorized the purchase of bison and traditional and locally-grown foods for FDPIR participants, but specific appropriations have not yet 

been made for these items. 

Commodity Supplemental Food Program (CSFP) 

CSFP was first authorized under the Agriculture and Consumer Protection Act of 

1973 to distribute USDA-purchased food to low-income women, infants, and children 

to supplement their nutritional needs. Legislation permitted individuals age 60 or 

more to participate beginning in the 1980s, and with the expansion in available of 

WIC, the program’s caseload transitioned so that today, almost 97 percent of the 

over 580,000 individuals that participate in CSFP each month are elderly. 

As of 2011, 39 states, two Indian Tribal Organizations (ITOs), and the District 

of Columbia are participating in CSFP. CSFP monthly food packages are good 

sources of the nutrients typically lacking in the diets of participants. The 2008 Farm 

Bill removed the priority status for women, infants, and children in receiving CSFP 

service; USDA published a final rule to implement this provision in February 2010. 

The Emergency Food Assistance Program (TEFAP) 

The Emergency Food Assistance Program (TEFAP) began in 1981 as a means of 

reducing stocks of surplus food held by the Federal Government by distributing it 

to households in need. In 1998, Congress authorized appropriations for USDA to 

purchase food specifically for TEFAP. Through TEFAP, USDA provides food and administrative funds to state agencies which distribute them to local emergency feeding organizations such as food banks, soup kitchens and food pantries. 

The 2008 Farm Bill increased funds for TEFAP food purchases to $250 million 

annually, indexed to inflation. The 2008 Farm Bill also authorized up to $100 million annually for administrative costs and up to $15 million annually for TEFAP infrastructure grants. In addition, the Secretary has authority to provide food that 

USDA acquires through certain price or market support activities (i.e., bonus food) 

to TEFAP. TEFAP currently operates in all 50 states, the District of Columbia, 

Puerto Rico, the Virgin Islands, Guam, and the Commonwealth of the Northern 

Mariana Islands. 

While USDA has provided the 2008 Farm Bill’s increased appropriated funding 

for TEFAP, market conditions have limited the availability of surplus food for 

TEFAP in recent months. USDA will continue to provide surplus food to TEFAP 

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should more become available and the President’s FY 2012 budget requests the authorized level for TEFAP food purchases. Legislation provided $6 million in 2010 for 

TEFAP infrastructure grants which USDA awarded to 39 emergency feeding organizations in rural and urban areas to help improve their ability to provide food to lowincome individuals. USDA also published a final regulation in November 2009, to 

implement the 2008 Farm Bill requirement to make TEFAP state plans permanent; 

this rule has streamlined TEFAP operations. 

Senior Farmers’ Market Nutrition Program 

The Senior Farmers’ Market Nutrition Program (SFMNP) was created as a pilot 

program in FY 2001; it was established by Congress as a permanent program 

through the 2002 Farm Bill, and has been reauthorized through 2012 under the 

2008 Farm Bill. The program provides low-income seniors with coupons that can be 

used to purchase fresh fruits, vegetables, honey and herbs from farmers at authorized farmers’ markets or roadside stands, or with shares in community supported 

agriculture (CSA) programs for regularly distributed bags or boxes of eligible foods. 

Fifty one state agencies and federally recognized Indian tribal governments received 

grants to operate the SFMNP in FY 2011. Over 20,000 farmers at 4,600 farmers’ 

markets as well 3,800 roadside stands and 163 CSAs participated in the program 

in FY 2010, enabling over 844,000 seniors to receive fresh fruits and vegetables during the 2010 market season. 

Conclusion 

Let me conclude by thanking you all again for this opportunity and by reiterating 

that the mission and the work of the nutrition assistance programs have never been 

more important to our nation. The Administration is committed to a more responsible government that maximizes transparency, accountability, and integrity. I am 

committed to ensuring that we live up to those expectations as we continue to manage these programs to meet the needs of the eligible people who rely on them, especially in these times of fiscal and economic challenges. 

I should also mention that I have never come into a job at the state level where 

budgets were not tight, so I guess I should not be surprised that in this new Federal 

role I come together with you all at a moment where budgets are extremely tight, 

and when substantial and significant changes are being considered for many Federal programs. As the Committee begins its work in writing the next farm bill, it 

is important to recognize that such changes can have both intended and unintended 

consequences. That is what is so valuable about the reauthorization process. It allows us to carefully work through and consider those impacts before we move forward so that we can preserve our successes while moving to meet new challenges 

and improve performance. In that light, I am particularly appreciative of the opportunity to join you today and review these programs, and I look forward to any questions that you may have.

The CHAIRWOMAN. Thank you. 

The sign of a good Administrator is when they bring their team 

so that they can look really, really smart. 

I would like to remind the Members that they will be recognized 

for questioning in order of seniority for Members who were here at 

the start of the hearing. After that, Members will be recognized in 

order of arrival, and I do appreciate the Members’ understanding 

in this. And now I would like to begin my own set of questions. 

Ms. Rowe, on the questionnaire, I found it interesting that the 

Department did not offer many details in regards to how programs 

might be duplicative or have overlap. Does this mean the Department didn’t find any duplication or overlap in the farm bill nutrition programs or something else? 

Ms. ROWE. Well, thank you for that question. When we looked 

at the programs, certainly they serve different vulnerable populations. They provide a safety net for individuals who may not 

qualify for certain programs, but still need food assistance. The 

Congress, in the past, in its wisdom, has undertaken various program initiatives to close some of these gaps so that we can have 

a safety net that provides benefits to our youngest, to our seniors, 

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to those who are disabled, and to those who face employment challenges. 

The CHAIRWOMAN. Okay. It seems you did not find any duplication? 

Ms. ROWE. We did not find duplicates. There are individuals who 

may participate in more than one program. For example, you may 

have individuals that benefit from the FDPIR Program, but also 

benefit from the School Lunch Program. So there are different populations that benefit for different purposes. 

The CHAIRWOMAN. Okay. And in your testimony, you said payment error rates are less than half of what they were 10 years ago, 

which has reduced improper payments by $3.3 billion. 

Ms. ROWE. Correct. 

The CHAIRWOMAN. Could you clarify for me if this is a reduction 

of $3.3 billion over 10 years, 1 year? 

Ms. ROWE. It is over 10 years. 

The CHAIRWOMAN. Okay. While I can appreciate the fact that the 

Department has reduced improper payments by $3.3 billion over 10 

years, I think it is still troubling that the GAO reports that there 

was $2.2 billion in overpayments in Fiscal Year 2009 alone. What 

is FNS doing to rein in improper payments? 

Ms. ROWE. We have undertaken a number of strategies. For example, in states where there are or there have been improper payments, either overpayments or underpayments, to an individual, 

we have provided technical support and assistance to those states. 

We have identified best practices in other states that can help a 

state that is having some challenges in those areas, provide a number of additional resources to the state so that they can look at how 

they are administering their program, and can target and be strategic in where they need to devote their resources to reduce the improper payments. We have been very aggressive in working with 

states to help them understand both how to reduce improper payments and the importance of continuing to reduce improper payments. 

The CHAIRWOMAN. And along that same line, what is the process 

in recovering overpayments made to SNAP participants? 

Ms. ROWE. It is a state function. States can—as a former administrator, a state does have the ability to either take an action to 

reduce, if the person is continuing to be on the SNAP Program—

to reduce their benefits to recoup. There are other recoup options 

that states have before them, and different states administer it in 

different ways. 

The CHAIRWOMAN. Following up on that a little bit more, we are 

giving all this money to states to create the program, and there 

might be some problems. Do you think we need to have more oversight at the Federal level to make sure that when there are bad 

actors, that the states are doing due diligence to, A, go after the 

bad actors, and, B, get whatever resources they can get back from 

those bad actors? 

Ms. ROWE. Well, when I was on the state side, I would have had 

a different answer, but on the Federal side, I can honestly say that 

we have been very focused in reminding states—Under Secretary 

Concannon, not only in visiting states and meeting with Governors 

and state commissioners and administrators—has reiterated again 

632

and again the importance of maintaining integrity in the various 

programs. He has sent letters to all the states. We have worked 

with the states to remind them—at a time when caseloads are increasing, states are facing fiscal challenges—it is not time to take 

your eye off the mark. We have to stay focused. 

And I think states have been very responsive. They have sought 

consultation. They have asked us to send in staff to help them 

manage some of the challenges they have. We do management reviews. Our regional office staff go out to the states, pull records. 

We look at information that states have available to help us determine how well they are doing. 

The CHAIRWOMAN. Thank you. 

And I see that my time has expired, so I am going to ask Mr. 

Baca if he has any questions for this witness. 

Mr. BACA. Yes, I do. Thank you very much, Madam Chair. 

Thank you again, Ms. Rowe, for testifying this morning, and I 

appreciate your efforts to ensure the integrity of SNAP and other 

programs at FNS. 

I will start with a statement. Nutrition education and access to 

healthy food are two key components necessary for improving the 

health of all Americans, especially those who rely on SNAP benefits 

to feed their families. In my district there is a huge problem with 

obesity amongst the Latino population, particularly children. The 

First Lady has done a great job in highlighting these problems, but 

I am also encouraged that new data from the Journal of Nutrition 

Education and Behavior showed that California has seen a 37 percent increase in fruits and vegetable consumption among low-income adults. This is the kind of information that helps us make 

good policy decisions. So, with this and other data out there, can 

you tell me about FNS’s evaluation of nutrition educational efforts? 

Ms. ROWE. Well, yes, certainly, Congressman. As you know, the 

Healthy, Hunger-Free Kids legislation required us to rethink and 

relook at our SNAP Education Program, to engage in much more 

collaboration, to provide additional opportunities for states to learn 

what is going on in another state and how effective it has been. 

The kind of research that you are talking about we would disseminate to states so that they can see the importance of staying very 

focused on nutrition. 

We have created within FNS a Latino outreach plan which is 

going to focus not only on California, but on Latino communities 

around the country, making sure that they understand the program, what is available to them, the importance of nutritious eating, healthy lifestyles, and healthy habits. 

We continue to share information. When I was in California and 

had an opportunity to see some of the outreach and SNAP education programs there, I immediately grabbed the information and 

brought it back to our other states. We have talked to states about 

what California is doing and encouraged them to adopt similar 

strategies and similar activities. 

Mr. BACA. Okay. As part of a follow-up, how would the changes 

made to SNAP nutrition and in the child nutrition bill passed in 

December 2010 affect these numbers? 

Ms. ROWE. That I am not really sure, Congressman. I would like 

to get back to you on that. I think what we are hoping is that it 

633

would allow us to do nutrition education in a more strategic way, 

in a more collaborative manner, but the impact on numbers, I really can’t answer that. 

Mr. BACA. Okay. Thank you. 

And I know you elaborated a little bit on this. Does FNS have 

any specific outreach plans to include nutrition education in minority communities? 

Ms. ROWE. Yes. As I had mentioned, we have designed the 

Latino outreach plan. We have been working with a number of national organizations, such as the National Urban League and others, to have them focus and provide information through their networks on nutrition education. We are developing new messages, 

messages that we have developed with focus groups, that help to 

focus individuals and remind individuals of nutritious feeding; not 

only nutritious feeding, but how to prepare food. It is one thing to 

buy the food and bring it into your home, but if you don’t have the 

tools and skills to prepare the food, so we are doing a number of 

things to help educate individuals. 

Mr. BACA. Thank you. 

I understand that the SNAP national enrollments are at an alltime high of 45 million people. Do you have any of the latest enrollment numbers for California? 

Ms. ROWE. We do have those, and I certainly can get those to 

you, sir. 

Mr. BACA. Okay. And how has the recession affected the sign-ups 

in states with traditionally low enrollments? 

Ms. ROWE. I beg your pardon, I am sorry? 

Mr. BACA. How has the recession affected sign-ups in states with 

traditionally low enrollments in the SNAP Program? 

Ms. ROWE. Well, we have encouraged states to reach out to populations that previously have not participated in these programs. We 

are doing—we have just talked to the Labor Department and other 

Federal agencies to look for ways in which we can get information 

out to individuals who participate in their programs about the 

availability of SNAP. One of the things that we find quite often is 

individuals don’t realize that they are eligible for a SNAP benefit 

even while they are receiving some level of unemployment compensation. 

Mr. BACA. Okay. I know that my time has run out, but you mentioned earlier that trafficking has gone down to about one percent. 

Ms. ROWE. Correct. 

Mr. BACA. What else, then, can we do to limit abuse and fraud? 

Is there anything else that we might need to implement both at the 

Federal or state level that would stop abuse and fraud that still occurs? 

Ms. ROWE. Well, one of the areas that we are looking at is the 

definition of retailers who can participate in the program. We have 

been able to develop profiles, if you will, on the types of businesses 

that may be prone to have trafficking activity, but we also want to 

make sure that we don’t limit access. And so that is one of the 

areas that we may want to come back and talk to you about. 

Mr. BACA. I know my time has run out. 

The CHAIRWOMAN. Thank you, and I am sure we will have more 

questions on that, so you will get a better clarification, sir. 

634

I am now going to give 5 minutes to my good friend from Iowa, 

Mr. King. 

Mr. KING. Thank you, Madam Chair. 

Administrator Rowe, thank you for your testimony and for coming prepared. I would just like to back us up historically a little bit 

and ask you if you could inform us as to what the original reason 

for the nutrition program at its inception? 

Ms. ROWE. For the SNAP Program? 

Mr. KING. Well, for the nutrition program all together. I could 

call it food stamps. I think that might be historically more accurate. 

Ms. ROWE. Well, the original statutory purpose was to alleviate 

such hunger and malnutrition, which will permit low-income 

households to obtain a more nutritious diet through normal channels of trade by increasing purchasing power for all eligible households who apply for participation. 

Mr. KING. And what year was that policy established? 

Ms. ROWE. 1977. 

Mr. KING. And prior to that, we didn’t have any Nutrition or 

Food Stamp Program? 

Ms. ROWE. No, and I am leaning back—no, we did have a Food 

Stamp Program, but the policy cited was from 1972. 

Mr. KING. Fair enough. I guess I grew up in an environment that 

didn’t have this program, and I wasn’t aware that it didn’t exist 

prior to 1977. So thanks for that information on it, and the basis 

of it would be to alleviate hunger and malnutrition. 

Now, then, in the current environment, can you statistically 

identify children that are suffering from malnutrition? 

Ms. ROWE. I would like to get you that. We do have that information. I did not come with that information available today, but I 

can get you that information in terms of food insecurity. 

Mr. KING. What about malnutrition? That is two different things, 

isn’t it? 

Ms. ROWE. Right, right. And in terms of malnutrition, we can 

certainly talk with our sister agency, the Center for Nutrition Policy and Promotion, to see if they have statistics. 

Mr. KING. Okay. I would ask you formally to produce that data 

for the Committee to statistically identify children that are suffering from malnutrition. 

Mr. KING. I think it is important that we anchor ourselves on the 

basis for this program originally, and hunger is another statistic 

that can be measured. I would expect everybody has been hungry 

at one time or another. I don’t know how you quantify that. If there 

is a means, I would like to know what that data is. 

Ms. ROWE. Well, there is—we do have a study that was released 

last year. I know the Food Research Action Council has released 

studies. We have looked at the food insecurity, and that is a data 

set that we have not only by state, but we can give it to you by 

Congressional districts. We can break down the food insecurity population for children and families. 

Mr. KING. Okay. And I would just—let us expand this if we can, 

as I focused on children, but as we look at this data, I presume it 

will be also equally available for adults and then perhaps seniors 

separated from that as a group as well. I would like to know in perVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00646 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
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centages of children that are suffering from malnutrition, adults, 

and then senior adults, and maybe perhaps three separate categories. And if it gives me some information by region, even by 

Congressional district, that would be useful. 

And I say this because I am concerned that we might have gotten away from our original mission. In fact, we have gotten away 

from our original mission, because I have heard you say a couple 

of times the words food insecurity, and that is a different definition. 

And I remember the testimony that we had here in 2007 about food 

insecurity, and I happen to have saved it in my BlackBerry. 

This is a witness before this Committee March 13, 2007, who 

said, ‘‘There is also mounting evidence that the overweight and 

obesity trends in the United States are due in part to high levels 

of food insecurity.’’ That is a bit of a concept that is difficult for a 

lot of my constituents to get their mind around, that people are 

overweight because of food insecurity, and presumably if we can resolve the insecurity, we can resolve some of the obesity. Do you adhere to that position statement? 

Ms. ROWE. Sir, when people have limited resources, and they 

need to put food on their table, the prevalence is for them to buy 

those foods that are high in starch, that will fill the need for hunger, which then increases their tendency to be overweight, to have 

obesity issues, as well as diabetes and other health-related issues. 

Mr. KING. Thank you. I do know these arguments, and they are 

the ones that I had anticipated. But I just make the point that it 

is hard for taxpayers to understand that more food stamps solves 

obesity. That is a messaging problem; however, there might be a 

basis in it in fact, and I could take issue with that. 

I would ask also are illegals—are they eligible for the SNAP Program? 

Ms. ROWE. No, they are not. 

Mr. KING. And do you have a verification program? 

I would ask unanimous consent for an additional minute. 

The CHAIRWOMAN. No, I will give you a chance later, because I 

want everybody to have a good 5 minutes. 

Mr. KING. Noting the objection, then I yield back the balance of 

my time. 

The CHAIRWOMAN. I hate to be hard about that, but I do want 

to be fair to everybody on the Committee, and I will now give 5 

minutes to Mr. Sablan. 

Mr. SABLAN. Thank you, Madam Chair, and to you and the 

Ranking Member for holding this hearing. 

Good morning, Ms. Rowe. My name is Kilili. I am from the most 

remote part of the United States. It takes you a day to get there, 

so you can just imagine how much it costs to ship things there, 

whether it is the chicken from Arkansas or the rice from California. 

Or we should actually ship more apples from Washington maybe 

and less SPAM from Minnesota. 

But I have several questions. Unlike all the other United States 

Territories, the Northern Mariana Islands has no statutory mandate to receive nutrition assistance other than the Secretary’s authority to extend USDA programs at his discretion under Public 

Law 96–597. The Secretary has decided it would be in a block 

636

grant, and you just testified earlier the difficulties of block grants 

at the time when people are having the most difficult time. 

I come from a place where one of the islands I represent, it costs 

$4 a pound for frozen chicken, $4. You can buy a chicken at less 

than a dollar a pound in many of the places here in the United 

States. 

I need to work with you, Ms. Rowe, on this issue, because, again, 

besides the high cost of those products, my government in the past 

3 years has lost almost 50 percent of its GDP. Many people are either laid off—if you are not laid off and lucky, you get furloughed, 

your hours are reduced, and the world economic conditions, everything is going up. 

I look at myself and I say, when I go home and I see the difficulties, the way for me to console myself is I thank God I am not in 

Haiti, because I can’t compare it to any part in the United States. 

You said the fundamental mission of FNS is to ensure that people have food. Now, we have—they reduced the program, the Block 

Grant Program you have afforded the Northern Mariana Islands 

where an individual gets an average of $111 a month. Fifty miles 

away in Guam, an individual gets $281 a month. We have just a 

couple of months ago reduced by 36 percent the benefits to everyone in the program and see an increase of 500 on the wait list now. 

I need to work with you before I go into my questions, really, because you, FNS, review and approve the integrity of the programs 

for the Northern Mariana Islands, and you know all of these things 

that violates what the fundamental mission is, and you won’t lift 

a finger to fix it. You should. 

I really need to work—I need your commitment right now, Ms. 

Rowe, that you will work with me on this. We have reached out to 

the Secretary. Mr. McGovern was kind enough to sign the letter for 

us to send to Secretary Vilsack, and I have not even received a response, and maybe it is because I don’t have a vote here. 

I hope that when you look at me, you see an American here, because those Americans out there that I live with are going hungry, 

seriously, and I know because I go to their homes. And I need your 

commitment, Ms. Rowe, please, to work with me on this. And I will 

move on to my questions, and hopefully there is enough—thank 

you, thank you. May I have your commitment? 

Ms. ROWE. I was going to say you have my commitment, sir. I 

would——

Mr. SABLAN. Because we have in the past—I will be very honest. 

Under Secretary Concannon has really been gracious to us, and we 

need to address this, get into the food program, because I think 

that is where Americans need the most help. I am just trying—

there are more details. If you want more details, I can share it to 

you. I am just a little embarrassed that I am telling the whole 

world that Americans in my district are not getting enough to eat, 

because the Americans are supposed to carry out the program, fulfill the number one reason it exists, approves plans that they know 

doesn’t serve the program. That is where I need your commitment. 

I appreciate it, and I yield back. 

The CHAIRWOMAN. Now, I would like to give Mr. Southerland 

from Florida, another Member of the Committee, a full 5 minutes. 

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Mr. SOUTHERLAND. Thank you, Madam Chair. I would like to 

yield as much time as my friend from the Northern Mariana Islands needs to finish his point. 

Mr. SABLAN. Thank you, Mr. Southerland. I have Ms. Rowe’s 

commitment. She will work with me. I shouldn’t be airing any 

more of this. I am really grateful that you consider that. Thank 

you. I yield back. 

Ms. ROWE. You have my commitment on the record. 

Mr. SABLAN. Thank you very much. 

Mr. SOUTHERLAND. Ms. Rowe, thank you for appearing today. I 

am going to ask just some basic fundamental questions. 

I am one of the newest Members of the Committee, so I am trying to get my arms around all of this. Tell me if you would, what 

is the average length of time SNAP recipients participate in the 

program? 

Ms. ROWE. The average length of time that new recipients are 

participating in the program is about 8 months, 8 or 9 months. 

Mr. SOUTHERLAND. Is there a—is there a maximum amount of 

time? Are there any limits on that? 

Ms. ROWE. There are no time limits on participating for most eligible people. 

Mr. SOUTHERLAND. Okay. And tell me about in calculating benefits, can you tell me what is excluded from household income and 

what deductions are allowed? 

Ms. ROWE. I am going to need some assistance from——

Mr. SOUTHERLAND. That is fine, and I understand. 

Ms. ROWE. Let me just confer with the staff. 

Mr. SOUTHERLAND. Sure. 

The CHAIRWOMAN. Ms. Rowe, if you would like to have one of 

your assistants answer for you, that might be better. 

If you could state your name for the record, and I will give you 

an extra 20 seconds. 

Ms. SHAHIN. My name is Jessica Shahin, and I am the Associate 

Administrator for SNAP at the Food and Nutrition Service. 

I believe your question was around the eligibility requirement. 

Mr. SOUTHERLAND. Yes, it was. In calculating benefits, what is 

excluded from household income, and what deductions are allowed? 

Ms. SHAHIN. Oh, okay. If I could start with the household income 

in the regular program, it is 130 percent of poverty, and then to 

receive benefits you need to get to a net of 100 percent of poverty. 

The deductions are around things like if a state uses a standard 

deduction that looks at shelter, utilities, those kinds of things. So 

the deductions are related to their household expenses. 

Mr. SOUTHERLAND. Okay. So those are all deducted. Tell me 

those again. Housing, utilities? 

Ms. SHAHIN. Shelter deduction, utilities. 

Mr. SOUTHERLAND. Okay. All right. And what is—I heard—what 

is the average? I see on here that the budget for Fiscal Year 2010 

was $68 billion. What is the average benefit at any given time of 

the people that are recipients of the program? What is the average 

benefit? 

Ms. SHAHIN. I think the average benefit for a family of four is 

around—for an individual person, it is around $130. You don’t mulVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00649 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
638

tiply that by four people, because you get less and less as the family grows. 

Mr. SOUTHERLAND. Sure. So that would be $100——

Ms. SHAHIN. Thiry dollars more per person average. 

Mr. SOUTHERLAND. Okay. And then finally, I noticed, Ms. Rowe, 

we were talking or discussions earlier about the states. What is the 

incentive for the states to track and prosecute, in your term, bad 

actors? Where is—well, what is the incentive? What is the penalty 

if they don’t? 

Ms. ROWE. Well, first of all, states will face a fiscal penalty for 

failing to achieve an error rate at a certain level based on the national error rate. You must maintain your error rate at or below 

the national error rate. States receive penalties. That is not something that any state wants to have to explain to the legislature or 

to their Governor, that they are going to receive a fiscal penalty for 

failure to perform. States also receive bonuses, and it is the bonuses that encourage states and—encourage states to not only stay 

focused in this area, but to have additional resources to apply, 

whether it is for additional investigators, additional staff, outreach. 

I will tell you, when I was a state administrator both in the District of Columbia and for the State of Connecticut, we were competitive among our colleagues. We wanted to have as low an error 

rate as possible. We wanted to be able to go to our Governors and 

our legislatures and talk about the efficiency in which we were operating the programs. Not only are you here in Congress concerned, 

but legislatures are concerned, and members of state legislatures 

and Governors, about the error rate and ensuring that the program 

is operated efficiently. 

So it is the efficient operation of the program, as well as staying 

very focused on what you need to do to maintain your error rate 

and to continue to have it drop. 

Mr. SOUTHERLAND. Okay. Thank you, Madam Chair, and I yield 

back. 

The CHAIRWOMAN. Thank you. 

And, Mr. McGovern, you are recognized for 5 minutes. And I 

would like to—before the clock begins—to recognize that the Ranking Member of the full Committee, Mr. Peterson, is here, and because I am a tough nut, you are going to be number 5 on the list, 

but we will give you a chance to make a statement as well as a 

chance to ask questions, sir. 

Mr. MCGOVERN. Well, thank you very much, and thank you, 

Madam Chair, for letting me participate in this hearing. Thank 

you, Administrator Rowe, for being here. 

You know, I just want to say a couple of things. First of all, when 

the Chairman of the full Committee opened up, he talked about the 

fact that we are in tough economic times, we all have to make difficult choices, but I would like to state for the record that I don’t 

think all programs are equal, and certainly programs that provide 

nutrition and food to people in this country to ensure that they 

don’t go hungry I think need to be prioritized. 

And the problem we have here, quite frankly, is we still have a 

hunger problem in America. There is not a community in this country that is hunger free. What we need is a holistic plan that involves, quite frankly, more than just the programs in your DepartVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00650 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
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ment and in USDA, but we need a holistic approach to try to eradicate this problem once and for all. 

It was mentioned that we are spending more on the SNAP Program than ever before. That is because more people are falling into 

poverty, more people are out of work, more people are eligible. If 

the economy gets better, the amount we spend goes down. 

The Chairman of the full Committee also talked about the Categorical Eligibility Program, or Cat El, I guess, is what they call 

it, which I think helps make SNAP a more efficient program, and 

I think repealing Cat El would decrease participation and make it 

more difficult and costly for states to administer the SNAP Program, and I think would result in increased error rates, exactly the 

opposite of what our goal should be. So I guess I don’t want to—

I hope this Committee doesn’t go down that road. 

I would appreciate your comments on that. You mentioned how 

the SNAP Program is now more efficient than at any other time 

in its history, and when you compare it to a lot of other government programs, it looks really, really efficient. And amongst the 

error rate, is included in that number the number of cases of underpayments; in other words, where people who are eligible for a 

benefit don’t get the entire benefit? 

Ms. ROWE. Correct. 

Mr. MCGOVERN. I appreciate your comment on that. 

And then finally, there are a lot of people still who are eligible 

who are not in this program, and I would be—I would like you to 

answer the question of how many people are eligible but are not 

participating, and are they senior citizens, or are they children, or 

where does that—you know, where do those numbers fall? 

But look, these are really vital programs. I am sorry my colleague from Iowa left. I have to tell you, I think all of us when we 

go into our districts, we see people who are in really tough situations, who—quite frankly, these are the programs that actually put 

food on the table to allow their kids to have enough to eat. So in 

any event, I will yield to you to answer the questions. 

Ms. ROWE. Well, you are absolutely right, the problem is hunger. 

People need to be able to put food on their table, and this program 

allows them to be able to do that; not only to put food, but to put 

healthy food on their table. 

With regard to broad-based categorical eligibility, it just allows 

states the ability to simplify their SNAP administration by aligning 

the income and the resource limits with their TANF Program, 

something I wish I would have had when I was administering programs. It is a simplified way of making the application process 

easier for both clients and states. 

I also should mention that the household must still have a net 

income low enough to receive SNAP benefits, so even though they 

are categorically eligible, they still have to have a household net income low enough to receive benefits. 

In looking at some of the data, almost 98 percent of those receiving SNAP benefits have an income at or below the regular SNAP 

income limit of 130 percent, even in states with broad-based categorical eligibility. So it hasn’t opened up. What it has done is 

made it easier for people who want to participate to understand 

what is necessary for them to participate, and also to support the 

640

staff in terms of the administration and the application of the program. 

Underpayments and overpayments are all part of that payment 

error. We continuously work to ensure that we have neither underpayments nor overpayments, again, something that states are very 

focused on. And there are those who think that we are more focused on the overpayments, but my experience is we are focused 

on both. We want the right amount of money to go to the family 

and individual who is participating in the program. So we focus a 

great deal on underpayments and overpayments. 

Those who are eligible who are not in the SNAP Program—and 

I was hoping somebody was pulling that data together and was 

going to hand me a note—but I will make sure, but it is a large 

percentage, and we can give it to you by the percentage of elderly 

and other individuals who are eligible but not participating. 

Mr. MCGOVERN. Thank you. 

The CHAIRWOMAN. Thank you. 

I would like to now recognize my friend from Maine, Ms. Pingree, 

for 5 minutes. 

Ms. PINGREE. Thank you, Madam Chair. I appreciate that, and 

I appreciate both of you holding this hearing today. Thank you very 

much for the work that you do and the way that you help some of 

our most vulnerable citizens. Welcome to your job after 4 months. 

I am also new on this job. I am a new Member of the Committee 

and am very pleased to be here. 

This is a tough economy, as many of my colleagues have stated, 

and I appreciate the thinking that my other colleagues are putting 

in on helping you think about how to make sure we reduce fraud 

and abuse in this program. And in tough times I think we do have 

to make sure that all the states are spending their money wisely 

and there is sufficient oversight. So I appreciate that discussion. 

I also know in my State of Maine, where we are 38th in per capita income, we have lost a tremendous number of manufacturing 

and other natural resource jobs, about 250,000 residents of our 

state take advantage of the SNAP Program, and that is a lot of 

people in a state of 1,300,000 people. I also know that we do have 

many vulnerable citizens who do still not receive access to the program, so I do appreciate the importance of outreach, I think particularly to seniors who often don’t take sufficient advantage of the 

program. 

I have a lot of concerns about this, and I will try to get a couple 

of questions out. One of my issues in Maine that you have helped 

us deal with—and we are very appreciative of the work that Secretary Concannon did. As you may know, he spent some time in 

Maine, and we think highly of him, and I hope that doesn’t ruin 

his reputation in the Department. We really struggle with high 

heating costs and other excessive expenses. As I am sure you know, 

as one of 17 states to obtain a standard utility assistance waiver 

offered by the USDA in 2009, I really appreciate the 40,000—on behalf of the 40,000 Mainers who benefited from the Administration’s 

decision to extend that waiver twice so Mainers could get through 

the winter, but the final adjustment came down to many people 

losing $20 a week in benefits. I know to many people that doesn’t 

sound like a lot of money, but I know too many seniors and other 

641

very vulnerable citizens who are out of work, who have been out 

of work for a long time, have depleted their benefits, they are at 

the end of the line, and that was very difficult. 

I guess one of my questions, which goes counter to some of the 

concerns that people have, is when was the last time we updated 

the SNAP formula, and how does the Department plan to deal with 

assuring adequate nutrition for those people who I think in a state 

like mine where we are the most oil-dependent state in the country, we pay high heating oil costs, tough winter like the last one, 

a lot of people just couldn’t make ends meet, and we didn’t feel the 

cost adjustment was sufficient or representative for us? 

Ms. ROWE. Again, I am going to ask Jessica if she would join me 

with regard to the last time that we looked at the standard utility 

allowance and made any updates. 

Ms. SHAHIN. Actually, yes, ma’am. The standard utility allowance is adjusted by states on an annual basis in accordance with 

what their rates are, so it is updated every year. Each state does 

their own methodology, but it does have to be approved by FNS as 

a methodology for determining that year’s standard utility allowance, and its basis is the cost that the state has incurred in the 

previous year. 

Ms. PINGREE. I am sure we will end up having more conversation 

on that over time, but I thank you for that. And I just wanted to 

reiterate that it is a continuing challenge for my state, and I am 

sure in other places as well. 

I want to switch gears here a little in the time I have available. 

One of the things that I am particularly interested in is this convergence, particularly being on the Agriculture Committee where 

we think about the interests of farmers. And I represent a lot of 

small farmers in my state, and I know how important it is to work 

as efficiently as possible in your Department, but we are very interested and excited about the idea that there are many programs 

in Maine and other states that are utilizing the SNAP Program for 

participants at local farmers markets. 

I may have to discuss some of this in my second round, but let 

me just sort of put it out there, and we can follow up on it later. 

It all seems like a win-win idea. To me, it gets into this issue of 

adequate nutrition, how do we make sure that people have access 

to healthy foods. It is good for our farmers. They sell more at the 

markets, and, frankly, many of them are excited to see seniors and 

other people in vulnerable populations coming in, buying fresh 

food, learning how to cook them, and a whole variety of other 

things. 

I do sense that there are some challenges in working with the 

program. There is some overlap in the departments, there is some 

difficulty in getting EBT readers in many of our farmers markets, 

and some of that has to do with what we see as a little bit of overlap between FNS and AMS, not to get into too many initials. 

I am about to run out of time, so I may just put this out there 

when I get back to my second round, which I assume we are going 

to have a second round probably. I would like to talk more about 

that because that seems like a solvable problem and deals with a 

lot of the things that we are talking about today. 

The CHAIRWOMAN. Thank you. 

642

Now I would like to recognize the Ranking Member of the full 

Committee, Mr. Peterson. 

You may give an opening statement and ask follow-up questions 

if you choose. 

Mr. PETERSON. No, Madam Chair. I just have a couple questions. 

Ms. Rowe, you proposed regulations for school nutrition standards that are supposed to keep the standards current within Dietary Guidelines and consider the recent IOM report, yet your proposed rule would significantly change the way tomato sauce and tomato paste is counted, which would substantially increase the cost 

of serving school lunches and generally make pizza uneconomical 

for schools to serve. As I understand it, you are miscounting tomatoes. Apparently there is nothing about crediting tomato products 

in the Dietary Guidelines, and there is nothing about it in this IOM 

report. We don’t think there is any scientific justification for the 

proposal, so could you explain to me why you proposed a change 

in accrediting tomato products? 

Ms. ROWE. Well, what I can say is that it was—as we looked at 

the standards of the Dietary Guidelines, as well as the standards 

within the IOM recommendations, it was a determination by our 

staff that that was a necessary change to make, which is why we 

included it in our proposal. Now, we did receive over 130,000 comments on those proposed rules. Just yesterday I received an executive summary of the comments, which was about 150 pages. We 

will be looking very closely at that issue as well as other issues 

that have been raised and make some determinations as to how to 

move forward. 

Mr. PETERSON. I don’t see what justification there is, and if you 

are going to go ahead with this, then maybe what I will propose 

is we will reduce the funding for this program by whatever the increased cost of this is, if that is how people want to operate. 

The second thing on the categorical eligibility issue, can you tell 

me how many more people became qualified for this program 

through categorical eligibility? 

Ms. ROWE. As I understand, based on looking at some preliminary data, it is about 2 to 21⁄2 percent. 

Mr. PETERSON. So that is—what is it, 44 million people? 

Ms. ROWE. So it is about 2 or 21⁄2 percent of that number. 

Mr. PETERSON. But do you have any idea how much cost that 

added to the system, these 2, 21⁄2 percent? I guess they have to go 

through this benefit formula calculation to figure out what they are 

going to get, like everybody else does, but——

Ms. ROWE. The comment that my staff is sharing with me is it 

is about one percent of the benefits, so it would be about $100 million. 

Mr. PETERSON. And we——

Ms. ROWE. About $600 million, I am sorry. 

Mr. PETERSON. We had the IG in here talking about the fraud 

issue. From what I could tell, a lot of the problem are these small 

mom-and-pop operations that only have a cash register and a tape. 

We have had the problem before where they were selling these food 

stamps outside the door for half price. Now apparently they are 

ringing this up and giving whoever has the card half of the money, 

and they keep half the money. Is that, in fact, the case? And what 

643

are you doing about this? I am not even sure we should let people 

buy food in some of these places because it is two or three times 

as expensive as it is in a grocery store. 

Ms. ROWE. Well, in response to your question, we have—that is 

trafficking. We have been looking very carefully, very closely at 

that issue. We do have identification through our ALERT system. 

We identify the stores where we see trafficking patterns that may 

exist. We are looking at our retailer definitions, who participates 

in the SNAP Program. We are working with the IG on some investigations. Many of the things, investigations and notoriety, that has 

arrived in the newspaper are stores that we already have been 

looking at. So trafficking, understanding what the profile is of 

stores who are trafficking, that are possibly trafficking, who are in 

the program, but also having some understanding of those—sorry, 

applying that knowledge to stores who are interested in participating in the program will also address some of the challenges that 

we face in not having stores come into the program who we think 

may very well be coming in, and the end result is they would participate in trafficking. 

We are also increasing the penalties for stores who are found to 

be conducting these unethical business practices. We have increased our working relationship and our coordination with the 

OIG’s office, as I have said. We are looking at specialized investigators. We have investigators who are very adept at looking at the 

data that we have, the data mining that we are doing. To profile 

a store, we can go in, we can determine through our own undercover investigation whether or not this activity is going on. So 

there is a lot going on. 

Even though we are at one percent, we do not find that satisfactory. So we are doing a number of things within the agency to continue to take that number down and to target those stores who are 

participating in these unethical practices. 

Mr. PETERSON. Could I just follow up? 

The CHAIRWOMAN. Since you are the Ranking Member of the full 

Committee, absolutely. 

Mr. PETERSON. What percentage of these stores that don’t have 

the current technology, are a problem? Is it one percent of them or 

ten percent of them? Do you have any idea? 

Ms. ROWE. I am not quite clear what you mean by the current 

technology.

Mr. PETERSON. Well, I mean they don’t have electronic scanners. 

Ms. ROWE. The electronic scan card. 

Mr. PETERSON. So they just have a tape. And so they don’t have 

to ring anything up. 

I was talking to the IG about whether you could set this system 

up so that as they ring up the groceries, the items actually are put 

on the card so you could have an audit trail, and one of the answers I received is that some of them don’t have the technology, 

so you can’t do that. 

I understand all these things that you are doing, but errors and 

fraud are still hard to catch. So the question is, are we getting at 

95 percent of the problem, or is this much bigger? Should we actually look at limiting the ability of some retailers to be in the proVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00655 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
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gram if you haven’t got a way to control it? That is the question 

I have. 

Ms. ROWE. As I understand it, there are very few stores that 

don’t have the EBT electronic devices, the point-of-sale devices. 

And those stores that don’t have the point-of-sale devices would be 

stores—as I said, we have stores that we set up. 

Mr. PETERSON. How many are there out of the total? I mean, do 

you have any idea what percentage of the total food stamp retailers 

are that kind of a store? 

Ms. ROWE. We can certainly get back to you on the percentage 

and the number of stores that do not have the point-of-sale devices. 

But I will say that as we look at strategically how do you think 

about managing this program, those would be stores that may be 

a store that is on a high-profile alert that we watch more carefully 

than stores that do have the electronic benefit device. 

Mr. PETERSON. I would like to have that information if you could 

get it. 

Ms. ROWE. Certainly. 

Mr. PETERSON. Thank you. 

Thank you, Madam Chair. 

The CHAIRWOMAN. And thank you, sir. 

Now we will go to the second round of questions. 

Ms. Rowe, Administrator Rowe, the 2010 Dietary Guidelines for 

Americans published by the USDA in January of this year specifically list four new trains of concern: potassium, dietary fiber, calcium, and vitamins. Unfortunately, Americans young and old are 

not getting enough of these important nutrients. One medium-sized 

potato has 18 percent of the daily recommendation of potassium 

and eight percent of dietary fiber. For potassium, potatoes are considered to be an excellent source, and for dietary fiber they are considered to be a good source. Knowing this, do you think potatoes 

are unhealthy? Yes or no. 

Ms. ROWE. Within our program for children who participate, no, 

I don’t think potatoes are unhealthy. 

The CHAIRWOMAN. Okay. If so, if they are not unhealthy, do you 

think Americans, and kids in particular, should reduce their consumption of potatoes as proposed by the USDA’s meal plan, also 

issued in January? 

Ms. ROWE. What we have said in that plan in looking at it is 

that children have meals outside of the school meals; that they 

would have access and the opportunity to have sufficient potato 

consumption and consumption of other vegetables that are limited 

under our guidelines. So we do not think that it is necessary to 

have unlimited white potatoes, within our dietary guidelines, in 

our meal pattern guidelines. 

The CHAIRWOMAN. Well, I am kind of surprised at that assumption, ma’am, because in my city of Cincinnati that I represent, 

there are some kids that the only food they get all day long is the 

School Lunch Program and maybe the School Breakfast Program. 

So to think that they are going to get these things outside of going 

to school is just not going to happen. 

And I really work to try to eradicate poverty in my district, and 

in some cases the only meals they get are when they are at school. 

In fact, I just read a book by Jeannette Walls about her issue with 

645

poverty, and she now works for MSNBC, and she talked about the 

fact that the only time she ever got a hot meal was when she was 

in school, and she is now into her 40s. So it is the school, whether 

we have had a SNAP Program or another nutrition program, that 

has really been the baseline for our children. 

But having said that, some proponents of the current USDA proposed meal plan rule believe that other revenue sources authorized 

in the child nutrition reauthorization will offset the cost increase 

contained in the proposed rule. USDA’s analysis indicates that 

schools will have to develop innovative solutions to the funding gap 

created by the proposed rule. In other words, they are talking 

about $5 billion over 10 years, of which 80 percent of the schools 

that have to bear that cost are the ones in my district that can 

least afford to do it. 

Does the USDA continue to stand by their estimates of the impact of the proposed rule, or do you now believe that revenues from 

paid meals and other administrative changes will be sufficient to 

make schools whole as they attempt to implement the proposed 

rule? And if you continue to believe that schools will face a revenue 

shortfall as they implement the proposed rule, do you have any 

suggestions that I might pass on to the schools in my district? And 

by the way, I have a district that has got a lot of poverty. 

Ms. ROWE. Well, let me answer the end of your question first. We 

continue to work with schools to help them identify strategies that 

they can use to meet the meal pattern guidelines. There are many 

schools who, at the time the IOM issued their recommendations, 

started changing their School Meal Program to try and meet those 

guidelines, identifying ways in which they could use more farm-toschool products that would maybe reduce their food costs. It may 

have an initial increase in their prep costs and their personnel 

costs, but eventually they were able to see some savings and be 

cost-efficient. 

In addition, by allowing schools to now charge the adequate 

amount for both the paid meals as well as their a` la carte, it is an 

additional revenue source that is coming into schools. 

We are prepared to work with schools to ensure that they are 

able to manage the new meal patterns within the budget constraints that they face within their schools, and we are doing that 

now. We are working with the National Food Service Management 

Institute. We have been working with a number of other organizations, School Nutrition Association, et cetera, to help schools think 

about how they can meet these guidelines and still be within their 

budget constraints. 

The CHAIRWOMAN. Okay. And because I am a strict timekeeper, 

I am going to now yield to my good friend Mr. Baca. 

Mr. BACA. Thank you. 

Again, Ms. Rowe, thank you very much for providing us with a 

lot of information. I am intrigued with the statistic mentioned, that 

one percent of the total fraud is trafficking. That is quite low, particularly now that there are record enrollments. And it seems like 

we are focusing a lot on this number. But, when we stop to look 

at one percent, consider that is less than the rate of fraud in Federal contracts. There is a lot more fraud and abuse in contracts. 

And it seems like we are not concentrating on the need to feed peoVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00657 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
646

ple here in the United States. We have a lot of people that are 

abusing our defense contracts and monies that are being wasted. 

If all we care about is fraud, we should be focusing a lot more in 

that area than on SNAP. 

But getting back to one of the questions I want to ask, what are 

your thoughts about the recent movement by some localities, most 

notably in the City of New York, to limit the choice of food available with SNAP benefits? 

Ms. ROWE. Well, as I said, we are looking at the New York waiver that they have submitted. We have it under careful review, and 

we will be making a determination. I would be happy to share the 

outcome of that decision with all of you. 

With regard to the other—your question in terms of the dietary 

behavior of most Americans, most Americans, I know myself, do 

not have a good diet, and we are constantly looking for ways to increase information to Americans so that they can improve their dietary habits and lifestyles. So I think what we see happening in 

state after state, the states are becoming more and more concerned 

about the diets of their citizens, states are taking actions. We are 

looking for ways to incentivize activities within states to reinforce, 

provide incentives that reinforce positive food—positive habits 

around healthy nutrition and healthy lifestyles. That is an approach that we have been taking. 

Mr. BACA. Okay. Do you feel that these initiatives will either improve health or save money? 

Ms. ROWE. Well, I think the initiatives—and the final information is still not available to us, but as we look at incentives, we certainly see greater participation in individuals who are purchasing 

fresh fruits and vegetables. As we look at availability, farmers markets, et cetera, particularly farmers markets where we do have—

where they are able to use SNAP benefits, or use the Senior Farmers Market vouchers, or the WIC vouchers, or any of those programs, we are seeing greater consumption and participation in 

fresh fruits and vegetables. We think that does carry over into people’s buying habits as well. 

Mr. BACA. Thank you. 

One of the programs that I am very much concerned about is the 

Food Distribution Program on Indian Reservations, FDPIR. Too 

many times we ignore that many of these tribes are very poor and 

don’t have adequate access to food. What role does USDA play in 

helping tribes reach out to promote FDPIR? 

Ms. ROWE. We work very closely with tribes. One of my first visits when I came onboard was to one of the major meetings of tribal 

leaders. We work very closely with them. We have an overview 

work group that looks at the types of foods that are distributed. We 

keep trying to make sure that the foods are healthy, but also meet 

tribal needs and tribal guidelines. We have continued to expand, 

work with the tribes members to explain to them the importance 

of the food package that we have available and how healthy that 

food package can be for themselves and for their families. 

Mr. BACA. Okay. I am also curious to know how FDPIR and 

SNAP work side by side, since, as I understand it, no one can be 

enrolled in both programs at the same time. Is FDPIR only used 

in areas that are remote and have little or no access to stores? 

647

Also, do you know the percentage of reservations that contain food 

stores that accept SNAP benefits? 

I had to throw in both questions because I am running out of 

time. 

Ms. ROWE. With regard to the participation in SNAP and FDPIR, 

it is operating in locations where there is not easy access to any 

other food stores and members who live on Indian reservations can 

participate in. So, yes, it is that individuals can participate in 

SNAP, or they can participate in FDPIR. They are not able to participate in both. 

With regard to the second part of your question, the availability 

of stores. That information we can get back to you on. I am sorry. 

The availability of stores. We can get that. 

The CHAIRWOMAN. Thank you so much. 

And before I turn it over to Mr. Southerland, I would just like 

to recognize that we have students in the audience from the Future 

Farmers of America in my district at Fayetteville-Perry, and they 

are seeing democracy in action. And I think it is very timely that 

they are here while we are discussing the merits of the food safety 

program—or I mean the food nutrition program in the farm bill. 

And so with that I will give 5 minutes to my friend from Florida. 

Mr. SOUTHERLAND. Thank you, Madam Chair. 

I would like to recognize the efforts of Florida Partnership to End 

Childhood Hunger and Florida Impact. Both organizations are 

based in my Congressional district in Florida, and I am proud of 

their efforts to work with over 50 organizations committed to work 

collaboratively to address childhood hunger and those in need. The 

partnership leverages public and private partnerships and Federal 

nutrition dollars to reach low-income families. 

What is your—and I know you are new in your post here. What 

is, in your opinion, the role between these public and private partnerships and what they—how they should work together to really 

address hunger? 

Ms. ROWE. The role of these partnerships is critical, particularly 

as they work together in a state leveraging both their resources 

and their knowledge, being able to target their resources, being 

able to be strategic in thinking through how do we reduce, how we 

move the dial, as I often call it, from where it is today to where 

we want it to be to reduce hunger, to improve nutrition. 

We support these partnerships. Many of them, our regional offices work closely with them. We provide staff support to them. 

They are an integral part of the work that we do at the regional 

level and at the national level. It is very important to have these 

public-private partnerships. 

Mr. SOUTHERLAND. I am assuming you have similar partnerships 

around the country in states everywhere and communities everywhere? 

Ms. ROWE. We have them around the country, and just for summer feeding alone, the partnerships, the work that goes on in a 

state with these major partnerships to get information out, to recruit families, to get them involved, but also to provide information 

and data, those partnerships are extremely important. 

Mr. SOUTHERLAND. Very good. 

648

I also want to mention, I know that our Florida Agriculture Commissioner Adam Putnam, a colleague of many of those on this 

panel this past year, I know he has a current pending application 

before USDA Food and Nutrition Service, and it is basically the 

Healthy Schools for Healthy Lives Act, and so I just would like on 

behalf of my state to just ask for your consideration in that application. 

Ms. ROWE. Absolutely. 

Mr. SOUTHERLAND. And I know that we are eager to work to 

make a difference not just in my district, but in the State of Florida. 

Madam Chair, I know I have 21⁄2 minutes, but we want to be 

good stewards of our time, so I don’t want to just ramble, so I am 

going to yield back. 

The CHAIRWOMAN. Let me now give 5 minutes to my good friend 

who may not feel that he has a vote, but he always has a voice, 

from the farthest part of our Americas, Mr. Sablan for 5 minutes. 

Mr. SABLAN. Thank you very much, Madam Chairman. Thank 

you for your kind words. I say I have a voice right now, but I prefer 

to vote actually eventually. 

Ms. Rowe, again, 4 months on the job, and I am asking you so 

many details about this place that you probably never have heard 

of maybe 4 months ago unless you have been there, right? 

Ms. ROWE. I will tell you that I have heard a lot about it since 

I have been in this position. 

Mr. SABLAN. I am sure. 

Anyway, I want to compliment you. WIC is one of the best programs that has happened to the Northern Mariana Islands, and on 

behalf of the babies and women and children, it is just a wonderful 

program. 

I have—the School Lunch Program, you see, because we are 

again from the territories, like I said earlier, almost 1⁄2, a decrease 

of almost 1⁄2, 50 percent of our GDP, increase in layoffs, increase 

in furloughs, but our Census count won’t come up until the summer of 2012. That is a year away from now. But all of these economic conditions have seen an increase of students eligible for the 

School Lunch Program, and I have my education people on my 

back all the time asking for the release of the Census because they 

know, they know that there is an increase of eligible students for 

the school lunch. They also know that without that increase in 

numbers, they can’t justify to you an increase in the need for increased funding for the program. So, again, I would like to ask you 

to join me again in looking into that, and I am just associating this 

new issue in food commitment we have to work together earlier. 

I am also going to ask, if possible, to ask for a response to the 

letter that Mr. Jim McGovern, Mr. Sam Farr, and I wrote on June 

24th to Secretary Vilsack, and I appreciate that. 

And let me just—let me give you a little information on how 

much attention—and this is not specific to your Department, this 

is to many Federal offices—how much attention they have for the 

Northern Mariana Islands. Yesterday I went to your website. I 

wanted to find out in your public affairs, government affairs, who 

I should talk to. And did you know that in your website as of yesterday, I don’t know if they made changes today, that under Region 

649

9 they are still listed as covering the Trust Territory of the Pacific 

Islands. The Trust Territory of the Pacific Islands ceased to exist 

25 years ago, but it doesn’t cover the Northern Mariana Islands, 

which became a part of this nation in 1978, over 30 years ago. 

This, Miss Rowe, with all due respect, and in all sincerity, is 

what I am saying when I say—and you are not the only one. Don’t 

think you are exclusive in this. The absence of the necessary attention that Federal agencies need to give to the territories, and in 

particular to America’s newest territory, the Northern Mariana Islands, and those are Americans out there. Thirty percent of our 

high school graduates put on a uniform. I don’t know if that happens anywhere else in America. Thirty percent of our high school 

graduates. And we are talking about a very small population. They 

deserve the attention from Federal Government employees, and it 

breaks my heart. 

And I am the most grateful person from the Northern Mariana 

Islands to all Americans. My gratitude and appreciation for the 

American people has grown exponentially in the little over 2 years 

that I have been here. Grateful. I tell my people back home, if you 

see an American taxpayer, by God say thank you, and I mean that 

from the bottom of my heart. 

But Federal offices, I know we are all busy, going through this 

175 page report and all these statistics that I don’t read basically. 

But those are Americans, and they are entitled to no less than the 

attention that we give Americans, we give Members of Congress. 

No less; not more, but no less. 

For that, I yield back, and I thank you for your presence here 

today. 

The CHAIRWOMAN. Thank you. And isn’t this a powerful voice? 

Ms. ROWE. I was going to say, you have my attention, and you 

have my commitment. 

Mr. SABLAN. And you know I love you, Ms. Rowe. 

The CHAIRWOMAN. Mr. McGovern, do you have any more questions? 

Mr. MCGOVERN. Yes, I do. 

The CHAIRWOMAN. Five minutes, sir. 

Mr. MCGOVERN. Thank you. 

Let me first say with regard to a couple things that were brought 

up, this New York waiver, and the suggestion by my colleague Mr. 

Peterson about limiting where SNAP beneficiaries can shop, I 

would urge you to proceed with extreme caution on both of those 

things. 

I was at the press conference with the First Lady yesterday dealing with food deserts. There are some people who do not have access to supermarkets and stores that provide the kind of nutritious 

food that we all define as nutritious, and while it sounds nice to 

say we are going to make sure people can only spend money on 

good food, we should be thinking about how to give people more access as well as the issue of affordability. So it sounds good, the 

New York waiver, but I would urge you to proceed with caution. 

I have a few questions, and then—let me get through them all, 

and then you can answer them. 

Following up with the categorical eligibility issue, isn’t it true 

that if we cut Cat El, that that would result in increasing—it 

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would result in an increase in error rates and fewer people receiving SNAP? 

And then on the benefit level, does the SNAP last a full month? 

What happens when someone runs out of their SNAP benefit? 

Where do they turn to for food? 

And then finally, going back to a point I brought from my original statement, I do not believe that we have a comprehensive or 

holistic plan to deal with hunger in America, and I have been suggesting to the White House and the Secretary of Agriculture, and 

I am going to suggest to you, we should have a White House conference on food and nutrition. We need to connect the dots because 

ending hunger is not just about SNAP, it is not just about WIC, 

it is about a whole bunch of other things. We need to connect these 

dots. 

And the President made a pledge that we would end childhood 

hunger in America by 2015. We are not, at the rate we are going. 

And I want to be able to keep that pledge, and I would—my followup question would be would you agree with me that we should do 

a White House conference on food and nutrition so that we can 

come up with a holistic plan so we all know what our assignments 

are? Again, it falls under the jurisdiction of not just what happens 

in this Committee and not just what happens in government, it is 

the private sector, it is the NGO community, it is the faith-based 

communities. But we don’t have a plan. We do not have a plan. I 

would urge you to help me convince the President to go ahead with 

that conference. 

So with that, I will let you answer my questions. 

Ms. ROWE. Well, let me answer the question in terms of any reduction in the food stamp program, any changes in categorical eligibility or any reductions would result in people having to leave the 

program and not being able to meet their basic needs. 

I think the other part of your question, you and I see it all the 

time, and I am sure others as well, individuals run out of benefits 

sometime toward the—after the middle of the month. They spend—

and when that happens, they have to turn to food pantries. They 

have to turn to the food pantries in their churches, they turn to the 

food pantries and the food banks that are in their communities, so 

they turn and look for resources very quickly. 

Benefits are usually spent in the first 3 weeks. So, the last week 

of the month, that is also in response to the question about the obesity issues, because when those benefits are spent, that is when individuals turn to foods that will fill the stomachs of their children 

and themselves, which may not be the healthy foods, and they may 

be the foods that lead to obesity and other health-related illnesses. 

The broad-based categorical eligibility simplifies and thus reduces error rates when you think about how, as a state, we apply 

that program or that rule. So I think if we eliminate it, we would 

find ourselves talking about a different number or additional resources being spent to try and maintain the error rate that we currently have in place. 

With regard to a comprehensive process for planning, I agree 

with you that we need to have a comprehensive process for planning. To the extent that that would be a White House conference 

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or some other vehicle, we would—I would certainly be prepared to 

support it. 

Mr. MCGOVERN. I appreciate it. I do have a request in to the 

President calling for a White House conference. I just feel it needs 

to be—this issue needs to be brought up to that level, if we are 

going to be serious about it. I think everybody, Republican and 

Democratic, are all committed to trying to end hunger in America, 

but we don’t have a plan. We don’t have a comprehensive plan, and 

I don’t know any other way to get to one where we can hold people 

accountable other than bringing it up to the Presidential level. The 

First Lady’s press conference was really good yesterday, but she 

didn’t talk a lot about hunger or poverty, and, as you have mentioned, hunger is a contributing—food insecurity is a contributing 

factor to obesity. But, anyway, I would appreciate any support I 

can get on this idea. Thank you. 

Ms. ROWE. You are welcome. 

The CHAIRWOMAN. Thank you. 

In our final set of questions before we go to two closing statements, one by Mr. Baca that will be delivered by Ms. Pingree and 

the final one by myself, and any closing remarks that you may 

have, so I am going to turn it over to Ms. Pingree in her role as 

Ranking Democratic Member for 5 minutes of questions. 

Ms. PINGREE. Thank you. 

Thank you for persevering here and again for your good work, 

and to our Chairwoman for holding this hearing. I will try to be 

brief here because some of these things I think I will just submit 

to you in writing. 

But just to go back to if you recall 100 questions ago, I am very 

interested around the things in EBTs and farmers markets, and 

one of the things I have heard, we talked to a lot of our farmers 

markets, I know many of them struggle. Some don’t have Internet 

access, but sometimes it is just other parts of the bureaucracy. I 

have been told that there is some argument that if they were able 

to combine the work that went on at FNS and AMS, and this may 

be way in the weeds for you at this moment, but it could streamline some of the processes, the application processes they have to 

go through. Our only interest in the end goal is making sure that 

more people who participate in the SNAP Program are able to buy 

food from the local farmers market. So I am not sure if you have 

an answer to that question, but one of our issues is around that 

and how to make this work better, and I think we could work with 

the Department on that. 

Ms. ROWE. We have started to have meetings with AMS earlier 

year this year before the season opened for farmers markets to find 

ways in which we could be more collaborative in—both in financing 

farmers markets, but also in approving them, authorizing them, 

and getting point-of-sale devices in. I think we were a bit better 

this year. We will continue to work toward it. I would be happy to 

have further conversations with you about it as well and members 

of your staff. 

I became interested in the nutrition area because of my involvement in my church’s farmers market, and so I saw the benefits on 

the south side of Chicago when people came out and had a farmers 

market where they could make purchases. 

652

Ms. PINGREE. Great. Well, I am glad we are on the same page 

on this. I would be happy to work with you and talk more about 

it. I do think it is one of those things, a few bureaucratic hurdles 

we get out of the way, and we can make this work. 

I just want to bring up one other topic, and I know there are 

many this morning. It is my understanding there are more applications from eligible schools for the Fresh Fruit and Vegetable Program than there are funds available. Again, this is one of the interests in my district. We have seen the huge change in schools that 

are able to provide more fresh foods, buy from local farmers. It 

spurs on the interests of young kids in what they are eating. Sometimes they take the information home to their families. I have sat 

next to kids in elementary school who are happily gobbling up their 

kale and Swiss chard. I think we deny them the opportunity to eat 

some very health foods when we don’t do that. 

So can you give me some background on the number of schools 

or percentage of schools that apply but are denied? And if you can’t 

provide that now, that is okay. 

Ms. ROWE. We don’t have the breakdown, but I agree with you. 

When I started going out, that was the one thing I heard from 

schools: We would like to be able to participate in this program. 

Ms. PINGREE. Great. I just want to put it out there again. We 

have seen the changes in our state. Again, it is great for local farmers, it creates new markets, but it also allows our kids to eat more 

foods. 

And I will just—in my own end of this, I appreciate the work the 

Chairwoman is doing on behalf of the lowly potato. As a potatoraising state, I understand the issues around too many carbohydrates and starches in kids’ diets, but the benefits of an actual 

potato, the nutritional value, and the importance of that is critical, 

and so I am glad that that is being much discussed. 

And I will yield back the balance of my time. 

The CHAIRWOMAN. Thank you. 

And now on behalf of Mr. Baca, would you care to give the closing statement? 

Ms. PINGREE. Thank you, Madam Chair, and as I mentioned to 

you, this makes me a far better pitcher in life. I feel I can play 

baseball again. 

So his closing statement, on behalf of Ranking Member Baca, I 

would like to thank you, Ms. Rowe, for your participation in today’s 

hearing and your thoughtful testimony. Your knowledge, ideas, and 

experiences will, I hope, be used by Congress to ensure adequate 

nutrition continues to be available to the neediest Americans in the 

most efficient manner. 

Again, thank you to Chairwoman Schmidt for holding this hearing. I know we share an interest in the health and wellness of our 

constituents, and I look forward to working with you during this 

next farm bill to put those interests into practice. 

The CHAIRWOMAN. Thank you. 

Now for my closing statement. There was so much that I could 

have—I wish I had the opportunity to ask, but I am going to combine it in a closing statement. 

I think that most Americans recognize we have an obesity problem in the United States, and that we have to find ways to tackle 

653

it, but I think sometimes we reach wrong conclusions when we look 

at current trends and make a decision that is not going to make 

folks eat more healthy or have trimmer bodies. And I look at your 

agency and others involved in food marketing guidelines, and there 

is—people think, well, the kids are getting heavy because they are 

watching too much TV, and I agree. I think the sedentary lifestyle 

that we have today with our children, the fact that they lack as 

much playground activity as I had as a child tends to build a 

broader waistline. But, I think that while we both might believe 

that the TV is the root cause, I think we are reaching the wrong 

conclusions as to why. 

I think that sometimes people say, well, it is the advertisement 

that is going on on the television that is helping to broaden those 

waistlines, and I am just not sure that is true, because I had those 

same advertisements when I was a kid, but my mother made me 

go outside and kick the can. 

Much of the products banned by the Interagency Working 

Group’s proposals are the same ones the USDA has recently determined to be important in the Special Supplemental Nutrition Program for Women, Infants and Children to promote healthy children 

under Title V. I assume that the reason the four agencies created 

a working group on this issue was for consistency of the Federal 

food nutrition recommendations, yet looking at the HealthierUS 

School Challenge criteria, the National School Lunch Program proposed rule, the WIC food package criteria, and the IOM Competitive Foods Report, inconsistencies abound. If the point is to encourage healthy food, isn’t it important that the Federal Government 

speak with one voice and a consistent voice? 

And I would like to add that it is not always about the food, it 

is about how in many cases the food is prepared. Cereal in the 

morning isn’t a bad product if you make sure that you are only 

having 3⁄4 of a cup, or 1⁄2 cup, or a cup, whatever is recommended, 

and that you are using either a low-fat or a skim milk with it and 

not adding sugar. That is not a bad actor. In fact, sometimes 

healthy cereals with a lot of granola and grain can have twice as 

many calories as, say, Tony the Tiger’s great cereal. So it is not 

about the advertising, it is about how we prepare the food. 

The war on potatoes, which I am so glad I have a fellow lady 

helping me with this, the potato is one of the best foods a person 

can eat, especially folks that have a modest income, because of all 

the nutrients that are in it. But, if you deep fry it, and you put 

a lot of cheese on it, and you put a lot of salt, then maybe it becomes a less attractive animal. But when you just eat it as a potato, whether it is mashed and with a little skim milk and a little 

pepper, that is not a bad thing to eat. And so I caution arbitrary 

conclusions based on unhealthy ways that we prepare products 

rather than the food group itself. 

I am concerned about recent findings in the Global Insight suggesting that the proposal could cause the loss of significant number 

of American jobs. I am concerned that it would cost our schools 

more money for the proposed rules that are there when it is not 

going to make our children thinner, it is not going to make them 

have more healthy foods. And most importantly, I am concerned at 

what will happen to those children, especially the at-risk children, 

654

when they leave school. To think that they are going to get those 

kinds of foods outside the school, that just may not be the case. 

And I am just throwing that out there because I think you and 

I are on the same page. We want to attack obesity, we want to 

make sure our children and our adults are healthy folks, and I 

really think that it is education. It is educating the food preparer, 

whether it is the mother or the father or the aunt or the grandmother, on how to prepare the foods in an appropriate way. And 

I know most schools are doing this now. 

So the problem is really not so much inside the school, but inside 

the home, but to arbitrarily think that seeing Toucan Sam or 

Honey Nut Cheerios or Tony the Tiger is making our kids fat, I 

just don’t think that is the case. 

So those are my thoughts, and I really thank you, and if you 

have any closing thoughts, I will give you the microphone. 

Ms. ROWE. Thank you so much. And I really do agree, and I appreciate your perspective and your passion on this subject. It is one 

that I am equally passionate about, and I am looking forward to 

working with you and Members of the Committee so that we can 

ensure that our future generations are healthy and have healthy 

lifestyles. 

I do want to make two clarifications. I did indicate that there 

was not a Food Stamp Program prior to 1977. I was not correct. 

Food Stamp Act of 1964 did exist, it established the program, and 

then there have been subsequent changes. So I wanted to put that 

clarification out there. 

The other was on time limits. There is a small category of individuals, able-bodied, working adults, who participate in the program who have a limit of 3 months and 36 months to participate 

in our SNAP Program. So I did want to make those two clarifications. 

I want to thank you for giving me and our staff an opportunity 

for being here. As my first foray out before a Congressional Committee, I can say that this experience has been both learning for 

me, and I hope I have been able to contribute to your thinking as 

you go forward. 

The CHAIRWOMAN. Thank you. And I think it is great, 4 months 

on the job, you really have a great deal of information and history 

lessons. That is okay. I make mistakes as well. 

In closing, I would just ask if I can impose on you to introduce 

you to my FFA children, young adults actually, because this is 

their first foray into Washington, and to meet the Administrator of 

the Food and Nutrition Service Program I think would really help 

them with their educational experience. So thank you very much. 

Ms. ROWE. My honor. 

The CHAIRWOMAN. With that, this meeting is adjourned. 

Ms. ROWE. Thank you. 

[Whereupon, at 11:55 a.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

655

SUBMITTED STATEMENT BY LISA DAVIS, VICE PRESIDENT OF PUBLIC POLICY, FEEDING

AMERICA

Chairwoman Schmidt, Ranking Member Baca, and Members of the House Committee on Agriculture, Subcommittee on Nutrition and Horticulture, thank you for 

the opportunity to submit this statement for the record on behalf of Feeding America and for holding this hearing. 

Feeding America is the nation’s leading domestic hunger-relief charity with a network of more than 200 food banks serving all 50 states through over 61,000 local 

food assistance agencies, 55% of which are faith-based. Feeding America food banks, 

as well as food pantries, soup kitchens and other assistance agencies, rely on a variety of public and private funding streams to feed 37 million Americans a year, including 14 million children and nearly 3 million seniors. 

During the worst economic downturn since the Great Depression, the number of 

American families struggling to make ends meet has increased significantly. With 

unemployment currently at 9.2 percent, the need for food assistance continues to remain high and food banks continue to be pressed to meet the need in their communities. Last year, one in eight Americans, received emergency food assistance 

through the Feeding America network. This represents an increase of 46 percent 

since 2006. As a result, approximately 5.7 million people per week are now receiving 

emergency food assistance through Feeding America food banks. 

For those individuals facing food insecurity, the nation’s Federal food assistance 

programs and emergency food providers provide a critical safety net. In April 2011, 

the last month for which data is available, nearly 45 million Americans were participating in the Supplemental Nutrition Assistance Program (SNAP), formerly known 

as food stamps. In addition, in FY 2011, the Commodity Supplemental Food Program (CSFP) is providing nutritious monthly food boxes to a caseload of more than 

604,000 people, more than 96 percent of them low-income seniors. Moreover, in FY 

2011, the Emergency Food Assistance Program (TEFAP) is providing more than 

$350 million worth of nutritious, American-grown commodities to help food banks 

supplement their food supplies and feed those in need. 

As the Committee hears testimony from the United States Department of Agriculture (USDA) regarding the Title IV Nutrition Program contained within the farm 

bill and the beneficial impact of these programs, Feeding America respectfully offers 

several policy recommendations that would further strengthen these programs and 

could provide a more stable and reliable stream of food to the food assistance network and to the millions of Americans we serve who are at risk of hunger. 

Policy Recommendations 

The Emergency Food Assistance Program (TEFAP) Commodities: TEFAP 

is a means-tested Federal program that provides food commodities at no cost to 

Americans in need of short-term hunger relief through organizations like food 

banks, pantries, soup kitchens, and emergency shelters. Healthy and nutritious food 

commodities provided through TEFAP are an essential resource that enables Feeding America food banks to meet the need in their communities. 

TEFAP commodities currently account for approximately 25 percent of the food 

moving through Feeding America food banks nationwide. In most instances, local 

food banks supplement TEFAP commodities with privately donated foods to extend 

TEFAP program benefits beyond the budgeted amount for the program. As the unprecedented demand for food continues at food banks across the country, TEFAP 

commodities are essential for the provision of a steady emergency food supply. However, the level of commodities USDA provides is projected to drop off significantly 

in FY 2011 and FY 2012. 

In FY 2010, TEFAP provided approximately $655 million worth of nutritious foods 

to low-income Americans. This figure includes commodity purchases mandated by 

the 2008 Farm Bill as well as bonus commodity purchases that were appropriated 

in FY 2010 Agriculture Appropriations and those bonus purchases made by USDA 

when necessitated by market conditions. 

Unfortunately, in FY 2011, even as the need remains at unprecedented levels, 

USDA has made no indication that there are plans to make any additional bonus 

commodity purchases beyond those already made this fiscal year. Without additional bonus purchases in FY 2011, TEFAP spending levels will fall by nearly 44 

percent to approximately $370 million. This $285 million decrease in TEFAP commodity spending for FY 2011 will significantly impact efforts to address the growing 

need for emergency food assistance throughout the country. Without additional r 

commodity purchases, too many Americans may go without adequate access to the 

food they need and food banks face the prospect of empty shelves. 

656

With agriculture commodity markets projected to remain strong in the coming 

years thereby driving a marked decline in the availability of bonus TEFAP commodities, Feeding America recommends that the amount of annual funding for mandatory TEFAP purchases be increased in the 2012 Farm Bill. Further, with respect 

to bonus commodity purchases, Feeding America recommends that the committee 

explore the development of an economic, need-based trigger that would prompt Section 32 bonus commodity purchases not only when agriculture markets are weak, 

but also when unemployment or other economic factors are driving up the demand 

for emergency food assistance. Last, with respect to the inflationary index already 

attached to mandatory TEFAP purchases, we recommend that a floor be placed on 

this program so that spending levels are precluded from being reduced below prior 

year levels. 

TEFAP Administrative Funding and TEFAP Infrastructure Grants: Federal administrative funding helps defray the costs of storing, transporting, and distributing TEFAP commodities, helping ensure food banks and partner agencies can 

get emergency food assistance to those in need. Recognizing the critical importance 

of these funds, the 2008 Farm Bill increased the authorization level to $100 million 

per year. However, despite that recognition, Congress has never provided more than 

$50 million per year in annual Agriculture Appropriations legislation. 

Food banks are struggling to respond to a significant increase in demand that is 

likely to continue for some time. Without adequate Federal assistance, they will be 

unable to afford the rising costs associated with storing and distributing emergency 

food commodities. While the increase in TEFAP products that require refrigeration 

or freezer capacity has been a welcome addition for clients, these products are more 

costly to store and deliver across large service areas. Compounding these challenges 

are rising fuel costs that in some cases have nearly doubled transportation and delivery costs. To help address these challenges and ensure that states and emergency 

food providers have the resources needed to store and distribute TEFAP commodities, Feeding America recommends that the Committee provide mandatory TEFAP 

Administrative funding of $100 million per year in the 2012 Farm Bill. 

Similarly, TEFAP Infrastructure Grants are essential to helping emergency food 

providers meet a variety of infrastructure needs and ensure the effective and efficient delivery of TEFAP foods to those in need. Funding provided through this competitive grant program may be used to help emergency food providers implement, 

improve, and expand their infrastructure activities and projects. Specific items that 

may be funded include: developing computerized systems for tracking time-sensitive 

food products; improving the distribution of perishable foods (such as fresh fruits 

and vegetables); rescuing prepared, unserved food; identifying donors and eligible 

recipients; and improving facilities and equipment. In FY 2010, USDA awarded $6 million in TEFAP Infrastructure Grants to 39 

emergency food providers, 19 of whom primarily served rural areas. However, USDA 

had at least 4 times as many applicants for these grants as they had funding to 

award, demonstrating there is a great demand for these grants. In recognition of 

the need and demand for this funding, Feeding America recommends that this program be reauthorized at a level of $15 million per year in the 2012 Farm Bill so 

that even more emergency food providers can benefit from this valuable program. 

Commodity Supplemental Food Program (CSFP): Administered by USDA, 

the Commodity Supplemental Food Program leverages government buying power to 

provide monthly, nutritionally-balanced food packages to more than 604,000 low-income participants in 39 states, two tribal organizations, and the District of Columbia. More than 96 percent of those benefiting from this program are seniors with 

incomes of less than 130 percent of the Federal poverty line (approximately $14,000 

for a senior living alone). For many of these seniors, CSFP may be the only nutrition assistance program readily accessible to them. 

CSFP is an efficient and effective program. While the cost to USDA to provide 

this package of food is, on average, $20 per month, the average retail value of the 

foods in the package is $50. For the seniors participating in this program, CSFP 

provides more than just food and nourishment, it also helps to combat the poor 

health conditions often found in seniors who are experiencing food insecurity and 

at risk of hunger. 

According to analysis of data from the 1999–2002 National Health and Nutrition 

Examination Survey, seniors over the age of 60 who are experiencing some form of 

food insecurity are significantly more likely to have lower intakes of major vitamins, 

significantly more likely to be in poor or fair health, and more likely to have limitations in activities of daily living. CSFP food packages, specifically designed to supplement needed sources of nutrients typically lacking in participants’ diets like protein, iron, zinc, and vitamins B6 and B12, can play an important role in addressing 

the nutrition needs of low-income seniors. 

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Recognizing the role that this program plays in the lives of our nation’s most vulnerable seniors, Feeding America recommends that this program be reauthorized in 

the 2012 Farm Bill and expanded to all 50 states. Additionally, Feeding America 

recommends that the income threshold for seniors wishing to participate in CSFP 

be raised to 185 percent of the Federal Poverty Line, bringing it in line with the 

threshold already applied to women and children participating in this program. 

Supplemental Nutrition Assistance Program (SNAP): While Feeding America food banks and the 61,000 local agencies we support are often the first place 

families turn to for emergency food assistance when they fall on hard times, the 

Supplemental Nutrition Assistance Program (SNAP) is the cornerstone of the nutrition safety net, ensuring families have adequate resources for food until their household economic conditions stabilize and improve. Many of our food banks conduct 

SNAP outreach to inform clients about their potential eligibility for SNAP and connect them with the long-term benefits they need. 

SNAP is the nation’s largest Federal nutrition program, providing nearly 45 million participants with monthly benefits in the form of an electronic benefit (EBT) 

card that they can use like cash at most grocery stores to ensure access to an adequate diet. Nearly 80 percent of SNAP households include either a child or an elderly or disabled person. 

One of the most attractive features of SNAP is that benefits can be redeemed at 

any of the more than 200,000 retail stores nationwide that are authorized to participate in the program. Almost 80 percent of SNAP benefits are redeemed within 2 

weeks of receipt, and 97 percent are spent within a month. Because the benefits can 

be quickly and efficiently delivered to recipients via EBT cards, and recipients are 

likely to spend the benefits quickly, many economists view SNAP as one of the most 

effective forms of economic stimulus during an economic downturn. The United 

States Department of Agriculture (USDA) estimates that every $1.00 spent on 

SNAP benefits generates $1.79 in local economic activity. 

Another critical feature of the SNAP program is its ability to respond with additional assistance amidst economic downturns or emergencies. SNAP responds quickly to changing economic circumstances, whether they occur locally, such as a plant 

closing, or nationally, like a recession. Enrollment increases during such times and 

then falls as need declines. SNAP demonstrated this responsiveness during the recent recession by providing millions of newly unemployed families with a stable 

source of money for food, proving it to be one of the most effective safety net programs available to families hardest hit by the recession. SNAP responds just as effectively to natural disasters. During the aftermath of disasters like Hurricanes 

Katrina and Rita in 2005, victims of the hurricane were able to have their immediate need for food addressed quickly because of SNAP. Similarly, the program is 

responding to immediate need in areas hit by recent flooding or tornados. 

Congress made many significant improvements to SNAP in the last farm bill. As 

we move toward consideration of the 2012 Farm Bill, it is essential that Congress 

build upon those improvements and protect the integrity of SNAP so that the program can continue to respond quickly and effectively as the foundation of the nutrition safety net. As such, we offer the following initial recommendations for consideration: 

Benefit Adequacy: Current SNAP benefit levels are often insufficient to last a 

family throughout the month. Over 90 percent of SNAP benefits are used up by the 

third week of the month, leaving many SNAP families food insecure for portions of 

the month. Adequate benefits would also provide families with opportunities to access more nutritious food. 

Congress approved a temporary boost in SNAP benefit levels in ARRA to help 

families make ends meet during the recession. Congress rescinded some of the boost 

in 2010 by using $2.5 billion of the increased benefits to fund the Healthy, HungerFree Kids Act and $11.9 billion to fund the Education jobs and Medicaid funding 

bill. As a result, the remaining increase in benefits is now expected to sunset in November 2013. 

Just as concerning as the cut to the ARRA boost itself is how the cut would be 

implemented. Congress carefully crafted the ARRA increase to protect families from 

a ‘‘cliff effect.’’ By designing the increase to phase out incrementally as food prices 

rise to catch up with the higher benefit, Congress made a promise not to pull the 

rug out from underneath our nation’s most vulnerable families. Under the recent 

cuts, this is exactly what would happen. A typical family of four would see their 

monthly benefits abruptly drop by some $54 per month, as estimated at the time 

the cuts were enacted. 

While the ARRA SNAP boost was intended to be temporary, it was also desperately needed, and Congress must take steps to permanently improve the adequacy of the SNAP benefit. Feeding America strongly urges the House Agriculture 

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Committee to restore the ARRA SNAP funds and protect the remaining boost to 

SNAP benefit levels from being used to fund other priorities. We also recommend 

that the Committee look at long-term ways to improve benefit adequacy, such as 

reviewing the Thrifty Food Plan as the basis for benefit levels, increasing the standard deduction to bring benefit levels in line with where they would be now had the 

inflationary peg not been removed for the period 1996 to 2008, and strengthening 

nutrition and other education to help participants maximize nutrition on a limited 

food budget. 

Improve Access and Participation: The Committee should continue to 

strengthen the SNAP’s ability to meet need by breaking down access and participation barriers. Not all who are eligible for SNAP participate in the program, whether 

because of stigma, misinformation about eligibility and potential benefits, or cumbersome enrollment procedures. While SNAP has made steady improvement in participation rates over the last several years, still only about 2⁄3 of those eligible are 

served. Participation is especially low among certain subpopulations, like Latinos 

and seniors. Continued outreach is needed to make sure all who are eligible and 

in need of assistance are informed of and enrolled in the program, especially among 

under-served and vulnerable populations. Congress should take steps to improve 

program education and outreach, streamline the application and eligibility-determination process, and increase coordination with SNAP across other programs. For 

example, categorical eligibility has been shown to both improve program access 

while at the same time allowing states to reduce administrative costs and simplify 

administration. Congress should strengthen categorical eligibility and encourage 

states to take advantage of the expanded option. 

Congress can also improve access to SNAP among vulnerable populations by 

eliminating or easing specific restrictions on subpopulations, including the harsh 

time limits on jobless adults, the 5 year waiting period for legal permanent residents, and the permanent ineligibility of drug felons:

• Able-bodied adults without dependents (ABAWDs) who are not working a minimum number of hours are limited to only 3 months of SNAP benefits out of 

every 3 years, although states with unemployment rates above ten percent may 

request a waiver. The time-limit for ABAWDs is too restrictive even when unemployment is low, but with unemployment at 9.2 percent nationally and many 

people returning to work forced to accept reduced hours, ABAWDs should be allowed to re-apply more frequently and for longer durations.

• Adult legal permanent residents are subject to a 5 year waiting period before 

they may participate in SNAP. Furthermore, the confusion about eligibility created by this policy decreases participation among eligible children of ineligible 

parents. Eligible adult immigrants who are here legally, many of whom are on 

a path to citizenship, should not have to wait five years to receive nutrition assistance.

• Federal policy permanently prohibits drug felons from participating in SNAP, 

presenting an additional challenge to self-sufficiency for formerly institutionalized persons who already face difficulties in re-entering the labor force. Recognizing this, 40 states have either lifted the Federal ban or modified the ban to 

make it less punitive. Congress should repeal the lifetime prohibition on drug 

felons participating in SNAP.

Program Integrity: In addition to making further progress to strengthen SNAP, 

Feeding America urges the Committee to protect the program from harmful policy 

changes that have been recently proposed, such as converting the program to a 

block grant, subjecting it to a global spending cap, imposing additional work or citizenship requirements, or restricting the kinds of groceries participants may purchase. Imposing an arbitrary cap on funding would fundamentally change the structure of the program and would undermine SNAP’s ability to respond quickly to 

changing economic circumstances, whether a natural disaster or a recession. SNAP 

already has strict time limitations for unemployed adults and legal immigrants. 

Adding further work or citizenship requirements will eliminate this important 

source of nutrition assistance for vulnerable families, increasing food insecurity and 

shifting more low-income households to the emergency food system. Ensuring food 

choice within the SNAP program allows families to make decisions that balance 

cost, nutrition, and time for preparation of meals. 

Reviewing Programs for Duplication and Efficiency 

In light of Congressional attention to the budget deficit, we recognize that the 

next farm bill will be written with limited opportunities for new program investments and a commitment to making sure existing dollars are being well-spent. 

While we support the goal of eliminating duplication and inefficiencies in Federal 

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nutrition programs, we urge you to ensure that any changes are made carefully and 

with the goal of improving service delivery, increasing program access, and 

strengthening benefit levels. 

Our food banks and the clients they serve know all too well the importance of 

stretching a tight budget. Given the extent of hunger and food insecurity in our 

country, it is important that we maximize the impact of each dollar spent through 

our network of emergency food providers. Likewise, we believe that Federal tax dollars should be spent effectively and efficiently to ensure a strong and responsive nutritional safety net. 

We support efforts to eliminate duplication in program delivery. However, it is important to keep in mind that programs with overlapping eligibility are not per se 

indicative of duplication. Nutrition programs work together to weave a comprehensive safety net and no one program is intended to meet the needs of all populations. 

Federal nutrition programs have been developed to respond to identified nutritional 

needs of specific populations or to reach eligible people in settings not addressed by 

other existing programs. 

We also support efforts to eliminate inefficiencies and streamline program administration. In many cases, the same changes that would result in administrative savings would also reduce barriers to enrollment, such as streamlining the application 

and eligibility-determination process. 

As the Committee works to identify opportunities to streamline programs and 

eliminate redundancy, members must ensure that such efforts are undertaken with 

thoughtfulness and careful deliberation. Our ultimate goal must be to better deliver 

benefits more effectively to all eligible people. As such, we offer the following principles to guide your work: 

Benefit Adequacy: Programs must provide resources sufficient to meet the nutritional needs of participants and any savings from greater efficiencies should be 

reinvested in improving benefit adequacy. 

Participation: Programs should be designed and implemented in ways that promote participation by all people in need of food assistance and savings should not 

be achieved by reducing eligibility or imposing access barriers. 

Coordination: Enrollment in nutrition assistance programs should be streamlined and integrated where possible with enrollment in other Federal programs 

serving low-income people, and eligibility rules should be consistent across programs. 

Data-Driven: Any changes to nutrition assistance programs, including those intended to eliminate duplication and inefficiency, must be data-driven and undertaken only after careful study and analysis of the potential impact on benefit levels, 

eligibility, and participation. 

Stakeholder Input: Recommendations should be developed in collaboration with 

stakeholder input from the public, private, and nonprofit sectors, including those responsible for administering programs at the Federal and state level and those providing delivery of services and benefits to low-income families at the local level. 

Conclusion 

We greatly appreciate the opportunity to submit testimony today on behalf of 

Feeding America, our over 200 member food banks, and the 37 million Americans 

our network fed last year. For these growing numbers of Americans, food banks are 

truly the first line of defense, and many times the only resource standing between 

them being able to put food on the family dinner table or going to bed with an 

empty stomach. However, our food banks and the charitable food assistance network 

cannot meet the needs of these families alone. It is only through our public-private 

partnership with Federal government through programs like TEFAP and CSFP and 

sustained support for SNAP and other programs in the nutrition safety net that we 

can make real strides in the fight against hunger. 

We are continuing to explore opportunities to enhance support for Federal nutrition programs through programmatic or policy innovations, and look forward to 

working with you as you review the Title IV Nutrition Programs and begin the work 

of crafting the next farm bill.

LISA DAVIS,

Vice President of Public Policy,

Feeding America. 

SUBMITTED LETTER AND STATEMENT BY SAM STONE, VICE PRESIDENT, GOVERNMENT

RELATIONS, DAIRY FARMERS OF AMERICA, INC. 

August 2, 2011

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Hon. JEAN SCHMIDT,

Chairwoman,

Subcommittee on Nutrition and Horticulture, House Committee on Agriculture, 

Washington, D.C.;

Hon. JOE BACA,

Ranking Minority Member,

Subcommittee on Nutrition and Horticulture, House Committee on Agriculture, 

Washington, D.C.

Dear Chairwoman Schmidt and Ranking Member Baca,

On behalf of the nearly 16,000 producer-members of Dairy Farmers of America, 

Inc. (DFA), I respectfully submit the attached testimony in regards to nutrition programs and the 2012 Farm Bill. We believe that milk and other dairy products, provided through Title IV of the farm bill, serves an important role in addressing hunger issues for many Americans. 

Please do not hesitate to contact me at [Redacted] should you have any further 

questions or need more information. 

Sincerely,

SAM STONE, 

Vice President, Government Relations,

Dairy Farmers of America, Inc.

CC:

Hon. FRANK D. LUCAS, Chairman, House Agriculture Committee; 

Hon. COLLIN C. PETERSON, Ranking Minority Member, House Agriculture Committee. 

ATTACHMENT

Dairy Farmers of America, Inc. (DFA) respectfully submits comments in response 

to the House Agriculture Subcommittee on Nutrition and Horticulture’s hearing titled ‘‘Agricultural Program Audit: Examination of Title IV Nutrition Programs.’’

DFA is a milk marketing cooperative that is owned and governed by nearly 16,000 

dairy farmers nationwide. Our cooperative’s success is built on the success of our 

farmer-owners who raise their dairy herds and their families on family farms across 

the nation. As the House Agriculture Committee begins the process of examining 

Title IV of the 2012 Farm Bill, DFA encourages the Committee to consider cost-effective ideas that can further expose needy families and individuals to milk and 

other nutritious dairy products. 

Historically, nutrition programs authorized under Title IV of the farm bill such 

as the Commodity Supplemental Food Program (CSFP), the Supplemental Nutrition 

Assistance Program (SNAP) and The Emergency Food Assistance Program (TEFAP) 

have played an important role in providing millions of Americans with the nutritional assistance needed to lead active and healthy lives. DFA strongly supports 

these programs because dairy products have continued to serve as an important 

component to meet the nutritional needs for many individuals. 

We also recognize the budget challenges Members of the House Agriculture Committee will face when writing the 2012 Farm Bill. Due to growing concerns related 

to the Federal deficit, we understand that drafting the next Farm Bill will be a difficult task due to the current budgetary constraints. As Congress continues efforts 

to address the Federal deficit, we have also witnessed attempts to reduce funding 

for several programs administered under Title IV of the farm bill. 

At the same time, the economic outlook for millions of Americans across the country remains dire as conditions have not improved since the most recent recession. 

For the month of June, the Department of Labor reported that 9.2 percent of America’s labor force was unemployed. Also, food banks have reported a record number 

of individuals and needy families seeking help through various hunger channels including soup kitchens and food pantries. 

Additionally, the U.S. Department of Agriculture (USDA) has witnessed a record 

number of individuals participating in hunger and feeding programs like CSFP, 

SNAP and TEFAP. Based on the latest statistics, approximately 45 million Americans are currently seeking help through SNAP and other hunger assistance programs. Clearly, people are in need during these challenging times. 

With this in mind, DFA has been identifying cost-efficient methods that could expand and increase the consumption of milk without expanding the size and scope 


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of current nutrition programs. One merited idea to consider would be the creation 

of a milk voucher program to provide fluid milk to those who access food banks and 

food pantries and that would be administered under TEFAP. 

Through this program, USDA would issue vouchers similar to those currently 

used in the Women, Infants and Children program to be distributed through local 

food banks and entities food banks support. Milk vouchers could be provided to food 

bank recipients and they could be redeemed at local participating grocery stores and 

be specified to fluid milk. It is our understanding that Congress could authorize 

such a program and appropriate funds through TEFAP. As you know, TEFAP provides food to food banks around the country, which they distribute to shelters, pantries and soup kitchens in their region. 

The use of milk vouchers would enhance the food banks’ ability to offer additional 

food and nutrition to their participants without requiring any new capital expenditures for refrigeration units or extra personnel to handle cases of milk. While we 

have learned that many food banks have upgraded their facilities to include refrigeration units, many others have not, do not have enough capacity or are serving 

shelters, pantries and soup kitchens with little to no refrigeration capacity. 

In closing, DFA is committed to identifying future programs that can address the 

need for nutritious and wholesome foods, including dairy products. It is our hope 

that implementing the milk voucher program through TEFAP will help many Americans currently suffering from financial hardship due to today’s economic conditions. 

Please consider including this merited program when drafting the 2012 Farm Bill. 

SUBMITTED QUESTIONS

Response from Audrey Rowe, Administrator, Food and Nutrition Service, 

U.S. Department of Agriculture 

Questions Submitted By Hon. Chellie Pingree, a Representative in Congress from 

Maine 

Question 1. A 2002 USDA report found that $5 in Federal benefits generates almost double, $9.20, in economic activity. In Maine we have a very innovative and 

effective program, called the Maine Senior Share Program. The state uses the dollars they receive from the Senior Farmers’ Market Nutrition program to pay farmers at the beginning if the season for shares allotted to low-income seniors. This increases nutrition to a vulnerable population and supports our struggling local agriculture community. Do you see benefit in these programs and if so, does the department hope to incorporate similar ideas on a national level? 

Answer. The Senior Farmers’ Market Nutrition Program (SFMNP) is designed to 

improve the diets of America’s low-income seniors by providing them with coupons 

that can be used to purchase fresh, nutritious, unprepared, locally-grown fruits and 

vegetables at farmers’ markets, roadside stands, and community supported agriculture (CSA) programs. The SFMNP also serves to increase the awareness and use 

of farmers’ markets, roadside stands, and CSA programs throughout the country. 

The FMNP and the SFMNP are administered through cash grants provided to 

states, United States Territories, federally-recognized Indian Tribal Organizations, 

and the District of Columbia. Federal SFMNP regulations give state agencies considerable flexibility in the design of the Program’s operation, thus enabling them to 

provide a program that best serves the needs of its senior participants as well as 

the farmers who benefit from SFMNP sales. Thus, some state agencies, including 

the Maine Department of Agriculture, have found that operating the SFMNP 

through the use of a CSA program model works best, while other state agencies 

have found it more effective and economical to deliver SFMNP benefits through the 

more traditional check or coupon distribution system. The Food and Nutrition Service (FNS) believes that each state agency is best qualified to choose the benefit delivery model that is appropriate for its individual circumstances. However, examples 

of successful program models are frequently shared among state agencies interested 

in innovative enhancements to their existing SFMNP operations, as well as prospective SFMNP state agencies that are in the process of choosing the best way to make 

fresh fruits and vegetables more accessible to their low-income seniors.

Question 2. During the pilot phase of the Fresh Fruit and Vegetable Program, 

around 12% of participating schools sourced their fresh produce from local growers. 

This is a great way to support local economies. Are there ways you would recommend that we can support the program to expand the percentage of produce that 

is sourced locally? 

Answer. FNS has undertaken a number of initiatives with the goal of increasing 

local sourcing in all the Child Nutrition programs, including the Fresh Fruit and 

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Vegetable Programs (FFVP). On April 22, 2011, the agency issued the final rule titled Geographic Preference Option for the Procurement of Unprocessed Agricultural 

Products in Child Nutrition Programs. This rule allows school districts to apply an 

optional geographic preference in procurement of unprocessed locally grown or locally raised agricultural products. 

FNS has taken a number of steps to assist FFVP operators in utilizing the geographic preference and other strategies for successful local sourcing. The agency has 

established a Farm to School website to provide an online resource to assist schools 

in expanding Farm to School activities; assist in the communication between local 

producers and schools; share information about Farm to School activities across the 

Nation and keep schools informed of the legislative and regulatory changes that influence the procurement of local produce. FNS also recently issued Q&As for program operators which further explain the geographic preference procurement option. 

Additionally, in the past months the agency has conducted webinars on geographic 

preference for state and local program operators. 

FNS plans to continue providing guidance and technical assistance such as 

webinars on geographic preference in order to better inform FFVP operators of the 

program regulations and how to best procure local produce within the contours of 

the program.

Question 3. Would you update the Committee on efforts within the agency to enable further access at farmers markets and CSA’s to the expanding WIC Cash Value 

Fruits and Vegetable Voucher Program? There is now over $500 million in this key 

program. I understand the current guidance issued by FNS to the states is cumbersome. Simplifying the regulations would make it easier for several million WIC 

mothers and their children to shop at farmers market, many now year round, with 

direct benefits to both farmers and WIC families. 

Answer. Under the interim rule governing the food packages offered in the Special 

Supplemental Nutrition Program for Women, Infants and Children (WIC), WIC 

state agencies have the option of authorizing individual farmers to accept Cash 

Value Vouchers (CVVs) issued to WIC participants for the purchase of fresh fruits 

and vegetables at farmers’ markets. Each woman and child participating in the WIC 

Program receives a voucher in the amount of $10 or $6, respectively, as part of the 

monthly package of supplemental foods issued to all WIC participants. At present, 

17 WIC state agencies have elected to allow CVVs to be used at farmers’ markets, 

although not all state agencies have implemented such authorization on a statewide 

basis; two more state agencies will authorize farmers to accept CVVs during Fiscal 

Year (FY) 2012. 

FNS received comments related to authorization of CVVs at farmers markets during the public comment period for the interim rule that closed February 1, 2010. 

FNS will address these comments in a final rule.

Question 4. One of the areas that most concerns me in SNAP is that there are 

many needy eligible people who do not participate. This problem is most prevalent 

amongst low-income senior citizens. By USDA’s own measurement about 2⁄3 of eligible seniors do not participate in the program. Can you tell me what steps USDA 

is taking to increase participation amongst our nation’s greatest generation? And, 

I’d also like to hear from you on how efforts to increase senior participation would 

be affected under a capped spending regime or a block grant? Would states have 

an incentive or a disincentive to connect poor seniors who aren’t participating to the 

program under a block grant? 

Answer. The Food and Nutrition Service (FNS) strives to ensure that all eligible 

people, including low income people over 60, have barrier-free access to the nutrition 

benefits of the Supplemental Nutrition Assistance Program (SNAP). Elderly individuals who are eligible for benefits participate at a rate substantially lower than other 

eligible groups. In 2009, the participation rate for elderly individuals was 34 percent, compared to 72 among all eligible people. 

SNAP eligibility policies take into account the special circumstances faced by seniors. They provide for deduction of medical expenses, no gross income limits, a higher asset limit and special eligibility status for seniors who receive Supplemental Security Income (SSI) because of their age and low income. Seniors may also designate 

authorized representatives to represent their interests during the application process to purchase food with SNAP benefits on their behalf. 

Special procedural requirements include certification periods up to 2 years; interviews over the telephone, instead of at the local office; the ability to apply for SNAP 

through the Social Security Administration when applying for SSI. A total of 42 

states have implemented broad based categorical eligibility which can ease the asset 

test. In addition, Combined Application Projects make it easier for the elderly and 

disabled SSI recipients to receive SNAP benefits by reengineering the SNAP appliVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00674 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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cation process and eliminating the need for this population to visit the SNAP local 

office. 

FNS has also awarded a number of grants to test approaches to increasing partici- pation among persons over age 60. SNAP awarded $3.1 million to three states to 

increase access and participation in the SNAP among low-income seniors, those who 

receive Medicare’s Extra Help, also known as the Low Income Subsidy, which helps 

low-income individuals or couples with limited resources pay for their Medicare prescriptions. SNAP also awards $5 million annually for projects aimed at developing 

and implementing simplified applications and eligibility determination systems and 

measures to improve access to SNAP benefits by eligible households. Over the last 

3 years, FNS has awarded six grants totaling almost $3.5 million for projects that 

focus on elderly persons or involve entities whose missions are to assist the elderly. 

In addition, FNS engages in numerous outreach efforts to educate eligible people 

over 60 about the nutrition benefits of SNAP and how to enroll. For example, SNAP 

develops and airs radio advertisements that target elderly audiences. Radio buys 

each year include spots specifically designed to address myths held by the elderly 

and air on stations with high rating among the elderly. SNAP offers a toll free information line in English and Spanish to provide information about the program and 

connect callers to their states for further details. 

Finally, FNS has fostered numerous partnerships with stakeholders trusted by 

the senior population, including the AARP Foundation, Catholic Charities, Feeding 

America, and with fellow Federal agencies including the Administration on Aging. 

This country has a long-standing national commitment to food security—and 

SNAP is well designed to respond quickly to economic conditions and meet food security needs until clients can get back on their feet. A block grant would undermine 

the program’s responsiveness to changing economic conditions. States currently 

have a great deal of flexibility provided through state options and waivers that further the purpose of the Program without degrading access to food for those in need. 

Block grants tied to past spending levels leave no room to address low participation 

rates among specific populations or ability to respond to changes in local economic 

conditions. A block grant would hinder the ability of states to support increased participation unless they cut benefits to accommodate increased caseload growth.

Question 5. While many CSFP participants are also eligible for SNAP, there are 

many components to CSFP that make it more suitable for some low-income seniors. 

CSFP provides a monthly food package with commodities that are chosen because 

they provide nutrients found to be lacking in the diets of low-income seniors. The 

cost of providing the same nourishment using SNAP’s retail-based structure rather 

than CSFP’s commodity-based structure would cost more than twice as much. CSFP 

relies on USDA commodities, which are a great value. It costs the USDA $20 to fill 

the monthly food package but the retail value is about $50 to the participant, providing a great return on investment to the Federal Government. Despite this value 

however, some have suggested that SNAP and CSFP are duplicative programs. Do 

you see the two programs as interchangeable? Or do you see value in continuing 

to have two separate programs. 

Answer. The Commodity Supplemental Food Program (CSFP) was authorized by 

Congress to supplement the diets of low-income women, infants, children, and seniors age 60 years and over; today, almost all participants are seniors. Both CSFP 

and the Supplemental Nutrition Assistance Program (SNAP) provide valuable supplemental nutrition assistance to the clients they serve. Each has aspects of its 

structure and services that may better serve the needs of some clients than others. 

These and other USDA nutrition assistance programs work together to create a 

strong nutrition safety net for those Americans in need. 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE

1. Program Name 

Commodity Supplemental Food Program (CSFP). 

2. Subprograms/Department Initiatives 

CSFP provides supplemental USDA Foods to low-income elderly people at least 

60 years of age, as well as some pregnant and breastfeeding women, other new 

mothers up to one year postpartum, infants, children up to age 6. 

3. Brief History 

CSFP was first authorized under the Agriculture and Consumer Protection Act of 

1973 to distribute foods to low-income women, infants, and children to supplement 

their nutritional needs. The 1985 Farm Bill expanded CSFP to include low-income 

664

elderly participants, but gave priority to eligible women, infants, and children for 

service. The 2008 Farm Bill removed the priority status for women, infants, and 

children. Despite beginning as a program for women, infants, and children, CSFP 

now serves mostly elderly individuals, who make up over 95 percent of current participants. 

4. Purpose/Goals 

CSFP works to improve the health of participants by supplementing their diets 

with nutritious USDA Foods. CSFP monthly food packages are good sources of the 

nutrients typically lacking in the diets of women, infants, children, and the elderly. 

CSFP also supports domestic agricultural markets by providing an outlet for products that USDA acquires through its agricultural market and price support activities. 

5. Success in Meeting Programmatic Purpose/Goals 

As of 2011, 39 states, two Indian Tribal Organizations (ITOs), and the District 

of Columbia are participating in CSFP.

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6. Annual Budget Authority (FY 2002–FY 2011) 

Commodity Supplemental Food Program (CSFP) 

Budget Authority 2002–2011

(Dollars in thousands) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

CSFP $92,813 $113,756 $98,335 $106,854 $111,202 $107,202 $139,715 $160,430 $171,409 $175,697

7. Annual Outlays (FY 2002–FY 2011) 

Commodity Supplemental Food Program (CSFP) 

Outlays 2002–2011

(Dollars in thousands) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

CSFP $89,006 $94,812 $87,927 $100,871 $100,667 $99,868 $133,226 $153,192 $152,768

8. Annual Delivery Cost (FY 2002–FY 2011) 

Commodity Assistance Program Account FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Commodity Supplemental Food Program 

(CSFP) 112,445 107,828 140,807 164,579 181,892 192,624

The Emergency Food Assistance Program 

(TEFAP) Administrative Cost 55,655 50,310 49,823 49,500 49,834 49,500

ARRA TEFAP Administrative Funds 25,000 54,609ARRA TEFAP Commodity Funds 100,000TEFAP Infrastructure Grants 5,956 44Farmers’ Market Programs: 

Farmers’ Market Nutrition Program 23,814 22,109 21,838 20,658 22,089 20,003Seniors’ Farmers’ Market Program 15,844 16,203 21,402 19,865 22,459 20,606

Commodity Assistance (Nuc. Affected Isld, 

Disaster Asst., NSIP Comm.) 3,882 2,756 3,736 4,224 5,114 3,883

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8. Annual Delivery Cost (FY 2002–FY 2011)—Continued

Commodity Assistance Program Account FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Nutrition Programs Administration (Allocation to this program) 15,523 15,561 15,553 15,616 15,923 15,828Other Program Costs 1 103,412 90,066 195,628 195,397 366,987 366,987

Total Cost $330,575 $304,833 $448,787 $594,839 $724,863 $669,475FTEs 97 95 95 100 112 112

Unit Costs 

CSFP (Total Annual Cost per Participant) $361.64 $349.43 $344.72 $394.27 $385.11 $348.09

Performance Measure: Average monthly 

CSFP participation (thousands) 463.1 466.1 475.3 473.5 518.9 604.9

1 Includes bonus commodities for TEFAP, CSFP, Disaster Assistance, Nuclear Affected Island, and other commodity assistance. 

667

9. Eligibility Criteria 

States establish an income limit for elderly participants that is at or below 130 

percent of the Federal Poverty Income Guidelines. States also establish income limits for women, infants, and children that are at or below 185 percent of the poverty 

guidelines, but not below 100 percent of these guidelines. Women, infants, and children who receive Supplemental Nutrition Assistance Program (SNAP) benefits, 

Temporary Assistance for Needy Families (TANF), Medicaid, or certain other public 

assistance programs, as determined by the state, are considered automatically eligible for CSFP. 

Clients must reside in one of the states or on one of the Indian reservations that 

participate in CSFP. States may establish local residency requirements based on 

designated service areas (but may not require a minimum period of residency). 

States may also require that participants be at nutritional risk, as determined by 

a physician or by local agency staff.

10. Utilization (Participation) Data 

Commodity Supplemental Food Program (CSFP) 

National Average Monthly Participation 

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

U.S. Total 512,433 462,349 466,075 475,307 466,615 518,838

11. Duplication or Overlap with Other Programs 

While CSFP was initially designed to serve low-income pregnant women, new 

mothers up to one year postpartum, infants, and children up to age 6, such clients 

now represent less than five percent of total caseload. Most CSFP clients are elderly 

people 60 and over. While some CSFP participants receive SNAP, many of them 

would be eligible for the minimum or no benefit due to differences in the program’s 

eligibility criteria. Participants may not simultaneously receive WIC and CSFP. 

12. Waste, Fraud and Abuse 

In FNS’s FY 2011 improper payment risk assessment conducted and forwarded 

to the Department, the CSFP was determined to have a low risk of significant improper payments or fraud. Federal management evaluations conducted on this program have not identified significant incidents of improper payments. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Fresh Fruit and Vegetable Program (FFVP). 

2. Subprograms/Department Initiatives 

3. Brief History 

Farm Security and Rural Investment Act of 2002 (P.L. 107–171)—authorized $6 

million for a pilot program to promote children’s consumption of fresh fruits and 

vegetables. The pilot was limited to 25 schools in each of four states and seven 

schools in one Indian Tribal Organization (ITOs). 

Child Nutrition and WIC Reauthorization Act of 2004 (P.L. 108–265)—amended 

the National School Lunch Act making the FFVP a permanent program in 11 states 

and three ITOs and providing $9 million in permanent annual funding. The program was authorized in 25 schools in each state and 25 schools among three ITOs. 

Agriculture, Rural Development, Food and Drug Administration, and Related 

Agencies Appropriations Act, 2006 (P.L. 109–97)—One time appropriation of $6 million, added six states, 25 schools in each state. 

Consolidated Appropriations Act 2008 (P.L. 110–161)—expanded the program nationwide, and included the District of Columbia. One time funding of $9.9 million 

provided. 

Food, Conservation, and Energy Act of 2008 (P.L. 110–234)—added section 19, the 

FFVP, to the National School Lunch Act which establishes a nationwide program 

with a new structure that increases FFVP funding gradually over 4 years, from $40 

million in 2008 to $150 million in 2011. Funding adjusts each July 1 thereafter to 

reflect changes in Consumer Price Index for All Urban Consumers. 

668

4. Purpose/Goals 

To introduce and provide free fresh fruits and vegetables in elementary schools 

representing the highest percent of children receiving free and reduced price school 

meal benefits and to help combat childhood obesity by helping children develop positive dietary habits during their formative years. 

5. Success in Meeting Programmatic Purpose/Goals 

The FFVP operates in all 50 states and is highly regarded by Members of Congress, nutrition advocates, the health care community, parents and students; over 

5,000 schools participate in the FFVP.

6. Annual Budget Authority (FY 2002–FY 2011) 

The Fresh Fruit and Vegetable Program (FFVP) 

Budget Authority 2009–2011

(dollars in thousands) 

FY 2009 FY 2010 FY 2011

Fresh Fruit and Vegetable Program $56,000 $74,000 $109,000

* Amounts displayed for budget authority reflect transfers authorized on July 1st 

of each fiscal year as modified by the annual appropriations bills by a delay of a portion of the transfer from July 1 to the following October 1; the total transfers authorized for each FY are as follows: FY 2009—$105 million; FY 2010—$101 million; 

FY 2011—$150 million. 

7. Annual Outlays (FY 2002–FY 2011) 

The Fresh Fruit and Vegetable Program (FFVP) Outlays 2009–2011

(dollars in thousands) 

FY 2009 FY 2010 FY 2011

Fresh Fruit and Vegetable Program $28,910 $56,125 $152,424

669

8. Annual Delivery Cost (FY 2002–FY 2011) 

The FFVP is administered as part of the Child Nutrition Programs (CNP) and the administrative costs associated with running this program are not specifically allocated within the CNP account. The table below provides the costs associated with the CNP account as a whole. 

Child Nutrition Program FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Child Nutrition Programs 

School Lunch Program $7,569,757 $7,836,174 $8,365,115 $9,071,783 $9,932,814 10,451,023School Breakfast Program 2,086,098 2,228,842 2,393,028 2,633,048 2,895,356 3,115,300Child and Adult Care Food Program 2,141,088 2,303,732 2,245,195 2,513,852 2,583,232 2,693,384Summer Food Service Program 284,224 297,933 312,203 357,984 374,203 375,518Special Milk Program 15,155 14,225 15,120 14,941 12,064 12,563State Administrative Expense 156,061 162,844 174,134 178,994 195,532 206,943

Total, Cash Grants to States 12,252,383 12,843,750 13,504,795 14,770,602 15,993,201 16,854,731

Commodities (Sec 6e Entitlement) 480,684 537,057 631,849 741,209 735,782 907,919Child Nutrition Program Discretionary Activities 25,619 25,378 30,550 39,128 75,472 59,916ARRA NSLP Equipment Grants 100,000Child Nutrition Program Permanent Activities (not including the FFVP) 36,452 91,069 32,457 172,327Fresh Fruit and Vegetable Program 42,993 79,902 134,000Nutrition Programs Administration (Allocation to this program) 30,215 30,422 30,383 30,724 36,189 35,972Other Program Costs 560,965 681,800 575,997 667,645 527,325 527,325

Total Cost $13,349,866 $14,118,407 $14,810,026 $16,483,370 $17,480,328 #########FTEs 392 368 379 393 414 437

Unit Costs 

Child Nutrition Total Cost per Meal 

Served ($/service) $1.57 $1.59 $1.70 $1.82 $1.86

Performance Measure: Avg. daily NSLP 

participation (millions) 30.0 30.6 30.9 31.6 31.6 32.1

670

Child Nutrition Program FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Performance Measure: Avg. daily SBP 

participation (millions) 9.8 10.1 10.6 11.0 11.6 12.4

9. Eligibility Criteria

—Elementary schools with 50 percent or more students certified eligible for free or reduced price meals.—Elementary schools with the highest percent of students eligible have priority for selection.—All children participating in eligible schools receive free fresh fruits and vegetables outside of school meals.—Number of participating elementary school limited by funding.

10. Utilization (Participation) Data

Approximately 5,000 schools participated in the FFVP during the 2010–2011 School Year. Although we have no information on the number of children served, the level of funding provided would support between approximately 1.5 million and 4.4 million students.

11. Duplication or Overlap with Other Programs

FFVP is authorized by section 19 of the Richard B. Russell National School Lunch Act. The Program provides fresh fruits and vegetables 

to elementary schools, targeted to schools with a high percentage of children certified for free and reduced-price school meals. Schools are reimbursed for the cost of making fresh fruits and vegetables available to students during the school day outside of the school meals.

12. Waste, Fraud and Abuse

The size and nature of this program puts it at a very low risk for improper payments and fraud. FNS is not aware of any issues regarding 

fraud, waste and abuse in the FFVP.

13. Effect of Administrative PAYGO

None. 

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1. Program Name 

The Emergency Food Assistance Program (TEFAP). 

2. Subprograms/Department Initiatives 

TEFAP provides USDA Foods and administrative support to states, which in turn 

provide these resources to emergency feeding organizations such as food banks, soup 

kitchens and food pantries. TEFAP administrative costs help state and local agencies defray costs associated with distributing USDA and privately-donated foods. 

Key program components include: 

Food Funds—USDA purchases food for distribution to TEFAP state and local 

agencies. 

Administrative Funds—USDA provides administrative funds to defray costs associated with processing, repackaging, storage, and distribution of Federal and privately donated food. 

Infrastructure Grants—Provides local emergency feeding organizations, such as 

food banks, food pantries, and soup kitchens, with funds to expand and improve 

their infrastructure, including their storage and distribution facilities. 

3. Brief History 

TEFAP was first authorized as the Temporary Emergency Food Assistance Program in 1981 to distribute surplus foods to households. The name was changed to 

The Emergency Food Assistance Program under the 1990 Farm Bill. The program 

was designed to help reduce Federal food inventories and storage costs while assisting the needy. Stocks of some foods held in surplus had been depleted by 1988. 

Therefore, the Hunger Prevention Act of 1988 authorized funds to be appropriated 

for the purchase of USDA foods specifically for TEFAP. 

The 2008 Farm Bill increased funds for TEFAP food purchases to $250 million 

annually, indexed to inflation. The 2008 Farm Bill also authorized up to $100 million annually for administrative costs and up to $15 million annually for TEFAP infrastructure grants. In addition, the Secretary has authority to provide food that 

USDA acquires through certain price or market support activities (i.e., bonus food) 

to TEFAP. 

4. Purpose/Goals 

TEFAP helps supplement the diets of low-income Americans by providing them 

with emergency food assistance at no cost. TEFAP also supports domestic agricultural markets by providing an outlet for products that USDA acquires through its 

agricultural market and price support activities. 

5. Success in Meeting Programmatic Purpose/Goals 

TEFAP currently operates in all 50 states, the District of Columbia, Puerto Rico, 

the Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands. 

The allocation of food and administrative funds to states is based on a formula that 

considers the states’ unemployment levels and the number of persons with income 

below the poverty level.

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6. Annual Budget Authority (FY 2002–FY 2011) 

The Emergency Food Assistance Program (TEFAP) 

Budget Authority 2002–2011

(Dollars in thousands) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

TEFAP Commodities $140,000 $140,000 $140,000 $140,000 $140,000 $140,000 $190,000 $250,000 $248,000 $247,500TEFAP Admin. Costs 50,000 49,675 49,705 49,600 55,500 49,500 49,650 49,500 49,500 49,401TEFAP Commodities—

ARRA 100,000

TEFAP Admin. Costs—

ARRA 50,000 28,000

7. Annual Outlays (FY 2002–FY 2011) 

The Emergency Food Assistance Program (TEFAP) 

Outlays 2002–2011

(Dollars in thousands) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

TEFAP Commodities $139,293 $137,106 $137,458 $135,428 $135,422 $137,462 $186,822 $245,466 $242,225TEFAP Administrative 

Costs 39,467 37,646 36,116 40,916 37,494 37,001 36,352 37,389 38,804

TEFAP Commodities—

ARRA 99,984

TEFAP Admin. Costs—

ARRA 13,629 35,654

673

8. Annual Delivery Cost (FY 2002–FY 2011) 

The Emergency Food Assistance Program 

(TEFAP) 1 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

The Emergency Food Assistance Program 

(TEFAP) Administrative Cost $55,655 $50,310 $49,823 $49,500 $49,834 $49,500

ARRA TEFAP Administrative Funds 25,000 54,609ARRA TEFAP Commodity Funds 100,000TEFAP Infrastructure Grants 5,956 44TEFAP Entitlement Foods 139,832 140,000 189,936 250,000 247,994 247,500TEFAP Bonus Foods 67,000 58,200 178,100 373,700 346,639 0

TEFAP Total 262,487 248,510 417,858 798,200 705,032 297,044

1Federal cost to administer this program included in the Commodity Assistance Program account. 

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9. Eligibility Criteria 

Households receiving food for consumption at home must meet eligibility criteria 

set by the state, including, but not limited to, an income standard and state residency. Households receiving prepared meals through a soup kitchen or other onsite 

feeding program are presumed to be needy and are not subject to a means test. 

10. Utilization (Participation) Data 

USDA does not collect data on the number of individuals served by TEFAP. A recent analysis by Feeding America, a national network of food banks, found that 54 

percent of affiliated food pantries reported receiving TEFAP food. 

11. Duplication or Overlap with Other Programs 

TEFAP targets low-income individuals that seek food through local feeding organizations such as food pantries and soup kitchens. These individuals are sometimes 

but not always eligible for SNAP, and an individual may receive SNAP and TEFAP 

concurrently. However, TEFAP’s more limited eligibility criteria and flexible structure supports its specific purpose in getting needed food directly into the hands of 

low-income Americans during times of emergency and natural disasters. 

12. Waste, Fraud and Abuse 

In FNS’s FY 2011 improper payment risk assessment conducted and forwarded 

to the Department, TEFAP was determined to have a low risk of significant improper payments or fraud. Management evaluations conducted by FNS Regional offices have not identified significant incidents of improper payments to state agencies, local organizations, or individuals. In addition, a comprehensive, ongoing audit 

conducted by OIG has identified no problems with waste, fraud and abuse in the 

Program. In addition, the benefit provided to individuals participating in the program is relatively low, so any errors in certification will not result in large improper 

payments program participants. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Food Distribution Program on Indian Reservations (FDPIR). 

2. Subprograms/Department Initiatives 

FDPIR provides a monthly package of USDA Foods, including fresh fruits and 

vegetables, to low-income households living on Indian reservations, and to American 

Indian households residing in approved areas near reservations or in Oklahoma. 

Many households participate in FDPIR as an alternative to the SNAP, because they 

do not have easy access to SNAP offices or authorized food stores. Key components 

include: 

Food: USDA purchases food for distribution to Indian Tribal Organizations and 

state agencies administering FDPIR. 

Administrative Funds: FDPIR Indian Tribal Organizations (ITOs) and state agencies receive funds for program administrative costs. 

Nutrition Education Grants: Funds projects developed by ITOs and state agencies 

administering FDPIR to enhance the nutrition knowledge of FDPIR participants 

and to foster positive lifestyle changes for eligible household members. 

Department initiatives on FDPIR include: 

Food Package Improvements: FNS continuously reviews the FDPIR food package, 

in consultation with program customers, to improve its nutritional profile and acceptability. On a regular basis, a work group consisting of tribally appointed FDPIR 

directors, procurement specialists from FSA and AMS, nutrition and health experts 

from the Indian Health Service and the Centers for Disease Control and Prevention 

(CDC), and FNS nutritionists and program staff considers changes to the food package and makes recommendations to FNS. The work group is continuing to focus on 

ways to reduce saturated fat, sugar, and sodium and is also exploring ways to improve the desirability and convenience of products in the food package. 

Improved Access to Fresh Fruits and Vegetables: In FDPIR, the Fresh Produce 

Program began as a pilot program in FY 1996 at two sites. This initiative, a joint 

venture with the Department of Defense, provides fresh fruits and vegetables that 

program participants may select in lieu of canned goods. In FY 2009, about 91 percent of the FDPIR programs were enrolled in the Fresh Produce Program, allowing 

most FDPIR participants to receive a variety of fresh fruits and vegetables that 

would otherwise be very difficult for them to obtain 

675

3. Brief History 

FDPIR was authorized under the Food Stamp Act of 1977 as an alternative to 

the Food Stamp Program, now the Supplemental Nutrition Assistance Program 

(SNAP), for households living on Indian reservations. In 1981, legislation allowed 

Tribes in Oklahoma that did not have traditional reservation boundaries to also participate in FDPIR. The program is currently authorized through 2012 under Section 

4(b) of the Food and Nutrition Act of 2008, and Section 4(a) of the Agriculture and 

Consumer Protection Act of 1973. 

4. Purpose/Goals 

FDPIR serves as an alternative to the SNAP for areas that do not have easy access to SNAP offices or authorized food stores, and for households in designated 

areas who prefer USDA foods to regular SNAP benefits. 

5. Success in Meeting Programmatic Purpose/Goals 

Currently, there are approximately 276 Tribes receiving benefits under FDPIR 

through 100 ITOs and five state agencies. 

Pursuant to the 2008 Farm Bill, USDA conducted a review of the nutritional quality of the FDPIR food package, comparing its content to scientific standards including the Dietary Guidelines for Americans, the Dietary Reference Intakes (DRIs), the 

Thrifty Food Plan nutrient standards and the Healthy Eating Index—2005. It found 

that:

• The package provides a nutritious variety of foods, and sufficient calories to 

meet the energy needs of most sedentary individuals and many moderately active children.

• While as for American diets in general, there is room for improvement in the 

quantities of fruits, vegetables, low-fat dairy products and whole grains, the nutritional content of the package is considerable.

• Individuals consuming FDPIR foods in the quantities provided would achieve a 

HEI–2005 score of 81 out of 100, considerably better than Americans in general 

(58 out of 100) and SNAP participants (52 out of 100).

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6. Annual Budget Authority (FY 2002–FY 2011) 

Food Distribution Program on Indian Reservations (FDPIR) 

Budget Authority 2002–2011

(Dollars in thousands) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

FDPIR $75,800 $82,165 $86,237 $82,200 $79,500 $77,557 $88,477 $114,914 $112,797 $96,958Recovery Act: 

FDPIR Equipment 5,000

7. Annual Outlays (FY 2002–FY 2011) 

Food Distribution Program on Indian Reservations (FDPIR) 

Outlays 2002–2011

(Dollars in thousands) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

FDPIR $69,810 $68,782 $75,195 $72,469 $78,553 $61,535 $79,116 $111,060 $105,012Recovery Act: 

FDPIR Equipment 5,000

8. Annual Delivery Cost (FY 2002–FY 2011) 

Supplemental Nutrition Assistance Program 

Account FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Supplemental Nutrition Assistance Program 

(SNAP) $32,984,909 $33,198,354 $37,557,661 $49,324,256 $57,820,329 $65,340,734

ARRA SNAP Benefits and Admin. Funds 4,478,246 10,763,853 10,486,716Nutrition Assistance for Puerto Rico (NAP) 1,517,752 1,551,167 1,622,521 1,760,435 1,746,351 1,744,605ARRA NAP Funds 240,133 254,217 255,963Food Distribution Program on Indian Reservation (FDPIR) 78,760 77,554 88,339 114,866 112,756 96,958

677

ARRA FDPIR Equipment Funds 3,712 1,367 0The Emergency Food Assistance Program 

(TEFAP) Commodities 139,832 140,000 189,936 250,000 247,994 247,500

American Samoa 4,795 5,219 5,204 7,006ARRA American Samoa Benefits 964 1,021 1,028Program Access/Community Food Project/

CNMI/Pilot Projects 24,026 23,816 14,852 27,009 38,368 25,792

Nutrition Programs Administration (Allocation to this program) 72,013 72,508 72,416 70,934 69,482 69,066Other Program Costs 895 2,726 3,918 703 377 377

Total Cost $34,818,187 $35,066,125 $39,554,437 $56,276,477 $71,061,319 $78,275,745FTEs 683 631 613 612 591 618

Unit Costs 

SNAP (Total Annual Cost per Participant) $1,236.28 $1,256.97 $1,324.50 $1,597.48 $1,703.50 $1,686.54FDPIR (Total Annual Cost per Participant) $887.65 $928.48 $1,024.98 $1,123.26 $1,077.93 $966.65Performance Measure: Average monthly SNAP participation (millions) 26.736 26.466 28.408 33.7 40.3 45.0

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9. Eligibility Criteria 

Low-income American Indian and non-Indian households that reside on a reservation and households living in approved areas near a reservation or in Oklahoma 

that contain at least one person who is a member of a federally-recognized Tribe, 

are eligible to participate in FDPIR. Households are certified based on Federal income and resource standards which are largely the same as those for SNAP. Households may not participate in FDPIR and SNAP in the same month.

10. Utilization (Participation) Data 

Food Distribution Program on Indian Reservations (FDPIR) 

National Average Monthly Participation 

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

U.S. Total 98,905 89,867 86,629 90,153 95,369 84,577

11. Duplication or Overlap with Other Programs 

Funds are appropriated by Congress to carry out the FDPIR under section 4(b) 

of the Food and Nutrition Act of 2008. The Program is administered locally by either Indian Tribal Organizations (ITOs) or other state agencies. USDA purchases 

and ships FDPIR foods to ITOs based on orders from a list of available foods. Many 

households participate in FDPIR as an alternative to SNAP due to availability. 

Households are not allowed to participate in both programs at the same time. 

12. Waste, Fraud and Abuse 

The last improper payment risk assessment conducted for FDPIR was in FY 2009. 

It was determined that the Program is at a low risk for improper payments or 

fraud. The benefit level for FDPIR is approximately $78 per person per month in 

FY 2009. Additionally, FDPIR benefits from simplified program requirements, regulatory controls and a continuous process for reviewing certification actions and taking appropriate corrective action to resolve problems with internal controls place 

FDPIR at a low level of risk. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Senior Farmers’ Market Nutrition Program (SFMNP). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The program was created as a pilot program in FY 2001; it was established by 

Congress as a permanent program in FY 2002, and has been reauthorized through 

2012 under the 2008 Farm Bill (Public Law 110–234). 

4. Purpose/Goals 

The SFMNP provides low-income seniors with coupons that can be used to purchase fresh fruits, vegetables, honey and herbs from farmers at authorized farmers’ 

markets or roadside stands, or with shares in Community Supported Agriculture 

(CSA) programs for regularly distributed bags or boxes of eligible foods. SFMNP 

seeks to increase the consumption of agricultural commodities by expanding, developing, or aiding in the development and expansion of domestic farmers’ markets, 

roadside stands, and community supported agriculture (CSA) programs. 

5. Success in Meeting Programmatic Purpose/Goals 

• 51 state agencies and federally recognized Indian tribal governments received 

grants to operate the SFMNP in FY 2010.

• 20,106 farmers at 4,601 farmers’ markets as well 3,861 roadside stands and 163 

community supported agriculture programs participated in the program in FY 

2010.

• 844,999 people received SFMNP coupons in FY 2010.

679

6. Annual Budget Authority (FY 2002–FY 2011) 

Senior Farmers’ Market Nutrition Program (SFMNP) 

Budget Authority 2002–2011

(Dollars in thousands) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

SFMNP $10,000 $15,000 $15,000 $15,000 $15,000 $15,000 $20,600 $20,600 $20,600 $20,600

7. Annual Outlays (FY 2002–FY 2011) 

Senior Farmers’ Market Nutrition Program (SFMNP) 

Outlays 2002–2011

(Dollars in thousands) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

SFMNP $6,533 $8,599 $8,343 $10,542 $9,979 $9,346 $11,872 $13,264 $12,314

8. Annual Delivery Cost (FY 2002–FY 2011) 

Commodity Assistance Program Account FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Commodity Supplemental Food Program 

(CSFP) $112,445 $107,828 $140,807 $164,579 $181,892 $192,624

The Emergency Food Assistance Program 

(TEFAP) Administrative Cost 55,655 50,310 49,823 49,500 49,834 49,500

ARRA TEFAP Administrative Funds 25,000 54,609ARRA TEFAP Commodity Funds 100,000TEFAP Infrastructure Grants 5,956 44Farmers’ Market Programs: 

Farmers’ Market Nutrition Program 23,814 22,109 21,838 20,658 22,089 20,003Seniors’ Farmers’ Market Program 15,844 16,203 21,402 19,865 22,459 20,606

Commodity Assistance (Nuc. Affected Isld, 

Disaster Asst., NSIP Comm.) 3,882 2,756 3,736 4,224 5,114 3,883

680

8. Annual Delivery Cost (FY 2002–FY 2011)—Continued

Commodity Assistance Program Account FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Nutrition Programs Administration (Allocation to this program) 15,523 15,561 15,553 15,616 15,923 15,828Other Program Costs 1 103,412 90,066 195,628 195,397 366,987 366,987

Total Cost $330,575 $304,833 $448,787 $594,839 $724,863 $669,475FTEs 97 95 95 100 112 112

Unit Costs: 

CSFP (Total Annual Cost per Participant) $361.64 $349.43 $344.72 $394.27 $385.11 $348.09Performance Measure: Average monthly CSFP participation (thousands) 463.1 466.1 475.3 473.5 518.9 604.9

1 Includes bonus commodities for TEFAP, CSFP, Disaster Assistance, Nuclear Affected Island, and other commodity assistance. 

681

9. Eligibility Criteria 

Low-income seniors, generally defined as individuals who are at least 60 years old 

and who have household incomes of not more than 185% of the Federal poverty income guidelines, are the targeted recipients of SFMNP benefits.

10. Utilization (Participation) Data 

Senior Farmers’ Market Nutrition Program (SFMNP) 

National Average Monthly Participation 

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

U.S. Total 771,285 825,691 803,985 833,026 809,711 844,999

11. Duplication or Overlap with Other Programs 

The SFMNP was established by the Farm Security and Rural Investment Act of 

2002. Program grants are awarded to states to provide low-income seniors with coupons that can be exchanged for eligible foods at farmers’ markets, roadside stands, 

and community supported agriculture (CSA) programs. The goals of the SFMNP are 

to provide resources in the form of fresh, nutritious, unprepared, locally grown 

fruits, vegetables, honey and herbs from farmers’ markets, roadside stands and CSA 

programs to low-income seniors; increase the domestic consumption of agricultural 

commodities by developing new or expanding existing domestic farmers’ markets, 

roadside stands, and CSA programs. The Program is similar in design and function 

to the Farmers’ Market Nutrition Program, but serves senior citizens rather than 

WIC recipients. 

12. Waste, Fraud and Abuse 

The last improper payment risk assessment for this program, conducted for FY 

2010, concluded that SFMNP presents a very low risk for erroneous payments. 

Guidelines provided in the SFMNP State Plan Guidance consistently require state 

agencies to provide FNS with detailed descriptions of their systems for ensuring 

that SFMNP benefits are issued to and used only by eligible recipients, and that 

SFMNP checks, coupons or vouchers are submitted for payment by authorized farmers through appropriate farmers’ markets, roadside stands, and/or community supported agriculture programs. FNS further requires that all SFMNP vouchers be 

matched to an authorized farmer and recipient before payment is made, either by 

the contracted banking facility or by the State Treasurer’s office. These controls are 

more than adequate to avoid significant improper payments. There have been no audits or management reviews which have identified significant fraud, waste and 

abuse issues. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Supplemental Nutrition Assistance Program (SNAP). 

2. Subprograms/Department Initiatives 

The subcomponents of SNAP include: 

Nutrition Education (SNAP-Ed): The goal of SNAP-Ed is to improve the likelihood that persons eligible for SNAP will make healthy food choices with in a limited 

budget and choose physically active lifestyles consistent with the current Dietary 

Guidelines for Americans.

Employment and Training (E&T): States are required to establish an E&T 

program to help able-bodied SNAP recipients find work or gain the skills, training, 

and experience that lead to employment. 

Quality Control (QC): Each state agency is responsible for monitoring and improving its administration of SNAP. As a part of this requirement, the SNAP QC 

System is used to determine the accuracy of the benefits authorized. The data collected is also used to determine areas for program improvement. 

Disaster Supplemental Nutrition Assistance Program (D–SNAP): Through 

D–SNAP, households affected by a disaster receive streamlined certification and 

benefit issuance, speeding assistance to these vulnerable disaster victims and reducing the administrative burden on state agencies operating in post-disaster conditions. D–SNAP recipients usually receive 1 month of benefits. Generally, states may 

request to operate a D–SNAP when the area has received a Presidential disaster 

682

declaration of Individual Assistance from the Federal Emergency Management 

Agency. Benefits are issued on an EBT card, similar to SNAP benefits. 

Retailer Authorization, Reauthorization, and Investigation: FNS is responsible for policy and oversight of authorization and reauthorization of applicant and 

licensed retailers; the monitoring of retail firms through ongoing systems analysis 

and undercover on-site investigations; and the administrative review of those firms 

which contest a disqualification or civil money penalty. 

Farmers’ Markets: USDA is committed to increasing participation by farmers’ 

markets in SNAP. At the end of FY 2010, 1,611 direct marketing farmers and farmers’ markets participated in SNAP which is a 263 percent increase in the number 

of authorized farmers and markets over the previous 5 fiscal years. Over that same 

period, SNAP redemptions at farmers’ markets increased 49 percent. 

Nutrition Assistance for Puerto Rico (NAP): Each year, Puerto Rico submits 

and gains approval for the program plan for its nutrition assistance block grant. The 

plan must assess the food and nutrition needs of the island’s most needy residents; 

describe the assistance needed; describe how it would be provided to the neediest 

residents; describe the amount of administrative expense needed and meet other 

such requirements as the provided by regulation. In the NAP, 75 percent of the nutrition benefits are targeted to the purchase of food while 25 percent are in cash. 

During an average month in FY2010, an average of 1.3 million people were served 

monthly by the NAP. 

Nutrition Assistance for American Samoa: Each year, American Samoa submits a Memorandum of Understanding specifying how the block grant will be operated, including the eligibility requirements to stay within the capped block grant 

amount. FNS reviews and approves the annual Memorandum of Understanding and 

monitors program operations to ensure program integrity. An average of 3,388 people were served monthly by the program in Fiscal Year 2010. 

Nutrition Assistance for the Commonwealth of the Northern Mariana Islands (CNMI): CNMI submits a Memorandum of Understanding each fiscal year, 

specifying how the program will be operated, including the eligibility requirements 

to stay within the capped block grant amount. FNS reviews and approves the annual Memorandum of Understanding and monitors program operations to ensure 

program integrity. A monthly average of 8,922 people were served monthly by the 

program in Fiscal Year 2010. 

3. Brief History 

SNAP has a long history of meeting the nutrition needs of low income people. The 

very first SNAP, then known as the Food Stamp Program (FSP), operated from May 

16, 1939 to the spring of 1943. It included a purchase requirement. 

The FSP began again on May 29, 1961 when President Kennedy’s first Executive 

Order called for expanded food distribution. The FSP became permanent with the 

Food Stamp Act of 1964. The Food Stamp Act of 1977 eliminated the purchase requirement and included a number of important access and integrity provisions. 

The late 1980s and 1990s were the dawn of Electronic Benefit Transfer (EBT). 

With EBT pilots spreading across the nation, EBT was made mandatory in 1996. 

At this time, welfare reform also affected the policies of the FSP, including establishment of time limits for able-bodied adults without dependents and eligibility restrictions for legal immigrants. 

Major changes arrived once again with the Farm Bill of 2002. This legislation restored benefits for certain legal immigrants, emphasized program access, simplified 

program rules, and offered states a large number of options to improve administration of the program. The quality control system was also reformed, enhanced funding for performance was eliminated, and performance bonuses were established and 

set at $48 million total. 

In June 2008, Congress ratified the Food, Conservation, and Energy Act of 2008 

which reauthorized the program as the Supplemental Nutrition Assistance Program 

(SNAP) under the newly named Food and Nutrition Act. This farm bill strengthened 

integrity, simplified administration, maintained state flexibility, and improved access. 

4. Purpose/Goals 

The Food and Nutrition Act statutorily defines the purpose of the program as ‘‘to 

alleviate such hunger and malnutrition, a supplemental nutrition assistance program is herein authorized which will permit low-income households to obtain a more 

nutritious diet through normal channels of trade by increasing food purchasing 

power for all eligible households who apply for participation.’’

As such, SNAP is the cornerstone of the Federal food assistance programs. SNAP 

supplements the income of low income individuals and families by providing an elecVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00694 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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tronic debit card which is used to purchase food at authorized stores. SNAP provides 

crucial support to needy households and helps those making the transition from welfare to work. 

State agencies are responsible for the administration of the program according to 

national eligibility and benefit standards set by Federal law and regulations. Benefits are 100 percent federally-financed, while administrative costs are shared between the Federal and state governments. 

SNAP is a countercyclical program that expands in tough economic times and contracts when the economy improves. SNAP has an economic multiplier effect. Every 

$5 in new SNAP benefits generates as much as $9.00 in total economic activity. 

SNAP uses multiple strategies to encourage participants to make healthy food 

choices and engage in active lifestyles. These include nutrition education, encouraging more farmers’ markets to participate in the program and a demonstration 

project to examine the impact of incentives on participant purchases of fruits and 

vegetables. 

While Americans support helping struggling families put food on the table they 

want to know that taxpayer dollars are being spent wisely. USDA actively works 

on behalf of American taxpayers to protect the Federal investment in SNAP and 

make sure the program is targeted towards those families who need it the most. To 

further this effort, FNS focuses on three key areas of oversight: reducing improper 

payments and errors; pursuing recipient fraud; and combating abuse and misuse of 

benefits. 

5. Success in Meeting Programmatic Purpose/Goals 

SNAP helped put food on the table for an average of 40.3 million people (or 18.6 

million households) per month during Fiscal Year 2010. In that year, the average 

monthly benefit per person was $133.79 and the average monthly benefit per household was $289.61. Five years ago, in Fiscal Year 2006, SNAP helped put food on 

the table for a monthly average of 26.5 million people (or 11.7 million households). 

In that year, the average monthly benefit per person was $94.75 and the average 

monthly benefit per household was $214.41. SNAP families and individuals spend 

benefits promptly, rather than save them. About 80 percent of SNAP benefits are 

used within 2 weeks of receipt and 97 percent are spent within a month. 

Most SNAP recipients are children or elderly. The most recent administrative 

data (for Fiscal Year 2009) show that nearly half (48 percent) of recipients were 

children and another eight percent were age 60 or older. Working-age women represented 28 percent of the caseload, while working-age men represented 16 percent. 

These figures have not changed greatly in the last 5 years. In Fiscal Year 2004, 50 

percent of participants were children and eight percent were age 60 or older. At that 

time, working age women represented 28 percent of the caseload and working age 

men represented 13 percent. 

Notably, the primary source of income among SNAP participants has shifted from 

welfare to work over time. In 1989, 42 percent of all SNAP households received cash 

welfare benefits and only 20 percent had earnings. In 2009, less than ten percent 

received cash welfare, while 29 percent had earnings. In Fiscal Year 2009, 40 percent of all SNAP participants lived in a household with earnings. For these households, earnings were the primary source of income. 

In Fiscal Year 2008, among those eligible for SNAP, the participation rate was 

66 percent at the national level. In Fiscal Year 2004, the participation rate among 

those eligible was 61 percent. Rates are consistently lower for some subgroups like 

the elderly, Latinos and working poor. FNS and the states continue to direct outreach efforts to these underserved populations to raise their awareness of the nutrition benefits of SNAP and how to apply. 

Recent historic growth in the number of households receiving SNAP benefits has 

had a tangible impact on the number of authorized retailers. As of September 30, 

2010, there were 216,738 firms authorized to accept SNAP benefits. The number of 

SNAP authorized firms increased 12 percent within the past year, and 49 percent 

since 2003 when just over 145,000 firms were in the Program. 

FNS is committed to working with our state and Federal partners on strategies 

to improve accuracy, as well as to identify and address fraud, while ensuring access 

and customer service. Over 98 percent of those receiving SNAP benefits are eligible. 

Payment accuracy was 96.19 percent in Fiscal Year 2010, a historic high. The FY10 

rate reflects the fourth continuous year of improvement and a decade long trend. 

Payment errors are less than half what they were 10 years ago, which has reduced 

improper payments by $3.3 billion in 2010.

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The prevalence of trafficking dropped from approximately four percent in the late 1990s to one percent in the mid 2000s. Over the last 10 

years, 8045 retail stores were permanently disqualified due to trafficking, reflecting our work to root out and eliminate bad actors from the program. 

6. Annual Budget Authority (FY 2002–FY 2011) 

Supplemental Nutrition Assistance Program 1

Annual Budget Authority 

(in millions) 

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Regular Appropriations:

SNAP $21,390 $24,598 $29,190 $33,422 $38,959 $36,377 $37,705 $51,805 $56,152 $66,782Puerto Rico and American Samoa 1,356 1,401 1,419 1,501 1,524 1,557 1,629 1,768 1,753 1,752Commonwealth Northern Mariana 6 8 11 8 8 9 10 12 12 12

Subtotal, Regular Appropriations 22,752 26,006 30,620 34,932 40,492 37,944 39,344 53,584 57,917 68,546

Supplemental Appropriations: 

DOD SAE 0 0 0 0 0 0 0 0 400 0

Recovery Act: 

Benefits 0 0 0 0 0 0 0 4,804 10,376 10,487Administrative Costs 0 0 0 0 0 0 0 145 150 0ARRA Benefits—Puerto Rico NAP 0 0 0 0 0 0 0 240 254 256American Samoa Benefits 0 0 0 0 0 0 0 1 1 1

Subtotal, Recovery Act 0 0 0 0 0 0 0 5,190 10,782 10,744

Total Appropriations 22,752 26,006 30,620 34,932 40,492 37,944 39,344 58,774 69,099 79,290

1 Note: Does not include appropriations for TEFAP or FDPIR. 

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7. Annual Outlays (FY 2002–FY 2011) 

Supplemental Nutrition Assistance Program 1

Annual Outlays 

(in millions) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

Regular Program Outlays: 

SNAP $19,862 $23,072 $26,234 $30,909 $32,820 $33,040 $37,364 $48,883 $58,901Puerto Rico and American Samoa 1,274 1,307 1,329 1,480 1,519 1,587 1,634 1,734 1,750Commonwealth Northern Mariana 5 7 6 11 9 10 9 10 12

Subtotal, Regular Appropriations 21,141 24,386 27,570 32,400 34,348 34,637 39,007 50,626 60,662

Supplemental Outlays: 

DOD SAE 0 0 0 0 0 0 0 0 126

Recovery Act Outlays: 

Total Recovery Act 0 0 0 0 0 0 0 4,568 10,968

Total Outlays 21,141 24,386 27,570 32,400 34,348 34,637 39,007 55,194 71,756

1 Note: Does not include outlays for TEFAP or FDPIR.

The difference between budget authority and outlays for the SNAP program is usually related to either use or non-use of the contingency fund. In 2010, for example, budget authority is shown as $69 billion, whereas outlays were $71.8 billion. In that year, over $2 billion in contingency funds carried forward from the previous fiscal year were used to fund participation. 

8. Annual Delivery Cost (FY 2002–FY 2011) 

Supplemental Nutrition Assistance Program 

Account FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Supplemental Nutrition Assistance Program 

(SNAP) $32,984,909 $33,198,354 $37,557,661 $49,324,256 $57,820,329 $65,340,734

ARRA SNAP Benefits and Admin. Funds 4,478,246 10,763,853 10,486,716Nutrition Assistance for Puerto Rico (NAP) 1,517,752 1,551,167 1,622,521 1,760,435 1,746,351 1,744,605ARRA NAP Funds 240,133 254,217 255,963

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8. Annual Delivery Cost (FY 2002–FY 2011)—Continued

Supplemental Nutrition Assistance Program 

Account FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Food Distribution Program on Indian Reservation (FDPIR) 78,760 77,554 88,339 114,866 112,756 96,958ARRA FDPIR Equipment Funds 3,712 1,367 0The Emergency Food Assistance Program 

(TEFAP) Commodities 139,832 140,000 189,936 250,000 247,994 247,500

American Samoa 4,795 5,219 5,204 7,006ARRA American Samoa Benefits 964 1,021 1,028Program Access/Community Food Project/

CNMI/Pilot Projects 24,026 23,816 14,852 27,009 38,368 25,792

Nutrition Programs Administration (Allocation to this program) 72,013 72,508 72,416 70,934 69,482 69,066Other Program Costs 895 2,726 3,918 703 377 377

Total Cost $34,818,187 $35,066,125 $39,554,437 $56,276,477 $71,061,319 $78,275,745FTEs 683 631 613 612 591 618

Unit Costs: 

SNAP (Total Annual Cost per Participant) $1,236.28 $1,256.97 $1,324.50 $1,597.48 $1,703.50 $1,686.54FDPIR (Total Annual Cost per Participant) $887.65 $928.48 $1,024.98 $1,123.26 $1,077.93 $966.65

Performance Measure: Average monthly 

SNAP participation (millions) 26.736 26.466 28.408 33.7 40.3 45.0

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9. Eligibility Criteria 

To qualify for SNAP, applicants must fill out an application and submit it to the 

local office. Applicants must meet certain financial, non-financial and citizenship requirements. Illegal immigrants are not eligible for SNAP benefits. 

To qualify, there is a gross income test of 130 percent of the Federal poverty 

guidelines and a net income test of 100 percent of the Federal poverty guidelines. 

SNAP allows for certain deductions from gross income like housing and utility costs, 

child support, medical expenses, or child-care costs to calculate net income. Households with an elderly person or a person receiving certain types of disability payments only have to meet the net income test. 

There is also a resource test. Households may have $2,000 in countable resources 

or $3,000 if at least one person is age 60 or older or disabled. In SNAP, examples 

of countable resources would include bank accounts. Certain resources are not 

counted, such as a home and lot, the resources of people who receive Supplemental 

Security Income (SSI), the resources of people who receive Temporary Assistance for 

Needy Families (TANF), certain education savings accounts, and most retirement 

and pension plans. 

Households are also eligible for SNAP through categorical eligibility in SSI, General Assistance, and TANF: 42 states have adopted TANF broad-based categorical 

eligibility, a program simplification measure allowing states to adjust the gross income test up to 200 percent of poverty test and raise or eliminates the resource test. 

States can change the TANF program that confers broad-based categorical eligibility 

to exclude households that receive a large lump sum payment or to create a resource limit of some amount. 

In addition, applicants must also meet some non-financial requirements, such as 

citizen/legal immigrant status and work requirements in some cases. Generally, 

Able-Bodied Adults without Dependents (ABAWDs) between 18 and 50 who do not 

have any dependent children can get SNAP benefits only for 3 months in a 36 

month period if they do not work or participate in a workfare or employment and 

training program other than job search. This requirement is waived in some locations in accordance with unemployment rates and job availability triggers determined by the Department of Labor. With some exceptions, all adults participating 

in SNAP between 16 and 60 must register for work, accept suitable employment, 

and take part in an employment and training program to which they are referred 

by the local office. Failure to comply with these requirements can result in disqualification from the program. 

Applicants must also provide verification such as pay stubs and bank statements, 

along with their application. In addition, the eligibility worker will conduct automated data matches with the Social Security Administration and other organizations to verify information. 

Benefits are provided at the household level. In SNAP, a household is defined as 

either an individual living alone or a group of people who live together and purchase 

and prepare meals together. The amount of benefits, called an allotment, is based 

on the Thrifty Food Plan, a low-cost model food plan that reflects current nutrition 

standards, the nutrient content and cost of food and consumption patterns of lowincome families and varies with household size and net income. While SNAP has 

uniform national benefit levels with cost-of-living adjustments for outlying states 

and territories, allotment s vary with household size and net income.

10. Utilization (Participation) Data 

Supplemental Nutrition Assistance Program (SNAP) 

National Level Average Monthly Participation 

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

U.S. 25,602,975 26,524,597 26,293,437 28,200,022 33,463,212 40,266,867

11. Duplication or Overlap with Other Programs 

SNAP is one of 15 nutrition assistance programs administered by USDA’s Food 

and Nutrition Service. Programs target the diverse needs of different subgroups of 

low-income persons by providing supplemental assistance through a variety of forms 

and settings. 

The programs are designed to work together to form a nutrition safety net to ensure that no American in need goes hungry. For example, children from households 

receiving SNAP benefits or, alternatively, the Food Distribution Program on Indian 

Reservations (FDPIR) are categorically eligible to receive free meals at school 

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through the National School Lunch and School Breakfast programs without a separate household application. This is done through direct certification, which typically 

involves matching SNAP or FDPIR records against student enrollment lists, either 

at the state or school district level. 

12. Waste, Fraud and Abuse 

SNAP has a demonstrated Quality Control system that has been in effect since 

the 1970s. The system includes provisions for state liabilities for sustained poor performance and bonuses for states that excel. FNS takes seriously its responsibility 

to make sure that only those families who are actually eligible for the program participate, and that the correct amount of benefits is provided to them. Over the past 

decade, FNS has made major strides to improve the accuracy of SNAP’s eligibility 

determination and benefit payment systems. In Fiscal Year 2000, the error rate was 

8.91 percent. The Fiscal Year 2010 error rate was an all-time low of 3.81 percent, 

which is 57 percent less than the Fiscal Year 2000 error rate. Similarly Payment 

errors are less than half what they were 10 years ago, which has reduced improper 

payments by $3.3 billion in 2010. 

While recipient fraud undermines public confidence and jeopardizes the ability of 

SNAP to serve the tens of millions of struggling families who need it, the most recent data suggests that it is relatively rare. FNS works through our state partners 

to investigate recipient fraud and hold bad actors accountable, and recipients who 

purposely commit fraud to get benefits are subject to disqualification. In Fiscal Year 

2010, states conducted 781,000 fraud investigations, disqualified 44,408 individuals, 

and collected $287 million in recipient claims. An additional $1.3 billion in delinquent SNAP recipient claims has been collected since 1992 via the Treasury Offset 

Program. 

FNS recently sent a letter to all states to encourage them to be more active and 

vigilant in the area of recipient trafficking. FNS is in process of contacting each 

state to engage in a discussion about doing more to promote integrity and remove 

bad actors from the program. FNS will work with each state to develop new approaches to fraud detection and prevention such as providing additional data to 

track and investigate fraud by recipients and by looking at sensible procedural 

changes and policy options. 

The sale/purchase of SNAP benefits for cash is called trafficking, an illegal activity punishable by criminal prosecution. Over the last 15 years, FNS has aggressively 

implemented a number of measures to reduce the prevalence of trafficking in SNAP 

from about four percent down to its current level of about one percent. FNS also 

continues to work closely with its state and Federal partners to investigate and 

prosecute trafficking. 

Retailers found guilty of trafficking are referred to OIG for consideration for 

criminal prosecution. If OIG accepts the case and the store is criminally prosecuted, 

it may be subject to asset forfeiture in addition to administrative penalties levied 

by FNS. If OIG declines a case against a retailer found guilty of trafficking, FNS 

initiates administrative action to permanently disqualify the retailer from further 

SNAP participation. The retailer is barred from future SNAP participation, including opening a new store in a different location. If a retailer convicted of trafficking 

sells the store, they are assessed a transfer of ownership civil money penalty. If they 

participate in the Special Supplemental Nutrition Program for Women, Infants, and 

Children, they are disqualified from that program as well. 

13. Effect of Administrative PAYGO 

See attached under ‘‘Costs—Title XIX Treatment Facilities.’’

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AGRICULTURAL PROGRAM AUDIT 

(EXAMINATION OF TITLE I AND THE SURE PROGRAM) 

WEDNESDAY, JULY 27, 2011

SUBCOMMITTEE ON GENERAL FARM COMMODITIES

AND RISK MANAGEMENT, HOUSE OF REPRESENTATIVES, COMMITTEE ON AGRICULTURE, Washington, D.C. 

The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 

1300, Longworth House Office Building, Hon. K. Michael Conaway 

[Chairman of the Subcommittee] presiding. 

Members present: Representatives Conaway, Schmidt, Austin 

Scott of Georgia, Crawford, Huelskamp, Ellmers, Gibson, Hultgren, 

Hartzler, Schilling, Lucas (ex officio), Ribble, Boswell, McIntyre, 

Walz, Kissell, McGovern, David Scott of Georgia, Sewell, and Peterson (ex officio). 

Staff present: Matt Schertz, Brandon Lipps, Bart Fischer, Heather Vaughan, Tamara Hinton, Debbie Smith, Clark Ogilvie, Anne 

Simmons, Liz Friedlander, John Konya, and Jamie Mitchell. 

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A 

REPRESENTATIVE IN CONGRESS FROM TEXAS 

The CHAIRMAN. This hearing of the Subcommittee on General 

Farm Commodities and Risk Management entitled, Agricultural 

Program Audit: Examination of Title I and the SURE Program,

will come to order. 

We have two witnesses here this morning, both relatively new to 

the FSA top leadership, both of them bring long, long credentials 

to their jobs. We have Bruce Nelson, who is now the Administrator 

of the Farm Service Agency, U.S. Department of Agriculture. We 

have the favorite son from Texas, Juan Garcia, the Acting Deputy 

Administrator for Farm Programs at the Farm Service Agency. 

So gentlemen, welcome. Rather than making any kind of long 

winded statement, I am going to recognize our Chairman of the full 

Committee for his opening statement and then the Ranking Member for his. 

[The prepared statement of Mr. Conaway follows:]

PREPARED STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE IN

CONGRESS FROM TEXAS

As you know, we are performing an extensive audit of all policies under the jurisdiction of the House Agriculture Committee. Today, we examine Title I of the farm 

bill, known as the Commodity Title, and standing disaster assistance, commonly 

known as SURE. 

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Not long ago, this Subcommittee reviewed Federal Crop Insurance. We know that 

without this public-private partnership, something as basic as multiple peril crop insurance would be out of reach for U.S. producers. That’s something everybody can 

get their arms around and appreciate. 

Less obvious are the reasons behind a commodity title to the farm bill and to 

standing disaster. People understand the production risks producers face. But folks 

are inclined to ask, what is so unique about the price risk and market volatility that 

producers face? Don’t all of us face this sort of thing? 

Texas Tech University did a good job during the last farm bill of helping people 

understand the market conditions U.S. producers face. I would encourage each of 

my colleagues to get a copy of the ‘‘Foreign Subsidies and Tariffs Handbook’’ to gain 

a better sense of the distorted global markets in which our producers must compete. 

I can assure you, the kind of dollars we are talking about here today pale by comparison to what foreign countries, both developed and developing, are providing 

their producers. In fact, U.S. producers receive only a very basic level of support, 

and our markets are among the most open in the world. 

As an accountant, I never faced these distorted global markets. I have never 

woken up one morning to learn that the U.S. has imposed an embargo on American 

accountants doing work for clients living in the former Soviet Union, causing a collapse in my prices. I never encountered China turning on and off my access to clients in that country. I’ve never had to fight for access to clients in countries where 

the government has a single desk where it buys and sells all accounting work. I 

never had a situation where the government was buying my competitors their 

equipment for them. I never experienced a price volatility where what I could 

charge a client one year was $100, and the next year it was $20. And, I never had 

clients walk into my office and tell me the prices I could charge. Are there risks 

in all businesses? Absolutely. Businesses open and close every day. But few are 

dealing with the incredible risks our producers face. 

The question for me, then, is not whether we need a farm policy but what it 

should look like, and how to make it the most effective not only for the producers 

but also for the taxpayer. Agriculture and farm policy are too important to our economy and jobs to short shrift. President Reagan recognized this in the mid 1980s 

when he initiated the largest ad hoc effort in U.S. history to stop the farm financial 

crisis. A decade later, Congress stepped in to address another farm crisis. These ad 

hoc efforts were very expensive. So, having policies in place to not only deal with 

a crisis but hopefully prevent one is the key to being cost-effective for taxpayers and 

producers. 

There are a few guiding principles that I will apply when working with colleagues 

to develop the farm policy provisions of the 2012 Farm Bill and I offer them here 

to help facilitate a good conversation in this audit.

(1) Does the policy undermine Federal Crop Insurance?

(2) Is the policy bankable to the producer? In other words, does the policy mean 

anything to the lender?

(3) Is the policy tailored to producer risk?

(4) Are the crops covered under Title I treated equitably under the policy?

(5) Can producers—and their lenders—understand the policy?

With finite resources, we need to be wise in how we invest in U.S. farm policy. 

These are some basic principles we can apply to make sure this happens. 

With that, I yield to my friend, the Ranking Member, Mr. Boswell, for any opening statement he may have.

The CHAIRMAN. Mr. Lucas. 

OPENING STATEMENT OF HON. FRANK D. LUCAS, A 

REPRESENTATIVE IN CONGRESS FROM OKLAHOMA 

Mr. LUCAS. Good morning and thank you, Chairman Conaway 

and Ranking Member Boswell, for holding this hearing. I would 

like to thank Bruce Nelson and Juan Garcia for joining us from the 

Farm Service Agency. 

