U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

66–272 PDF 2011

S. HRG. 111–1024 

EXPANDING OUR FOOD AND FIBER SUPPLY 

THROUGH A STRONG U.S. FARM POLICY 

HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

JUNE 30, 2010 

Printed for the use of the 

Committee on Agriculture, Nutrition, and Forestry 

( 

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

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY 

BLANCHE LINCOLN, Arkansas, Chairman 

PATRICK J. LEAHY, Vermont 

TOM HARKIN, Iowa 

KENT CONRAD, North Dakota 

MAX BAUCUS, Montana 

DEBBIE STABENOW, Michigan 

E. BENJAMIN NELSON, Nebraska 

SHERROD BROWN, Ohio 

ROBERT CASEY, Jr., Pennsylvania 

AMY KLOBUCHAR, Minnesota 

MICHAEL BENNET, Colorado 

KIRSTEN GILLIBRAND, New York 

SAXBY CHAMBLISS, Georgia 

RICHARD G. LUGAR, Indiana 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

PAT ROBERTS, Kansas 

MIKE JOHANNS, Nebraska 

CHARLES GRASSLEY, Iowa 

JOHN THUNE, South Dakota 

JOHN CORNYN, Texas 

ROBERT HOLIFIELD, Majority Staff Director 

JESSICA L. WILLIAMS, Chief Clerk 

MARTHA SCOTT POINDEXTER, Minority Staff Director 

ANNE C. HAZLETT, Minority Chief Counsel 

(II) 

(III) 

C O N T E N T S 

Page 

HEARING(S): 

Expanding Our Food and Fiber Supply Through a Strong U.S. Farm Policy .... 1 

Wednesday, June 30, 2010 

STATEMENTS PRESENTED BY SENATORS 

Lincoln, Hon. Blanche L., U.S. Senator from the State of Arkansas, Chairman, Committee on Agriculture, Nutrition, And Forestry ............................... 1 

Chambliss, Hon. Saxby, U.S. Senator from the State of Georgia ........................ 3 

Roberts, Hon. Pat, U.S. Senator from the State of Kansas .................................. 14 

Panel I 

Vilsack, Hon. Tom, Secretary, U.S. Department of Agriculture, Washington, 

DC .......................................................................................................................... 5 

Panel II 

Johnson, Roger, President, National Farmers Union, Washington, DC ............. 36 

Stallman, Bob, President, American Farm Bureau Federation, Washington, 

DC .......................................................................................................................... 37

Panel III 

Brantley, Dow, Farmer, England, Arkansas ......................................................... 44 

Cochran, Thomas, Farmer, Slyvester, Georgia ..................................................... 46 

Pawelski, Richard, Farmer, Goshen, New York .................................................... 48 

Watne, Mark, Farmer, Jamestown, North Dakota ............................................... 50 

APPENDIX 

PREPARED STATEMENTS: 

Brown, Hon. Sherrod ........................................................................................ 64 

Casey, Hon. Robert P., Jr. ............................................................................... 65 

Cochran, Hon. Thad ......................................................................................... 66 

Harkin, Hon. Tom ............................................................................................ 69 

Brantley, Dow ................................................................................................... 72 

Cochran, Thomas .............................................................................................. 78 

Johnson, Roger .................................................................................................. 82 

Pawelski, Richard ............................................................................................. 93 

Stallman, Bob ................................................................................................... 97 

Vilsack, Hon. Tom ............................................................................................ 103 

Watne, Mark ..................................................................................................... 116 

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

Pawelski, Richard: 

Farm Bill Proposal, Crop Insurance Reform, Pawelski Farms, statement 

for the Record ................................................................................................ 122 

Written letter to Pawelski Farms from USDA ............................................... 128 

QUESTION AND ANSWER: 

Lincoln, Hon. Blanche L.: 

Written questions for Hon. Tom Vilsack ........................................................ 132 

Page

IV 

Chambliss, Hon. Saxby: 

Written questions for Hon. Tom Vilsack ........................................................ 133 

Casey, Hon. Robert P., Jr.: 

Written questions for Hon. Tom Vilsack ........................................................ 135 

Written questions for Roger Johnson ............................................................. 136 

Written questions for Bob Stallman ............................................................... 136 

Cochran, Hon. Thad: 

Written questions for Hon. Tom Vilsack ........................................................ 137 

Written questions for Bob Stallman ............................................................... 138 

Grassley, Hon. Chuck: 

Written questions for Hon. Tom Vilsack ........................................................ 139 

Written questions for Roger Johnson ............................................................. 140 

Written questions for Bob Stallman ............................................................... 141 

Harkin, Hon. Tom: 

Written questions for Hon. Tom Vilsack ........................................................ 142 

Roberts, Hon. Pat: 

Written questions for Hon. Tom Vilsack ........................................................ 144 

Johnson, Roger: 

Written response to questions from Hon. Robert P. Casey, Jr. .................... 145 

Written response to questions from Hon. Chuck Grassley ........................... 146 

Stallman, Bob: 

Written response to questions from Hon. Robert P. Casey, Jr. .................... 149 

Written response to questions from Hon. Thad Cochran .............................. 151 

Written response to questions from Hon. Chuck Grassley ........................... 153 

Vilsack, Hon. Tom: 

Written response to questions from Hon. Blanche L. Lincoln ...................... 156 

Written response to questions from Hon. Saxby Chambliss ......................... 159 

Written response to questions from Hon. Robert P. Casey, Jr. .................... 172 

Written response to questions from Hon. Thad Cochran .............................. 177 

Written response to questions from Hon. Chuck Grassley ........................... 180 

Written response to questions from Hon. Tom Harkin ................................. 184 

Written response to questions from Hon. Pat Roberts .................................. 188 

(1) 

EXPANDING OUR FOOD AND FIBER SUPPLY 

THROUGH A STRONG U.S. FARM POLICY 

Wednesday, June 30, 2010 

UNITED STATES SENATE, COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY

Washington, DC 

The Committee met, pursuant to notice, at 9:36 a.m., in Room 

SDG50, Dirksen Senate Office Building, Hon. Blanche Lincoln, 

Chairman of the Committee, presiding. 

Present: Senators Lincoln, Harkin, Baucus, Nelson, Brown, 

Casey, Chambliss, Lugar, Cochran, Roberts, Johanns, Thune and 

Grassley. 

STATEMENT OF HON. BLANCHE L. LINCOLN, U.S. SENATOR 

FROM THE STATE OF ARKANSAS, CHAIRMAN, COMMITTEE 

ON AGRICULTURE, NUTRITION, AND FORESTRY 

Chairman LINCOLN. Good morning. The Senate Committee on 

Agriculture, Nutrition and Forestry will now come to order. This is 

the first in a series of hearings to help this committee prepare for 

the next Farm Bill. We will be taking an inventory of what we 

have, obviously, from the 2008 Farm Bill and ensuring that it is 

working properly but doing so with our eye on the future of farm 

policy. 

I want to first thank my very good friend Senator Chambliss for 

helping me to organize this hearing, for being a great partner on 

this committee, and for being a steadfast advocate for our Nation’s 

farmers and ranchers. America’s producers are blessed to have 

such a good friend in their corner and so am I. 

I also want to thank my other distinguished colleagues for their 

attendance here today and for all the work that they do on behalf 

of rural America. This has always been a bipartisan committee 

where we put problem solving and people above partisan politics. 

We are privileged to have some excellent witnesses today. I very 

much appreciate Secretary Vilsack as well as Dow Brantley from 

my home state of Arkansas, and all of our witnesses for being here 

to offer their unique perspectives. I look forward to hearing from 

each of you-all. 

I am very honored to be the first Arkansan to serve as Chairman 

of the Senate Agriculture Committee, not to mention being a farmer’s daughter. Agriculture provides a job for one out of every four 

Arkansans, and it contributes more than 15 billion each year to my 

state’s economy. I expect that each and every one of my colleagues 

around this table has a similar story to tell about the importance 

of agriculture to their state’s economy and jobs both on and off the 

2 

farm. Of course, the Farm Bill is one of the most important pieces 

of legislation that Congress considers on behalf of rural America 

and our Nation’s farmers and ranchers. 

In the 2008 Farm Bill, we made some significant new investments in nutrition, energy, conservation, rural development and 

other priorities while maintaining the integrity of the farm safety 

net. In the next Congress, we will be writing the 2012 Farm Bill. 

In this process, we will have the opportunity to build on the good 

things that we have accomplished. 

This first hearing will focus on how well the current safety net 

is working for our Nation’s farmers and ranchers. As we begin our 

discussion, I want to share five points that will guide me when deliberating the next Farm Bill. 

First, I am proud of our farmers and ranchers. They work hard. 

They put food on our tables, clothes on our back and fuel in our 

cars and trucks. But today, our farmers and ranchers not only have 

to cope with unpredictable weather and unfair global markets, but 

they must also suffer from abuse on TV and in newspapers from 

folks who really ought to know better than to bite the hand that 

feeds them. Our Nation’s farmers and ranchers need to know that 

they will never have to apologize to this chairman or to this committee for the hard work that they do. We appreciate the work that 

you do every day, and we are going to be on your side. 

Second, these Farm Bill deliberations should not be a Washington command and control top-to-bottom approach to policy. 

President Reagan used to say that ordinary people see things that 

work in principle and wonder if they work in practice, but economists see things that work in practice and wonder if they work in 

principle. In the same way, we in Washington may know what policies work in principle, but it is our farmers and ranchers who know 

what works on the ground. 

The good Lord gave us two ears and one mouth, so it is important that we use them in that proportion. And it is also vitally important that the safety net features of the 2012 Farm Bill come 

from the kitchen tables of places like Stuttgart, Arkansas and 

Cando, North Dakota rather than tables like this one. 

Third, we need to look before we leap. More than anything else, 

I think most American farm and ranch families simply want 

steady, predictable, supportive policies coming out of Washington 

and for us to otherwise get out of their way. Huge policy fluctuations, mixed signals coming out of Washington, and the uncertainty 

that these things create make it very difficult for our producers to 

compete, invest and plan for the future. 

So rather than start from scratch, or from some newfangled idea 

cooked up in Washington, or in some college professor’s office, we 

need to reassure our farmers and ranchers that we will start where 

we left off, the 2008 Farm Bill. If we can do better by our producers 

in 2012, great, but if not, current law serves as the benchmark 

from which we will work. 

Fourth, we need to get more creative. The safety net provided 

under the 2008 Farm Bill is not perfect. It can and should be 

strengthened. But Congress does not even have to wait for 2012 for 

that to happen. In fact, Congress does not even have to act. For instance, back in 2000, Congress provided USDA with very broad auVerDate Nov 24 2008 04:25 Jul 28, 2011 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 C:\DOCS\66272.TXT MICHA
3 

thority to develop and approve new tools to help producers of all 

crops and from all regions better manage price, production and revenue risk. We need to use this and other authorities to their absolute fullest. 

For example, if we could get every farmer in this country to 85 

percent revenue insurance that is affordable, we would go a long 

way in filling the holes of the current safety net. I know my rice 

farmers are working towards this goal, and I suspect farmers from 

other states are doing the same thing. We can make this happen. 

Finally, I was reading an article the other day about the OECD 

rethinking its objectives away from promoting policies that discourage food and fiber production towards policies that help us meet 

the needs of a planet that will one day in the not-too-distant future 

host 9 million—not million—billion people. 

I believe that this consideration needs to be our overarching objective as well. Too often, it takes a crisis to remind us of the essentials in life, basic as they may all be. But I do not believe it is wise 

for us to wait for a crisis to value our domestic food and fiber production. 

Mike Rowe—and this comes from the mother of twin boys at the 

age of 14—the host of the popular TV program ‘‘Dirty Jobs,’’ had 

this to say about the importance of production agriculture. ‘‘All jobs 

rely on one of two industries, mining and agriculture. Every tangible thing our society needs is either pulled from the ground or 

grown from the ground. Without these fundamental industries, 

there would be no jobs of any kind. There would be no economy. 

Civilization begins with miners and farmers, and polite society is 

only possible when skilled workers transform those raw materials 

into something useful or edible.’’ 

It is from this perspective that I will hope to approach the 2012 

Farm Bill. Again, I look forward to hearing from our friend, Secretary Vilsack, and all of our distinguished witnesses. And I will 

now would like to yield to my good friend, Senator Chambliss, for 

any opening remarks that he may have. 

STATEMENT OF HON. SAXBY CHAMBLISS, U.S. SENATOR FROM 

THE STATE OF GEORGIA 

Senator CHAMBLISS. Thank you very much, Madam Chairman, 

and thanks for your kind words. Most of all, thanks for your friendship and your leadership on this committee. Your commitment to 

agriculture has been unwavering. And as we move towards the 

writing of the next Farm Bill, obviously, we are going to be looking 

to you for that continued leadership that I know is going to be 

there. So thanks for starting off with this hearing and moving us 

in the right direction early on. And I thank you for holding this 

oversight hearing of the current farm safety net. U.S. farm policy 

certainly plays a valuable role as we seek to expand our food and 

fiber supply. 