Today’s hearing is the eighth audit of farm programs conducted 

by the Agriculture Committee’s Subcommittees. We have evaluated 

everything from conservation to nutrition assistance so far. We 

gathered information about which programs are most effective and 

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which can be streamlined. Having these facts on hand will help us 

make difficult decisions when we begin developing the next farm 

bill. Each of those audits was important in their own right, but I 

believe today’s audit of Title I’s programs and disaster assistance 

is particular significant. 

Along with crop insurance, Title I programs form the very fabric 

of our farm safety net. They ensure that dramatic swings in commodities prices and volatile weather don’t put our farmers and 

ranchers out of business. As a rancher I understand how difficult 

it is for producers to invest in a crop and see any hope of profit 

vanish because of factors beyond their control. 

Not only are producers engaging in a risky industry, but they 

have to significantly leverage their assets to do so. Farmers and 

ranchers borrow more money each year than most Americans will 

borrow in a lifetime. And in addition to the high personal risk and 

questionable returns farmers accept as part of doing business, they 

also put in the hard labor every day. 

I can tell you in these temperatures every chore is that much 

harder. And while we can avoid the heat here in Washington by 

crossing between our offices in the Capitol in air conditioned tunnels, our farmers and ranchers have no such luxury. There are no 

tunnels out to the pasture. 

That is why I am so grateful to the men and women who choose 

farming as a career. They work hard every day, braving the uncertainties of weather and commodity markets to produce high quality 

food for Americans and consumers around the world. 

While they do the hard work of producing our food, we have to 

do our part to support them. Without a safety net, a few bad seasons can put a farm out of business. When we lose that source of 

production, we don’t usually get it back. So maybe instead of 

speaking about this as a farm safety net, we need to start calling 

it a food safety net. Perhaps that will get the message out that 

commodity support keeps farmers in business, which keeps food on 

our plates. And that is the message that seems to be getting lost. 

When I talk to farmers and ranchers I hear a constant refrain, 

we are not asking for a handout, we just need a floor in place when 

the bottom drops out. That is what crop insurance and Title I programs provide, a floor, a safety net for food production. 

So when opponents of farm policy start talking about the enormous amount of money that can be saved by eliminating this safety 

net, and they truly believe it is an enormous amount of money, I 

wonder what numbers they are using. The cost of losing food production surely outweighs the cost of a safety net, especially when 

you consider that many Title I programs don’t kick in until prices 

fall below a set trigger. 

I would like to get one thing straight right off the bat. There 

aren’t enormous savings to be found from cutting farm programs. 

They comprise less than 1⁄2 of 1 percent of the Federal budget. That 

is only 50¢ out of every $100. 

Now these are difficult times and the agriculture community is 

going to have to accept budget cuts. We don’t believe that we 

should take a disproportionate hit. We are prepared to reduce our 

spending, however, and these audits help us determine the best 

places to trim our budget and streamline programs. We are here 

692

to take an honest look at the Title I programs to see how they are 

working in the countryside. Are they the helping one group of producers over another? Are they more effective in certain regions? Is 

there duplication? 

We need to evaluate the new programs from the 2008 Farm Bill. 

For instance, are there ways to improve the ACRE program. I don’t 

believe the SURE Program has worked the way most of us hoped 

it would. And it does not have a budgetary baseline once the 2008 

Farm Bill expires. So we need to consider how that fits in with 

both our budget and our safety net. 

We have to look at our legacy programs, too. Should the threelegged stool of direct payments, and the countercyclical programs 

and marketing loan assistance be updated to reflect the new trends 

in prices? I think we also need to look at the repercussions of eliminating programs. Do we eliminate all incentives for producers to 

participate? And then in turn when they do opt out do we lose the 

conservation compliance that comes with program participation? 

We need to consider the potential consequences of any program 

changes. 

I am pleased that Mr. Nelson and Mr. Garcia are here to answer 

all of these questions. Understanding the true cost and benefits of 

our Title I programs will help us develop a better farm bill moving 

forward. 

I look forward to your testimony, gentlemen, and I thank you 

once again for being here, and yield back the balance of my time, 

Mr. Chairman. 

[The prepared statement of Mr. Lucas follows:]

PREPARED STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN CONGRESS

FROM OKLAHOMA

Good morning. I’d like to thank Chairman Conaway and Ranking Member Boswell for holding this hearing. And I’d like to thank Bruce Nelson and Juan Garcia 

for joining us from the Farm Service Agency. 

Today’s hearing is the eight audit of farm programs conducted by the Agriculture 

Committee’s Subcommittees. 

We’ve evaluated everything from conservation to nutrition assistance so far. We 

gathered information about which programs are most effective and which can be 

streamlined. Having these facts on hand will help us make difficult decisions when 

we begin developing the next farm bill. 

Each of those audits was important in their own right, but I believe today’s audit 

of Title I programs and disaster assistance is particularly significant. 

Along with crop insurance, Title I programs form the very fabric of our farm safety net. They ensure that dramatic swings in commodity prices and volatile weather 

don’t put our farmers and ranchers out of business. 

As a rancher, I understand how difficult it is for producers to invest in a crop 

and see any hope of profit vanish because of factors beyond their control. 

Not only are producers engaging in a risky industry, but they have to significantly 

leverage their assets to do so. Farmers and ranchers borrow more money each year 

than most Americans will borrow in a lifetime. 

In addition to the high personal risk and questionable returns farmers accept as 

part of doing business, they also put in hard labor every day. 

I can tell you—in these temperatures every chore is that much harder. And while 

we can avoid the heat here in Washington by crossing between our offices and the 

Capitol in air conditioned tunnels, our farmers and ranchers have no such luxury. 

There are no tunnels out to the pasture. 

That’s why I’m so grateful to the men and women who choose farming as a career. 

They work hard every day, braving the uncertainties of weather and commodity 

markets to produce high quality food for Americans and consumers around the 

world. 

693

While they do the hard work of producing our food, we have to do our part to 

support them. Without a safety net, a few bad seasons can put a farm out of business. When we lose that source of production, we don’t usually get it back. 

So maybe instead of speaking about this as a farm safety net, we need to start 

calling it a food safety net. Perhaps that will get the message out that commodity 

support keeps farmers in business, which keeps food on our plates. 

That message seems to be getting lost. 

When I talk to farmers and ranchers, I hear a constant refrain: we’re not asking 

for a handout; we just need a floor in place for when the bottom drops out. 

That’s what crop insurance and Title I programs provide: a floor. A safety net for 

food production. 

So when opponents of farm policy start talking about the ‘‘enormous’’ amount of 

money that could be saved by eliminating this safety net, I wonder what numbers 

they’re using. 

The costs of losing food production surely outweigh the costs of a safety net. Especially when you consider that many Title I programs don’t kick in until prices fall 

below a set trigger. 

I’d also like to get one thing straight right off the bat: there aren’t enormous savings to be found from cutting farm programs. They comprise less than 1⁄2 of 1 per- cent of the Federal budget. That’s only 50¢ out of every $100. 

Now, these are difficult times, and the agricultural community is going to have 

to accept budget cuts. But we don’t believe that we should take a disproportional 

hit. 

We are prepared to reduce our spending, however, and these audits help us determine the best places to trim our budget and streamline programs. 

We are here to take an honest look at the Title I programs to see how they are 

working in the countryside. Are they helping one group of producers over another? 

Are they more effective in certain regions? Is there duplication? 

We need to evaluate the new programs from the 2008 Farm Bill. For instance, 

are there ways to improve the ACRE program? 

I don’t believe the SURE program has worked the way most of us hoped it would. 

And it does not have a budgetary baseline once the 2008 Farm Bill expires. So we 

need to consider how that fits in to both our budget and our safety net. 

And we have to look at our legacy programs too. Should the three-legged stool of 

direct payments, the countercyclical program, and marketing loan assistance be updated to reflect the new trends in prices? 

I think we also need to look at the repercussions of eliminating programs. Do we 

eliminate all incentives for producers to participate and in turn when they do opt 

out, do we lose the conservation compliance that comes with program participation. 

We need to consider the potential consequences of any program changes. 

I’m pleased that we have Mr. Nelson and Mr. Garcia here to help answer all of 

these questions. 

Understanding the true costs and benefits of our Title I programs will help us develop a better farm bill moving forward. 

I look forward to your testimony, and I thank you once again for being here.

The CHAIRMAN. Thank you, Mr. Chairman. I now recognize the 

Ranking Member for an opening statement. 

OPENING STATEMENT OF HON. LEONARD L. BOSWELL, A 

REPRESENTATIVE IN CONGRESS FROM IOWA 

Mr. BOSWELL. Thank you, Mr. Chairman, and I appreciate you 

having this hearing today. I want to thank everyone for joining us 

as we review our farm safety net system. I would especially like 

to thank our witnesses, Mr. Nelson and Mr. Garcia. 

I am one of those around this place who knows my way through 

the FSA office. There have been times when we went through what 

we refer to in the farm business, and I think the Chairman has 

been there too, where we have had to remember the farm crisis of 

the late 1970s, early 1980s. And wow, I personally know our director in Iowa, John Whitaker and I thank you for his service and for 

selecting him. He is doing an outstanding job and has a great crew. 

As a farmer, as I said I have always considered myself an eternal 

optimist, I used that word once or twice. You kind of have to be 

694

that way to do what Frank Lucas and Leonard Boswell do because 

you have to believe. No matter how hot it gets or how hard it rains 

or how dry it gets, we hope as much as we can that it will get better and our crop will grow and our livestock will survive and remain healthy. 

Unfortunately, this is not always the case. Every now and then 

because of Mother Nature, the farmers and ranchers who feed our 

nation feel painful consequences to their operation, whether a 

storm tears down a grain bin or the sun wears down our livestock 

and even in some cases not only stops the efficiency of the feeding 

but causes death. I had farmers yesterday come into my office; turkey people as you know, have lost thousands of birds and it is not 

because they did something wrong. So if they are not protected, it 

has the impact to dramatically increase the cost of food. 

The heat risks our producers face are happening before us across 

the nation. The news from the past week has shown livestock 

losses in Virginia all the way to Minnesota as well as my home 

State of Iowa and many other places. While those losses attribute 

to the need for a safety net, the ongoing farm income is also affected with this kind of weather. Unable to cool down, cattle feed 

less and gain less and in many cases die. As well, poor conditions 

cause a dairy cow to produce less, and after years of investment 

these issues skim profits and production off of each and every animal every day. 

A big reason our producers succeed in an industry that relies on 

uncontrollable forces of rain, the sun, the soil, the market is because we provide a support system. And in return, and I think 

Chairman Lucas just pointed it out, and I know that Chairman 

Conaway has many times, we give the Americans the most abundant, safe and affordable food on this Earth, because we all invest 

in it. Whether you live in downtown New York or LA or Miami, we 

invest in it and that is what we get. And we are constantly from 

the Agriculture Committee telling our colleagues that are in these 

positions that you have an investment, you have a vital concern. 

This is not something you are just handing out to the farmers and 

ranchers. It is to protect the safe, affordable, abundant food supply 

better than any place in the world. I am constantly sharing that 

because we have a vested interest in this. 

Programs in Title I, the farm bill, like ACRE, Livestock Indemnity, and this is what the turkey farmers were talking about yesterday, as you already know, and other disaster assistance programs are critical to maintaining our food supply and its affordability. 

This Committee under the leadership of Chairman Lucas and 

Chairman Conaway is dedicated to working to ensure that policy 

in D.C. is practical for farmers and ranchers across America. 

So thank you for your being here. And your testimony will be essential for us to move forward on the next farm bill I am sure. 

Thank you very much. I yield back. 

[The prepared statement of Mr. Boswell follows:]

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PREPARED STATEMENT OF HON. LEONARD L. BOSWELL, A REPRESENTATIVE IN

CONGRESS FROM IOWA

Thank you Chairman Conaway. I would like to thank everyone for joining us here 

today as we review our farm safety net system. I would especially like to thank our 

witnesses. Mr. Nelson and Mr. Garcia, my colleagues and I look forward to hearing 

from you and to having the opportunity to review these programs with you. 

As a farmer, I have always considered myself an eternal optimist. No matter how 

hot it gets or how hard it rains, I hope as much as I can that it will get better—

that my crop will keep, and that my livestock will survive and remain healthy. 

Unfortunately, that is not always the case. Every now and then, because of Mother Nature, the farmers and ranchers who feed our nation face painful ramifications 

to their operation. Whether a storm tears down a grain bin or the sun wears down 

our livestock the inputs and investments, if not protected, have the ability to dramatically increase the cost of food. 

The heat risks our producers face are happening before us across our nation. 

News from the past week has shown livestock losses in Virginia all the way to Minnesota, as well as my home State of Iowa. While these losses attribute to the need 

for a safety net, the ongoing farm income is also affected by this kind of weather. 

Unable to cool down, cattle feed less and gain less. As well, poor conditions cause 

a dairy cow to produce less. After years of investments these issues skim profit and 

production off of each animal every day. 

A big reason our producers succeed in an industry that relies on uncontrollable 

forces—the rain, sun, and soil—is because we provide a support system. In return, 

they have given Americans the most abundant, safe, and affordable food on the 

planet. Programs in Title I of the farm bill, like ACRE, Livestock Indemnity, and 

other disaster assistance programs are critical to maintaining our food supply and 

its affordability. 

Our Committee is dedicated to working to ensure that policy in D.C. is practical 

for the farmers and ranchers across America. Thank you again, your testimony will 

be essential for us as we continue to move towards the next farm bill.

The CHAIRMAN. I thank the gentleman. I will make a couple of 

comments here. Not long ago this Subcommittee reviewed the Federal Crop Insurance Program. We know that without this publicprivate partnership something as basic as multi-peril crop insurance will be out of reach for most U.S. producers. That is something that everybody can get their arms around and appreciate. 

Less obvious, however, are the reasons behind a commodity title 

to the farm bill and to standing disaster. People understand the 

production risks producers face, but folks are inclined to ask what 

is so unique about price risk and market volatility that producers 

face? Don’t all of our small business owners face these sorts of 

things? 

Texas Tech did a good job during the last farm bill of helping 

people understand the market conditions U.S. producers face. I 

would encourage each of my colleagues to get a copy of the Foreign 

Crop Subsidies and Tariffs handbook to gain a better understanding and sense of the distorted global markets in which our 

producers must compete. I can assure you the kind of dollars we 

are talking about here today pale by comparison to what foreign 

countries, both developed and developing, are providing their producers. In fact U.S. producers receive only a very basic level of support and our markets are among the most open in the world. As 

an accountant, I never faced these distorted global markets. 

I never woke up one morning to learn that the U.S. has imposed 

an embargo on American accountants doing work for clients living 

in the former Soviet Union causing a collapse in my prices. I never 

encountered China turning off or on my access to clients in that 

country. I have never had to fight for access to clients in countries 

where the government has a single desk where it buys and sells 

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all accounting work. I never had a situation where the government 

was buying my competitors their equipment for them. And I never 

experienced a price volatility where I could charge a client one year 

$100 and the next $20. I rarely had a client that big. You boys are 

a tough audience. I never had a client walk into my office and tell 

me the prices they would charge. 

Are there risks in all businesses? Absolutely. Businesses open 

and close every day, but few are dealing with the incredible risks 

our producers face. The question for me is not whether to have a 

farm policy but what it should look like and how to make it the 

most effective, not only for producers but also for our taxpayers. 

Agriculture and farm policy are too important to our economy 

and jobs to short shrift. President Reagan recognized this in the 

mid-eighties when he initiated the largest ad hoc effort in U.S. history to stop the farm financial crisis. A decade later Congress 

stepped in to address another farm crisis. These ad hoc efforts are 

very expensive, so having policies in place to not only deal with the 

crisis, but hopefully prevent one is the key to being cost effective 

for taxpayers and producers. 

There are few guiding principles that I would like to apply when 

our colleagues and I develop the farm policy provisions for the 2012 

Farm Bill. One, does the policy undermine crop insurance? Two, is 

the policy bankable to the banker—to the producer? In other words, 

does the policy mean anything to a lender? Is the policy tailored 

to producer risks? Are crops covered under Title I treated equitably 

under the policy? Can producers and their lenders understand the 

policy? With finite resources we need to make wise decisions as we 

invest in U.S. farm policy. These will be some of the guiding principles that I hope we can use. 

The CHAIRMAN. The chair would request that other Members 

submit their opening statements for the record so that the witnesses may begin their testimony and to ensure there is ample 

time for questions. 

[The prepared statements of Mr. Peterson and Mr. McGovern follow:]

PREPARED STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE IN

CONGRESS FROM MINNESOTA

Thank you Chairman Conaway and Ranking Member Boswell for holding today’s 

hearing and continuing this Committee’s agricultural program audits in preparation 

for the next farm bill. This is the eighth audit hearing, focusing on Title I and the 

SURE program. 

I have said this many times, but the budget is going to be our biggest challenge 

when we sit down to write a new farm bill. There is no doubt that we need to get 

our fiscal house in order. I have said repeatedly that agriculture can, and will, do 

its part. My concern is that we are being asked to cut agriculture spending three 

to four times more than other areas of the budget. 

While only a small portion of farm bill spending comes from Title I, folks outside 

of agriculture have repeatedly targeted these programs for cuts, arguing that high 

commodity prices mean we can dismantle the farm safety net. We’ve been down this 

road before. In 1995 and 1996, we had high prices and a new Congressional majority who didn’t like farm programs and wanted to cut the deficit. We passed a farm 

bill, Freedom to Farm, which saved a little money right away but we ended up 

spending a lot more when prices collapsed. The environment looks much similar 

now. These prices are not going to last forever and if we don’t have an adequate 

safety net in place when prices fall we could screw up the one part of the economy 

that’s actually working. 

697

One Title I program that is of particular concern to my constituents in Minnesota 

is the sugar program. With so much focus on the budget, it is important to note 

that this is a no cost program. The sugar program is working as it is supposed to, 

it is administered well and it is something we should not mess with. 

Of course, today’s hearing is happening in a very uncertain budget climate. At 

this point, there is a lot of speculation about what will ultimately happen. I am 

hopeful that any cuts to agriculture are reasonable and fair compared to other parts 

of the budget. 

Again, I thank the Chairman for holding today’s hearing and look forward to 

hearing from our witnesses. 

PREPARED STATEMENT OF HON. JAMES P. MCGOVERN, A REPRESENTATIVE IN

CONGRESS FROM MASSACHUSETTS

Mr. Nelson, I regret not being able to stay longer at the July 27th Subcommittee 

hearing but I had to leave early due to a scheduling conflict. I would like to make 

a few points that I feel are important to keep in mind as we move forward with 

our work on the next farm bill. I have several questions for you and I respectfully 

request a written response. 

On July 21st, I participated in the Subcommittee on Nutrition and Horticulture’s 

audit hearing on Title IV Nutrition Programs. One area of discussion was eligibility 

requirements for receiving SNAP benefits, including income and asset limits. While 

I understand SNAP and other nutrition programs are administered by the Food and 

Nutrition Service, I am concerned that there is more focus on SNAP benefits and 

not enough on who is receiving farm subsidies.

• Can you tell me how much the average farmer earns per year?

• What is the maximum amount that a farmer can make and still be eligible for 

a Title I programs?

• Can you tell me what share of the annual taxable income does a direct payment 

constitute for the average farmer?

• Is it accurate to say that larger, wealthier farmers tend to receive larger benefits from Title I?

Just for the sake of comparison, the most a family of four can make to be eligible 

to receive benefits under the SNAP program is $28,668. The average SNAP benefit 

is $2,724 per household per year. 

Next, I’d like to get a better sense of how your agency measures the accuracy of 

the benefits that you are paying. 

Over the course of the last few months, many of my colleagues who serve on this 

Committee continue to falsely claim that fraud, waste and abuse is rampant in the 

SNAP program. In fact, many of my colleagues continue to misstate the level of 

overpayments to SNAP recipients. It’s important to correct the false statements and 

to state for the record that SNAP is not only one of the most efficiently run programs at USDA, is one of the most efficiently run programs in the federal government. In fact, SNAP error rates are at historic lows and are at levels unseen in both 

the public and private sectors. 

For example, in terms of SNAP oversight and measuring the accuracy of benefits 

paid, my understanding is that the states and federal government sample approximately 50,000 SNAP cases each year in order to develop a nationally and state-level 

representative sample of the caseload. Each case is reviewed by a state staffer who 

reviews every document in the case record, independent information about clients 

and re-interviews the SNAP client. The Federal Government then re-reviews a sample of the state sample in order to verify its accuracy. All states are measured 

against the same standard making it possible to compare states to each other and 

longitudinally. Errors are sorted into different categories: client caused and household caused. FNS also knows which aspect of the program was the source of the 

error, such as inaccurately calculating income or a certain deduction. Of course, this 

is just the quality control check at the end of a lengthy application and eligibility 

review process that thoroughly scrutinizes each household’s eligibility.

• Would you please provide more information about how FSA measures the accuracy of Title I payments? I’d like to know how many cases are sampled, what 

level of review they undergo, whether there is a statistical audit of the accuracy, 

and where that information is published.

• What are the error rates in farm payments/subsides—i.e., how many payments 

go to deceased farmers?

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• What is the level of overpayments going to farmers?

As we continue moving towards a reauthorization of the farm bill, it’s important 

for Members and the public to know that there is a vast monetary difference in the 

amount of money going to wealthy farmers versus a poor family of four. It’s critical 

that we not demagogue SNAP simply because it’s doing the job it was designed to 

do and, at the same time, turn a blind eye to the way our farm payment system 

is structured. 

Thank you for taking the time to review my questions and I look forward to working with you and the FSA over the next several months.

The CHAIRMAN. And with that, I now turn to our witness for his 

opening statement. Bruce Nelson, Administrator for Farm Service 

Agency, the floor is yours, sir. 

STATEMENT OF BRUCE NELSON, ADMINISTRATOR, FARM 

SERVICE AGENCY, U.S. DEPARTMENT OF AGRICULTURE, 

WASHINGTON, D.C.; ACCOMPANIED BY JUAN M. GARCIA, 

ACTING DEPUTY ADMINISTRATOR FOR FARM PROGRAMS, 

FSA, USDA 

Mr. NELSON. Mr. Chairman, Ranking Member Boswell, and 

Members of the Subcommittee, thank you for the opportunity to 

discuss Title I and disaster assistance provisions associated with 

the 2008 Farm Bill. My name is Bruce Nelson. I am the Administrator of the Farm Service Agency. And I am joined here today by 

FSA Acting Deputy Administrator for Farm Programs, Juan Garcia. I would like to briefly address our efforts toward efficient and 

accurate implementation of these important programs. 

America’s farmers and ranchers are the best in the world, providing food, fiber and fuel we depend on to grow our nation. Farmers drive our national economy and they are the nation’s leading 

stewards of the environment. No matter where we live in this country all of us have a stake in the livelihoods of farmers. 

A farmer faces many risks inherent to this work. Prices can 

plummet or a natural disaster can destroy a farm. The farm safety 

net exists to help offset this uncertainty and when misfortune 

strikes to help a farmer get back on their feet. 

The Title I and disaster programs authorized under the farm bill, 

along with the farm loan programs I discussed in a recent hearing 

before your colleagues, are the primary tools that we use to help 

at FSA. FSA implements a wide variety of price support programs 

authorized under the 2008 Farm Bill. I included an update on 

these programs in my written testimony. 

One program of note is the Average Crop Revenue Election Program. We have worked hard to educate producers regarding ACRE, 

which is not only new but requires producers to do a good deal of 

background research. Those who have participated in a direct payment program for many years had to make a complex choice on 

ACRE, which was a major reason we saw modest sign-up numbers. 

These price support programs affect a very large number of producers. Last year FSA made seven million separate payments on 

Title I. That means one of our biggest responsibilities is to be sure 

we make payments quickly and accurately, and I take that responsibility very seriously. 

FSA has a variety of mechanisms in place to prevent improper 

or inaccurate payments. Even one improper payment is one too 

many and when we identify a potential error we address it. 

699

The disaster programs have also proven to be a very significant 

part of the safety net laid out in the 2008 Farm Bill. I am pleased 

to report that over the past 2 years FSA has fully implemented 

these disaster programs and delivered them in the field largely due 

to the commitment of our field staff and explaining and calculating 

complex new programs. Together with the 2008 Recovery Act, these 

programs have delivered more than $3 billion in assistance to more 

than 200,000 farmers and ranchers. 

Unlike the Title I programs and most other farm bill provisions 

FSA has implemented, authorization for these five major disaster 

programs is set to expire at the end of this fiscal year. 

Our biggest challenge in implementing both disaster and price 

support programs has been our aging IT infrastructure. We are 

very focused on the modernization and innovation of the delivery 

of agricultural systems program, our effort to streamline farm program delivery. We are complementing this work with an initiative 

to reduce crop reporting for farmers. 

Recently when I testified regarding farm loan programs I had the 

opportunity to point out the successes we have had with modernizing our farm loan delivery. Modernization of our farm programs 

as you know is just as important; it gives us the opportunity to 

serve farmers better and faster using new tools to create a more 

efficient government agency. I am committed to seeing these successes carried through on-farm perhaps as they have been with 

farm loans. 

Mr. Chairman, as we move forward toward development of the 

next farm bill I believe it is important that we approach this new 

legislation with an eye toward making a difference across rural 

America, for letting the needs of the American farmer drive our 

priorities. 

I would like to echo Secretary Vilsack’s sentiments regarding our 

needs for the next farm bill. We stand ready to innovate and adapt 

in implementing a farm bill that best addresses current challenges 

in rural America and needs faced by our agricultural producers. I 

would ask you and your colleagues to identify priorities and let us 

know what those priorities are in the next farm bill. And I would 

ask that you give the USDA the flexibility and the resources to 

generate results. 

Finally, I ask that you work closely with FSA and with USDA 

to make sure we are accountable for getting the job done. My team 

and I at FSA look forward to working with you as this process 

takes hold. 

Mr. Chairman, this concludes my statement, and I would be 

happy to try to provide answers to your questions now or any time 

in the future. Thank you very much. 

[The prepared statement of Mr. Nelson follows:]

PREPARED STATEMENT OF BRUCE NELSON, ADMINISTRATOR, FARM SERVICE AGENCY, 

U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Mr. Chairman, Ranking Member, and Members of the Subcommittee, thank you 

for the opportunity to discuss Title I and disaster assistance provisions associated 

with the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill). These programs, together with the Federal crop insurance program, form the backbone of the 

farm safety net. This hearing provides an opportunity to reflect on the performance 

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of these programs under the 2008 Farm Bill, while thinking ahead to the upcoming 

2012 debate. 

Title I is very broad and covers not only our ‘‘traditional’’ commodity programs, 

but also the new Average Crop Revenue Election (ACRE) program, as well as dairy, 

sugar, and many other provisions. Disaster assistance programs are covered in Titles XII and XV and complement the Title I provisions. After discussing our experience with these programs, I would like to address our efforts to modernize and ensure high-quality, cost-effective program delivery, which is benefiting producers and 

streamlining our internal operations. 

Direct and Counter-Cyclical Payment Program 

The Farm Service Agency (FSA) operates the direct and countercyclical payment 

program, which was first authorized by the 2002 Farm Bill. Direct payments are 

made to producers with program crop base acres, and do not depend on the crop 

that is currently planted or on current yields or prices. A producer’s payment is 

based on the farm’s base acres associated with the crop, the farm’s (fixed) program 

yield, and a fixed national payment rate established in statute. In total, FSA makes 

approximately $4.9 billion in direct payments annually, accounting for about 80 percent of Title I outlays in Fiscal Year (FY) 2011. 

Like direct payments, countercyclical payments depend on base acres, but are 

made when market prices drop to levels that trigger payments. With grain and oilseed market prices at record, or near-record levels, countercyclical payments have 

been modest, and for FY 2010 and 2011, only producers with cotton and peanut base 

acres have received benefit. FSA will issue about $131.8 million in countercyclical 

payments in FY 2011. In comparison, countercyclical payments totaled $4.4 billion 

in FY 2006 and $3.2 billion in FY 2007, when market prices averaged significantly 

lower. 

Average Crop Revenue Election (ACRE) Program 

ACRE was first authorized by the 2008 Farm Bill, and is based on revenue risk 

rather than price risk. It provides an alternative to traditional farm programs and 

depends on both state- and farm-level triggers. Both the state-level and farm-level 

triggers—which are in turn based on historical average yields and national average 

market prices—must be met before a producer receives a payment. Because it is an 

alternative to traditional programs, an ACRE participant forgoes countercyclical 

payments and incurs a 20 percent reduction in direct payments and a 30 percent 

reduction in marketing assistance loan rates for all commodities on the ACRE-enrolled farm. Once a farm is enrolled in ACRE, that farm is required to stay enrolled 

in ACRE throughout the duration of the 2008 Farm Bill (through 2012). 

Overall, ACRE participation has been strongest for corn, soybeans and wheat. In 

2009, about 33 million acres of base acres were enrolled, including 13 million acres 

(16 percent) of corn base (over half of that total is in Illinois, Iowa, and Nebraska), 

and about 8 million acres (15 percent) of soybean base (Illinois and Iowa were again 

top states). Nearly 10 million acres of wheat base were enrolled in ACRE, about 13 

percent of the total enrolled wheat base. For wheat, expected net returns, combined 

with strong educational efforts, improved ACRE participation for the crop, particularly in Oklahoma (2.5 million acres enrolled) and North Dakota (1.6 million acres). 

The bulk of enrollment occurred in 2009, the first year of the program. An additional 1.2 million acres of base and 6,000 farms (not in the program in 2009) were 

enrolled in ACRE in 2010. In 2011, about 2,600 more farms have enrolled in ACRE. 

Several reasons likely explain the relatively modest interest in this new program. 

ACRE requires producers to do a significant amount of ‘‘homework’’ to understand 

how it would work for their farms. Many producers have been participating in some 

form of direct payment since 1996 with Production Flexibility Contract payments, 

and later the direct payment program. This is further complicated by operators’ having to explain to landlords and, at times, bankers, how expected ACRE net returns 

compare to net returns under the traditional programs. According to statute, ACRE 

participation is locked in for a farm throughout the remainder of the 2008 Farm Bill 

once that farm is enrolled in ACRE. Because of market uncertainties and without 

a clear understanding of this new program, most producers hesitated to commit 

their farms to a multi-year ACRE agreement. Basically, producers found themselves 

trading off the certainty of existing direct payments with the uncertainty of ACRE 

payouts. 

For the 2009 crop year, about $446.6 million in ACRE payments were made. 

Wheat producers (who experienced both low prices and yield losses) accounted for 

about $310 million of that total, with an estimated $100 million paid for corn, $20 

million for barley, $10 million for sunflower seed, and small amounts for several 

701

other crops. Oklahoma, Washington, Illinois, South Dakota, North Dakota, and 

Idaho received about 80 percent of the payments. 

Because the magnitude of ACRE payments are determined by season average 

prices in any given year, there is a significant time lag between the start of a crop 

year and the issuance of payments. Further, the 2008 Farm Bill mandates that payments cannot be made until after October 1 of the calendar year following the calendar year of the harvest. We expect 2010 crop year payments to total about $24 

million in FY 2012. 

Marketing Assistance Loans 

Marketing assistance loans provide producers with interim financing at harvest 

time to meet cash flow needs without having to sell their commodities. The harvested commodity is used as collateral for the loan. The value of marketing assistance loans made totaled about $7 billion in FY 2011. Market loan repayment provisions specify, under certain circumstances, that producers may repay loans at less 

than principal plus accrued interest and other charges. 

Alternatively, producers can apply for a loan deficiency payment in lieu of secur- ing a loan. Similar to the situation for countercyclical payments, high market prices 

have greatly reduced marketing loan benefits, which are expected to total less than 

$50 million in FY 2011. 

Ensuring Compliance with Eligibility Requirements 

Each year, FSA makes about seven million separate payments to farmers and 

ranchers. The vast majority of payments are made quickly and accurately. Over the 

past 2 years, FSA has taken a variety of actions to help identify and further limit 

the occurrence of improper payments. 

The 2008 Farm Bill redefined eligibility requirements for DCP, ACRE, and certain other programs by lowering the average gross income (AGI) limit to $750,000 for 

on-farm income and to $500,000 for non-farm income from the previous cap of $2.5 

million for all income. To ensure that only those participants who comply with AGI 

requirements receive specified farm program benefits, FSA entered into an agreement with the Internal Revenue Service (IRS). With the written consent of the program participant, the IRS performs a series of calculations using tax return data 

to determine a producer’s average AGI values and compares those values with the 

AGI limits. IRS then provides to FSA a report that indicates whether or not the 

participant appears to meet or exceed each of the average AGI limitations. AGI compliance reviews for FY 2009 and 2010 are still underway and we look forward to 

being able to soon verify that producers are fully compliant with the law. 

The 2008 Farm Bill also requires that FSA reconcile data with the Social Security 

Administration (SSA) to address concerns regarding payments to deceased persons. 

Before the 2008 Farm Bill was enacted, FSA started a data-matching process that 

compares program payment information to the SSA ‘‘death master file,’’ starting 

with payments issued in FY 2007. Review of the data-match report and information 

on file in FSA offices revealed that 121,527 payments in FY 2007, totaling $108 million, were disbursed on behalf of deceased persons. However, relatively few of these 

payments warranted further action. The vast majority of the payments identified as 

issued to deceased producers were in fact earned or requested prior to death. If a 

producer is enrolled in a program and is due a payment and the producer passes 

away during that year, the payment will be issued to the estate of the deceased person. USDA issued a regulation in late 2010 making explicit that payments will not 

be made on behalf of a deceased person unless the payment was earned by that person while alive and was requested by that person or their authorized representative 

before or after their death. 

Planting Flexibility, 10-Acre Base Provisions 

We recently delivered two reports to Congress mandated by the 2008 Farm Bill—

one on the impacts of the Planting Transferability Pilot Program (PTPP) and the 

other on the effects of provisions eliminating payments to FSA farms with 10 or 

fewer base acres. The Economic Research Service provided substantial assistance 

with these reports, which we greatly appreciate. 

PTPP, first authorized in the 2008 Farm Bill, relaxes the planting restrictions, in 

certain FSA programs, placed on vegetables destined for processing, and is available 

in seven upper Midwestern States. PTPP emerged in response to claims by Midwestern vegetable processors that access to vegetables used for producing pickles, 

tomato paste, and canned beans, among other foods, has been constrained by statutory planting restrictions. These statutory fruit and vegetable planting restrictions 

date back to 1990, and were put in place to address concerns expressed by the 

produce sector that payments to farms with base acres planted to fruits and vegetables could lead to a significant decline in prices, which would be unfair to a sector 

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that received relatively modest government support. Prior to PTPP, fruit and vegetables could be grown on base acreage if the farm has a history of planting fruit 

and vegetables. In these cases, payments are reduced acre-for-acre for each acre of 

fruit and vegetables planted. PTPP places farms with no history of planting fruit 

and vegetables on the same footing as those with a planting history for the select 

processing vegetables. Without PTPP, participating farms with no planting history 

would receive a far greater penalty. 

FSA data for 2009 indicate that 10,215 acres were planted under PTPP, about 14 

percent of the 75,000 allowable acres in the statute and a small share of total processing vegetable acreage. One hundred and fifty-five farms participated, with Illinois, Indiana, and Minnesota accounting for approximately 85 percent of the farms 

and acres. Several reasons explain the relatively low participation. Stagnant market 

demand and producers’ flexibility to expand processing vegetable production without 

PTPP are major reasons. For growers to expand acreage, processors must offer attractive contract prices. Growers and processors, though, are very well aware that 

long-run demand for processing vegetables is stagnant or declining, and that net returns to other crops are often more attractive. Even if markets were more favorable, 

availability of non-base acres and a producer’s prior vegetable planting history on 

base acres often provide sufficient acreage for expanded plantings. 

Regarding the 10-acre base (base-10) analysis, the 2008 Farm Bill eliminates DCP 

and ACRE payments to FSA farms with 10 or fewer base acres. Farms classified 

as ‘‘limited resource’’ and ‘‘socially disadvantaged’’ are exempt from this provision. 

About 371,000 FSA farms, out of 2.2 million farms with base acres, became ineligible for payments as a result of the provision. The dollar amount of payments prohibited was $29.1 million, compared to approximately $5.9 billion total DCP and 

ACRE payments in 2009, since the affected farms control only 1.6 million, or 0.6 

percent, of total base acres. However, the actual savings was likely smaller, since 

not all operators of FSA farms enroll in commodity programs in a given year. In 

2008, prior to implementation of the provision, just 40 percent of base-10 FSA farms 

enrolled in the DCP program. Operators affected by the provision would forgo an 

average of $79 per farm in 2009, compared with the average DCP/ACRE payment 

across all FSA farms of $2,620. For farmers choosing not to enroll, the transaction 

cost of enrolling may outweigh the benefits. 

Applying a 40 percent enrollment rate to 2009 data, there are an estimated 

148,400 farms who no longer receive $11.7 million in payments. The administrative 

cost savings are another estimated $1.5 million, for a total savings of $13.2 million 

per year. 

The base-10 provision had little impact in the Corn Belt and Great Plains, where 

FSA farm sizes are relatively large. In contrast, regions along or near the East 

Coast tend to have a high proportion of farms with small base acre holdings and 

have been more affected. For example, in the Eastern Upland and Southern Seaboard regions, 35 and 28 percent of FSA farms, respectively, became ineligible under 

the base-10 provision in 2009. 

Supplemental Revenue Assistance Payments (SURE) Program 

Title XII of the 2008 Farm Bill contains the SURE program, which provides assistance to crop producers for eligible losses in times of natural disasters. To be eligible for SURE (or any other 2008 Farm Bill disaster program except for the Livestock Indemnity Program), producers must have Federal crop insurance or Noninsured Crop Disaster Assistance Program (NAP) coverage on all their crops and be 

located in a county included in the geographic area covered by a natural disaster 

declaration issued by the USDA Secretary. The Secretarial disaster designation is 

not required if a farmer can prove a whole farm loss of more than 50 percent of 

normal, including farming operations across county or state lines. 

As of July 12, 2011, payments for 2008 and 2009 crop losses to date total more 

than $2.6 billion. (Of this amount, about $0.8 billion can be attributed to an increase 

in benefits mandated under the American Recovery and Reinvestment Act.) Major 

recipient states include North Dakota ($358 million), Texas ($349 million), and Iowa 

($289 million), which account for 40 percent of the total. Although these states have 

been key beneficiaries, SURE payments have been critical to helping producers in 

many other states. Twenty-seven states have received over $10 million since the inception of SURE. 

SURE differs from previous disaster programs in that SURE losses and revenues 

are calculated based on all of a producer’s land, including multiple farms combined, 

compared to ad hoc disaster program calculations made on a crop-by-crop basis. As 

a result of the whole-farm focus, a county may receive a Secretarial disaster designation, but few producers may be eligible for SURE payments. SURE’s whole-farm 

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nature and the number of variables used in the calculations make the program 

quite complex. 

A significant lag exists between the timing of crop loss and receipt of SURE payment to allow for the calculation of actual farm revenue. Farm revenue depends on 

season average prices reported by USDA’s National Agricultural Statistics Service, 

which are usually released 13 months after the start of the crop year. Actual farm 

revenue also depends on other data which are not available until well after a crop 

loss occurs, including marketing loan benefits, ACRE payments, crop insurance indemnities, and other payments. Producers have until July 29, 2011, to apply for assistance for 2009 crop losses under SURE. To date, payments for 2009 losses are 

approximately $465 million; however, producers have until July 29, 2011, to apply 

for assistance for 2009 crop losses under SURE. 

Other Disaster Programs 

The 2008 Farm Bill also authorizes disaster assistance programs for livestock and 

trees. These programs include the Livestock Indemnity Program (LIP), the Livestock Forage Disaster Program (LFP), the Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program (ELAP), and the Tree Assistance Program 

(TAP). 

The Livestock Indemnity Program (LIP) provides assistance to producers who lose 

livestock due to natural disaster. For 2008–10 losses, about $110 million has been 

paid out under LIP as of July 12, 2011. LIP payments are made for livestock losses 

(death) above normal mortality rates at fixed payment rates per animal. Accordingly, LIP payments can be issued soon after a qualifying loss occurs to help producers rebuild herds and undertake other activities. These payments were particularly helpful to ranchers whose livestock were lost during major blizzards in the 

Northern Plains, as well as during extended heat in many Midwestern states during 

the summer of 2009. Major LIP recipient states include South Dakota ($30 million 

to date) and North Dakota ($20 million to date). 

The Livestock Forage Disaster Program (LFP) compensates livestock producers for 

grazing losses due to drought. LFP has provided $380 million as of July 12, 2011 

to ranchers affected by drought. LFP payments can typically be made within a few 

weeks of a county qualifying for assistance, which has been particularly helpful to 

ranchers during severe drought events. The major LFP recipient states are those 

that have suffered significant drought losses such as Texas ($155 million), North 

Dakota ($28 million), California ($26 million), and Georgia ($18 million). 

The Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program (ELAP) provides funds for losses that are not covered by other disaster programs. ELAP provides assistance for those livestock losses that are not covered by 

LIP or LFP. Funding is limited by statute to $50 million per calendar year. Of the 

$29 million disbursed to date for 2008–10 losses, primary recipient states include 

South Dakota (more than $4 million), Florida ($4 million), and California ($3 million). ELAP has provided substantial assistance to beekeepers whose bees have suffered from Colony Collapse Disorder. 

The Tree Assistance Program (TAP) provides assistance to replace or rehabilitate 

trees, bushes and vines lost or damaged due to natural disasters. To date, TAP payments for 2008–10 losses have totaled nearly $9 million. 

In addition, the Noninsured Crop Disaster Assistance Program (NAP) provides financial assistance to producers of crops where crop insurance is not available and 

when low yields, loss of inventory, or prevented planting occur due to natural disasters. NAP payments for 2008–10 losses have totaled $210 million. 

Per the 2008 Farm Bill, losses incurred under SURE, LIP, LFP, ELAP, and TAP 

are not covered beyond September 30, 2011. Among the disaster assistance programs, only NAP losses will be covered beyond September 30, 2011. In contrast, authority for Title I programs discussed in this testimony extend through the 2012 

crop year. 

Sugar 

The sugar program has supported grower returns from raising sugarcane and sugarbeets at minimal Federal cost since it was established in 1981. The sugar program 

has been a no cost program during the tenure of the 2008 Farm bill due to program 

operation and a tight sugar market in the United States and throughout the world. 

Cane and beet growers are supported by several programs that first establish a level 

of support, then provide USDA with supply controls tools to maintain the support 

level. The Sugar Price Support Loan Program establishes the support level by providing nonrecourse loans to processors of domestically grown sugarcane and sugarbeets based on loan rates mandated in farm bills. If market returns are lower than 

loan proceeds at the time of loan maturity, sugarbeet and sugarcane processors can 

704

fully satisfy their loan obligations by forfeiting sugar loan collateral to the Commodity Credit Corporation (CCC). Since sugar producers can always receive at least 

the loan proceeds from their crop, the loan rate acts as a floor on the market price 

of domestic sugar. The Price Support Loan Program also provides the beet and cane 

mills the financing to pay beet and cane growers for their crops long before they 

receive the revenue from the sale of their sugar. 

To avoid Federal costs, the farm bill includes tools that permit USDA to manage 

domestic supply so that domestic sugar prices are higher than the support price, 

hence, eliminating forfeiture costs. Domestic supply is limited through (1) the Flexible Marketing Allotments for Sugar Program, which provides limits for the quantity 

of sugar that domestic sugarbeet and sugarcane processors can market; (2) the administration of Tariff Rate Quotas (TRQ) that limit foreign sugar imports at the low 

tier tariff; and (3) a new program, the Feedstock Flexibility Program for Bioenergy 

Producers (authorized under Title IX of the 2008 Farm Bill), which requires USDA 

to purchase expected surplus sugar in the marketplace and sell it to producers of 

bioenergy to prevent loan forfeitures under the Price Support Loan Program. 

The enactment of the 2008 Farm Bill coincided with full implementation of the 

North American Free Trade Agreement (NAFTA), which allows sweetener trade between the U.S. and Mexico without a tariff. Before the 2008 Farm Bill, analysts expected that the U.S. would increase shipments of High Fructose Corn Syrup 

(HFCS), a cheaper sweetener than sugar, to Mexico. This situation was expected to 

displace Mexican sugar, production of which was expected to expand in response to 

U.S. sugar support prices that were raised in the 2008 Farm Bill. Mexican sugar 

was expected to flow into the U.S., resulting in U.S. prices falling below the Federal 

price support level, threatening sugar forfeitures to the CCC and thereby requiring 

activation of CCC purchases of surplus sugar for sale to bioenergy producers under 

the Feedstock Flexibility Program. 

Compared to these expectations, U.S. sugar demand has increased significantly. 

In fact, greater Mexican imports did not saturate the U.S. market, but instead 

helped maintain adequate U.S. sugar supplies in response to the loss of refining capacity due to an explosion at the Savannah sugar refinery and a temporary reduction in beet sugar production. Even with increased Mexican imports, growing U.S. 

demand prompted USDA to increase the sugar import tariff-rate quota twice in both 

FY 2010 and FY 2011. Despite the almost doubling of sugar prices since 2008, sugar 

is increasingly used in the U.S. to replace other sweeteners in food products. 

The sugar market outlook in the near term remains tighter than expected in 2008 

and USDA does not anticipate forfeitures of sugar to the CCC and the activation 

of the Feedstock Flexibility Program under the current Farm bill. 

Farm Storage Facility Loan (FSFL) Program 

The Farm Storage Facility Loan (FSFL) program ensures that eligible producers 

have adequate capacity to store their harvested production through low-interest financing that can be used to build a new storage facility, upgrade existing storage, 

or purchase handling equipment. The maximum amount that may be borrowed is 

$500,000 per structure under the 2008 Farm Bill (increased from $100,000 under 

the re-establishment of FSFL in 2000 as authorized by the CCC Charter Act, and 

the repayment terms are for 7, 10, or 12 years (depending on the size of the loan). 

The 2008 Farm Bill also expanded eligibility for the FSFL program and, in addition 

to grains, low-interest loans are now available for biomass and hay facilities as well 

as cold storage for fruits and vegetables. 

Interest in the FSFL program has increased in recent years; applications have increased from 1,717 in FY 2005 to 3,961 in Fiscal Year 2010. In FY 2006, the CCC 

made nearly $100 million in loans, while in FY 2010, loans exceeded $296 million. 

Much of the increased interest is on the part of corn producers who store the commodity for delivery at a later date to a nearby ethanol plant. Fruit and vegetable 

growers’ interest in FSFLs for cold storage is relatively low at this time, and moderate interest exists for hay FSFLs. 

Reimbursement Transportation Cost Payment for Geographically Disadvantaged Farmers and Ranchers (RTCP) Program 

The RTCP program provides assistance to geographically disadvantaged farmers 

and ranchers in Hawaii, Alaska, and insular areas (Guam, American Samoa, Commonwealth of Puerto Rico, Commonwealth of the Northern Mariana Islands, Federated States of Micronesia, Republic of the Marshall Islands, Republic of Palau, 

and the Virgin Islands of the United States). The program reimburses producers for 

a portion of the transportation cost of their agricultural commodity, or of inputs 

used to produce an agricultural commodity during a fiscal year. Under RTCP transportation costs of inputs used to produce an agricultural commodity include, but are 

705

not limited to, air freight, ocean freight, and land freight of chemicals, feed, fertilizer, fuel, seeds, plants, supplies, equipment parts, and other inputs as determined. 

This program benefits farms and ranches in geographically disadvantaged areas 

of the U.S. Signup for 2010 RTCP program began Aug. 2, 2010 and ended on Sept. 

10, 2010. Distribution of payments for 2010 RTCP began on July 20, 2011. In FY 

2010, 1,545 geographically disadvantaged farmers and ranchers applied to participate in the program, and more are expected with the FY 2011 RTCP signup beginning July 25, 2011. 

Acreage Crop Reporting Streamlining Initiative (ACRSI) 

FSA requires that producers participating in any Title I program report all the 

cropland acreage on their farm each year to their local office. In field hearings, we 

repeatedly heard from producers that they were dismayed by the necessity to report 

acreage and production data to multiple agencies (not only FSA, but also the Risk 

Management Agency and the National Agricultural Statistics Service). To address 

these concerns, we have initiated the Acreage Crop Reporting Streamlining Initiative (ACRSI), a system which allows producers to report their acreage data only 

once to USDA. 

We anticipate piloting this effort in four counties in Kansas in fall 2011 for 2012 

crop wheat plantings. Feedback from this pilot will help us move this project forward to a nationwide scale. Over time, our ACRSI project will be leveraged to support our ‘‘Modernize and Innovate the Delivery of Agricultural Systems’’ (MIDAS) 

effort, which I will turn to next. 

MIDAS 

FSA has relied on aging technology which was installed in the mid-1980’s, as well 

as segmented web-based IT systems that have created inefficiencies and threatened 

the delivery of Title I benefits. To address these issues, FSA has invested in the 

Modernize and Innovate the Delivery of Agricultural Systems (MIDAS) program. 

MIDAS is an integrated business solution based on enterprise resource planning 

(ERP) technology. MIDAS will modernize Farm Programs delivery and will provide 

comprehensive and robust processes and tools to simplify Title I, Title II, and disaster program service delivery and improve customer service for both agency employees and producers. 

Currently, MIDAS is developing the ‘‘to-be’’ global requirements, processes, and 

solution design. Over the longer term, MIDAS will be integrated with other initiatives, such as Geospatial Information Systems (GIS), the Department’s Financial 

Management Modernization Initiative (FMMI), and the Enterprise Data Management (EDM) program. MIDAS has already improved service delivery by implementing recommendations from the USDA ‘‘Listening Sessions’’ and the FSA 

MIDAS Lean Six Sigma field office visits to improve processes. These efforts focused 

on modifying program forms and addressing web time out issues for web applications in high usage by field office employees, such as reconstitutions. As a result 

service delivery has been improved and opportunities for errors have been reduced. 

Full implementation of MIDAS, which would occur in FY 2014 assuming the program is fully funded, will result in improved business processes and service delivery 

to our producers, ranchers and farmers, and USDA employees that provide day-today service to our customers. Through MIDAS, we will be able to adapt to and implement new programs more rapidly, with the time between passage of new legislation and program delivery to producers substantially reduced. Producer information 

will be collected once, not multiple times for multiple programs or multiple times 

for multiple agencies (through integration of MIDAS with ACRSI). Benefits will also 

be realized internally within FSA. Systems integration will result in improved performance and more reliable reporting. In addition, the need for manual processes 

(such as data entry) will be greatly reduced. This work is very similar in scope to 

the modernization and streamlining of FSA’s farm loan programs—through which 

the agency has realized significantly shorter processing times and more efficient 

service through online business processes. 

The MIDAS Project Office recently conducted a series of demonstrations for USDA 

management, FSA state and county offices, and others on the functionality of the 

ERP software solution. Based on initial feedback, the MIDAS demonstration was 

well received and state and county offices have re-confirmed that the software will 

meet the requirements of farm program delivery. 

Working Toward the Next Farm Bill 

Mr. Chairman, as we move forward toward development of the next farm bill, it 

is important that we approach this new legislation with an eye toward truly making 

a difference in the future of the lives of millions of rural Americans, while at the 

706

same time using scarce resources wisely. In the coming months, I look forward to 

providing answers to your questions and helping better frame and move the debate 

toward the topics and issues that are most important to our constituents. 

I am happy to respond to any questions. Thank you.

The CHAIRMAN. Thank you, Mr. Nelson. Mr. Garcia, do you have 

an opening statement? 

Mr. GARCIA. Good morning, Mr. Chairman. I do not have an additional statement at this time, just to thank you and the Committee Members for having us here today. 

The CHAIRMAN. All right, thank you very much, I appreciate 

that. The chair would remind Members that they will be recognized 

for questioning in order of seniority for Members who were here at 

the start of the hearing. After that Members will be recognized in 

order of arrival. I appreciate my colleagues’ understanding in that 

regard. 

Also we have been joined by Mr. Ribble from Wisconsin. I ask 

unanimous consent that even though he is not a Member of the 

Subcommittee that he be permitted to join in the questioning of the 

witnesses. Without objection. 

Mr. Nelson, we made some changes in the 2008 Farm Bill with 

respect to AGI and how that impacts eligibility. You also have 

some agreements with the IRS as to how that gets tracked. There 

were some initial concerns about producers having to share too 

much information with FSA locally and that there are some workarounds for that. Can you walk us through that? And also kind of 

answer that question that gets distorted in the paper, in the media 

a lot is that the bulk of these farm program support payments go 

to large corporations that don’t really need it. And so if you could 

walk us through the AGI efforts and how you have seen that play 

out. 

Mr. NELSON. Well, I appreciate that question because as you are 

suggesting, there is a lot of information out there that isn’t quite 

as accurate as it could be on this subject. The AGI limits that were 

established under the 2008 Farm Bill are that an individual producer can have up to $750,000 of on-farm adjusted gross income 

and $500,000 of off-farm adjusted gross income. USDA and FSA 

were tasked in the farm bill with deciding how best to try to ensure 

compliance with those AGI provisions, and basically it was a choice 

between having farmers bring their tax returns into our county offices around the country and have them do reviews, or the Department could work as we did and as we have now been implementing 

with the Internal Revenue Service on a data sharing process where 

producers authorize the Internal Revenue Service to data match 

against our USDA database. We basically get back an indication 

with a red flag or green flag whether the individual producer is in 

compliance or not. And I actually believe as a farmer, and my family has been on our place for about 100 years since my grandparents homesteaded, that it is a much preferable way to utilizing 

the Internal Revenue Service’s capacity to assist us with this than 

to have farms and ranchers bring their tax returns down to local 

offices. And talking to our folks at least in Montana about this who 

work there, I think they are glad that it is being done this way as 

well. 

707

Now, I understand there are some things that—some glitches 

along the way. For example, one of the things that I ran into out 

in Montana is that producers had to put the address that was on 

their tax return on the form that was sent into the IRS or it might 

come back to them. And so it took some time and it is still taking 

some time to make sure that producers understand what it is that 

is required for the IRS to accept those forms. 

The CHAIRMAN. Mr. Nelson, does the IRS communicate directly 

with you or do they send the clearance to the producer and the producer brings in something from the IRS that says they are good to 

go? 

Mr. NELSON. As I understand it, Mr. Chairman, we get the indication back from the Internal Revenue Service. The good news is 

that after October 1 we are going to eliminate that form that producers have had to send in to the Internal Revenue Service and we 

are going to do that authorization as a part of their other sign-up 

papers. We think will be a lot better for the producers and ultimately a lot easier on our employees out there too. Some offices 

had had to deal with producers coming in saying, ‘‘I don’t know 

why the IRS didn’t accept this.’’ So moving to one form we think 

will be much better for everybody involved. 

The CHAIRMAN. Is the turn-around time with the IRS quick 

enough to be able to not delay payments to producers? 

Mr. NELSON. Mr. Garcia, I am going to let you talk about payments. 

The CHAIRMAN. Mr. Garcia, what is your experience in Texas on 

this style of doing it? 

Mr. GARCIA. Well, of course, Mr. Chairman, the individual producers that certified to their AGI we will not delay payments because it is a certification. After that we will review that with the 

IRS, we will get information on those producers that appear questionable. It is very important to note that we do not receive any 

particular income tax information from any producer. If a producer 

that we obtain on that list does appear questionable, we will notify 

the producer and ask him to provide to the national office any particular information that he has, either IRS records or his statement 

from his Certified Public Accountant, to clear that. 

We want to provide the producer the best opportunity to prove 

to us that he is eligible based on those AGI provisions. 

The CHAIRMAN. All right. Thank you. 

Mr. Boswell, for 5 minutes, you are now recognized. 

Mr. BOSWELL. Thank you, Mr. Chairman. I would be happy to 

defer to Chairman Lucas if he would like to, at this time. 

Mr. LUCAS. I appreciate that courtesy, Ranking Member Boswell. 

Thank you very much. 

Mr. BOSWELL. I will follow behind you. 

Mr. LUCAS. Absolutely. Gentlemen, I have several questions. As 

the Chairman alluded to discussing the AGI issues, how many 

farmers have been flagged by the IRS as part of this process as 

having too high of an AGI to qualify? 

Mr. GARCIA. Mr. Chairman, at the present time we do have a list 

in producers that we are looking at right now. We have sent some 

initial letters here a couple of months ago. We are in the process 

of sending some additional letters to producers to submit their inVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00719 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
708

formation to us. We have quite a few producers that have not yet 

filed that form—I should not say that—they may have filed a form 

and there could have been some errors in filling out the form that 

are still questionable. We just obtained another report this month 

that we have forwarded to our county offices to check with those 

producers to ensure that they did receive a payment. Of course we 

also obtained those AGI forms producers that are getting payment 

with NRCS to the EQIP Program. So we are checking with NRCS 

to ensure that those producers did actually receive a payment. We 

are working on that particular listing and trying to resolve it as 

soon as possible. 

Mr. LUCAS. So it is still a while before you can say how many 

farmers have been flagged by this procedure. 

Mr. GARCIA. That is right. 

Mr. LUCAS. Let’s turn to the SURE Program for a moment, one 

of those things that does not have a baseline in the existing farm 

bill, and in a very tight budget as we all looked at these things. 

There have been comments out in the countryside about the complexities of signing up and, once you sign up, the length of time to 

receive a benefit when you qualify. 

Gentlemen, would you care to comment on the complexities of 

implementing SURE and what the time or period between qualifying and actual payments have been issued, those kind of underlying issues? 

Mr. NELSON. Yes, Mr. Chairman, that is a good question because 

I have heard from a lot of folks out in Montana about this over the 

last couple of years. The principal concern is with the timeliness 

of the payments, but it is also a matter of the complexity of the 

calculations that are hard for the folks in our county offices. As you 

know, there are factors within the SURE Program that basically 

dictate that we are not going to be able to make the payments until 

at least a year after the disaster occurred. And so this is something 

that we really look forward to working with you on because if we 

are going to have a good food safety net as you suggest out there, 

I think that we need to work on streamlining these provisions and 

we look forward to working with you on those. 

Again, I also think the complexity of the calculations are part of 

the factor here that we need to look at as well to try to make it 

not only easier for folks in our county offices but for producers to 

understand. I talked to farmers in Montana who have no idea that 

they might be eligible for a SURE payment, but we got them to go 

in and apply and sure enough they got a SURE payment. 

Mr. LUCAS. This is particularly important in Mr. Garcia and my 

part of the world because we are in the most wicked of droughts 

in the Southwest. And literally while there was some wheat cut in 

the northern part of the southern plains there will be no row crops 

this summer. If the weather patterns don’t change it will be extremely difficult to think that you can put a wheat crop in the 

ground this fall. So this issue is going to receive incredible attention in our home region. So if there are ways to address that and 

accelerate it, certainly the Committee wants to know. And as we—

whether it is a late farm bill this year or under regular order my 

preference is next summer in writing the next farm bill, we are 

going to be left working so hard for every penny of baseline money 

709

that we have to maximize it. So I just ask you to focus on that and 

I would look forward to comments later on in the coming weeks 

and months on this topic. 

With that, I yield back my time and thank the Ranking Member 

for his courtesy. 

The CHAIRMAN. Mr. Boswell now for 5 minutes. 

Mr. BOSWELL. Thank you. I appreciate that discussion, even 

though my operation in southern Iowa we get some of those Chinook winds up there and I know something about droughts, Chairman Lucas, and I realize you are facing a real tough situation. So 

it will be interesting how this works. 

I would like for you, if you could, just give us some update on—

you have the personnel to do what you need to do. We went 

through different cycles of that and software, your IT staff, where 

are you at in that part of it in trying to run an efficient operation 

in all the different areas across the country. Could you comment 

on that a little bit? 

Mr. NELSON. Well, thank you for that question because it gives 

me an opportunity to give a pat on the back, especially to the people out in our county offices who work very hard around the country doing the real work of this agency with farmers and ranchers 

every day, and they do a great job. And in 2011 with the budget 

that we have for this fiscal year we are able to sustain our staffing 

levels, as well as our field operations. But with the Congressional 

appropriations process for the next fiscal year still incomplete, one 

thing is pretty clear and that is that we will likely have fewer dollars for operations in Fiscal Year 2012 than we did this year. 

Again, thanks to the belt tightening folks around the country in 

FSA, we have been able to continue to provide quality service to 

farmers and ranchers within this year’s constrained overall funding 

level. In anticipation of what we might be facing for next year, I 

formed a state executive director workforce planning task force. 

And they are looking at ideas about how we tackle next year’s 

budget. Our planning is also considering the potential for further 

offering of voluntary early retirements within the agency. The Department has authorized those for this fiscal year for all agencies, 

including the Farm Service Agency, and we did have a number of 

employees take us up on that offer when it was put out in the last 

month. And I believe the fact that a lot of folks in our county offices signed up for the early out is a sign of the stress out there 

in the county offices due to, among other things, the budget situation that we are facing in the future. 

So I give our folks terrific high marks for what they have been 

doing. We are looking ahead to the budget for next year, trying to 

plan ahead. And when we get the final numbers we will cross that 

bridge when we get there. 

Mr. BOSWELL. Just a little follow-up there. I know we had a lot 

of concern in days past about modernizing your computer system, 

the ACRSI we are operating while trying to move forward. How is 

that going? And where do we stand on the Modernize and Innovate 

the Delivery of Agriculture—the MIDAS program I guess we call 

it. Where do we stand on that? 

Mr. NELSON. Congressman, I appreciate the chance to talk about 

this. I will turn it over to my colleague, Mr. Garcia, in a minute 

710

here. I sat across the desk from virtually every county office employee in Montana, and I have seen how hard this transition from 

1985 computer technology to the modern era is. I was privileged 

several weeks ago to be part of a demonstration of this MIDAS 

project up here. It is important to remember that the MIDAS 

project isn’t just about hardware and software, that is a big part 

of it. But a big part of it as well is that we are looking at how we 

do business with FSA in order to try to figure out a way to streamline and operate more efficiency. We have a Lean Six Sigma business re-engineering process that is a key part of MIDAS. 

So look, this is really important for us to get done, as I said in 

my opening statement, because we need to have the same kind of 

efficiencies in our IT systems on the farm program side that we 

have in the farm loan program side. I take the GAO report that 

just came out very seriously, and I am working hard and I have 

already brought the FSA and USDA management teams together 

on this to make sure that we get this project done on time and on 

budget. It is too important for our employees and our county employees and farmers and ranchers. 

Mr. BOSWELL. So you think you are kind of on track? 

Mr. NELSON. We are on track and I am going to push hard if we 

are not on track to get on track. 

Mr. BOSWELL. Okay, my time is up. Thank you very much, thank 

you. 

The CHAIRMAN. I thank the gentleman. Austin Scott, for 5 minutes. 

Mr. AUSTIN SCOTT of Georgia. Thank you, Mr. Chairman. Gentlemen, I want to commend the people who worked at the local county 

offices in my State of Georgia, especially those in Turner County 

and Tift County that I know well. They are excellent people from 

the standpoint of their caliber of character and they are excellent 

employees for you and doing their job. 

I don’t have a specific question as much as a comment that I 

would kind of like to get your input on. For any business and as 

we work to get this economy to recover it is access to capital and 

regulatory certainty that those businesses need to have the comfort 

to go out and invest and grow those businesses. When you add in 

commodity prices and the volatility that we see with commodity 

prices and the input prices for farming, where do you see us today 

with regard to the risk spectrum of investing in agriculture from 

the farmer’s standpoint over the years? 

Mr. NELSON. Well, I think that you have brought up a great 

point because historically the principal risks in agriculture have 

been natural disasters and low prices. But you have brought up 

great points here that I think added substantially to that risk and 

put our producers in an increasingly vulnerable position out there. 

And that is the high cost of production. In 1975, you could plant 

and raise an acre of corn for $81. That cost today is $286 an acre. 

And those costs of production or trends of corn have been the same 

for wheat and soybeans and the other commodities. The capital investment required to get involved in agriculture just between 2002 

and 2008 for the crop production sector went up 77 percent. And 

in the first 9 months of this fiscal year alone the capital requirements in the crop production sector have gone up 9.5 percent. So 

711

we created this safety net back in the thirties to try to make sure 

that we didn’t ever jeopardize our food security in this country. It 

has been updated in every farm bill since. And we look forward to 

working with you to update it this time within what we know are 

going to be some pretty severe budget restraints. 

Mr. AUSTIN SCOTT of Georgia. Any other comments, Mr. Garcia? 

Mr. GARCIA. If I can add, Congressman, farm bill programs do 

provide risk management for our producers out there. If the prices 

fluctuate we do have a commodity loan program where they can 

place their commodity into the loan for a period of 9 months. As 

prices go up they can repay the loan. Of course through crop insurance provisions, and then we have the SURE Program that complements crop insurance. The ACRE Program is another program 

where there is some risk management involved for those fluctuating prices. We do have those programs available that have 

helped our producers manage that risk. 

Mr. AUSTIN SCOTT of Georgia. You have ongoing dialogue with 

the Environmental Protection Agency about the uncertainty that 

they create for the farmer and the agricultural community? 

Mr. NELSON. Well, I just would like to say that when I was here 

a few weeks ago talking along with my colleague Dave White from 

NRCS, we both emphasized that achieving environmental benefits, 

environmental protection through voluntary conservation programs 

at USDA is in our minds much preferable to the regulatory approach of other government agencies. And so I think that is an important thing to keep in mind as you approach the farm bill, that 

those investments in those conservation practices that help farmers 

comply with regulations from other government agencies, that they 

do so voluntarily and in a partnership with the government is a 

great way to go. 

Mr. AUSTIN SCOTT of Georgia. I thank the gentleman. I apologize 

that I will be leaving before the end of the hearing, but I appreciate your time and your testimony. 

The CHAIRMAN. I thank the gentleman. Mr. Scott from Georgia. 

Mr. DAVID SCOTT of Georgia. Thank you very much, Chairman 

Conaway. And I appreciate the hearing and welcome Mr. Nelson 

and Mr. Garcia to the Committee. 

I think it is no secret that farm incomes are historically volatile, 

they fluctuate widely and often unpredictable and quite frankly are 

as fickle as the weather. And yes, farm incomes are relatively high 

now, but they may not be tomorrow. It is the role of the farm bill’s 

Title I programs to provide a buffer against these lean times. 

I mention that, Mr. Chairman, because cuts or drastic changes 

to eligibility requirements for these programs are not felt equally 

across all commodities. Different commodities have different economies of scale and input or operating costs. And so slapping a stringent one-size-fits-all income tax or slashing commodity support 

across the board just makes very little economic sense to me. 

We have to remember income does not always equal profit and 

this distinction is especially vital when your income has to be reinvested in your operations to keep it up and running. 

So Mr. Nelson, I want to ask you just a simple question here and 

I will forgive you in advance if you say you don’t know the answer, 

712

but I want to get this out here. Mr. Nelson, do you know what is 

the average cost of a new cotton harvester? 

Mr. NELSON. One of the things that I am looking forward to in 

this position is learning about cotton and crops from other parts of 

the country, Congressman. And my friend Juan Garcia is going to 

take me down to Texas in a couple weeks and teach me. So I don’t 

know. I am looking forward to finding out. I know what a combine 

costs for our farm back in Montana, about $350,000, as much as 

a really, really, really nice house in Montana. 

Mr. DAVID SCOTT of Georgia. Well, last night in anticipation of 

this hearing I looked up the nearest I could find as to what a cotton harvester would cost a farmer. And it would cost roughly 

$600,000 to buy a new cotton harvester from John Deere. Not to 

toot my own horn or anything, but I have an MBA from the Wharton School of Finance, I have studied economics, I love economics, 

I try to get into it, but what I am not is a banker. So I may be 

missing something here, but let me ask you how on Earth is a 

farmer going to be able to convince a bank to finance the purchase 

of a machine like the cotton harvester which costs over a half million dollars so that they can sustain or expand their business when 

they cannot demonstrate a significant stable source of income? Can 

you explain that to me, Mr. Nelson? Do you have any thoughts on 

that? 

Mr. NELSON. What I can say is from my own experience with the 

bankers is that the first question that I always got asked when I 

went in to get our line of credit for our farm of the year is have 

you been to FSA and signed up for the programs? And do you have 

a crop insurance policy? So I think part of the answer is that it is 

the safety net that is created by Congress, working together with 

USDA, that can help give the bankers some confidence in making 

those loans. It is part of the answer, it is not the whole answer, 

because you have a cash flow, I found that out, but that is part of 

the answer. If there is a strong safety net there, then the lending 

institutions out there, whether it is commercial private lenders or 

FSA itself, have some basis for thinking farmers are going to make 

it when the tough years that inevitably will come along come along. 

Mr. Garcia? 

Mr. DAVID SCOTT of Georgia. Very good answer. 

Mr. GARCIA. Congressman, of course it is very difficult for a farmer to purchase a $600,000 cotton harvester out there and be 

able to cash flow. They have to farm quite a few acres in order to 

make that work. I tell the story often with cotton prices the way 

they have been that if you go to the department store and pay $50 

or $60 for a part of blue jeans, the farmers is only getting $0.90 

out those $50 or $60 for that pair of blue jeans. So what we are 

seeing and what we have seen in the past because of the high cost 

of equipment, as you mentioned, is that many of our producers do 

not have the harvesting equipment and they rely on custom services in order to harvest their cotton. So it is very difficult with commercial lending the way it is right now. Thank you. 

Mr. DAVID SCOTT of Georgia. I appreciate that, Mr. Chairman. I 

just wanted to conclude if I may in 10 seconds, and I know that 

America’s farmers know we are having a hard time in Washington. 

I do want to make the statement we need to be sensitive as we look 

713

at these cuts we are engaged in a monumental debate how to 

straighten out our own economy and our spending, and I agree and 

the farmers agree with us that it must be done. 

I just want to make this concluding statement. If we as a nation 

want to remain the leader of the world in producing high quality, 

high volume food and fiber at stable prices, then we must not balance the budget on the backs of those farmers and producers who 

are engaged in that enterprise. The world’s population is growing 

rapidly and soon we will have to feed and clothe billions more people, and so we need to be very sensitive to the needs of our farmers 

and cutting these Title I programs is just something we have to be 

careful with. 

Thank you for the time, Mr. Chairman. 

The CHAIRMAN. Yes, the gentleman’s time has expired. Mr. 

Ribble, from Wisconsin for 5 minutes. 

Mr. RIBBLE. Thank you very much, Mr. Chairman. And I appreciate you allowing me to come this morning to this Subcommittee. 

I do have a couple comments I wanted to make, and Mr. Nelson 

and Mr. Garcia, thank you very much for being here. Mr. Nelson, 

it is good to see you. 

As you know, Title I of the farm bill has a general prohibition 

of growing fruits and vegetables on program acres. I understand 

that this is to ensure that the fresh produce industry is not hurt 

by produce production on subsidized farm program acres. 

The 2008 Farm Bill included a Planting Flexibility Pilot Program 

to allow crop producers in Midwestern states like Wisconsin to 

grow fruits and vegetables for processing on some of their acres. 

The USDA Economic Research Service report on the pilot concluded that it did not harm the fresh fruit, fresh produce industry. 

In your view, is this due to the requirement that fruits and vegetables could only be grown for processing? 

Mr. NELSON. Congressman, I don’t know that I have an answer 

to your question as to the why, and so that is something that I 

would like a chance to look into. 

Mr. RIBBLE. Certainly. 

Mr. NELSON.——and get back to you on. I can report that there 

were a little over, as I recall, about—Mr. Garcia, how many acres, 

up to 75,000 acres that was allotted under that pilot. 

Mr. GARCIA. Yes, we had the—Planting Flexibility Pilot Program 

that was initiated with the farm bill for seven Midwestern states, 

including Illinois, Iowa, Illinois and Minnesota, in which we offered 

that program to assist producers that did not have a planting history of fruits and vegetables. The way the farm bill program works 

is that in order for a producer to be able to plant fruits and vegetables on what we call base acres of a commodity they must either 

have a planting history or be able to double crop that vegetable 

with that other regular commodity. 

So we have had some success in that program, Congressman. We 

had around 150 farms that had participated on that. There is some 

consideration there as far as participation because of the demands 

in the prices of vegetables, but it is a program that is available and 

has produced some participation and we will look into it further to 

see if we can increase that. 

714

Mr. RIBBLE. I would appreciate that. I am curious if you think 

that additional planting flexibility allowed for fruits and vegetables 

under contract for processing, would you expect that to have an adverse affect on the fresh produce industry? 

Mr. NELSON. We would be happy to look into that. One other 

point that I want to make on that is that it appears that there 

were a number of producers who were able to use non-base acres 

to expand their vegetables production. So that in addition to the 

low demand out there for those particular vegetables are what we 

attributed to the relatively low participation rates at this point. 

But again, we will look into your question and get back to you. 

Mr. RIBBLE. I appreciate that. 

And just another kind of different direction here, we are expecting it is possible direct payments could be reduced from some of the 

budget pressures that the country is facing. Farmers who receive 

direct payments under current law are expected to comply with certain conservation practices. If direct payments are reduced or altogether eliminated, do you anticipate that producers would continue 

with various conservation practices, and would USDA recommend 

putting centers in place to ensure farmers keep their land production for future generations? 

Mr. NELSON. Well, we would look to work with you on provisions 

here, but I think it is important to note that all of the other FSA 

programs that producers might want to participate in, as well as 

the NRCS programs, require conservation compliance. So it will be 

up to individual producers whether they weigh the cost, the conservation compliance against the benefits. But again we would look 

forward to working with you on that issue as you discuss and debate that provision of the farm bill. 

Mr. RIBBLE. Thank you very much, and thank you, Mr. Chairman. I appreciate you letting me be here. 

The CHAIRMAN. The gentleman yields back. Ms. Sewell, from Alabama, for 5 minutes. 

Ms. SEWELL. Thank you, Mr. Chairman, and I thank our witnesses for being here today. 

As you may all know, Alabama forest landowners suffered tremendous losses during the April tornados that caused such great 

devastation across my district. It has recently come to my attention 

that Alabama’s nonindustrial private forest landowners will receive 

a little over $3 million from FSA’s Emergency Forest Restoration 

Fund. As it currently stands, the funding is totally inadequate to 

meet our needs and the requirements of our state. 

What can be done to aid in the restoration of our forest, and in 

case of inadequate directed funding, and are there any FSA accounts that currently have a balance that those funds can be shifted to. 

Mr. NELSON. Congresswoman, as I recall the figures—and I don’t 

have them with me today—but we are very close to the limit on 

the amount of funds that are available in that program, and I 

would be happy to have Mr. Garcia add to this to see if there are 

any other programs that can assist those producers. If those counties do have Secretarial natural disaster designations or Presidential designations, then they are eligible for emergency loan assistance under our farm loan program and there is a provision in 

715

there for physical losses as well that we need to look at and see 

whether that might apply in this particular situation. 

Mr. Garcia. 

Mr. GARCIA. Congresswoman, as you mentioned, we have had 

several disasters throughout the United States. The Emergency 

Forest Restoration Program is a very important program that assists producers in rehabilitating their forests. Presently, the funding for that program is very challenging. We have obligated all our 

funding. We have several requests from some states because of all 

the disaster situations that have occurred. Presently, we do not 

have any other funding source to switch money around. 

The other program that also—that we face a challenge with right 

now is the Emergency Conservation Program, which also assists 

producers in rehabilitating conservation practices, and we offer 

cost-share and assistance for that, also. 

So with all the disasters that we had, the wildfires, the tornadoes, the flooding along the Mississippi and Missouri, it has posed 

a great challenge for us, and what we do as far as an agency, we 

allocate funding to certain counties, and as those funds are released back to us, for example, they are not used, then we can go 

ahead and approve other requests as they come in. 

Ms. SEWELL. So right now there is not really any other source 

other than the emergency loan assistance that could aid farmers in 

restoring their forests? 

Mr. NELSON. Congresswoman, we will look into that and get back 

to you, but I believe that is unfortunately right now where we 

stand, but we will get back to you. 

Ms. SEWELL. Thank you. 

Now, in these difficult budgetary times, it is very important that 

we analyze the effectiveness of our safety net programs, and I 

would really like to know your opinion as to what safety net programs under Title I have been the most effective and which ones 

you think could be better improved. 

Mr. NELSON. Well, I think rather than talk about individual programs, what I would like to talk about is an approach for your consideration as we look ahead to discussion about that title of the 

farm bill. Again, as I said, in every farm bill since the 1930s, the 

safety net has been updated, and we need to do that again. And 

what I would suggest is that the goal here and the priority ought 

to be that we cover both the crop and the livestock sector with our 

safety net; that we have effective safety net programs for all crops 

around the country; and that we treat all regions of the country equitably. Because as one of the Members pointed out earlier, there 

are a lot of differences in agriculture around the country, and one 

size doesn’t fit all. And so we need to try to make sure when we 

put a safety net package together that it does take into consideration that things are very different in Mr. Garcia’s State of Texas, 

in your home State of Alabama, and my home in Montana, and we 

have to have the flexibility in the administration of these programs 

to make them work every place. 

Ms. SEWELL. Thank you. 

The CHAIRMAN. Thank you very much. Mrs. Schmidt for 5 minutes. 

716

Mrs. SCHMIDT. Thank you, Mr. Chairman, and if these have already been asked, I apologize. I want to focus a little bit on the 

marketing assistance loans and the loan deficiency payments, if I 

might, and I understand if you don’t know all these answers, that 

is okay. You can get back with us. 

But are there scenarios where producers make the use of marketing loans, even when the average marketing year price ends up 

exceeding those loan rates? 

Mr. NELSON. Congresswoman, from having taken marketing assistance loans on our farm, and my family has done it for years, 

the answer is yes. In anticipation of higher prices, if you need cash 

at harvest time and you have some grain in the bin and you can 

take a loan as that is not normally the optimal time in order to 

market your crop. The marketing assistance loans, the bulk of the 

volume of those are in December and in January, and that is clearly because producers are able to use the flexibility of that program 

to take income either at the end of a year for tax purposes or the 

beginning of a year for tax purposes. 

So the answer to your question is yes, but it is because it buys 

producers time, in particular if they believe that the market is 

trending up but they need cash at that point. 

Mrs. SCHMIDT. Thank you. Has the Marketing Assistance Loan 

Program created any unusual market distortions between crops or 

among various classes of a particular commodity? For example, 

USDA has issued loan rates for durum wheat at levels significantly 

higher than other wheat classes, and has that affected outlays? 

Mr. NELSON. We would like to look into that a little bit, the issue 

of market distortions, and get back to you, if we could for the 

record, Congresswoman. 

Mrs. SCHMIDT. Thank you. After the 2008 Farm Bill, the USDA 

began issuing a 30 day posted county price and an alternate price. 

Has that made a difference in the operation of the program, and 

would there be changes you might consider for the future or recommend to Congress? 

Now is your chance to give us some recommendations. 

Mr. GARCIA. Well, I am trying to think of how to answer this. 

The 30 day posted county price is still in effect, and those are the 

prices, of course, that producers use to determine (if they do have 

their commodity in the loan) when they want to take it out of loan. 

Of course, if you have a producer that has a commodity loan, 

whether it be warehouse stored or farm stored, they have to have 

the market for it. They have to have a buyer. So those posted county prices are used both by the producer and, of course, the buyers 

of the commodity, and we do have those posted on our website so 

producers are able to look at those particular prices on a daily 

basis. If they are also dealing with their elevator, the elevators 

could look at those on a daily basis and could determine that, especially, when to market that commodity and get the best price available. 

Mrs. SCHMIDT. Okay. And is there anything you would like to 

change with the program or improve with the program? 

Mr. GARCIA. It is probably something that we will have to look 

at. 

Mrs. SCHMIDT. You will get back to us? 

717

Mr. GARCIA. I am sorry, it is something we will have to look at 

as we look at the farm bill negotiations for this upcoming farm bill. 

Mrs. SCHMIDT. All right. And ACRE was a new program that was 

brought out in the 2008 Farm Bill and the sign-up generally for 

ACRE programs was considerably lower than anticipated. To what 

do you attribute that response? And you have indicated there are 

regional disparities in the sign-up. But we have also heard of some 

of the counties being particularly well represented with ACRE participants due to activity from the FSA, and do you think that has 

enabled the bump-up in it, and do you see any changes or improvements to that? 

Mr. NELSON. Congresswoman, I had, right before I came back to 

work for FSA in the summer of 2009, a chance to go back to my 

hometown of Fort Benton, Montana, to an FSA meeting about the 

ACRE program. Chouteau County is the largest wheat producing 

county in the state. There are about 115 producers there, most of 

whom I grew up with and farmed with over the years. And the 

principal reasons that I got out of that and I have gotten since for 

the ACRE sign-up numbers being lower than anticipated were, first 

of all, it was an unknown. For about 13 years at that point with 

the production flexibility payments and then direct contract payments, producers had been able to count on a fixed amount of 

money, and this was something where there was risk as to whether 

they would make as much as they had historically made or not. 

Second thing was, is summertime is a bad time for farmers to 

have to make decisions like this. I mean——

Mrs. SCHMIDT. Good point. 

Mr. NELSON. Yes, it is the last thing that producers want to be 

doing is be in our offices or having to make major financial decisions about their farming operation when they know they ought to 

be out on a tractor or combine or swather or fixing fence. 

And the third thing is at that meeting is a lot of us remember 

the late nineties when prices went down precipitously and we all 

had a lot of LDP payments for the next few years, and so there was 

some concern about the 30 percent reduction in the market loan 

rate as well. I have heard those kind of concerns echoed from other 

producers since, and I would attribute that largely, at least in our 

part of the country, to why the sign-up wasn’t higher. 

The CHAIRMAN. Thank you. The Ranking Member of the full 

Committee, Mr. Peterson, for 5 minutes. 

Mr. PETERSON. Thank you, Mr. Chairman. Mr. Nelson, I wanted 

to try to figure out where we are at on this permanent disaster program. It is like 2 years after it happened before you can actually 

figure out how much it is, right? I mean, it is—the way it is set 

up, it takes you a long time to figure out the actual loss. So at this 

point you don’t even know what you have spent for 2010, right? 

Mr. NELSON. Congressman, that is correct because the sign-up 

for the 2010 SURE program actually ends this Friday July 29, 

2010? 

Mr. PETERSON. Yes. 

Mr. NELSON. I am sorry, 2009. I was wrong, and so because of 

features within the program, we are looking forward to working 

with you to addressing because the timeliness of payments under 

this program are something that really need to be looked at. 

718

Mr. PETERSON. Well, we were trying to deal with CBO and so 

forth and that was part of the problem, but so what I am wondering about, is there a limitation of $4 billion or was that just the 

estimate of the baseline? Is there any limitation on the program 

other than it was only 4 years, so it runs out this September? So, 

these folks that have losses this year are going to be able to sign 

up at some point. Is there any kind of problem in terms of how 

much money that costs or was the only limitation we put on this 

just the 4 years and not any limitation on the amount that is 

spent? 

Mr. NELSON. Congressman, as I understand it, and I want to 

have the opportunity to clarify the answer here, it is my understanding that these disaster programs, SURE, LFP, TAP and LIP 

were only funded for the period 2008 through September 30 of this 

year. There was an estimate on the baseline. You could spend 

whatever needed to be spent out of CCC to meet the obligations for 

the program for that period of time. The Emergency Livestock Assistance Program was the only one of the five that had a cap on 

it of $50 million a year. 

So I guess the upshot of my answer is that they are CCC funded 

through September 30 of this year but they are not part of the 

baseline. 

Mr. PETERSON. Well, so if I understand how all this works, whatever it ends up costing will be the new baseline or I guess the baseline expires on this, that is right? This is not an ongoing baseline 

because it was only 4 years so it doesn’t make any difference. So 

anyway, the money will be there for anybody that has losses 

through this September 30? 

Mr. NELSON. Correct. 

Mr. PETERSON. With the exception of livestock, which may get 

capped or something? 

Mr. NELSON. The Emergency Livestock Assistance Program is 

the only one of the five that has a spending cap. We do have the 

authority to fund all approved applications for the other programs 

through September 30. 

Mr. PETERSON. Right. Have you had requests or people talking 

to you about trying to do some kind of ad hoc disaster in addition 

to this? 

Mr. NELSON. I haven’t had anybody talk to me about it, but I 

might not necessarily be the one that they would approach, Congressman. 

Mr. PETERSON. You haven’t heard any talk about it? Okay. 

Thank you, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. Mrs. Ellmers, from North 

Carolina, for 5 minutes. 

Mrs. ELLMERS. Thank you, Mr. Chairman. 

Along the lines of getting just a baseline of where we are at, 

when you are talking with the farmers what are the programs that 

they say that they need the most? What is it that seems to be the 

biggest concern and the biggest focus? 

Mr. NELSON. Well, I can speak best from the part of the country 

that I know which may or may not represent the rest of the country, but the principal concern of producers back in Montana and 

our part of the Northern Great Plains are the safety net programs. 

719

We are a disaster prone region of the country. We are heavily 

participatory in Federal crop insurance, as well as FSA programs, 

and so I would say, again from the perspective of Montana and 

other Northern Great Plains States, that the safety net programs 

are the ones that the producers are the most concerned about. 

Mr. Garcia? 

Mr. GARCIA. Well, Congresswoman, as far as the Southwest area 

and really throughout the nation, as Administrator Nelson mentioned, safety net programs are very important. We have many producers that do participate in the commodity loan program. As we 

talked earlier, that is an important program for them, and then 

also the permanent disaster programs, as Ranking Member Peterson was talking about, especially in this year where we have had 

so many disasters throughout the nation. 

The Livestock Forage Program has been very beneficial, in which 

we have been issuing payments this year for producers in the Sunbelt area, Texas, Oklahoma, Kansas, and now the drought is moving back east towards Missouri, Mississippi, Alabama, and that 

area. So those programs have been very important to our producers. 

Mrs. ELLMERS. Along the lines of the commodity programs, given 

that most of the crops are experiencing high prices right now, how 

does that compare to previous years’ prices? 

Mr. NELSON. Well, the programs that are—DCP is a fixed cost 

program, and that is our biggest program. The countercyclical payments have gone down substantially. We were making over $4 billion of payments just about 3, 4 years ago. Now we are down to 

a little over $140 million of countercyclical payments this year for 

just a couple of commodities. And so the high prices have helped 

there, but on the other hand, as Mr. Garcia is pointing out, we are 

looking at a big part of the country this year with tornados, floods, 

a drought that just keeps expanding, and an increasing impact on 

producers out there. And so I anticipate that we are going to see 

substantially higher participation in the safety net disaster programs this year than we have seen in the last couple of years. 

Mrs. ELLMERS. And you mentioned the DCP programs as the biggest program that you have. Which of those programs are currently 

making payments to producers right now? I mean, is there one that 

seems to be the——

Mr. NELSON. I think there are a couple of disaster programs that 

work particularly well. The Livestock Forage Program, for example, 

and the reason that that works well, I believe, is there is an automatic trigger tied to the national drought monitors. So when a 

county hits a certain ranking on the national drought monitor for 

X period of time they become eligible. The producers can come in 

and sign up, and again, because it is CCC funded, the producer 

doesn’t have to wait for the payments like they do on other programs where there is limited funding like the Emergency Livestock 

Assistance Program. So that is one of the programs that I think is 

working well for producers right now. 

Livestock Indemnity Program is another one of the safety net 

programs because that is essentially triggered by a natural disaster 

that causes livestock losses. That is the trigger. Again, it is CCC 

funded, so the funds are available for producers. 

720

Mrs. ELLMERS. Great. Thank you so much. I yield back the remainder of my time. 

The CHAIRMAN. The gentlelady yields back. Mrs. Hartzler from 

Missouri. 

Mrs. HARTZLER. Thank you, Mr. Chairman. Hello. 

I just was wondering, we talked about direct payments a little 

bit. They are in the news once in a while here lately, and just wondered if you could give me sort of an idea of what percentage of 

farmers participate in the direct payments program right now. 

Mr. GARCIA. Thank you for your question. If I can give you some 

figures on acres, if that might suffice, there is close to 272 million 

acres of crop acreage bases in the United States that we have for 

particular commodity crops, cotton, grains, sorghum, soybeans, and 

so forth. Out of that, 222 million are enrolled in DCP. Now, I am 

giving you 2010 figures, Mrs. Hartzler. 

Mrs. HARTZLER. Okay. 

Mr. GARCIA. So and there are 35 million acres that are enrolled 

in the ACRE program in 2010. So we have around 14 million acres 

of base that are not currently—that were not enrolled in 2010 for 

either DCP or the ACRE program. So a large percentage of the 

farms do participate in the direct and countercyclical program 

throughout the states. 

Mrs. HARTZLER. In your opinion, what would be the impact on 

farmers if direct payments were to be done away with? 

Mr. NELSON. Congresswoman, we would like the opportunity to 

work with you on that during your discussion of the provisions of 

the farm bill. 

Mrs. HARTZLER. I am not saying I am proposing it, by the way. 

I just want to clarify that. I just want some information. 

Mr. NELSON. What I would like to do is that there has been analysis done by USDA on who gets the payments and of different scenarios for the program, and we would be happy to provide those 

analyses to you for your consideration as you look at this program 

during the discussion of that provision of the farm bill. 

Mrs. HARTZLER. I have read the FAPRI analysis of it and just interested in your hearing your perspective on that. Do you also have 

figures showing if cuts were made at different levels, the impacts 

of totally eliminating—I mean various cuts at different levels? 

Mr. NELSON. Congresswoman, I can’t say for sure that all of that 

is covered in the analysis, but we will get you what we do have and 

we would be happy to follow up with you to see if we could get 

some more information for you. 

Mrs. HARTZLER. Okay. Just some other sort of related questions. 

What are farmers’ biggest concerns with respect to just program 

delivery right now, given your connection to producers in the field? 

Mr. NELSON. Well, again, I am only in a position really to speak 

for the part of the country that I come from at this point. Again, 

I think it is timeliness of payments of some of these programs because of the factors within the ACRE and SURE program, for example, that mean that it is at least a year later before we can 

begin making payments to producers under those provisions. I 

think that is especially of concern in disaster or emergency-related 

programs that we need to have a more timely mechanism for making payments, again, for those programs in particular. 

721

Mrs. HARTZLER. Do you have some analysis of over say the past 

10 years the impact that direct payments have had on the percentage of net farm income that they have had? Of course, it depends 

on the price. It depends on how your crops are doing. But I am just 

curious, some years, bad years, I would assume the direct payments make a large percentage of the income that would come in 

that year. Other years obviously not. So do you have a graph or 

something showing over time——

Mr. NELSON. Congresswoman, yes, we do, and so—and again, we 

would be happy to provide that. 

Mrs. HARTZLER. Okay. Great. Thank you very much. I yield back 

my time. 

The CHAIRMAN. The gentlelady yields back. Mr. Huelskamp, I 

apologize. I took you out of order but you are recognized for 5 minutes. Sorry about that. 

Mr. HUELSKAMP. No problem, Mr. Chairman. Thank you. Good 

to be here. I have a few questions to follow up on Representative 

Hartzler’s question about key programs in your mind. 

If Members of the Committee had to select one particular program as top priority, what would your recommendation be? 

Mr. NELSON. Again, Congressman, I am going to go back to my 

answer that we believe the safety net is critical and rather than 

comment on individual programs, again, I would like to talk about 

that as we work with you to craft the safety net and update the 

safety net that we look at making sure that we have both the livestock and the crop sectors covered, that we have all crops covered 

effectively, and that we treat all regions of the country equitably. 

If we keep those goals in mind within the budget constraints that 

we know we are all going to face, we look forward to again crafting 

a safety net that works for producers today. 

Mr. HUELSKAMP. And I appreciate that. That is difficult. The answer to the question for my producers is on the crop side. It is very 

clear it is about crop insurance, number one, without a doubt. I 

don’t know if that varied or how much it varied across the country. 

One thing I would request is simply a list of the safety net programs, those you are considering safety net programs, and then everything else. That word gets thrown around a lot. I am new to 

Washington, and I want to know exactly what is in that category. 

Speaking of crop insurance, though, I was looking at farm prices 

in my home area of Dodge City this morning. Very nice if you had 

some to sell. Whole crop of wheat is selling at $1.40; corn, $7.25; 

soybeans, $13.16. My concern about a crop insurance program is it 

only deals with—it does not deal with the input costs, which are 

not on the board, and those are particularly higher and going higher. Is there any particular changes in the crop insurance program 

that you would suggest to deal with that aspect of the cost side 

versus the revenue? 

Mr. NELSON. Congressman, the crop insurance program is a little 

bit outside of our Farm Service Agency area, but what I would suggest is important on our side with respect to crop insurance is that 

we make sure that the SURE program, if it continues, is crafted 

to fit together with crop insurance to help fill the kind of gaps that 

you are talking about that crop insurance doesn’t cover. That is 

what they are designed to do, is to work together, not be duplicaVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00733 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
722

tive but to actually supplement and complement each other. I think 

with any dimension of the safety net but particularly the SURE 

program in particular, which is the biggest one relating to crops, 

that it is very important that consideration of any future version 

of it again be crafted to fit very closely together to cover the gaps 

that crop insurance doesn’t cover. 

Mr. HUELSKAMP. And is crop insurance in your category of safety 

net programs? 

Mr. NELSON. As a farmer, it would be in my category. 

Mr. HUELSKAMP. Well, I am not worried about the farmer. I am 

worried about the agency. 

Mr. NELSON. I would have to say yes. It is a critical part of the 

safety net, but it is not the whole safety net. 

Mr. HUELSKAMP. Understood. The other question would be, 

again, on the revenue side, outside of government, do you have any 

analyses of the potential impact of the proposed free trade agreements and its impact on the actual cost to programs and the return 

to farmers? 

Mr. NELSON. You know, Congressman, what I would like to suggest on that is that we have our trade team at USDA come up and 

brief you on those issues. We would really look forward to that opportunity to do so for you and any other Members and staff that 

would like to get together on that. So that offer is on the table. 

Mr. HUELSKAMP. Thank you. I would love to take you up on that. 

I would also request as well, though, that certain other members 

of the Administration and Members of Congress certainly need to 

hear that briefing, and we can sit and talk about programs all day. 

But, if we can just sell more stuff and we got folks out there—we 

are losing markets every day by Washington, whoever’s to blame, 

sitting around and letting those markets be taken over by our competitors, and we are losing not just today but in the future as well 

by our failure to move. And I am very frustrated by that. Whatever 

you can do and whatever the USDA can do to get that done, I 

mean, that makes this discussion a lot easier when we are able to 

solve that step. 

But I appreciate the responses and look forward to and would 

love to have you in my office to visit about that directly. 

Mr. NELSON. Thank you very much. 

The CHAIRMAN. The gentleman’s time has expired. The gentleman from New York, Mr. Gibson, for 5 minutes. 

Mr. GIBSON. Thank you very much, Mr. Chairman. I appreciate 

the panelists being here today. 

I represent a district in upstate New York. We have about a 

thousand farms, about half of them dairy, and this is a good time 

for the hundredweight price of milk, but there are challenges with 

input. I am curious if you have any analysis, if ethanol subsidies 

were reduced or eliminated, how would that impact the price per 

bushel? 

Mr. NELSON. Congressman, we are going to need to get back to 

you on that and I just want to make sure that I understand what 

you are talking about is whether or not ethanol subsidies and their 

effect on feed grain prices, the impact that they have had on the 

livestock sector? 

723

Mr. GIBSON. That is correct. I am curious to know what analysis 

that you may have on the elasticity of price if these—if we reform 

the subsidies, various unspectrum degradation in terms of stepping 

them back, also an estimate on impact on the market if they were 

eliminated. And I look forward to a response for the record on that. 

Mr. GIBSON. The other piece I just want to follow up, I am curious to know what your analysts or your subject matter experts, 

what ideas that you may have with regard to crop insurance reform. This is a topic that often comes up with my farmers, and I 

would like to be able to share with them the latest insight from 

your experts. 

Mr. NELSON. I am going to turn this over to Mr. Garcia because 

he is actually involved with a project that we are working on on 

crop reporting jointly with crop insurance, and let him take this 

one. 

Mr. GIBSON. Thank you. 

Mr. GARCIA. Congressman, of course, when we are talking about 

crop insurance reform, as the Administrator mentioned, the Farm 

Service Agency does collaborate with the Risk Management Agency, who is in charge of the crop insurance provision and we work 

with them very closely. And what we have been working with them 

on especially after this 2008 Farm Bill when the SURE program 

was approved, we have been working with Risk Management Agency to fully understand all the different types of policies that are 

available, whether it is a production policy or a revenue policy. We 

had to spend quite a bit of time learning those particular different 

policies to write our regulations for the SURE program. 

So it is very important that the Risk Management Agency and 

the producers talk to their insurance agencies. I do know that the 

crop insurance organizations do constantly have meetings throughout the year with their private insurance agents and ask for recommendations on how the particular policies should be changed. 

Now, the one thing that we are very excited about that we are 

working with the Risk Management Agency right now that will 

help our farmers tremendously, is that our producers will only file 

one acreage report. Right now the farmers have to file an acreage 

report with their private insurance agency and then another acreage report with the Farm Service Agency. So we are working on 

a project right now where producers would just file one time and 

we will use that acreage for both agencies. 

Mr. GIBSON. Thank you. And I guess the last point, assess the 

EQIP program and your thoughts on perhaps the way forward 

there. 

Mr. NELSON. Well, the EQIP program is an NRCS program, and 

it is the premier conservation program in our CS office, and I think 

there has been a tremendous amount of good work done with that 

program over the years. This is more from an individual producer 

point of view than an FSA Administrator point of view. Originally, 

the program was set up so that it was only long-term contracts, 

and that was beneficial for producers that could afford to make the 

financial commitment to a long-term cost-share agreement under 

EQIP. I think they greatly improved the program a few years ago 

when they started offering annual practices, which I believe allows 

a lot more producers, again who aren’t in a position to make longVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00735 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
724

term financial commitments to cost-share practices, to participate 

in that program. So I think that was a substantial improvement. 

We don’t jointly administer the program within NRCS, but we do 

work closely with them on any number of other programs. 

Mr. GIBSON. Thank you very much, and let me just say, Mr. 

Chairman, and I will turn it back, that it is actually one of the 

more popular programs back home. There are some folks who have 

a decided point of view that FSA perhaps could play a more active 

role in it going forward. Maybe we can collaborate on that going 

forward. 

Thank you, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. The gentleman yields 

back. 

Mr. Nelson, we want to thank you for being here today. I want 

to thank whoever your team put together the answers to our audit 

questionnaire. I am sure both of you slaved over it mightily, but 

somewhere in your system you put this together and thank you 

very much. It is very helpful to what we are trying to do here. 

Couple of quick this and that. In some of the responses, you 

talked about improper payment rates on the various programs. 

They appear to be really good, but what is the recovery experience 

with respect to going after those improper payments? Can you give 

us some sort of thought on how quickly the—or what your experience of getting money back had there been an improper payment? 

Mr. NELSON. Congressman, I am glad that we do have a chance 

to talk about that because it gives me the opportunity to say that 

FSA last year made seven million correct payments, and I think 

that that is important for the record, but we know with that many 

correct payments, as I said in my opening remarks, even one improper payment is one too many, and we find out when one may 

have been improper, we review it and we go back and determine 

whether or not it actually was improper. We have implemented a 

couple of things. We talked about the AGI checks with the Internal 

Revenue Service earlier, but in addition to that, four times a year, 

twice that required by Congress, we do check the death master file 

at the Social Security Administration to determine whether or not 

we are making improper payments to producers who have passed 

away. And again, that has been an important step forward, but I 

think it is important to note for the record as well that sometimes 

a payment to a producer who has passed away is a proper payment 

because we had a contract with that producer when they passed 

away and just like any other contract in this country, when somebody passes away, we make that payment to the estate. 

The CHAIRMAN. But you are actually experiencing recovering—

the very few payments that are made improperly, you are experiencing recovery of those dollars? 

Mr. NELSON. I am sorry if I missed your point a little bit. We 

have pretty good experience with that, but it does involve getting 

in touch with the producer, and they do have appeal rights and so 

they have the opportunity to say, in front of first the agency and 

then the National Appeals Division, hey, that payment was proper. 

We also have the 90 day rule that has been in the statutes for 

quite some time that in some cases prevents us from going back 

725

and getting the money back from producers even if it is established——

The CHAIRMAN. If you don’t catch the improper payment within 

90 days then——

Mr. NELSON. In certain cases, sir. 

The CHAIRMAN. Let me ask you one other real quick one, Mr. 

Nelson. You talked earlier to one of the Members about capital cost 

increases from a certain period through today, 90 percent just in 

this year. What impact does land cost, and can you break out those 

increases by what land—increase in land prices have had in your 

numbers? 

Mr. NELSON. Congressman, I don’t have that with me, but we 

would certainly be happy to try to provide that. 

The CHAIRMAN. Okay. All right. Mr. Scott, any final comments? 

All right. 

Well, again, gentlemen, thank you both for being here. Look forward to working with you in your new roles as leadership at FSA. 

Under the rules of the Committee, today’s record of the hearing 

will remain open for 10 calendar days to receive additional material and supplementary written responses from the witnesses to 

any question posed by a Member. 

This hearing of the Subcommittee on General Farm Commodities 

and Risk Management is adjourned. 

[Whereupon, at 11:36 a.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

726

727

* There was no response from the witness by the time this hearing went to press. 

SUBMITTED QUESTIONS

Response from Bruce Nelson, Administrator, Farm Service Agency, U.S. Department of Agriculture * 

Questions Submitted By Hon. Eric A. ‘‘Rick’’ Crawford, a Representative in Congress 

from Arkansas 

Question 1. Given the current make up of farm safety net programs, including the 

marketing loan, direct and countercyclical program, and ACRE do you think it is 

important for Congress to look at streamlining programs in the next farm bill? What 

would be the impact on your agency, the Farm Service Agency, If you were only implementing and administering streamlined programs? Would this improve your 

service and support to farmers, and if so how? 

Question 2. What has been the current enrollment level in ACRE across all crops 

and for rice specifically? What is your impression of why such a low enrollment 

level? 

Question 3. Of all the current safety net programs, can you rank them by degree 

of complexity and level of cost/resources to implement and administer? 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE

1. Program Name 

Direct and Countercyclical Program (DCP). 

2. Subprograms/Department Initiatives 

The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) reauthorizes 

direct and countercyclical payments, with some changes, that were previously authorized under the Farm Security and Rural Investment Act of 2002 (2002 Farm 

Bill). FSA enters into annual contracts with agricultural producers to maintain base 

acres on participating farms. During the contract period, eligible land on the participating farm, may be planted to any commodity except fruits, vegetables (other than 

mung beans and pulse crops), and wild rice. 

FSA is responsible for overall implementation of DCP. Producers enroll and payments are initiated at the FSA County Office administratively designated for the 

farm.

DCP Direct Payments:

Direct payments are paid annually and are not based on producers’ current production choices, but instead are tied to base acres and program yields. Direct payments do not provide an incentive to increase production of any particular crop and 

the payments support farm income without affecting producers’ current production 

decisions. 

The 2008 Farm Bill continues the direct payments that began under the 2002 

Farm Bill. Direct payment rates for the eligible DCP commodities are statutory and 

as follows:

• Wheat: $0.52 per bushel

• Corn: $0.28 per bushel

• Grain sorghum: $0.35 per bushel

• Barley: $0.24 per bushel

• Oats: $0.024 per bushel

• Upland cotton: $0.0667 per pound

• Rice, long grain: $2.35 per hundredweight

• Rice, medium/short grain: $2.35 per hundredweight

• Soybeans: $0.44 per bushel

• Other oilseeds: $0.80 per hundredweight

• Peanuts; $36 per ton

For each commodity, the total direct payment for producers on a farm is determined by multiplying 83.3 percent for 2009 through 2011 and 85 percent in 2008 

and 2012 of the farm’s base acreage times the farm’s direct payment yield times the 

direct payment rate.

Countercyclical Payments:

728

Countercyclical payments provide support counter to the cycle of movement of 

market prices as part of a ‘‘safety net’’ in the event of low crop prices. Countercyclical payments for a commodity are only issued if in a given year, the effective 

price for a commodity is below the target price for the commodity. The countercyclical payment rate is the amount by which the target price of each commodity 

exceeds its effective price. The effective price for each commodity equals the direct 

payment rate plus the higher of:

• the national average market price received by producers during the marketing 

year as determined by the USDA Secretary,

• or the national loan rate for the commodity.

Target prices, as provided by the 2008 Farm Bill, for each commodity are as follows:

Crop 2008 2009 2010–12

Wheat $3.92/bu $3.92/bu $4.17/bu 

Corn $2.63/bu $2.63/bu $2.63/bu 

Grain sorghum $2.57/bu $2.57/bu $2.63/bu 

Barley $2.24/bu $2.24/bu $2.63/bu 

Oats $1.44/bu $1.44/bu $1.79/bu 

Upland cotton $0.7125/lb $0.7125/lb $0.7125/lb 

Rice, long grain $10.50/cwt $10.50/cwt $10.50/cwt 

Rice, medium/short grain $10.50/cwt $10.50/cwt $10.50/cwt 

Soybeans $5.80/bu $5.80/bu $6.00/bu 

Other oilseeds $10.10/cwt $10.10/cwt $12.68/cwt 

Dry peas (*) $8.32/cwt $8.32/cwt 

Lentils (*) $12.81/cwt $12.81/cwt 

Chickpeas, small (Garbanzo bean, Desi) (*) $10.36/cwt $10.36/cwt 

Chickpeas, large (Garbanzo bean, Kabuli) (*) $12.81/cwt $12.81/cwt 

Peanuts $495/ton $495/ton $495/ton 

* Not available. 

3. Brief History 

For crop years 2002 through 2007, pursuant to the 2002 Farm Bill (P.L. 107–171), 

wheat, corn, barley, grain sorghum, oats, upland cotton and rice, (the same crops 

that were previously eligible for fixed annual Production Flexibility Contract (PFC) 

payments for producers under the 1996 Farm Bill) oilseed crops, including soybeans, 

sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe, sesame 

seed, and peanuts were crops eligible for a fixed direct payment. (PFC payments 

were based on historical yields and acreage. Direct payments were received whether 

or not a crop was planted, and did not depend on what crop was planted, (except 

for fruit and vegetable restrictions)). The 2008 Farm Bill further authorizes these 

types of direct payments for the 2008 through 2012 crop years, with some changes, 

and adds pulse crops beginning with the 2009 crop year. 

Countercyclical payments (countercyclical payments are similar to the deficiency 

payments authorized under the earlier Acreage Reduction Program (ARP), which 

mandated strict acreage limitations and mandatory acreage idling or set-aside requirements) were authorized for the 2002 through 2007 crop years pursuant to the 

2002 Farm Bill for these same crops. 

Under the 2008 Farm Bill, peanuts continue to be eligible for direct and countercyclical payments, and continue to have slightly different statutory requirements 

than for other crops. 

The 2008 Farm Bill provides that the base acres and program yields established 

by the 2002 Farm Bill that were effective September 30, 2007, will constitute the 

base acres and yields for the 2008 through 2012 crop years. The 2008 Farm Bill, 

however, requires adjustments to base acres for various reasons including, but not 

limited to, land no longer being devoted to agricultural uses. 

4. Purpose/Goals 

The Direct and Counter-Cyclical Program (DCP) provides annual payments to eligible producers on farms enrolled for the 2008 through 2012 crop years. Both direct 

and countercyclical payments are computed using the base acres and payment yields 

established for each farm. 

729

The intent of DCP is to provide a safety net for farmers, while allowing farmers 

planting flexibility. The program protects farmers from low market prices of program commodities, and helps ensure farmer’s cash flow needs are met. Roughly 80 

percent of all farms with base acres are enrolled in DCP. 

5. Success in Meeting Programmatic Purpose/Goals 

DCP has successfully met its programmatic goals.

730

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

Direct Payments $0 $4,151,272 $5,288,646 $5,234,599 $4,962,372 $3,957,175 $4,821,206 $5,222,325 $4,898,085 $4,950,510Countercyclical 

Payments 0 1,742,999 809,381 2,771,503 4,355,612 3,158,554 359,064 730,918 902,584 131,848

This program is funded by Commodity Credit Corporation (CCC). Budget authority for this CCC program is based on actual outlays.

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Annual Outlays 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

Direct Payments $0 $4,151,272 $5,288,646 $5,234,599 $4,962,372 $3,957,175 $4,821,206 $5,222,325 $4,898,085 $4,950,510Countercyclical 

Payments 0 1,742,999 809,381 2,771,503 4,355,612 3,158,554 359,064 730,918 902,584 131,848

8. Annual Delivery Cost (FY 2002–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan. The administrative costs included in the table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available. 

731

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsIncome Support and Disaster Assistance 

Price Support and Marketing Assistance Loans 11,286,100 9,509,047 8,290,909 6,313,263 6,095,604Loan Deficiency Payments 173,751 6,036 148,553 191,647 36,565Direct Payments 3,957,175 4,821,206 4,176,795 4,898,085 4,950,410Countercyclical Payments 3,158,554 359,064 1,213,300 902,584 131,848ACRE Payments 0 0 0 0 446,633Milk Income Loss Contract Payments 157,850 2,153 769,900 181,527 173,000Tobacco Payments 955,495 954,817 1,130,095 954,091 960,000Other Direct Payments 25,695 29,768 84,375 103,432 80,504NAP Payments 126,951 73,989 40,700 98,745 116,873Crop Disaster Assistance 58,591 1,281 114,828 

¥109 0

Livestock Indemnity Program 198 2 1,716 91,825 77,000Emergency Livestock Assistance 664 25 1,926

¥403 0

Emergency Conservation Program 149,727 128,456 0 92,459 39,719Biomass Crop Assistance 0 0 248,202 199,000

Emergency Forest Restoration Program 0 0 0 18,000Tree Assistance Program 1,973 1,010 68 90 0

CCC Interest Expenditures 648,627 140,936 2,856 10,426 16,635Dairy Indemnity Program 181 144 651 162 200

Emergency Forestry Conservation Program 6,302 12,717 7,854 8,297 9,291USDA Supplemental Assistance, appropriated 0 0 83,814 295,600 295,600FSA Disaster Assistance, appropriated 0 2,541,733 0 0 0

Reforestation Pilot Program 0 794 794 800 800

Agricultural Disaster Relief Trust Fund 0 0 6,000 1,573,278 1,926,134

Aquaculture Grants (123317) 0 0 48,500 39,942 0

Farm Storage Facility Loans 548 0 12,500 0 0

Administrative costs (direct) 776,465 683,795 694,980 744,303 753,934Indirect costs 47,548 234,633 226,905 242,967 246,299

Total Costs 21,532,395 19,501,606 17,058,019 16,991,214 16,574,049FTEs 8,905 8,620 9,529 8,355 8,140

732

9. Eligibility Criteria 

Any farm with base acres is eligible to participate in DCP. A producer on a farm 

with base acres is eligible to receive payment if the following criteria are met:

• Actively Engaged in Farming provisions.

• Highly Erodible Land and Wetland provisions.

• Average Adjusted Gross Income provisions.

• Conservation Compliance provisions.

• Controlled substance provisions.

• Federal Crop Insurance Corporation fraud provisions.

Additionally, farms that contain fewer than 10 base acres do not earn a payment 

unless that farm is at least 50 percent owned by a socially disadvantaged or limited 

resource farmer or rancher. 

10. Utilization (Participation) Data 

Under the 2008 DCP, 1.1 million producers enrolled 1.8 million farms with 260.9 

million base acres. Under the 2009 DCP, 940,000 producers’ enrolled 1.5 million 

farms with 226.4 million base acres (Note that for 2009, 90,000 producers’ enrolled 

131,000 farms with 33.9 million base acres in ACRE program). Preliminary 2010 

DCP enrollment numbers show that 903,300 producers’ enrolled 1.6 million farms 

with 222.3 million base acres (Note that for 2010, 94,000 producers’ enrolled 137 

thousand farms with 35.1 million base acres in the ACRE program). Preliminary reports for the 2011 DCP indicate that the number of producers, farms, and base 

acres will decrease marginally due to a slight increase (about 1,000 farms) in ACRE 

participation. 

11. Duplication or Overlap with Other Programs 

Beginning with the 2009 crop, ACRE payments provide a revenue-based safety 

net that is an alternative to price based countercyclical payments. To enroll a farm 

in ACRE, producers agree to forgo countercyclical payments, take a 20 percent reduction in direct payments, and a 30 percent reduction in the marketing assistance 

loan rates. 

12. Waste, Fraud and Abuse 

Improper Payments Information Act review was conducted on DCP in accordance 

with Appendix C to OMB Circular A–123. Based on random sampling, a 1.77 percent error rate was recorded for 2010 DCP. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Marketing Assistance Loans (MAL) and Loan Deficiency Payments (LDP) Program. 

2. Subprograms/Department Initiatives 

Subprograms:

MAL and LDP:

The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) reauthorizes 

non-recourse marketing assistance loans (MAL) and loan deficiency payments (LDP) 

and makes them available for the 2008–2012 crops of wheat, corn, grain sorghum, 

barley, oats, upland cotton, extra-long staple cotton, long grain rice, medium grain 

rice, soybeans, other oilseeds (including sunflower seed, rapeseed, canola, safflower, 

flaxseed, mustard seed, crambe and sesame seed), dry peas, lentils, small chickpeas, 

large chickpeas, graded wool, non-graded wool, honey and peanuts. 

MALs and LDPs are marketing tools available to producers beginning upon harvest or shearing. The MAL provides cash when market prices are typically at harvest-time lows, which allows the producer to delay the sale of the commodity until 

more favorable market conditions emerge. Allowing producers to store production at 

harvest or shearing provides for a more orderly marketing of commodities throughout the year. 

MALs for commodities are considered nonrecourse when the MAL can either be 

redeemed by the repayment of the MAL or by delivering the pledged collateral to 

the Commodity Credit Corporation (CCC) as full payment for the MAL at maturity. 

MAL repayment provisions specify, under certain circumstances, that producers 

may repay MALs at less than loan rate (principal) plus accrued interest and other 

733

charges. Alternatively, loan deficiency payment (LDP) provisions specify that, in lieu 

of securing a MAL, producers may elect to receive an LDP. 

LDPs are payments made to a producer who, although eligible to obtain a MAL, 

agrees to forgo the loan in return for a payment on the eligible commodity. The LDP 

payment is the difference between the county loan rate and CCC determined value 

for the applicable commodity or class of commodity multiplied by the eligible quantity. LDPs are only applicable when the market price or CCC determined value is 

less than the county loan rate. 

MAL repayment and LDP provisions are intended to minimize potential delivery 

of loan collateral to CCC, accumulation of CCC-owned stocks, storage costs, discrepancies in marketing loan benefits across state and county boundaries, and allow 

U.S. produced-commodities to be marketed freely and competitively. Accumulating 

CCC-owned stocks tends to make U.S.-produced commodities less competitive in 

world markets and can result in substantial storage costs to taxpayers.

Recourse Loans:

Recourse loans are commodity loans for which the commodity offered as collateral 

does not meet the specified quality eligibility requirements and may not be delivered 

or forfeited to CCC in satisfaction of the loan indebtedness. Recourse loans must be 

repaid in full on or before the loan maturity date at principal plus interest. The following are considered recourse loans: high moisture corn and grain sorghum, and 

seed cotton; acquired grain for high moisture corn or grain sorghum loans; distress 

loans on any commodity that is not stored in eligible storage; and any commodity 

otherwise eligible for nonrecourse loan but not meeting the quality eligibility requirements according to U.S. grading standards.

Graze-Out Payments:

Graze-out payments are payments made to eligible producers who although eligible to obtain a loan elect to use acreage planted to barley, oats, triticale, or wheat 

for livestock grazing and agree to forgo any other harvesting of the commodity on 

this acreage during the applicable crop year. The payment rate is determined by the 

amount the applicable commodity loan rate exceeds the CCC-determined value of 

the commodity for the county where the farm is located. Graze-out payments are 

only applicable when the market price or CCC determined value is less than the 

county loan rate.

Department Initiatives:

None. 

3. Brief History 

The Commodity Credit Corporation (CCC) was created on October 17, 1933, by 

the CCC Charter Act, and established for the purpose of stabilizing, supporting, and 

protecting farm income and prices. The CCC Charter Act gave CCC the authority 

to carry out price and income support activities, and initially made commodity loans 

available to cotton and corn producers. 

The Agricultural Adjustment Act of 1938 (1938 Act) is considered a permanent 

part of agricultural legislation. In the original law. Congress enacted the first comprehensive legislation dealing with price support, and provided price support loans 

for wheat, corn, and cotton. Price support for peanuts and wool were subsequently 

added. Currently, when current legislation is not renewed, the law reverts back to 

the permanent provisions of the 1938 Act, along with the Agricultural Act of 1949 

(1949 Act). 

The 1949 Act is permanent legislation of U.S. agricultural policy and has been 

amended by every subsequent farm bill. The 1949 Act made commodity loans available to producers of approved commodities at a rate established in the legislation, 

or subsequent amendments. The commodities included wheat, corn, cotton, peanuts, 

rice, honey, honey, grain sorghum, barley, oats, rye and soybeans. 

The Food Security Act of 1985 (1985 Farm Bill) authorized producers to repay 

their commodity loans at a level that is the lesser of principal plus interest, or at 

the prevailing market price as determined by the Secretary, thus the applicable 

commodity loans became known as Marketing Assistance Loans (MAL). From 1985 

until 1990, repayments at the prevailing market price were required to be made by 

a negotiable certificate issued by CCC as an in-kind payment. 

The 1985 Farm Bill also introduced the Loan Deficiency Payment (LDP) which enabled eligible producers of rice and cotton to forgo obtaining a commodity loan and 

instead receive a payment based on the difference between the county loan rate and 

CCC determined value for the applicable commodity or class of commodity times the 

eligible quantity 

The Food Agriculture, Conservation and Trade Act of 1990 (1990 Farm Bill) continued MAL and LDP provisions but allowed MAL repayments with cash. The 1990 

734

Farm Bill added wheat, feed grains and oilseeds as commodities eligible for LDP 

and also allowed recourse loans for silage and high moisture feed grains. 

4. Purpose/Goals 

MALs and LDPs are marketing tools available to producers of eligible commodities. The MAL program supports America’s farmers and ranchers by providing producers with short term interim financing after harvest and during the shearing season for wool, and providing significant income support for eligible commodities when 

market prices are below statutory loan rates. MALs also facilitate the orderly marketing and distribution of all commodities throughout the year, giving producers 

flexibility on when to sell their commodities. 

Producers can settle their loan by either repaying the loan or by forfeiting the 

commodity to CCC as full payment for the MAL at maturity. MAL repayment provisions specify, under certain circumstances, that producers may repay at less than 

the loan rate (principal) plus accrued interest. 

The LDP program is an alternative to the MAL program. If a producer agrees to 

forgo receiving a MAL and provided there is a rate in effect, the producer may obtain an LDP on their harvested commodity. An LDP rate is in effect when the alternative repayment rate is below the applicable crop year commodity loan rate. Like 

MALs, LDPs support America’s farmers by providing price income support to producers and giving producers flexibility on when to sell their commodities. 

The intent of MAL repayments and LDP’s was to minimize the potential delivery 

of loan collateral to CCC, limit the accumulation of CCC-owned stocks, minimize 

storage costs, stabilize the discrepancies in marketing loan benefits across state and 

county boundaries, and allow U.S. produced commodities to be marketed freely and 

competitively. Accumulating CCC-owned stocks tends to make U.S. produced commodities less competitive in world markets and can result in substantial storage 

costs to taxpayers. 

When market prices are low, LDP participation tends to increase. Likewise when 

market prices are high, LDPs are not authorized which leaves only the MAL option 

open to producers for providing them the influx of cash at harvest.

735

5. Success in Meeting Programmatic Purpose/Goals 

Total Number of MALs and LDPs by Crop Year 

Program 

Crop Years 

2002 2003 2004 2005 2006 2007 2008 2009 2010

Marketing Assistance Loans 193,132 132,276 209,997 185,132 158,154 99,828 101,551 74,662 66,507Loan Deficiency Payments 221,545 300,936 1,843,984 1,500,137 180,640 18,864 35,734 33,903 25,500

MALs are used by producers of loan commodities who at harvest take advantage of the low interest CCC loans on the commodities they 

produce to pay their crop expenses, and market these commodities later in the year when prices are usually higher. LDPs are only applicable when the current market price is below the established commodity loan rate. 

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

Marketing Assistance Loans $10,130,603 $10,718,057 $9,149,591 $12,619,239 $12,013,778 $11,286,100 $9,509,047 $8,290,909 $7,189,585 $7,014,700Loan Deficiency Payments 5,344,682 693,390 461,177 3,855,624 4,629,556 173,736 6,036 145,497 191,647 36,565

Budget authority for CCC programs is based on obligations. Funds obligated in one fiscal year may not be disbursed until a succeeding fiscal year or fiscal 

years. In the case of these two programs, obligations, budget authority and outlays are incurred at the same time period. 

736

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Annual Outlays 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

Marketing Assistance Loans $10,130,603 $10,718,057 $9,149,591 $12,619,239 $12,013,778 $11,286,100 $9,509,047 $8,290,909 $7,189,585 $7,014,700Loan Deficiency Payments 5,344,682 693,390 461,177 3,855,624 4,629,556 173,736 6,036 145,497 191,647 36,565

8. Annual Delivery Cost (FY 2002–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan. The administrative costs included in the table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available. 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsIncome Support and Disaster Assistance 

Price Support and Marketing Assistance Loans 11,286,100 9,509,047 8,290,909 6,313,263 6,095,604Loan Deficiency Payments 173,751 6,036 148,553 191,647 36,565Direct Payments 3,957,175 4,821,206 4,176,795 4,898,085 4,950,410Countercyclical Payments 3,158,554 359,064 1,213,300 902,584 131,848ACRE Payments 0 0 0 0 446,633Milk Income Loss Contract Payments 157,850 2,153 769,900 181,527 173,000Tobacco Payments 955,495 954,817 1,130,095 954,091 960,000Other Direct Payments 25,695 29,768 84,375 103,432 80,504NAP Payments 126,951 73,989 40,700 98,745 116,873Crop Disaster Assistance 58,591 1,281 114,828 

¥109 0

Livestock Indemnity Program 198 2 1,716 91,825 77,000Emergency Livestock Assistance 664 25 1,926

¥403 0

737

Emergency Conservation Program 149,727 128,456 0 92,459 39,719Biomass Crop Assistance 0 0 248,202 199,000

Emergency Forest Restoration Program 0 0 0 18,000Tree Assistance Program 1,973 1,010 68 90 0

CCC Interest Expenditures 648,627 140,936 2,856 10,426 16,635Dairy Indemnity Program 181 144 651 162 200

Emergency Forestry Conservation Program 6,302 12,717 7,854 8,297 9,291USDA Supplemental Assistance, appropriated 0 0 83,814 295,600 295,600FSA Disaster Assistance, appropriated 0 2,541,733 0 0 0Reforestation Pilot Program 0 794 794 800 800

Agricultural Disaster Relief Trust Fund 0 0 6,000 1,573,278 1,926,134

Aquaculture Grants (123317) 0 0 48,500 39,942 0

Farm Storage Facility Loans 548 0 12,500 0 0

Administrative costs (direct) 776,465 683,795 694,980 744,303 753,934Indirect costs 47,548 234,633 226,905 242,967 246,299

Total Costs 21,532,395 19,501,606 17,058,019 16,991,214 16,574,049FTEs 8,905 8,620 9,529 8,355 8,140

738

9. Eligibility Criteria 

To be eligible for MAL or LDP, the producer must comply with conservation and 

wetland protection requirements, submit an acreage report to account for all cropland on the farm, have and retain beneficial interest in the commodity until the 

MAL is repaid or CCC takes title to the commodity, and meet the applicable adjusted gross income limitations. 

Several commodities have been added to the list as eligible for MAL and LDP 

through previous farm bills. Current commodities eligible for MAL and LDP include 

wheat, barley, oats, corn, grain sorghum, soybeans, long and medium rice, peanuts, 

cotton, sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe, 

sesame seed, graded and nongraded wool, mohair, honey, dry peas, lentils, small 

chickpeas, and beginning with the 2009 crop year, large chickpeas. Hay, silage, and 

unshorn pelts are eligible for LDP only. Mohair was recently removed from the list 

of eligible commodities for both MAL and LDP through the remainder of Fiscal Year 

2011. 

A person or legal entity with an average adjusted gross non-farm income that ex- ceeds $500,000 is not eligible for an LDP or market loan gain (MLG). These producers may request an MAL but must repay the MAL at principal plus interest. The 

MLG rate equals the amount by which the applicable loan rate exceeds the MAL 

repayment rate. 

10. Utilization (Participation) Data 

Producer participation in the MAL or LDP program includes producers from all 

fifty states, some to a much larger extent than others. Depending on the predominate commodities produced in the state and the current market price of these commodities, some years a particular state has many MAL and just a few LDPs, and 

other years both MAL and LDP numbers are high. 

11. Duplication or Overlap with Other Programs 

MALs and LDPs are not a duplication of other USDA programs. 

12. Waste, Fraud and Abuse 

To comply with the Improper Payments Information Act of 2002, FSA conducts 

internal investigations through the County Office Review Program of high risk programs. MALs and LDPs have been reviewed numerous times in the last few years. 

The error rate for improper payments for MALs was 0.52 percent in 2011. For 

LDPs, the error rate for improper payments was 0.44 percent in 2010. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Average Crop Revenue Election (ACRE) Program. 

2. Subprograms/Department Initiatives 

The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) authorizes annual direct and countercyclical payments, with some changes, similar to the direct 

and countercyclical payments (DCP) previously authorized under the Farm Security 

and Rural Investment Act of 2002 (2002 Farm Bill). In addition, the 2008 Farm Bill 

authorized the optional ACRE program as an alternative to the traditional countercyclical program. ACRE consists of two payment types, direct payments (ACRE direct) and revenue-based countercyclical payments (ACRE). Similar to DCP, FSA enters into annual contracts with agricultural producers to maintain base acres on 

participating farms and makes direct payments on these base acres (see previous 

response for DCP). In contrast, ACRE’s revenue based countercyclical payments are 

made on crops planted on the farm during the current contract year as opposed to 

the historical plantings of DCP. During the contract period, eligible land on the participating farm, may be planted to any commodity except fruits, vegetables (other 

than mung beans and pulse crops), and wild rice. 

FSA is responsible for overall implementation of ACRE. Producers enroll and payments are initiated at the FSA County Office administratively designated for the 

farm.

ACRE Direct Payments:

ACRE direct payments are not based on producers’ current production choices, but 

instead are tied to base acres and yields. Direct payments do not provide an incentive to increase production of any particular crop and the payments support farm 

income without affecting producers’ current production decisions. 

739

The 2008 Farm Bill continues the direct payments that began under the Farm 

Security and Rural Investment Act of 2002. Direct payments under the ACRE program are identical to those available under DCP except that the ACRE direct payment rate is 80 percent of the DCP direct payment rate. ACRE direct payment rates 

for the eligible ACRE commodities are as follows:

• Wheat: $0.416 per bushel

• Corn: $0.224 per bushel

• Grain sorghum: $0.28 per bushel

• Barley: $0.192 per bushel

• Oats: $0.0192 per bushel

• Upland cotton: $0.05336 per pound

• Rice, long grain: $1.88 per hundredweight

• Rice, medium/short grain: $1.88 per hundredweight

• Soybeans: $0.352 per bushel

• Other oilseeds: $0.64 per hundredweight

• Peanuts: $28.80 per ton

ACRE Payments:

ACRE payments are issued when two conditions are met for a commodity. Actual 

State Revenue falls below the State ACRE Guarantee and Actual Farm Revenue 

falls below the Farm ACRE Guarantee. 

Once it has been determined that both conditions have been met for the farm to 

earn an ACRE payment, the payment is computed for a year by multiplying:

• 83.3 percent (85 percent in 2012) of the planted and considered planted acres 

on the farm not to exceed the total base acres on the farm by

• the farm productivity index by

• the lesser of:

» state ACRE guarantee minus actual state revenue

» state ACRE guarantee times 25 percent

Note: Similar to DCP, Federal crop insurance or NAP is not required for participation in ACRE. 

3. Brief History 

Background:

The optional ACRE Program is an alternative revenue-based safety net to the 

price-based safety net provided by countercyclical payments in DCP for crop years 

2009 through 2012. Producers must elect to participate in ACRE rather than in the 

traditional DCP. Producers are required to sign-up for ACRE (or DCP) annually. 

ACRE provides producers an option to protect against declines in market revenue. 

ACRE involves state and farm revenue changes from guarantee revenue levels that 

are based on national prices, state planted yields, and farm planted yields. 

A decision to participate in ACRE may be made in any of the crop years 2009–

2012; however, the ACRE election is irrevocable and cannot be changed from the 

time of election through the 2012 crop year. Producers may elect the ACRE alternative on a farm-by-farm basis.

ACRE Tradeoffs:

Producers who elect and enroll a farm in ACRE agree to: (1) forgo DCP countercyclical payments, (2) a 20 percent reduction in their direct payments, and (3) a 30 

percent reduction in the marketing assistance loan rates for all commodities produced on the farm which are eligible for ACRE payments. 

4. Purpose/Goals 

The purpose of ACRE is to offer producers an alternative approach to managing 

risk. ACRE provides, payments to producers when farm revenues fall below a set 

threshold. This contrasts with the price based protection offered by countercyclical 

payments. The ACRE program provides payments to eligible producers on farms enrolled for the 2009 through 2012 crop years to partially offset annual reductions in 

market revenue. 

5. Success in Meeting Programmatic Purpose/Goals 

The ACRE program has successfully met its programmatic goals to provide a revenue-based countercyclical safety net to producers. However, enrollment in ACRE 

has been lower than expected.

740

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

ACRE Payments 0 0 0 0 0 0 0 0 0 $446,633

This program is funded by Commodity Credit Corporation (CCC). Budget authority for this CCC program is based on actual outlays.

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Annual Outlays 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

ACRE Payments 0 0 0 0 0 0 0 0 0 $446,633

8. Annual Delivery Cost (FY 2002–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan. The administrative costs included in the table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available. 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsIncome Support and Disaster Assistance 

Price Support and Marketing Assistance Loans 11,286,100 9,509,047 8,290,909 6,313,263 6,095,604Loan Deficiency Payments 173,751 6,036 148,553 191,647 36,565Direct Payments 3,957,175 4,821,206 4,176,795 4,898,085 4,950,410Countercyclical Payments 3,158,554 359,064 1,213,300 902,584 131,848ACRE Payments 0 0 0 0 446,633

741

Milk Income Loss Contract Payments 157,850 2,153 769,900 181,527 173,000Tobacco Payments 955,495 954,817 1,130,095 954,091 960,000Other Direct Payments 25,695 29,768 84,375 103,432 80,504NAP Payments 126,951 73,989 40,700 98,745 116,873Crop Disaster Assistance 58,591 1,281 114,828 

¥109 0

Livestock Indemnity Program 198 2 1,716 91,825 77,000

Emergency Livestock Assistance 664 25 1,926

¥403 0

Emergency Conservation Program 149,727 128,456 0 92,459 39,719Biomass Crop Assistance 0 0 248,202 199,000

Emergency Forest Restoration Program 0 0 0 18,000Tree Assistance Program 1,973 1,010 68 90 0

CCC Interest Expenditures 648,627 140,936 2,856 10,426 16,635Dairy Indemnity Program 181 144 651 162 200Emergency Forestry Conservation Program 6,302 12,717 7,854 8,297 9,291USDA Supplemental Assistance, appropriated 0 0 83,814 295,600 295,600FSA Disaster Assistance, appropriated 0 2,541,733 0 0 0Reforestation Pilot Program 0 794 794 800 800

Agricultural Disaster Relief Trust Fund 0 0 6,000 1,573,278 1,926,134

Aquaculture Grants (123317) 0 0 48,500 39,942 0

Farm Storage Facility Loans 548 0 12,500 0 0

Administrative costs (direct) 776,465 683,795 694,980 744,303 753,934Indirect costs 47,548 234,633 226,905 242,967 246,299

Total Costs 21,532,395 19,501,606 17,058,019 16,991,214 16,574,049FTEs 8,905 8,620 9,529 8,355 8,140

742

* Editor’s note: Exhibit 1 is printed at the end of the questionnaire. 

9. Eligibility Criteria 

Any farm with base acres is eligible to participate in ACRE; however, to receive 

an ACRE payment, producers on the farm must plant a covered commodity (wheat, 

corn, grain sorghum, barley, oats, upland cotton, rice, soybeans, other oilseeds, dry 

peas, lentils, small chickpeas, and large chickpeas) or peanuts. 

A producer on a farm with base acres is eligible to receive payment if the following criteria are met:

• Actively engaged in farming provisions

• Highly Erodible Land and Wetland provisions

• Average (3 year) Adjusted Gross Income not to exceed $750,000 for farm income 

and $500,000 for non-farm income

• Conservation Compliance provisions

• Controlled substance provisions

• Federal Crop Insurance Corporation fraud provisions

Additionally, farms that contain fewer than 10 base acres do not earn a payment 

unless that farm is at least 50 percent owned by a socially disadvantaged or limited 

resource farmer or rancher. 

10. Utilization (Participation) Data 

Under the 2009 ACRE Program, 90,000 producers enrolled 131,000 farms with 

33.9 million base acres. Preliminary 2010 ACRE enrollment numbers, show that, 

94,000 producers enrolled 137,000 farms with 35.1 million base acres. Preliminary 

reports for the 2011 ACRE Program indicate that enrollment will increase by about 

1,000 farms. 

11. Duplication or Overlap with Other Programs 

ACRE payments provide a revenue-based safety net that is an alternative to price 

based traditional countercyclical payments. To enroll a farm in ACRE, producers 

agree to forgo traditional countercyclical payments, take a 20 percent reduction in 

direct payments, and a 30 percent reduction in the marketing assistance loan rates. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. FSA minimizes the risk of improper ACRE payments by working in partnership with the Internal Revenue Service to determine whether or not the participant appears to meet or exceed AGI limitations. 

13. Effect of Administrative PAYGO 

See Exhibit 1.* 

1. Program Name 

Supplemental Revenue Assistance Payments (SURE) Program. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

SURE is a nationwide crop disaster program authorized by the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) to provide assistance to producers 

suffering production, quality and/or revenue losses due to natural disasters. Unlike 

prior ad hoc disaster programs, the 2008 Farm Bill created a Trust Fund during 

FY 2008–11 to provide funding for assistance to producers incurring 2008 through 

September 30, 2011 disaster-related losses. 

SURE is based on a producer’s entire farming operation in all counties (and 

states) rather than on individual crop losses. Payments are calculated in an amount 

equal to 60 percent of the difference between the SURE guarantee and the calculated SURE total farm revenue. The SURE guarantee cannot exceed 90 percent 

of the expected revenue for the producer’s farming operation. 

The American Recovery and Reinvestment Act of 2009 (ARRA) increased 2008 

SURE program benefits for participants by increasing the guarantee calculation for 

both insurable and noninsurable (NAP) crops. 

SURE is one of five complementary disaster programs authorized by the 2008 

Farm Bill. The others are Emergency Assistance for Livestock, Honey Bees, and 

743

Farm-Raised Fish Program (ELAP), Livestock Indemnity Program (LIP), the Livestock Forage Program (LFP), and the Tree Assistance Program (TAP). 

4. Purpose/Goals 

SURE helps mitigate the impacts of natural disasters on producers such as prevented planting, loss of production, loss due to quality, and decreases in market 

prices received. SURE provides a revenue guarantee (SURE guarantee) for a producer’s total farming interest. SURE is a supplement to Federal crop insurance and 

the Noninsured Crop Disaster Assistance Program (NAP) to reduce producers’ financial losses and cover shallow losses not covered by crop insurance or NAP. 

5. Success in Meeting Programmatic Purpose/Goals 

SURE successfully provides financial assistance to producers who suffer qualifying losses due to natural disasters. As of July 19, 2011, 103,709 producers received 

approximately $2.1 billion for 2008 crop year losses, and to date, 32,273 producers 

have qualified for approximately $485 million for 2009 crop year losses. Crop year 

2009 SURE sign up is scheduled to end on July 29, 2011.

744

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

SURE $0 $0 $0 $0 $0 $0 $0 $0 $1,195,517 $1,287,000SURE Recovery Act 0 0 0 0 0 0 0 0 $688,805 $171,393

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Annual Outlays 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

SURE $0 $0 $0 $0 $0 $0 $0 $0 $973,434 $1,287,000SURE Recovery Act 0 0 0 0 0 0 0 0 $578,327 $255,000

8. Annual Delivery Cost (FY 2002–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan. The administrative costs included in the table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available. 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsIncome Support and Disaster Assistance 

Price Support and Marketing Assistance Loans 11,286,100 9,509,047 8,290,909 6,313,263 6,095,604Loan Deficiency Payments 173,751 6,036 148,553 191,647 36,565Direct Payments 3,957,175 4,821,206 4,176,795 4,898,085 4,950,410Countercyclical Payments 3,158,554 359,064 1,213,300 902,584 131,848

745

ACRE Payments 0 0 0 0 446,633Milk Income Loss Contract Payments 157,850 2,153 769,900 181,527 173,000Tobacco Payments 955,495 954,817 1,130,095 954,091 960,000Other Direct Payments 25,695 29,768 84,375 103,432 80,504NAP Payments 126,951 73,989 40,700 98,745 116,873Crop Disaster Assistance 58,591 1,281 114,828 

¥109 0

Livestock Indemnity Program 198 2 1,716 91,825 77,000Emergency Livestock Assistance 664 25 1,926

¥403 0

Emergency Conservation Program 149,727 128,456 0 92,459 39,719Biomass Crop Assistance 0 0 248,202 199,000

Emergency Forest Restoration Program 0 0 0 18,000Tree Assistance Program 1,973 1,010 68 90 0

CCC Interest Expenditures 648,627 140,936 2,856 10,426 16,635Dairy Indemnity Program 181 144 651 162 200

Emergency Forestry Conservation Program 6,302 12,717 7,854 8,297 9,291USDA Supplemental Assistance, appropriated 0 0 83,814 295,600 295,600FSA Disaster Assistance, appropriated 0 2,541,733 0 0 0Reforestation Pilot Program 0 794 794 800 800

Agricultural Disaster Relief Trust Fund 0 0 6,000 1,573,278 1,926,134

Aquaculture Grants (123317) 0 0 48,500 39,942 0

Farm Storage Facility Loans 548 0 12,500 0 0

Administrative costs (direct) 776,465 683,795 694,980 744,303 753,934Indirect costs 47,548 234,633 226,905 242,967 246,299

Total Costs 21,532,395 19,501,606 17,058,019 16,991,214 16,574,049FTEs 8,905 8,620 9,529 8,355 8,140

746

9. Eligibility Criteria 

To be eligible for SURE benefits, producers and entities must:

(1) Obtain crop insurance and/or NAP on all crops of economic significance (a 

crop contributing at least five percent to the total farm’s expected revenue), unless they qualify as a Limited Resource, Socially Disadvantaged, or Beginning 

Farmer or Rancher.

(2) Have at least one crop of economic significance suffer at least a 10% production loss, adjusted for quality, due to a natural disaster.

(3) Have a risk and ownership share in a qualified crop, in a Secretarial declared disaster county or contiguous county, or if not located in a qualified county, have a 50 percent or greater actual production loss for the farm compared 

with normal production for the farm.

(4) For the 2008 program year, no person as defined and determined under provisions in 7 CFR Part 1400 in effect for 2008, may receive more than $100,000 

total in payments under SURE, ELAP, LIP, and LFP combined. For 2009 and 

subsequent years, no person or legal entity, excluding joint venture or general 

partnership, may receive directly or indirectly, more than $100,000 total in payments under SURE, ELAP, LIP, and LFP, combined.

(5) Also, in applying the limitation on average adjusted gross income (AGI) for 

2008, an individual or entity is ineligible for payment under SURE if the individual’s or entity’s average adjusted gross income exceeds $2.5 million for 2007, 

2006, and 2005 under the provisions in 7 CFR Part 1400 in effect for 2008 unless 75 percent or more of their income was from farming, ranching or forestry. 

For 2009 through 2011, the average AGI limitation relating to limits on payments for persons or legal entities, excluding joint ventures and general partnerships, with certain levels of average adjusted gross income will apply. Specifically, for 2009 through 2011, a person or legal entity with an average adjusted gross non-farm income, as defined in 7 CFR Part 1404.3 that exceeds 

$500,000 will not be eligible to receive SURE payments. Direct attribution provisions also apply to SURE for 2009 and subsequent years. Under direct attribution, any payment to a legal entity—also will be considered for payment limitation purposes to be a payment to a persons or legal entity with an interest 

in the legal entity or in a sub-entity.

10. Utilization (Participation) Data 

2008 Crop Year 2009 Crop Year (to date) 

Non-stimulus Stimulus 

Total

Participants Total Dollars Total

Participants Total Dollars TotalParticipants * Total Dollars 

89,831 $1,294,950,257 103,709 $815,381,190 32,273 $485,287,214

The 2008 crop year included Stimulus funds. Not everyone qualified for Stimulus 

funds. Producers with high levels of Federal crop insurance coverage may not have 

been able to fully take advantage of Stimulus funds because SURE payments are 

capped at 90 percent of a producer’s expected revenue. 

The last day to sign-up for 2009 benefits is July 29, 2011. A large percentage of 

2009 data has not been reported as of this date. 

Acreage data is not available because the SURE application process is completed 

manually, therefore acreage data is not compiled in an automated format. 

11. Duplication or Overlap with Other Programs 

SURE assists producers with crop losses and is a supplement to crop insurance 

and NAP. In many instances the producer or entity has already received crop insurance indemnities and/or NAP payments and these payments are included in determining the total farm revenue to count against the SURE guarantee. For the 2009 

crop year, counties receiving a Secretarial disaster designation due to excessive 

moisture may have had producers qualify for assistance under the Crop Assistance 

Program (CAP) on some crops. However, any Federal Government assistance received for crop losses that are covered under SURE during a program year are 

counted as revenue for the farm, thus reducing the total SURE payment by the 

amount of payment received for that loss. 

747

12. Waste, Fraud and Abuse 

Compliance reviews for SURE are required to ensure accuracy of the information 

provided by producers. If a producer is selected, the information is recorded in the 

National Compliance Review database. Additional selections may be required when 

County Committees, District Directors or State Committees have reason to believe 

inaccurate data or certifications were provided. Those found with inaccurate data 

may have to refund the SURE payment or part of the payment. 

When RMA and FSA data does not match or falls outside of acreage tolerance 

rules, FSA notifies RMA of the discrepancy and the two agencies work to correct 

inaccuracies. For instance, FSA may deny RMA prevented planting acreage if documented evidence exists that supports the lack of prevented planting conditions. 

Currently SURE is in the early stages of being audited by the Office of Inspector 

General. At this time, we do not have any indication of on-going systemic waste, 

fraud, and abuse. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Livestock Forage Disaster Program (LFP). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) authorized the 

Livestock Forage Disaster Program (LFP) to provide compensation to eligible livestock producers that have suffered grazing losses for covered livestock on land that 

is native or improved pastureland with permanent vegetative cover or that is planted specifically for grazing. The grazing losses must be due to a qualifying drought 

condition during the normal grazing period for the county. LFP also provides compensation to eligible livestock producers that have suffered grazing losses on rangeland managed by a Federal agency (public lands) if the eligible livestock producer 

is prohibited by the Federal agency from grazing the normal permitted livestock on 

the public lands due to a qualifying fire. 

The grazing losses must have occurred on or after January 1, 2008, and before 

October 1, 2011. 

LFP is one of five complementary disaster programs authorized by the 2008 Farm 

Bill. The others are Emergency Assistance for Livestock, Honey Bees, and FarmRaised Fish Program (ELAP), Livestock Indemnity Program (LIP), the Supplemental Revenue Assistance Payments (SURE) Program, and the Tree Assistance 

Program (TAP). 

4. Purpose/Goals 

Provide compensation to livestock producers that have suffered grazing losses for 

livestock. The grazing losses must be due to a drought condition during the normal 

grazing period for the county or the eligible livestock producer must be prohibited 

by a Federal agency from grazing the normal permitted livestock on public lands 

due to a qualifying fire. 

5. Success in Meeting Programmatic Purpose/Goals 

LFP successfully provides immediate financial assistance to livestock producers 

who suffer qualifying grazing losses due to drought (on private and public lands) 

or fire (on public lands). Livestock producers received compensation for grazing 

losses totaling approximately $163.9 million for 2008 calendar year losses, $98.1 

million for 2009 calendar year losses, and $32 million for 2010 calendar year losses. 

As of July 12, 2011, livestock producers have received compensation in the amount 

of approximately $86.4 million for 2011 calendar year losses.

748

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

LFP $0 $0 $0 $0 $0 $0 $0 $2 $264,664 $524,000

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Annual Outlays 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

LFP $0 $0 $0 $0 $0 $0 $0 $0 $263,263 $50,000

8. Annual Delivery Cost (FY 2002–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan. The administrative costs included in the table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available. 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsIncome Support and Disaster Assistance 

Price Support and Marketing Assistance Loans 11,286,100 9,509,047 8,290,909 6,313,263 6,095,604Loan Deficiency Payments 173,751 6,036 148,553 191,647 36,565Direct Payments 3,957,175 4,821,206 4,176,795 4,898,085 4,950,410Countercyclical Payments 3,158,554 359,064 1,213,300 902,584 131,848ACRE Payments 0 0 0 0 446,633Milk Income Loss Contract Payments 157,850 2,153 769,900 181,527 173,000

749

Tobacco Payments 955,495 954,817 1,130,095 954,091 960,000Other Direct Payments 25,695 29,768 84,375 103,432 80,504NAP Payments 126,951 73,989 40,700 98,745 116,873Crop Disaster Assistance 58,591 1,281 114,828 

¥109 0

Livestock Indemnity Program 198 2 1,716 91,825 77,000

Emergency Livestock Assistance 664 25 1,926

¥403 0

Emergency Conservation Program 149,727 128,456 0 92,459 39,719Biomass Crop Assistance 0 0 248,202 199,000

Emergency Forest Restoration Program 0 0 0 18,000Tree Assistance Program 1,973 1,010 68 90 0

CCC Interest Expenditures 648,627 140,936 2,856 10,426 16,635Dairy Indemnity Program 181 144 651 162 200

Emergency Forestry Conservation Program 6,302 12,717 7,854 8,297 9,291USDA Supplemental Assistance, appropriated 0 0 83,814 295,600 295,600FSA Disaster Assistance, appropriated 0 2,541,733 0 0 0Reforestation Pilot Program 0 794 794 800 800Agricultural Disaster Relief Trust Fund 0 0 6,000 1,573,278 1,926,134

Aquaculture Grants (123317) 0 0 48,500 39,942 0

Farm Storage Facility Loans 548 0 12,500 0 0

Administrative costs (direct) 776,465 683,795 694,980 744,303 753,934Indirect costs 47,548 234,633 226,905 242,967 246,299

Total Costs 21,532,395 19,501,606 17,058,019 16,991,214 16,574,049FTEs 8,905 8,620 9,529 8,355 8,140

750

9. Eligibility Criteria 

LFP provides compensation to eligible livestock producers that have suffered grazing losses for covered livestock on land that is native or improved pastureland with 

permanent vegetative cover or that is planted specifically for grazing. The grazing 

losses must be due to a qualifying drought condition during the normal grazing period for the county. LFP also provides compensation to eligible livestock producers 

that have suffered grazing losses on rangeland managed by a Federal agency if the 

eligible livestock producer is prohibited by the Federal agency from gazing the normal permitted livestock on the managed rangeland due to a qualifying fire. 

The grazing losses must have occurred on or after January 1, 2008, and before 

October 1, 2011. 

An eligible livestock producer that owns or leases grazing land or pastureland 

physically located in a county rated by the U.S. Drought Monitor as having a:

• D2 (severe drought) intensity in any area of the county for at least 8 weeks during the normal grazing period is eligible to receive assistance in an amount 

equal to one monthly payment;

• D3 (extreme drought) intensity in any area of the county at any time during 

the normal grazing period is eligible to receive assistance in an amount equal 

to two monthly payments; or

• D3 (extreme drought) intensity in any area of the county for at least 4 weeks 

during the normal grazing period or is rated a D4 (exceptional drought) at any 

time during the normal grazing period is eligible to receive assistance in an 

amount equal to three monthly payments.

Eligible livestock are livestock (alpacas, beef cattle, beefalo, beefalo, dairy cattle, 

deer, elk, emus, equine, goats, llamas, poultry, reindeer, sheep or swine) that have 

been or would have been grazing the eligible grazing land or pastureland:

• during the normal grazing period for the specific type of grazing land or 

pastureland for the county suffering from drought, or

• when the Federal agency excluded the livestock producer from grazing the normally permitted livestock on the managed rangeland due to fire.

To be eligible for LFP for the grazing land incurring losses because of a qualifying 

drought or fire for which assistance is to be requested, producers must:

• obtain a policy or plan of insurance for the grazed forage crop under the Federal 

Crop Insurance Act (FICA); or

• file the required paperwork and pay the administrative fee by the applicable 

state application closing date for the Noninsured Crop Disaster Assistance Program (NAP).

Note: Eligible farmers and ranchers who meet the definition of ‘‘Socially Disadvantaged,’’ ‘‘Limited Resource,’’ or ‘‘Beginning Farmer or Rancher’’ does not have 

to meet this requirement. 

For the 2008 program year, no person as defined and determined under provisions 

in 7 CFR Part 1400 in effect for 2008, may receive more than $100,000 total in payments under LFP, the Emergency Assistance for Livestock, Honey Bees, and FarmRaised Fish Program (ELAP), Livestock Indemnity Program (LIP) and the Supplemental Revenue Assistance Payments (SURE) Program, combined. For 2009 and 

subsequent years, no person or legal entity, excluding joint venture or general partnership, may receive directly or indirectly, more than $100,000 total in payments 

under LFP, ELAP, LIP, and SURE, combined. 

Also, in applying the limitation on average adjusted gross income (AGI) for 2008, 

an individual or entity is ineligible for payment under LFP if the individual’s or entity’s average adjusted gross income exceeds $2.5 million for 2007, 2006, and 2005 

under the provisions in 7 CFR Part 1400 in effect for 2008 unless 75 percent or 

more of their income was from farming, ranching or forestry. For 2009 through 

2011, the average AGI limitation relating to limits on payments for persons or legal 

entities, excluding joint ventures and general partnerships, with certain levels of average adjusted gross income will apply. Specifically, for 2009 through 2011, a person 

or legal entity with an average adjusted gross non-farm income, as defined in 7 CFR 

Part 1404.3 that exceeds $500,000 will not be eligible to receive LFP payments. Direct attribution provisions also apply to LFP for 2009 and subsequent years. Under 

direct attribution, any payment to a legal entity also will be considered for payment 

limitation purposes to be a payment to a persons or legal entity with an interest 

in the legal entity or in a sub-entity. 

751

Producers must provide a completed application for payment and supporting documentation to their administrative FSA county office within 30 calendar days after 

the end of the calendar year in which the grazing loss occurred. 

10. Utilization (Participation) Data 

72,705 livestock producers have received compensation under LFP totaling 

$380,384,965 for grazing losses due to drought (on private and public lands) or fire 

(on public lands) due to fire that have occurred on or after January 1, 2008, and 

before October 1, 2011.

Livestock Forage Disaster Program Payments as of July 12, 2011

State 

2008 LFP 

Payments 

Disbursed 

2009 LFP 

Payments 

Disbursed 

2010 LFP 

Payments 

Disbursed 

2011 LFP 

Payments 

Disbursed 

Total LFP 

Payments 

Disbursed 

AL $8,970,452 $3,436,639 $1,018,350 $13,425,441

AK $0

AZ $112,019 $2,881,334 $1,924,860 $1,788,812 $6,707,025

AR $223,938 $1,822,648 $2,046,586

CA $10,465,247 $14,349,563 $1,430,587 $26,245,397

CO $4,274,245 $36,612 $20,314 $1,414,975 $5,746,146

CT $0

DE $0

FL $2,653,553 $6,079,415 $23,166 $5,722,708 $14,478,842

GA $13,676,692 $2,683,255 $1,970,068 $18,330,015

HI $2,770,495 $3,246,585 $4,031,805 $2,180,142 $12,229,027

ID $0

IL $0

IN $527,276 $527,276

IA $0

KS $1,280,842 $318,273 $1,599,115

KY $6,550,532 $275,589 $6,826,121

LA $2,164,080 $2,392,366 $4,556,446

ME $0

MD $0

MA $0

MI $61,486 $265,612 $327,098

MN $1,703 $813 $2,516

MS $1,134,122 $1,134,122

MO $803,802 $803,802

MT $6,310,926 $593,988 $6,904,914

NE $0

NV $1,222,059 $889,741 $4,290 $2,116,090

NH $0

NJ $0

NM $6,674,520 $2,139,308 $4,606 $9,718,946 $18,537,380

NY $0

NC $7,379,022 $72,426 $7,451,448

ND $28,315,713 $28,315,713

OH $0

OK $2,105,355 $3,773,266 $14,801,107 $20,679,728

OR $761,349 $222,072 $1,134,019 $2,117,440

PA $1,567 $1,567

PR $0

RI $0

SC $4,848,645 $1,127,386 $24,820 $6,000,851

SD $50,278 $50,278

TN $12,791,638 $12,791,638

TX $40,073,665 $58,975,944 $12,486,955 $43,263,996 $154,800,560

UT $505,429 $223,403 $288,312 $1,017,144

VT $0

VA $1,217,885 $380,936 $1,598,821

WA $468,451 $468,451

WV $617,919 $617,919

WI $295,234 $50,160 $345,394

WY $918,932 $665,722 $1,584,654

752

Livestock Forage Disaster Program Payments as of July 12, 2011—

Continued

State 

2008 LFP 

Payments 

Disbursed 

2009 LFP 

Payments 

Disbursed 

2010 LFP 

Payments 

Disbursed 

2011 LFP 

Payments 

Disbursed 

Total LFP 

Payments 

Disbursed 

Total dollars $163,929,493 $98,048,746 $31,969,515 $86,437,211 $380,384,965

Total Applications 37,340 16,495 6,852 12,018 72,705

11. Duplication or Overlap with Other Programs 

LFP provides compensation for grazing losses for covered livestock due to drought 

(on private and public lands) or fire (on public lands). ELAP covers eligible grazing 

losses due to other eligible adverse weather events and loss conditions not due to 

drought or fire on federally managed lands, as determined by the Secretary. The 

amount of any payment for which a livestock producer may be eligible under LFP 

may be reduced by any amount received by the livestock producer for the same or 

any similar loss from any Federal disaster assistance program. 

12. Waste, Fraud and Abuse 

There has been no Office of Inspector (OIG) or Government Accountability Office 

(GAO) audit of LFP. However, FSA conducts its own internal investigations through 

its county office review process and through its internal review audit process. These 

reviews have not raised any significant issues of waste, fraud, and abuse. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Livestock Indemnity Program (LIP). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) authorized the 

Livestock Indemnity Program (LIP) which provides disaster assistance to livestock 

owners and contract growers who suffered livestock death losses in excess of normal 

mortality due to adverse weather during the calendar year, including losses due to 

hurricanes, floods, blizzards, disease, wildfires, extreme heat, and extreme cold. 

Eligible LIP losses must have occurred on or after January 1, 2008, and before 

October 1, 2011. 

LIP is one of five complementary disaster programs authorized by the 2008 Farm 

Bill. The others are Emergency Assistance for Livestock, Honey Bees, and FarmRaised Fish Program (ELAP), Livestock Forage Program (LFP), the Supplemental 

Revenue Assistance Payments (SURE) Program, and the Tree Assistance Program 

(TAP). 

4. Purpose/Goals 

Provide compensation to eligible livestock owners and contract growers for eligible 

livestock deaths in excess of normal mortality as a result of an eligible adverse 

weather event. 

5. Success in Meeting Programmatic Purpose/Goals 

LIP successfully provides financial assistance to livestock producers who suffer 

livestock death losses in excess of normal mortality because of eligible adverse 

weather events. Livestock producers received compensation for livestock death 

losses totaling approximately $25.5 million for 2008 calendar year losses, $62.5 million for 2009 calendar year losses, and $16.3 million for 2010 calendar year losses. 

As of July 12, 2011, livestock producers have received compensation in the amount 

of approximately $6.3 million for 2011 calendar year losses.

753

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

LIP $0 $0 $0 $0 $0 $0 $0 $5,761 $89,438 $77,000

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Annual Outlays 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

LIP $0 $0 $0 $0 $0 $0 $0 $2,947 $91,825 $77,000

8. Annual Delivery Cost (FY 2002–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan. The administrative costs included in the table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available. 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsIncome Support and Disaster Assistance 

Price Support and Marketing Assistance Loans 11,286,100 9,509,047 8,290,909 6,313,263 6,095,604Loan Deficiency Payments 173,751 6,036 148,553 191,647 36,565Direct Payments 3,957,175 4,821,206 4,176,795 4,898,085 4,950,410Countercyclical Payments 3,158,554 359,064 1,213,300 902,584 131,848ACRE Payments 0 0 0 0 446,633Milk Income Loss Contract Payments 157,850 2,153 769,900 181,527 173,000

754

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Tobacco Payments 955,495 954,817 1,130,095 954,091 960,000Other Direct Payments 25,695 29,768 84,375 103,432 80,504NAP Payments 126,951 73,989 40,700 98,745 116,873Crop Disaster Assistance 58,591 1,281 114,828 

¥109 0

Livestock Indemnity Program 198 2 1,716 91,825 77,000Emergency Livestock Assistance 664 25 1,926

¥403 0

Emergency Conservation Program 149,727 128,456 0 92,459 39,719Biomass Crop Assistance 0 0 248,202 199,000

Emergency Forest Restoration Program 0 0 0 18,000Tree Assistance Program 1,973 1,010 68 90 0

CCC Interest Expenditures 648,627 140,936 2,856 10,426 16,635Dairy Indemnity Program 181 144 651 162 200

Emergency Forestry Conservation Program 6,302 12,717 7,854 8,297 9,291USDA Supplemental Assistance, appropriated 0 0 83,814 295,600 295,600FSA Disaster Assistance, appropriated 0 2,541,733 0 0 0

Reforestation Pilot Program 0 794 794 800 800

Agricultural Disaster Relief Trust Fund 0 0 6,000 1,573,278 1,926,134

Aquaculture Grants (123317) 0 0 48,500 39,942 0

Farm Storage Facility Loans 548 0 12,500 0 0

Administrative costs (direct) 776,465 683,795 694,980 744,303 753,934Indirect costs 47,548 234,633 226,905 242,967 246,299

Total Costs 21,532,395 19,501,606 17,058,019 16,991,214 16,574,049FTEs 8,905 8,620 9,529 8,355 8,140

755

9. Eligibility Criteria 

LIP provides compensation to livestock owners and contract growers who suffer 

livestock deaths in excess of normal mortality caused by eligible adverse weather 

events during the calendar year, including losses because of hurricanes, floods, blizzards, disease, wildfires, extreme heat, and extreme cold. The livestock death losses 

must have occurred on or after January 1, 2008, and before October 1, 2011. The 

livestock death losses must have also occurred in the calendar year for which benefits are being requested. 

Eligible livestock owners must have legally owned the livestock on the day the 

livestock died. Eligible contract growers may receive payments for poultry or swine 

only and must have, on the day the livestock died:

• had possession and control of the eligible livestock; and

• a written agreement setting specific terms, conditions and obligations of the 

parties involved regarding production of livestock.

To be eligible for LIP, the owner or contract grower’s livestock must:

• have died as a direct result of an eligible adverse weather event:

» that occurred on or after January 1, 2008, but before October 1, 2011;

» no later than 60 calendar days from the ending date of the applicable adverse 

weather event(s); and

» in the calendar year for which benefits are being requested.

• have been maintained for commercial use as part of a farming operation on the 

day they died; and

• not have been produced for reasons other than for commercial use as part of 

a farming operation which includes wild free roaming animals, pets, or animals 

used for recreational purposes, such as hunting or show.

For the 2008 program year, no person as defined and determined under provisions 

in 7 CFR Part 1400 in effect for 2008, may receive more than $100,000 total in payments under LIP, the Emergency Assistance for Livestock, Honey Bees, and FarmRaised Fish Program (ELAP), Livestock Forage Disaster Program (LFP) and the 

Supplemental Revenue Assistance Payments (SURE) Program, combined. For 2009 

and subsequent years, no person or legal entity, excluding joint venture or general 

partnership, may receive directly or indirectly, more than $100,000 total in payments under LIP, ELAP, LFP, and SURE, combined. 

Also, in applying the limitation on average adjusted gross income (AGI) for 2008, 

an individual or entity is ineligible for payment under LIP if the individual’s or entity’s average adjusted gross income exceeds $2.5 million for 2007, 2006, and 2005 

under the provisions in 7 CFR Part 1400 in effect for 2008 unless 75 percent or 

more of their income was from farming, ranching or forestry. For 2009 through 

2011, the average AGI limitation relating to limits on payments for persons or legal 

entities, excluding joint ventures and general partnerships, with certain levels of average adjusted gross income will apply. Specifically, for 2009 through 2011, a person 

or legal entity with an average adjusted gross non-farm income, as defined in 7 CFR 

Part 1404.3 that exceeds $500,000 will not be eligible to receive LIP payments. Direct attribution provisions also apply to LIP for 2009 and subsequent years. Under 

direct attribution, any payment to a legal entity also will be considered for payment 

limitation purposes to be a payment to a persons or legal entity with an interest 

in the legal entity or in a sub-entity. 

Producers who suffer livestock death losses must submit a notice of loss and an 

application for payment to the local FSA service center that maintains their farm 

records within prescribed deadlines along with adequate proof that the eligible livestock death occurred as a direct result of an eligible adverse weather event. 

10. Utilization (Participation) Data 

As of July 15, 2011, 15,953 livestock producers have received compensation under 

LIP totaling $110,670,892 for livestock deaths that have occurred on or after January 1, 2008, and before October 1, 2011, in excess of normal mortality due to eligible 

adverse weather events.

756

Livestock Indemnity Program Payments as of July 12, 2011

State 

2008 LIP 

Payments 

Disbursed 

2009 LIP 

Payments 

Disbursed 

2010 LIP 

Payments 

Disbursed 

2011 LIP 

Payments 

Disbursed 

Total LIP 

Payments 

Disbursed 

AL $37,794 $132,220 $270,584 $1,098,581 $1,539,179

AK $0

AZ $3,197 $3,197

AR $412,372 $326,652 $441,513 $107,715 $1,288,252

CA $87,965 $38,347 $2,353 $8,083 $136,748

CO $1,803,635 $196,740 $359,359 $2,359,734

CT $9,800 $26,956 $36,756

DE $39,956 $39,956

FL $63,514 $28,388 $48,592 $24,851 $165,345

GA $41,312 $173,644 $66,297 $69,751 $351,004

HI $169,000 $29,318 $198,318

ID $286,351 $368,886 $270,613 $1,008 $926,858

IL $56,063 $2,861 $3,505 $17,773 $80,202

IN $30,081 $121,031 $10,283 $30,290 $191,685

IA $604,067 $1,160,283 $837,663 $94,457 $2,696,470

KS $74,910 $1,388,046 $1,538,042 $498,362 $3,499,360

KY $2,071,058 $1,954,936 $2,771,729 $433,584 $7,231,307

LA $1,297,023 $40,110 $34,287 $1,371,420

ME $16,199 $10,841 $27,040

MD $13,758 $90,209 $103,967

MA $3,999 $3,999

MI $27,239 $29,947 $8,879 $66,065

MN $319,643 $550,448 $329,553 $92,718 $1,292,362

MS $90,670 $83,258 $59,064 $39,708 $272,700

MO $209,337 $471,998 $606,558 $836,328 $2,124,221

MT $430,213 $3,435,950 $574,825 $298,588 $4,739,576

NE $308,986 $2,856,961 $1,115,303 $12,078 $4,293,328

NV $8,596 $120,063 $32,229 $160,888

NH $6,900 $6,900

NJ $4,759 $61,550 $66,309

NM $1,365,695 $1,100,770 $378,267 $579,931 $3,424,663

NY $120,086 $38,405 $30,793 $59,642 $248,926

NC $85,748 $153,267 $397,428 $67,256 $703,699

ND $1,363,691 $17,893,403 $319,104 $293,919 $19,870,117

OH $27,600 $48,167 $62,659 $6,748 $145,174

OK $337,903 $835,202 $418,424 $795,186 $2,386,715

OR $106,169 $122,220 $78,630 $307,019

PA $1,202 $116,754 $3,435 $121,391

PR $582,249 $16,108 $1,558 $599,915

RI $4,590 $4,590

SC $33,206 $20,380 $3,950 $6,650 $64,186

SD $5,102,720 $23,376,238 $1,134,243 $194,328 $29,807,529

TN $66,019 $29,239 $263,840 $36,593 $395,691

TX $6,359,396 $2,527,482 $152,612 $229,014 $9,268,504

UT $725,779 $160,229 $928,773 $1,250 $1,816,031

VT $23,407 $23,407

VA $6,900 $96,007 $1,300,888 $119,435 $1,523,230

WA $62,141 $118,543 $210 $180,894

WV $14,799 $1,007,678 $17,325 $1,039,802

WI $110,654 $160,289 $150,796 $24,691 $446,430

WY $561,493 $2,268,998 $175,901 $13,441 $3,019,833

Total dollars $25,470,377 $62,533,390 $16,407,945 $6,259,180 $110,670,892

Total Applications 2,073 7,310 4,567 2,003 15,953

11. Duplication or Overlap with Other Programs 

LIP is not a duplication of other USDA disaster programs. LIP covers livestock 

death losses in excess of normal mortality due to eligible adverse weather events. 

ELAP covers eligible livestock death losses, as determined by the Secretary, that are 

not covered under LIP. The amount of any payment for which a livestock producer 

may be eligible under LIP may be reduced by any amount received by the livestock 

757

producer for the same or any similar loss from any Federal disaster assistance program. 

12. Waste, Fraud and Abuse 

There has been no Office of Inspector General (OIG) or Government Accountability Office (GAO) audit of the program during the last 4 years. However, OIG 

has conducted financial audits of the program which have not identified any significant issues. Likewise, internal audits conducted by FSA through its county office review process have found no significant instances of waste, fraud, and abuse. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Tree Assistance Program (TAP). 

2. Subprograms/Department Initiatives 

N/A. 

3. Brief History 

The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) authorized the 

Tree Assistance Program (TAP) to provide disaster assistance to eligible orchardists 

and nursery tree growers to replant or rehabilitate trees, bushes, and vines that 

were lost or damaged because of an eligible natural disaster. TAP is available to 

orchardists and nursery tree growers who commercially raise perennial trees for 

production of an annual crop and for those nursery tree growers who produce nursery, ornamental, fruit, nut, or Christmas trees for commercial sale. 

Eligible losses must have occurred on or after January 1, 2008, and before October 

1, 2011. 

TAP is one of five complementary disaster programs authorized by the 2008 Farm 

Bill. The others are Emergency Assistance for Livestock, Honey Bees, and FarmRaised Fish Program (ELAP), Livestock Indemnity Program (LIP), the Supplemental Revenue Assistance Payments (SURE) Program, and the Livestock Forage 

Program (LFP). 

4. Purpose/Goals 

Provide compensation to eligible orchardists and nursery tree growers to replant 

or rehabilitate trees, bushes, and vines that were lost or damaged because of an eligible natural disaster. TAP provides cost-share on various replanting and rehabilitation practices to assist producers in reestablishing a viable orchard or nursery 

stand. 

5. Success in Meeting Programmatic Purpose/Goals 

TAP successfully provides cost-share assistance to orchardists and nursery tree 

growers who suffer tree, bush, or vine losses or damage due an eligible natural disaster. Orchardists and nursery tree growers received cost-share amounts totaling 

$156,736 for 2008, approximately $2 million for 2009, and $2.3 million for 2010 calendar year losses.

758

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

TAP $0 $0 $0 $0 $0 $0 $0 $0 $2,198 $5,000

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Annual Outlays 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

TAP $0 $0 $0 $0 $0 $0 $0 $0 $1,507 $5,000

8. Annual Delivery Cost (FY 2002–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan. The administrative costs included in the table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available. 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsIncome Support and Disaster Assistance 

Price Support and Marketing Assistance Loans 11,286,100 9,509,047 8,290,909 6,313,263 6,095,604Loan Deficiency Payments 173,751 6,036 148,553 191,647 36,565Direct Payments 3,957,175 4,821,206 4,176,795 4,898,085 4,950,410Countercyclical Payments 3,158,554 359,064 1,213,300 902,584 131,848ACRE Payments 0 0 0 0 446,633Milk Income Loss Contract Payments 157,850 2,153 769,900 181,527 173,000

759

Tobacco Payments 955,495 954,817 1,130,095 954,091 960,000Other Direct Payments 25,695 29,768 84,375 103,432 80,504NAP Payments 126,951 73,989 40,700 98,745 116,873Crop Disaster Assistance 58,591 1,281 114,828 

¥109 0

Livestock Indemnity Program 198 2 1,716 91,825 77,000

Emergency Livestock Assistance 664 25 1,926

¥403 0

Emergency Conservation Program 149,727 128,456 0 92,459 39,719Biomass Crop Assistance 0 0 248,202 199,000

Emergency Forest Restoration Program 0 0 0 18,000Tree Assistance Program 1,973 1,010 68 90 0

CCC Interest Expenditures 648,627 140,936 2,856 10,426 16,635Dairy Indemnity Program 181 144 651 162 200

Emergency Forestry Conservation Program 6,302 12,717 7,854 8,297 9,291USDA Supplemental Assistance, appropriated 0 0 83,814 295,600 295,600FSA Disaster Assistance, appropriated 0 2,541,733 0 0 0Reforestation Pilot Program 0 794 794 800 800Agricultural Disaster Relief Trust Fund 0 0 6,000 1,573,278 1,926,134

Aquaculture Grants (123317) 0 0 48,500 39,942 0

Farm Storage Facility Loans 548 0 12,500 0 0

Administrative costs (direct) 776,465 683,795 694,980 744,303 753,934Indirect costs 47,548 234,633 226,905 242,967 246,299

Total Costs 21,532,395 19,501,606 17,058,019 16,991,214 16,574,049FTEs 8,905 8,620 9,529 8,355 8,140

760

9. Eligibility Criteria 

To be eligible for TAP payments, the eligible orchardist or nursery tree grower 

must have:

• planted, or be considered to have planted (by purchasing the orchard or nursery 

prior to the loss of the existing stand) trees, bushes, or vines for commercial 

purposes, or

• a production history on planted or existing trees, for commercial purposes.

• suffered loss due to an eligible natural disaster in excess of 15 percent mortality 

or damage, adjusted for normal mortality.

• obtained coverage under the Federal Crop Insurance Act or Noninsured Crop 

Disaster Assistance Program (NAP). ‘‘Socially Disadvantaged,’’ ‘‘Limited Resource,’’ and ‘‘Beginning Farmers or Ranchers’’ do not have to meet this requirement.

Producers who planted, or are considered to have planted trees they are eligible 

for assistance in the form of:

• replanting and the cost of seedlings or cuttings, for tree, bush, or vine replacement the lessor of either of the following:

» 70 percent of the actual cost of the practice

» total amount calculated using the national rates established for that practice.

• rehabilitation and the cost of pruning, removal, and other costs incurred for salvaging existing trees, bushes, or vines, or in the case of mortality, to prepare 

the land to replant trees, bushes, or vines, the lesser of the following:

» 50 percent of the actual cost of the practice

» amount calculated using the national rates established for that practice.

Producers who had a production history on planted or existing trees they are eligible for assistance for the cost of pruning, removing debris, and other costs incurred 

for salvaging existing trees or, for tree mortality, to prepare the land to replant 

trees the lessor of the following:

» 50 percent of the actual total cost of the practice

» total amount calculated using national rates established for the practice.

Eligible applicants qualify for TAP only if the tree, bush, or vine mortality in each 

stand, for each eligible natural disaster, exceeds the 15 percent loss threshold, plus 

normal mortality. The 15 percent mortality, adjusted for normal mortality, must be 

met before damaged trees are eligible for payment. 

Eligible losses must have occurred on or after January 1, 2008, and before October 

1, 2011. 

The cumulative total quantity of acres planted to trees, bushes, or vines, where 

a producer may receive TAP, cannot exceed 500 acres for all years, 2008 through 

2011. 

For the 2008 program year, no person as defined and determined under provisions 

in 7 CFR Part 1400 in effect for 2008, may receive more than $100,000 total in payments under TAP. For 2009 and subsequent years, no person or legal entity, excluding joint venture or general partnership, may receive directly or indirectly, more 

than $100,000 total in payments. 

For the 2009 and subsequent program years, producers or legal entities whose average non-farm Adjusted Gross Income (AGI) exceeds $500,000 are not eligible. For 

the 2008 program year, producers are not eligible if their average AGI is $2.5 million or greater, unless 75 percent or more of their AGI is from agriculture. Direct 

attribution provisions also apply to TAP for 2009 and subsequent years. Under direct attribution, any payment to a legal entity also will be considered for payment 

limitation purposes to be a payment to a persons or legal entity with an interest 

in the legal entity or in a sub-entity. 

TAP applicants who suffer eligible losses must file a Tree Assistance Program Application within 90 calendar days from the occurrence of the disaster event or the 

date when the loss become apparent to the producer. Upon completion of the practices the producer must provide copies of all sales receipts, invoices, canceled checks 

or other documentation necessary to determine cost. Practices must be completed 

within 12 months of an approved application.

761

10. Utilization (Participation) Data 

Number of

producers applying 

for TAP 

Number of

producers

receiving payment 

2008—289 161

2009—194 87

2010—366 74

2011—110 * 6

* As of July 19. 

11. Duplication or Overlap with Other Programs 

TAP does not duplicate benefits delivered by other USDA disaster assistance programs. It is the only program that provides compensation to replant or rehabilitate 

trees, bushes, or vines that were lost or damaged as the result of a natural disaster. 

The Noninsured Crop Disaster Assistance Program (NAP) complements TAP by covering the actual loss of fruit or nut production. There is no overlap between those 

programs. Regarding nursery, again TAP pays for the cost of re-establishing (seedling or grafts) or rehabilitating the nursery while NAP covers the loss of value of 

the crop at the time the disaster occurs. 

12. Waste, Fraud and Abuse 

There has been no extensive Office of Inspector General (OIG) or Government Accountability Office (GAO) audit of the program during the last 4 years. Currently, 

we do not have a current audit that indicates on-going systemic waste, fraud, or 

abuse. FSA conducts its own internal investigation through its county office review 

process and through its internal review audit process. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program 

(ELAP). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The Food, Conservation, and Energy Act of 2008 (the 2008 Farm Bill) established 

five disaster assistance programs: ELAP, Livestock Forage Disaster Program (LFP), 

Livestock Indemnity Program (LIP), Supplemental Revenue Assistance Payments 

Program (SURE) and the Tree Assistance Program (TAP). Sections 12033 and 15101 

of the 2008 Farm Bill authorized the Secretary to use up to $50 million per year 

from the Agricultural Disaster Relief Trust Fund to provide emergency relief to eligible producers under ELAP. 

4. Purpose/Goals 

ELAP provides emergency assistance to eligible producers of livestock, honeybees 

and farm-raised fish that have losses due to disease, adverse weather or other conditions, including losses due to blizzards and wildfires. ELAP covers losses occurring 

on or after January 1, 2008, and before October 1, 2011 that are not covered under 

any of the other disaster assistance programs established by the 2008 Farm Bill. 

5. Success in Meeting Programmatic Purpose/Goals 

To date, ELAP has successfully provided over $29 million in benefits to eligible 

livestock, honeybee, and farm-raised fish producers for 2008 through 2010 calendar 

year losses nationwide. The following table provides the total benefits disbursed nationwide to eligible livestock, honeybee and farm-raised fish producers for the calendar year in which the losses occurred.

Calendar Year of 

Loss 

ELAP Payments 

Disbursed 

2008 $10,779,914

762

Calendar Year of 

Loss 

ELAP Payments 

Disbursed 

2009 $11,824,366

2010 $6,572,795

Total $29,177,076

ELAP has been particularly beneficial to beekeepers whose bees suffered from 

Colony Collapse Disorder (CCD). The following table provides approximate benefits 

disbursed nationwide to eligible honeybee producers due to CCD.

Calendar Year of 

Loss 

ELAP Honeybee 

Payments 

2008 Over $6 million 

2009 Over $7 million 

2010 Over $5 million 

763

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

ELAP $0 $0 $0 $0 $0 $0 $0 $0 $21,460 $50,000

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Annual Outlays 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

ELAP $0 $0 $0 $0 $0 $0 $0 $0 $21,413 $50,000

8. Annual Delivery Cost (FY 2002–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan. The administrative costs included in the table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available. 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsIncome Support and Disaster Assistance 

Price Support and Marketing Assistance Loans 11,286,100 9,509,047 8,290,909 6,313,263 6,095,604Loan Deficiency Payments 173,751 6,036 148,553 191,647 36,565Direct Payments 3,957,175 4,821,206 4,176,795 4,898,085 4,950,410Countercyclical Payments 3,158,554 359,064 1,213,300 902,584 131,848ACRE Payments 0 0 0 0 446,633Milk Income Loss Contract Payments 157,850 2,153 769,900 181,527 173,000

764

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Tobacco Payments 955,495 954,817 1,130,095 954,091 960,000Other Direct Payments 25,695 29,768 84,375 103,432 80,504NAP Payments 126,951 73,989 40,700 98,745 116,873Crop Disaster Assistance 58,591 1,281 114,828 

¥109 0

Livestock Indemnity Program 198 2 1,716 91,825 77,000Emergency Livestock Assistance 664 25 1,926

¥403 0

Emergency Conservation Program 149,727 128,456 0 92,459 39,719Biomass Crop Assistance 0 0 248,202 199,000

Emergency Forest Restoration Program 0 0 0 18,000Tree Assistance Program 1,973 1,010 68 90 0

CCC Interest Expenditures 648,627 140,936 2,856 10,426 16,635Dairy Indemnity Program 181 144 651 162 200

Emergency Forestry Conservation Program 6,302 12,717 7,854 8,297 9,291USDA Supplemental Assistance, appropriated 0 0 83,814 295,600 295,600FSA Disaster Assistance, appropriated 0 2,541,733 0 0 0

Reforestation Pilot Program 0 794 794 800 800

Agricultural Disaster Relief Trust Fund 0 0 6,000 1,573,278 1,926,134

Aquaculture Grants (123317) 0 0 48,500 39,942 0

Farm Storage Facility Loans 548 0 12,500 0 0

Administrative costs (direct) 776,465 683,795 694,980 744,303 753,934Indirect costs 47,548 234,633 226,905 242,967 246,299

Total Costs 21,532,395 19,501,606 17,058,019 16,991,214 16,574,049FTEs 8,905 8,620 9,529 8,355 8,140

9. Eligibility Criteria

General Producer Eligibility:To be considered an eligible producer for ELAP, producers must:• file a notice of loss, no later than 30 calendar days of when the loss is apparent to the producer and file an application for payment by 

the applicable signup deadline.

765

• have suffered eligible losses of livestock, honeybees, and farm-raised fish because of an eligible adverse weather event or loss condition 

that occurred on or after January 1, 2008 and before October 1, 2011 and in the calendar year for which assistance is being requested.

• have suffered losses that are physically located in the county where the eligible adverse weather or eligible loss condition occurred.

• for every commodity in which the producer has an interest for the relevant program year:

» in the case of an insurable commodity, obtain catastrophic coverage or better under a policy or plan of insurance administered 

under the Federal Crop Insurance Act except this obligation will not include forage crops intended for grazing.

» in the case of a noninsurable commodity, obtain Noninsured Crop Disaster Assistance Program coverage by filing the required paperwork and paying the administrative fee by the applicable state application closing date, except that this requirement will not include forage on grazing land

There is a $100,000 limitation per crop year that applies to payments received under ELAP, LFP, LIP or SURE. Individuals or entities 

are ineligible for a payment under ELAP for 2008 if their average Adjusted Gross Income for 2005, 2006 and 2007 exceeds $2.5 million. For 2009 through 2011, an average adjusted gross non-farm income limitation of $500,000 applies.

Eligible Losses:An eligible loss under ELAP is a loss that an eligible producer or contract grower of livestock, honeybees, or farm-raised fish incurs because of an eligible adverse weather event or loss condition including, but not limited to, blizzards and wildfires. To be considered an eligible loss, the loss must have occurred:• during the calendar year for which payment is being requested.• on or after January 1, 2008, and before October 1, 2011.• in the county where the eligible adverse weather event or loss condition occurred.Eligible livestock losses include livestock death losses and livestock feed and grazing losses that are not due to drought or wildfires on 

federally managed lands, caused by an eligible adverse weather event or loss condition. 

Eligible honeybee losses include the loss of honeybee colonies in excess of normal mortality, honeybee hives, and purchase or produced 

honeybee feed losses caused by an eligible adverse weather event or loss condition. 

Eligible farm-raised fish losses include death losses of eligible bait fish or game fish and purchased or produced farm-raised fish feed 

losses caused by an eligible adverse weather event or loss condition.

10. Utilization (Participation) Data

The following table provides the number and amount of ELAP payments disbursed by state for the 2008 through 2010 calendar years. 

State 2008 No. of Payments 2008 ELAP 2009 No. of Payments 2009 ELAP 2010 No. of Payments 2010 ELAP Total ELAP Payments Disbursed 

AL 11 $80,808 17 $78,610 5 $34,515 $193,933AK 5 $6,084 $6,684

766

State 2008 No. of Payments 2008 ELAP 2009 No. of Payments 2009 ELAP 2010 No. of Payments 2010 ELAP Total ELAP Payments Disbursed 

AZ 1 $106,000 13 $234,123 5 $162,892 $497,015AR 1 $10,008 3 $157,780 4 $127,667 $295,455CA 54 $1,206,084 59 $1,380,580 29 $593,593 $3,180,257CO 2 $83,522 5 $49,261 8 $60,248 $193,031CT 1 $3,044 $3,044FL 187 $2,918,121 14 $272,028 109 $803,963 $3,994,112GA 15 $225,720 17 $141,021 9 $55,447 $422,188ID 17 $367,022 18 $360,546 15 $384,246 $1,111,814IL 5 $21,168 5 $15,876 1 $4,608 $41,652IN 2 $30,405 7 $73,409 1 $3,744 $107,558IA 15 $210,922 15 $376,150 11 $133,741 $720,813KS 8 $82,912 8 $34,801 4 $41,168 $158,881KY 5 $2,016 8 $2,916 11 $118,657 $123,589LA 136 $775,927 23 $98,768 $874,695MD 4 $11,196 1 $19,008 $30,204MA 2 $100,000 4 $102,124 4 $200,504 $402,628MI 12 $334,758.29 11 $153,259 6 $67,266 $555,283MN 12 $276,836 17 $423,641.64 11 $277,328 $977,806MS 3 $9,899 11 $52,258 108 $235,871 $298,028MO 10 $36,703 3 $9,285 4 $39,015 $85,003MT 21 $329,634 190 $1,132,114 10 $209,485 $1,671,233NE 16 $136,990 3 $43,956 23 $97,711 $278,657NM 4 $7,602 3 $34,735 93 $305,619 $347,956NY 9 $180,562 10 $178,997 15 $203,191 $562,750NC 22 $124,397 26 $38,302 14 $71,736 $234,435ND 17 $605,980 64 $895,631 8 $283,596 $1,785,207OH 6 $24,171 11 $49,392 5 $19,109 $92,672OK 1 $7,803 33 $213,427 1 $600 $221,830OR 11 $117,754 16 $303,612 7 $114,070 $534,836PA 9 $73,962 18 $158,271 9 $173,359 $405,592SC 2 $2,196 3 $7,363 $9,559SD 50 $1,082,515 207 $2,122,966 134 $1,170,655 $4,376,076TN 1 $1,584 2 $2,088 3 $5,381 $9,053TX 15 $658,553 17 $532,950.19 6 $121,839 $1,313,342UT 8 $137,903 5 $61,128 10 $74,540 $273,571VA 5 $18,820 7 $5,952 10 $24,946 $49,718WA 6 $248,123 16 $482,416 3 $164,628 $895,161WV 1 $1,084 $1,084WI 11 $102,645 10 $70,713 9 $66,727 $240,085WY 4 $39,805 162 $1,460,342.60 11 $101,038 $1,601,186

Totals 721 $10,779,914 1,066 $11,824,366 718 $6,572,795 $29,177,076

767

11. Duplication or Overlap with Other Programs 

There is no overlap or duplication. ELAP is specifically authorized to provide assistance for losses not covered under any other disaster assistance program established by the 2008 Farm Bill. 

12. Waste, Fraud and Abuse 

There has been no Office of Inspector (OIG) or Government Accountability Office 

(GAO) audit of ELAP. FSA conducts its own internal investigations through its 

county office review process and through its internal review audit process. These reviews have not raised any significant issues of waste, fraud, and abuse. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Noninsured Crop Disaster Assistance Program (NAP). 

2. Subprograms/Department Initiatives 

N/A. 

3. Brief History 

NAP was initially authorized under the Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994 (P.L. 103–354). NAP was reauthorized under Section 196 of the Federal Agriculture Improvement and Reform Act 

of 1996 (P.L. 104–127) which also terminated the prior authorities. NAP provides 

financial assistance to producers of noninsurable crops when natural disasters 

occur. The regulations governing NAP are found at 7 CFR Part 1437. 

NAP is a permanent program designed to reduce financial losses that occur when 

natural disasters cause a catastrophic loss of production or prevented planting for 

noninsurable crops by providing coverage equivalent to the catastrophic risk protection (CAT) level of crop insurance. 

4. Purpose/Goals 

NAP provides financial assistance to producers of noninsurable crops when low 

yields, loss of inventory, or prevented planting occur due to natural disasters. NAP 

is a standing risk tool producers can use to mitigate noninsured crop losses similar 

to crop insurance. 

5. Success in Meeting Programmatic Purpose/Goals 

During 2009, NAP producer enrollment increased by 19.73 percent over 2008, in 

part, because the 2008 Farm Bill requires total farm participation in NAP and/or 

purchase of crop insurance for eligibility for other disaster programs (specifically, 

SURE, TAP, and ELAP). Although participation increased, dollars paid out in crop 

year 2010 decreased from approximately $89 million for crop year 2009 to $52 million in 2010. It is important to note that dollars paid are directly related to the severity and number of disasters that occur in any given crop year. 

NAP continues to provide coverage equivalent to catastrophic (CAT) insurance for 

each commercial crop or agricultural commodity, except livestock, for which CAT is 

not available.

768

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

Non-Insured Assistance Payments $182,199 $237,149 $124,108 $109,619 $66,268 $126,951 $73,989 $62,064 $98,745 $116,873NAP Fees ¥16,319 ¥8,359 ¥12,550 ¥9,879 ¥9,155 ¥7,760 ¥11,529 ¥23,621 ¥19,396 ¥29,086

Net Budget Authority 165,880 228,790 111,558 99,740 57,113 119,191 62,460 38,443 79,349 87,787

Budget authority for CCC programs is based on obligations. Funds obligated in one fiscal year may not be disbursed until a succeeding fiscal year or fiscal 

years. In the case of these two programs, obligations, budget authority and outlays are incurred at the same time period. 

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Annual Outlays 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

Non-Insured Assistance Payments $182,199 $237,149 $124,108 $109,619 $66,268 $126,951 $73,989 $62,064 $98,745 $116,873NAP Fees ¥16,319 ¥8,359 ¥12,550 ¥9,879 ¥9,155 ¥7,760 ¥11,529 ¥23,621 ¥19,396 ¥29,086Net Outlays 165,880 228,790 111,558 99,740 57,113 119,191 62,460 38,443 79,349 87,787

8. Annual Delivery Cost (FY 2002–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan. The administrative costs included in the table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available. 

769

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsIncome Support and Disaster Assistance 

Price Support and Marketing Assistance Loans 11,286,100 9,509,047 8,290,909 6,313,263 6,095,604Loan Deficiency Payments 173,751 6,036 148,553 191,647 36,565Direct Payments 3,957,175 4,821,206 4,176,795 4,898,085 4,950,410Countercyclical Payments 3,158,554 359,064 1,213,300 902,584 131,848ACRE Payments 0 0 0 0 446,633Milk Income Loss Contract Payments 157,850 2,153 769,900 181,527 173,000Tobacco Payments 955,495 954,817 1,130,095 954,091 960,000Other Direct Payments 25,695 29,768 84,375 103,432 80,504NAP Payments 126,951 73,989 40,700 98,745 116,873Crop Disaster Assistance 58,591 1,281 114,828 

¥109 0

Livestock Indemnity Program 198 2 1,716 91,825 77,000Emergency Livestock Assistance 664 25 1,926

¥403 0

Emergency Conservation Program 149,727 128,456 0 92,459 39,719Biomass Crop Assistance 0 0 248,202 199,000

Emergency Forest Restoration Program 0 0 0 18,000Tree Assistance Program 1,973 1,010 68 90 0

CCC Interest Expenditures 648,627 140,936 2,856 10,426 16,635Dairy Indemnity Program 181 144 651 162 200

Emergency Forestry Conservation Program 6,302 12,717 7,854 8,297 9,291USDA Supplemental Assistance, appropriated 0 0 83,814 295,600 295,600FSA Disaster Assistance, appropriated 0 2,541,733 0 0 0

Reforestation Pilot Program 0 794 794 800 800

Agricultural Disaster Relief Trust Fund 0 0 6,000 1,573,278 1,926,134

Aquaculture Grants (123317) 0 0 48,500 39,942 0

Farm Storage Facility Loans 548 0 12,500 0 0

Administrative costs (direct) 776,465 683,795 694,980 744,303 753,934Indirect costs 47,548 234,633 226,905 242,967 246,299

Total Costs 21,532,395 19,501,606 17,058,019 16,991,214 16,574,049FTEs 8,905 8,620 9,529 8,355 8,140

770

9. Eligibility Criteria 

An eligible producer is a landowner, tenant or sharecropper who has an ownership share and shares in the risk of producing an eligible crop. Crops must be noninsurable crops and agricultural commodities for which the CAT level of crop insurance is not available, and must be any of the following commercially produced crops:

• crops grown for food;

• crops planted and grown for livestock consumption, including, but not limited 

to grain and forage crops, including native forage;

• crops grown for fiber, such as cotton and flax (except for trees);

• crops grown under a controlled environment such as mushrooms and floriculture;

• specialty crops, such as honey and maple sap;

• value loss crops, such as aquaculture, Christmas trees, ginseng, ornamental 

nursery and turfgrass sod;

• sea oats and sea grass; and

• seed crops where the propagation stock is produced for sale as seed stock for 

other eligible NAP crop production.

Producers must apply for NAP coverage and pay the applicable service fee at their 

local Farm Service Agency (FSA) office 30 calendar days prior to the beginning of 

the coverage period. The application and service fees must be filed by the application closing date as established. The service; fee is $250 per crop or $750 per producer per administrative county, not to exceed a total of $1,875 per producer with 

farming interests in multiple counties. Limited resource producers may request a 

waiver of the NAP service fees. 

Producers are required to provide acreage and production reports in a timely manner, and in the event a loss occurs, file a notice of loss within the earlier of 15 days 

of the disaster event or when the damage becomes apparent to the producer. To finalize a claim producers have until the subsequent year’s acreage reporting date to 

submit an application for payment 

For 2009 and subsequent years, no person or legal entity, excluding joint venture 

or general partnership, may receive directly or indirectly, more than $100,000 total 

in payments under NAP. 

For 2009 and subsequent years, the average AGI limitation relating to limits on 

payments for persons or legal entities, excluding joint ventures and general partnerships, with certain levels of average adjusted gross income will apply. Specifically, 

for 2009 and subsequent years, a person or legal entity with an average adjusted 

gross non-farm income, as defined in 7 CFR Part 1404.3 that exceeds $500,000 will 

not be eligible to receive NAP payments. Direct attribution provisions also apply to 

NAP for 2009 and subsequent years. Under direct attribution, any payment to a 

legal entity also will be considered for payment limitation purposes to be a payment 

to a persons or legal entity with an interest in the legal entity or in a sub-entity.

10. Utilization (Participation) Data 

Number of

producers obtaining 

NAP coverage 

Number of

producers

receiving payment 

2008—53,222 * 16,509

2009—63,724 * 16,958

2010—52,572 * 9,194

2011—52,058 * Not yet available 

* If a producer is operating in two 

counties, the producer would be counted 

twice. 

11. Duplication or Overlap with Other Programs 

By statute, NAP is prohibited from paying multiple benefits for the same loss. If 

the producer is eligible to receive NAP payments and benefits under any other program administered by the Secretary for the same crop loss, the producer must 

choose whether to receive NAP payments or benefits from any other program. Exceptions to this rule include past ad hoc Crop Disaster Programs and recently the 

Supplemental Revenue Assistance Payments (SURE) Program. SURE is a suppleVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00782 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
771

mental program to crop insurance and NAP coverage and only pays on shallow 

losses. NAP payments are included in total farm revenue when SURE payments are 

calculated. 

NAP works in concert with the Tree Assistance Program (TAP). TAP compensates 

eligible producers of commercial fruit, nut, and nursery crops to cover the cost of 

reestablishing or rehabilitating lost or damaged trees, bushes, or vines while NAP 

covers the actual loss of fruit or nut production. Similarly, for nursery losses, TAP 

pays for the cost of re-establishing (seedling or graft) or rehabilitating the nursery 

where NAP covers the loss of value of the crop at the time the disaster occurs. 

12. Waste, Fraud and Abuse 

The Department is not aware of any national problems of fraud, waste, and abuse. 

To comply with the Improper Payments Information Act of 2002, FSA conducts internal investigations through the County Office Review Program of high risk programs. NAP overpayments have decreased from 22.94 percent in Fiscal Year 2006 

to 11.65 percent in Fiscal Year 2010. Many of the improper payments are due to 

complexities of the program associated to calculating an approved yield. The National Office has developed and enhanced corrective actions each year to address 

IPIA findings and NAP Compliance Overview findings. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Sugar Program. 

2. Subprograms/Department Initiatives 

The sugar program is a collection of Federal programs designed to support, at 

minimal Federal cost, producer returns from growing sugarcane and sugarbeets. 

The programs collectively referred to as the Sugar Program include: the Price Support Loan Program, the Flexible Marketing Allotments for Sugar Program, the Tariff Rate Quota Program, and the Feedstock Flexibility Program for Bioenergy Producers. 

The Price Support Loan Program establishes the support level by providing nonrecourse loans to processors of domestically grown sugarcane and sugarbeets based 

on loan rates mandated in farm bills. If market returns are lower than loan proceeds at the time of loan maturity, sugarbeet and sugarcane processors can fully 

satisfy their loan obligations by forfeiting sugar loan collateral to the Commodity 

Credit Corporation (CCC). Since sugar producers can always receive at least the 

loan proceeds from their crop, the loan rate acts as a floor on the market price of 

domestic sugar. 

The remaining programs work to limit the domestic sugar supply to result in 

higher domestic prices than the support price imposed by the sugar loan program, 

and hence, minimize or eliminate forfeiture costs. The Department limits domestic 

supply through (1) the Flexible Marketing Allotments for Sugar Program, which provides limits for the quantity of sugar that domestic sugarbeet and sugarcane processors can market; (2) an imported sugar supply control strategy that includes a 

prohibitively high tariff rate for unrestricted imports and adjustable Tariff Rate 

Quotas (TRQ) that limit foreign sugar imports at the low tier tariff; and (3) the 

Feedstock Flexibility Program for Bioenergy Producers, which authorizes USDA to 

purchase surplus sugar in the marketplace and sell it to producers of bio-energy to 

prevent loan forfeitures under the Price Support Loan Program. The Feedstock 

Flexibility Program is authorized under Title IX of the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill). To date, the Feedstock Flexibility Program has 

not been needed due to high domestic sugar prices. Regulations implementing the 

Feedstock Flexibility Program are currently under development. 

3. Brief History 

Domestic sugar production has been supported by tariffs on imported sugar since 

1789. The early tariffs were established primarily to provide government revenue. 

However, since 1894, the tariffs were created primarily to support the domestic 

sugar industry. Extensive government regulation of the sugar industry began with 

the Sugar Act of 1934, which established the domestic sugar market supply control 

strategy still used today. Market shares were assigned for domestic beet sugar, domestic raw cane sugar, and imported sugar. The Sugar Act was allowed to lapse 

during the 1974 sugar price spike. 

Sugar loan provisions were first included in the Food and Agriculture Act of 1977, 

and modified to the current non-recourse loan program under the Food and AgriVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00783 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
772

culture Act of 1981. By 1984, overproduction in the U.S. led to forfeitures costing 

the U.S. Treasury $105 million. In response. Congress inserted the no-cost provision 

requiring program administrators to strongly avoid forfeitures in the 1985 Farm 

bill. Tariff-rate quotas (TRQs), which allow a set amount of imports with almost no 

tariff and an unrestricted high tier tariff on additional imports, replaced strict import quotas in the late 1980s. TRQs are based on each country’s share of the U.S. 

market during 1975–81 when imports were relatively unrestricted. The 1990 Farm 

bill reinstated domestic supply controls as the marketing allotment program. The 

2008 Farm Bill also mandated the Feedstock Flexibility Program. 

4. Purpose/Goals 

The purpose of the sugar program is to support producer returns from raising sugarcane and sugarbeets, to the extent practicable, at no cost to the Federal budget. 

5. Success in Meeting Programmatic Purpose/Goals 

CCC has been fairly successful in achieving the goals of the sugar program. The 

market value of production of sugarbeets and sugarcane increased 14 percent and 

40 percent, respectively, between FY 2005 and FY 2010. Beet processors forfeited 

40,000 tons of 2004-crop beet sugar with a loan value of 22.7¢ per pound. CCC sold 

the sugar inventory back to the market for 21.8¢ per pound, for a net realized loss 

of $742,000. Since 2005, the domestic market has tightened and the primary sugar 

program issue has been focused on maintaining adequate supplies.

773

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

Total Outlays $736,807 $879,856 $871,130 $824,168 $794,209 $1,051,171 $1,237,787 $1,118,371 $875,200 $891,402Total Receipts 866,883 964,016 809,865 910,135 783,815 l,026,436 1,272,821 1,118,369 875,200 891,402

Net Expenditures ¥130,076 ¥84,161 61,265 ¥85,966 10,394 24,735 ¥35,034 2 0 0

These programs are funded by Commodity Credit Corporation (CCC). Budget authority for these CCC programs is based on actual outlays. 

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Annual Outlays 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

Total Outlays $736,807 $879,856 $871,130 $824,168 $794,209 $1,051,171 $1,237,787 $1,118,371 $875,200 $891,402Total Receipts 866,883 964,016 809,865 910,135 783,815 1,026,436 1,272,821 1,118,369 875,200 891,402

Net Expenditures ¥130,076 ¥S4,161 61,265 ¥85,966 10,394 24,735 ¥35,034 2 0 0

8. Annual Delivery Cost (FY 2002–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan. The administrative costs included in the table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available. 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program Items

774

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Income Support and Disaster Assistance 

Price Support and Marketing Assistance Loans 11,286,100 9,509,047 8,290,909 6,313,263 6,095,604Loan Deficiency Payments 173,751 6,036 148,553 191,647 36,565Direct Payments 3,957,175 4,821,206 4,176,795 4,898,085 4,950,410Countercyclical Payments 3,158,554 359,064 1,213,300 902,584 131,848ACRE Payments 0 0 0 0 446,633Milk Income Loss Contract Payments 157,850 2,153 769,900 181,527 173,000Tobacco Payments 955,495 954,817 1,130,095 954,091 960,000Other Direct Payments 25,695 29,768 84,375 103,432 80,504NAP Payments 126,951 73,989 40,700 98,745 116,873Crop Disaster Assistance 58,591 1,281 114,828 

¥109 0

Livestock Indemnity Program 198 2 1,716 91,825 77,000Emergency Livestock Assistance 664 25 1,926

¥403 0

Emergency Conservation Program 149,727 128,456 0 92,459 39,719Biomass Crop Assistance 0 0 248,202 199,000

Emergency Forest Restoration Program 0 0 0 18,000Tree Assistance Program 1,973 1,010 68 90 0

CCC Interest Expenditures 648,627 140,936 2,856 10,426 16,635Dairy Indemnity Program 181 144 651 162 200

Emergency Forestry Conservation Program 6,302 12,717 7,854 8,297 9,291USDA Supplemental Assistance, appropriated 0 0 83,814 295,600 295,600FSA Disaster Assistance, appropriated 0 2,541,733 0 0 0

Reforestation Pilot Program 0 794 794 800 800

Agricultural Disaster Relief Trust Fund 0 0 6,000 1,573,278 1,926,134

Aquaculture Grants (123317) 0 0 48,500 39,942 0

Farm Storage Facility Loans 548 0 12,500 0 0

Administrative costs (direct) 776,465 683,795 694,980 744,303 753,934Indirect costs 47,548 234,633 226,905 242,967 246,299

Total Costs 21,532,395 19,501,606 17,058,019 16,991,214 16,574,049FTEs 8,905 8,620 9,529 8,355 8,140

775

9. Eligibility Criteria 

To be eligible for loans, a sugarbeet or sugarcane processor must: agree to all the 

terms and conditions in the loan application, and execute a note, security agreement, and storage agreement with CCC. Sugar pledged as collateral during the crop 

year must be processed and owned by the eligible processor and stored in a CCCapproved warehouse. The loan collateral must have been processed in the United 

States. 

In order to be pledged as loan collateral, sugar and in-process sugar must be dry 

and free flowing; free of excessive sediment; and free of any objectionable color, flavor, odor, or other characteristic that would impair its merchantability or that 

would impair or prevent its use for normal commercial purposes. 

10. Utilization (Participation) Data 

Since FY 2000, loan participation has been steady with, on average, about 21 percent of the sugarcane crop’s annual production placed under loan with the CCC. 

Around 26 percent of the annual sugarbeet crop is normally placed under loan. 

Loans, which are generally placed early in the fiscal year once harvest begins, help 

the processor make advance payments to growers upon delivery of their beets to the 

processor. This permits growers to be paid for their beet or cane crop up to 10 

months earlier than the processor (usually owned by the growers) receives revenues 

from the sale of the sugar made from the crop. 

11. Duplication or Overlap with Other Programs 

The Sugar Program is not duplicative of other commodity programs, as it offers 

unique benefits to the sugar market and its participants. However, there is some 

beneficial overlap with other programs. For instance, growers of sugarcane and sugarbeets must be in compliance with highly erodible and wetlands regulations in 

order to protect processor eligibility. Likewise, these growers must meet all certified 

acreage reporting requirements. 

12. Waste, Fraud and Abuse 

There has been no extensive Office of Inspector (OIG) or Government Accountability Office (GAO) audit of the program during the past 5 years. Although on rare 

occasion accusations of misconduct have arisen, internal FSA review indicated no 

waste, fraud or abuse. Furthermore, the sugar regulation authorizes CCC to require 

sugarbeet processors, sugarcane processors, sugarcane refiners and importers of 

sugar, as selected by CCC, to submit a report prepared by an independent Certified 

Public Accountant that reviews information submitted to CCC during the previous 

crop year. These reports have yet to indicate waste, fraud or other abuses. 

13. Effect of Administrative PAYGO 

Exhibit 1 shows the costs and savings related to USDA’s Administrative PAYGO 

Scorecard. 

1. Program Name 

Farm Storage Facility Loan (FSFL) Program. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The FSFL Program was originally authorized by the Commodity Credit Corporation (CCC) Charter Act of 1933. Specifically, the CCC Charter Act provides that the 

Corporation may make loans to grain producers needing storage facilities and that 

loans shall be made in areas in which the Secretary determines that there is a deficiency of such storage. 

The CCC had made loans for storage facilities intermittently since 1948 and 

stopped issuing storage facility loans in 1982 based on studies that revealed that 

producers had sufficient storage for their crops. However, demand for storage has 

increased dramatically since 1995 and storage shortages currently exist in some 

areas. The net decrease in storage capacity from 1996 to 1998 has been about 79.5 

million bushels, or nearly one percent of total capacity. During this same period, 

grain production increased by nearly eight percent, from 14 billion bushels in 1996 

to 15 billion bushels in 1998. As a result, it was determined there was insufficient 

capacity to allow farmers to store their grain, forcing farmers to sell at harvest 

when prices are usually at their lowest. Therefore, on February 2, 2000, the Secretary announced the availability of financing for on-farm storage and handling facilities. 

776

Section 1614 of the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill), 

authorized the Secretary to establish a storage facility loan program to producers 

of grains, oilseeds, pulse crops, hay, renewable biomass, and other storable commodities (other than sugar), as determined by the Secretary. Accordingly, regulations 

implementing the 2008 Farm Bill added fruits and vegetables as eligible commodities for on-farm storage. The maximum loan amount is $500,000 per structure and 

depending on the loan amount, the FSFL borrower has the option of selecting 7, 10, 

or 12 year repayment terms for the FSFL. 

4. Purpose/Goals 

The purpose of the FSFL Program is to assist producers with low-interest financing for adequate capacity to store their harvested production until they sell it on 

the open market. The FSFL Program adds additional storage capacity in deficit 

areas and producers also benefit from the potential for higher market returns on 

their crops. 

5. Success in Meeting Programmatic Purpose/Goals 

The FSFL Program has been very successful with meeting program goals to provide low interest financing for on-farm storage. Since FSFL was reestablished in FY 

2000, over 27,900 FSFL’s have been disbursed providing on-farm storage for over 

785 million bushels of eligible commodities. The FSFL Program has seen increased 

interest in the past several years mainly due to the construction of ethanol plants 

in the Midwest and South. The vast majority of FSFL borrowers make their annual 

installment payments on time as the program has a delinquency rate of less than 

0.005 percent.

777

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

Farm Storage Facility Loans—Subsidy $3,025 $1,897 $2,322 $1,157 $1,238 $475 $1,540 $12,500 $15 $0

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Annual Outlays 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

Farm Storage Facility Loans—Subsidy $1,654 $820 $1,502 $989 $290 $502 $1,135 $4,796 $7,446 $0

The FSFL Program is a credit reform program. Budget Authority and outlays reflect estimated subsidy costs of disbursing the direct loans in 

each fiscal year. 8. Annual Delivery Cost (FY 2002–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan. The administrative costs included in the table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available. 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsIncome Support and Disaster Assistance 

778

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Price Support and Marketing Assistance Loans 11,286,100 9,509,047 8,290,909 6,313,263 6,095,604Loan Deficiency Payments 173,751 6,036 148,553 191,647 36,565Direct Payments 3,957,175 4,821,206 4,176,795 4,898,085 4,950,410Countercyclical Payments 3,158,554 359,064 1,213,300 902,584 131,848ACRE Payments 0 0 0 0 446,633Milk Income Loss Contract Payments 157,850 2,153 769,900 181,527 173,000Tobacco Payments 955,495 954,817 1,130,095 954,091 960,000Other Direct Payments 25,695 29,768 84,375 103,432 80,504NAP Payments 126,951 73,989 40,700 98,745 116,873Crop Disaster Assistance 58,591 1,281 114,828 

¥109 0

Livestock Indemnity Program 198 2 1,716 91,825 77,000Emergency Livestock Assistance 664 25 1,926

¥403 0

Emergency Conservation Program 149,727 128,456 0 92,459 39,719Biomass Crop Assistance 0 0 248,202 199,000

Emergency Forest Restoration Program 0 0 0 18,000Tree Assistance Program 1,973 1,010 68 90 0

CCC Interest Expenditures 648,627 140,936 2,856 10,426 16,635Dairy Indemnity Program 181 144 651 162 200

Emergency Forestry Conservation Program 6,302 12,717 7,854 8,297 9,291USDA Supplemental Assistance, appropriated 0 0 83,814 295,600 295,600FSA Disaster Assistance, appropriated 0 2,541,733 0 0 0

Reforestation Pilot Program 0 794 794 800 800

Agricultural Disaster Relief Trust Fund 0 0 6,000 1,573,278 1,926,134

Aquaculture Grants (123317) 0 0 48,500 39,942 0

Farm Storage Facility Loans 548 0 12,500 0 0

Administrative costs (direct) 776,465 683,795 694,980 744,303 753,934Indirect costs 47,548 234,633 226,905 242,967 246,299

Total Costs 21,532,395 19,501,606 17,058,019 16,991,214 16,574,049FTEs 8,905 8,620 9,529 8,355 8,140

779

9. Eligibility Criteria 

Producers requesting a FSFL must provide information to the FSA County Office 

to support the need for on-farm storage. Specific eligibility requirements for applicants are as follows:

• producer of an eligible commodity

• engaged in farming

• has a satisfactory credit rating as determined by CCC

• demonstrates the ability to pay the down payment and repay the debt resulting 

from FSFL

• has no delinquent Federal debt as defined by the Debt Collection Improvement 

Act of 1996

• has not been convicted under Federal or state law of a controlled substance violation

• provide proof of insurance requirements, such as:

» multi-peril crop insurance

» all-peril structural insurance

» flood insurance, if applicable

• demonstrates compliance with USDA provisions for highly erodible land and 

wetland provisions

• demonstrates compliance with National Environmental Policy Act

• demonstrates compliance with any applicable local zoning, land use and building codes for the applicable farm storage facility structure. 

10. Utilization (Participation) Data 

The FSFL Program has provided financing for on-farm storage for over 785 million bushels of eligible commodities since FY 2000. FSFL applications have increased from 1,717 in FY 2005 to 3,961 in FY 2010. In FY 2006, the Commodity 

Credit Corporation (CCC) made nearly $100 million in FSFLs, while in FY 2010 the 

loan amount of FSFLs exceeded $296 million. To date, in FY 2010, 3,926 FSFLs 

have been obligated and disbursed totaling $291 million. Currently, in FY 2011, 

2,110 FSFLs have been obligated and disbursed totaling $175 million. Also, in FY 

2011, applications for 93 hay storage structures were received and 55 have been disbursed, and eight fruit and vegetable applications were received and one has been 

disbursed. 

11. Duplication or Overlap with Other Programs 

The USDA’s Rural Development (RD) Mission Area has grants and loans for certain energy efficiency improvements under the Rural Energy for America Program 

(REAP). Producers are eligible for certain grants and loans to purchase or replace 

energy efficient equipment in commodity storage structures. 

CCC is currently collaborating with RD to identify any cases where duplication 

or overlap of FSFL disbursements may have occurred with the grant and loan program offered by RD. If duplication of benefits have occurred, CCC is reducing the 

outstanding FSFL principal by the amount of the RD grant or loan. To prevent this 

from continuing, CCC implemented a form that producers sign before their final 

FSFL disbursement. This form provides producer certification that they have not 

applied, been approved for, or received government grants or loans on the same 

structure requested for FSFL. Having this certification before the FSFL disbursement will ensure that there is no duplication or overlap of benefits under FSFL. 

12. Waste, Fraud and Abuse 

The FSFL Program has been reviewed frequently by County Office Reviewers and 

it has been determined that the program findings are insignificant. Additionally, because second party reviews are performed by FSA staff and final cost documents are 

submitted by producers to support the cost of the storage structure before all FSFL 

closings, waste, fraud, and abuse would be considered minimal. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Durum Wheat Quality Program (DWQP). 

780

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

Section 1613 of the Food, Conservation, and Energy Act of 2008 (the 2008 Farm 

Bill) authorized up to $10 million to be appropriated for each of the 2009 through 

2012 Fiscal Years (FY) to compensate producers of durum wheat for up to 50 percent of the actual cost of fungicide applied to control Fusarium head blight, a fungal 

disease commonly known as ‘‘wheat scab.’’

The Agriculture, Rural Development, Food and Drug Administration, and Related 

Agencies Appropriations Act, 2010 provided $3 million for this program in FY 2010. 

No funding was appropriated for this program in FY 2009 or 2011. To date, no funding has been appropriated for this program for FY 2012. 

If applications for assistance exceed the funding availability for a particular crop 

year, payment amounts are reduced by a ’national payment factor’ so that each applicant receives a pro-rata share of the available funding. In FY 2010, payments 

were reduced by a national payment factor of 0.9663. 

4. Purpose/Goals 

The purpose of this program is to provide cost-share assistance to durum wheat 

producers for the purchase and application of an eligible fungicide used on acres 

planted to durum wheat to control wheat scab. 

5. Success in Meeting Programmatic Purpose/Goals 

DWQP successfully provided cost-share assistance to durum wheat producers for 

their share of the purchase price of an eligible fungicide and the cost of applying 

the eligible fungicide to durum wheat acres. In FY 2011, over $2.8 million was allocated to durum wheat producers in Idaho, Minnesota, Montana, North Dakota and 

South Dakota.

781

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

Durum Wheat Quality Program $0 $0 $0 $0 $0 $0 $0 $0 $3,000 $0

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Annual Outlays 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

Durum Wheat Quality Program $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,850

Of the $3 million appropriated for this program in FY 2010, $150,000 is being held in reserve for possible future appeal cases.

782

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in Millions) 

The program has only been available during FY 2010, the portion of Agency overhead expenditures allocated to the program during the fiscal year have not been 

captured but are believed to be minimal. 

9. Eligibility Criteria 

Producer Eligibility:

To be considered an eligible producer, the producer must have a share in the 

treated durum wheat crop planted on eligible acres and in the cost of either or both 

of the following:

• purchasing an eligible fungicide

• applying an eligible fungicide to eligible acres.

Eligible Fungicide:

To be considered an eligible fungicide for DWQP, the fungicide must be:

• registered with the Environmental Protection Agency (EPA), as required under 

the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), unless exempt 

from FIFRA requirements

• compliant with pesticide regulations in the state in which benefits are being requested

• used specifically for one fungicide treatment in the applicable crop year, to control Fusarium head blight on eligible acres.

Eligible Acres:

To be considered eligible acres for DWQP, the acres must be planted to durum 

wheat and treated with an eligible fungicide to specifically control Fusarium head 

blight and applied during the flowering stage. 

10. Utilization (Participation) Data 

In FY 2011, over $2.8 million was allocated to 1,020 durum wheat producers in 

Idaho, Minnesota, Montana, North Dakota and South Dakota. DWQP provided costshare assistance to durum wheat producers for 551,984 acres in the following five 

states.

State Acres 

Idaho 150

Minnesota 4,713

Montana 17,362

North Dakota 528,257

South Dakota 1,501

Total 551,984

11. Duplication or Overlap with Other Programs 

DWQP does not duplicate or overlap any other USDA program. 

12. Waste, Fraud and Abuse 

There has been no Office of Inspector (OIG) or Government Accountability Office 

(GAO) audit of DWQP. FSA conducts its own internal investigation through its 

county office review process and through its internal review audit process. The potential for fraud and abuse is minimal since producers are required to show proof 

of purchase and treatment with an EPA approved fungicide. 

13. Effect of Administrative PAYGO 

DWQP is funded through the discretionary appropriations process; accordingly, it 

is not subject to Administrative PAYGO procedures 

1. Program Name 

Reimbursement Transportation Cost Payment (RTCP) Program for Geographically 

Disadvantaged Farmers and Ranchers. 

2. Subprograms/Department Initiatives 

Subprograms—None.

783

Department Initiatives—None. 

3. Brief History 

The 2008 Farm Bill authorized the RTCP program to provide assistance to geographically disadvantaged farmers and ranchers in Hawaii, Alaska, and insular 

areas (Guam, American Samoa, Commonwealth of Puerto Rico, Commonwealth of 

the Northern Mariana Islands, Federated States of Micronesia, Republic of the Marshall Islands, Republic of Palau, and the Virgin Islands of the United States). The 

program reimburses producers for a portion of the transportation cost of their agricultural commodity, or inputs used to produce an agricultural commodity during a 

fiscal year. Under RTCP transportation costs of inputs used to produce an agricultural commodity include, but are not limited to, air freight, ocean freight, and land 

freight of chemicals, feed, fertilizer, fuel, seeds, plants, supplies, equipment parts, 

and other inputs as determined. RTCP is subject to appropriated funding. The 2010 

Agriculture Appropriations Bill authorized $2.6 million and the 2011 Defense and 

Full-Year Continuing Appropriations Act of 2011 authorized $1.996 million to assist 

geographically disadvantaged farmers and ranchers in accordance with Section 1621 

of the 2008 Farm Bill. 

4. Purpose/Goals 

The purpose of the RTCP is to assist geographically isolated farmers and ranchers 

to access inputs needed for production (seed, fertilizer, pesticides, etc.) and get their 

product to market. The goal of the program is to provide payments to these targeted 

producers to offset a portion of their transportation costs. 

5. Success in Meeting Programmatic Purpose/Goals 

This program benefits farms and ranches in geographically disadvantaged areas 

of the U.S. Signup for 2010 RTCP program began Aug. 2, 2010 and ended on Sept. 

10, 2010. Distribution of payments for 2010 RTCP began on July 20, 2011. In FY 

2010, 1,545 geographically disadvantaged farmers and ranchers applied to participate in the program, and more are expected with the FY 2011 RTCP signup beginning July 25, 2011.

784

6. Annual Budget Authority (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

Reimbursement 

Transportation Costs $0 $0 $0 $0 $0 $0 $0 $0 $2,600 $1,996

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Annual Outlays 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Estimated 

Reimbursement 

Transportation Costs $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,600

785

8. Annual Delivery Cost (FY 2002–FY 2011) ($ in Millions) 

The program first received funding in FY 2010, the portion of Agency overhead 

expenditures allocated to the program during the fiscal year have not been captured 

but are believed to be minimal. 

9. Eligibility Criteria 

To be eligible for RTCP program benefits, producers must:

• Be a geographically disadvantaged farmer or rancher producing and marketing, 

including the transportation of an agricultural commodity in an approved area;

• Submit an application during the specified period applicable for each fiscal year;

• Provide proof of the amount of costs incurred for the transportation of the agricultural commodity or input used to produce an agricultural commodity;

• Comply with conservation and wetland protection requirements on all their 

land;

• Have an average non-farm income that does not exceed $500,000; and

• Be a citizen or a legal resident alien of the United States in accordance with 

7 CFR Part 1400 for foreign persons. 

10. Utilization (Participation) Data 

• A total of 1,545 applicants applied to receive benefits under RTCP for FY 2010.

• Signup for FY 2011 RTCP began on July 25, 2011, and will end on September 

9, 2011. 

11. Duplication or Overlap with Other Programs 

No duplication or overlap with other programs. 

12. Waste, Fraud and Abuse 

Minimal to no waste, fraud, or abuse in the RTCP program because verifiable evidence of costs incurred are required to qualify for program benefits. 

13. Effect of Administrative PAYGO 

RTCP is funded through the discretionary appropriations process; accordingly, it 

is not subject to Administrative PAYGO procedures.

786

EXHIBIT 1

Administrative PAYGO Scorecard 

(In Millions of Dollars) 

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Savings

GSM–102 implementation of risk based 

approach (FAS/GSM) (139.0) (139.0) (139.0) (139.0) (139.0) 

RMA Terminations not previously counted 

(RMA/Crop Ins.) (4.6) (23.0) (23.4) (23.7) (24.1) 

Forest Service Increase Timber and Payment to State Receipts (FS/KV) (51.0) 2008 $2 CRP Maintenance Reduction—

present & future (FSA/CRP) (0.1) (0.6) (24.6) (28.7) (31.6) 

2009 Reduction in CRP maintenance payments (FSA/CRP) (43.6) (1.5) 2010 CRP Modification (Duck, Quail, 

SAFE/Reduction in bottomland hardwood) (FSA/CRP) 0.0 0.0 0.0 0.0 0.0 (2.9) 

Crop Insurance Standard Risk Agreement 

(RMA/Crop Ins.) (2,000.0) 

Costs 

Title XIX Treatment Facilities (FNS/

SNAP) 3.0 4.0 6.0 6.0 6.0

Forest Service Change in K–V Trust Fund 

Spending (FS/KV) 51 18

Factor Removal (RMA/Crop Ins.) 0.4 2.7 8.3RMA Crop Expansions (RMA/Crop Ins.) 0.6 12.8CCC Section 4 Limit (FSA/CCC) 7.5 10.8 6.9 5.3Food Aid Commodity Swaps (FSA/CCC) 77.0 60.0 111.0 67.0Federal Base Acre reinstatement (FSA/Direct and Counter-cyclical) 5.0Wetland Incentives (FSA/CRP) 7.8 14.6 17.3 19.2 20.8CREP Incentives (FSA/CRP) 0.7 2.3 7.3 9.5 10.8ACRE sign-up extension (FSA/ACRE) 30.02009 CRP extensions (FSA/CRP) 19.0

787

July 2009 Increase in minimum dairy 

prices (CCC/Dairy Product Price Support) 7.0

RMA—PRF–RI in MT (Board Approved) 

(RMA/Crop Ins.) 4.6 23.0 23.4 23.7 24.1

CRP Initiatives (FSA/CRP) 500.0Crop Insurance Initiatives (RMA/Crop 

Ins.) 1,500.0Available Savings (128.5) (29.2) (65.7) (17.6) (0.0) 0.0 0.0 (0.0) 0.0 (2.9) 

(789)

AGRICULTURAL PROGRAM AUDIT 

(EXAMINATION OF USDA RESEARCH PROGRAMS) 

THURSDAY, JULY 28, 2011

SUBCOMMITTEE ON RURAL DEVELOPMENT, 

RESEARCH, BIOTECHNOLOGY, AND FOREIGN

AGRICULTURE, 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON AGRICULTURE, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 10:05 a.m., in Room 

1300 of the Longworth House Office Building, Hon. Timothy V. 

Johnson [Chairman of the Subcommittee] presiding. 

Members present: Representatives Johnson, Thompson, Scott, 

Costa, and Kissell. 

Staff present: Mike Dunlap, John Goldberg, Tamara Hinton, 

DaNita Murray, Debbie Smith, Lauren Sturgeon, Suzanne Watson, 

Andy Baker, Nona S. Darrell, Liz Friedlander, Anne Simmons, 

John Konya, and Jamie Mitchell. 

OPENING STATEMENT OF HON. TIMOTHY V. JOHNSON, A 

REPRESENTATIVE IN CONGRESS FROM ILLINOIS 

The CHAIRMAN. This is a hearing of the Subcommittee on Rural 

Development, Research, Biotechnology, and Foreign Agriculture entitled, Agriculture Program Audit: Examination of USDA Research 

Programs, will come to order. 

I have an opening statement to make and I think the Ranking 

Member will and then we will proceed. 

Good morning. This hearing is the ninth in a series of audits of 

USDA farm programs. Through these discussions we hope to gain 

a better understanding of how each program is operating and what 

we might do to improve farm policy moving forward. 

As we move forward to write the next farm bill, we have to be 

mindful of current challenges and also anticipate future issues. A 

few perennial challenges for agriculture are that farmers and 

ranchers share all the obstacles that any small business faces such 

as access to credit, market demand, and variable input costs. 

Farmers and ranchers must also rely on weather to grow and harvest their crops and in spite of these challenges, our farmers and 

ranchers work hard every day to supply our country and consumers 

around the world with a safe and affordable supply of food and 

fiber. 

In addition to these challenges, we will soon face the issues of 

a dramatically growing population. The United Nations predicts 

790

that our population will grow 1⁄3 by 2050 and feeding over nine billion people on the planet would require a 70 percent increase in ag 

products. The only way to meet that growing demand will be 

through technological advances. In fact, research on new crop varieties, best practices, and biotechnology has been one of the most 

successful methods of increasing production to keep pace with demand. 

Continued investment in research can provide the necessary 

foundation to our farmers to remain competitive. The research 

projects conducted through public and private institutions touch 

every area of our lives. From research in food science and biotechnology, to integrated pest management, to agriculture extension and services, this Committee feels it is important to continue 

finding more efficient methods of production. It also includes educating rural and urban communities through agricultural extension 

services and youth programs. 

The USDA research mission is divided among four distinct agencies, and this morning we will be hearing from the administrators 

of each one. One of the many ways USDA works to fulfill the core 

mission of research, education, and extension is through land-grant 

colleges and universities throughout the United States. I might say 

parenthetically, my own University of Illinois being one of the preeminent institutions in the country in a lot of regards and specifically in this regard. 

USDA also conducts research in extension through Federal research stations located throughout the country and around the 

world. Through the gathering of market and production data, the 

Department of Agriculture also provides statistical information on 

the rural economy and the agriculture industry at large. This information is extremely valuable as policy makers work to craft agricultural and economic policies for rural America. As we consider 

the next farm bill, we are faced with scarce resources, so this Subcommittee has the responsibility to improve the administration of 

research programs to make the most efficient and effective use of 

funds available. 

Some of the areas we would like to address this morning are the 

duplication of programs, research priorities, USDA leveraging of 

Federal resources and the cost of administration and research mission area. In each area we are looking for opportunities to streamline. And I thank all the witnesses for appearing before the Subcommittee and look forward to our discussion. 

[The prepared statement of Mr. Johnson follows:]

PREPARED STATEMENT OF HON. TIMOTHY V. JOHNSON, A REPRESENTATIVE IN

CONGRESS FROM ILLINOIS

Good morning. This hearing is the ninth in a series of audits of USDA farm programs. Through these discussions we will gain a better understanding of how each 

program is operating and what we might do to improve farm policy moving forward. 

As we write the next farm bill, we must not only be mindful of current challenges, 

but anticipate future issues as well. 

There are a few perennial challenges for agriculture. Our farmers and ranchers 

share all of the obstacles that any small business faces, such as access to credit, 

market demand, and variable input costs. But farmers and ranchers also must rely 

on the weather to grow and harvest their crops. In spite of these challenges, our 

farmers and ranchers work hard every day to supply our country and consumers 

around the world with a safe, reliable, and affordable supply of food and fiber. 

791

In addition to these challenges, however, our farmers and ranchers will soon bear 

the burden of supporting a dramatically larger population. The UN is predicting 

that our population will grow by 1⁄3 by 2050. Feeding the 9.1 billion people on the 

planet would require a 70% increase in agricultural production. 

The only way to meet that growing demand for food will be through technological 

advances. In fact, research on new crop varieties, best practices, and biotechnology 

has been one of the most successful methods of increasing food production to keep 

pace with demand. Since 1862, USDA supported research has provided a critical 

foundation for increased production and yields. 

Continued investments in research can provide the necessary foundation for our 

farmers to remain competitive in the global market. The research projects conducted 

through public and private institutions touch every area of our lives. From research 

in food science and biotechnology, to integrated pest management, to agricultural 

extension services, this Committee feels it is important to continue finding more efficient methods of production. 

This effort also includes educating rural and urban communities through agricultural extension services and youth programs. These efforts can yield tremendous returns through building and maintaining knowledge of agricultural production systems and encouraging our next generation to engage in the agricultural industry. 

The USDA research mission is divided among four distinct agencies, and this 

morning we will be hearing from the administrators of each of those. One of the 

many ways USDA works to fulfill the core mission of research, education, and extension is through our land-grant colleges and universities throughout the United 

States. USDA also conducts research and extension through Federal research stations located across the country and around the world. Through the gathering of 

market and production data, USDA also provides statistical information on the 

rural economy and the agricultural industry at large. This information is invaluable 

as policy makers work to craft agricultural and economic policies for rural America. 

As we consider the next farm bill, we are faced with scarce resources, so this Subcommittee has a responsibility to improve the administration of research programs 

to make the most efficient and effective use of the funds available. Part of that process this morning will be to hear from USDA and take a close look at how research 

funding is currently being allocated within the agencies. 

Some of the areas we would like to focus on this morning include the duplication 

of programs, research priorities, how USDA is leveraging Federal resources, and the 

cost of administering the research mission area. In each area of government we are 

looking for opportunities to streamline processes and ensure that programs are delivered as efficiently as possible. 

I thank all of our witness for appearing before the Subcommittee today, and I look 

forward to our discussion.

The CHAIRMAN. And with that, I recognize Mr. Costa, the Ranking Member, for his opening statement. 

OPENING STATEMENT OF HON. JIM COSTA, A 

REPRESENTATIVE IN CONGRESS FROM CALIFORNIA 

Mr. COSTA. Thank you very much, Mr. Chairman, for once again 

focusing on our efforts as it relates to the reauthorization of the 

2008 Farm Bill and the programs that provide valuable support for 

America’s agricultural efforts. 

This audit hearing is important for not only Members of the Subcommittee but for our new Members who will be for the first time 

looking at the reauthorization of the farm bill. 

Today, we look at the United States Department of Agriculture’s 

research, education, and economics program authorized under Title 

XII of the farm bill. Research, for those of us who have been involved with the United States Department of Agriculture, the 

USDA, has been part and parcel of the Department’s efforts really 

for over 150 years since the Department was created. Particularly, 

through our land-grant institutions as the Chairman noted not only 

at the land-grant university in Illinois but throughout the country 

have really been at the bedrock of so much of what is so good about 

792

our ability to produce food and fiber, not only for the entire nation 

but many in instances throughout the world. 

The research that takes place here is a partnership between the 

USDA and the land-grant institutions. It helps ensure safe, abundant, and affordable food and fiber that has allowed American 

farmers and ranchers and dairymen and women to thrive. I think 

it is really unique when you look around the world the relationship 

that we have had with the land-grant universities and our agricultural producers. I think it is one of the reasons that consumers in 

America have more faith and confidence in our ability to ensure 

that when we talk about risk management and risk assessment in 

food safety that we are doing the very best to ensure the food safety for all American consumers. There is this history with our landgrant universities, our educational institutions, the research that 

also supports the Food and Drug Administration and other regulatory agencies to ensure that we not only produce the highest 

quality food, the highest nutritional food, but also as safely as possible. 

But I must also point out that not only land-grant universities 

but other agricultural schools such as my alma mater, Fresno State 

University, and other universities throughout the country that 

have done a great deal in terms of agriculture research as well. So 

I look forward to the efforts, as we talked about, the reauthorization of the farm bill, and to hear the witnesses here today talk 

about how we can ensure that we get more bang for our buck in 

terms of competitive research dollars; how we can leverage those 

dollars with institutions as well as in the public-private partnerships with many of our industries that are directly focused on agricultural research as it relates to seed development, tolerance, resistance to pesticide, drought. This partnership ensures that we 

can do a better job as we look at the issues of risk management 

and risk assessment. 

The four agencies that we will be listening to this morning, Mr. 

Chairman, comprise the heart and soul of the USDA’s Research, 

Education, and Economics mission. I look forward to hearing from 

our witnesses about how we can reauthorize the farm bill, realizing 

that the funding is going to be less next year than it was in the 

2008 authorization. That is just the facts of the fiscal challenges we 

are dealing with here in Washington today. 

But I think that it does not make sense in my opinion as we look 

at how we are going to do more with less that we go into the bone 

marrow of what is so essential in terms of research, vital research 

that the USDA provides, particularly as we look at challenges 

ahead. The Agricultural Research Service works across the country 

to help deal with agriculture problems of high national priorities. 

The National Institute for Food and Agriculture was created in the 

2008 Farm Bill to help drive basic agricultural research through 

breakthroughs that can ensure we are still the most innovative in 

the world. 

The National Agricultural Statistic Service provides valuable 

data to everyone who is involved at all levels of the agricultural 

community. I use it as well as the entire ag economy. Of course, 

the Economic Research Service helps inform decision-making both 

793

inside and outside the United States on food, farming, natural resources and other developmental issues. 

So let me close by saying that I am going to take particular focus 

during the testimony on the area of the Specialty Crop Research 

Initiative. That was something that a number of us worked very 

hard on for the 2008 Farm Bill. 

Our witnesses, I believe, are aware that the mandatory funding 

for this program expires after the year 2012. I would be interested 

to know your thoughts on how the unique needs of specialty crops 

can be addressed in the USDA’s research program under the current budget environment. Specialty crops—and let me underline 

this—represent approximately 1⁄2 the value of the U.S. agricultural 

industry and it has no support under the Title I programs: 2008 

was the first time that we provided some technical assistance, 

which allows programs like the Market Access Program to compete 

in foreign markets, the research programs like the Specialty Crop 

Research Initiative that are important in this effort, as well as the 

EQIP Program. 

So I look forward to hearing from our witnesses in those areas 

today in how we can maintain and strengthen our vital ag research 

programs in a cost-savings environment that we are currently 

working in today, Mr. Chairman. And I thank you for your due diligence and your focus, and I look forward to the testimony of our 

witnesses. 

The CHAIRMAN. Thank you, Mr. Costa. And I ask that other 

Members submit opening statements, if any, so that witnesses can 

proceed. 

With that, let me introduce the panel of witnesses. We have one 

panel today, in order of your testimony: Dr. Edward B. Knipling, 

Administrator, Agricultural Research Service, U.S. Department of 

Agriculture here in D.C.; Dr. Chavonda Jacobs-Young, Acting Director, National Institute of Food and Agriculture; Dr. Cynthia 

Clark, Administrator, National Agricultural Statistics Service; and 

Dr. Laurian Unnevehr, Acting Administrator, Economic Research 

Service, U.S. Department of Agriculture, Washington, D.C. 

So with that, we turn to Dr. Knipling and we are more than 

pleased to hear your comments. 

STATEMENT OF DR. EDWARD B. KNIPLING, ADMINISTRATOR, 

AGRICULTURAL RESEARCH SERVICE, U.S. DEPARTMENT OF 

AGRICULTURE, WASHINGTON, D.C. 

Dr. KNIPLING. Chairman Johnson, Ranking Member Costa, and 

Members of the Subcommittee, good morning. My name is Edward 

Knipling. I serve as Administrator of the Agricultural Research 

Service. Thank you all for your opening comments this morning 

and ARS indeed appreciates the opportunity to discuss our work 

with you. 

The Agricultural Research Service is the Department of Agriculture’s intramural research agency for the biological and other 

natural sciences. We in essence constitute USDA’s Federal laboratory network, and as such, a majority of ARS’ funding remains inhouse, that is to employ government scientists and support personnel. Our research is broad-based and is particularly concerned 

with problem-solving and pre-commercial research of long duration. 

794

ARS is a multifaceted agency that is spread across the country 

at over 100 locations. We also have four research locations in foreign countries. We employ over 8,500 people, 2,500 of which are 

Ph.D. scientists. In Fiscal Year 2011, the agency has a budget of 

$1.13 billion. 

The mission of ARS is to conduct research to develop and transfer solutions to agricultural problems of high national priority and 

provide information access and dissemination to ensure high-quality safe food and other agricultural products, assess the nutritional 

needs of Americans, sustain a competitive agricultural economy, 

enhance the natural resource base in the environment, and provide 

economic opportunities for rural citizens, communities, and society 

as a whole. 

As an organization with national reach, ARS has a broad spectrum of users and customers who help define the research priorities of the agency. The agency was established nearly 60 years ago 

by our current name to, among other things, serve the other agencies of USDA that need science information and technology to carry 

out their programs. This remains an important purpose of the 

agency. 

Additionally, the agency is dedicated to serving producers of both 

commodity and specialty crops, as well as private-sector entities 

that depend on public research. Each year, the agency on a continuing basis dedicates itself to an extensive process of listening to 

these stakeholders as we determine their needs and problems and 

we use this information for setting priorities. 

Research partnerships of all types are very important to ARS 

and a hallmark of the agency is the collaborative nature of our 

work. In addition to our sister agencies represented by my colleagues on this panel, of particular importance is our close partnership with the land-grant colleges and universities. Of ARS’ 105 laboratory locations, 60 are located on the campuses of a land-grant 

institution and an additional seven are located on other institutions 

of higher learning. 

For 150 years, the U.S. has built a system for agricultural research that has led to more innovation than by any other nation 

in the world. This is a unique system emphasizing necessary 

foundational research for the public good that cannot and will not 

be done by private or commercial enterprises. As part of the Research, Education, and Economics mission area, ARS and the other 

three agencies represented here this morning conduct joint planning, stakeholder conferences, peer review of our projects, complementary allocation of funding, and program reviews. 

Like the other agencies, ARS is currently directing special research attention to five broad national priorities that are deemed 

of particular importance to society. These include adaptation to the 

changing climate, food safety, children’s nutrition and health, global food security, and bioenergy, particularly biomass production. 

ARS organizes itself to accomplish these and all other research 

goals into four major national program areas. These are natural resources and sustainable agricultural systems, crop production and 

protection, animal production and protection, and nutrition, food 

safety, and quality. These areas, in turn, are comprised of 20 national programs across the country to address specific goals and 

795

priorities set out in 5 year action plans. My full written testimony 

that is provided for the record cites some outstanding recent research accomplishments in these program areas. 

Once our research is complete, the agency also takes very seriously its responsibility to transfer our research results to the public. This is an important facet of our agency and we take great 

pride in being able to provide technologies that improve people’s 

lives and producers’ businesses. ARS’ Office of Technology Transfer 

is assigned this responsibility to facilitate and accelerate the delivery of ARS research results and innovation to the public benefit to 

private-sector entities that further develop, commercialize, and 

market publicly developed and known technology and——

The CHAIRMAN. If you want to bring your comments to a close, 

we are a minute over. So let us try to stay on track. 

Dr. KNIPLING. Yes. Well, this in essence completes my oral testimony, Mr. Chairman, and we are pleased to answer any questions 

later. 

[The prepared statement of Dr. Knipling follows:]

PREPARED STATEMENT OF DR. EDWARD B. KNIPLING, ADMINISTRATOR, AGRICULTURAL

RESEARCH SERVICE, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Chairman Johnson, Ranking Member Costa, and Members of the Subcommittee, 

I am Edward Knipling, Administrator of the Agricultural Research Service. Thank 

you for the invitation here today to discuss the work of the ARS and the agricultural 

science that we pursue on behalf of all Americans. I am delighted to share our work 

with you and to have a discussion regarding our programs. 

The Agricultural Research Service is the Department of Agriculture’s primary intramural scientific research agency. We constitute USDA’s Federal laboratory network and as such the majority of ARS’ funding remains ‘‘in-house’’ to employ government scientists and technicians. Our research is broad-based covering all science 

facets of agricultural and food production and utilization and is particularly concerned with problem-solving and pre-commercial research of long duration. 

The Agricultural Research Service was officially founded in 1953 but has precursor agencies that date back as far as 1884 to the Bureaus of Animal and Plant 

Industry. The importance of agricultural research performed by the government 

goes back even farther, to the first work done to stem hog cholera outbreaks in 

1868. Prior to the formal creation of the agency, Congress recognized the need for 

concentrated centers of agricultural research focusing on issues of regional importance and, for example, in 1938, appropriated funding to create agricultural research laboratories in Peoria, Illinois; Wyndmoor, Pennsylvania; Albany, California; 

and New Orleans, Louisiana; to work particularly on utilization of agricultural commodities. These locations still exist to this day as major centers of ARS work and 

concentrations of our science. We are proud of this long history of government commitment to solving agricultural problems that affect every single American in one 

way or another. 

Today, ARS is a multi-faceted agency that is spread across the country at over 

100 locations. We also have four research locations in foreign countries. We employ 

over 8,500 people, 2,500 of whom are Ph.D. scientists. In Fiscal Year (FY) 2011, the 

agency has a budget of over $1.13 billion. The agency’s funding is allocated to two 

budget lines; the Salaries and Expense account and Buildings and Facilities. In FY 

2011, the appropriation rescinded $230 million in balances from prior appropriations, and there was no funding received under the Building and Facilities line. 

The stated mission of ARS (www.ars.usda.gov) is to conduct research to develop 

and transfer solutions to agricultural problems of high national priority and provide 

information access and dissemination to:

• Ensure high-quality, safe food, and other agricultural products;

• Assess the nutritional needs of Americans;

• Sustain a competitive agricultural economy;

• Enhance the natural resource base and the environment; and

• Provide economic opportunities for rural citizens, communities, and society as 

a whole.

796

As an organization with national reach, ARS has a broad spectrum of users and 

stakeholders who drive the research priorities of the agency. When the agency was 

officially formed in 1953 it was with the intent to create a clearing house for research issues within USDA and to serve the other agencies of the Department that 

need science information and technology to carry out their programs. This remains 

an important purpose of the agency. Examples of customer agencies within USDA 

include the Animal and Plant Health Inspection Service, the Food Safety and Inspection Service, the Natural Resources Conservation Service, and the Food and Nutrition Service. Additionally, the agency is dedicated to serving producers of both 

commodity and specialty crops, as well as private sector entities that depend on 

public research. Each year, the agency dedicates itself to an extensive process of listening to these stakeholders as we determine their needs and problems and use this 

information in setting priorities. 

As mentioned, most of ARS’ research takes place inside of the agency and is conducted by our federally employed scientists. However, research partnerships of all 

types are very important to ARS and a hallmark of the agency is the collaborative 

nature of our work. Of particular importance is our close partnership with the landgrant colleges and universities, as well as other universities. Of our 105 locations, 

60 are located on the campus of a land-grant institution and an additional seven 

are located on other institutions of higher learning. 

Our sister agency, the National Institute of Food and Agriculture (NIFA), serves 

to complement ARS by providing grants and other forms of extramural funding, 

largely to the land-grant institutions, which enhances the research partnerships at 

the laboratory, field, and scientific levels. Further, ARS scientists are often Co-Principal Investigators with our university partners on grants funded by NIFA and the 

National Science Foundation which serve as a source of extramural funding for 

ARS. 

Over the last 150 years the United States has built a system for agricultural research that has led to more innovation than any other in the world. This is a unique 

system emphasizing necessary foundational research for the public good that cannot 

and will not be done by private or commercial enterprises. ARS and NIFA, as well 

as the other research agencies, broadly coordinate our research programs through 

joint planning, stakeholder conferences, peer review of projects, complementary allocation of funding and program reviews. 

As part of the Research, Education, and Economics (REE) Mission Area, ARS, like 

its fellow REE agencies, currently is directing special research attention to five 

broad national priorities that the Administration has deemed of particular importance:

• Climate change/adaptation;

• Food safety;

• Children’s nutrition and health;

• Global food security;

• Bioenergy.

To give you a better understanding of the Agricultural Research Service and our 

work on these major priorities, I would like to describe highlights and examples of 

significant accomplishments of our work done under four major program areas: Natural Resources and Sustainable Agricultural Systems; Crop Production and Protection; Animal Production and Protection; and Nutrition, Food Safety and Quality. 

Natural Resources and Sustainable Agricultural Systems 

Sustainable agricultural systems produce the agricultural crops and livestock 

needed by society; protect the natural resource foundation essential for production, 

processing, and other uses; and provide economic and social value to producers, 

processors, consumers, and communities. Our research creates profitable agricultural systems that capitalize on the nation’s vast renewable natural resources to 

preserve the fertility and productivity of soils, provide abundant and high quality 

water supply and clean air, maintain healthy agricultural and rangeland ecosystems, and offer renewable energy and fuel alternatives that form the basis of the 

U.S. economy and the well being of rural America. 

Today, farmers have a wide array of conservation techniques to choose from, and 

the U.S. Government supports many of them through cooperative programs. One 

problem associated with these efforts is determining what works and what doesn’t. 

The Conservation Effects Assessment Project (CEAP) of the Natural Resources Conservation Service answers this question, by determining the effectiveness of USDA 

conservation programs on the environment. ARS plays a significant role in this 

project by analyzing the impact of agricultural practices in numerous watersheds 

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across the country. The ARS watershed research focuses on the effects of practices 

such as no till farming, terracing, riparian buffers, cover crops, and chemical, fertilizer, and manure application on soil erosion and water quality in agricultural watersheds. Measurements at some watersheds have been going on for decades, allowing tracking of changes in these areas over time and with varying conservation scenarios. 

These data have been used to construct models for the accurate prediction of the 

consequences of conservation technologies, allowing one to track conservation 

progress and select conservation interventions for the future that work best given 

the characteristics of the region. Examples of ARS contributions include an ARS 

study that found that cattle manure deposited directly into streams contributed 12% 

of the phosphorus in water from the studied watershed. Improved fencing to limit 

cattle access to streams solves this problem. Scientists from ARS developed a weather advisory system to help farmers decide when to apply manure so that nutrient 

runoff associated with rain events could be avoided. 

This research and the resulting models have led to improved deployment of conservation practices that have significantly reduced soil erosion and improved water 

quality. Two recent reports regarding the Chesapeake Bay region and the Upper 

Mississippi River basin indicate significant reduction in soil loss and nitrogen, phosphorus and pesticide runoff. In the Chesapeake Bay region, soil losses were reduced 

by 55%, nitrogen loss was reduced by 31% and phosphorus loss was reduced by 41% 

due to conservation interventions deployed there. In the Upper Mississippi River 

basin, soil loss was reduced by 69%, nitrogen loss by 18%, phosphorus loss by 49%, 

and 51% reduction in pesticide loss. This type of long term, large scale agriculturally-based conservation research needed to realize these and future improvements 

illustrates a primary strength of ARS in this research area. 

Crop Production and Protection 

Crop Production and Protection research programs deliver science-based information, genetic resources, and technologies for increased crop productivity and quality, 

protection from plant diseases and pests, and economically and environmentally sustainable methods of crop production that meet consumers’ demands for a ready supply of high quality, safe, affordable and nutritious food, the public’s desire to protect 

the environment, and the global community’s needs for food security. 

The ARS response to a new strain of wheat stem rust (Uganda 99 or Ug99) illustrates another of the unique capabilities of ARS, its disease experts and genetics resources enabled it to respond quickly to this urgent agriculture issue. In the early 

1900s, wheat stem rust caused extensive losses of wheat worldwide, until rust resistant varieties could be developed. These were extremely successful at reducing 

the incidence of wheat stem rust for decades. In 1999, a new strain of wheat stem 

rust was discovered in Uganda that had overcome the resistance of currently available strains, and ARS disease experts were the first to identify it as a new mutant 

strain called Ug99. Since its discovery, this rust has spread across Africa, Asia and 

parts of the Middle East. 

Monitoring programs in the major wheat producing areas of the U.S. were 

strengthened by ARS and others to detect Ug99 or related wheat stem rust entry 

into the country. ARS scientists are also determining the mechanisms by which the 

Ug99 strain was able to overcome the disease resistance of commercial varieties. 

Worldwide surveys of wheat, barley and related grasses were undertaken to discover 

resistance to Ug99, and several resistant plants have been discovered. Research is 

currently underway to transfer disease resistance from varieties where it was discovered to all commercial forms of wheat grown in the U.S. and worldwide. ARS 

scientists are also developing and studying the use of appropriate fungicides to help 

combat wheat stem rust. Finally, ARS scientists are participating in an international consortium that monitors the movement of Ug99 from country to country, 

and supporting efforts to provide Ug99 resistant wheat to areas of the world that 

have been stricken with this disease. These interventions are intended to prevent 

the entrance of this disease into the U.S., and mitigate or prevent the negative consequences of the disease should it manage to become established here. 

Much of the infrastructure needed for U.S. monitoring for wheat stem rust was 

already in place, maintained by ARS. This includes scientific expertise in the diseases of cereal grains. Because of this, ARS was able to rapidly mount an effective 

research response to this problem. 

Animal Production and Protection 

The mission of the ARS Animal Production and Protection research programs is 

to provide the scientific information and tools to help support the U.S. food animal 

industries to continue to compete successfully in worldwide trade, provide the supVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00809 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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ply of nutritional animal products required by the nation, and contribute toward 

global food security. ARS accomplishes this mission by maximizing production efficiency and animal health through scientific innovation and the discovery and development of new technologies focused on national priorities. Strategic public-private 

partnerships have been established to achieve our mission, including support of government action and regulatory agencies responsible for trade, bio-defense, and global food security. 

The recent success of dairy cattle genomics illustrates a unique strength of ARS, 

the ability to commit to a research topic long enough to generate real solutions to 

complex agricultural problems. In the early 1990s, ARS began investing resources 

in cattle genomics. ARS cattle genomics research contributed significantly to early 

cattle genome mapping and ARS leadership organized a successful collaborative effort to sequence the bovine genome, which was published in 2009 in Science. Building from these accomplishments, ARS scientists in collaboration with scientists at George Mason University, University of Missouri, University of Maryland, 

University of Alberta and Illumina Inc., developed the tool needed to enable dense 

genotyping on individual cattle at a cost that allowed the analysis of enough cattle 

for successful genomic prediction of quantitative traits. Combining national production records for dairy cattle available and the ability to do dense genotyping provided the opportunity to realize the huge potential of genomic analysis for Dairy cattle selection. Subsequent analyses by ARS demonstrated that use of genomic prediction in dairy cattle substantially improved the accuracy of selection of young 

dairy bulls compared to that derived from trait measurements in the parents, and 

effectively shortened the generation interval. Scientists from ARS have further developed genotyping tools, strategies and computer analyses to further reduce the 

cost of genotyping without significantly reducing accuracy. 

These innovations have been extensively adopted by the U.S. dairy industry. It 

is estimated that this technology will double the rate of genetic progress. To put this 

in perspective, according to the National Agricultural Statistics Service, milk production per cow has increased at the rate of 1.6% per year over the last decade. If 

this rate were doubled, the dairy herd in this country could be reduced by 30% in 

the next decade without reducing the milk supply, significantly reducing both the 

cost of producing milk and the demand on feed and natural resources used. This 

success has been possible only through sustained ARS commitment and leadership 

in cattle genetics and genomics. 

Nutrition, Food Safety and Quality 

The Nutrition, Food Safety and Quality research and information area exists to 

lead and coordinate ARS research and information dissemination to define the role 

of food and its components in optimizing health for all Americans. Our scientists 

focus on developing tests and processes that keep the food supply safe; reducing and 

controlling pathogens and toxins in agricultural products; and improving the economic viability and competitiveness of American agriculture by enhancing the quality and utilization of agricultural products for the benefit of producers and consumers. 

Unique national resources that are part of this program include the National Nutrient Databank and the ‘‘USDA What We Eat in America/NHANES’’ national food 

consumption survey. Partnerships with other Federal agencies and nonprofit and industry groups allow ARS to leverage funds and build upon common research goals. 

Information dissemination programs operated by ARS’ National Agricultural Library address general and specific human nutrition issues and audiences and include general web portals such as www.nutrition.gov for the American consumer as 

well as the targeted web sites for professionals such as the Food and Nutrition Information Center. 

The ARS response to E. coli contamination of a variety of foods illustrates several 

distinguishing characteristics of ARS, which includes the ability to rapidly respond 

to public health problems; the development of real solutions to those problems; and 

the ability to provide a long-term commitment of resources to a research topic. In 

1993, hundreds were sickened after eating undercooked Jack-in-the-Box hamburgers. The culprit was rapidly identified as Escherichia coli O157:H7. E. coli is 

a common bacterium that is resident in the large intestine of man and animals and 

is typically harmless. However, O157:H7 E. coli produces toxins, which cause severe 

illness and death. ARS scientists rapidly (within a year) developed tests for bacterial 

contamination of meat that were used by the meat processing industry to monitor 

and control contamination, followed by further tests to specifically detect E. coli

O157:H7. 

According to the CDC, E .Coli disease has been reduced by 40% over the last decade. However, outbreaks continue both in the U.S. and other countries in meat and 

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other foods such as fresh produce. Some outbreaks have been linked to E. coli

O157:H7, but others are due to non-O157 E. coli (STEC) strains described as O26, 

O45, O103, O111, O121 and O145, also known as the ‘‘Big Six’’. ARS scientists at 

the request of the USDA-Food Safety and Inspection Service (FSIS) recently developed and validated tests that can specifically detect and differentiate the disease 

causing non-O157 strains for use in regulatory monitoring of the food supply. 

For 17 years, ARS’ food safety research program has rapidly and uniquely responded to the challenges of pathogenic E. coli contamination of foods, and has successfully provided technological solutions that have been rapidly adopted by its various stakeholders. These technologies have been and will continue to be used to 

monitor, eliminate the entrance, and/or reduce the level of disease causing E. coli

into the food supply. 

International Research 

ARS operates four laboratories abroad that are dedicated to the biological control 

of invasive species and pests. These labs are located in Montpelier, France; Brisbane, Australia; Buenos Aires, Argentina; and Beijing, China. The laboratories exist 

primarily to allow ARS scientists to evaluate harmful, non-native species that have 

invaded the United States and to discover beneficial species in their native environments that can be used to control the invasive species. 

In addition to these laboratories, the agency’s Office of International Research 

Programs serves to promote and enhance the research of ARS through mutually 

beneficial international research agreements. We currently have cooperative agreements with researchers in dozens of countries across the globe. These agreements 

cover the entire spectrum of research and allow our scientists access to information 

and conditions for their research that would otherwise be unattainable. 

Technology Transfer 

ARS’s Office of Technology Transfer (OTT) is assigned the responsibility to facilitate and accelerate the delivery of ARS research results for the public benefit to private sector entities that further develop, commercialize, and market publicly developed and owned technology and information Further responsibilities of the office include protecting intellectual property (IP), and developing strategic partnerships 

with outside organizations, ARS–OTT is centralized for patent, license, and cooperative agreement policies and approvals, but maintains field offices to provide one-onone customer service to ARS researchers and private sector partners throughout the 

U.S. 

In addition to OTT activities, technology transfer is accomplished through many 

other mechanisms, such as:

• developing written information for customers and stakeholders, including scientific publications, publications in trade journals, and reports to stakeholders;

• releasing plant germplasm to the public;

• transferring research materials to scientists outside of ARS;

• delivering specific research results to regulatory agencies to support their actions;

• participating in meetings with industry organizations and universities, workshops and field days; and

• distributing information to the public via the ARS Information Staff, the National Agricultural Library, and other sources. 

Buildings and Facilities 

As the nation’s science based Federal intramural agricultural research agency, 

ARS uniquely owns and manages a large infrastructure of modern research laboratories and other real property assets that support and sustain the long term USDA 

science capacity. Collectively, this network of over 100 locations spread across the 

country essentially constitutes the national laboratory for agriculture. The agency 

places the management of its physical assets as a high priority proactively monitors 

and reviews the status of those facilities. Currently ARS is developing a capital 

management strategy to take us into the future. 

ARS is now completing a number of repair, maintenance, and modernization 

projects that were funded with $176 million made available by the American Recovery and Reinvestment Act of 2009. This program created jobs and corrected facility 

deficiencies which allow ARS research to be effectively and efficiently conducted at 

suitable facilities. Critical deferred maintenance is work associated with critical systems such as HVAC, electric, roofing, exterior closure and plumbing and involves 

maintenance to systems and components beyond simple patch and repair tasks. 

Completion of this work will, in many cases, result in improved energy efficiency, 

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reduction in current operation and maintenance costs, and arrested further deterioration of ARS facilities. 

At the end of FY 2010, ARS obligated approximately $171 million. The balance 

of approximately $5 million was used as a reserve for change orders typically expected in construction of this type. As of July 2011, ARS has obligated a total of 

$174 million. 

ARS also owns or leases over 400,000 acres of land across the country, on which 

are more than 3,000 operational buildings with a total gross square footage of over 

13.5 million. The agency estimates the replacement value of all of its real property 

assets to be $3.64 billion. 

Mr. Chairman, as you can see ARS is a very active and involved agency that is 

dedicated to solving the world’s agricultural problems and to delivering the science 

needed to feed and clothe a growing world population. ARS has been focused on 

these issues for over half a century and we are very excited about the next 50 years 

as well. I appreciate this Committee’s long-standing support of ARS and I would like 

to again thank you for the opportunity to testify before you today. I look forward 

to answering any questions that you may have.

The CHAIRMAN. Thank you very much. 

Yes, ma’am. 

STATEMENT OF CHAVONDA JACOBS-YOUNG, PH.D., ACTING

DIRECTOR, NATIONAL INSTITUTE OF FOOD AND

AGRICULTURE, U.S. DEPARTMENT OF AGRICULTURE,

WASHINGTON, D.C. 

Dr. JACOBS-YOUNG. Good morning, Chairman Johnson, Ranking 

Member Costa, and Members of the Subcommittee. I am Chavonda 

Jacobs-Young, and I am acting Director of USDA’s National Institute of Food and Agriculture, NIFA. I appreciate the opportunity 

to appear before you and tell you about how NIFA is serving the 

needs of the nation and addressing its challenges through agricultural science. 

Mr. Chairman, agricultural science is a fundamental part of 

American agriculture from field to table, and NIFA is at the intersection of research, education, and extension. By supporting extramural agricultural research across the country, typically at research universities and colleges, NIFA improves agricultural 

science throughout the nation. 

The 2008 Farm Bill created NIFA in order to coordinate a diversity of research programs across functions and funding methods. 

NIFA science institutes support the four main priorities aimed at 

enhancing the impact of food, agriculture, and natural resources 

sciences. These are the Institute of Food Production and Sustainability; the Institute of Bioenergy, Climate, and Environment; the 

Institute of Food Safety and Nutrition; and the Institute of Youth, 

Family, and Community. 

Through this reorganization, Congress made a bold step toward 

streamlining agricultural science for the 21st century. While only 

11⁄2 years old, NIFA already has a long and impressive list of accomplishments. My written testimony, submitted for the record, includes many examples of this, but I would like to highlight just a 

few for you here today. 

The Agriculture and Food Research Initiative, AFRI, is NIFA’s 

flagship granting mechanism. Among numerous accomplishments, 

AFRI funding has been pivotal in mapping the genomes of vital agricultural commodities, including wheat, rice, pigs, cattle, and 

chickens. This science is the gateway to fast-tracking improved 

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breeding that helps our agricultural producers meet our growing 

needs for domestic and global populations. 

NIFA’s investment in AFRI is complemented by the Specialty 

Crop Research Initiative, SCRI. SCRI supports research and extension in plant breeding, pest and disease management, and production efficiency. Though SCRI is still in its initial stages, it promises 

to deliver significant benefits to growers and consumers. 

NIFA funds a variety of capacity-building programs that support 

a wide range of agricultural science initiatives. Some of these include minority-serving programs that work with underserved communities. NIFA is also helping build the next generation of producers through our Beginning Farmer and Rancher Development 

Program. These are just a few of the many successful programs 

from NIFA’s first 2 years. 

Going forward, NIFA will continue to make smart investments, 

forge enduring relationships, and engage new partners in scientific 

research, education, and extension programs to maximize the 

public’s investment in agricultural research. As well, NIFA’s investment in agriculture research and extension helps support and 

sustain a highly skilled workforce that is critical to the 21st century U.S. economy. 

In addition, NIFA is committed to ensuring Federal dollars are 

well spent through systematic monitoring and evaluation. NIFA 

tracks scientific projects through a centralized database to avoid 

duplication. NIFA and USDA’s Agricultural Research Service also 

hold joint stakeholder meetings on scientific research to synchronize and coordinate compatible research projects. 

NIFA has a promising future, and in collaboration with our Congressional partners, we look forward to building on our leadership 

role in national agriculture scientific research, education, and extension. 

I appreciate your time and would be pleased to answer any questions. 

[The prepared statement of Dr. Jacobs-Young follows:]

PREPARED STATEMENT OF CHAVONDA JACOBS-YOUNG, PH.D., ACTING DIRECTOR,

NATIONAL INSTITUTE OF FOOD AND AGRICULTURE, U.S. DEPARTMENT OF

AGRICULTURE, WASHINGTON, D.C. 

Good morning Chairman Johnson, Ranking Member Costa, and Members of the 

Subcommittee. Thank you for inviting me here today to participate in this timely 

hearing on farm bill programs as they relate to USDA’s National Institute of Food 

and Agriculture (NIFA) of which I am the Acting Director. I am pleased to have this 

opportunity to provide some detailed information on our achievements and challenges and look forward to learning about your interests. 

Agricultural science is a dynamic system that moves from farm to lab to dining 

table and back again. At USDA when we speak of agricultural science we mean all 

the activities relating to research, education, and extension and NIFA is a critical 

part of this. 

That is why I am pleased to be leading an agency team of about 350 professionals 

at a time when both Congress and the Administration understand the inherent 

value of investing in scientific research in a smart and efficient way. One of our 

goals at NIFA is to elevate the standing and stature of research, education and extension within the Federal science enterprise while being effective stewards of the 

public trust. This is the real challenge that NIFA faces. 

Mandate from 2008 Farm Bill 

It’s against such a backdrop that the 2008 Farm Bill (FCEA Act of 2008) created 

the National Institute of Food and Agriculture in support of extramural agricultural 

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research across the nation. The 2008 Farm Bill called for the integration of programs across functions and funding methods within the Agency. As such, NIFA is 

comprised of four main institutes. These are the:

1. Institute of Food Production and Sustainability;

2. Institute of Bioenergy, Climate, and Environment;

3. Institute of Food Safety and Nutrition; and the

4. Institute of Youth, Family, and Community.

These institutes coordinate a mixed portfolio of competitive and capacity building 

programs all with the aim of enhancing the impact of food, agricultural, and natural 

resource sciences. In reorganizing the Federal extramural research efforts in this 

manner, Congress took a 21st century approach in the last farm bill in acknowledging the broad reach and interdisciplinary nature of agricultural science. 

But NIFA is not operating in a vacuum. NIFA scientists develop research partnerships with a diverse group of scientists, farmers, private sector investigators, and 

a wide array of higher learning institutions across the nation. In fact, these relationships are key in how NIFA identifies its priorities. 

Input from Congress, The National Agricultural Research, Extension, Education, 

and Economics Advisory Board (NAREEEAB), as well as our many university, scientific and agricultural partners and stakeholders all feed into a decision-making 

process. NIFA’s leadership team takes this all into consideration as it establishes 

broad program priorities and goals across the Agency and ensures they are aligned 

with broad strategic goals of the department and the mission area. These goals and 

informed priorities are pursued via competitive programs and capacity building programs. 

While only a year and half old, NIFA has already collected a long and impressive 

list of accomplishments, some of which I would like to highlight in the next few minutes: 

Agriculture and Food Research Initiative (AFRI) 

NIFA’s flagship granting initiative is the Agriculture and Food Research Initiative 

(AFRI). AFRI’s competitive grants program supports both fundamental science and 

applied research and education for the nation’s leading scientists. In particular, 

AFRI is charged with making research, education, and extension grants that address key problems of national, regional, and multi-state importance in sustaining 

all components of agriculture. These include farm efficiency and profitability, ranching, renewable energy, forestry (both urban and agroforestry), aquaculture, rural 

communities and entrepreneurship, human nutrition, food safety, biotechnology, and 

classical breeding. In fact, AFRI funding was pivotal in completing the genome of 

agriculturally important plants and animals like wheat, rice, pigs, cattle, and chickens. 

An example of recent success includes the work by a team at the University of 

California-Davis which has used AFRI funding to identify genes in wheat that are 

responsible for the plant’s tolerance to freezing temperatures. Wheat breeders have 

long recognized the need to produce cultivars with greater resistance to freezing 

temperatures and this discovery may lead to improved crop production. 

Another example comes from scientists in Connecticut who are investigating the 

use of natural plant products to reduce foodborne pathogens in broiler chickens. 

This work will potentially lead to decreased bacterial outbreaks, improving public 

health, and economic opportunity for poultry farmers. 

Specialty Crop Research Initiative (SCRI) 

NIFA’s investment in AFRI is complemented by another program: the Specialty 

Crop Research Initiative (SCRI). SCRI was created to help fund solutions to critical 

issues of the specialty crop industry. SCRI supports research in plant breeding, genetics and genomics to improve crop characteristics and appearance, environmental 

responses and tolerances, pest and disease management and production efficiency 

to name a few. SCRI’s multi-state, multi-institutional, interdisciplinary funding not 

only requires a non-Federal one-to-one match but also requires project proposals to 

combine research and extension. This helps ensure that new products, processes, 

practices, and tools are made available to specialty crop stakeholders. Even though 

most SCRI-funded projects have not yet reached completion, growers and consumers 

are already benefiting from this investment. 

For example, water availability is an issue affecting all Americans. SCRI has 

funded projects to reduce the amount of water needed to profitably raise crops. One 

project in California has the potential to reduce water use in grape production by 

153 billion to 307 billion gallons per year. This is enough water to meet the daily 

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household water needs of over six million Americans for an entire year, or about 

the equivalent of the populations of Los Angeles and Chicago combined. 

Fruit growers must reduce the quantity of fruit on their trees so that the remaining fruit reaches marketable size. Until recently, U.S. growers did this either with 

chemicals or manual labor. 

One SCRI-funded project looking at mechanical thinning techniques demonstrated 

$500 to $700 per acre savings in apricots and nectarines and $200 to $500 per acre 

savings in cherries during commercial field trials. This led to increasing adoption 

of this technology across the entire country. This will result in local jobs to manufacture and service the needed equipment, increased wages for workers who move from 

manual labor to equipment operation, and savings for consumers in the grocery 

store. 

SCRI-funded work on biological control of insect pests (in particular, codling 

moth) in orchards in the Pacific Northwest demonstrated that sustainable pest management, which includes maintaining natural predators of orchard pests, can reduce 

annual orchard pest management costs of $2,300 by 25 percent. 

Beginning Farmers and Rancher Development Program 

While NIFA scientists are committed to ensuring that the scientific pipeline for 

the next generation of scientists is being filled, NIFA’s Beginning Farmer and 

Rancher Development Program aims to support the pipeline of our next generation 

of producers. Training for beginning farmers and ranchers includes: webinars, seminars, internships, mentorships, and on-farm field days. Other training sessions have 

included face-to-face training events, such a regular non-credit courses or workshop 

sessions at farming conferences. More than 5,300 new and potential farmers participated in training events. 

For example, The Western Navajo Nation Beginning Farmers and Ranchers 

Project engages, prepares, and supports socially disadvantaged, underserved, and 

limited resource beginning Navajo farmers and ranchers in eight communities covering 8,000 square miles of the Navajo Nation. The overall goal of the project is to 

provide Navajo community members who wish to begin farming and ranching with 

the skills to effectively launch sustainable agricultural operations using traditional 

and contemporary agricultural techniques in conjunction with effective business 

practices. In the first year, the project worked with 13 chapter members through 

direct agricultural training and networking activities that included two roundtables, 

two conferences, and weekly classes in technology, business, or introductory farming 

and ranching to 1,000+ participants. Fifty percent of participants are women. Seventy percent have been farming or ranching for less than one year, or do not currently farm or ranch. The project staff is comprised of four traditional Navajo locals 

of varying ages and educational backgrounds. All are bilingual, fluent in Navajo, 

and culturally sensitive to the target group’s history and challenges. 

Serving Minority Communities 

NIFA is also working to ensure that its research and extension programs continue 

to expand its reach into non-traditional, diverse communities through its minority 

serving programs. These programs include: Hispanic Serving Institutions Education 

Grants Program, the Tribal Colleges Education Equity Grants Program, and the 

1890 Institution Capacity Grants Program. 

An example of a recent success is at Fort Valley State University (FVSU) in Georgia where the 1890 Capacity Building Grant has been essential in helping design 

and implement an Outdoor Forestry Classroom/Laboratory Program. One of America’s challenges is to attract young people from all walks of life to the sciences and 

in particular the agricultural sciences to fill the pipeline for our future. This program provides hands-on and experiential learning to forestry course students, trains 

and prepares high school agriculture students for various forestry careers through 

development events, and allows use of its facilities for summer workshops for high 

school agriculture teachers throughout the state of Georgia. During Spring 2009, 

Area 3 of district number 4 of Georgia used the site to conduct forestry career development events. One hundred and fifty high school students were in attendance and 

had the opportunity to interact and discuss careers in the forestry industry with foresters from USDA, the Georgia Forestry Commission and Weyerhaeuser. 

Another example includes, the Teaching and Research in Environmental Ecology 

Program at the University of Texas at San Antonio which helped recruit, retain, and 

financially support underrepresented undergraduate and graduate students. 

Capacity Building Grant Programs 

Another set of key programs are NIFA programs which build capacity for research 

and extension in cooperation with our university partners. These include:

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a. Hatch Act programs which support research at state agricultural experiment 

stations;

b. McIntire-Stennis Cooperative Forestry Research program which funds research related to the use of the nation’s forest resources;

c. Evans-Allen Program, created to support agricultural research at 1890 Colleges; and

d. the Smith-Lever programs which support not only the national Cooperative 

Extension System but also targeted programs within the extension system on 

subjects like food and nutrition education, pest management, and children, 

youth, and families at risk.

Examples of recent successes made through these capacity building programs run 

across a wide range of NIFA’s activities. For instance, scientists in North Dakota 

developed three varieties of barley which has been recommended for malting and 

brewing by the American Malting Barley Association. These efforts resulted in an 

additional $23 million in revenue for growers in 2009. 

In another example, researchers at the University of Georgia used advanced 

genomic and proteomic approaches to identify and develop strategies to improve 

pine tree resistance to an invasive wood wasp. 

Conclusion 

These are just a few examples of successes in the first 2 years of NIFA’s existence. 

However, the reach and scope of future accomplishments are becoming increasingly 

challenging in a tight budget environment. While research outcomes can never be 

fixed to a certain timeline, NIFA is doing its best in this fiscal climate to make 

smart investments, forge enduring relationships, and engage new partners in scientific research, education and extension programs. 

In addition, NIFA is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers 

rigorously track scientific projects through its Current Research Information System 

(CRIS) to avoid duplication. In addition NIFA and ARS hold joint stakeholder meetings on scientific research to pull together research projects that are compatible and 

not duplicative. 

NIFA has a promising future and in collaboration with our Congressional partners will continue to build on its leadership role in national agricultural scientific 

research, education, and extension. 

I appreciate your time and would be pleased to answer any questions.

The CHAIRMAN. Thank you very much. 

Dr. Clark? 

STATEMENT OF DR. CYNTHIA CLARK, ADMINISTRATOR,

NATIONAL AGRICULTURAL STATISTICS SERVICE, U.S.

DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Dr. CLARK. Chairman Johnson, Ranking Member Costa, and 

Members of the Subcommittee, I thank you for the opportunity to 

appear before this Subcommittee. My name is Cynthia Clark, and 

I have been an Administrator at the National Agricultural Statistics Service, or NASS, since July of 2008. NASS administers the 

U.S. agricultural statistics program, a program that began at 

USDA in 1863 and conducts the quinquennial U.S. Census of Agriculture first collected by the Census Bureau in 1840. Both programs are aligned with the basic mission of NASS—to provide 

timely, accurate, and useful statistics in service to U.S. agriculture. 

NASS has 1,050 employees currently located in 46 field offices 

and headquarters with the new operations center opening in October 2011 in Overland, Missouri. Additionally, NASS has a cooperative agreement with the National Association of State Departments 

of Agriculture to collect agriculture data with a core of 3,500 interviewers. 

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NASS’ annual agricultural estimates reports are critically important to assess the current supply and demand in agriculture commodities. They are extremely valuable to producers, agribusiness, 

farm organizations, commodity groups, economists, public officials, 

and others who use the data for decision-making. The statistics disseminated by NASS support fairness in markets ensuring that buyers and sellers both have access to the same official statistics at the 

same preannounced time. This prevents markets from being influenced by inside information. 

Our program supplies important economic, environmental, and 

demographic data that informs policy decisions. One example is the 

Risk Management Agency relies on NASS annual county estimates 

to administer crop insurance programs that provide U.S. farmers 

a safety net ensuring protection against unpredictable growing conditions. The Farm Service Agency relies on NASS county-level data 

to administer the Conservation Reserve Program, crop revenue 

support program, and emergency assistance payments. 

As we speak, NASS is undertaking a transformation of its business process for collecting processing, analyzing, and disseminating 

agricultural statistics. We are pursuing six operational initiatives 

to improve data quality, create business cost efficiencies, improve 

career opportunities for NASS staff, and position the agency to better serve the future statistical needs of USDA. 

These efforts include centralizing IT services throughout the 

agency, standardizing systems, using Apple iPads to collect data securely in the field and transmit the information in real time by a 

high-speed broadband into NASS systems, centralizing telephone 

data collection, and utilizing video teleconferencing for meetings 

and training. 

The lynchpin of the centralized data collection initiative is the 

new NASS National Operations Center in Missouri. NASS is implementing these initiatives without a request for additional appropriated funding. Once in place, they will result in substantial cost 

savings to U.S. taxpayers. NASS has also embarked on a research 

program to improve the quality and accuracy of its agriculture estimates. 

NASS is preparing now for the 2012 Census of Agriculture with 

an initial mailing to farmers and ranchers in December 2012. The 

Census of Agriculture is the only source of comprehensive data on 

farm operations at the national, state, and county level. Detailed 

information at the county level helps agricultural organizations, 

suppliers, handlers, processers, and wholesalers and retailers better plan their operations. Census demographic information provides 

a valuable database for developing a public policy for rural areas. 

These data have been critical for farm bill discussions. 

The authority to conduct the Census of Agriculture was transferred to USDA in 1997. During the past 14 years, NASS has made 

significant strides to improve this vital data series. The 2007 Census provided the option for electronic reporting, dramatically increased coverage of Native American, minority, and disadvantaged 

farm operators, and released data meeting newly defined needs for 

Congressional districts and for watersheds. NASS listens to Congress, industry, local and state governments, and stakeholders as 

it identifies emerging data needs. 

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The 2012 Census will include new sections on organic agriculture 

and on-farm renewable energy. It will have additional questions on 

land-use practices and new questions on agroforestry, on-farm 

packing facilities, and farms that sell to intermediary outlets. Having the Census of Agriculture within USDA enables the Census to 

be more responsive to USDA and agriculture data needs. 

I appreciate the opportunity to testify and to share with your 

Subcommittee some of the important information that NASS provides for public and private decision-making relevant to food, agriculture, and rural America. Thank you. 

[The prepared statement of Dr. Clark follows:]

PREPARED STATEMENT OF DR. CYNTHIA CLARK, ADMINISTRATOR, NATIONAL

AGRICULTURAL STATISTICS SERVICE, U.S. DEPARTMENT OF AGRICULTURE,

WASHINGTON, D.C. 

Mr. Chairman and Members of the Subcommittee, I appreciate the opportunity 

to submit a statement for this Subcommittee’s consideration. The National Agricultural Statistics Service administers the U.S. agricultural statistics program, which 

began at the United States Department of Agriculture (USDA) in 1863. NASS also 

conducts the quinquennial U.S. Census of Agriculture, first collected by the Department of Commerce in 1840. Both programs are aligned with the basic mission of 

NASS to provide timely, accurate, and useful statistics in service to U.S. agriculture. 

Agricultural Estimates 

NASS’s annual agricultural estimates reports are critically important to assess 

the current supply and demand in agricultural commodities. They are extremely 

valuable to producers, agribusinesses, farm organizations, commodity groups, economists, public officials, and others who use the data for decision-making. The statistics disseminated by NASS support fairness in markets ensuring buyers and sellers 

have access to the same official statistics at the same pre-announced time. This prevents markets from being influenced by ‘‘inside’’ information, which might unfairly 

affect market prices for the gain of an individual market participant. The efficiency 

of commodity markets is enhanced by the free flow of information, which minimizes 

price fluctuations for U.S. producers. Statistical measures help the competitiveness 

of our nation’s agricultural industry and have become increasingly important as producers rely more on world markets for their sales. 

The U.S. food and agricultural sector relies on reliable statistical information. The 

NASS statistical program serves most U.S. agricultural commodity data needs and 

supplies important economic, environmental, and demographic data that informs 

policy decisions that impact the livelihood and quality of life of rural residents. 

The Risk Management Agency relies on NASS annual county estimates to administer crop insurance programs that provide U.S. farmers a safety net ensuring protection against unpredictable growing conditions. Additionally, the Farm Service 

Agency relies on NASS county level data to administer the Conservation Reserve 

Program, crop revenue support programs, and emergency assistance payments. Having accurate estimates from an unbiased data source, has added fairness and transparency to the overall process. 

Additionally, NASS is undertaking a transformation of its business process for collecting, processing, analyzing, and disseminating agricultural statistics. NASS identified six operational initiatives that allow the agency with the opportunity to improve data quality, create business cost efficiencies, improve career opportunities to 

its staff, and position the agency to better serve the statistical needs of USDA and 

agricultural data users. These efforts include centralizing IT services throughout the 

agency; standardizing systems; collecting data in the field through the use of computer assisted personal interviewing that relays the data into the NASS systems in 

real-time; centralizing telephone data collection; and utilizing video teleconferencing 

in lieu of certain travel. As a result of the centralized data collection initiative, 

NASS has opened a National Operations Center in St. Louis, Missouri and will 

begin operations in October. This facility will handle questionnaire processing, telephone data collection, training of telephone and field enumerators and statisticians 

and list maintenance from one central location. These efforts are being implemented 

without the request for additional appropriated funding and will eventually result 

in cost savings to the U.S. taxpayers. 

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NASS has also embarked on a research program to improve the quality and accuracy of our estimates. Projects include editing and imputation research to make the 

pre-summary analytical processes more efficient, model based estimation and forecasting to make NASS estimates more reproducible, and remote sensing measurements to increase the accuracy of estimates. 

Census of Agriculture 

NASS is currently preparing for the 2012 Census of Agriculture. The initial mail 

out to the nation’s farmers and ranchers will be in December 2012. The Census of 

Agriculture is taken every 5 years and provides comprehensive data at the national, 

state, and county level on the agricultural sector. The Census of Agriculture is the 

only source for this information on a local level and is extremely important to the 

agricultural community. These data were used extensively by USDA to help answer 

both internal and Congressional questions during the 2008 Farm Bill debate and 

will be as critical for the next farm bill. Detailed information at the county level 

helps agricultural organizations, suppliers, handlers, processors, and wholesalers 

and retailers better plan their operations. Demographic information supplied by the 

Census of Agriculture also provides a very valuable database for developing public 

policy for rural areas. In addition to the 50 states, the Census of Agriculture programs are conducted in Puerto Rico, the Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands. Results from all of the Censuses are made 

available on the NASS website. 

The authority to conduct the Census of Agriculture was transferred to USDA in 

1997. During the past 14 years, NASS has made significant strides to continually 

improve this vital data series. For the first time in history, respondents had the option of reporting electronically through the Internet on the 2007 Census of Agriculture. NASS also targeted improved coverage for the 2007 Census of Agriculture 

by working closely with Community Based Organizations and American Indians 

tribes and reservations to increase awareness of the importance of being represented. NASS published a report by watershed using data from the 2007 Census 

of Agriculture. Finally, NASS continues to listen to Congress and industry on the 

ever expanding need for additional agricultural statistics. For example, the 2012 

Census of Agriculture includes an entire section on organic agriculture, a new section covering on-farm renewable energy, an expanded list of questions on land use 

practices, and sales data collected along-side production questions. For the first 

time, NASS also plans to pick up information on agroforestry, on-farm packing facilities, and farms that sell to intermediary outlets These are just a few of the improvements and successes achieved over the first decade of the Census of Agriculture at USDA. Having the Census of Agriculture within USDA enables the Census to be more responsive to USDA data needs. 

Major Activities of the National Agricultural Statistics Service 

The ongoing expansion of global markets for U.S. goods and services continues to 

increase the need for modern and reliable statistical information. The surveys and 

Censuses conducted by NASS contribute significantly to economic decisions made by 

policymakers, agricultural producers, lenders, transporters, processors, wholesalers, 

retailers and, ultimately, consumers. NASS estimates have proven to provide critically important principal economic indicators for the agricultural food and fiber industry. Lack of relevant, timely, and accurate data contributes to wasteful inefficiencies throughout the entire production and marketing system. 

An example of one of the many important surveys conducted by NASS is the Agricultural Resource Management Survey (ARMS). This survey is conducted in cooperation with the USDA’s Economic Research Service and is the primary input in 

developing the nation’s farm income statements used as one of the nation’s principal 

economic indicators. The ARMS provides vitally important information on the financial health of the farming sector and is heavily used by program analysts to determine the success and future scope of farm policies and programs. 

The need for timely, accurate, and useful statistics on U.S. agriculture continues 

to be emphasized throughout the sector. A few examples highlight the importance 

these data have on the market place and agricultural producers ability to manage 

their operations. The importance of accurate agricultural data can be demonstrated 

through the ever expanding use of the NASS county estimates for administering 

farmer safety nets. Specifically, NASS county estimates impact billions of dollars insured through the Risk Management Agency’s Group Risk Program and Group Risk 

Income Program. The difference of one bushel in an average county yield estimate 

may result in the incorrect decision on indemnity payments. Farmers trust and demand that these data be an accurate gauge for administering these very important 

safety nets. 

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NASS works cooperatively with each State Department of Agriculture throughout 

the year to provide commodity, environmental, economic, and demographic statistics 

for agriculture. This cooperative program, which began in 1917, has served the agricultural industry well and is recognized as an excellent model of successful stateFederal cooperation. Approximately sixty percent of the NASS staff is located in its 

46 field offices; 21 of these offices are collocated with State Departments of Agriculture or land-grant universities. Working together helps meet both state and national data needs while minimizing overall costs by consolidating staff and resources, eliminating duplication of effort, and reducing the reporting burden on the 

nation’s farm and ranch operators. Covering all fifty states and Puerto Rico, NASS 

provides statistical information that serves national, state, and local data needs. 

NASS has been a leader among Federal agencies in providing electronic access to 

information. All reports issued by NASS’ Agricultural Statistics Board are made 

available to the public at a previously announced release time to ensure that everyone is given equal access to the information. All national statistical reports and data 

products, including graphics, are available on the Internet, as well as in printed 

form, at the time they are released. Customers are able to electronically subscribe 

to NASS reports and can download any of these reports in an easily accessible format using standard software. NASS also provides free Rich Site Summary and 

Podcast feeds to interested data users. This technology sends an alert or audio clip 

directly to data users when content of interest is posted to the NASS Web site. A 

summary of NASS and other USDA statistical data are produced annually in 

USDA’s Agricultural Statistics, available on the Internet through the NASS home 

page, on CD–ROM disc, or in hard copy. All forty-six NASS field offices have home 

pages on the Internet that provide access to special statistical reports and information on current local commodity conditions and production. 

The primary activity of NASS is to provide reliable data for decision-making 

based on unbiased surveys and the Census of Agriculture to meet the current data 

needs of the agricultural industry. Farmers, ranchers, and agribusinesses voluntarily respond to a series of nationwide surveys about crops, livestock, prices, chemical use and other agricultural activities. Surveys are conducted during the growing 

season to measure the impact of weather, pests, and other factors on crop production. Many crop surveys are supplemented by actual field observations in which various plant counts and measurements are made. Administrative data from other 

state and USDA agencies, as well as data on imports and exports, are thoroughly 

analyzed and utilized by the agency to supplement survey data. NASS prepares estimates for over 120 crops and 45 livestock items which are published annually in 

more than 500 separate reports. 

NASS’s Statistical Research Program is conducted to improve methods and techniques used for collecting, processing, and disseminating agricultural data. This research is directed toward achieving higher quality Census and survey data with less 

burden on respondents, producing more accurate and timely statistics for data 

users, and increasing the efficiency of the entire process. Graphical products simultaneously displaying progress and condition were developed to make it easier for 

data users and analysts to see the effects of conditions on the crop. Research has 

also allowed NASS to utilize real-time acreage and yield indications based on remote sensing methodology to assist in estimating acreage and production for select 

major corn and soybean states. This adds another objective measure to aid in accurately forecasting current year crop production. The growing diversity and specialization of the nation’s farm operations have greatly complicated procedures for producing accurate agricultural statistics. Developing new sampling and survey methodology, expanding modes of data collection, including electronic data reporting, and 

exploiting computer intensive processing technology enables NASS to keep pace 

with an increasingly complex agricultural industry. 

NASS conducts a number of special surveys, as well as provides consulting services for many USDA agencies, other Federal or state agencies, universities, and agricultural organizations on a cost-reimbursable basis. Consulting services include assistance with survey methodology, questionnaire and sample design, information resource management, and statistical analysis. NASS has been very active in assisting 

USDA agencies in programs that monitor nutrition, food safety, environmental quality, and customer satisfaction. In cooperation with State Departments of Agriculture, land-grant universities, and industry groups, NASS conducts over 200 special surveys each year covering a wide range of issues such as farm injury, nursery 

and horticulture, farm finance, fruits and nuts, vegetables, and cropping practices. 

All results from these reimbursable efforts are made publicly available. 

NASS provides technical assistance and training to improve agricultural survey 

programs in other countries in cooperation with other government agencies on a 

cost-reimbursable basis. The NASS international program focuses on the developing 

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and emerging market countries in Asia, Central and South America, and Eastern 

Europe. Accurate foreign country information is essential for the orderly marketing 

of U.S. farm products throughout the world. NASS works directly with countries by 

assisting in the application of modern statistical methodology, including sample survey techniques. 

NASS annually seeks input on improvements and priorities from the public 

through the Secretary of Agriculture’s Advisory Committee on Agriculture Statistics, 

interaction with producers at major commodity meetings, data user meetings with 

representatives from agribusinesses and commodity groups, special briefings for agricultural leaders during the release of major reports, and numerous individual contacts. As a result of these activities, the agency has made adjustments to its statistics program, published reports, and expanded electronic access capabilities to better 

meet the statistical needs of customers and stakeholders. 

This concludes my statement, Mr. Chairman. Thank you for the opportunity to 

submit this statement for the record.

The CHAIRMAN. Yes, ma’am. Proceed. 

STATEMENT OF LAURIAN J. UNNEVEHR, PH.D., ACTING

ADMINISTRATOR, ECONOMIC RESEARCH SERVICE, U.S.

DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Dr. UNNEVEHR. Good morning. Chairman Johnson, Ranking 

Member Costa, and Members of the Subcommittee, I am Dr. 

Laurian Unnevehr, Acting Administrator of the Economic Research 

Service, or ERS. I appreciate this opportunity to discuss our agency’s programs. 

The mission of ERS is to inform public and private decision-making related to agriculture, food, the environment, and rural development. The agency’s research program is aimed at the information 

needs of USDA policymakers, but ERS information and analysis is 

also used by the media, trade associations, public interest groups, 

and the general public. In fact, our research findings improve the 

quality of the market information that guides farmers’ production 

decisions and risk management in the agricultural sector. 

ERS is the primary source of statistical indicators that, among 

other things, gauge the health of the farm sector including farm income estimates, assess the performance of the agricultural sector, 

and provide measures of food and security at home and abroad. 

ERS is in the Research, Education, and Economics mission area 

within USDA, reflecting its role in providing high-quality objective 

data and analysis. 

As you have heard here this morning, the four REE agencies are 

complementary but each has a distinct mission. For example, the 

National Agricultural Statistics Service conducts surveys that reflect facts on the ground. That is, NASS collects primary data. 

ERS, on the other hand, uses data from a variety of sources to 

carry out its research mission. For example, data collected by 

NASS are used by ERS for its farm income estimates. ERS also 

uses other sources of primary data, such as the Census Bureau current population survey that provides the basis for our domestic food 

security statistics. Thus, ERS draws on primary data from different 

sources to construct statistical indicators that inform our research 

mission. 

Economic analysis is critical to making progress on challenges 

facing U.S. agriculture, and thus, ERS collaborates with ARS in 

carrying out research that supports the entire range of REE mission area goals. ERS also coordinates with NIFA regarding extraVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00821 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
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mural funding priorities and in identifying promising new areas for 

research. 

The importance of public agricultural research to U.S. agriculture is supported in a recent ERS publication, Public Agriculture 

Research Spending and Future U.S. Agricultural Productivity 

Growth. By 2050, global agricultural demand is projected to grow 

by 70 to 100 percent due to population increase, energy demands, 

and higher incomes in developing countries. To meet this demand, 

agriculture will need to produce more output per unit of input—

that is, increased productivity will be necessary. 

Public agriculture research is the primary source of increased 

productivity, including improved crop varieties and animal breeds. 

ERS simulations indicate that if support for U.S. public agricultural research remains constant at current nominal levels, then 

productivity growth will fall and output would only increase by 40 

percent by 2050, falling short of future demand. To meet future demand growth, an increase in agricultural research support of 4.7 

percent per year, or one percent in inflation-adjusted spending 

would be needed. 

Failing to meet future demand means that more land will be put 

into production, more food would be imported into the United 

States, and food consumers would pay higher prices. This ERS 

analysis shows the importance of investments in public agricultural 

research. 

As documented in the written testimony, ERS carried out research on several topics in response to requests related to the 2008 

Farm Bill. One study in particular on food deserts provides the 

first-ever national assessment of food deserts defined by Congress 

as, ‘‘low-income areas with low access to affordable and nutritious 

food.’’

Our 2009 study and follow-up efforts at ERS to map food deserts 

identified new opportunities for business and employment. Two 

major retail chains, Wal-Mart and SUPERVALU, announced last 

week plans to open more than 250 new stores in underserved 

neighborhoods identified by USDA. This example shows how ERS 

is able to create new information of value to the business community. 

We would be happy to brief the Committee Members on the results of these or any other research projects. Mr. Chairman, this 

concludes my statement. I will be happy to answer any questions 

you or the Subcommittee may have. 

[The prepared statement of Dr. Unnevehr follows:]

PREPARED STATEMENT OF LAURIAN J. UNNEVEHR, PH.D., ACTING ADMINISTRATOR, 

ECONOMIC RESEARCH SERVICE, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, 

D.C. 

Mr. Chairman and Members of the Subcommittee, I appreciate this opportunity 

to discuss the Economic Research Service’s (ERS) research, market analysis, outlook, and data program. The mission of the Economic Research Service is to inform 

and enhance public and private decision making on economic and policy issues related to agriculture, food, the environment, and rural development. While the agency’s research program is aimed at the information needs of USDA policy makers and 

programs, ERS information and analysis is also used by the media, trade associations, public interest groups, and the general public. Our research is widely recognized in the research community for its credibility, timeliness, and use of cutting 

edge data, models, and methods. 

811

Rather than make recommendations, ERS designs its research to demonstrate to 

its users the consequences of taking alternative policy or programmatic pathways. 

Reflecting the arms-length role it plays in this regard, ERS is in the Research, Education, and Economics (REE) mission area. 

The four REE agencies are complementary and have distinct missions. The National Agriculture Statistics Service (NASS) conducts basic statistically valid surveys to create a body of data that reflects on-the-ground factual information. ERS 

constructs data series, using data from a variety of sources, to inform its program 

of research and market analysis. Data collected by NASS are used by ERS for its 

farm income estimates and research, and in the ERS program of market outlook and 

analysis. Other data and research in ERS, such as the food security statistics, rely 

on survey agreements with other Federal agencies such as the Census bureau. ERS 

provides data, research and analysis that support the wide range of program and 

policy issues of importance to USDA. 

ERS provides social science research and analysis to complement the other scientific expertise of the REE agencies in multidisciplinary research. ERS collaborates 

with ARS in carrying out research to address the needs of U.S. agriculture, including research and data development to support rural prosperity, agricultural productivity, global food security, food safety, and better diets. ERS coordinates with NIFA 

regarding extramural funding priorities and identifying promising new areas for research. 

ERS data, information and analysis meet the information needs of USDA policy 

makers and programs, and are used by the media, trade associations, public interest 

groups, and the general public. Findings are useful to inform policymakers and for 

continuously improving the quality of the market information that guides production decisions and risk management. 

ERS is also the primary source of statistical indicators that, among other things, 

gauge the health of the farm sector (including farm income estimates and projections), assess the current and expected performance of the agricultural sector (including trade), and provide measures of food insecurity here and abroad. ERS is one 

of the 14 Office of Management and Budget (OMB) officially designated Federal statistical agencies. 

ERS disseminates its research findings, market information, and statistical indicators in a variety of outlets including our website (www.ers.usda.gov), our awardwinning magazine, Amber Waves, outlook reports for specific commodity sectors, 

ERS research and information reports, Oral briefings, written staff analyses, and 

Congressionally mandated studies delivered directly to executive and legislative 

branch policymakers and program administrators, and refereed journal articles, 

which assure the professional credibility of findings. 

There were three research studies requested of ERS in the Food, Conservation, 

and Energy Act of 2008, Pub. L. No 110–246 (2008 Farm Bill). 

Study and Report on Grassland to Cropland in the Northern Plains. Native grasslands in the U.S. Northern Plains, particularly those located in the Prairie 

Pothole Region, are excellent breeding habitat for migratory birds. The conversion 

of grassland to crop production could damage this habitat and affect bird populations. House Report No. 110–627 accompanying the 2008 Farm Bill, requested the 

Secretary of Agriculture to conduct a study of the conversion of native grasslands 

to crop production. The study examined three questions: (1) How fast are grasslands 

being converted to cropland in the United States and especially in the Northern 

Plains?; (2) Can a temporary (5 year) ban on crop insurance purchase for converted 

grassland slow grassland to cropland conversion?; and (3) What has been the role 

of crop insurance and other farm programs in grassland to cropland conversion? The 

study found that: (1) roughly 770,000 acres (one percent) of 1997 rangeland acreage 

in the Northern Plains were converted to cultivated crops by 2007; (2) a 5 year ban 

on crop insurance purchase for converted grassland could slow but is unlikely to 

stop grassland to cropland conversion; and (3) the benefits of crop insurance, disaster assistance, and marketing loans increased cropland acreage by about 2.9 percent between 1998 and 2007. It is available on the ERS website at: http://

www.ers.usda.gov/Publications/ERR120/. 

Study and Report on Food Deserts. Concerned that some areas have become 

‘food deserts’—areas with limited access to affordable and nutritious foods, particularly low-income communities—Congress, in section 7527 of the 2008 Farm Bill, requested that the Department of Agriculture conduct a study on the topic. ERS took 

the lead in conducting this study, with assistance from FNS and NIFA. The study 

considered the prevalence, causes, and consequences of areas with low access to affordable and nutritious food, as well as possible solutions to reducing their negative 

impact on diets and health. The study found that (1) according to the 2000 Census 

about 23.5 million people, or 8.4 percent of the U.S. population, live in low-income 

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neighborhoods that are more than a mile from a supermarket or large grocery store. 

Of that, 11.5 million people, or 4.1 percent of the population who live in these areas 

are also low income (below 200 percent of the Federal poverty level). (2) Urban core 

areas with limited food access have higher levels of racial segregation and greater 

income inequality. In small town and rural areas with limited food access, the lack 

of transportation infrastructure is the most defining characteristic. (3) Many studies 

find a correlation between limited food access and lower intake of nutritious foods. 

However, the causal links between access and nutritional outcomes are not well understood. (4) The degree of access to affordable and nutritious food depends on supply—costs that stores face—and on consumer demand. Understanding the market 

conditions that contribute to differences in access to food is critical to the design of 

effective policy interventions. The final report was delivered in June, 2009. It is 

available on the ERS website at: http://www.ers.usda.gov/publications/ap/ap036/ . Study and Report on Animal Manure Bioenergy Operations. Section 11014 

of the 2008 Farm Bill mandated a study to evaluate the role of animal manure as 

a source of fertilizer and its potential additional uses. The study included a determination of the extent to which animal manure is utilized as fertilizer in agricultural operations by type (including species and agronomic practices employed) and 

size. The potential impact on consumers and on agricultural operations resulting 

from limitations being placed on the utilization of animal manure as fertilizer was 

evaluated, along with an evaluation of the effects on agriculture production of increased competition for animal manure use due to bioenergy production, including 

as a feedstock or a replacement for fossil fuels. The study found that (1) About 15.8 

million acres of cropland, equivalent to about five percent of all U.S. cropland, are 

fertilized with livestock manure. Patterns of manure use are driven by the agronomic needs of crops and by transport costs, which limit the distance that manure 

can be moved and create close links between types of livestock and certain crop commodities. (2) Higher commercial fertilizer prices also favor the use of manure as fertilizer. However, manure is not a complete substitute for commercial fertilizer, and 

farmers who use manure therefore reduce their use of commercial fertilizer but 

rarely eliminate it. (3) Livestock operations can comply with nutrient management 

plans by spreading manure on more of their own cropland, by removing manure to 

other farms for spreading, by altering feed mixes to reduce manure production, or 

by developing herds or flocks with reduced manure production. (4) Estimated costs 

of compliance with nutrient management plans vary sharply with the degree to 

which excess manure needs to be disposed of and the willingness of nearby farmers 

to accept manure for application to their cropland. With a limited willingness to accept manure, the study finds that production costs, including those for manure management, would likely rise by 2.5–3.5 percent for large operations. Such increases 

are unlikely to alter the emerging structure of livestock production. (5) Manure-toenergy projects are not currently in widespread use; currently, the costs generally 

exceed the revenues that most farmers can receive from electricity production. But 

because such projects use existing resources, they could provide society with benefits 

if manure replaces newly mined fossil fuels in energy production, and if methane, 

a greenhouse gas, can be captured. (6) Currently envisioned manure-to-energy 

projects are not likely to impose substantive constraints on the use of manure as 

fertilizer. The final report was delivered in June, 2009. It is available on the ERS 

website at: http://www.ers.usda.gov/publications/ap/ap037/. 

ERS also co-authored two other studies that were requested in the 2008 Farm 

Bill. 

Analysis of the Planting Transferability Pilot Program. Section 1107 of the 

2008 Farm Bill requires the Secretary of Agriculture to periodically evaluate the effect of the 2008 Planting Transferability Pilot Program (PTPP) authorized in that 

section, which relaxes the planting restrictions placed on vegetables destined for 

processing. This study was produced for the Farm Service Agency (FSA). It provides 

an overview of the market for processing vegetables and uses farm-level data from 

FSA to evaluate PTPP’s effect on the supply and price of processing vegetables. 

Using a simulation model representing the national market, the study found that 

the PTPP entices a very modest increase in processing vegetable production and a 

very modest decline in processing vegetable prices. The quantity of processing vegetables supplied was projected to increase between 0.1 and 0.6 percent, and prices 

decline by 0.3 to 2.8 percent. The study did not find that PTPP has an impact on 

fresh fruit and vegetable markets. It is available on the FSA website at http://

www.fsa.usda.gov/Internet/FSAlFile/fvlplantglrstrictslrptl120210.pdf. 

Analysis of the Limited Base Provision of the 2008 Farm Bill. Section 1101 

of the 2008 Farm Bill included a provision to suspend payments to farms with 10-

base acres or less (base-10 provision). Congress included this provision in the 2008 

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Farm Bill as a cost saving measure. Not only would the provision eliminate the payments to farms with limited base acres, but also reduce the number of farm payments processed. The 2008 Farm Bill mandated that USDA evaluate the effects of 

suspending payments under this provision. At the request of FSA, ERS evaluated 

the impact of eliminating direct and countercyclical and ACRE payments to farms 

with 10-base acres or less as required by the 2008 Farm Bill. The study examined 

the number and location of farms impacted by the provision, the characteristics of 

those farms, and the amount the government could save due to the suspension of 

program payments under this provision. The evaluation included information about 

farm characteristics and production as well as an assessment of the provision on 

specialty crop producers. The study found that (1) The base-10 provision affects a 

large number of farms but had little effect on total payments. In 2009, nearly 

371,000 FSA farms became ineligible for payments under this provision, with prohibited payments equaling an upper bound of $29.1 million. (2) The East Coast is 

more affected by the base-10 provision than the Heartland and West Coast. (3) Adverse effects on the fruit and vegetable sector are not expected as a result of the 

base-10 provision. (4) FSA farms for which payments were prohibited are generally 

part of larger operations. (5) Budgetary savings would accrue from reducing administrative costs. The study estimated $3.5 million in personnel cost savings to FSA 

and $0.2 million in mailing and paperwork savings associated with the base-l0 provision. Combined with the reduction in payment outlays to farms of a maximum 

$29.1 million, the budgetary savings from prohibited payments is estimated to total 

as much as $32.8 million for 2009. The study is available on the FSA website

http://www.fsa.usda.gov/Internet/FSAlFile/basel10lrptlcopylltrsl 6744901.pdf. The Economic Research Service has also conducted a number of studies on programs, policies, and issues raised by the 2008 Farm Bill. Among these include the 

following:

• ERS published the web-based The 2008 Farm bill Side-by-Side Comparison— a comparison of the 2008 Farm Bill with previous legislation. It offers a timesaving reference to farm bill provisions. In addition to key provisions and details by Title, the side-by-side includes links to related ERS publications and 

to analyses of previous Farm Acts.

• Economic analyses of commodity programs, including revenue-based commodity 

support, factors influencing the Average Crop Revenue Election (ACRE) program enrollment and the effect of ACRE program payments on risk reduction.

• Economic analysis of conservation programs, including the impacts of regional 

equity provisions on conservation program outcomes, participation in conservation programs by beginning, limited-resource, and socially disadvantaged operators, and the implications for program eligibility of alternative definitions of 

U.S. agricultures basic unit, the farm.

We would be happy to brief the Committee Members and staff on the results of 

any of our research projects, as well as our ongoing program of research, market 

outlook, and data analysis. 

Mr. Chairman, this concludes my statement. I will be happy to answer any questions that the Subcommittee may have.

The CHAIRMAN. Thank you, all four of you, for your testimony. 

I guess I will start the questions here maybe with one for the 

whole panel and you can selectively take it. I guess this is the category of a softball question but it is sincerely trying to give an 

overall perspective. 

Why now has the government been—and you specifically—in the 

business of collecting data? I know that is a generic question but 

maybe one of you would like to address that for us. Not adversarial, just inquisitive. 

Dr. CLARK. Well, data is very important for public and private 

decision-making. If you don’t have complete data provided by government, then private organizations collect information. It is not 

complete, it is not comprehensive, it is not available for access to 

all, and it often does not reflect reality and the current situation. 

So if you are basing your decision-making on inaccurate data, your 

decisions are going to be flawed. 

814

Dr. UNNEVEHR. I would just like to follow up and talk about the 

importance of objective data and information, especially for small 

businesses, small producers. Having a level playing field in terms 

of the market information that is available in agriculture means 

that prices are able to respond more quickly to changes in supply 

and demand. It means that producers are able to make informed 

decisions in response to those prices. And without a single objective 

and timely source of data, the market could be subject to manipulation from, well, subjective sources controlled by those who have information that is not available to all. 

The CHAIRMAN. Dr. Unnevehr, how does the mission of your 

agency, what you do daily, differ from what is done in the Office 

of the Chief Economist? 

Dr. UNNEVEHR. The Chief Economist is the advisor to the Secretary on economic issues. He often draws on the data and analysis 

carried out in the Economic Research Service. Because we are a research agency, in REE, we carry out research and analysis that is 

objective and informs policymakers of the consequences of alternative decisions. And that information is available both to the Office of the Chief Economist as well as to USDA program agencies 

for use in their program planning and analysis. 

The CHAIRMAN. Thank you. And Dr. Young, when Congress created your institute, the intent was for a ‘‘independent, scientific 

policy-setting agency for the food and agriculture sciences.’’ Do you 

believe that recent awards have been consistent with that direction? And specifically, has the construct of RFAs been determined 

by scientific need and merit? And finally, has your directorship and 

peer review panel been the sole determinates of those RFAs or 

have the offices of the Under Secretary impacted the process outside the scientific realm? I have particular interest in that on behalf of universities, but just in general. 

Dr. JACOBS-YOUNG. Chairman Johnson, thank you for your question. In addition to my role as acting Director for the National Institute of Food and Agriculture, I am also the Director for the Office of the Chief Scientist at the Department of Agriculture and responsible for leading the development of a scientific integrity policy 

for the Department. And that scientific integrity not only applies 

to NIFA but applies to the entire Department preventing or seeking to ensure nonpolitical interference in science for the Department. 

In the National Institute of Food and Agriculture, our peer review process is world renowned. We have taken many painstaking 

efforts to ensure that we are meeting the needs of our stakeholders, 

of our land-grant universities and setting priorities. And so I would 

say that, yes, we are operating a program that is a pious level of 

integrity. 

The CHAIRMAN. I don’t think we question the integrity. My specific question is are those decisions solely based on the criterion 

laid out in the statute, scientific-based, or has Secretary Vilsack 

and the Under Secretary been involved in the decision-making 

process outside that specific direction? 

Dr. JACOBS-YOUNG. Chairman Johnson, my answer is yes up 

front. And second——

The CHAIRMAN. Yes what? 

815

Dr. JACOBS-YOUNG. Yes, we use a panel of experts from across 

the scientific community to make the decisions and recommendations for the funding for our program. So no, there is no political 

interference, and yes, it is based solely on science and the merit of 

the applications that have been received. 

The CHAIRMAN. I have come to the end of my own time, so I 

would recognize the distinguished Ranking Member, Mr. Costa. 

Mr. COSTA. Thank you very much, Mr. Chairman. 

Dr. Jacobs-Young, you are obviously aware that the mandatory 

funding for Specialty Crop Research Initiative expires at the end 

of 2012. As I mentioned at the outset, I think it was an important 

breakthrough in the 2008 Farm Bill. What are your thoughts in 

terms of where we go? It is unclear whether or not that commitment is going to be there next year, and I would like you to make 

a case for why the research has been effective and plays a unique 

role if you can. 

Dr. JACOBS-YOUNG. I agree that the specialty crop industry is a 

very important industry to agriculture, a $67 billion industry, 46.9 

percent of the U.S. crop. The specialty crops program of the Specialty Crops Research Initiative that was——

Mr. COSTA. Healthy, nutritional food. 

Dr. JACOBS-YOUNG.—and it is healthy and nutritional. 

The Specialty Crops Research Initiative provides an opportunity 

for us to pay particular attention to breeding and genetics and 

genomes and pest and disease management for that industry. 

Without the Specialty Crop Research Initiative, the applicants 

would need to apply to our general plant-based programs in AFRI, 

in our Hatch programs, in our SBIR programs, in our Integrated 

Pest Management programs, and in those programs, they all focus 

on national needs. And so we could not ensure that those projects 

would rank in the funding range so to speak, so we would not be 

able to pay——

Mr. COSTA. Let me make two observations, then, because I have 

some other questions I want to ask. One, I think you should provide the Subcommittee and therefore the full Committee with the 

information on where this research is valuable as it relates to providing foods that require less use of herbicides, pesticides, other 

kinds of things that provide values to farmers as well as consumers 

because of the ability of the research, things that are less droughtresistant. And then the other observation is we probably should 

change the name specialty crops. I think people think, specialty, 

well what does that mean? Specialty crops took on the name somewhere, but it is really fruits and vegetables and all the other 

healthy stuff we eat, staples. They are not some exotic pear that 

comes from some different part of the world. 

So anyway, I need to move on here. Dr. Knipling, I hope you 

were briefed with the Agriculture Research Service, which, as you 

stated in your testimony, does good work, but they are looking at 

closures of various facilities. I wrote a letter to Secretary Vilsack 

about the UC Shafter Research and Extension Center. Its efforts 

are important for not only other varieties of cotton but pima cotton 

as well. Are you familiar with this? Can you respond to what the 

department’s outlook on this particular research center that is in 

the San Joaquin Valley? 

816

Dr. KNIPLING. Yes, I am quite familiar with that issue and the 

Shafter Research Station itself. This is a proposal in the President’s 2012 budget yet to be acted on by the Appropriation Subcommittees and Congress as a whole. The Shafter proposed closure 

is one of ten ARS laboratories that are proposed for closure for the 

general purpose of contributing to deficit reduction but also to be 

able to allocate those resources, perhaps, to some of these other priority areas of emphasis that I mentioned earlier in my testimony. 

Mr. COSTA. Well, to cut to the chase as we say, I know I will and 

I believe Congressman McCarthy will as well look toward the response back from the Secretary as to the criteria you are using. We 

are obviously all focused on cost-cutting but we want to make sure 

that the validity and the criteria that the Department is using justifies this. I know personally of the research that takes place there, 

and I think it is effective. 

Quickly, as my time is running out, Dr. Unnevehr, you talked 

about food deserts and the research that you are doing and I was 

mentioning to the Chairman how the irony is because we produce 

so much aplenty, as you know, in the San Joaquin Valley in terms 

of healthy foods and yet certain areas within the Valley have been 

designated as food deserts. And I think that is an irony because 

when you are producing half the nation’s fruits and vegetables yet 

to be qualified a food desert, I think you might want to explain in 

detail how you came to that—if the Chairman wants to allow you 

to answer the question because my time now has expired. 

The CHAIRMAN. Proceed. 

Dr. UNNEVEHR. Yes. 

Mr. COSTA. Briefly. 

Dr. UNNEVEHR. Briefly. We worked with the Healthy Food Financing Initiative to develop the definition of a food desert so we 

would have national criteria that would identify areas of greatest 

need for the U.S. And the criteria are as follows: basically low-income areas—new market tax credit zones as defined by Treasury—

which is a certain proportion of people under a certain level of income—combined with a fairly large number of people or proportion 

of people more than a mile from a supermarket in urban areas and 

more than 10 miles from a supermarket in rural areas. So it was 

a combined criteria of low-income areas with a significant number 

of folks at risk for low access. And so that is why there may be food 

production in your district but there may not be food retail outlets. 

Mr. COSTA. And so being near a fast-food outlet doesn’t count? 

Dr. UNNEVEHR. That is correct. 

Mr. COSTA. All right. I just think it is important for the Committee to understand how you arrived at that definition of a food 

desert because the irony, of course, is in the case that I pointed out 

is you have a tremendous amount of a wide variety of agriculture 

production taking place, yet the access to that same food because 

of the criteria you explained qualifies it in those terms, correct? 

Dr. UNNEVEHR. Correct. 

Mr. COSTA. Okay. 

The CHAIRMAN. Thank you, Mr. Costa. I will now turn to the 

gentleman from Pennsylvania, Mr. Thompson. 

Mr. THOMPSON. Well, thank you to the panel for being here and 

your leadership. 