Farmers form the backbone of rural communities. They are employers. They are businessmen and women keeping local economies 

moving. They are conservationists seeking ways to improve the productive capability of their land. Farmers are also feeding, clothing 

and providing bioenergy to the world. 

4 

A challenge that I believe our producers can help meet is related 

to the anticipated world population growth. The Organization for 

Economic Cooperation and Development projects that production 

output will have to double over the next 40 years to feed a world 

population of 9 billion people in 2050. I want to ensure that our 

farmers and ranchers remain well positioned to be the best suppliers of the world’s food and fiber well into the future. 

Agriculture has a positive story to tell. Agriculture is absolutely 

essential to our everyday lives. And I am pleased to learn of new 

and innovative uses of our agricultural products. 

As a fellow Cotton Belt member, Madam Chairman, you are 

probably familiar with a new cotton product, Fibertect, which will 

aid in the cleanup of the Gulf spill. Many of our agriculture products hold tremendous new potential. Programs under the jurisdiction of this committee also have a positive story to tell in terms of 

cost to the taxpayer. 

Agriculture spending is a small share, extremely small share, of 

the federal budget. Over the 10-year projected period of 2011 to 

2020, the Congressional Budget Office estimates Commodity Credit 

Corporation outlays at .24 percent, less than one-half of 1 percent 

of all mandatory and discretionary spending. Adding nutrition program spending raises the share to just 2.31 percent of the entire 

federal budget. 

With concern growing over the deficit and debt, mandatory 

spending under this committee’s jurisdiction will be the focus of increased attention. While many believe that the bulk of agriculture 

program funding goes toward commodity programs, that is not simply not the case. In fact, nutrition spending is the largest share of 

the committee’s mandatory outlays, approximately 81 percent, according to CBO, with spending on nutrition programs rising since 

the Farm Bill due to the recession and increased participation. 

Those and other important Farm Bill programs will be reviewed on 

another day. 

Today’s hearing will allow us to exercise oversight of the commodity and risk management safety net components of the 2008 

Farm Bill, which is now two years old. In my view, it is important 

for us to focus on oversight at this point rather than fully discuss 

reauthorization of the safety net, as some programs, such as the 

ACRE Program, have not yet distributed assistance. We appreciate 

the Department’s work to deliver Farm Bill programs to date and 

look forward to completion of outstanding programs. 

Before I conclude, I would like to make a quick mention regarding the recent bilateral talks between the United States and Brazil. 

As many of you know, the export credit and cotton programs are 

a particular interest of mine, and recently both have been in the 

news. The announcement last week of a framework agreement between both countries sets forth a constructive process to find a mutually agreeable resolution to the Brazil World Trade Organization 

case. While there is much work and discussion that remain and 

some parts of the agreement are not without concern, I believe that 

we are on the right path. 

Since Congress writes the Farm Bill, we know this will be an integral part of the 2012 Farm Bill. But for now, we have an opportunity to carefully discuss and find agreeable modifications to both 

5 

programs. The success of the talks is due in no small part to the 

hard work and efforts of Secretary Vilsack—and thank you, sir— 

U.S. Trade representative Ron Kirk, Under Secretary Jim Miller 

and Chief Agriculture negotiator Islam Siddiqui. Thanks to you-all 

for your great work. 

We appreciate our witnesses being with us today. I wish to say 

a special thank you to my neighbor, my good friend, Johnny Cochran, of my home state. We look forward to hearing your perspective 

on the 2008 Farm Bill and your thoughts about how we can ensure 

a bright future for American food and fiber products. 

Thank you very much, Madam Chairman. 

Chairman LINCOLN. Thank you, Senator Chambliss. 

If I can just take a moment, seeing a quorum, if I may just ask 

the indulgence of Secretary Vilsack, I think this will be beneficial 

to you as well. 

[Recess.] 

Chairman LINCOLN. We will resume our hearing in the Committee. And, again, thank you, Senator Chambliss. I appreciate 

that. I thank all the members for their indulgence in moving that 

business forward. 

We do have three panels today, and we are eager to hear from 

our witnesses and to get questions in, as many as possible. So in 

the interest of time, I would certainly like to ask members, if they 

could, to submit their opening statements for the record. If anyone 

wants to say a few words, certainly, I am amenable to that. But 

if there is anybody that needs to say anything, we would like to 

offer your opening statements for the record. 

Chairman LINCOLN. Well, in that case, welcome, Mr. Secretary, 

to the Committee. Thank you again for your testimony today on behalf of the Department. Before we do get started with your testimony, I would like to take a moment and say a very special thank 

you for joining me recently in Arkansas and visiting the site of the 

tragic Albert Pike flood that took 20 lives in the Ouachita National 

Forest. It meant so much to the people of Arkansas to have you 

there, as well as the chief of the Forest Service, Chief Tidwell, to 

see the devastation firsthand and to simply lift those people up in 

your thoughts and prayers as you did. And I am grateful to that. 

I originally had scheduled a hearing for tomorrow looking at the 

flood with Chief Tidwell of the Forest Service and some of the first 

responders. That hearing has been postponed due to the passing of 

Senator Robert Byrd. So we will reschedule that at another time. 

But thank you again for coming. 

Secretary Vilsack, your written testimony will be submitted for 

the record, so hopefully that can help you keep your remarks to 

five minutes. Thank you. 

STATEMENT OF HON. TOM VILSACK, SECRETARY, U.S. 

DEPARTMENT OF AGRICULTURE 

Secretary VILSACK. Thank you, Madam Chair and Senator 

Chambliss and other members of the Committee. Thank you for the 

opportunity to be here. 

First and foremost, Madam Chair, our condolences continue to be 

extended to the families of those who were tragically lost as a result of that very devastating flood in Arkansas. And I appreciate 

6 

the opportunity to spend a few minutes—recognizing that the focus 

of this hearing will likely be more on the implementation of the 

2008 Farm Bill, permit me for just a couple of minutes to talk a 

little bit about the 2012 Farm Bill. 

My staff and I met several weeks ago to begin that process, and 

during the course of our conversation, it occurred to me that we did 

not have a very clear understanding or appreciation of the vision 

and the results that we sought from a 2012 Farm Bill. And I asked 

the staff to think about that, and it concluded for them that for my 

perception and from my vantage point, what I am most interested 

in is trying to increase populations in our rural communities, in 

our rural areas and also improve incomes. 

Why am I interested in increasing populations? Well, the sad reality is that in 56 percent of the counties in rural America today, 

we have lost population. And with that, as everyone knows, you 

lose political influence. You have fewer people who understand, as 

members of this Committee understand, the hardworking folks who 

live, work and raise their families in those rural communities. 

It is particularly true in the area of production agriculture and 

particularly true in small commercial operations, the operations 

where you may have 200,000, $300,000 in sales every year. Over 

the last 10 years, we have lost 141,000 of those operators. And I 

think we ought to get very serious, as we consider the 2012 Farm 

Bill, about how we can replenish and rebuild that population center, how can we focus policies and procedures and programs and efforts to increase small and medium-sized farming operations. 

Let me suggest one idea that this committee might consider. We 

had at one point in time not long ago a goal and a national commitment to increase the national police force by 100,000 police officers. 

We have talked about the need for additional teachers in our classrooms. 

Why not set as a goal for the 2012 Farm Bill the ability to add 

at least 100,000 additional farmers in the area of the small farming 

and commercial operations? 

Why not establish local advisory councils in communities across 

the country, to identify, recruit and encourage and incent young 

people to consider a life of farming? 

Why not develop a system similar to case management in 

Human Services that would enable those young people to have assistance to work themselves through the many programs that are 

created in a Farm Bill? 

Why not create a venue where new farmers can get help with 

business planning, with marketing and the other ingredients of 

successful entrepreneurship? 

Why not expand our efforts to encourage transitions from those 

seeking to retire to those seeking to start in the farming business? 

Why not place the Nation’s attention on our need for young farmers on the same plane as police officers and teachers, as they are 

equally important to the future of this country? 

The sad reality is that the farming community is aging. The average age of a farmer today in America is 57 years of age. Five 

years ago it was 55. We have had an increase of 30 percent of the 

farmers over the age of 75 and a decrease in the number of farmers 

under the age of 25 by 20 percent. 

7 

I think it is important, as you-all begin your discussions and deliberations of the Farm Bill, that we focus an aggressive effort on 

helping beginning farmers begin. 

At the same time, I think we also have to pay attention to those 

who live, work and raise their families in rural communities that 

are not necessarily only connected to farming but may be living in 

these small towns, providing other services and assisting these 

farm families. The sad reality of rural America is that 90 percent 

of the persistent poverty counties in this country exist in rural 

America. The sad reality is that the per capita income differential 

between those who live in rural communities and those who live in 

urban centers is about $11,000 per capita. 

I think it is important and necessary that we really focus our attention and efforts as well on building and revitalizing the rural 

economy generally. I think we need to focus on building regional 

economy, providing greater flexibility in our programs and making 

sure that our programs are simplified from an application and 

process standpoint. 

In short, Madam Chair, I think we need to begin focusing on 

very clear result orientation to the Farm Bill. If we can rebuild the 

farming population, if we can increase populations in rural communities, if we can increase income levels for farm families and for 

rural families, I think we will not only benefit rural America, we 

will benefit the country. 

With that, Madam Chair, I will be happy to answer questions. 

[The prepared statement of Secretary Vilsack can be found on 

page 103 in the appendix.] 

Chairman LINCOLN. Well, thank you, Mr. Secretary, again for 

joining us today. And hopefully, in the next panel, we have got 

some young farmers in here that can talk to the concerns and the 

challenges that are faced by young farmers in this country. So I 

certainly appreciate that and certainly your objective there. Just a 

couple of questions from me and then I will turn it to my colleague. 

One thing I would like to visit with, and it is something we have 

talked about an awful lot recently—and I have some disappointment that the Department was unable to come up with any ideas 

that would help the House and Senate Ag committees preserve the 

baseline for our use in the 2012 Farm Bill. 

Obviously, the $4 billion designated for deficit reduction out of 

the crop insurance cannot be recaptured. But it is not clear that 

the increased spending that you are contemplating for the Conservation Reserve Program will impact the CBO baseline since they 

assume that the retired acreage will already be at the cap in the 

out years. 

If we cannot capture the full 2 billion in additional crop insurance and Conservation Program spending in the CBO baseline that 

will be developed after the new SRA is signed, can you at least 

hopefully assure the Committee that you will remind OMB that the 

Crop Insurance Program and the Agriculture Committee already 

gave at the office when it comes to future budget cuts? And that 

was something we experienced, and we have experienced it year 

after year as we do these farm bills, is that we seem to give and 

give and give, and it is very rarely is it remembered. 

8 

I hope that we can look to you for that assistance in reminding 

OMB. 

Secretary VILSACK. Well, let me, first of all, emphatically say 

that we have begun that process publicly in encouraging not just 

OMB but the entire country to understand and appreciate that agriculture has led in this effort to try to not only focus on the Farm 

Bill baseline but the Nation’s baseline. There is, I think, agreement 

that there is a need to address deficits in a meaningful way. Failure to address deficits could lead to inflation, interest rates which 

would be very harmful to those who farm and live in rural America. 

Having said that, I think it is also important to recognize that 

the CRP program is a very popular program and one in which we 

currently need the additional resources in order to meet the 32-million-acre threshold which we are working under. It has been well 

received out in the countryside, and it is an opportunity again for 

us to do what is right for our farm families and also for the environment. 

We will continue to work with the Committee, continue to work 

with Congress to preserve that 2 billion, and we will certainly continually remind OMB and anyone else who is interested in this 

that this part of the budget has given. And it might be interesting 

to know if everyone else gave in a proportion to what we gave, how 

quickly we could get the deficit under control. 

Chairman LINCOLN. Absolutely. Well, I appreciate that. And 

again, in building the foundation to be able to feed 9 billion people 

globally, not to mention encouraging young farmers to come in and 

to be able to make a living in agriculture to feed their families, and 

to raise their children, and to do all of those things, I think it is 

going to be really critical that we remind people that time and time 

again, production agriculture has given. And we have been willing 

to come to the table, whether it is deficit reduction or just making 

sure that we are being responsible within the confines of our own 

budget baselines in this Committee, and I hope that we will have 

your assistance in doing that. 

My staff has also been working with the Risk Management Agency to find a way to provide insurance against the higher harvest 

costs farmers incur when high winds result in downed rice in their 

fields, and, obviously, with these capital intensive crops and some 

of these types of circumstances. RMA has been very helpful so far 

in suggesting possible approaches, but the sooner that we can get 

such a product in place, certainly, the better off my rice farmers 

in Arkansas and I know rice farmers across the country would be. 

What are the prospects for developing such an insurance policy? 

Secretary VILSACK. Madam Chair, specifically, I would like to 

have the opportunity to specifically respond to your question in 

writing, if I might. But take this opportunity to indicate to you that 

we are constantly looking for ways in which we can expand opportunity. One of the things that we are hopeful of doing with the resources that we are recapturing from the SRA negotiations is to expand on our range and forage and pastoral land programs, long 

overdue. And we continue to look at specialty crops in a variety of 

other ways in which we can provide assistance and help. 