817

Dr. Clark, I want to start with you. You mentioned in your testimony that NASS will for the first time have specific statistics dealing with farm energy and agroforestry. What kinds of statistics will 

this entail? 

Dr. CLARK. Well, these will be questions on the 2012 Census. 

They will not necessarily be detailed questions. They will provide 

the opportunity to use the 2012 Census as a sampling frame to develop a larger questionnaire for a survey if that were to be desired. 

It also allows the opportunity of combining that data with the demographic and economic and environmental data that is on the 

Census form. So you get a better picture of how an individual question response would relate to an agriculture operation. 

Mr. THOMPSON. Okay. Thank you. Our farmers and agriculture 

in general are not getting the credit they deserve for their extensive efforts in restoring the Chesapeake Bay. Dr. Clark or Dr. 

Knipling, since you talked about conservation efforts and watershed modeling, what kinds of information do you have on the role 

of agriculture on these restoration efforts in the Chesapeake Bay 

watershed? 

Dr. KNIPLING. ARS has a number of our research locations actually focused on the Chesapeake Bay watershed, one of which is at 

University Park in Pennsylvania on the campus of Penn State University. That is our Pasture Research Lab. And in fact they have 

been looking at the upper reaches of the watershed of the Susquehanna River and all of the Chesapeake Bay watershed. Our Beltsville Agricultural Research Center located quite close by is part of 

that network of laboratories. And we are working closely with other 

Federal agencies, state agencies, various environmental groups, 

producer organizations, and actual farmers, producers on their land 

to monitor agricultural practices and to develop such practices that 

might minimize the runoff of fertilizer, nutrients, and pesticides. 

Mr. THOMPSON. Dr. Clark, any follow up on that particular question related to the Chesapeake Bay statistics gathering in terms of 

the efforts in restoring the Bay and information that is being collected on the outcomes or the efforts that are made in agriculture? 

Dr. CLARK. I could speak to a project that has just been initiated 

with the Natural Resources Conservation Service and the National 

Agriculture Statistics Service. We are doing a pilot data collection 

next year in the Chesapeake Bay that would collect environmental 

and agricultural data from those states. And I could get you more 

details on that if you would like that. 

Mr. THOMPSON. That would be great. I look forward to visiting 

the Penn State Pasture Research Lab. I wasn’t aware of that actually. That is in my backyard for the most part. You know, I appreciate within your testimony, Dr. Knipling, in particular you talked 

about the Chesapeake Bay region’s soil losses reduced by 55 percent, nitrogen loss by 31 percent, phosphorus reduced by 41 percent. I appreciate what all of you do because obviously to make 

good decisions you need good data to make sound decisions. And 

I think the data you report really shows that we have made great 

progress within the Chesapeake Bay. Frankly, I think it helpful in 

combating other agencies that seem to use a hammer on agriculture such as the EPA. 

818

Dr. Jacobs-Young, you mentioned the Institute of Bioenergy. Can 

you talk a bit more about that and what it does? 

Dr. JACOBS-YOUNG. Yes. Thank you for the question. So one of 

our five challenge areas is renewable energy, bioenergy. And in the 

Department of Agriculture, including the National Institute of Food 

and Agriculture, we are focusing on the feedstock development 

piece of the supply chain for bioenergy production. So the production of biomass in the way that is environmentally friendly, that 

is developed to grow in areas where there is drought or flooding or 

high temperatures or salinity. And so much of our research deals 

with the genomics, the genetics, the breeding of feedstock for bioenergy. 

Mr. THOMPSON. Okay. Thank you. 

Chairman, I think my time is about expired. 

The CHAIRMAN. Thank you, Mr. Thompson. And the gentleman 

from North Carolina, Mr. Kissell. 

Mr. KISSELL. Thank you, Mr. Chairman, and I welcome the panelists today. And I want to get a little bit of a parochial statement 

out of the way but it is much more than talking about North Carolina. But in North Carolina we have a North Carolina Research 

Campus. A gentleman, Mr. Murdoch, David Murdoch has invested 

$1⁄2 billion of his own money along with the State of North Carolina 

and local monies into a research campus that is in my district. It 

is an incredible public-private investment, research equipment that 

is almost one-of-a-kind in the western hemisphere, is certainly very 

rare to find but made available to various people to come in and 

seven of our universities in North Carolina are there with a major 

focused research. Also there are private entities there and it is an 

agriculture research station there all focused upon food nutrition 

and development. If you are not familiar with it, I would love if you 

got familiar with it and came to visit us because it is just an incredible example of what can be done when we come together with 

all resources for research for the advancement of the things we are 

talking about today. 

Moving on to another area, we had a panel not that long ago and 

we were talking about biotech research, and the statement was 

made that it has been several years since we had a major advancement in biotechnology that has been approved and brought into the 

commercial arena, which I found to be of concern. When we consider the things we are talking about today that if we are going to 

be able to have the food that we need to have for the growing populations and recognizing less resources available, we have to continue to make these advancements in research and bring those 

ideas forward. 

Just wondering if any of you had any thoughts on why we are 

not able to bring this research forward into viable commercial products and what are our problems, what do we need to overcome to 

do this? 

Dr. KNIPLING. Congressman, I would start the commentary. Of 

course, when you refer to new products coming into the market, 

generally that implies genetically modified organisms, GMOs, that 

actually require regulatory approval. 

Mr. KISSELL. And that is what I am talking about. Thank you. 

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Dr. KNIPLING. Yes. And yes, there are additional products coming 

on but they are utilizing mostly the crop protectants, the protection 

against herbicides, the protection against insects and so forth. And 

it is, I guess, a significant regulatory burden, although I am sure 

my collegues here could cite some statistics of the rapid adoption 

of genetically modified crops throughout the country for some of the 

major agronomic crops. 

I would like to turn the discussion perhaps more to biotechnology 

in the sense of other forms of molecular biology that are significantly impacting crop production. That would be the use of 

genomics to understand the genetic traits and how those relate to 

phenotypic characteristics. And this is really going to be the future 

of biotechnology, the use of genomics, selective markers to support 

traditional crop and animal breeding with great precision. And we 

have tremendous examples of many species of crops, animals, some 

of the pathogens that affect those, and we can, with precision, start 

targeting genetic improvement through traditional means. 

I would just cite the rapid progress just made in the last few 

years with the dairy industry where using genetic markers from 

high-performing cows, high-performing breeding stock to make tremendous——

Mr. KISSELL. I am going to interrupt you just one second. I appreciate this tremendously, but my time is on caution right now. 

So the concerns that were expressed in that panel from a while 

back that we are not bringing forth these new products, do any of 

you just flat out disagree or do you share these concerns very 

quickly? 

Dr. JACOBS-YOUNG. Congressman Kissell, we are busy providing 

the science to base the decisions on, but this is a very complex 

issue. In the Department of Agriculture, we are producing the data 

to support three different areas—and we talk about coexistence—

GE, non-GE, and organics. So we have three alternative methods. 

And so what we are doing at REE is providing the data for decision-making. And so we do believe that all the regulatory actions 

should be based on science. 

Mr. KISSELL. Okay. And my time is out, but it is very much a 

concern that all the research that takes place at all our universities 

and other places, if we can’t bring that forward in a timely manner 

because of, yes, we should have concerns about the regulations. 

But, if that becomes an obstacle in itself which was indicated last 

time, it is something that we just need to really work on. 

Thank you, Mr. Chairman. 

The CHAIRMAN. I have no other questions. I would turn to the 

Ranking Member to see if you have another round of questions? 

And Mr. Thompson or Mr. Kissell, I would be more than happy if 

you would like. Mr. Thompson? 

Mr. COSTA. I have a couple questions. I don’t think they will take 

5 minutes unless the answers are long. 

Dr. Clark, you talked about the important role that you play in 

terms of surveys and information. How good do you believe is the 

information that you are reporting on, whether it is on prices, specialty crop surveys, on civil rights, on your focus on the organic program surveys? I am always wondering when I see this information 

as how much you attest to the validity of it. 

820

Dr. CLARK. I can tell you it is very good information. It is probably better than any other information that is out there, but it is 

collected from respondents, and so there is always some variability 

in the data that you collect. It is collected through sample surveys 

primarily. There is variability in a sampling estimate. In most 

cases, you know what the variability is and so you can factor that 

into your decision-making. Some of the efforts that we are undertaking at NASS will make our data even better than it is right 

now. Our efforts to put in a national operations center will remove 

a lot of the data collection processing efforts from 46 offices to one 

center where we can put in quality-control procedures, which are 

not feasible now in 46 different places. 

So we are working to put more control on our processes, which 

will improve the quality of our data. We are also working on more 

sophisticated estimation procedures, which will also improve the 

quality of our data. We have just begun publishing measures on 

the quality of our data, so that should help you in using the data. 

Mr. COSTA. So do you ever attempt to provide third-party 

verification if a survey is—I don’t know how—let us say a typical 

survey may be on a crop survey. I suspect it is in the hundreds if 

not larger. Do you determine that the information that was sent 

back to the Department was accurately reported? 

Dr. CLARK. We don’t generally do audits. Occasionally, we do reinterview surveys and we measure the discrepancy between the initial reported data and a second interview. Those are ways to measure different types of error. There are many different kinds of error 

that you could have in a data-collection process and we design our 

processes to minimize those errors and to measure them so that we 

have some information on the quality of what we are producing. 

Mr. COSTA. Let me ask all of you if you want to comment just 

quickly. When we look at the totality of the ag research taking 

place, and I know that it varies regionally and in terms of the tremendous diversity that reflects U.S. agriculture, but are we really 

focusing where we ought to be? I mean can you make that judgment within the four different agencies that are represented here? 

Quickly. 

Dr. KNIPLING. Just quickly, ARS is frequently asked why do we 

have 100 laboratories across the country and that does reflect the 

site specificity of agriculture, the diversity of climates, the diversity 

of customers, users, the diversity of our partnerships. And there is 

a historical previous priority-setting basis for why we have all of 

these activities in the places we do. 

Mr. COSTA. Would anyone else care to comment? 

Dr. UNNEVEHR. Well, I will just offer the comment that we all 

set our priorities in consultation with stakeholders, and certainly 

in the case of ERS, our research programs are driven by the needs 

of USDA policies and programs. 

Mr. COSTA. But you think the agriculture producers have a large 

say in it in terms of the stakeholders you are speaking of? 

Dr. UNNEVEHR. Absolutely. Although I will say that there are 

food programs for food consumers in USDA, and thus we also have 

research on those issues. 

Mr. COSTA. But those are part of the stakeholders as well, yes. 

Dr. UNNEVEHR. Exactly. 

821

Mr. COSTA. But I mean you think that on a regular basis they 

are letting their priorities be known and it is assessed within the 

Department and people feel that the focus is being spread throughout the diversity of America’s food production and its consumption? 

Dr. UNNEVEHR. We hear from a wide variety of stakeholders in 

all four of the agencies. 

Dr. JACOBS-YOUNG. Yes. And I would just like to add in NIFA 

we have a strong partnership with the land-grant universities, as 

next year we will celebrate our 150th year. And we work very 

closely with the land-grant universities in addition to all of the 

stakeholder groups that support the Department and the work that 

we are doing. And thus far, we have had a very good relationship. 

We are receiving feedback from our stakeholders. And each one of 

our solicitations for applications provides an opportunity for our 

stakeholders to give us feedback on what is presented. 

Mr. COSTA. Thank you, Mr. Chairman. I have no further questions. 

The CHAIRMAN. Mr. Thompson? 

Mr. THOMPSON. Thank you, Mr. Chairman. Thanks for the opportunity for a second round. 

An emerging issue in my area—I represent a very rural district, 

22 percent of the land mass of Pennsylvania, and in some of the 

most rural areas of my district interestingly enough is an issue of 

affordable housing. And it is a direct result of the new and certainly booming natural gas industry in Pennsylvania. Normally, we 

had no shortage of affordable housing. That has certainly changed. 

And this is for all the panelists. Are there any kinds of work that 

you are doing regarding looking at rural housing? Is that anything 

that data is collected on that you are aware of? I will take that as 

a no at this point. Okay. Like I said, this is new for us as well in 

the past few years. So I will probably be in contact with you. 

Dr. JACOBS-YOUNG. Secretary Vilsack is a part of a rural council 

that was recently announced a couple of weeks ago, and that rural 

council will be looking at those issues. How do we improve the vitality of rural communities including providing housing for the 

folks who live there and providing jobs and opportunities and creating places where young people want to return to and create lives? 

Mr. THOMPSON. And I will reach out to the Secretary. I am proud 

to say that many parts of my district, the young people are finding 

great opportunities. They are not leaving now, and frankly, we 

have a lot of folks moving into the area. So that is more of a blessing than a problem. 

And my final question, Dr. Jacobs-Young, you mentioned NIFA’s 

effort in Georgia to attract more students into the forestry-related 

careers, which I think is great. Is NIFA working on any similar forestry projects in other states and obviously specifically I was interested if there was anything going on in Pennsylvania? 

Dr. JACOBS-YOUNG. Congressman Thompson, NIFA participates 

in many different education and training opportunities. Some of 

you may have even been involved in 4–H during your primary 

school years; Ag in the Classroom is a nationwide program. We are 

now offering NIFA fellowships. We heard from our stakeholders 

that they wanted us to do more in support of the pipeline for agriculture. And so we are now offering NIFA fellowships. We have the 

822

Veterinary Loan Repayment Program where we want to place 

those veterinarians in areas where there may be a shortage. And 

the Beginning Farmers and Ranchers Program, I believe, supports 

the Georgia-based program, and that is offered nationally. So we 

have similar programs throughout the nation. And in our Youth, 

Family, and Community Institute, we are looking at many different 

areas for education and training, including looking at youth at risk. 

So, yes, we have many programs across the nation. I would be 

more than happy to find out what we have going on in Pennsylvania and provide that in a written response. 

Mr. THOMPSON. I appreciate that. Thank you to all the panelists. 

Thank you, Mr. Chairman, for this hearing. 

The CHAIRMAN. Thank you. Before we adjourn, I would ask if the 

Ranking Member, Mr. Costa, has any closing remarks to make? 

Mr. COSTA. Just to say thank you again, Mr. Chairman, for your 

due diligence, and we will continue to work together as we try to 

fashion the most responsible 2012 Farm Bill we can put together 

working with all these agencies, including those we heard from this 

morning. 

The CHAIRMAN. Well, I thank you, Mr. Costa, and Members of 

the Committee and members of the panel. I appreciate your input 

and your ongoing service to American agriculture and to American 

consumers as represented by your testimony and by your jobs. 

Under the rules of the Committee, the record of today’s hearing 

will remain open for 10 calendar days to receive additional material and supplementary responses from the witnesses, with respect 

to any question posed by a Member. 

So then with that, this hearing of the Subcommittee on Rural 

Development, Research, Biotechnology, and Foreign Agriculture is 

adjourned. 

[Whereupon, at 11:11 a.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

823

SUBMITTED STATEMENT BY R. THOMAS VAN ARSDALL, EXECUTIVE DIRECTOR, NATIONAL COALITION FOR FOOD AND AGRICULTURAL RESEARCH

July 27, 2011—via e-mail

Hon. TIMOTHY V. JOHNSON, Chairman,

Subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture, House Committee on Agriculture, 

Washington, D.C.;

Hon. JIM COSTA, Ranking Minority Member, 

Subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture, House Committee on Agriculture, 

Washington, D.C.

RE: Comments on USDA Research Programs

Dear Chairman Johnson and Ranking Member Costa:

On behalf of the National Coalition for Food and Agricultural Research (National 

C–FAR), I am pleased to submit these comments for the July 28 hearing record, 

‘‘Agricultural Program Audit: Examination of USDA Research Programs.’’ National 

C–FAR is pleased that the Subcommittee is holding this hearing learn how the 2008 

Farm Bill research title provisions are being implemented, while looking ahead to 

the 2012 Farm Bill reauthorization. 

National C–FAR is a nonprofit, nonpartisan, consensus-based and customer-led co- alition that brings food, agriculture, nutrition, conservation and natural resource 

stakeholders together with the food and agriculture research and extension community, serving as a forum and a unified voice in support of sustaining and increasing 

public investment at the national level in food and agricultural research, extension 

and education. 

Entire Farm Bill Dependent on Successful Research Title—The Research 

Title of the farm bill represents the nation’s signature Federal investment in the 

future of the food and agricultural sector. Other farm bill titles depend heavily upon 

the Research Title for tools to help achieve their stated objectives. Public investment 

in food and agricultural research, extension and education today and in the future 

must simultaneously satisfy multiple needs, including food quality and quantity, nutrition, food safety, resource preservation and producer profitability. 

Scientific outcomes and tools realized through USDA’s research, extension and 

education (REE) mission are needed to help achieve safer, more nutritious, convenient and affordable foods delivered to sustain a well nourished, healthy population; 

more efficient and environmentally friendly food, fiber and forest production; improved water quality, land conservation, wildlife and other environmental conditions; less dependence on non-renewable sources of energy; expanded global markets 

and improved balance of trade; and more jobs and sustainable rural economic development. 

Societal demands and expectations placed upon the food and agricultural system 

are ever-changing and growing. Examples of current and future needs include—

strengthened bio-security; food-linked health costs; environment and conservation; 

farm income and rural revitalization; biofuels and climate change; the world demand for food and natural fiber and improved diets; and biotechnology and genetic 

resources research and public oversight. 

Unsustainable Research Funding Deficit Threatens Future of U.S. Agriculture—At the risk of oversimplification, funding is the fuel that will fuel the 

USDA research mission engine and determine how effectively the action plan will 

be implemented. National C–FAR believes the nation has a serious food and agricultural science deficit, just as the nation has a budget deficit. This food and agricultural science funding deficit is serious, long running and unsustainable. Failure to 

address this research deficit will have real negative consequences, not just to the 

agriculture and food system but to the entire nation and U.S. economy. If USDA’s 

research mission continues to be starved for funds, any action plan is destined to 

fall short of not only its potential but of leading to the outcomes this nation needs 

from the food and agricultural system. 

National C–FAR’s support for funding encompasses the entire REE mission—both 

inter- and intra-mural programs—including the National Institute of Food and Agriculture (NIFA), the Agricultural Research Service (ARS), the Economic Research 

Service (ERS) and the National Agricultural Statistics Service (NASS). 

National C–FAR’s strong support for a NIFA and other reforms in the Research 

Title of the 2008 Farm Bill was motivated by the belief that such reforms would 

824

result in increased funding for food and ag research. Unfortunately, that has not 

been the case. 

By any measure, Federal funding for food and agricultural research, extension 

and education has failed to keep pace with identified priority needs. Federal investment in research and development at the USDA has declined by about 1⁄4 since FY 

2003. A continuing deficit in terms of a commitment to Federal funding for agricultural research will have detrimental effects on human and animal health and the 

nation’s economy. 

Recent fundamental changes in the budget process have exacerbated the deficit. 

Agricultural research has historically been more heavily ‘earmarked’ than other 

spending accounts. With the elimination of congressionally directed spending from 

the budget process and failure to recapture the funds involved, the critical USDA 

REE mission has been disproportionately impacted. 

Unless sufficient funding is achieved, the best concepts about how to organize and 

conduct research won’t be able to deliver the results needed by the nation. With the 

nation and world seeking solutions for climate change, sustainable fuel production, 

ecosystem health, food security and nutrition challenges, now is the time to grow 

investment in our nation’s agricultural research enterprise. 

Research Business Plan Needed—This quest starts with articulating a compelling case to fund unmet needs. National C–FAR recommends that this Subcommittee and USDA make it a priority to identify current and future challenges 

to the food and agricultural sector and the REE needs and resource requirements 

to respond to those challenges in the coming years in a timely and effective manner. 

USDA has involved stakeholders in the development of a new REE Action Plan. 

Consistent with our stated mission, National C–FAR’s input focused on how the 

plan articulates the case for addressing the longstanding REE funding deficit and 

helps lay the groundwork for necessary increases in Federal investment. 

National C–FAR recommended that the REE Action Plan include a thoughtful 

and credible ‘‘Research Business Plan,’’ either as part of the Action Plan, or as a 

necessary complement. The REE Action Plan is a hollow shell unless the resources 

needed to accomplish stated goals are identified and articulated, with a business/

action plan to secure the necessary resources. 

Such a ‘‘Research Business Plan’’ should make the best case possible for how 

much funding is needed to achieve the goals and REE programs intended to meet 

those goals, as well as the likely consequences of not providing sufficient funding. 

For example, an evaluation of performance and needs should address the following—

• What is the best estimate of funding needed to accomplish stated desired outcomes?

• What is the appropriate food and agricultural science role of the public sector 

versus the private sector? Publicly financed REE is a necessary complement to 

private sector research, focusing in areas where the private sector does not have 

an incentive to invest, when (1) the pay-off is over a long term; (2) the potential 

market is more speculative; (3) the effort is during the pre-technology stage; 

and (4) where the benefits are widely diffused.

• How will the Action Plan (and outcomes) be impacted by different funding levels—for example, current funding, 2X funding, funding at a level identified as 

needed to accomplish all stated goals, 0.5X funding?

• How will priorities change based on different funding levels? How will outcomes 

be affected? What priority needs will not be addressed due to insufficient funding? Will outcomes still be timely to meet identified challenges, like closing the 

productivity gap in time to feed nine billion people?

Those responsible for making difficult decisions about shaping the 2012 Farm Bill 

and future budgets in Congress and the Administration arguably don’t have even 

the basic information needed to make informed decisions about REE funding levels 

with the information currently available. Those who read the USDA Action Plan 

should also come away with an appreciation of what will and won’t be addressed 

at different resource levels.

• While studies touting the high returns on public investment are helpful, that 

doesn’t appear to be compelling enough to attract additional funding, especially 

when the trend is to during these challenging budget times is to cut spending, 

not increase it.

• National C–FAR recommends that USDA’s REE Action Plan—and its implementation—should emphasize the current leadership’s commitment to focusing 

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resources to make a difference rather than spreading limited funds a mile wide 

and an inch deep.

• The Action Plan should articulate choices on what will and will not be done 

[and done well] at different resource scenario levels.

Invest in Research Business Plan—USDA and the Administration should base 

annual budget requests for the REE mission on such a needs assessment. The 

crafting of the research component of the 2012 Farm Bill should be shaped around 

meeting future challenges and needs. 

If ‘‘Research Business Plan’’ answers aren’t available, then it is time to invest additional resources in developing defensible answers—even if just through a building 

block approach, improving the quality of information provided to budget decision 

makers a step at a time so they can better understand the rationale of budget requests and likely consequences of funding decisions. This is a shared responsibility—of USDA, Congress and REE stakeholders—those who authorize and fund 

the programs, those who manage the programs and those who need the outcomes. 

For example, a ‘‘productivity gap’’ has been identified in tracking what will be 

needed to produce enough food to feed nine billion people.

• What is the commensurate ‘‘research gap’’ in developing the science and tools 

to close the productivity gap?

• What are defensible estimates of how much will be needed—and when (lead 

times)?

• What is the appropriate and/or necessary portion/role of public sector REE investment?

• How much can leveraging contribute to closing the ‘‘research gap?’’

• What are the consequences of not committing to adequate public investment?

To the credit of the USDA Economic Research Service, a peer-reviewed, new report, ‘‘Public Agriculture Research Spending and Future U.S. Agricultural Productivity Growth: Scenarios for 2010–2050,’’ (Heisey, Wang and Fuglie, Economic Report No. EB–17, July 2011, http://www.ers.usda.gov/publications/eb17) has just 

been released that provides timely analysis and perspective on the vital linkage between investments in research and productivity. In brief:

‘‘By 2050, global agricultural demand is projected to grow by 70–100 percent 

due to population growth, energy demands, and higher incomes in developing 

countries. Meeting this demand from existing agricultural resources will require 

raising global agricultural total factor productivity (TFP) by a similar level. The 

rate of TFP growth of U.S. agriculture has averaged about 1.5 percent annually 

over the past 50 years, but stagnant (inflation-adjusted) funding for public agricultural research since the 1980s may be causing agricultural TFP growth to 

slow down. ERS simulations indicate that if U.S. public agricultural R&D 

spending remains constant (in nominal terms) until 2050, the annual rate of agricultural TFP growth will fall to under 0.75 percent and U.S. agricultural output will increase by only 40 percent by 2050. Under this scenario, raising output beyond this level would require bringing more land, labor, capital, materials, and other resources into production.’’

National C–FAR recommends utilizing this analysis and related new information 

as a reference point in evaluating USDA’s research program and moving forward. 

In ‘‘Investing in a Better Future through Public Agricultural Research,’’ a Commentary released on March 14, 2011 by the Council for Agricultural Science and 

Technology (CAST Commentary QTA2011–1), the authors make a number of salient 

observations that National C–FAR believes are germane to the funding debate and 

the future viability of USDA’s research program—

• The benefits of past public investments in ag research are measurable on multiple fronts. For example, farm productivity has increased, and the share of U.S. 

household income spent on food has declined to less than 10%.

• Numerous studies find rates of return on public ag research investments of 20 

to 80%. Huffman and Evenson (2006) estimate a marginal rate of return of approximately 50%. This level is approached by few other public sector investments.

• Publicly funded food and ag research in the U.S. has been essentially flat over 

the past 2 decades, while funding of other research fields has increased significantly. Public funding of agricultural research in the rest of the world during 

the same time period has outpaced investment in the U.S.

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• Advances in new science and technologies involve long gestation periods, with 

later advances built on earlier successes. Time lags between publicly funded ag 

research and benefits are long, with a delay before any benefits are realized.

• There is an important and necessary role for public research because the private sector faces weak incentives to undertake research in numerous areas of 

national interest. Most research in general, basic and pre-invention sciences occurs in public and private universities. Applied research is shared among universities, government institutions and private firms.

• Funding for both inter- and intra-mural research is important, as is formula 

funding, given the ‘‘placed-based’’ nature of agricultural science.

• World population continues to grow. Demand for food will be much greater, and 

limited new land is available.

• Agricultural research is a low-cost source of future agricultural productivity and 

output increases, but advances in the frontiers of science are difficult and uncertain, translating into long lags, typically 15–20 years. Productivity cannot be 

easily jump-started after a long period of stagnant investment in public agricultural research.

• With agricultural research funding delays, productivity increases are expected 

to slow, and world food prices will rise more rapidly than otherwise projected 

during the next 40 years.

Other touchstone issues in evaluating USDA’s research program include:

• The role of the private versus public sector in committing to investments.

• How does our nation invest in the science needed to do our part in helping feed 

a global population that is projected to grow to nine billion people in the not 

too distant future?

• How do we develop the science needed to achieve other goals expected and demanded of the food and agriculture sector, like biofuels, conservation, nutrition, 

food safety and environmental protection?

• How do we develop the science needed to sustain the natural resource base 

upon which agriculture depends while achieving all the other goals?

• What are the top priorities of USDA’s research program? While USDA’s research Action Plan presents a list, it is not clear what is most important and 

how resources are being allocated.

National C–FAR believes it is imperative to lay the groundwork now to respond 

to the many challenges and promising opportunities ahead through Federal policies 

and programs needed to promote the long-term health and vitality of food and agriculture for the benefit of both consumers and producers. Stronger public investment 

in food and agricultural REE is essential in producing research outcomes needed to 

help deliver beneficial and timely solutions on a sustainable basis. The potential 

payoff is enormous for Americans’ health, rural America and agriculture and the nation’s economy, and world food security. It is equally sobering to reflect on the likely 

negative consequences of not making the necessary investments. 

National C–FAR and others in the stakeholder community bear a commensurate 

responsibility in articulating needs and making the case for increased funding. It 

is incumbent on USDA, stakeholders in the REE and ‘‘customer’’ communities, and 

the Congress to find the will and a way to increase investments in this vital mission 

area and turn our shared hope into an operational reality. 

Thank you for the opportunity to share our views. 

Sincerely,

R. THOMAS VAN ARSDALL, Executive Director.

SUBMITTED STATEMENT BY BIOTECHNOLOGY INDUSTRY ORGANIZATION

The Biotechnology Industry Organization (BIO) is the world’s largest biotechnology organization, providing advocacy, business development and communications services for more than 1,100 members worldwide. BIO members are involved 

in the research and development of innovative healthcare, agricultural, industrial, 

and environmental biotechnology products. 

BIO would like to emphasize the value of agricultural research programs within 

the U.S. Department of Agriculture (USDA), which have sparked agricultural innoVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00838 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN

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vation and will help to solve the critical food and energy security challenges facing 

a rapidly growing global population. 

The United Nations predicts that the global population will rise to nine billion in 

2050 and over ten billion by 2100. It is predicted that global agricultural production 

will need to double by 2050. Because there is a fixed amount of arable land on the 

planet, to meet these challenges, new and existing technologies must provide at 

least 70 percent of the necessary increase in food production. Robust agricultural 

research will allow scientists to improve technologies and invigorate know-how so 

that humans can best produce food on a limited land base using safe, efficient, and 

sustainable methods. 

In the 6 decades since 1948, USDA estimates show that U.S. farm output increased by an average of 1.58 percent per year, inputs under the control of farmers 

increased by only 0.06 percent per year, and agricultural productivity increased by 

1.52 percent per year (USDA–ERS, 2011). Hence, virtually all the increase in U.S. 

farm output during the past 60 years is due to productivity increases and a negligible amount is due to increases in conventional inputs. According to the USDA 

Economic Research Service, farm productivity has risen 158 percent since 1948. 

This increase can be attributed to changes in the efficiency of farming practices and 

research and development of agricultural technologies. The return on investment of 

agricultural, food, nutrition, and natural resource research and development is $20 

or more to the U.S. economy for every dollar spent (Fuglie et al., 2007). 

Growth in agricultural productivity during the last 2 decades of the twentieth century, which was sizable in developed countries and in some developing countries, 

was built on previous investments in agricultural research. For modern agriculture 

to fully flourish, investments in agricultural research must grow. Today, the United 

States is a leader in agriculture, producing $312 billion in agricultural products and 

exporting $108 billion annually. 

Unfortunately, however, investments in public agricultural research in the United 

States has slowed since 1980 (Huffman and Evenson 2006; Pardey et al. 2006). 

In the United States, broadly defined public agricultural research expenditures 

grew by an average of 3.2 percent per year (adjusted for inflation) during the 2 decades leading up to 1980. No net growth occurred between 1980 and 1990, and net 

growth averaged only 0.6 percent per year between 1990 and 2009. Public funding 

of agricultural research in the rest of the world during the last 2 decades has outpaced U.S. research investment. 

Meeting the various complex modern agricultural demands of a growing global 

population will require raising global agricultural total factor productivity (TFP). 

The rate of TFP growth of U.S. agriculture has averaged about 1.5 percent annually 

over the past 50 years, but stagnant (inflation-adjusted) funding for public agricultural research since the 1980s may be causing agricultural TFP growth to slow 

down. ERS simulations indicate that if U.S. public agricultural R&D spending remains constant (in nominal terms) until 2050, the annual rate of agricultural TFP 

growth will fall to under 0.75 percent and U.S. agricultural output will increase by 

only 40 percent by 2050. Under this scenario, raising output beyond this level would 

require bringing more land, labor, capital, materials, and other resources into production (Heisey et al., 2011). With mean lags of 15 to 20 years, agricultural productivity cannot be easily jump-started after a long period of stagnant investment in 

public agricultural research. 

BIO supports research funding for technologies that will provide fuel for the future, improve agricultural production efficiency, and allow us to raise crops in 

harsher climates. Research in plant and animal biotechnology will play a key role 

not only in improving food, feed, and fuel production and reducing the environmental impact of agriculture but also in improving models of human disease and 

producing pharmaceuticals for animal and human uses. Agricultural and forestry 

biotechnology also contribute to rural economies and rural job growth. 

BIO supports increased funding for the research programs at the Department of 

Agriculture, including all programs within the Research, Education, and Economics 

mission area: the National Institute of Food and Agriculture and its Agriculture and 

Food Research Initiative, the Agricultural Research Service, the National Agricultural Statistics Service, and the Economic Research Service and research conducted 

by the Forest Service. Results from these important research programs can be leveraged across the research arms of the government to solve critical problems that require science-based, cross-cutting and multi-disciplinary solutions. 

Through biotechnology, animals can be raised that produce high concentrations of 

readily extractible human antibodies and other proteins to treat human diseases 

and protect military personnel and to replace tissues for regenerative medicine. 

High level research can be performed on livestock that have been engineered to accurately develop diseases that afflict humans. As agriculture continues to be pressed 

828

to be ever more productive and economically and environmentally sustainable, the 

targets of research are to increase yields; to develop more nutritious and safer foods; 

to reduce requirements for water, nitrogen and other inputs; and to develop disease 

resistant crops that require fewer chemical protectants, crops that are used to 

produce more and better biofuels, and crops that produce useful and valuable materials that will fuel the industrial and pharmaceutical sectors of the future. 

While biotechnology has been heavily utilized in commodity crops, it also shows 

great promise for specialty crops and in parts of the world not already realizing its 

benefits. Nutrient-enhanced crops and those tolerant of sub-standard growing conditions benefit people around the world who otherwise would have difficulty getting 

the proper nutrition. Many of these advances will come out the research performed 

within public institutions, such as the USDA. Most research in general, basic and 

pre-invention sciences, occurs in public and private universities. Applied research is 

shared among universities, government institutions and private firms. 

Publicly financed Research, Extension, and Education is a necessary complement 

to private sector research, focusing in areas where the private sector does not have 

an incentive to invest, when (1) the pay-off is over a long term; (2) the potential 

market is more speculative; (3) the effort is during the pre-technology stage; and (4) 

where the benefits are widely diffused. Public research, extension and education 

help provide oversight and measure long-term progress. Public research, extension 

and education also act as a means to detect and resolve problems in an early stage, 

thus saving American taxpayer dollars in remedial and corrective actions. 

The Research Title of the farm bill represents the nation’s signature Federal investment in the future of the food and agricultural sector. Other Farm Bill titles 

depend heavily upon the Research Title for tools to help achieve their stated objectives. Continued authorized and appropriated support for public research benefits 

producers domestically and worldwide while preparing for the future of all of agriculture. 

References 

Fuglie, K. and P.W. Heisey. September 2007. Economic Returns to Public Agricultural Research. EB–10, U.S. Dept. of Agriculture, Economic Research Service. 

Heisey, P., S.L. Wang, and K. Fuglie. July 2011. Public Agriculture Research 

Spending and Future U.S. Agricultural Productivity Growth: Scenarios for 2010–

2050. EB–17, U.S. Dept. of Agriculture, Economic Research Service. 

Huffman, W.E. and R.E. Evenson. 2006. Science for Agriculture: A Long-Term Perspective. 2nd ed. Blackwell Publishing, Ames, Iowa. 

Pardey, P.B., N.M. Beintema, S. Dehmer, and S. Wood. 2006. Agricultural Research: A Global Divide? IFPRI Food Policy Report. International Food Policy Research Institute, Washington, D.C. 

U.S. Department of Agriculture-Economic Research Service (USDA–ERS). 2011. 

Agricultural Productivity in the United States, http://www.ers.usda.gov/Data/

AgProductivity/ (8 February 2011). 

SUBMITTED QUESTIONS

Response from National Institute of Food and Agriculture; Agricultural Research Service; National Agricultural Statistics Service; and Economic 

Research Service, U.S. Department of Agriculture 

Questions Submitted By Hon. Steve Southerland II, a Representative in Congress 

from Florida 

Question 1. Thank you for the U.S. Department of Agriculture’s ongoing efforts 

and commitment toward research to sustain and foster U.S. agriculture production 

in our nation. I recognize the critical significance of continuation and strengthening 

of research programs authorized in the 2008 Farm Bill to address pressing agricultural priorities, particularly for specialty crops, a significant segment of the U.S. agricultural industry and in my home state of Florida. 

The 2008 Farm Bill, the Food, Conservation, and Energy Act of 2008 (P.L. 110–

246) strengthened emphasis on research, including establishment of the Specialty 

Crop Research and Initiative (Section 7311) to address, ‘‘the critical needs of the specialty crop industry by developing and disseminating science-based tools to address 

needs of specific crops and their regions, including—

‘‘(1) research in plant breeding, genetics, and genomics to improve crop characteristics, such as—

(A) product, taste, quality, and appearance; 

(B) environmental responses and tolerances; 

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(C) nutrient management, including plant nutrient uptake efficiency; 

(D) pest and disease management, including resistance to pests and diseases resulting in reduced application management strategies; and 

(E) enhanced phytonutrient content;

‘‘(2) efforts to identify and address threats from pests and diseases, including 

threats to specialty crop pollinators; 

‘‘(3) efforts to improve production efficiency, productivity, and profitability over 

the long term (including specialty crop policy and marketing); 

‘‘(4) new innovations and technology, including improved mechanization and 

technologies that delay or inhibit ripening; and 

‘‘(5) methods to prevent, detect, monitor, control, and respondto potential food 

safety hazards in the production and processing of specialty crops, including fresh produce.’’

Could you please elaborate on how the Specialty Crop Research Initiative (SCRI), 

aimed by its authors of the House Agriculture Committee to meet the critical challenges of specialty crop production in this nation—and my home state of Florida—

which ranks second in the nation in specialty crop value, is serving these ends? 

Answer. NIFA believes that the keys to meeting the critical challenges of the specialty crop industries in this country, as articulated by the House Agriculture Committee in SCRI, are two-fold: (1) engaging stakeholders and incorporating their 

needs and (2) funding the highest quality science to develop the tools that address 

those needs. 

NIFA implements those two keys for an impactful program through several mechanisms. First, the Request for Applications (RFA), published each year to solicit applications for funding, includes a short list of priorities for each of the five focus 

areas identified in the SCRI legislation. These non-exclusionary priorities are written to be fairly generic for many specialty crops, as they were gleaned from the strategic plans and research roadmaps of many major U.S. specialty crops. Each year, 

NIFA reevaluates those priorities and makes minor adjustments as industry needs 

dictate. Second, from its inception, the SCRI program has asked applicants to include stakeholders and stakeholder organizations as full participants in their proposed projects. This means stakeholder engagement in: identifying project objectives, conducting the research and extension activities, and evaluating project impacts. Furthermore, each applicant must demonstrate that their project addresses 

an industry need. In the peer-review process, each application is evaluated on these 

elements of stakeholder needs and engagement as part of the application’s ‘‘relevance’’ score. Based on the recommendations from a 2011 external review of the 

SCRI program, NIFA has reevaluated the relevance scoring and made some modifications for fiscal year 2012. Third, NIFA actively seeks to include scientists from 

specialty crop industries on peer-review panels to help ensure that the industry perspective is fully considered and appreciated. Fourth, in addition to a possible score 

for relevance, each application receives up to an equal score for ‘‘scientific merit.’’ 

Because of the highly competitive nature of the SCRI program, only those applications that have demonstrated strong industry relevance/need and high scientific 

merit are eventually considered for funding. Finally, most projects funded by the 

SCRI program are required to create, and meet regularly with, an advisory board 

consisting of industry, academia, NGOs, technology providers, etc. In most cases, 

specialty crop stakeholders are the majority, or only, members of these advisory 

boards. 

During the first 3 years of SCRI awards, investigators in Florida are participating 

in 16 different SCRI projects covering a variety of specialty crop needs that are important to that State’s industries. 

In addition, the following excerpt from the SCRI external review report’s Conclusion section attests that this NIFA program is meeting the intents of the SCRI legislation:

The Review Panel believes that the SCRI Program is following the guidelines 

mandated by the 2008 Farm Bill. The Panel views the SCRI as an essential/

critical Program to maintain and enhance the competitiveness of the specialty 

crop industry in the U.S. . . . Results from funded projects that are now in midstream have already demonstrated value to the specialty crop industry.

Question 2. Specifically, within the Specialty Crop Research Initiative consideration process is there recognition of the following factors:

a. Crops facing imminent dangers and threats to future production?

b. Magnitude and significance of the specialty crop in crop value nationally?

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c. Awards representational of specialty crop value regionally/state, in award distribution?

d. Priorities of producer organizations and state agricultural bodies?

Answer. Applications to the SCRI program are evaluated by a scientific peer-review process based on both relevance to U.S. specialty crop industries and scientific 

merit. These two components of the review for each application are weighted equally. Given the extremely competitive nature of the program and the overall quality 

of applications received each year, only those applications that score very high on 

both components are considered for funding. Certainly, ‘‘imminent dangers and 

threats to future production’’ is something that many good applications clearly demonstrate. In general, the quality of proposals as determined by review panels is such 

that NIFA could fund twice as many projects each year, if the funds were available 

to SCRI. 

Unlike the Specialty Crop Block Grant Program, which considers crop size in each 

state as part of funding allocations, a scientific grant program like the SCRI is intended to fund the best science, irrespective of any crop’s magnitude regionally or 

nationally. While scientific merit can be evaluated quite objectively, it is much more 

problematic to impartially assess the needs of one industry/crop versus another. So, 

in the peer-review process, NIFA only asks that the panel assess whether stakeholder need has been established, and then let scientific merit guide the relative 

ranking of applications. All things being equal among a group of applications, however, the panelists may consider the size of the industry in its final ranking. 

One would expect that larger, national industries would have a larger, established 

base of scientific investigators already engaged, and so that scientific community 

would apply to SCRI at a higher rate and, all things being equal, receive a commensurate level of SCRI funding. In the first two years of the SCRI, NIFA examined 

the geographic distribution of awardees and subcontractors and found that maps depicting geographic participation in SCRI awards matched very closely maps displaying the intensity of U.S. specialty crop production. So, while a scientific grant 

program does not seek geographic proportionality, for the rationale stated above, 

SCRI projects and specialty crop production seem to align geographically. 

In addition to the response already provided regarding stakeholder input to the 

SCRI, each published RFA asks for stakeholder input to the program. Also, when 

preparing for the 2011 external review of SCRI, NIFA made a special request for 

stakeholder input to help inform the review team, publishing that request in the 

RFA and on our agency web site.

Question 3. What are USDA’s plan to address the National Agricultural Research 

Extension, Education and Economic Advisory Board (NAREEE) Report on Effectiveness of Research, Extension and Economics Programs for U.S. Specialty Crops,

issued on July 23, 2011, which included recommendations and improvements from 

the specialty crops stakeholder community regarding the Specialty Crop Research 

Initiate? 

Answer. NIFA has received a copy of the NAREEE Board’s report. A number of 

the issues raised in that report, with respect to the SCRI, are similar to several recommendations made by the SCRI external review panel in their report (see response 

to question no. 1 above). Many of that external review report’s recommendations 

have been incorporated into the upcoming 2012 Request for Applications. However, 

for the record and to cover any remaining issues, NIFA plans to release a response 

to the NAREEE Board’s report shortly. 

Question 4. I would like to formally commend the U.S. Department of Agriculture 

for their July 11 announcement to ‘‘Strengthen Efforts to Address Citrus Greening’’ 

through funding of $2 million into research through Agricultural Research Service 

(ARS) and USDA’s National Institute of Food and Agriculture (NIFA) focusing $9 

million in a 3 year, competitive grants program targeting citrus greening, as well 

as establishment of a Citrus Disease Research and Development Advisory Committee These efforts are greatly appreciated and extremely valuable, and as is noted 

in the USDA’s announcement:

Citrus greening is one of the most devastating diseases affecting any commercial 

agricultural crop, according to the National Academy of Sciences. Citrus greening threatens to destroy over 1 million commercial citrus acres that have an annual production value of approximately $3 billion across the nation. Yearly 

losses could reach $10 billion if citrus greening is left unchecked.

Could you please detail how this vital collaborative and research initiative to 

Strengthen Efforts to Address Citrus Greening will be carried out? (Agencies of jurisdiction, timeline, collaborative stakeholders/research partners?) 

831

* Exception Texas ARS award in 2008. 

Answer. Under the aegis and leadership of the APHIS Citrus Health Research 

Program, ARS, and NIFA together with the National Citrus Mutual representatives 

from Florida, Texas, and California have formed a Science and Technology committee that coordinates research across the Citrus Greening research community. 

This coordination includes keeping an active inventory of currently funded research 

projects and helping the research community organize into strategic outcome working groups. The strategic outcomes, identified in an industry stakeholder workshop 

are designed to produce short-, medium- and long-term outcomes, respectively:

a. Maintain citrus groves that are already infected with Citrus Greening productive and alive (primarily Florida);

b. Keep Citrus Greening disease from moving into areas that already have the 

disease vector (the Citrus Psyllid)—(Texas, Arizona, and California); and

c. Create new Psyllid management systems and Citrus genetics that render Citrus Greening a non-issue.

Although each of these outcomes have distinct research pathways and activities, 

there are overlaps and feedback among them. 

The Citrus research community has embraced the strategic plan and is organized 

in working groups representing the three outcome areas, which meet via teleconference and report to the Science and Technology committee monthly. 

The Citrus research community meets biannually and will meet again in October, 

2011. These meetings facilitate intra- and inter working group communications, research gap analyses, and peer and stakeholder review of research outcomes. It is 

expected that this upcoming meeting, and future such meetings, will be the genesis 

of collaborative projects leading to participation in NIFA funding opportunities on 

Citrus Greening. 

While the SCRI program has explicitly solicited Citrus Greening projects for the 

past several years, NIFA plans to further strengthen that focus in the upcoming 

2012 SCRI solicitation. Specific research and extension targets in that solicitation 

will be closely aligned with the priorities identified by the Science and Technology 

committee, as noted above. 

Additionally, after receiving input from many stakeholders, Secretary Vilsack 

charged REE to work with the relevant components of USDA to devise several other 

strategies to address this serious threat. To this end, REE has been considering all 

options—from a stand-alone committee to an entity within the NAREEE board to 

broader task forces—in the formation of the new committee Citrus Disease Research 

and Development Advisory Committee. While the details of the committee are still 

being worked out, the USDA is committed to ensuring that solutions incorporate 

continued input from producers, industry representatives, and the scientific community. As timing and flexibility are of utmost importance, REE is working quickly to 

design a mechanism that meets the interests and requirements of the many entities 

involved.

Question 5. Could you indicate the specific reasons why Citrus Greening was not 

successful in an award through the Specialty Crop Research Initiative, for the last 

3 years,* in concert with the recommendations of the Florida, Texas and California 

collaborative research efforts, given that citrus ranks second in crop value among 

fruit and vegetable crops, according to USDA’s National Agricultural Statistics Service, and USDA indicates that ‘‘Citrus greening is one of the most devastating diseases 

affecting any commercial agricultural crop, according to the National Academy of 

Sciences’’? 

Answer. SCRI has funded a number of projects in its first three years of existence 

that are dealing with the Citrus Greening issue. Two of these projects (ARS, 2008; 

Arizona State Univ., 2010) address management and control strategies, covering 

prevention and economics. Two other projects (Carnegie-Mellon, 2008; Wash. State, 

2009) are developing the management technologies for growers to better control the 

disease (precision spraying, early detection of HLB infection) and the genetic information for researchers to develop new plant material (Citrus genomics database). 

As noted above, the peer-review process equally weights relevance and scientific 

merit in the evaluation of applications. No one disputes the relevance of Citrus 

Greening projects to the needs of the citrus industry. However, in a competitive scientific grant program, applications must also demonstrate high scientific quality. 

Many of the applications to date dealing with Citrus Greening have lacked the necessary scientific merit for peer-review panels to rank them high enough for NIFA 

to consider them for funding. For reasons of confidentiality, NIFA only releases to 

an application’s project director detailed information (individual reviews and peerVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00843 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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review panel summary) regarding why their project was not recommended for funding.

Question 6. The National Plant Diagnostic Network (NPDN) was established in 

2002 by legislative mandate to enhance agricultural security through plant diagnostic laboratories carried out by National Institute of Food and Agriculture (NIFA) 

and through the collective efforts of many individuals representing Land Grant Universities, federal agencies, state departments of agriculture, and other stakeholders, 

the NPDN has grown into an internationally respected consortium of plant diagnostic laboratories. The specific purpose of the NPDN is to provide a nationwide network of public agricultural institutions with a cohesive, distributed system to quickly detect high consequence pests and pathogens that have been introduced into agricultural and natural ecosystems, identify them, and immediately report them to appropriate responders and decision makers. 

NPDN Funding is located in the NIFA Budget: National Institute of Food and Agriculture President’s Proposed Budget for 2011. Funding located under Integrated 

Activities—Item for Food and Agriculture Defense Initiative (This item includes 

both USDA National Animal Health Laboratory Network (NAHLN). 

I understand that funding for the National Plant Diagnostic Network, has been 

reduced by roughly 37% from FY 2010 to FY 2011:

2010—$9.830 million enacted $4,283,386 to NPDN

2011—$5.988 million reduction Enacted, $2,675,000 to NPDN

Can you please let me know the Administration’s plans and specific funding priorities for the National Plant Diagnostic Network program? 

Answer. The specific purpose of the NPDN is to provide a nationwide network of 

public agricultural institutions with a cohesive, distributed first detector and laboratory system to quickly detect high consequence pests and pathogens that have been 

introduced into agricultural and natural ecosystems, identify them, and immediately 

report them to appropriate responders and decision makers. To accomplish this mission, the NPDN has invested in plant diagnostic laboratory infrastructure and training, developed an extensive network of first detectors through education and outreach, and enhanced communication among agencies and stakeholders responsible 

for responding to and mitigating new outbreaks. 

NPDN is in the final year of a 5 year (May 2007–May 2012) Cooperative Agreement, and the strategic objectives for the five year plan are to:

1. Maintain a strong diagnostic network through communications, evolving 

standard operating procedures, and diagnostic training for high consequence 

pathogen and pest outbreaks;

2. Enhance the national database of real-time diagnostic records;

3. Develop and keep a registry of trained first detectors (field scouts, extension 

agents, certified crop consultants) of high consequence pathogens and pests;

4. Exercise, in every state, communications with regulatory officials.

The work plan for 2011, due to the budget cut, must curtail objective three activities, eliminate objective four activities, and reduce the number APHIS training sessions that diagnosticians can attend. Additionally, the NPDN was to complete the 

roll-out of a Quality Assurance/Quality Control accreditation system by the end of 

the Cooperative Agreement. With reduced funding, the QA/QC system will not be 

implemented. 

The highest order priority for the NPDN is to maintain its network of diagnostic 

laboratories. The NPDN system is currently responding to two high-impact outbreaks of regulatory plant diseases. 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE—

AGRICULTURAL RESEARCH SERVICE

1. Program Name 

Agricultural Research Service (ARS). 

2. Subprograms/Department Initiatives 

Animal Production and Protection

The mission of the ARS Animal Production and Protection (APP) national programs is to provide the scientific information and tools to help support the U.S. food 

animal industries to continue to compete successfully in worldwide trade, provide 

the supply of nutritional animal products required by the nation, and contribute toward global food security. APP accomplishes this mission by research to maximize 

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production efficiency and animal health through scientific innovation and the discovery and development of new technologies focused on national priorities. Strategic 

public-private partnerships are established to achieve our mission, including support 

of government action and regulatory agencies responsible for trade, biodefense, and 

global food security. Emphasis will be given to genetic improvements of traits related to production and production efficiencies and germplasm conservation; understanding the mechanisms of disease resistance, and the development of tools to prevent, control, or eradicate diseases that threaten our food supply and public health; 

and identifying and developing sustainable systems for production of high quality 

meat, fish, milk, and eggs that also ensure animal health and well-being. The portion of the program that produces new solutions to the many veterinary problems 

created by arthropod pests and vectors will be leveraged to solve related problems 

affecting human health and the well-being of American citizens.

APP Statistics:

Total Projects: 108

Total Locations: 37

Total Scientists: 295

The Food Animal Production program conducts research to furnish scientific 

information about biotechnologies and management practices that ensure an abundant supply of competitively priced animal products. The mission of the Food Animal Production Program is to: safeguard and utilize animal genetic resources, associated genetic and genomic databases, and bioinformatic tools; develop a basic understanding of the physiology of livestock and poultry; and develop information, 

tools, and technologies that can be used to improve animal production systems, all 

to ensure an abundant, safe, and inexpensive supply of animal products produced 

in a healthy, competitive, and sustainable animal agriculture sector of the U.S. 

economy. 

U.S. systems of agricultural animal management and production face formidable 

challenges. One of the most exacting challenges is successful adaptation to the accelerating demands of society that impact animal productivity and product quality. The 

demands placed on the national system of food animal production by a rapidly 

changing world can only be met by technologies that optimally harness the inherent 

genetic potential of animal and plant germplasm in concert with certified industry 

and food marketing practices. Production systems that successfully identify, preserve, and harness that genetic potential will maximize profits, secure supply, increase market competitiveness, sustain small and mid-sized producers, and maintain genetic diversity and consumer confidence. 

This National Program addresses high-priority national needs for:

• Understanding, Improving, and Effectively Using Animal Genetic and Genomic 

Resources

• Enhancing Animal Adaptation, Well-Being and Efficiency in Diverse Production 

Systems

• Measuring and Enhancing Product Quality

Total Projects: 32

Total Locations: 17

Total Scientists: 91

The Animal Health program aims to deliver scientific information and tools to 

detect, control, and eradicate animal diseases of high national priority. The goal of 

the program is to protect and ensure the safety of the nation’s agriculture and food 

supply through improved disease detection, prevention, control, and treatment. 

Basic and applied research approaches will be applied to solve animal health problems of high national priority. Emphasis will be given to methods and procedures 

to control animal diseases through the discovery and development of diagnostics, 

biotherapeutics, animal genomics applications, disease management systems, animal disease models and farm biosecurity measures. 

Achieving results in veterinary medical research, which provide useful information for problem-solving, often demands an integrated approach in which the experimental design may range from knowledge development at the molecular level to 

clinical trials that will lead to the development of countermeasures for preventing 

and controlling a disease outbreak in the field. This national program provides the 

means for the integration of research. Major initiatives draw upon relevant expertise within the national program, coordinating and integrating that expertise to develop a specific useful application of the knowledge. Research projects also attract 

Federal, university, industry and international partners. Because a significant number of projects in the animal health research portfolio focuses on the discovery of 

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novel technologies, intellectual property strategies will be addressed in project plans 

to facilitate technology transfers and the investment by the private sector in the development of these technologies. 

This National Program addresses high-priority national needs for:

• Biodefense research

• Animal genomics and immunology

• Zoonotic, respiratory, reproductive, neonatal, enteric and parasitic diseases

• Transmissible spongiform encephalopathies

Total Projects: 40

Total Locations: 11

Total Scientists: 103

The Veterinary, Medical and Urban Entomology program develops more effective means to prevent or suppress insects, ticks and mites that affect animal and 

human well being. The program aims to eliminate losses to animal production and 

products caused by arthropod borne diseases and arthropod induced trauma; to reduce the risk to humans from arthropod borne zoonotic diseases; to enhance the 

safety of animal products and the quality of life for humans; and to increase the 

value and competitiveness of United States agriculture. 

More detailed behavioral studies of certain activities (e.g., blood sucking) will result in the association of chemical and other stimuli with these behaviors. A new 

understanding will also present the possibility of entirely new tools being developed 

to alter arthropod behavior in such a way that their damage is prevented. Beyond 

the research needed to understand the nature of these behaviors, bioassays that accurately measure them will be necessary to find out what chemical or physical factors affect them. Before integrating bioassays into an evaluation scheme, they 

should be validated independently to be sure that they are measuring what is intended. Electrophysiology is another essential part of development, representing a 

range of activities and measurements. Among the organizational products required 

for maximum impact are a standard vocabulary for influences on hematophagous arthropods and a standard concept of how to develop useful products. 

This National Program addresses high-priority national needs for:

• Medical Entomology for the Public and Military

• Veterinary Entomology of Livestock and Poultry

• Pests that Damage Structures

• Fire Ants, other Invasive Ants, and Household Pests

Total Projects: 13

Total Locations: 7

Total Scientists: 49

The vision for the Aquaculture program is to support a thriving domestic industry based on improved genetic stocks and scientific information on biotechnologies 

and management practices to ensure a high quality, safe supply of healthful seafood 

and aquatic products. 

The U.S. aquaculture industries face formidable challenges. The demand for seafood is increasing worldwide, yet the ability for U.S. aquaculture producers to meet 

that demand requires development of technologies to reduce the cost of production 

while maintaining and improving product quality. Producers, processors and breeders are in need of systems that successfully identify, promote, and harness the 

aquatic animal improvements to maximize profits, secure supply, reduce environmental impacts, increase market competitiveness, sustain small and mid-sized scale 

producers, and earn consumer confidence. Research in the disciplines of genetics, 

nutrition, health, and physiology will support the biological improvement of animals, 

while ecology, engineering and economics will support the improvement of systems 

and help to ensure sustainability. Our research components strive to develop and 

ensure an abundant, safe, and affordable supply of seafood products for the 300 million U.S. consumers produced in a healthy, competitive, and sustainable aquaculture sector, a sector supported by over 4,300 aquaculture farmers that produced 

in excess of $1 billion worth of goods in 2005 (National Agricultural Statistics Service (NASS), 2005 Census of Aquaculture). 

This National Program addresses high-priority national needs for:

• Understanding, Improving, and Effectively Using Animal Genetic and Genomic 

Resources

• Enhancing Animal Performance, Well-being and Efficiency in Diverse Production Systems

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• Defining Nutrient Requirements, Nutrient Composition of Feedstuffs and Expanding Alternative Ingredients

• Improving Health and Welfare of Aquatic Animals

• Improving Production Systems, Developing New Products and Enhancing Product Quality

Total Projects: 23

Total Locations: 11

Total Scientists: 52

Crop Production and Protection

Crop Production and Protection (CPP) National Programs deliver science-based information, genetic resources, and technologies for increased crop productivity and 

quality, protection from plant diseases and pests, and economically and environmentally sustainable methods of crop production that meet consumers’ demands for 

a ready supply of high quality, safe, affordable and nutritious food, the public’s desire to protect the environment, and the global community’s needs for food security.

CPP Statistics:

Total Projects: 379

Total Locations: 78

Total Scientists: 816

The Plant Genetic Resources, Genomics, and Genetic Improvement program 

provides research that addresses national priorities of genetic resource conservation, 

genomics and genetic improvement. This program harnesses the inherent genetic 

potential of plants. This research develops, and effectively applies new knowledge 

of crop genes, genomes, and the control and expression of genes, to accelerate increases in productivity and improves the quality of crops; realized via traditional 

and novel plant breeding methods. 

Genetic resources are the foundation of our agricultural future. ARS crop 

genebanks contain the sources of resistance to biotic and abiotic stresses and new 

genes to improve the quantity and quality of crops. To ensure that these genes are 

available for research and breeding, ARS continues to acquire and conserve crop genetic resources, develop more effective screening methods for identifying superior 

traits, characterize the genetic profiles of genebank holdings, ensure that genetic resources are distributed where and when they are needed, and safeguard these collections and their associated information for future generations. 

New crop genetic improvement methods are incorporating advances in genome sequencing and analysis, molecular genetics, computational biology, and metabolic engineering. New crop breeding theories and strategies are being developed that more 

effectively capture the intrinsic genetic potential of germplasm-especially to improve 

key agronomic and horticultural traits-resulting in crops tailored for consumer and 

producer needs. 

This National Program addresses high-priority national needs for:

• Plant and Microbial Genetic Resource Management

• Crop Informatics, Genomics, and Genetic Analyses

• Genetic Improvement of Crops

• Plant Biological and Molecular Processes

Total Projects: 179

Total Locations: 55

Total Scientists: 360

The Plant Diseases program delivers research to develop and improve ways to 

reduce crop losses caused by plant diseases. The program focuses on developing effective disease control strategies that are not environmentally harmful, do not 

threaten the safety of consumers, and are compatible with sustainable and profitable crop production. 

Plant diseases—spread by viruses, viroids, bacteria, phytoplasmas, fungi, nematodes or other methods—cause billions of dollars in economic losses each year to agriculture, landscape, and forest settings in the United States. These diseases reduce 

yields, lower product quality or shelf-life, decrease aesthetic or nutritional value, 

and, sometimes, contaminate food and feed with toxic compounds. Control of plant 

diseases is essential for providing an adequate supply of food, feed, fiber and aesthetics. Yet, growers spend millions of dollars each year only to partially control the 

pathogens that attack their crops and other plants. Reducing these losses has long 

been a high priority for agriculture and for the Agricultural Research Service (ARS). 

Besides the obvious monetary benefits to producers and processors, successful plant 

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health protection is important for maintaining and increasing food supplies with 

minimal increases in land under cultivation. Additionally, the knowledge and management of plant diseases of quarantine significance are vital, not only for protecting our domestic crops from foreign disease, but also for maintaining and expanding export markets for plants and plant products. 

This National Program addresses high-priority national needs for:

• Disease diagnosis: Detection, identification and characterization of plant pathogens

• Biology, ecology, epidemiology, and spread of plant pathogens and their relationships

• Plant disease resistance

• Biological and cultural strategies for sustainable disease management

Total Projects: 69

Total Locations: 29

Total Scientists: 141

The Crop Protection and Quarantine program provides fundamental and applied research to develop improved strategies for the cost-effective management and 

control of native and invasive insect, mite, and weed pests, while minimizing impacts on the environment and human health. The rationale for this National Program is that the development and implementation of improved management and 

control strategies will contribute to maintaining the competitiveness and vitality of 

agriculture in America. 

Insects, mites, and weeds have a considerable impact on our nation’s food and 

fiber crops, affecting domestic supply and exports with economic losses estimated to 

be in the tens of billions of dollars. This program also provides research contributing 

to greater productivity in traditional and organic agricultural and horticultural systems by improving and developing new, innovative control strategies, by improving 

existing control methods and by alerting growers and producers to problems so informed decisions regarding mitigation can be accomplished at the earliest possible 

time. 

This National Program addresses high-priority national needs for:

• Systematics and Identification (of invasive insects, mites and weeds as a threat)

• Protection of Agricultural and Horticultural Crops

• Protection of Natural Ecosystems

• Protection of Post-Harvest Commodities and Quarantine

Total Projects: 92

Total Locations: 39

Total Scientists: 211

The Crop Production program’s research develops economically and environmentally sound technologies that improve the production efficiency, quality, health 

and value of America’s crops. 

Contemporary U.S. crop enterprises for annual, perennial, and greenhouse crop 

production are complex and depend on access to and successful integration of highly 

diverse components, such as a steady stream of superior crop varieties, new strategies for mitigation of crop losses from biotic and abiotic stresses, and mechanization 

and automation of undesirable or labor intensive activities. This program is developing successful new production systems to sustain or increase crop yield and quality by focusing on (1) productive and profitable crop management strategies for new 

and traditional crops that conserve natural resources; (2) efficient and effective integrated management strategies for multiple pests; (3) mechanization of management 

activities to address labor constraints; and (4) improved crop management models 

and decision aids. 

Pollination is a critical element in agriculture as well, because honey bees pollinate more than 130 crops in the United States and add $15 billion in crop value 

annually. Declining honeybee populations and honey production due to Colony Collapse Disorder (CCD) require special attention. CCD has now increased honey bee 

mortality to more than 30 percent. This program provides research to improve 

honey bee and non-apis bee health and well being, better hive management practices for more robust pollination, development of emerging technologies to be used 

to address current and future challenges of the bee keeping industry, conserving bee 

biodiversity, and develop pollinators for land restoration.

This National Program addresses high-priority national needs for:

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• Integrated Sustainable Crop Production Systems

• Bees and Pollination

Total Projects: 24

Total Locations: 17

Total Scientists: 71

The Methyl Bromide Alternatives program provides research to develop alternatives to the agricultural uses of methyl bromide, a widely used fumigant and 

known ozone depletor. Methyl bromide is a highly efficacious fumigant that has for 

a number of decades been used on more than 100 crops, in forest and ornamental 

nurseries, and on wood products to control insects, nematodes, weeds, and pathogens, and thus, has been critical to important segments of U.S. agriculture. The research focuses on strawberry, pepper, tomato, perennial replant, field-grown propagative material, and ornamental and cut flower cropping systems for pre-plant 

methyl bromide use, and for processing and storage structures, fresh and durable 

commodities, and quarantine for post-harvest use. The ultimate goal of this National Program is to make available to the U.S. agriculture community environmentally acceptable, practical, economically feasible, and sustainable alternatives to 

methyl bromide. 

The U.S. Department of Agriculture (USDA) has vigorously responded to the 

methyl bromide challenge. It has brought together agricultural and forestry leaders 

from private industry, academia, state governments, and the Federal Government 

to assess the problem, formulate priorities, and implement research directed at providing solutions to the problems predicted by the methyl bromide phase-out. The Agricultural Research Service (ARS) was assigned the lead in this process and has emphasized the importance of research on alternatives to methyl bromide. 

This National Program addresses high-priority national needs for:

• Pre-plant Soil Fumigation Alternatives

• Post-Harvest Alternatives

Total Projects: 15

Total Locations: 10

Total Scientists: 33

Natural Resources and Sustainable Agricultural Systems (NRSAS)

Sustainable agricultural systems produce the agricultural crops and livestock 

needed by societies; protect the natural resource foundation essential for production, 

processing, and other uses; and provide economic and social value to producers, 

processors, consumers, and communities. ARS develops scientific knowledge that enhances quality of life for all Americans by ensuring safe, affordable, and sustainable 

food, feed, fiber and renewable energy while enhancing natural resources and the 

environment. ARS research creates profitable agricultural systems that capitalize on 

the nation’s vast renewable natural resources to preserve the fertility and productivity of soils, provide abundant and high quality water supply and clean air, maintain healthy agricultural and rangeland ecosystems, and offer renewable energy and 

fuel alternatives that form the basis of U.S. economy and the well being of rural 

America.

NRSAS Statistics:

Total Projects: 171

Total Locations: 71

Total Scientists: 518

The Water Availability and Watershed Management National Program conducts research that helps provide integrated, effective, and safe water resource management. There is no substitute for fresh water, nor are there replacements for its 

essential role in maintaining human health, agriculture, industry, and ecosystem integrity. ARS scientists conduct fundamental and applied research on the processes 

that control water availability and quality and develop new and improved technologies for managing agricultural water resources to help ensure the health and 

economic growth of the nation. Results provide the technologies to manage and deliver safe and reliable fresh water supplies to the agricultural, urban, and industrial 

sectors of society while enhancing the aquatic natural resources of the nation. Results are a key part of the USDA’s Conservation Effects Assessment Project (CEAP), 

which seeks to determine and improve the effectiveness of farm bill conservation 

practices and programs. Strategic approaches include coordination of ARS’ infrastructure of experimental watersheds and rangelands, located in all major production regions of the nation, as a single long-term agroecosystems research network 

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focusing on natural resources that provide the foundation for agriculture, especially 

water. 

This National Program addresses high-priority national needs for:

• Effective Water Management in Agriculture

• Erosion, Sedimentation, and Water Quality Protection

• Improving Conservation Effectiveness

• Improving Watershed Management and Ecosystem Services in Agricultural 

Landscapes

Total Projects: 47

Total Locations: 30

Total Scientists: 151

The Climate Change, Soils, and Emissions National Program conducts research to improve the quality of atmosphere and soil resources, understand how agriculture and climate affect each other, develop strategies to adapt agricultural systems to climate variability, mitigate gaseous and particulate emissions, and convert 

research results into decision-support capabilities for end-users. 

The effects of climate change create challenges to agriculture and offer new opportunities for production, and these are identified and managed through research on 

crop and livestock responses and resilience to abiotic stresses; changing risks related 

to pests, pathogens, and weeds; soil, nutrient, and water management; and carbon 

sequestration. Enhancement of soil productivity is a focus of ARS research and together with crop improvement research, offers promise for meeting future global agricultural demands. Atmospheric emissions from agriculture are under increased 

scrutiny due to potential negative environmental effects and threats to human and 

animal welfare. Emissions contribute to tensions between agriculture and residential communities from visibility impairment (haze) and nuisance odors. Strategic, coordinated research projects include the nation-wide Greenhouse gas Reduction 

through Agricultural Carbon Enhancement network (GRACEnet project); the Renewable Energy Assessment Project (REAP) in collaboration with universities; development of models such as the Soil and Water Assessment Tool (SWAT), which 

is used worldwide for conservation and land management applications; widely used 

models for assessing and managing wind and water erosion; and leadership in the 

Global Research Alliance on Agricultural Greenhouse Gases. 

This National Program addresses high-priority national needs for:

• Improvements of Air Quality via Management and Mitigation of Emissions from 

Agricultural Operations

• Knowledge and Technologies for Reducing Atmospheric Greenhouse Gas Concentrations Through Management of Agricultural Emissions and Carbon Sequestration

• Agriculture to Adapt to Climate Change

• Maintaining and Enhancing Soil Resources

Total Projects: 38

Total Locations: 29

Total Scientists: 97

The Bioenergy National Program conducts research to develop technologies to enable sustainable commercial production of biofuels by the agricultural sector in ways 

that enhance our natural resources without disrupting existing food, feed, and fiber 

markets. 

ARS research creates new varieties and hybrids of bioenergy feedstocks with optimal traits; develops new optimal practices and systems that maximize the sustainable yield of high-quality bioenergy feedstocks; develops new, commercially preferred conversion technologies; and optimizes both the production of plant feedstocks 

and the biorefining of agricultural materials to bioenergy and value-added coproducts. Much of the research is conducted through the USDA Regional Biomass Research Centers, emphasizing development of crops and sustainable production methods that can be regionally successful. Strategic planning tools to identify research, 

technologies, and organizational actions needed to achieve commercial viability of 

biofuels are developed in cooperation with other agencies and industry. This research leads to strengthened rural economies, provides knowledge for increased supplies of renewable transportation fuel, enhance energy security, and supports efforts 

to improve the U.S. balance of trade. 

This National Program addresses high-priority national needs for:

• Feedstock Development

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• Feedstock Production

• Biorefining

Total Projects: 14

Total Locations: 6

Total Scientists: 45

The Agricultural and Industrial Byproducts National Program conducts research to effectively and safely manage and use animal wastes and other agricultural and industrial byproducts in ways that maximize their potential benefits, 

while protecting the environment and human and animal health. 

Improvements are needed in animal feeding and management regimens to increase the proportion of dietary nutrients retained in the animal or animal products 

while decreasing the quantity of dietary nutrients excreted and lost to water, air, 

and soil. Research tracks the fate and transport of excreted nutrients in the major 

soil-crop systems common to animal agriculture, providing the foundation for developing Best Management Practices. New application methods improve nutrient use 

efficiency and incorporate wastes to conserve nitrogen while maintaining adequate 

crop residue to protect the soil from erosion and runoff. These practices, and their 

associated nutrient management plans, are developed from sound understanding of 

the fate and transport of specific nutrients for major soils, hydrologic conditions, and 

cropping systems. Other research addresses pathogen inactivation and die-off as 

well as their potential for regrowth as functions of environmental conditions (e.g.,

temperature, moisture, etc.) during all stages of waste management. Technologically 

sound methods are developed for utilizing byproducts that are characterized as beneficial and result in products that are commercially sustainable. This includes 

blending, composting, and amending byproducts as well as developing land application and management techniques that improve soil, water, and air quality in addition to improved plant growth. Much of the research is done in collaboration with 

private sector entities, with a strong emphasis on development of useful, safe, commercially desirable products from what would otherwise be considered wastes. 

This National Program addresses high-priority national needs for:

• Management, Enhancement, and Utilization of Manure Nutrients and Resources

• Manure Pathogens and Pharmaceutically Active Compounds (PACs)

• Atmospheric Emissions

• Developing Beneficial Uses of Agricultural, Industrial, and Municipal Byproducts

Total Projects: 17

Total Locations: 15

Total Scientists: 54

The Rangeland, Pasture & Forages National Program develops and integrates 

improved management practices, germplasm, and land-use strategies to optimize 

productivity, economic viability and environmental enhancement in managing vegetation, livestock and natural resources on private and public grass and forage lands. 

Grazing lands constitute the largest single land use in the United States. Their 

environmental and economic sustainability are essential to the nation, yet they are 

under stresses from many environmental factors and land uses. Research to mitigate these problems and strengthen their value include: enhancing conservation and 

restoration of ecosystems and agroecosystems through improvements based on the 

application of ecological principles; improving management of fire, invasive weeds, 

grazing, climate change and other agents of change; developing grazing-based livestock systems that reduce risk and increase profitability in existing and emerging 

markets; developing improved grass and forage legume germplasm for livestock, 

conservation, turf and bioenergy and bioproduct systems; improving the sustainability of turf management; and improving decision-support systems including improving inventory, monitoring, and assessment tools. 

This National Program addresses high-priority national needs for:

• Rangeland Management Systems to Improve Economic Viability and Enhance 

the Environment

• Pasture Management Systems to Improve Economic Viability and Enhance the 

Environment

• Sustainable Harvested Forage Systems for Livestock, Bioenergy and Bioproducts

• Sustainable Turf Systems

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Total Projects: 35

Total Locations: 25

Total Scientists: 106

The Agricultural System Competitiveness and Sustainability National Program integrates information and technologies to develop dynamic systems that enhance the productivity, profitability, energy efficiency, and natural resource management of American farms. 

The program uses interdisciplinary systems research to develop an understanding 

of how different kinds of farm enterprises function, and how changing or introducing 

new technology affect their productivity, profitability, energy efficiency, and natural 

resource stewardship. Finding the best combinations of practices helps producers 

achieve their production goals, while enhancing the environmental goods and services derived from agricultural lands. Diverse and dynamic agricultural systems in 

development can adjust to changing environmental and market conditions to increase the long-term financial viability and competitiveness of farms, enhance natural resource quality, contribute to the vibrancy of rural communities, and increase 

the food, fiber, and energy security for the nation and the world. 

This National Program addresses high-priority national needs for:

• Agronomic Crop Production Systems

• Specialty Crop Production Systems

• Integrated Whole Farm Production Systems

• Integrated Technology And Information To Increase Customer Problem Solving 

Capacity

Total Projects: 20

Total Locations: 18

Total Scientists: 65

Nutrition, Food Safety and Quality

The Nutrition, Food Safety and Quality (NFSQ) research area leads and coordinates ARS research and information dissemination to define the role of food and its 

components in optimizing health for all Americans; develop tests and processes that 

keep the food supply safe; reduce and control pathogens and toxins in agricultural 

products; and improve the economic viability and competitiveness of American agriculture by enhancing the quality and utilization of agricultural products for the benefit of producers and consumers.

NFSQ Statistics:

Total Projects: 226

Total Locations: 47

Total Scientists: 553

The Human Nutrition program provides the science base to undergird U.S. food 

policy, i.e., the Dietary Guidelines for Americans, thus enabling Americans to make 

nutritious and health-promoting dietary choices. The mission of the Human Nutrition Program is to define the role of food and its components in optimizing health 

throughout the life cycle for all Americans. Distinctive aspects of this research include an emphasis on a food-based approach to improving health; the core capability 

to sustain long-term research; the availability of state-of-the-science equipment and 

facilities for human research across the lifecycle; and the conduct of multidisciplinary research to improve the nutritional value of the American diet and the food 

supply. 

This research is focused on maintaining health and preventing disease through 

food-based recommendations. This unique USDA research does not duplicate other 

Federal departments. The research emphasizes study of essential nutrients and nonessential health-promoting components in foods, evaluating the nutritional value of 

diets eaten by people in America, determining how consumption of specific foods or 

food components can enhance health, and developing strategies to improve food 

choices and lifestyle factors to promote health in Americans. Increasingly, research 

focuses on addressing over-consumption and caloric imbalance (obesity related research) with incorporation of cutting-edge genomic and metabolomic technologies. 

Unique national resources that are part of this Program include the National Nutrient Databank and the ‘‘USDA What We Eat in America/NHANES’’ national food 

consumption survey. Partnerships with other Federal agencies and nonprofit and industry groups allow ARS to leverage funds and build upon common goals. Information dissemination programs operated by the National Agricultural Library address 

general and specific human nutrition issues and audiences and include general Web 

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portals such as www.nutrition.gov for the American consumer as well as the targeted websites for professionals such as the Food and Nutrition Information Center. 

This National Program addresses high-priority national needs for:

• Monitoring Nutrient Composition of the Food Supply and Consumption by 

Americans

• Strengthening the Scientific Basis for Dietary Guidance for Health Promotion 

and Disease Prevention

• Developing Strategies for Prevention of Obesity and Related Diseases

• Conducting Research on Life Stage Nutrition and Metabolism

Total Projects: 89

Total Locations: 9

Total Scientists: 172

The Food Safety program protects food from pathogens, toxins, and chemical contamination during production, processing, and preparation. The safety of the food 

supply is a highly visible public health issue and a national priority for the Federal 

Government. The continued priority is partly due to the diverse and complex system 

of production, processing, and distribution of food in the U.S. and the increasing 

global distribution. Outbreaks of foodborne illness are seen as a major cause of morbidity and mortality, and economic costs, both nationally and internationally. The 

full extent of the disease burden is still unknown, even with recent Centers for Disease Control (CDC) estimates. Foodborne illnesses can be caused by microbial pathogens, parasites, viruses and an array of foodborne contaminants such as chemicals 

or toxins. The cause of every outbreak is still unknown, but persistent outbreaks 

of major commodity-specific foods that may directly affect public health, regulations, 

industry, and trade, require our immediate attention. 

ARS has developed an integrated approach to food safety, that is, food production 

is seen as a continuous process from production, through harvesting and processing, 

to retail and the consumer. Pre- and post-harvest are not separated but considered 

an integrated production system of safe and quality food. Interventions and controls 

that are applied to one phase will ultimately affect the other segments of food production and processing. Food safety research has also changed during the past decade, having moved past simple, surveillance/prevalence studies to asking more complex questions. Consequently, researchers are required to think creatively to solve 

problems, which means considering alternate perspectives, exploiting new opportunities and technologies, and crossing conventional boundaries. Multidisciplinary collaborations, especially between Centers/Institutes, nationally and internationally 

are an absolute necessity. 

ARS provides the intramural infrastructure and expertise to address short and 

long-term needs in food safety. Because of the infrastructure, ARS is uniquely 

poised to respond quickly to emerging and critical food safety issues. ARS also collaborates closely with Federal regulatory agencies as well as industry, professional, 

and international stakeholders to assist in addressing their specific food safety 

needs. 

This National Program addresses high-priority national needs for:

• Foodborne Contaminants

• Microbial Population Systems

• Systems Biology (Pathogenicity and Virulence)

• Technologies for the Detection and Characterization of Microbial Contaminants

• Intervention and Control Strategies to Decrease or Eliminate Pathogens

• Predictive Microbiology and Data Acquisition

• Chemical and Biological Contaminants: Detection Methodology, Toxicology and 

Toxinology

Total Projects: 64

Total Locations: 14

Total Scientists: 180

The Quality and Utilization of Agricultural Products program conducts research to enhance the economic viability and competitiveness of U.S. Agriculture by 

maintaining the quality of harvested agricultural commodities or otherwise enhancing their marketability, meeting consumer needs, developing environmentally 

friendly and efficient processing concepts, and expanding domestic and global market opportunities through the development of value-added food and nonfood technologies and products, except energy and fuels. 

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Research is being conducted on the development of nonfood, nonfuel biobased 

products from agricultural commodities and byproducts. Interest in biobased products has increased as consumers and governments have sought more environmentally friendly products that provide alternatives to petroleum and which do not 

contribute to greenhouse gases. Thus, biobased products can reduce our dependency 

on petroleum and provide a more sustainable technology for the future. Biobased 

products that were once too expensive to commercialize may now be affordable. 

There is some public concern that biobased products could contribute to the rising 

cost of food in the U.S. This program seeks opportunities to develop biobased products from agricultural feedstocks that do not compete with food, in cooperation with 

other ARS national programs and partners. ARS also supports quality and processing research on crop fiber, such as cotton, and animal hides, leather and wool. 

Stakeholders who produce fibers and hides constitute an important segment of our 

rural economy. These industries are severely impacted by energy and production 

costs and have lost market share to foreign competition. Technologies that improve 

fiber quality, reduce the energy consumption of processing equipment, and develop 

new products are needed to help the fiber industry to compete in a global market. 

This National Program addresses high-priority national needs for:

• Methods and Technologies to Enhance Quality & Utilization of Food Crops and 

Animals

• Methods and Technologies to Enhance Quality & Utilization of Agricultural Fibers

• Non-Food, Non-Fuel Biobased Products and Sustainable Technologies/Processes

Total Projects: 73

Total Locations: 24

Total Scientists: 201

ARS International Research Programs

ARS engages in international collaborations primarily that support its mission but 

may also conduct research under external funding that falls within its mission and 

also supports critical U.S. Foreign Policy initiatives. ARS international research collaborations enable an economically vibrant U.S. agricultural system by developing 

technologies, knowledge and tools that help U.S. producers be more productive, efficient and sustainable. ARS research also support the Foreign Agricultural Service’s 

(FAS) mission by providing key research that helps FAS project crop production estimates in other countries and by engaging in collaborations that underpin food security. The Office of International Research Programs (OIRP) is an ARS Headquarters Office under the Office of National Programs in Beltsville, Maryland. The 

OIRP maintains a cadre of International Affairs Specialists who: (1) liaise with each 

National Programs; (2) provide special focus on specific regions of the world; and 

(3) oversee a portfolio of programs/projects that are important to U.S. foreign policy 

objectives as well as the agency’s objectives. 

This Program is currently focused on three major areas:

• Global Food Security

• Biosecurity Engagement

• International Partnerships

ARS Operates four Overseas Biological Control Laboratories (OBCLs) that offer 

the benefits of international projection of mission, training for key personnel, and 

broadening of potential solutions for invasive species. Having operations overseas 

forms a 365 days per year presence for ARS, something that could never be accomplished by temporary visits and assignments. As a result of that dedication to their 

missions and host countries, the overseas laboratories have established reputations 

as reliable partners. The flow of information, training, and agricultural progress go 

in both directions. The OBCLs are administered out of ARS Headquarters by a Director within the Crop Production and Protection (CPP) mission area of the Office 

of National Programs. There are four OBCLs:

• The European Biological Control Laboratory in Montpelier, France

• The South American Biological Control Laboratory in Buenos Aires, Argentina

• The Australian Biological Control Laboratory in Brisbane, Australia

• The Sino-American Biological Control Laboratory in Beijing, China

ARS Technology Transfer Programs

USDA broadly defines technology transfer as the adoption of research outcomes 

for public benefit. Innovations arising from USDA intramural research, such as new 

843

or improved technologies, processes, products and services, benefit the nation by increasing productivity, increasing efficiency (keeping costs low) and enhancing global 

competitiveness for the U.S. agriculture sector. Thus, technology transfer functions 

are critical to accelerating utility of public R&D investments, creating economic activity, and in job creation and sustainable economic development. 

Principal among the formal instruments of technology transfer are Cooperative 

Research and Development Agreements (CRADAs), patents, and invention licenses 

for commercialization by the private sector, as well as material transfer agreements 

and germplasm releases to industry. 

To assist USDA in transferring technologies to the private sector, the Agricultural 

Research Service (ARS) created the Agricultural Technology Innovation Partnership 

(ATIP) program consisting of ten economic development organizations across the 

U.S. serving as ‘‘intermediaries’’ to further enhance the likelihood that research outcomes would be adopted by the private sector for commercialization. ATIP members 

coordinate regional cosponsored events with ARS, showcasing available technologies 

for licensing, and USDA intramural research capabilities available to businesses to 

assist in solving high priority, mission-related issues connected to the agricultural 

industries. Additionally, members provide the current or prospective private sector 

partners of ARS with access to business mentors, entrepreneur schools, seed and 

venture funds, and the Manufacturing Extension Partnership programs. 

The Agricultural Research Service (ARS) has been delegated authority by the Secretary of Agriculture to administer the patent program for ARS, the review of 

CRADAs and the technology licensing program for all intramural research conducted by USDA. 

ARS’s Office of Technology Transfer (OTT) is assigned the responsibility for protecting intellectual property (IP), developing strategic partnerships with outside organizations, and performing other activities that effectively transfer ARS research 

outcomes and technologies to the marketplace. ARS–OTT is centralized in policy 

and approval procedures, but maintains field offices to provide one-on-one customer 

service to ARS researchers. To facilitate technology transfer, OTT is organized into 

five sections that include Administrative/Headquarters, Patents Licensing, Marketing and Technology Transfer Coordinators (TTCs). TTCs are seven highly qualified employees stationed across the United States who are responsible for facilitating the development and transfer of USDA technologies. They serve as liaisons 

with scientists, ARS managers, university partners, and the private sector. 

Technology transfer is accomplished through many mechanisms, such as:

• developing written information for customers and stakeholders, including scientific publications, publications in trade journals, and reports to stakeholders;

• releasing plant germplasm to the public;

• transferring research materials to scientists outside of ARS;

• entering into formal partnership agreements, such as CRADAs, and other cooperative agreements;

• delivering specific research results to regulatory agencies to support their actions;

• licensing IP (patents, Plant Variety Protections Certificates, and biological materials);

• participating in meetings with industry organizations and universities, workshops and field days; and distributing information to the public via the ARS Information Staff, the National Agricultural Library, and other sources.

Enhanced Use Lease Authority

Enhanced Use Lease (EUL) is provided under the authority of section 7409 of the 

Food, Conservation and Energy Act of 2008, Public Law 110–246 (112 Stat. 1651), 

commonly referred to as the 2008 Farm Bill. This authority grants the Secretary 

of the Department of Agricultural (USDA) the authority to establish a pilot program 

at the Beltsville Agricultural Research Center (BARC) to lease non-excess property 

to any private or public entities. 

Five calls for proposals were issued by ARS on or about December 4, 2010, requiring businesses to set forth a Business and Leasing plan, a Development plan and 

a Property Management plan. 

Within the Development plan, businesses are to identify the collaborative research 

in-place or a plan of a potential project consistent with the research mission of the 

USDA. The six calls for proposals were directed to (i) use of greenhouse facilities, 

(ii) 10 acres for bio-byproduct production, (iii) an under-utilized composting facility. 

(iv) Transgenic greenhouse space; and (v) large animal transgenic research space, 

with screened barn, surgery room, lunch room and storage and rest room facilities. 

844

Four proposals were submitted by small businesses. All of which had existing 

agreements with ARS. Proposals received from Renewable Carbon Management, 

LLC and EnviRemed were uncannily similar and were directed to a full scale 

composting business located at BARC. The two proposals were rejected by committee as being deficient in failing to outline a research component directed to the 

mission of ARS–USDA. Both entities were advised by letter of the deficiencies in 

their proposals and no reply was received. The existing agreements with these entities have expired. 

A Proposal from New Agriculture was received directed to production of plant proteins from tobacco for use in plastics manufacture and as a nutritional supplement. 

The proposal was unfocused and New Agriculture was invited to tour the facility 

in which the proposed operation was to be housed and to submit a more focused 

proposal directed to the specific space to be occupied. New Agriculture failed to follow-up; however a CRADA agreement is still active and is being worked to completion with this entity. 

A proposal from Plant Sensory Systems Inc. was received for the purpose of leasing two transgenic greenhouses in building 010 at BARC, for a total of 1859 ft2 for 

3 years. The proposal was directed to growing transgenic corn for purposes of 

drought and heat tolerance and efficiency of nitrogen use. A lease was successfully 

negotiated and Plant Sensory Systems occupied space on or about May 1, 2011. 

Today both soybean and corn are being grown for the stated research purpose. In 

a direct quote from the company, ‘‘we could not live without the space!’’

This EUL project supports the USDA priority of responding to climate change and 

is part of the Climate Change, Soils and Emissions (#212).

Buildings and Facilities

Because ARS operates at over 100 locations both nationally and internationally, 

a high priority and great degree of focus is placed on the maintenance of the agency’s facility assets. The Secretary has received many requests from Members of Congress for the Administration to support budget increases to complete pending ARS 

capital improvement projects. In response, the Administrator of ARS was asked to 

establish an objective process to guide orderly and timely capital investments for 

ARS Laboratory facilities focusing on support to priority programs and other longterm requirements of USDA scientific research. The agency is also in the process 

of completing more than $176 million in repair and maintenance projects across the 

country as a result of funding from the A summary of those assets and a discussion 

of the agency’s developing capital asset strategy are below. 

Land under ARS custody & control:

Leased 10,888

Owned 393,260

Subtotal 404,148

MOU 2,051

Total Acres 406,199

Buildings owned/leased (Gross Square Feet):

Number GSF 

Owned Buildings Existing Operational 3,016 13,565,457

Existing Excess 294 80,498

Subtotal 3,310 14,345,955

Leased Buildings 116 495,596

Total 3,426 14,841,551

• 105 Domestic Locations; 3 Foreign Locations; & 60 worksites.

• Location/Worksites collocated with Land-Grants/Institutes of Higher Learning

» Land-Grant Locations—60

845

» Land-Grant Worksites—14

» Non Land-Grant Locations—4

» Non Land-Grant Worksites—1

• Replacement Value $3.64B

With the issuance of Executive Order (E.O.) 13327, Federal Real Property Asset 

Management in February 2004, the USDA recognized the need to adopt a more consistent, structured, performance-based, integrated planning process to better enable 

the Agency to oversee management of its extensive real property portfolio. In October, 2007 USDA issued the Real Property Capital Programming and Investment 

Process (CPIP). The CPIP was based upon the Office of Management and Budget 

(OMB) Capital Planning and Investment Control (CPIC) guidance (OMB A–11 Part 

7; Planning, Budgeting, and Acquisition of Capital Assets.) An ARS specific CPIP—

the ARS Building Block Plan (BBP)—was included as an appendix. 

Similar to the USDA Plan, ARS built its process around the OMB CPIC guidance; 

this allowed ARS to evaluate real property investments based upon risks and returns throughout their lifecycle while ensuring that USDA and ARS’ investments 

are well-conceived, cost-effective, and support strategic mission and business goals. 

A key component of the ARS BBP is the use of investment review boards as the 

decision-making body in matters related to real property—the Boards are called 

Asset Management Review Boards (AMRB). There are two levels of review; the initial process begins at each of the eight Area offices, these eight plans are then consolidated and reviewed at the Headquarters level. The AMRB’s membership includes representation from throughout the ARS and includes program, finance, 

budget, planning, and facilities. This membership ensures a balanced approach to 

investment decisions. The ARS Headquarters AMRB is chaired by the Deputy Administrator, Administrative & Financial Management and is responsible for:

• Reviewing new Capital investments (includes new construction, repair, land 

purchase, and disposal) using a standard set of criteria to ensure proposed 

projects that will support the ARS and Department missions and program delivery processes.

• Recommending approving/disapproving all projects over $1,000,000. (The ARS 

AMRB assumes projects under $1,000,000 have been validated by the Area 

AMRB’s).

• Reviewing opportunities to right-size inventories and operations and management costs.

• Ensuring that both the Department’s and ARS’s criteria and performance goals 

are considered and implemented when making Agency investment decisions.

• Assuring that the ARS’s Real Property program remains in compliance with 

E.O. and implementing directives.

As outlined above, once a decision is made on which real property assets warrant 

attention, there is an OMB process for analyzing capital investments. The process 

is generic, and it allows for the analysis of various capital investments, not just real 

property. The guidance provided in the USDA and ARS BBP process follows the 

basic criteria outlined within the OMB guidance. 

Informal discussions with NASA and National Institutes of Health (NIH) staff 

have indicated that their Capital Investment Process closely follows the OMB guidance. The criteria taken into account include the following:

• Does the investment in a major capital asset support core/priority mission functions that need to be performed by the Federal Government? (How does the 

project support the Secretaries priorities, Congressional mandates, and the Department’s and agency’s strategic goals and objectives);

• Is the investment supported by a Life Cycle analysis?

• Does the investment improve the Real Property Performance Measures? (1) Utilization; (2) Condition Index; (3) Mission Dependency; and (4) Annual Operation 

& Maintenance (O&M) costs.

The challenge for ARS is in identifying those real property assets that warrant 

priority attention and investment to ensure core and priority research needs are 

met. (There will always be a number of facilities that require immediate attention 

due to failing building systems and life safety issues; these assets also need to be 

addressed.) ARS has identified the following tasks as necessary to complete its capital investment strategy.

846

Task 1—Bench mark the ARS BBP against other government and industry organizations (General Services Administration (GSA), Department of Defense 

(DOD) activities, NIH, university, pharmaceutical, etc.). Include the decision 

making process, investment strategies, business systems and automation systems used, and metrics on expenditures for operation, sustainment, and recapitalization of similar assets.

Task 2—Identify funding amounts necessary to raise existing facilities to an acceptable condition, sustain facilities at that level, and recapitalize facilities.

Task 3—(concurrent with task 2) Implement processes and procedures to improve ARS management of its assets and prioritize investment priorities 

through a decision matrix that aligns and relates research program priorities 

and investment requirements with associated infrastructure needs in a systematic way to support a rank-ordered priority plan for identifying, scheduling, and 

sequencing existing and out-year capital investments needed to address infrastructure improvement requirements on a regular and recurring basis consistent with facility engineering industry norms. The ranking process will consider Congressional directed projects, recent construction, and general facilities 

that need to be accounted for in ranking priorities. ARS program priorities will 

relate both to facilities where specific research is conducted and also to facilities 

where the work could be conducted. 

3. Brief History 

The Agricultural Research Service was officially founded in 1953 but has precursor agencies that date back as far as 1884 to the Bureaus of Plant and Animal 

Industry. The importance of agricultural research performed by the government 

goes back even farther, to the first work done to stem hog cholera outbreaks in 

1868. In 1938, Congress appropriated funding to create agricultural research laboratories in Peoria, IL, Wyndmoor, PA, Albany, CA and New Orleans, LA. These locations still exist to this day as major centers of ARS work and concentrations of our 

science. We are proud of this long history of government commitment to solving agricultural problems that affect every single American in one way or another. 

4. Purpose/Goals 

ARS conducts research to develop and transfer solutions to agricultural problems 

of high national priority and provide information access and dissemination to:

• Ensure high-quality, safe food, and other agricultural products;

• Assess the nutritional needs of Americans;

• Sustain a competitive agricultural economy;

• Enhance the natural resource base and the environment; and

• Provide economic opportunities for rural citizens, communities, and society as 

a whole.

As part of the Research, Education, and Economics (REE) Mission Area, ARS, like 

its fellow REE agencies, focuses its research on five priorities:

• Climate change;

• Food safety;

• Children’s nutrition and health;

• International food security;

• Bio-Energy. 

5. Success in Meeting Programmatic Purpose/Goals 

Climate Change

In an ARS study of the impact of global climate change, crops responded positively to future levels of atmospheric carbon dioxide (CO2), but soil tillage practices 

had little effect on this response. This first long-term study comparing tillage practices under high CO2 levels showed that elevated CO2 caused soybean and sorghum 

plants to increase photosynthesis while reducing transpiration, the amount of water 

the plants release. This resulted in increased water use efficiency, whether the crops 

were grown with no-till or conventional tillage. 

ARS scientists have found that using alternative types of fertilizers can cut back 

on greenhouse gas emissions, at least in one part of the country, and are examining 

whether the alternatives offer similar benefits nationwide. Nitrogen fertilizers are 

often a necessity for ensuring sufficient crop yields, but their use leads to release 

of nitrous oxide, a major greenhouse gas, into the atmosphere. Fertilizer use is one 

847

reason an estimated 78 percent of the nation’s nitrous oxide emissions come from 

agriculture. 

Current atmospheric ozone levels are already suppressing soybean yields, according to ARS scientists’ studies of the effect of global climate change on crops. The 

scientists have been working on a project called ‘‘SoyFACE’’—short for Soybean Free 

Air Concentration Enrichment—to measure how the projected increases in carbon 

dioxide (CO2) and ozone will affect soybean production. The scientists found that 

soybean yields increase by about 12 percent at the elevated CO2 levels predicted for 

the year 2050 (550 parts per million)—only 1⁄2 of what previous studies estimated. 

They also found that increased ozone is quite harmful to soybean yields, reducing 

them by about 20 percent. In addition, current levels of ozone are already suppressing soybean yields by up to 15 percent.

Food Safety

Innovative studies by ARS scientists are providing new information about the impressive array of genes that a major foodborne pathogen, Escherichia coli O157:H7, 

calls into action when attempting to colonize leaves of fresh-cut lettuce. The investigation—the first to provide extensive details about the biology of E. coli O157:H7 

in fresh-cut lettuce—could pave the way to new technologies to improve the safety 

of bagged salads. 

ARS scientists have used a type of high-tech imaging called ‘‘hyperspectral imaging’’ to distinguish the foodborne pathogen Campylobacter from other microorganisms as quickly as 24 hours in laboratory tests. Campylobacter infections in humans are a major cause of bacterial foodborne illness both in the United States and 

other countries throughout the world. Normally, isolation and detection for identification of Campylobacter from foods like raw chicken can take several days to a 

week. This ‘‘sensing’’ technology, which was nearly 100 percent accurate with pure 

cultures of the microorganisms, could be used for early detection of presumptive 

Campylobacter colonies. 

Using a cleansing solution to wash eviscerated chicken carcasses is effective in removing bacteria that cause human foodborne diseases, according to an ARS study. 

The findings provide data that may be useful to poultry producers in designing practical, non-chlorine-based sanitizers. The cleanser, which is composed of lauric acid 

and potassium hydroxide, could be used to sanitize chicken carcasses during processing prior to chilling. Since other countries do not use chlorine rinses, ARS is looking at alternatives for them and is evaluating the most effective rinses against 

foodborne pathogens in poultry.

Children’s Nutrition and Health

Aspiring moms are often advised to achieve a healthy weight before they become 

pregnant, and to gain only the recommended amount of weight during their pregnancy, and ARS-funded studies could provide new insights into those recommendations. The studies focus on how influences that occur in the womb—and perhaps 

during the first few months of life—might affect development of a child’s ability to 

regulate his or her weight later in life. In fact, the child’s body-weight-regulating 

mechanisms might be permanently altered by maternal signals associated with the 

mother’s own overweight, the scientists say, and such maternal programming of the 

unborn child could increase the risk that the child would become an overweight or 

obese adult and would have a higher risk of obesity-related afflictions. 

Parents of kids age 2 and up can check a handy website every 6 months to help 

determine if their children’s weight gains or losses are heading in the right direction. ARS-funded scientists developed the easy-to-use, online resource and based it 

on growth charts issued by the Centers for Disease Control and Prevention. In just 

a few minutes spent at their computer, parents can easily calculate their child’s 

BMI, or Body Mass Index, and put it into perspective by viewing the youngster’s 

BMI percentile on a helpful graph. 

A collaborative study conducted by ARS scientists and Harvard University scientists showed decreased nutritional dietary quality and increased caloric intake 

among U.S. children on days when they consumed fast food. The authors analyzed 

existing dietary intake data from 6,212 children and adolescents, aged 4 to 19, from 

a nationally representative USDA Continuing Survey of Food Intakes by Individuals, 1994–1996, and the Supplemental Children’s Survey, 1998. The findings 

showed that U.S. children who ate fast food, compared with those who did not, consumed more total calories, more calories per gram of food, more total and saturated 

fat, more total carbohydrate, more added sugars and more sugar-sweetened beverages, but less milk, fiber, fruit and nonstarchy vegetables.

International Food Security

848

ARS scientists have solved a longstanding mystery as to why a pathogen that 

threatens the world’s wheat supply can be so adaptable, diverse and virulent. It is 

because the fungus that causes the wheat disease called stripe rust may use sexual 

recombination to adapt to resistant varieties of wheat. The scientists showed for the 

first time that stripe rust, caused by Puccinia striiformis, is capable of sexually reproducing on the leaves of an alternate host called barberry, a common ornamental. 

An international team of researchers co-led by an ARS scientist has sequenced the 

genomes of two fungal pathogens—one that threatens global wheat supplies and another that limits production of a tree crop valued as a future source for biofuel. The 

sequencing of the genetic codes of wheat stem rust pathogen (Puccinia graminis) 

and poplar leaf rust pathogen (Melampsora larici-populina) is expected to help researchers develop control strategies to address worldwide threats to wheat fields 

and tree plantations. 

ARS scientists and their colleagues completed a 4 year effort to sequence the genome of corn, an achievement expected to speed up development of corn varieties 

that will help feed the world and meet growing demands for using this important 

grain crop as a biofuel and animal feed. The results represent the largest and most 

complex plant genome sequenced to date.

Bio-Energy

ARS scientists have found that barley grain can be used to produce ethanol, and 

the leftover byproducts—barley straw, hulls, and dried distillers grains—can be 

used to produce an energy-rich oil called bio-oil. The bio-oil could then be used either for transportation fuels or for producing heat and power needed for the grainto-ethanol conversion. 

ARS scientists have long-term studies underway to examine growing camelina as 

a bioenergy crop for producing jet fuel for the military and the aviation industry. 

This research supports the recently signed memorandum of understanding between 

the U.S. Department of Agriculture (USDA) and the Department of the Navy (DON) 

and interests of the Commercial Airlines Alternative Fuels Initiative (CAAFI). Native to Europe, camelina (Camelina sativa) is a member of the plant family 

Brassicaceae and has been grown since ancient times for use as lamp fuel, among 

other things. The seed’s high oil content has made it a promising candidate as a 

new source for biofuels. 

ARS scientists have developed a new tool for deciphering the genetics of a native 

prairie grass being widely studied for its potential as a biofuel. The genetic map of 

switchgrass is expected to speed up the search for genes that will make the perennial plant a more viable source of bioenergy. Interest in using switchgrass as a 

biofuel has intensified in recent years because it can be burned to produce electricity 

and, like corn stalks, can be converted to ethanol. It also grows on marginal lands, 

is adaptable to different regions, and—as a perennial—does not need to be replanted 

each year, which means lower energy costs and less runoff. 

6. Annual Budget Authority (FY 2002–FY 2011) ($ in Millions)

Salaries and Expenses Buildings and Facilities

FY 2002 $978,865 FY 2002 $216,824

FY 2003 $1,048,906 FY 2003 $228,703

FY 2004 $1,088,057 FY 2004 $63,434

FY 2005 $1,108,129 FY 2005 $186,335

FY 2006 $1,130,128 FY 2006 $149,883

FY 2007 $1,132,031 FY 2007 $0

FY 2008 $1,124,992 FY 2008 $51,752

FY 2009 $1,143,459 FY 2009 $46,752

FY 2010 $1,179,784 FY 2010 $70,873

FY 2011 $1,133,230 FY 2011 $0

Note: In FY 2011, the appropriation rescinded $230 million in balances from prior appropriations, and there was no funding received under the Buildings and Facilities line. 

7. Annual Outlays (FY 2002–FY 2011) ($ in Millions) 

Aggregate agency outlays are below. See next table for details by location.

FY 2002 $928,330

FY 2003 $1,024,665

FY 2004 $1,076,374

849

FY 2005 $1,107,953

FY 2006 $1,133,833

FY 2007 $1,099,270

FY 2008 $1,135,728

FY 2009 $1,133,144

FY 2010 $1,169,025

FY 2011 $1,115,892

United States Department of Agriculture 

Agricultural Research Service 

FY 2011 Estimated Research Funding by Location 

($ in thousands) 

Location 2011 NTL

Estimate 

Alabama, Auburn 

Aquatic Animal Health Research 2,302,355

Soil Dynamics Research 3,604,375

Subtotal, Alabama 5,906,730

Alaska, Fairbanks 

Subarctic Agricultural Research Unit 5,465,003

Subtotal, Alaska 5,465,003

Arizona, Maricopa—U.S. Arid Land Agricultural Research 

Center 

Aflatoxin Reduction 850,435

Pest Management and Biocontrol Research 2,897,456

Plant Physiology and Genetics Research 3,026,574

Water Management and Conservation Research 2,950,663

Maricopa Subtotal 9,725,128

Arizona, Tucson 

Honey Bee Research 1,627,276

Southwest Watershed Research 3,318,636

Tucson Subtotal 4,945,912

Subtotal, Arizona 14,671,040

Arkansas, Booneville 

Dale Bumpers Small Farms Research Center 1,764,605

Arkansas, Fayetteville 

Poultry Production and Products Safety Research 1,627,547

Arkansas, Little Rock 

Arkansas Children’s Nutrition Center 6,348,600

Arkansas, Stuttgart 

Dale Bumpers National Rice Research Center 3,600,124

Harry K. Dupree Stuttgart National Aquaculture Research Center 3,224,860

Stuttgart Subtotal 6,824,984

Subtotal, Arkansas 16,565,736

California, Albany—Plant Gene Expression Center 4,116,816

850

United States Department of Agriculture—Continued

Agricultural Research Service 

FY 2011 Estimated Research Funding by Location 

($ in thousands) 

Location 2011 NTL

Estimate 

California, Albany—Western Regional Research Center 

Bioproduct Chemistry and Engineering Research 3,924,646

Crop Improvement/Utilization Research 4,507,709

Exotic and Invasive Weeds Research 4,967,546

Foodborne Contaminants Research 4,246,950

Genomics and Gene Discovery 2,092,410

Plant Mycotoxins Research 3,007,727

Processed Foods Research 3,855,196

Produce Safety and Microbiology Research 5,436,157

Albany Subtotal 36,155,157

California, Davis 

Crops Pathology and Genetics Research 2,763,178

National Clonal Germplasm Repository—Tree Fruit & Nut Crops 

& Grapes 1,304,663

Western Human Nutrition Research Center: 

Obesity And Metabolism Research 3,400,766

Immunity and Disease Prevention Research Unit 3,485,541

Davis Subtotal 10,954,148

California, Parlier—San Joaquin Valley Agricultural 

Sciences Center 

Commodity Protection and Quality Research 3,358,348

Crop Diseases, Pests and Genetics 5,429,823

Plant Genetic Resources Conservation 625,023

Water Management Research 2,363,685

Parlier Subtotal 11,776,879

California, Riverside 

U.S. Salinity Laboratory: 

Contaminant Fate And Transport Research 2,114,961

Water Reuse And Remediation Research 2,316,566

National Clonal Germplasm Repository for Citrus 1,142,398

Riverside Subtotal 5,573,925

California, Salinas 

Crop Improvement And Protection Research 4,907,345

California, Shafter 

Western Integrated Cropping Systems Research 1,455,204

Subtotal, California 70,822,658

Colorado, Akron 

Central Plains Resources Management Research 2,049,276

Colorado, Fort Collins 

Agricultural Systems Research 2,132,160

Plant and Animal Genetic Resources Preservation Research Unit 4,620,480

Soil, Plant And Nutrient Research 2,782,077

Sugarbeet Research 797,220

851

United States Department of Agriculture—Continued

Agricultural Research Service 

FY 2011 Estimated Research Funding by Location 

($ in thousands) 

Location 2011 NTL

Estimate 

Water Management Research 1,819,074

Fort Collins Subtotal 12,151,011

Subtotal, Colorado 14,200,287

Delaware, Newark 

Beneficial Insects Introduction Research 2,069,908

Subtotal, Delaware 2,069,908

District of Columbia 

U.S. National Arboretum: 

Education Unit 1,328,736

Floral And Nursery Plants Research Unit 6,489,013

Gardens Unit 3,594,923

Subtotal, District of Columbia 11,412,672

Florida, Brooksville 

Beef Cattle Research 1,249,875

Florida, Canal Point 

Sugarcane Production Research 2,888,264

Florida, Fort Lauderdale 

Invasive Plant Research Laboratory 2,552,219

Florida, Fort Pierce—U.S. Horticultural Research Laboratory 

Horticulture and Breeding Research 4,117,253

Quality Improvement in Citrus and Subtropical Products Research 2,644,308

Subtropical Insects Research 2,964,198

Subtropical Plant Pathology Research 4,543,843

Fort Pierce Subtotal 14,269,602

Florida, Gainesville—Center for Medical, Agricultural and 

Veterinary Entomology 

Chemistry Research 3,464,716

Imported Fire Ant and Household Insects Research 2,120,122

Insect Behavior and Biocontrol Research Unit 4,034,501

Mosquito and Fly Research 2,455,817

Gainesville Subtotal 12,075,156

Florida, Miami 

Subtropical Horticulture Research 4,569,783

Subtotal, Florida 37,604,899

Georgia, Athens 

Southeast Poultry Research Laboratory: 

Endemic Poultry Viral Diseases Research 1,839,675

852

United States Department of Agriculture—Continued

Agricultural Research Service 

FY 2011 Estimated Research Funding by Location 

($ in thousands) 

Location 2011 NTL

Estimate 

Exotic And Emerging Avian Viral Diseases Research 3,908,077

Richard B. Russell Research Center: 

Bacterial Epidemiology and Antimicrobial Resistance Research 3,401,577

Egg Safety and Quality Research 2,200,757

Poultry Microbiological Safety Research 2,735,627

Poultry Processing and Swine Physiology Research 1,721,610

Quality and Safety Assessment Research 3,847,038

Toxicology and Mycotoxin Research 2,617,726

Southern Piedmont Conservation Research 2,659,303

Athens Subtotal 24,931,390

Georgia, Byron 

Fruit and Nut Research 3,650,947

Georgia, Dawson 

Peanut Research 3,878,854

Georgia, Griffin 

Plant Genetic Resources Conservation Research 2,318,940

Georgia, Tifton 

Crop Genetics and Breeding Research 2,205,021

Crop Protection and Management Research 4,075,707

Southeast Watershed Research 3,412,954

Tifton Subtotal 9,693,682

Subtotal, Georgia 44,473,813

Hawaii, Hilo—U.S. Pacific Basin Agricultural Research Center 

Tropical Crop and Commodity Protection Research Unit 5,961,010

Tropical Plant Genetic Resources and Disease Research Unit 3,583,427

Subtotal, Hawaii 9,544,437

Idaho, Aberdeen 

Small Grains and Potato Germplasm Research 6,011,779

Idaho, Boise 

Watershed Management Research 2,142,620

Idaho, Dubois 

Range Sheep Production Efficiency Research 2,149,498

Idaho, Kimberly 

Northwest Irrigation and Soils Research 3,584,719

Subtotal, Idaho 13,888,616

Illinois, Peoria—National Center for Agricultural Utilization 

Research 

Bacterial Foodborne Pathogens & Mycology Research 6,453,938

Bioenergy Research 4,215,810

Bio-Oils Research 4,260,469

Crop Bioprotection Research 2,876,133

Functional Foods Research 4,650,895

853

United States Department of Agriculture—Continued

Agricultural Research Service 

FY 2011 Estimated Research Funding by Location 

($ in thousands) 

Location 2011 NTL

Estimate 

Plant Polymer Research 5,032,373

Renewable Product Technology Research 4,328,884

Peoria Subtotal 31,818,502

Illinois, Urbana 

Global Change and Photosynthesis Research 2,959,242

Soybean/Maize Germplasm, Pathology, and Genetics Research 2,771,594

Urbana Subtotal 5,730,836

Subtotal, Illinois 37,549,338

Indiana, West Lafayette 

Crop Production and Pest Control Research 3,514,487

Livestock Behavior Research 1,471,316

National Soil Erosion Research 2,766,782

Subtotal, Indiana 7,752,585

Iowa, Ames 

Corn Insects and Crop Genetics Research 6,881,204

National Animal Disease Center: 

Food Safety and Enteric Pathogens 5,384,398

Infectious Bacterial Diseases 9,413,272

Ruminant Diseases and Immunology 7,217,472

Virus and Prion 10,029,973

Plant Introduction Research 3,407,852

National Laboratory for Agriculture and the Environment: 

Soil, Water & Air Resources Research 3,428,406

Agroecosystems Management Research 5,323,618

Subtotal, Iowa 51,086,195

Kansas, Manhattan—Center for Grain and Animal Health 

Research 

Arthropod-Borne Animal Diseases Research 3,133,205

Engineering and Wind Erosion Research 2,204,583

Grain Quality and Structure Research 2,973,412

Hard Winter Wheat Genetics Research 2,712,749

Stored Product Insect Research 2,777,678

Subtotal, Kansas 13,801,627

Kentucky, Bowling Green 

Animal Waste Management Research 2,583,864

Kentucky, Lexington 

Forage-Animal Production Research 2,635,527

Subtotal, Kentucky 5,219,391

Louisiana, Baton Rouge 

854

United States Department of Agriculture—Continued

Agricultural Research Service 

FY 2011 Estimated Research Funding by Location 

($ in thousands) 

Location 2011 NTL

Estimate 

Honey Bee Breeding, Genetics, and Physiology Research 2,580,696

Louisiana, Houma 

Sugarcane Research 4,068,690

Louisiana, New Orleans—Southern Regional Research Center 

Commodity Utilization Research 4,449,989

Cotton Chemistry and Utilization Research 3,573,813

Cotton Fiber Bioscience Research 1,344,318

Cotton Structure and Quality Research 3,535,833

Food and Feed Safety Research 4,871,129

Food Processing and Sensory Quality Research 4,509,075

Formosan Subterranean Termite Research 2,868,331

New Orleans Subtotal 25,152,488

Subtotal, Louisiana 31,801,874

Maine, Orono 

Cranberry Research 374,250

National Cold Water Marine Aquaculture Center 820,496

Subtotal, Maine 1,194,746

Maryland, Beltsville 

Animal and Natural Resources Institute: 

Animal Biosciences and Biotechnology Laboratory 6,675,716

Animal Improvement Programs Laboratory 2,632,700

Animal Parasitic Diseases Laboratory 6,850,965

Bovine Functional Genomics Laboratory 6,649,867

Crop Systems and Global Change Laboratory 2,673,959

Environmental Management and By-Product Utilization Laboratory 5,196,763

Environmental Microbial and Food Safety Laboratory 7,773,429

Hydrology and Remote Sensing Laboratory 4,861,439

Sustainable Agricultural Systems Laboratory 4,649,332

Beltsville Human Nutrition Research Center: 

Diet, Genomics and Immunology Laboratory 3,796,455

Food Components and Health Laboratory 5,636,649

Food Composition and Methods Development Laboratory 2,585,426

Food Surveys Research Group 6,588,506

Nutrient Data Laboratory 3,137,610

Plant Sciences Institute: 

Bee Research Laboratory 2,476,706

Food Quality Laboratory 3,895,437

Genetic Improvement for Fruits and Vegetables Laboratory 5,420,857

Invasive Insect Biocontrol and Behavior Laboratory 6,261,849

Molecular Plant Pathology Laboratory 3,673,159

National Germplasm Resources Laboratory 4,309,679

Nematology Laboratory 2,478,053

Soybean Genomics and Improvement Laboratory 4,169,210

Sustainable Perennial Crops Laboratory 4,100,507

Systematic Mycology and Microbiology Laboratory 1,953,259

855

United States Department of Agriculture—Continued

Agricultural Research Service 

FY 2011 Estimated Research Funding by Location 

($ in thousands) 

Location 2011 NTL

Estimate 

Systematics Entomology Laboratory 4,736,782

Beltsville Agricultural Research Center Subtotal 113,184,314

Maryland, Beltsville—National Agricultural Library 21,184,588

Maryland, Frederick 

Foreign Disease-Weed Science Research 5,630,325

Subtotal, Maryland 139,999,227

Massachusetts, Boston 

Human Nutrition Research Center on Aging 15,258,288

Subtotal, Massachusetts 15,258,288

Michigan, East Lansing 

Avian Disease and Oncology Research 3,269,791

Sugarbeet and Bean Research 1,326,766

Subtotal, Michigan 4,596,557

Minnesota, Morris 

Soil Management Research 2,643,268

Minnesota, St. Paul 

Cereal Disease Research 2,547,162

Plant Science Research 2,493,211

Soil and Water Management Research 1,752,683

St. Paul Subtotal 6,793,056

Subtotal, Minnesota 9,436,324

Mississippi, Mississippi State 

Crop Science Research Laboratory: 

Corn Host Plant Resistance Research 2,050,412

Genetics and Precision Agriculture Research 4,292,462

Poultry Research 2,873,253

Mississippi State Subtotal 9,216,127

Mississippi, Oxford 

National Sedimentation Laboratory: 

Water Quality and Ecology Research 3,345,131

Watershed Physical Processes 5,169,338

Natural Products Utilization Research 5,525,076

Oxford Subtotal 14,039,545

Mississippi, Poplarville 

Southern Horticultural Research 5,168,880

Mississippi, Stoneville 

Biological Control of Pests Research 5,246,151

856

United States Department of Agriculture—Continued

Agricultural Research Service 

FY 2011 Estimated Research Funding by Location 

($ in thousands) 

Location 2011 NTL

Estimate 

Catfish Genetics Research 8,860,750

Cotton Ginning Research 1,428,364

Crop Genetics Research 6,450,422

Crop Production Systems Research 5,655,407

Genomics and Bioinformatics Research 1,831,962

Human Nutrition Research 273,454

Southern Insect Management Research 4,687,200

Soybean Research 778,425

Stoneville Subtotal 35,212,135

Subtotal, Mississippi 63,636,687

Missouri, Columbia 

Biological Control of Insects Research 1,692,322

Cropping Systems and Water Quality Research 3,172,521

Plant Genetics Research 4,239,347

Subtotal, Missouri 9,104,190

Montana, Miles City 

Range and Livestock Research 3,337,966

Montana, Sidney—Northern Plains Agricultural Research 

Laboratory 

Agricultural Systems Research Unit 2,563,705

Pest Management Research Unit 2,573,427

Sidney Subtotal 5,137,132

Subtotal, Montana 8,475,098

Nebraska, Clay Center—U.S. Meat Animal Research Center 

Animal Health Research 1,552,861

Environmental Management Research 1,957,037

Genetics and Breeding Research 4,215,173

Meats Safety & Quality Research 5,349,777

Nutrition Research 2,972,038

Reproduction Research 3,537,864

Clay Center Subtotal 19,584,750

Nebraska, Lincoln 

Agroecosystem Management Research 3,175,627

Grain, Forage, and Bioenergy Research 2,808,228

Lincoln Subtotal 5,983,855

Subtotal, Nebraska 25,568,605

New Mexico, Las Cruces 

Cotton Ginning Research 1,856,867

857

United States Department of Agriculture—Continued

Agricultural Research Service 

FY 2011 Estimated Research Funding by Location 

($ in thousands) 

Location 2011 NTL

Estimate 

Range Management Research 4,174,766

Subtotal, New Mexico 6,031,633

New York, Geneva 

Grape Genetics Research 1,662,812

Plant Genetic Resources 2,263,266

Geneva Subtotal 3,926,078

New York, Greenport 

Foreign Animal Disease Research 3,840,400

New York, Ithaca 

Biological Integrated Pest Management Research 3,283,196

Plant, Soil and Nutrition Research 5,539,605

Plant-Microbe Interactions Research 1,771,550

Ithaca Subtotal 10,594,351

Subtotal, New York 18,360,829

North Carolina, Raleigh 

Food Science Research 1,310,075

Market Quality and Handling Research 1,112,911

Plant Science Research 4,922,910

Soybean and Nitrogen Fixation Research 2,055,687

Subtotal, North Carolina 9,401,583

North Dakota, Fargo—Red River Valley Agricultural Research Center 

Animal Metabolism-Agricultural Chemicals Research 2,405,557

Cereal Crops Research 4,104,352

Insect Genetics and Biochemistry Research 1,928,232

Sugarbeet and Potato Research 2,290,933

Sunflower and Plant Biology Research 3,542,935

Weed Biology Research 1,511,423

Fargo Subtotal 15,783,432

North Dakota, Grand Forks—Grand Forks Human Nutrition 

Research Center 

Dietary Prevention of Obesity-Related Research 4,337,437

Healthy Body Weight Research 5,224,694

Grand Forks Subtotal 9,562,131

North Dakota, Mandan 

Natural Resource Management Research 3,442,163

Subtotal, North Dakota 28,787,726

858

United States Department of Agriculture—Continued

Agricultural Research Service 

FY 2011 Estimated Research Funding by Location 

($ in thousands) 

Location 2011 NTL

Estimate 

Ohio, Columbus 

Soil Drainage Research 1,477,805

Ohio, Coshocton 

North Appalachian Experimental Watershed Research 1,250,740

Ohio, Wooster 

Application Technology Research 3,236,110

Corn and Soybean Research 879,325

Soft Wheat Quality Research 943,096

Wooster Subtotal 5,058,531

Subtotal, Ohio 7,787,076

Oklahoma, El Reno—Grazinglands Research Laboratory 

Forage and Livestock Production Research Unit 2,933,754

Great Plains Agroclimate and Natural Resources Research Unit 2,427,656

El Reno Subtotal 5,361,410

Oklahoma, Lane—South Central Agricultural Research Laboratory 

Genetics and Production Research 1,962,617

Oklahoma, Stillwater 

Hydraulic Engineering Research 938,916

Wheat, Peanut, and Other Field Crops Research 2,721,669

Stillwater Subtotal 3,660,585

Oklahoma, Woodward 

Rangeland and Pasture Research 1,645,398

Subtotal, Oklahoma 12,630,010

Oregon, Burns 

Range and Meadow Forage Management Research 2,726,833

Oregon, Corvallis 

Forage Seed and Cereal Research 4,633,549

Horticultural Crops Research 5,741,888

National Clonal Germplasm Repository 1,484,276

Corvallis Subtotal 11,859,713

Oregon, Pendleton 

Soil and Water Conservation Research 1,961,163

Subtotal, Oregon 16,547,709

Pennsylvania, University Park 

Pasture Systems & Watershed Management Research 4,216,231

Pennsylvania, Wyndmoor—Eastern Regional Research Center 

Biobased and Other Animal Co-Products Research 3,668,679

859

United States Department of Agriculture—Continued

Agricultural Research Service 

FY 2011 Estimated Research Funding by Location 

($ in thousands) 

Location 2011 NTL

Estimate 

Dairy and Functional Foods Research 4,966,168

Food Safety and Intervention Technologies Research 5,784,714

Molecular Characterization of Foodborne Pathogens Research 6,939,849

Residue Chemistry and Predictive Microbiology Research 4,766,582

Sustainable Biofuels and Co-Products Research 5,416,802

Wyndmoor Subtotal 31,542,794

Subtotal, Pennsylvania 35,759,025

South Carolina, Charleston 

Vegetable Research 4,434,754

South Carolina, Clemson 

Cotton Quality Research 2,355,935

South Carolina, Florence 

Coastal Plain Soil, Water and Plant Conservation Research 4,148,647

Subtotal, South Carolina 10,939,336

South Dakota, Brookings 

Integrated Cropping Systems Research 2,968,164

Subtotal, South Dakota 2,968,164

Texas, Beaumont 

Rice Research 1,428,857

Texas, Bushland—Conservation and Production Research 

Laboratory 

Renewable Energy and Manure Management Research 1,731,850

Soil and Water Management Research 5,228,070

Bushland Subtotal 6,959,920

Texas, College Station—Southern Plains Agricultural Research Center 

Areawide Pest Management Research 3,233,491

Cotton Pathology Research 1,511,849

Crop Germplasm Research 3,363,939

Food and Feed Safety Research 5,087,980

College Station Subtotal 13,197,259

Texas, Houston 

Children’s Nutrition Research Center 13,677,579

Texas, Kerrville—Knipling-Bushland U.S. Livestock Insects 

Research Laboratory 

Screwworm Research 1,023,231

Tick and Biting Fly Research 4,640,802

Kerrville Subtotal 5,664,033

Texas, Lubbock—Cropping Systems Research Laboratory 

860

United States Department of Agriculture—Continued

Agricultural Research Service 

FY 2011 Estimated Research Funding by Location 

($ in thousands) 

Location 2011 NTL

Estimate 

Cotton Production and Processing Research 1,187,720

Livestock Issues Research 1,157,043

Plant Stress and Germplasm Development Research 3,635,239

Wind Erosion and Water Conservation Research 3,058,531

Lubbock Subtotal 9,038,533

Texas, Temple 

Grassland, Soil and Water Research Laboratory 3,585,877

Texas, Weslaco—Kika de la Garza Subtropical Agricultural 

Research Center 

Beneficial Insects Research 2,967,672

Crop Quality and Fruit Insects Research 1,972,766

Honey Bee Research 1,616,482

Integrated Farming and Natural Resources Research 3,140,728

Weslaco Subtotal 9,697,648

Subtotal, Texas 63,249,706

Utah, Logan 

Forage and Range Research 3,931,926

Poisonous Plant Research 3,292,975

Pollinating Insect-Biology, Management, Systematics Research 1,784,531

Subtotal, Utah 9,009,432

Washington, Prosser 

Vegetable and Forage Crops Production Research 3,319,128

Washington, Pullman 

Animal Disease Research 6,957,540

Grain Legume Genetics Physiology Research 974,874

Land Management and Water Conservation Research 1,673,928

Plant Germplasm Introduction and Testing Research 2,735,366

Root Disease and Biological Control Research 1,485,447

Wheat Genetics, Quality Physiology and Disease Research 2,686,923

Pullman Subtotal 16,514,078

Washington, Wapato 

Fruit and Vegetable Insect Research 4,550,497

Washington, Wenatchee 

Physiology and Pathology of Tree Fruits Research 2,107,760

Subtotal, Washington 26,491,463

West Virginia, Beaver 

Appalachian Farming Systems Research Center 7,376,867

West Virginia, Kearneysville—Appalachian Fruit Research 

Laboratory 

Innovative Fruit Production, Improvement and Protection 7,185,870

West Virginia, Leetown 

861

United States Department of Agriculture—Continued

Agricultural Research Service 

FY 2011 Estimated Research Funding by Location 

($ in thousands) 

Location 2011 NTL

Estimate 

Cool and Cold Water Aquaculture Research 7,157,417

Subtotal, West Virginia 21,720,154

Wisconsin, Madison 

Cereal Crops Research 2,657,598

U.S. Dairy Forage Research Center: 

Cell Wall Biology and Utilization Research 3,019,146

Dairy Forage and Aquaculture Research 4,696,175

Environmentally Integrated Dairy Management 1,781,972

Vegetable Crops Research 3,933,194

Subtotal, Wisconsin 16,088,085

Wyoming, Cheyenne 

Rangeland Resources Research 2,313,149

Subtotal, Wyoming 2,313,149

Puerto Rico, Mayaguez 

Tropical Crops and Germplasm Research 2,837,405

Subtotal, Puerto Rico 2,837,405

Other Countries 

Argentina, Buenos Aires—South American Biological Control 

Laboratory 532,225

France, Montpellier—European Biological Control Laboratory 3,078,341

Subtotal, Other Countries 3,610,566

ARS Research Total 965,639,582

Repair & Maintenance of Facilities (Arboretum & NAL) 1,553,266

Office of the Director—WRRC Renovation 495,096

Administrator and Immediate Staffs 54,740,337

National Programs 36,916,510

Administrtive and Financial Management 28,557,007

Research Operations and Management 16,994,855

Beltsville Area Office of the Director 5,936,605

North Atlantic Area Office of the Director 3,291,214

Midwest Area Office of the Director 3,252,327

Pacific West Area Office of the Director 3,751,231

Northern Plains Area—Office of the Director 3,276,233

Southern Plains Area Office of the Director 2,819,470

Mid South Area Office of the Director 2,913,196

South Atlantic Area Office of the Director 3,093,069

Subtotal, Admin 165,542,054

Total ARS 1,133,229,998

862

8. Annual Delivery Cost (FY 2002–FY 2011) 

United States Department Of Agriculture 

Agricultural Research Service 

Annual Delivery Cost (FY 2007–FY 2011) 

USDA Strategic Goal 1: Assist rural communities to create prosperity so they are self-sustaining, repopulating and economically thriving. 

Program Items 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Product Quality/Value Added 95,383 94,310 96,737 99,496 99,950Livestock Production 38,510 38,077 38,830 39,368 39,547Crop Production 114,550 113,262 115,396 107,564 119,763National Agricultural Library 21,428 20,843 21,022 21,213 20,010Repair and Maintenance 17,635 17,524 17,491 17,461 17,503Collaborative Research Program 2,959 3,824 2,913 — —Miscellaneous Fees 8,727 554 120 167 —

Indirect Costs 28,263 29,000 30,220 29,738 31,030

Total Costs 327,455 317,394 322,729 315,007 327,803FTEs 2,182 2,154 2,114 2,106 2,436

Note: Total is from 2012 and was based on the Full Year Continuing Resolution. 

USDA Strategic Goal 2: Ensure our National Forests and private working lands are conserved, restored, and made more resilient to climate change, while enhancing our water resources. 

Program Items 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Environmental Stewardship 178,547 176,539 179,109 185,975 186,825

863

Indirect Costs 18,699 19,211 19,901 20,664 20,758

Total Costs 197,246 195,750 199,010 206,639 207,583FTEs 2,084 2,058 2,024 2,017 1,709USDA Strategic Goal 3: Help America promote agricultural production and biotechnology exports as America works to increase food security. 

Program Items 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Livestock Production 38,510 38,077 38,830 39,368 39,548Crop Production 91,081 90,058 91,880 107,564 96,348

Indirect Costs 13,572 13,943 14,523 16,326 15,100

Total Costs 143,163 142,078 145,233 163,258 150,996FTEs 1,079 1,065 1,050 1,056 1,060USDA Strategic Goal 4: Ensure that all of America’s children have access to safe, nutritious and balanced meals. 

Program Items 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Food Safety 94,818 94,240 95,126 96,837 96,837Human Nutrition 77,545 76,964 76,778 80,761 80,761Livestock Protection 78,528 73,967 74,659 80,825 81,194Crop Protection 178,341 176,334 180,283 184,346 185,140H1N1 Transfer — — — 1,416 —

Indirect Costs 44,952 45,868 47,427 49,197 49,325

Total Costs 474,184 467,373 474,273 493,382 493,257

864

Program Items 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

FTEs 3,166 3,130 3,080 3,103 3,077

Note: Annual delivery cost is reported consistent with the President’s 2012 Budget and the USDA Strategic Plan FY 2010–2015. 

865

9. Eligibility Criteria 

ARS is not a granting agency and as such does not have programs that distribute 

money to outside organizations and thus does not have eligibility criteria for its programs. 

10. Utilization (Participation) Data 

In the traditional sense, because ARS is an intramural research agency, it does 

not have direct outside utilization of it programs by other individuals or entities 

through granting. However, the agency does execute a large number of extramural 

agreements with other research organizations and does provide funding to aid in the 

completion of these projects by our collaborators. A summary of the agency’s current 

extramural agreements is below and a detailed list follows. The table below reflects 

the aggregate of agreements currently in force. These agreements may have been 

entered into and funds obligated as early as 2006.

Performing Organization Type Number of 

Agreements Dollar Amount 

Other Federal Agency 1 $150,000.00

State Agricultural Experiment Station 34 $36,766,986.24

1862 Land-Grant College 1,335 $189,618,764.02

1890 Land-Grant College or Tuskegee Institute 138 $17,860,097.79

Private University or College 46 $54,664,158.92

Public University or College (non-land-grant) 114 $53,134,432.50

Private for Profit Organization 14 $797,632.44

Private nonprofit Organization 112 $78,111,607.51

State or Local Government 8 $1,642,399.00

Small Business 4 $836,658.35

Minority-owned Business 1 $45,000.00

Female Owned Business 2 $95,000.00

Other 5 $1,741,095.10

Individual 4 $293,775.00

Tribal Colleges and Universities 1 $102,000.00

Foreign 97 $10,610,575.57

Total 1,916 $446,470,182.44

Type Perf Org

Description Cooperator Name Number ofAgreements Dollar Amount 

FR Other Federal Agency NASA Goddard Space Flight 

Center 

1 $150,000.00

SA State Agricultural Experiment Station Connecticut Agricultural Experiment Station 2 $3,950,532.00

SA State Agricultural Experiment Station Mississippi Agri & Forestry 

Exp Station 

29 $30,708,547.24

SA State Agricultural Experiment Station Rutgers-New Jersey Agricultural Exper Sta 2 $1,976,457.00

SA State Agricultural Experiment Station Texas Agricultural Experiment Station 1 $131,450.00

LG 1862 Land-Grant College Arizona Board Of Regents 9 $2,296,472.94

LG 1862 Land-Grant College Auburn University 10 $5,000,208.94

LG 1862 Land-Grant College Board of Regents—Univ of 

Wisconsin System 

14 $913,982.67

LG 1862 Land-Grant College Board of Trustees of the Univ 

of Illinois 

3 $935,280.00

LG 1862 Land-Grant College Clemson University 11 $1,219,728.86

LG 1862 Land-Grant College Colorado State University 25 $2,105,979.45

LG 1862 Land-Grant College Cornell University 53 $7,323,596.03

LG 1862 Land-Grant College Curators of the University of 

Missouri 

26 $7,473,576.87

LG 1862 Land-Grant College Iowa State University 50 $3,090,966.48

LG 1862 Land-Grant College Kansas State University 43 $6,817,111.89

LG 1862 Land-Grant College Louisiana State Univ Agricultural Center 18 $8,471,005.47

866

Type Perf Org

Description Cooperator Name Number ofAgreements Dollar Amount 

LG 1862 Land-Grant College Michigan State University 37 $3,829,112.74

LG 1862 Land-Grant College Mississippi State University 9 $7,676,027.00

LG 1862 Land-Grant College Montana State University 7 $151,474.06

LG 1862 Land-Grant College New Mexico State University 21 $2,366,107.72

LG 1862 Land-Grant College North Carolina Agricultural 

Research Service 

55 $3,819,326.99

LG 1862 Land-Grant College North Carolina State University 4 $170,640.00

LG 1862 Land-Grant College North Dakota State University 59 $7,362,212.36

LG 1862 Land-Grant College Ohio State University Libraries 1 $4,000.00

LG 1862 Land-Grant College Ohio State University Research Foundation 14 $2,726,026.25

LG 1862 Land-Grant College Oklahoma State University 19 $693,196.24

LG 1862 Land-Grant College Oregon State University 87 $7,425,573.67

LG 1862 Land-Grant College Pennsylvania State University 29 $2,779,442.93

LG 1862 Land-Grant College Purdue University 31 $6,867,373.78

LG 1862 Land-Grant College Regents of the University of 

California 

89 $17,035,168.73

LG 1862 Land-Grant College Regents of the University of 

Minnesota 

14 $2,796,725.31

LG 1862 Land-Grant College Rutgers, The State University 

of New Jersey 

7 $743,699.60

LG 1862 Land-Grant College South Dakota State University 17 $2,051,651.23

LG 1862 Land-Grant College Texas A&M University 9 $337,883.00

LG 1862 Land-Grant College Texas A&M UniversityKingsville 3 $74,000.00

LG 1862 Land-Grant College Texas AgriLife Research 34 $5,627,731.56

LG 1862 Land-Grant College The Board of Trustees, University of Illinois 6 $281,745.08

LG 1862 Land-Grant College The Ohio State University 14 $120,464.95

LG 1862 Land-Grant College U of AK—Alaska Agric & 

Forestry Exp Sta 

2 $113,250.50

LG 1862 Land-Grant College U of ID—Idaho Agricultural 

Exp Sta 

2 $140,086.51

LG 1862 Land-Grant College University of Alaska 6 $2,901,927.79

LG 1862 Land-Grant College University of Alaska Museum 2 $27,401.00

LG 1862 Land-Grant College University of Arizona 4 $73,143.92

LG 1862 Land-Grant College University of Arkansas 20 $1,240,258.30

LG 1862 Land-Grant College University of California 3 $112,500.00

LG 1862 Land-Grant College University of California, 

Davis 

58 $2,126,281.93

LG 1862 Land-Grant College University of Connecticut 8 $5,344,456.98

LG 1862 Land-Grant College University of Delaware 17 $689,161.03

LG 1862 Land-Grant College University of Florida 32 $3,088,401.12

LG 1862 Land-Grant College University of Georgia 7 $271,828.00

LG 1862 Land-Grant College University of Hawaii 23 $7,054,349.38

LG 1862 Land-Grant College University of Idaho 22 $2,404,977.12

LG 1862 Land-Grant College University of Illinois 44 $6,211,402.53

LG 1862 Land-Grant College University of Kentucky 3 $281,017.72

LG 1862 Land-Grant College University of Kentucky Research Foundation 9 $5,987,369.21

LG 1862 Land-Grant College University of Maine 9 $417,891.00

LG 1862 Land-Grant College University of Maryland at 

College Park 

44 $5,265,610.54

LG 1862 Land-Grant College University of Maryland Biotechnology Inst 1 $41,042.00

LG 1862 Land-Grant College University of Massachusetts 2 $47,319.00

LG 1862 Land-Grant College University of Minnesota 30 $1,984,057.37

LG 1862 Land-Grant College University of Nebraska 31 $5,076,024.35

LG 1862 Land-Grant College University of Nevada 9 $625,104.00

LG 1862 Land-Grant College University of Puerto Rico 3 $220,062.83

867

Type Perf Org

Description Cooperator Name Number ofAgreements Dollar Amount 

LG 1862 Land-Grant College University of Rhode Island 1 $106,680.00

LG 1862 Land-Grant College University of Tennessee 19 $3,305,247.57

LG 1862 Land-Grant College University of Texas Medical 

Branch 

3 $55,948.80

LG 1862 Land-Grant College University of Vermont & St 

Agricultural Col 

3 $54,979.00

LG 1862 Land-Grant College University of Wisconsin—

Madison 

40 $2,419,070.00

LG 1862 Land-Grant College University of Wyoming 6 $416,685.31

LG 1862 Land-Grant College Utah State University 16 $2,715,207.87

LG 1862 Land-Grant College Virginia Polytechnic Institute 

and State Univ 

14 $4,082,277.28

LG 1862 Land-Grant College West Virginia University Research Corporation 4 $3,548,993.27

HB 1890 Land-Grant College 

or Tuskegee Institute 

Alabama A&M University 3 $672,747.22

HB 1890 Land-Grant College 

or Tuskegee Institute 

Alcorn State University 3 $1,652,469.83

HB 1890 Land-Grant College 

or Tuskegee Institute 

Delaware State University 3 $104,371.11

HB 1890 Land-Grant College 

or Tuskegee Institute 

Florida A&M University 1 $516,283.00

HB 1890 Land-Grant College 

or Tuskegee Institute 

Fort Valley State University 1 $4,000.00

HB 1890 Land-Grant College 

or Tuskegee Institute 

North Carolina Agric & Tech 

State University 

1 $22,000.00

HB 1890 Land-Grant College 

or Tuskegee Institute 

Southern University & A&M 

College 

1 $1,262,000.00

HB 1890 Land-Grant College 

or Tuskegee Institute 

Tennessee State University 3 $2,233,030.51

HB 1890 Land-Grant College 

or Tuskegee Inst. 

Tuskegee University 1 $125,358.15

HB 1890 Land-Grant College 

or Tuskegee Institute 

University of Arkansas at 

Pine Bluff 

5 $1,261,534.45

HB 1890 Land-Grant College 

or Tuskegee Institute 

University Of Maryland/Eastern Shore 4 $503,000.00

HB 1890 Land-Grant College 

or Tuskegee Institute 

Virginia State University 1 $37,029.00

HB 1890 Land-Grant College 

or Tuskegee Institute 

Washington State University 109 $8,956,772.52

HB 1890 Land-Grant College 

or Tuskegee Institute 

West Virginia State Univ Res 

and Dev Corp 

3 $519,502.00

PR Private University or College Abilene Christian University 1 $5,000.00

PR Private University or College Baylor College of Medicine 6 $17,670,562.00

PR Private University or College Brandeis University 1 $249,447.00

PR Private University or College Brigham Young University 1 $30,890.45

PR Private University or College Columbia University in the 

City of New York 

2 $256,341.00

PR Private University or College Drexel University 3 $10,000.00

PR Private University or College Duke University 1 $20,000.00

PR Private University or College Eastern Mennonite University 1 $15,000.00

PR Private University or College Johns Hopkins University 1 $2,798,370.00

PR Private University or College Miami University 1 $268,494.00

PR Private University or College Mountain State University 1 $725,755.49

868

Type Perf Org

Description Cooperator Name Number ofAgreements Dollar Amount 

PR Private University or College Texas Christian University 1 $20,000.00

PR Private University or College Tufts University 15 $28,151,966.58

PR Private University or College Tulane University 3 $2,596,653.73

PR Private University or College Washington University in St. 

Louis 

3 $81,166.00

PR Private University or College William Carey University 1 $14,883.00

PR Private University or College Wilson College 1 $20,000.00

PR Private University or College Wittenberg University 1 $8,000.00

PR Private University or College Xavier University 1 $14,674.35

PR Private University or College Yale University 1 $1,706,955.32

PU Public University or College (non-land-grant) Arkansas State University 2 $82,979.97

PU Public University or College (non-land-grant) Board of Trustees, Southern 

Illinois Univ 

1 $624,390.00

PU Public University or College (non-land-grant) California State Univ Fresno 1 $27,390.00

PU Public University or College (non-land-grant) Columbia Basin College 1 $10,000.00

PU Public University or College (non-land-grant) Florida Atlantic University 1 $1,659,942.12

PU Public University or College (non-land-grant) George Mason University 1 $30,000.00

PU Public University or College (non-land-grant) George Mason University 3 $129,680.00

PU Public University or College (non-land-grant) Indiana University 1 $63,631.00

PU Public University or College (non-land-grant) Mississippi Valley State University 4 $31,276.00

PU Public University or College (non-land-grant) Northern Illinois University 2 $61,000.00

PU Public University or College (non-land-grant) Ohio State University Agricultural Tech Inst 1 $54,667.00

PU Public University or College (non-land-grant) Southeastern Louisiana University 1 $11,700.00

PU Public University or College (non-land-grant) Southern Illinois University 1 $16,000.00

PU Public University or College (non-land-grant) Stephen F. Austin State University 2 $11,000.00

PU Public University or College (non-land-grant) Tarleton State University 1 $9,955.96

PU Public University or College (non-land-grant) Tennessee Tech University 1 $10,800.00

PU Public University or College (non-land-grant) Texas State University 8 $2,694,602.00

PU Public University or College (non-land-grant) Truman State University 1 $9,756.00

PU Public University or College (non-land-grant) University of Akron 1 $6,600.00

PU Public University or College (non-land-grant) University of Arkansas at 

Little Rock 

1 $1,153,656.00

PU Public University or College (non-land-grant) University of Central Florida 1 $151,847.95

PU Public University or College (non-land-grant) University of Iowa 5 $123,500.00

PU Public University or College (non-land-grant) University of Louisiana at 

Lafayette 

1 $33,265.00

869

Type Perf Org

Description Cooperator Name Number ofAgreements Dollar Amount 

PU Public University or College (non-land-grant) University of Maryland 11 $448,046.87

PU Public University or College (non-land-grant) University of Memphis 1 $46,628.00

PU Public University or College (non-land-grant) University of Mississippi 15 $25,963,746.17

PU Public University or College (non-land-grant) University of Missouri 5 $1,105,355.00

PU Public University or College (non-land-grant) University of New Orleans 2 $20,004.00

PU Public University or College (non-land-grant) University of North Carolina 1 $9,600.00

PU Public University or College (non-land-grant) University of North Dakota 8 $6,477,316.47

PU Public University or College (non-land-grant) University of North Texas 2 $431,219.00

PU Public University or College (non-land-grant) University of Northern Iowa 1 $59,826.00

PU Public University or College (non-land-grant) University of Oklahoma 1 $3,839.98

PU Public University or College (non-land-grant) University of Oregon 1 $15,000.00

PU Public University or College (non-land-grant) University of Pittsburgh 2 $71,543.00

PU Public University or College (non-land-grant) University of Southern Mississippi 1 $1,300,000.00

PU Public University or College (non-land-grant) University of Toledo 4 $2,453,938.77

PU Public University or College (non-land-grant) University of Washington 6 $773,600.64

PU Public University or College (non-land-grant) University of Wisconsin—Milwaukee 1 $995,206.00 

PU Public University or College (non-land-grant) West Chester University of 

Pennsylvania 

1 $39,991.00

PU Public University or College (non-land-grant) West Texas A&M University 5 $831,610.00

PU Public University or College (non-land-grant) Western Illinois University 

Inc 

1 $75,000.00

PU Public University or College (non-land-grant) Western Kentucky University 3 $5,005,322.60

PP Private for Profit Organization Agriculture Development 

Group, Inc. 

1 $137,695.00

PP Private for Profit Organization Biotechnology Foundation, 

Inc. 

1 $195,122.00

PP Private for Profit Organization Clear Springs Foods, Inc. 1 $30,000.00

PP Private for Profit Organization Craft Technologies Inc 1 $3,240.00

PP Private for Profit Organization Duarte Nursery/Dry Creek 

Laboratories 

1 $5,000.00

PP Private for Profit Organization Empire Prototype and Product Development, Inc. 1 $125,492.44

PP Private for Profit Organization Fabrate, LLC 1 $20,000.00

PP Private for Profit Organization ISCA Technologies 1 $50,000.00

PP Private for Profit Organization Norwalt Design, Inc. 1 $59,310.00

PP Private for Profit Organization Pasteuria BioScience 1 $48,519.00

PP Private for Profit Organization Peerbolt Crop Management 1 $30,254.00

PP Private for Profit Organization Smith Helicopters, Inc. 1 $55,000.00

870

Type Perf Org

Description Cooperator Name Number ofAgreements Dollar Amount 

PP Private for Profit Organization SPECTIR LLC 1 $46,000.00

PP Private for Profit Organization Spectrum Research Inc. 1 $7,000.00

PP Private for Profit Organization Tetracam Company, Inc. 1 $5,000.00

PN Private nonprofit Organization American Assoc of Botanic 

Gardens & Arboreta 

1 $165,855.00

PN Private nonprofit Organization American Biological Safety 

Association 

1 $4,000.00

PN Private nonprofit Organization American Chemical Society 1 $3,400.00

PN Private nonprofit Organization American Council for Food 

Safety & Quality 

1 $43,000.00

PN Private nonprofit Organization American Indian Science & 

Engineering Society 

1 $20,000.00

PN Private nonprofit Organization American Phytopathological 

Society 

1 $33,000.00

PN Private nonprofit Organization American Society for Nutrition, Inc. 1 $4,000.00

PN Private nonprofit Organization American Society for Testing 

Materials 

1 $39,933.52

PN Private nonprofit Organization AOAC 1 $2,000.00

PN Private nonprofit Organization Arkansas Children’s Hospital 3 $34,243,929.10

PN Private nonprofit Organization Arkansas Children’s Hospital 

Research Center 

1 $1,637,550.00

PN Private nonprofit Organization Audubon Nature Institute 1 $692,046.66

PN Private nonprofit Organization Beet Sugar Development 

Foundation 

1 $58,659.85

PN Private nonprofit Organization Biotechnology Res & Develop 

Center 

2 $9,325,847.00

PN Private nonprofit Organization Boys, Girls, & Adults Comm 

Dev Ctr (BGACDC) 

1 $282,500.00

PN Private nonprofit Organization Brooklyn Botanic Garden 1 $5,000.00

PN Private nonprofit Organization Canaan Valley Institute, Inc. 1 $1,286,972.00

PN Private nonprofit Organization Cary Christian Center, Inc. 1 $4,000.00

PN Private nonprofit Organization Cold Spring Harbor Laboratory 1 $548,750.79

PN Private nonprofit Organization Conference on Asian Pacific 

American Leadersh 

1 $22,500.00

PN Private nonprofit Organization Council for Agricultural Sci & 

Tech (CAST) 

1 $20,000.00

PN Private nonprofit Organization Crow Valley Livestock Coop 

Inc 

1 $258,302.24

PN Private nonprofit Organization Delta Health Alliance 2 $500,268.00

PN Private nonprofit Organization Donald Danforth Plant 

Science Center 

1 $50,000.00

PN Private nonprofit Organization Environmental Resource Coalition 1 $96,702.39

PN Private nonprofit Organization Farm Foundation 2 $57,000.00

PN Private nonprofit Organization FASEB 1 $5,000.00

PN Private nonprofit Organization Geisinger Clinic 1 $362,085.57

PN Private nonprofit Organization Gordon Research Conferences 1 $4,000.00

871

Type Perf Org

Description Cooperator Name Number ofAgreements Dollar Amount 

PN Private nonprofit Organization Hawaii Agriculture Research 

Center 

1 $1,712,779.00

PN Private nonprofit Organization High Plains RCD Council, 

Inc. 

1 $2,500.00

PN Private nonprofit Organization Imperial Valley Cons Res Ctr 

Com 

1 $180,820.00

PN Private nonprofit Organization J. Craig Venter Institute 3 $898,755.00

PN Private nonprofit Organization Just Food, Inc. 1 $4,900.00

PN Private nonprofit Organization Malpais Borderlands Group 1 $10,000.00

PN Private nonprofit Organization Marshfield Clinic Research 1 $66,000.00

PN Private nonprofit Organization MBI International 1 $962,000.00

PN Private nonprofit Organization MedStar Health Research Institute 2 $286,590.00

PN Private nonprofit Organization Methyl Bromide Alternatives 

Outreach 

1 $40,000.00

PN Private nonprofit Organization Michael Fields Agricultural 

Institute 

1 $624,213.00

PN Private nonprofit Organization Missouri Botanical Garden 1 $60,000.00

PN Private nonprofit Organization Morton Arboretum 2 $34,535.00

PN Private nonprofit Organization Nat Assoc of Seed and Venture Funds (NASVF) 1 $25,000.00

PN Private nonprofit Organization National Academy of Sciences 1 $50,000.00

PN Private nonprofit Organization National Center for Genome 

Resources 

6 $4,378,850.00

PN Private nonprofit Organization National Cotton Council 1 $333,836.00

PN Private nonprofit Organization National Turfgrass Evaluation Program, Inc. 1 $8,000.00

PN Private nonprofit Organization Pollinator Partnership 1 $12,927.00

PN Private nonprofit Organization Potato Variety Management 

Institute 

1 $14,237.00

PN Private nonprofit Organization Practical Farmers of Iowa 1 $173,072.00

PN Private nonprofit Organization Research Foundation of 

SUNY 

1 $236,735.00

PN Private nonprofit Organization Rodale Institute 4 $498,062.00

PN Private nonprofit Organization Samuel Roberts Noble Foundation 2 $11,800.00

PN Private nonprofit Organization Society for Range Management 3 $69,512.00

PN Private nonprofit Organization Soil and Water Conservation 

Society 

3 $16,300.00

PN Private nonprofit Organization Sugar Processing Research 

Institute 

1 $86,666.66

PN Private nonprofit Organization The Conservation Fund 2 $11,339,104.00

PN Private nonprofit Organization The Institute for Genomic Research (TIGR) 1 $53,625.00

PN Private nonprofit Organization The Research Foundation of 

SUNY 

1 $11,215.42

PN Private nonprofit Organization The Student Conservation 

Association, Inc. 

2 $88,608.00

PN Private nonprofit Organization U.S. Civilian Research & Develop. Foundation 1 $4,361,346.00

872

Type Perf Org

Description Cooperator Name Number ofAgreements Dollar Amount 

PN Private nonprofit Organization University of Alabama 2 $253,193.00

PN Private nonprofit Organization University of Georgia Research Foundation 31 $1,494,236.30

PN Private nonprofit Organization Woods End Research Laboratory 1 $30,000.00

PN Private nonprofit Organization World Food Prize Foundation 2 $477,146.00

SL State or Local Government Arizona Cotton Research & 

Protection Council 

1 $158,699.00

SL State or Local Government Nevada Tahoe Conservation 

District 

1 $4,100.00

SL State or Local Government Oklahoma Water Resource 

Board 

1 $274,100.00

SL State or Local Government Pennington Biomedical Research Center 2 $1,123,500.00

SL State or Local Government Soil & Water Conser District 

Dekalb County 

1 $72,000.00

SL State or Local Government Texas Engineering Experiments Station 2 $10,000.00

SB Small Business Alaska Berries 1 $1,658.35

SB Small Business Applied Biomics, Inc. 1 $16,188.00

SB Small Business Crystal River 1 $30,000.00

SB Small Business Houma Avionics, Inc. 1 $5,000.00

SB Small Business Service Specialist, Ltd. 1 $800,000.00

MO Minority-owned Business Federal Asian Pacific American Council 1 $45,000.00

FO Female Owned Business ASOMBRO Institute for 

Science Education 

1 $13,000.00

FO Female Owned Business Bluewave Microbics, LLC 1 $82,000.00

OT Other Akwesasne Task Force on the 

Environment 

1 $30,000.00

OT Other Boyce Thompson Inst Plant 

Rsch, Inc. 

2 $1,674,907.10

IN Individual Barry Lavine 1 $12,075.00

IN Individual Brent Larson 1 $8,000.00

IN Individual Darrel M. Temple 1 $198,700.00

IN Individual Earline Strickland 1 $75,000.00

TC Tribal Colleges and Universities Cankdeska Cikana Community College 1 $102,000.00

FN Foreign Agricultural Research Council 1 $33,000.00

FN Foreign Agriculture and Agri-Food 

Canada 

1 $85,800.00

FN Foreign Al-Qasemi Academic Collage 1 $40,000.00

FN Foreign Animal Sciences Institute 1 $243,902.00

FN Foreign Azerbaijan National Academy 

of Sciences 

1 $4,000.00

FN Foreign Biotechnology & Biological 

Control Agency 

3 $40,000.00

FN Foreign Bioversity International 1 $165,659.00

FN Foreign Bioversity International—

CIAT 

1 $32,580.00

FN Foreign Cabi BioSciences, U.K. 2 $987,808.00

FN Foreign CAPECO 1 $182,500.00

FN Foreign CATIE 3 $150,659.00

FN Foreign Chinese Academy of Agricultural Sciences 1 $464,508.65

FN Foreign Chung-Ang University 1 $20,000.00

FN Foreign CIMMYT 4 $441,403.15

FN Foreign CIRAD–BIOS 2 $160,900.00

FN Foreign Cocoa Research Institute of 

Ghana 

1 $80,000.00

FN Foreign CONCELLAE, AB 1 $40,000.00

873

Type Perf Org

Description Cooperator Name Number ofAgreements Dollar Amount 

FN Foreign Consultoria Agropecuaria 

Junior (CONAPEC Jr.) 

1 $7,000.00

FN Foreign CORPOINIAP 1 $87,000.00

FN Foreign CSIRO Entomology 1 $1,835,431.00

FN Foreign Department of Animal Health 1 $269,000.00

FN Foreign Department of Veterinary 

Services 

1 $13,500.00

FN Foreign Elhawakeer-Association 1 $40,000.00

FN Foreign Far East Forestry Research 

Institute 

1 $25,000.00

FN Foreign Federal University of Santa 

Maria 

1 $35,000.00

FN Foreign Gyeongsang National University 1 $60,309.00

FN Foreign Honduran Foundation for Agriculture Research 1 $7,000.00

FN Foreign ICARDA 4 $80,000.00

FN Foreign ICIPE—Intl Centre of Insect 

Physio and Ecol 

2 $185,000.00

FN Foreign IICA Costa Rica 1 $3,000.00

FN Foreign ILIA Chavchavadze State 

University 

1 $13,370.00

FN Foreign Indian Council of Agricultural 

Research 

1 $453,000.00

FN Foreign INIA 1 $39,000.00

FN Foreign INIAP 1 $6,150.00

FN Foreign INIFAP 2 $45,500.00

FN Foreign INRA Animal Genetics Division 1 $5,000.00

FN Foreign Institute of Botany 1 $24,000.00

FN Foreign Instituto de Cultivos 

Tropicales 

1 $455,000.00

FN Foreign Instituto Nacional de 

Technologia Agropecuari 

3 $219,890.00

FN Foreign Instituto UNIEMP 1 $143,080.00

FN Foreign International Institute Tropical Agriculture 4 $216,898.00

FN Foreign International Livestock Research Institute 2 $319,500.00

FN Foreign International Potato Center 

(CIP) 

1 $4,500.00

FN Foreign International Science & Technology Center 1 $868,730.00

FN Foreign Kenya Agricultural Research 

Service 

2 $257,968.00

FN Foreign Kenya Medical Research Institute 1 $250,000.00

FN Foreign Kyrgyz National Agrarian 

University 

1 $17,490.00

FN Foreign Ministry of Agriculture & 

Land Reclamation 

1 $100,000.00

FN Foreign National Genebank of Morocco 1 $4,000.00

FN Foreign Natl Ctr for Agr Reseach & 

Extension (NCARE) 

1 $17,000.00

FN Foreign Philippine Animal Health 

Center (PAHC) 

2 $487,652.00

FN Foreign PICTIPAPA 1 $12,541.00

FN Foreign Plant Research (NZ) Ltd 1 $3,787.28

FN Foreign Polish Academy of Sciences 1 $16,000.00

FN Foreign Punjab Agricultural University 1 $80,000.00

FN Foreign Rothamsted Experiment Station 1 $5,000.00

FN Foreign Seoul National University 2 $20,000.00

874

Type Perf Org

Description Cooperator Name Number ofAgreements Dollar Amount 

FN Foreign Simon Fraser University 2 $115,000.00

FN Foreign South African Agricultural 

Research Council 

1 $3,000.00

FN Foreign Tel Aviv University 2 $33,000.00

FN Foreign The University of Adelaide 1 $132,000.00

FN Foreign Universidad Autonoma de 

Zacateca 

1 $2,000.00

FN Foreign University of Calgary 1 $22,000.00

FN Foreign University of Ottawa 1 $64,940.00

FN Foreign University of Reading 2 $146,265.00

FN Foreign University of Saskatchewan 1 $7,000.00

FN Foreign University of Science and 

Technology of China 

1 $15,000.00

FN Foreign University of the West Indies 2 $128,574.49

FN Foreign Wuhan Botanical Garden, 

Chinese Academy Scienc 

1 $32,780.00

FN Foreign Zentralverband der 

Deutschen 

Schweineprodukti 

1 $4,000.00

1,916 $446,470,182.44

11. Duplication or Overlap with Other Programs 

ARS research does not duplicate or overlap other programs. REE and ARS are 

committed to maximizing Federal dollars by ensuring systematic monitoring and 

evaluation. While the scientific method requires the flexibility to replicate results, 

ARS and NIFA leadership, program managers, and researchers rigorously track scientific projects to avoid duplication. In addition NIFA and ARS hold joint stakeholder meetings on scientific research to pull together research projects that are 

compatible and not duplicative. 

ARS does play a critical role in providing research relevant to the mission of 

USDA’s action and regulatory agencies and other Federal departments. Examples 

include:

• Research on bacterial pathogens in produce and meats is relevant to the missions of the Food and Drug Administration and the USDA, Food Safety and Inspection Service, respectively.

• Improving conservation practices enhances the environmental benefits of farm 

bill conservation programs and supports the mission of the Natural Resources 

Conservation Service.

• Research on the nutrient needs of children, adults and the elderly provides the 

science base to undergird U.S. food policy, the Dietary Guidelines for Americans,

essential to the missions of USDA (Food and Nutrition Service (FNS), Center 

for Nutrition Policy and Promotion (CNPP), ERS), Health and Human Services 

(Food and Drug Administration (FDA), CDC, NIH), and the Department of Defense.

• Determining the effects of biotech products on the ground beetle population benefits sustainable agricultural productivity and also is relevant to the mission of 

USDA, APHIS, Biotechnology Regulatory Services.

• Long-term assessment of the effectiveness of biotech products contributes to 

maintaining crop disease protection but is also relevant to the mission of the 

Environmental Protection Agency.

• Research on tree pathogens benefits fruit tree improvement but is also relevant 

to forest trees and contributes to the mission of the Forest Service.

• Research on reducing cereal grain mycotoxins improves grain quality but is also 

relevant to the mission of the Grain Inspection, Packers, and Stockyards Administration (GIPSA).

• Research on effective biological control of invasive weeds and pests supports 

sustainable farming systems but is also be relevant to protecting the U.S. border and the mission of Homeland Security.

• Developing new sorghum and forage grass germplasm with high value for animal feed also benefits the mission of the Department of Energy to develop 

biofuels.

875

• Creation of planning tools for research, development, and commercial production of biofuels benefits plans for the Department of Defense and the Federal 

Aviation Administration to achieve diverse fuel sources.

• Research contributing to the sound design, maintenance, and assessment of 

dams, levees, and channels for water storage and control supports the mission 

of the Army Corps of Engineers and the Federal Emergency Management Agency.

• Development of vaccines, diagnostic tests and other countermeasures to control 

foreign animal diseases in coordination with the Department of Homeland Security to help the Animal Plant Health Inspection Services to protect the United 

States from these diseases.

• Research to develop and validate novel methods to protect United States military deployed abroad from threats posed by disease-carrying insects. This program is in support of the Department of Defense.

ARS partners with other Federal agencies in responding to national needs and 

emergencies through cooperation in Task Forces and Interagency Working Groups 

that identify urgent research needs and agency roles. Recent examples include interagency task forces and working groups to develop and implement action plans to 

address Soybean Rust, Avian Influenza, Childhood Obesity, Antibiotic Resistance, 

Citrus Greening, Ug99 Wheat Stem Rust, Water Resources, and Climate Change. 

These group’s national plans clearly identify the specific roles and responsibilities 

of ARS research projects and researchers. Often, ARS is responsible for providing 

unique disease and pest scientific expertise, specialized genetic resources and collections, critical human nutrition and food safety expertise and resources, natural resource management expertise, and nationally coordinated research teams. 

ARS partners with the USDA Research, Education and Economics (REE) agencies 

through the leadership of the Under Secretary and Chief Scientist. One of the most 

important of these partnerships is with the National Institute of Food and Agriculture (NIFA), which provides grants that support universities and also much collaboration between universities and ARS. ARS research is funded by Congressional 

appropriations that can support multi-year, long-term research while NIFA grants 

support complementary, shorter-term agricultural research. Cooperation and avoidance of duplication is guided through REE administrative leadership, budget development, and according to REE research priorities. The REE Action Plan identifies 

important goals for the agencies and specifies the role of ARS, NIFA and the other 

REE agencies. Other coordination is provided by multiple working groups, committees, and joint customer/stakeholder workshops that insure that ARS long-term research is optimally leveraged with NIFA awards and research supported by other 

agencies. These types of partnerships are a perfect mesh of interests and collaboration for the public good. The list of accomplishments that have come from partnerships between ARS and land-grant schools is long and impressive. Examples include:

• The Interagency Working Group on Plant Genomes, guides research on plant 

genome sequencing with NIFA supporting sequencing projects and ARS supporting crop genome database to curate and distribute the data information to 

crop breeders and other researchers (REE Action Plan, Goal 8).

• ARS manages and safeguards the national genebanks and seed collections. 

NIFA has recently awarded a Triticeae grant to a university-led project that 

will evaluate accessions in the ARS small grains collection for weather stress 

tolerance traits.

• The USDA BioEnergy Science team guides interagency cooperative research on 

bioenergy with ARS researchers developing new bioenergy feedstock lines.

• ARS and NIFA national program leaders include their counterparts in national 

program planning workshops including some joint workshops such as the 2011 

joint ARS–NIFA Animal Genomics Workshop.

In addition to complementing the work of other agencies, ARS ensures that duplication and overlap are avoided within its own programs by developing nationally coordinated research Action Plans for each of the ARS National Programs. The ARS 

Office of National Programs and National Program Leaders provide oversight to 

guarantee that individual ARS project plans are targeted to the problem priorities 

and optimally coordinated to achieve the expected results. The National Programs 

are planned centrally with extensive input with external customers, stakeholders, 

research partners, and ARS scientists. Those providing perspectives on problems to 

be solved and research needs include producers, industry and other agricultural 

processors, consumers, Administration officials, representatives of USDA action and 

876

regulatory agencies, other government agencies, Congress, non-governmental groups 

(e.g., commodity groups and advisory groups), state and local governments, national 

and international trade organizations, university scientists, private researchers, and 

government laboratories. Research collaborations among Agency scientists and with 

non-ARS scientists are a frequent outcome of the input and planning process, which 

ensures complementary objectives and approaches, prevents redundancies, and 

leads to research projects and programs that have impact for the public. Routinely, 

the agency’s senior line managers and field scientists also meet with customers, 

stakeholders, and partners to build a strong understanding of regional and local 

issues. 

Input from these constituencies leads to development of an Action Plan that provides the documentation of needs and researchable problems, which guides development of individual research project plans. Those plans—which include an assessment of related research already accomplished or in progress—are reviewed by peer 

panels who have the Action Plan in hand. This rigorous process, developed by ARS 

in response to a mandate in the 1995 Farm Bill, is a further check point for ensuring that research will solve problems without wasteful programmatic redundancies. 

In an era of limited available funds, there is a strong incentive to not repeat what 

others in the agricultural research arena are doing unless there is a stronger public 

good provision requirement. ARS national leaders and scientists participate on over 

160 Federal interagency working groups, and an uncounted but similarly large number of formal and informal professional associations and an even larger number of 

private-academic-ARS scientist work collaborations. As a result, ARS prevents 

redundancies in its programs, complements the missions of many other sciencebased Departments and agencies, and achieves much of the value in its research 

through mission-driven responsiveness to customer needs.

Intra-Agency Duplication

As an example of how the agency conducts research on important issues in multiple locations across the country without duplicating itself, the agency would like 

to highlight three particular programs that have multiple scientists collaborating 

across the country to answer complex research questions without unnecessary duplication.

ARS Watersheds

The Agricultural Research Service (ARS) operates a network of approximately 23 

Benchmark Watersheds, Experimental Ranges, and associated/related research facilities that collect long-term physical, chemical, and biological data on agricultural 

sustainability, climate change, ecosystem services, and natural resource conservation at the watershed or landscape scale. Data records extend as far back as 98 

years. The distribution of these sites across the nation gives them great value because the interactions of agricultural production systems with natural resources are 

highly environment-dependent. ARS sustains this land-based infrastructure for research and environmental management testing to enable understanding and forecasting of the nation’s capacity to provide agricultural commodities and other ecosystem goods and services under geographically variable, ever-changing environmental and resource-use conditions. 

In addition to supporting high-quality, location-based research, these sites provide 

an unparalleled opportunity to make important comparisons between very different 

environments, across large distances. The multi-location approach allows ARS to develop research questions that are shared and coordinated across sites; provide the 

capacity to address these large-scale questions across sites through shared research 

protocols; collect compatible data sets across sites; provide the capacity and infrastructure for cross-site data analysis; and generally facilitate and foster shared engagement in agricultural research across the nation’s highly diverse environments. 

The watershed/rangeland network is a key infrastructure for the research in 

many ARS National Programs and addresses the needs of other USDA agencies, 

such as the evaluation and improvement of farm bill conservation programs through 

the Conservation Effects Assessment Project (CEAP). Collectively, the sites are a 

platform to support multi-organization research and funding efforts; a resource for 

developing and testing regional- and national-scale hypotheses that cannot be undertaken by individual locations alone; and a foundation for developing long-range, 

multi-agency/institutional funding plans. 

During the last 10 years, a concept for a Long-Term Agroecosystems Research 

(LTAR) network has been proposed in a number of highly visible publications, e.g.,

the 2003 National Research Council report, Frontiers in Agricultural Research,

which urged the USDA to adapt a strategic, long-term approach to food and agricultural research. Creation of a new LTAR network would cost tens of millions of dollars, and universities or other organizations could not likely duplicate the existing 

877

ARS resource and its long-term data records. Two of ARS’ Experimental Range research sites are already part of the National Science Foundation’s (NSF) Long-Term 

Ecological Research (LTER) Network; three have been selected to become part of 

NSF’s proposed National Ecological Observatory Network (NEON). Thus, the geographically distributed LTAR network needed by the scientific community already 

exists in ARS’ experimental watershed/rangeland network. 

ARS’ unique watershed/rangeland resource is widely available for partnerships 

with non-USDA organizations, and research in cooperation with university scientists, other Federal agencies, and others is widespread within the network.

ARS Bee Research

The bee industry is essential for the security of the nation’s food supply. Polli- nation is responsible for $15 billion in added crop value; bee pollinated crops include 

important field crops such as alfalfa, and many fruits and nuts, major sources of 

vitamins. The bee industry is threatened by invasive mites (varroa and tracheal), 

predators (small hive beetle), diseases (American foulbrood, chalkbrood, viruses), insecticide poisoning, Africanization of managed colonies, the pressures of migratory 

beekeeping, and other problems leading to decreased colony health and manageability. With the appearance of colony collapse disorder in 2007, 30% or more of the 

nation’s colonies are now lost annually, an unsustainable situation that threatens 

the entire bee industry and crops such as almond and apple that are totally dependent on bee pollination. In response, ARS has the core national responsibility for ensuring an adequate force of pollinators, and conducts honey bee research at four laboratories, in Arizona, Louisiana, Maryland, and Texas. In addition, ARS conducts 

research on other (non-honey bee) pollinating bees in Utah. Each laboratory has a 

unique regional advantage and research role:

• Arizona, Tucson, the ‘‘Bee Health and Nutrition Laboratory’’: (1) determines 

nutritional needs of bees and develops supplementary diets such as a highly 

successful protein diet now commercialized as MegaBee; (2) determines the negative effects of fungicides and bactericides on bee bread, the fermented pollenbased protein diet that bees store to feed their brood; (3) conducts research for 

beekeepers that transport colonies for pollination, particularly into California, 

where crops pollinated by bees have a value in excess of $12.7 billion; (4) identifies new compounds for varroa mite control, such as newly commercialized plant 

beta-acids from hops; (5) develops tools to manage the genetics of commercial 

colonies in Africanized areas; (6) and maintains an Africanized Honey Bee 

(AHB) Identification Service.

• Louisiana, Baton Rouge, the ‘‘Bee Breeding Laboratory’’: (1) focuses uniquely 

on breeding improved bees, and has developed a Southern-based island system 

for isolation of breeding stocks during breeding; (2) selected and commercialized 

the Russian bee for varroa and tracheal mite resistance (and high honey production and survival in harsh climates); (3) and is using molecular and other 

techniques to determine genes for introgression of resistance traits into bee 

lines preferred by beekeepers for their docility, honey production, and other 

characteristics.

• Beltsville, Maryland, the ‘‘Bee Disease Laboratory’’: (1) has a Bee Disease Diagnosis Service that works with APHIS to prevent introduction of new pathogens and pests; (2) has been lead in developing antibiotics for controlling bee 

bacterial diseases and kits for detection of bee viruses for maintenance of pure 

stock; and, (3) is the laboratory leading international efforts to exploit the 

genomes of bees and their parasites and pathogens.

• Texas, Weslaco, the ‘‘Bee IPM Laboratory’’: (1) conducts research in a region 

that has served as a pathway for invasive problems, e.g., Africanized honey bee; 

(2) is the principal laboratory developing systems, including miticide resistance 

management, for control of bee pests; and (3) is working to elucidate bee immunity to disease.

• Utah, Logan, the ‘‘Native Bee Laboratory’’: (1) is the only ARS facility (and 

only large facility in the world) developing alternative species of bees for pollination of crops and for land restoration; and, (2) maintains the premier bee systematics laboratory.

ARS Beef Production Research

Beef cattle research is conducted in the USDA–ARS in three primary locations: 

the U.S. Meat Animal Research Center in Clay Center Nebraska (USMARC), Fort 

Keogh Livestock and Range Research Laboratory in Miles City, Montana and the 

Sub Tropical Agriculture Research Station in Brooksville, Florida (STARS). Research and priority for these ARS labs is outlined below. In addition, ARS conducts 

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research in forage efficiencies, manure management, range and pasture management, parasite control, climate change/adaptation and forage toxicology at various 

other locations where cattle and/or sheep serve as experimental units, but are not 

the focus of the primary research objectives. 

USMARC: Research at USMARC is focused on bovine genetic and genomics and 

improvement of beef cattle growth and efficiencies in typical corn belt pasture production systems. Beef cattle research is specifically focused on improving feedlot nutrient utilization efficiency, enhancing reproductive efficiencies, improving meat 

quality and consumer acceptance, combating bovine respiratory disease and improving the management and adaptability of feedlot cattle to environmental stressors. 

USMARC also conducts significant research in emerging genetic and genomic technologies to improve the rate of genetic improvement for numerous traits of economic 

importance for the beef industry. 

Fort Keogh: Research at Fort Keogh in Miles City Montana is focused on range 

cattle production efficiencies particularly on cow-calf production and the interface 

between beef cattle production and range-forage management and ecosystem services on open range lands in the Western U.S. Specific beef cattle research includes 

genetic and genomic technology development to improve the productivity and efficiency of cattle grazing open range and the improvement of reproductive efficiencies 

of cows in typical Western range production environments. Additional research is 

focused on rumen ecology and the relationship between the rumen microbiome and 

beef cattle production efficiencies, particularly in cow-calf production systems. 

STARS: Research at STARS in Brooksville Florida is focused on breed improvement of cattle adapted to the severe production environments of the subtropics 

which include additional stressors of poorer quality forages, extreme heat and humidity, and significantly increased disease and parasite infestation challenges than 

cattle production in the rest of the U.S. Beef cattle production in the subtropics of 

the U.S. is largely confined to the cow-calf sector but represents 40% of the total 

U.S. beef cow herd. Specific research is being conducted to improve the Brahman 

(Bos indicus) breed and their crosses to enhance adaptation throughout the subtropics and tropics around the world. Brahman cattle exhibit adaptive characteristics for these extreme environments but are discriminated against for poor dispositions, inferior reproductive performance, inferior feedlot performance, and inferior 

carcass quality particularly meat tenderness. To ensure the sustainability and competitiveness of beef producers in sub-tropical and tropical environments Brahman 

cattle are being genetically improved to consistently demonstrate better performance 

and efficiency for these critical economic traits. 

12. Waste, Fraud and Abuse 

There are currently no fraud, waste, and abuse audits ongoing. The agency utilizes various internal procedures to prevent and detect fraud, waste, and abuse instances and provide an annual assurance statement to the Department of Agriculture Chief Financial Officer with our assessment of the effectiveness of our procedures. Over the past several years, the assurance statement has not identified any 

exceptions related to fraud, waste, and abuse. Some of the procedures that support 

our assurance statement are as follows:

• Office of Management and Budget Circular A–123 Appendix A ‘‘Internal Control 

over Financial Reporting’’ covering Financial Reporting, Reimbursable Agreements, Property Management, Funds Management, Budgeting, and Human Resources

• Consolidated Assistance, Review, and Evaluations of ARS Area offices and Locations

• National Program Reviews

• National Institute of Standards and Technology and Federal Information Security Management Act Risk Assessments

• Human Resources Management Evaluations

• Quality Control Reviews of Near Field Communications (NFC) Data Elements

• Facilities Contracting and Engineering Management Design Review Board and 

Contract Review Board Meetings

• Safety, Health, and Environmental Management Reviews, Evaluations, and 

Studies

• Procurement and Personal Property Management Reviews

• Purchase Card Audits and Reviews

Open Audit Summary

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ARS is undergoing several Government Accountability Office (GAO) and Office of 

the Inspector General (OIG) audits. The focus of the majority of these audits is how 

effective and efficient ARS is in conducting its research, securing and protecting select agents, addressing critical and emerging issues (such as Colony Collapse Disorder) and managing its resources. In the table below is a breakout of the different 

types of audits ongoing at ARS.

Audit Entity Program

Audits IT Audits 

Financial and 

Administrative 

Audits 

Fraud, Waste 

and Abuse 

Audits/Investigations 

Total Open 

Audits 

GAO 11 1 0 0 12

OIG 2 3 2 0 7

Open GAO Audit Findings

There is currently one GAO audit with open findings that ARS must address related to Agroterrorism Response and Recovery Efforts. ARS has responded to these 

findings and is awaiting additional instructions. In our response, ARS did not disagree with the findings, however the agency believes that additional information is 

required to further explain observations made in the report.

GAO Audits (In Progress)

120788, DOD Research Facilities and Administration Cost Reimbursement 

311044, Update to the 2005 Wireless Network Security Report 

361174, Quality Assurance of Carbon Offsets in U.S. Climate Change Programs 

361177, The USDA Protocols and Standards to Ensure the Safety of Meat and Other 

Food Procured by Schools 

361185, Renewable Energy Initiatives 

361191, Ethanol Blends and Risk 

361204, Agroterrorism Response and Recovery Efforts 

361216, Chesapeake Bay Action Plan 

361223, Antibiotic Use in Food and Animals 

361260, USDA Efforts to Reduce E. Coli 

460612, High Containment Laboratories: GAO Assessment of Commissioned Reports 

on Biosafety and Biosecurity 

460619, Duplication of Federal Inspections of High-Containment Laboratories

OIG Audits (In Progress)

50401–01–11, Fiscal Year 2011 USDA Consolidated Financial Statements Audit 

50501–1–12, USDA’s Security over Domain Name Systems Services 

50501–2–12, FY 2011 Federal Information Security Management Act Audit 

50601–01–22, Effectiveness of the Departments Recent Efforts to Entrance Agricultural Trade 

50703–01–HQ, Oversight and Control of USDA ARRA Activities 

50099–84–HY, USDA’s Response to Colony Collapse Disorder 

50501–01–IT, USDA’s Management and Security Over Wireless Handheld Devices 

13. Effect of Administrative PAYGO 

None. 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE—NATIONAL

INSTITUTE OF FOOD AND AGRICULTURE

1. Program Name 

1890 Institutions Capacity Building Grants Program. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

This program is authorized by section 1417(b)(4) of the National Agricultural Research, Extension, and Teaching Policy Act of 1977, as amended (NARETPA) (7 

U.S.C. 3152(b)(4)) and pursuant to annual appropriations made available specifically for the 1890 Capacity Building Program. 

Section 7107 of the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) 

(Pub. L. 110–246) amended the authority for the 1890 Capacity Building Program 

to allow for extension capacity building, as well as teaching and research. In accordVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00891 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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ance with the statutory authority, subject to the availability of funds, the Secretary 

of Agriculture may make competitive grants, for a period not to exceed 5 years, to 

design and implement food and agricultural programs to build Teaching, Research 

and Extension capacity at colleges and universities having significant minority enrollments. 

4. Purpose/Goals 

The purpose of the 1890 Capacity Building Program is to support research, education, and extension as well as integrated research, teaching, and/or extension by 

awarding grants that address key problems of national, regional, and multi-institutional importance in sustaining all components of agriculture, including farm efficiency and profitability, ranching, renewable energy, forestry (both urban and agroforestry), aquaculture, rural communities and entrepreneurship, human nutrition, 

food safety, family and consumer sciences, biotechnology, and conventional breeding. 

5. Success in Meeting Programmatic Purpose/Goals 

The 1890 Capacity Building Grant strengthens teaching, research and extension 

programs in the food and agricultural sciences by building the institutional capacities of the 1890 Land-Grant Institutions, and Tuskegee University. The program 

supports projects that strengthen teaching programs in the food and agricultural 

sciences in the need areas of curriculum design and materials development, faculty 

development, and others. It supports projects that strengthen research and extension programs in need areas of studies and experimentation, extension program development support systems, and others. 

Examples of success include: 

As a result of the capacity building grant at Kentucky State University, the 

Geospatial Education and Analysis Center provided ESRI (a GIS software company) 

authorized training to faculty, staff, and students and to state, regional and local 

government employees and others who use the ESRI suite of software products. The 

KSU GIS Training facility has had 382 students take the Introduction to ArcGIS 

I and II courses taught by KSU staff. Almost ten percent of the total number of students that enrolled in the courses were KSU students, faculty, and staff. The Center’s ESRI Authorized Training courses have provided the facility the means to be 

self-sustaining. The center generates funds needed to maintain the equipment, upgrade the facility, and invest in new hardware, software, and data needed to meet 

the needs of campus users, as well as local GIS users. The KSU GIS resources have 

been used to produce several map products that are in use by the Frankfort/Franklin County Riverfront Development Commission in their efforts to create better 

interaction between citizens and the Kentucky Riverfront environment. 

An educational effort at Tennessee State University (TSU) collaborates with 

India’s G.B. Pant Agricultural University of Agriculture and Technology 

(GBPUA&T) to internationalize TSU’s agriculture program, enhance the competitiveness of Tennessee’s agricultural entrepreneurs, and foster on-going research collaborations with GBPUA&T faculty. The new course contents were developed for 

two courses in agribusiness after the interactive meetings with faculty and students 

of the GBPUA&T and other Indian agricultural universities on issues related to curriculum in Agribusiness. International content is being integrated in several courses 

at TSU’s undergraduate and graduate agriculture program. The content has greater 

examples of real-life situations. More interdisciplinary content in courses are being 

designed to include research opportunities for graduate and undergraduate students. Scientific information is being made available on faculty and student experience with international exchange program, and best management practices and lessons learned. Students now have a better appreciation and understanding of global 

problems. 

Fort Valley State University (FVSU) in Georgia has designed and developed 

an Outdoor Forestry Classroom/Laboratory to provide hands-on and experiential 

learning experiences to students enrolled in the FVSU’s forestry course, to use the 

Outdoor Forestry Classroom/Laboratory to train and prepare high school agriculture 

students for various forestry career development events, and to use the Outdoor 

Forestry Classroom/Laboratory for summer workshops for high school agriculture 

teachers throughout the state of Georgia. During Spring 2009, Area 3 of district 

number 4 of Georgia used the site to conduct Forestry Career Development Event 

activities. One hundred and fifty high school students were in attendance and had 

the opportunity to interact and discuss careers in the forestry industry with foresters from USDA, the Georgia Forestry Commission and Weyerhaeuser. In the future this site will be used to train and prepare high school agriculture students 

(FFA) for various forestry career development events. Forestry Camps (Workshops) 

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will be conducted to upgrade the skills of limited resource forestry, land owners and 

provide continuing education for FFA teachers. 

Participation in global education programs is low and there are deficiencies in 

gathering and managing data for decision-making in global education programs. A 

NIFA-funded project at North Carolina A&T State University developed a set 

of best practices and retool curricula to equip faculty and students with the skills 

needed to function smartly around the world in order to strengthen America’s leadership in international agriculture. As outcome, a 30 percent improvement in international content in curricula in agricultural courses; a reported increase of 40 percent in participation in study abroad programs among students enrolled in schools 

of agriculture in 1890 institutions; a 40 percent increase in awareness of and interest in international agricultural issues among faculty and students in schools of agriculture in 1890 institutions. In the long run the project will produce students and 

faculty capable of working with their counterparts in a transnational context to 

solve complex global agricultural problems.

6. Annual Budget Authority (Fiscal Year (FY) 2007–FY 2011) 

(in thousands of dollars) 

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Annual Budget Authority $9,479 $11,404 $11,411 $12,312 $12,189 $12,375 $13,592 $15,000 $18,250 $19,336

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Outlays $1,238 $7,547 $13,246 $14,762 $17,059

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Delivery Cost $495 $544 $600 $730 $773

9. Eligibility Criteria 

Applications may only be submitted by 1890 Land-Grant Institutions, including 

Tuskegee University and West Virginia State University.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received 110 None 344

Applications Funded 43 None 118

Note: FY 2009 funds were awarded collectively with FY 2010 funds. 

11. Duplication or Overlap with Other Programs 

USDA’s Research, Education, and Economics (REE) mission area is committed to 

maximizing Federal dollars by ensuring systematic monitoring and evaluation. 

While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously track scientific projects 

through its Current Research Information System (CRIS) to avoid duplication. Program leadership also holds joint stakeholder meetings and/or coordinates with other 

science agencies (ARS, ERS, others) to ensure that programs are complementary, 

and do not duplicate other science programs in USDA and other Federal agencies. 

The creation and staffing of the USDA Office of the Chief Scientist has bolstered 

this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

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13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Agriculture and Food Research Initiative (AFRI). 

2. Subprograms/Department Initiatives 

Foundational Program 

Childhood Obesity 

Climate Change 

Global Food Security 

Food Safety 

Sustainable Bioenergy 

NIFA Fellowship Grant Program 

3. Brief History 

Section 7406 of the 2008 Farm Bill amended section 2(b) of the Competitive, Special, and Facilities Research Grant Act (7 U.S.C. 450i(b)) to authorize AFRI. 

4. Purpose/Goals 

The Foundational Program Request for Application (RFA) focuses on building a 

foundation of knowledge in fundamental and applied food and agricultural sciences 

critical for solving current and future societal challenges. 

The Childhood Obesity Prevention Challenge Area RFA focuses on the societal 

challenge to end child obesity through specific program areas that are designed to 

achieve the long-term outcome of reducing the prevalence of overweight and obesity 

among children and adolescents. 

The Climate Change RFA focuses on the societal challenge to mitigate and adapt 

to climate change through specific program areas that are designed to achieve the 

long-term outcome of reducing the use of energy, nitrogen, and water in the production of food, fiber and fuel, and increase carbon sequestration. 

The Global Food Security RFA focuses on the societal challenge to keep American 

agriculture competitive while ending world hunger through specific program areas 

that are designed to achieve the long-term outcome of increasing food availability 

and decreasing the number of food insecure individuals. 

The Food Safety Challenge Area RFA focuses on the societal challenge to improve 

food safety for all Americans through specific program that areas are designed to 

achieve the long-term outcome of reducing foodborne illnesses and deaths through 

a safe food supply. 

The Sustainable Bioenergy RFA focuses on the societal challenge to secure America’s energy future through specific program areas that are designed to achieve the 

long-term outcome of reducing the national dependence on foreign oil through the 

production of sustainable bioenergy. 

The AFRI NIFA Fellowships Grant Program is focused on developing technical 

and functional competence for pre-doctoral students, and the research independence 

and teaching credentials of postdoctoral scientists in the food, forestry and agricultural sciences that are within NIFA’s challenge areas through well-developed and 

highly interactive mentoring and training activities. 

5. Success in Meeting Programmatic Purpose/Goals 

AFRI at the National Institute of Food and Agriculture (NIFA) is charged with 

funding research, education, and extension grants and integrated research, extension, and education grants that address key problems of national, regional, and 

multi-state importance in sustaining all components of agriculture, including farm 

efficiency and profitability, ranching, renewable energy, forestry (both urban and 

agroforestry), aquaculture, rural communities and entrepreneurship, human nutrition, food safety, biotechnology, and conventional breeding. Providing this support 

requires that AFRI advances fundamental sciences in support of agriculture and coordinates opportunities to build on these discoveries. This will necessitate efforts in 

education and extension that deliver science-based knowledge to people, allowing 

them to make informed practical decisions. 

Examples of success include: 

The AFRI Wheat Coordinated Agricultural Project (WheatCAP) is led by the University of California, Davis implemented genetic Marker Assisted Selection (MAS) 

strategies for quality and disease resistance traits across the U.S. public breeding 

programs. The project generated approximately 1,000,000 MAS data points that 

were used to develop 90 new germplasm lines and cultivars and thousands of imVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00894 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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proved lines for breeding. The WheatCAP provided a stimulating learning environment that supported training of 117 undergraduates and 73 graduate students, 

many of which are being hired as breeders in companies and public institutions. 

An international team of scientists have mapped the genome of the plant pathogen that causes downy mildew disease which causes major losses to crops such as 

corn, grapes, and lettuce. The genome sequence of Hyaloperonospora arabidopsidis,

the pathogen that causes downy mildew disease, is published this week in the journal Science. In the paper, researchers compare the sequence of H. arabidopsidis

with other fully-sequenced genomes of destructive plant pathogens to shed light on 

the differences in the ways microbes interact with their host and how those differences evolve. The study could lead to new ways to investigate how these pathogens cause plant disease and find new ways to prevent plant loss in the future. 

S. Enteritidis and C. jejuni are major foodborne pathogens transmitted through 

poultry products. Many plant-derived antimicrobials are natural, generally regarded 

as safe molecules used to preserve foods and enhance food flavor. Preliminary research by Connecticut scientists revealed that plant molecules, including transcinnamaldehyde, carvacrol, thymol, and eugenol were bactericidal on S. Enteritidis

and C. jejuni in chicken bowel contents in the laboratory. Additionally, transcinnamaldehyde and eugenol reduced significant bowel populations of these pathogens in chickens. The current research is investigating the effect of transcinnamaldehyde, carvacrol, thymol, and eugenol as dietary supplements to reduce 

colonization of S. Enteritidis and C. jejuni in broiler chickens and their safety in 

chickens. The work will potentially lead to decreased outbreaks of salmonellosis and 

campylobacteriosis, thereby improving public health and economic opportunities for 

poultry farmers. 

Scientists at the University of Wisconsin created a Relative Antioxidant Index 

(RACI) which provides standardization of information about the antioxidant content 

of various fruits and vegetables and is useful as a ranking tool for use by the food 

industry, scientists, and consumers. The RACI statistically integrates the antioxidant capacity values generated using seven different chemical methods and was 

validated using 20 commonly consumed vegetables. 

With funding from NIFA, scientists at the University of California-Davis have 

identified the genes in wheat that are responsible for the plant’s tolerance to freezing temperatures. This discovery may lead to improved crop production since wheat 

breeders have long recognized the need to produce cultivars with greater resistance 

to freezing temperatures, but have had limited success to date. 

NIFA-funded scientists at the University of Missouri in cooperation with the 

Agricultural Research Service developed a new tool for cattle, called the Illumina 

BovineSNP50 Chip. This tool allows scientists to examine the animal’s entire genome to detect variations in a more efficient and economical way. Researchers 

around the world are using the chip to identify regions within the bovine genome 

that harbor variants that cause animals to differ in the outward expression of important traits. More importantly, the high resolution of this snip chip will allow scientists to predict an animal’s total genetic merit from its SNP profile. Breeding companies are using the chip to assist in the genetic selection process of dairy animals. 

As a result, the industry is saving millions of dollars annually by more efficiently 

prescreening young bulls and streamlining the process of identifying elite cows. Producers base these and other decisions on each animal’s genetic merit, as estimated 

from their SNP profiles.

6. Annual Budget Authority (Fiscal Year (FY) 2007–FY 2011) 

(in thousands of dollars) 

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Annual Budget Authority $120,452 $166,045 $164,027 $179,552 $181,170 $190,229 $190,883 $201,504 $262,482 $264,470

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Outlays $9,511 $76,124 $143,464 $198,017 $223,339

884

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Delivery Cost $7,609 $7,635 $8,060 $10,499 $10,579

9. Eligibility Criteria 

AFRI makes awards under two legislative authorities with different eligibilities. 

Depending on Program Area Priorities and the requested activities, the authority 

used, and hence eligibility, may differ within a particular Program Area. 

Eligibility is also linked to the project type requested in Program Area Descriptions. 

Eligible applicants for Research Projects include:

• State Agricultural Experiment Stations;

• Colleges and universities (including junior colleges offering associate degrees 

orhigher);

• University research foundations;

• Other research institutions and organizations;

• Federal agencies;

• National laboratories;

• Private organizations or corporations;

• Individuals who are U.S. citizens, nationals, or permanent residents; and

• any group consisting of two or more entities identified in (1) through (8).

Eligible institutions do not include foreign and international organizations. 

Eligible applicants for Integrated Projects include: (1) colleges and universities; (2) 

1994 Land-Grant Institutions; and (3) Hispanic-serving agricultural colleges and 

universities. 

Eligible applicants for the Research, Education, or Extension Projects include: (1) 

State Agricultural Experiment Stations; (2) colleges and universities (including junior colleges offering associate degrees or higher); (3) university research foundations; 

(4) other research institutions and organizations; (5) Federal agencies, (6) national 

laboratories; (7) private organizations or corporations; (8) individuals who are U.S. 

citizens, nationals, or permanent residents; and (9) any group consisting of two or 

more entities identified in (1) through (8). 

Eligible institutions do not include foreign and international organizations.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received None 2,417 1,569

Applications Funded None 151 350

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

A peer review panel verifies that the project described in the application is original compared to the published literature; however, a search of the CRIS database 

is also conducted to ensure that the program is not unwarrantedly repeating work 

that is not yet published in scientific journals or other outlets. The CRIS search 

would include any work under the name of the Project Director (PD) and a separate 

search for key words associated with the specific investigation described in the 

project application. Search results must be checked for the possibility of supporting 

duplicative work by two different investigators or the overlapping support of one investigator from two sources for essentially the same work. Should the NIFA NaVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00896 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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tional Program Leader (NPL) suspect duplication of effort the NPL must contact the 

PD to discuss any potential or suspected overlaps or duplication. The AFRI will not 

fund any project for overlapping objectives receiving funds from another USDA program or that is unnecessarily duplicative. The search is documented on the Competitive Proposal Recommendation Form (Form 3) with the following statement: ‘‘A 

CRIS search performed on (Date) for the PD and using the following key words 

deemed appropriate for this application: (key words). Results confirm that this is 

original work and is not inappropriately duplicative of, or overlapping with, other 

work supported by USDA.’’

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Beginning Farmer and Rancher Development Program (BFRDP). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

Section 7405(c) of the Farm Security and Rural Investment Act of 2002 (2002 

Farm Bill) (Pub. L. 107–171) (7 U.S.C. 3319f(c)), as amended by section 7410 of the 

2008 Farm Bill, established a competitive grants program for the purpose of providing education, outreach, training and technical assistance to benefit beginning 

farmers and ranchers in the United States. 

Section 7405(d) of the 2002 Farm Bill established beginning farmer and rancher 

education teams to develop curricula and conduct educational programs and workshops for beginning farmers orranchers in diverse geographical areas of the United 

States. 

4. Purpose/Goals 

The primary goal of BFRDP is to enhance food security by providing beginning 

farmer and rancher producers and their families in the U.S. and its territories, with 

the knowledge, skills and tools needed to make informed decisions for their operations, and enhance their sustainability. 

5. Success in Meeting Programmatic Purpose/Goals 

Training activities are the cornerstone of almost all the BFRDP grantee programs. 

Types of training included webinars, seminars, internships, mentorships, on-farm 

field days, etc. Face-to-face training events, such as regular non-credit courses or 

workshop sessions at farming conferences, were the most frequent types of events. 

More than 5,000 new and potential farmers were counted as participants in BFRDP 

project training events. Most attended face-to-face workshops or courses, but many 

also participated in other types of training, including roundtable discussions, handson field days, farm internships, and working with mentor farmers. This outcome indicates that the BFRDP goal to train more than 6,000 beginning farmers and ranchers will most likely be met, if not greatly exceeded. Data from BFRDP training program participants who responded to surveys shows that approximately 17 percent 

of the 5,339 farmers trained had very little or no experience in farming. About 12–

16 percent are farm workers, females, limited resource, and socially disadvantaged. 

Examples of success include: 

The Northeast Beginning Farmer Coalition is a learning network for beginning farmer training programs. Three major strategies to foster the network include 

the delivering of mentoring, training, and program development resources; developing evaluation resources and outreach strategies to understand and enhance the 

impacts of training efforts; and engaging K–12 teachers and young farmer activists 

to shift youth cultural norms about farming career options. During the coalition’s 

first year, it conducted needs assessments of new farm start-ups focused on gaps 

in service. A course to train new instructors reached 20 farmers, nonprofit, and extension educator participants. Attendees developed five new online courses for beginning farmers. The coalition also developed and reviewed materials and resources 

and created resources to support teachers at eight schools in New York with agriculture education programs. 

The Western Navajo Nation Beginning Farmers and Ranchers Project engages, prepares, and supports socially disadvantaged, underserved, and limited reVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00897 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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source beginning Navajo farmers and ranchers in eight communities covering 8,000 

square miles of the Navajo Nation. The overall goal of the project is to provide Navajo community members who wish to begin farming and ranching with the skills 

to effectively launch sustainable agricultural operations using traditional and contemporary agricultural techniques in conjunction with effective business practices. 

Utilizing multiple learning methods, the project features Navajo language-based instruction, intensive experiential education with successful Navajo farmer and rancher mentors, regional peer roundtables with expert facilitators, and production experts. The project is teaching ancestral traditional ways to introduce participants to 

farming or ranching. 

In the first year, the project worked with 13 chapter members through direct agricultural training and networking activities that included two roundtables, two conferences, and weekly classes in technology, business, or introductory farming and 

ranching to 1,000+ participants. Fifty percent of participants are women. Seventy 

percent are farming or ranching less than 1 year, or do not farm/ranch currently. 

The project staff is comprised of four traditional Navajo locals of varying ages and 

educational backgrounds. All are bilingual, fluent in Navajo, and culturally sensitive 

to the target group’s history and challenges 

The Florida A&M University New and Beginning Farmer Training Program encourages farm entry by removing the barriers in four major areas that face the next 

generation farmers: (1) access to training, education, and technical assistance; (2) 

access to land; (3) access to capital and credit, and; (4) access to markets. This 

project uses non-traditional approaches in its extension training and assistance activities to reach the target African-American audience. These opportunities include 

the Young Farmer Entrepreneur Incubator; a business incubator model for agricultural production and marketing demonstrations that targets new and beginning 

farmers under the age of 25; and a beginning farmer demonstration/training website 

with various alternative enterprises, production management practices, and market 

development models. The demonstration site uses hands-on training activities in collard and green bean production and marketing to show the viability of alternative 

market opportunities, including institutions, retail, and direct-to-consumer outlets.

6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

(1) (1) $18,000 $19,000 $19,000

1Funding began in FY 2009. Mandatory funding was provided by transfer from Commodity 

Credit Corporation (CCC). 

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

(1) (1) $1,800 $10,000 $18,550

1Funding began in FY 2009. Mandatory funding was provided by transfer from Commodity 

Credit Corporation (CCC). 

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

(1) (1) $720 $760 $760

1Funding began in FY 2009. Mandatory funding was provided by transfer from Commodity 

Credit Corporation (CCC). 

9. Eligibility Criteria 

BFRDP program recipients must be a collaborative state, tribal, local, or regionally-based network or partnership of public or private entities, which may include: 

a state cooperative extension service; a Federal, state or tribal agency; a communitybased and nongovernmental organization; college or university (including an institution awarding an associate’s degree) or foundation maintained by a college or university; or any other appropriate partner, as determined by the Secretary. In accordVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00898 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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ance with the authorizing legislation, Priority will be given to partnerships and collaborations led by or including nongovernmental and community-based organizations with expertise in new agricultural producer training and outreach.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received None 196 122

Applications Funded None 29 40

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Community Food Projects Competitive Grants Program (CFPCGP). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

CFPCGP was authorized by Section 25 of the Food Stamp Act of 1977 (7 U.S.C. 

2034), as amended by the Food and Nutrition Act of 2008 and reauthorized by Section 4402 of the 2008 Farm Bill. 

Since 1996, CFPCGP has promoted self-sufficiency and food security in low-income communities through community food projects (CFP) and Training and Technical Assistance (T&TA) projects. CFPs unite the entire food system, assessing 

strengths, establishing linkages, and creating systems that improve self-reliance 

over food needs. 

4. Purpose/Goals 

CFPCGP was established to meet the needs of low-income people by increasing 

access to fresher, more nutritious food supplies; increase the self-reliance of communities in providing for their own food needs; promote comprehensive responses to 

local food, farm, and nutrition issues; meets specific state, local, or neighborhood 

food and agricultural needs for infrastructure improvement and development; plans 

for long-term solutions; and create innovative marketing activities that benefit both 

agricultural producers and low-income consumers. Grants are intended to help eligible private nonprofit entities in need of a one-time infusion of Federal assistance 

to establish and carryout multipurpose community food projects. 

5. Success in Meeting Programmatic Purpose/Goals 

Examples of success include: 

The Philadelphia Horticultural Society (PHS) is establishing and developing 

a network of urban entrepreneurial growers in Philadelphia that will significantly 

increase the supply of locally grown fruits and vegetables to Philadelphia communities. Over the course of 3 years, approximately 66 entrepreneurial growers are 

being supplied with locally grown seedlings as well as soil, tools and all necessary 

materials for sustainable urban food gardening for market. These growers are developing skills and experience in areas such as organic pest management, season extension, growing for market, crop planning, marketing, and networking through five 

mandatory workshops and on-going technical assistance delivered by PHS staff. 

Marketing and distribution opportunities for the growers are being developed by 

888

PHS staff (with grower input) and includes community farmers markets, mobile 

purchase by a local co-op market, purchase by a local food assistance provider, and 

relationships with 20 wholesale outlets. They are also establishing and operating 

three Neighborhood Green Centers to serve the network of growers as well as the 

surrounding community; and improving food security and access to affordable, locally grown produce in targeted neighborhoods by establishing three community 

farmers markets with partner organizations to provide 50 market days over the 

course of 3 years in targeted areas in which CGA produce can be sold at affordable 

prices. Over 4300 pounds of naturally grown produce was made available to local 

residents during this first year of the project. As additional growers are added in 

years 2 and 3, this annual output will increase. 

The American Friends Service Committee in New Mexico (AFSC) is to increasing economic development and food security for low-income communities in the 

South Valley and surrounding areas. They are providing direct technical assistance 

to farmers to develop farm infrastructure, increase technical farming skills and entrepreneurial capacity; facilitating the development of a network of communitybased farms with a joint business plan and set up procurement by institutional buyers, retail outlets, and wholesale distributors and families; (3) documenting training 

curricula, best practices and lessons learned for farmer-to-farmer information sharing and outreach; and increasing local food sales and nutritional education in Albuquerque Public Schools and among low-income communities in the South Valley. 

The project has met and exceeded expectations in its first year, especially in terms 

of training outcomes (meeting trainee learning objectives) and enterprise capacity. 

Project participants experienced market growth, production growth, and increased 

income, notable given the farmers limited to no farming experience or training at 

the beginning of the project. The year one trainees/farmers all have ongoing farm 

enterprises and expect to continue to earn substantial parts of their household income from farming into the near future. In addition to its market successes, the establishment of ACN promises to represent an important advancement in institutionalized organizational collaboration in the South Valley. 

World Hunger Year, Inc. (WHY) is working in conjunction with the Community 

Food Security Coalition (CFSC) on ongoing evaluation of the Food Security Learning 

Center (FSLC). These evaluation measures will help gain a better understanding of 

the FSLC audience, what tools and resources they need to conduct their work or 

research and how to take action and combat challenges facing our food system. 

WHY staff is currently evaluating the effectiveness of the FSLC. This includes determining how the outcomes and outputs of the FSLC can be best measured. Finally, WHY will document major initiatives that take place as a result of this 

project through event surveys, meeting minutes, photographs and video, etc. These 

will be used to inform future decisions, delegate responsibilities and write final reports.

6. Annual Budget Authority (Fiscal Year (FY) 2007–FY 2011) 

(in thousands of dollars) 

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Annual Budget Authority $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 * $0 $10,000 $5,000 $5,000

* FY 2008 funds were made available to NIFA in FY 2009. 

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Annual Outlays (*) (*) (*) (*) (*) 

* Mandatory funding was provided by transfer from the Food and Nutrition Service. Therefore, NIFA does not report outlays for the program. 

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Annual Delivery Cost $200 $0 $400 $200 $200

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9. Eligibility Criteria 

A. Community Food Projects (CFP) and Planning Projects (PP) Eligibility

Only private, nonprofit entities, meeting the following three (3) requirements are 

eligible to receive a CFP or PP grant:

(a) have experience in the area of:

(i) community food work, particularly concerning small and medium-size 

farms, including the provision of sustainably produced food to people in lowincome communities and the development of new markets in low-income 

communities for agricultural producers; or 

(ii) job training and business development activities for food-related activities in low-income communities;

(b) demonstrate competency to implement a project, provide fiscal accountability, collect data, and prepare reports and other necessary documentation; 

and 

(c) demonstrate a willingness to share information with researchers, evaluators, practitioners, and other interested parties, including a plan for dissemination of results.

B. Partners and Collaborators

Applicants with CFP and PP proposals are encouraged to seek and create partnerships with public or private, nonprofit or for-profit entities, including links with academic institutions (including minority-serving colleges and universities), and/or 

other appropriate professionals, community-based organizations, and local government entities. Only the applicant must meet the eligibility requirements.

Project partners and collaborators need not meet the eligibility requirements.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received 113 159 171

Applications Funded None 50 27

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

Complainant (an employee of the grantee, Our School of Blair Grocery, New Orleans) contacted NIFA alleging that grantee has depleted most of the approx. 

$299,000 award without fulfilling the required budgetary items or the programming 

listed in the proposal. Complaint was received March 29, 2011and review is ongoing. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Distance Education Grants for Insular Areas. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The Distance Education Grants for Insular Areas (DEG) program is administered 

under the Provisions of 7 U.S.C. 3362, to strengthen the capacity of Insular Area 

institutions to carry out distance education programs in the food and agricultural 

sciences. This program was first funded in FY 2010. 

890

4. Purpose/Goals 

The purpose of this program is to strengthen the capacity of institutions of higher 

education in Insular Areas to carry out resident instruction, curriculum, and teaching programs in the food and agricultural sciences through distance education technology. The Distance Education Grants Program for Institutions of Higher Education in Insular Areas (DEG) is a NIFA-administered competitive grants program 

focused on improving formal, post-secondary agricultural sciences education. 

5. Success in Meeting Programmatic Purpose/Goals 

Although this grant program is too new to have any discernable success to date 

examples of expected success include: 

These new funds will strengthen the University of Guam’s Distance Education 

for the Consortium of Caribbean and Pacific Island institutions (CariPac) and are 

a key strategy for fulfilling the mission. The Caribbean and Pacific Island students 

contribute to sustaining a balanced and healthy society, and provide excellent higher education in Agriculture and Food Science, within the Insular Areas, to meet the 

evolving needs of a global society supports the Distance Education program goals: 

(1) to increase the number of graduates with a degree in the food and agricultural 

sciences and (2) helps students achieve their career goals and help meet workplace 

needs by increasing the quality of undergraduate instruction. The goals of CariPac 

are to harness research and education to help address local food, agricultural, and 

environmental needs; support local economic growth; and to prepare students to 

achieve their own personal career goals.

6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Budget Authority (1) (1) (1) $750 $749

1Funding began in FY 2010. 

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Outlays (1) (1) (1) $38 $112

1Funding began in FY 2010. 

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Delivery Cost (1) (1) (1) $30 $30

1Funding began in FY 2010. 

9. Eligibility Criteria 

Applications may only be submitted by an institution of higher education, as defined in section 101(a) of the Higher Education Act of 1995 (20 U.S.C. 1001(a)), that 

is located in an Insular Area and that has a demonstrable capacity to carry out 

teaching and extension programs in the food and agricultural sciences. Individual 

land-grant colleges and universities, and other institutions that have secured landgrant status through Federal legislation, and which are located in Insular Areas 

are automatically eligible for awards under the DEG grants program, either as direct applicants or as parties to a consortium agreement. The eight insular areas are 

the Commonwealth of Puerto Rico, Guam, American Samoa, the Commonwealth of 

the Northern Mariana Islands, the Federated States of Micronesia, the Republic of 

the Marshall Islands, the Republic of Palau, and the Virgin Islands of the United 

States.

891

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received None None 1

Applications Funded None None 1

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Farm Business Management and Benchmarking Program (FBMB). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The authority for this program is under Section 7208 of the 2008 Farm Bill which 

amended the Food, Agriculture, Conservation and Trade Act of 1990 by adding section 1672D (7 U.S.C. 5925f) which established a competitive research and extension 

grants program to support improved farm management. The FBMB program was 

newly authorized by the FCEA and initially funded in FY 2010. 

4. Purpose/Goals 

The Farm Business Management and Benchmarking (FBMB) Competitive Grants 

Program provides funds to (1) improve the farm management knowledge and skills 

of agricultural producers; and (2) establish and maintain a national, publicly available farm financial management database to support improved farm management. 

5. Success in Meeting Programmatic Purpose/Goals 

Although this grant program is too new to have any discernable success to date 

examples of expected success include: 

This competitive grants program provides funds to improve the farm management 

knowledge and skills of agricultural producers; and establish and maintain a national, publicly available farm financial management database to support improved 

farm management. 

The University of Minnesota is leading the effort by developing and maintaining 

a national, publicly available online farm financial database that any U.S. producer 

can use for benchmarking and improving their farm management. The project will 

improve the profitability and competitiveness of small and mid-sized U.S. farms and 

ranches by providing benchmarking resources using high-quality farm financial 

management data. Benchmarking allows producers to compare their performance to 

farms and ranches of similar size that produce the same products. The 

benchmarking database will let producers identify their businesses strengths and 

weaknesses. To develop and expand a national benchmarking database of actual 

farm data, the data will be collected by farm business management education programs and associations that deliver financial analyses to producers. Data collection 

and aggregation into a national database will be accomplished through increased 

collaboration between state-level farm management education programs and associations. A National Farm Management Center is being established to develop and 

maintain the benchmarking database and to facilitate collaboration among the 

many state level programs that will partner to implement the database. The national center will coordinate development of standardized procedures and training 

892

for financial analysis and data collection methodologies to ensure the database provides uniform benchmarking data. Twelve farm business management education 

programs and associations in eleven states will collaborative to implement this 

project. Several additional programs will be involved in a task force to discuss how 

to expand the database to include more states. The national database will be publicly available to all U.S. producers. Use of the database for benchmarking will improve producers’ abilities to successfully manage risk and financial challenges and 

to become more globally competitive.

6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Budget Authority (1) (1) (1) $1,500 $1,497

1Funding began in FY 2010. 

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Outlays (1) (1) (1) $150 $825

1Funding began in FY 2010. 

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Delivery Cost (1) (1) (1) $60 $60

1Funding began in FY 2010. 

9. Eligibility Criteria 

Pursuant to 7 U.S.C. 450i(b)(7), eligible applicants means: (A) state agricultural 

experiment stations; (B) colleges and universities; (C) university research foundations; (D) other research institutions and organizations; (E) Federal agencies; (F) national laboratories; (G) private organizations or corporations; (H) individuals; or (I) 

any group consisting of two or more of the entities described in subparagraphs (A) 

through (H).

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received None None 6

Applications Funded None None 1

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

893

1. Program Name 

Food and Agriculture Defense Initiative (FADI). 

2. Subprograms/Department Initiatives 

National Animal Health Laboratory Network (NAHLN) 

National Plant Diagnostic Network (NPDN) 

Extension Disaster Education Network (EDEN) 

3. Brief History 

Section 1484 (7 U.S.C. 3351) of the National Agricultural Research, Extension, 

and Teaching Policy Act of 1977 (NARETPA), which was amended by the 2002 

Farm Bill, provides amounts for agricultural research, extension, and education. 

There are also amounts authorized to be appropriated for agricultural research, education, and extension activities for biosecurity planning and response. 

According to NARETPA of 1977, using any authority available to the Secretary, 

the Secretary shall use funds made available under this section to carry out agricultural research, education, and extension activities (including through competitive 

grants) for the following:

(1) To reduce the vulnerability of the United States food and agricultural system to chemical or biological attack.

(2) To continue partnerships with institutions of higher education and other institutions to help form stable, long-term programs to enhance the biosecurity of 

the United States, including the coordination of the development, implementation, and enhancement of diverse capabilities for addressing threats to the nation’s agricultural economy and food supply with special emphasis on planning, 

training, outreach, and research activities related to vulnerability analyses, incident response, and detection and prevention technologies.

(3) To make competitive grants to universities and qualified research institutions for research on counterbioterrorism.

(4) To counter or otherwise respond to chemical or biological attack. 

4. Purpose/Goals 

a. The National Animal Health Laboratory Network (NANLN)—The 

United States Department of Agriculture established the NAHLN as part of a 

national strategy to coordinate and network the diagnostic testing capacities of 

the Federal veterinary diagnostic laboratories with the extensive infrastructure 

(facilities, professional expertise, and support) of state and university veterinary 

diagnostic laboratories. This network enhances the nation’s early detection of, 

response to, and recovery from animal health emergencies, including bioterrorist events, newly emerging diseases, and foreign animal disease (FAD) 

agents that threaten the nation’s food supply and public health. NIFA and the 

Animal and Plant Health Inspection Service cooperatively provide leadership for 

this network.

b. National Plant Diagnostic Network (NPDN)—The NPDN mission is to 

quickly detect, diagnose and communicate outbreaks of newly introduced and 

emerging high consequence pests in over 1 billion acres of forest, pasture, and 

crop lands of the United States of America (please see attached Impact of the 

NPDN). Early detection leads to early response and successful remediation.

c. Extension Disaster Education Network (EDEN)—The Extension Disaster Education Network (EDEN) mission is to reduce the impact of disasters 

through extension education. Seventy institutions from all 50 states and three 

U.S. territories participate in EDEN. This valuable network of multidisciplinary 

professionals ensures that the cooperative extension system can appropriately 

respond to local, state, regional, and national education needs during a crisis. 

This network and its management fit well into the nation’s Homeland Security 

framework. 

5. Success in Meeting Programmatic Purpose/Goals 

The National Animal Health Laboratory Network (NAHLN) is a national network 

of non-Federal public animal diagnostic laboratories; under the leadership of NIFA, 

Animal and Plant Health Inspection Service (APHIS), and the American Association 

of Veterinary Laboratory Diagnosticians. It has 12 core laboratories who receive 

NIFA support; which are located at Cornell University (New York), Louisiana 

State University, University of Georgia, Texas A&M, University of Wisconsin, Iowa State University, Colorado State University, Washington State 

University, University of California at Davis, University of Arizona, North 

Carolina Department of Agriculture and Consumer Services, and Florida 

894

Department of Agriculture and Consumer Services. In addition to these core 

laboratories, NIFA provides a reduced amount of funding for laboratories in 16 

other states: Oregon, Utah, New Mexico, Wyoming, South Dakota, Nebraska, 

Kansas, Minnesota, Mississippi, Tennessee, Indiana, Michigan, Kentucky, 

Ohio, Pennsylvania, and New Jersey. Animal disease-detection criteria have 

been developed for the following ten high-consequence diseases: Foot-and-Mouth 

Disease, Exotic Newcastle Disease, Classical Swine Fever (or hog cholera), High 

Pathogen Avian Influenza, Low Pathogen Avian Influenza, Bovine Spongiform 

Encephalopathy, Scrapie, Chronic Wasting Disease, Rift Valley Fever and African 

Swine Fever. African Swine Fever, added in Fiscal Year 2010, causes swine to have 

high fevers, reddening of the skin, hemorrhages in lymph nodes and internal organs, and occasionally enlargement of the spleen. NAHLN is part of a national 

strategy to coordinate the nation’s Federal, state and university laboratory resources. 

The National Plant Diagnostic Network (NPDN) is a 50 state network of landgrant university based plant diagnostic laboratories. The network is led by diagnostic laboratory centers at Cornell University (New York), University of Florida, Kansas State University, Michigan State University, and University of 

California at Davis. These institutions receive direct funding from NIFA and provide support to the other land-grant plant diagnostic laboratories in their region 

through subcontracts, training, and leadership. Because of this, plant laboratories 

in every state receive Federal funding and other support from the five NPDN centers. All 50 states and many U.S. territories are connected to the NPDN through 

digital distance diagnostics, used throughout the nation to speed early detection of 

high consequence plant pathogens and solve other agricultural problems. This webbased diagnostics system allows plant diagnosticians in one location to transmit a 

digital image across the country to someone with special expertise. Plant disease 

(and insect) detection criteria have been developed for soybean rust, sudden oak 

death, Ralstonia stem rot, plum pox virus, pink hibiscus mealybug, potato wart, 

huanglongbing (citrus greening), Potato Cyst Nematode, Late Blight and Beet Curly 

Top. The laboratory network partnered with other cooperative extension officials to 

quickly and efficiently conduct a widespread outreach and detection campaign on tomato and potato Late Blight, which became a significant problem in 2009 for the 

first time since the network was established. A new diagnostic test was implemented for Beet Curly Top, a disease spread by insects that affects tomatoes, sugarbeets, table beets, beans, and cucurbits. 

The Extension Disaster Education Network (EDEN) is a collaborative multi-state 

effort by extension services across the country to improve the delivery of services 

to citizens affected by disasters. NIFA leads this effort. For example, the University of Arkansas Cooperative Extension Service assisted communities in the aftermath of severe ice storms and tornadoes that tore through Arkansas in the winter 

and spring. Faculty and staff helped residents and community leaders cope with disaster, identify and locate sources of assistance, make emergency plans, find information on emergency sheltering, manage storm damaged trees and debris, and negotiate FEMA regulations

6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Annual Budget Authority $7,953 $8,928 $9,900 $9,900 $9,830 $9,830 $9,830 $5,988

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY06 FY07 FY08 FY09 FY10 FY11

Annual Outlays $495 $3,957 $7,397 $9,848 $9,638

895

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY06 FY07 FY08 FY09 FY10 FY11

Annual Delivery Cost $396 $393 $393 $393 $240

9. Eligibility Criteria 

Although applications may be submitted by universities and qualified research institutions for research on counterbioterrorism, NIFA makes awards through noncompetitive cooperative agreements.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received 35 35 36

Applications Funded 35 35 35

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Food Animal Residue Avoidance Database Program (FARAD). 

2. Subprograms/Department Initiatives 

There are no subprograms. 

3. Brief History 

Section 604 of the Agricultural Research, Extension, and Education Reform Act 

of 1998 (7 U.S.C. 7642) authorized this program. Section 7312 of the 2008 Farm Bill 

authorized appropriations and reauthorized the program through FY 2012. 

4. Purpose/Goals 

This funding is used to establish and maintain FARAD, a computer-based decision 

support system designed to provide livestock producers, extension specialists, and 

veterinarians with practical information on how to avoid drug, pesticide, and environmental contaminant residue problems. 

5. Success in Meeting Programmatic Purpose/Goals 

NIFA administers the funding that establishes and maintains the Food Animal 

Residue Avoidance Databank (FARAD), a computer-based decision support system 

designed to provide livestock producers, extension specialists, and veterinarians 

with practical information on how to avoid drug, pesticide, and environmental contaminant residue problems. The drugs and pesticides used in modern animal agriculture improve animal health and thereby promote more efficient and humane production. 

Wherever drugs are used to treat sick animals or prevent disease, there is a potential that residues may be incurred. The U.S. Food and Drug Administration 

(FDA), which must approve all drugs meant to be marketed for use in animals, establishes tolerances for drug residues (similar to speed limits) to ensure food safety. 

The FDA also establishes ‘‘withdrawal times’’ or ‘‘withholding periods,’’ which are 

896

times after drug treatment when milk and eggs are not to be used for food and during which animals are not to be slaughtered. This allows time for the animals to 

eliminate the drug residues. 

FARAD is a repository of comprehensive residue avoidance information. FARAD 

also is sanctioned to provide these estimates to the U.S. Pharmacopeia-Drug Information (USP–DI) Veterinary Medicine Advisory Committee. Since 1982, FARAD has 

been working with producers, extension specialists and agents, and veterinarians to 

help avoid and mitigate residue problems. As a cooperative multi-state program, 

FARAD is available nationwide to offer advice about residue avoidance.

6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Budget Authority (1) (1) $806 $1,000 $998

1Funding began in FY 2009. 

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Outlays (1) (1) $484 $898 $977

1Funding began in FY 2009. 

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Delivery Cost (1) (1) $32 $40 $40

1Funding began in FY 2009. 

9. Eligibility Criteria 

The Secretary shall offer to enter into a contract, grant, or cooperative agreement 

with one or more appropriate colleges and universities to operate the FARAD program.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received None 5 4

Applications Funded None 5 4

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

897

1. Program Name 

Grants for Youth Serving Institutions (Rural Youth Development Grants Program 

or RYD). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

Section 410 of the Agricultural Research, Extension, and Education Reform Act 

of 1998 (7 U.S.C. 7630) authorized this program. 

Section 7309 of the 2008 Farm Bill reauthorized 7 U.S.C. 7630 and also amended 

to provide additional flexibility in content delivery to each organization receiving 

funds and to allow recipients to redistribute all or part of the funds to individual 

councils or local chapters without further need of approval from the Secretary. 

4. Purpose/Goals 

The goals are to support and enhance the goals, objectives, and priorities of the 

eligible youth organizations; Support programs which address issues and needs of 

rural youth; Involve youth in design and implementation of their educational activities; Increase knowledge, skills, attitudes and behaviors necessary for rural youth 

to live productive, contributing, and fulfilling lives; and Increase economic opportunities and sustainability and improve quality of life in rural communities through 

enhanced human, social, civic, natural, financial, cultural, and built capital. 

5. Success in Meeting Programmatic Purpose/Goals 

NIFA makes grants available to the Girl Scouts of the United States of America, 

the Boy Scouts of America, the National 4–H Council, and the National FFA Organization to establish pilot projects to expand the programs carried out by the organizations in rural areas and small towns. 

Examples of success: 

The Girl Scouts in Rural Communities (GSRC) project utilizes Girl Scouting 

to facilitate the training and experiences that will empower rural girls with the 

leadership and personal development assets and skills to improve their lives and 

their communities. Funds enable the implementation of the ‘‘Challenge and Change: 

Challenge Yourself, Change Your World’’, a social entrepreneurship curriculumbased project for rural teen girls (ages 14–17) that was launched in FY 2005. 

Through this program the Girls Scouts recruit and train rural girls in social entrepreneurship (Challenge and Change Curriculum); provide opportunities for rural 

girls to assess the needs of their rural communities; provide opportunities for rural 

girls to identify, plan and lead projects aimed at solving identified needs in their 

communities; recruit and train adults to facilitate girl participation and serve as 

caring adults; and develop partnerships with other organizations in their communities to facilitate social entrepreneurship projects and the development of rural 

girls. 

National FFA Organization is providing outreach and dissemination of their 

‘‘Living to Serve’’ materials to over 7,000 chapters serving a membership base of approximately 500,000. They deliver tools that motivate and mobilize rural youth to 

partner with adults in joint ventures to create change in their communities that address identified needs and build capital. This program was the catalyst to move FFA 

from a model of ‘‘community service’’ to a much more rich and meaningful model 

of ‘‘service-learning’’. The ‘‘Living to Serve’’ instructional materials provide education 

on the principles of service-learning. These projects have dealt with specific community needs identified by the FFA members, plus the overarching goal of civic engagement and youth leadership. 

The National 4–H Council implemented the ‘‘Engaging Youth, Serving Community’’ (EYSC) program that supports land-grant university efforts to develop, implement, and evaluate community based issues forums and action plans in rural communities. Projects provide youth with adult partners and constructive peer interaction through youth-adult partnerships and empower youth through meaningful 

leadership roles and life skills development. Youth and adults gain the life skills 

and experience needed to emerge as effective leaders and contributing members of 

society; develop positive attitudes towards the roles of youth in communities; improve their abilities to work with diverse community members to identify local 

issues and develop strategies for addressing these issues; and provide more opportunities for youth and families in rural communities for positive youth development 

experiences during out-of-school time.

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6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Annual Budget Authority $8,000 $2,981 $2,667 $2,646 $1,980 $1,980 $1,737 $1,767 $1,784 $1,780

Note: In FY 2002, Grants for Youth Serving Institutions were funded by transfer to the agency 

from Commodity Credit Corporation funds. 

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Outlays $1,188 $1,775 $1,723 $1,761 $1,783

Note: In FY 2002, Grants for Youth Serving Institutions were funded by transfer to the agency from Commodity Credit Corporation funds. 

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Delivery Cost $79 $70 $71 $71 $71

Note: In FY 2002, Grants for Youth Serving Institutions were funded by transfer to the agency from Commodity Credit Corporation funds. 

9. Eligibility Criteria 

Pursuant to 7 U.S.C. 7630(a), only the Girl Scouts of the United States of America 

(GSUSA), the National 4–H Council (4–H), the Boy Scouts of America (BSA), and 

the National FFA Organization (FFA) are eligible.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received 3 3 4

Applications Funded 3 3 3

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Healthy Urban Food Enterprise Development Center (HUFED). 

2. Subprograms/Department Initiatives 

There are no subprograms. 

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3. Brief History 

The Healthy Urban Food Enterprise Development Center (HUFED) legislative authority is located in Section 25(h) (7 U.S.C. 2034(h)) of the Food and Nutrition Act 

of 2008. The HUFED Center program was created to respond to the need to redevelop a food enterprise structure in the United States in order to make more 

healthy, affordable food available in low-income areas, to improve access for small 

and mid-sized agricultural producers, and to promote positive economic activities 

generated from attracting healthy food enterprises into underserved communities. 

Section 4402 of the 2008 Farm Bill provided mandatory funding for the HUFED 

Center and program-specific requirements. 

4. Purpose/Goals 

The purpose of the HUFED Center grant program is to establish and support a 

Healthy Urban Food Enterprise Development Center to increase access to healthy 

affordable foods, including locally produced agricultural products, to underserved 

communities. The HUFED Center will provide training and technical assistance for 

food enterprises and award sub-grants to eligible entities for healthy food enterprise 

development. 

5. Success in Meeting Programmatic Purpose/Goals 

The purpose of the this program is to establish and support a Healthy Urban 

Food Enterprise Development Center (HUFED) to increase access to healthy affordable foods, including locally produced agricultural products, to underserved communities. 

Since the Center started, several high profile Federal initiatives interested in food 

access have emerged: Let’s Move; Know Your Farmer, Know Your Food; and 

Healthy Food Financing Initiative. They have been actively pursuing news, information, and research to better position the Center to take advantage of the direction 

and interest in food access and regional food systems. The Center’s understanding 

of the need for funding for healthy food enterprises was significantly deepened. They 

received 538 Letters of Interest (LOIs) within a 4 week outreach period. The LOIs 

spanned across the country, and included 47 states, as well as the District of Columbia and the U.S. Virgin Islands. A preliminary analysis of the applicant database 

has provided further insight on the landscape of food access work, which will inform 

future strategies not only for HUFED, but also for USDA. The enterprises for Year 

1 grantees are underway and outcomes and impacts from their enterprises will be 

reported in Year 2’s Accomplishments Report. Due to the new high profiled initiatives, the Center has taken a stronger effort in meeting and sharing information 

with USDA Deputy Undersecretaries and Senior Advisors to further link the Center’s resources and knowledge. After designing and managing the proposal process 

for Year 1, an evaluation was conducted to identify efficiencies and areas of improvement for future RFAs. The grant making process will be streamlined towards 

the needs of the applicants, as well as the review panel. As the grantees begin the 

enterprises, HUFED is working with the internal evaluator, Kingslow Associates 

LLC, to ensure that metrics and indicators are in place so that the Center as well 

as the individual enterprises, can effectively measure their successes and challenges, with the long term goal of documenting best practices and lessons learned. 

The Center is also providing grantees guidance, and coaching around evaluation, 

and assisting with reporting and working with government grants, as needed.

6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Budget Authority (1) (1) $1,000 $1,000 $1,000

1Funding began in FY 2009. Mandatory funding was provided through direct appropriation 

from the farm bill. 

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Outlays (1) (1) $100 $550 $1,000

1Funding began in FY 2009. Mandatory funding was provided through direct appropriation 

from the farm bill. 

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8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Delivery Cost (1) (1) $100 $100 $100

1Funding began in FY 2009. Mandatory funding was provided through direct appropriation 

from the farm bill. 

9. Eligibility Criteria 

Eligible Applicants are nonprofit organizations are eligible to apply for and receive awards under the HUFED Center authority (7 U.S.C. 2034(h)(2)). 

Regarding Eligible Applicants for Subgrants, the term ‘‘eligible entity’’ for the purpose of subgrants means (A) a nonprofit organization; (B) a cooperative; (C) a commercial entity; (D) an agricultural producers; (E) an academic institution; (F) an individual; and (G) such other entities as the Secretary may designate. Award recipients may subcontract to organizations not eligible to apply provided such organizations are necessary for the conduct of the project.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received None 13 1

Applications Funded None 1 1

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Hispanic-Serving Agricultural Colleges and Universities (HSACU). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The authority for this program is under Section 7101 of the 2008 Farm Bill which 

amended section 1404 of the National Agricultural Research, Extension, and Teaching Policy Act of 1977 to add a definition for a new group of cooperating educational 

institutions known as Hispanic-Serving Agricultural Colleges and Universities. 

Additionally, Section 7129 of the 2008 Farm Bill authorizes the following five new 

programs for HSACUs: (1) HSACU Endowment Fund (formula-based); (2) HSACU 

Equity Grants Program (formula-based); (3) HSACU Institutional Capacity-Building 

Grants Program (competitive); (4) HSACU Extension Grants Program (competitive); 

and (5) HSACU Fundamental and Applied Research Grants Program (competitive). 

As of FY 2011, none of the five new programs have received an appropriation. 

4. Purpose/Goals 

Establishing a process to identify and certify HSACUs supports the Federal Government-wide initiative to streamline and standardize all Federal assistance processes across the Federal Government. NIFA will be able to apply consistent rules 

901

used to determine HSACU eligibility for Federal assistance programs, including programs created or amended by the passage of the FCEA. 

Use of funds from the HSACU Endowment Fund and the resulting interest distribution are authorized under the Act of August 30, 1980, (commonly known as the 

‘Second Morrill Act’) (7 U.S.C. 321 et seq.). These funds benefit the HSACUs by supporting teaching programs in the food and agricultural sciences in the targeted 

areas of (1) curricula design and instructional materials development, (2) faculty development and preparation for teaching, (3) instruction delivery systems, (4) student 

experiential learning, (5) equipment and instrumentation for teaching, and (6) student recruitment and retention. 

5. Success in Meeting Programmatic Purpose/Goals 

This program was not funded by appropriation and, therefore, has no examples 

of success in meeting programmatic goals. However, another funded program within 

NIFA, Higher Education—Hispanic Serving Institutions has examples of success 

which include: 

The education program at California State University in Fresno has improved 

and enhanced the capacity of food and agricultural science education on organic agriculture for plant science, food science, dietetic, and culinology. The grant helped 

create and facilitate an expansion of organic farming for teaching, research, and outreach programs. This project has attracted a number of under-represented student 

groups who are interested in learning and working with various aspects of healthy 

farming. CSU-Fresno has been able to establish year-round organic vegetable operation, organic greenhouse, organic herb garden, compost and vermicompost on campus farm operations for the first time which became an outdoor classroom demonstration to various classes and interested individuals, community, and local organizations such as Fresno City College, 4–H programs, and K–12 schools. 

The function of the TREE (Teaching and Research in Environmental Ecology) Program at the University of Texas at San Antonio is to recruit, retain and financially support underrepresented undergraduates and graduate students. Workshops, 

training programs and mentorship from local community entities have been used to 

foster and develop the student’s interest in careers in conservation and natural resources. While only three role-model seminars were planned, twenty-eight (28) rolemodel seminars were presented by a USDA research scientist, the Endangered Species Grants Coordinator from Texas Parks and Wildlife, faculty from the University 

of Texas at San Antonio, and faculty from other universities in the United States. 

The program has increased the number of minority and disadvantaged students participating in conservation and natural resource research from one to twelve. 

Through partnerships with USDA Forest Service, University of California Riverside and University of California Santa Barbara, Mt. San Jacinto College 

in San Jacinto, California has implemented a strategic student recruitment and 

retention plan to increase diversity in the Environmental Studies degree program 

and facilitate seamless transfer to 4 year universities. As a result there have been 

significant increases in enrollment and retention of underrepresented groups. There 

has been a 148% growth in students enrolling and majoring in environmental studies during the first year of the project, and a 205% growth moving into the second 

year. The Summer Field Institute showed a 400% increase in the enrollment of Hispanic and other under-represented students, outpacing the 375% growth in overall 

enrollment over the last year. Students mentored under this program have become 

increasingly active on campus and in the local communities, which will likely generate future growth as well. 

6. Annual Budget Authority (FY 2002–FY 2011) 

This program has not been funded. 

7. Annual Outlays (FY 2002–FY 2011) 

This program has not been funded. 

8. Annual Delivery Cost (FY 2002–FY 2011) 

This program has not been funded. 

9. Eligibility Criteria 

HSACUs are defined as colleges and universities that qualify as Hispanic-serving 

Institutions (HSIs) and offer associate, bachelors, or other accredited degree programs in agriculture-related fields. 

HSACUs do not include 1862 land-grant institutions, as defined in section 2 of 

the Agricultural Research, Extension, and Education Reform Act of 1998 (7 U.S.C. 

7601).

902

* No funds were provided for this program in FY 2011 or FY 2012 Budgets

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received None None None 

Applications Funded None None None 

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Integrated Research, Education, and Extension Competitive Grants Program (Section 406). 

2. Subprograms/Department Initiatives 

A. Water Quality

B. Food Safety

C. Regional Pest Management Centers

D. Crops at Risk * 

E. Risk Avoidance and Mitigation *

F. Methyl Bromide Transition

G. Organic Transitions 

3. Brief History 

Section 406 of the Agricultural Research, Extension, and Education Reform Act 

of 1998 (AREERA) (7 U.S.C. 7626), as reauthorized by Section 7306 of the 2008 

Farm Bill and authorized a competitive grants program that provides funding for 

integrated, multifunctional agricultural research, extension, and education activities. 

Section 7206 of the 2002 Farm Bill amended section 406(b) of AREERA to add 

the 1994 Land-Grant Institutions as eligible to apply for grants under this authority. 

Section 7129 of the FCEA amended section 406(b) of AREERA (7 U.S.C. 7626(b)), 

adding Hispanic-serving agricultural colleges and universities (HSACUs) as eligible 

entities for competitive funds awarded under this authority. 

4. Purpose/Goals 

The purpose of the Integrated Research, Education, and Extension Competitive 

Grants Program (Section 406) is to provide funding for integrated, multifunctional 

agricultural research, extension, and education activities through a research, education, and extension competitive grants program. Grants are to be awarded to address priorities in United States agriculture that involve integrated research, education, and extension activities as determined by the Secretary in consultation with 

the National Agricultural Research, Extension, Education, and Economics Advisory 

Board (NAREEEAB). 

5. Success in Meeting Programmatic Purpose/Goals 

Examples of success include:

Water Quality Program

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Faculty at the University of Rhode Island are heading up the Northeast States 

and Caribbean Islands (NESCI) Regional Water Program which is promoting collaboration, enhancing delivery of successful programs, and encouraging multi-state 

efforts to protect and restore water resources. The regional Sustainable Landscaping 

focus area has developed lawn care recommendations specific for northern and 

southern New England and is using these recommendations with residents to promote water quality protection. Post-evaluations of private well water workshops indicate that workshop participants are adopting practices to protect their private 

well, including: 52% had their well water tested; 67% inspected their wellhead; 18% 

maintained their water treatment system; 13% had a water treatment system installed. Moreover, Private Wells Nonpoint Education for Municipal Officials 

(NEMO) programs work with communities are resulting in changes to community 

plans, land use regulations, development practices, and the local decision making 

process that include strategies to protect water quality. 

The University of Maine has worked with four communities which have learned 

more about groundwater resources, private well water, and water quality testing. 

Training participants expressed increased awareness and interest in local groundwater issues and solutions to address quality and quantity concerns. To date, the 

trainings enabled 90 students and parents to participate in ‘‘GET WET!’’ (a K–12 

environmental education program) and private well water screening for contaminants. At three different academic conferences, they shared preliminary findings regarding (a) social capital production through community-based research about 

groundwater and private wells, and (b) the factors that influence private well water 

testing as a result of extension activities, and intergenerational learning between 

students and parents of environmental education content.

Food Safety Program

Scientists at the University of Wisconsin are assisting small and very small 

plants in HACCP validation through: (1) development of methods for in-plant validation of heating/drying regimes used in making ground and formed beef jerky and 

for in-plant validation of beef carcass interventions, using lactic acid bacteria as 

pathogen surrogates; and (2) development of a multi-media outreach program to disseminate project results and assist processors and regulators in validating Critical 

Limits. This research showed that methods commonly recommended to consumers 

for drying beef jerky in home-style products do not produce a safe product. Recommendations are being prepared to share with consumers wishing to make groundand-formed beef jerky safely at home. 

According to the Centers for Disease Control & Prevention, human enteric viruses 

are estimated to cause 2⁄3 of the foodborne illness in the U.S. each year, with the 

great majority of those attributed to norovirus (NoV). Fruits and vegetables have 

increasingly been implicated as vehicles for NoV gastroenteritis. Researchers in Illinois are developing a method which will serve as a foundation for upcoming cross 

contamination studies which will in turn lead to the development of a risk assessment model for NoV transfer within the food service setting. The methods developed 

from this project thus far, allowed for an assessment of recover methods for viruses. 

Recovery rates varied widely and the project team was able to use the information 

in method selection and refinement to ensure consistent recovery of viruses.

Regional Pest Management Centers

The goal of the Regional Integrated Pest Management Centers (IPM Centers) is 

to promote the development and implementation of IPM by facilitating collaboration 

across states, disciplines, and purposes. IPM Centers will establish and maintain information networks, build partnerships to address pest management challenges and 

opportunities, evaluate the impact of IPM implementation, communicate positive 

outcomes to key stakeholders, and manage funding resources effectively. The IPM 

Roadmap addresses pest management needs for production agriculture, natural resources and recreational environments, and residential and public areas. 

Examples of success include: 

The Integrated Pest Management Pest Information Platform for Extension and Education (ipmPIPE) informs growers about seasonal development and 

spread of Asian soybean rust, a devastating disease of legumes. The Regional IPM 

Centers manage this program that has allowed soybean growers to save a conservative estimate of $1 billion or more since 2005. Most of the savings derive from the 

ability by growers of 98% of the crop to avoid unnecessary fungicide applications. 

USDA’s Economic Research Service estimated farmers avoided as much as 0.2lb of 

fungicide per acre per season, which works out to about 74 million pounds of fungicide avoided since 2005. Soybean growers in Gulf Coast states, where the disease 

is more prevalent, use the program to properly choose fungicides and time applications to protect their crop. In a similar program, pecan growers estimated gains of 

904

$268/acre from the ipmPIPE Pecan system representing a potential benefit of $77 

million for the 288,000 acres in participating states. Another ipmPIPE component 

for vine crops (cucumber, pumpkin, melons, etc.) saved many participants 2–3 fungicide sprays in 2009. 

The Regional IPM Centers are collaborating with the EPA Tribal Pesticide Program Council (TPPC), USDA Tribal Education Equity and Extension Programs, 

1994 and 1862 Land-Grant institutions, First American Land-Grant College and Organization Network (FALCON), American Indian Higher Education Consortium and 

First Nations to increase IPM practices and reduce pesticide usage and risk on reservations. The development of culturally sensitive IPM curricula and training modules allows for greater acceptance and implementation of IPM practices on the 56 

million acres of tribal land. The program focuses on developing relationships at the 

state, regional and national levels to share knowledge of existing practices and foster adoption of these practices by other First Nations. 

The Regional IPM Centers are coordinating ‘‘IPM Training in Public Housing,’’ a 

national project to reduce pest-related risks that can trigger asthma. This collaborative effort between the Regional IPM Centers, U.S. Department of Housing and 

Urban Development’s Healthy Homes Initiative, the Environmental Protection 

Agency, Land-Grant institutions, and public housing personnel and residents is implementing IPM to reduce human health risks. There are 1.2 million public housing 

units in the U.S. This project addresses many urban pest issues including bed bug 

infestations that are increasing at an alarming rate across the U.S. Partnering with 

the public housing personnel and residents will allow this sustainable approach to 

have long-term impacts in reducing asthma and other human health problems resulting from pest infestations.

Crops at Risk

In December 2008, the invasion of the Mexican rice borer (MRB) was discovered 

in two pheromone traps a few kilometers from the western Louisiana state line, in 

accordance with previously modeled forecasts. Annual yield losses of $220 million 

(sugarcane) and $45 million (rice) are forecast when the regions of both industries 

become fully infested. Research at Louisiana State University indicates that 

management techniques to mitigate the infestation which involve irrigation in sugarcane can reduce MRB losses up to 29%, use of environmentally friendly insecticides can reduce losses up to 53%, and resistant cultivars can reduce losses by 24%. 

The multi-year quarantine on MRB movement through the transport of sugarcane 

into Louisiana is projected to save between $1.1 and $3.2 billion (depending on management) during the time for complete invasion of both industries. 

The University of California Davis has developed a polymerase chain reaction 

(PCR)-based diagnostic assay to differentiate races one and two of Verticillium 

dahliae, the pathogen that causes Verticillium wilt in lettuce. No resistance in lettuce cultivars is currently available against race two. This assay has allowed the 

determination of the current distribution of the two races in coastal California. 

Based on these results, the growers have been able to avoid planting lettuce in 

fields that contained race two. These results have been disseminated widely to the 

California Leafy Greens Board that is attended by growers, processors, seed company representatives, and everyone associated with the lettuce supply chain.

Risk Avoidance and Mitigation

Scientists at the University of Georgia developed a method which documented 

high level of resistance to Tomato spotted wilt virus (TSWV) in tomato under field 

conditions. This single tactic provides an available, viable means of managing this 

serious pest problem in commercial production systems. Growers were able to view 

the different resistant cultivars in the field so that they could evaluate the plants 

directly. Growers that participated in this project will likely base planting decisions 

on these results in subsequent commercial plantings. As early in the project as 

2009, scientists were able to demonstrate an 8–12 fold increase in tomato yield with 

the resistant lines under heavy TSWV infection pressure in the field. The implementation of the use of host plant resistant lines and other tactics presented here could 

save growers millions of dollars annually. 

Research by scientists in California is developing integrated pest management 

strategies to control the potato psyllid, a pathogen which is causing millions of dollars in damage to crops. As a result of research there has been a change in the understanding that many pesticides reduce transmission of the bacterial pathogen by 

the potato psyllid through repellency, not simply by killing the psyllid. As the result 

of an aggressive effort to disseminate this information, growers are beginning to 

change their pesticide use patterns from very intensive weekly control efforts that 

relied on large amounts of chemical pesticides, to a more sustainable approach using 

greener chemistries and application technique. This more sustainable approach also 

905

incorporates sampling to eliminate pesticide applications when the pest is not 

present, and to manage the potential development of pesticide resistance. As a result fewer pesticide applications are made, resulting in reduced costs to the grower 

and enhanced profitability, and as importantly, reduced farm worker and consumer 

exposure to agricultural chemicals.

Methyl Bromide Transition

The goal of the Methyl Bromide Transitions (MBT) program is to support the discovery and implementation of practical pest management alternatives to methyl bromide uses or minimize methyl bromide emissions for which the United States is requesting critical use exemptions. The program seeks to ensure that economically 

viable and environmentally sound alternatives to methyl bromide are in place and 

available as soon as possible. The program is focused on integrated commercial or 

field scale research that targets short- to medium-term solutions and associated extension activity that will foster the adoption of these solutions. 

Kansas State University’s objective it to show a reduction in methyl bromide 

(MB) usage as a structural treatment in food-processing facilities by facilitating 

adoption of MB alternatives strategies such as sulfuryl fluoride (SF), heat treatment 

and integrated pest management (IPM) approaches through pilot and commercial 

scale evaluations. Documenting cost-effectiveness of each strategy is central to adoption of MB strategies. The work also involves quantifying effects of structure airtightness and weather conditions on fumigant emissions from and dispersion around 

fumigated structures, an aspect useful in defining buffer zones for MB and SF fumigants. Research results showed that both methyl bromide and sulfuryl fluoride 

equilibrated throughout the five floors of the 340,000 cubic foot mill within 2 hours. 

Results are encouraging. When 1,250 pounds of sulfuryl fluoride was applied in a 

May application, all life stages of the red flour beetle were killed when using forced 

air heat treatment. 

Virginia ranks third in the U.S. in fresh-market tomato production, with the majority of acres grown on plasticulture, utilizing methyl bromide (MeBr). Bell peppers 

are grown using similar production practices. Both of these crops are highly susceptible to soilborne pests and overgrowth by noxious weeds. The use of MeBr has been 

the primary tool to suppress these pest problems, and tomatoes and peppers are listed as MeBr Critical Use Nominations for 2009. Results of research at Virginia 

Tech show that field trials in 2008 and 2009 were able to identify a bacterial wilt 

resistant tomato cultivar (BHN669) that produced commercially acceptable fruit and 

yield. A small acreage of BHN669 was commercially produced in 2009 by two tomato producing companies and was found to be a suitable cultivar in terms of agronomic qualities and was extremely successful at delivering acceptable yields with 

high levels of bacterial wilt resistance. In 2010, full scale production using BHN669 

was implemented by several producers resulting in successful management of bacterial wilt in historically problematic fields. Cultivar screens are continuing in small 

research plots to determine if any replacements other than BHN669 are suitable for 

production on the Eastern Shore of Virginia. In addition to the favorable results obtained with BHN669, the fumigant dimethyl disulfide (DMDS) was discovered to effectively suppress levels of bacterial wilt in small plots.

Organic Transition Program

Georgia scientists examined the feasibility of using protected cultivation in plastic tunnels as a means of producing high quality, organic blueberries, blackberries, 

and raspberries under southeastern conditions. As a result, high tunnels were found 

to speed up vegetative and reproductive development of blueberries. Tunnels were 

effective at advancing the spring harvest of highbush blueberries and the summer 

harvest of floricane blackberries and raspberries. Tunnels also extended the season 

of autumn-producing primocane blackberries and raspberries. Overall, tunnels advanced spring production and extended fall production of blackberries and raspberries, increasing total harvest and berry size. Upon completion of the research, 

the high tunnels in Georgia became an integral part of the organic teaching program, assuring that students get hands-on experience with high tunnels. 

Organic soybean growers have few options for controlling the soybean aphid, 

which can severely depress soybean yields. Scientists in Minnesota found that 

planting a rye winter cover crop prior to soybeans can lead to lower densities of soybean aphids and an increase in yield when soybean aphid pressure is high. This is 

an important finding for organic farmers that have no reliable insecticides to use 

against soybean aphid.

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6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Annual Budget Authority $42,853 $43,942 $39,558 $42,714 $42,286 $42,286 $41,990 $41,990 $45,148 $28,942

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Outlays $2,114 $16,900 $29,451 $40,384 $41,679

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Delivery Cost $1,691 $1,680 $1,680 $1,806 $1,158

9. Eligibility Criteria 

Colleges and universities (as defined in section 1404 of NARETPA) (7 U.S.C. 

3103) are eligible to submit applications for the Integrated Research, Education, and 

Extension Competitive Grants (Section 406) Programs. 

Section 1404 of NARETPA was amended by section 7101 of the Food, Conservation, and Energy Act of 2008 (Pub. L. 110–246), to define and include as eligible, 

Hispanic-serving Agricultural Colleges and Universities (HSACUs), and to include 

research foundations maintained by eligible colleges or universities.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received 289 375 319

Applications Funded 77 95 84

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

McIntire-Stennis Cooperative Forestry Research Program. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

Pub. L. 87–778 (76 Stat.806, 16 U.S.C. 582a, et seq.) signed into law on October 

10, 1962, is also known as the McIntire-Stennis Cooperative Forestry Research Act. 

907

This law provides the basis for Federal funding in forestry research and graduate 

education programs at state-certified schools of forestry in the United States. 

Funding is provided to the states through a formula-based allocation process 

which depends on several factors. First, a base amount (approximately $25,000) is 

allocated to each state; however, this base amount is excluded from the formula. 

The balance of funding to each state is determined through a ranking process and 

dependent upon the following three factors: (1) forty percent of the remaining balance is allocated based on the area of non-Federal commercial forestland; (2) forty 

percent is allocated based upon the volume of timber cut annually from stock; and 

(3) twenty percent is allocated based on the total expenditures for forestry research 

from non-Federal sources. Funds are then distributed to the eligible state-certified 

Institutions within the state as determined by the Governor’s designee. 

Section 7412 of the Food, Conservation, and Energy Act of 2008 amended section 

2 of the McIntire-Stennis Cooperative Forestry Act (16 U.S.C. 582a–1) to include the 

1890 Land-Grant Institutions and made this change effective October 1, 2008. On 

an annual basis, USDA contacts the Governors of each state in which an eligible 

1890 institution is located and receives the names of the McIntire-Stennis certified 

institutions and the proportionate amount of the state’s McIntire-Stennis funding 

that is to be allocated to each. 

4. Purpose/Goals 

The purpose of this program is to increase forestry research in the production, utilization, and protection of forestland; to train future forestry scientists; and to involve other disciplines in forestry research. 

5. Success in Meeting Programmatic Purpose/Goals 

This program assists all states in carrying out a program of state forestry research at state forestry schools and colleges and developing a trained pool of forest 

scientists capable of conducting needed forestry research, which should include: (1) 

ecological restoration; (2) catastrophe management; (3) valuing and trading ecological services; (4) energy conservation, biomass energy and bio-based materials development; (5) forest fragmentation: (6) carbon sequestration and climate change; and 

(7) ways of fostering healthy forests and a globally competitive forest resources sector. 

Examples of success include: 

Scientists in Kansas have produced applied knowledge on a series of herbicides 

to eradicate saltcedar, which is an invasive weed tree found on the flood plains on 

the Cimmaron National Grasslands in Kansas. From this research, techniques have 

been developed that result in more effective control with reduced labor and herbicides with a resulting reduction in costs. 

An invasive insect, the woodwasp Sirex noctilio, has recently become established 

in North American where it poses a significant threat to pine forests. The wasp 

transmits a pathogenic fungus and helps the fungus establish lethal infections by 

injecting a phytotoxic mucus into the trees along with the fungus and its eggs. Basic 

research at the University of Georgia is using advanced genomic and proteomic approaches to identify the bioactive protein and peptide constituents of the wasp 

mucus that facilitate fungal colonization of the pine tissues. Better understanding 

of the constituents and their mechanisms of action will enable development to develop genetic approaches and strategies to improve pine resistance to this pest. 

Research at the University of Kentucky on the black bear in both Florida and 

Kentucky have provided important demographic, resource and habitat use, and 

movement data valuable to wildlife and other natural resource managers and land 

stewards. Detailed GPS-based movement data are providing a foundation for new 

analytical approaches that is changing the way black bear and other large mammal 

telemetry data are collected and interpreted. These findings continue to inform both 

professional and public findings and perceptions of these ecologically and economically important species. Both the black bear and elk have the potential to drive a 

productive recreation-based economy in economically challenged southeastern Kentucky. A science-based understanding and appreciation for the black bear and elk 

will strongly influence educational efforts and concomitant public perceptions about 

the species in ways that reduce human-wildlife conflict and that promotes species 

viability. 

Research at the University of Illinois developed methods which were used to map 

the flooding regimes and internal drainage of soils in newly-acquired Weaver Park 

in Urbana, Illinois. This information is being used to plan the ecological restoration 

of native forest, prairie, and wetland plants in the park. A soil moisture regime map 

with micro-ecosystem level precision and greater accuracy than county soil maps 

was developed and reported in an article in the journal ‘‘Restoration Ecology.’’ Soil 

908

moisture adaptations of plants to be used in the ecosystem restoration project are 

being matched to planting sites across a precisely mapped gradient of soil moisture 

from flooded to moderately well-drained. This is being done through a collaboration 

among the University of Illinois Agricultural Experiment Station, the Illinois State 

Geological Survey, and the Urbana Park District.

6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Annual Budget Authority $21,884 $21,742 $21,755 $22,205 $22,008 $30,008 $24,791 $27,535 $29,000 $32,934

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Outlays $27,007 $25,313 $27,261 $28,854 $32,541

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Delivery Cost $900 $744 $826 $870 $988

9. Eligibility Criteria 

Applications may be submitted by state-certified Schools of Forestry as stipulated 

in accordance with Section 2 of Pub. L. 87–788, McIntire-Stennis Act.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received 65 65 65

Applications Funded 65 65 65

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

New Era Rural Technology Program. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

Section 1405 of the National Agricultural Research, Extension, and Teaching Policy Act (NARETPA) of 1977, as amended (7 U.S.C. 3121), designates the U.S. DeVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00920 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
909

partment of Agriculture (USDA) as the lead Federal agency for agriculture research, 

extension and teaching in the food and agricultural sciences. 

Section 1473E of NARETPA (7 U.S.C. 3319e), as amended, required the establishment of a New Era Rural Technology Competitive Grants Program (RTP), which 

NIFA administers. 

The RTP was authorized by Section 7137 of the 2008 Farm Bill and first funded 

in 2009. 

4. Purpose/Goals 

The New Era Rural Technology Competitive Grants Program will make grants 

available for technology development, applied research, and/or training, with a focus 

on rural communities, to aid in the development of a workforce for bioenergy, pulp 

and paper manufacturing, or agriculture-based renewable energy. 

5. Success in Meeting Programmatic Purpose/Goals 

The New Era Rural Technology Competitive Grants Program makes grants available to community colleges or advanced technological centers, located in a rural 

area, for technology development, applied research, and training necessary to 

produce graduates capable of strengthening the nation’s technical, scientific and 

professional workforce in the fields of bioenergy, pulp and paper manufacturing, and 

agriculture-based renewable energy resources. 

Examples of success include: 

North Dakota State College of Science is addressing the workforce training 

needs in emerging technologies through the creation of a Regional Bio-fuels Advanced Technological Center (RBATC) The RBATC is addressing the educational 

and technical training needs in the biofuels industry in Minnesota, North Dakota 

and South Dakota by establishing an education and training center designed to deliver biofuels industry based, educational programs, hands-on skill development and 

industry training. The workforce challenges addressed by the RBATC include: (1) 

availability and capacity of education and training; (2) development of entry-level 

employee skills; (3) enhancement of incumbent employee skills; (4) promotion of career awareness and outreach opportunities for students and the general public. 

Treasure Valley Community College in Oregon is conducting regional agriculture-based renewable energy summit with broad-based representation from regional businesses, agencies and education for the purpose of providing information 

for identifying: current agricultural renewable energy practices in the rural region, 

new or expanded renewable energy practices planned in the next 3–5 years, workforce skills related to renewable energy needed by agriculture-related employers 

where workforce skills are taught in current programs, and where revisions or new 

programs are required. They are developing and disseminating a final strategic 

workforce plan to guide curricular improvement, revision and innovation Identify 

and implement renewable energy curricular revision options to in agriculture, natural resources, and basic manufacturing. 

An Indian Hills Community College in Iowa project is focusing on improving 

the quality of bioenergy education through professional development for instructors 

and creating opportunities for students to gain valuable experiential learning 

through internships and applied research with bioenergy companies. It is improving 

the students’ marketable skills and exposing them to industry contacts for future 

employment references and connections. For the industry, this program is helping 

smaller bioenergy companies realize the value of internships which is, in turn, creating a sustainable pool of companies for student internship opportunities in the future. It is also helping smaller bioenergy companies conduct applied research to support specific product development projects that they might otherwise have been unable to afford.

6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Budget Authority (1) (1) $750 $875 $873

1Funding began in FY 2009. 

910

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Outlays (1) (1) $75 $425 $819

1Funding began in FY 2009. 

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Delivery Cost (1) (1) $30 $35 $35

1Funding began in FY 2009. 

9. Eligibility Criteria 

Applications may be submitted by either: (1) public or private nonprofit community colleges, or (2) post-secondary, degree-granting advanced technological centers, 

either of which must:

a. be located in a rural area (see definition in Part VIII, E.);

b. have been in existence as of June 18, 2008;

c. participate in agricultural or bioenergy research and applied research;

d. have a proven record of development and implementation of programs to 

meet the needs of students, educators, business, and industry to supply the agriculture-based, renewable energy or pulp and paper manufacturing fields with 

certified technicians, as determined by the Secretary; and

e. have the ability to leverage existing partnerships and occupational outreach 

and training programs for secondary schools, 4 year institutions, and relevant 

nonprofit organizations.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received None 13 13

Applications Funded None 6 5

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Outreach and Assistance for Socially Disadvantaged Farmers and Ranchers. 

2. Subprograms/Department Initiatives 

None. 

911

3. Brief History 

Established by the Food, Agriculture, Conservation, and Trade Act of 1990, Section 2501, Public Law 101–624, 7 U.S.C. 2279. In accordance with Section 14013 of 

the 2008 Farm Bill, the Office of Advocacy and Outreach was established within 

USDA and authority to carry out this program was transferred to that office. 

4. Purpose/Goals 

The objective of the Outreach and Assistance for Socially Disadvantaged Farmers 

and Ranchers (OASDFR) program is to provide outreach, training, education, assistance, and technical assistance to encourage and assist socially disadvantaged farmers, ranchers and forest landowners in owning and operating farms, ranches and 

nonindustrial forestlands. 

The intent of the competitive grant program is to communicate in a linguistically 

appropriate manner, to socially disadvantaged farmers, ranchers and forest landowners about participating equitably in the full range of agricultural programs offered by the Department. 

5. Success in Meeting Programmatic Purpose/Goals 

Examples of success include: 

As a result of outreach activities by the University of Arkansas at Pine Bluff,

approximately 20 individuals were assisted in developing financial plans for their 

farm operations. Eight producers used their plans to obtain $763,000.00 in USDA 

Operating Loans. Six producers were assisted in restructuring their debts, and five 

producers were assisted in developing plans to determine the feasibility of adding 

different alternatives to their operation. Many of these producers were assisted in 

determining crop insurance premium cost, breakeven prices, and in developing marketing plans for their grain crops. Five individuals were assisted in using their local 

elevators to pre-market portions of their crops using forward contracts. Using Conservation Programs—In Central Arkansas approximately eight Environmental Quality Incentive Program (EQIP) contracts were awarded to Socially Disadvantaged 

Producers for a total of $683,575. Most of this went toward helping producers level 

land to improve drainage and increase irrigation efficiency. 

As a result of outreach activities at Alcorn State University in Mississippi, 102 

borrowers received structured training to increase their knowledge and skills needed 

to complete a balance sheet, income statement and inventory analysis for their 

farming operations. Borrowers have gained knowledge of current farm practices, 

minimize farm risks. Borrowers also met their educational requirement according 

to the USDA–FSA regulation and qualify to receive additional funds from USDA 

and have currently assisted in putting $2.5 million into the Mississippi economy. 

There were a 100 percent passing rate. In addition, 176 small farmers now have 

the knowledge, skills and a formulized record keeping system to keep accurate farm 

records; 72 small farmers have gained knowledge of legal issues associated with 

family farm operations and the risk management strategies; and 531 small farmers, 

ranchers and women and business are knowledgeable of new and innovative alternative enterprises that would have a greater return with less startup capital or 

input cost. 

Because of the New Entry Sustainable Farming Project (New Entry) which assists 

immigrants, refugees, and other underserved producers to develop commercial farming opportunities across Eastern Massachusetts, farmers participating in New Entry 

since October 2008 have increased their technical crop production skills, trained and 

shared practical farm skills with each other, and utilized educational resources on 

New Entry’s website. Since October, a total of 29 potential farmers enrolled in the 

Explore Farming classes to assess their farming interest and a total of 45 people 

enrolled in the Farm Business Planning Course (FBPC). New Entry graduated total 

of 23 people from its FBPC, representing 19 farm businesses. All graduates completed a comprehensive business plan. 12 new graduates are currently implementing their business plans on farmland, and another nine New Entry farmers 

graduates began another season of business/production plan implementation. New 

Entry farmers are experiencing an increase in production and sales over prior years. 

A total of 20 New Entry farmers have joined together into a cooperative to sell their 

produce into the 2009 Community Supported Agriculture (CSA) program. A total of 

218 CSA shares were purchased by customers (double over 2008). Combined CSA 

revenues for New Entry farmers are projected to be about $67,000 for the 2009 season. 

As a result of the Small Farm Program’s outreach activities at the University of 

California, small-scale growers, many of whom speak Spanish, Hmong, or Chinese 

as their primary language, have gained access to results of applied research on specialty crops, business management skills, relevant market analysis, and irrigation/

912

water quality management in agriculture. Information was disseminated through 

ongoing personal consultations, workshops, classes, field days, radio and printed 

newsletters and other printed materials. The diversity of information delivery 

means that small-scale producers in the five regions covered by the Small Farm Program gained access to one-on-one consultation when relevant, and that this information also reached wider audiences. Workshops and classes typically attracted between 20 and 60 producers, while field days and conferences reached 100 or more 

during this period.

6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Annual Budget Authority $3,243 $3,470 $5,935 $5,888 $5,940 $5,940 $6,395 $15,000 $0 $0

Note: Became a mandatory program in FY 2009; Mandatory funding was provided by transfer 

from CCC. The program was delegated to the Assistant Secretary for Civil Rights, Office of Advocacy and Outreach in FY 2010. 

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY08 FY09 FY10 FY11

Annual Outlays $1,500 $8,250 $13,500 $6,750

Note: Became a mandatory program in FY 2009; Mandatory funding was provided by transfer 

from CCC. The program was delegated to the Assistant Secretary for Civil Rights, Office of Advocacy and Outreach in FY 2010. 

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Delivery Cost $238 $256 $750 $0 $0

Note: Became a mandatory program in FY 2009; Mandatory funding was provided by transfer 

from CCC. The program was delegated to the Assistant Secretary for Civil Rights, Office of Advocacy and Outreach in FY 2010. 

9. Eligibility Criteria 

As determined in 7 U.S.C. 2279, eligibility is defined as follows: 1890 Land-Grant 

Institutions, including Tuskegee University and West Virginia State College, Indian 

Tribal Community Colleges, Alaska Native Cooperative Colleges, Hispanic-serving 

post-secondary educational institutions, other accredited post-secondary educational 

institutions, and Indian tribes providing agricultural education or other agriculturally-related services to socially disadvantaged farmers and ranchers in their region, 

and community-based organizations that: (1) have demonstrated experience in providing agricultural education or other agriculturally related services to socially disadvantaged farmers and ranchers in their region; (2) provides documentary evidence 

of its past experience in working with socially disadvantaged farmers and ranchers 

during the 2 years preceding its application for assistance; and (3) does not engage 

in activities prohibited under Section 501(c)(3) of the Internal Revenue Code of 

1986. 

Also eligible are organizations or institutions that received funding under 7 U.S.C. 

2279(a) before January 1, 1996, but only with respect to projects that the Secretary 

considers are similar to projects previously carried out by the organization or institution under such subsection.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received 57 91 None 

Applications Funded 15 55 None 

913

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Secondary Education, Two-Year Postsecondary Education, and Agriculture in the 

K–12 Classroom Challenge Grants Program. 

2. Subprograms/Department Initiatives 

There are no subprograms. 

3. Brief History 

Section 1405 of the National Agricultural Research, Extension, and Teaching Policy Act of 1977, as amended, (7 U.S.C. 3121) designates the U.S. Department of Agriculture (USDA) as the lead Federal agency for agriculture research, extension and 

teaching in the food and agricultural sciences. Section 7109 of the Food, Conservation, and Energy Act of 2008 (P.L. 110–246) amends authority for this program contained in section 1417(j) of the National Agricultural Research, Extension, and 

Teaching Policy Act of 1977 (7 U.S.C. 3152(j)). 

Section 7109 of the 2008 Food, Conservation, and Energy Act (Pub. L. 110–246) 

expanded the eligibility to include other institutions of higher education and nonprofit organizations and the objectives to support current Agriculture in the classroom programs for grades Kindergarten through 12. 

4. Purpose/Goals 

The Secondary Education, Two-Year Postsecondary Education, and Agriculture in 

the K–12 Classroom Challenge Grants (SPECA) program seeks to: (a) promote and 

strengthen secondary education and 2 year post-secondary education in agri-science 

and agribusiness in order to help ensure the existence in the United States of a 

qualified workforce to serve the food and agricultural sciences system; and (b) promote complementary and synergistic linkages among secondary, 2 year post-secondary, and higher education programs in the food and agricultural sciences in 

order to advance excellence in education and encourage more young Americans to 

pursue and complete a baccalaureate or higher degree in the food and agricultural 

sciences. 

5. Success in Meeting Programmatic Purpose/Goals 

Agriculture in the Classroom (AITC) is a partnership of agriculture, business, 

education, government, and volunteers, coordinated through NIFA Higher Education Programs, to improve agricultural literacy in the nation’s secondary schools. 

AITC accomplishes this goal through two mechanisms; projects developed by the national office, and projects developed by the individual state programs. 

Examples of success include: 

New York has developed school food gardens through the New York Ag in the 

Classroom Kids Growing Food program. Survey data indicates that the gardens impacted well over 65,000 students, teachers, and community members in 2007 by creating opportunities to make links to agriculture, food systems, and good nutrition; 

increasing student motivation; providing opportunities for peer teaching; teaching 

life skills; integrating garden-based learning into the core curriculum; and involving 

the community in the gardens. Moreover, 40,000 elementary age students received 

instruction during New York’s Ag Literacy Week Program, 150 Educators were 

trained on the Food, Land and People Curriculum, and over 30,000 passed through 

the Moo Country area at the New York State Fair. 

In California Ag in the Classroom (CFAITC), the number of CFAITC ambassadors increased by 10.3% in 2010 (13,427 in December 2010 compared to 12,173 

914

in December 2009), showing significant gains in the target audience. CFAITC is represented by Ambassadors in 44% of California’s schools. The CFAITC website 

(www.learnaboutag.org) received 23% more website hits (2,626,608 in total) in 2010 

compared to 2009, an increase of more than 492,761 website hits. Moreover, 100 

percent of conference attendees agreed that, after attending the conference they 

would implement the materials/ideas received upon returning to class. 

In Michigan, Agricultural Literacy activities conducted by volunteers, increased 

across the state by 30 percent in 2010. The number of students reached through agriculture in the classroom increased by 40 percent in 2010. 80 percent of the volunteers trained at the state level conduct AITC lessons at the local level. Volunteer 

involvement in Michigan Agricultural Education programs rose by 25 percent in 

2010. The number of Project RED (Rural Education Day) events held across the 

state has increased by 35 percent to 31 counties, 46 percent of all the involved counties across the state. Moreover, teachers reached through in-service activities increased by 25 percent in 2010. Of the teachers trained, 90 percent said they planned 

to continue to integrate agriculture into their existing curriculum.

6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Annual Budget Authority $1,000 $994 $890 $992 $990 $990 $983 $983 $983 $981

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Outlays $50 $148 $494 $987 $983

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Annual Outlays $50 $148 $494 $987 $983

9. Eligibility Criteria 

Applications may only be submitted by: (1) public secondary schools, (2) public or 

private nonprofit junior and community colleges, (3) institutions of higher education, 

or (4) nonprofit organizations.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received 43 75 66

Applications Funded 24 24 24

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

915

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Smith-Lever 3(d) Extension Activities Programs. 

2. Subprograms/Department Initiatives 

A. Expanded Food and Nutrition Education (EFNEP)

B. Pest Management

C. Farm Safety (aka Assistive Technology Program for Farmers with Disabilities or AgrAbility)

D. New Technologies for Agricultural Extension

E. Children, Youth, and Families at Risk (CYFAR)

F. Youth Farm Safety Education and Certification

G. Sustainable Agriculture (SARE)

H. Federally Recognized Tribes (formerly Extension Indian Reservation or 

EIRP) 

3. Brief History 

Various Extension Activities are authorized under Section 3(d) of the Smith-Lever 

Act (7 U.S.C. 343(d)); section 1680 of the Food, Agriculture, Conservation, and Trade 

Act of 1990 (7 U.S.C. 5933). 

Section 7116 of the Food, Conservation, and Energy Act of 2008 (FCEA) provided 

several amendments to Section 1425 of the National Agricultural Research, Extension, and Teaching Policy Act of 1977 (NARETPA) (7 U.S.C. 3175); including inserting sec. 1425 Nutrition Education Program and the definition of 1862 and 1890 Institutions for the Agricultural Research, Extension, and Education Reform Act of 

1998 (7 U.S.C. 7601). 

Section 7403 of the Food, Conservation, and Energy Act of 2008 (Public Law 110–

246) (FCEA) amended section 3(d) of the Smith-Lever Act (7 U.S.C. 343(d)) to provide the opportunity for 1862 and 1890 land-grant institutions, including Tuskegee 

University and West Virginia State University, and the University of the District 

Columbia, to compete for and receive these funds directly from the Secretary of Agriculture. However, section 1425 of the National Agricultural Research, Extension, 

and Teaching Policy Act of 1977 (NARETPA) provides a statutory formula for the 

distribution of funds appropriated for the Expanded Food and Nutrition Education 

program (EFNEP). Section 7116 of FCEA amended NARETPA section 1425 to revise 

this statutory formula effective October 1, 2008. 

4. Purpose/Goals 

Expanded Food and Nutrition Education (EFNEP)

Grants under this program are to assist all states in carrying out a program of 

extension activities designed to employ and train professional and paraprofessional 

aides to engage in direct nutrition education of low-income families and in other appropriate nutrition education programs.

Pest Management

Pest management includes a wide range of programs addressing human health, 

environmental and economic issues related to the management of pest populations 

through a variety of science based technologies. Americans want safe, pest and disease-free homes, schools, parks, recreational areas, as well as a safe and affordable 

supply of blemish-free food products and a wholesome pesticide-free environment. 

NIFA funds programs and projects which support research, education, and extension 

activities that promote pest management in general, and reduced risk pest management in particular. The agency’s pest management programs are implemented 

through working partnerships with scientists in our nation’s colleges and universities, other Federal agencies and the private sector.

Farm Safety (aka Assistive Technology Program for Farmers with Disabilities or 

AgrAbility)

AgrAbility increases the likelihood that individuals with disabilities and their 

families engaged in production agriculture (AgrAbility customers) become more successful. The primary outcome is enhanced quality of life for people with disabilities 

in agriculture. The program supports cooperative projects in which State Cooperative Extension Services (CES) based at either 1862 or 1890 Land-Grant Universities 

subcontract to private, nonprofit disability organizations. Measures of success may 

916

include improvements in customers’ financial stability or access to life activities and 

the capacity of states and regions to deliver services this population requires in a 

timely and satisfying manner. To address the specialized needs of AgrAbility’s customers, the program builds service capacity on national, regional, state, and local 

levels through education and networking. In the absence of capacity, projects provide assistance to customers. Projects use marketing to direct the public to initiatives in education, networking, and assistance.

New Technologies for Agricultural Extension

The purpose of the New Technologies for Ag Extension Program (NTAE) is to increase the capacity of each state to contribute expertise and content to the development of eXtension, a national web-based information and education delivery system 

that provides direct access to science-based educational resources from land-grant 

and other partner institutions about subjects of high importance to the general public. This initiative is intended to dramatically change how the CES does business 

with its customers. Applications are being solicited for the NTAE to deliver: state 

of the art technology and software applications, high quality leaders and staff, training for an exceptional CES workforce, legally binding contractual and financial instruments, and comprehensive evaluation, communications and marketing activities.

Children, Youth, and Families at Risk (CYFAR)

Through an annual Congressional appropriation for the National Children, Youth, 

and Families at Risk (CYFAR) Program, NIFA allocates funding to land-grant university extension services for community-based programs for at-risk children and 

their families. Since 1991, CYFAR has supported programs in more than 600 communities in all states and territories. State and local public and private organizations have contributed cash and in-kind resources that match or exceed the Federal 

appropriation. The CYFAR Program is based on research on effective programs for 

at-risk youth and families and on the human ecological principle of working across 

the lifespan in the context of the family and community. To assure that critical 

needs of children and families are met, CYFAR supports comprehensive, intensive, 

community-based programs developed with active citizen participation in all phases. 

CYFAR promotes building resiliency and protective factors in youth, families, and 

communities. CYFAR supports collaboration—forming lasting partnerships to 

achieve greater outcomes and to provide a support base for sustaining programs for 

those at risk. CYFAR also promotes the use of technology to improve programs, provide efficient access to educational resources, and provide essential technological 

skills for youth and adults in at-risk environments.

Youth Farm Safety Education and Certification

The Youth Farm Safety Education and Certification Program (YFSEC) supports 

national efforts to deliver timely, pertinent, and appropriate training to youth seeking employment or already employed in agricultural production. The program has 

critical ties to the current regulations for youth employment in agriculture, especially the exemptions provided in 29 CFR Part 570, subpart E–1 for youth under 

the age of 16 employed in some agricultural occupations having obtained certification. Significant changes in agricultural production and in the agricultural workforce since this regulation took effect in the early 1970’s have encouraged the USDA 

to consider training and certification innovations along with developing appropriate 

training and restrictions on youth employment in hazardous agricultural jobs. 

YFSEC’s funding has appeared under the Smith-Lever 3(d) line for Youth Farm 

Safety Education and Certification since 2001.

Sustainable Agriculture (SARE)

SARE works to increase knowledge about—and help farmers and ranchers 

adopt—practices that are profitable, environmentally sound, and good to communities. Several types of competitive grants are awarded by four regional administrative councils. Research and education grants, generally ranging from $60,000 to 

$150,000, fund projects that usually involve scientists, producers and others in an 

interdisciplinary approach. Professional development grants, generally ranging from 

$20,000 to $90,000, offer educational opportunities for extension, NRCS, and other 

agricultural professionals. Producer grants, typically between $1,000 and $15,000, 

go to farmers and ranchers who test innovative ideas and share the results with 

their neighbors. Projects address crop and livestock production and marketing, stewardship of soil and other natural resources, economics and quality of life.

Federally Recognized Tribes (formerly Extension Indian Reservation or EIRP)

The purpose of this program is to support Extension Agents who establish Extension education programs on the Indian Reservations and Tribal jurisdictions of Federally-Recognized Tribes. To the extent practicable, priorities should reflect the folVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00928 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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lowing national critical needs areas: (1) Development of sustainable energy; (2) Increased global food security; (3) Adaptation/mitigation of agriculture and natural resources to global climate change; (4) Reduction of childhood and adolescent obesity; 

and (5) Improved food safety. 

5. Success in Meeting Programmatic Purpose/Goals 

Expanded Food and Nutrition Education Program

The Expanded Food and Nutrition Education Program (EFNEP) program continues to be highly effective in changing participants’ behaviors, resulting in significant improvements in daily living skills. In 2010 94 percent of adults reported improvements in their diets including consuming the equivalent of nearly one additional cup of fruits and vegetables, 84 percent of recent graduates improved food 

management practices, 89 percent improved nutrition practices, and 67 percent improved food safety practices. Multiple cost-benefit studies in past years show that 

every dollar invested in EFNEP results in from $3.63 to $10.64 in saved health care 

costs and $2.48 saved in food expenditures. State success examples include: Pennsylvania State University’s EFNEP reported over 96% of the EFNEP adult participants made positive changes in one or more food groups including consuming the 

equivalent of an additional 1⁄2 cup of fruits and vegetables. Louisiana State University’s EFNEP survey found that over 96% of EFNEP program participants reported positive change in any food group at program exit including consuming the 

equivalent of one additional cup of fruits and vegetables. Utah State University’s 

EFNEP reported over 98% of its EFNEP families made a positive change in consumption of at least one food group including consuming the equivalent of nearly 

one additional cup of fruits and vegetables. The Mississippi State University Extension EFNEP reported over ninety-five percent (95%) of the EFNEP adult participants made positive changes in one or more food groups. The Iowa State University EFNEP survey found that over 98% of EFNEP program participants reported positive change in any food group at program exit. The University of Missouri reported over 87% of its EFNEP families made a positive change in consumption of at least one food group.

Smith-Lever 3(d) Program

The Smith-Lever 3(d) Renewable Resources Extension Act (RREA) calls for ‘‘expanded extension programs for forest and rangeland resources’’ to enhance the sustainability of these renewable natural resources. With NIFA funding, 69 land-grant 

institutions educated private forestland and rangeland owners regarding forest and 

rangeland sustainability. As a result of these activities: 937 income-generating business were created or expanded, 2,390 new jobs were created, 27,300 landowners increased their awareness of forest or rangeland resources, 21,100 landowners implemented at least one new renewable resource practice, landowners either earned or 

saved and estimated $17,810,000, loggers either earned or saved $198,571,756 by 

adopting new harvesting technologies, and every RREA dollar leverages from $5–

$15 from state, county and other resources.

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6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Smith-Lever 3(d) Extension Activities Programs 

(excluding EFNEP) $32,688 $31,926 $28,563 $28,228 $29,955 $30,979 $31,970 $32,383 $33,199 $33,133

Expanded Food and Nutrition Education Program 

(EFVEP) $32,688 $31,926 $28,563 $28,228 $29,955 $30,979 $31,970 $32,383 $33,199 $33,133

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Smith-Lever 3(d) Extension Activities Programs (excluding EFNEP) $18,587 $30,644 $31,568 $32,531 $33,117Expanded Food and Nutrition Education Program (EFVEP) $38,123 $62,843 $64,584 $66,610 $67,899

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Smith-Lever 3(d) Extension Activities Programs (excluding EFNEP) $1,131 $1,278 $1,187 $1,328 $1,325Expanded Food and Nutrition Education Program (EFVEP) $341 $422 $446 $522 $517

919

9. Eligibility Criteria 

Section 7403 of the Food, Conservation, and Energy Act of 2008 (Public Law 110–

246) (FCEA) amended section 3(d) of the Smith-Lever Act (7 U.S.C. 343(d)) to provide the opportunity for 1862 and 1890 land-grant institutions, including Tuskegee 

University and West Virginia State University, and the University of the District 

of Columbia, to compete for and receive these funds directly from the Secretary of 

Agriculture. 

10. Utilization (Participation) Data 

For Smith-Lever 3(d) Extension Activities Programs (excluding EFNEP):

Fiscal Year 2008 2009 2010

Applications Received 193 269 274

Applications Funded 165 223 234

For Expanded Food and Nutrition Education Program (EFNEP):

Fiscal Year 2008 2009 2010

Applications Received 74 75 75

Applications Funded 74 75 75

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

One OIG Hotline complaint (PS–1399–0071) was investigated alleging misuse of 

Federal funds by the grantee (the University of Hawaii) Cooperative Extension 

Service (CES). The complainant alleged that the university did not use NIFA CES 

program funds to fill the position of CES Agent for coffee producers left vacant by 

the former agent’s resignation. As a result, the complainant was concerned that 

CES funding to provide assistance to farmers may have been diverted to other uses. 

The USDA OIG and NIFA both investigated the allegations and determined that 

the allegations do not appear to be substantiated, and no further review was warranted. 

The funding involved is primarily Smith-Lever 3(b) and (c); and to a lesser extent 

Smith-Lever 3(d) Extension Activities Programs. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Specialty Crop Research Initiative Program. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

The authority for this program is under Section 7311 of the 2008 Farm Bill which 

amended Section 412 to the Agricultural Research, Extension, and Education Reform Act of 1998 (7 U.S.C. 7621 et seq.) and established the Specialty Crop Research 

Initiative Program. This represents a newly authorized and newly funded program. 

4. Purpose/Goals 

The Specialty Crop Research Initiative (SCRI) Program was established to address the critical needs of the specialty crop industry by developing and disseminating science-based tools to address needs of specific crops and their regions includVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00931 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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ing research in plant breeding, genetics, and genomics to improve crop characteristics (such as product, taste, quality, and appearance; environmental responses and 

tolerances; nutrient management, including plant nutrient uptake efficiency; pest 

and disease management, including resistance to pests and diseases resulting in reduced application management strategies; and enhanced phytonutrient content); efforts to identify and address threats from pests and diseases, including threats to 

specialty crop pollinators; efforts to improve production efficiency, productivity, and 

profitability over the long term (including specialty crop policy and marketing); new 

innovations and technology, including improved mechanization and technologies 

that delay or inhibit ripening; and methods to prevent, detect, monitor, control, and 

respond to potential food safety hazards in the production and processing of specialty crops, including fresh produce. 

5. Success in Meeting Programmatic Purpose/Goals 

The Specialty Crop Research Initiative (SCRI) was established to solve critical industry issues through research and extension activities. SCRI gives priority to 

projects that are multi-state, multi-institutional, or trans-disciplinary; and include 

explicit mechanisms to communicate results to producers and the public. Projects 

must address at least one of five focus areas: research in plant breeding, genetics, 

and genomics to improve crop characteristics; efforts to identify and address threats 

from pests and diseases, including threats to specialty crop pollinators; efforts to improve production efficiency, productivity, and profitability over the long term; new 

innovations and technology, including improved mechanization and technologies 

that delay or inhibit ripening; and methods to prevent, detect, monitor, control, and 

respond to potential food safety hazards in the production and processing of specialty crops. 

Examples of success include: 

The RosBREED project being led by Michigan State University is creating a 

national, dynamic, sustained effort in research, infrastructure establishment, training, and extension for applying marker-assisted breeding (MAB) to deliver improved 

plant materials more efficiently and rapidly. The Rosaceae family (almonds, apples, 

apricots, blackberries, peaches, pears, plums, sweet cherries, tart cherries, strawberries, raspberries, roses and other ornamentals) provides vital contributions to 

human health and well-being, and collectively constitutes the economic backbone of 

many U.S. rural communities. Rosaceae genetics and genomics are developing rapidly but have not been translated to routine practical application. This project will 

increase the likelihood of new cultivar adoption, enlarge market potential, and increase consumption of rosaceous fruits by using socioeconomic knowledge of stakeholder values and consumer preferences to inform breeding; establish sustainable 

technical infrastructure for an efficient MAB Pipeline in Rosaceae, including crop 

specific SNP genome scan platforms for breeding-relevant germplasm exploiting the 

shared ancestry of Rosaceae crops; integrate breeding and genomics resources by establishing a user-friendly U.S.-wide standardized statistical framework and breeding information management system; implement MAB in core RosBREED breeding 

programs with a common focus on fruit quality traits; and enhance sustainability 

of cultivar development by transferring MAB technologies to the public and private 

community of U.S. Rosaceae breeders through training current and future breeders 

as well as engaging the production, processing and marketing sectors, allied scientists, and consumers. 

Carnegie Mellon University is working with the specialty crop industry to fulfill its vision of significantly reducing the cost of production of U.S. fruit. They are 

developing, integrating, testing, deploying, and assessing a carefully chosen set of 

information, mobility, manipulation and plant science technologies, assessing their 

socioeconomic utility, and transferring results to the end-users via commercialization and outreach. Among the numerous preliminary results include initial trials 

with harvest assist system showed ten percent improvement in harvesting speed 

with 5% reduction in bruising; management efficiency trials in pilot orchards demonstrated increases in efficiency as high as 78 percent; and over 27 percent of Pennsylvania producers who attended field days are adopting trellised planting systems 

to increase efficiency and 65 percent plan to make this change. 

Washington State University (WSU) is leading a team of scientists in the western U.S. to improve the long-term sustainability of the apple, pear and walnut industries in the by enhancing biological control of pest insects and mites, and synthesize the information developed in this project along with existing information to 

provide the outreach tools needed to bring about change in grower practices. Preliminary results are encouraging and will be added to the WSU-Decision Aid System 

and University of California UC–IPM web sites for easy access and will be very useful to apple, pear and walnut growers and pest control advisors. These recommendaVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00932 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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tions will to lead to increased biological control in orchards, which should reduce 

pesticide inputs leading to higher grower profits and lower worker safety problems. 

Water and nitrogen management in deciduous perennial crops is constrained by 

a lack of information and an inability to provide targeted management. Currently, 

the application of fertilizers and water follows standardized practice with little consideration of spatial, temporal and crop variability resulting in lost income and negative environmental impact. The University of California is addressing these 

needs through a multi-discipline, multi-scale activity that integrates remote and 

local sensing, with modeling and on-farm validation to derive grower appropriate 

management tools and sound knowledge to inform policy decisions. Initial activities 

are being conducted in Almond, Pecan, Grape and Pistachio and are being adapted 

to the full range of perennial fruit and nut species through collaborative agreements 

in years 3 through 5 of this project. Thus far, the RESET remote sensing model 

(which measures evaporation and transpiration) has been published online, and provides e-mail output to users. Researchers in California have tested the model 

against Almond data and have help improved the operation and user interface of 

the model.

6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Budget Authority (1) $30,000 $50,000 $50,000 $50,000

1Program was first authorized in 2008. 

Note: Mandatory funding was provided by transfer from CCC. 

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Outlays (1) $1,500 $13,000 $30,500 $45,000

1Program was first authorized in 2008. 

Note: Mandatory funding was provided by transfer from CCC. 

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Outlays (1) $1,200 $1,720 $2,000 $2,000

1Program was first authorized in 2008. 

Note: Mandatory funding was provided by transfer from CCC. 

9. Eligibility Criteria 

The Secretary may carry out the SCRI Program through (1) Federal Agencies; (2) 

national laboratories; (3) colleges and universities; (4) research institutions and organizations; (5) private organizations or corporations; (6) state agricultural experiment stations; (7) individuals; or (8) groups consisting of two or more entities described in paragraphs (1) through (7). 

In making grants under this section, the Secretary shall provide a higher priority 

to projects that (1) are multi-state, multi-institutional, or multi-disciplinary; and (2) 

include explicit mechanisms to communicate results to producers and the public.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received 238 265 149

Applications Funded 27 92 32

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to repVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00933 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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licate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Sun Grant Program. 

2. Subprograms/Department Initiatives 

There are no subprograms. 

3. Brief History 

The authority for this program is contained in section 7526 of the 2008 Farm Bill. 

USDA received its first funding for this program in FY 2010. 

4. Purpose/Goals 

The purpose of this program is to provide grants to the North-Central, Southeastern, South-Central, Western, and Northeastern Sun Grant Centers and the 

Western Insular Pacific Subcenter (as designated in section 7526(b)(1)(A)–(F) of the 

FCEA). The Sun Grant Centers and Subcenter will use the majority of grant funds 

for competitive grants and the remainder for research on technology development 

and implementation. 

All activities conducted in this program must seek to (a) enhance national energy 

security through the development, distribution, and implementation of bio-based energy technologies; (b) promote diversification in, and the environmental sustainability of, agricultural production in the United States through bio-based energy and 

product technologies; (c) promote economic diversification in rural areas of the 

United States through bio-based energy and product technologies; and (d) enhance 

the efficiency of bioenergy and biomass research and development programs through 

improved coordination and collaboration among the Department of Agriculture, the 

Department of Energy, and land-grant colleges and universities. 

5. Success in Meeting Programmatic Purpose/Goals 

Although this grant program is too new to have any discernable success to date 

examples of expected success include: 

This program is providing grants to the North-Central, Southeastern, South-Central, Western, and Northeastern Sun Grant Centers and the Western Insular Pacific 

Sub-center. All activities conducted in this program are seeking to enhance national 

energy security through the development, distribution, and implementation of 

biobased energy technologies; promote diversification in, and the environmental sustainability of, agricultural production in the United States through biobased energy 

and product technologies; promote economic diversification in rural areas of the 

United States through biobased energy and product technologies; and enhance the 

efficiency of bioenergy and biomass research and development programs through improved coordination and collaboration among the Department of Agriculture, the Department of Energy, and land-grant colleges and universities.

6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

2010 2011

Annual Budget Authority $2,250 $2,246

Note: Program was first funded in FY 2010. 

923

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

2010 2011

Annual Outlays $225 $1,237

Note: Program was first funded in FY 2010. 

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

2010 2011

Annual Delivery Cost $90 $90

Note: Program was first funded in FY 2010. 

9. Eligibility Criteria 

Eligible applicants are the five centers that will competitively award projects to 

eligible entities in the states and territories within their regions: 

North-Central Center—A north-central sun grant center at South Dakota State 

University for the region composed of the States of Illinois, Indiana, Iowa, Minnesota, Montana, Nebraska, North Dakota, South Dakota, Wisconsin and Wyoming. 

Southeastern Center—A southeastern sun grant center at the University of Tennessee at Knoxville for the region composed of the States of Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee and Virginia, 

the Commonwealth of Puerto Rico, and the United States Virgin Islands. 

South-Central Center—A south-central sun grant center at Oklahoma State University for the region composed of the States of Arkansas, Colorado, Kansas, Louisiana, Missouri, New Mexico, Oklahoma, and Texas. 

Western Center—A western sun grant center at Oregon State University for the 

region composed of the States of Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah, and Washington and a Western Insular Pacific Subcenter at 

the University of Hawaii for the region of Alaska, Hawaii, Guam, American Samoa, 

the Commonwealth of the Northern Mariana Islands, the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau. 

Northeastern Center—A northeastern sun grant center at Cornell University for 

the region composed of the States of Connecticut, Delaware, Massachusetts, Maryland, Maine, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, and West Virginia. 

Funding for the Western Insular Pacific Sun Grant Subcenter at University of 

Hawaii must come from Western Sun Grant Center at Oregon State University. 

Eligible applicants for competitively awarded projects within the respective regions of the individual Sun Grant Centers and Subcenter are: state agricultural experiment stations; colleges and universities; university research foundations; other 

research institutions and organizations; Federal agencies; national laboratories; private organizations or corporations; individuals; or any group consisting of two or 

more of the entities described in this paragraph.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received None None 5

Applications Funded None None 5

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

924

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Tribal Colleges Education Equity Grants Program. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

Authority for this program is contained in the Equity in Educational Land-Grant 

Status Act of 1994 (7 U.S.C. 301 note) as amended by the Agricultural Research, 

Extension, and Education Reform Act of 1998 (7 U.S.C. 7601 note). Under this authority, appropriated funds are to be awarded to the 1994 Land-Grant Institutions 

(hereinafter referred to as 1994 Institutions) for Education capacity building and 

funds are to be distributed equally among institutions that meet eligibility requirements. 

Section 7402 of the 2008 Farm Bill added Ilisagvik College as a 1994 Land-Grant 

Institution. 

4. Purpose/Goals 

The purpose of the Tribal Colleges Education Equity Grants Program (TCEG) is 

to provide funding to enhance educational opportunities for Native Americans in the 

food and agricultural sciences. The TCEG program is intended to strengthen institutional capacity to deliver relevant formal education opportunities. The TCEG is intended to be a component of the applicant 1994 institution’s land-grant roadmap or 

strategic planning process. To the extent practicable, priorities should reflect NIFA’s 

following national critical needs areas: (a) Development of sustainable energy; (b) 

Increased global food security; (c) Adaptation/mitigation of agriculture and natural 

resources to global climate change; (d) Reduction of childhood and adolescent obesity; and (e) Improved food safety. 

5. Success in Meeting Programmatic Purpose/Goals 

This program provides funding to enhance educational opportunities for Native 

Americans in the food and agricultural sciences; and strengthens institutional capacity to deliver relevant formal education opportunities. 

Examples of success include: 

As a result of a move of the Equity program to the Math & Science Department 

at Oglala Lakota College in South Dakota, the program has had a 300% increase 

in contact with new and/or potential students for the Natural Resource degree plan 

of study. Two Native American men advanced their care goals through hard work 

earning an Associate of Arts or a Baccalaureate of Science degree in either General 

Agriculture or Natural Resource Management. The program has been able to serve 

a larger group of students through instruction of the course Bio 113 People and the 

Environment, which is a core course to meet the science requirements in the majority of Oglala Lakota College’s degree programs. Moreover, a current student working for the Bureau of Indian Affairs in Pine Ridge South Dakota stated that through 

the programs course content he learned more than he has in any other program, 

especially courses taught by the project director. 

The Omaha Nation and Santee Sioux have epidemic numbers for Health Problems, diabetes, obesity, heart disease, and malnutrition. Nebraska Indian Community College (NICC) is enhancing the short-term and long-term educational opportunities for the Omaha Nation and Santee Sioux Nation by strengthening specific instructional programs in the Food, Natural Resources, Native Foods and Agricultural Sciences Area. Twenty-six students were enrolled in courses with a specific 

focus in agri-science and agribusiness. Other courses incorporated these topics to a 

lesser extent. The impacted students are in a wide-variety of degrees (education, 

science, business, general liberal arts), allowing for information to be disseminated 

to a large constituency in these communities. 

A Sinte Gleska University (South Dakota) project developed curricula and syllabi in Natural Resources History and Management, Tribal Land Management and 

History, Horticulture and Environmental Law. This project also worked on revision 

925

of the Tribal Land Management degree programs and produced new degree programs. They also developed a career guide for students based on available careers 

on the Rosebud Reservation. As a result, one student completed a bachelor’s degree 

in Environmental Science; ten students have been recruited to the Tribal Lands 

Management degree program; collaborations have been formed with tribal land programs, Federal land programs and with South Dakota state extension programs; 

Career Guide is available for local schools and as a recruitment tool; and an advisory committee was formed to provide community and stakeholders input into future planning for the USDA programs. 

The Turtle Mountain Community College’s (North Dakota) formed an articulation agreement between the college and a local agricultural high school—St. 

John Public—to provide Equine Science offerings to its students as dual credit. They 

designed and implemented agricultural related curriculum in GIS/GPS and NSCA 

Certified Personal Trainer Certificate which will be part of the college’s course catalog. Moreover, the College enhanced the community’s knowledge of animal sciences 

by offering a series of workshops throughout the year and provided educational opportunities to youth and adults in a vast array of subjects in the areas of health, 

wellness, community wellness, and outreach education. The program has allowed 

the community to participate in a vast number of educational programming in the 

agricultural fields. Participating students are now academically prepared to further 

their education or seek employment in Equine Science, GPS/GIS and Certified Personal Training. The program has perked the interest of the community to be more 

actively involved in gardening and other agricultural-related disciplines which will 

in turn contribute to better health and fitness. The college’s Anishinabe Center has 

become a ‘One Stop Wellness Center’ which actively promotes and has integrated 

the seven pillars of wellness—Social, Emotional, Occupational, Spiritual, Physical, 

Environmental, and Intellectual.

6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Annual Budget Authority $1,549 $1,689 $1,679 $2,232 $2,228 $3,342 $3,319 $3,342 $3,342 $3,335

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Outlays $167 $500 $1,669 $3,334 $3,330

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Delivery Cost $0 $0 $0 $0 $0

9. Eligibility Criteria 

Tribal colleges and universities designated as 1994 Land-Grant Institutions under 

the Educational Land-Grant Status Act of 1994, as amended. This Act, as amended 

in Section 533(a), requires that each 1994 Land-Grant Institution be accredited or 

making progress towards accreditation and be recognized as a legal entity. If accreditation is being sought, a college must demonstrate its progress towards accreditation by a letter from a nationally recognized accreditation agency affirming receipt 

of application for an accreditation site visit or other such documentation.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received 30 31 30

Applications Funded 30 30 30

926

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Veterinary Medicine Loan Repayment Program. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

In January 2003, NVMSA was passed into law adding section 1415A to the National Agricultural Research, Extension, and Teaching Policy Act of 1997. This law 

established a new Veterinary Medicine Loan Repayment Program (7 U.S.C. 3151a) 

Section 7105 of the 2008 Farm Bill amended section 1415A to revise the determination of veterinarian shortage situations to consider (1) geographical areas that 

the Secretary determines have a shortage of veterinarians; and (2) areas of veterinary practice that the Secretary determines have a shortage of veterinarians, such 

as food animal medicine, public health, epidemiology, and food safety. This section 

also added that priority should be given to agreements with veterinarians for the 

practice of food animal medicine in veterinarian shortage situations. 

4. Purpose/Goals 

USDA’s Veterinary Medicine Loan Repayment Program (VMLRP), authorized by 

the National Veterinary Medical Services Act (NVMSA) helps qualified veterinarians offset a significant portion of the debt incurred in pursuit of their veterinary 

medicine degrees in return for their service in certain high-priority veterinary shortage situations. The National Institute of Food and Agriculture (NIFA) will carry out 

NVMSA by entering into educational loan repayment agreements with veterinarians 

who agree to provide veterinary services in veterinarian shortage situations for a 

determined period of time. 

5. Success in Meeting Programmatic Purpose/Goals 

Veterinarians are critical to the national food safety and food security infrastructures, and to the health and well-being of both animals and humans; however, 

major studies indicate significant and growing shortages of food supply veterinarians and veterinarians serving in certain other high priority specialty areas. A leading cause for this shortage is the heavy cost of 4 years of professional veterinary 

medical training, which can average between $100,000 and $140,000. Congress established the VMLRP as a way to remedy this growing need. 

In Fiscal Year 2010, NIFA made 62 award offers of which 53 were accepted for a total of $5,185,970 (includes loan and tax payments) with the average award at 

$97,848 (includes loan and tax payments). The average eligible debt for repayment 

was $98,672. Sixty-five percent of recipients received the maximum payment of 

$25,000 per year (plus taxes), and 65 percent of awards went to those who obtained 

their Doctor of Veterinary Medicine within the last 3 years. Thirty-four states will 

fill at least one shortage area through VMLRP:

• Iowa will fill five shortage areas

• Idaho, Kansas and Texas will fill four shortage areas

• Kentucky and South Dakota will fill three shortage areas

Shortage type breakdown:

• Type 1 (at least 80 percent private practice): 24 awards

• Type 2 (at least 30 percent private practice): 24 awards

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• Type 3: (at least 49 percent public practice): 5 awards

Participants are required to serve in one of three types of shortage situations. 

Type 1 shortage areas are private practice dedicated to food animal medicine at 

least 80 percent of the time. Type 2 shortages are private practices in rural areas 

dedicated to food animal medicine up to 30 percent of the time. Type 3 shortage 

areas are dedicated to public practice up to 49 percent of the time.

6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

FY06 FY07 FY08 FY09 FY10 FY11

Annual Budget Authority $495 $495 $869 $2,950 $4,800 $4,790

Note: Funding began in FY 2006. 

7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Outlays $50 $310 $909 $2,199 $3,967

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

FY07 FY08 FY09 FY10 FY11

Annual Outlays $50 $87 $295 $480 $479

9. Eligibility Criteria 

To be eligible to apply to the VMLRP, an applicant must: (1) Have a degree of 

Doctor of Veterinary Medicine (DVM), or the equivalent, from a college of veterinary 

medicine accredited by the AVMA Council on Education; (2) Have qualifying educational loan debt as defined in 7 CFR 3431 Section 3; (3) Secure an offer of employment or establish and/or maintain a practice in a veterinary shortage situation, as 

determined by the Secretary, within the time period specified in the VMLRP service 

agreement offer; and (4) provide certifications and verifications in accordance with 

7 CFR 3431 Section 16.

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received 0 0 260

Applications Funded 0 0 53

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

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1. Program Name 

Women in Minorities in Science, Technology, Engineering and Mathematics Fields 

Program (WAMS). 

2. Subprograms/Department Initiatives 

There are no subprograms. 

3. Brief History 

Section 7204 of the 2008 Farm Bill amended Section 1672 of the Food, Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 5925), authorizes the Secretary of Agriculture to make competitive grants to support research and extension 

activities to increase participation by women and underrepresented minorities from 

rural areas in the fields of science, technology, engineering, and mathematics. 

4. Purpose/Goals 

Purpose/Goals include:

(1) To support research and extension projects to increase participation by 

women and underrepresented minorities from rural areas in science, technology, 

engineering, and mathematics fields related to the food and agricultural 

sciences;

(2) to improve the economic health and viability of rural communities through 

the development of research and extension initiatives focused on new and 

emerging employment opportunities in STEM occupations; and

(3) to fund projects that address the national challenge to increase the number 

and diversity (i.e., having a food and agricultural sciences workforce representative of the nation’s population) of students entering food and agriculture related 

STEM disciplines. 

5. Success in Meeting Programmatic Purpose/Goals 

Although this grant program is too new to have any discernable success to date 

examples of expected success include: 

An education grant to Twin Cities Public Television in Minnesota aims to encourage more girls to consider careers in STEM fields via the ‘‘SciGirls’’ program. 

While girls and women have increased their representation in many fields of science 

in recent years, their progress is still not keeping pace with the rising demand for 

skilled workers in many STEM fields. Although women make up nearly 1⁄2 the college-educated workforce, they represent only 1⁄4 of the college-educated workforce in 

science and engineering occupations. ‘‘SciGirls’’ will be distributed through PBS Plus 

to the nation’s 350 PBS stations. From experience with comparable PBS Plus programs, they project that each episode will attract several million viewers over its 

broadcast life, nearly 1⁄2 of which will be rural audiences. 

A University of Georgia project is enhancing the readiness of women and 

underrepresented males from Georgia’s rural communities to successfully transition 

into careers in STEM in general and food, agriculture, natural resources, and related sciences (UFANRRS) in particular. In addition to addressing the clogs in the 

existing pipeline of trained women and minorities from high school to undergraduate degrees, the project is also including a component that introduces middle 

school students to career options in food and agricultural sciences. The innovativeness and significance of this project rest on the project’s design in building the pipeline to the undergraduate pool through increased interest in STEM programs early 

in the education process and recognizing the need to transition students from bachelor’s to master’s STEM programs through better preparation.

6. Annual Budget Authority (FY 2007–FY 2011) 

(in thousands of dollars) 

2010 2011

Annual Budget Authority $400 $399

Note: Funding began in FY 2010. 

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7. Annual Outlays (FY 2007–FY 2011) 

(in thousands of dollars) 

2010 2011

Annual Outlays $240 $387

Note: Funding began in FY 2010. 

8. Annual Delivery Cost (FY 2007–FY 2011) 

(in thousands of dollars) 

2010 2011

Annual Delivery Cost $16 $16

Note: Funding began in FY 2010. 

9. Eligibility Criteria 

Eligible applicants are: (a) state agricultural experiment stations; (b) colleges and 

universities; (c) university research foundations; (d) other research institutions and 

organizations; (e) Federal agencies; (f) national laboratories; (g) private organizations or corporations; (h) individuals; or (i) any group consisting of two or more of 

the entities described in subparagraphs (a) through (h).

10. Utilization (Participation) Data 

Fiscal Year 2008 2009 2010

Applications Received None None 13

Applications Funded None None 2

11. Duplication or Overlap with Other Programs 

REE is committed to maximizing Federal dollars by ensuring systematic monitoring and evaluation. While the scientific method requires the flexibility to replicate results, NIFA’s leadership, program managers, and researchers rigorously 

track scientific projects through its Current Research Information System (CRIS) to 

avoid duplication. Program leadership also holds joint stakeholder meetings and/or 

coordinates with other science agencies (ARS, ERS, others) to ensure that programs 

are complementary, and do not duplicate other science programs in USDA and other 

Federal agencies. The creation and staffing of the USDA Office of the Chief Scientist 

has bolstered this coordination. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE—NATIONAL

AGRICULTURAL STATISTICS SERVICE

1. Program Name 

National Agricultural Statistics Service. 

2. Subprograms/Department Initiatives 

Agricultural Estimates and Census of Agriculture:

i. 2008 Organic Production Survey,

ii. Cash Rents Survey,

iii. Prices Survey,

iv. Specialty Crops Survey, and

v. Civil Rights Report. 

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3. Brief History 

a. 2008 Organic Program Survey: The 2007 Census of Agriculture showed more 

than 20,000 farmers engaged in organic production in the United States. As a 

follow-up to the 2007 Census, USDA conducted it first ever, wide-scale survey 

of organic agriculture.

b. Cash Rents Survey: NASS has been directed through the 2008 Farm Bill to 

collect cash rents data for use by the Farm Service Agency (FSA) in program 

administration. The Food, Conservation, and Energy Act of 2008, Section 2110, 

states,

‘‘The Secretary (acting through the National Agricultural Statistics 

Service) shall conduct an annual survey of per acre estimates of county 

average market dry land and irrigated cash rental rates for cropland 

and pastureland in all counties or equivalent subdivisions within each 

state that have 20,000 acres of cropland or pastureland.’’

The Cash Rents Survey is conducted annually by the USDA’s National 

Agricultural Statistics Service (NASS). The Cash Rents Survey obtains 

annual average cash rental rates by farmers and ranchers for all counties in the U.S. that meet the requirements outlined in the 2008 Farm 

Bill. This survey provides the basis for estimates of the current year’s 

Cash Rent paid for Irrigated Cropland, Non-irrigated Cropland, and 

Permanent Pasture. Data collection on the Cash Rents Survey is from 

February through mid July. The final 2011 Cash Rents estimates will 

be published on September 9, 2011. Data will be published at the county, district, state, and national level.

c. Prices Survey: The collection and publication of prices received by farmers 

gained importance with passage of the Farm Security and Rural Investment Act 

of 2002 (2002 Farm Bill) and the importance continued with the passage of the 

Food, Conservation, and Energy Act of 2008 (2008 Farm Bill).

d. Specialty Crops Survey: Issued in November 2009, this is the first time NASS 

has summarized and published the Census of agriculture data for specialty 

crops.

e. Civil Rights Report: FARM BILL Section 14006 TRANSPARENCY AND ACCOUNTABILITY FOR SOCIALLY DISADVANTAGED FARMERS OR RANCHERS requires USDA to annually compile program application and participation 

rate data regarding socially disadvantaged farmers or ranchers: race, ethnicity, 

and gender for the entire U.S. for each state and county. 

4. Purpose/Goals 

a. 2008 Organic Program Survey: Through the Organic Production Survey, 

USDA’s National Agricultural Statistics Service (NASS) gathered additional information on how the growth of organic farming is changing the face of U.S. 

agriculture. This survey gave organic producers an opportunity to share information about their industry and help ensure the continued growth and sustainability of organic farming in the United States. The survey results can be utilized to help shape decisions regarding farm policy, funding allocations, availability of goods and services, community development and other key issues. In 

addition, the information can help producers of organic agriculture make informed decisions about the future of their own organic production operations. 

The survey looked at organic farming during the 2008 calendar year, including:

• Production of field crops, vegetables, fruits, tree nuts, berries, livestock and

poultry

• Production practices, including pest management, cover crops, crop rotation, rotational grazing, conservation tillage, water management and buffer

zones

• Production expenses

• Marketing practices, including wholesale, retail and direct-to-consumer

sales

• Value-added production and processing

The survey included not only farm operations that are currently engaged in organic production, but those making the transition to organic agriculture.

b. Cash Rents Survey: The Cash Rents Survey provides the per acre estimate 

of county average cash rent paid by farmers. Estimates derived from this survey 

supply basic information needed by farmers to make decisions for both short 

term and long term planning. The Cash Rents Report may also be used by indiVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00942 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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vidual producers in planning expenses for their agricultural operation or by Extension or University Staff in developing operating budgets for agricultural operations in their locale.

c. Prices Survey: Farm commodity prices are subject to the market forces of supply and demand. However, in times of depressed commodity prices the government will make counter cyclical payments to producers to assist them. The 2008 

Farm Bill continued many of the commodity programs introduced in the 2002 

Farm Bill, adjusting payment levels and eligibility while introducing the ACRE 

program. The data showing prices received by farmers is collected and published by NASS, and is critical to implementing and administering these programs.

d. Specialty Crops Survey: The 2007 Census of Agriculture Specialty Crop publication provides data that supplement the 2007 Census of Agriculture, Volume 

1. As a service to agricultural and economic data users, the 2007 data for specialty crops are published at the U.S. and state-level.

e. Civil Rights Report: As stated in the farm bill ‘‘Using the technologies and 

systems of the National Agricultural Statistics Service, the Secretary shall compile and present the data compiled under paragraph (1) for each program described in the paragraph in a manner that includes the raw numbers and participation rates for (A) the entire United States; (B) each state; and (C) each 

county in each state.’’ The department will use the report to ensure all farm 

producers are treated equitably by departmental service providers. 

5. Success in Meeting Programmatic Purpose/Goals 

a. 2008 Organic Program Survey: Data were collected, edited, analysis conducted and results released on February 3, 2010. There was an 87 percent response rate and NASS counted 14,540 USDA certified and exempt organic 

farms.

b. Cash Rents Survey: The survey has been conducted each year since the 2008 

Farm Bill was enacted. Published results have been made available to FSA and 

the general public for 2008, 2009, and 2010 as mandated by the farm bill. The 

2011 results will be published on August 4, 2011.

c. Prices Survey: NASS has maintained this important data series for many 

years, making this critical data available to FSA and the general public. Data 

are published each month in the Agriculture Prices report—a Principal Economic Indicator of the United States.

d. Specialty Crops Survey: A volume was published on this subject in November 

2009 at the U.S. level and state level. An additional volume was published for 

Outlying Areas including Puerto Rico, U.S. Virgin Islands, Guam, and the Commonwealth of Northern Mariana Islands.

e. Civil Rights Report: NASS has participated with the department in an ongoing process for several years to fulfill this important section of the farm bill: 

‘‘(1) ANNUAL REQUIREMENT.—For each county and state in the United States, 

the Secretary of Agriculture (referred to in this section as the ’Secretary’) shall 

annually compile program application and participation rate data regarding socially disadvantaged farmers or ranchers by computing for each program of the 

Department of Agriculture that serves agricultural producers and landowners—

(A) raw numbers of applicants and participants by race, ethnicity, 

and gender, subject to appropriate privacy protections, as determined 

by the Secretary; and 

(B) the application and participation rate, by race, ethnicity, and gender, as a percentage of the total participation rate of all agricultural 

producers and landowners.’’

NASS has created a web-based tool that will provide participation rates for 

every applicable USDA program at the state and county level. NASS has 

worked with other agencies in developing a format the agencies can use to submit participation data to the database which the web-based tool uses. This software works to facilitate data queries for USDA program Agencies who will load 

program application and participation data and will be maintained by the Department. As per the farm bill, both percentage rate and number of applicants 

and participants will be available. NASS has also summarized the data for total 

agricultural producers at the appropriate levels which will be used as the denominator in the participation rate calculation.

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6. Annual Budget Authority (FY 2007–FY 2011) 

National Agricultural Statistics Service 

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Grand Total 

Budget Authority from the Farm Bill

a. 2008 Organic Production Survey—Farm bill funds transferred to 

NASS through Farm Service Agency (FSA) Commodity Credit Corporation (CCC) $1,000,000 $1,000,000

b. Cash Rents Survey—Reimbursable Agreement with FSA CCC $800,000 $4,811,132 $5,700,000 $5,700,000 $4,275,000 $21,286,132c. Prices Survey—Reimbursable Agreement with FSA CCC $2,486,000 $2,800,000 $2,800,000 $2,800,000 $2,800,000 $13,686,000d. Specialty Crops Survey * ————— —e. Civil Rights Report * ————— —

Grand Total $1,800,000 $4,811,132 $5,700,000 $5,700,000 $4,275,000 $22,286,132

* The farm bill directed work to be done on Specialty Crops Survey and Civil Rights Report but no funds were given through the farm bill. 

7. Annual Outlays (FY 2002–FY 2011) 

Budget authority is the authority provided by public law to enter into financial obligations that will result in immediate or future outlays 

of funds. Outlays are the issuance of checks, disbursement of cash, or electronic transfer of funds made to liquidate a Federal obligation. Outlays may be from unexpended balances of prior-year budgetary resources plus the current budgetary resources. 

For example: The farm bill authorized $1.0 million in 2008 for the Organic Production Survey but most of those funds were obligated and 

spent in 2009. The farm bill directed work on Specialty Crops and Civil Rights but no funds were provided in the farm bill. NASS used resources from the Census of Agriculture to summarize data needed for the survey and report. This data is considered a special tabulation of the Census, a service provided under Census of Agriculture authority. 