9 

We appreciate and understand that risk management is a very 

critical component of a safety net, and the more we can figure out 

how to spread that opportunity to more producers, covering more 

risk, the better off they will be and the better we will be. So we 

are committed to continually looking for ways in which we can expand coverage. 

Chairman LINCOLN. Well, I appreciate it. I know you have commented to me several times, ‘‘It seems like the Committee’s dealing 

an awful lot with risk management these days,’’ whether it is the 

financial world or agriculture, and I appreciate that. So I will look 

forward to getting your written response and suggestions there. 

One last note. One complaint that I hear from many farmers is 

that the safety net programs have become very complicated, and 

especially the ACRE and the SURE Program. We also have other 

programs that are similar to these, such as crop insurance and 

counter-cyclical payments. 

Do you think that these programs complement each other or do 

they work at cross purposes? 

Secretary VILSACK. Well, I think there has got to be work done 

on ACRE. There is no question about that. We were asking farmers 

to basically give up the known for the unknown. We were asking 

them to enroll for the life of the Farm Bill instead of being able 

reevaluate the impact and effect of that decision. 

We know that this particular program was not particularly 

geared towards all commodities. It was more favorably inclined towards some commodities. Certainly, the rice and cotton producers 

and peanut producers were not necessarily enamored with the 

ACRE Program. So I think there is still work to be done. When 

only 8 percent of farms and 13 percent of total base acres are included in the program, it tells you that there is still additional 

work that needs to be done. 

Candidly, I think we have a lot of work to do in terms of simplifying all of these programs and encouraging and improving our 

technologies so that we can provide quicker service and better service. We are still dealing with a very antiquated technology system 

in our Farm Service offices. We have started the MIDAS Program. 

We have started to stabilize our technology, but it is going to take 

a couple of years for us to get the job done. And hopefully, we can 

maintain the resources that have been provided in the last year or 

two. 

With that, I think when we have better technology and if we can 

focus in the discussions on the Farm Bill on trying to simplify 

these programs, I think we will all be better off. 

Chairman LINCOLN. Well, thank you, Mr. Secretary. Just one 

adage there. Crop insurance really does not work very well in my 

state. And since crop insurance does not well, SURE does not work 

well. One of the reasons I have been fighting for disaster assistance 

is that I have got foreclosures now on a lot of my farms because 

they did not receive any ’08 disaster or ’09 disaster and, of course, 

going into a 2010 crop year without those resources or having suffered from that, it just makes it a very, very difficult circumstance. 

So I hope that we will work together to improve the safety net 

program dealing with crop disasters and certainly hopefully work 

10 

together in terms of any disaster assistance that we can provide 

farmers that are really in need right now. 

Secretary VILSACK. Madam Chair, just 15 seconds. On the issue 

of credit, we obviously have been working very closely with our own 

credit operations to see whether or not we can forebear or restructure loans to farmers who are struggling. At the same time, we 

have done as much as we can to convince and encourage our commercial bankers with which we have a guarantee relationship to do 

the same. 

Chairman LINCOLN. Thank you. 

Senator CHAMBLISS. Senator CHAMBLISS. Thanks very much, Madam Chairman. 

And, Mr. Secretary, I would be remiss if I did not comment very 

quickly on a matter that you and I talked very briefly about before 

the hearing and to thank you for the great work that your department is doing in continuing to provide assistance to the people of 

Afghanistan. 

If we are going to be successful in the war on terror, it is interesting to note that the U.S. Department of Agriculture plays a very 

key role in that. And we have a number of volunteers from my 

state who have been in and out of Afghanistan, as well as a number of other folks from around the country who are providing assistance to the people of Afghanistan. And it is all under your leadership and the leadership that has continued from the previous administration. So I thank you for that good work that you are doing 

there, and again, I look forward to visiting that country with you 

soon. 

Also, I appreciate your comment about the average age of farmers. We have talked about that on this committee ever since I have 

been a member of Congress. And it is difficult to try to devise 

methods to encourage young people to come into farming when, 

just as they step right out of college, for example, and into the 

world of farming, they immediately have got to incur hundreds and 

hundreds of thousands of dollars of debt to buy equipment, to rent 

land or buy land. For somebody with absolutely no ability to have 

credit extended to them, obviously, it makes it very difficult. 

I am not sure what the answer is, but I think the way that we 

have approached it thus far has been the best way that is available. That is, some sort of safety net program that at least when 

they go in and speak to the banker guarantees that banker that 

he is going to have some income coming in, that farmer is going 

to have some income coming to pay him the debt that he is going 

to have to incur to step out there in the world of farming, which 

is so uncertain. 

As Chairman Lincoln alluded to, the disaster situation we have 

got right now, this is my 16th year on the Ag 

Committee in both the House and the Senate. We have never 

had a year when in some part of the country, some farmer, some 

group of farmers did not have an agricultural disaster. And it is a 

very difficult issue, but as we move into this Farm Bill, I appreciate your ideas and appreciate your bringing it up now so that we 

can put it at the top of the list and think about ways that we can 

encourage farmers, young farmers, to engage in this business because that age of 57 is rising, unfortunately. It is not falling. 

11 

I want to first of all mention the five pillars that I have heard 

you talk about that will make rural America stronger. One is trade. 

Two is rural broadband access. Three is renewable energy. Four is 

conservation, and five is research. I do not disagree with any of 

those as being critically important to the world of agriculture. But 

ensuring that new farmers find a way to be a part of the 21st Century of agriculture is listed as a ‘‘concern’’, and we just talked for 

a minute about that. 

Where do production agriculture and commodity and risk management programs fit into that picture of those five pillars? 

Secretary VILSACK. Senator, when we talk about the five pillars, 

we talk about the first pillar being improving incomes for farmers, 

and that involves a variety of issues. One is trade, obviously, expanding export markets. This year, we are fortunate. We are on 

track to have perhaps the second best export opportunity we have 

seen in agriculture since we have been keeping records. The first 

six months of our fiscal year were actually a record. Continued 

good news with the President’s leadership in opening up the poultry market in Russia should help those numbers as well. 

It is also about expanding domestic markets and creating opportunities. That is one of the reasons why we are focused on trying 

to better link local production with local consumption. This is not 

just about small, very, very small operations. This is about production agriculture, the ability of schools, institutional purchasers of 

food to be able to access things locally. Sometimes you would be 

surprised that there are folks in small communities who are purchasing food from far, far away that do not realize or appreciate 

what is being grown and raised in their area. And that is why we 

are focusing on trying to rebuild the supply chain with local 

slaughter facilities and mobile slaughter facilities with storage facilities, also creating job opportunities. So it is very important to 

understand and appreciate that production agriculture is critically 

key to that first pillar. 

Obviously, having a safety net is important. It is very important 

when you take a look at the overall farm income. If you take a look 

at all farmers of all sizes and you ask the question how much of 

their income comes from farming operations, if you include all 

farmers, only 9 percent of their income comes from the farming operations. So it is obvious that we need to do work there. If you look 

at just large production agriculture, still 30 percent of their income 

has to come from off the farm. 

So I think there is still work to be done in expanding markets 

and providing assistance and help, but it is clearly one of the key 

keys to revitalizing the economy. And that is why we also focus on 

energy, providing new ways and new opportunities to use the crops 

and the waste product that is produced from agriculture, I think 

has an exciting potential. If we get to 36 billion gallons of renewable fuel in this country by the year 2012, we will see $95 billion 

of additional investment in rural America and 800,000 jobs and obviously increased bottom lines for farmers and ranchers. So that is 

one of the reasons why we focus a great deal on that. 

I might just say just very briefly as it relates to the issue of beginning farmers, I think one of the focuses should be on how we 

might be able to incent sweat equity opportunities in beginning 

12 

farming operations so that the credit needs are not as great as they 

are today. And the other is to take a look at our guaranteed programs and determine whether or not there is a difference between 

a guaranteed loan and a guaranteed payment of a loan. Whether 

or not it is possible to provide guarantees of payments during difficult times as opposed to waiting until the loan has to be foreclosed on to trigger the guarantee, could that possibly open up 

more credit, could it make it more available to young farmers and 

make it easier for them to get started. 

These are some of the ways that are being discussed, and I think 

they are obviously a lot of ideas that we need to think about. But 

it is clear we have to think about it and we have to get the Nation’s 

attention focused on it. 

Senator CHAMBLISS. Let me just throw out one suggestion to you 

there. Leasing of equipment has become more and more common 

practice. And rather than thinking in terms of these young folks 

going out and having to purchase equipment, if we could get creative and develop some programs that incentivize maybe the leasing for short-term periods and have some sort of credit programs 

really focused on that aspect, it would be a huge benefit, obviously, 

to our agribusiness people as well as to the farmers. And I look forward to dialoguing with you on that. 

My time is up, but I cannot not comment on the proposal in the 

President’s 2011 budget to not only take some money out of the 

baseline, the Farm Bill baseline, for risk management but also the 

reduction in direct payments as well as the adjusted gross income 

limitations are issues that are very much a concern to me. 

This is an issue that we dealt with in a very significant way in 

the 2008 Farm Bill, and I will have to tell you that there was very 

much in the way of discussion about these issues. I see Senator 

Johanns down there. He was the secretary during those days, and 

he will remember well the discussions between the administration 

and this committee. And we made significant changes, and to now 

step in and take another whack at two of the basic safety net programs is something that this committee is going to look long and 

hard at because we want to make our contribution. 

No farmer has ever told me that they did not believe in paying 

their fair share when it came to dealing with the issue of deficit 

reduction, but in taking those two programs now and once again 

trying to make significant reductions in them, I think is going to 

be met with a lot of resistance on this committee. But in any event, 

we look forward to continuing to work with you on that and all the 

other difficult issues as we move into the next Farm Bill debate. 

Thank you, Madam Chairman. 

Chairman LINCOLN. Senator Brown. 

Senator BROWN. Thank you, Madam Chair, for holding this hearing and thank you for your exceptional work on the derivatives 

issue. I wanted to thank you publicly for your leadership on that 

very important issue. 

Mr. Secretary, welcome. I appreciated your work, your discussion 

earlier on the ACRE Program. I would like to pursue that, that and 

one other issue, for a couple of moments. 

The ACRE compromise that ended up in the final bill obviously 

was not particularly close to but in the right direction from where 

13 

Senator Harkin and—then Chairman Harkin and Senator Durbin 

and I advocated. The program is—you mentioned in your testimony, it is complicated. It has made it difficult for farmers to make 

their election decision. 

How do we simplify the process? Give me some very prescriptive 

words on how we simplify the process so that there is higher participation. How do we improve the program during the next Farm 

Bill as we just move forward? 

Secretary VILSACK. I think there are a couple things, Senator. I 

think, first of all, the fact that you are making a farmer commit 

to a decision, particularly at the outset of this program, asking him 

or her to give up a certain percentage of payments and protections 

for something that is not quite known and then suggesting that 

they need to be locked in for an extended period of time, that this 

is not a year-to-year kind of operation, that they are essentially 

locked in for the life of the Farm Bill, it makes it difficult for folks 

to be interested in trying a new program out. 

Secondly, there is some concern that the program is based on 

state data as opposed to individual county data. That may be adding a level of complexity to it, but it may make it easier for people 

to calculate how it may actually impact their operations and it may 

become a more popular program. 

We are seeing—as I said, we have a relatively small percentage 

of farms enrolled in this. I think it is obviously focused on trying 

to figure out how you would deal with what the Chair indicated, 

which is how do you get to some level of protection, some level of 

assistance that assures that you are going to get a good part of 

your production costs back and so that the risk of farming is minimized. 

But I think if you take a look at giving people a little more flexibility within the program and you also take a look at the data that 

you are going to use in making the calculations, it might make it 

more popular and more interesting for people. And I think as people see the impacts of it on their neighbors who elected ACRE, 

hopefully, we will see improvements in—— 

Senator BROWN. You are getting generally good reports back 

from those who have enrolled, correct? 

Secretary VILSACK. Good reports in the sense that I think people 

are satisfied with the election that they have made, not necessarily 

good reports—and that is part of our challenge and part of our 

issue, is to make sure that we do as good a job as possible articulating and explaining these new programs. 

It is again somewhat difficult for the 3,000 Farm Service Agency 

offices to institute new programs when you realize how much they 

were required to institute by virtue of the enormous work you-all 

did on the 2008 Farm Bill, and then having to do a lot of it with 

very antiquated technology, it creates a very difficult, stressful 

time for folks. So, hopefully, people are getting more comfortable 

with the program and in a better position to explain it to their 

friends and neighbors. 

Senator BROWN. Thank you. Another question I wanted to ask 

you, you, of course, are familiar with the struggles that dairy farmers across the country have undergone with high costs and low 

14 

prices. Senator Casey and I worked on the Feed Cost Adjuster provision to help farmers when the cost of feed spiked. 

Give me an assessment of how that provision has worked. 