National Agricultural Statistics Service 

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Grand Total 

Outlays of Farm Bill Funds

a. 2008 Organic Production Survey—Farm bill funds transferred to 

NASS through FSA CCC $12,355 $987,645 $0 $0 $0 $1,000,000

b. Cash Rents Survey—Reimbursable Agreement with FSA CCC $800,000 $4,811,132 $5,700,000 $5,700,000 $4,275,000 $21,286,132

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c. Prices Survey—Reimbursable Agreement with FSA CCC $2,486,000 $2,800,000 $2,800,000 $2,800,000 $2,800,000 $13,686,000

Outlays of NASS Funds for Farm Bill Directed Activities

d. Specialty Crops Survey * $0 $15,413 $9,438 $0 $0 $24,851e. Civil Rights Report * $1,512 $4,320 $9,720 $11,448 $0 $27,000

Grand Total $813,867 $5,818,510 $5,719,158 $5,711,448 $4,275,000 $22,337,983

* NASS redirected funds to fulfill the farm bill direction. NASS used resources from the Census of Agriculture to summarize data needed for 

the survey and report. This data is considered a special tabulation of the Census, a service provided under Census of Agriculture authority. 8. Annual Delivery Cost (FY 2002–FY 2011) 

NASS programs are very integrated; most of the surveys are done from questionnaires with the farmers and ranchers. The questions 

cover a wide variety of crops; farming and ranching practices; operator characteristics (primary occupation, sex, age, race, and Spanish, Hispanic, or Latino origin); farm size and type of ownership (family, partnership, corporation, other). NASS produces over 500 reports derived from this data. 

National Agricultural Statistics Service 

Annual Cost of Surveys 

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Grand Total 

a. 2008 Organic Production Survey—Farm bill funds transferred to NASS through FSA CCC

Salary expenses Subtotal $12,355 $987,645 $0 $0 $0 $1,000,000FTEs 0.0 6.2 0.0 0.0 0.0 6.22008 Organic Production Survey—funds appropriated to NASS Salary expenses Subtotal $174,410 $441,040 $0 $0 $615,450

Contracts $0 $485,897 $0 $0 $0 $485,897Printing $0 $0 $45,008 $0 $0 $45,008Postage $0 $59,947 $0 $0 $0 $59,947

Subtotal $0 $720,254 $486,049 $0 $0 $1,206,303FTEs 0.1 4.6 4.1 0.0 0.0 8.8

Total $12,355 $1,707,899 $486,049 $0 $0 $2,206,303

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National Agricultural Statistics Service—Continued

Annual Cost of Surveys 

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Grand Total 

Total FTEs 0.1 10.8 4.1 0.0 0.0 15.0

b. Cash Rents Survey—Reimbursable Agreement with FSA CCC

Salary expenses Subtotal $800,000 $4,811,132 $5,700,000 $5,700,000 $4,275,000 $21,286,132FTEs 7.4 44.3 52.5 52.5 39.4 196.0

c. Prices Survey—Reimbursable Agreement with FSA CCC

Salary expenses Subtotal $2,486,000 $2,800,000 $2,800,000 $2,800,000 $2,800,000 $13,686,000FTEs 22.9 25.8 25.8 25.8 25.8 126.0

d. Specialty Crops Survey *—Funds appropriated to NASS

Salary expenses Subtotal $0 $13,313 $4,438 $0 $0 $17,750FTEs 0.0 0.1 0.0 0.0 0.0 0.1

e. Civil Rights Report *—Funds appropriated to NASS

Salary expenses $1,512 $4,320 $9,720 $11,448 $0 $27,000FTEs 0.0 0.0 0.1 0.1 0.0 0.2

Grand Total $3,299,867 $9,336,664 $9,000,206 $8,511,448 $7,075,000 $37,223,185Grand Total FTEs 30.4 81.0 82.5 78.4 65.2 337.4

* The farm bill directed work to be done on Specialty Crops and Civil Rights but funds were not given from the farm bill. NASS used resources 

from the Census of Agriculture to summarize data needed for the survey and report. This data is considered a special tabulation of the Census, a service provided under Census of Agriculture authority. 

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9. Eligibility Criteria 

a. 2008 Organic Production Survey: USDA-certified organic producers; Producers exempt from USDA certification; Producers transitioning to organic identified from the 2007 Census of Agriculture and updated for newly certified, exempt, and transitioning farms.

b. Cash Rents: The population for the Cash Rents Survey is the USDA–NASS 

farm population. It includes ‘‘all operations that sold or have the potential to 

sell at least $1,000 worth of agricultural products during the year.’’ A sample 

of farmers/ranchers is surveyed that have or could have a cash rental agreement.

c. Prices Survey: All entities that purchase grains, oilseeds, pulse crops, peanuts, or cotton directly from farmers are eligible to be surveyed, and represent 

the population. All sampled units are visited each year to go over all procedures 

and detailed reporting instructions to ensure that the data is accurate and complete.

d. Specialty Crops Survey: A specialty crop is defined by Section 3 of the Specialty Crops Competitiveness Act of 2004 (7 U.S.C. 1621 note; Public Law 108–

465) as fruits and vegetables, tree nuts, dried fruits, and nursery crops (including floriculture). Maple syrup is included because some USDA agencies consider 

it a specialty crop. Data are provided that include and exclude maple syrup to 

accommodate either definition.

e. Civil Rights Report: The population for the Civil Rights Report is the USDA–

NASS farm population. It includes ‘‘all operations that sold or have the potential to sell at least $1,000 worth of agricultural products during the year.’’

10. Utilization (Participation) Data 

a. 2008 Organic Production Survey: The final mail list included 28,938 farms 

that met the criteria of which 14,540 farms were USDA certified or exempt.

b. Cash Rents: NASS sampled approximately 220,000 producers and strives to 

get 80% percent response rate.

c. Prices Survey: NASS strives to achieve an 80% response rate for operations 

surveyed each month.

d. Specialty Crops Survey: The number of farms producing specialty crops totals 

247,772.

e. Civil Rights Report: NASS used already collected data from the Census of Agriculture. The Census form was mailed to approximately 3.1 million potential 

farm operations. The 2007 Census of Agriculture counted 2.2 million farming 

operations. USDA program agencies will load application and participation data 

for their programs. The application and participation rates and data will then 

be available to the general public. 

11. Duplication or Overlap with Other Programs 

a. 2008 Organic Production Survey: No duplication. These data were collected 

from the organic producers themselves and not from certifying entities as is 

published from other agencies.

b. Cash Rents: No duplication. This is the only source of information on farm 

level cash rent rates for all qualifying counties in the United States.

c. Prices Survey: No duplication. This data series is the only available source 

of prices received by farmers available for the U.S.

d. Specialty Crops Survey: No duplication.

e. Civil Rights Report: No duplication. This is the only source of information for 

participation and application rate data. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE—ECONOMIC

RESEARCH SERVICE

1. Program Name 

Economic Research Service (ERS). 

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2. Subprograms/Department Initiatives 

Economic Research and Analysis. 

3. Brief History 

The Economic Research Service (ERS) was established in 1961 from components 

of the former Bureau of Agricultural Economics principally under the authority of 

the Agricultural Marketing Act of 1946 (7 U.S.C. 1621–1627). 

4. Purpose/Goals 

The mission of ERS is to inform and enhance public and private decision making 

on economic and policy issues related to agriculture, food, the environment, and 

rural development. 

ERS has six strategic goals which correspond to each of the four USDA strategic 

goals. To achieve these goals, ERS enhances the understanding of policy makers, 

regulators, program managers, and those shaping debate of economic issues affecting agriculture, food, the environment, and rural development. Activities to support 

ERS’ mission and goals involve research and development of economic and statistical indicators on a broad range of topics, including but not limited to global agricultural market conditions, trade restrictions, agribusiness concentration, farm and 

retail food prices, foodborne illnesses, food labeling, nutrition, food assistance programs, agrichemical usage, livestock waste management, conservation, agricultural 

productivity, technology transfer, and rural employment. Research results and economic indicators on such important agricultural, food, natural resource, and rural 

issues are fully disseminated to public and private decision makers through published and electronic reports and articles; special staff analyses, briefings, presentations, and papers; databases; and individual contacts. 

5. Success in Meeting Programmatic Purpose/Goals 

The long-term performance goal for the Economic Research Service is the successful execution of the ERS program of economic research and analysis to provide policy makers, regulators, program managers, and those shaping the public debate on 

agricultural economic issues with timely, relevant, and high quality economic research, analysis, and data to enhance their understanding of economic issues affecting food and agriculture. The key outcome of the ERS program is informed public 

and private decision-making on economic and policy issues related to agriculture, 

food, the environment, and rural development. 

Central to effective ERS performance is successful completion of planned research 

that enhances understanding by policy makers, regulators, program managers, and 

those shaping the public debate of economic issues related to enhancing economic 

opportunities for agricultural producers. ERS research and management practices 

use many methods to ensure that the direction of agency research activities reflects 

current and anticipated needs of ERS stakeholders and customers, that research 

and analysis produced by the agency adheres to disciplinary standards to ensure the 

highest possible quality, and that the agency’s research products are delivered in 

a way that is accessible to customers. 

ERS interacts with stakeholders and customers in many ways to ensure that the 

research agenda focuses on topics relevant to public and private decision makers. 

ERS regularly convenes workshops, stakeholder sessions, or other meetings in 

which the results of recent agency research are discussed, upcoming policy issues 

are identified, and questions for future research are explored. 

ERS strategic planning activities include reviews of progress in meeting program 

plans and implementing revisions as necessary. ERS strategic planning includes discussions with customers and stakeholders on prospective research projects to meet 

anticipated needs of policy officials. Stakeholder conferences are used to help set priorities for ERS extramural funding programs. ERS management regularly discusses 

implementation of research activities with key customers and stakeholders including 

USDA Agencies, other Federal departments, Congressional staff and members, and 

private sector partners to ensure continued and improved agency effectiveness. Suggestions and ideas from our key customers informs our program planning process 

to ensure that ERS continues to provide the information, data, market outlook and 

analysis needed to inform decision making on economic issues related to food, agriculture, and rural America. 

ERS uses independent expert review panels that evaluate the effectiveness of the 

ERS program of economic research and analysis to enable better informed decisions 

on food and agricultural policy issues. Over the past 6 years, review panels have 

assessed major segments of the ERS program. In each review, the external panels 

assess the relevance, quality, and performance of program plans, activities, and accomplishments. This assessment includes an evaluation using a quantitative analVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00948 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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ysis tool to rate portfolio effectiveness on a multi-category scale (excellent, adequate, 

needs improvement). The panel recommendations are used in agency strategic planning and priority setting. All past reviews have rated ERS performance as ‘‘Excellent.’’

6. Annual Budget Authority (FY 2002–FY 2011) ($000) 

FY 2002: $67,154

FY 2003: $68,674

FY 2004: $70,981

FY 2005: $74,170

FY 2006: $75,172

FY 2007: $75,193

FY 2008: $77,397

FY 2009: $79,500

FY 2010: $82,478

FY 2011: $81,814

7. Annual Outlays (FY 2002–FY 2011) ($000) 

FY 2002: $69,892

FY 2003: $70,262

FY 2004: $65,543

FY 2005: $72,847

FY 2006: $72,778

FY 2007: $72,760

FY 2008: $77,707

FY 2009: $79,719

FY 2010: $67,927

FY 2011: $82,000 (est.)

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8. Annual Delivery Cost (FY 2007–FY 2011) ($000) 

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Salaries and Expenses $34,157 $32,945 $39,621 $39,675 $40,781 $42,311 $45,080 $48,897 $52,361 $52,400Data Acquisition $4,000 $6,500 $6,950 $10,450 $10,027 $10,250 $13,116 $16,407 $16,095 $16,199Contracts, Agreements, 

and Grants $12,859 $11,732 $5,130 $5,899 $6,899 $5,240 $8,750 $8,223 $9,050 $8,634Direct costs $492 $270 $283 $480 $2,176 $1,757 $1,200 $1,200

Indirect Costs * $16,029 $17,243 $18,637 $17,743 $17,015 $16,335 $7,908 $3,606 $3,037 $3,381

Total Cost $67,045 $68,420 $70,830 $74,037 $75,005 $74,616 $77,030 $78,890 $81,743 $81,814Total FTEs 479 462 439 427 400 376 386 388 400 400

* Variances in Indirect Costs throughout the years are attributed to differences in charging data acquisition, contracts, and agreements to 

the budget object class for categories included in Indirect costs. 

939

9. Eligibility Criteria 

N/A. 

10. Utilization (Participation) Data 

N/A. 

11. Duplication or Overlap with Other Programs 

The four REE agencies are complementary and have distinct missions. The National Agriculture Statistics Service (NASS) conducts basic statistically valid surveys to create a body of data that reflects on-the-ground factual information. ERS 

constructs data series, using data from a variety of sources, to inform its program 

of research and market analysis. Data collected by NASS are used by ERS for its 

farm income estimates and research, and in the ERS program of market outlook and 

analysis. Other data and research in ERS, such as the food security statistics, rely 

on survey agreements with other Federal agencies such as the Census bureau. ERS 

provides data, research and analysis that support the wide range of program and 

policy issues of importance to USDA. ERS data, information and analysis meet the 

information needs of USDA policy makers and programs, and are used by the 

media, trade associations, public interest groups, and the general public. Findings 

are useful to inform policymakers and for continuously improving the quality of the 

market information that guides production decisions and risk management. 

ERS provides social science research and analysis to complement the other scientific expertise of the REE agencies in multidisciplinary research. ERS collaborates 

with ARS in carrying out research to address the needs of U.S. agriculture, including research and data development to support rural prosperity, agricultural productivity, global food security, food safety, and better diets. ERS coordinates with NIFA 

regarding extramural funding priorities and identifying promising new areas for research. 

ERS is the primary source of statistical indicators that, among other things, 

gauge the health of the farm sector (including farm income estimates and projections), assess the current and expected performance of the agricultural sector (including trade), and provide measures of food insecurity here and abroad. ERS is one 

of the 14 OMB officially-designated Federal statistical agencies. 

ERS collaborates with the staff of the Office of the Chief Economist and staff 

economists in USDA program agencies to provide data, research findings, and market analysis and outlook to support Departmental decision making on program implementation and development. 

12. Waste, Fraud and Abuse 

No such instances have to date been identified. 

13. Effect of Administrative PAYGO 

None. 

(941)

AGRICULTURAL PROGRAM AUDIT 

(EXAMINATION OF USDA DAIRY PROGRAMS) 

THURSDAY, SEPTEMBER 8, 2011

SUBCOMMITTEE ON LIVESTOCK, DAIRY, AND POULTRY, 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON AGRICULTURE, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 2:15 p.m., in Room 

1300, Longworth House Office Building, Hon. Thomas J. Rooney 

[Chairman of the Subcommittee] presiding. 

Members present: Representatives Rooney, Goodlatte, 

Neugebauer, Conaway, Huelskamp, DesJarlais, Gibson, Ribble, 

Cardoza, Scott, Courtney, Boswell, Owens, Peterson (ex officio), 

Costa, and Welch. 

Staff present: John Goldberg, Debbie Smith, Lauren Sturgeon, 

Suzanne Watson, Michelle Weber, John Konya, Nathaniel B. Fretz, 

Mary Knigge, and Jamie Mitchell. 

OPENING STATEMENT OF HON. THOMAS J. ROONEY, A 

REPRESENTATIVE IN CONGRESS FROM FLORIDA 

The CHAIRMAN. This hearing of the Subcommittee on Livestock, 

Dairy, and Poultry for the purpose of conducting an agricultural 

program audit; an examination of USDA dairy programs will come 

to order. 

I would like to welcome y’all to today’s hearing to review the current dairy programs. I would like to begin by thanking Ranking 

Member Cardoza for his help in preparing for today’s hearing. I 

would also like to welcome our witnesses and extend our gratitude 

for you making the effort to be here and to share your time and 

expertise with our Subcommittee. 

This hearing is the tenth in a series of audits of USDA farm programs. Through these discussions, we hope to gain a better understanding of how each program is operating and what we might do 

to improve farm policy, moving forward. Our witnesses today will 

share their knowledge and expertise in administering Federal dairy 

programs. 

The events of 2009 exposed what many have long held to be an 

inadequacy of some of our current dairy programs. While some observers may argue that additional funding may improve the overall 

effectiveness of our dairy safety net, our current budgetary outlook 

makes this option a nonstarter. Innovative and effective ideas are 

needed in order to ensure that our programs support our producers, facilitate product and market development, and continue to 

942

ensure the availability of safe, abundant, and affordable products 

for our consumers. 

Our witnesses will provide the Subcommittee with detailed information on existing programs, testifying to their current conditions, 

productivity, and possible public policy challenges. In this hearing, 

we hope to gain some perspective about the issues we should focus 

on in greater detail later in this Congress. 

I appreciate my colleagues’ attendance and interest in this hearing and encourage suggestions and recommendations as we move 

forward with our Subcommittee’s agenda. 

[The prepared statement of Mr. Rooney follows:]

PREPARED STATEMENT OF HON. THOMAS J. ROONEY, A REPRESENTATIVE IN

CONGRESS FROM FLORIDA

Good afternoon, and welcome to today’s hearing to review current dairy programs. 

I would like to begin by thanking Ranking Member Cardoza for his help in preparing for today’s hearing. I would also like to welcome our witnesses and extend 

our gratitude for making the effort to be here and to share their time and expertise 

with our Subcommittee. 

This hearing is the tenth is a series of audits of USDA farm programs. Through 

these discussions we hope to gain a better understanding of how each program is 

operating and what we might do to improve farm policy, moving forward. Our witnesses today will share their knowledge and expertise in administering Federal 

dairy programs. 

The events of 2009 exposed what many have long-held to be an inadequacy of 

some of our current dairy programs. While some observers may argue that additional funding may improve the overall effectiveness of our dairy safety net, our current budgetary outlook makes this option a non-starter. Innovative and effective 

ideas are needed in order to ensure that our programs support our producers, facilitate product and market development, and continue to ensure the availability of 

safe, abundant and affordable products for our consumers. 

Our witnesses will provide the Subcommittee with detailed information on existing programs, testifying to their current conditions, productivity, and possible public 

policy challenges. In this hearing we hope to gain some perspective about the issues 

we should focus on in greater detail later in this Congress. 

I appreciate my colleagues’ attendance and interest in this hearing and encourage 

suggestions and recommendations as we move forward with our Subcommittee’s 

agenda.

The CHAIRMAN. With that, I would like to recognize the Ranking 

Member, Representative Cardoza. 

OPENING STATEMENT OF HON. DENNIS A. CARDOZA, A 

REPRESENTATIVE IN CONGRESS FROM CALIFORNIA 

Mr. CARDOZA. Thank you, Mr. Chairman. 

I very much appreciate your friendship and your organizational 

ability putting this hearing together. I want to also thank our witnesses for being with us today. This is a vital hearing with regard 

to our dairy programs at USDA. 

The dairy industry has always faced a rocky road, but the past 

few years have been particularly challenging. In California, we 

produce 21 percent of the country’s milk supply, producing some of 

the highest amounts of cheese, milk, butter, yogurt, nonfat dry 

milk than anywhere else in the country. 

Alone, the dairy industry produces $4.5 billion in annual sales 

and generates $63 billion in economic activity. This equates to over 

443,000 jobs for our country; therefore, it is vital that USDA implement programs that keep the industry strong and are equitably 

distributed throughout the country in order to keep dairymen and 

943

women producing wholesome products that we all enjoy and so that 

parents can provide their children with the best available nutrition. 

It is also essential that this Congress enact dairy policy reforms 

that lift up the industry and lay the foundation for the future of 

dairy production. As a country and as a Committee, we need to ensure that we lay the long-term foundation for a strong industry so 

that we can continue to produce milk and other dairy products at 

home and not rely on imports from other countries. Producing our 

own food is vital to our national security. It is imperative that we 

protect our domestic food production industry, especially the dairy 

industry. 

I look forward to hearing from our witnesses today and thank 

them all for being here. We will use this information to craft dairy 

policies, moving forward, and I appreciate your input. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Cardoza follows:]

PREPARED STATEMENT OF HON. DENNIS A. CARDOZA, A REPRESENTATIVE IN

CONGRESS FROM CALIFORNIA

Thank you, Mr. Chairman, and thank you to our witnesses for sharing with us 

today the status of the dairy programs at USDA. 

The dairy industry has always faced a rocky road, but the past few years have 

been particularly challenging. 

In California, we produce 21% of the country’s milk supply, producing some of the 

highest amounts of cheese, milk, butter, yogurt, and nonfat dry milk in the country. 

Alone, the dairy industry produced $4.5 billion in annual sales and generated $63 

billion in economic activity. This equates to over 443,000 jobs. 

Therefore, it is vital that USDA implement programs that keep the industry 

strong and are equitably distributed throughout the country, to keep dairymen and 

women producing the wholesome products that we all enjoy, and so that parents can 

provide their children with the best available nutrition. 

It is also essential that this Congress enact dairy policy reforms that lift up the 

industry and lay a foundation for the future of dairy production. 

As a country and as a Committee, we need to ensure that we lay the long-term 

foundation for a strong industry so that we can continue to produce milk and other 

dairy products at home—and not rely on imports from other countries. 

Producing our own food is vital to our national security. It is imperative that we 

protect our domestic food production industry, including dairy. 

I look forward to hearing from our witnesses today and thank them for being 

here. We’ll use this information to craft dairy policies, moving forward, and I appreciate your input. Thank you.

The CHAIRMAN. Thank you, Mr. Cardoza. 

The chair would request that other Members submit their opening statements for the record so that the witnesses may be able to 

begin their testimony and ensure that there is ample time for questions. 

[The prepared statements of Mr. Peterson and Mr. Baca follow:]

PREPARED STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE IN

CONGRESS FROM MINNESOTA

Good afternoon. Thank you Chairman Rooney and Ranking Member Cardoza for 

continuing the Agriculture Committee’s farm bill audit hearings. 

We have known for some time now that our current dairy programs are not working. They are not keeping pace with the challenges facing today’s dairy industry. 

I worry that if we have another situation like we had in 2009 we could easily lose 

half our nation’s dairies. Unfortunately, the current environment in the dairy sector 

is becoming very similar to what we saw leading up to the 2009 collapse. This is 

why I believe we need to address dairy programs sooner than later. 

944

I’ve put forward a draft dairy reform proposal that I hope to introduce in the coming weeks. We can discuss the proposal more at another time but I do believe that 

we’re on the right track to reaching a solution. 

It is also important to note that whatever this Committee decides to do, with 

dairy programs specifically or the farm bill as a whole, we will have to make some 

tough choices to reduce spending. 

Again, I thank the chair for holding today’s hearing and look forward to hearing 

from our witnesses. 

PREPARED STATEMENT OF HON. JOE BACA, A REPRESENTATIVE IN CONGRESS FROM

CALIFORNIA

Chairman Rooney and Ranking Member Cardoza:

I am pleased to be here today to review the current state of dairy programs at 

USDA—and to discuss what steps, if any, the Federal Government should take to 

stabilize the dairy market in the 2012 Farm Bill. 

I thank the Chairman and Ranking Member for convening this hearing and hope 

we will be able to gain valuable insight into this critical issue. 

I also want to thank our witnesses for coming here today—and taking time from 

their schedule to help us in Congress better understand current dairy policy. 

Everyone in this room understands the important work America’s dairy farmers 

do, and the vital need to keep the dairy industry healthy and prosperous. 

When agricultural markets fluctuate, there is a direct and significant impact on 

our nation’s food supply—and thus the health and nutrition of virtually every American. 

In my own Congressional District in the Inland Empire of California—dairy is a 

significant agricultural and economic product. 

We all know the dairy industry has been hit harder than most by the recent economic downturn. We also know that our dairy farmers continue to see higher levels 

of production costs. 

As Members of the Subcommittee on Livestock, Dairy, and Poultry, it is vitally 

important that we review the current efficiency and effectiveness of dairy programs. 

America’s dairy industry must remain strong and secure. 

We must be willing to work together on this issue. The USDA, industry groups, 

the Federal and state governments all play an important role in stabilizing our markets. 

I look forward to hearing from our witnesses today and again thank the Chairman 

and Ranking Member for their leadership. 

Thank you.

The CHAIRMAN. I would like to welcome our panel of witnesses 

to the table: Mr. Juan Garcia, Acting Deputy Administrator for 

Farm Programs, Farm Service Agency, U.S. Department of Agriculture, accompanied by Dr. Larry Salathe, Senior Economist, Office of the Chief Economist, USDA; and Ms. Dana Coale, Deputy 

Administrator for Dairy Programs, Agricultural Marketing Service, 

U.S. Department of Agriculture, Washington, D.C. 

Mr. Garcia, please begin when you are ready. 

STATEMENT OF JUAN M. GARCIA, ACTING DEPUTY

ADMINISTRATOR FOR FARM PROGRAMS, FARM SERVICE 

AGENCY, U.S. DEPARTMENT OF AGRICULTURE,

WASHINGTON, D.C.; ACCOMPANIED BY LARRY SALATHE, 

PH.D., SENIOR ECONOMIST, OFFICE OF THE CHIEF

ECONOMIST, USDA 

Mr. GARCIA. Thank you, Mr. Chairman. 

Mr. Chairman, Ranking Member Cardoza, and Members of the 

Subcommittee, thank you for the opportunity to discuss the dairy 

provisions associated with the 2008 Farm Bill. Today, I will review 

dairy programs of the Farm Service Agency, Foreign Agricultural 

Service and Risk Management Agency. I will also briefly mention 

945

some important dairy assistance programs authorized outside the 

farm bill. 

Dairy production in the United States is marked by significant 

volatility and low market predictability. Our dairy producers are 

the most productive in the world, but their livelihood comes with 

a great deal of uncertainty regarding prices and input costs. Given 

the roller coaster cycle of the dairy market, market downturns can 

have very significant impacts very quickly. We saw this unfold in 

2009 with the last dramatic and rapid decline in dairy prices. The 

global economic recession, the melamine scare in China, and increases in the value of the dollar lowered the demand for U.S. 

dairy products in world markets, while grain prices kept feed costs 

relatively high. As you know, this puts tremendous pressure on 

U.S. dairy producers. 

Since 2009, Secretary Vilsack has exercised every authority at 

hand to provide as much relief as possible to dairy producers under 

a variety of programs. Today, I would like to mention those programs briefly. Since April 2009, FSA has provided more than $900 million for 

producers under the Milk Income Loss Contract Program, which 

makes payments when market prices are low relative to a level 

fixed in statute. Most of those payments went out at the height of 

the crisis in 2009. 

We are also working hard to be sure credit is available for dairy 

producers, in particular during market downturns when commercial credit is hard to come by. 

In March 2009, FSA authorized the release of MILC sales proceeds for essential family living and farm operating expenses and 

notified borrowers of a wide variety of additional loan servicing options. 

Stable markets are crucial to a healthy dairy industry. The Commodity Credit Corporation stands ready to buy certain dairy products at support levels under the Dairy Product Price Support Program. By doing so, the Dairy Product Price Support Program helps 

support market prices. The acquired products are largely used to 

provide assistance to needy families, both in the U.S. and overseas. 

The Foreign Agricultural Service, in turn, operates a Dairy Export Incentive Program, which provides a bonus on a bid basis to 

exporters of dairy products to bridge the gap between world market 

prices and U.S. domestic prices. Since 2002, world dairy prices 

have warranted issuing allocations under the program five times. 

In addition to these authorities under the farm bill, USDA has 

also expedited emergency non-farm bill aid to producers. The Fiscal 

Year 2010 Agricultural Appropriations Act authorized $290 million 

in additional direct payments to dairy producers under the Dairy 

Economic Loss Program, as well as $60 million for the purchase of 

cheese and other products. The $290 million was paid in near 

record time, with payments beginning within 60 days of legislative 

passage. We are particularly proud that these important payments 

were made so quickly to the greatest possible benefit during a time 

of crisis for U.S. dairies. 

Finally, insurance makes up an important part of the safety net 

for dairy producers. There are two basic insurance models used to 

provide livestock insurance: the Livestock Risk Protection and 

946

Livestock Gross Margin. The Livestock Risk Protection provides 

protection against unexpected declines in the price of certain livestock, while the Livestock Gross Margin provides protection against 

unexpected declines in the gross margin of the insured livestock 

product for certain livestock, which includes milk. 

Mr. Chairman and Members of the Subcommittee, Secretary 

Vilsack and all of us at USDA recognize that volatility and market 

uncertainty affect all producers to a certain extent. Market fluctuations can be particularly dramatic in the dairy industry, and we 

have been very diligent in exercising a broad range of program authority to help dairy producers across America. We look forward to 

continuing our work with Congress on this important issue, providing information or technical assistance wherever we can. 

Mr. Chairman, this concludes my remarks and I would be happy 

to answer any questions you may have. Thank you very much. 

[The prepared statement of Mr. Garcia follows:]

PREPARED STATEMENT OF JUAN M. GARCIA, ACTING DEPUTY ADMINISTRATOR FOR

FARM PROGRAMS, FARM SERVICE AGENCY, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Mr. Chairman, Ranking Member, and Members of the Subcommittee, thank you 

for the opportunity to discuss the dairy provisions associated with the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill). I will be covering not only the 

programs associated with the Farm Service Agency (FSA), but also those associated 

with the Foreign Agricultural Service (FAS) and the Risk Management Agency 

(RMA). The programs of these agencies provide the backbone of the farm safety net 

for dairy producers. This hearing provides an opportunity to reflect on the performance of these programs under the 2008 Farm Bill, while thinking ahead to the upcoming farm bill debate. 

The dairy market situation has been extremely volatile in recent years, which has 

greatly affected FSA programs, in particular. I will start my discussion with those 

programs, intertwining information on the dairy market situation to highlight our 

response to the very weak economic climate faced by dairy producers in 2009. 

Farm Service Agency Programs and the Dairy Crisis 

Several events converged in early 2009 that caused a dramatic and rapid decline 

in dairy prices, which averaged $12.93 per hundredweight (cwt.) for the calendar 

year, the lowest level since 2003. The global economic recession, the melamine scare 

in China, and increases in the value of the dollar lowered the demand for U.S. dairy 

products in world markets. In addition, more normal weather returned to the grassfed dairy industry in New Zealand and Australia, which had been plagued by 

drought in the preceding years. And, at home, the economic crisis weakened the demand for dairy products. 

Meanwhile, feed costs remained relatively high in 2009, causing the ratio between 

milk and feed prices to fall to its lowest level in more than 25 years. Financial pressure led producers to cull additional dairy cows and reduce milk production. The 

number of milk cows dropped from 9.31 million head in January 2009 to 9.08 million head in December 2009. In 2009, milk production declined by 0.3 percent, the 

first year-over-year decline since 2001. 

Since April 2009, FSA has paid dairy producers more than $900 million under the 

Milk Income Loss Contract (MILC) program, which makes payments when market 

prices are low relative to a level fixed in statute. The 2008 Farm Bill kept the same 

basic countercyclical price structure for the MILC program as in the 2002 Farm Bill, 

but also included a ‘‘feed cost adjuster,’’ which increases the size of the payment depending on ration costs. 

Most of these MILC payments occurred in calendar year 2009, although a payment of about $15 million was made for April production in early June, 2010. Since 

enactment of the 2008 Farm Bill, MILC payments have been made during 11 

months; the feed cost adjuster had an impact on the payment in 5 of those months. 

The dairy crisis also affected producers’ ability to receive financing from commercial sources. In March 2009, FSA issued guidance on assisting dairy producers with 

their credit needs. This notice announced that FSA Farm Loan Programs (FLP) was 

authorizing the release of milk sales proceeds for essential family living and farm 

947

operating expenses and notified FLP borrowers of servicing options that could be 

considered by FSA on a case-by-case basis, including extending repayment terms for 

annual operating loans for dairy farmers, rescheduling, consolidation, reamortization, and deferral for 1 to 5 years. We also contacted guaranteed lenders to discuss 

FSA policies for dairy loans and remind them of loan servicing options available 

under the Guaranteed Loan Program that could be considered for certain producers. 

USDA also expedited emergency non-farm bill aid to producers during the dairy 

crisis. The Fiscal Year 2010 Agriculture Appropriations Act authorized $290 million 

in additional direct payments to dairy producers, as well as $60 million for the purchase of cheese and other products. The $290 million was paid in near-record time—

with payments beginning within 60 days of legislative passage. Under the Dairy 

Economic Loss Assistance Program, eligible farmers received a one-time direct payment based on the amount of milk both produced and commercially marketed by 

their operations during the months of February through July 2009. A 100 cow dairy 

farm received payments of roughly $6,000; a 200 cow dairy, about $12,000; and operations of 400 cows or more, roughly $19,000. (Note that payments did not increase 

proportionately for large operations because of the application of a 6 million pound 

production eligibility limitation.) 

In addition, the Commodity Credit Corporation (CCC) stands ready to buy certain 

dairy products at support levels under the Dairy Product Price Support Program 

(DPPSP). By doing so, the DPPSP helps support market prices. The acquired products are largely used to provide assistance to needy families, both in the U.S. and 

overseas. In total since October 2008, CCC has purchased nearly 270 million pounds 

of nonfat dry milk (NDM) under the DPPSP at a cost of $227 million. Expenditures 

for purchases, handling, transportation, and storage were an additional $16 million, 

bringing total program expenditures to $243 million. No purchases have occurred 

since July 2009. Also during this time period, CCC purchased about 4.6 million 

pounds of butter, much of it during late 2008 and the first half of 2009. The Secretary announced in March 2009 that about 200 million pounds of NDM would be 

processed or bartered into value-added products, such as instantized nonfat dry 

milk, ultra high temperature milk, cheese, and ready-to-eat milk-based soups for the 

National School Lunch Program and the Emergency Food Assistance Program. 

USDA also temporarily increased DPPSP purchase prices for cheddar blocks, cheddar barrels, and NDM during August–October 2009. 

With the mid-point of the all-milk price forecast to average a record of $20.40 per 

cwt. in calendar year 2011, no MILC payments are expected during the remainder 

of the year, nor are purchases under the DPPSP expected. While high feed costs are 

putting financial pressure on dairy producers, milk prices are at high enough levels 

that MILC payments will not be triggered in the foreseeable future. Indeed, no payments have been made under MILC for milk produced since April 2010. 

The current strong prices are in part due to strong world dairy markets, which 

are supporting higher U.S. exports and lower U.S. imports. Compared to the same 

period a year ago, March through May exports of U.S. dairy products were 36.4 percent higher for cheese, 65.7 percent higher for butter and 13.7 percent higher for 

nonfat dry milk. 

Dairy Export Incentive Program 

The Dairy Export Incentive Program (DEIP) was authorized under the Food Security Act of 1985 and most recently reauthorized in the 2008 Farm Bill. This program, administered by the Foreign Agricultural Service, provides a bonus or subsidy 

on a bid basis to exporters of dairy products. By providing a subsidy on exports of 

dairy products, Congress intended DEIP to bridge the gap between world market 

prices and U.S. domestic prices. Commodities eligible under DEIP are milk powder, 

NDM, butterfat, and various cheeses. 

The authorizing legislation for DEIP provides that the subsidy may be paid in 

cash or in commodities held by the CCC. As CCC inventories diminished, DEIP 

evolved into the sole use of cash payments for the subsidy. DEIP is subject to U.S. 

export subsidy reduction commitments under the World Trade Organization’s Uruguay Round Agreements, and is therefore capped annually by both subsidy value 

and quantity in accordance with those commitments. DEIP has helped to meet the 

needs of U.S. exporters and expand markets for U.S. dairy products when world 

prices are depressed due to the application of subsidies by other nations, particularly the European Union. Agricultural economists at FAS continuously monitor the 

world dairy situation and have the responsibility for recommending issuing allocations under DEIP as world dairy prices dictate. 

Since 2002, world dairy prices have warranted issuing allocations under DEIP five 

times. DEIP bonuses were last awarded in Fiscal Year 2010 in an amount of $2.37 

948

million, including for sales of mozzarella cheese to China and butter to Saudi Arabia. 

Livestock Gross Margin-Dairy (LGM-Dairy) Program 

While not contained in the farm bill, insurance is an important part of the safety 

net for dairy producers. The Agricultural Risk Protection Act of 2000 amended the 

Federal Crop Insurance Act (FCIA), providing authority to RMA to offer insurance 

for livestock products. It also provided $20 million in funding to cover administrative and operating and premium subsidy costs for pilot livestock insurance plans 

each fiscal year. RMA currently reinsures eight livestock products, all of which were 

developed and submitted by private parties through authorities contained in section 

508(h) of the FCIA. There are two basic insurance models used to provide livestock 

insurance—Livestock Risk Protection (LRP) and Livestock Gross Margin (LGM). 

LRP provides protection against unexpected declines in the price of feeder cattle, fed 

cattle, lamb, and swine. LGM provides protection against unexpected declines in the 

gross margin (difference between the price received and feed costs) of the insured 

livestock product for cattle, dairy (milk), and swine. 

The LGM-Dairy insurance product provides protection to dairy producers when 

the gross margin declines. LGM-Dairy uses futures prices for corn, soybean meal, 

and milk to determine the expected gross margin and the actual gross margin. LGM 

Dairy is a private sector pilot program owned and maintained by Iowa Agricultural 

Insurance Innovations, LLC (IAII). RMA works actively with this entity, and is 

aware that IAII continues to evaluate areas for potential improvement to make the 

product more effective and attractive for dairy farmers. 

Prior to Fiscal Year 2011, total annual expenditures on all livestock insurance 

products had never exceeded $5 million. For Fiscal Year 2011, about $345,523 had 

been spent to support all livestock products through mid-December, 2010, with 

LGM-Dairy accounting for $66,117 of the total. In response to dairy producer concerns, the Federal Crop Insurance Corporation (FCIC) Board of Directors approved 

changes to LGM-Dairy, which became effective in December 2010, including a shift 

in the premium due date to after the end of the insurance period and the addition 

of graduated producer premium subsidies. These changes, along with promotional 

efforts led by industry groups, resulted in a dramatic and immediate increase in 

sales. For the December 17, 2010 sales period, LGM-Dairy sales increased by almost 

$1.4 million, compared to less than $70,000 during all sales periods dating back to 

the beginning of the fiscal year. 

Subsequently, RMA revised the funding allocation for LGM-Dairy and added an 

additional $5 million to underwriting capacity, using funds from other livestock 

products that, to date, had limited sales. Because of continued strong sales of LGMDairy, further revisions to the funding allocation occurred, and $16 million were 

eventually allocated to LGM-Dairy and $4 million to the other seven livestock insurance plans. The $16 million in underwriting capacity ran out during the sales period 

in March 2011 and LGM Dairy sales for the remainder of Fiscal Year 2011 ceased 

at that time. 

As of August 8, 2011, less than $600,000 of funding remained for the other livestock insurance products for the remainder of fiscal 2011. As funding is depleted for 

each insurance product, sales will cease for that product until funds become available again beginning with the 2012 Fiscal Year. 

Dairy Industry Advisory Committee 

In response to the dairy crisis, USDA announced in August 2009 that nominations 

would be accepted to form a Dairy Industry Advisory Committee. The Secretary of 

Agriculture appointed 17 representatives from the dairy industry to serve in an advisory capacity, including producers and producer organizations, processors and 

processor organizations, handlers, consumers, academia, retailers, and others. The 

Committee’s charge was ‘‘to review the issues of: (1) farm milk price volatility and 

(2) dairy farmer profitability.’’ USDA very much appreciates the work of this Committee, which submitted its final report to the Secretary in March 2011. 

This final report includes 23 wide-ranging recommendations. USDA is currently 

reviewing other recommendations and considering action as appropriate. We look 

forward to working with Congress to develop policies that provide the most efficient 

and cost-effective protection to the dairy sector. 

Working Toward the Next Farm Bill 

Mr. Chairman, as we move forward toward development of the next farm bill, it 

is important that we approach this new legislation with an eye toward truly making 

a difference in the future of the lives of millions of rural Americans, while at the 

same time using scare resources wisely. In the coming months, I look forward to 

949

providing answers to your questions and helping to better frame and push the debate toward the topics and issues that are most important to our constituents. 

I am happy to respond to any questions. Thank you.

The CHAIRMAN. Thank you, Mr. Garcia. 

The gentleman from California, Mr. Costa, is not a Member of 

the Subcommittee but has joined us today. I have consulted with 

the Ranking Member, and we are pleased to welcome him in the 

questioning of the witnesses. 

Now, we will move to the testimony of Ms. Coale. 

Ms. Coale, please begin when you are ready. 

STATEMENT OF DANA COALE, DEPUTY ADMINISTRATOR FOR 

DAIRY PROGRAMS, AGRICULTURAL MARKETING SERVICE, 

U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.; 

ACCOMPANIED BY LARRY SALATHE, PH.D., SENIOR

ECONOMIST, OFFICE OF THE CHIEF ECONOMIST, USDA 

Ms. COALE. Chairman Rooney, Ranking Member Cardoza and 

Members of the Subcommittee, thank you for inviting me to appear 

before you today to review the dairy programs administered by the 

Agricultural Marketing Service of the U.S. Department of Agriculture. 

I will provide you with an update on the activities authorized in 

the 2008 Farm Bill that I hope will be helpful as you examine 

dairy provisions for the 2012 Farm Bill. 

AMS dairy programs conduct several activities to facilitate the 

competitive and efficient marketing of milk and dairy products. I 

am going to focus my oral statement on the three areas specifically 

identified in the 2008 Farm Bill: Federal Milk Marketing Orders; 

Research and Promotion Programs; and Domestic and International Market News. 

The Federal Milk Marketing Order Program has been in existence since the 1930s when it was authorized by the Agricultural 

Marketing Agreement Act of 1937. Currently, there are ten Orders 

that represent nearly 65 percent of all milk marketed in the United 

States. Federal Milk Marketing Orders are designed to promote orderly marketing by classifying and computing a minimum value of 

milk that is reflective of supply and demand conditions. The Order 

program ensures that processors pay producers this minimum 

value by verifying market utilization, delivery weights and component tests. 

Through this verification process, the Federal Order program obtains and publishes extensive market information that aids producers and processors with marketing decisions. During 2010, the 

Federal Order program ensured minimum payments to nearly 

46,000 producers, totaling approximately $20.4 billion. 

Although Federal Milk Marketing Orders have been in existence 

for over 70 years, they are continually updated through the amendatory process. The 2008 Farm Bill made several changes to the 

amendatory process designed to expedite the time needed to implement changes. The new time-frames were implemented August 20, 

2008. These time-frames decrease the rulemaking process from 

over 2 years to less than 12 months from the date a hearing is 

held. USDA has held one national proceeding utilizing the new 

process and successfully met the mandated time-frame. 

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Based on the 2008 Farm Bill, AMS also established a Dairy Forward Pricing Program that allows dairy farmers to enter into forward price contracts with processors for non-fluid milk uses. The 

milk under contract is exempt from receiving minimum Federal 

Order prices. Participation in the program has been minimal, approximately 300 producers of a possible 10,000 to 15,000. Low participation rates may be attributed to perceived unfavorable price 

relationships and a limited number of processors offering forward 

contracts. 

Finally, the 2008 Farm Bill authorized the formation of a commission to review the Federal Milk Marketing Order program. 

Since this item was not funded, USDA did not appoint a commission. However, Secretary Vilsack did appoint an advisory committee that reviewed overall dairy policy, including a review of Federal Milk Marketing Orders. 

AMS also has oversight responsibility for various research and 

promotion programs. The dairy industry has the two largest such 

programs, both overseen by dairy programs, one funded by producers at 15¢ per hundredweight and one funded by processors at 

20¢ per hundredweight. The 2008 Farm Bill required expansion of 

the producer program to include a 15¢ assessment on production 

in Alaska, Hawaii, the District of Columbia, and the Commonwealth of Puerto Rico. This assessment became effective on April 

1, 2011. In addition to the expanded producer assessment, a 7.5¢ 

assessment was mandated for imported dairy products. This assessment became effective August 1, 2011. 

AMS provides a wealth of market information to dairy farmers 

through our voluntary Domestic and International Market News 

Program. The 2008 Farm Bill directed USDA to establish an electronic reporting system for price reporting of four dairy commodities: cheddar cheese, butter, dry whey, and nonfat dry milk. Since 

funding was not provided, USDA did not implement these provisions. However, the Mandatory Price Reporting Act of 2010 mandated establishment of the program. AMS issued a proposed rule 

on June 10, 2011, to implement this mandate. Seven comments 

were filed in response to the proposal. A final rule is being prepared to implement the program. In addition, software programming has begun to develop the electronic format that will accommodate the weekly reporting of these dairy commodities. 

I hope this testimony and the subsequent questions and answers 

will prove useful to the Subcommittee as you undertake your work 

on the next farm bill. Thank you. 

[The prepared statement of Ms. Coale follows]

PREPARED STATEMENT OF DANA COALE, DEPUTY ADMINISTRATOR FOR DAIRY

PROGRAMS, AGRICULTURAL MARKETING SERVICE, U.S. DEPARTMENT OF

AGRICULTURE, WASHINGTON, D.C. 

Chairman Rooney, Ranking Member Cardoza, and Members of the Subcommittee, 

thank you for inviting me to appear before you today to review the dairy programs 

administered by the U.S. Department of Agriculture (USDA) and to provide a comprehensive picture of the dairy activities authorized in the Food, Conservation, and 

Energy Act of 2008 (2008 Farm Bill). It is our hope that this examination of these 

dairy provisions will prove helpful as you begin work on the next farm bill. 

The Commodity Title (Title I) of the 2008 Farm Bill covered a wide range of dairy 

issues. USDA’s Agricultural Marketing Service (AMS) and the Farm Service Agency 

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(FSA) are the primary agencies with responsibility for implementing Title I. Mr. 

Garcia of FSA is here with me today to discuss their activities. 

The economic vitality and quality of life in rural America, as well as the U.S. 

economy at large, depend on a competitive, efficient, and productive agricultural 

system. To increase prosperity and sustainability in our nation’s agricultural system 

and rural communities, AMS conducts oversight activities to protect producers from 

unfair business practices. To assist producers in management and marketing, AMS 

develops and oversees national standards for the production and handling of agricultural products. AMS also supports producers by providing market information and 

marketing tools that serve as the eyes and ears of American agriculture to cover 

numerous commodities on a daily basis and provides information that impacts billions of dollars in agricultural trading each year. 

Federal Milk Marketing Orders 

Federal Milk Marketing Orders (FMMO) are authorized by the Agricultural Marketing Agreement Act of 1937, as amended. There are currently ten FMMO areas, 

impacting about 65 percent of all milk marketed in the U.S. These ten Orders are 

administered by eight market administrators. 

The objectives of the FMMO system are to stabilize market conditions, to benefit 

producers and consumers by establishing and maintaining orderly marketing conditions, and to assure consumers of adequate supplies of pure and wholesome milk 

at all times. The FMMO program guarantees dairy farmers a minimum price for 

their milk while assuring that consumers have an adequate supply of milk to meet 

their needs throughout the year. 

FMMOs are initiated and amended based on industry requests that are addressed 

through the formal rulemaking process. This involves hearings, briefings, recommended decisions, public comments, final decisions, farmer votes, and, ultimately, implementation by USDA. Changes in FMMOs are approved by an affirmative vote of 2⁄3 of the eligible dairy farmers. 

The 2008 Farm Bill had three provisions related to FMMOs. The first directed 

USDA to establish supplemental rules to define guidelines and time-frames to improve the timeliness of the Federal Milk Marketing Order hearing process. AMS 

published this final rule on August 20, 2008. 

Second, the 2008 Farm Bill directed AMS to establish a Dairy Forward Pricing 

Program to allow milk producers and cooperative associations to voluntarily enter 

into forward price contracts with milk handlers for milk used for non-fluid purposes. 

The program exempts handlers regulated under the Federal Milk Marketing Order 

from paying producers and cooperative associations the minimum Federal Order 

price for milk under forward contract. AMS published this final rule on October 31, 

2008. 

Third, the 2008 Farm Bill authorized the Secretary to create a Commission to 

conduct a comprehensive review and evaluation of the current Federal Milk Marketing Order system and the other non-Federal Milk Marketing Order systems such 

as California. As no funding was provided, the commission was not established. 

However, on January 6, 2010, USDA announced the selection of 17 members to the 

Dairy Industry Advisory Committee (DIAC). The activities of the DIAC will be discussed by FSA. 

Research and Promotion 

Authorized by Federal legislation, research and promotion programs, often referred to as ‘‘checkoffs’’, are designed to strengthen the position of the industry in 

the marketplace and to maintain and expand domestic and foreign markets. The 

programs are funded by industry assessments. Board members are nominated by 

the industry and appointed by the Secretary of Agriculture. AMS oversees the activities of the boards and approves their budgets in order to assure compliance with 

the legislation. 

Dairy Programs oversees two dairy promotion and research programs. The Fluid 

Milk Promotion Act of 1990, as amended (Fluid Milk Act) (7 U.S.C. 6401 et seq.), 

authorized the establishment of a national fluid milk processor promotion program 

to develop and finance generic advertising programs designed to maintain and expand markets and uses for fluid milk products produced in the contiguous 48 states 

and the District of Columbia. The Fluid Milk Order became effective December 10, 

1993. The Secretary appointed the initial National Fluid Milk Processor Promotion 

Board (Fluid Milk Board) on June 6, 1994. Processors administer the Fluid Milk 

Processor Promotion Program through the Fluid Milk Board. 

Since August 2002, processors marketing more than 3 million pounds of fluid milk 

per month, excluding those fluid milk products delivered to the residence of a consumer, fund this program through a 20¢ per hundredweight assessment on fluid 

952

milk processed and marketed in consumer-type packages in the contiguous 48 states 

and the District of Columbia. 

The second dairy promotion and research program, authorized by the Dairy Production Stabilization Act of 1983, is a national producer program for dairy product 

promotion, research, and nutrition education to increase human consumption of 

milk and dairy products. This self-help program was funded by a mandatory 15¢ 

per hundredweight assessment on all milk produced in the contiguous 48 states and 

marketed commercially by dairy farmers and administered by the National Dairy 

Promotion and Research Board (Dairy Board). 

For this National Dairy Promotion and Research program, the 2008 Farm Bill required that dairy promotion and research assessments apply to all states, the District of Columbia, the Commonwealth of Puerto Rico and dairy product importers. 

The assessment rate was set at 15¢ per hundredweight for domestic milk and 7.5¢ 

per hundredweight for imported dairy products. A final rule implementing this provision was published March 18, 2011. All provisions became effective April 1, 2011, 

except provisions regarding dairy importer assessments which were effective August 

1, 2011. 

Market News 

AMS’ Dairy Market News provides dairy farmers and their cooperatives, processors, buyers and sellers of dairy products, and others with timely and accurate 

market information on milk and dairy products that will help them in making current buying and selling decisions and in future planning. This information is released through reports issued daily, weekly, monthly and annually. These reports 

are available free of charge and the information is easily accessible. 

In collecting market information, reporters cover multiple markets that results in 

over 65 reports by constantly interviewing buyers, sellers, and brokers of fluid milk, 

cream, butter, cheese, condensed milk, and dried milk products. Currently, the industry voluntarily provides the information. 

AMS and the National Agricultural Statistics Service (NASS) also administer a 

Dairy Product Mandatory Reporting Program, which requires persons engaged in 

manufacturing dairy products to report certain information including the price, 

quantity, and moisture content where applicable, of certain dairy products sold by 

the manufacturer. The program also requires persons storing dairy products to report information on the quantity of dairy products stored. 

Currently, NASS collects information for the program and AMS provides 

verification and enforcement functions for dairy product price information. NASS 

publishes sales information for block cheddar cheese, barrel cheese, butter, dry 

whey, and nonfat dry milk on a weekly basis. Any manufacturer that markets less 

than 1 million pounds of these dairy products per year is exempt from the price reporting requirements. 

The 2008 Farm Bill directed USDA to establish an electronic reporting system for 

price reporting of these dairy commodities. As no funding was provided, AMS did 

not implement this provision. However, in September 2010, Congress passed the 

Mandatory Price Reporting Act of 2010, mandating the establishment of this electronic reporting system (again without funding) while directing AMS to publish the 

information obtained for the preceding week not later than 3:00 p.m. Eastern Time 

on Wednesday of each week, rather than on Friday. 

On June 10, 2011, USDA issued a proposed rule to implement the provisions contained in the Mandatory Price Reporting Act of 2010. Under the proposed rule, AMS 

would develop the electronic system and collect the data. The comment period closed 

August 9, 2011, and AMS is currently reviewing the seven comments received. 

Other AMS Dairy Activities 

AMS undertakes a number of other activities not referenced in the 2008 Farm Bill 

that are of great importance to the dairy industry. AMS grading services assist the 

dairy industry in marketing high-quality dairy products by providing buyers and 

sellers with an impartial appraisal of product quality and to provide the consumer 

confidence in buying. 

AMS also provides certification services to assist in the export of dairy and related 

products. These certificates are issued to eligible plants which include those dairy 

plants listed in the Interstate Milk Shippers list (IMS list), the Food and Drug Administration maintained European Union Dairy Plant Reference list (EU list), and 

Dairy Plants Surveyed and Approved for USDA Grading Service (USDA Approved 

Plant list). 

Conclusion 

AMS undertakes numerous activities to facilitate the competitive and efficient 

marketing of U.S. agricultural products. These efforts support the overall mission 

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of USDA, which is to protect and promote food, agriculture, natural resources and 

related issues. I hope that this testimony and the subsequent questions and answers 

will prove useful to the Subcommittee as you undertake your work on the next farm 

bill.

The CHAIRMAN. Thank you, Ms. Coale. 

The chair would like to remind Members that they will be recognized for questioning in order of seniority for Members who were 

here at the start of the hearing. After that, Members will be recognized in order of their arrival. I appreciate Members understanding. 

With that, I recognize the Ranking Member, Mr. Cardoza. 

Mr. CARDOZA. Thank you. 

I have questions for Mr. Garcia. 

I want to thank you for your work with USDA Industry Advisory 

Committee. The committee recommends that USDA further study 

raising minimum fluid milk nutrition standards nationwide. A 

similar FAPRI study requested by the House Dairy Farmer Caucus 

showed that such a move could return several hundred million dollars to producers in just a few years, while consumers would pay 

only about a penny more per glass for milk, with up to a third 

more calcium and protein in that milk supply. 

One thing that the committee identified as an issue not addressed in the FAPRI study was the potential startup costs to processors. Is there a way for the Department to study what those processor startup costs might be? 

Mr. GARCIA. Thank you, Mr. Cardoza. 

I may have to refer that to Ms. Coale since she has been doing 

some work with the advisory committee. 

Mr. CARDOZA. Thank you. 

Ms. Coale. 

Ms. COALE. Thank you, Mr. Cardoza. 

As you know, the advisory committee submitted to the Secretary 

23 recommendations, one of which did look at adopting the California milk solid standards. The Secretary, of those 23 proposals, 

has been reviewing them. Over half of them require new or additional funding or additional legislative authority for the Secretary 

to take action on that. 

Currently, with regards to the California milk solid standards, 

the Secretary has been reviewing this proposal and is aware of an 

industry interest in looking at the startup costs associated with 

that. At this time, it is still under review by the Department. 

Mr. CARDOZA. I would like to encourage the Department. I see 

great acceptance of the standards in California. The product is 

more nutritious, and I am a huge fan of increased standards. 

To follow up, the MILC Program is a prime example of government programs that pick between winners and losers, in my opinion. In fact, a USDA study a few years back confirmed that the 

program keeps farm milk prices lower than they would otherwise 

be. Could any of you please tell us what the total amount of money 

producers in each of the top five milk-producing states have received from MILC under the farm bill, along with the most recent 

annual milk production figure for those states? 

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Mr. GARCIA. Mr. Cardoza, I don’t have that information readily 

available, but we can provide that information as far as the top five 

states under the MILC Program. 

Mr. CARDOZA. I would very much like to have that. 

Mr. GARCIA. Yes, sir, we can provide that. 

[The information referred to is located on p. 971.] 

Mr. CARDOZA. In 2009, Congress appropriated $350 million in 

emergency funds to help dairy farmers through what was then the 

worst economic crisis in at least a generation. This crisis was 

caused by significant decline in U.S. exports due to the worldwide 

financial crisis. Some of us thought that the entire $350 million 

should have gone to the purchase of cheddar cheese to donate to 

food banks which were having trouble keeping up with record demand in this country. In the end, only $60 million went to cheese 

donations. 

Many have questioned the decision to purchase high-cost items, 

like shredded cheese, with these funds instead of the more reasonable and more widely available block cheese. Can you tell me what 

products were purchased and how quickly these donations were 

completed? 

Mr. GARCIA. I am going to have to look at that, Mr. Cardoza. I 

think I have that information. 

[The information referred to is located on p. 972.] 

Mr. CARDOZA. Please get back to me on that. I think that is a 

very important piece of information the Committee is going to need 

as we move forward not to make mistakes. As everybody knows, 

there is a shortage of dollars available to do these kinds of programs, and money is hard to come by, and we want to make sure 

that we get the most bang for the buck. 

Finally, for Ms. Coale, California producers have an extensive 

history in using a small part of their checkoff to educate consumers 

about how farmers care for their animals and the environment. 

AMS has oversight over the dairy checkoff, and I want to personally encourage you to continue to allow those activities with the intent of Congress for the dairy checkoff. 

Ms. COALE. Thank you. We will take that under advisement. 

Mr. CARDOZA. Thank you. 

Thank you, Mr. Chairman. No further questions at this time. 

The CHAIRMAN. Thank you, Mr. Cardoza. 

The gentleman from Vermont, Mr. Welch, has also joined us and 

is also not a Member of the Committee. 

I have consulted with the Ranking Member, and without objection, we are pleased to welcome him to join in the questioning of 

the witnesses. 

Mr. WELCH. Thank you very much, Mr. Chairman. 

The CHAIRMAN. With that, we will move to Mr. Conaway from 

Texas. 

Mr. CONAWAY. Thank you, Mr. Chairman. 

The existing array of programs we have available for milk from 

the 1930s; world distribution and world demand is different than 

it was then. Can you walk us through how that existing array 

helps and/or hurts the milk producers in this country be competitive with products they could otherwise produce and sell into the 

world market? 

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Dr. SALATHE. I will take that question. 

The dairy industry has changed a lot since the 1949 Act, which 

supported the price of milk at parity levels and supported milk 

prices at parity through the late 1970s, and then we had a change 

in programs because our purchases became burdensome under the 

Price Support Program. And after that, Congress lowered the purchase price—support price for milk and started instituting payment 

programs to producers to counter some of the price volatility or income volatility that they faced. 

Back in the 1970s and early 1980s, we were basically a net importer of dairy products. We also had import quotas on imports of 

dairy products, and so we were pretty well insulated from the 

international market. And as a result, if we increased our prices, 

we supported the prices to dairy producers, we didn’t provide an incentive to expand world production of dairy products. 

That has changed, of course, under the WTO Uruguay round 

agreement, our market is now pretty open to imports of dairy products. We are also now a net exporter of dairy products. We are competitive in the world price—world market. We compete every day 

for markets outside our borders, and so it is very important to have 

a dairy policy that reflects that change in the market environment 

that producers and processors face. 

Mr. CONAWAY. The line here is that we pay producers to produce 

stuff that can’t be sold in the world market, and if we were to adjust the incentives—and I am just parroting more than I understand really what is going on—this argument has been made that 

there is a disconnect between what we incent to be produced versus

what could be sold to the world market. That is what I am trying 

to get at. 

Dr. SALATHE. There has been an argument and continues to be 

an argument that the amount of nonfat dry milk we produce in this 

country has increased higher than it should because of the Price 

Support Program we have. We have a support program for nonfat 

dry milk, a Dairy Product Support Program for nonfat dry milk, 

cheddar cheese, and butter. And so there may be an incentive to 

produce more nonfat dry milk. 

I think over time that incentive probably is being reduced, other 

dairy products are being produced, value-added products, whey 

products, more protein-concentrate products are being produced in 

the U.S. 

Mr. CONAWAY. Okay. Well, I think I understand. Let’s talk a little bit about the LGM Program, Ms. Coale, and that it looks to be 

oversubscribed in terms of popularity. I think in somebody’s testimony or information we have, that we have about $20 million appropriated for support of that program. Demand looks like we are 

about $164 million a year versus the $20 million. Are those numbers anything you guys are familiar with? Is the LGM——

Dr. SALATHE. Yes. 

Mr. CONAWAY.—popular enough that we should look at expanding it? 

Dr. SALATHE. I think that is—we have a variety of tools to help 

dairy producers through difficult times. That is one of the tools we 

have right now. You are correct; it is limited in terms of budget authority at $20 million. That is all risk management products for 

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livestock, including dairy are limited by that, and that has prevented us from expanding the dairy cattle product, Livestock Gross 

Margin for dairy cattle. 

I think that is a difficult question. That is one that you are going 

to have to wrestle with. It is one of the tools in the tool bag we 

have to help dairy producers, and you have to look at all those 

tools, which ones you want to expand and which ones you want to 

reduce in terms of budget authority. 

Mr. CONAWAY. Thank you, Mr. Chairman. 

I yield back. 

The CHAIRMAN. Thank you, Mr. Conaway. 

The Committee would now like to recognize the Ranking Member 

for the full Committee on Agriculture, Mr. Peterson. 

Mr. PETERSON. Thank you, Mr. Chairman. I don’t know who 

wants to answer this, but the dairy industry now has a safety net 

that is based largely on price through the Price Support Program, 

as you mentioned, and the MILC program. As you are aware, there 

is significant discussion around moving towards a margin-type program as opposed to price. Can you talk about dairy farm margins 

in the past few years and where they are likely to head with increased feed costs, and do you believe that dairy producers would 

be better supported if we had a safety net that focused on margin 

versus price? 

Dr. SALATHE. I will attempt to the answer that, Mr. Peterson. 

Thank you for that question. It is a very good question. I wish we 

knew where margins were going. I think if you look at 2009, margins were very low compared to history. If you look at 2010, your 

average, depending on how you exactly calculate feed costs, but in 

the $8 range. Remember, it fell to an average of $4 in 2009 and 

some of the months were much lower than that. 

In 2010, we came pretty close to the average, and so far this 

year, we are pretty close to the historical average, despite the high 

feed costs, because we have had record high milk prices this year. 

Where it will go in the future is difficult to say. Obviously there 

is going to be some vulnerability. Over the long term, feed costs 

and milk prices go together, but in the very short term, milk prices 

may go down and feed costs may stay high. 

So, as we look out, it is very difficult to say, but we are going 

to have periods in which the milk margin is going to be below average, no doubt about it, because we have seen these cycles, and 

there is no doubt they are going to continue. 

Mr. PETERSON. There are some in the industry who are still asking for daily price reporting. Can you talk about how much that 

would cost for USDA to administer and if you believe daily price 

reporting for the dairy industry would provide dairy producers with 

better tools than they would have with electronic reporting? 

Ms. COALE. Certainly. We are currently in the process of implementing weekly mandatory electronic reporting. At this particular 

point in time, we do not have that program implemented yet, and 

we only have estimated costs. 

Mr. PETERSON. That is one that we asked you to do in the farm 

bill? 

Ms. COALE. Yes, that is correct. That is the one that was also 

mandated in the Mandatory Reporting Act of 2010. Currently that 

957

program, the software development costs are in the neighborhood 

of approximately $1⁄2 million. That is being taken out of the Fiscal 

Year 2011 monies that AMS reprioritized to be able to implement. 

Looking forward into 2012 as we actually implement that, we 

know that there will be costs associated with managing the program, and we are not quite certain exactly what those costs will 

be, although we are estimating them to be about in the neighborhood of $500,000 as well in 2012. 

When you look forward to daily reporting, this is an issue that 

has been raised in a rulemaking process that we are currently involved with in implementing the mandatory reporting. What I can 

tell you is that in one of the comments filed in response to that 

rulemaking, one of the reporters has indicated that daily reporting 

would be very difficult for the reporters to implement and would 

actually, instead of increasing market transparency, could in fact 

result in more misinformation being provided as the reporters 

would not be able to report accurate prices on a daily basis and 

would be submitting significant revisions to the numbers that they 

submit. 

Again, this is addressed in a comment that was filed and at this 

time the Department is reviewing. 

Mr. PETERSON. You said a price reporter? 

Ms. COALE. Yes. 

Mr. PETERSON. Who was that? 

Ms. COALE. The price reporter issuing that comment was Dairy 

America. 

Mr. PETERSON. Was that the only comment you had? 

Ms. COALE. No. We received seven comments in regards to our 

initial proposed rule. All of those comments are available for the 

public on dairy program’s website. 

Mr. PETERSON. When do you close the comment period and move 

through the process? 

Ms. COALE. Yes. The comment period on the proposed rule, which 

in essence transfers the responsibility for mandatory reporting that 

is currently held by NASS to the Agricultural Marketing Service, 

the comment period ended the beginning—first part of August. We 

are in review of those comments and preparing a final rule. The 

Mandatory Act required we implement the program within a year, 

and we are on schedule to hopefully have the program up and running in the first part of 2012. 

Mr. PETERSON. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. The chair thanks the Ranking Member. 

We will now move to Mr. Huelskamp. 

Mr. HUELSKAMP. Thank you, Mr. Chairman. 

I appreciate the opportunity to ask a few questions here, and I 

would like the general thoughts of the witnesses in reference to a 

reform proposal entitled, Foundation for the Future, and general 

thoughts of you all as far as its possible effectiveness and what it 

might do for the dairy industry, and so if you could each respond, 

I would appreciate it. 

Ms. COALE. First and foremost, Secretary Vilsack is on record as 

stating that the draft legislation that has been presented, which is 

958

based primarily off of Foundation for the Future is a good start and 

it identifies issues that need to be addressed by the dairy industry. 

We recognize at the Department that there are numerous proposals under consideration, both here at Congress and by the industry itself. We look forward to working with you here and to 

working with the industry to provide technical assistance and any 

analysis that would be requested or needed to be able to examine 

and further determine how those programs might be implemented 

and what the effects of those implementations might be. 

Mr. HUELSKAMP. And beyond the administrative issues, what do 

we expect the Administration or the Department to have a particular proposal or simply just to provide technical expertise as we 

talk about these changes? 

Ms. COALE. At this particular point in time, the Department is 

more than happy to provide any technical assistance that would be 

needed by you as you are reviewing the farm bill proposals and the 

legislative options that are presented. We do not have any intentions at this point of submitting any type of legislative language. 

Mr. HUELSKAMP. Okay. Are there any particular parts of the current programs that you would suggest are most effective or least 

effective when we are looking at proposed changes? 

Mr. GARCIA. Thank you, Congressman. 

What I would like to do is comment somewhat on the Milk Income Loss Contract, the MILC. After the enactment of the 2008 

Farm Bill, it provided for, if I can call it, an improved safety net 

for producers because it included a feed cost adjuster to the $16.94 

per hundredweight baseline. So if that—if that feed cost adjuster 

did trigger, it would essentially add that amount to the $16.94 

baseline for the program, thus providing additional payments for 

producers that qualified for the payment. So that was an improvement with the 2008 Farm Bill that we were able to administer. 

Mr. HUELSKAMP. And you think the MILC is a successful program or those that you would suggest, ‘‘Hey, these are not working 

as we anticipated and could be improved or replaced?’’ 

Mr. GARCIA. Well, as far as our producers are concerned, we did pay over $940 million under the MILC Program, especially during 

2009. Now, there have been some concerns regarding the 2,985,000 

pound cap that is under the program. Now, we also have to recognize that as of September 1, 2012, there will be some changes in 

the program. The amount of cap will be reduced to 2.4 million 

pounds, plus other adjustments that will occur after September 1, 

2012. 

Mr. HUELSKAMP. I appreciate that. One last question in reference 

to just trying to get to the heart of how we might improve the programs. My understanding is New Zealand and other countries have 

been more innovative in new products and the suggestion has been 

perhaps our policies have not promoted that innovation. Are there 

any particular changes that would allow us to compete more effectively in international markets or in domestic markets with innovative products? 

Dr. SALATHE. Well, there are two programs that have been pointed to as affecting what we produce here in the United States and 

whether they reduce the incentives to develop new products. One 

is the Price Support Program, which we talked about earlier in refVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00970 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
959

erence to nonfat dry milk and whether that program provides an 

incentive to produce nonfat dry milk rather than other products 

that would be perhaps sold abroad as well as developing new products. There is also some concern about the Federal Milk Marketing 

Order Program doing a similar thing. 

I have not personally, despite being a dairy economist for probably 30 years, seen any quantitative assessment of those concerns, 

and so it is hard to say whether those are large, small, or medium 

effects that we should be concerned about. Nevertheless, I think 

those have been concerns that have been raised by a variety of people, and they are probably—for that reason, there may be legitimate concerns. 

Mr. HUELSKAMP. Thank you, Mr. Chairman. 

The CHAIRMAN. Next we move to Mr. Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. 

Let me ask the first question to you, Mr. Garcia. 

I am worried that the expansion of the Livestock Gross Margin 

Dairy Program would be extremely limited, especially given the 

tight budgets we are dealing with right now here in Congress. Congress simply doesn’t have the money to increase participation numbers at the current premium subsidy level. So, in your opinion, 

what effect would lowering the premium support level have on participation? 

Dr. SALATHE. Well, under the program that was offered this past 

year in 2011, with the premium subsidy, we enrolled about 2.4 percent of total milk production in the U.S. Prior to that, the program 

was very, very small, and we enrolled 1⁄10 of 1 percent of total milk 

production, in that range, and so if you reduce the premium subsidy, we would get, I would say, it is likely that you would get 

something in between that, between .1 and 2 percent of total milk 

production would be enrolled in the program, so it would still be 

very small. 

Mr. SCOTT. So what is the current level, the bare minimum a 

producer or a private insurance company needs in order to participate? 

Dr. SALATHE. Well, there is—the program that was offered, like 

I said, in 2010, when only very small numbers of producers were 

participating, and so it would—this is a guess on my part—that it 

was still possible to offer the program, even though participation 

was fairly low. 

Mr. SCOTT. So the current level is the bare minimum? 

Dr. SALATHE. The current level of participation, about 2–2.5 percent of total milk production enrolled in the program is kind of the 

maximum, kind of the maximum that is allowed under the current 

budget cap on livestock products offered by the Risk Management 

Agency. 

Mr. SCOTT. Ms. Coale, let me ask you this with respect to the 

Federal Milk Marketing Orders. I think they play a crucial role in 

another risk management tool, and that is hedging, but because of 

their structure, they produce a highly variable basis where a more 

stable basis is needed for accurate and useful hedging. 

So let me ask you what changes do you think could be made to 

the Federal Milk Marketing Order pricing system that would allow 

960

producers to make use of what is a valuable private sector risk 

management tool, hedging? 

Ms. COALE. Thank you. I think there are two areas that I would 

like to explore in response to this question. First and foremost, 

with regards to the Federal Order Program, as you are looking forward, one of the areas that the Department have seen great consensus in the industry with has to do with the way the minimum 

prices are established under the program. Currently, the Department uses a product price formula to establish the minimum prices 

that are used to pay producers for the milk that is marketed and 

pooled within a Federal Marketing Order. 

One of the other areas that the 2008 Farm Bill expanded was implementation of the Forward Contracting Program. What we have 

seen upon implementation of the program, that it is available to 

producers for all non-fluid milk that they market, but we have seen 

low participation rates. Primarily, while we have not completed 

any surveys since the pilot program was put in place back in 2004, 

what we believe from the information we obtained is that processors have not been offering contracts to their producers, and producers are somewhat hesitant to enter into a contract with a processor for what they perceive—and it is their perception, as it is a 

voluntary program—that it doesn’t make economic sense for them 

to sign a forward contract. 

One of the interesting things to note is that while the program 

in 2009 only had 75 participants, currently there are about 300 

participants who have signed contracts. So we are seeing a slight 

uptick in the amount that the program is utilized. 

Mr. SCOTT. Mr. Chairman, I did want to be able to ask one more. 

The CHAIRMAN. Absolutely. 

Mr. SCOTT. I wanted to ask you about tax liability real quickly—

thank you, Mr. Chairman—because I know that producers like to 

reinvest their profits into their businesses in order to avoid tax liabilities. But, this can lead to an increase in supply when, in fact, 

demand is falling, and that is what has exasperated lag time between aligning supply and demand, and that has produced in the 

past a crisis as we have seen in the last few years. So if you could 

each very quickly—do each of you think that tax-deferred farm savings accounts are a viable method to both avoid tax liability and 

artificial bumps in production? 

Dr. SALATHE. Farm savings account, of course, are a way to—I 

don’t know if the word ‘‘avoid’’ is right—I mean, it is a short-run 

avoidance of tax liability. Obviously, when you take the money out, 

supposedly if there is no reduction in tax rate, when you take the 

money out, supposedly then you are going to pay tax when you 

take the money out. Maybe your income is lower, though, so your 

average tax rate would be lower on average. 

I think the question becomes, how many producers and what is 

their demographic makeup of those farmers that actually pay 

taxes? We know a number of farmers don’t pay taxes for the reasons you indicate. You know, they might put it into their business, 

which may be a great long-term decision for them. For those that 

do that, there are some who would not change that decision because they want to expand and want to maintain their business. 

961

I think it is difficult at this point to say how many producers would 

benefit and what the response, market response, would be. 

Mr. SCOTT. Well, thank you very much. 

Thank you for your generosity, Mr. Chairman. 

The CHAIRMAN. Okay. We will move to Mr. Ribble. 

Mr. RIBBLE. Thank you, Mr. Chairman. 

Mr. Garcia, good afternoon. Thanks for being here today. 

I am from Wisconsin, and some of our smaller producers, actually quite a few of our small producers, participate in the Milk Income Loss Contract Program, and as Mr. Peterson’s line of questioning implied, there are some proposals on the table to shift to 

a margin insurance component type of program. What is currently 

the average size of a dairy operation participating in the MILC 

Program, and how much do you expect the program to pay out this 

year? 

Mr. GARCIA. If I can address your latter question, we have not 

issued any MILC Programs all year long since the prices have remained high. Of course, right now, the prices of milk are relatively 

high. Of course, it is predicted that with higher feed costs, we could 

see lower milk prices toward the end of this year or early next 

year. So there is a possibility that the MILC payments could trigger in either late December or early January. 

Now, as far as the average herd size of the producers that participate in this program, it is hard to tell because, of course, this 

program is available to your—if you would categorize your smaller 

producers in the neighborhood of 300 cow dairy or your larger producers which—and I am from Texas. We have some of both. You 

know, we have the 160 cow dairy up to the 10,000 cow dairy. So, 

of course, all the producers can participate in that particular program. 

Now, the issue is that with the larger producers, that they can 

reach their cap limit of 2.985 million pounds in a month’s time, 

where your smaller dairies will have—will take more time to reach 

that cap. So it is hard to come up with an average size of dairy 

producers that participate. 

Mr. RIBBLE. Is there statistical data available on the size of the 

producers that are using the program? Especially when you look 

back like 2009, when things were pretty rough, is there some statistical data that shows how that money was distributed by size? 

Dr. SALATHE. Yes, I believe so. We have information in terms of 

the size of producers who got payments. All producers are eligible 

for the program. It is whether they hit the production limit or not, 

and so—but we probably do have data on the size of producers and 

what they received or whether they participated and got a payment 

or not. 

[The information referred to is located on p. 972.] 

Mr. RIBBLE. That would be interesting information for me, and 

if you could get that for me, I would appreciate it. 

Going along, I understand that many stakeholders within the 

dairy industry support the elimination of the Dairy Product Price 

Support Program. I have also talked with several operators in Wisconsin about the increasing importance of export markets to their 

farms. I have heard repeatedly from producers that they would like 

to sell their products on the world markets without obstacles in the 

962

way. What in your view should we be doing to expand export opportunities? 

Dr. SALATHE. I guess I will take a shot at it by default. Honestly, 

we want to make sure our programs are conducive to us exporting 

abroad, so we want to look at our programs very carefully and 

make sure that they do allow us to export. I think free trade agreements are very important. We need to reduce the barriers abroad 

to our dairy products that exist now. We need to break those barriers down. There are sanitary types of restrictions. There are 

quotas on imports and things of that sort. We need to address 

those country by country as we can. I think those are the most important. 

I strongly agree and I agree with dairy farmers in Wisconsin, 

and I strongly think that our dairy industry is competitive and can 

be very competitive. There are producers in Australia we have to 

compete with. I think the market is big enough that we can, and 

we can have a significant share of the world market along with 

them. I think the future is very bright for the dairy industry in 

terms of expanding the export market. I think breaking down barriers is probably the number one thing and making our programs, 

being sure our programs do not interfere with us making good, 

quality dairy products for the export market. 

Mr. RIBBLE. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Mr. Courtney. 

Mr. COURTNEY. Thank you, Mr. Chairman, for holding this hearing. 

And actually before asking my question, I just want to take a 

point of personal privilege in recognizing in the back of the room 

Ms. Marsha Jette ́, who is the Connecticut FSA Administrator. She 

is in town for a meeting in Washington. She has had a pretty 

amazing year with the record snowstorms that destroyed a lot of 

livestock and dairy buildings in Connecticut and, obviously, Hurricane Irene last week, which wiped out a lot of silage. And her team 

is doing a great job helping Connecticut farmers deal with those 

disasters. 

I have to say, when Mr. Huelskamp asked the question about 

where the Administration’s position was going to be on the Foundation for the Future, that your answer was that you are going to 

supply us with information, I was disappointed with that because, 

Secretary Vilsack when he established the Dairy Advisory Committee, I mean, that was a stroke of genius, after the agony of 

2009, to get people feeling engaged in terms of the administration. 

And they have made a lot of recommendations. They have worked 

hard. 

It is my understanding over 20 recommendations, a lot of which 

are certainly relative to Mr. Peterson’s proposal, and you know, we 

could use a little help here. I just feel like you have gone to all that 

extent of soliciting input, and I would hope that the Department 

is going to be more of an engaged partner in terms of this Committee trying to come up with a solution for this industry. And I 

just wondered if you could maybe give us a little more insight 

about what you are doing to do with the advisory committee’s suggestions. 

963

Ms. COALE. Certainly, I will be happy to provide some more information on that. 

As you mentioned, the advisory committee was formed. It consisted of 17 individuals that were highly diverse, and they represented all facets of the dairy industry. Those individuals met and 

did an extensive amount of work in a very short period of time to 

develop 23 recommendations that they presented to the Secretary 

last spring. The Secretary did not put any qualifiers around the 

recommendations that the advisory committee could come forward 

with. So, therefore, he did not put any indicators on budgetary constraints or legislative authorities that would need to be considered 

when they were developing the recommendations. 

Consequently, of the 23 recommendations that were presented to 

the Secretary, over half of them requested either new funding or 

higher levels of funding, or requested or would require the Secretary to have new legislative authority in order to enact those particular recommendations. 

Of the remaining recommendations that exist, the Department 

has been actively working on five of those or has completed five of 

those recommendations. The Department also has three of the recommendations that we are working closely with you up here on as 

they do relate to various provisions contained in the draft legislation of Congressman Peterson, as well as other legislative proposals 

that have been presented up here. 

So we have taken what the advisory committee, the work that 

they have done, we have been reviewing it, analyzing it, providing 

information up here to help with the technical assistance that 

might be needed when it comes to actually determining what policy 

you want to implement with regards to that. 

Mr. COURTNEY. Well, I appreciate that, and I would hope, at 

some point, the Department would also maybe talk about what policy you would like to see implemented as well. I am not trying to 

be a wise guy here, but the purpose of this, is to have a dialogue 

and collaboration to come up with—these are tough issues. 

I mean, let me ask one, for example, I know Mr. Peterson’s draft 

proposal explores expanding that crop insurance, the risk insurance program for dairy. 

What I hear back home is it is too complicated. As a product, it 

is just too unimaginable, particularly for smaller guys, let alone 

cost issues, which Mr. Scott mentioned earlier. Is the Department 

looking at issues like that? Are they trying to see if there is a better way to design the product so that it becomes more workable, 

particularly for smaller farmers? 

Dr. SALATHE. I guess I am a little bit confused by your question. 

Are you talking about the Peterson draft bill, or are you talking 

about LGM-Dairy? 

Mr. COURTNEY. Well, obviously, the LGM-Dairy is what is out 

there right now. 

Dr. SALATHE. Correct. 

Mr. COURTNEY. To some degree, the bill sort of tries to adopt 

that model a little bit but doesn’t necessarily incorporate that specific program, but to me, we are going to run into that same issue 

if the Peterson bill passed, for example. 

964

Dr. SALATHE. I think it is safe to say that the Secretary is very 

interested in having a dialogue. He is not interested in putting out 

a very specific proposal that then competes with some other proposal. He is not interested in that. The Secretary is very interested 

in dairy policy. I think he wants to come to some compromise or 

conclusion, and he feels very strongly that the safety net needs to 

be improved for dairy producers. 

I think, on the other hand, he recognizes that it is very difficult 

to get consensus in the dairy industry, and he also recognizes that 

we are in a very difficult budget situation. So he is interested in 

coming to some conclusion. 

Mr. COURTNEY. Again, hopefully, he will be an active participant 

in that. 

So I thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Mr. Courtney. 

We move to Mr. DesJarlais. 

Mr. DESJARLAIS. Thank you, Mr. Chairman. 

And I thank the panel for being here today. 

I had the opportunity to speak with some of our dairy farmers 

in Tennessee’s Fourth District over the August recess, and they 

sent me armed with several specific questions, but after listening 

to the testimony today, I agree with Mr. Courtney. I think that 

maybe it is premature to ask some of those, considering where we 

are at in this process, but not wanting them to be left out, let me 

just ask a very broad general question, tapping upon your expertise. 

What risk management programs do you feel are particularly 

successful and which ones not so much, and what do we do with 

those, moving forward, as we write the farm bill in Fiscal Year 

2012 to keep the dairy market strong and competitive? 

Dr. SALATHE. Very good question. I wish had I an answer. 

I guess, risk management—I assume you are talking broadly 

about dairy programs in general, not about the risk management 

programs in particular? 

Mr. DESJARLAIS. More narrowly related to risk, go ahead and 

take a shot at either one. 

Dr. SALATHE. Okay, thank you. Thank you very much. 

Basically, on dairy, we have four programs. As I see it, we have 

the MILC, Milk Income Loss Contract, program. It is a direct payment program. It pays when milk prices are low and feed prices 

are high. We have the Dairy Product Price Support Program, if you 

look at current price levels, milk prices would have to fall by about 

50 percent before anything would kick in. I think most producers 

say that is too much; it doesn’t provide enough of a safety net. And 

we have the Dairy Export Incentive Program, which nobody has 

addressed, which provides an export subsidy in certain instances 

when the world price is above the U.S. price. We haven’t operated 

that program very often. We did operate all three of those programs in 2009. 

And then you have LGM-Dairy, which has a real problem in 

terms of its budget. The amount of outlays or amount of money 

provided for that program just doesn’t, at this point, provide for a 

whole lot of participation. 

965

So you have—the main driver in this program, set of programs 

that we have, if you look at 2009, was the MILC program, which 

provided over $900 million in direct payments to producers. The 

next most important program was the Dairy Product Price Support 

Program, in which we purchased 276 million pounds of nonfat dry 

milk and about 5 million pounds of butter in late 2008 and 2009. 

And DEIP we operated, but the quantities were fairly small. 

So that leaves, really, two programs—MILC and DPPSP. And 

those two programs—the National Milk’s Foundation for the Future

will eliminate those two programs and replace it with a margin insurance program. 

That is kind of a nutshell. There are, of course—farmers can and 

should think about using the futures market to lock in prices, to 

provide a safety net that way. Obviously, there are private-market 

tools that they can use, from forward contracting to some extent, 

futures markets as well. 

Mr. DESJARLAIS. Okay. I appreciate that. 

Does anybody have anything to add specifically on the dairy programs, the DPPSP or the MILC program, as far as its success or 

failure, moving forward? 

Dr. SALATHE. The other thing that I would point out, being a 

trained economist—maybe not so trained, but anyway—that any 

program you put in place has both positive and negative impacts. 

If you provide payments to producers, direct payments to offset 

lower returns, that may keep more producers in business and may 

mitigate the signal to reduce production when production should be 

reduced. And so, on the other hand, it does allow some producers 

to stay in business. 

So there are these positive and negative consequences of any 

type of intervention, and it is very important to be cognizant of 

those. 

Mr. DESJARLAIS. Okay. Well, thank you for that. And then 

maybe next time around, we will get more into the specific questions. But I appreciate your thoughts. 

And I yield back. 

The CHAIRMAN. Mr. Costa? 

Mr. COSTA. Thank you very much, Mr. Chairman, for allowing 

me to sit in on the Subcommittee hearing. 

My family has been involved in the dairy business for three generations, and I guess if I didn’t have this job I could get a job somewhere milking cows. I do have some redeemable skills in that area. 

While you are correct to say in the last 6 months the prices have 

gotten better within the dairy industry, we are rebounding from 

perhaps the most difficult period the industry has been in in decades. As a matter of fact, if you look at the cycles, in 2000, 2003, 

2006, and 2009, some estimate that the period between 2008 and 

2010, that the industry, nationwide, lost anywhere between $15 billion and $20 billion in equity. I am talking about the dairy producers. 

And yet, part of it is obvious, why the size of the dairies continue 

to shrink and a growing number of large farms, large dairy farms, 

are still—that is the trend. What factors do you think are creating 

that trend? 

966

Dr. SALATHE. Well, that is a very good question. But, the bottom 

line is that there is just—it is new technology for farmers. 

Mr. COSTA. Marginal costs. 

Dr. SALATHE. Marginal costs. Adoption of new technology allows 

farmers to produce milk at a lower cost. And so, if you have——

Mr. COSTA. Do you have the total number—you were taking 

about the MILC program to producers—how much was paid out in 

2009? 

Mr. Garcia? 

Mr. GARCIA. It was about $940 million. 

Mr. COSTA. And how many producers went out of business in 

2009? 

Mr. GARCIA. The information that we have, Congressman, based 

on statistical data from the National Agricultural Statistics Service 

is, between 2008 and 2009, we had around three percent of producers that went out of business. 

Mr. COSTA. Obviously, the MILC, then, therefore, isn’t a very effective safety net in that instance, if that is the purpose and part 

for what it is done. 

The last time the Dairy Product Price Support Program purchased product, when was that? 

Mr. GARCIA. It was in summer of 2009, August of 2009. 

Mr. COSTA. How much product did it purchase? 

Mr. GARCIA. It bought—really, it was one small purchase for 

back test purposes—well, I am sorry. 

Dr. Salathe, maybe you can help me with that one. 

Dr. SALATHE. Well, under the Dairy Product Price Support Program, in late 2008 and through about August 2009, we purchased 

276 million pounds of nonfat dry milk and 5 million pounds of butter. 

Mr. COSTA. Some of my producers think that the Price Support 

Program takes the U.S. out of the export market and the margins 

based upon per hundredweight on whether or not we are in a surplus condition or below. Do you think that is the case? 

Dr. SALATHE. Well, when we are purchasing product, we are supporting the world price on nonfat dry milk. So, by doing that, we 

are supporting prices to producers in——

Mr. COSTA. Do you think some companies or some co-ops are producing nonfat dry milk because of the program that is in place and 

they have a guaranteed purchaser? 

Dr. SALATHE. I think you would have to ask them. I really don’t 

have——

Mr. COSTA. Not going to tread in that water? 

Dr. SALATHE. No. 

Mr. COSTA. How much powder does the government currently 

have in storage today? 

Dr. SALATHE. I don’t believe we have any nonfat dry milk in storage. 

Mr. COSTA. None? 

Mr. GARCIA. I don’t believe so. I don’t believe there is any right 

now. 

Mr. COSTA. Ms. Coale, the AMS has been studying alternatives, 

and you spoke of that, toward pricing formulas. What are some of 

the alternatives are you considering? 

967

Ms. COALE. We have been actively working with the industry to 

further develop and provide analysis on a different array of competitive pay prices that the industry is trying to establish. These 

are looking at primarily what cheese manufacturers are paying for 

their milk. And depending on the various proposals, there are different aspects that——

Mr. COSTA. Before my time expires, do you think the current four 

class system curtails market innovation? 

Ms. COALE. I do not believe that it curtails market innovation. 

We have seen that there are new products continually entering into 

the marketplace. 

Mr. COSTA. Well, Mr. Chairman, I have other questions. I will 

submit them in writing. 

My time has expired. I appreciate your allowing me to sit on the 

Committee. 

I think that your efforts with the Subcommittee, given the volatile nature and the cycles that I referenced—if they continue in 

that pattern, 2000, 2003, 2006, 2009, it will mean that the next 

cycle will be next year. And with all the equity that has been lost 

in the dairy industry in recent years, I am not so sure we can survive another cycle as we did the last one. And I hope that we will 

all try to work together on behalf of dairy producers in America to 

avoid a crash, as we have just had over the last 2 year cycle, the 

last bust cycle. 

Thank you. 

The CHAIRMAN. Thank you, Mr. Costa. You are very welcome. 

Mr. Gibson? 

Mr. GIBSON. Well, thanks, Mr. Chairman. 

And I thank the panelists for being here today. 

So, a comment and then a question, and if there is time, perhaps 

a second question. 

The comment: I want to begin by associating myself with the remarks of Mr. Courtney. You know, both of our districts, as well as 

Peter Welch’s district, our districts have been hit very hard by 

Hurricane Irene and then the remnants of Lee. And, it is clear that 

the insurance program, the risk management tools are just not effective for us, with too many farmers, as Mr. Courtney mentioned 

finding it too complicated to sort through. And for other reasons, 

those risk management tools are just not revalent for us. 

And then there are other programs that seem to have a track 

record of effectiveness but yet have no money in them, like the 

Emergency Conservation Program, which helps with debris and 

other removal and replacing of fences and, certainly, trying to bring 

back the farm. From a conservation standpoint, in the watershed 

dimension of the program, helps us get into streambeds and not 

only remediate but also take us to a better level where we wouldn’t 

be subject to future floods. 

So I guess that is a comment and perhaps a bit of frustration. 

And, certainly, I am new here, and we are going to have to work 

on this going forward. I look to the farm bill to try to do some reforms in insurance. But I guess I would pause and see if there is 

any reaction to that. 

Ms. COALE. If I could take a moment to comment on that. 

968

The Secretary is very attuned to what has happened in the 

Northeast——

Mr. GIBSON. Yes, he is. 

Ms. COALE.—with regards to Hurricane Irene. And just today, 

earlier this afternoon, he issued a press release on some actions 

that the Department has taken to help alleviate the distress that 

has been caused by the natural disaster. 

One such action that is being taken under the Federal Milk Marketing Order program, for those dairy producers whose milk has 

not been able to be picked up by their cooperative due to infrastructure damage, the Secretary has determined that we will allow 

that milk to be associated with the Federal Order pool as if it had 

been delivered to the marketplace. That will aid those producers in 

getting the benefit of receiving the Federal Order blend price for 

that amount of milk that they did dump. 

So the Secretary is very, very concerned about what is happening 

in the Northeast. And he has also outlined other programs, which 

he has mentioned in the press release, that are available to those 

producers. 

Mr. GIBSON. I agree. And, I had a chance to meet with him just 

a few days ago, and I find him very concerned and vigilant and diligent to try to help us. 

I think that there is some work on this side that we are going 

to need to do, going forward. And, taking up his advice, Senator 

Gillibrand and I have a bill we just introduced yesterday that is 

looking to put money into those programs, those conservation programs, which will be helpful. 

But thank you for the dialogue on that. 

The question: Earlier in the dialogue here with Mr. Peterson, you 

were giving some initial feedback on the weekly electronic reporting. I am curious—and you were raising some concerns about that, 

about the potential counterproductive nature of it. 

I am curious—no doubt you have policy wonks down there. What 

is the latest thinking in the agency on how we might be able to get 

more dynamic price discovery in a manner that more accurately reflects supply and demand dynamics? 

Ms. COALE. To make certain that the record is clear, the Department is very supportive of weekly reporting, as is currently conducted by the National Agricultural Statistics Service, as well as 

what will be transferred to AMS with the Mandatory Price Reporting Act. 

The concerns that we have been hearing with regards to daily reporting are ones that the industry has expressed in relationship to 

how accurate that price information will be. And while you may be 

providing data out to producers, is that data really accurate and 

does that provide the information that they need to make marketing decisions? 

It is important to note that the dairy industry does operate differently than other commodities within agriculture, in that producers are paid based off of a monthly price. So receiving a daily 

report of what commodities are trading at does not translate directly into a pay price for those producers. 

Recognizing that the current system for determining minimum 

prices is based off of product price formulas that use the commodVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00980 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
969

ities in which we actually report on, we are very open to looking 

at returning to some type of a competitive pay price. And the Department did use a competitive pay price within the Federal Order 

system for a number of years, and it worked very effectively up 

until the milk that was being used to determine that competitive 

pay price basically disappeared. 

So there are challenges with how best to return to a competitive 

pay price that is truly going to reflect that value for the milk used 

in manufacturing, and is not going to over-inflate the value but be 

reflective of what is needed to maintain supply and demand for the 

marketplace. 

Mr. GIBSON. Interesting. Thank you very much for that response. 

I yield back. 

The CHAIRMAN. Thank you, Mr. Gibson. 

Mr. Welch? 

Mr. WELCH. Again, thank you, Mr. Chairman. 

I have a couple of questions for Mr. Garcia about the Dairy Product Price Support Program. It is quite important, obviously, to 

Vermont farmers as well as others. 

You know, my understanding is the floor price for dairy created 

in the program is about $9.90 per farm—the farm gate price. And 

in the last 5 years, has that floor price ever been utilized as the 

actual floor price for dairy products? Or is it really fair to say that 

the floor price is just out of date and ineffective? 

Mr. GARCIA. Dr. Salathe, can you help me out with that? 

I am sorry, I am going to have to defer to my economist. 

Mr. WELCH. All right. 

Dr. SALATHE. Well, under the 2008 Farm Bill, we no longer support the price of milk. There is no longer a support price designated 

in the farm bill. 

What is designated is minimum purchase prices for butter, cheddar cheese in barrels and blocks, and nonfat dry milk. Those can 

be actually reduced if purchases exceed certain levels. And there is 

flexibility, of course, to increase since they are minimums to increase purchase prices. But we did—like I said, we did buy nonfat 

dry milk in late 2008 and 2009 to the tune of 276 million pounds 

of nonfat dry milk and 5 million pounds of butter. 

Like I said, there is no floor price on milk. There is a floor price 

on the products themselves. 

Mr. WELCH. All right. Let me ask my next question. 

In 2009, the Congressional Dairy Caucus, of which many of us 

are Members, asked Secretary Vilsack to raise the floor price for 

dairy products under the program. Secretary Vilsack responded 

and did raise the price, and we obviously thanked him for that action. 

However, the increase in the DPPS price support didn’t have any 

positive change on the price paid to farmers. From the perspective 

of a Vermont dairy farmer, does the dairy price support provide literally any protection in today’s market? 

Dr. SALATHE. Well, if you go back and you look at when the Secretary made those changes—he increased the nonfat dry milk purchase price by 12¢ and, I believe, cheddar cheese by 18¢. If you 

look at when that occurred and the immediate response, in terms 

of what happened in terms of wholesale prices for those products, 

970

you did see an immediate change even though no purchases were 

made. 

So it is a little bit difficult to say that there was no effect when 

there was some effect, immediate effect, on wholesale prices when 

that announcement was made. 

Mr. WELCH. All right. Let me ask my last question. I thank you. 

I have heard some concerns that the DPPSP price undercuts our 

export abilities. For example, the industry’s ability to innovate new 

products, such as MPCs, has been hampered by the price support 

system, or so some people believe. 

Can you speak to that issue? Is there truth to the claim that the 

DPPSP price hinders our dairy exports? 

Dr. SALATHE. Well, I think that we are competitive on the world 

market, we are competitive in terms of our dairy products. And so, 

when we do purchase dairy products under the Price Support Program, that does stabilize the price here as well as abroad. And I 

do think it probably does undercut our exports somewhat. However, I would say it was an important tool for us in 2008 and 2009 

when milk prices collapsed. Like I indicated, we did purchase significant amounts of nonfat dry milk during that time. 

And I will reiterate another comment I made earlier, that when 

you intervene in the markets, no matter how you intervene in markets, it does have positive and negative ramifications. So you have 

to weigh those positive and negative ramifications. 

Mr. WELCH. I yield back. 

The CHAIRMAN. Thank you, Mr. Welch. 

I wanted to take this opportunity to thank the witnesses for their 

testimony and for answering the questions from our Members; and 

all the Members that showed up, including a couple of special 

guests. 

I also want to thank the staff for all their hard work in preparing 

this hearing today on the USDA dairy program. We are going to 

look forward to arranging and organizing more meetings to continue to work toward solutions for this and all the other issues on 

the Subcommittee. 

So, with that, under the rules of the Committee, the record of today’s hearing will remain open for 10 calendar days to receive additional material and supplementary written responses from the witnesses to any question posed by a Member. 

This hearing of the Subcommittee on Livestock, Dairy, and Poultry is adjourned. 

[Whereupon, at 3:35 p.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

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SUPPLEMENTARY MATERIAL SUBMITTED BY U.S. DEPARTMENT OF AGRICULTURE

During the September 8, 2011 hearing entitled, Agricultural Program Audit: Examination of USDA Dairy Programs, requests for information were made to the U.S. 

Department of Agriculture. The following are their information submissions for the 

record. 

Insert 1

Mr. CARDOZA. I would like to encourage the Department. I see great acceptance of the standards in California. The product is more nutritious, and I am 

a huge fan of increased standards. 

To follow up, the MILC Program is a prime example of government programs 

that pick between winners and losers, in my opinion. In fact, a USDA study a 

few years back confirmed that the program keeps farm milk prices lower than 

they would otherwise be. Could any of you please tell us what the total amount 

of money producers in each of the top five milk-producing states have received 

from MILC under the farm bill, along with the most recent annual milk production figure for those states? 

Mr. GARCIA. Mr. Cardoza, I don’t have that information readily available, but 

we can provide that information as far as the top five states under the MILC 

Program. 

Mr. CARDOZA. I would very much like to have that. 

Mr. GARCIA. Yes, sir, we can provide that.

See following tables:

Milk Income Loss Contract (MILC) Program 

Top Producers’ Payments and Production 

by State/Fiscal Year 

as of 01/25/2012

Row Labels Values Payment Totals Paid Production Totals 

California $104,400,571.98 12,480,259,870

2009 $85,814,553.72 6,959,242,651

2010 $18,586,018.26 5,521,017,219

Idaho $22,351,849.09 2,825,504,576

2009 $18,713,813.32 1,602,963,230

2010 $3,638,035.77 1,222,541,346

New York $82,550,499.76 7,549,547,304

2009 $73,500,545.34 5,065,859,188

2010 $9,049,954.42 2,483,688,116

Pennsylvania $76,248,956.41 6,301,537,139

2009 $69,319,102.01 4,476,854,732

2010 $6,929,854.40 1,824,682,407

Wisconsin $195,565,282.93 19,859,501,257

2009 $175,742,332.01 13,671,012,480

2010 $19,822,950.92 6,188,488,177

Grand Total $481,117,160.17 49,016,350,146

Milk Income Loss Contract (MILC) Program 

Top Producers’ Payments and Production 

by Fiscal Year/State 

as of 01/25/2012

Row Labels Values Payment Totals Paid Production Totals 

2009 $423,090,346.40 31,775,932,281

California $85,814,553.72 6,959,242,651

Idaho $18,713,813.32 1,602,963,230

New York $73,500,545.34 5,065,859,188

Pennsylvania $69,319,102.01 4,476,854,732

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Milk Income Loss Contract (MILC) Program—Continued

Top Producers’ Payments and Production 

by Fiscal Year/State 

as of 01/25/2012

Row Labels Values Payment Totals Paid Production Totals 

Wisconsin $175,742,332.01 13,671,012,480

2010 $58,026,813.77 17,240,417,865

California $18,586,018.26 5,521,017,219

Idaho $3,638,035.77 1,222,541,346

New York $9,049,954.42 2,483,688,116

Pennsylvania $6,929,854.40 1,824,682,407

Wisconsin $19,822,950.92 6,188,488,777

Grand Total $481,117,160.17 49,016,350,146

Insert 2

Mr. CARDOZA. In 2009, Congress appropriated $350 million in emergency 

funds to help dairy farmers through what was then the worst economic crisis 

in at least a generation. This crisis was caused by significant decline in U.S. 

exports due to the worldwide financial crisis. Some of us thought that the entire 

$350 million should have gone to the purchase of cheddar cheese to donate to 

food banks which were having trouble keeping up with record demand in this 

country. In the end, only $60 million went to cheese donations. 

Many have questioned the decision to purchase high-cost items, like shredded 

cheese, with these funds instead of the more reasonable and more widely available block cheese. Can you tell me what products were purchased and how 

quickly these donations were completed? 

Mr. GARCIA. I am going to have to look at that, Mr. Cardoza. I think I have 

that information.

The Fiscal Year 2010 Agriculture Appropriations Act authorized $60 million for 

the purchase of cheese and other products. USDA purchased approximately 10.2 

million pounds of mozzarella cheese and 17.4 million pounds of cheddar cheese, at 

a cost just under $60 million. USDA held back just over $200,000 to cover offshore 

transportation and contract administration. 

Based on recipient needs, purchases were made for 10.2 million pounds of mozzarella (5.3 million pounds loaves/blocks, 4.9 million pounds shreds), and 17.4 million 

pounds of cheddar (8.8 million pounds loaves/blocks, 8.6 million pounds shreds). 

The contract awards were made for $48 million in January 2010, as responsive 

bids were not received for all recipient delivery locations. Contract awards for the 

remaining $12 million were issued in February 2010. While there was a substantial 

time lag between the announcement of purchases and when donations were made, 

USDA schedules deliveries based on recipient needs and does not make payment to 

the vendor until the cheese is actually delivered, in accordance with procurement 

guidelines. 

Insert 3

Mr. RIBBLE. Is there statistical data available on the size of the producers 

that are using the program? Especially when you look back like 2009, when 

things were pretty rough, is there some statistical data that shows how that 

money was distributed by size? 

Dr. SALATHE. Yes, I believe so. We have information in terms of the size of 

producers who got payments. All producers are eligible for the program. It is 

whether they hit the production limit or not, and so—but we probably do have 

data on the size of producers and what they received or whether they participated and got a payment or not.

The Milk Income Loss Contract (MILC) Program is designed to provide a direct 

payment to producers when milk prices fall below an established level adjusted for 

feed costs. Information on herd size is not collected by the Farm Service Agency 

when operations sign contracts for the program. Milk sales information is collected 

only during months when there is a payment rate for the program and operations 

are requesting payment, thus information on operation size is not available through 

the data collected under this program. However, data collected annually by the National Agricultural Statistics Service (NASS) on the distribution of dairy herds by 

973

size can be used to provide an indication of the distribution of MILC payments during Fiscal Year 2009 by size of herd. Based on the herd size distribution data collected by NASS, we estimate that about 35–40 percent of FY 2009 MILC payments 

were paid to producers with less than 100 cows and 70–75 percent of payments were 

paid to producers with less than 200 cows. 

Distribution of MILC Payments by Herd Size

SUBMITTED QUESTIONS

Questions Submitted by Hon. Reid J. Ribble, a Representative in Congress 

from Wisconsin 

Response from Juan M. Garcia, Acting Deputy Administrator for Farm Programs, 

U.S. Department of Agriculture, Farm Service Agency 

Question. Mr. Garcia, do you believe that elimination of the Dairy Export Incentive Program would significantly impact our participation in world markets? 

Answer. The Dairy Export Incentive Program (DEIP) helps exporters of U.S. dairy 

products meet prevailing world prices for targeted dairy products and destinations. 

Under the program and in conformity with U.S. obligations under the World Trade 

Organization, the U.S. Department of Agriculture pays cash to exporters as bonuses, 

allowing them to sell certain U.S. dairy products at prices lower than the exporter’s 

costs of acquiring them. The major objective of the program is to develop export 

markets for dairy products where U.S. products are not competitive due to the use 

of export subsidies by other countries. 

The United States is currently competitive in world dairy markets without the 

need for the DEIP. At present, no nation—including the European Union (EU)—is 

using export subsidies for dairy products. The EU does not have significant stocks 

of surplus dairy products and is not expected to use export subsidies during 2011 

or 2012. 

The United States is projected to be a major participant in world dairy markets 

in FY 2011 and FY 2012. Exports from the U.S. for 2011 are forecast at over 

400,000 metric tons of skim milk powder, over 200,000 metric tons of cheese and 

over 60,000 metric tons of butter. The value of U.S. dairy exports is estimated at 

a record $4.2 billion in FY 2011. For FY 2012, U.S. dairy exports are forecast to 

remain strong at a value of $4.0 billion. 

Response from Dana Coale, Deputy Administrator for Dairy Programs, U.S. Department of Agriculture, Agricultural Marketing Service 

Question 1. Ms. Coale, as you are likely aware, several proposals are on the table 

for modifying the Federal Milk Marketing Order system. Is it your sense that we 

in Congress should legislate specific reforms, or would the process best be left to 

USDA with some broad parameters from Congress? If the latter, what sort of conVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00985 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN

1122053.eps
974

sensus would you need from us? How much agreement do we need to find here in 

Congress before USDA could begin its work? 

Answer. There are several industry proposals that are designed to make changes 

to the Federal Milk Marketing Order program. These proposals are focused primarily on making changes to the method utilized to establish minimum prices within the Federal Milk Marketing Order system. Typically, changes of this significance 

are determined utilizing the administrative formal rulemaking process, a transparent process that enhances participation by all interested persons. USDA recognizes the desire for Congress to provide specific guidance on how these minimum 

prices are established. We would suggest that Congress provide specific parameters 

on proposals that should be considered as alternatives for establishing minimum 

prices under Federal Milk Marketing Orders.

Question 2. Ms. Coale, I understand that the FMMO system places the highest 

value on fluid milk. In the Upper Midwest, most of our milk is used for cheese. Consequently, many producers have talked with me about the need to modify this disparity. If we address this as part of the dairy reform process, how, in your view, 

can we push forward this kind of change through broad parameters? 

Answer. The Federal Milk Order program establishes minimum prices for milk 

based on the classification of milk according to its use and then these values are 

averaged together based on the individual utilization of these milk values. Milk utilized to produce Class I products receives the highest value because of the additional 

costs associated with servicing the fluid market. This higher price is established utilizing the highest price for manufacturing uses plus a Class I differential. These differentials vary from $1.60 per hundredweight in the Upper Midwest and Western 

United States to $6.00 per hundredweight in Southern Florida. A change to how 

these values are determined could be directed by Congress by providing direction 

such as was provided in the 1996 Farm Bill. In the 1996 Farm Bill, Congress authorized the Secretary to review the Class I price structure as part of the consolidation of the orders, including the consideration of utilization rates and multiple basing points for developing a pricing system. 

SUBMITTED REPORT BY NATIONAL MILK PRODUCERS FEDERATION

National Milk Producers Federation 

Foundation for the Future: Detailed Program Description 

August 2011

Table of Contents 

Background 

Executive Summary 

Detailed Descriptions of Individual Program Elements

Replace Current Federal Safety Net Programs 

Dairy Producer Margin Protection Program 

Federal Milk Marketing Order Reform 

Dairy Market Stabilization Program 

Conclusion

Attachment 1

Attachment 2

Attachment 3

Attachment 4

Background 

The National Milk Producers Federation (NMPF) created a new roadmap for U.S. 

dairy policy called Foundation for the Future. In June 2009, NMPF Chairman 

Randy Mooney formed the NMPF Strategic Planning Task Force aimed at exploring 

different approaches to dairy policy, including options that would work to achieve 

more effective protection for producer margins and stabilization of dairy markets. 

Task force members (Attachment 1) came from within the NMPF and/or Cooperatives Working Together (CWT) membership and were charged with making policy 

recommendations to the NMPF Board of Directors for further deliberation and subsequent action. The task force was designed to include viewpoints from all segments 

of the NMPF and CWT membership and the participants reflected a broad spectrum 

of demographics and affiliations. The task force was further broken down into three 

subcommittees (Attachment 2), each focusing on a specific aspect of dairy policy. The 

subcommittees carried out their specific assignments by drawing upon the best professional expertise and informational resources available to the industry from both 

975

private and public sources. Finally, in order to make certain that the demand-building programs of Dairy Management, Inc. and the U.S. Dairy Export Council were 

recognized in this important planning process, Tom Gallagher and Tom Suber, the 

respective leaders of these organizations also served as advisory members of the 

task force. 

The overriding purpose of the task force was to build consensus across the dairy 

producer community by identifying the underlying factors affecting producer income 

and examining the ways in which the producer community could realistically work 

to address those factors for the betterment of the industry. The specific goal of the 

task force was to analyze and develop a long-term strategic plan for consideration 

by the NMPF Board of Directors, which would have a positive impact on the various 

factors influencing both supply and demand for milk and dairy products. 

Through an initial round of listening sessions, the task force brought in a number 

of producer groups (Attachment 3) representing different industry segments and 

dairy producer constituencies all across the country to obtain widespread input and 

access to the best ideas circulating throughout the industry. Individual cooperatives 

were also invited to provide proposals to the task force for consideration. Following 

its meetings with the various dairy producer organizations, the task force began internal deliberations, to analyze and discuss the many proposals and options presented, and develop recommendations for the NMPF Board of Directors. 

As a result of this valuable exchange with various dairy organizations, NMPF developed Foundation for the Future. As envisioned by NMPF, Foundation for the Future offers much-needed change to many aspects of current dairy programs, some 

of which were designed in an earlier time to operate in a relatively closed domestic 

market. Today’s market for U.S. dairy farmers’ milk, however, is influenced to a 

much greater degree by global demand and supply, as the record prices of 2008—

and their disastrous plunge in 2009—have clearly demonstrated. 

Executive Summary 

This Executive Summary provides an overview of the policy changes proposed by 

NMPF. Detailed descriptions of each of the elements comprising the Foundation for 

the Future program are also contained in this document. While each element of 

Foundation for the Future is identified separately, they were designed to work together to ensure the best possible result for U.S. dairy producers and the U.S. dairy 

industry, in general. It should be emphasized that each element of Foundation for 

the Future interlinks with one or more of the other elements to obtain maximum 

effect. It is therefore imperative that the entire package of Foundation for 

the Future be considered for the totality of its impact.

Just as multiple problems contributed to an unprofitable situation for U.S. dairy 

farms recently, multiple solutions are required to achieve a more prosperous future. 

To meet this need, Foundation for the Future offers a multi-faceted approach 

by: (1) replacing existing Federal safety net programs; (2) creating a new 

Dairy Producer Margin Protection Program to protect against both severe 

and unsustainable loss of margin; (3) reforming the Federal Milk Marketing 

Order system; and (4) establishing a Dairy Market Stabilization Program to 

help address periodic imbalances in dairy supply and demand.

1. Replace Current Federal Safety Net Programs 

Foundation for the Future recommends discontinuing the Dairy Product 

Price Support Program (DPPSP) and the Milk Income Loss Contract 

(MILC) program in the next Farm Bill. Instead, Foundation for the Future 

proposes to convert the budgetary savings in the Federal dairy baseline to 

establish the Dairy Producer Margin Protection Program, as described further in this document.

The Dairy Product Price Support Program (DPPSP) and the Milk Income Loss 

Contract (MILC) program deliver inadequate protection against periodic low milk 

prices and destructively-low margins that occur when input costs, especially feed 

prices, rise rapidly. The DPPSP is ineffective as a safety net because it hinders U.S. 

and world markets to adjust to supply-demand signals. It also stifles product innovation. The MILC program fails to assist farmers when they need it the most, often 

providing payments to producers when margins were in fact, relatively good. The 

feed cost adjustor in MILC assists only when feed costs are very high. In 2008, 

when producers were severely impacted by high feed costs, these programs didn’t 

help them until after the milk price crashed at the end of the year. 

2. Dairy Producer Margin Protection Program 

Foundation for the Future recommends establishing a new program entitled the Dairy Producer Margin Protection Program (DPMPP) which is inVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00987 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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tended to support producer margins, not prices. DPMPP is a program that 

is designed to address both catastrophic conditions, which can result in the 

severe loss of equity for dairy farmers, such as those witnessed in 2009, as 

well as long periods of low margins, such as those in 2002. Under this program, ‘‘margin’’ is simply defined as the All-Milk Price minus feed costs. 

Feed costs are determined using a new feed ration that has been developed 

to more realistically reflect those costs associated with feeding the entire 

dairy farm enterprise, including milking cows, heifers, etc. The DPMPP operates on the premise of providing a basic level of protection (i.e., insurance coverage) for all producers and a voluntary supplemental coverage. 

The basic coverage is fully-subsidized by the Federal Government (as was 

the case with the DPPSP and MILC), while the supplemental coverage is 

voluntary and premiums are partially subsidized by the government, but in 

a manner in which the level of subsidization decreases as the level of coverage per hundredweight increases. Consequently, dairy farmers electing 

to insure their operations beyond the fully-subsidized basic level coverage 

would pay the non-subsidized portion of the premium associated with the 

supplemental coverage. The DPMPP is intended to be a Title I program operated by the Farm Service Agency (FSA). Since DPMPP is a margin insurance program, it is proposed to have no payment limitations based on income and/or size of herd.

In the future, the solvency of dairy farms will depend ultimately on margins (the 

difference between milk prices and overall costs—in particular, feed costs) rather 

than just the milk price alone. The economic hardship of 2009 revealed that relatively high prices do not guarantee profitability when accompanied by high input 

costs. A program that helps provide income insurance coverage for dairy farmers 

during periods when their margins are low, or even negative, is a key element of 

Foundation for the Future.

In developing the DPMPP, the following important principles were observed:

(1) Losses caused by either low milk prices or high feed costs need to be covered;

(2) A dairy farmer’s cost for the basic level of protection must be subsidized by 

the Federal Government since the DPPSP and MILC are being replaced by the 

DPMPP;

(3) The level of voluntary supplemental protection should be flexible, and producers should be able to purchase additional protection to complement the nature of their operations;

(4) The program should be voluntary, national in scope, and open to all dairy 

farmers, regardless of size without payment limitations;

(5) The program should address both catastrophic conditions and long periods 

of relatively low margins, yet not provide incentives to create artificial over-production; and

(6) The program must be easily accessed by all producers through a simple application process or through the assistance of their cooperative. 

3. Federal Milk Marketing Order Reform 

Foundation for the Future’s revisions to the Federal Milk Marketing 

Order (FMMO) Program address the following fundamental issues associated with the current milk pricing system that are of concern to both dairy 

producers and processors. The proposal:

• Replaces end product pricing formulas with a competitive milk pricing 

system

• Incorporates a pricing system for two classes of milk: fluid (Class I) and 

manufacturing (formerly Class II, III and IV product uses)

• Maintains the ‘‘higher of’’ for establishing the fluid use (Class I) minimum base price

• Maintains current Class I differentials

• Maintains the number and basic structure and provisions of Federal 

Orders

FMMOs have provided an important support system for dairy farmers and cooperatives for many years. They have worked to establish consistent pricing mechanisms for milk for all uses, provide audited data on marketed milk, and help maintain supplies for bottlers and to compensate their suppliers. In recent years, however, dairy markets have become more complex and current Federal Order provisions have experienced difficulty accommodating them. Markets have evolved—from 

977

regional, to national, and now global. Pricing has become complex and linked to 

markets—including unregulated areas, state marketing orders, and international, 

which are not under the control of FMMO regulation. 

The current end-product pricing formulas set minimum milk prices for dairy farmers by fixing a maximum gross margin for manufacturers of the benchmark products. This creates winners and losers between producers and processors, and even 

among cooperatives, and has strained commercial relationships and distracted from 

other potentially constructive reform efforts. When the end-product pricing formulas 

require adjustment, it is done through a lengthy and, most often, divisive FMMO 

formal rulemaking process. The goal of NMPF’s effort is to develop a pricing system 

that compensates producers fairly, reduces price volatility, and creates a more dynamic dairy industry. The key in doing so is to eliminate the present end-product 

pricing formulas that have been troublesome since their establishment. Another goal 

is to create a timelier and more transparent system in order to avoid distorting market signals sent both to producers and processors. 

4. Dairy Market Stabilization Program 

Foundation for the Future is recommending the establishment of a Dairy 

Market Stabilization Program (DMSP) in order to address extreme volatility in dairy producer margins by sending strong and timely signals to 

producers that temporarily reducing milk production by a small percentage will have a positive impact on their overall margins. As the U.S. dairy 

industry increases its global participation, exposure to greater price volatility is more likely. The DMSP is intended to absorb some of the market 

shocks that this volatility may cause. The DMSP is designed to act swiftly, 

but infrequently, to address brief imbalances in the market. The program 

is also designed to work in conjunction with the Dairy Producer Margin 

Protection Program (DPMPP).

Key principles of the DMSP include:

(1) Allow for production growth—The program is intended solely to intervene 

in the market to address temporary imbalances between supply and demand. 

The program will send clear and timely economic signals to producers that 

there is an imbalance in the marketplace;

(2) Reduce margin volatility—The program’s ultimate objective is to prevent 

acute imbalances in the marketplace that negatively impact producer margins. 

By encouraging producers to lower their milk marketings at appropriate times, 

prices should rise, thus improving margins;

(3) Minimize government intervention—The legislation will set the parameters 

that trigger the program and USDA’s role will be limited to calculating the actual margin on a monthly basis using data from CME and NASS information; 

and

(4) Not encourage imports or discourage exports—Global and U.S. markets must 

maintain a strong correlation. Such correlation will allow domestic inventories 

to clear faster, encourage exports, discourage imports, and help assure that 

market downturns are of shorter duration.

The program will only go into effect when the actual margin (determined using 

the same calculations of the DPMPP) falls below a set margin trigger level for two 

consecutive months. Once DMSP is triggered, producers will receive payment for 

only a certain percentage of their base milk marketings. The percentage of milk 

marketings upon which payment will be based shall be determined according to the 

severity of the margin loss. A maximum reduction in milk marketings upon which 

payment will be based will also be established according to a predetermined formula. Producers whose milk marketings in a month when the program is in effect 

are less than the set percentage of their base milk marketings upon which payment 

will be based would not be subject to a reduction in payment. The program would 

cease once the margin trigger level has been exceeded for two consecutive months. 

The DMSP will cover all producers in all markets. Monies resulting from reductions 

in producer payments will be collected by the Agricultural Marketing Service (AMS) 

using the same framework used to collect the dairy promotion monies and will apply 

to all milk marketed with no exemptions. The USDA will announce that the DMSP 

is being implemented 30 days in advance of the month in which the program goes 

into effect. Although not effectuate through any decision-making on the part of 

AMS, the DMSP is intended to be a government program administered by that 

agency. The purpose of the monies collected through the DMSP is to effectively 

stimulate the domestic consumption of dairy products through contributions to food 

assistance programs. 

978

Conclusion 

All of these recommendations and proposed changes will ultimately require a new 

way of thinking about U.S. dairy policy, milk pricing systems, and the impact of 

margin on individual dairy operations. NMPF is not underestimating the size of the 

shift in attitude necessary on the part of producers and other sectors of the industry 

to give these proposed programs a fair evaluation. We realize it will take a great 

deal of education and communication as we proceed to gain industry consensus on 

Foundation for the Future. However, if there is a lesson to be learned from 2009, 

it is that the present safety nets are inadequate, the present pricing system is not 

serving the industry well, and that change is needed. Foundation for the Future 

represents the timeliest opportunity for changing the direction of dairy 

policy for the future of our dairy farmers by assisting the entry of new generations of dairy farmers and helping the entire industry meet the challenges of a new global marketplace. 

For more detailed information on Foundation for the Future, including 

video and PowerPoint presentations, go to www.futurefordairy.com.

Detailed Descriptions of Individual Program Elements 

1. Replace Current Federal Safety Net Programs 

• Discontinuing the Dairy Product Price Support Program (DPPSP) 

would allow greater flexibility to meet increased global demand and 

shorten periods of low prices by reducing foreign competition.

• Shifting resources from the DPPSP and Milk Income Loss Contract 

(MILC) Program towards the new Dairy Producer Margin Protection 

Program (DPMPP) would provide farmers with a more effective safety 

net.

Discontinuing the Dairy Product Price Support Program

The DPPSP was created in 1949 as a means to help provide government support 

for farm-level milk prices. During most of its lifespan, the program targeted a set 

milk price, and then established pricing targets for key products, such as cheese, 

butter and non-fat milk powder, that would help support that price. 

In the 2008 Farm Bill, the program was altered to support specific products, ending its focus on a singular milk price, and targeting specific product price levels. Regardless of its function, however, NMPF believes it is now time to end the DPPSP 

and shift resources toward a new Federal safety net. Here’s why:

1. It supports dairy farmers all around the world and disadvantages 

U.S. dairy farmers.

The current program helps balance world supplies by encouraging the periodic 

global surplus of milk products to be purchased by U.S. taxpayers. As a result, dairy 

farmers in other countries, particularly the Oceania region, enjoy as much price protection from the DPPSP as our own U.S. farmers. Without the USDA’s Commodity 

Credit Corporation (CCC), buying up occasional surpluses of dairy proteins in the 

form of nonfat dry milk, a temporarily lower world price would affect America’s competitors, all of whom would be forced to adjust their production downward and ultimately hasten a global recovery in prices.

2. It reduces total demand for U.S. dairy products and dampens our 

ability to export, while encouraging more foreign imports into the U.S.

The price support program effectively reduces U.S. exports, by diverting some of 

the U.S. milk flow into government warehouses, rather than to commercial buyers 

in other nations. It creates a dynamic where it is more difficult for the U.S. to be 

a consistent supplier of many products, since sometimes the domestic industry has 

products to export, and at other times, the domestic industry just sells to the government.

3. It acts as a disincentive to product innovation.

The DPPSP distorts what the U.S. produces—for example, too much nonfat dry 

milk, and not enough protein-standardized skim milk powder, as well as specialty 

milk proteins, such as milk protein concentrates—that are in demand both domestically and internationally. 

Because the price support program is a blunt instrument that will buy only nonfat 

dry milk and because some plants have been specifically built to produce nonfat dry 

milk, it puts the U.S. at a competitive disadvantage with respect to other global 

dairy vendors.

4. It isn’t effectively managed to fulfill its objectives.

979

Although the DPPSP has a standing offer to purchase butter, cheese and nonfat 

dry milk, during the past 12 years, only the last of that trio has been sold to the 

USDA in any significant quantity. In essence, the product that the DPPSP really 

supports is nonfat dry milk. Even at times when the cheese price has sagged well 

beneath the price support target, cheese makers have chosen not to sell to the government for a variety of logistical and marketing-related reasons. NMPF has tried 

to address these problems, but the USDA shows no inclination toward facilitating 

greater purchases of product by recognizing the additional costs required to sell to 

government specifications. Once purchased, powder returning back to the market 

from government storage also presents challenges, dampening the recovery of prices 

as evidenced in Chart 1.

Chart 1

U.S. and World Prices—SMP/NFDM

5. It seeks to achieve price levels that are no longer relevant to farmers.

Even though the $9.90 per hundredweight target was eliminated in the last Farm 

Bill, the individual price support targets—$1.13 per pound for block cheese, $0.85 

for powder, and $1.05 for butter—will essentially return Class III and IV prices 

around $10 per hundredweight. In an era of higher costs of production, that minimal price isn’t acceptable in any way, shape or form as the following chart so clearly 

demonstrates. As shown on Chart 2, the effective price support level has been considerably less than the cost of production for many years. The government is not 

at all likely to raise the support prices (which would have negative consequences 

both for the burgeoning Federal deficit, as well as our trade treaty limitations), and 

even if it did, the industry would likely experience continued delays in the recovery 

of prices when the program is most needed. 


1122035.eps
980

Chart 2

Price Support Level and Costs of Production, 2006–2011

Source: USDA Economic Research Service.

In summary, discontinuing the DPPSP would eventually result in higher 

milk prices for U.S. dairy farmers. By focusing on indemnifying against 

poor margins, rather than on a milk price target that is clearly inadequate, 

the industry can create a more relevant safety net that allows for quicker 

price adjustments, reduces imports and facilitates exports. As a result of 

the present DPPSP, the U.S. has, in effect, become the world’s balancing 

plant. As time marches on, so, too, must our approach to helping U.S. dairy 

farmers.

Discontinuing the Milk Income Loss Contract (MILC) Program

MILC is a price-based safety net, which is as ineffective for today’s dairy producers as the Dairy Product Price Support Program. In 2008 and 2009, MILC 

proved to be an inconsistent safety net program for dairy farmers facing very low, 

or even negative, operating margins. MILC, despite its feed cost adjustor, does not 

adequately offset high feed costs and its price target does not track national farm 

milk prices. 

MILC payments depend on a low milk price. If milk prices are at average levels 

and feed costs are high, farmers can suffer substantial losses and still not receive 

any assistance from MILC. Although a feed cost adjustor was added in the 2008 

Farm Bill, this program does not go into effect until the price of the National Agricultural Statistics Service (NASS) standard feed ration reaches $147 per ton (equivalent, for example, to $3.75 per bushel of corn, $9.50 per bushel of soybeans, and 

$130 per ton of alfalfa). It also only covers about 30 percent of the feed price increase above this high level. This was clearly inadequate through most of 2008, 

when high feed costs overwhelmed average milk prices and put most farmers into 

a deep hole without the help of any MILC payments. The current feed ration utilized in the MILC has not been sufficiently updated to reflect today’s current dairy 

farm feeding practices. On the other hand, the Dairy Producer Margin Protection 

Program recommends utilizing a new feed ration reflective of the entire dairy feeding enterprise at the farm level. 

The MILC target price is a Class I price. Class I is currently based on the ‘‘higher 

of’’ Class III or IV prices, so when the Class IV (butter powder) price or the Class 

III (cheese) price is high, MILC payments can be low or zero, even if producers are 

facing low margins. That is why the whole premise of the Foundation for the Future is changing the focus of dairy farmers from price targets to margins.

The MILC program is inequitable in its treatment of dairy farmers and, therefore, 

ineffective in its objective of providing economic relief to dairy farmers in time of 

need. Requiring producers who market more than 2.985 million pounds of milk a 

year to guess in which of the coming twelve months they will most need economic 


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assistance is why it is ineffective. Limiting the level of protection to a maximum 

of 2.985 million pounds of milk a year provides protection for less than 30 percent 

of the total milk produced in the U.S. A basic principle of Foundation for the 

Future is that all farmers should be treated equally regardless of size or region.

As dairy farmers face growing volatility in both their feed costs and their milk 

prices, the milk price-based dairy producer programs are no longer adequate or efficient. As evidenced significantly in 2009, the MILC program does not provide an effective safety net for dairy producers. It is for these reasons that Foundation 

for the Future recommends discontinuing the Dairy Product Price Support 

Program (DPPSP) and the Milk Income Loss Contract (MILC) program in 

the next Farm Bill and using the budgetary savings in the Federal dairy 

baseline to establish the new Dairy Producer Margin Protection Program 

as described next in this document. 

2. Dairy Producer Margin Protection Program 

Foundation for the Future recommends establishing a new program entitled the Dairy Producer Margin Protection Program (DPMPP), which is intended to support producer margins, not prices. DPMPP is a program that 

is designed to address both catastrophic conditions, which can result in the 

severe loss of equity for dairy farmers, such as those witnessed in 2009 as 

well as long periods of low margins, such as those experienced in 2002. 

Under this program, ‘‘margin’’ is simply defined as the All-Milk Price minus 

feed costs. Feed costs are determined using a new feed ration that has been 

developed to more realistically reflect those costs associated with feeding 

the entire dairy farm enterprise including milking cows, heifers, etc. The 

DPMPP operates on the premise of providing a basic level of protection 

(i.e., insurance coverage) for all producers and a voluntary supplemental 

coverage. The basic coverage is fully-subsidized by the Federal Government (as was the case with the DPPSP and MILC), while the supplemental 

coverage is voluntary and premiums are partially subsidized by the government, but in a manner in which the level of subsidization decreases as 

the level of coverage per hundredweight increases. Consequently, dairy 

farmers electing to insure their operations beyond the fully-subsidized 

basic level coverage would pay the non-subsidized portion of the premium 

associated with the supplemental coverage. The DPMPP is intended to be 

a Title I program operated by the Farm Service Agency (FSA). In terms of 

U.S. obligations as a member of the World Trade Organization (WTO), the 

program has also been designed to fit within the permitted provisions for 

agricultural policies, as well as within the subsidy limits permitted for U.S. 

agriculture. Finally, since DPMPP is a margin insurance program, it is proposed to have no payment limitations based on income and/or size of herd.

Background

Increased volatility in milk and feed markets has driven interest in developing a 

new approach to providing a Federal safety net for milk producers. Development of 

a new margin insurance program for milk producers will provide dairy farmers the 

support they need when their margins fall because of low milk prices or high feed 

costs. The program would enable producers to protect or insure their margin (AllMilk Price minus feed cost) by enrolling in a margin insurance/protection program. 

The DPMPP will help dairy farmers survive financially difficult times by paying 

them an insurance indemnity (payout) when catastrophic or significant losses occur 

in their dairy operations.

The New Measure of Feed Costs

DPMPP requires calculating the margin over feed costs on a dollar per hundredweight of milk basis. This is equal to the price received per hundredweight of milk 

minus the total cost of purchased feed needed to produce a hundredweight of milk. 

Other production cost components such as labor, energy, depreciation, capital, veterinary services, and nutritional supplements vary greatly across individual operations and will need to be addressed by producers when determining their desired 

level of coverage. To determine feed costs, DPMPP uses a new measure based on 

a daily ration for lactating cows shown in Table 1. The new feed ration was developed by NMPF with the support of a number of experts and prominent animal nutritionists (Attachment 4) from all across the country. This ration, which is for a cow 

producing the national average of 68.85 pounds of milk per day, uses the four feed 

ingredients shown in that table to capture the changes in dairy farmers’ feed costs 

that result from volatile prices in the feed commodities markets.

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Table 1—Daily Quantities of Feed Ingredients for a Lactating Cow 

Ingredient 

Quantity of 

Dry Ingredient 

(lbs/day) 

Moisture

Content 

Quantity of 

Commercial

Ingredient

(lbs/day) 

Quantity in Commercial 

Units (units/day) 

Shelled Corn 15.4 14% 17.9 0.319803 bushels 

Corn Silage 16.0 65% 45.7 0.02286 tons 

Soybean Meal 5.7 12% 6.5 0.003238 tons 

Alfalfa Hay 10.0 15% 11.8 0.00588 tons 

The DPMPP feed cost measure also includes daily rations for all milk cows and 

replacement heifers on a model dairy farm enterprise that are not producing milk 

sold on a given day, but are necessary for the milk production enterprise. These include hospital cows, dry cows, and replacement calves and heifers of all ages, as 

shown in Table 2. The specific rations for these animals are also based on the same 

four feed ingredients, as shown in that table.

Table 2—Daily Quantities of Feed Ingredients for the Entire Herd 

Cow Type Proportion 

of Herd 

Dry

Matter 

Consumed

(lbs/day) 

Quantity in Commercial Units (units/day) 

Shelled 

Corn

(bu/day) 

Corn

Silage

(tons/day) 

Soybean 

Meal 

(tons/day) 

Alfalfa 

Hay

(tons/day) 

Milking Cows 52.49% 47.1 0.3198 0.0229 0.0032 0.0059

Hospital Cows 1.05% 47.1 0.3198 0.0229 0.0032 0.0059

Dry Cows 8.82% 24.0 0.0249 0.0172 0.0020 0.0042

Replacements Heifers:

Calving within 1 year 18.53% 23.0 0.0239 0.0164 0.0020 0.0041

500 lbs. and over 9.55% 15.0 0.0311 0.0107 0.0013 0.0022

Less than 500 lbs. 9.55% 7.0 0.0363 0.0045 0.0006 0.0006

The total cost of feed per hundredweight of milk is determined by adding the total 

daily cost of purchasing the four feed ingredients used in the amounts shown in 

Table 2 and dividing the result by the daily volume of milk marketed, which is 

0.6885 hundredweights for each milking cow. Because this feed cost measure is on 

a per hundredweight of milk basis, its calculated value for any set of prices for the 

four ingredients is the same regardless of the actual number of animals that make 

up the model dairy farm enterprise, as long as the animals of the various categories 

are in the proportions shown in Table 2. And because the feed cost used in the 

DPMPP margin calculation captures the total cost of feed purchased, it uses a 

shrink factor of 10 percent between the volumes of all feed ingredients purchased 

and the volumes of those ingredients actually consumed by animals. 

Although the new feed cost measure is derived from an analysis of daily feed rations, it has the same calculated value for any set of prices for the four ingredients 

regardless of the period of time used. For administering the DPMPP, this calculation will be done monthly using monthly prices for the four basic feed ingredients. 

The DPMPP feed cost for corn for a particular month will be calculated using the 

Chicago Mercantile Exchange (CME) average daily settlement price for every trading day during that month for the corn futures contract closest to expiration. The 

feed cost for soybean meal will be computed using the same methodology. The 

monthly price paid for alfalfa hay, per ton, will be the monthly price received by 

farmers in the U.S. reported by USDA’s National Agricultural Statistics Service 

(NASS). The monthly price paid for corn silage, per ton, is determined using the 

monthly price paid for corn, as described above, by the formula:

Price of corn silage, per ton = 10.1 μ Price of corn, per bushel.

The DPMPP feed cost measure can therefore be calculated using just three prices, 

for corn, soybean meal and alfalfa hay. The formula for this calculation is:

Feed cost per cwt. of milk = 1.192 μ Price of corn, per bushel + 0.00817 μ

Price of soybean meal, per ton + 0.0152 μ Price of alfalfa hay, per ton.

Historical monthly feed costs since 2000 are shown in Chart 3 below. 

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Chart 3

Feed Costs Per Cwt, 2000–2011

The role that feed costs play in the DPMPP is to capture the volatility of feed 

costs paid by dairy farmers, relative to an average or expected level. For this purpose, it is important that the measure used to calculate feed costs is adequately sensitive to the volatility or variability in the markets for feed components, as opposed 

to the actual level of these costs. For the period since 2000, the new DPMPP feed 

cost shows exactly the same level of variability as does the cost of feed to produce 

milk reported by USDA’s Economic Research Service based on periodic farm survey 

data. 

The DPMPP milk-feed margin is then determined for each month as the difference between the monthly price received by farmers for all milk sold in the U.S., 

the All-Milk Price, reported by USDA/NASS minus the monthly feed cost, as determined above. The resulting monthly margins are shown in Chart 4 below for the 

period since 2000, together with the monthly All-Milk Price and the feed costs used 

to determine them. 


1122037.eps
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Chart 4

Milk Price, Feed Costs, and Margins, 2000–2011

Operation of the DPMPP

The DPMPP will provide two levels of coverage: a Basic Plan and a Supplemental Plan (both described below). The DPMPP has been created to protect producers from catastrophic or significant losses due to low margins, not to set milk 

prices. Since it is an insurance program, the DPMPP is designed to cover 

all producers regardless of size or region. The DPMPP is intended to be a Federal Farm Program run by local Farm Services Agencies (FSA), not by private insurance companies. The DPMPP will not encourage or provide support for expanded 

production. Support will only be provided based on the producer’s historical milk 

production, except for new entrants. 

Under the program, USDA will use historical data to project future margins (defined as All-Milk Price minus feed costs). The levels of protection under the program 

will be $4.00 for the Basic Plan and the maximum level of coverage under the Supplemental Plan will be the lesser of USDA’s projected margin or $8.00. 

Producers will sign up for the Basic Plan at no cost. In addition, they will have 

an option to purchase Supplemental margin protection by paying a premium that 

is inversely subsidized as the level of requested level margin coverage increases. In 

other words, as the level of requested coverage increases, the percentage of the premium subsidized by the Federal Government decreases. The margin guarantees will 

be fixed for the duration of the Farm Bill once the producer has signed up. 

USDA will calculate, on a monthly basis, the margin (i.e., the actual All-Milk 

Price for that month minus the feed costs) by using: (1) the current formula for determining the All-Milk Price, and (2) the feed costs calculated on the basis of the 

new NMPF ration described on p. 16 [sic] in this document. USDA will calculate 

the average margin for each consecutive two month period and compare it to the 

Basic margin which will be set at $4.00 by the authorizing legislation at the start 

of the program, as well as the Supplemental margins for each individual producer 

(determined at the time the producer signed up) and calculate whether an insurance 

payment is necessary to the individual producer.

The Basic Plan

The Basic Plan is voluntary and is intended to address catastrophic losses only. 

It is, therefore, expected to be triggered rarely. As proposed, the Basic Plan margin 

guarantee will be $4.00 per hundredweight for 75 percent of their historic production. Producers will have the ability to sign up for the Basic Plan throughout the 

first year of implementation of the next Farm Bill.

The Supplemental Plan

The Supplemental Plan is also voluntary and is intended to provide additional 

margin protection beyond the Basic Plan’s margin guarantee. However, producers 


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will only be able to sign up for additional coverage up to an additional $4.00 per 

hundredweight unless USDA projects the average margin for the duration of the 

Farm Bill less than $8.00. Unlike the Basic Plan, producers will be able to cover 

up to 90 percent of their production history under this Supplemental Margin Protection Plan. The cost of this optional coverage for an individual producer will depend 

on the level of margin guarantee per hundredweight selected by the producer and 

the volume of milk production to be protected. 

Since this is a new concept, the producer will have a choice under the Supplemental Plan to purchase additional coverage throughout the first year. The producer 

will pay a prorated premium for the first year based on the date on which the producer purchases the coverage. Once the producer signs up, the terms of coverage, 

the level of additional coverage per hundredweight, and the percentage of the production history, will be fixed for the duration of the Farm Bill. 

As mentioned previously, the level of subsidy available to help pay for the premium under the Supplemental Plan will depend on the level of coverage per hundredweight selected by the producer. The higher the margin guarantee selected (i.e.,

the closer to the maximum level allowed), the lower the subsidized rate for the coverage. 

Under the Supplemental Plan, a producer will be able to guarantee a margin 

above the Basic Plan (minimum), but only up to the lesser of the $8.00 margin level 

or USDA’s projected margin for the duration of the Farm Bill. As an example, Table 

3 describes the premium rate per hundredweight above the margin guarantee under 

the Basic Plan (at $4.00) up to the maximum level of protection of $8.00 per hundredweight.

Table 3—Premium Rates for Supplemental Coverage 

Additional

Supplemental

Protection Per Cwt. 

Premium Per Cwt. 

Additional

Supplemental

Protection Per Cwt. 

Premium Per Cwt. 

$0.50 $0.015 $2.50 $0.230

$1.00 $0.036 $3.00 $0.434

$1.50 $0.081 $3.50 $0.590

$2.00 $0.155 $4.00 $0.922

Table 4 is an example of how the premiums for supplemental coverage would be 

calculated using examples of projected margins, feed costs, and milk prices. In Example A below, a producer with 200 cows and a production history of 4.115 million 

pounds purchased an additional $2.00 of supplemental coverage on 90 percent of 

his/her production history. Under the Basic Plan with a margin guarantee of $4.00, 

the producer would have received ‘‘no-cost’’ coverage at a margin of $4.00 on up to 

75 percent of the amount of milk produced. 

The premium for supplemental coverage in this example is $0.155 per hundredweight and results in an annual premium of $5,760.00 each year for the life of the 

Farm Bill.

Table 4—Premium Calculator (Example A) 

Farm Data:

• 200 cow dairy

• 20,576 lbs./cow

• 4.129 million lb. production history

• Wants $2/cwt supplemental on 90% of production history

• Annual Premium Rate 15.5¢/cwt

• Annual Premium $5,760 per year

2009 DPMPP Payout:

• Basic Protection = $27,357

• Net Supplemental Protection = $47,136

• Total Net Payout = $74,492 or Average $1.81/cwt. for the year 

Based on actual market conditions for 2009, the producer in this example would 

have received a payment of $27,357.00 from the Basic Plan. In addition, since the 

producer purchased $2.00 of supplemental coverage on 90 percent of his/her producVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00997 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
986

tion history, the producer would have received an additional net payment of 

$47,136.00 in supplemental coverage and his/her total net payment for 2009 would 

have been $74,492.00 or $1.81 per hundredweight. The annual premium payment for this producer would have been only $5,760.00. 

Table 5 is an example of the same farm, but in this situation, the producer pur- chased additional margin protection under the Supplemental Plan at a $4.00 per 

hundredweight on 90 percent of his/her production history). This example would 

have a premium of $0.922 per hundredweight. and resulted in an annual premium 

of $34,022.00 each year for the life of the Farm Bill.

Table 5—Premium Calculator (Example B) 

Farm Data:

• 200 cow dairy

• 20,576 lbs./cow

• 4.115 million lb. production history

• Wants $4.00/cwt supplemental on 90% of production history

• Annual Premium Rate 92.2¢/cwt

• Annual Premium $34,265 per year

2009 DPMPP Payout:

• Basic Protection = $27,357

• Net Supplemental Protection = $80,571

• Total Net Payout = $107,928 or $2.62/cwt. for the year 

The Dairy Producer Margin Protection Calculator available at 

www.futurefordairy.com can help farmers calculate base and supplemental coverage 

options on his/her own dairy operations, based on their annual milk production.

Other Important DPMPP Specifics

• Dairy Producer Production History

The DPMPP will not support new production. Under the DPMPP, farmers will be 

able to insure a percentage of their milk production history. Each producer signing 

up for the program will have a production history, which is defined as the year of 

highest milk production from among the 3 years preceding implementation of 

DPMPP. Any producer without at least one year of production history will be allowed to use the latest monthly data, extrapolated to a full 12 months prior to the 

implementation of the program. 

The production history is transferable solely with the farm or stays with the farmer. If the farm (installation) is sold, the production history will be transferable with 

the farm to the new owner. In special situations, where the farmer is moving his 

entire operation, the farmer will be able to keep the production history (with the 

old facility no longer having a production history). Additional parameters must be 

in place to avoid abuses of the ‘‘farm sale/move’’ option. The production history will 

be updated every new Farm Bill or 5 years, whichever comes first.

• Penalties (for Supplemental Buyers)

Penalties must be severe to prevent farmers from opting out of the program if it 

is economically convenient to do so. Farmers not complying with their obligations 

will not be eligible to join the program again and will be required to pay back any 

payment received during the previous years. Exemptions will include farmer’s death 

or full retirement (out of business for at least 7 years).

• New Farmers (Entries)

Farmers will be allowed to enter the DPMPP only if they have no ownership interest in other dairy farms. USDA will use a Tax ID system (similar to other government programs) to verify this requirement. New entries will have to apply for 

coverage within 6 months after establishing the farm. New farms will be eligible 

to receive coverage under both the Basic Plan and the Supplemental Plan option.

Economic Analysis of the Dairy Producer Margin Protection Program

Two separate analyses of the impact the DPMPP program would have had on 

dairy farmer income in 2009—one by Dr. Peter Vitaliano, NMPF Vice President of 

Economic Policy and Market Research, and the other by Dr. Scott Brown of the University of Missouri and the Food and Agriculture Policy Research Institute 

(FAPRI)—yielded very similar results. Chart 5 below clearly shows the positive imVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00998 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
987

pact the DPMPP Basic Plan would have had on dairy farmer revenue had it been 

in place in 2009. 

Chart 5

2009 DPMPP Basic Coverage Payments on 90% of Production History

Prepared by: National Milk Producers Federation. 

3. Federal Milk Marketing Order Reform 

Based upon extensive deliberation and analysis during the past 12 months, a proposal for Federal Milk Marketing Order (FMMO) reform has been developed for inclusion in Foundation for the Future. This proposal addresses the fundamental 

issues associated with the current milk pricing system that are of concern to both 

dairy producers and processors. The proposal:

• Replaces end-product pricing formulas with a competitive milk pricing system.

• Incorporates a pricing system for two classes of milk: fluid (Class I) and manufacturing (formerly Class II, III and IV product uses).

• Maintains the higher of for establishing the fluid use (Class I) minimum base 

price.

• Maintains current Class I differentials.

• Maintains the number and basic structure and provisions of Federal Orders.

The proposed reform program is focused on basic pricing and changes in pooling 

that follow from the suggested revisions to the pricing system and recommends the 

consideration of additional and reformed balancing programs. The basic framework 

of FMMOs—including marketing areas, Class I differentials, producer location differentials and plant and producer pooling qualifications—are left intact by the proposal. That is, it does not propose to review or revise the myriad of Federal Order 

details that have been designed to serve many specific and regional needs.

Introduction

The Federal Milk Marketing Order system provides substantial benefits to producers. These include the equitable pooling of minimum Class I revenues, the dissemination of important market information, and the third-party audit of milk use 

in plants. 

Unfortunately, the current end-product pricing formulas used to calculate minimum manufacturing milk prices have had some unintended consequences since 

they replaced competitive milk price surveys in 2000. The make allowances and 

yield factors built into these formulas have become a source of conflict within the 

industry and have created winners and losers. Producers believe that make allowances unfairly guarantee a profit to processors and processors insist that the formulas don’t allow them to capture a fair return on their investment. There is also 

concern that the make allowances negatively impact the Dairy Product Price SupVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 00999 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN

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port Program and put Federal Order processors at a competitive disadvantage with 

unregulated areas and state milk marketing orders. 

In addition, the inflexibility of minimum prices based on specific product prices 

can create risk for processors who produce other products, when the government requires them to pay a price that doesn’t match the value of their products. 

There is also concern by both producers and processors that the Federal Orders 

don’t adequately address the difficulty and expense of balancing fluid milk supplies. 

Consequently, the primary objectives of the Foundation for the Future Federal 

Order Reform proposal, are to:

(1) Address the inequities and the inadequacies of end-product pricing formulas;

(2) Encourage manufacturers to produce new products resulting in higher returns both to themselves and dairy producers; and

(3) Provide more equitable rewards producers and handlers for balancing milk 

supplies.

The resulting proposal focuses on adopting competitive pricing for manufacturing 

milk, while maintaining minimum price protection for fluid milk, and pursuing new 

balancing programs in markets where needed. Many other elements of the Federal 

Orders developed over the years for many specific reasons, are left as they are, including Class I differentials, marketing areas, pool plant definitions, and producer 

pooling qualifications. 

The proposed reform program is more market-oriented while preserving the most 

valuable elements of Federal Orders. The use of a competitive pay price as the fundamental basis for pricing milk will enhance price discovery and facilitate the ability to export offering greater opportunities for U.S. dairy products in the global marketplace.

Two Classes

This Federal Order reform proposal will improve price discovery and the transparency of milk pricing. The key element of the proposal is the elimination of the 

end-product pricing formulas for manufacturing milk, including make allowances. 

All milk used in manufactured dairy products will be competitively priced. Consequently, there will be no minimum prices manufacturers are required to pay for 

milk used to produce these products. 

There will, in effect, be two classes of milk use:

• Class I—Fluid milk products. Milk used to produce fluid milk products will 

be subject to minimum pricing, plus market-based premiums.

• Class II—Manufactured products. Milk used for manufacturing (under the 

current system Class II, III and IV products) will be competitively priced in the 

market.

Fluid milk (Class I) Price

Each month, USDA’s Agricultural Marketing Service will carry out a survey of 

the competitive price paid by proprietary cheese plants to cooperatives and individual producers for milk used to make cheese. Proprietary plants (including those 

with 50 percent cooperative ownership or less and managed by the proprietary partner) producing all types of cheese will be surveyed if they process a daily average 

of at least 250,000 pounds of milk and are not subject to minimum pricing for that 

milk (under a state order, for instance). 

The data collected by USDA in the survey will include pounds of milk and pounds 

of butterfat, all premiums, component values, hauling subsidies, and lab and field 

service costs where applicable. Forward contracted milk would not be included. 

USDA will publish the results of this survey for each of the five regions. These 

regions will correspond to, and expand upon, the current Federal Order markets, 

but are defined for reporting purposes only. There will be fewer reporting regions 

than Federal Order markets to ensure that each region has a sufficient volume of 

manufacturing milk use to result in a robust competitive pay price. California would 

be excluded from the survey so long as it continues to set a minimum price for 

cheese milk. 

The basic price determinant or ‘‘price mover’’ for fluid milk (Class I) nationally 

will be the higher of the national weighted average competitive cheese milk price 

survey, or the current Class IV formula butter powder milk value. The price mover 

will be announced in advance. For example, the Class I mover for April would be 

the higher of: (1) February’s national average cheese milk competitive price, adjusted with weighted average NASS block and barrel cheese prices for the first 2 

weeks of March; or (2) an advanced Class IV price as currently calculated. The April 

Class I price mover would be announced by the 23rd of March. The minimum price 

989

for Class I milk would be this national mover plus the current Class I differential 

at the plant.

Manufacturing Milk Price

The price producers are paid for milk in manufactured dairy product uses (as currently defined for Class II, III and IV) will be a competitive price. There will be no 

minimum price for manufacturing milk. 

Each region’s competitive price for milk used to produce cheese, in addition to 

being used in establishing the Class I base price, as described above, will be used 

to determine the butter powder plant pool credit and the lowest of the regional competitive cheese milk prices will enter into the calculation of the Class I pool contribution. (See Pooling below.)

Pooling

In order to stabilize pooled values and eliminate most plant de-pooling, the Federal Order pool would be a modified pooling of differentials, resulting in a producer 

price differential. That is, instead of pooling four class prices, relatively stable price 

differentials and balancing credits would be paid into and out of a differential pool, 

as follows:

• Since the concept of a ‘‘blend price’’ will no longer apply, individual handlers 

of Class I milk would contribute to the pool the lagged difference between their 

Class I price and the lowest regional competitive price. Both the Class I price 

and the lowest regional competitive price would be announced in advance and 

lagged in the same way. The Class I pool contribution would be consistently 

positive from month to month, because it would not depend on a pooling of old 

and new prices, but would only depend on the fixed Class I differential and a 

consistently positive difference between the national mover and the lowest regional cheese milk price. In fact, the full contribution to the pool per hundredweight of Class I milk would be known by the 23rd of the month before.

• Handlers of a subclass of perishable manufacturing milk (generally products 

now in Class II) would contribute a fixed differential of $0.30 per hundredweight in the pool.

• Handlers of milk used to make cheese would have no contribution or draw.

• Handlers of milk used to produce butter and milk powders would receive a payment from the pool when the national value of milk used to make powder and 

butter as calculated using the current Class IV formula adjusted for energy 

costs is less than the regional competitive cheese milk price. When the Class 

IV formula is higher than the regional competitive cheese price, the Class IV 

handler shall pay the difference into the pool. The payment to those who manufacture butter and milk powders will not exceed the funds available in the pool. 

The blended result after the distribution would be a producer price differential 

for all pooled producer milk that would be paid directly from the Market Administrator to producers and producer cooperatives.

Balancing and Transportation Credits Addendum

USDA will be required to hold hearings, either at the national level or for individual orders, when requested for the purpose of considering and implementing proposals to compensate handlers that truly perform balancing services for the Class 

I market. These hearings are to include but not be limited to:

• A plant balancing credit to manufacturing plants that provide balancing 

services to the market.

• Intramarket transportation credits for markets in which balancing is based 

on long shipments of milk from within the marketing area.

How Foundation for the Future’s Federal Order Reform Works

Class I Price Mover and Minimum Price

The Class I price mover for any given month is the higher of the weighted average 

national competitive cheese milk price from two months prior (the base month), or 

the advance Class IV formula price per hundredweight. The competitive cheese milk 

price will be updated using the change in the NASS cheddar cheese price from the 

first two weeks in the base month compared to the price for the first two weeks of 

the month immediately prior to the month for which the Class I price mover would 

be effective. The advance Class IV price is calculated using the current formula and 

the NASS butter and nonfat powder prices for the first two weeks of the month immediately prior to the month for which the Class I price mover would be effective. 

For example, the Class I price mover for June 2011 would be calculated as follows:

990

April competitive cheese price = $17.57

NASS Cheddar Price

• First two weeks April = $1.6768

• First two weeks May = $1.6413

NASS Butter Price

• First two weeks April = $1.9869

• First two weeks May = $2.0460

NASS Dry Whey Price

• First two weeks April = $0.4775

• First two weeks May = $0.4915

NASS NFDM Price

• First two weeks May = $1.6065

Adjusted April competitive cheese milk price = $17.57 ¥ $0.23 = $17.34

Advanced Class IV Formula Price = $20.32

June 2011 Class I Price mover (higher of) = $20.32

Class I handlers must pay their producers a minimum price equal to the lowest 

regional competitive cheese milk pay price in the country, adjusted as the mover is 

above and pay the difference between Class I price and the lowest regional competitive cheese milk price into the pool. The producer price differential (PPD) will be 

paid directly to producers and cooperatives by the Market Administrator.

Class II Product Processor Milk Price and Pool Contribution

Processors of products formerly categorized as Class II will pay their producers 

a competitive price. That is, it is what the processor must pay producers to secure 

a milk supply. There is no minimum price. However, the processors of these products shall pay $0.30 per hundredweight of milk processed into the Federal Order 

pool with which they are associated. Plant pooling and producer qualification requirements are unchanged.

Cheese and Butter Powder Processors

Class III and Class IV product processors price to their producers will be a competitive price. That is, it is what the processor must pay producers to secure a milk 

supply. There is no minimum price. Plant pooling and producer qualification requirements are unchanged. These plants make no pool contribution.

Distribution of the Pool

The funds in each order’s pool shall consist of:

• From Class I handlers:

» The applicable Class I differential.

» The difference between the Class I price mover and the lowest regional competitive advanced Class III survey price adjusted as described above.

• From soft dairy product (Class II in the current system) pool handlers/processors:

» The $0.30 differential.

• From butter powder milk pool handlers:

» Any amount that the butter powder (Class IV in the current system) formula 

price (adjusted for energy costs of processing) is above the region’s competitive 

cheese milk price.

If the butter/powder formula price is below the region’s competitive cheese milk 

price, the first distribution from an order’s pool will be to handlers of butter powder 

milk up to a maximum of the total funds available in the pool. 

The remaining pool balance is paid to producers in the Producer Price Differential 

(PPD), subject to location adjustments and other pool balancing adjustments, as of 

today. So that the PPD cannot be negative, the draw for butter powder pool handlers cannot exceed the available pool balance. The PPD is paid directly to producers and to producer cooperative associations, to keep it separate from the competitive prices paid to producers by handlers/manufacturers.

NMPF Five Year Analysis Summary

991

The table shows the impact of the proposed Federal Order reforms as described 

above on the producer price differential in each order using actual pooled volumes 

and underlying market values.

Table 6—Producer Price Differentials, 2006–2010

Current FFTF Difference 

Northeast 1 $1.75 $2.01 +$0.26

Appalachian 5 $2.62 $2.94 +$0.32

Florida 6 $4.32 $4.72 +$0.40

Southeast 7 $2.72 $3.03 +$0.31

Upper Midwest 30 $0.29 $0.40 +$0.11

Central 32 $0.48 $0.71 +$0.24

Mid-east 33 $0.80 $1.09 +$0.29

Pacific Northwest 124 $0.33 $0.74 +$0.41

Southwest 126 $1.41 $1.87 +$0.47

Arizona 131 $0.78 $1.01 +$0.23

Based on pooling Class IV, snubbed to total value in the pool. 