Secretary VILSACK. We are still working. I mean, the program is 

providing some degree of assistance and help, but it is not enough 

to avoid a substantial amount of stress in dairy. And I think that 

is because we really have to address this in a much more holistic 

and comprehensive way. It is one of the reasons why I asked the 

Dairy Council to be formed and asked and challenged them to come 

up with a consensus view on how we might be able to end what 

we are seeing as more peaks and valleys in the pricing of dairy, 

which makes it very difficult for operators to have a difficult year 

and recoup the losses that they incur in these very, very difficult 

years, because they are more frequent and they are more severe, 

and the highs are not as high as they need to be and they do not 

last as long as they need to last in order for people to recover. 

So I think really what we need to look at is a very significant 

effort at trying to figure out how we stabilize the price band in 

dairy. Absent that, you can tinker with programs and you can provide assistance as we did last year and as we are continuing to do 

this year, over a billion and a half dollars in assistance to the dairy 

industry. You are going to continue to have to do that until we figure out how to stabilize that price band. And, hopefully, the Dairy 

Council is focused on that. I know the Milk Federation has come 

up with some ideas and thoughts that are provoking some good 

deal of discussion, and, hopefully, we can get a consensus across 

the country, and we do not get into a situation which we have had 

in the past where there are regional differences that prevent a consensus in moving forward. 

Senator BROWN. Okay. Thank you. 

Thank you, Madam Chair. 

Chairman LINCOLN. Senator Roberts. 

STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE 

STATE OF KANSAS 

Senator ROBERTS. Well, thank you. Thank you, Madam Chairman, and I think you said it would be preferable that if we would 

not give opening comments and just keep them to a few words. Obviously, that is an oxymoron for senators, especially this one. But 

I want to rip through here, about two or three minutes and then 

have a question for the Secretary. 

Are we going to have a second round? 

Chairman LINCOLN. If you need one. 

Senator ROBERTS. I would like to ask some specifics about crop 

insurance. 

Anyway, thank you, and let me just say that you gave one of the 

best opening statements I have heard in the House Ag Committee 

or Senate Ag Committee. I think that you have shown again that 

you are a true champion for all farmers, all of agriculture, and I 

truly appreciate it. I supported the 2008 bill with 79 other senators 

and overriding a presidential veto twice. 

Mr. Secretary, thank you for taking your very valuable time. You 

have been all over the country with a listening tour to come and 

visit with us. It seems like yesterday the Conference Committee 

15 

met in this very room till the early hours in the morning. I think 

we met in the House first. That is when Charlie Rangel made the 

announcement he did not know why he was here but he was told 

to be there, and it sort of went from there. 

But at any rate, here we are two years, 12 days after the bill became public law. Already folks want to move on to drafting the 

next bill. I am not sure that this is wise, but that is what we are 

doing. It is always good to look back first and then try to see where 

we are headed down the road or what trail we take. 

The Secretary’s testimony points out that the commodity title 

and the statute programs are yet to be fully implemented. I know, 

I think there is 21 regulations yet to come out, and I hope it is appropriate to find out what farmers and ranchers think of the current bill before we start suggesting any drastic changes and program cuts. Although I find the Secretary’s comments about trying 

to repopulate rural areas through rural development, I hope 

through farm income, very interesting and very pertinent. 

I am here today to relay the concerns and experiences of our producers in Kansas. Mr. Secretary, I am pleased that you have joined 

us. I want to thank you—or I am asking you to pass a thank you 

on to Under Secretary Concannon for agreeing to come out to Kansas to work with me on the bonus commodities issue within the 

senior nutrition programs. We depend on that. That was a pilot 

program that has worked very well. I am going to be out there in 

August, and we have issued a request for him to come out and join 

me, and we will have a good time. We will buy him a big steak in 

Dodge City and the whole thing. 

One of the responsibilities, I think, for a Secretary of Agriculture—and I am not trying to tell you what your job is. But I 

think I asked during your confirmation hearings, is who is going 

to be the champion for agriculture, for farmers and ranchers, somebody to help tell their story to those who neither understand nor 

appreciate the miracle of modern agriculture. And the Chairman 

talked about that, one in four people in Arkansas employed by agriculture, same thing in Kansas, same thing in Iowa, same thing in 

the Dakotas, same thing, Georgia. 

Today’s producers face challenges from many different directions, 

including their government. And you spent most of your term touring rural America, which is a very good thing, a very positive 

thing. We have a former secretary that did that sitting over here 

to my left, doing the same kind of thing. Basically, you have seen 

firsthand the struggles of farm country. 

Of all the rural investment tools in our tool belt, perhaps the 

most effective is our commodity and crop insurance portfolio. The 

dollars that our producers receive through these programs, demanded by their lenders by the way, get passed through to lenders, 

to grocery stores, to mechanics, to implement dealers, churches and 

many more. 

Now, I am talking about Crop Insurance and the Direct Payment 

Program. I know that they come under a lot of criticism. Usually, 

that is the first thing people talk about, about cutting something 

in agriculture, but I think that is very misleading. And I know 

there is a lot of talk about the ACRE Program and the problem 

with it and how complex it is. 1.8 percent of Kansas wheat farmers 

16 

took part in that program out of a 75,000 ballpark figure. So something has to be done to make that program more beneficial, and the 

one we have ongoing is obviously the Direct Program and the Crop 

Insurance Program. 

I know you want to be of help to these areas, and we want to 

be partners in that effort, but our producers, unfortunately, are 

hearing a different message from your colleagues in other agencies, 

not the USDA but other agencies. And I am talking about the evertightening ratchet of federal regulation. The Chairman talked 

about that somewhat. 

Whether it calls for overly burdensome and unreasonable carbon 

and dust standards, rural fugitive dust is back. I dealt with that 

when I was a staffer, I dealt with it when I was a member of Congress, and now we are dealing with it again. I think it has been 

in some pile, and somebody just jerks it out of there and says, well, 

here we go again, or to regulate every pothole and play as if it were 

the Missouri River, these are very, very small little ponds where 

no self-respecting duck would ever land. 

So producers are being squeezed. They feel attacked by some federal officials and agencies, and especially the press. I am so upset 

in regards to the lack of press from people who understand production agriculture, which has actually become a pejorative. People 

used to win Nobel Peace Prizes for our ability to feed this country 

and a troubled and hungry world. And yet now, if you are not 

small—definition of a small family farmer, I guess we could say it 

would be 5 foot 2, but there is a 6 foot 3 guy out in Kansas who 

has a 10,000-acre operation that is just operating on the edge. But 

that individual plus other individuals in Kansas produce 400 million bushels of wheat, and if that is endangered, our capacity to 

feed this country and to make everybody pay one dime out of their 

disposable income dollar for food, they are going to pay more. And 

then when we have a Haiti disaster, we cannot respond. 

So I am not very happy with the press in regards to how they 

describe farming only as small family farmers. I am not opposed 

to that at all. I am for all of agriculture, and you have done a great 

job in highlighting that. A matter of fact, you have educated probably more consumers than almost any other secretary and you deserve the credit. 

At any rate, the American farmer and rancher supplies food and 

fiber not just for our benefit but for that of the many nations in 

need. I went through that. But they are criticized for the programs 

that help provide this very assistance. I am back again to crop insurance and the direct payment. 

The fact of the matter is our producers are not competing against 

themselves. We are competing against Brazil, Europe, Australia, 

other parts of the world. We all know that story. Our Farm Bill 

takes modest steps to level the scale of international competition, 

but, Mr. Secretary, we need a lot more help in that area. 

So as you are advocate in chief of agriculture, let me just ask you 

a question. How are you working to defend and protect our farmers 

and ranchers, all of agriculture? And I know I heard you say to repopulate the areas. And I know that we keep hearing about small 

family farmers, and we have put that on the size, we put that on 

income or whatever. But the folks that really—that one farmer out 

17 

there and three sons, one son went to Denver, one son went to 

Kansas City, one son stayed. His daughter stayed, and now he is 

farming 10,000 acres, maybe 20,000 acres. And yet, it is high-risk 

agriculture, and he has to depend on crop insurance, has to depend 

on that direct payment, and his contribution to this country is tremendous. And yet somehow, he is pilloried by the press as some 

big business farmer that does not need any help at all. 

So I am just asking, in your opinion—I do not think we have 

swung the pendulum too far because you have done a good job, but 

in your opinion, how can we better defend or better tell our story 

in agriculture from the standpoint of production agriculture? 

Secretary VILSACK. Senator, boy. 

How much time do we have, Madam Chair? 

Senator ROBERTS. Well, I went over three minutes and 54 seconds, and so I am way over. 

Chairman LINCOLN. He went a little over, but I found myself 

agreeing with him, so it was hard to cut him off. 

Secretary VILSACK. Let me try to answer this question, Senator, 

and I would be more than happy to have a more extended conversation with you about this, just to give you a couple things. 

First of all, on the press issue, I absolutely agree with you. I absolutely agree with you, and it is one of the great frustrations. And 

I am sure Senator Johanns when he was secretary probably had 

the same feeling. 

I was watching one of the morning shows a couple weeks ago, 

and they were highlighting a fellow who had written a book, suggesting that the worst thing that ever happened to humankind was 

agriculture. So I came to the office enraged, and I said to the communications folks at my shop, ‘‘Call that show up and ask them for 

equal time.’’ We have yet to hear from them. We have yet to hear 

from them. That is wrong. Major newspapers—— 

Senator ROBERTS. Well, name the program here and now. You 

know, go get ’em. You are on, man. 

[Laughter.] 

Secretary VILSACK. It is ‘‘Morning Joe,’’ and—— 

Senator ROBERTS. Joe did that? 

Secretary VILSACK. Well, I do not know that—Joe may not have 

been on that day. 

Senator ROBERTS. Did he have a roll with his cup of coffee? 

[Laughter.] 

Secretary VILSACK. But it irritated me to the point where we 

asked for equal time. And many major newspapers are reducing 

staffs and reducing it in agriculture at a time—— 

Senator ROBERTS. You are exactly right. 

Secretary VILSACK. —when agriculture is absolutely so fundamentally important. 

Senator Chambliss referred to Afghanistan. You do not win in 

Afghanistan until and unless you have a functioning agricultural 

economy in that country. 

Senator ROBERTS. Yes, the Taliban killed everybody. I mean, we had zero. If they make $400 a month, they can make it and they 

will not grow poppies, but they do not do it with $400 a month, and 

now we have National Guard people over there teaching them basic 

agriculture. 

18 

Secretary VILSACK. Well, here is the deal. If they grow tables 

grapes or they grow saffron or they grow pomegranates, they can 

make three, four, fix, six, eight times what they are making selling 

poppy. We just have to create a system of credit and so forth. So 

that is one thing. 

Secondly, you mentioned the issue of regulation, and I know that 

is a frustration. As I traveled around the country listening to folks, 

there is deep concern about this. So what we have done and what 

we have started is we are bringing the major commodity groups, 

the major livestock groups, and the major specialty crop groups 

into a joint meeting with myself and the administrator of EPA. 

It is the first time that this kind of conversation has been taking 

place on that level. We are setting up working groups so that there 

is an effort to have ongoing dialogue, so that there is a clarity of 

understanding and positions relative to regulations, what is and is 

not being considered. Oftentimes, what we find is that what is out 

in the countryside is not necessarily what is actually happening. So 

helping with those discussions, I think is important. 

But the last thing I will say is this. You ask how do we relate 

this to ordinary folks. I think it is important for Americans to understand that they have something that nobody else in the world 

has. No one else in the world has this, and it is because of our farm 

families and our farm laborers. They spend somewhere in the 

neighborhood of 10 percent of their take-home pay for food. Everybody else in the developed world spends 25 percent or 30 percent— 

or in the developing world, 40 or 50 or 60 percent of their pay in 

food. 

So the question we ought to be asking Americans is, what do you 

do with that extra 10 to 15 percent of your income. Do you buy a 

nicer house? Do you have a vacation home? Do you have a retirement fund? Do you have something for college education for your 

children? Do you buy a nicer home? What do you do with that 10 

to 15 percent, and when was the last time you thanked a farmer 

for it? Because a farmer and farm laborers are in part significantly 

responsible for that. 

Part of the reason why I think it is important to put the emphasis in having a goal and encouraging the number of farmers to increase in this country is to give people a concrete way of explaining 

to the rest of the country that without farmers, we would not be 

able to do anything. It all starts with farmers. I mean, you may 

never need a police officer, and I hope you never do need a police 

officer. But every day, two, three times a day, you need a farmer. 

Chairman LINCOLN. Here, here. 

Senator ROBERTS. I thank you for that statement. Thank you, 

Mr. Secretary. 

Chairman LINCOLN. Senator Johanns. 

Senator JOHANNS. Thank you very much. 

Let me, if I might, start out where I think this discussion relative to the Farm Bill does need to start out, and that is an analysis of the baseline because there can be a lot of great ideas, and 

there are a lot of great ideas out there. But the reality is we have 

to figure out how to deal with this within the confines of the budget 

we have. 

19 

Now, Mr. Secretary, I think there is a whole host of factors at 

work here, but there is outside forces. There is the desire by this 

country to bring down the deficit, and that is going to put pressure 

on every budget. You have got internal forces; certain programs are 

growing. 

We just had a debate about the Child Nutrition Program, which 

I think every member of this committee supports. The offset, where 

did it come from, it came from a very well-received program 

EQUIP, or it looks like that is where it is going to come from. You 

have crop insurance. You have got a 4-billion-dollar squeeze there. 

The Permanent Disaster Relief programs are, as I understand it, 

a part of the baseline only through the 2008 bill. 

Chairman Peterson has already said, ‘‘Look, when we look at the 

baseline for this upcoming Farm Bill, we need to focus on what is 

within our jurisdiction.’’ I think that is just a way of saying, look, 

we are not going to go out and ask somebody else to try to find 

money beyond what is there. 

So I guess what I would like your thoughts about, it seems to me 

as we think about this upcoming Farm Bill, in some respects, it is 

going to be important to recognize that because of these financial 

restrictions, this may be a time where we just simply decide what 

is it about the ’08 bill, which was really based upon the ’02 bill that 

we like, and how do we focus on keeping those in place, how do we 

keep those programs in place because there is no likely going to be 

much opportunity for expansion. 

Would you agree with that analysis? 

Secretary VILSACK. Senator, I certainly would. Somewhat complicated by the fact that not all of the programs within the 2008 

Farm Bill were carried through the entire term of the 2008 Farm 

Bill, so they are—and you may have alluded to that in your comments. So that creates a slightly deeper hole than you would normally be faced with. 

Having said that, I think the challenge for us at USDA is to provide assistance and help to this committee and to the House committee on how we can do a better job, how we can learn from the 

experiences that we have had the last couple of years in an effort 

to try to squeeze as much effectiveness out of these dollars as we 

possibly can. 

But I think your analysis of where this starts is important, and 

I think the Chair’s comments is that we have to constantly remind 

the outside world and the folks inside in the inside world of the 

fact of the decisions that have already been made that have already affected the baseline so that there is not an expectation. 

I mean, to be honest with you, one of the concerns I had was 

when the Commission was appointed to take a look at the budget 

issues. There was Medicaid, Medicare and Social Security, but then 

they talked about farm programs. And I thought to myself, well, 

farm programs, the first three are the ones that you really got to 

have to deal with. And proportionally, if everyone else gave as 

much as we have already given, it would be interesting to see what 

the deficit would be. 

Senator JOHANNS. You would solve a lot of the problem. 

Secretary VILSACK. Yes. 

20 

Senator JOHANNS. The other thing that would be very, very helpful to me, I think there is this perception that the Crop Insurance 

Program has gotten less and less and less and less. And the reality 

is, at least from the numbers I am looking at, that program has 

grown pretty significantly, while at the same time, the Commodity 

Program, largely due to not paying money out on counter-cyclical, 

has gone down. 

What would be helpful to me, and I think to the Committee, is 

if Joe Glauber and some others could kind of give us analysis of 

what is driving that because it may be a good thing. It may be a 

direction that we want to pursue, and it may not. But very clearly, 

you can see an increase in crop insurance payments and a decrease 

in commodity payments. And I just want to know the inner workings of that. Other than to look at the macro numbers, I have not 

been able to get a sense of what is driving that. I think it would 

be helpful to the debate if you would task your people to maybe 

provide us some more information on that. 

Secretary VILSACK. Senator, we will do that. 

Senator JOHANNS. Okay. Great. Thank you. 

Chairman LINCOLN. Senator Thune. 

Senator THUNE. Thank you, Madam Chair. I want to thank you 

and Senator Chambliss for holding this hearing. 

Secretary Vilsack, welcome. It is always nice to have you here, 

and it seems like we just did finish the 2008 Farm Bill and we are 

already talking about the next one. But I think it is always appropriate to evaluate the effectiveness of these programs and to discuss ways to improve U.S. farm policy in the coming years. 

My view is that a strong ag industry that provides the food, feed, 

fiber and energy for the country really is the backbone of our rural 

economy. And I think it is going to be important going forward as 

we look at the next Farm Bill to determine how best we can stretch 

every taxpayer dollar within the Farm Bill’s jurisdiction because 

there is going to be, as you know, a tremendous amount of pressure, budgetary pressures. And my guess is we will be authorizing, 

reauthorizing the Farm Bill at or below the existing baseline. 

So it seems to me at least that farm safety net programs are accounting for a smaller and smaller portion of the overall Farm Bill. 

It is important that these programs continue to provide the most 

effective, efficient and targeted protections for our agricultural producers. And, of course, we have got some revenue-based safety net 

programs that we have been attempting to get implemented and 

with mixed results, but I hope that we can continue to refine those 

and make those more effective and more attractive to our producers. 

I want to focus, briefly, though, however, on one aspect. I said 

food, feed, fiber and energy. And to me, the energy issue is relevant, is interconnected now with farm policy, because in many respects, when you have a corn price that is at a decent level because 

there is demand for corn, some of which is for energy production, 

it means then that in many cases LDP payments and counter-cyclical payments are not being made. So it does impact in a very direct 

way, I think, the commodity title of the Farm Bill when you have 

got a robust renewable fuels, biofuels industry in this country. 

21 

For that reason, I am concerned about where we are headed with 

respect to policy on ethanol and biofuels. And I wanted to ask if 

you agree with the EPA announcement to delay the decision on approval of E15. 

Secretary VILSACK. Senator, I would like the permission to agree 

with half of the statement of EPA, which was an indication that 

they are prepared in the fall to authorize E15. The question is 

what level and what make vehicles and what year vehicles will be 

covered by that. As I understand it, there is additional testing that 

is being conducted by the Department of Energy on some of the 

older vehicle models and on smaller engines so that there is a determination of what is appropriate. And I think the fact that the 

EPA is proceeding with working on labeling is an indication of the 

direction. 

So we took this at USDA as an indication that we want to take 

this as a positive sign. This is an industry that must grow, that 

needs to grow. So what we did, what I tasked our team to do is 

to say, okay, Congress has set 36 billion gallons, a threshold. What 

do we have to do? How many biorefineries do we need? Where do 

they need to be? What kind of feedstock are we going to need? How 

do we make this an industry that is national in scope so that it has 

the kind of support, both political and financial, that it needs to 

survive and to thrive? What distribution systems need to be put in 

place? What kind of blender pumps do we need? What do we need 

to do in terms of providing assistance and help to expand blender 

pumps? And what do we need to do to ask the question whether 

the existing assistance that we are providing the industry needs to 

be calibrated or recalibrated to focus on distribution and encouraging the promotion and development of flexible fuel vehicles? 

I think that has got to be part of the conversation, and I think 

as we talk about energy in this country, as we deal with what is 

going on in the Gulf, it just seems to me that we ought to be reminding Americans that we have the capacity in our farm fields 

and our forested areas and our grasslands to be enormously far 

more independent than we have been of fossil fuel, of foreign oil 

and of oil generally. And I think we ought to be promoting this. 

And so we are full speed ahead at USDA on trying to build out a 

biofuels industry. 

Senator THUNE. Do you think we are hitting—are we hitting the 

E10 wall? 

Secretary VILSACK. I think we are very, very close to hitting the 

E10 wall, which is why this determination is important. The sooner 

that it is made, obviously, the better. The more expansive it is 

made, the better. But even if it is—no matter when it is made or 

how it is made, there still is the issue of how do you build out the 

industry, how do you make it a nationwide industry, how do you 

build and support the biorefineries, how do we use the Farm Bill 

programs that you-all have put in place in an effective way, and 

what do we do about distribution? 

I am concerned that we are going to have production capacity, 

then no distribution capacity that is convenient and co-located, and 

that it will create confusion among consumers and not particularly 

an interest in the industry. And even if we have production and 

distribution, if we do not have enough vehicles, if we are not conVerDate Nov 24 2008 04:25 Jul 28, 2011 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 C:\DOCS\66272.TXT MICHA
22 

tinually encouraging flexible fuel vehicles, there will not be the demand. 

Senator THUNE. Right. 

Secretary VILSACK. So we have to balance all of that at the same 

time. 

Senator THUNE. And I agree with everything you are saying, but 

to get to the infrastructure to support the pipelines, the blender 

pumps, the flex fuel vehicles that are all essential, in my view, in 

creating a market for this, you also have to, in my view, get these 

blend levels raised. And I do not know. 

I mean, do you think we can achieve what the RFS calls for absent higher blends? 

Secretary VILSACK. I think it is going to be difficult to do that, 

which is why we are supporting and encouraging EPA to get to E15 

as quickly as possible. 

Senator THUNE. Good. And I hope that USDA is leaning heavily 

on them to do that because the sooner the better. I mean, this 

is—— 

Secretary VILSACK. You asked Administrator Jackson something; 

I talk to her about it every day, and it is something—when I see 

Secretary Chu, it is something I talk to him about every day. This 

is very, very important, and it is important because it will help. It 

is the key, one of the keys, principal keys, to revitalizing the rural 

economy. 

Senator THUNE. Good. 

All right. I see my time has expired. Thank you, Madam Chair. 

Chairman LINCOLN. Thank you. 

Senator Cochran is not with us, so Senator Lugar, go to you. 

Senator LUGAR. Thank you, Madam Chairman. 

Mr. Secretary, I took advantage of the opportunity at the White 

House yesterday to talk to Secretary Jackson about the same issue 

that Senator Thune has been addressing. And I commend you not 

only for thinking about the blend but also the distribution problems, the overall industry problems. I think these are crucial, and 

to the extent that you and your administration were able to move 

on them, this would be tremendous. 

Likewise, I appreciate your earlier remarks about encouragement 

of younger farmers, and that is imperative and may require some 

creativity on the part of our committee working with you. But I appreciate very much that opening statement. 

My question, however, today, is with regard to Congress’ debate 

of the 2008 Farm Bill. At that time, I shared my frustration with 

colleagues. We were specifically ignoring a ruling by the World 

Trade Organization that Farm Bill programs largely associated 

with cotton production were in violation of our trade agreements. 

In fact, during the debate, I offered an amendment that would have 

created a fast track process to amend offending statutory language 

upon a final WTO ruling. I agreed to retract my amendment upon 

offers to resolve the issue through compromise, which ultimately 

did not occur. 

Predictably, upon exhaustion of appeals by the United States, is 

now held in violation of the trade agreements by the WTO, and 

Brazil has legal authority to impose over $800 million annually in 

retaliation against U.S. interests. Now, while I applaud the fact 

23 

that the U.S. has reached an agreement with Brazil to stave off 

that retaliation, it is not without cost. The administration and 

USDA have agreed to provide the Brazilian farm sector with nearly 

$150 million annually in taxpayer dollars without explicit authority 

from Congress. 

I would appreciate your response to these questions. Please explain the Department’s legal authority to provide these payments 

to Brazil and relied upon precedent. Does the administration support immediate reform of the Farm Bill programs found in violation 

of our WTO trade rules in order to preserve taxpayer resources and 

abide by our trading commitments? And while Congress ultimately 

determines annual appropriations, the administration suggests 

spending and saving priorities through the annual budget requests. 

Should USDA continue to make payments to the Brazilians, 

would you support offsetting those payments through corresponding reductions in farm program payments, specifically from 

the trade offending provisions? 

Secretary VILSACK. Senator, we—before I agreed to enter into negotiations along the lines of what ultimately became the framework 

for an agreement, I asked whether or not we had the capacity and 

authority within, I believe, the Commodity Credit Program to basically provide the resources to fund this settlement. And I was assured by our lawyers that this was the case. I would be more than 

happy to provide to you a more detailed explanation in terms of 

chapter and verse of that opinion. I am frank to say I just asked 

for the go-ahead and got it. I did not go into great detail in terms 

of the actual specific language, but they were reasonably certain 

that they had the authority to proceed, and we will provide you 

with that information. 

As it relates to the necessity of reforming the Farm Bill, as you 

know, the framework and structure of this agreement provides for 

modifications of the credit program, which we have done and which 

we were planning on doing anyway. It also provided for APHIS to 

be perhaps a bit more timely in terms of responding to requests 

from Brazil on certain commodities, which they are in the process 

of doing without compromising the safety and security of our food 

supply. 

There was also an understanding that we would enter into conversations and discussions about how we could potentially create a 

better program that was not violating WTO rules and regulations. 

Obviously, we will have to work with the Committee, the respective 

committees, and I recognize and respect that there are differences 

in opinion within this committee, I suspect, on these very issues. 

But we are committed to working with you so that we not just have 

a framework for a resolution but we actually get this behind us. 

Senator LUGAR. Well, I appreciate that, and I hope that you will 

forward to the Committee the legal findings, at least of your attorneys, because, literally, the situation is one in which we entered 

into this Farm Bill knowing that we were potentially going to be 

found in violation—we needed to set some contingency in the event 

that was the case. We did not. So as a result, we were levied with 

an $800 million burden, not farming. This is all of American industry, and the Brazilians have the ability to retaliate against everything that is in our trade situation. 

24 

Secretary VILSACK. Senator, that was one of the concerns that I 

had about this situation was that there was a concern on our part 

that they would interfere with intellectual property, which would 

carry with it a far greater economic consequence than the $850 million price tag. 