In Summary

Foundation for the Future’s proposal to revise Federal Milk Marketing Orders will 

provide a number benefits:

• Discover a true market price for milk used in manufactured products rather 

than a price generated by a formula using thinly-traded product values and contentious make allowances.

• Reduce price volatility—analysis shows that a competitive pricing system results in less volatility than product price-driven formulas.

• Encourage product innovation by not locking manufacturers into a minimum 

price based on the value of a dissimilar product.

• Provide more equitable compensation to the cooperatives and other handlers 

who do the hard work of balancing fluid markets.

• Maintain the core framework of Federal Milk Marketing Orders.

Federal Orders provide an important support system for processors, dairy farmers, and cooperatives through pooling of Class I values, providing third-party audits 

to verify market pricing, and helping to maintain supplies for fluid processors by 

compensating their suppliers. Without reform, Federal Orders will be strained to 

the point that their existence comes into question, to the producer’s loss. 

The reforms proposed as part of Foundation for the Future will accommodate the 

growing complexity of U.S. and international dairy markets while maintaining the 

basic framework of the FMMO system and preserving the elements of the orders 

that are most important to producers and processors. These reforms will promote 

a milk pricing system that compensates producers fairly, reduces price volatility, 

and creates a more dynamic dairy industry. 

4. Dairy Market Stabilization Program 

➢ Foundation for the Future is recommending the establishment of a 

Dairy Market Stabilization Program (DMSP) to address and prevent extreme margin volatility for dairy producers by sending strong and 

timely signals to producers that a small percentage of additional milk 

production may have significant consequences on their overall margins. The DMSP is intended to absorb some of the market shocks that 

this volatility may cause. The DMSP has been designed to act swiftly, 

but infrequently, to address brief imbalances in the market. The program will work in conjunction with the Dairy Producer Margin Protection Program (DPMPP). DMSP is compatible with the United State’s 

WTO obligations.

The U.S. dairy industry has been actively increasing its global participation. This 

increased interaction with global markets, will likely create more exposure to greater price volatility. Some of the key principles that guided the development of the 

DMSP include:

• Allow for production growth. The program is intended solely to intervene in the 

market to address temporary imbalances between supply and demand. The proVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 01003 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
992

gram will send clear economic signals to producers that there is an imbalance 

in the marketplace.

• Reduce margin volatility. The program’s ultimate objective is to restore balance 

between supply and demand in the marketplace for milk. By encouraging producers to lower their milk marketings at appropriate times, prices should rise, 

thus improving margins.

• Keep government intervention at a minimum. The legislation establishing the 

program will set the parameters that put it into effect. USDA’s role will be limited to determine the actual monthly margin and to collect potential farmers’ 

contributions. It does not require a producer advisory board to determine when 

the program would ‘‘trigger in’’ and to what extent.

• Not encourage imports or discourage exports. Global and U.S. markets must 

maintain a strong correlation. Such correlation will allow domestic inventories 

to clear faster, encourage exports, discourage imports, and help ensure that 

market downturns are of shorter duration.

Margin as the Trigger Mechanism for DMSP

As in the case of the DPMPP, the DMSP will be based on margin (All-Milk Price 

minus feed costs). After extensive analysis and review of state, regional and national data, it has been determined that the All-Milk Price is the most appropriate 

and accurate measure for use in development of the margin. The new feed cost ration developed for the DPMPP will also be used in the feed cost formula for this 

program; hence the actual margin will be determined each month using the same 

methodology as the Dairy Producer Margin Protection Program.

Program Operation

USDA will calculate the monthly margin for both the DPMPP and the DMSP 

using identical methodology. The margin trigger levels for the DMSP will be set as 

follows:

• When the actual national margin is $6.00 or less for 2 consecutive months, producers will be paid the higher of 98 percent of their base milk marketings (definition follows) or 94 percent of their current milk marketing (definition follows);

• When the actual national margin is $5.00 or less for 2 consecutive months, producers will be paid the higher of 97 percent of their base milk marketings or 

93 percent of their current milk marketing;

• When the actual national margin is $4.00 or less in a single month, producers 

will be paid the higher of 96 percent of their base milk marketings or 92 percent 

of their current milk marketing.

As noted above, the DMSP would only take effect when the actual margin 

is equal to or below the margin trigger level for 2 consecutive months, except that the program would go into effect if the national margin is equal 

to or below $4.00 per hundredweight in a single month. Conversely, when 

the DMSP is in effect, if the actual national margin exceeds the $6.00 trigger level margin for 2 consecutive months, the DMSP will be suspended.

Producers whose milk marketings in a given month are less than the required 

percentage of their base milk marketings serving as the basis of payment when the 

program is in effect would not be subject to a reduction in payment. (See examples 

below.)

Bases to be Used in the DMSP

The specified percentage of base milk marketings which will serve as the basis 

of payment when the program is in effect will be calculated off the producer’s base. 

The producer’s base is defined as the 3 month average of the most recent of milk 

marketings prior to the notification from USDA that the margin trigger level has 

been reached. An example of a 3 month average would include the average of marketings for January, February, and March for a program to be implemented in May. 

This base would remain fixed at that level until the margin exceeds the $6.00 trigger level for 2 consecutive months. To address any conditions specific to individual operations (e.g., seasonality or grazing), a producer will have the option of choosing the same month in the previous year as his/her base for 

each month the DMSP is in effect, making the selection annually.

Preventing an Influx of Dairy Product Imports

When domestic prices are significantly higher than world prices, conditions are 

ripe for an influx of imported dairy products. Therefore, if either of the U.S. prices 

for cheddar cheese or skim milk powder (SMP) is 20 percent higher than the world 

price for the applicable commodity, DMSP will be discontinued unless the national 

993

average margin is below $4.00. In this case, conditions would be such that even if 

the world prices for cheddar cheese or SMP are 20 percent below the U.S. price, the 

implementation of the DMSP would continue. 

The following examples explain how the program is intended to work: 

Scenario—The average margin for 2 months, February and March, is below the 

set margin trigger level of $6.00. As a result of the margin falling below $6.00 for 

2 consecutive months, producers will be notified in early April that beginning with 

the milk marketings for the month of May, they will receive payment for the greater 

of 98 percent of their base milk marketings (in this example the average of their 

January through March monthly marketings) or 94 percent of their milk marketings 

for May. For purposes of this example, it is assumed the pay price for the month 

of May is $14.00 per hundredweight.

• Producer A whose 3 month average base milk marketings is 1,000,000 pounds 

and markets 1,010,000 pounds in May will be paid for 980,000 pounds of milk 

(1,000,000 pounds × 98 percent). The DMSP deduction from his/her milk check 

for May is 30,000 pounds (1,010,000 pounds minus 980,000 pounds) × $14.00 

per hundredweight = $4,200.00.

• Producer B whose 3 month average base milk marketings is 1,000,000 pounds 

and markets 1,200,000 pounds of milk in May. In this example, 98 percent of 

his/her base is 980,000 pounds. However, 94 percent of his/her current (May) 

milk marketings is 1,128,000 pounds. Therefore, the quantity of milk Producer 

B is not paid for is 1,200,000 pounds ¥ 1,128,000 = 72,000 pounds. The deduction from his/her milk check would be 72,000 pounds × $14.00 per hundredweight = $10,080.00.

• Producer C also has a 3 month average base of 1,000,000 pounds and his/her 

milk marketings are 979,000 pounds in May. This producer would have nothing 

deducted from his/her milk check since milk production in May is below the required 98 percent of his/her base (980,000 pounds), serving as the basis of payment. However, if this producer’s June marketings were to increase to 989,000 

pounds, he/she would incur a reduction in his/her milk check of $1260.00 (9000 

pounds × $14.00 per hundredweight), since his/her June marketings exceeded 

the 98 percent of base serving as the basis of payment.

• Producer D chooses the option of the same month in the previous year. His/her 

base milk marketings were 1,000,000 pounds in May of the previous year and 

1,010,000 pounds were marketed in May of the current year. He/she will be 

paid for 980,000 pounds of milk (1,000,000 pounds × 98 percent). The DMSP 

deduction from his/her milk check for May is 30,000 pounds (1,010,000 pounds 

¥ 980,000 pounds) × $14.00 per hundredweight = $4,200.00.

Administration of the Program

The DMSP will cover all producers in all markets and is intended to be a government program administered by the Agricultural Marketing Service (AMS) of USDA. 

Monies will be collected by the AMS using the same framework as the dairy promotion checkoff monies and will apply to all milk marketed with no exceptions. The 

USDA will announce that the DMSP is being implemented 30 days in advance of 

the month in which the reduction in milk payments goes into effect. The trigger 

mechanism will be statutorily mandated to go into effect without USDA sanction 

when certain pre-determined economic conditions occur.

How the Monies will be Collected and Managed

The purpose of the monies collected via milk check deductions under the DMSP 

is to effectively stimulate the consumption of dairy products domestically. Foundation for the Future proposes that a DMSP board be established to oversee and direct 

the utilization of these producer monies into programs that will effectively work to 

increase the consumption of U.S. dairy products. 

The DMSP board shall be appointed by the USDA Secretary. It will consist of 24 

directors representing the diverse dairy producer community throughout the U.S. 

All board decisions will require a 2⁄3 affirmative vote. 

Utilizing the funds collected through the program, the DMSP board will have the 

authority to direct the purchase of dairy products for donations to food banks and 

other feeding or food aid programs. 

The board will conduct performance reviews of DMSP every two years and make 

recommendations to USDA Secretary for possible consideration by the Congress. 

The programs funded by the DMSP should be compatible with, but not duplicative 

of, the programs established by the dairy checkoff program. They should adhere to 

the principle of expanding consumption without cannibalizing existing sales. The 

994

DMSP board would have the authority to contract with a managing entity for execution and implementation of its objectives.

Economic Analysis of the Impact of the Dairy Market Stabilization Program

Dr. Scott Brown (FAPRI) also conducted an independent analysis of the DMSP. 

The full analysis is available online (http://www.fapri.missouri.edu/outreach/publications/2011/FAPRIlMUlReportl04l11.pdf). 

While the DMSP program does have a cost element to it for dairy farmers, the 

FAPRI analysis clearly demonstrates that the return on investment is ten-fold. The 

analysis assumes that when DMSP is in effect, half of the milk produced over the 

production base will be marketed. It also assumes that all producers select the same 

month in the previous year as their base. 

Chart 6 shows the impact the DMSP program would have had on dairy farmer 

margins in 2009. The blue bars represent the actual margins and the red bars indicate what the margins would have been with the DMSP in effect. 

Chart 7 quantifies the impact DMSP would have had on dairy farmer revenue 

in 2009. It demonstrates that the program would have yielded an increase in the 

average All-Milk Price in 2009 of $1.84 per hundredweight. By coupling this program with the DPMPP Basic Plan payment (that would have added another $0.10 

per hundredweight), it is clear that the loss of equity at the farm level would have 

been significantly less severe during that period. 

Chart 6

2009 Margins With/Without DMSP

Prepared by: National Milk Producers Federation. 


1122040.eps
995

Chart 7

DMSP Would Have Raised the Average All-Milk Price $1.84/cwt. in 2009

Prepared by: National Milk Producers Federation.

How Margin Protection and Market Stabilization Work Together

Foundation for the Future is a package of programs designed to work together. 

This is evident when looking at the impact the combination of the market stabilization program and the margin production program would have had on producers in 

2009. 

This review uses the dairy operation in the example under the Dairy Producer 

Margin Protection Program section of this paper: a 200 cow dairy; 20,576 pounds 

per cow; 4,100,000 pounds production history; and $2.00 per hundredweight supplemental on 90 percent of production history. For this analysis, the producer selects 

the same month in the previous year as his/her production history. 

As seen in Chart 7 above, the DMSP program increases revenue. Chart 6 above 

shows that the DMSP program’s impact on the margin level reduces the duration 

of the margin protection program and the length of time it would have been in effect. 

The following examples using the 200 cow dairy described above. In the first, the 

producer does not reduce production when the DMSP program triggers in; in the 

second, the producer does make the reduction.

Example—Producer 1: Does Not Reduce Production When DMSP Activates 

2009 DMSP Milk Check Reductions:

• March–May = $7,010

• September–November = $3,174

• Total Taken Off Milk Checks = $10,184

Impact on Farm Revenue:

• Net Increase in milk revenues = +$66,880

• Net Revenue Increase per Hundredweight = $1.63 average for the year 

Example—Producer 2: Reduces Production When DMSP Activates 

2009 DMSP Milk Check Reductions:

• March–May = $0.00

• September–November = $0.00

• Total Taken Off Milk Checks = $0.00

Impact on Farm Revenue:

• Net Increase in milk revenues = +$77,064

• Net Revenue Increase per Hundredweight = $1.87 average for the year 


1122041.eps
996

* Denotes NMPF Officers. 

** CWT Coop Member Only. 

Example: Impact on Total Revenue 

2009 DPMMP Payout:

• $2.00/cwt supplemental on 90% of production history

• Supplemental Premium $5,760 per year

• Basic Protection Payment = $3,458

• Net Supplemental Protection Payment = $19,490

• Total DPMPP Net Payment = $22,951, $0.56/cwt.

• Producer 1—No Reduction: DMSP $1.63 + DPMPP $0.56 = Ave. +$2.19/cwt.

• Producer 2—Reduced Output: DMSP $1.87 + DPMPP $0.56 = Ave. +$2.43/cwt. 

Conclusion 

Working together, the programs of Foundation for the Future protect dairy farmer equity, create stability by reducing price and margin volatility, and minimize 

growth restrictions in milk production that are needed to provide U.S. dairy products to a growing global market. All dairy producers need to do is Rethink What’s 

Possible.

ATTACHMENT 1

2009 NMPF Strategic Planning Task Force 

Chairman: Randy Mooney*

Jim Baird, Lone Star Milk Producers Ralph McNall, St. Albans Cooperative Creamery, Inc. 

Adrian Boer, Northwest Dairy Association Keith Murfield, United Dairymen of Arizona 

Jay Bryant, MD & VA Milk Producers Coop 

Assn., Inc. 

David Newhouse, Farmers Cooperative Creamery 

Richard Cotta,** California Dairies, Inc. Ken Nobis,* Michigan Milk Producers Association 

Rod DeJong,* Northwest Dairy Association Doug Nuttelman, Dairy Farmers of America, 

Inc. 

Clint Fall, First District Association Wayne Palla, Dairy Farmers of America, Inc. 

Dave Fuhrmann,* Foremost Farms USA Neal Rea, Agri-Mark 

Thomas Gallagher, Dairy Management, Inc. Clyde Rutherford,* Dairylea Cooperative, Inc. 

Bobby Hall, Upstate Niagara Cooperative, Inc. Tom Suber, U.S. Dairy Export Council 

Pete Kappelman, Land O’Lakes, Inc. Paul Toft,* Associated Milk Producers, Inc. 

Cornell Kasbergen,* Land O’Lakes, Inc. John Wilson, Dairy Farmers of America, Inc. 

Mike McCloskey,* Select Milk Producers, Inc. Joe Wright, Southeast Milk 

ATTACHMENT 2

Foundation for the Future Subcommittees 

Dairy Market Stabilization—Chairman Wayne Palla, DFA

Adrian Boer, Northwest Dairy Association 

Jay Bryant, MD & VA Milk Producers Coop 

Richard Cotta, California Dairies, Inc. 

Cornell Kasbergen, Land O’Lakes, Inc. 

Gene Paul, National Farmers Organization 

Neal Rea, Agri-Mark 

David Scheevel, Foremost Farms USA 

Tom Suber, U.S. Dairy Export Council

Dairy Producer Margin Protection—Chairman Ken Nobis, Michigan Milk 

Producers Association

Clint Fall First District 

Ed Gallagher Dairylea Cooperative, Inc. 

Pete Kappelman Land O’Lakes, Inc. 

Doug Nuttelman Dairy Farmers of America, Inc. 

Tom Thompson United Dairymen of Arizona 

Joe Wright Southeast Milk 

Consultant: Bruce Babcock—Iowa State University

997

FMMO—Chairman Dave Fuhrmann, Foremost Farms

Jim Baird, Lone Star Milk Producers 

Neil Gulden, Associated Milk Producers, Inc. 

Mike McCloskey, Select Milk Producers 

Keith Murfield, United Dairymen of Arizona 

Jim Sleper, Land O’Lakes, Inc. 

Rich Stammer, Agri-Mark 

Jim Wegner, Northwest Dairy Association 

Greg Wickham, Dairylea Cooperative, Inc. 

John Wilson, Dairy Farmers of America, Inc. 

ATTACHMENT 3

Groups Presenting Proposals/Policy Statements at the NMPF Strategic 

Planning Task Force on July 20–21, 2009 Meeting 

American Farm Bureau Federation 

Dairy Farmers Working Together 

Holstein Association 

Milk Producers Council 

National Farmers Organization 

National Farmers Union 

Western United Dairymen 

ATTACHMENT 4

List of Industry Feed Ration Experts and Nutritionists 

Development Team:

Steve Watrin, Land O’Lakes, Inc. 

Ed Gallagher, Dairylea Cooperative, Inc. 

Dr. Gordie Jones, Veterinarian, Farmer, Nutritionist

Reviewed by:

Dr. Mary Beth Hall, Ph.D., USDA Forage Center 

Dr. Terry Howard, Ph.D., University of Wisconsin (retired) 

Dr. Mike Hutjens, Ph.D., University of Illinois 

Dr. Randy Shaver, Ph.D., University Of Wisconsin 

National Milk Producers Federation 

2101 Wilson Blvd., Suite 400

Arlington, VA 22201

Phone: 703–243–6111

Fax: 703–841–9328

info@nmpf.org 

www.futurefordairy.com 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE—FARM

SERVICE AGENCY

1. Program Name 

Dairy Export Incentive Program (DEIP). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

Authorized by Congress under Sec. 153 of the Food Security Act of 1985, the program provides a bonus or subsidy on a bid basis to exporters of eligible dairy products (butterfat, nonfat dry milk, whole milk powder and various cheeses). The payments may be made in cash or in commodities held by the Commodity Credit Corporation (CCC). Initially, the program provided the bonuses ‘‘in-kind’’ from surplus 

stocks of dairy products held by CCC. This, ‘in-kind’ payment was replaced by the 

issuance of ‘‘generic certificates’’ redeemable for any inventory held by the CCC. As 

inventories diminished, the program evolved into the sole use of cash payments for 

the subsidy. As this program provides an export subsidy, it is subject to the subsidy 

998

reduction commitments of the United States under the Uruguay Round Agreements 

of the World Trade Organization (WTO). The program is therefore subject to both 

budget and quantity limits in accordance with those reduction commitments. 

4. Purpose/Goals 

By providing a subsidy on exports of eligible dairy products, an amount intended 

to bridge the gap between world market prices and the U.S. domestic price, DEIP 

enables exporters to meet the lower world market prices, often influenced by the application of subsidies by other exporting countries—primarily the European Union 

(EU). 

5. Success in Meeting Programmatic Purpose/Goals 

The program has been very successful in meeting the needs of exporters and expanding markets for U.S. dairy products when world prices are depressed due to 

the application of subsidies by other countries. This was most evident leading up 

to and during the implementation period of the Uruguay Round subsidy reduction 

commitments. At that time, the EU was aggressively subsidizing dairy exports. Almost 250,000 metric tons of dairy products were exported under DEIP in Fiscal 

Year 1995 and $162 million in bonus payments were committed under DEIP in Fiscal Year 1993. 

6. Annual Budget Authority (FY 2002–FY 2011) 

This is a mandatory program with spending capped by our commitments under 

the WTO Uruguay Round Agreements. These are product specific and follow:

Dairy Product Budgetary Cap ($Mil) Quantity Cap (MT) 

Nonfat dry milk $82.46 68,201

Butterfat $30.49 21,097

Cheese $3.63 3,030

Other (whole milk powder) $0.021 34

Total $116.601 N/A 

7. Annual Outlays (FY 2002–FY 2011) 

Fiscal Year Subsidy Awarded ($Mil) Quantity (MT) 

2002 $54.62 86,473

2003 $32.52 86,155

2004 $2.68 48,498

2005 $0 0

2006 $0 0

2007 $0 0

2008 $0 0

2009 $18.89 50,886

2010 $2.37 4,811

2011 $0 0

The budget authority is restricted to the budgetary limits of our subsidy reduction 

commitments under the Uruguay Round Agreements. DEIP is designed to meet, not 

set, world market prices. Years where there has been limited use of DEIP reflect 

the United States’ competitiveness in the world market without the need for a subsidy. This condition exists today. 

8. Annual Delivery Cost (FY 2002–FY 2011) 

Delivery costs are a function of collateral duty when the program is operating. 

When not operating, program delivery costs are estimated at 0.10 FTE—largely a 

function of closing outstanding performance issues. When operational, USDA estimates that no more than two FTE equivalents are utilized to operate the program. 

In fiscal 2010, the program operated for 1 month and estimated delivery costs were 

under $40,000. In 2011, estimated delivery costs are under $10,000. The software 

costs for the program are under $1,000 per year. 

9. Eligibility Criteria 

All potential exporters of U.S. dairy products can participate provided they have 

an agent in the United States and they are not suspended, debarred or otherwise 

prohibited from participation in U.S. Government programs. 

999

10. Utilization (Participation) Data 

To date, 115 exporters of dairy products have participated in DEIP since inception. 

The following is a list of the number of participants for the period 2002–2011:

Fiscal Year Participants 

2002 17

2003 12

2004 4

2005 0

2006 0

2007 0

2008 0

2009 17

2010 12

2011 0

11. Duplication or Overlap with Other Programs 

None. 

12. Waste, Fraud and Abuse 

USDA is proactive in reviewing this program and its participants. Payments are 

not made until the exporters provide appropriate export documentation that is reviewed for compliance with program requirements. Where there is any indication of 

waste, fraud and abuse, the Department is aggressive in investigating those incidents. At this time we have no confirmed evidence of waste, fraud or abuse under 

DEIP. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Milk Income Loss Contract (MILC) Program. 

2. Subprograms/Department Initiatives 

Subprogram—The 2010 Agricultural Appropriations Bill authorized $290 million 

for loss assistance payments under the Dairy Economic Loss Assistance Payment 

(DELAP) Program for eligible producers to receive a one-time payment based on the 

amount of milk both produced and commercially marketed by their operation during 

the months of February through July 2009. 

3. Brief History 

The National Dairy Market Loss Program, later named the Milk Income Loss 

Contract Program, was initially authorized by Section 1502 of the Farm Security 

and Rural Investment Act of 2002 (2002 Farm Bill). The MILC program supports 

the dairy industry by providing direct countercyclical style payments to milk producers on a monthly basis when the Boston Federal Milk Marketing Order Class 

I price for fluid milk falls below the benchmark of $16.94 per hundredweight (cwt.). 

For production marketed during the authorized period, milk producers in eligible 

dairy operations received a payment equal to 45 percent of the difference between 

the benchmark and the Class I price, if this difference was positive. This rate was 

decreased by the Deficit Reduction Act of 2005 to 34 percent of the difference between $16.94 and the Boston Class I Federal Milk Marketing Order price for October 1, 2005 through August 31, 2007. The MILC program was amended further by 

the Agriculture Reconciliation Act of 2005 to extend the program through September 

30, 2007, consistent with other farm bill programs ending September 30, 2007. The 

MILC program was last authorized by the 2008 Farm Bill through September 30, 

2012, and also introduced a feed cost adjustment to the monthly payment rate calculation. Under the MILC program, a dairy operation’s monthly payment is based 

on the quantity of milk sold in a month in which a payment rate is in effect, up 

to a maximum of 2.985 million pounds per dairy operation, per fiscal year for the 

period beginning October 1, 2008 and ending August 31, 2012. Before October 1, 

2008 the maximum eligible production had been 2.4 million pounds. 

The MILC program replaces previous Dairy Market Loss Assistance programs 

that provided payments to dairy producers from 1997 through 2000. MILC was implemented soon after authority for the Northeast Dairy Compact expired. 

1000

4. Purpose/Goals 

The purpose and goal of the MILC program is to stabilize milk producer revenue 

by compensating dairy producers when domestic milk prices fall below a specified 

level. 

5. Success in Meeting Programmatic Purpose/Goals 

The MILC program has paid out approximately $2.5 billion to dairy operations 

over the first 5 initial years of program administration. Annual expenditures when 

the program was re-authorized for 2006 and 2007 totaled over $510 million. Expenditures during the period authorized by the 2008 Farm Bill, to date, total $938 million. Due to the countercyclical nature of the program, the direct payments provide 

a safety net to dairy producers at times when they may struggle most as a result 

of low milk prices. The payments have reduced the financial stress on U.S. dairy 

operations during periods of low milk prices helping to sustain the domestic milk 

supply resulting in consumers being able to buy dairy products at lower prices than 

if the program was not operating.

1001

6. Annual Budget Authority (FY 2007–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Est. 

Milk Income Loss Contracts $0 $1,795,452 $221,126 $9,124 $351,586 $156.598 $2,153 $756,889 $181,527 $173,000

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Outlays 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Est. 

Milk Income Loss Contracts $0 $1,796,452 $221,126 $9,124 $351,586 $156.598 $2,153 $756,889 $181,527 $173,000

8. Annual Delivery Cost (FY 2002–FY 2011) 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsIncome Support and Disaster Assistance 

Price Support and Marketing Assistance Loans 11,286,100 9,509,047 8,290,909 6,313,263 6,095,604Loan Deficiency Payments 173,751 6,036 148,553 191,647 36,565Direct Payments 3,957,175 4,821,206 4,176,795 4,898,085 4,950,410Countercyclical Payments 3,158,554 359,064 1,213,300 902,584 131,848ACRE Payments 0 0 0 0 446,633Milk Income Loss Contract Payments 157,850 2,153 769,900 181,527 173,000Tobacco Payments 955,495 954,817 1,130,095 954,091 960,000Other Direct Payments 25,695 29,768 84,375 103,432 80,504NAP Payments 126,951 73,989 40,700 98,745 116,873

1002

8. Annual Delivery Cost (FY 2002–FY 2011)—Continued

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Crop Disaster Assistance 58,591 1,281 114,828

¥109 0

Livestock Indemnity Program 198 2 1,716 91,825 77,000Emergency Livestock Assistance 664 25 1,926

¥403 0

Emergency Conservation Program 149,727 128,456 0 92,459 39,719Biomass Crop Assistance 0 0 248,202 199,000Emergency Forest Restoration Program 0 0 0 18,000Tree Assistance Program 1,973 1,010 68 90 0CCC Interest Expenditures 648,627 140,936 2,856 10,426 16,635Dairy Indemnity Program 181 144 651 162 200Emergency Forestry Conservation Program 6,302 12,717 7,854 8,297 9,291USDA Supplemental Assistance, appropriated 0 0 83,814 295,600 295,600FSA Disaster Assistance, appropriated 0 2,541,733 0 0 0Reforestation Pilot Program 0 794 794 800 800Agricultural Disaster Relief Trust Fund 0 0 6,000 1,573,278 1,926,134Aquaculture Grants (123317) 0 0 48,500 39,942 0Farm Storage Facility Loans 548 0 12,500 0 0

Administrative costs (direct) 776,465 683,795 694,980 744,303 753,934Indirect costs 47,548 234,633 226,905 242,967 246,299

Total Costs 21,532,395 19,501,606 17,058,019 16,991,214 16,574,049FTEs 8,905 8,620 9,529 8,355 8,140

1003

9. Eligibility Criteria 

To be eligible for payments, dairy producers must have produced cow milk in the 

U.S., and commercially marketed the milk produced anytime during the authorized 

period. Dairy producers must also be in compliance with Highly Erodible Land and 

Wetland conservation provisions and Adjusted Gross Income limitations. Signup for 

the program under the 2008 Farm Bill began December 22, 2008, and extends 

through the conclusion of the program on September 30, 2012. Payments are issued 

based on a start month selection by the producers in the dairy operation and are 

subject to a maximum eligible production limit of 2.985 million pounds per dairy operation per fiscal year. Payment start month selections must be made on form CCC–

580 and submitted to an FSA Service Center on or before the 14th of the month 

before the month the dairy operation wants to begin payments. Production evidence 

for each applicable payment month must be provided to FSA before a MILC payment can be issued. 

10. Utilization (Participation) Data 

51,975 dairy producers have participated in the MILC program from 2008 to 

present, as authorized under the 2008 Act. 

11. Duplication or Overlap with Other Programs 

No duplication or overlap with other programs. 

12. Waste, Fraud and Abuse 

There has been minimal to no waste, fraud, or abuse in the MILC program because verifiable production evidence must be provided by the producers in an eligible dairy operation to qualify for program benefits. During the FY 2010 CORP review for improper payments for MILC program, it was determined that MILC improper payment error rates increased because of the lack of proper supporting documentation, such as eligibility forms, before disbursing a MILC payment. FSA continues to make eliminating improper payments a top priority and has incorporated 

the priority into strategic planning and performance measures. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Dairy Indemnity Payment Program (DIPP). 

2. Subprograms/Department Initiatives 

Subprogram—none. 

Department Initiatives—none. 

3. Brief History 

The Dairy Indemnity Payment Program was originally authorized by Public Law 

90–484, the Act of August 13, 1968 (7 U.S.C. 4501), and has been extended numerous times. The Food, Conservation, and Energy Act of 2008, Public Law 110–246, 

extended the program through 2012. Most recently, funds were appropriated for 

DIPP by the Department of Defense and Full-Year Continuing Appropriations Act 

of 2011, Public Law 112–10. 

DIPP is available to dairy farmers for milk, or cows producing milk, and manufacturers of dairy products who, through no fault of their own, have been directed to 

remove their milk or dairy products from commercial markets because of the presence of certain chemical or toxic residue in the products. Under DIPP, payments are 

made to dairy producers when a regulatory agency directs them to remove their raw 

milk from the commercial market because it has been contaminated by pesticides, 

nuclear radiation, or fallout, or toxic substances and chemical residues other than 

pesticides. Payments are made to manufacturers of dairy products only for products 

removed from the market because of pesticide contamination. Dairy producers and 

manufacturers are eligible for indemnification from the date the milk was officially 

removed from the market by a public regulatory Agency through the date the milk 

is officially reinstated to the market by a public regulatory Agency, based on the 

fair market value determined for the milk. To apply for DIPP benefits, affected producers and manufacturers must meet all eligibility requirements and submit a completed FSA–373 to their USDA Service Center or FSA Office no later than December 31 following the fiscal year in which the loss occurred. 

1004

4. Purpose/Goals 

The purpose and goal of DIPP is to indemnify dairy farmers and manufacturers 

of dairy products who, through no fault of their own, suffer income losses with respect to milk or milk products removed from commercial markets because such milk 

or milk products contain certain harmful residues. 

5. Success in Meeting Programmatic Purpose/Goals 

DIPP has successfully allowed dairy producers and manufacturers, to recover financial losses suffered from being directed by a public regulatory agency to remove 

their production from the commercial market, when removal has been through no 

fault of their own. This financial compensation allows producers to maintain business operations and slows the exit of U.S. dairy operations from the dairy business. 

This program also ensures a healthy milk supply for U.S. consumers.

1005

6. Annual Budget Authority (FY 2007–FY 2011) 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Est. 

Dairy Indemnity Payments $100 $100 $100 $100 $100 $100 $100 $876 $876 $100

7. Annual Outlays (FY 2002–FY 2011) 

FY 2002 Through FY 2011 Budget Outlays 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Est. 

Dairy Indemnity Payments $124 $393 $601 $349 $132 $181 $144 $651 $162 $200

8. Annual Delivery Cost (FY 2002–FY 2011) 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsIncome Support and Disaster Assistance 

Price Support and Marketing Assistance Loans 11,286,100 9,509,047 8,290,909 6,313,263 6,095,604Loan Deficiency Payments 173,751 6,036 148,553 191,647 36,565Direct Payments 3,957,175 4,821,206 4,176,795 4,898,085 4,950,410Countercyclical Payments 3,158,554 359,064 1,213,300 902,584 131,848ACRE Payments 0 0 0 0 446,633Milk Income Loss Contract Payments 157,850 2,153 769,900 181,527 173,000Tobacco Payments 955,495 954,817 1,130,095 954,091 960,000Other Direct Payments 25,695 29,768 84,375 103,432 80,504NAP Payments 126,951 73,989 40,700 98,745 116,873

1006

8. Annual Delivery Cost (FY 2002–FY 2011)—Continued

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Crop Disaster Assistance 58,591 1,281 114,828

¥109 0

Livestock Indemnity Program 198 2 1,716 91,825 77,000Emergency Livestock Assistance 664 25 1,926

¥403 0

Emergency Conservation Program 149,727 128,456 0 92,459 39,719Biomass Crop Assistance 0 0 248,202 199,000Emergency Forest Restoration Program 0 0 0 18,000Tree Assistance Program 1,973 1,010 68 90 0CCC Interest Expenditures 648,627 140,936 2,856 10,426 16,635Dairy Indemnity Program 181 144 651 162 200Emergency Forestry Conservation Program 6,302 12,717 7,854 8,297 9,291USDA Supplemental Assistance, appropriated 0 0 83,814 295,600 295,600FSA Disaster Assistance, appropriated 0 2,541,733 0 0 0Reforestation Pilot Program 0 794 794 800 800Agricultural Disaster Relief Trust Fund 0 0 6,000 1,573,278 1,926,134Aquaculture Grants (123317) 0 0 48,500 39,942 0Farm Storage Facility Loans 548 0 12,500 0 0

Administrative costs (direct) 776,465 683,795 694,980 744,303 753,934Indirect costs 47,548 234,633 226,905 242,967 246,299

Total Costs 21,532,395 19,501,606 17,058,019 16,991,214 16,574,049FTEs 8,905 8,620 9,529 8,355 8,140

1007

9. Eligibility Criteria 

To be eligible to receive DIPP payments, the producer must have produced whole 

milk that was removed from the commercial market pursuant to the direction of a 

public regulatory agency, not have been responsible for the milk contamination, or 

not have been indemnified for the same loss from another source. 

In addition, the producer must certify to the compliance with Highly Erodible 

Land Conservation (HELC) and Wetland Conservation (WC) provisions and submit 

a complete application to the county Farm Service Agency office no later than December 31 following the end of the fiscal year in which the loss occurred. 

10. Utilization (Participation) Data 

Participation in DIPP varies from one fiscal year to another. Since 2008, weather 

conditions in various regions within the United States prompted regulatory agencies 

to remove dairy producers from marketing milk because of aflatoxin found in their 

milk. Below are the number of applications and total dollars paid for DIPP from FY 

2008 through FY 2011.

• FY 2008—14 applicants—$144,388

• FY 2009—22 applicants—$650,788

• FY 2010—18 applicants—$158,951

• FY 2011—22 applicants—$261,256

11. Duplication or Overlap with Other Programs 

No duplication or overlap with other programs. 

12. Waste, Fraud and Abuse 

Minimal to no waste, fraud, or abuse in the DIPP program because of the many 

eligibility factors that require verifiable evidence from official sources that must be 

provided by the producers in an eligible dairy operation to qualify for program benefits. Applications for benefits are verified by the County Committee, State Committee, and National Office before payment is authorized to a producer. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Dairy Product Price Support Program (DPPSP). 

2. Subprograms/Department Initiatives 

Dairy Economic Loss Assistance Program (DELAP). The 2010 Agriculture Appro- priations bill authorized the purchase of cheese worth $60 million for donation to 

feeding programs. 

2009 expansion of feeding programs—On March 26, 2009 Secretary Vilsack announced a disposition plan for inventories of nonfat dry milk (NDM) that totaled 

232.9 million pounds, which had been purchased by the CCC at the NDM support 

price. The plan was intended to help support both low-income families, domestically 

and internationally, as well as dairy farmers challenged by high feed and low dairy 

prices. Through this initiative, CCC donated 30 million lbs of NDM to states for further processing to acquire fortified fat-free fluid milk and macaroni and cheese for 

use in the National School Lunch Program (NSLP); 40 million lbs was fortified and 

instantized, placed into consumer-sized packages and made available in domestic 

feeding programs; 60 million lbs was bartered for 1% ultra high temperature (UTH) 

milk for use in the Emergency Food Assistance Program (TEFAP); 50 million lbs 

were bartered for reduced fat and lite cheese for use in the NSLP and TEFAP; and 

20 million were bartered for ready-to-eat, milk-based soups for use in TEFAP. In 

addition, 1 million lbs was offered for sale on a competitive basis for the production 

of casein and 1.5 million lbs were used to meet food assistance needs overseas. 

3. Brief History 

DPPSP, established by the Food, Conservation, and Energy Act of 2008 (2008 

Farm Bill), is the latest iteration of the milk price support program (MPSP) established by the Agricultural Act of 1949 (1949 Act). The DPPSP requires the CCC to 

offer to purchase unlimited quantities, at fixed announced prices, of cheddar cheese, 

butter, and nonfat dry milk. Since most wholesale milk is priced based on the price 

of these three dairy products, providing a floor on these products provides a floor 

for the farm milk price. Many versions of the support to dairy have been tried since 

1949 as the Federal Government has tried to balance the need for a stable milk supply with the cost of the support program. Some programs have tried to tie milk itself 

1008

to a particular price through the use of secondary purchases. Sometimes the prices 

have been tied to parity or purchase levels. Other programs have included voluntary 

supply control schemes—milk diversion programs or herd buyouts. Still other programs to address dairy matters have included milk assessments; and many surplus 

dairy product disposal schemes. 

For a long time, dairy support was controlled by the basic provisions of the Agricultural Act of 1949, as amended, which required that the price of milk paid to producers be supported at a level between 75 and 90 percent parity to assure an adequate supply of milk, reflect changes in the cost of production, and assure a level 

of farm income to maintain productive capacity sufficient to meet future needs. 

However, after October 21, 1981, the support price was established by Congress either at specific price levels or by a formula related to expected surplus, rather than 

parity levels. The 2008 legislation takes a different approach and does not set a support price for milk, but rather sets purchases prices for products. 

The 1996 Federal Agriculture Improvement and Reform Act authorized the Milk 

Price Support Program (MPSP) through December 31, 1999. Due to low prices and 

concerns from the dairy industry, Congress extended the MPSP into 2000, 2001, and 

until May 31, 2002 through the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Acts of 2000 and 2001. After 

June 1, 2002, the Farm Security and Rural Investment Act of 2002 (2002 Farm Bill) 

was passed authorizing the MPSP program through December 31, 2007 at a rate 

of $9.90 per hundredweight (cwt) for manufacturing milk. Under the old program, 

milk prices were supported through purchases by the government of dairy products. 

The Secretary could adjust the price of NDM or butter twice within the calendar 

year. The DPPSP minimum purchase prices in the 2008 Farm Bill were the dairy 

product prices USDA had established under the 2002 Farm Bill. Under the DPPSP, 

the minimum purchase prices can be lowered if CCC removals exceed certain levels. 

4. Purpose/Goals 

The goal of the DPPSP is to support dairy products by providing a support price 

for those products. That support has beneficial effects for milk producers. 

5. Success in Meeting Programmatic Purpose/Goals 

The DPPSP has been successful in providing economic support to dairy producers 

when economic conditions have been challenging. This program has kept some producers operating through times that would otherwise force them out of business 

thus making industry transition less dramatic. However, the industry does continue 

to adjust, with many small operations going out of business and their milk production being replaced by fewer and larger operations. Recently, significantly increasing 

feed costs have become a challenge for dairy producers. Dairy farm viability is determined by the margin between milk prices and feed costs, the dairy farms most significant variable cost. Since the DPPSP supports the price of products, and not the 

milk margin, producers have increased their participation in the dairy gross margin 

insurance program as a complement to the DPPSP.

1009

6. Annual Budget Authority (FY 2002–FY 2011) 

Budget outlays are made the same year that budget authority is granted. 

FY 2002 Through FY 2011 Budget Authority 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Est. 

Price Support Related $597,405 $650,102 $308,662 $29,315 $60,307 $2,389 $¥2,211 $236,188 $153,011 $124,915

7. Annual Outlays (FY 2002–FY 2011) 

Annual outlays averaged $216 million over the FY 2002–FY 2011 period, and included average outlays exceeding $600 million during FY 

2002–03. Outlays for the DPPSP totaled $236.2 million in FY 2009 and $153 million in FY 2010. No purchases have been made in FY 2011. 

FY 2002 Through FY 2011 Budget Outlays 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Est. 

Price Support Related $597,405 $650,102 $308,662 $29,315 $60,307 $2,389 $¥2,211 $236,188 $153,011 $124,915

8. Annual Delivery Cost (FY 2002–FY 2011) 

Annual delivery cost is reported consistent with the President’s 2012 Budget and USDA’s Strategic Plan: Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining, repopulating and economically 

thriving. 

1010

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsCommodity Operations 

Cotton User Marketing Payments 9,518 0 0 0 0ELS Cotton Competiveness Payments 1,103 29,839 9,630 27,866 0Upland Cotton Economic Adjustment Assistance 0 0 74,661 75,635 65,504Commodity Purchases and Sales 726,938 1,116,157 1,027,768 853,110 1,626,852Storage, Handling, Transportation, Processing, and Packaging 133,213 36,329 67,740 73,100 77,475CCC Interest Expenditures 70,070 15,660 3,173 791 2,226Dairy Price Support 101 319 226,894 40,597 17,250

Administrative costs (direct) 33,724 21,340 39,728 24,087 24,364Indirect costs 2,153 49,458 33,697 18,728 18,943

Total Costs 976,820 1,269,102 1,483,291 1,113,914 1,832,614FTEs 458 254 263 256 256

1011

1The Dairy 7, issued November 17, 2010, provides specific contracting information for CCC 

price support purchases. This announcement along with the Dairy Invitations provides the information needed to offer and comply with the regulations. This includes eligibility, submissions, 

provisions, product specifications, instructions and compliance data. 

9. Eligibility Criteria 

All cheddar cheese, butter, and nonfat dry milk made of cow’s milk produced in 

the United States and which is located in the United States when offered and not 

previously owned by the CCC is eligible if it meets the standards for product quality 

and packaging as listed in the Dairy Product Price Support Program Purchase Announcement Dairy 7 1 (Dairy 7). Further, the dairy product must be manufactured 

in dairy plants in which USDA inspection and grading services are performed under 

7 CFR Part 58—Grading and Inspection, General Specifications for Approved Plants 

and Standards for Grades of Dairy Products. 

10. Utilization (Participation) Data 

During FY 2004, the CCC purchased a total of 2.911 billion pounds of NDM, at costs totaling $2.7 billion or an annual average $536 million. Stocks exceeded 1 billion pounds for most of 2002 and 2003. In 2008 and 2009, net removals totaled 359 

million pounds of NDM, 3 million pounds of cheese, and 30 million pounds of butter. 

11. Duplication or Overlap with Other Programs 

DPPSP supports prices received by dairy farmers through the purchase of unlimited quantities, at fixed announced prices, of cheddar cheese, butter, and nonfat dry 

milk. No other program supports the price of milk in this manner. The MILC program provides countercyclical support to dairy producers when the margin (difference between price and feed costs) falls below specified levels. 

12. Waste, Fraud and Abuse 

There has been no waste, fraud, or abuse in the DPPSP that USDA is aware of. 

The Farm Service Agency reviews applicant eligibility when offers are made, and 

the Agriculture Marketing Service inspects all products offered under DPPSP to ensure that grade and other requirements of Dairy 7 are met before products are purchased. 

13. Effect of Administrative PAYGO 

There has been no impact from Administrative PAYGO on the operation of 

DPPSP. 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE—

AGRICULTURAL MARKETING SERVICE

1. Program Name 

Dairy Product Mandatory Reporting. 

2. Subprograms/Department Initiatives 

AMS Dairy Program. 

3. Brief History 

The Dairy Product Mandatory Reporting Program was established on August 2, 

2007, on an interim final basis, with final implementation effective June 22, 2008. 

The program: (1) requires persons engaged in manufacturing dairy products to provide to USDA certain information including the price, quantity, and moisture content, where applicable, for cheddar cheese, butter, dry whey, and nonfat dry milk 

(NFDM) sold by a manufacturer on a weekly basis; and (2) requires manufacturers 

and other persons storing dairy products to report to USDA information on the 

quantity of dairy products stored. Any manufacturer that processes and markets 

less than 1 million pounds of the applicable dairy products per calendar year is exempt from these reporting requirements. 

For the first requirement, the National Agricultural Statistics Service (NASS) currently collects and publishes information for the program. AMS provides verification 

and enforcement functions to ensure accuracy of the price information reported to 

NASS. The second requirement is solely a function of NASS. Prior to implementation of the Dairy Product Mandatory Reporting Program information was collected 

on a voluntary basis. NASS began publishing cheddar cheese sales information in 

1997 and began publishing butter, NFDM, and dry whey sales information in 1998. 

AMS has established a verification program to verify that sales transactions 

match information reported to NASS and applicable sales transactions are not exVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 01023 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
1012

cluded. AMS currently visits larger entities accounting for 80 percent of yearly reported product volume of specified dairy products at least once annually. AMS visits 

1⁄2 of the entities accounting for the remaining 20 percent at least once every other 

year. During each visit, AMS reviews applicable sales transaction records for at 

least the 4 most recent weeks. In some cases, AMS may review sales records for 

periods of up to 2 years. AMS also conducts additional verification procedures on 

an as-needed basis when price information may be questioned. 

The 2008 Farm Bill requires that an electronic system be employed to collect information for the Dairy Product Mandatory Reporting Program on a more frequent 

basis subject to the availability of funds. The farm bill also requires quarterly audits 

of program information. Funds have not been made available for an electronic reporting system, more frequent collection of data, or quarterly audits. 

The Mandatory Price Reporting Act of 2010 requires that the Secretary establish 

an electronic reporting system for manufacturers of dairy products to report certain 

market information for the mandatory dairy product reporting program. The amendment further states that the Secretary shall publish the information obtained under 

this section for the preceding week not later than 3 p.m. Eastern Time on Wednesday of each week. 

4. Purpose/Goals 

The purpose of the program is to provide accurate and timely market information 

for dairy industry participants. Widely available market information provides transparency to assist markets in operating competitively and fairly. Data collected 

through the program is used as the price discovery mechanism to establish minimum prices for the Federal Order system. 

The program will continue reporting dairy commodity sales information that is accurate but released a day and a half earlier. The electronic system will be designed 

to minimize the burden on reporting entities. 

5. Success in Meeting Programmatic Purpose/Goals 

As required in the 2008 Farm Bill, AMS has successfully implemented a 

verification and enforcement program to ensure the accuracy of information provided to NASS for the required dairy product prices. Due to continual outreach and 

education, a significant decline has occurred in reporting errors. In 2007, 35 discrepancies were discovered by AMS on audit while to-date in 2011 only four discrepancies have been discovered by AMS. Since inception of the verification program, 

a total of 91 discrepancies have been found. 

A proposed rule was published on June 10, 2011, which included regulatory 

changes for implementing the provisions of the Mandatory Price Reporting Act of 

2010 and for transferring data collection responsibilities from NASS to AMS. Seven 

comments were received by August 9, 2011, and a final rule is being prepared. Following beta-testing, mandatory electronic collection of dairy product prices is expected to begin January 1, 2012. 

6. Annual Budget Authority (FY 2002–FY 2011) ($ in Millions) 

Additional budget authority has not been authorized for this activity within the 

Dairy Marketing Agreements & Orders (MA&O) program. AMS prioritized the 

available resource for MA&O in order to allow for dairy price verification from 

2007–2011. Additional one-time funding within current resources was provided in 

FY 2011 to modify the Agency’s existing Livestock Mandatory Price Reporting System to accommodate selected dairy products. The following legislative timeline identifies the evolution of dairy mandatory reporting:

Fiscal Year Legislative Reference 

2000–2001 Dairy Enhancement Act of 2000 (P.L. 106–532)—established mandatory reporting for dairy products 

2002–2007 2002 Farm Bill (P.L. 107–171)—amended above Act to modify the definition of products 

2008–2010 2008 Farm Bill (P.L. 110–246)—develop a system and conduct quarterly audits 

2011 2010 Mandatory Price Reporting Act (P.L. 111–239)—required electronic reporting system and established a publication schedule 

1013

7. Annual Outlays (FY 2002–FY 2011) 

Annual Outlays 

FY 2002 Through FY 2011 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Est. 

Outlays $0 $0 $0 $0 $0 $300 $300 $300 $300 $858

(This includes verification expenses 2007–2011 plus 1x IT expense in 2011 to modify the LMR System for DY reporting.) 

8. Annual Delivery Cost (FY 2002–FY 2011) 

Annual Delivery Costs 

FY 2002 Through FY 2011 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Est. 

Annual Delivery Costs $0 $0 $0 $0 $0 $300 $300 $300 $300 $858

(This includes verification expenses 2007–2011 plus 1x IT expense in 2011 to modify the LMR System for DY reporting.) 

1014

9. Eligibility Criteria 

As required by law, dairy manufacturers producing and selling 1 million pounds 

or more of specific dairy products (cheddar cheese, butter, nonfat dry milk and/or 

dry whey) per calendar year, are required to participate in the weekly surveys. 

10. Utilization (Participation) Data 

In 2010, there were 88 dairy product plants that were subject to mandatory reporting of sales data for one or more products. Fifty-two entities reported data for 

one or more plants. 

11. Duplication or Overlap with Other Programs 

A final rule will implement the provisions of the Mandatory Price Reporting Act 

of 2010 transfer applicable data collection responsibilities from NASS to AMS. During voluntary software beta testing NASS and AMS will run parallel programs for 

about 2 months to ensure system is fully operation before eliminating NASS’s responsibilities. 

12. Waste, Fraud and Abuse 

Not applicable. 

13. Effect of Administrative PAYGO 

Not applicable. 

1. Program Name 

Dairy Import Assessment. 

2. Subprograms/Department Initiatives 

AMS Dairy Program. 

3. Brief History 

The U.S. Department of Agriculture has announced a Final Rule that amends the 

Dairy Promotion and Research Order (Dairy Order) and implements a dairy import 

assessment program as required by the Dairy Production Stabilization Act of 1983, 

as amended. The program implements the equivalent of 7.5¢ per hundredweight of 

milk assessment on imported dairy products; adds two importer members to the National Dairy Promotion and Research board; amends the term ‘‘United States’’ to 

mean all states (adding Alaska and Hawaii), the District of Columbia and the Commonwealth of Puerto Rico; and extends the mandatory 15¢ per hundredweight of 

milk assessment to dairy farmers in Alaska, Hawaii, and the Commonwealth of 

Puerto Rico. 

4. Purpose/Goals 

The Farm Security and Rural Investment Act of 2002 (2002 Farm Bill) mandates 

that the Dairy Order be amended to implement an assessment on imported dairy 

products to fund promotion and research. The Food, Conservation, and Energy Act 

of 2008 (2008 Farm Bill) specifies a mandatory assessment rate of 7.5¢ per hundredweight of milk, or equivalent thereof, on dairy products imported into the United 

States. 

5. Success in Meeting Programmatic Purpose/Goals 

All provisions were effective April 1, 2011, with the exception of those regarding 

importer assessments. Importer assessment provisions became effective on August 

1, 2011. Importer payments are made directly to the U.S. Customs and Border Patrol and are forwarded to the Dairy Promotion and Research Board. 

6. Annual Budget Authority (FY 2002–FY 2011) 

Not applicable. 

7. Annual Outlays (FY 2002–FY 2011) 

Not applicable. 

8. Annual Delivery Cost (FY 2002–FY 2011) 

Not applicable. 

9. Eligibility Criteria 

An applicant must be an importer of dairy products into the United States as a 

principle or as an agent, broker, or consignee of any person who produces or handles 

dairy products outside of the United States, and who is listed as the importer of 

1015

record for such dairy products. A producer is defined as any person engaged in the 

production of milk for commercial use. 

10. Utilization (Participation) Data 

There are an estimated 2,600 dairy importers that are affected by the dairy import assessment and an estimated 350 producers in the added areas of Alaska, Hawaii, the District of Columbia and the Commonwealth of Puerto Rico. 

11. Duplication or Overlap with Other Programs 

Not applicable. 

12. Waste, Fraud and Abuse 

Not applicable. 

13. Effect of Administrative PAYGO 

Not applicable. 

1. Program Name 

Federal Milk Marketing Orders including Forward Contracting and the Formal 

Rulemaking Process. 

2. Subprograms/Department Initiatives 

AMS Dairy Program. 

3. Brief History 

Federal milk marketing orders (FMMO) are authorized by the Agricultural Marketing Agreement Act of 1937, as amended. There are currently 10 FMMO areas, 

impacting about 65 percent of all milk marketed in the U.S. These 10 orders are 

administered by 8 market administrators. 

FMMOs are initiated and amended through industry requests that are addressed 

through the formal rulemaking process. This includes hearings, briefings, recommended decisions, public comments, final decisions, farmer votes, and, ultimately, implementation by USDA. Changes in FMMOs are approved by an affirmative vote of 2⁄3 of the eligible dairy farmers. 

The 2008 Farm Bill directed USDA to establish supplemental rules to define 

guidelines and timeframes to improve the timeliness of the Federal Milk Order 

hearing process. AMS published this final rule on August 20, 2008 (73 FR 49085). 

The 2008 Farm Bill also directed AMS to establish a Dairy Forward Pricing Program to allow milk producers and cooperative associations to voluntarily enter into 

forward price contracts with milk handlers for milk used for non-fluid purposes. The 

program exempts handlers regulated under the Federal Milk Order program from 

paying producers and cooperative associations the minimum Federal Order price for 

milk under a forward contract. AMS published this final rule on October 31, 2008 

(73 FR 64868). 

4. Purpose/Goals 

The objectives of the FMMO system are to stabilize market conditions, to benefit 

producers and consumers by establishing and maintaining orderly marketing conditions, and to assure consumers of adequate supplies of pure and wholesome milk 

at all times. The FMMO program assures dairy farmers a minimum price for their 

milk while assuring that consumers have an adequate supply of milk to meet their 

needs throughout the year. 

5. Success in Meeting Programmatic Purpose/Goals 

Forward Contracting—Handlers that enter into forward contracts with producers 

are required under 7 CFR Part 1145 to file a copy of the contract with a Market 

Administrator’s office. Less than 100 dairy farmers have utilized the forward contracting program since 2008. 

Rulemaking Process—Only one hearing has been initiated and completed under 

the new timeframes outlined in the supplemental rules of practice for Milk Marketing Orders (see 7 CFR §§ 900.20 through 900.33). In June 2011, USDA received 

a request for a hearing to consider changes to the Mideast Marketing Area. USDA 

subsequently held a hearing on October 4–5, 2011, in Cincinnati, OH, to consider 

and take evidence on proposed changes to that order (76 FR 55608). The deadline 

for filling corrections to the transcript is October 31, 2011 and the deadline for filing 

post-hearing briefs is November 30, 2011.

1016

6. Annual Budget Authority (FY 2002–FY 2011) 

Annual Budget Authority 

FY 2002 Through FY 2011 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Est. 

Budget Authority $5,132 $5,528 $5,434 $5,541 $5,736 $6,076 $6,131 $6,301 $6,965 $6,814

7. Annual Outlays (FY 2002–FY 2011) 

Annual Outlays 

FY 2002 Through FY 2011 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Est. 

Outlays $4,716 $4,663 $4,660 $5,204 $5,428 $5,546 $5,477 $5,837 $6,846 $6,400

Explanation: The budget authority may be different from outlays due to timing of payments and the accounting process. 

8. Annual Delivery Cost (FY 2002–FY 2011) 

Annual Delivery Costs 

FY 2002 Through FY 2011 

(Dollars in thousands) 

FY 2002 

Actual 

FY 2003 

Actual 

FY 2004 

Actual 

FY 2005 

Actual 

FY 2006 

Actual 

FY 2007 

Actual 

FY 2008 

Actual 

FY 2009 

Actual 

FY 2010 

Actual 

FY 2011 

Est. 

Direct Costs $4,275 $4,165 $4,454 $4,797 $4,699 $4,962 $5,202 $5,299 $5,799 $5,703Indirect Costs $483 $453 $474 $474 $516 $527 $584 $599 $710 $697

Total Costs $4,758 $4,618 $4,928 $5,271 $5,215 $5,489 $5,786 $5,898 $6,509 $6,400

There have been no additional delivery costs in implementation of the expedited rulemaking process. The costs associated with the forward contracting program are minimal due to the low participation rate. 

1017

9. Eligibility Criteria 

During 2010, nearly 127 billion pounds of milk was pooled from 45,918 producers 

on Federal Milk Marketing Orders. This represents about 65 percent of all milk produced in the United States. 

10. Utilization (Participation) Data 

Fewer than 100 farmers have utilized the forward contracting program. 

11. Duplication or Overlap with Other Programs 

Not applicable. 

12. Waste, Fraud and Abuse 

Not applicable. 

13. Effect of Administrative PAYGO 

Not applicable. 

(1019)

AGRICULTURAL PROGRAM AUDIT 

(EXAMINATION OF USDA RURAL DEVELOPMENT PROGRAMS) 

TUESDAY, SEPTEMBER 13, 2011

SUBCOMMITTEE ON RURAL DEVELOPMENT, 

RESEARCH, BIOTECHNOLOGY, AND FOREIGN

AGRICULTURE, 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON AGRICULTURE, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 10:03 a.m., in Room 

1300 of the Longworth House Office Building, Hon. Timothy V. 

Johnson [Chairman of the Subcommittee] presiding. 

Members present: Representatives Johnson, Thompson, 

Stutzman, Scott, Hartzler, Lucas (ex officio), Costa, Welch, Sewell, 

Kissell, and Peterson (ex officio). 

Staff present: Mike Dunlap, Tamara Hinton, DaNita Murray, 

Mary Nowak, Lauren Sturgeon, Suzanne Watson, Andy Baker, Liz 

Friedlander, John Konya, and Jamie Mitchell. 

OPENING STATEMENT OF HON. TIMOTHY V. JOHNSON, A 

REPRESENTATIVE IN CONGRESS FROM ILLINOIS 

The CHAIRMAN. The Subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture hearing, entitled 

Agricultural Program Audit: Examination of USDA Rural Development Programs, will come to order. 

Let us see. We have a quorum, so we are prepared to proceed. 

Welcome to this audit hearing of the USDA’s Rural Development 

Programs. This is the third such hearing by this Subcommittee and 

the eleventh overall that the Agriculture Committee Subcommittees have held to closely review all the programs under our jurisdiction. The continuing discussions in Congress on spending, and 

the budget, will add impetus to what we will be discussing today. 

Through this series of hearings, we are assessing how USDA is utilizing the authorities provided through this Committee and where 

scarce resources are being allocated. As we approach the next farm 

bill, it is important that we have a clear idea of how programs are 

being implemented as we look for opportunities to streamline and 

improve those programs. 

Rural communities rely on a variety of industries, including mining, fishing, forestry, manufacturing, and of course farming. The 

programs we will be discussing today are designed to spur innovation and investment and, through the provision of farm credits, advancement. The goal of these programs is greater economic opporVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 01031 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
1020

tunity to help our rural communities to compete in the global market. 

Of particular interest to this Subcommittee is the Broadband 

Loan Program. Reauthorized in the 2008 Farm Bill, this program 

is intended to reach those rural areas without access to the economic, education, and healthcare opportunities which broadband 

access can bring rural America. Unfortunately, it was only this 

summer—nearly 3 years after the farm bill was signed into law—

that USDA finally began accepting applications for loans. I hope 

that the Rural Utilities Service has an update for us on how the 

applications are progressing and what we might hope to learn from 

the program before we begin writing the next farm bill. 

The current farm bill also requires USDA to report on the various definitions of rural and how those definitions have impacted 

their programs. This report was due 2 years after the enactment 

of the farm bill, and yet we still haven’t received the report. In February of this year, Deputy Under Secretary for Rural Development, 

Cheryl Cook assured the Committee that we would have a finished 

report in June of 2011, over 3 months ago. I hope the USDA can 

provide an explanation this morning as to why this report is not 

finished, and how long it is expected to be delayed. 

Almost a year ago, USDA was required to allocate all the remaining funds received through the stimulus bill. We hope the 

analysis provided by the testimony today will have a clear picture 

of how those funds have been disbursed. The stimulus bill was an 

imperfect approach to economic policy, which resulted in a mass expansion of government spending. I hope that in spite of the rush 

to spend taxpayer dollars, USDA can demonstrate that the benefits 

to rural communities have exceeded the cost. 

With tight budgets, it is incumbent upon our agencies to reduce 

costs and provide the maximum impact possible with limited dollars. This morning, we hope to hear how the agencies are already 

streamlining their mission areas and where we can work together 

to streamline our process. 

With us this morning are the Administrators of the USDA’s 

three rural development agencies: Jonathan Adelstein with the 

Rural Utilities Service, Judith Canales with the Rural BusinessCooperative Service, and Tammye Trevin ̃ o from the Rural Housing 

Service. I would like to thank each one of you for being here this 

morning. We look forward to your testimony. 

[The prepared statement of Mr. Johnson follows:]

PREPARED STATEMENT OF HON. TIMOTHY V. JOHNSON, A REPRESENTATIVE IN

CONGRESS FROM ILLINOIS

Good morning and welcome to this hearing to audit USDA’s rural development 

programs. This is the third such hearing by this Subcommittee, and the eleventh 

overall that the Agriculture Committee has held to closely review all the programs 

under our jurisdiction. 

The continuing discussions in Congress on spending and the budget have added 

impetus to what we will be talking about today. Through this series of hearings we 

are assessing how USDA is utilizing the authorities provided through this Committee, and where scarce funds are being allocated. As we approach the next farm 

bill, it is important that we have a clear idea of how programs are being implemented as we look for opportunities to streamline and improve them. 

Rural communities rely on a variety of industries, including mining, fishing, forestry, manufacturing, and of course, farming. The programs we will be discussing 

1021

today are designed to spur innovation and investment. Through the provision of 

credit and financing, the goal of these programs is greater economic opportunity and 

to help our rural communities compete in a global market. 

Of particular interest to this Subcommittee is the broadband loan program. Reauthorized in the 2008 Farm Bill, this program was intended to reach those rural 

areas without access to the economic, education, and healthcare opportunities which 

broadband access can bring to rural America. Unfortunately, it was only this summer, nearly 3 years after the farm bill was signed into law, that USDA finally began 

accepting applications for rural broadband loans. I hope that the Rural Utilities 

Service has an update for us on how the applications are progressing and what we 

might hope to learn from the program before we begin writing the next farm bill. 

The current farm bill also required USDA to report on the various definitions of 

‘rural’ and how those definitions have impacted our programs. This report was due 

2 years after enactment of the farm bill, yet we still have not received the report. 

In February of this year, Deputy Under Secretary Cook assured the Committee that 

we would have the finished report in June 2011—over 3 months ago. I hope that 

USDA can provide an explanation this morning for why this report is still not finished and how long it is expected to be delayed. 

Almost a year ago USDA was required to obligate all the remaining funds received through the stimulus bill. We hope that in the analysis provided by the testimony today will have a clear picture for how those funds have been disbursed. The 

stimulus bill was an imperfect approach to economic policy which resulted in a massive expansion of government and spending. I hope that in spite of the rush to spend 

taxpayer dollars USDA can demonstrate that the benefits to rural communities 

have exceeded the cost. 

With tight budgets, it is incumbent upon our agencies to reduce costs and provide 

the maximum impact possible with the funds provided. This morning we hope to 

hear how the agencies are already accomplishing this mission, and where we can 

work together to streamline our programs. 

With us this morning are the Administrators from USDA’s three Rural Development agencies: Jonathan Adelstein with the Rural Utilities Service, Judith Canales 

with the Rural Business-Cooperative Service, and Tammye Trevin ̃ o from the Rural 

Housing Service. I would like to thank each of you for being here this morning, and 

we look forward to your testimony.

The CHAIRMAN. I would turn the floor over to the distinguished 

Ranking Member, the gentleman from California, Mr. Costa. 

OPENING STATEMENT OF HON. JIM COSTA, A 

REPRESENTATIVE IN CONGRESS FROM CALIFORNIA 

Mr. COSTA. Thank you, Mr. Chairman, for calling this hearing 

today. It is the third and final hearing of the audits that this Subcommittee is doing to review the U.S. Department of Agriculture 

and setting the stage for the reauthorization of the 2012 Farm Bill. 

The audit hearings are an important opportunity for Members of 

the Subcommittee to reexamine what has worked to our satisfaction and, more importantly, what we think could be improved or 

hasn’t worked, as we look at tight budgets and a farm bill that will 

be less than the 2008 bill. 

Today’s topic, as you noted, is dealing with the Title VI of the 

farm bill. In one form or another, there has been a partnership between Washington and rural families and communities going back 

to the Great Depression for various purposes. Over the course of 

those 80 years, the landscape of rural America has dramatically 

changed. We have gone from, at the turn of the 19th, 20th century, 

more of an agrarian society to much more of an urbanized and suburbanized society. Yet, our rural areas are still, I believe, a vital 

component of America. Manufacturing and service sectors have replaced agriculture in many areas as the dominant economic force. 

As we look towards the 21st century with approximately 6.4 billion 

people on the planet and an estimation of over nine billion by the 

1022

middle of this century, we want to maintain our ability to produce 

the food and fiber not only to serve our own domestic needs but 

also to be able to continue to be competitive—which we are—in agricultural markets. 

But as we keep those goals in mind, it is important to note that 

in fact there are changes that have occurred. Most of you probably 

think from a person that represents part of California that you 

think of Silicon Valley, you think of Hollywood, you think of aerospace, and all of those things are part and parcel of California’s 

economy along with tourism. But, for 54 years, we have been the 

number one agricultural state in the nation, over $38 billion a year 

at the farm gate. 

And I have the great honor to serve, along with four of my other 

colleagues, the San Joaquin Valley, which is among the richest and 

most productive agricultural regions in the country. The number 

one agricultural county and number three are in my district: Fresno County and Kern County. And while by any plain evidence—

and I hope to have colleagues of the Subcommittee there in my district—you would see it as rural. We don’t qualify under a lot of our 

programs in Washington under the various rural definitions because we have larger urban cities within those Valley counties—the 

City of Fresno, City of Bakersfield, City of Modesto. If you go 45 

minutes outside of Fresno it is very rural, services are very limited, 

and it is the land of many contrasts. There is a lot of poverty that 

exists in those communities. 

I think that all of our districts, whether you are in the Midwest, 

whether you are in the Northeast, whether you are in the South, 

have similar stories to tell. You have wonderful rural areas where 

Americans do their very best to work hard and to contribute, 

whether it is the agricultural community or whether it is other 

rural industries. But oftentimes, they are the part of America that 

is not well understood or taken into account with regards to some 

of these programs that are no longer applicable. 

I think that it is important that we consider, Mr. Chairman, as 

we look at the 2012 Farm Bill the definitions of rural and how they 

are applied to communities through all corners of the nation. I 

think everyone here, and our United States Department of Agriculture witnesses included, would be hard-pressed to come up with 

a singular definition that accurately portrays what rural is in each 

state. We think we know but we have the practical experience of 

living in our communities and having the honor to represent those 

communities. 

Recent farm bills have tweaked the definitions of rural, and so 

I look forward to hearing our witnesses’ thoughts on whether or not 

further reforms should be considered in the next farm bill. We have 

looked at some notions as to whether or not we look at an application as opposed to counties’ Census tracks so that it would take 

into account those of you who represent multiple counties. I know 

some of you represent 10, 20, and 30 counties in your respective 

districts. I represent parts of two and one entire county. Our counties are different sizes and shapes throughout the country. But 

maybe we ought to consider thinking outside the box as we look toward the application of rural definitions. Would they be better 

served with a different set of criteria, different regionally based apVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 01034 Fmt 6601 Sfmt 6601 I:\DOCS\112-20\68336.TXT BRIAN
1023

proach as it relates to some things we ought to consider, Mr. Chairman, in this Subcommittee for next year’s farm bill? I would be interested in hearing that testimony. 

So I look forward to hearing our witnesses today from the Rural 

Development agencies, the different benefits that they provide, 

whether we are talking about housing, whether we are talking 

about outreach for rural development, whether we are talking 

about the other challenges that we face with regards to infrastructure. 

So with that, I thank you for my opportunity and look forward 

to hearing the witnesses testify this morning. 

The CHAIRMAN. Thank you, Congressman Costa. With that, we 

will proceed with the first witness. 

STATEMENT OF HON. JONATHAN S. ADELSTEIN,

ADMINISTRATOR, RURAL UTILITIES SERVICE, U.S.

DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Mr. ADELSTEIN. Thank you, Mr. Chairman, Ranking Member 

Costa, and Members of the Committee for the opportunity to testify 

this morning. 

USDA’s Rural Utilities Service has a long-proven history of financing electric, water, and telecom infrastructure in rural America dating back to 75 years ago, when the RUS began. We have 

been a model of public-private partnerships, we have succeeding in 

bringing modern utilities to some of America’s most remote and 

hard-to-serve areas. We have done so prudently while creating jobs 

and improving the rural quality of life. Meeting today’s needs, a 

successful rural electrification model is working to provide access 

to 21st century broadband, telemedicine, distance learning, smart 

grid, renewable energy, and safe, clean water to areas that would 

otherwise be left being. 

The RUS programs represent true investments. Our limited 

grant dollars target those areas most in need, but most of what we 

do are loans, and the capital provided for loans are repaid by our 

borrowers. So a very small amount of budget authority leverages 

much greater lending authority to meet the massive unmet needs 

of rural America. For example, $1 budget authority could be 

stretched to $16 of loan investment or even more. Our U.S. loan 

programs have a repayment rate that any private banker would 

envy. Our U.S. portfolio is over $56 billion and the current delinquency rate is .21 percent. 

Our agency has achieved record levels of investment over the last 

couple of years. We have successfully obligated the Broadband and 

Water Projects under the Recovery Act, and at the same time, we 

have set consecutive records of investments in rural electric infrastructure. In March, the RUS published new regulations for the 

farm bill broadband program. Mr. Chairman, as you noted, the new 

regs streamline the application process and target funding toward 

the most rural areas. This marks the first time, under the current 

Administration, the program is open to new applications. We wanted to wait and make sure that we had it right. We learned the lessons from the Recovery Act program. The new regulations, along 

with additional steps we have taken, fully address concerns raised 

1024

by USDA’s Inspector General about the previous administration of 

the program. 

The traditional Telecommunications Loan Program, which originates back from 1949, has achieved enormous success in connecting 

rural America. While much has changed in telecommunications 

technology in the last 60 years, the need for a public-private partnership to spur investment in rural areas has not. The tremendous 

number of applications we received for the Recovery Act is a real 

testament to the hunger out there for bandwidth in rural areas. We 

are just as excited by the rapid technological change in the electric 

sector. We are working on renewable energy, smart grid technologies, energy conservation, as well as generating, transmitting, 

and distributing clean, reliable, affordable power. It makes our 

electric program every bit as relevant to America today as it was 

in the 1930s. 

With affordable financing from RUS, America’s rural communities are at the forefront of the renewable energy movement. Renewable power is a new crop for rural America which can help feed 

the nation’s need for clean, affordable, homegrown electricity. Due 

to the strong performance of our electric program, no budget authority or taxpayer dollars are necessary to deliver about $6 billion 

in funding annually. As a matter of fact, we generate for the taxpayers $100 million. 

The 2008 Farm Bill provided new authority for energy efficiency 

programs, renewable energy and direct lending authority for loans 

that we are now implementing. RUS set a goal to finance $250 million for grid modernization during this fiscal year. Smart grid technologies give consumers greater control to keep their electric bills 

low and help utilities better manage the grid to improve efficiencies. 

When it comes to rural quality of life, few things are as fundamental as water. Since 2009, RUS’s Water and Waste Disposal Program has invested nearly $6 billion in 4,500 water and wastewater 

infrastructure loans and grants to safeguard the health of nearly 

nine million rural residents. These funds build upon the $11.5 billion portfolio of investments that we have made over the years to 

help rural communities replace aging infrastructure, make necessary repairs, and extend service to areas without access to public 

water and waste services. 

RUS’s water program maintains a delinquency rate of .24 percent. Facilitating reliable and affordable access to water is necessary for business development. It creates jobs and builds the 

economy. Our water program is the only one exclusively focused on 

rural needs. It safeguards the health of rural residents and the environment while ensuring that rural water systems can meet growing demands. Projects funding during FY 2010 will result in a 28 

percent reduction in rural residents’ exposure to water-borne illnesses. 

The RUS portfolio remains very strong. Thank you for your support. I thank the Committee today for the opportunity to testify, 

and I look forward to any questions or comments that you have. 

[The prepared statement of Mr. Adelstein follows:]

1025

PREPARED STATEMENT OF HON. JONATHAN S. ADELSTEIN, ADMINISTRATOR, RURAL

UTILITIES SERVICE, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Chairman Johnson, Ranking Member Costa, and Members of the Subcommittee, 

thank you for the opportunity to provide to you a review and accomplishments of 

the Rural Development’s (RD) Rural Utilities Service (RUS) authorized through the 

Food, Conservation, and Energy Act of 2008 (2008 Farm Bill). 

Overview 

The Department of Agriculture’s RUS is the only Federal agency that funds electric, telecommunications, and water and wastewater infrastructure for rural areas. 

Because of RUS investments, many rural communities nationwide have reliable, affordable electric power, safe water and wastewater facilities, essential telecommunications, and broadband capability. 

RUS investments provide more than basic infrastructure services. RUS is one of 

three RD agencies with a mission to facilitate rural economic development, foster 

sustainable job creation, and revitalize rural areas. 

RUS achieves its goals by funding projects to help rebuild America’s infrastructure which is essential to stronger American economic growth. Beginning with the 

creation of the Rural Electrification Administration in 1935, RUS has and continues 

to be a prominent lender for rural utility investment. 

Today’s RUS portfolio includes Federal financing for electric, telecommunications, 

broadband, and water and wastewater projects. These investments enhance community resources, including health care and education, and increase the need for 

skilled labor to meet the needs of growing and emerging industries in rural areas. 

We use the term ‘‘investment’’ because the capital provided for loans is repaid and 

delivers additional returns in the form of jobs and the types of services with the 

capability of delivering more jobs in our nation’s rural communities. 

The RUS portfolio is over $56 billion and the current delinquency rate is 0.21 percent. We are very proud of our customers’ repayment history. 

Broadband and Telecommunications Programs 

The broadband program, created under the Farm Security and Rural Investment 

Act of 2002 (2002 Farm Bill) and revised by the 2008 Farm Bill, has provided more 

than $1 billion in financing to improve telecommunications by delivering broadband 

services to rural areas for nearly a decade. 

Broadband availability allows business owners to increase distribution channels 

and enables a new generation of entrepreneurs to thrive in rural areas. Broadband 

helps America’s farmers and ranchers monitor prices, obtain weather forecasts, and 

find new markets for their produce and livestock. 

New regulations published in March 2011 streamlined the application process and 

allowed the program to focus investment to reach rural areas with three or fewer 

broadband service providers. These new regulations, along with additional steps 

RUS has taken, fully address USDA’s Office of Inspector General findings previously raised about the program. The Telecommunications Infrastructure Loan Program is authorized under the Rural Electrification Act of 1936, as amended (REA), 

and is the only Federal program that has funded telecommunications services for 

over 60 years. This program funds improvements to existing and new broadband infrastructure for rural telecommunications service providers or REA Title II borrowers. 

RUS Telecommunications Programs also administers the Community Connect 

Grant Program, which provides funding to establish broadband service in rural communities that currently do not have service. Awards of $13.4 million in available 

funding are expected to be announced by the end of FY 2011. 

RUS’ Distance Learning and Telemedicine Program fund equipment to enhance 

educational and health care services in rural areas. RUS has $24.9 million available 

and expects to announce awards by the end of FY2011. 

Electric Programs 

America‘s rural communities are on the forefront of the renewable energy movement. By increasing the supply of home-grown renewable energy, we can meet the 

growing demands for renewable sources of both fuel and power. 

The RUS Electric Program portfolio has over 650 borrowers with an outstanding 

balance of over $41 billion. The Rural Electrification Direct and Guaranteed Loan 

and High Energy Cost Grant Programs are authorized under the Rural Electrification Act of 1936; however, the 2008 Farm Bill provided new program authority, including authorization for energy efficiency programs, renewable energy, and direct 

lending authority for loans. 

1026

RUS loan funds may be used to finance generating, transmission, and distribution 

facilities. RUS also finances environmental upgrades, energy efficiency, smart grid, 

demand management and energy conservation programs. In FY 2010, RUS approved over $313.3 million in loan guarantees for new projects for renewable electric 

generation. 

RUS has a goal to finance $250 million for grid modernization during FY2012. 

Smart grid technologies give consumers greater control over their electric costs and 

help utilities better manage the electric grid to improve operational efficiencies. 

These investments help rural utilities improve their delivery and storage of renewable energy to generate electricity and help ensure sustainable economic growth in 

rural communities. For example, in North Carolina and Tennessee, French Broad 

Electric Membership Corporation received a loan guarantee of $20 million, of which 

more than $2.4 million is to be used for advanced meter infrastructure upgrades 

that can help utility providers better control the use and production of electric energy. 

The demand for electricity in rural areas is growing at two percent annually, according to the Energy Information Administration in the Department of Energy. 

During FY 2010, RUS funded $7.1 billion for electric system improvements for over 

nine million rural residents. The electric program serves 667 active rural borrowers 

and grantees in 46 states, Puerto Rico, American Samoa, and the Republic of the 

Marshall Islands. No other agency funds rural electric infrastructure projects. 

Meeting the growth in demand for electric power generation is capital intensive 

and takes significant time from concept to completion. RUS will continue to work 

to ensure that our projects are good for the environment, good for the economy, and 

good for electric consumers. 

Water and Wastewater Funding 

Since 2009, over $6.7 billion invested by the Obama Administration in 4,565 

water and waste water community infrastructure loans and grants has helped safeguard the health of nearly nine million rural residents through access to a safe 

water supply and sanitary sewer system. The loans and grants are also expected 

to create or save 143,507 jobs in the communities where projects are underway. Almost 4.8 million customers are being helped through new or improved systems that 

will deliver safe, clean drinking water, or will clean up existing waste removal environmental hazards 

These funds will build upon the $11.5 billion portfolio of investments that help 

rural communities replace aging infrastructure, make necessary repairs and extend 

service to areas without access to public water and waste service. 

Facilitating reliable and affordable access to water is necessary for business development which in turn creates jobs and builds the economy. Lack of adequate water 

and wastewater facilities kept Turrell, Arkansas, from competing for a large retail 

distribution facility that would have brought jobs to the rural community. RUS is 

now working with Turrell to build a water and waste plant. Lack of jobs has caused 

their population to drop from 1,000 in 2,000 to 615 today. 

Reliable access to water is essential for rural communities to prosper. RUS water 

programs—the only program exclusively focused on rural needs—which safeguard 

the health of rural residents and the environment and ensure that rural water systems meet growing demands. Projects funded during FY 2010 will result in a nearly 

28 percent reduction in rural residents’ exposure to water-borne illness. RUS-funded 

circuit riders responded to over 111,000 requests to assist rural water systems during FY 2010. 

Conclusion 

The RUS loan portfolio remains very strong. We constantly strive to improve program delivery, working with local leaders to deliver funds to address critical infrastructure needs which are fundamental to the quality of life and economic future 

of rural America. In closing, I would like to thank the Committee for the opportunity to appear before you today and look forward to responding to your questions.

The CHAIRMAN. Thank you. Now, we turn to Judith Canales. 

STATEMENT OF JUDITH A. CANALES, ADMINISTRATOR, RURAL 

BUSINESS-COOPERATIVE SERVICE, U.S. DEPARTMENT OF 

AGRICULTURE, WASHINGTON, D.C. 

Ms. CANALES. Thank you, Chairman Johnson, Ranking Member 

Costa, and Members of the Subcommittee for the opportunity to 

1027

discuss the success of Rural Development’s Rural Business-Cooperative Service programs impacted by the 2008 Farm Bill. 

As you are well aware, the American people are facing challenging economic times. However, in the midst of these troubling 

conditions, since 2009, the programs and services of the Rural 

Business-Cooperative Service have or will create and save nearly 

250,000 jobs, thus directly improving the economic climate of rural 

America. 

The mission of Rural Development’s Rural Business-Cooperative 

Service programs is to improve rural economies by providing financial and technical assistance to rural businesses and cooperatives. 

Through our national office, and our network of 47 state offices, 

and through our local offices located in the heartland of rural 

America, we have established strategic alliances and partnerships 

that leverage public, private, and cooperative resources to create 

jobs and stimulate rural economic activity. 

The Rural Business-Cooperative Service mission is unique in the 

Federal Government. There is no other Federal agency that focuses 

solely on rural businesses. The people who staff our 47 state offices 

as well as our local offices live in these rural communities. This 

makes them uniquely qualified to support the most rural communities in America providing access to capital and credit in areas 

otherwise ignored. 

Rural Business-Cooperative Service is responsible for five Title 

VI programs that are designed to assist people in rural communities in addition to our four Title IX energy programs that have 

provided over $700 million in support since 2009. For example, in 

late 2010, southern Illinois Coal Belt received a Rural Microentrepreneur Assistance Program loan of $500,000. Since March of this 

year, they have made loans totaling $306,000 assisting seven 

microenterprises and creating 21 new jobs. Six of these seven businesses are startup businesses. 

The Guaranteed Business and Industry Loan Program is our 

flagship program. The B&I Program provides credit support to establish, expand, or modernize rural businesses. Since 2009, the 

B&I Program has provided $5.5 billion in loan guarantees to community banks at a cost of $3,000 per job and supporting over 3,000 

businesses. 

Rural Business Opportunity Grant Program was authorized 

under Title VI of the farm bill. This program provides training and 

technical assistance for business development, entrepreneurs, and 

assists with economic development planning. The Rural Microentrepreneur Assistance Program provides capital access and funding for business-based training and technical assistance to local 

micro-development organizations to support very small businesses 

with less than ten employees. The Value-Added Producer Grant 

Program, the lead source in rural development for promoting local 

foods in rural America, provides funding for planning activities and 

working capital, for marketing value-added agriculture products, 

and for farm-based renewable energy. We look forward to announcing awards very soon of $37 million. 

The Rural Development Cooperative Development Grant Program and the Small and Socially Disadvantaged Producer Grant 

Program provides funding to centers and cooperatives to develop 

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new or improve existing cooperatives. These business cooperatives 

in turn grow and expand their operations in rural America. 

Mr. Chairman and Members of the Subcommittee, thank you for 

your time. The Rural Business-Cooperative Service is committed 

and, with your help, will continue to promote economic prosperity 

in rural America. Thank you. 

[The prepared statement of Ms. Canales follows:]

PREPARED STATEMENT OF JUDITH A. CANALES, RURAL BUSINESS-COOPERATIVE

SERVICE, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Chairman Johnson, Ranking Member Costa, and Members of the Subcommittee, 

thank you for the opportunity to provide a review and highlight the accomplishments of Rural Development’s (RD) Rural Business-Cooperative Service (RBS) programs authorized through Title VI of the 2008 Farm Bill. We are still in challenging 

economic times but the programs and services of RBS, in partnership with other 

public and private sector funding, are improving the economic climate of rural 

areas. I appreciate the opportunity to discuss the successes of the business programs 

today. 

Overview 

The mission of RBS programs is to create economic opportunities for rural Americans by supporting the creation and growth of viable businesses, including cooperatives, that can compete and prosper in the global marketplace. 

We meet these goals by investing financial resources and providing technical assistance to businesses and cooperatives located in rural communities, and establishing strategic alliances and partnerships that leverage public, private, and cooperative resources to create jobs and stimulate rural economic activity. 

RBS currently operates five programs authorized under the Consolidated Farm 

and Rural Development Act (CONACT) or the Agricultural Risk Protection Act of 

2000 (ARPA) which were either added or amended by Title VI of the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill). These programs include: the 

new Rural Microentrepreneur Assistance Program (RMAP), Rural Business Opportunity Grants (RBOG), the Value-Added Producer Grant (VAPG) Program, the 

Rural Cooperative Development Grant (RCDG) Program, and the Small SociallyDisadvantaged Producer Grant (SSDPG) Program. These programs are designed to 

assist people in rural communities and increase economic opportunities by improving community infrastructure, environmental health, and the sustainability of agricultural production. 

RBS also implements numerous other programs which provide job training and 

business development opportunities for rural residents, including cooperative business development, community economic development and strategic community planning and faith-based and self-help initiatives. While these programs were not 

amended by the 2008 Farm Bill they will be included in this testimony to provide 

the Committee a complete picture of the scope of RBS investment in the economic 

opportunities in rural America. 

The RBS mission is unique in the Federal Government. There is no other Federal 

agency that focuses only on promoting rural communities and businesses. Our field 

offices reach out to rural America, including the poorest, most rural counties in 

America, providing Federal support to businesses that find it impossible to receive 

financial aid from any other source. 

Administration Priorities 

Secretary Vilsack has directed RBS to expand our reach in rural communities. 

USDA will continue to engage public and private partners to revitalize rural communities by expanding economic opportunities and creating jobs for rural residents. 

Administration priorities include: capital markets, local and regional food systems, 

and regional innovation. 

Capital Markets 

To increase economic prosperity in rural communities, capital is needed to spur 

business expansion and promote new businesses. RBS administers several loan and 

grant programs that can be used to attract investment capital, including loan guarantee programs such as Business and Industry loans. 

Our employees are also key tools in creating capital markets, providing the skills 

and expertise to review business plans, identify tax incentives, and put together viaVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 01040 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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ble loan and grant combinations that can be used to spur capital investment in 

rural areas. 

Local and Regional Food Systems 

RBS actively promotes local- and regionally-produced agricultural food products 

through existing authorities and programs. We have worked to elevate the visibility 

of local foods, identifying and utilizing 2008 Farm Bill authority that can be used 

to support this important initiative through local and regional food projects, such 

as the five percent reserve in the Business and Industry Guaranteed Loan program 

for projects that support local and regional food systems. We have provided approximately $200 million of support for local and regional food projects in 2010. 

Regional Innovation 

The key to creating economic growth for many communities is to encourage better 

collaboration on a regional scale. RBS looks for opportunities to assist rural communities in breaking down the barriers in accessing multi-jurisdictional opportunities 

and to cut across the bureaucratic silos that prevent investment in good ideas. This 

approach increases the prosperity of rural communities by supporting locally-led, regional economic strategies. The focus creates strong local and regional economies in 

emerging opportunities such as food systems, renewable energy, broadband-based 

economies, rural recreation, and the creation and preservation of wealth in rural 

America. 

Business Programs 

Business development and job creation are at the foundation of our agency mission. This foundation, along with the targeted programmatic approach of the Administration’s Priorities, makes RBS programs an essential tool for rural America. 

In 2010, we invested about $3 billion to ensure America’s rural businesses maintain a competitive edge in today’s global marketplace. The vast majority of this 

funding was provided through guaranteed loans. These guarantees leverage funding 

provided by the commercial lending community along with other private sector 

funding. 

The remaining text discusses our RBS programs and how they impact rural America. 

Guaranteed Business and Industry Loans (B&I) 

The B&I program, authorized under section 310B of the CONACT, is the largest 

of the RBS programs and provides protection against loan losses so that lenders are 

willing to extend credit to establish, expand, or modernize rural businesses. 

Capital is the lifeline of rural businesses to maintain and create rural jobs. The 

President’s Fiscal Year (FY) 2012 Budget requests $53 million in budget authority 

to support $823 million in loan guarantees for B&I. We will fund $1.387 billion in 

guarantees this fiscal year; we have already obligated $995.36 million though 373 

loans. In FY 2010, we obligated 1,030 loans totaling over $2.9 billion. 

This program has had proven results and supports a holistic economic approach. 

For example, in 2010 the Brattleboro Food Co-op received a $4.2 million guarantee 

from the RBS B&I program. This cooperative has grown from a warehouse storefront in 1979 with a volunteer staff into a $17 million operation with 100 employees. 

The cooperative now supplies local and organic food choices to its 5,000 members 

located throughout southeastern Vermont. 

To support its long term viability and expand choices for its growing consumer 

membership, the cooperative embarked upon an expansion plan. The cost of doubling its space in its downtown location would cost $8.8 million. The cooperative 

raised more than $1 million from its members and leveraged those funds with a 

$4.2 million B&I guaranteed loan from Peoples United Bank. The remaining financing came from nonprofit, private, and borrower equity. As a result, the cooperative 

is expanding from 17,200 square foot building into an energy efficient 33,847 square 

foot building serving as an anchor business in downtown Brattleboro. 

The expanded store will add market capacity for the 146 local farmers and 46 food 

producers that it currently supports. Additionally, the project will develop 24 units 

of affordable housing that will be owned and operated by the Windham Housing 

Trust and Housing Vermont. The cutting edge, environmentally-friendly building 

will even recycle the grocery store’s waste heat from its refrigeration and reuse it 

to heat water for the entire facility. 

Rural Business Opportunity Grant (RBOG) 

Authorized under the CONACT, the 2008 Farm Bill extended the RBOG program 

through FY 2012. The RBOG program promotes sustainable economic development 

in rural communities with exceptional needs through provision of training and techVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 01041 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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nical assistance for business development, entrepreneurs, and economic development officials and to assist with economic development planning. In FY 2010, the 

RBOG program provided funding to seven regions to develop plans focused on supporting local food systems, renewable energy, and the utilization of natural resources to promote economic development through regional planning among Federal, 

state, local, and private entities. By creating a regional focus and increasing collaboration with other Federal agencies, and other partners, our resources will have a 

larger impact, enabling greater wealth creation, quality of life improvements, and 

sustainability. 

Leveraging is an essential tool of the RBOG program. For example, Ecotrust in 

Oregon, was awarded a $249,340 grant in FY 2010. Using the RBOG funds along 

with over $1 million in leveraged funds, Ecotrust will be able to increase recruitment of producers and buyers in rural communities throughout the Pacific Northwest and provide the training and assistance necessary to ensure FoodHub, a 

project of Ecotrust, supports their business, procurement, and marketing goals. 

FoodHub (http://food-hub.org/) is an on-line directory and marketplace designed 

to help wholesale food buyers and sellers find each other, connect, and do business. 

FoodHub will help agri-producers tap into the consumer demand for local food, help 

forge more direct connections between food buyers and producers, and shorten the 

supply chain between producers and wholesalers. FoodHub has 550 members signed 

up as of June 2010, and schools, bakeries, restaurants, processed product manufacturers, hospitals, grocers and wholesalers have already reported success in finding 

new regional suppliers through FoodHub. We were pleased to see that Fast Company’s included EcoTrust’ FoodHub on their top ten list of innovative food companies. 

Rural Microentrepreneur Assistance Program (RMAP) 

Newly created in the 2008 Farm Bill, RMAP is authorized under the CONACT. 

RMAP provides capital access, business-based training and technical assistance to 

the smallest of small businesses, employing less than ten people. The RMAP purpose is to support the development and ongoing success of rural microentrepreneurs 

and microenterprises. Direct loans and grants are made to approved Microenterprise 

Development Organizations (MDO’s). The 2008 Farm Bill provided mandatory funding of $4 million per year for FY 2009–2011 and $3 million for FY 2012. In addition, 

the 2008 Farm Bill authorized further discretionary appropriations of up to $40 million per year for FY 2009–2012. 

In FY 2010, RBS utilized the mandatory funding available for FY 2009–10 to provided 73 grants totaling $6.6 million for technical assistance. Additionally, 63 rural 

microloans were made totaling $24.9 million. In FY 2011 the $4 million in mandatory funding provided by the 2008 Farm Bill is expected to support 160 businesses 

through $10.7 million in grants and loans. To further support this important program, the President’s FY 2012 Budget requests $5.7 million in discretionary funds. 

This funding request is in addition to the $3.0 million in mandatory funds that was 

provided by the 2008 Farm Bill. 

Though new, this program is already showing results. The Valley Small Business 

Development Corporation located in Fresno, California, is preparing to close on their 

first RMAP loan. The recipient of the $50,000 loan will be a custom farm operator 

in Hanford, California. Loan funds will be used to purchase farm equipment and 

expand this micro business. 

Those eligible to apply are MDO’s that are located in any area outside the boundaries of a city or town with a population of 50,000, or more, and the urbanized area 

contiguous and adjacent to such city or town. 

Value-Added Producer Grant (VAPG) Program 

Authorized under ARPA, the VAPG program provides grants for planning activities and for working capital for marketing value-added agricultural products and for 

farm-based renewable energy. The program encourages farmers and ranchers to add 

value to the commodities and products they produce allowing them to capture a 

greater percentage of the consumer’s dollar. Eligible applicants are independent producers, farmer and rancher cooperatives, agricultural producer groups, and majority-controlled producer-based business ventures. The grants can be used for two purposes. The first is for planning activities such as conducting feasibility studies and 

developing business plans. Or, grants can be used to establish working capital accounts to pay salaries, utilities and other operating costs; to finance inventories; and 

to purchase office equipment, computers, and supplies. The value-added program is 

highly successful and has contributed to the creation of more jobs and business opportunities in rural America. The President’s FY 2012 Budget requests funding 

VAPG at $20.4 million. This level of funding allows RBS to maintain this important 

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program to encourage producers to refine or enhance their products thereby increasing their value and their returns to producers. During the last funding cycle, awards 

were made to 45 states and Puerto Rico, the broadest distribution of awards in the 

history of this nationally competitive program. On June, 28, 2011, $37 million in 

funds were announced through a Notice of Funding Availability which is scheduled 

to close on August 29, 2011. We estimate that this funding will support 350 businesses. On February 23, 2011, a final rule was published in the Federal Register incorporating changes made by the 2008 Farm Bill and expanding the types of eligible 

applicants. The programmatic changes associated with the regulation provide additional opportunities to beginning and socially disadvantaged producers by helping 

owners of small and medium-sized family farms sell their products in local and regional markets and reserving ten percent of the total funds available for projects 

to benefit beginning and socially disadvantaged farmers and mid-tier value chains. 

Those eligible to apply are independent agricultural producers, producer groups, 

agriculture cooperatives, or majority-controlled producer-based business ventures. 

The revised regulatory language reserves ten percent of funds for beginning and socially disadvantaged farmers and ten percent for projects that support the use of 

a mid-tier value chain. The eligible area is within the United States. 

Rural Cooperatives 

Cooperatives are an important form of business model that is the cornerstone for 

business development in some rural communities. Cooperatives provide rural residents with new job opportunities, enhanced educational and healthcare services, and 

products that enable them to compete with their urban and suburban counterparts. 

Opportunities are created locally and revenues are maintained and re-circulated locally. The RBS cooperative services staff conducts basic research on the cooperative 

form of business, collect statistics and financial data pertaining to cooperatives, and 

provides technical assistance to farmer groups interested in starting a cooperative 

or improve existing cooperatives. In addition, the cooperative services staff manage 

a number of RBS grant programs. 

Rural Cooperative Development Grant (RCDG) Program 

The RCDG program assists nonprofit organizations and institutions of higher education to establish and operate cooperative development centers to start and establish cooperatives who improve the economic condition of rural areas. This program 

provides support to centers to develop new cooperatives and improve existing cooperatives. This program complements our national and state office technical assistance efforts by increasing outreach and developing feasibility studies and business 

plans for new cooperatives and assisting existing cooperatives in meeting the demands of today’s ever-changing global economy. Those eligible to apply are nonprofit 

corporations or institutions of higher learning. The eligible area is rural areas of 

50,000 or less in the United States. 

Small Socially-Disadvantaged Producer Grant (SSDPG) Program 

The SSDPG program supports cooperatives or associations of cooperatives whose 

primary focus is to provide assistance to small, minority producers and whose governing board and/or membership is comprised of at least 75 percent small, socially 

disadvantaged producers. In 2010, awards were made to groups representing African American, Asian, Hispanic, Hmong, Native American, Native Hawaiian, Pacific 

Islander, and women producers. 

For example, the Hillside Farmers Co-op of Northfield, Minnesota, assists Latino 

farmers by partnering with established farmers who, together, are committed to producing sustainable foods and building healthier communities. The cooperative pairs 

immigrant families with established farmers in the area who rent out their land for 

gardening and poultry production. The SSDPG grant awarded in 2010 is helping the 

cooperative conduct a feasibility study, develop a business plan, provide training, 

and help pay for other related expenses in developing a coordinated network of local 

businesses in the free-range poultry industry. 

Those eligible to apply for the SSDPG are minority cooperatives or minority associations of cooperatives. Eligible areas include areas outside towns having a population greater than 50,000 and any adjacent urbanized area, or an urbanized area 

that is nevertheless rural in character. 

Other RBS Programs 

In addition to the programs described above, RBS has a number of other programs that are not authorized under Title VI of the 2008 Farm Bill but are essential programs in the RBS portfolio. These programs include: the Intermediary Relending Program, the Rural Business Enterprise Grant Program, the Rural EcoVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 01043 Fmt 6601 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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nomic Development Loan and Grant program, the Biorefinery Assistance program, 

the Repowering Assistance Program, the Advanced Biofuel Payment Program, and 

the Rural Energy for America Program. 

Backlog 

Our RD programs are oversubscribed and in high demand. The B&I guaranteed 

loan program currently has 255 eligible pending applications/preapplications totaling $983 million that would receive funding if it were available. 

The RMAP program has currently received 78 eligible loan and grant applications 

totaling $12.4 million in funding requests but was only provided $4 million for FY 

2011, which will support 160 businesses through $10.7 million in grants and loans. 

The Rural Business Opportunity Grant program had 424 eligible applications totaling $60 million apply in 2010. Only 27 awards could be funded totaling $2.6 million. 

The last time funding for the Value-Added Grant Program was announced, there 

were 300 eligible applicants requesting $32.7 million, but only 196 projects totaling 

$22.7 million were awarded. 

Uniqueness 

All of the RBS programs are unique by virtue of their singular focus on rural 

America. Though some of the goals of these programs may be similar to SBA, the 

implementation, technical support, and outreach for the programs, eligibility requirements, loan limitations, and project expansion are tailored to support rural 

businesses and residents to expand their local economies. In Government Accountability Office comparisons of RD programs to the programs of other Federal agencies, they found that while similarities exist, RD is the only Federal agency with 

a broad experience base for implementing rural programs. 

Unfunded Programs 

There were numerous programs included under Title VI of the 2008 Farm Bill 

which no longer receive funding or never received funding. These programs include: 

the Appropriate Technology Transfer for Rural Areas program, the Rural Business 

Investment Program, the Rural Collaborative Investment Program, Grants for the 

Expansion of Employment Opportunities for Individuals with Disabilities in Rural 

Areas, and the Agriculture Innovation Center Demonstration Program. 

Councils 

In addition to the RBS programs, we also work as liaisons along with the Rural 

Utilities Service and Rural Housing Service to support businesses in the following 

communities: Rural Economic Area partnership zones, Delta Regional Authority, 

and the Northern Great Plains Regional Authority. 

Conclusion 

RBS is committed to promoting economic prosperity in rural communities through 

our grant, loan, and loan guarantee programs. In partnership with other public and 

private sector businesses, RBS continues to improve the economic climate of rural 

areas through the creation or preservation of sustainable business opportunities and 

jobs and by helping to close the gap in opportunity for the underserved rural areas 

and populations. With your help, we will continue working to bridge the opportunity 

gap between rural and urban areas. In closing, I would like to thank the Subcommittee for the opportunity to appear before you today and look forward to responding to your questions.

The CHAIRMAN. Thank you for your comments. 

And last on the panel, we have Tammye Trevin ̃ o of the Rural 

Housing Service. You can go ahead and proceed. 

STATEMENT OF TAMMYE H. TREVIN ̃ O, ADMINISTRATOR, 

RURAL HOUSING SERVICE, U.S. DEPARTMENT OF

AGRICULTURE, WASHINGTON, D.C. 

Ms. TREVIN ̃ O. Good morning, Mr. Chairman, Ranking Member 

Costa, and Members of the Committee, it is a privilege to provide 

a brief overview of the United States Department of Agriculture’s 

Rural Development Rural Housing Service activities. 

For over 60 years, the Rural Housing Service, part of the Department of Agriculture’s Rural Development mission area, along with 

1033

Rural Utilities Service and the Rural Business-Cooperative Service 

has been working to help rural America thrive by supporting the 

housing needs of these communities. Rural Development is a collaborative agency. Our programs build upon one another ultimately 

creating efficiencies for the taxpayer and the communities that we 

serve. As part of the Rural Development mission area, Rural Housing Service provides Single-Family Homeownership Programs, 

Multi-Family Housing Programs, housing loans and grants for repair and rehabilitation, and community programs. All are integrated into a more holistic approach at rural community and economic development. 

We have exceptional staff in local offices across the rural landscape working closely with dedicated partners in the for-profit and 

nonprofit sectors. This same staff delivers programs for all three 

agencies across the mission area. By being located in rural communities, we are able to cultivate important relationship with lenders, 

realtors, community-based organizations, redevelopment authorities, and others. Our efficiency is noted in the strategic centralization of a significant portion of core operations while leveraging the 

community knowledge of our field structure across all programs. 

For example, staff delivering Rural Housing Services Community 

Facilities Programs to eligible municipalities, tribes, and nonprofit 

organizations also work with these same partners on the Rural 

Utilities Service’s Water and Waste Disposal Program. The importance of our local staffers cannot be overemphasized. They know 

the needs of their neighbors and their rural communities and provide critical support both effectively and efficiently. 

In the wake of natural disasters Rural Development programs 

have worked in concert to build communities from the ground up. 

No other department in the Federal family offers rural communities the range of financial services available from USDA Rural 

Development and the staff nearby to provide the technical assistance. 

At the Rural Housing Service, our mission is to help families, individuals, and businesses in rural communities thrive by ensuring 

access to capital for housing and community facilities. Utilizing a 

total budget authority of $1.03 billion, the Rural Housing Service 

leveraged a program level of approximately $26.3 billion in loans, 

loan guarantees, grants, and technical assistance in Fiscal Year 

2010. Our programs are provided through the Housing Act of 1949 

in combination with the consolidated Farm and Rural Development 

Act. 

Rural Housing Service is a big part of Rural Development’s overall success and effective program operations. Despite doubling our 

borrowers’ numbers over the last 2 years, Rural Housing Service’s 

direct and guaranteed loan portfolios continue to perform well 

thanks in large part to our state-of-the-art call center, the Centralized Servicing Center in St. Louis, Missouri. Rural Housing Service 

also provides funding for essential community facilities. Since the 

Rural Community Programs were authorized by the CONACT in 

1972, more than $12.7 billion has been invested in facilities equipment for healthcare, education, public safety, and other services essential to the healthy economic and civic environment in rural 

America. 

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For Fiscal Year 2012, the CF Direct Loan Program has a negative subsidy rate that enabled Rural Development to request zero 

budget authority for a program level of $1 billion, more than triple 

our current level. In the essence of saving time, information about 

delinquencies and accomplishments in the Rural Housing Service 

Program has been provided in written form. As stated in the 

CONACT, rural America has complex needs, and at Rural Development, we share an important commitment with you to meet those 

needs. We believe that the mission and delivery of programs that 

Rural Development affords us the flexibility to respond to current 

and changing needs across the rural landscape; and lead other public sector and private sector, for-profit and nonprofit partners to invest strategically in rural people and rural places, particularly 

those who are traditionally underserved by conventional financial 

models and at times where the private sector is unable to step in. 

Rural communities have a unique set of challenges that Rural Development is well-suited to address. 

Thank you for the opportunity to appear before you today, and 

I welcome any questions or comments. 

[The prepared statement of Ms. Trevin ̃ o follows:]

PREPARED STATEMENT OF TAMMYE H. TREVIN ̃ O, ADMINISTRATOR, RURAL HOUSING

SERVICE, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Chairman Johnson, Ranking Member Costa, and Members of the Committee, it 

is my privilege today to provide to you a review of the United States Department 

of Agriculture (USDA) Rural Development’s (RD) Rural Housing Service (RHS) programs and activities. The core mission of RHS is to create vibrant, thriving rural 

communities, a strong housing stock, access to safe, decent and affordable rental 

housing and access to high quality essential community infrastructure. RHS accomplishes its mission through a number of housing programs authorized under the 

Housing Act of 1949 and the Community Facilities (CF) programs authorized under 

the Consolidated Farm and Rural Development Act (CONACT) and amended 

through farm bill legislation. In addition, through the Rural Community Development Initiative (RCDI) RD provides technical assistance and training funds to qualified intermediary organizations to develop their capacity to undertake housing, community facilities, and community and economic development projects in rural areas. 

Overview 

The RHS programs are a systematic part of RD’s community and economic development structure which works to improve the quality of life in rural America. We 

work to improve infrastructure, sustain and create jobs, and create economic wealth 

in rural communities. RD programs are locally-led and they work together in a cohesive manner to provide all of the necessary services and activities to have sustainable and prosperous communities. Housing, community development, and technical 

assistance are at the foundation of our agency’s mission. This foundation, along with 

the targeted programmatic approach, makes RHS programs an essential tool for 

rural America. 

In Fiscal Year (FY) 2010, utilizing budget authority of about $1 billion, RHS supported a program level of approximately $26.3 billion in loans, loan guarantees, 

grants, and technical assistance. The budget targeted resources to programs that 

are most needed and most effective in rural communities. RHS programs continually 

assist USDA’s efforts to help rural America out-build, out-educate, and out-innovate 

our global competitors while making the tough choices necessary to address responsibly the nation’s budget deficit. In 2010, RHS assisted nearly 161,000 rural American families to buy or repair their homes, provided safe, decent affordable rental 

housing to 460,000 individuals, and provided financing to assist over 1,000 small 

communities develop essential community buildings and equipment. The remaining 

text discusses our RHS programs, and how they impact rural America. 

CF Program 

The CF program was authorized in 1972 under the CONACT to provide funding 

necessary for the installation or improvement of essential community facilities in 

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rural America. Since that time, the CF program has provided over $12.7 billion in 

funding for health care, educational, public safety, and other essential community 

facilities and more than 40 percent of the CF program investments have been made 

in rural health care facilities. The local hospital, school system, or public safety district is often the largest employer in a rural community or region. By providing lowinterest loan and grant funding for these organizations through the CF program, we 

directly support economic development and job creation. 

The current CF program portfolio consists of about $5.2 billion in outstanding 

loans and grants that have been made to 11,197 facilities that received either individually, or in combination, a direct loan, guaranteed loan, or grant. Since FY 2009, 

the CF programs have invested over $3.1 billion in 4,207 essential community facilities, estimated to directly create 9,996 jobs and save 22,384 jobs. Of that amount, 

over $1.66 billion was invested in 464 rural health care facilities and is estimated 

to create 4,124 jobs and save 10,319 jobs. 

CF Loan Programs 

RHS offers both guaranteed and direct CF loan programs. Direct loans are available to those who are unable to obtain commercial financing. The maximum term 

for all loans is limited to the lesser of the useful life of the facility, any state law 

limitation on loan terms, or 40 years. Interest rates for direct loans are based on 

current market yields for municipal obligations, although loans for facilities impacting prime or unique farmland may require a slightly higher rate. Certain other direct loans may qualify for a lower interest rate, depending upon the median household income of the residents of the community to be served. Guaranteed loans are 

made and serviced by commercial lenders such as banks, savings and loans, mortgage companies which are part of bank holding companies, the Farm Credit System, 

or insurance companies. CF programs may guarantee up to 90 percent of any loss 

of interest or principal on the loan. The entities eligible to apply for loans are public 

bodies, nonprofits, and federally-recognized Indian tribes. The eligible area for both 

direct and guaranteed loans is rural communities with a population up to 20,000. 

The President’s FY 2012 Budget proposes to fund the CF direct loan program at 

$1 billion, more than triple the historic funding level. In addition, the budget proposes to eliminate funding for the CF guaranteed loan program. The CF guaranteed 

loan program originated as an inexpensive alternative to the direct loan program, 

designed to stimulate additional assistance to moderate income communities in 

rural areas. However, the defaults in the CF guaranteed program have been much 

higher than originally projected, making it more expensive than the direct loan program. The CF direct loan program has a negative subsidy rate in FY 2012. This 

means that the $1 billion in CF direct loan assistance can be provided without the 

need to request subsidy budget authority. The proposed increase in the CF direct 

loan program will mitigate any effects of ending the guaranteed loan program. This 

is a win-win for taxpayers and rural residents working to strengthen their rural 

communities. 

CF Grant Program 

The entities eligible to apply for grants are public bodies, nonprofits, and federally-recognized Indian tribes. The eligible area for the program is rural communities 

with a population up to 20,000. The amount of grant assistance depends upon the 

median household income and the population in the community where the project 

is located. Grant assistance may be available for up to 75 percent of project costs. 

Housing Programs 

Title V of the Housing Act of 1949 authorizes loans and grants to assist rural families in becoming homeowners and to provide safe, decent and affordable rental 

housing. The major housing programs under this legislation are single family housing (Section 502), single family housing repair and rehabilitation (Section 504), rural 

rental housing (Section 515), and self-help technical assistance grants (Section 523),. 

These programs were carried out by the Farmers Home Administration prior to reorganization of the Department in 1994 and creation of the Rural Housing Service. 

In 1968, an amendment to Title V of the Housing Act of 1949 established the interest-credit housing loan program. It enabled some low-income families to pay as 

little as one percent interest and provided for subsidized loans to developers of lowpriced rental housing for low-income families and senior citizens. New programs 

also were enacted in 1968 for rural homesite development loans and for grants toward support of ‘‘self-help’’ homebuilding group projects. Grants of up to 90 percent, 

as well as loans, were authorized for farm labor housing projects. 

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Single-Family Housing Programs 

The Single-Family Housing (SFH) programs provide homeownership opportunities 

for rural Americans with very low-to moderate incomes to purchase and improve 

homes through several loan, grant, and loan guarantee programs. The programs 

also make funding available to individuals to finance vital improvements necessary 

to make their homes decent, safe, and sanitary. Thus far in FY 2011, USDA through 

the RHS Single Family Housing programs has provided $11.7 billion in direct and 

guaranteed loans to assist 92,786 families to purchase or refinance a home, 

strengthening our rural communities and neighborhoods and helping families build 

equity in their future. In FY 2010, the SFH programs provided $18.9 billion to 

150,693 families to purchase or refinance a home, helping boost rural economies and 

creating thousands of new jobs in rural communities. The 2012 budget proposed a $24 billion program level for the SFH Section 502 

loan guarantees which is anticipated to fully meet demand. For FY 2011 and FY 

2012, the program has a negative subsidy rate because of a low and stable default 

rate coupled with increased program fees. The 2012 fee structure will be a two percent up-front fee and an annual fee of 0.3 percent. Single-family housing direct 

loans and housing repair grants are both funded at reduced levels for 2012, reflecting the efforts of this Administration to ‘‘tighten our belts’’. The shift from direct 

loans and grants to guaranteed loans allows us to significantly increase our investment in rural America while simultaneously decreasing the burden on taxpayers. 

The $24 billion guaranteed loan level allows RHS to provide the highest level of assistance for single family housing in rural areas that has ever been provided—and 

without needing to request subsidy budget authority. 

The collapse in the housing market caused a reduction in lender confidence, which 

has increased demand for the SFH guaranteed program. Currently, approximately 

2,000 lenders participate in the program. The low home mortgage interest rate environment has enabled the guaranteed rural housing program to serve low-income 

families who may have previously looked to our SFH direct loan program for assistance. However, recognizing that an unserved need may continue to exist for very 

low-income families, the single-family direct loan program’s reduced funding level 

will be $211 million and will be targeted to very low-income applicants. 

Multi-Family Housing Programs 

The Multi-Family Housing (MFH) budget continues RD’s commitment to providing affordable housing options to the poorest of the poor in rural America. Our 

existing portfolio provides decent, safe, sanitary, and affordable residences for the 

460,000 tenant households. The MFH Program offers Rural Rental Housing Loans 

to provide affordable multi-family rental housing for very low-, low-, and moderateincome families; the elderly; and persons with disabilities. This is primarily a direct 

mortgage program, but funds may also be used to buy and improve land and to provide necessary facilities such as water and waste disposal systems. In addition, rental assistance is available to eligible families. 

The total program level request for MFH programs is $1.06 billion of which $907 

million is allotted for the MFH Rental Assistance contract renewals. The requested 

rental assistance is sufficient to accommodate the renewal of 204,503 expiring rental 

assistance contracts. While the FY 2012 budget request proposes to terminate funding for the MFH Revitalization Demonstration Program, it proposes to increase the 

MFH direct loan program from a program level of $69.5 million to $95 million, ensuring that more affordable rental housing opportunities are created for the verylow income tenant base in rural America. The direct loan program can be used for 

repair and rehabilitation as well as new construction. So the increase in funding 

should allow property owners to continue to finance revitalization efforts even without the demonstration program. 

The FY 2012 budget request proposes $16 million for the Rural Housing Voucher 

Program. The voucher funding will be used to offset some of the reductions in rental 

assistance. If a MFH property offering rental assistance leaves the portfolio, vouchers will be offered to all low-income tenants that presently receive rental assistance. 

The FY 2012 budget request for MFH Section 514/516 Farm Labor Housing is approximately $37.2 million in program level funding. 

Farm Labor Housing 

Funding was not proposed for FY 2012 for the Farm Labor Housing program. The 

program provides loans and grants to build affordable rental housing and related 

facilities for both migrant and year-round farm workers. Units may be off-farm 

housing available to eligible farm workers of any farming operation or on-farm housing for farm employees. Funds for this program may also be used for repairs of existing program units. 

1037

Housing Loans and Grants for Rehabilitation and Repair 

The FY 2012 budget limits or eliminates funding to some very small loan and 

grant programs to allow the agency to focus on the programs that most effectively 

achieve USDA’s housing goals through higher loan volumes. USDA will provide approximately 2,000 grants to very-low income, elderly, rural homeowners in order to 

make essential repairs to their homes to make them safe and to remove health hazards through the SFH Housing Repair grant program. This program is designed to 

help the most vulnerable residents in rural America. 

Smaller and more labor intensive programs that are not proposed for funding include housing repair loans, self-help housing grants, housing assistance grants, and 

loans to deal with inventory property referred to as ‘‘credit sales.’’ This shift in the 

focus of program delivery will make USDA leaner, more efficient and will help the 

agency streamline operations and deliver results at a lower cost for the American 

people. 

Technical Assistance 

The RCDI provides technical assistance and training funds to qualified intermediary organizations to develop their capacity to undertake housing, community 

facilities, and community and economic development projects in rural areas. 

Technical assistance promotes partnerships at the local, regional, and state levels 

to assist communities in advancing their strategic or economic development plans. 

It also encourages coordinated planning among RD programs to address specific 

projects within the context of a community or regional strategic plan. 

The entities eligible to apply for RCDI funds are public bodies, for profits, private 

nonprofits and Indian Tribes. Eligible areas include outside the boundaries of a city 

with a population of 50,000 or more and its immediately adjacent urbanized area. 

Conclusion 

RHS implements rural housing and CF programs to assist rural communities to 

create a healthy, safe, and prosperous place in which to live and work. Rural housing direct and guaranteed loans and grants assist rural families in becoming homeowners and provide safe, decent and affordable rental housing. CF direct and guaranteed loans and grants create jobs in rural America through the development of 

essential community facilities such as hospitals, libraries, day-care facilities, fire 

halls, community centers, and more. In closing, I would like to thank the Subcommittee for the opportunity to appear before you today and look forward to responding to your questions.

The CHAIRMAN. Thanks to the three of you for your direct remarks. They are gratefully received by the Members of the Committee. 

Let me start with this question for all three of you. The existing 

farm bill, which we are in the course of actively working on a new 

version, required USDA to report on the various definitions of rural

and how those definitions impact our programs. Obviously, as 

Ranking Member Costa alluded to in his opening remarks, and as 

I can tell you and Members of the Committee on both sides can tell 

you, this is a critical determination in terms of your services and 

the services to the agricultural sector. The report was due 2 years 

after the enactment of the farm bill, and we still haven’t received 

the report. I believe in the second or third month of this year, Deputy Under Secretary Cook assured the Committee that we would 

have the finished report by June of 2011, over 3 months ago. We 

still haven’t received it. Why not? 

Ms. CANALES. Mr. Chairman and Ranking Member Costa, both 

of you have a strong interest and of course the entire Subcommittee, indeed Deputy Under Secretary Cook did make that 

statement. I do want to say to you that the report is at Rural Development. It is a report, as you can well imagine, given that the 

three agencies that are represented here all have different standards and different population limits and different criteria for how 

we operate, each one of the programs that we are responsible for, 

1038

given the authorization language from these different agencies. So 

I will say to you that in response to your question that the report 

is being worked on. There is a draft. The Deputy did state to us 

that this is something that is very important to provide to the Congress. 

I do want to say to you that certainly within my agency, we have 

had a tremendous amount of experience utilizing the very specific 

criteria that you all authorized regarding the definitions of rural

and characterizations, which were able to utilize them. And those 

were able to, therefore, gain more rural areas. That is a petition 

that a local community can make to Rural Development in order 

to get a review of their area. So the report——

The CHAIRMAN. If I could—I appreciate it. Back to the question. 

I don’t mean to be adversarial. I am just asking the question. But 

it has been 3 months and you indicated it is under review. Now, 

when can we expect that? Not generally, in the real near future, 

but specifically when can we expect that report. I know the Ranking Member, several others on this Committee, and I are going to 

be in a field hearing where that definition in terms of rural 

broadband has particular significance. That is actually in a couple 

weeks. We would love to be able to have some parameters for a variety of reasons so we know what way we are operating. Can you, 

between the three of you, give me a date? Like next week? 

Ms. CANALES. I could not state that it will be next week. You 

know, we could give you a date——

The CHAIRMAN. When could you say to us that it will be? And 

again I am not trying to be unkind. This is an important concept 

and it was promised a long time ago. I think we can legitimately 

ask the Department to give us a date. So can you give us a date? 

We need to know what we are operating with. Mr. Costa has pointed out the tremendous significance in his counties, likewise with 

mine and the Members of the Committee. You know, Congressman 

Schilling’s district is very similar to mine in terms of limited access 

to facilities and how the definitions affect that. I mean rural America in many parts of the country is on the decline. This is critical, 

critical to maintaining or increasing the viability of rural America. 

And we can’t just have generic promises. We need to know. 

Ms. CANALES. Well, certainly, we agree with you in the sense of 

the need to focus on rural America and each one of our agencies 

has our own definitions that we utilize. But I mean I could not give 

you a date——

The CHAIRMAN. Well, I am going to ask you to anyway. Let me 

ask each one of you to give me a date by which we can expect that 

report. You, sir? 

Mr. ADELSTEIN. I have been told by the Under Secretary’s office 

that the report is imminent. If it is possible if I could get back to 

you by the end of today with a date-certain that we can get that 

to you, we will do that. 

The CHAIRMAN. Yes, ma’am, you? No, I am asking you, Ms. 

Canales. 

Ms. CANALES. The information that I have received in regards to 

the report is as my colleague stated that it is imminent, which I 

reported to you. And so we can respond back today and give you 

more certainty. 

1039

The CHAIRMAN. Yes, ma’am? 

Ms. TREVIN ̃ O. I have nothing to add, Mr. Chairman. 

The CHAIRMAN. I think if the three members of the panel would 

be willing to communicate with the office of the Ranking Member 

and myself either in writing or otherwise to tell us—rather than 

the end of the day, let’s just do it by the end of the week, to give 

you time to deal with it more effectively, and give us a date by 

which we can expect that. I think we can make a lot of plans accordingly. But without reiterating the obvious, this is a really critical determination and it is a lynchpin to a lot of programs. 

Ms. CANALES. Absolutely. 

Mr. ADELSTEIN. We will do it, Mr. Chairman. One of the reasons 

that this is so difficult is the importance of it and the complexity 

of it. We have significant impact on communities we serve based 

on that definition. 

The CHAIRMAN. That I understand, but if it is difficult, then if 

we were told a year ago that it is difficult, so we would not be expecting it and have expectations built around June of this year. 

This isn’t a partisan issue. This is just a government layer of bureaucracy issue and we need to uncover the layers. I think we 

would all agree with that. All right. And I now turn to the distinguished Ranking Member, the gentleman from California, Mr. 

Costa. 

Mr. COSTA. Thank you very much, Mr. Chairman. I couldn’t 

agree with you more. Ms. Canales, your response was nice but it 

was filled with a lot of ‘‘bureaucratic-ese;’’ and it is not to be necessarily a reflection on you or the United States Department of Agriculture. So much of what frustrates many of us and our constituents is the bureaucratic difficulty in responding in a fashion that 

seems to be clear cut and one that is expedited. Yes, it is difficult. 

As the gentleman who just responded, Mr. Adelstein, said, ‘‘Look, 

we are working on this. It is taking more time than we thought. 

We are having problems in this area and that area.’’ If it is difficult, then you owe the Subcommittee, the Members of the Committee a response. But I would hope that in the sense of cooperation and collaboration that you would get back to the Chairman 

and myself later today and give us a timeline that you think you 

can follow. And if there is a problem with it, let us know, because 

this is vital not only to the field hearing we are holding in 2 weeks 

in Illinois but to a lot of the work the Subcommittee is doing. 

So let me get into a couple questions here. I think it has been 

underlined enough I hope. I talked about the definition of, and 

flexibility to, address the nation’s rural communities. After all, 

these are taxpayers’ dollars in which our rural communities pay to 

Washington. We want to ensure that we get an appropriate share 

of those taxpayers dollars back to those rural communities. Have 

you thought about utilizing Census tracts, Ms. Canales or any of 

the other two witnesses, and would you care to comment as a way 

of redefining rural? 

Ms. CANALES. Ranking Member Costa, absolutely. Census tracts 

has been a point that has been raised among our western state directors. You know, going back to——

Mr. COSTA. I have worked with them. 

Ms. CANALES. Yes. 

1040

Mr. COSTA. Have you considered it? 

Ms. CANALES. Yes. 

Mr. COSTA. What are the details? 

Ms. CANALES. The answer is yes. 

Mr. COSTA. What do you think the problems are? Where are you 

on that? 

Ms. CANALES. The answer is yes, we are considering Census 

tracts. 

Mr. COSTA. Will you get that in terms of response in this report 

or will it not be included? Do you know? 

Ms. CANALES. I believe that it will be included, yes, sir, as part 

of the report. 

Mr. COSTA. Yes. There is also an announcement by the White 

House, an Executive Order for a Rural Council. I have been critical. In previous Administrations they have designated a person 

within the White House to handle rural areas. My friend who is on 

the mend right now, God bless him, Marion Barry from Arkansas 

played that role at the Clinton White House. What has happened 

with this Executive Order? Has the council been named? Do you 

know? Can you add some meat on that bone? 

Mr. ADELSTEIN. The council has been named. The lead of the 

council is Secretary Vilsack. The council is working across the Federal Government family to meet the needs of rural America and to 

coordinate between different agencies. So it is similar to the function that was previously handled by staff in the White House, but 

now there has been a more formalized way of ensuring proper coordination across the Federal Government. 

Mr. COSTA. Coordination is fine but stakeholders have to understand that they are playing a role and they are participating and 

their comments are going to be taken into account. I mean otherwise it just becomes another council for illustrative purposes. You 

have to get by it in a way that makes sense. 

Ms. Trevin ̃ o, you talked about housing and I am very concerned. 

I think we all see the housing crisis around the country but it is 

just as serious in our rural areas. My colleague Congressman 

Cardoza has tried to get the Administration’s attention on it. Notwithstanding the best of intentions, and your intentions are laudable, it seems most of the efforts have been ham-fisted and not successful. What about Section 502 Single-Family Housing Guaranteed Loan Programs? Many private lenders still aren’t lending for 

reasons that we are aware of—regulatory means and other situations—can you comment on the success of that or where you are 

at on that? 

Ms. TREVIN ̃ O. Yes, thank you for the question, Congressman. The 

Rural Housing Section 502 Single-Family Guaranteed Program has 

been very successful. We have increased our numbers in the last 

3 to 4 years by three and four times as much as we were producing 

years ago. Our portfolio has remained stable in terms of its performance on delinquencies and foreclosures and so we continue to 

monitor what the lenders are doing. Currently, those programs are 

not as high in terms of numbers as we had seen at this time last 

year in terms of demand, but we are continuing to work with our 

lenders and try to——

1041

Mr. COSTA. My time has expired, but I would like to understand 

how you define success? 

Ms. TREVIN ̃ O. We measure ourselves with the private sector and 

other government-sponsored entities, and currently our delinquency and foreclosure rates are below other government-sponsored 

entities. 

Mr. COSTA. Thank you, Mr. Chairman, for your time. 

The CHAIRMAN. The gentleman from Georgia, Mr. Scott. 

Mr. SCOTT. Thank you, Mr. Chairman and Ranking Member. To 

those of you on the panel I would just start with a comment. I am 

one of those that is a freshman in Congress and 8 months ago I 

was in the private business sector. I wonder what would have happened had I looked at a government agency and said it is important, it is complex, I don’t know when I will get it to you even 

though it was due 2 years ago. I am not quite sure if they would 

have executed my business with a shotgun or a sledgehammer, but 

I feel quite confident, coming from the private sector, that dealing 

with a government agency had I been negligent in providing an 

audit or some other form or, God forbid, miss dotting an ‘‘i’’ or 

crossing a ‘‘t,’’ they would have been there to shut my business 

down. 

With that said, I want to go back to USDA Housing, and I understand that the President has proposed to move this to HUD. Is that 

correct, the housing aspect of USDA to HUD? 

Ms. TREVIN ̃ O. No, sir, that is not proposal by the President. 

Mr. SCOTT. Who is it a proposal by? 

Ms. TREVIN ̃ O. It is currently a draft discussion by the House Financial Services Subcommittee. 

Mr. SCOTT. What are your thoughts on that? 

Ms. TREVIN ̃ O. We strongly oppose that move. 

Mr. SCOTT. Okay. 

Ms. TREVIN ̃ O. At Rural Development, as I stated earlier, we are 

a collaborative effort. We believe that we need to look at the entire 

needs of rural America because they are very complex as you stated. And every rural American has interrelated needs. The communities have other needs, and for us to be able to address just the 

housing needs by moving over to HUD would negate all the work 

that we have done working in synergy with our other partners in 

Business and Utilities. We believe that we create efficiencies and 

cost-effectiveness because of the way we operate currently. 

Mr. SCOTT. Okay. Thank you for that. So it is the House Financial Services Committee, and I would just hope that you would continue to argue on behalf of the rural communities because I know 

that my housing authorities, even in my metropolitan areas, had 

suggested to me that HUD has indicated to them that if they have 

been run well and have actually accumulated reserves, some operating reserves, that HUD has some intent of having those housing 

authorities that are well-run turn those monies back over so that 

they can be redistributed to other housing authorities that haven’t 

been run as well. So certainly HUD is one of those agencies that 

I do not think is well run in Washington, and there is certainly a 

long list of those. But thank you for continuing to stand up for 

rural America. 

1042

Administrator Adelstein, I would like to speak with you about 

the broadband briefly, and I have about 2 minutes left. But what 

steps are you doing to make sure that when we do expand the 

broadband that we are not overbuilding? In other words, are we 

giving loans to develop broadband in areas where there already is 

access to broadband versus making sure that the loans go to areas 

where there is no access to broadband? I would also like for you 

to speak to that in regard to the report that came out about how 

much money was spent to develop broadband to a select few families and whether or not you think that those investments going forward with satellite technology and other things that are going to 

make faster communications available in the rural areas or good 

use of taxpayers’ dollars? 

Mr. ADELSTEIN. Congressman, our goal is to serve the most remote rural areas, to get the funds to those places that have no 

service or inadequate service. And the 2008 Farm Bill is designed 

so we don’t finance broadband in areas with service. But broadband 

doesn’t always follow neat lines. It doesn’t shape itself along lines, 

you can say we are going to serve here and not serve there. To bolster the financial feasibility of some of these proposals to serve the 

most difficult-to-serve areas, occasionally there is some overlap, but 

we do focus on ensuring that we close the digital divide between 

those underserved and unserved areas. The statute recognizes that. 

When it comes to satellite service, we are technologically neutral. 

We want rural businesses and residents to have first-class 

broadband service no matter where it comes from. We did provide 

for satellite service as part of the Recovery Act, an initiative for 

those who didn’t have broadband through any other of our awards, 

that they would have access to low-cost satellite service. For some 

businesses, they have issues that satellite is not adequate to their 

needs, so we try to maximize the amount of bandwidth that we can 

get to rural areas. 

Mr. SCOTT. My time has expired. 

The CHAIRMAN. Thank you, Mr. Scott. That is I guess a good 

segue for the fact that we do have the first field hearing of 2011, 

Mr. Costa and I. Other Members of the Committee are invited. In 

fact, we have at least five coming already. I realize there are some 

conflicts along the schedule, but that is scheduled for Saturday, the 

24th of this month, University of Illinois-Springfield specifically on 

the subject of rural broadband services and the future of rural 

America. 

Let me also mention to all three of you—because I have 

ascertained the names in the meantime—you had indicated you 

would by the end of the week let us know a date by which we can 

expect that definition. In Ranking Member Costa’s office, the gentleman’s name is Nick Choate, and in my office, the gentleman’s 

name is Sam Pfister, and we would eagerly await your response 

and hope that you will get that to us and then obviously the implementation thereafter. 

I would recognize the distinguished gentlelady from Alabama, 

Ms. Sewell. 

Ms. SEWELL. Thank you, Mr. Chairman. I would like to thank all 

of our panelists for being here today and for your testimony. 

1043

My question is actually to Mr. Adelstein. I represent a very rural 

part of Alabama, and I, too, am very concerned about broadband 

and access to areas in my district that just don’t have access. 

Frankly, my mother and father—they live in Selma, Alabama, and 

it was only last year that we got away from dial-up. So it is really 

important that I reiterate what Congressman Scott said as well, 

that it is very, very important to get it to remote areas, broadband 

access. 

My question is many of the entities that you lend to are dealing 

with regulations and settlements under Federal law, including the 

Clean Air and Clean Water Acts. Have you seen an impact on systems that serve rural residents and their ability to deal with these 

regulations? 

Mr. ADELSTEIN. Yes. First, on the broadband, I was thrilled we 

were able to get a Recovery Act award to your district, to Butler 

Telephone Company, and we will continue to work in rural Alabama and across the country to get broadband to the most remote 

areas. In terms of impact on our programs, yes, we have seen that 

certainly regulatory requirements do impose costs that we need to 

deal with, and we do deal with as part of our efforts to ensure that 

rural areas can meet requirements for the health and safety of 

their residents. I mean those are consistent with what we do. Rural 

areas do incur costs. The impact depends—in the Water Program, 

for example—on the size and type of the treatment facility, on the 

quality of water service and what the regulatory standard might 

be. It increases demand for RUS Loan and Grant Programs. Right 

now, we have a $3.2 billion backlog in our Water Program, and 

these requirements certainly do have an impact. 

We do work with our colleagues in other agencies of the government to make sure that they are aware of the impact on rural 

America of the different departments that they do have, but we 

will work with the communities affected to help them comply. 

Ms. SEWELL. Very good. What programs have been most beneficial under your tenure in providing reliable and affordable electric 

power, water, broadband? What programs do you think have been 

the most effective under your agency and what programs have 

yielded disappointing results? 

Mr. ADELSTEIN. Well, we have really been thrilled at the impact of our major flagship programs, the Electric Program, again $6 billion of investment this past year with no requirement of taxpayer 

dollars to get that done. We have had great success with our traditional telecommunications program, as well as the Recovery Act 

broadband programs and getting these rural systems up to date. 

I mentioned just briefly that the Water Program is oversub- scribed. We have some $3 billion backlog attesting to the demand. 

That is after we did over $3 billion in new programs under the Recovery Act to deal with the backlog that we had. 

There are some small programs we don’t think are that important. We have a Household Water Well Program that, for example, 

is very small and doesn’t do that much. I mean it is for individuals 

to get their own wells improved and with a couple million dollars 

for the whole country, it doesn’t really have the kind of global impact that our major Water Environmental Program has. So there 

are some programs that we can do without in this difficult budget 

1044

environment, but the major programs have done a remarkable job 

of meeting the needs of rural America. 

Ms. SEWELL. Thank you. 

The CHAIRMAN. I recognize the gentlelady from Missouri, Mrs. 

Hartzler. 

Mrs. HARTZLER. Thank you, Mr. Chairman. I wanted to follow up 

some more on the broadband questions. How much total is dedicated right now to the broadband program? 

Mr. ADELSTEIN. Right now, the traditional broadband program 

has been authorized by Congress to provide $690 million in loans, 

and we have sufficient funding under the broadband program for 

about $300 million in loans. And then we have a couple of smaller 

grant programs, the Distance Learning Telemedicine Program, 

around $25 million; and the Community Connect Grant Program, 

which provides grants to areas with no service, very small, remote, 

rural communities, about $13 million. 

Mrs. HARTZLER. Okay. Out of that total amount, how much is 

going to the end-of-the-line customers specifically to help people 

who don’t have any other access or any other service to high-speed 

versus how much is going to people who already have service? 

Mr. ADELSTEIN. Well, all of it is going to either improve or provide service to people that don’t have it today. So generally speaking, we do focus, as I said, our resources on areas that have no 

service, but in many cases what we have, for example, in the Telecommunications Loan Program is our existing telephone company 

will be providing improvements to—they may be providing 

broadband to customers today, but they want to improve that. They 

want to, say, go from 1 megabyte per second or 768 kilobytes per 

second to fiber right to the home. So this would be the same provider that is upgrading its system. So they had broadband under 

one definition, but that telecommunications company, in order to 

meet the needs of the future to provide video, to provide all the 

current needs of rural consumers will upgrade. And again, that 

program is no cost to the taxpayer because they pay us back and 

our default rate is very low. 

Mrs. HARTZLER. So do you have an indication of how much is upgrade versus how much is new? 

Mr. ADELSTEIN. I don’t have an exact number. I mean it is very 

hard to see because broadband doesn’t follow neat lines. We have 

requirements in our broadband loan program, which we just created that ensures the funds go to the most rural areas that don’t 

have adequate broadband as defined by the statute. We don’t provide funds for overbuilding ourselves under the traditional, the 

$690 million program, but we are finding that many of those are 

upgrades. They are going from old, slow DSL to fiber to the farm 

or to the ranch, which is what a lot of rural consumers need, a lot 

of rural businesses need to compete in the 21st century. 

Mrs. HARTZLER. How long have these grants been available, 

these loans, and what is the percentage of payback at this time? 

Mr. ADELSTEIN. Well, the traditional program has been operating 

since 1949, so we have been doing this for 60 years. 

Mrs. HARTZLER. Sure, but I am talking about broadband, not 

rural electric. 

1045

Mr. ADELSTEIN. The broadband program was initiated in the 

Farm Bill of 2002. There were some pilots that had been done before that, so over the last decade, we have invested about $1 billion 

in broadband infrastructure through the broadband loan program, 

of which we are repaid the vast bulk of that. There is a very small 

default rate. Right now, the Office of Management and Budget is 

giving us a subsidy rate assuming defaults of 2.58 percent I believe. 

Mrs. HARTZLER. Okay, great. I want to switch gears real fast 

with the EPA. And Mr. Adelstein, they have placed a significant 

burden on a lot of small, rural communities with new and increasingly stringent regulations. I know I have a couple of towns in my 

district that we have been visiting with trying to help. Anyway, 

many of these cases, these communities are faced with no choice 

but to attempt to take on significant debt to finance new water and 

wastewater systems for homes which were previously served by 

wells, individual drain systems. In your view, is the EPA requiring 

too much from these small communities? 

Mr. ADELSTEIN. Well, as I mentioned in the previous question, 

we do see that requirements do incur cost on rural systems and we 

are trying to meet those needs. Some of those requirements are for 

the health and safety of the community. For example, in your district I visited Gravois Mills—or actually it was Gravois Arm Sewer 

District——

Mrs. HARTZLER. Yes. 

Mr. ADELSTEIN.—and you are probably familiar with the problem 

there. It is on the Lake of the Ozarks and people had built their 

own septic systems right along the lake and those were draining 

into the lake. And the lifeblood of that community, as you know 

better than I——

Mrs. HARTZLER. Yes. 

Mr. ADELSTEIN.—is the tourism of that lake. And there was a 

time when it has been shut down from swimming and use. 

Mrs. HARTZLER. Right. 

Mr. ADELSTEIN. So we provided funding to improve that water 

system. Sometimes EPA will require that these communities come 

up to snuff and not be dumping sewage—sometimes raw sewage 

into a lake that is shared by the entire community like Lake of the 

Ozarks. But we work with the EPA in terms of those requirements 

to make sure that they are understanding what the impact is on 

our program and one of the reasons we have such a large backlog. 

Mrs. HARTZLER. What is the backlog real quickly? 

Mr. ADELSTEIN. It is $3.2 billion backlog for rural water applications. 

Mrs. HARTZLER. Okay. My time has expired. Thank you, Mr. 

Chairman. 

The CHAIRMAN. The gentleman from Vermont, Mr. Welch. 

Mr. WELCH. Thank you very much, Mr. Chairman. I appreciate 

being here. We are pretty proud of the work that you all do in 

Vermont. Molly Lambert has been in charge there and she has a 

lot of experience both in that job and other important jobs that she 

has had in Vermont. And we have had, as you know, this terrible 

flooding in Vermont that is the worst natural disaster that we have 

had since 1927. And roads and bridges, houses, small businesses 

1046

have been destroyed. So we have an immense amount of rebuilding 

to do and we are really going to be needing some help to be able 

to do that. And I just wanted to ask a few questions. 

This challenge in Vermont is going to be a long-term challenge, 

and I just want to generally ask Ms. Trevin ̃ o, is the USDA Office 

of Rural Development in a position to handle the long-term effects 

of the hurricane after FEMA leaves? I mean what we have been 

learning, of course, is that FEMA is there. They have been doing 

a fabulous job, incidentally. The Governor is very pleased; people 

are pleased. But FEMA is not the one-stop shop that a lot of people 

who are under siege think it is. We really need you to provide the 

help that only you can provide. 

So this is an open-ended question about whether you have the 

resources you need, what additional resources either financial or in 

waivers or flexibility in order to do your job under emergency circumstances would be helpful? And, this would affect some of my 

colleagues, certainly Mr. Owens from New York where his folks 

have been similarly hit. So maybe you could respond to that. 

Ms. TREVIN ̃ O. Thank you very much. And we sympathize with all 

the natural disasters that you have had that have affected your 

area. We certainly are ready and prepared to help as much as we 

can. Ms. Lambert has been made aware of the areas that are designated as FEMA disaster areas. And once that designation is in 

place, we are able to come in and provide, for instance, moratoria 

on CF facilities and on housing homeownership that we currently 

have financed through our systems. 

In addition, we are getting towards the end of our fiscal year, so 

we are running across funding issues when it comes to rehabilitation and repair of affected homes, but in terms of refinancing and 

being able to use our Direct Program and Guarantee Program in 

Single-Family Housing, we still have funds available for that and 

we are ready to help wherever we can. 

Mr. WELCH. Well, I appreciate that. 

Let me ask a little bit about homeownership. The Rural Development Guarantee Program has been extremely helpful in Vermont 

for low- and moderate-income homeownership opportunities. We 

think in Vermont it is crucial that the program be continued and 

fully authorized. The new fee structure, as you know, is intended 

to cover costs of the program, but I have heard from some Vermont 

lenders that it may be administratively very difficult for them to 

collect some of these fees. Do you have any thoughts on how we can 

address that? We don’t want to make it a hassle for the folks that 

need to be our partners. 

Ms. TREVIN ̃ O. I understand and, again, it has been an issue that 

we have been working on for about a year. One of the things that 

we realized around January of this year was that our authority to 

collect in that front fee is 3.5 percent. In order to continue to have 

a program come October 1, our subsidy rate is going to 3.8 percent. 

Since we do not have the authority to go higher than 3.5 percent 

in an up-front fee, we have had to instigate an annual fee to make 

up the difference so that we can continue to have a program at all, 

because it is a subsidy-rate-neutral program——

Mr. WELCH. Yes. 

1047

Ms. TREVIN ̃ O.—therefore, we do not get budget authority to run 

that guarantee. 

Mr. WELCH. Okay. And there has been some discussion as well—

thank you—that Rural Housing Programs could be moved out of 

the jurisdiction of USDA to management by HUD. I wonder whether given USDA’s unique understanding of the rural issues, can you 

give us some information on how such a move would occur while 

preserving safeguards that are put in place to ensure that the rural 

nature of this program is preserved? 

Ms. TREVIN ̃ O. What I can tell you about the discussion draft is 

that it does not outline how it will do that. We certainly believe 

that it is not a good idea and we believe that it is a very premature 

discussion draft at this time. No studies have been made as to the 

cost-savings for such a move. Simply picking up a chess piece and 

moving it across the board is not going to give you a cost-savings. 

Some of the things that have not been considered are the IT needs. 

We at USDA Rural Development run on totally different information technology than does HUD, and so that would be, we believe, 

a significant investment. And it would, frankly, upset the synergy 

with how we offer programs in rural America. We are a collaborative agency and we work in tandem by looking at the holistic 

needs of the entire community, not just the business needs, not just 

residential needs. 

Mr. WELCH. Thank you very much. I yield back. 

Ms. TREVIN ̃ O. You are welcome. 

The CHAIRMAN. Thank you, Mr. Welch. The gentleman from Indiana, Mr. Stutzman. 

Mr. STUTZMAN. Thank you, Mr. Chairman. And thank you to the 

panel for being here today. 

I would like to start with Mr. Adelstein, a question regarding 

broadband again. There is a wide range of definitions of what constitutes an area which is served by broadband access. These definitions can include everything from the advertised connection speed, 

the actual connection speed, consumer price, or simply proximity to 

the nearest connection. Could you please clarify for the Committee 

what you think the minimum connection speed should be to justify 

Federal investments, and then how are you monitoring providers to 

ensure the advertised speed matches actual connection speeds over 

these systems built with Federal dollars? 

Mr. ADELSTEIN. Thank you, Congressman. Great question. We 

spent a lot of time considering that and we determined that 5 

megabytes per second combined was what was needed for rural 

economic development. That provides for video streaming. That 

would be, for example, 4 megabytes down, 1 megabyte up. We combine both down speed and up. That is one that we put in a flexible 

definition for in the Farm Bill Broadband Loan Program because 

we expect that will continue to go up. As urban areas see increases, 

we want rural areas to be able to keep pace. 

We are not looking at advertised speeds; we are looking at actual 

speeds. We want our borrowers to be able to deliver those speeds 

on the ground. The way we monitor that is we look at the application and we have engineers on staff that evaluate whether or not 

the proposed technology actually will deliver the actual speeds that 

are being promised in the application, and if they are not, we will 

1048

not approve the application until such time as we are satisfied the 

technical requirements are satisfied. And then as the program is 

being built out, we have in the field general field representatives 

that are often engineers that watch the construction of the project. 

We have the contracts coming in being reviewed by engineers in 

Washington. So as they are building the project, we are evaluating 

them step-by-step, contract-by-contract to make sure that it complies with what they put in the loan application that it can deliver 

the levels of speed that they told us that they were going to provide. 

Mr. STUTZMAN. Thank you. I would like to switch gears a little 

bit. The EPA has placed a significant burden on small, rural communities with new and increasingly stringent regulations. In many 

cases, those communities are faced with very few choices, if any, 

but to attempt to take on significant debt to finance new water and 

sewer wastewater systems for homes which were previously served 

by wells and individual drain systems. In your view, is the EPA requiring too much from these small communities? 

Mr. ADELSTEIN. Well, rural communities do incur costs as a result of EPA rules and the impact depends on the type and size of 

the treatment plant, the quality of the existing water source that 

they are dealing with depending on the regulatory standard. This 

certainly does increase demand for our programs and one of the 

reasons that we have, as I indicated, a $3.2 billion backlog are 

these requirements. We do work with our colleagues in EPA and 

others. I met with EPA to make sure that they understand the impact of these proposals on rural areas. They are, of course, the expert agency on determining the health and safety needs of the public, and we defer to them. And in response, we have to deal with 

financing the improvements that are required to comply with EPA 

rules. 

Mr. STUTZMAN. What was the backlog number again for water 

and wastewater applications? 

Mr. ADELSTEIN. For water and wastewater applications we have 

a backlog of around $3.2 billion. 

Mr. STUTZMAN. Billion with a ‘‘b,’’ okay. 

Mr. ADELSTEIN. Right. 

Mr. STUTZMAN. Thank you. All right. And then with 1 minute 

left I would like to ask Ms. Trevin ̃ o, could you elaborate on how 

funds through the Community Facilities Program are dispersed 

around the country? Just, for instance, if you received an application for first responders versus an application for a daycare center, 

how do you decide which to fund and which not? 

Ms. TREVIN ̃ O. That is a good question. Thank you, Congressman. 

We have eligibility criteria that is written by statute and reinforced 

in our regulation. We emphasize public safety, education, and 

healthcare. So those applications that address those three areas 

are weighted by score. The applications, when they are received in 

a state office, are then scored and funded based on that score. We 

do hold some reserve money in the national office, and at the end 

of the year, any applications that weren’t funded in that state then 

are referred to the national office to compete for the reserve and 

we score them, again, the exact same way based on that criteria. 

Mr. STUTZMAN. Okay. Thank you. I yield back, Mr. Chairman. 

1049

The CHAIRMAN. The gentleman from Pennsylvania, Mr. Thompson. 

Mr. THOMPSON. Thank you, Chairman. Thanks to the panelists 

for your testimony today. 

Ms. Trevin ̃ o, I wanted to talk about housing specifically with 

USDA. It looks like a lot of good programs are out there that we 

do. Specifically, I was interested under the farm bill and the title 

that is there, I have a mixed blessing in my Congressional district 

because of the success of natural gas, which has been really good 

for the economy. Unemployment is down and prosperity is up for 

the first time in a very long time in parts of the district. We have 

an affordable housing crisis. It is not one that we are used to in 

rural America. Normally, we have plenty of places available and we 

don’t have that today. Are there specific programs under the 2008 

Farm Bill that would assist—as a result, we see property values 

being pushed up, people on a limited or fixed income can’t afford 

the rent anymore. Their rent is being increased exponentially, 

which is great for the property owners. I have no criticism of that. 

So are there programs out there in the existing farm bill to assist 

in a situation like that in any way? 

Ms. TREVIN ̃ O. They don’t currently exist—Congressman, thank 

you—in the CONACT they are given to us through the Housing Act 

of 1949. We have rental assistance for low-income individuals who 

can’t find housing, and that rental assistance allows them to live 

in apartments that would be market-rent and we pay the difference, anything they pay based on their income. So as long as 

they don’t contribute more than 30 percent of their income towards 

their housing needs, we pay the difference to make up for it. It is 

our largest-funded program, the Rental Assistance Program. I believe that in your communities what you are finding is an absence 

of housing and not just the market cost. Again, one of the things 

that we have tried to do is work with the communities and encourage them to take these companies and to ask them to partner with 

us and to invest in the communities either by building temporary 

housing or by taking existing structures and turning them into single-room occupancy homes. So we are trying to be creative in working with our state directors to determine how we can best meet any 

lack of the housing that we are seeing in those areas. 

Mr. THOMPSON. Very good. Thank you. 

Ms. TREVIN ̃ O. You are welcome. 

Mr. THOMPSON. And I look forward to talking more with you 

about that. And actually I put together a work group in the Congressional district to bring all the partners to the table, the industry and kind of a public-private partnership to address that. 

Ms. TREVIN ̃ O. I look forward to it. 

Mr. THOMPSON. You mention in your written testimony that the 

Community Facilities Program has provided over $12.7 billion in 

funding for healthcare, education, public safety, and other essential 

community services, and more than 40 percent of the Community 

Facilities Program investments have been made in rural healthcare 

facilities. Can you further elaborate on how these dollars have been 

spent specifically on rural healthcare? 

Ms. TREVIN ̃ O. Yes, sir. Mostly what we do is provide money for 

bricks and mortar and equipment. We do not provide money for 

1050

operational cost, so one of the things that we have been very good 

at is collaborating with Health and Human Services and with the 

HRSA Programs in helping critical access hospitals access equipment that they need. So we fund their equipment and any type of 

buildings that they need. 

One of the mandates that HHS has right now is that all critical 

access hospitals in rural America must be tied to electronic medical 

records. And in rural America that is a huge need to be able to 

overhaul your IT needs. And we are providing the funding that is 

needed to partner with them. 

Mr. THOMPSON. All right. Thank you. 

Ms. TREVIN ̃ O. Yes. 

Mr. THOMPSON. Now, Mr. Adelstein, there was a lot of questions 

on broadband and it is obviously something everybody is very interested in. I appreciate the USDA and the agency’s work in that 

area. I wasn’t familiar with the numbers that we had spent a billion dollars, and frankly we have a billion dollars over a number 

of different funds looking to invest. And I know the approach that 

we are taking as sort of looking at different vendors who have different proposals, that type of thing. Was there ever any consideration of—because I looked at the broadband issue in rural America 

almost similar to the electrification of rural America, and the rural 

electric cooperatives are a great model. They are public-based because of the constituency that drives it, those volunteer board. Was 

there ever any consideration of perhaps taking that kind of an approach or even partnering with the rural electric cooperatives who, 

frankly, have right-of-ways to the end-user, the last mile? All those 

miles are covered with electricity and right-of-ways. Was that ever 

considered in our looking at how we address the broadband issue? 

Mr. ADELSTEIN. Yes, we thought about that a lot. As a matter of 

fact, we went to the National Rural Electric Cooperative Association and encouraged them to apply for broadband. As a matter of 

fact, a number of them did when Consolidated Electric and Ohio’s 

building—they are using smart grid, and down in New Mexico the 

Electric Cooperative, Kit Carson is using it. And again, when they 

do it, they provide smart grid also to their consumers. A number 

of our awardees are telephone cooperatives, real old telecommunications cooperatives that we have worked with many of them for 

60 years, 50 years that are some of our most reliable borrowers. 

They pay us back year after year, they know what they are doing, 

they are technically on top of it, and we love working with our cooperative borrowers because of their competence, their dedication 

to the community. The model really does work for rural America. 

I agree with you. 

Mr. THOMPSON. Glad to hear that. Thank you. Thank you, Mr. 

Chairman. 

The CHAIRMAN. The chair would recognize the distinguished 

Ranking Member, Mr. Costa, for follow-up questions. 

Mr. COSTA. Thank you very much. Very quickly here, just to get 

back to that White House Rural Council and the Executive Order. 

Is it simply going to be Federal officials on this or are you going 

to give an opportunity for local and state officials and people of expertise to participate in this? 

1051

Ms. CANALES. Ranking Member Costa, the opportunity for stakeholders is already underway and also has been a strong aspect of 

the outreach that is occurring to date——

Mr. COSTA. Ma’am, I think the work product is going to be better 

if it is from the bottom up as opposed to the top down. 

Ms. CANALES. As I was going to state——

Mr. COSTA. And I would like you to provide some information to 

the chair and myself and other Members of the Subcommittee on 

how that is going to take place, okay? 

Ms. CANALES. We have held 100 rural roundtables, meaning 100 

locations throughout the United States with stakeholders and have 

reports based on that. 

Mr. COSTA. Give a little brief summary on that. I am not talking 

about War and Peace. I would like a brief, two page memo, on what 

those 100 meetings have done, where they are around the country, 

and who has participated. I would like to know, for example, how 

many have taken place in California and whether any of them have 

taken place in the San Joaquin Valley. Somehow if that has taken 

place, it has missed me. 

[The information referred to is located on p. 1056.] 

Mr. COSTA. Mr. Adelstein, you mentioned that the new authorization was provided in the farm bill for lending energy efficient 

programs as well as renewable energy. Now, this is a question not 

only of my own but Ranking Member Peterson has an interest in 

this. Can you tell what activities or agencies have been lending 

under for these authorities? And I have two other quick questions, 

so please be brief. 

Mr. ADELSTEIN. Yes. Primarily, for retrofitting, we have an initiative that we are working on to have rural electric cooperatives 

work with their members to retrofit their homes to save electricity, 

and they——

Mr. COSTA. Could you give us some facts on that later on and 

submit that for Congressman Peterson and myself and other Members so that we know the specifics on it? 

Mr. ADELSTEIN. Will do. 

Mr. COSTA. Okay. Many of the entities that you lend to are dealing with regulations and settlements under various laws, and of 

course, this Administration and many of us have been critical of a 

lot of the regulations being burdensome and unnecessary. Those 

are included but not limited to the Clean Air and Clean Water 

Acts. Have you in your review seen the impact on these symptoms 

as they serve rural residents and their ability to deal with these 

regulatory requirements? And does it impact your ability to lend 

because of the repayment concerns? 

Mr. ADELSTEIN. Well, certainly, both our water and electric programs have seen a number of regulatory requirements that have 

required compliance that have resulted in major loans being committed. Sometimes it is hard to see which upgrades they are doing 

and ones they are doing just for EPA requirements, for example, 

but they do impact our programs. They impact our borrowers. 

Mr. COSTA. Well, maybe if you were to highlight those and suggest where those are problematic, maybe we might work together. 

Although, frankly, these are things that you don’t need, I think in 

many cases, Congressional changes. You can do it administratively. 

1052

I would hope there is a review going on there as to what is burdensome, what is working, what is not working, and why don’t we 

change it? 

Mr. ADELSTEIN. Well, we do work with our colleagues in other 

agencies on regulatory requirements and let them know what impact they are having on our programs. They do increase demand 

for our loan programs in both electric and water. 

Mr. COSTA. On the electric, do you have any interactions with 

FERC or various ISOs that regulate the grid? 

Mr. ADELSTEIN. Yes, we do. As a matter of fact, there is an interagency working group that we are a part of with the White House 

and the Council on Environmental Quality to accelerate citing of 

transmission and the agency has been very involved in——

Mr. COSTA. I know Congressman Peterson and I both have concerns—I suspect many of our other colleagues as we are looking toward generation of wind power and other types of energy production—whether or not landowner-controlled wind projects have access to transmission lines? Obviously, those are oftentimes opposed 

by utilities in terms of the generation of the electrical power in 

rural areas. 

Mr. ADELSTEIN. Well, we would like to see distributed generation 

happen. You know, our rural electric co-ops are very open to it. Of 

course, they need to upgrade their systems to be capable of having 

the grids smarter in order to be able to take those inputs of electricity. I think it can be a really great domestic source of energy, 

something that we are eager to see and we have financed a lot of 

upgrades in the grid—and in smart grid that I think could eventually lead towards distributed generation. 

Mr. COSTA. Is the Department proposing to make recommendations to the Congress on changes that might be made? 