Senator LUGAR. So temporarily, as you say, we have settled with 

the Brazilians for 150 million a year, but this goes on and on. This 

is not a one-time situation, and literally, in framework in which 

they got a ruling for 800 million. Now, granted, we have a responsibility in the Congress, but so does the administration. And this is 

why I have certain frustration about this. 

I think, by and large, the American taxpayers are oblivious to 

the fact that we are on the hook for 800 million against our entire 

trade apparatus because of a program, in this specific case, the cotton program. I hope there are not other programs that we have 

that are likely to run aground and run into other difficulties, because, if so, we better highlight those while we are thinking about 

the next Farm Bill right now. This is huge in comparison to all the 

baseline discussions we have had and the rest of the budget. 

Secretary VILSACK. It might be instructive for the Committee if 

we put together a list of current WTO cases and complaints. As I 

testify here, the obvious one is the COOL litigation that Mexico 

and Canada have precipitated, which we feel very strongly about, 

but nevertheless, there is that case pending. And how long it takes 

and when it gets resolved is another matter. 

Senator LUGAR. Thank you very much. 

Chairman LINCOLN. Senator Grassley. 

Senator GRASSLEY. Thank you, Madam Chairman. And, thank 

you, Mr. Secretary. 

Senator Thune touched on biofuels, so I will not bring that up. 

Senator Brown touched on dairy. I will not bring that up. I have 

four questions in regard to the SURE Program. I will only ask one 

and then submit the others for answer in writing, because if there 

is one part of the Farm Bill that I have heard complaints about, 

it is about the implementation, and more importantly, maybe the 

complexity of SURE. And it is not your problem that it is complex. 

That is what we have done here. 

We have had a very large payment in Iowa under this program, 

but I am not certain that it has always been equitable. It is my 

understanding that Iowa has about 185 million in payments that 

have already been made for 2008, and we are on track to hit 300 

million before we close out 2008. 

My question to you is, do you know about regional differences 

that have been discovered, and if you do, could you explain what 

you know about those? Because that is something that has cropped 

up as a problem. 

Secretary VILSACK. Senator, I know that in terms of the—I think 

it is a billion and a half dollars that have been paid out so far in 

terms of the overall disaster programs that you established. A significant percentage of that amount has been paid in what I refer 

to as the Midwest and Plains states. Whether or not there are— 

I mean, there are significant regional differences, I mean, I think 

it is it depends on the size of the state, and it depends on the number of farmers, obviously. 

25 

But we can provide you with a list of states—I have it right 

here—in terms of the amounts that have been paid out to date 

under SURE. It is a little over $965 million that have been paid 

out. And there are obviously states—well, Pennsylvania, for example, has received very little. Texas has received a good deal. Iowa, 

looking quickly at this, has received the most. So you have got 

Pennsylvania with hardly anything and Iowa with—Pennsylvania 

has got $49,000, and Iowa has 185 million, so I think that is—— 

Senator GRASSLEY. Well, thank you for that. I want to just point 

out something, and you do not have to answer this. But I have 

heard a lot of people in southern Iowa that hay and forage acres 

were being taken into account for revenue, which are not crops that 

typically sell but are instead used for feed on farms. One area of 

consideration is removing the requirement on crop insurance for 

crops that are not true risk crops. In other words, allowing producers to decide what their risk crops are and whether they want 

to purchase insurance for them and then only being eligible for 

sure on those acres and crops that they have chosen to insure. 

Would you have any thoughts on a proposal like that? 

Secretary VILSACK. I would like the opportunity to have our team 

think about that before I responded to it, Senator. I do know that 

we—in the implementation of the SURE Program and referencing 

hay, and particularly in Iowa, there was a glitch in which we had 

to make a slight adjustment because of record keeping issues that 

some farmers had difficulty with. 

I can understand why there is frustration here because the way 

it is set up, you actually have to have a full year’s data before you 

can make the calculation for payments. So we are now in the process of doing 2008, 2009, and people are dealing with 2010 difficulties. So I understand and appreciate why there is some concern. 

It was further complicated by the fact that there were adjustments made in the Recovery Act, which we had to recalculate into 

the SURE Program, further complicated by the fact that, again, our 

technology’s pretty antiquated and it is difficult to institute a new 

program with antiquated technology and do it in a quick way. So 

a combination of all those things, it is perfectly understandable 

why people in the field are frustrated. 

Senator GRASSLEY. Yes. One other thing, I think that you have 

highlighted and tried to do a good job in the area of civil rights 

that had some shortcomings from a lot of previous administrations. 

I have been an advocate for this Pigford African American settlement. Now that the Extenders Bill might not move, have you got 

any suggestions how we might move forward on getting that money 

out? 

Secretary VILSACK. Senator, our hope would be that you find a 

vehicle, a legislative vehicle. We have identified an offset that you 

can tack that onto so that we can get these people—begin the process of getting these folks paid what they are entitled to. And at the 

same time, we are setting up a process by which we are going to 

offer a settlement opportunity for the folks in the Garcia and the 

Love cases, and we are in, I think, significant negotiations with the 

plaintiffs in the Keepseagle case. The goal of all of this is to close 

this chapter and start a new chapter in civil rights within the 

USDA. 

26 

Senator GRASSLEY. Thank you, Madam Chairman. 

Chairman LINCOLN. Senator Nelson. 

Senator NELSON. Thank you, Madam Chairman. 

Mr. Secretary, throughout the efforts on putting together the 

Standard Reinsurance Agreement, I am sure I am not alone, but 

I have heard from a number of agents over the impact of the proposed SRA cuts we have on the delivery system. As a matter of 

fact, some have raised the question about whether or not they 

would have access and availability—the producers will continue to 

have access and availability to agents if the new and more rigid 

cap on agents’ commissions reduces the number of insurance 

agents providing service, particularly in rural communities, recognizing the space distances between communities and what impact 

that could have. 

In addition, a question; does the Department foresee that these 

cuts will have a detrimental impact on high-risk areas that crop insurance companies may see as simply too risky to insure so that 

they no longer decide to provide service there as in western Nebraska where we had the multi-year drought that went from at 

least 2000 to 2005, longer in some areas. 

So I guess what I am saying is while we recognize the need to 

take some cuts, we do not want to impair the program to the point 

where service is impacted and reduced and the possibility that 

some crops will just simply be redlined, if you will, as being too 

risky to cover. I wonder if you have any thoughts on that. 

Secretary VILSACK. I do, Senator. First of all, we obviously share 

with you the concern about the stability and solvency of this very 

important piece of the safety net, and we understand and appreciate the role that agents play in providing service. I would say 

that we are confident that this agreement is fair to farmers because it does not necessarily increase costs to them. In fact, many 

farmers may as a result of our proposal see a decrease in crop insurance premiums. It also, we believe, will help to expand coverage 

under the pasture, forage and range land portions of the product, 

which we have been talking about for some time, but we have now 

identified the resources to be able to make that happen, so we 

think an expansion of the program. 

We think that in terms of the agents, while it is true that they 

may not make as much as they made last year, they will certainly 

make more than they made several years ago, and it is, I think, 

a fair return for the work that needs to be done. 

The companies suggested that the A&O be about $1.3 billion and 

then that number would be adjusted for inflation from this point 

forward. Interestingly enough, that $1.3 billion number for A&O is 

roughly the same as the 2010 number would be under the current 

agreement. 

So because of the way in which this is structured, we think this 

is fair to the taxpayers. We think it is fair to the agents, fair to 

the companies, and most importantly of all, it maintains the program, it expands the program, and offers many producers the possibility of reduced crop insurance premiums. 

Senator NELSON. Well, as long as it does not result in a reduction 

in availability of a program for certain kinds of crops because now 

the lost costs are projected to be much higher and maybe even 

27 

higher than the premium would suggest. So I hope that this is not 

the case. As a matter of fact—— 

Secretary VILSACK. Senator, can I just—— 

Senator NELSON. Yes, sure. 

Secretary VILSACK. To that point, just to be clear, we asked to 

do an analysis, an outside analysis, of what we think a reasonable 

rate of return would be for companies. What we found was a reasonable rate would be somewhere in the neighborhood of 12 percent, and the previous year, the companies had a 26 percent return 

on investment. Historically, it has been about 17 percent. This 

agreement takes it down to about 14 and a half percent. So it is 

above the 12 percent number, slightly below the 17 percent number, but we think that is a reasonable number that should not necessarily result in a reduction of coverage. 

Senator NELSON. Well, it assumes that lost costs are going to be 

even over a period of time and premiums will be even over a period 

of time. If you have unusual losses or an unusual year, you will see 

that this number probably will not maintain. But let’s see how it 

works. 

I had a call yesterday from a gentleman that indicated that some 

producers would prefer to select crop insurance over direct payments as a way of risk management. In other words, that they 

would prefer to insure against unforeseen future events that could 

affect their livelihood rather than having direct payments. 

I think that is an interesting thought. I hope the Department 

would take a look at that. Obviously, one of the things one would 

want would be that if they are going to give up the coverage of direct payments, perhaps they ought to have some reduction, something to reduce the size of the premium in order to secure that kind 

of risk management. I wonder if anyone has brought that up as an 

internal discussion within the Department. 

Secretary VILSACK. Senator—— 

Senator NELSON. It could be optional. It is not something that 

would be mandatory. 

Secretary VILSACK. I think your question offers me the opportunity to sort of explain how we see our role in all of this, and if 

we are off base on this, we obviously need to be told. Our view is 

that you-all will be writing the Farm Bill and our job is to provide 

the assistance and advice and analysis that you need. Senator 

Johanns has asked for an analysis, which was perfectly appropriate. 

We may very well throw out some ideas and some concepts for 

consideration, as I did today with beginning farmers. But in terms 

of direction, we are looking to you to direct us in terms of what you 

need. 

Now, I can tell you that we have had inquiries from House members of the Ag Committee in terms of how much money are we currently spending in totality in the safety net and is there a better 

way of channeling those resources in a way that provides greater 

protection and fairer protection and broader protection for farmers 

that they would like. And I think that those are questions that we 

always need to be asking at this point in time when we enter into 

a Farm Bill discussion. Learn from previous experience, perfect on 

what we have done, and always question whether or not there is 

28 

a better way. And that is obviously what we are interested in helping you do. 

Secretary NELSON. Well, I wonder if you would undertake some 

sort of analysis on what could be accomplished if there could be a 

program offered as a voluntary program to move away from direct 

payments into a risk management arrangement that is based on an 

insurance model. I appreciate that. 

Thank you, Madam Chairman. 

Chairman LINCOLN. Yes, certainly. 

I know Senator Baucus has to get somewhere, and I want to 

thank Senator Casey for being just a heck of a nice guy. 

Senator BAUCUS. 

Senator BAUCUS. Thank you, Madam Chairman. 

First, I want to thank my colleague from Pennsylvania. I am on 

this Deficit Reduction Commission, and my deficit time today has 

been about an hour. I need to get back to it. Thank you very, very 

much. And thank you, Madam Chairman, for holding this important hearing. 

I would just like to state, just for a fact because it is true, that 

agriculture is still Montana’s number one industry. It has been for 

as long as I can remember. It clearly is today. It is 3 billion of our 

state’s economy, and that might be small by other state standards, 

but it means so much to our state, Mr. Secretary. I know you know 

that. 

I also thank you for coming to Montana. I commend you on lots 

of actions you have taken with respect to Montana, several conversations we have had, and I appreciate your candor and your 

forthrightness and your follow-up on assurances that you made. 

That means a lot to me personally. I just wanted to thank you very 

much for that. 

When we wrote the last Farm Bill, before we wrote it, I spent 

a lot of time traveling around Montana. I made a major effort. I 

went to the major cities in our state to ask farmers what do they 

think about the next Farm Bill, what should it contain. When I say 

cities, I do not mean like Great Falls, Missoula. I mean major communities. I had about ten of these around the state. 

There were various themes that became apparent. One is the 

need for much better, efficient ag disaster assistance. Our farmers 

very much were concerned about the time it took for Congress to 

pass agricultural disaster assistance. Sometime it took a long time. 

Sometimes some farmers were helped and other farmers were not 

when it should be the other way around. Sometimes it was tied. We 

had to wait until some other bigger disaster came long. It just did 

not work. And sometimes the payment had to be one year, not to 

another. We had to choose between years, et cetera. 

And so I authored the Ag Disaster Trust Fund in the Farm Bill, 

and I am very happy that it is there. And, of course, it is not perfect, but at least there is much more assurance that farmers when 

they incur a disaster are paid properly and the right farmers are 

paid. It is better than what we had previously. And I just want to 

thank you, Mr. Secretary, for helping to implement that. 

One of the programs funded obviously in the Trust Fund, as has 

been discussed a few times already this morning, is the SURE ProVerDate Nov 24 2008 04:25 Jul 28, 2011 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 C:\DOCS\66272.TXT MICHA
29 

gram, the Supplemental Revenue Assistance Payments Program. 

So I have a couple of questions about the program. 

First is, does the administration view the SURE Program as an 

effective part of disaster assistance safety net? And second, since 

it is funded only through 2011, does the administration see enough 

value in it to support it being fully funded in the 2012 Farm Bill? 

And I might add, I would like to hear what suggestions you might 

have to deal with this administration glitch. As it is, it just takes 

a long time for farmers to get compensated. If you could just comment on SURE, its importance and the degree to which you want 

to recommend that we pursue it in the 2012 Farm Bill. 

Secretary VILSACK. Senator, first of all, recognizing your leadership in this, I think it is important to recognize that and to thank 

you for it. I will say that for the farmers that are predominantly 

covered by the SURE Program, it is a very important component 

of a safety net because there can be and there are on a frequent 

basis things that cannot be anticipated, disasters of significant proportion that impact and affect farmers. And there has to be some 

way short of ad hoc disaster programs on an ongoing basis, which 

you dealt with before SURE. 

Having said that, I think I have to recognize that in the Chairwoman’s state, that is a program that does not necessarily work as 

well because of the nature of farming in Arkansas and in some of 

the other southern states. So I think as we look at the future, I 

think we have to recognize that whatever program you create to try 

to provide a permanent disaster assistance program, it has to be 

available to the diversity of farming in America. 

Then to Senator Nelson’s point, which is that there are conversations and discussions about all the money that is spent in the safety net, are we comfortable that it is being spent in precisely the 

most effective and fair way, that is obviously a conversation youall are going to have. 

So whether or not SURE survives in its current form or you have 

something that is a modification to it or you have something that 

builds on it, that, I think, is yet to be determined. But it is very 

clear, you have to have some vehicle because I think your farmers’ 

concerns were appropriate. They have a disaster, and the disaster 

creates an immediate need. And you have to have a program that 

responds to the immediate need. And with all due respect, sometimes it takes awhile for Congress to basically do the necessary legislative steps to get the need fulfilled. And then it takes time for 

us to distribute the resources. 

I think we showed the capacity to get resources out the door 

quickly with the dairy program that you-all passed at the end of 

last year. We got that out in record time. 

There has been a delay on the SURE Program simply because of 

the complexity of the calculations that are required and the antiquated nature of our technology. I have said that a couple of times 

today. I just need to emphasize it. 

We are dealing with 1980, 1990 technology. In no other area of 

government, I think that has to do as much as we have to do in 

terms of regular folks, interconnection with regular folks, could 

deal with the kind of technology we are dealing with. So the fact 

that we have got a billion and a half dollars out the door already 

30 

in these disaster programs, I think is a testimony to the hardworking folks at the local level, the Farm Service Agency. But we 

have got to do a better job on technology, and we have got to figure 

out ways to simplify these programs. And I do not have the answers today, but I think by identifying the problems early and having this conversation early, I think we will do a better job of finding those solutions. 

Senator BAUCUS. I appreciate that, and clearly, we want to work 

together. This Committee, I know I can speak for the Chairman. 

We want to work with you. It is right. SURE works better in some 

parts of the country than other parts, and that is why disaster assistance is set up in a multifaceted way, to make it work. But 

thank you very much, Mr. Secretary. 

Thank you, Madam Chairman. And thank you, Senator Casey. 

Chairman LINCOLN. Senator Casey, thank you for your patience. 

Senator CASEY. Thank you, Madam Chair. 

And I want to commend the work Senator Baucus is doing on a 

whole host of fronts, including the challenge of the deficit, so we 

are happy to yield a little time to that. We are grateful. 

Mr. Secretary, thank you for being here once again. You have 

been in this room a number of times, and I think every time you 

have been here, I have asked you about the dairy issue. But we are 

particularly grateful for your work and your commitment, not only 

as Secretary of Agriculture and all of the difficult challenges you 

face and we all face, but, in particular, the time you have spent 

being available and accessible to us, either here in Washington or 

back in our states and in this case, Pennsylvania. I know you are 

a native. We want to get you back there as often as we can, but 

we are grateful for the time you spend there. 

You know better than I, I think. You understand this issue, the 

challenge that dairy farm families face with regard to the cost of 

production being so difficult. You also, I think, understand and you 

have given meaning to this difficult issue we face when we encounter families that are suffering through this, so many families that 

have led and continue to lead lives of struggle and real stress because of the economy and because of the impact on dairy farmers 

and their families. 

I remember early in my time in the Senate way back in 2007, 

on a very, very cold day going to Wayne County, Pennsylvania, you 

know, where that is in the northeastern corner of our state, and 

meeting Joe Davitt and talking to him about whether or not he 

would be able to continue that tradition in his family going back 

several generations. And he told me at the time he did not think 

he could and was despondent about that, and I think in many ways 

his life and his struggle encapsulates the struggle that so many 

families face. 

But in the face of that, we have taken action. In your testimony, 

I was looking on page 5. I know you were not able to get through 

all of this today, but the Milk Income Loss Contract Program, the 

so-called MILC Program, $930 million. You mentioned the impact, 

although it is limited of the feed cost adjuster that we worked on. 

But under your leadership, 290 million in additional direct payments to dairy producers, 60 million for the purchase of cheese and 

other products, expediting the purchase of cheese and cheese prodVerDate Nov 24 2008 04:25 Jul 28, 2011 Jkt 000000 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 C:\DOCS\66272.TXT MICHA
31 

ucts, helping both farmers and food banks, and increasing the purchase price for cheddar blocks, barrels and nonfat dry milk in the 

Dairy Products Price Support Program. So a lot of actions you have 

taken, whether they are in furtherance or in the development of 

programs as it relates to appropriations, emergency actions you 

have taken, all of that is meaningful and has had an impact. 

I guess I ask you what more can we do to help you, to give you 

more options or resources or tools to combat this terribly difficult 

challenge by way of new programs, by way of adjustments or 

changes to existing programs, by way of appropriations, number 

three. And I guess number four, looking down the road a bit as you 

have done today so appropriately, are there strategies that we can 

employ in the 2012 Farm Bill that will attack this problem with 

even more impact? I know that is a lot, but as best you can. 

Secretary VILSACK. Well, first of all, Senator, no one in Congress 

has been more focused on this issue than you have, and that is one 

of the reasons why we have taken the action we have taken is because of your request for us to—— 

Senator CASEY. Thank you. 

Secretary VILSACK. —continue to move. And it is a crisis, and it 

is a crisis because 10 years ago, we had 110,000 more people in the 

dairy business than we had—and today we have 65,000. So we 

have lost half of our dairy operators in this country. I certainly am 

sensitive to the pain that you have discussed in terms of your constituent. I heard a number of similar conversations and stories on 

my rural tour, as well as just last week in Wisconsin when we had 

a hearing, part of the consolidation and competition hearings that 

the Department of Justice and the USDA are cosponsoring around 

the country. We went to Madison, Wisconsin, and we focused on 

dairy. 

I think that there were many concerns expressed about the way 

in which markets are setting prices and basically have control over 

what is being—how things are priced and whether or not there is 

a need for an examination of that structure and system. 

Here is the problem. I mean, we took all of these steps last year 

in an effort to try to get folks through a tough time. And initially, 

the industry reacted as it needed to, which was a very systematic 

and thoughtful reduction of herd so that the amount of oversupply 

was reduced. And as it was being reduced, prices began to rebound 

and we began to see strength again in the industry. 

Just about the time we got to see that strength in a significant 

way, folks decided that it was okay to increase their herds, and we 

got right back into the situation in the first part of this year that 

we were in, in 2009. So that led me to believe that we cannot just 

simply look at individual assistance programs as we have in the 

past. So we really do need to look at a holistic and comprehensive 

response, and that is why we put the Dairy Council together. We 

have representatives from all across the country. Our co-chair is 

from Pennsylvania. And we have just basically challenged them; 

can you come up with a consensus position within the dairy industry as to what needs to be done in terms of supply, in terms of pricing, in terms of marketing so that we have greater stability and a 

broader price band that we have today and greater distance between the very high and lows that men and women in the dairy 

32 

industry experience? And how do we make sure that the folks who 

are producing the milk and the cheese and the cream and the butter get their fair share of the value, the retail value of those products? I mean, the reality is that they get a very, very small percentage of the retail value corresponding to the amount of work 

and effort and capital it takes. 

So those issues are being discussed and reviewed, and I would 

say, in terms of responding to your question of what more can you 

do, give us some time to formulate a more comprehensive approach 

and then basically take a look at it and see whether or not it is 

something that you could be supportive of and champion, because 

at the end of the day, it has got to be a more comprehensive approach than this sort of ad hoc, band-aid approach that we have 

had. 

There are just too many people losing, too many people leaving, 

and I too have heard very sad stories. The first week I was in office, I talked to the widow of a dairyman who took his own life because of being distraught and distressed over credit circumstances. 

And so it is a painful memory that will not leave me as long as 

I am in this job. 

Senator CASEY. Well, thanks so much for your enduring commitment on this. We look forward to continue to work with you. Thank 

you so much. 

Chairman LINCOLN. Thank you, Senator Casey. 

We do have a vote coming up at noon, and so I want to—since 

it is the same question I was going to ask, I am going to yield to 

Senator Chambliss and then we will yield to Senator Roberts for 

the remaining questions. 

Senator CHAMBLISS. Thanks, Madam Chairman. 

Mr. Secretary, as USDA has partnered with the Internal Revenue Service to monitor compliance with the income level restriction for farm program participation, I am curious to know if the list 

of those flagged by the IRS and then supplied to the USDA will be 

subject to release under the Freedom of Information Act. While I 

realize that tax information is not subject to release, I also understand the list transmitted to USDA from the IRS will actually have 

no tax data contained in it. 

Secretary VILSACK. Senator, that is a question I am not prepared 

to answer today. I will get you an answer as quickly as I can. I 

know that we made concerted efforts in the MOU and in the discussions with the IRS to make sure there was a firewall, appropriate firewall, in terms of the information we were receiving, that 

it would not be disclosed either intentionally or unintentionally. I 

do not know whether it is subject to the Freedom of Information 

Act, and I will be more than happy to get that answer to you. I 

just do not know. 

Senator CHAMBLISS. All right. If you will please, I would appreciate it. Thanks very much. 

Secretary VILSACK. Thank you. 

Chairman LINCOLN. Senator Roberts. 

Senator ROBERTS. Thank you, Madam Chairman. 

And again, Mr. Secretary, thank you for coming up, and I do look 

forward to having a good conversation with you at your convenience. I know you are very busy. 

33 

In regards to crop insurance, the thing that concerns me is that 

when back in the dark ages when I used to be somebody and I was 

chairman of the House Ag Committee, there were 30 insurance 

companies in the business, crop insurance business, and they 

would concentrate in certain areas of the country with certain commodities. Now there is 12. 

I am very worried that if we cut $12 billion—well, not if, we 

have. But if we continue down this road, you are going to have a 

hodgepodge of coverage that is not a national program. That is not 

what Bob Kerrey and I worked on and Dick Lugar worked on very 

hard with the Crop Insurance Program. But if we do not preserve 

that, I just worry, both from the lending standpoint and the producers’ standpoint, we are going to be in a lot of trouble. So I am 

just going to leave it there, and then I look forward to having a 

good discussion with you. 

We are about 60 percent finished with harvest this year. I am 

going to be very bullish and say we are going to approach 400 million bushels. I hope that is the case. Some of have had a very good 

year; others, a poor year. The weather has been—Mother Nature, 

I do not know what we did to Mother Nature, but she has not been 

very kind to us. 

But at any rate, no matter who you talk to, all of our farmers 

are concerned, and they do not understand the widening basis. 

Now, by that I mean the difference between the future price at the 

Board of Trade and those and the price at the country elevator. 

That is a buck fifty difference, over a buck fifty. And you know the 

stories that will come out in regards to who is at fault and whatever. I think I have a gnat here from the Board of Trade that is 

giving me some problems. 

Global wheat production is up. This is what I get back. Storage 

capacity is full. Transportation costs are high. And they say we just 

have to have more demand, and obviously, that gets back to a 

trade agenda. That gets back to several countries that we have 

been working with for a considerable amount of time but unfortunately have not been able to consummate any kind of a trade 

agreement. So I guess in order to explain to farmers this widening 

basis—and if you have some kind of a formula or some kind of a 

short explanation, I would sure like to hear it and I know they 

would. 

What are we going to do to address this concern on the over 

basis? 

Secretary VILSACK. If I understand your question properly—let 

me say this. We are working very hard to try to create a good deal 

of momentum behind a trade agenda that basically allows us to do 

a better job of reducing oversupplies of commodities that we have 

the extraordinary capacity to produce, and to do it in a way that 

provides greater income opportunities for those producers. And it 

involves taking a look at trade not as every country being looked 

at in the same way, but actually individualizing our approach to 

each individual country depending upon where they are in terms 

of their market maturity and in terms of their market sophistication. 

So you have got countries right now where we are trying to build 

a relationship that someday will lead to a trading opportunity. 

34 

They are fragile markets. You have got markets that are very 

closed and which we are trying to open them up. I use India as an 

example there. We have had a significant difficulty on a number 

of areas with India trying to get them to be more cooperative in 

opening up our markets. Then there are maturing markets like 

China where we are confronted with a series of issues concerning 

quality, phytosanitary, sanitary barriers that we are trying to 

knock down. It is the reason why we have spent a lot of time promoting more technical assistance teams traveling around the world 

trying to knock those barriers down. And then you have got mature 

markets, very mature markets like Japan, where we are making a 

concerted effort to brand American products more successfully. 