Mr. ADELSTEIN. Well, we are working on an interagency basis on 

this. We have worked on an interagency basis on the smart grid. 

There was a report that was issued by the White House on the 

smart grid that would enable distributed generation in terms of 

transmission and the delicate balance between state and local governments. Again, we are not the lead agency necessarily but we 

have been involved with DOI and DOE and FERC in these discussions in talking about how it impacts rural consumers. We want to 

make sure that USDA is the voice of these rural consumers and 

rural electric cooperatives in these interagency discussions. 

Mr. COSTA. Thank you very much, Mr. Chairman, and look forward to your follow-through on that additional information I requested. 

Mr. ADELSTEIN. Will do. 

The CHAIRMAN. One concluding question from the chair and then 

we will conclude the hearing. And thanks to all three of you and 

the Members of the Committee for being here. 

I don’t remember which one of you made the estimate. Regardless, one of the three of you estimated that there have been a quarter of a million jobs created as a result of your programs. I guess 

my question is this. According to a recent report of the Government 

Accountability Office, your department, the USDA has indicated 

that agency staff is now required to count the actual numbers of 

jobs created through Rural Development Programs rather than the 

1053

estimation methods that you previously used. When you came up 

with that specific figure for us that you created 250,000 jobs, which 

system did you use? The estimation system? Just try to give me a 

direct answer. I mean it is either one or the other. Or the new system that the GAO has indicated that your agency is going to be 

using? 

Ms. CANALES. Yes, Mr. Chairman. First of all, I want to reaffirm 

with you created and saved. So saved means jobs retention. That 

is in my testimony. 

The CHAIRMAN. Again, that goes back to awfully difficult to know 

that, but regardless, that is a political debate we are not going to 

have. 

Ms. CANALES. Okay. 

The CHAIRMAN. The issue is which of these two systems, the old 

system or the new system did you use in the save or create category? 

Ms. CANALES. The system that we are using in regards to that 

is a system that is within every single application that—it is based 

on our loan guarantees that we are making with the banks——

The CHAIRMAN. Let me be very specific, okay. I am going to be 

as specific as I can be and if you could be specific with me in response, I would be really grateful for that. The GAO recently reported in their report on duplication among economic development 

programs, they cited a need to count job creation more precisely. 

In that regard, according to that report, the USDA indicated that 

agency staff is now required to count the actual number of jobs created—I guess or saved—through Rural Development Programs 

rather than the estimation methods previously used. My specific 

question is when you gave us that figure—1⁄4 of a million jobs created or saved—which system were you using? The estimation system or the required specific count. 

Ms. CANALES. We used both. 

The CHAIRMAN. So you interpret the GAO’s report and USDA’s 

implementation to be that they are not required to use one versus

the other? You continue to use both? 

Ms. CANALES. When an application is made with a bank, you use 

both information. You use what is estimated to be created but then 

you also will have jobs that will be saved as well, too. 

The CHAIRMAN. I don’t mean to be argumentative and I won’t because I don’t think it is the appropriate position of the chair, but 

if you would be willing to provide for us your specific area, your 

department, and USDA provide for Mr. Dunlap, who is the Subcommittee Staff Director and his counterpart on the Democratic 

side, let us know specifically how you came up with those figures 

and how that juxtaposes with the estimates versus the actuality 

count that I have made reference to and GAO made reference to. 

That would be very, very helpful to us. 

Ms. CANALES. We will do so, Mr. Chairman. 

[The information referred to is located on p. 1055.] 

The CHAIRMAN. With that, I would invite all the Members of the 

Committee to our field hearing on the 24th of September focusing 

on rural broadband in Springfield, Illinois, at the University of Illinois. We have already had a number of Members say they are 

1054

going to attend and we certainly welcome your attendance at that 

meeting. 

So under the rules of the Committee, the record of today’s hearing will remain open for 10 calendar days to receive both opening 

statements and additional material and supplementary written responses from any witness to any questions posed by a Member. 

Therefore, this hearing of the Subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture is adjourned. Thank you all for attending, and we appreciate your input. 

[Whereupon, at 11:25 a.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

1055

SUPPLEMENTARY MATERIAL SUBMITTED BY JUDITH A. CANALES, ADMINISTRATOR, 

RURAL BUSINESS-COOPERATIVE SERVICE, U.S. DEPARTMENT OF AGRICULTURE

During the September 13, 2011 hearing entitled, Agricultural Program Audit: Examination of USDA Rural Development Programs, a request for information was 

made to Judith A. Canales, Administrator, Rural Business-Cooperative Service, U.S. 

Department of Agriculture. The following is the information submission for the 

record. 

Insert 

The CHAIRMAN. Let me be very specific, okay. I am going to be as specific as 

I can be and if you could be specific with me in response, I would be really 

grateful for that. The GAO recently reported in their report on duplication 

among economic development programs, they cited a need to count job creation 

more precisely. In that regard, according to that report, the USDA indicated 

that agency staff is now required to count the actual number of jobs created—

I guess or saved—through Rural Development Programs rather than the estimation methods previously used. My specific question is when you gave us that 

figure—1⁄4 of a million jobs created or saved—which system were you using? 

The estimation system or the required specific count. 

Ms. CANALES. We used both. 

The CHAIRMAN. So you interpret the GAO’s report and USDA’s implementation to be that they are not required to use one versus the other? You continue 

to use both? 

Ms. CANALES. When an application is made with a bank, you use both information. You use what is estimated to be created but then you also will have 

jobs that will be saved as well, too. 

The CHAIRMAN. I don’t mean to be argumentative and I won’t because I don’t 

think it is the appropriate position of the chair, but if you would be willing to 

provide for us your specific area, your department, and USDA provide for Mr. 

Dunlap, who is the Subcommittee Staff Director and his counterpart on the 

Democratic side, let us know specifically how you came up with those figures 

and how that juxtaposes with the estimates versus the actuality count that I 

have made reference to and GAO made reference to. That would be very, very 

helpful to us. 

Ms. CANALES. We will do so, Mr. Chairman.

Since 2009, the programs and services of the Rural Business-Cooperative Service 

(RBS) have or will create or save nearly 250,000 jobs. The Government Accountability Office (GAO) report, Efficiency and Effectiveness of Fragmented Economic Development Programs Are Unclear, GAO–11–477R, May 19, 2011, refers to two different methods for reporting jobs created/save. One method relies on determining 

actual jobs created/saved once an award has been made. The other method is an 

estimation method based on dollars invested. 

RBS is in the process of moving from the ‘‘estimation’’ method to the ‘‘actual’’ 

method. Because this transition has been occurring since 2009 and is still underway, the number of jobs indicated in Administrator Canales’ testimony represents 

a combination of these two different methods for reporting jobs created/saved. 

The ‘‘estimation’’ methodology utilized by RBS includes: (1) applying our professional judgment as to the number of jobs created or saved reported based on the 

specific project, including any observations during a site visit, (2) applying a formula 

that is based on the dollar amount of the project, and (3) applying a formula that 

estimates direct and indirect employment and other socioeconomic benefits. 

In the ‘‘actual’’ methodology: upon processing the award of a loan, grant, or loan 

guarantee the projected number of jobs to be created or saved is obtained from the 

applicant or borrower and recorded as actual jobs in the agency’s database. 

RBS is implementing job verification processes to validate applicant or borrower 

job projections. After closing of the loan or grant, and completion of the project, the 

actual numbers of jobs created or saved by the business is verified by the agency 

and recorded in our database. Note that in some instances significant time can 

elapse between the job projections at the time of the award of a loan or grant and 

actual job verifications after the completion of the project, start-up or expansion of 

a business and ramp-up to full operations. Agency verifications can be 1–2 years 

after the loan or grant is awarded. 

RBS continues to implement and refine its verification process. With the exception 

of the Agency’s Intermediary Relending Program RBS is using the ‘‘actual’’ methodology, described above, for the balance of its programs. 

1056

SUBMITTED REPORT BY JUDITH A. CANALES, ADMINISTRATOR, RURAL BUSINESSCOOPERATIVE SERVICE, U.S. DEPARTMENT OF AGRICULTURE

White House Rural Council 

Feedback from Rural America 

Summer 2011

‘‘. . . Getting out of Washington and meeting all of you, and seeing how hard 

you’re working, how creative you are, how resourceful you are, how determined 

you are, that just makes me that much more determined to serve you as best 

I can as President of the United States.’’

—President Barack Obama 

August 16, 2011

Peosta, Iowa 

White House Rural Economic Forum 

Contents 

Letter from the Secretary of Agriculture 

Introduction 

A Note About the Numbers 

Most Important Issues 

Breakdown of Issues Discussed 

Rural Economic Forum—Peosta, Iowa 

List of Visits 

Additional Resources 

Letter from the Secretary of Agriculture 

On June 9, 2011, President Obama signed an Executive Order establishing the 

White House Rural Council. Over the past few months, the Council has had the opportunity to hear from rural communities through roundtable discussions and visits 

across the country. By engaging in open dialogue, top Administration officials have 

been hearing about the most important issues on the minds of rural Americans and 

bringing that message back to Washington. 

Since the establishment of the White House Rural Council, President Obama, 

members of his Cabinet, and others senior Administration officials have made nearly 200 visits to rural communities. Through these visits, the Council has been listening to the voice of rural Americans—to their concerns and aspirations, to what they 

see as the challenges that lay ahead and the opportunities open to them. 

This report provides an overview of what we heard during these visits. I look forward to working with the Council on addressing these issues and ensuring that 

rural America moves toward a prosperous and thriving future. 

Finally, I would like to thank all of those who hosted and attended these visits. 

Your help and participation is truly appreciated as we all work together for rural 

America. 

Sincerely,

THOMAS J. VILSACK,

Secretary of Agriculture & Chair of the White House Rural Council. 

Introduction 

On June 9, 2011, President Obama established the White House Rural Council 

to address challenges in rural America and to build on the administration’s rural 

economic strategy. Since the establishment of the Council, administration officials 

have traveled to rural communities across the country to discuss the important 

issues facing rural Americans. 

Administration officials traveled to rural communities in 46 states and met with 

rural Americans to hear about the unique challenges they are facing and the ways 

in which the Council can most effectively focus its efforts. Officials reported back 

on what they heard during these visits and their feedback is shared in this report.


1122044.eps
1057

President Barack Obama, accompanied by Agriculture Secretary Tom 

Vilsack, holds a breakout session at the White House Rural Economic 

Forum at Northeast Iowa Community College in Peosta, Iowa, Aug. 16, 

2011, as part of his three-day economic bus tour of the Midwest. (Official 

White House Photo by Pete Souza)

This report begins with a pie chart we developed based upon the information shared with us. It is not a scientific poll, but it provides a sense of 

the most important issues that rural Americans are facing. 

A Note About the Numbers: 

These discussions and visits were designed as an opportunity to facilitate a candid 

and direct conversation between rural Americans and the Obama administration. 

The numbers presented here were all reported by administration officials moderating discussions and are not designed to reflect a scientific survey or poll. The 

numbers we have compiled are not designed to be reflective of all rural Americans—

just those who participated in these conversations and visits. The views presented 

here are representative of those attending the events and do not constitute an endorsement by the White House or the President of the United States.


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Map of the Rural Visit Locations

Most Important Issues 

A breakdown of the issues discussed in our conversations in rural America:


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Breakdown of Issues Discussed: 

• Education

» Encourage vocational training

» Improve rural education

» Costs of higher education/improve financial assistance

» Focus on research

» Reform No Child Left Behind

» Brain-drain: educated individuals moving out of rural communities

» Focus on science & technology

» Focus on education geared toward entrepreneurship

• Government programs and regulations

» Increase certainty and flexibility on regulations for rural industry and small 

businesses

» More timely application processing for contracting

» Streamline reporting requirements and applications

» Increase technical assistance for loans and grants

• Infrastructure

» Improve broadband access in rural areas, including in tribal communities

» Improve federal assistance in road infrastructure

» Support water storage projects, levees, rivers, locks, and dams

» Support water and wastewater treatment facilities

• Access to capital/business incentives

» Improve access to capital for businesses

» Support small business tax credits and/or financial support, including micro 

loan programs and financial support for farmers

» Establish a Rural Community Development Fund where rural areas can invest in their own communities and have government match any private dollars

» Increased access to early stage and growth capital for rural entrepreneurs

• Renewable Energy

» Support for biofuels, including woody biomass

» Encourage local wind energy development

» Streamline and ease regulations for green energy development

• Economy & Workforce Concerns

» Focus more on domestic manufacturing

» Immigration and workforce concerns

» Rising cost of living and declining income

» Reform unemployment compensation

» Improve immigration policies to encourage highly-skilled students to stay in 

U.S.

» Focus on economic development opportunities in tribal communities

• Agriculture

» Improve resources for new and beginning farmers

» Role of agriculture in our national security, including natural disasters

• Healthcare

» Need solutions to lower current/projected costs and burden on businesses/

families

» Support broadband and telemedicine programs for rural healthcare

» Targeted substance abuse policy to address challenges of rural communities

• Trade

» Improve trade policy and make U.S. competitive in a global market

• Quality of Life

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» Improve quality of life in rural communities for economic growth and job creation

» Continued support for rural public safety

• Conservation and Environmental Concerns

» Rewards for smart farming and land conservation

» Environmental quality of water sources Importance of soil conservation

» Growing the outdoor recreation economy

» Collaboration in advancing sustainable natural resource economies

• Other issues

» Farm Bill

» Government spending

» Housing market

» Tourism in rural America

» Auto-industry

» Regional cooperation in rural communities 

Rural Economic Forum—Peosta, Iowa 

August 16, 2011

In August, President Obama embarked on a three-day, three state bus tour of the 

Midwest that included stops in five communities. The Rural Forum itself was held 

at the Northeast Iowa Community College in Peosta, Iowa on August 16, 2011. During the Forum, five breakout group discussions were moderated by Cabinet members focusing on key issues facing rural America. President Obama participated in 

the first two breakout sessions.

Growing Rural Small Business

Moderated by Karen Mills, Administrator of the Small Business Administration

Promoting Agricultural Innovation and Renewable Energy Jobs

Moderated by Tom Vilsack, Secretary of Agriculture

Strengthening the Middle Class in Rural America

Moderated by Shaun Donovan, Secretary of Housing and Urban Development and 

Melody Barnes, Chair of the Domestic Policy Council

Creating Jobs through Conservation, Outdoor Recreation, and Tourism

Moderated by Ken Salazar, Secretary of Interior and Nancy Sutley, Chair of the 

Council on Environmental Quality

Building Economic Opportunity for Rural Business through Infrastructure 

Investments

Moderated by Ray LaHood, Secretary of Transportation

Key Themes and Issues:

• Importance of rural America in contributing to the economic health of the country

• Need to attract capital and increase available credit for rural communities

• Importance of small business support for rural communities

• Regional planning and development has been successful and should continue to 

be supported

• Importance of continuing to support the innovation occurring in renewable energy

• Increased certainty and flexibility on regulations

• Important to attract new, young farmers—reduce barriers to getting into farming.

• Broadband is key to providing economic opportunities. The ability to telecommute or have access to distance learning and telemedicine is extremely important to rural communities.

• Need for increased opportunities and incentives for physicians to provide service 

in rural areas

• Technical assistance on accessing Federal programs is important to small, rural 

communities.

• Modernization of existing federal agriculture subsidies

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• Importance of easements in mitigating future flood impacts on both private and 

public lands

• Rewards and incentives for farmers that use good conservation practices 

List of Visits: 

Below is the full list of visits that Obama Administration officials made to rural 

America during the summer of 2011. These visits included tours of rural communities, businesses and farms as well as roundtable discussions with rural Americans.

June 9, SBA Regional Administrator John Shoraka, Clarksburg, West Virginia

June 10, USDA State Directors Dan Steinkruger and Maxine Moul, Ceresco, Nebraska

June 17, USDA Deputy Secretary Kathleen Merrigan, York, Pennsylvania

June 20, USDA Under Secretary Dallas Tonsager, Salt Lake City, Utah

June 22, USDA Deputy Under Secretary Cheryl Cook, Dubuque, Iowa

June 23, HUD Assistant Secretary Mercedes Marquez and USDA State Director 

Vicki Walker, Redmond, Oregon

June 24, SBA Regional Administrator Dan Hannaher and USDA State Director 

Derrel Carruth, Casper, Wyoming

June 26, USDA Under Secretary Ed Avalos, Denver, Colorado

June 27, White House ONDCP Director Gil Kerlikowske and ARC Co-Chair Earl 

Gohl, Johnson City, Tennessee

June 28, GSA Regional Administrator Sue Damour, Lower Brule Sioux Tribe, SD

June 29, SBA Regional Administrator Dan Hannaher, Fargo, North Dakota

June 30, SBA Regional Administrator Calvin Goings, Puyallup, Washington

July 5, VA Secretary Eric Shinseki, Bismarck, North Dakota

July 7, VA Secretary Eric Shinseki, Bozeman, Montana

July 7, VA Secretary Eric Shinseki, Helena, Montana

July 7, VA Secretary Eric Shinseki, Billings, Montana

July 8, VA Secretary Eric Shinseki, Billings, Montana

July 8, USDA Under Secretary Ed Avalos, Billings, Montana

July 11, USDA Deputy Secretary Kathleen Merrigan, Richmond, Virginia

July 11, ARC Co-Chair Earl Gohl, Kingsport, Tennessee

July 12, USDA Administrator Judy Canales, Hidalgo, Texas

July 12, USDA Under Secretary Michael Scuse, Springfield, Illinois

July 13, GSA Regional Administrator Sue Damour, Billings, Montana

July 14, DOI Secretary Ken Salazar, Madison, Wisconsin

July 14, SBA Administrator Karen Mills, Fairmont, West Virginia

July 15, DOI Secretary Ken Salazar, Crow Reservation, Montana

July 15, DOI Secretary Ken Salazar, Ovando, Montana

July 15, DOI Secretary Ken Salazar, Kalispell, Montana

July 18, ED Deputy Assistant Secretary John White, Greenville, Tennessee

July 18, USDA Administrator Jonathan Adelstein, Nelsonville, Ohio

July 18, DOC Under Secretary David Kappos and USDA State Director Virginia 

Manuel, Bangor, Maine

July 18, State Department Senior Advisor for Innovation Alec Ross, Cumberland, 

Maryland

July 20, USDA Secretary Tom Vilsack, Annapolis, Maryland

July 22, ARC Co-Chair Earl Gohl, Oak Ridge, Tennessee

July 22, HHS Regional Director Joanne Grossi, Wise, Virginia

July 22, EPA Regional Administrator Jared Blumenfeld, Ibapah, Utah

July 23, ARC Co-Chair Earl Gohl, Abingdon, Virginia

July 25, DOE Secretary Steven Chu, Concord, North Carolina

July 25, GSA Regional Administrator Sue Damour, Jamestown, North Dakota

July 26, ARC Co-Chair Earl Gohl, Spartanburg, South Carolina

July 26, USDA Administrator Jonathan Adelstein, Charles City, Iowa

July 27, SBA Regional Administrator John Shoraka, Lancaster, Pennsylvania

July 27, USDA Under Secretary Harris Sherman, Murfreesboro, Tennessee

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July 28, ARC Co-Chair Earl Gohl and Commerce Deputy Under Secretary Nancy 

Potok, Lewisburg, Pennsylvania

July 29, ARC Co-Chair Earl Gohl and USDA State Directors Bill Wehry and Tom 

Williams, Williamsport, Pennsylvania

July 31, HHS Regional Director Herb Schultz, Flagstaff, Arizona

August 1, HHS Secretary Kathleen Sebelius, Aurora, Missouri

August 1, HHS Secretary Kathleen Sebelius, Joplin, Missouri

August 1, USDA Deputy Under Secretary Ann Mills, Thibodaux, Louisiana

August 1–3, EPA Regional Administrator Karl Brooks, Kansas

August 2, DOT Deputy Secretary John Porcari and USDA Under Secretary Ed 

Avalos, Groves City, Ohio

August 2, GSA Regional Administrator Ann Kalayil, Princeton, IL

August 2, DOT Secretary John Porcari and USDA Under Secretary Ed Avalos, Columbus, Ohio

August 2, HHS Regional Director Herb Schultz, Litchfield, Arizona

August 2, EPA Regional Administrator Jared Blumenfeld, Loleta, California

August 3, USDA Under Secretary Michael Scuse, Berlin, Vermont

August 3, SBA Assistant Administrator Ana Harvey, Newton, Iowa

August 3, EPA Regional Administrator Al Armendariz, Irving, Texas

August 3, SBA Regional Administrator Calvin Goings and USDA State Director 

Mario Villanueva, Elma, Washington

August 3, ARC Co-Chair Earl Gohl, Greeneville, Tennessee

August 3, DRA Federal-Chairman Chris Masingill and USDA State Director Bobby 

Goode, Union City, Tennessee

August 3, EPA Administrator Lisa Jackson, Lititz, Pennsylvania

August 3, HHS Regional Director Joanne Grossi, Wheeling, West Virginia

August 3, HHS Regional Director Susan Johnson, Anchorage, Alaska

August 4, White House Senior Policy Advisor for Native American Affairs Kimberly 

Teehee and federal agency colleagues, Washington, DC

August 4, HHS Regional Director Herb Schultz, Fresno, California

August 4, USDA Secretary Tom Vilsack, West Allis, Wisconsin

August 4, DOT Deputy Administrator Greg Nadeau, Wilmington, Ohio

August 4, HUD Assistant Secretary John Trasvina, Lampeter, Pennsylvania

August 4, ARC Co-Chair Earl Gohl, Morristown, Tennessee

August 4, DRA Federal-Chairman Chris Masingill, Mayfield, Kentucky

August 4, FCC Chairman Julius Genachowski, Jeffersonville, Indiana

August 5, GSA Regional Administrator George Northcroft, Ketchikan, Alaska

August 5, White House OSTP Aneesh Kopra, Blacksburg, Virginia

August 6, HHS Regional Director Herb Schultz, Pomona, California

August 8, ED Linda Hall, Spokane, Washington

August 9, CEQ Chair Nancy Sutley, Grant County, Oregon

August 9, EPA Regional Administrator Judith Enck and USDA State Director Paul 

Hlubik, Augusta, New Jersey

August 9, ARC Co-Chair Earl Gohl, London, Kentucky

August 9, GSA Administrator Sue Damour, Cheyenne, Wyoming

August 9, ED Linda Hall, Spokane, Washington

August 10, GSA Administrator Sue Damour, Salt Lake City, Utah

August 10, ED Secretary Arne Duncan, Nashville, Tennessee

August 10, HHS Regional Director Christie Hager, Dexter, Maine

August 10, HHS Regional Director Jaime Torres, Buffalo, New York

August 10, DOT Administrator Peter Appel, Ames, Iowa

August 10, CEQ Chair Nancy Sutley, Deschutes County, Oregon

August 10, ED Deputy Assistant Secretary John White, St. Peters, Minnesota

August 10, SBA Regional Administrator Calvin Goings and USDA State Directors 

Richard Rush and Wally Hedrick, Middleton, Idaho

August 11, HHS Regional Director Christie Hager, Machais, Maine

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August 11, HHS Regional Director Christie Hager, Lubec, Maine

August 11, SBA Regional Administrator Calvin Goings, Boise, Idaho

August 11, DRA Federal-Chairman Chris Masingill and USDA State Director Trina 

George, Clarksdale, Mississippi

August 11, DOT Administrator Peter Appel, Park City, Utah

August 11, EPA Regional Administrator Karl Brooks, St. Joseph, Missouri

August 11, HHS Regional Director Marguerite Salazar, Denver, Colorado

August 11, HHS Regional Director Herb Schultz, Fresno, California

August 12, ARC Co-Chair Earl Gohl, Sylva, North Carolina

August 12, USDA Deputy Under Secretary Karis Gutter, Helena, Arkansas

August 12, USDA Under Secretary Cathy Woteki, Wamego, Kansas

August 12, SBA Regional Administrator Jorge Silva-Puras, DOT Administrator 

Karen Rae, USDA State Directors James Barber and Jill Harvey, Troy, New York

August 12, DOT Administrator, David Strickland, Waxahatchie, Texas

August 12, HHS Regional Director Joanne Grossi, Huntington, West Virginia

August 12, HHS Regional Director Herb Schultz, Petaluma, California

August 15, President Obama, Cannon Falls, Minnesota

August 15, President Obama, Decorah, Iowa

August 15, USDA Deputy Under Secretary Ann Wright and USDA Senior Advisor 

Brandon Willis, Brainerd, Minnesota

August 15, USDA Administrator Judy Canales, Covington, Louisiana

August 15, USDA Deputy Under Secretary Janey Thornton, Frankfort, Kentucky

August 16, President Obama, Peosta, Iowa

August 16, USDA Under Secretary Ed Avalos, Dothan, Alabama

August 16, USDA Administrator Judy Canales, Marianna, Florida

August 16, USDA Administrator Audrey Rowe, Newton, Georgia

August 16, SBA Regional Administrator Dan Hannaher and USDA State Director 

Matt Jones, Kalispell, Montana

August 16, HHS Regional Director Susan Johnson, Squaxin, Washington

August 16, USDA Faith Based Director Max Finberg, Dubuque, Iowa

August 17, President Obama, Atkinson, Illinois

August 17, President Obama, Alpha, Illinois

August 17, ARC Co-Chair Earl Gohl, Florence, Alabama

August 17, VA Secretary Eric Shinseki, Las Vegas, Nevada

August 17, EPA Regional Administrator Karl Brooks, Des Moines, Iowa

August 17, EPA Regional Administrator Shawn Garvin and HUD Regional Administrator Jane Vincent, Lincoln, Delaware

August 17, HHS Regional Director Joanne Grossi, Charleston, West Virginia

August 18, ARC Co-Chair Earl Gohl, Walton, New York

August 18, HHS Regional Director Marjorie Petty, Albuquerque, New Mexico

August 18, HHS Regional Director Marjorie Petty, Los Luna, New Mexico

August 18, HHS Regional Director Susan Johnson, Bethel, Alaska

August 18, USDA Under Secretary Dallas Tonsager, Howard, South Dakota

August 18, DRA Co-Chairman Chris Masingill, Selma, Alabama

August 18, USDA Administrator Judy Canales, Sedalia, Missouri

August 19, ARC Co-Chair Earl Gohl, Cortland, New York

August 19, ED Director Karen Cator, Mooresville, North Carolina

August 19, HHS Regional Director Marjorie Petty, Espanola, New Mexico

August 19, HHS Regional Director Marjorie Petty, Moriaty, New Mexico

August 19, DOI Assistant Secretary Marcilynn Burke, Fairbanks, Alaska

August 19, USDA Secretary Tom Vilsack, Des Moines, Iowa

August 19, DOC Under Secretary Jane Lubchenco, Morro Bay, California

August 19, EPA Regional Administrator Judith Enck, Sanarac Lake, New York

August 19, GSA Regional Administrator Sue Damour, Rapid City, South Dakota

August 19, DOT Secretary Ray LaHood, Springfield, Illinois

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August 19, VA Secretary Eric Shinseki, Omaha, Nebraska

August 19, EPA Regional Administrator Jim Martin, Douglas, Wyoming

August 20, DOC Under Secretary Jane Lubchenco, Newport, Oregon

August 21, USDA Secretary Tom Vilsack, Brooklyn, Michigan

August 21, USDA Under Secretary Harris Sherman, Sitka, Alaska

August 22, USDA Secretary Tom Vilsack, Lansing, Michigan

August 22, USDA Secretary Tom Vilsack, Battle Creek, Michigan

August 22, USDA Secretary Tom Vilsack, Sparta, Michigan

August 22, DOI Assistant Secretary Gail Adams, Flat Rock, North Carolina

August 22, HUD Secretary Shaun Donovan, Albuquerque, New Mexico

August 22, USDA Senior Advisor Janie Hipp, Oklahoma City, Oklahoma

August 22, DOI BLM Director Bob Abbey, Elko, Nevada

August 23, DOI Assistant Secretary Anne Castle and USDA State Director Alan 

Stephens, Maricopa, Arizona

August 23, DOC Under Secretary Jane Lubchenco, Homer, Alaska

August 23, DOT Administrator David Strickland, Aiken, South Carolina

August 23, USDA Under Secretary Harris Sherman, Ketchikan, Alaska

August 23, EPA Regional Administrator Gwen Fleming, Pasco County, Florida

August 23, SBA Regional Administrator John Shoraka, Lewisburg, West Virginia

August 23, USDA Under Secretary Dallas Tonsager and SBA Regional Administrator Patricia Brown-Dixon, Grinnell, Iowa

August 23, USDA State Director Bill Menning, West Union, Iowa

August 23, DRA Co-Chairman Chris Masingill and USDA Deputy Under Secretary 

Doug O’Brien, Bastrop, Louisiana

August 23, USDA Under Secretary Cathy Woteki, Greenville, South Carolina

August 23, SBA Regional Administrator Jeanne Hulit and USDA State Director 

Donovan Todd, Orono, Maine

August 23, SBA Regional Administrator Dan Hannaher, Windsor, Colorado

August 23, GSA Regional Administrator Shyam Reddy, SBA Regional Administrator 

Cassius Butts and USDA State Directors Vernita Dore and Laurie Lawson, Columbia, South Carolina

August 24, GSA Regional Administrator Martha Johnson, Montpelier, Vermont

August 24, USDA Administrator Jonathan Adelstein, Fairbanks, Alaska

August 24, SBA Regional Administrator Jeanne Hulit, Exeter, New Hampshire

August 24, DRA Co-Chairman Chris Masingill, USDA Deputy Under Secretary 

Doug O’Brien, DOC Assistant Secretary John Fernandez, Pine Bluff, Arkansas

August 24, SBA Regional Administrator Elizabeth Echols, Fernley, Nevada

August 24, HHS Regional Director Joanne Grossi, Harrisburg, Pennsylvania

August 25, HUD Chief of Staff Laurel Blatchford, Berkeley Springs, West Virginia

August 25, ARC Co-Chair Earl Gohl, Holly Springs, Mississippi

August 25, EPA Regional Administrator Al Armendariz, Falcon Heights, Minnesota

August 25, DOC Under Secretary Jane Lubchenco, Barrow, Alaska

August 25, DOC Under Secretary Jane Lubchenco, Wainwright, Alaska

August 26, HHS Regional Director Marguerite Salazar, Rifle, Colorado

August 27, HHS Regional Director Marguerite Salazar, Grand Junction, Colorado

August 29, HHS Regional Director Anton Gunn, Marrianna, Florida

August 29, HHS Acting Regional Director James Galloway, Lawrence, Michigan

August 29, SBA Regional Administrator Jorge Silva-Puras, Ponce, Puerto Rico

August 30, SBA Regional Administrator Dan Hannaher, Dickinson, North Dakota

August 30, DOT Administrator Anne Ferro, Bismarck, North Dakota

August 30, DOT Administrator David Strickland, East Liberty, Ohio

August 30–September 1, EPA Regional Administrator Curt Spaulding and USDA 

State Director Virginia Manuel, Maine

August 30, GSA Regional Administrator Shyam Reddy, Oxford, Mississippi

August 31, VA Secretary Eric Shinseki, St. Paul, Minnesota

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September 1, VA Secretary Eric Shinseki and USDA State Director John Whitaker, 

Indianola, Iowa

September 1, EPA Regional Administrator Shawn Garvin, Timonium, Maryland

September 1, EPA Regional Administrator Jim Martin, Utah

September 1, USDA Acting Deputy Under Secretary Rebecca Blue, Huron, South 

Dakota

September 1, USDA Acting Deputy Under Secretary Rebecca Blue, Brookings, South 

Dakota

September 1, HHS Regional Director Marguerite Salazar, Alamosa, Colorado

September 6, EPA Regional Administrator Dennis McLerran, Yakima, Washington

September 6, ARC Co-Chair Earl Gohl, Prestonsburg, Kentucky

September 8, EPA Regional Administrator Al Armendariz, Dallas, Texas

September 9, HHS Administrator Mary Wakefield HHS Administrator Judy Baker 

and USDA State Director Bill Menner, Atlantic, Iowa

Department References: 

ARC—Appalachian Regional Commission 

CEQ—Council on Environmental Quality 

DOC—Department of Commerce 

GSA—General Services Administration 

HHS—Department of Health and 

Human Services 

HUD—Department of Housing and 

Urban Development 

DOE—Department of Energy 

DOI—Department of Interior 

ONDCP—White House Office of National Drug Control Policy 

DOT—Department of Transportation 

DRA—Delta Regional Authority 

OSTP—White House Office of Science 

and Technology Policy 

ED—Department of Education SBA—Small Business Administration 

EPA—Environmental Protection Agency USDA—U.S. Department of Agriculture 

FCC—Federal Communications Commission VA—Veterans Affairs 

Additional Resources: 

White House Rural Council 

• Stay updated on upcoming announcements and work by the Council

» http://www.whitehouse.gov/administration/eop/rural-council

• Sign-up for email updates and continue to provide us with feedback

» http://www.whitehouse.gov/administration/eop/rural-council/about/email

Rural America and the President’s Jobs Plan: 

• http://www.whitehouse.gov/blog/2011/09/09/rural-america-and-presidentsjobs-plan

President Obama’s Rural Tour: 

• http://www.whitehouse.gov/administration/eop/rural-council/rural-tour-2011

SUBMITTED QUESTIONS

Response from Hon. Jonathan S. Adelstein, Administrator, Rural Utilities 

Service, U.S. Department of Agriculture 

Questions Submitted By Hon. Timothy V. Johnson, a Representative in Congress 

from Illinois 

Question 1. Mr. Adelstein, you highlighted the Community Connect Grant Program which provides funding to establish broadband service where none exists. Why 

are you not focusing on completely un-served area in ALL of our programs? 

Answer. The Community Connect grant program has been highly successful in 

bringing broadband to single communities where no broadband exists. These communities are unserved because private companies are unable to make a business 

case to expand service into these areas. 

Our loan programs target such unserved areas, but even with lower interest rates, 

applicants generally cannot develop a business case based on the loan product alone. 

This is why the Recovery Act Broadband Initiatives Program (BIP) was so successVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 01077 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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ful—the statute provided RUS with the authority to fund projects with grants, loans 

and loan/grant combinations. Through this flexibility, Rural Development could tailor a financing package that best serves the needs of the area. This model is successfully used in other Rural Development areas such as our Water and Environmental programs. This flexibility allows us to customize a financing package consistent with the needs and financial resources of the community.

Question 2. Mr. Adelstein, there are several distinct programs mentioned today 

which provide broadband funding. In your view, are these programs utilized to 

achieve basically the same goal? What are the most common elements among the 

programs? How do they specifically differ? 

Answer. Our telecommunication programs have differing statutory mandates and 

goals. For example, Community Connect brings broadband to a single community 

that has no broadband service. Our Distance Learning and Telemedicine (DLT) finances end-user equipment in rural areas that already have broadband, but need 

assistance to expand education and health resources. Our traditional infrastructure 

loan program (authorized under Title II of the Rural Electrification Act) and the 

broadband program (authorized in the Farm Bill) do have similar goals; however, 

they have starkly different statutory requirements. Since the same staff administers 

both programs and shares forms, Information Technology (IT) systems, etc., the 

Agency has already streamlined processes to the extent possible.

Question 3. Mr. Adelstein, would you agree that the importance of broadband is 

to create coverage for all un-served individuals in the United States? With the increased budget pressures we are facing, do you feel it is in good practice to continue 

to allow RUS to fund broadband services in areas that are already covered? Do you 

think it be more important to invest the tax-payers dollars into areas where 

broadband does not exist, as opposed to continuing to allow funding in places that 

have already achieved the primary goal of broadband access? 

Answer. I believe that rural America deserves the same quality of broadband service that is deployed in urban America. Broadband creates jobs today and builds the 

foundation for future economic development and job creation. 

The term broadband means different things to different people. Some define 

broadband to include any community with dial-up Internet service. Some say a community has broadband where it is available within the town limits, but not to the 

anchor institutions and families outside the community’s corporate limits. Our 

broadband programs are designed to help communities access the quality of service 

that meets 21st Century needs of modern businesses, health care providers, emergency responders, educational institutions and others. 

Rural America cannot afford a further deepening of the digital divides. Businesses 

and good-paying jobs will not grow in rural America without true high-speed 

broadband. Further, recent studies report that young Americans will leave communities that do not have access to broadband. 

Questions Submitted By Hon. Glenn Thompson, a Representative in Congress from 

Pennsylvania 

Question 1. Over the history of the REDLG program, how many total loans and 

grants have been made? 

Answer. Since inception of the program:

• 494 REDLG loans totaling $235,205,564

• 491 REDLG grants totaling $139,527,701

Question 2. There are several eligible applicants for REDLG funds. To what types 

of organizations have those grants and loans been made, and what are the relative 

award totals in each category? What is the total amount awarded by state? 

Answer. Telephone and electric utilities that serve customers in rural areas and 

that are organized as not-for-profit cooperatives, for-profit corporations and public 

bodies are eligible for Rural Economic Development Loans and Grants (REDLGs). 

Total number and amount of loans and grants by Category:

Telephone

Loans Grants Total

Number Amount Number Amount Number Amount

Cooperatives 50 $22,462,492 40 $9,974,099 90 $32,436,591

Corporations 30 $12,032,806 22 $5,657,000 52 $17,689,806

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Other 3 $993,000 1 $300,000 4 $1,293,000

Subtotal 83 $35,488,298 63 $15,931,099 146 $51,419,397

Electric

Cooperatives 300 $148,101,635 320 $94,270,299 620 $242,371,934

Corporations 92 $44,078,944 85 $22,856,303 177 $66,935,247

Other 16 $6,836,687 11 $3,020,000 27 $9,856,687

Public Body 3 $700,000 12 $3,450,000 15 $4,150,000

Subtotal 411 $199,717,266 428 $123,596,602 839 $323,313,868

Total 494 $235,205,564 491 $139,527,701 985 $374,733,265

The Total number and amount of loans and grants by State:

State Number Amount 

Alabama 41 $14,915,400

Arizona 7 $1,894,300

Colorado 6 $2,620,000

Florida 6 $1,801,660

Georgia 26 $13,710,000

Hawaii 3 $900,000

Iowa 193 $61,372,207

Illinois 20 $10,410,000

Indiana 4 $1,590,000

Kansas 104 $40,201,030

Kentucky 35 $15,076,469

Louisiana 3 $1,640,000

Michigan 8 $3,221,203

Minnesota 113 $39,599,568

Missouri 38 $16,916,100

Mississippi 21 $12,371,687

Montana 12 $4,294,805

North Carolina 36 $12,060,000

North Dakota 36 $12,341,850

Nebraska 20 $6,638,000

New Hampshire 1 $300,000

New Mexico 10 $3,950,000

New York 1 $281,666

Ohio 5 $1,316,600

Oklahoma 24 $6,745,537

Oregon 5 $2,000,000

Pennsylvania 6 $3,020,000

South Carolina 25 $14,732,360

South Dakota 64 $20,946,000

Tennessee 57 $23,356,481

Texas 4 $1,245,000

Virginia 7 $9,860,000

Vermont 1 $600,000

Washington 3 $604,000

Wisconsin 36 $11,101,342

Wyoming 4 $1,100,000

Total 985 $374,733,265

Question Submitted By Hon. Randy Hultgren, a Representative in Congress from Illinois 

Question. I understand that the RUS will not lend its money to overbuild an area 

where there is an existing RUS borrower because doing so would put the RUS’ investment at risk. Doesn’t that same logic apply to the use of RUS money to overVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 01079 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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build an existing broadband provider financed by a local bank? Should the government really be in the business of putting private investment at risk? 

Answer. Our goal at Rural Development is to finance broadband deployments that 

create jobs today and lay the foundation for economic development and job creation 

in the future. The last farm bill, enacted in 2008, required that 25 percent of the 

proposed service territory be unserved and the remaining 75 percent be served by 

not more than three competitors. The farm bill recognized that competition is 

healthy and often necessary to extend broadband to the most unserved areas in 

rural America. Our regulations implementing the 2008 Farm Bill codified these 

statutory requirements. Further, the new regulations allow for RUS to help an existing borrower expand services if the incumbent is not providing broadband at 

enough capacity or speed to meet the needs of business. 

Questions Submitted By Hon. Collin C. Peterson, a Representative in Congress from 

Minnesota 

Question 1. You mentioned the new authorization that was provided in the 2008 

Farm Bill to lend for energy efficiency programs as well as renewable energy. Can 

you tell us what activities your agency is lending for under these authorities? 

Answer. Our current obligations (under existing statute and regulation) for renewable energy in fiscal year 2011 total $294 million in new loans for electric generation and distribution and $7.28 million for energy efficiency improvements through 

RUS programs. This is in addition to the significant funding support for energy efficiency and renewable energy through Rural Development’s suite of Business and 

Cooperative Programs. 

Though minor compared to RUS’s total loan portfolio, RUS is working to support 

energy efficiency projects authorized under the 2008 Farm Bill. RUS has drafted a 

regulation proposing a comprehensive retail energy efficiency initiative. This regulation is in the final stages of internal clearance. The Agency anticipates implementation of this regulation in Fiscal Year 2012. 

Since the early 1980’s the Rural Utilities Service has allowed borrowers (rural 

electric cooperatives) to defer principal payments for up to 84 months and use the 

funds to assist consumers in implementation of energy efficiency improvements to 

their homes. As of the end of August, 2011, 365 rural electric borrowers have used 

$206 million in deferred principal to assist their consumers. 

Last year in support the White House initiative on Recovery through Retrofit, 

USDA Rural Development created the Rural Economic Development Energy Efficiency Effort which combines the efforts of the Rural Utilities Service, Rural Business-Cooperative Service and the Rural Housing Service, working in concert with 

the electric cooperatives and using existing authorities and funding. Under this effort Rural Development makes a Rural Economic Development Loan to an electric 

utility, typically a cooperative, which in turn passes the funds to a for profit or nonprofit entity to use as working capital to assist consumers in making energy efficiency improvements.

Question 2. Many of the entities that you lend to are dealing with regulations and 

settlements under various Federal laws, including the Clean Air and Clean Water 

Acts. Have you seen an impact on systems that serve rural residents, and their ability to deal with these regulatory requirements? Does it impact your ability to lend 

to them because of repayment concerns? 

Answer. When rural communities incur costs associated with compliance with new 

and existing regulatory standards, the level of financial impact depends on a number of factors. 

For the Water and Environmental Programs (WEP), these factors include the type 

and size of existing treatment facilities and infrastructure, the quality of the current 

water source and the regulatory standard itself. As most rural systems are operated 

on a not-for-profit basis by municipalities and water associations, many rural communities do not have the additional financial resources needed to fully address the 

systems’ needs, including needs related to compliance. 

As a result, changes in regulatory standards can be one variable in the demand 

for RD funding. We do our best to work with applicants to find a loan/grant package 

that works for the community, makes the best use of RD and leveraged funds, and 

keeps payments affordable while addressing environmental and regulatory requirements. 

RD is also working with our colleagues in regulatory agencies to improve their 

understanding of the impact of new requirements on rural systems.

Question 3. Do you have any interactions with FERC and the various ISOs that 

regulate the movement of electricity on to the grid? Do you feel that these entities 

could be doing more to ensure that distributed energy production such as landowner 

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controlled wind projects have access to transmission lines as opposed to the large, 

often out of state, utilities? 

Answer. We have had discussions with FERC and serve on committees examining 

these issues. Constantly balancing supply and demand within a regional transmission system and attempting to integrate small, intermittent loads such as wind 

resources is challenging, but all parties are encouraged that it can be done as the 

capacity of the grid is improved and planning models become more sophisticated. 

Response from Judith A. Canales, Administrator, Rural Business-Cooperative Service, U.S. Department of Agriculture

Question 1. Ms. Canales, RBS administers Rural Cooperative Development Grants 

which are used to provide funds for value-added agricultural market development 

projects (VAPG), small and socially-disadvantaged producer grants, and other subprograms and initiatives. For those grants which are primarily given to start or expand a business, are there other lending or re-lending programs which might be 

suitable to assist farmers? Do you think there may be some administrative savings 

in combining similar programs to reduce overhead and confusion among applicants? 

Answer. There are three grant programs funded under the Rural Cooperative Development Grant umbrella:

• Value-Added Producer Grant (VAPG),

• Rural Cooperative Development Grant (RCDG), and

• Small, Socially-Disadvantaged Producer Grant (SSDPG).

VAPG is unique within USDA in that it awards grants to independent producers 

of agricultural commodities for planning activities, such as feasibility studies and 

business plans; and for working capital expenses, such as labor, inventory, and advertising. The planning grants often provide incentive for producers to find innovative ways to market value-added agricultural products and the working capital 

grants provide much-needed cash during the first few years of operation of a venture, helping to ensure the venture’s success. This program has been instrumental 

in launching numerous new, and often innovative, rural businesses and assisting 

others with expansion. Since its inception, VAPG has funded 1,440 projects throughout rural America. In 2010, VAPG funded 196 projects across 45 states and Puerto 

Rico. Over 60 percent of awards made in 2010 were made beginning or socially-disadvantaged farmers or ranchers and small to medium-sized family farms. Awards 

for project planning activities—feasibility studies, business and marketing plans—

were made to 72 applicants. Funding for working capital—operating costs associated 

with processing and marketing value-added products—was awarded to 124 applicants. Projects included local food initiatives linking farmers directly to consumers 

and local institutional buyers such as schools and hospitals; innovative technologies 

for on-farm generation of energy and by-products, as well as development of niche 

markets for specialty products which bring a larger share of the consumer dollar 

back to agricultural producers. 

RCDG and SSDPG are similar in that both focus on providing funding for technical assistance and training for rural producers and business, rather than direct 

financial assistance. Specifically, RCDG funds centers of cooperative development, 

which provide assistance related to the start-up, expansion and operational improvement of rural businesses, especially cooperatives and other mutually-owned businesses. The SSDPG program funds technical assistance and training specifically for 

socially-disadvantaged agricultural producers via existing cooperatives or associations of cooperatives. 

We do see complementary relationships with some of our lending and re-lending 

programs. Programs like VAPG, RCDG, and SSDPG emphasize financing and technical support during the initial stages of new business ventures begun by farmers 

(or other applicants). However, grantees cannot use awards made under the Rural 

Cooperative Grant umbrella for purchasing or improving buildings, facilities or 

equipment. Thus, they may need additional project capital as the business evolves 

or expands. Other RBS programs can provide capital for facilities and equipment 

to the applicant’s new business venture. We strongly encourage all applicants to explore all potential funding opportunities available throughout Rural Development. 

RBS staff believes our continuing efforts to streamline programs provide the best 

opportunity to achieve administrative savings and deliver support to our stakeholders. If similar programs were combined, there may be an opportunity to achieve 

some incremental savings in overhead and administration for the combined programs. In addition, a combined program could reduce potential confusion that may 

exist with separate programs.

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Question 2. Ms. Canales, the Rural Micro-entrepreneur Assistance Program 

(RMAP) provides funds to organizations who then relend those funds to small businesses. Your supplemental testimony indicated that this and two other programs 

could be combined into existing authorities to gain administrative efficiencies. Could 

you elaborate on where you think these programs could be combined? Could you 

provide more details on what savings could be expected from such a move? 

Answer. Combining programs into one comprehensive program and regulation will 

benefit applicants and grantees who utilize more than one of the programs reducing 

their administrative cost as a result of time savings because they will not need to 

learn and understand different program regulations, program policies and reporting 

procedures 

The RMAP, Intermediary Relending Program (IRP), and revolving loan fund component of the Rural Business Enterprise Grant (RBEG) program could be combined 

into a comprehensive Intermediary program, while retaining the intended purposes 

of each through funds administration. 

By implementing one comprehensive revolving loan fund program rather than 

three separate ones, we would expect to realize incremental administrative efficiencies and savings. For example, training staff on one program rather than three 

marginally reduces training costs. Incremental savings may also be realized through 

the maintaining and updating of one set of regulations and utilization of fewer 

forms. Once a comprehensive Intermediary program is in place, such savings are expected to be relatively small and would be realized over a period of time.

Question 3. Ms. Canales, the Rural Micro-entrepreneur Assistance Program 

(RMAP) provides training for small businesses. Could you give the Committee an 

idea of how many of the training grants have been utilized by community colleges 

and universities? 

Answer. Ten training grants were awarded in FY 2010 of which two were made 

to universities: Ohio State University and Saint Francis University, PA. An additional loan and grant was made to Lane Community College, OR, to provide 

microloans and technical assistance to borrowers. The FY 2011 awards are not finalized as of 09–20–2011.

Question 4. Ms. Canales, your supplemental testimony indicated that more than 

$13 million, or 30 percent, for the Rural Micro-entrepreneur Assistance Program 

(RMAP) was not utilized in FY10. Do you have an explanation for why so little of 

the program was utilized in FY10? What is your estimate for participation in the 

program in FY11? 

Answer. RMAP is a new program. In order to get this program implemented, we 

had to (1) address administrative requirements, (2) address numerous and detailed 

public comments, including stakeholders, on the proposed rule, and (3) train our 

State office personnel and field staff. As soon as these requirements could be addressed, which took a substantial amount of time, the program was implemented 

in June 2010 and stakeholders are now fully engaged in the program. 

Funding available in FY 2011 consisted of FY 2010 carryover and FY 2011 funding, together totaling $7.5 million in budget authority for a program level of $20.2 

million. We are projecting that $13.5 million in loans and $3.6 million in grants will 

be awarded in FY 2011. 

Joint Response from Mr. Adelstein, Ms. Canales, and Ms. Trevin ̃ o 

Questions Submitted By Hon. Timothy V. Johnson, a Representative in Congress 

from Illinois 

Question 1. Many counties and development organizations have highlighted regional coordination as a way to more effectively utilize Federal funds. Could you 

please describe what your agency is already doing to coordinate regional development efforts? What is the role of other agencies outside of USDA in your regional 

efforts? 

Answer. In order to provide better investments and coordination and alignment 

with other agencies, Rural Development is providing support to local communities 

who come together on a multi-county regional basis to develop a thoughtful regional 

economic development strategy. We are working to position our programs to support 

specific eligible project applications that are consistent with and supportive of the 

region’s comprehensive strategy. This will allow us to direct our limited resources 

toward projects that will support the region’s top priorities as delineated in its regional economic development strategy. We also encourage other Federal agencies to 

follow our lead in making investments in specific projects that will support each region’s economic development strategy. To support rural regions, we are exploring 

how to better coordinate Rural Development’s programs so that they can better support regional strategies. For example, we have amended NOFA’s (including RBOG 

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and RCDI) to make clear Rural Development’s interest in innovative regional approaches. We are considering how to effectively review various grant and loan applications so that they can be viewed in light of regional strategies. 

As part of an Administration-wide effort, USDA is a supporting agency to the Jobs 

and Innovation Accelerator Challenge, a multi-agency effort to support regional innovation clusters. While USDA is not one of the funding agencies, we have worked 

closely with our rural constituencies to ensure they knew about the $34 million in 

funds available from the Departments of Commerce and Labor, as well as the Small 

Business Administration. Several of the 20 funded regions include substantial rural 

components (e.g., a regional cluster in northern Maine is focused on renewable energy and a cluster in the Finger Lakes region of upstate New York concentrates on 

food processing); USDA will support this work in some of these regions. In addition, 

USDA is partnering with the Economic Development Administration in developing 

a second round of the Jobs and Innovation Accelerator Challenge grants; this second 

round will target predominantly rural regions, enabling them to take viable economic clusters and make them stronger. 

USDA is also a supporting partner on another key Administration-wide initiative: 

the Partnership for Sustainable Communities, which is a collaborative effort among 

the Departments of Transportation and Housing and Urban Development, as well 

as the Environmental Protection Agency. For instance, under this initiative, HUD 

has funded many regions with planning grants; some of these regions include rural 

areas; USDA may be in a good position to fund some projects that will be needed 

for successful plan implementation in such regions. 

In one more example of the work USDA is doing on regional strategies, Rural Development and the National Institute of Food and Agriculture are working jointly 

on a pilot initiative called the Stronger Economies Together (SET) program. USDA 

RD is working collaboratively with the Extension Service and the four Rural Regional Development Centers to design and deliver SET to 30+ regions across the 

country. Under SET, the participating multi-county regions engage in a severalmonth training program where each region explores its assets and comparative economic advantages prior to preparing a regional economic development strategy. A 

critical component of SET is the provision of expert economic analysis to describe 

the region’s current and emerging economic clusters; this targeted information can 

be used by the region to help craft a practical economic development plan. 

USDA believes that the approach described here will help establish a locally-driven economic development framework that can enable more effective Federal investments, not only by RD, but by all Federal agencies.

Question 2. Technical assistance is almost a necessity for applicants in many programs throughout Rural Development. In your view, could this be due to the complexity of the application process for grants and loans? Does your agency see a need 

to reorganize or rethink the process as a whole? Do you think consolidating and 

streamlining such application processes could address some of the overlap of programs within Rural Development? 

Answer. One of RD’s major focus is to minimize burdens on individuals, businesses, and communities attempting to access programs that promote economic 

growth, create jobs, and protect the health and safety of the American people. 

We are developing creative ways to conduct business and make changes in structure, program delivery, staffing, or responsibilities to improve our efficiency or quality of service. 

Our application process may be challenging to applicants in rural areas, which 

often lack the resources commonly available in urban areas. Providing technical assistance to rural applicants has helped protect the taxpayers’ investment while ensuring that rural utility systems are designed to provide affordable reliable service 

for rural residents and businesses. 

RD is interested in more flexible authorities that would provide us the ability to 

serve rural communities with the same types of assistance, but with much fewer 

than the forty programs we now have. We are considering merging some of our programs to reach better administrative efficiencies and reduce confusion for our customers. 

The following are some examples of our current efforts to streamline, simplify and 

improve program efficiencies, reduce administrative and operating costs, and reduce 

barriers for entry and access to USDA programs:

Regulatory Program Review:

Rural Development recently began a new retrospective review of existing regulations to determine whether any such regulations should be modified, streamlined, 

expanded, or repealed, as called for by President Obama in Executive Order 13563. 

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The purpose of this review is to make the mission area’s regulatory program more 

effective and efficient in order to enhance program administration and delivery. 

Rural Development analyzes and evaluates its existing rules based on review and 

input from internal and external customers, including National and State Office 

staff, lenders, Office of Inspector General (OIG), and other stakeholders and partners. Rural Development’s existing oversight activities include conducting thorough 

reviews of program administration and delivery, and coordinating internal and external audits at both the National and State Offices. Through these efforts the mission area collects and analyzes data on overall program performance/effectiveness 

and regulatory compliance. 

Both the internal and external reviews provide information that the mission area 

uses when determining the regulatory changes that are necessary to minimize risk 

and enhance program utilization.

Stakeholder Outreach:

From July 2011 through September 2011, Rural Development hosted webinar 

based listening sessions and stakeholder meetings in rural areas. 

On July 7th, 2011, USEC hosted a webinar with 180 national stakeholders to receive public input on our mission area priorities for the upcoming fiscal year. Under 

Secretary Tonsager provided the opening presentation and the Administrators from 

Rural Business Services, Rural Housing Services, and Rural Utilities Services discussed their agency’s role in achieving the objectives of President Obama’s Executive 

Order. 

On July 21st, 2011, USEC hosted a webinar with 82 tribes and tribal leaders that 

included introduction and explanation of our regulatory priorities and opening remarks from the Under Secretary and all three administrators. There was a productive 90 minute discussion that took place that focused primarily on the need for 

more technical assistance and infrastructure challenges unique to tribes. 

On July 14th, 2011, Rural Development launched a website to inform stakeholders of the process and to give them the opportunity to submit comments. A separate e-mail box was created (rdreform@osec.usda.gov) to receive all public comments. 

State Directors hosted webinars and stakeholder meetings across the country. 

Rural Development has received over 100 written comments from a broad range of 

stakeholders, including individuals, regulated entities, and trade groups. 

Rural Development will review and reference the public comments received in the 

preamble of our regulations.

Diversity Hiring and Recruiting:

In response to the USDA Jackson Lewis study, RD is working to improve its hiring diversity. USDA awarded a competitive contract to the Jackson Lewis LLP Corporate Diversity Counseling Group to conduct an Independent Assessment of the 

USDA Delivery of Technical and Financial Assistance to all Americans. In order to 

respond to the ninety-four recommendations that pertain to RD, we are actively engaged with Department and other agencies to take action where appropriate.

Comprehensive Loan Program (CLP):

Rural Development continues to transition to a new computing environment that 

provides greater flexibility for management and business development. The CLP retires legacy accounting systems and replaces them with upgraded accounting systems that can be utilized to support business needs of today. Replacing these systems makes it easier to maintain, modify and meet new requirements, improves the 

use for internal and external customers, improves the integrity of the entire loan 

portfolio, and improves management reporting and analyzing capabilities. No new 

funding has been requested for this transition and all savings realized from reducing infrastructure costs are being used to continue the transition. The CLP will enable RD to implement new statutory or regulatory provisions in a more timely and 

effective manner

Question 3. Due to the continuing budget constraints faced by Federal, state, and 

local governments and the consensus to reform and consolidate many programs, 

does your agency have the necessary authorities to streamline some of these programs. How is your agency working with stakeholders to address the needs of small 

rural communities while addressing budget realities? 

Answer. At USDA, we are focusing on actions to better coordinate and streamline 

Federal program efforts in rural America, and to better leverage Federal investments. The collaboration will result in better programs and services in rural communities and maximize the benefits of those programs. 

As stated earlier, RD is conducting a regulatory review of its regulations to determine which application procedures for Business Programs, Community Facilities 

1073

Programs, Energy Programs, and Water and Environmental Programs can be 

streamlined and requirements synchronized. RD is approaching this exercise from 

the perspective of the people it serves, specifically by communicating with stakeholders on two common areas of regulation that would provide the basis of reform. 

This process will look to have similar requirements for programs that are focused 

on a similar applicant base, such as nonprofit, Native American Tribes, and public 

bodies such as Community Facilities and Water and Environmental programs will 

make an effort to have similar requirements. 

To the extent practicable, each reform effort will consist of a common application 

and uniform documentation requirements making it easier for constituency groups 

to apply for multiple programs. In addition, there will be associated regulations for 

each program that will contain information specific to each program. 

RD’s State and national offices hosted a number of webinars with stakeholders 

from across the nation to discuss existing regulations and processes, and seek input 

on potential changes that would make them more customer-friendly and effective. 

We will continue to provide the best service possible to our stakeholders by seeking implementable efficiencies to meet this commitment and to ensure that awards 

are made to the highest priority projects for which we can obtain the best results 

for the funds expended. 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE—RURAL

UTILITIES SERVICE

1. Program Name 

Water and Environmental Programs (WEP). 

2. Subprograms/Department Initiatives 

Rural Development’s (RD) Rural Utilities Service (RUS) provides loans, grants, 

and loan guarantees for drinking water, sanitary sewer, solid waste, and storm 

drainage facilities in rural areas and cities and towns of 10,000 or less. Public bodies, nonprofit organizations, and federally-recognized Indian tribes may qualify for 

assistance. WEP also makes grants to nonprofit organizations to provide technical 

assistance and training to assist rural communities with their water, wastewater, 

and solid waste problems. WEP subprograms include:

Subprograms 2008 Farm 

Bill Section 

CONACT Section U.S. Code 7 

U.S.C. 

Water and Waste Loan and Grant Program (Direct) 6001 306 1926

Special Evaluation Assistance for Rural 

Communities and Households Program 

(SEARCH) 6002 306(a)(2) (a)(2)(C) 

Rural Water and Wastewater Circuit 

Rider Program 6006 306(a)(22) 1926(a)(22) 

Water and Waste Disposal Programs 

Guaranteed Loans 306(a)(24) 1926

Emergency Community Water Assistance 

Grants 6008 306A 1926(a) 

Water Systems for Rural and Native Villages in Alaska 6009 306D 1926(d) 

Household Water Well System (HWWS) 

Grant Program 6010 306E 1926(e) 

Interest Rates for Water and Waste Disposal Facilities Loans (Direct) 6011 307(a)(3) 1927(a)(3) 

WEP initiatives include:

Subprograms 2008 Farm 

Bill Section 

CONACT

Section 

U.S. Code 7 

U.S.C. 

Water, Waste Disposal, and Wastewater 

Facility Grants (Revolving Funds for Financing Water and Wastewater Projects) 6001 306(a)(2)(B)(vii) 1926(a)(2)(B)(vii) 

Technical Assistance and Training Grant 

(TAT) Program 6001 306(a)(14)(A) 1926(a)(14) 

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Subprograms 2008 Farm 

Bill Section 

CONACT

Section 

U.S. Code 7 

U.S.C. 

Water and Waste Facility Loans and 

Grants to Alleviate Health Risks (applied to Colonias and Native American 

tribes) 6001 306C 1926(c) 

Solid Waste Management Grant (SWM) 

Program 6001 310B(b) 1932(b) 

Note: Initiatives are funded through set-asides in the annual appropriation for the Water and 

Waste Loan and Grant Program (Direct). 

3. Brief History 

The origins of the Water and Environmental Programs date to the 1937 Resettlement Administration. These provisions were later included in section 306 of the 

CONACT (Farm Bill), 7 U.S.C. 1926. 

4. Purpose/Goals 

The purpose and goals of WEP’s subprograms include:

Water and Waste Disposal Direct Loans and Grants Program

WEP provides loans, grants and loan guarantees for drinking water, sanitary 

sewer, solid waste and storm drainage facilities in rural areas and cities and towns 

with populations of 10,000 or less.

• Water, Waste Disposal, and Wastewater Facility Grants (Revolving Funds for Financing Water and Wastewater Projects): The WEP Revolving Fund Program 

(RFP) provides grants to private nonprofit organizations to establish a lending 

program for entities eligible under the Water and Waste Disposal Loans (direct 

and guaranteed). As grant recipients, the nonprofit organizations set up a revolving loan fund to provide loans to finance predevelopment costs of water or 

wastewater projects, or short-term small capital projects not part of the regular 

operation and maintenance of current water and wastewater systems.

• Technical Assistance and Training Grant (TAT) Program: The TAT Program 

provides grants to nonprofit organizations to provide technical assistance and/

or training to associations on a wide range of issues relating to delivery of water 

and waste disposal service.

• Section 306C Water and Waste Facility Loans and Grants to Alleviate Health 

Risks: Section 306C loans and grants provide water and waste disposal facilities 

and services to low income rural communities whose residents face significant 

health risks. These funds have been set aside for eligible projects that benefit 

members of Federally Recognized Native American Tribes and the Colonias 

area.

• Solid Waste Management Grant (SWM) Program: SWM grants are available to 

both public and private nonprofit organizations to help communities identify 

threats to water resources and reduce the solid waste stream. Communities receive assistance from eligible organizations to reduce or eliminate pollution of 

water resources, improve planning and management of solid waste disposal facilities in rural areas, and enhance operator skills in operations and maintenance.

SEARCH Grants Program

To provide grants to public bodies, nonprofits, and federally-recognized Indian 

tribes for feasibility studies, design, technical and direct or guaranteed water and 

waste disposal loan application assistance. Grants are limited to financially-distressed communities in rural areas with populations of 2,500 or fewer inhabitants 

for water and waste disposal projects. Grants are limited to $30,000 per project.

Circuit Rider—Technical Assistance for Rural Water Systems Program

Providing technical assistance for the operations of rural water systems, RUS contracts with the National Rural Water Association (NRWA) to assist rural water systems with day-to-day operational, financial, and management support. The assistance may be requested by officials of rural water systems or RUS. The program 

complements RUS’s loan supervision responsibilities. The NRWA’s State Affiliates 

do the work in their states.

Water and Waste Disposal Programs Guaranteed Loans

The Water and Waste Disposal Programs Guaranteed Loans provide a loan guarantee for the construction or improvement of water and waste disposal projects servVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 01086 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
1075

ing the financially needy communities in rural areas. This purpose is achieved 

through bolstering the existing private credit structure through the guarantee of 

quality loans which will provide lasting benefits.

Emergency Community Water Assistance Grants Program

Assists rural communities that have experienced a significant decline in quantity 

or quality of drinking water due to an emergency or when such decline is considered 

imminent, to obtain or maintain adequate quantities of water that meets the standards set by the Safe Drinking Water Act. This emergency includes, for example, 

drought, earthquake, flood, tornado, hurricane, disease outbreak or chemical spill, 

leakage, or seepage.

Section 306E Grants for the Construction, Refurbishment, and Servicing of Low 

or Moderate Income Individual Household Water Well Systems

Provides funds to nonprofit organizations to assist them in establishing loan programs from which individuals may borrow money for household water well systems. 

5. Success in Meeting Programmatic Purpose/Goals 

In Fiscal Year (FY) 2010, RD invested $1.67 billion in direct and guaranteed loans 

and grants to help rural communities develop water and waste disposal facilities.

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Water and Environmental 2007 2008 2009 2010 2011

Number of program borrowers’ subscribers receiving new improved service from Agency’s funded water facilities. Target Actual $557,000 $1,332,063 $1,380,000 $4,361,872 $1,418,000 $3,388,089 $1,457,000 $3,961,166 $1,394,000 $4,292,318

Water and Environmental ARRA 2007 2008 2009 2010 2011

Number of program borrowers’ subscribers receiving new improved service from Agency’s funded water facilities. Target (1) (1) $1,900,000 (1)

Actual (1) (1) 769,559 949,646

1 ARRA funding was only available for FY 2009 and 2010. 

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In addition to the regular appropriated funding, RD invested $300 million in funding provided by the 2008 Farm Bill and a total of $1.8 billion in American Recovery 

and Reinvestment Act (ARRA) funding for water and waste disposal infrastructure 

and technical assistance across Rural America in FY 2009 and FY 2010. 

The RUS WEP’s:

• Brings modern, reliable and affordable water and waste services to 

rural America.

» 5.7 million rural customers will benefit from RUS FY 2010 regular and 

ARRA investments in water and waste disposal infrastructure.

» As a result, rural communities are able to provide clean, reliable services at 

reasonable costs, more efficiently manage how and how much water they use, 

and reduce their impact on our nation’s waterways through improved compliance with regulatory requirements and reduced discharge of waste byproducts.

• Reduces health risks to rural residents and protects our nation’s waterways.

» FY 2010 funded projects will result in a nearly 28 percent reduction in rural 

resident’s exposure to water-borne illnesses.

» Provides access to a public water system to residents who obtain their water 

from contaminated or unreliable drinking water wells, or untreated surface 

sources improves public health.

» Replacing failing individual septic tanks reduces harmful discharges into 

lakes, rivers, and other waterways.

• Facilitates sustainable communities.

» With reliable water and waste infrastructure, the establishment of core community services is made possible, supporting existing residents and attracting 

new ones. USDA helps to ensure the safety, health, and education of rural 

residents by financing the construction of new and improved hospitals, 

schools, fire stations, and other essential community facilities—all of which 

rely on water and waste services to operate.

The presence of reliable water and waste infrastructure facilitates business 

development in rural America, helps create jobs, strengthen our nation’s economy, and our ability to compete in the global marketplace.

• Assists rural water and waste systems with technical issues and emergency recovery.

» In FY 2010, circuit riders made more than 111,000 technical assistance calls 

to rural systems.

» RUS contract circuit riders provided critical support and emergency equipment to rural operators in the aftermath of the tornados across the south and 

the flooding along the Missouri and Mississippi Rivers in 2011.

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6. Annual Budget Authority (FY 2007–FY 2011) 

FY 2007 through FY 2011 Budget Authority (Enacted) 

(Dollars in thousands) 

Program 2007 2008 2009 2010 2011

Water and Environmental $494,043 $538,767 $538,768 $551,230 $515,968Water and Environmental ARRA (1) (1) $734,881 $655,675 (1) 

1 ARRA funding was only available for FY 2009 and 2010. 

7. Annual Outlays (FY 2002–FY 2011) 

Account Name 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual 

Water and Waste Disposal Program 1 2 $650,383 $604,033 $746,706 $980,000 $1,086,000

1Outlays are not a one to one correlation with obligations. Programs disburse over numerous years. Undisbursed balances are carried forward for future year outlays. 2Outlayed through RCAP. 

8. Annual Delivery Cost (FY 2002–FY 2011) 

Program 

2007 

Amount 

($000) 

2008 

Amount 

($000) 

2009 

Amount 

($000) 

2010 

Amount 

($000) 

2011 

Amount 

($000) 

Direct Water & Waste Disposal Loans, Guaranteed Water & Waste Disposal Loans, Water & Disposal Grants, Individually-Owned Water Well System Grants, Grants for Water and Wastewater Revolving Funds, Solid Waste Management Grants, and Emergency & Imminent Community 

Water Asst. Grants.

Program Items: 

Program Level $1,579,948 $1,822,949 $886,873 $1,660,647 $1,447,422 Budget Authority $564,174 $666,367 $411,792 $770,362 $551,230 S&E $59,323 $57,610 $21,716 $65,322 $65,322

Total Costs $549,721 $723,977 $433,508 $835,684 $616,552

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FTEs 542 514 192 551 551

Direct Water and Waste Disposal Loan 2008 Disasters Emer. Supp., Water and Waste Disp. Grants May 6, 2007 Emer. Supp., Water and Waste Disp. 

Grants 2008 Disasters Emergency Supplemental, Water and Waste Disp. Grants 2003/2004 Hurricanes Emer. Supp., Water and Waste Disp. Grants 2005 Hurricanes Emer. Suppl., Emer. And Imminent Comm. Waster Asst. Grants—Emer. Supp., Emer. and Imminent Comm. Water Asst. Grants—2005 Hurricanes.

Program Items: 

Program Level $13,010 $0 $34,203 $10,406 $0 Budget Authority $13,010 $0 $19,068 $7,054 $0 S&E $0 $0 $0 $0 $0

Total Costs $13,010 $0 $19,068 $7,054 $0 FTEs 0 0 0 0 0

Direct Water and Waste Disposal Loans—Stimulus, Water and Waste Disposal Grants—Stimulus, Circuit Rider—Tech. Assist. Grants for Rural 

Water Systems—Stimulus.

Program Items: 

Program Level N/A N/A $1,581,548 $1,828,627 $0 Budget Authority N/A N/A $734,881 $650,675 $0 S&E N/A N/A $41,363 $0 $0 

Total Costs N/A N/A $776,244 $650,675 $0 FTEs N/A N/A 364 0 0 

9. Eligibility Criteria 

Program Eligibility (Entities) Eligible Areas (Populations) Eligible Purpose Funding Limits Per Request Loan Terms 

Water and Waste Disposal Direct 

Loans and Grants 

Public body, not-for-profit organization, and Indian tribes Rural areas and towns with a population of 10,000 or less. Construct and improve water and waste facilities None 40 years

Water and Waste Disposal Guaranteed Loans Public body, not-for-profit orga- nization, and Indian tribes Rural areas and towns with a population of 10,000 or less. Construct and improve water and waste facilities None 40 yearsTechnical Assistance and Training Grant (TAT) Program Public, private, and nonprofit organizations Rural areas and towns with population of 10,000 or less. Provide technical assistance and training Pre-determined percentages of annual allocation N/ACircuit Rider—Technical Assistance for Rural Water Systems Public, private, and nonprofit organizations Rural areas and towns with population of 10,000 or less. Provide technical assistance and training No Cost N/A

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9. Eligibility Criteria—Continued

Program Eligibility (Entities) Eligible Areas (Populations) Eligible Purpose Funding Limits Per Request Loan Terms 

Water and Waste Facility Loans 

and Grants to Alleviate Health Risks (applied to Colonias and Native American tribes) 

Colonias and Native American 

Indian tribes 

Colonias and tribal lands Construct or improve water and 

waste facilities 

$1 M—Native American Indian 

tribes (none for Colonias) 

40 years for 

loans

Solid Waste Management Grant 

(SWM) Program 

Public body, private nonprofit 

organizations and Indian tribes 

Rural areas and towns with a 

population of 10,000 or less. 

Technical assistance to local 

and regional governments for reducing or eliminating water pollution and planning or mgmt of solid waste disposal facilities 

None N/A

Predevelopment and Planning 

Grants 

Rural communities that do not 

have resources to pay predevelopment expenses 

Rural area must be either below 

the poverty line or below 80 percent of the statewide nonmetropolitan median household income. 

Costs associated with the development of a complete application $15,000 or 75 percent of the project costs (whichever is smaller) N/A

SEARCH Grants Rural communities that do not 

have resources to pay predevelopment expenses 

Rural area must be either below 

the poverty line or below 80 percent of the statewide nonmetropolitan median household income. 

Costs associated with the development of a complete application $30,000 or 75 percent of the project costs (whichever is smaller) N/A

Emergency Community Water 

Assistance Grants 

Public body such as a municipal, county, district, authority, state or commonwealth, 

Not for profit organization, and Native American Tribe 

Rural areas with population of 

2,500 or fewer inhabitants and must also be financially stressed as well as rural 

To fund pre-development planning grants for feasibility 

studies, design assistance & tech assistance for water & waste disposal projects 

May fund up to 100 percent of 

eligible costs, not to exceed $30,000

N/A

Section 306D Water and Waste 

system Grants for Alaskan Villages, incl. technical assistance 

State of Alaska for rural or native villages Rural or native Alaskan villages Development and construction of water and waste facilities 

to improve health and sanitation conditions 

None, however 25 percent in 

matching funds from State of Alaska from non-Federal sources 

N/A

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Section 306E Grants for the Construction, Refurbishment and 

Servicing of Low or Moderate Income Household Water Well Systems 

Private, nonprofit organizations 

that are tax exempt. 

Projects must be located in 

rural areas with population of 50,000 or less. 

Development of revolving loan 

funds for construction, refurbishing, and servicing of individual household water well systems in eligible rural areas. 

Organization must contribute 

ten percent of grant amount to capitalize the fund and individual homeowner loans capped at $11,000

N/A

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10. Utilization (Participation) Data 

From 2007–present the Water and Waste Disposal Loan and Grant Program has 

obligated 9,152 loans and grants to rural communities in all 50 states.

Fiscal Year Number of Loans Number of Grants 

2007 810 957

2008 895 926

2009 909 1,604

2010 1,045 1,037

2011 * 498 471

Total 4,157 4,995

* As of July 29, 2011. 

Approximately 115 Circuit riders have been funded annually since 2008 through 

the program and have made 311,509 technical assistance calls to rural water and 

waste systems. 

11. Duplication or Overlap with Other Programs 

RD’s Water and Waste Disposal Loan and Grant program provides funding for 

construction of water and waste facilities in rural communities of 10,000 or less in 

population. 

While the GAO report on duplicative programs did not specifically address water 

and waste funding at USDA, there are a number of Federal programs that provide 

financing for water and waste infrastructure. 

Other federally-funded programs that fund water and waste infrastructure in 

rural areas include:

• State Revolving Funds (Environmental Protection Agency (EPA) pass-through 

funding-Clean Water State Revolving Fund and Drinking Water State Revolving Fund);

• EPA (State and Tribal Assistance Grants, United States-Mexico border, Tribal);

• Department of Commerce—Economic Development Agency can assist in financing infrastructure when tied to jobs and economic development;

• Department of Housing and Urban Development community development block 

grants (CDBG), Community Investment Funds (CIF), Colonias, and Tribal);

• Appalachian Regional Commission (ARC) which is implemented through RD;

• Indian Health Service; and

• Delta Regional Authority.

What sets USDA Apart from other programs?

• WEP is the only program that is exclusively focused on rural water and waste 

infrastructure needs, working only with rural areas with populations of 10,000 

or less.

• Most RD projects serve areas well below 10,000 in population. The average RD 

project serves fewer than 2000 equivalent dwelling units.

» In FY 2010, 80 percent of funded projects served populations of 5,000 or less;

» 65 percent serve communities of 2,500 or less;

» 51 percent serve populations below 1,500; and

» 43 percent were for projects serving less than 1,000 people.

• Applicants must demonstrate that they need Federal assistance because they 

cannot obtain credit from commercial lenders or investors, and they have urgent 

needs for water or wastewater improvements.

• The program is a needs-based program, where loan and grant are combined 

based on strict underwriting process to keep rates reasonable for rural residents.

• Other Federal programs serve both large and small systems. Small rural communities must compete with larger projects for limited funding.

» For example, in 2009, while 77 percent of the loans made by EPA State Revolving Funds for wastewater infrastructure upgrades went to communities 

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less than 10,000 in population, those loans represented only 23 percent of the 

total funding available.

» State Administered HUD/CDBG grants are available to communities of 

50,000 or less population and counties up to 200,000.

• The program has been recognized by OMB as one of the most effective lending 

programs in the Federal Government.

Regarding Circuit Rider, there is no overlap with RD programs which provide 

support grants and loans for water and wastewater treatment, distribution, and collection systems. 

12. Waste, Fraud and Abuse 

RD’s Water and Waste Disposal Loan and Grant programs have standardized procedures and guidance, as well as strong internal controls to prevent fraud waste and 

abuse. Vulnerability Assessments are conducted annually. In addition, management 

control reviews and State Program reviews are conducted to identify and correct potential problem with underwriting and servicing activities. The regular program and 

ARRA funding have been audited twice over the last 2 years by the USDA’s Office 

of Inspector General (OIG). No findings of fraud, waste or abuse were made in either audit. 

The September 2010 USDA OIG report (OIG Audit Report 09601–1–At, Rural 

Utilities Service Controls Over Water and Waste Disposal Loans and Grants) on program delivery stated, ‘‘Generally, we found RUS’ internal controls to be adequately 

designed and operating for the locations we reviewed.’’ Where recommended by OIG, 

the program enhanced guidance to employees to better clarify program regulations. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Distance Learning, Telemedicine, and Broadband Program. 

2. Subprograms/Department Initiatives

Description 2008 Farm 

Bill Section 

Federal

Agricultural

Improvement and 

Reform Act of 

1996 Section 

U.S. Code 7 

U.S.C. 

Distance Learning and Telemedicine Loans 6201 704 950aaa et seq.

Distance Learning and Telemedicine Grant 

Program 6201 704 950aaa et seq.

Distance Learning and Telemedicine Combination Loan-Grant Program 6201 704 950aaa et seq.

Public Television Digital Transition Grant 

Program 6014 CONACT 2005, 

Title III 

P.L. 108–447

Delta Health Care Services Grant Program 6025 CONACT § 379G 2008u 

Rural Broadband Access Loan and Loan 

Guarantee Program 6110 RE Act § 601 950bb 

Broadband Initiatives Program (STIMULUS) ARRA P.L. 111–5

Weather Radio Transmitter Grant Program 6021 CONACT § 379B P.L. 108–119

Community Connect Grant Program 6005 (*) 

Note: CONACT is the Consolidated Farm and Rural Development Act. 

* Historically appeared as an annual earmark in appropriations bills. 

3. Brief History 

The Rural Broadband Access Loan and Loan Guarantee Program was established 

by the 2002 Farm Bill; the Distance Learning and Telemedicine Programs were established by the Federal Agriculture Improvement Act of 1996. The farm bill has 

made changes to these provisions. 

4. Purpose/Goals 

Community Connect Grant Program

This program provides grants to rural communities with populations of 20,000 or 

less that do not currently have access to broadband services. The grant provides 

funding for a Community Center open to the public and broadband infrastructure 

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provided to critical facilities in the community such as public safety, local government, and educational institutions.

Public Television Digital Transition Grant Program

This program provides grants to assist public television stations serving rural 

populations in transitioning to digital broadcast television transmission. Funds may 

be used to acquire and install facilities and software necessary for the transition. 

Grant funds may also be used for associated engineering and environmental studies.

Weather Radio Transmitter Grant Program

This program provides grant funds to finance the installation of new transmitters 

to extend the coverage of the National Oceanic and Atmospheric Administration’s 

Weather Radio system (NOAA Weather Radio) in rural America. Grant funds are 

available to facilitate the expansion of NOAA Weather Radio system coverage into 

rural areas that are not covered or are poorly covered.

Delta Health Care Services Grant Program

The Delta Health Care Services Grant Program is authorized under Section 379G 

of the Consolidated Farm and Rural Development Act to provide financial assistance 

to address the continued unmet health needs in the Delta region through cooperation among health care professionals, institutions of higher education, research institutions, and other individuals and entities in the Delta Region. Grants are available to eligible entities in the Delta region serving communities of no more than 

50,000 inhabitants.

Rural Broadband Access Program

This program is designed to provide loans for funding, on a technology neutral 

basis, for the costs of construction, improvement, and acquisition of facilities and 

equipment to provide broadband service to eligible rural communities.

Distance Learning and Telemedicine Program (DLT)

DLT is designed to bring educational and health care services to rural America. 

Through loans, grants, and loan/grant combinations, RUS provides financial assistance for end-user equipment to provide enhanced learning and health care opportunities for rural residents.

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5. Success in Meeting Programmatic Purpose/Goals 

Performance measures have been developed for DLT and Farm Bill Broadband Programs as indicators of programmatic success. 

Distance Learning and Telemedicine 2007 2008 2009 2010 2011

Counties Served

Number of counties served by entities receiving distance learning 

and telemedicine funding 

Target Actual 

380392

695

586

400754

380

633

380

N/A 

1 Actual is from FY 2010 funds obligated in FY 2011. 

The 2008 Farm Bill required changes to the Rural Broadband Access loan program which was authorized under the 2002 Farm Bill, last 

revised in 2008. An Interim Rule was published on March 14, 2011. The Rural Broadband Access loan program provides funding for broadband infrastructure in communities with a population of 20,000 or less. 

Rural Broadband Access 2007 2008 2009 2010 2011

Borrowers’ Subscribers Served

Number of borrowers’ subscribers receiving new or improved 

service 

Target Actual 

190,000

356,440

240,000775,341

230,000187,399

350,000136,694

300,000

N/A 

1Funding provided under ARRA was flexible (loans, grants and loan/grant combos) and therefore more conducive to bringing broadband to rural America; therefore, regular program 

loans funds were not requested during ARRA. Telecommunications Program data also includes broadband funding under traditional infrastructure program authorized by REA. 

Rural Broadband Access ARRA 2007 2008 2009 2010 2011

Borrowers’ Subscribers Served

Number of borrowers’ subscribers receiving new or improved 

service 

Target Actual 

(1) 

(1) 

(1) 

(1) 

(1) 

(1) 

N/A 

847,239

(1) 

1 ARRA funding was not available for these years. 

Note: See section at end with all REA Title II programs (Electric and Telecom). 

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6. Annual Budget Authority (FY 2007–FY 2011) 

Program 2007 2008 2009 2010 2011

Distance Learning and Tele-medicine and Broadband $44,486 $54,565 $63,780 $84,691 $68,090Broadband ARRA (1) (1) $0 $2,423,536 (1) 

1 ARRA funding was not available for these years. 

Note: See section at end with all REA Title II programs (Electric and Telecom). 

7. Annual Outlays (FY 2002–FY 2011) 

(Dollars in thousands) 

2007 2008 2009 2010 2011

Distance Learning and Telemedicine and Broadband Program $46,428 $48,542 $134,694 $69,164 $305,143

Note: Outlays are not a one to one correlation with obligations. Programs disburse over numerous years. Undisbursed balances are carried forward for future year outlays. 

Note: See section at end with all REA Title II programs (Electric and Telecom). 

8. Annual Delivery Cost (FY 2002–FY 2011) 

Program 

2007 

Amount 

($000) 

2008 

Amount 

($000) 

2009 

Amount 

($000) 

2010 

Amount 

($000) 

2011 

Amount 

($000) 

Treasury Distance Learning Loans, Distance Learning and Telemedicine Grants.

Program Items: 

Program Level $59,400 $43,242 $54,741 $0 $30,255 Budget Authority $27,691 $30,429 $33,366 $0 $30,255S&E $1,930 $1,875 $2,048 $2,125 $2,125

Total Costs $29,621 $32,304 $35,414 $2,125 $26,974 FTEs 17 17 18 18 18

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Con Farm & RD Act, Sec 379G Health Care Services Grant.

Program Items: 

Program Level $0 $2,994 Budget Authority $0 $2,994 S&E $0 $0

Total Costs $0 $2,994 FTEs 0 0

Broadband Telecommunication Loans and Grants, and Public Broadcasting System Grants.

Program Items: 

Program Level $266,252 $459,124 $425,069 $78,924 $343,533 Budget Authority $20,689 $30,076 $34,681 $10,006 $40,145 S&E $7,618 $7,398 $8,85 $8,387 $8,387

Total Costs $28,307 $37,474 $42,766 $18,393 $48,532 FTEs 70 66 70 71 71

Direct Broadband Telecommunications Loans—Treasury Rate—Stimulus, and Broadband Telecommunications Grants—Stimulus.

Program Items: 

Program Level $3,529,091 $0 Budget Authority $2,423,536 $0 S&E (a) (a)

Total Costs $2,423,536 $0 FTEs 0 0 

a RUS is unable to provide a break out of S&E costs for Recovery Act implementation. 

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9. Eligibility Criteria 

Program Eligibility (Entities) Eligible Areas (Populations) Eligible Purpose Funding Limits Per Request Loan Terms, if Applicable 

Distance Learning and Telemedicine Loans Public body, Indian tribe, co- operative, nonprofit, limited dividend or mutual association, municipality, libraries, corporations and 

other legally-organized entities. 

Areas outside incorporated or 

unincorporated cities with population over 20,000. 

In addition to the DLT Combination Loan-Grant Program purposes, loans may 

be used for certain broadcasting and operational costs, except salaries and administrative expenses 

Minimum loan-grant amount: 

$50,000

Maximum amount: $10 Million 

Loan interest rate is the 

Treasury interest rate at date of advance; up to 10 year amortization, determined by useful life of facilities financed.

Distance Learning and Telemedicine Grant Program Public body, Indian tribe, co- operative, nonprofit, limited dividend or mutual association, municipality, libraries, corporations and 

other legally-organized entities. 

RUS electric and Telephone 

Loan borrowers not eligible. 

Areas outside incorporated or 

unincorporated cities with population over 20,000. 

Smaller communities receive 

more points. 

To provide end-user equipment and programming 

that delivers distance learning and telemedicine services into eligible areas. 

Minimum grant amount: 

$50,000. 

Maximum grant amount: 

$500,000. 

15 percent matching funds 

required.

Distance Learning and Telemedicine Combination 

Loan-Grant Program 

Public body, Indian tribe, cooperative, nonprofit, limited dividend or mutual association, municipality, libraries, corporations and 

other legally-organized entities. 

RUS electric and Telephone 

Loan borrowers not eligible. 

Areas outside incorporated or 

unincorporated cities with population over 20,000. 

In addition to the DLT Grant 

Program purposes, loans may provide DLT across a single facility, may provide new building space, including land, buildings, and building construction, and telecommunications transmission facilities. 

Minimum loan-grant amount: 

$50,000

Maximum amount: $10 Million 

Loan interest rate is the 

Treasury interest rate at date of advance; up to 10 year amortization, determined by useful life of facilities financed.

Public Television Digital 

Transition Grant Program 

Public digital television stations that serve rural areas Areas outside incorporated or unincorporated cities with 

population over 20,000—station applicants must demonstrate core rural coverage 

Grant funds may be used to 

acquire, lease, and/or install facilities and software necessary for transition to digital signal 

Maximum amount: $ 750,000 

per applicant per year 

N/A

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Delta Health Care Services 

Grant Program 

Consortium of regional institutions of higher education, 

academic health and research institutes and economic development entities located in the Delta region 

The distinct northwest section of the state of Mississippi, known as the 

Delta Region, consisting of 18 counties 

Further limited to include 

only those areas in the Delta Region (a) not included within the boundaries of any incorporated or unincorporated city, village, or borough having a population greater than 50,000 and (b) any urbanized area contiguous and adjacent to a city or town described in (a). 

The development of health 

care services, health education programs, health care job training programs and the development and expansion of public healthrelated facilities 

Minimum Grant amount: 

$50,000

N/A

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9. Eligibility Criteria—Continued

Program Eligibility (Entities) Eligible Areas (Populations) Eligible Purpose Funding Limits Per Request Loan Terms, if Applicable 

Rural Broadband Access 

Loan and Loan Guarantee Program 

andBroadband Initiative Program (Stimulus) 

RUS makes broadband loans 

and loan guarantees to legally organized entities providing, or proposing to provide, broadband services in eligible rural communities. Types of eligible entities include: cooperative, nonprofit, limited dividend or mutual associations, limited liability companies, Indian tribes and tribal organizations, and commercial organizations. Individuals or partnerships are not eligible. 

An eligible rural area means 

any area, as confirmed by the latest decennial census of the Bureau of the Census, which is not located within(1) a city, town, or incorporated area that has a 

population of greater than 20,000 inhabitants; or 

(2) an Urbanized Area contiguous and adjacent to a 

city or town that has a population of greater than 50,000 inhabitants.

The proceeds of a loan may 

be used to carry out a project only if, as of the date on which the application is submitted:

(i) not less than 25 percent of the households 

in the proposed service territory is offered broadband service by not more than one incumbent service provider; and 

(ii) broadband service is 

not provided in any part of the proposed service territory by 3 or more incumbent service providers. 

Finance the construction, improvement, and acquisition 

of facilities and equipment to provide broadband service in eligible rural communities; 

Finance broadband facilities 

leased under the terms of a capital lease, as defined in generally accepted accounting principles; financing will be limited to 5 years of lease costs; 

Finance the acquisition by an 

eligible entity of another system, lines or facilities if the acquisition is necessary and incidental to furnishing or improving rural broadband service (can not exceed 50 percent of requested loan amount); and 

Refinance an outstanding obligation on another telecommunications loan made 

under the RE Act. The refinancing cannot exceed 40 percent of the loan amount. 

Maximum loan amount: $75 

million. 

Maximum four percent loans 

are limited by the NOFA 

Interest rates: 4 percent Treasury rate at date of advance private lender—set rate for 

guaranteed loans. 

(Amortization determined by 

life of the facilities)

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Weather Radio Transmitter 

Grant Program 

Public body; an Indian tribe; 

a cooperative, nonprofit, limited dividend or mutual association; municipality; corporations and other legally organized entities 

A single community outside 

incorporated or unincorporated cities with population over 20,000 which does not have broadband 

To build broadband infrastructure and establish a 

community center which offers free public access to broadband for 2 years. 

Min. $50,000Max. $1,000,000Amounts are published in 

NOFAs and may vary 

N/A

Community Connect Grant 

Program 

Public body; an Indian tribe; 

a cooperative, nonprofit, limited dividend or mutual association; municipality; corporations and other legally organized entities 

A single community outside 

incorporated or unincorporated cities with population over 20,000 which does not have broadband 

To build broadband infrastructure and establish a 

community center which offers free public access to broadband for 2 years. 

Min. $50,000Max. $1,000,000Amounts are published in 

NOFAs and may vary 

N/A

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10. Utilization (Participation) Data 

• DLT: As of September 30, 2010, there were 26 active borrowers (no loan funds 

have been available).

• There are 115 public television digital transition grant awardees.

• There have been no Delta Health grant awards to date. Awards are expected 

September 2011.

• For the Broadband Loan and Loan Guarantee Program, as of September 30, 

2010, there were 71 active borrowers.

• There have been 217 NOAA Weather Radio grant awards.

• There have been 197 Community Connect broadband grant awards. 

11. Duplication or Overlap with Other Programs 

We are unaware of other Federal programs that fund distance learning and telemedicine services with the same requirements and eligibility as the USDA program. 

Funding for emergency communications may also be available from other agencies 

such as NOAA. USDA and NOAA work closely together. 

In 2009–2010, the Department of Commerce was authorized under ARRA to provide grant funding for broadband infrastructure. Extensive coordination occurred between both Agencies. 

Funding for DLT services may be available from other Federal agencies such as 

FCC and HHS RUS coordinates closely with the Agencies and we participate in 

each other’s outreach events. 

12. Waste, Fraud and Abuse 

RUS closely monitors loan performance to ensure that there is no fraud, waste, 

or abuse. If any is suspected, RUS officials work closely with the OIG to investigate 

and, if necessary, prosecute any offender. For example, Sequelle Communications, 

a pilot Broadband Loan Program borrower, was referred to the OIG for investigation 

by RUS. With the assistance of RUS, the former CEO of Sequelle was convicted of 

money laundering and conspiracy, sentenced to 18 months in prison, and required 

to pay approximately $848,000 in retribution. In addition, another officer of Sequelle 

and another company pled guilty to money laundering, received probation sentences, 

and were ordered to pay restitution of $549,000 and $1.5 million, respectively. RUS 

is beginning to receive some restitution payments and should continue to receive 

them over many years as the court did not impose any deadline for when the entire 

amount should be paid. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Electric Programs. 

2. Subprograms/Department Initiatives 

Subprograms include:

Description 2008 Farm 

Bill Section RE Act Section U.S. Code 7 U.S.C. 

Hardship (Direct) Loan Program 6102 305(c)(1) 935(c)(1) 

Federal Financing Bank Guaranteed Loan 

Program 6102 306 936

Renewable Loan Program 6108 317 940(g) 

High Energy Cost Grants & Loans Program:

• High Energy Cost Grants 918(a)(1)

• Denali Commission Grants 918(a)(2)

• State Bulk Fuel Revolving Fund Grants 19 918(a)(3)

Bond and Note Guarantee Program for Publicly Issued Securities 6106 313A 940(c)(1) 

3. Brief History 

The Rural Electrification Direct and Guaranteed Loan Programs and the High 

Energy Cost Grant Program have permanent authorizations under the Rural Electrification (RE) Act of 1936 (7 U.S.C. 901 et seq.) and are not authorized under the 

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farm bill. However, the farm bill can and often does amend the permanent authorities. The bond and note guarantee program under section 313A of the RE Act was 

authorized under the 2008 Farm Bill and is authorized through September 30, 2012. 

Subtitle B of Title VI of the 2008 Farm Bill modified and added new authority 

under the RE Act as follows:

• Section 6101, Energy Efficiency Programs, amended sections 2 and 4 of the 

RE Act to explicitly authorize loans to electric borrowers to implement energy 

efficiency programs, codifying long-standing USDA policy.

• Section 6102, Direct Electric Loan Authority, amended section 4 of the RE 

Act reinstating direct lending authority for hardship loans and other direct 

loans. It deleted language requiring the Federal Financing Bank (FFB) to make 

loans to electric borrowers under the section 306 guaranteed loan program. 

Funding levels will be set by appropriations. FFB loan guarantees are still 

available as provided by appropriations.

• Section 6103, Deferments for Energy Efficiency and Demand Reduction,

amended section 12 to allow electric borrowers to defer principal and interest 

payments on direct loans for up to 60 months to make loans to residential, commercial, and industrial customers for energy audits and installation of energy 

efficiency, and/or demand reduction measures and devices.

• Section 6104, Definition of Rural Area, amended the section 13 definition 

of a ‘‘rural area’’ for purposes of electric loans eligibility by cross reference to 

section 343(a)(13)(C) of the Consolidated Farm and Rural Development Act (7 

U.S.C. 1991(a)(13)(C)) to mean any area that excludes a city or town of 20,000 

or more, or is an area within the service area of a borrower with an outstanding loan under titles I through V of the RE Act. This amendment expands 

eligibility for electric loans for rural areas from the prior limit to non-urbanized 

places of less than 2,500 and codifies the ‘‘once rural, always rural’’ policy under 

the RE Act.

• Section 6105, Substantially Underserved Trust Areas, provides new authority Secretary to adapt RUS loans and grants requirements to facilitate the 

construction, acquisition, or improvement of infrastructure projects in ‘‘Substantially underserved trust areas’’ defined as Native American trust lands where 

more than 20 percent of population does not have electric, telecommunications, 

broadband, or water service.

• Section 6106, Guarantees for Bonds and Notes Issued for Electrification 

or Telephone Purposes, amended section 313A to extend authority to guarantee bonds and notes issued by nonprofit cooperative lenders to September 30, 

2012 at an annual authorization of $1 billion.

• Section 6108, Electric Loans for Renewable Energy, added new section 

317 providing authority to make loans for electric generation from renewable 

energy resources for resale to rural and nonrural residents. Eligible renewable 

energy resources include energy conversion systems fueled from solar, wind, hydropower, biomass, or geothermal sources. The interest rate for these loans is 

set at the average tax-exempt municipal bond rate of similar maturities. Funding is dependent on appropriations.

Since 2005, the electric loan programs have approved over $34.4 billion in financing for rural electric systems. In 2010, the program approved 174 loans totaling $7.1 billion. The funds were used by rural utilities to construct new or 

improved electric distribution, transmission and generation facilities to provide 

electric service in rural areas, supporting economic development and modernizing community infrastructure. The investment of the electric loan funds creates and maintains jobs in rural communities. Interest in financing renewable 

energy and energy efficiency programs through the electric programs is growing. In 2010, the program approved over $313.3 million in loan guarantees for 

new renewable electric generation projects. The electric programs have adopted 

a progressive management approach by enhancing use of automated systems to 

support loan and grant management and innovating new products and procedures to support renewable energy initiatives. The program continues its commitment to, maintaining a workplace that values employees, and provides highquality service to its customers. 

4. Purpose/Goals 

The RE Act authorized assistance for rural electrification and for furnishing and 

improving electric service in rural areas, including the construction and operation 

of generating plants, electric transmission and distribution lines, and assisting elecVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 01105 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
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tric borrowers to implement demand side management, energy efficiency and conservation programs, and on-grid and off-grid renewable energy systems. 

In support of this purpose, the RE Act authorizes a variety of loan, loan guarantee, and grant programs, including the rural electrification loan programs (RE 

Act, sections 4, 305 and 306), the nonprofit lender bond and note guarantee program 

(section 313A), the High Energy Cost Grant Program (section 19), and the Renewable Energy Loan Program (section 317).

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5. Success in Meeting Programmatic Purpose/Goals 

The RUS electric loan programs have exceeded their targets from FY 2008 to FY 2010. In FY 2010, the electric programs approved 174 

direct loans and loan guarantees totaling $7.1 billion. USDA approved 160 distribution loans totaling about $3.5 billion, 13 power supply (generation and transmission) Federal Financing Bank (FFB) loans totaling about $3.2 billion, and four direct hardship distribution loans totaling $100 million. In addition, USDA approved one nonprofit lender bond and note guarantee of $0.5 billion for relending for eligible electric and telephone purposes. 

Electric 2007 2008 2009 2010 2011

Number of program borrowers’ consumers receiving new or improved electric service Target Actual 2,390,000 8,000,000 7,125,000 7,130,000 6,125,000 7,100,000 7,100,000 9,420,832 6,125,000 N/A 

6. Annual Budget Authority (FY 2007–FY 2011) 

Budget Authority (in thousands) 

Program 2007 2008 2009 2010 2011

Electric Loans $3,614 $119.2 $0 $0 $699High Energy Cost Grants $25,740 $19,860 $17,500 $17,500 $11,976

7. Annual Outlays (FY 2002–FY 2011) 

Account Name Account Number 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Target 

Rural Electric and Telephone Program 1 1230 $160,070 $82,267 $799,017 $606,031 $400,013High Energy Cost Grants 2042 $31,550 $16,422 $22,347 $17,376 $37,000

1Outlays are reported under one account which includes both the Electric and Telephone programs. 

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8. Annual Delivery Cost (FY 2002–FY 2011) 

Program 

2007 

Amount 

($000) 

2008 

Amount 

($000) 

2009 

Amount 

($000) 

2010 

Amount 

($000) 

2011 

Amount 

($000) 

Direct Electric Loans, Treasury Electric Loans, Municipal Electric Loans, FFB Electric Loans, Guaranteed Electric Loans and Electric 

Underwriting Loans for Bonds and Notes.

Program Items: 

Program Level $3,889,764 $7,099,300 $6,600,000 $7,100,000 $6,600,000 Budget Authority $3,640 $119 $0 $0 $0S&E $19,876 $19,300 $21,094 $21,886 $21,886

Total Costs $23,516 $19,419 $21,094 $21,886 $22,585 FTEs 182 171 185 185 185

High Energy Cost Grants.

Program Items: 

Program Level $19,687 $21,260 $37,000 $17,954 $11,976 Budget Authority $19,687 $21,260 $37,000 $17,954 $11,976 S&E (a) (a) (a) (a) (a) 

Total Costs $19,687 $21,260 $37,000 $17,954 $11,976 FTEs (a) (a) (a) (a) (a) 

aS&E funds associated with the High Energy Cost Grants program is included in the S&E section for the entire electric program. 

9. Eligibility Criteria 

Program Eligibility (Entities) Eligible Areas (Populations) Eligible Purpose Funding Limits Per Request Loan Terms, if Applicable 

Hardship Loan Program (Section 305) Corporations, States, Terri- tories, and Subdivisions 

and Agencies, Municipalities, People’s Utility Districts, and Distribution Cooperatives, nonprofit and limited-dividend, Or Mutual Associations 

Rural areas outside the 

boundaries of a city or town of more than 20,000 population and areas served by an existing electric borrower. 

Electric distribution and subtransmission facilities Not Applicable Up to 35 years, based on the expected useful life of the 

facilities financed by the loan

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FFB Guaranteed Loan Program (Section 306) Corporations, States, Terri- tories, and Subdivisions 

and Agencies, Municipalities, People’s Utility Districts, and Cooperatives, nonprofit and limited-dividend, Or Mutual Associations 

Rural areas outside the 

boundaries of a city or town of more than 20,000 population and areas served by an existing electric borrower. 

Electric distribution, subtransmission, bulk transmission, and generation facilities, energy efficiency investments, and renewable 

energy systems 

No limit. Up to 35 years, based on the 

expected useful life of the facilities financed by the loan

Bond and Note Guarantee 

Program (Section 313A) 

Cooperative or other lenders 

organized on a nonprofit basis 

None Proceeds to be used to make 

loans for eligible electric or telephone purposes, excluding electric generation, or to refinance bonds or notes previously issued for such purposes. 

None 20 years (by regulation) 

Annual guarantee fee of 30 

basis points supports the Rural Economic Development Loan and Grant (REDLEG) program under section 313(b)(2)(A) of the RE Act.

High Energy Cost Grants & 

Loans Programs:High Energy Cost Grants Persons, For Profit and Not 

For Profit Businesses, State & Local Governments, and Federally-Recognized Indian Tribes & Tribal entities 

Extremely high energy cost 

communities with annual average residential energy expenditures is 275% of national average. 

Energy distribution, transmission and generation facilities (including energy efficiency & renewable energy) serving eligible communities Administrative and planning costs may not exceed 4% of funds provided N/A 

Denali Commission Grants Denali Commission Extremely high energy cost 

communities in Alaska 

Energy distribution, transmission and generation facilities (including energy efficiency & renewable energy) serving eligible communities in Alaska. Administrative and planning costs may not exceed 4% of funds provided N/A 

State Bulk Fuel Revolving 

Fund Grants 

State Entity existing as of 11/

9/2000

Rural areas where fuel cannot be shipped by surface 

means 

Establishment of Fuel Purchase Revolving Fund Administrative and planning costs may not exceed 4% of 

funds provided 

N/A 

1098

10. Utilization (Participation) Data 

The electric programs services 667 active electric borrowers and grantees in 46 

states, Puerto Rico, American Samoa, and the Republic of the Marshall Islands. 

During FY 2011, the Agency has approved more than $1.9 billion in loan guarantees. 

The High Energy Cost Grant Program’s FY 2010 Notice of Funding Availability 

for $15.5 million in competitive grants received over 100 applications from 18 states 

and eight eligible insular areas. 

11. Duplication or Overlap with Other Programs 

The Rural Electrification Loan programs are the primary source of electric infrastructure financing for rural electric providers in 46 states. All RUS loans must 

demonstrate financial feasibility, assurances of repayment, and adequate loan security. There is no overlap between the electric loan program and other USDA energy 

loan and grant programs because electric infrastructure is not an eligible purpose 

under those programs. The U.S. Department of Energy Loan Guarantee Programs 

are intended to provide incentives for high risk technology innovation, advanced nuclear power generation, and advanced clean energy technology projects, but does not 

support loans for traditional electric infrastructure. 

The High Energy Cost Grant Program differs from other USDA and Department 

of Energy grant programs in that it is targeted at extremely high cost rural communities, includes a broad range of eligible energy project activities, including traditional infrastructure, renewable energy and energy efficiency, and permits applications from tribes, tribal entities, state and local governments, school districts, and 

other for profit and not for profit entities, that are not eligible under other loan or 

grant programs. 

12. Waste, Fraud and Abuse 

The Electric Programs does not have any outstanding issues with respect to overpayments, waste, fraud, or abuse identified by the Department or other government 

agency. There are no outstanding audits for these programs. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Telecommunications Program. 

2. Subprograms/Department Initiatives

Description 2008 Farm 

Bill Section RE Act Section U.S. Code 7 U.S.C. 

Telecom Hardship Loan Program (Direct) N/A 305 935(d)(1) 

Telecom Treasury Rate Loan Program N/A 305(d)(2) 935

Telecom Guaranteed Loan Program (FFB) N/A 306 936

3. Brief History 

The Telecommunications Loan Program has permanent authorizations under the 

Rural Electrification Act (REA) of 1936. 

4. Purpose/Goals 

The Telecommunications Program finances the improvement or extension of telecommunications service in rural areas through telecommunications borrowers. Borrowers can apply for direct (Treasury rate) loans at an interest rate which is tied 

to the government’s cost of money. Borrowers can also request FFB loans and guaranteed loans. Loans at five percent are available to borrowers that further qualify 

under ‘‘hardship’’ conditions, which include subscriber density factors and net income projections of the borrowers.

1099

5. Success in Meeting Programmatic Purpose/Goals 

In FY 2010, the telecommunications program approved $690 million in infrastructure program loans. This funding will allow rural telecommunications providers to deploy new or improved service to more than 136,694 rural subscribers. For the last 2 years, 90 percent of the 

loans financed have been for fiber-to-the-home projects to provide fiber-optic service to rural homes and businesses. 

(Dollars in thousands) 

Telecommunications 2007 2008 2009 2010 2011

Number of borrowers’ subscribers receiving new or improved 

service 

Target Actual 

194,699

155,135

194,931182,174

180,000175,416

171,000136,694

120,000

Note: Telecommunications includes broadband data. Rural Broadband Access chart also includes broadband data. 

6. Annual Budget Authority (FY 2007–FY 2011) 

Budget Authority (in thousands) 

2007 2008 2009 2010 2011

$605 $3,595 $525 $0 $0

7. Annual Outlays (FY 2002–FY 2011) 

Account Name Account Number 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Target 

Rural Electric and Telephone Program 1 1230 $160,070 $82,267 $799,017 $606,031 $400,013

1Outlays are reported under one account which includes both the Electric and Telephone programs. 

1100

8. Annual Delivery Cost (FY 2002–FY 2011) 

Program 

2007 

Amount 

($000) 

2008 

Amount 

($000) 

2009 

Amount 

($000) 

2010 

Amount 

($000) 

2011 

Amount 

($000) 

Direct Telecommunications Loans, Treasury Telecommunications Loans, and FFB Telecommunications Loans.

Program Items: 

Program Level $376,736 $685,170 $690,000 $690,000 $690,000 Budget Authority $392 $3,594 $525 $0 $0 S&E $8,688 $8,431 $11,047 $9,567 $9,567

Total Costs $9,080 $12,026 $11,572 $9,567 $9,567 FTEs 80 80 97 81 81 

9. Eligibility Criteria 

Program Eligibility (Entities) Eligible Areas (Populations) Eligible Purpose Funding Limits Per Request Loan Terms, if Applicable 

Telecom Hardship Loan Program (Direct) For-profit and nonprofit cor- porations that do or will 

provide voice and data telecom service 

Areas outside incorporated or 

unincorporated cities with population over 5,000

To build, acquire, extend, improve and refinance telephone infrastructure Minimum loan amount: $50,000 Maximum loan amount: None 5 percent fixed interest rate; up to 35 year amortization, determined by the life of facilities financed.

Telecom Treasury Rate Loan 

Program 

For-profit and nonprofit corporations that do or will 

provide voice and data telecom service 

Areas outside incorporated or 

unincorporated cities with population over 5,000

To build, acquire, extend, improve and refinance telephone infrastructure Minimum loan amount: $50,000 Maximum loan amount: None Treasury interest rate at date of advance; up to 35 year amortization, determined 

by the life of facilities financed.

Telecom Guaranteed Loan 

Program (FFB) 

For-profit and nonprofit corporations that do or will 

provide voice and data telecom service 

Areas outside incorporated or 

unincorporated cities with population over 5,000. 

To build, acquire, extend, improve and refinance telephone infrastructure. Minimum loan amount: $50,000 Maximum loan amount: None Treasury interest rate plus 1⁄8 percent; up to 35 year am- ortization, determined by 

useful life of facilities financed. 

1101

10. Utilization (Participation) Data 

As of September 30, 2010, there were 481 active borrowers. 

11. Duplication or Overlap with Other Programs 

We are not aware of other Federal programs that provide funding for broadband 

infrastructure with the same requirements and objectives as this program. In 2009–

2010, the Department of Commerce was authorized under the American Recovery 

and Reinvestment Act to provide grant funding for broadband infrastructure. Additionally, funding is provided to RUS telecommunications borrowers from the Federal 

Communications Commission (FCC) through the universal service fund. These funds 

are used as revenue and are considered to be part of the RUS borrower’s ability to 

repay Federal debt. 

12. Waste, Fraud and Abuse 

We are not aware of any examples of waste, fraud or abuse under this program. 

All previous GAO and OIG recommendations have been completed. There are no 

outstanding audits for these programs. 

13. Effect of Administrative PAYGO 

None. 

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE—RURAL

BUSINESS-COOPERATIVE SERVICE

1. Program Name 

Rural Business Opportunity Grants (RBOG). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

RBOG was authorized by Section 306(a)(19)(C)(ii) of the Consolidated Farm and 

Rural Development Act (7 U.S.C. 1926(a)(19)(C)(ii) and reauthorized by the Food, 

Conservation, and Energy Act of 2008 (2008 Farm Bill), Section 6003 (Pub. L. 110–

246). 

In addition to a national pool of funds, the program has historically operated two 

Congressionally Mandated set-asides—one for Native Americans and another for 

Rural Economic Area Partnership (REAP) zones. 

4. Purpose/Goals 

RBOG promotes sustainable economic development in rural communities with exceptional needs through provision of training and technical assistance for business 

development, entrepreneurs, and economic development officials and to assist with 

economic development planning. 

RBOG is primarily a training and technical assistance program. Funds may be 

provided for development of export markets; feasibility studies; development of long 

term trade strategies; community economic development planning; business training 

and business based technical assistance for rural entrepreneurs and business managers; establishment of rural business incubators; and assistance with technology 

based economic development. The types of projects that may be funded could include 

identification and analysis of business opportunities that will utilize local material 

and human resources; leadership development training to existing or prospective 

rural entrepreneurs and managers; business support centers; centers for training, 

technology and export trade; and, economic development planning. 

5. Success in Meeting Programmatic Purpose/Goals 

In Fiscal Year (FY) 2010, the 27 grants awarded to residents and businesses in 

17 states totaled $2.6 million and created or saved more than 990 jobs. A $249,340 

grant was awarded to Ecotrust, an organization based in Portland, Oregon, that 

seeks to create economic opportunity, social equity and environmental well-being by 

demonstrating new business models based on economic, social and environmental 

principles, to support their FoodHub initiative, an online directory and marketplace 

that makes it easy for regional food buyers and sellers to find each other, connect 

and do business. The grant will aid Ecotrust in increasing recruitment of producers 

and buyers in rural communities and providing the training and assistance necessary to ensure FoodHub supports their goals. 

6. Annual Budget Authority (FY 2002–FY 2011) 

RBOG budget authority includes:

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RBOG 

(in millions of dollars) 

2007 2008 2009 2010 2011

Budget Authority $2.97 $2.482 $2.483 $2.483 $2.478

7. Annual Outlays (FY 2002–FY 2011) 

RBOG annual outlays included:

Account Name Account Number 

(in millions of dollars) 

2007

Actual 

2008

Actual 

2009

Actual 

2010

Actual 

Rural Business Program Account 1902 (RBOG line item) $3.1 $4.1 $4.4 $2.9M 

8. Annual Delivery Cost (FY 2002–FY 2011) 

RBOG annual delivery costs were:

RBOG 

(in millions of dollars) 

2007 2008 2009 2010 2011

Program Level $2.97 $2.482 $2.483 $2.483 $2.478

Budget Authority $2.97 $2.482 $2.483 $2.483 $2.478

9. Eligibility Criteria 

Rural public bodies, rural nonprofit corporations, rural Indian tribes, and cooperatives with primarily rural members that conduct activities for the mutual benefit 

of the membership are eligible provided they have sufficient financial strength and 

expertise to carry out the activity to be funded. 

10. Utilization (Participation) Data 

The program is annually over-subscribed (applications received exceed available 

funding). Due to the limited amount of funding available, Rural Development has 

limited the number of applications individual states may submit and capped the 

maximum grant amount (applies to the national pool only). In 2010 USDA received 

424 eligible applications totaling $60 million; only 27 awards totaling $2.6 million 

could be funded. 

11. Duplication or Overlap with Other Programs 

The program is unique in that the focus is on provision of technical assistance 

to priority communities (e.g., persistent poverty and economic distress) as well as 

sponsoring best practices for economic development activities that are transferable. 

While the program objective is unique, RBOG complements multiple other Rural 

Development (RD) programs including the Rural Business Enterprise Grant, Community Facilities and Rural Community Development Initiative programs. Further, 

the RBOG project activities can be leveraged with other community development 

programs outside of the Department. 

12. Waste, Fraud and Abuse 

There are no reports or audits from GAO and OIG on the RBOG program. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Rural Cooperative Development Grants (RCDG). 

2. Subprograms/Department Initiatives 

Appropriate Technology Transfer for Rural Areas (ATTRA). 

Cooperative Research Agreements. 

The Small Socially-Disadvantaged Producer Grants (SSDPG). 

1103

Value-Added Agricultural Market Development Grant Program (VAPG). 

Agricultural Marketing Resource Center Grants (AgMRC). 

3. Brief History 

RCDG was authorized by section 310B(e) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1932(e)). Regulations are found in 7 CFR part 4284, subparts A and F. 

ATTRA was authorized by P.L. 104–37 and amended by Section 6016 of the farm 

bill. It was first authorized by the 1985 Farm Bill and the Department received its 

first appropriation to start the project in FY 1987. In FY 1990, ATTRA was transferred to the U.S. Fish and Wildlife Service and then in FY 1996 the authority to 

the Rural Business-Cooperative Service (RBS) for administration. ATTRA is located 

on the University of Arkansas campus at Fayetteville, Arkansas, and functions as 

an information and technical assistance center staffed with sustainable agriculture 

specialists accessible nationally by toll-free telephone. 

Cooperative Research Agreements were authorized by the Cooperative Marketing 

Act of 1926, (7 U.S.C. 453). 

Formerly known as the Small Minority Producer Grant program, SSDPG was authorized by Public Law 109–97 under the rural cooperative development grants authorized under 310(b) of the Consolidated Farm and Rural Development Act (7 

U.S.C. 1932). FY 2006 was the first year this program was administered. 

VAPG was authorized by the Agricultural Risk Protection Act of 2000 and amended by the 2002 and 2008 Farm Bill. 

AgMRC was developed in 2001 and is operated by the Value-Added Agriculture 

Program at Iowa State University Extension and the Arthur Capper Cooperative 

Center at Kansas State University. AgMRC actively recruits other institutions, particularly land-grant institutions and USDA affiliated institutions for special grant 

projects or subcontracts. More than 22 states have partnered with AgMRC since 

2002, and a map of those relationships is available. 

4. Purpose/Goals 

The purpose of RCDG is to establish and operate centers for cooperative development to improve the economic condition of rural areas through the development of 

new cooperatives and improving operations of existing cooperatives. RCDG’s improve the economic condition of rural areas by promoting a range of cooperative development activities. 

Grants are made to nonprofit corporations and institutions of higher education to 

operate centers for cooperative development. The centers address rural economic 

problems in two ways. First, a center brings together expertise in cooperative development and cooperative business operations that would otherwise be more difficult 

to obtain. Second, these experts in cooperative development facilitate new cooperative businesses and improve the operations of existing cooperatives through technical assistance and educational programs. Consequently, RCDG’s promote the creation or retention of jobs in rural areas through the development of new rural cooperatives, value-added processing and other rural businesses. 

ATTRA provides information to farmers and other rural users on a variety of sustainable agricultural practices that include both crop and livestock operations. The 

program encourages agricultural producers to adopt sustainable agricultural practices, which allow for them to maintain or improve profits, produce high quality food 

and reduce adverse impacts to the environment. 

Cooperative Research Agreements Program is a partnership program with the nation’s colleges and universities that leverage our financial and human resources to 

conduct research on the problems and opportunities for the cooperative form of business. Cooperative agreements are awarded to 1862 and 1890 Land-Grant Universities, other institutions of higher education, and to nonprofits. Cooperative agreements are used to encourage research on critical issues vital to the development and 

sustainability of cooperatives as a means of improving the quality of life in America’s rural communities. 

SSDPG provides grants to assist small, minority agricultural producers in rural 

areas provides funding for cooperatives or associations of cooperatives whose primary focus is to provide assistance to such producers, and whose governing board 

and/or membership is comprised of at least 75 percent socially disadvantaged members. Grants may be used for developing business plans, conducting feasibility studies, or developing marketing plans for farmers, ranchers, loggers, agricultural harvesters, and fishermen. 

VAPG enable producers of agricultural commodities to participate in the economic 

returns found in the value-added market. Grants may be used to develop business 

plans and develop strategies for creating marketing opportunities. Grants may also 

1104

be used for feasibility studies and to provide capital to establish alliances or business ventures allowing producers to better compete in domestic and international 

markets. These grants for expansion, modernization or start-up, enhance the local 

job market mix and improve the local tax base. As a result, the overall local rural 

economy is stimulated, jobs are created, and quality of life improves. 

AgMRC answers questions and provides information to media, investors, bankers, 

consultants and agricultural students on specific topics.

1105

5. Success in Meeting Programmatic Purpose/Goals 

RCDG performance includes: 

Performance Measures 2007 2008 2009 2010 2011

Rural Cooperative Development Grants: 

Number of Cooperatives and prospective cooperative groups assisted 200 225 195 300 300Program Dollars (in thousands) $6,217 $8,933 $8,765 $14,290 $14,487

Value-Added Producer Grants (discretionary): 

Proposed, new, or expanded Value-Added businesses assisted 185 151 142 0 277Program Dollars (in thousands) $21,203 $23,801 $19,389 $0 $37,736

6. Annual Budget Authority (FY 2002–FY 2011) 

Annual budget authority was: 

RBS Coop Grant Programs (in thousands) 2007 2008 2009 2010 2011

Rural Cooperative Development Grants, Appropriate Technology Transfer, Cooperative Research Agreements, and Grants to Assist Minority Producers $6,218 $8,934 $8,769 $14,293 $14,487Value-Added Agricultural Market Development Grant Program and Agricultural 

Marketing Resource Center Grants $23,801 $20,333 $20,657 $17,367 $20,367

7. Annual Outlays (FY 2002–FY 2011) 

Annual outlays were: 

Account Name Account Number 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual 

Cooperative Development Grants 1900 $31,488 $29,685 $26,955 $33,880 $31,732

Annual obligations were: 

1106

Account Name Account Number 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual 

Cooperative Development Grants 1900 $29,875 $29,506 $32,399 $15,393 $48,589

Note: Outlays are not a one to one correlation with Budget Authority. Some programs disburse over numerous years. Undisbursed balances 

are carried forward for future year outlays. 8. Annual Delivery Cost (FY 2002–FY 2011) 

2007 2008 2009 2010 2011

Rural Cooperative Development Grants, Appropriate Technology Transfer, Cooperative Research Agreements, and Grants to Assist Minority 

Producers.

Program Level $6,218 $8,934 $8,769 $14,293 $14,487 Budget Authority $6,218 $8,934 $8,769 $14,293 $14,487 Administrative Costs (Direct) $246 $214 $262 $157 $157 Administrative Costs (Indirect) N/A N/A N/A $403 $403

Total Costs $6,464 $9,148 $9,031 $14,853 $15,047 

FTEs 2 2 2 2 2

Performance measure: No. Groups assisted 187 175 150 300 360 Cost per Measure (unit cost) $34.57 $52.27 $60.21 $49.51 $41.80

Value-Added Agricultural Product Market Development Grants & Agricultural Mtng. Res. Center Grants

Program Level $23,801 $20,333 $20,657 $17,367 $20,367 Budget Authority $23,801 $20,333 $20,657 $17,367 $20,367 Administrative Costs (Direct) $1,167 $1,171 $1,311 $468 $468 Administrative Costs (Indirect) $1,205 $1,205

Total Costs $24,968 $21,504 $21,968 $19,040 $22,040 FTEs 11 10 11 11 11

Performance Measure: No. of businesses assisted 151 150 192 127 150 Cost per Measure (unit cost) $165.35 $143.36 $114.42 $149.92 $146.93 

1107

9. Eligibility Criteria 

Under RCDG, nonprofit corporations and institutions of higher education are eligible. 

For ATTRA, farmers and other rural users or anyone with a need for agricultural 

related information are eligible. 

Regarding Cooperative Research Agreements, research proposals are solicited 

from institutions of higher education or nonprofit organizations interested in applying for competitively awarded cooperative agreements for research related to agricultural and nonagricultural cooperatives serving rural communities. 

For the SSDPG, socially disadvantaged persons or 100 percent socially-disadvantaged producer-owned entities, including farmers, ranchers, loggers, agricultural 

harvesters, and fishermen, that have averaged $250,000 or less in annual gross 

sales of agricultural products in the last 3 years are eligible. A socially-disadvantaged producer for SSDPG purposes means individual agricultural producers who 

have been subjected to racial, ethnic or gender prejudice because of their identity 

as members of a group, without regard for their individual qualities. 

Under VAPG, eligible applicants are independent producers, farmer and rancher 

cooperatives, agricultural producer groups, and majority-controlled producer-based 

business ventures. 

AgMRC services are available to independent producers, processors, and service 

providers with critical information to build successful value-added agricultural enterprises. In order to better serve our core audience, the AgMRC website just completed a reorganization and new graphical update, giving users a clean, contemporary design and giving clear organization to files. 

10. Utilization (Participation) Data 

The last time funding for the Value-Added Grant Program was announced, there were 550 applicants requesting $56.4 million, but only 196 projects totaling $22.7 

million could be awarded. 

11. Duplication or Overlap with Other Programs 

The purposes of these programs are unique. RCDG and SSDPG focus on providing 

technical assistance to existing, new, or developing cooperative businesses. RBS is 

the sole provider of research, information and technical assistance specifically targeted to support cooperatives. 

While these programs are unique, they can complement a number of other programs within USDA, most notably, programs administered by Agricultural Marketing Service (AMS). The AMS Federal-State Marketing Improvement Program 

(FSMIP), Farmers Market Promotion Program (FMPP) and Specialty Crop Block 

Grant programs can be used in conjunction with RCDG programs to enhance or expand the scope or scale of a project. Further, programs under RCDG can also compliment a number of other RD programs including, but not limited to, the Rural 

Business Enterprise Grant, Business and Industry Guaranteed Loan, Community 

Facilities, and Renewable Energy for America Program. 

12. Waste, Fraud and Abuse 

There have been no reports of such problems with any of the programs included 

under RCDG. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Rural Economic Area Partnership (REAP) Zones. 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

Many rural areas face economic and community development issues of a very different character than communities whose needs are mainly defined by poverty. 

Often, the defining features are geographic isolation of communities separated by 

long distances, absence of large metropolitan centers, low-density settlement patterns, historic dependence on agriculture, continued population loss, out-migration, 

and economic upheaval or economic distress. 

To address these issues, USDA advocated a pilot concept for rural revitalization 

and community development called REAP Zones. The REAP Initiative was established to address critical issues related to constraints in economic activity and 

1108

growth, low density settlement patterns, stagnant or declining employment, and isolation that has led to disconnection from markets, suppliers, and centers of information and finance. 

Memoranda of Agreement between the REAP Zones and USDA established the 

RD mission area as the lead Federal Agency to assist the zones in the implementation of their programs. In 1995, two REAP Zones in North Dakota were initially designated to participate. 

Subsequently, in 1999, two areas in upstate New York were added as the third 

and fourth REAP Zones. In 2000, an area in Vermont was designated as the fifth 

REAP Zone. The North Dakota Zones and the Vermont Zone are multi-county in 

size and the two REAP Zones in New York are, for the most part, single counties. 

Each REAP Zone developed a strategic plan for economic revitalization in their respective geographic areas. 

A Presidential Memorandum dated August 5, 1993; variously dated Memoranda 

of Agreement; Pub. L. No. 106–387, Agriculture, Rural Development, Food and Drug 

Administration, and Related Agencies Appropriations Act of 2001. 2008 Farm Bill, 

Section 6017 (J) extends the current REAP Zones to 2012. 

4. Purpose/Goals 

This pilot project sets up a collaborative and citizen-led effort to enhance economic 

development in the REAP Zones. This effort will become the model for building a 

new rural economy for other rural areas with similar problems. The Department of 

Agriculture has provided modest amounts of money to REAP Zones for planning this 

program. This contribution has been augmented by USDA community development 

technical assistance across all areas of REAP Zone endeavor. Further, priority consideration is afforded for REAP Zone applications submitted for funding through 

RD. 

A summary of the REAP Zones’ locations includes:

REAP Zone State Counties Included Status 

Ends 

CONAC ND McHenry, Bottineau, Rolette, Towner, Pierce and Benson; and the 

Indian reservations of the Turtle Mountain Chippewa and Spirit 

Lake Sioux 

9/30/12

Southwest ND Dunn, Stark, Hettinger, Adams, Bowman, Slope, Golden Valley, 

Billings, and part of the Fort Berthold Indian Reservation 

9/30/12

Sullivan-Wawarsing NY Sullivan and the Town of Wawarsing 9/30/12

Tioga NY Tioga 9/30/12

Northeast Kingdom VT Caledonia, Essex, Orleans 9/30/12

5. Success in Meeting Programmatic Purpose/Goals 

Each REAP Zone developed a strategic community & economic development plan 

with a variety of projects that have been completed or are in the process of being 

implemented. Given a modest amount of money to develop a strategic, each of the 

five REAP Zones have continued on in vary degrees with their economic development projects for better than 10 years, with the oldest two dating back to 1995. 

Leveraged funds from 1999–2011 include:

As of: 4/1/2011

Grant from Designation 0

State Government $62,302,055 

Nonprofit $8,494,877 

Local or Regional Gov’t $12,053,461 

Federal Gov’t $221,896,363 

Private Sector $48,184,764 

Tribal Gov’t $6,086,699 

Other $4,502,286 

REAP Zones 5

Total $3,633,398,005

Per Zone Average $72,704,101.00 

6. Annual Budget Authority (FY 2002–FY 2011) 

There is no direct budget authority for REAP Zones. Only funding references in 

the budget are specific dollar amounts set aside in three RD programs. If funding 

1109

is not applied for by June 30, the funds are returned to the general pool. Set aside 

funding for REAPS was eliminated in FY 2011 for the Rural Business Enterprise 

and Rural Business Opportunity programs, with the only set aside being under the 

Intermediary Relending Program. This funding is in the form of loans. 

7. Annual Outlays (FY 2002–FY 2011) 

There were no outlays for REAP Zones during FY 2007 through FT 2011. 

8. Annual Delivery Cost (FY 2002–FY 2011) 

There is no direct funding for REAP zones, thus we cannot provide delivery cost 

funding levels. Delivery costs are scattered throughout all of the RBS programs; depending on what programs provide funding to the areas in a given year. 

9. Eligibility Criteria 

The REAP Initiative is a USDA pilot program targeting areas of economic distress 

not normally addressed by standard RD programs. In some cases this included high 

population loss, and others sharp economic downturns due to declining industries. 

10. Utilization (Participation) Data 

The communities and residents of 19 counties and three Indian reservations in 

parts of three states: North Dakota, New York, and Vermont. 

11. Duplication or Overlap with Other Programs 

Within RD, there are no other programs with similar purposes. Within USDA, 

there are few programs that promote strategic planning on a multi-community or 

multi-county basis. The closest program to the REAP Initiative would be the Resource, Conservation & Development Program. It also promotes multi-county strategic planning, but is focused on natural resources and resource-based economic development. 

12. Waste, Fraud and Abuse 

Any actions in these areas around REAP Zones are covered by the specific programs the Zones may have participated in. There is not any direct USDA funding 

for REAP Zones. For the minimal initial planning grants each Zone received, there 

were not any instances of waste, fraud, and abuse. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Rural Business Programs. 

2. Subprograms/Department Initiatives 

Guaranteed Business and Industry Loans. 

Guaranteed Business and Industry Loans 2008 Disasters Emergency Supplemental. 

North American Development Bank Guaranteed Business and Industry Loans. 

Guaranteed Business and Industry—Stimulus. 

3. Brief History 

The mission of the guaranteed Business and Industry (B&I) loan program is to 

improve, develop, or finance business, industry, and employment and improve the 

economic and environmental climate in rural communities. This purpose is achieved 

by bolstering the existing private credit structure through the guarantee of quality 

loans which will provide lasting community benefits. USDA implements its part of 

the Community Adjustment Investment Program under the North American Development (NAD) Bank through the B&I Guaranteed Loan Program. 

4. Purpose/Goals 

The B&I loan guarantee program is authorized by Section 310B of CONACT [7 

U.S.C. 1921]. Access to capital is key to keeping and increasing the number and size 

of businesses operating in rural areas. The guaranteed loan program supports financing for business and industrial acquisition, construction, conversion, enlargement, repair or modernization outside a town or city with a population of less than 

50,000. Loan funds are used to finance the purchase and development of land, easements, rights-of-way, buildings, equipment, facilities, machinery, supplies and materials, and fund to pay startup costs and supply working capital. Individuals, as well 

as public, private, or cooperative organizations, Indian tribes, and corporations are 

eligible. The loan guarantee percentage drops from a maximum of 80 percent for 

1110

loans of up to $5 million to 60 percent for loans between $10 million and $40 million. The aggregate loan amount available to any one borrower under this program 

is limited to $25 million. An exception to the limit is for cooperative organizations 

when the facility is located in a rural area and the facility provides value-added 

processing of an agricultural commodity. The maximum amount in such cases is $40 

million which must be approved by the Secretary. 

5. Success in Meeting Programmatic Purpose/Goals 

The B&I loan program is RD’s flagship job creation and capital expansion business program. Through $1.379 billion in annual appropriations and $1.561 billion 

appropriated through the ARRA, more than 55,000 jobs were created and saved and 

1,332 rural businesses were impacted. 

For example, Medora Environmental, Inc. (MEI) and its operating company, 

SolarBee, Inc., manufacture the SolarBee, a solar powered high volume water circulating system. The companies received a B&I guaranteed loan for permanent working capital of $1,787,100 and existing debt refinance in the amount of $1,212,900. 

The permanent working capital allowed the business to supplement its cash needs 

on a contingency basis. This loan also refinanced term debt which will save the company approximately $6,700 each month to help retain 67 jobs paying wages of approximately $28 per hour. 

Another example is Ocean Classroom Foundation (OCF) which received a $2.2 

million B&I guaranteed loan on February 1, 2010. This loan helped the organization 

restructure its debt and access much-needed working capital. The project also created and saved 14 jobs. OCF is located in Boothbay Harbor, Maine. The non-traditional school contributes to preserving the state’s maritime heritage, while expanding students’ horizons, by combining academic and nautical curriculums with experience at sea. Accredited programs are offered to teenaged and young-adult students 

as a means of providing academic and technical training, along with life experiences. 

The B&I Guaranteed Loan program helps create and maintain employment and 

improve the economic climate in rural communities. This is accomplished by providing loan guarantees to private lenders of up to 80 percent that can be used to 

fund business and industrial acquisition, construction, conversion, enlargement, repair or modernization. The number of jobs created or saved in rural communities 

is a key performance measure and a critical element in determining the viability 

of a project for funding. 

Performance data includes:

1111

Performance Measures 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual 

Performance Measure No. 1

a. Jobs created/saved * total

Guaranteed Business and Industry:

a. New or saved jobs 12,343 18,703 17,602 21,328 11,705b. Program Dollars—Loans $830,525 $1,390,532 $949,010 $1,322,984 $813,824

Guaranteed Business and Industry Loans 2008 Disasters Emergency 

Supplemental:a. New or saved jobs 0000b. Program Dollars—Loans $0 $0 $246,197 $0 $0

Guaranteed NadBank Business and Industry:

a. New or saved jobs 00000b. Program Dollars—Loans $3,490 $0 $0 $0 $0

Guaranteed Business and Industry—Stimulus:

a. New or saved jobs 00000b. Program Dollars—Loans $0 $0 $49,412 $0 $0

6. Annual Budget Authority (FY 2002–FY 2011) 

(Dollars in Thousands) 

Account Name 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual 

Guaranteed Business and Industry Loans: 

Budget Authority $36,211 $60,071 $49,350 $70,515 $41,179Subsidy Rate 4.36% 4.32% 4.35% 5.33% 5.06%Program Level $830,525 $1,390,532 $949,010 $1,322,984 $813,824

Guaranteed NadBank Business and Industry: 

Budget Authority $319 $0 $351 $0 $0Subsidy Rate 9.15% 7.69% 10.36%Program Level $3,490 $0 $0 $0 $0

Guaranteed Business and Industry Loans 2008 Disasters Emergency 

Supplemental: Budget Authority $0 $0 $19,400 $3,046 $0Subsidy Rate 4.35% 5.33%Program Level $0 $0 $445,977 $57,157 $0

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6. Annual Budget Authority (FY 2002–FY 2011)—Continued(Dollars in Thousands) 

Account Name 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual 

Guaranteed Business and Industry—Stimulus: 

Budget Authority $0 $0 $26,100 $125,241 $0Subsidy Rate 4.35% 5.33%Program Level $0 $0 $2,898,851 $1,557,725 $0

7. Annual Outlays (FY 2002–FY 2011) 

Annual outlays were: 

Account Name 2007 Actual ($000) 2008 Actual ($000) 2009 Actual ($000) 2010 Actual ($000) 2011 Actual ($000) 

Guaranteed Business and Industry * $100,400 $119,464 $133,671 $263,067 $244,000

Note: Outlays are not a one to one correlation with Budget Authority. Some programs disburse over numerous years. Undisbursed balances 

are carried forward for future year outlays. Also, outlays reflect non-farm bill accounts as well. 8. Annual Delivery Cost 

Business and Cooperative Programs 

Full Cost by Department Strategic Goal 

Strategic Goal: Assist Rural Communities to Create Prosperity so They Are Self-Sustaining, Repopulating and Economically Thriving. 

FY 2007 

Amount 

($000) 

FY 2008 

Amount 

($000) 

FY 2009 

Amount 

($000) 

FY 2010 

Amount 

($000) 

FY 2011 

Amount 

($000) 

Program Program ItemsGuaranteed Business and Industry Loans 

Program Level $830,525 $1,390,532 $949,010 $1,322,984 $813,824Budget Authority $36,211 $60,071 $41,282 $70,515 $41,179

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Admin Costs (Direct) 

—

— — $13,637 $12,982

Admin Costs (Indirect) 

—

— — $35,066 $33,381

Total Admin Costs $49,978 $43,523 $47,435 $48,703 $46,363

Total Costs $86,189 $103,594 $88,717 $119,218 $87,542

Guaranteed NadBank Business and Industry Loans 

Program Level $3,490 $0 $0 $0 $0Budget Authority $319 $0 $351 $0 $0Admin Costs (Direct) $0 $0 $0 $0 $0Admin Costs (Indirect) $0 $0 $0 $0 $0S&E $0 $0 $0 $0 $0

Total Costs $319 $0 $351 $0 $0

Business and Industry Guaranteed Loans—Stimulus 

Program Level $0 $0 $2,898,851 $1,557,725 $0Budget Authority $0 $0 $126,100 $125,241 $0Admin Costs (Direct) $0 $0 $0 $0 $0Admin Costs (Indirect) $0 $0 $0 $0 $0S&E $0 $0 $0 $0 $0

Total Costs $0 $0 $126,100 $125,241 $0

Guaranteed Business and Industry Loans 2008 Disasters Emergency Supplemental 

Program Level $0 $0 $445,977 $57,157 $0Budget Authority $0 $0 $19,400 $3,046 $0Admin Costs (Direct) $0 $0 $0 $0 $0Admin Costs (Indirect) $0 $0 $0 $0 $0S&E $0 $0 $0 $0 $0

Total Costs $0 $0 $19,400 $3,046 $0

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9. Eligibility Criteria 

In order to issue a guarantee on a particular project, there are various levels of 

eligibility that must be satisfied under the program. 

First, the project must be eligible. A list of eligible projects can be found in RD 

Instruction 4279–B, section 4279.113 and they range from small manufacturing 

plants and hotels to convenience stores and biofuels refineries. One of the major advantages of the program is the variety of projects that are considered eligible. 

Second, the project must have an eligible lender willing to offer financing. An eligible lender is any Federal or state chartered bank, Farm Credit Bank, other Farm 

Credit System institution with direct lending authority, Bank for Cooperatives, Savings and Loan Association, or mortgage company that is part of a bank-holding company. These entities must be subject to credit examination and supervision by either 

an agency of the United States or a state. Eligible lenders may also include credit 

unions provided, they are subject to credit examination and supervision by either 

the National Credit Union Administration or a state agency, and insurance companies provided they are regulated by a state or national insurance regulatory agency. 

Third, the project must have an eligible borrower. An eligible borrower is one that 

is a cooperative organization, corporation, partnership, or other legal entity organized and operated on a profit or nonprofit basis; an Indian tribe on a Federal or 

state reservation or other federally recognized tribal group; a public body; or an individual. 

10. Utilization (Participation) Data 

Since the program’s inception in 1974, the USDA B&I Guaranteed Loan Program 

has guaranteed over 16,000 loans, totaling approximately $24 billion, promoting 

business activity and entrepreneurship in rural areas. 

11. Duplication or Overlap with Other Programs 

A number of programs serve to stimulate economic development in rural communities. These include: the Small Business Administration’s (SBA) 7(a) and Community Development (504) programs, the Economic Development Administration, the 

Tennessee Valley Authority’s Economic Development Loan Fund, and other USDA 

programs that support business and community development. For example, an applicant from the Appalachian region may apply to programs administered by HUD, 

USDA, and ARC to obtain financing for building construction. In other cases, two 

agencies may explicitly have the same goals and serve similar applicants both SBA 

and USDA measure the number of jobs created. However, in some specific cases, 

programs can be differentiated. For example, SBA’s 7(a) loan levels are limited to 

$5 million. Although there are a variety of state programs that serve a similar purpose, they also vary in degree of funding and rural availability. 

12. Waste, Fraud and Abuse 

Though there have been only a few examples of waste, fraud and abuse. All cases 

are investigated by the Department’s Office of the Inspector General, and if necessary, the Federal Bureau of Investigation. 

The guarantee is supported by the full faith and credit of the United States and 

is incontestable except under the circumstances of fraud or misrepresentation of 

which the lender has actual knowledge at the execution of the guarantee or of which 

the lender participates in or condones. 

In the event the state office becomes aware of willful lender noncompliance with 

any provision of the Loan Agreement, Lender’s Agreement, Loan Note Guarantee, 

or other similar document, the lender is to be notified in writing of the Full Faith 

and Credit provisions as they relate to the enforceability of the Loan Note Guarantee, with a copy of the letter to be included in the case file. 

Some examples of the lender noncompliance include: 

Hermitage Tomato Cooperative—fraud and misrepresentation—a total of $9.6 million, 90 percent B&I Guaranteed Loans were made to the Hermitage Tomato Cooperative Association (Hermitage Tomato). The borrower defaulted on the loan payments, and the assets of the cooperative were liquidated in October 2002 by the 

lender, Farmers Bank of Hamburg (Farmers Bank). The Agency reduced the loss 

claim based on negligent serving and diversion of funds from the Cooperative. 

Catfish INT, Inc.—negligent servicing—On June 5, 1998, the Agency approved a 

$5 million, 70 percent B&I guaranteed loan for this borrower through its lender, Enterprise National Bank of Palm Beach. The lender foreclosed on the account on June 

4, 2002. The borrower filed bankruptcy on May 19, 2000. The Agency discovered 

that the building construction was not to specs as in the Conditional Commitment. 

The Agency issued Adverse Decision Letter to reduce guarantee and OIG InvestigaVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 01126 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
1115

tion was initiated. NAD and Federal Court upheld Agency determination to reduce 

loss claim by $3,030,000. 

Bill Russell Oil—negligent servicing—on June 21, 2000, the Agency issued a $3 

million Loan Note Guarantee to Business Loan Express, now known as Ciena Capital Corporation, for this borrower. The operation soon failed with the last payment 

received from this borrower in January 2001. On December 19, 2007, the U.S. Attorney sent a draft complaint asserting the False Claims Act and Financial Institution 

Reform Recovery and Enforcement Act. As a result the loss claim was reduced and 

a settlement in the amount of $2.5 million was paid. 

The National Office continues to remind the state offices through training sessions, webinars, monthly conference calls, etc., of their responsibility to monitor the 

lender’s actions. The Agency will work with the Office of the Inspector General in 

those instances where fraud, misrepresentation, or negligent servicing is suspected 

in an attempt to collect from the lender. 

In addition, when the Agency suspects fraud and misrepresentation, the Agency 

consults with the Office of General Counsel and the U.S. Attorney’s Office as appropriate to pursue matters for the best possible outcome for the government and taxpayer. 

13. Effect of Administrative PAYGO 

None. 

1. Program Name 

Rural Microentrepreneur Assistance Program (RMAP). 

2. Subprograms/Department Initiatives 

None. 

3. Brief History 

RMAP is authorized under section 379E of the Consolidated Farm and Rural Security Act, as amended by the Food, Conservation, and Energy Act of 2008 (2008 

Farm Bill). The 2008 Farm Bill provided mandatory funding for this program totaling $15 million from FY 2009 through FY 2012. An interim rule was published for 

RMAP on May 28, 2010 to implement the program. A Notice of Funding Availability 

(NOFA) was published on June 3, 2010, announcing $45.1 million in funding in FY 

2010 for direct loans and grants. This available program level includes mandatory 

and discretionary funding. No funding was provided in FY 2011 through annual appropriations; however, $4 million in mandatory funding is available. The President’s 

2012 budget requests $5.7 million in budget authority for RMAP, in addition to $3 

million in mandatory funds provided by the 2008 Farm Bill. 

4. Purpose/Goals 

RMAP provides rural microentrepreneurs the opportunity to gain the skills necessary to establish new rural microenterprises, gain training, and receive continuing 

technical and financial assistance related to the successful operation of rural microenterprises. Loans and grants are made to qualified Microenterprise Development 

Organizations (MDO’s) for the purposes of: (1) providing microloans to rural microentrepreneurs, and (2) providing training and technical assistance to current and/

or potential micro entrepreneurs to establish new or sustain existing micro businesses in rural areas. 

5. Success in Meeting Programmatic Purpose/Goals 

In FY 2010, USDA announced $45.1 million in program level in FY 2010, this 

level of funding supported 63 loans and 74 grants; about $13.6 million of the announced amount was unutilized in FY 2010 and is available for use in FY 2011. 

RBS continues to accept and fund applications from the FY 2010 carryover funding. 

A NOFA for the FY 2011 mandatory funding is under development. MDO’s are projecting to assist 574 microentrepreneurs and create or save 1,391 jobs. 

6. Annual Budget Authority (FY 2002–FY 2011)

RMAP—Discretionary and Mandatory 

(in millions of dollars) 

2007 2008 2009 2010 2011

Budget Authority (Mandatory) N/A N/A $4.0 $4.0 $4.0

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RMAP—Discretionary and Mandatory—Continued

(in millions of dollars) 

2007 2008 2009 2010 2011

Budget Authority (Discretionary) N/A N/A $0 $5.0 $0

7. Annual Outlays (FY 2002–FY 2011)

RMAP—Discretionary and Mandatory Outlays 

(in millions of dollars) 

2007 2008 2009 2010 2011

Outlays N/A N/A $0 $9.7 $7.3

8. Annual Delivery Cost (FY 2002–FY 2011)

RMAP—Discretionary and Mandatory 

(in thousands of dollars) 

2007 2008 2009 2010 2011

Program Level N/A N/A N/A $31,628 $24,961

Budget Authority N/A N/A N/A $9,654 $7,346

Administrative Costs (Direct) $130 $130

Administrative Costs (Indirect) $333 $333

Total Cost $10,117 $7,809

FTEs 4 4

Note: Annual delivery costs are presented consistent with the FY 2012 Budget Explanatory 

Notes. 

9. Eligibility Criteria 

Loans and grants are provided to MDOs who, in turn, assist rural micro enterprises and microentrepreneurs. RMAP applicants are nonprofit entities, Indian 

tribes, and public institutions of higher education that, for the benefit of rural 

microentrepreneurs and microenterprises, provides training and technical assistance, makes microloans or facilitates access to capital or another related service, 

and/or has demonstrated record of delivering, or an effective plan to develop a program to deliver such services. 

10. Utilization (Participation) Data 

The RMAP program was implemented in FY 2010 and made 63 loans and 74 

grants. Applications are accepted throughout the year and to date 165 loans and/

or grants have been awarded. 

11. Duplication or Overlap with Other Programs 

Small Business Administration administers a newly-implemented Micro Loan program, which is very similar in nature. As is the case with all of the programs operated by RD, RMAP is specifically designed to assistance microentrepreneurs in rural 

areas. The Rural Business Service also operates the intermediary relending program 

and the rural economic development program under similar intermediary concepts. 

While these programs utilize the same basic operational platform, each program is 

targeted to a specific group of applicants. Streamlining these activities within existing authorizes could generate savings from implementation activities. 

12. Waste, Fraud and Abuse 

Not applicable as this is a newly-implemented program and has not yet undergone 

an audit or test of controls 

13. Effect of Administrative PAYGO 

None. 

1117

HOUSE COMMITTEE ON AGRICULTURE FARM BILL AUDIT QUESTIONNAIRE—RURAL

HOUSING SERVICE

1. Program Name 

Community Facilities (CF) Programs Direct and Guaranteed Loans and Grants. 

2. Subprograms/Department Initiatives 

CF Direct Loans. 

CF Guaranteed Loans. 

CF Grants. 

CF Economic Impact Initiative Grants. 

CF Tribal College and University Grants. 

3. Brief History 

USDA’s CF Programs are implemented under Rural Development’s Rural Housing 

Service (RHS). The programs provide access to capital for critical civic infrastructure investments primarily in the area of rural health care, public safety, and educational facilities. These investments are creating jobs and economic growth and are 

also funding technology and infrastructure such as health information technology 

that will lay the groundwork for future economic growth. 

In 1972, Congress amended the Consolidated Farm and Rural Development Act 

(CON Act) to authorize the CF direct loan program to address the need for an agency devoted to providing essential community facilities in rural areas. Other Federal 

agencies were located in metropolitan cities and historically most of their activities 

were within cities with populations far exceeding the size of rural communities. Authority to implement the CF Programs was delegated to the predecessor to RHS, 

the Farmers Home Administration, which had an established field staff based in 

rural communities with the capacity to address local rural issues and concerns, assist those communities in assembling applications and providing supervised credit. 

All applicants must demonstrate that they are unable to obtain credit from commercial sources at reasonable rates and terms. Applicants are required to be units 

of government, federally-recognized Indian tribes, or nonprofit entities with significant community support and ties to the local community, which helps to assure that 

the services are affordable for low- and moderate-income rural Americans. 

In 1990, the CF authority was expanded to include the capability to guarantee 

loans made by commercial lenders. Authority for the CF grant program was added 

in 1997. The direct and guaranteed loan repayment terms are limited to the useful 

life of the facility, state statute, or 40 years, whichever is less. 

Since its inception, more than 40 percent of RD’s CF Programs’ portfolio is invested in rural health care facilities. Since 2009 to June 30, 2011, the CF direct and 

guaranteed loan and grant programs invested over $3.1 billion in 4,207 essential 

community facilities. These investments are estimated to directly create 9,996 jobs 

and save 22,384 jobs. Of this amount over $1.66 billion has been invested in 464 

rural health care facilities which is estimated to create 4,124 jobs and save 10,319 

jobs. The President’s FY 2012 Budget proposes to fund the CF direct loan program 

at $1 billion, more than triple the historic funding level. In addition, the budget proposes to eliminate funding for the CF guaranteed loan program which has had higher defaults than projected, making it more expensive than the direct loan program. 

The proposed increase in the CF direct loan program will mitigate any effects of 

ending the guaranteed loan program. The CF direct loan program has a negative 

subsidy rate in FY 2012. This means that the $1 billion in CF direct loan assistance 

can be provided without the need to request subsidy budget authority. This is a winwin for taxpayers and rural residents working to strengthen their rural communities. 

4. Purpose/Goals 

CF Programs direct and guaranteed loans and grants provide financing to units 

of local government, nonprofit organizations, or federally-recognized Indian tribes 

for the development of essential community facilities in rural areas. Eligible purposes include:

• Health care facilities;

• Fire, rescue, and public safety buildings, vehicles, and equipment;

• Educational and cultural facilities;

• Town halls, community centers, and libraries; and

• Adult and child day care facilities.

• Public buildings and civic infrastructure. 

1118

5. Success in Meeting Programmatic Purpose/Goals 

CF Programs’ performance includes:

Performance Measure 2007 

Actual 

2008 

Actual 

2009 

Actual 

2010 

Actual 

2011 

Actual 

Percentage of rural population with new 

or improved:

• Health Care 5.2 5.3 5.4 3.2 3.2

• Public Safety 2.7 2.8 5.0 3.2 3.2

• Educational facilities N/A N/A 3.5 3.8 3.0

Program Level (in millions) $755.0 $672.0 $639.3 $948.4 $488.3

6. Annual Budget Authority (FY 2002–FY 2011) 

Annual budget authority included:

CF Programs Direct and Guaranteed Loans and Grants 

(dollars in thousands) 

2007 2008 2009 2010 2011

Direct CF Loans $11,130 $16,369 $16,871 $3,864 $3,856

Guaranteed CF Loans $322 $7,596 $6,358 $6,626 $6,613

CF Grants $16,714 $20,373 $20,373 $20,373 $14,970

Rural Community Development Initiative $8,021 $6,256 $6,256 $6,256 $4,990

Economic Impact Initiative Grants $17,123 $13,902 $10,000 $13,902 $6,986

Tribal College and University Grants $4,592 $3,972 $3,972 $3,972 $3,964

7. Annual Outlays (FY 2002–FY 2011) 

Annual outlays included:

(Dollars in thousands) 

Account Name Account 

Number 

2007

Actual 

2008

Actual 

2009

Actual 

2010

Actual 

2011

Target 

CF Program 1951 1 $112,098 $109,417 $235,410 $145,409 $175,000

1Funded through RCAP. 

Note: Outlays are not a one to one correlation with Budget Authority. Some programs disburse over numerous years. Undisbursed balances are carried forward for future year outlays. 

Also, outlays reflect non-farm bill accounts as well. 

8. Annual Delivery Cost (FY 2002–FY 2011) 

Annual delivery costs included:

CF Programs Direct and Guaranteed Loans and Grants 

(dollars in thousands) 

2007 2008 2009 2010 2011

Program Level $609,103 $640,889 $435,502 $948,423 $488,266

Budget Authority $77,397 $78,199 $56,921 $69,455 $41,379

S&E $114,578 $113,299 $117,408 $119,993 $119,993

Total Costs $169,630 $191,498 $174,329 $189,448 $161,372

FTE 1,079 1,012 970 1,028 1,028

9. Eligibility Criteria 

CF Programs can make and guarantee loans to develop essential community facilities in rural areas and towns of up to 20,000 in population. Loans and guaranteed loans are available to public entities such as municipalities, counties, and special-purpose districts, as well as to nonprofit corporations and tribal governments. 

CF Programs provide grants to assist in the development of essential community 

facilities in rural areas and towns of up to 20,000 in population. Grants are authorized on a graduated scale. Applicants located in small communities with low popuVerDate 0ct 09 2002 08:51 Jul 25, 2012 Jkt 041481 PO 00000 Frm 01130 Fmt 6621 Sfmt 6621 I:\DOCS\112-20\68336.TXT BRIAN
1119

lations and low incomes will receive a higher percentage of grants. Grants are available to public entities such as municipalities, counties, and special-purpose districts, 

as well as nonprofit corporations and tribal governments. 

10. Utilization (Participation) Data 

• Number of Loans and Grants

» FY 2011 to date—1,032;

» FY 2010—2,754;

» FY 2009—2,377

» FY 2008—1,840;

» FY 2007—1,766. 

11. Duplication or Overlap with Other Programs 

There are a broad range of essential community facilities which may be financed 

through the CF Programs, and there are other agencies that finance some of the 

same types of community facilities within that range that could be located in rural 

areas. HUD’s CDBG grant program is the main program that funds similar types 

of projects, albeit not through Federal loans or loan guarantees and not specifically 

for rural areas. 

The RD agencies were created by Congress specifically to serve rural communities. In those cases where there are shared interests, RD has developed partnerships. We have long standing partnerships with the Health Resources and Services 

Administration, the Economic Development Administration, and the Appalachian 

Regional Commission which have included Memoranda of Understanding that set 

forth the ways in which the agencies collaborate and leverage resources to improve 

access to critical health care, education, and public safety facilities. 

At the RD State Office level, we have extensive partnerships with the individual 

state’s economic development, health, and water and sewage treatment agencies. RD 

has also developed partnerships over the years with organizations representing 

some of our major constituency groups, including lenders, fire fighters, and rural 

hospitals. Newer relationships include those with the Delta Regional Authority and 

the Federal Interagency Partnership on the Southwest Border Region. 

12. Waste, Fraud and Abuse 

There are numerous reviews performed on the CF program, such as state internal 

reviews, management control reviews, improper payments risk assessment, OMB 

Circular A–123 assessment, project reviews and reviews by external agencies such 

as the Office of Inspector General and the General Accountability Office. Senior 

management is also required to provide an annual assurance statement which is 

senior management’s judgment as to the overall adequacy and effectiveness of internal control within the agency. CF has had no significant findings in any of the reviews or assessments. Effective internal controls are one of the CF program’s main 

objectives to achieve results through improved accountability and to ensure the 

overall success of the program. 

CF Programs have established internal controls to ensure that: (1) obligations and 

costs are in compliance will applicable law; (2) funds, property, and other assets are 

safeguarded against waste, loss, unauthorized use or misappropriation; and (3) revenues and expenditures applicable to agency operations are properly recorded and accounted for to permit the preparation of accounts and reliable financial and statistical reports and to maintain accountability over the assets. These controls are effective in guarding against overspending, operational failure, fraud, waste, abuse, or 

violations of law. They provide a reasonable assurance of effectiveness and efficiency 

of operations, reliability of financial reporting, and compliance with laws and regulations. 

13. Effect of Administrative PAYGO 

None.

Æ