The area of—the wheat issue is a difficult one, and it is one that 

worries me because of the price differential. We are looking at ways 

in which we can provide assistance and help through our lending 

programs, but I wish I had a better answer for you, Senator. I am 

afraid I do not, other than we are working hard to expand opportunities. 

Senator ROBERTS. Well, I know you get the same question as I 

do, and I have difficulty trying to explain it. Here is a farmer who 

is getting, what, 2.80 at the country elevator going over the scales 

and then he looks at the future price at the Board of Trade, and 

it is 3.50 or 3.80 or 3.90. And he asked me, ‘‘Senator Roberts, how 

do you explain this?’’ or ‘‘Pat, how do you explain this?’’ And I have 

a little trouble doing that. 

Secretary VILSACK. Well—— 

Senator ROBERTS. Bob Stallman has the answer, so I am sorry. 

I mean, he will come up with the answer with his testimony, I am 

sure. 

Secretary VILSACK. We face that in virtually every commodity in 

terms of the producer putting a lot of the labor and a great deal 

of capital and then getting a relatively small percentage of the retail value or the market value of—— 

Senator ROBERTS. Exactly. 

Secretary VILSACK. —the product. And I think that is one of the 

reasons why we are having these consolidation and competition 

hearings, is to determine whether or not there is anything within 

the current structure of how these commodities are being marketed. Is there insufficient transparency, for example? Is there the 

capacity for folks to differentiate from producers that is not fair? 

Are there special deals and sweetheart deals that distort the market? Is there just a general markup that takes place when you 

have got as many steps in the process as you have? 

It is one of the reasons why, candidly, we are trying to figure out 

a way to better connect local producers with local consumers by 

bringing some of the processing facilities at a smaller way down 

into the more local area to see if there is a way in which we can 

do a better job of converting those crops so that you have competition for that wheat, so that you have got competition for the corn 

or the hogs or whatever. 

When I have got it figured out, I will let you know, Senator. 

When you have it figured out, I would appreciate it if you let me 

know. 

35 

Senator ROBERTS. All right. We will get together on it. We will 

have some meaningful dialogue. 

Thank you, Madam Chairman. 

Chairman LINCOLN. Thank you, Senator Roberts. 

Mr. Secretary, I want to applaud the Administration’s effort in 

moving Korea, the Korean Free Trade Agreement, and hope and 

encourage that we can also see Columbia and Panama follow suit, 

and would certainly say that the self-imposed ban that we have on 

our products and exports into Cuba is another issue. The President’s comments have been that we can create jobs by increasing 

exports, and I hope that we will work with the Administration to 

see those happen in all of these different areas where there is 

meaningful opportunities for our products to be able to go into 

those countries, and I look forward to working with you. 

Thank you for your patience and your willingness to be here. We 

certainly appreciate working with you, and we look forward to not 

only work on a 2012 Farm Bill but a 2008 implementation and so 

many other issues that are important to rural America and certainly our hardworking farm families and ranchers across the country. 

Secretary VILSACK. Madam Chair, thank you. And just to point 

out and to remind folks who might be watching this or listening 

to it, there is always conversation in this country about trade deficits. It is often not appreciated or recognized that in agriculture, 

we have a surplus. We anticipate it could be $28 billion, and for 

every billion dollars of ag trade, it is somewhere between 8 and 

9,000 jobs. It is one of the reasons why ag is responsible nationwide 

for one out of every 12 jobs. Thank you. 

Chairman LINCOLN. We appreciate it. We look forward to continuing that. Thank you so much. 

I would like to ask the witnesses of the second panel to come forward and be seated. We are going to run up against a vote, so we 

want to make sure we move forward. So I am going to go ahead 

and introduce them as they are taking their seats. 

Bob Stallman, a rice and cattle producer from Columbus, Texas, 

is president of the American Farm Bureau Federation, the 11th 

president in the organization’s history. Mr. Stallman was first 

elected president on January the 13th, 2000. He is the first American Farm Bureau Federation president from the Lone Star state, 

and we welcome him here. 

Roger Johnson is the 14th president of the National Farmers 

Union. He was elected to serve in this role at the organization’s 

107th anniversary convention in 2009. Prior to leading the family 

farm organization, Johnson is a third-generation family farmer 

from Turtle Lake, North Dakota; served as North Dakota agricultural commissioner, a position he was first elected to in 1996. 

Mr. Johnson and Mr. Stallman, your written testimony will be 

submitted for the record, so we appreciate all of that and would 

certainly ask you to try to keep your remarks to five minutes. 

Mr. Johnson. 

36 

STATEMENT OF ROGER JOHNSON, PRESIDENT, NATIONAL 

FARMERS UNION 

Mr. JOHNSON. Thank you, Madam Chair and members of the 

Committee for the opportunity to testify. You have heard my introduction. It is again in writing. Let me get directly to the point, if 

I can, because I know your time is short and we are running late. 

I just have a number of observations that I think are important 

as we begin to look at the next farm bill development. We want to 

sort of take a high-level look and see what is working and what is 

not, and what some of the needs might be for future farm programs. 

Certainly, the 2008 Farm Bill, we think was an improvement 

over many of the predecessor bills, but there still is room for improvement that remains. As many have said during this here, the 

United States is the—our agriculture has the producers of the 

safest, most abundant and most affordable food supply in the 

world. That certainly is something that we want to make sure that 

we maintain as we begin looking at the next farm bill. 

It is often asked why a domestic farm policy, and I think it is 

important that we have a little bit of discussion about why that is 

important. The history of U.S. agriculture shows that the challenges that we have always faced are persistently low incomes in 

agriculture, persistent high volatility, and that has become an even 

larger issue in the last couple of decades as we have made some 

changes to farm policy, particularly higher price volatility and excess capacity. When I first started farming many years ago, I was 

told we are at this high price point and we are going to be here, 

it is clear sailing, so get in the business and get ready for the ride, 

and we all know what has happened. 

To buttress this argument, I have showed a number of charts because, quite often, it is argued that really the answer to this is we 

can trade our way out of it. And while trade is extraordinarily important, we need to recognize that it by itself is not going to solve 

this problem. In the bottom line chart I show on page 5, which 

really shows that if you look at the major commodities, wheat, corn 

and soybeans over the last 30 years, on real terms, on a volume 

basis, our trading volume has been basically flat as a country. And 

so that is not going to be by itself—while it is an important part 

of what we want to do, it is not going to solve those three critical 

problems that I pointed out at the beginning. 

On page 6, I show a chart that shows the distribution of where 

we spend money on these safety net programs. More than half of 

it goes to crop insurance. We would argue appropriately so. The 

next largest chunk goes to direct payments, and then a number of 

smaller slices to try and deal with what we would argue are the 

more important pieces of the safety net, those parts of the program 

that kick in when times are tough and go away when times are 

good. It is difficult for us to argue persuasively to the general public that we need to subsidize agriculture more when we are in very 

high income time periods. It is much less difficult to make the argument when times are difficult. And so we think that we ought 

to be putting more of our efforts into those kinds of things that are 

counter-cyclical in nature that help through tough times, not good 

times. 

37 

I have comments about the ACRE Program. Several of the observations that have been made already dealing with the statewide 

trigger, we think it needs to be a county, even better if you could 

make it a local producer trigger. That would be very helpful for 

that program. In many ways, the ACRE Program and the SURE 

Program were both new programs, came at the same problem from 

different directions in the last Farm Bill. 

We think the SURE Program is extraordinarily important, and 

if you make some of the adjustments that have been talked about 

in ACRE, it will more closely mirror what the SURE Program was 

trying to do, the big difference being that the SURE Program is appropriately coupled to crop insurance. So having crop insurance expanded into more commodities, into more geographical areas, we 

think is a very good thing. Having the SURE Program tied to that 

is a very good thing. Having programs that work in a counter-cyclical fashion are also a very good thing. 

Finally, let me just make a last point that I make in the last couple pages of my testimony. And it is that some years ago, we threw 

away a number of public policy tools that we would argue you need 

to be reconsidering. You heard a lot of dialogue about the dairy 

problem that we have. And one of the things that the dairy industry is coming together around is some sort of supply management 

program. 

We think you ought to seriously look at whether we ought to 

have some sort of supply management that is incorporated into 

other parts of the Farm Bill and included with that, of course, is 

some sort of a strategic reserve. The final point is in this country, 

we think energy is important enough to have a strategic oil reserve, but we do not have a strategic food reserve and perhaps we 

ought to. Thank you. 

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

82 in the appendix.] 

Chairman LINCOLN. Mr. Stallman, we will ask questions after 

you both complete your testimony, so thank you. 

STATEMENT OF BOB STALLMAN, PRESIDENT, AMERICAN 

FARM BUREAU FEDERATION 

Mr. STALLMAN. Madam Chairman, Ranking Member Chambliss, 

thank you for allowing us the opportunity to present before this 

Committee today, and thank you for holding the hearing. 

I would like to start by saying that our farmers can generally 

point to at least one safety net program included in the 2008 Farm 

Bill that they utilize on their farm, although it does depend on 

what kind of farmer you talk to and in what part of the country 

they farm as to what portions of the Farm Bill producers find most 

useful. Most farmers, though, in most states rely in some way on 

the safety net provided in the 2008 Farm Bill. 

That said, we know we will face many challenges in writing the 

2012 Farm Bill, including the budget environment and the need to 

balance the interests of a multitude of players. At Farm Bureau, 

we have just started the process of evaluating the programs in the 

2008 Farm Bill, grappling with budget constraints and considering 

future policy recommendations. 

38 

We are not here today to present to this Committee a proposal 

for the 2012 Farm Bill, but we have outlined five general principles 

that we will follow when we develop and evaluate our future proposals. 

One, the options we support will be fiscally responsible. Two, the 

basic funding structure of the 2008 Farm Bill will not be altered. 

In other words, money will not be shifted from one title of the 

Farm Bill to another. Three, the proposals we support will aim to 

benefit all of the agricultural sectors. Four, World Trade rulings 

will be considered. And five, consideration will be given to the stable business environment that is critical to success in agriculture. 

While our farmers are generally content with the safety net provided in the 2008 Farm Bill, it can sometimes feel like you are 

reading the old children’s story ‘‘Goldilocks and the Three Bears.’’ 

When you talk to individual farmers, some farmers think the safety 

net coverage provided under the 2008 Farm Bill is just right. But 

in other cases and for other farmers, the coverage is sometimes too 

little. In a small number of cases, the coverage may even be duplicative and too much. 

Without fail, farmers that farm different crops in different parts 

of the country rely most heavily on different pieces of the safety 

net. And the complexity of the interactions between the commodity 

program safety nets and crop insurance, it can probably best be illustrated by looking at two state examples. A farmer in Illinois 

might have a multitude of layers of protection for both price and 

yield risk exposure first through the ACRE Program, then through 

buy-up crop insurance, and then through the SURE Program. 

In fact, Illinois has some of the highest levels of ACRE participation; 26,000 out of the 134,000 farmers in the U.S. reside in Illinois 

that have signed up for the ACRE Program. That is about 17 percent. Buy-up crop insurance coverage is the norm. About 95 percent 

of Illinois farmers have buy-up crop insurance. And farmers in disaster and contiguous counties are expected to benefit from the 

SURE Program. 

But these same programs might not provide a farmer in Mississippi with the same depth of safety net coverage. For example, 

ACRE has not proven to be a useful program in Mississippi for a 

variety of reasons. Only 165 out of the 22,435 farmers in Mississippi that could qualify have signed up for the program. Many 

farmers in the region, particularly cotton farmers, experienced very 

low prices in 2007 and 2008, which were the base years for setting 

the support level for ACRE. 

In Mississippi, the direct payment and marketing loan portions 

of the traditional safety net are critical, and the cuts required to 

participate in this portion of the safety net were too steep to attract 

farmers to ACRE, particularly when their bankers are more comfortable with the greater certainty of direct and marketing loan 

payments. 

The use of buy-up crop insurance is also not as prevalent in Mississippi as it is in the state of Illinois. Only 41 percent of the farmers have buy-up coverage in Mississippi. Again, there are a lot of 

reasons a farmer in Mississippi might not purchase buy-up levels 

of crop insurance. In many cases, the availability of programs is 

not as robust and sometimes coverage is prohibitively expensive. In 

39 

other cases, the products offered simply do not align with the types 

of risks faced by Mississippi farmers. 

Without the purchase of buy-up crop insurance, the value of 

SURE as a disaster program is also minimized. Again, almost all 

of our farmers can find at least one component of the commodity 

title that works for their farm, but it depends on who you ask as 

to which programs work best and are utilized the most. 

Given the great deal of discussion that has already occurred regarding whole farm revenue programs, we would be remiss if it we 

did not at least briefly discuss our thoughts on this topic. Both the 

adjusted gross income crop insurance product and SURE provide us 

with case studies of whole farm revenue programs. And from those 

cases, we have determined potential problem areas to consider as 

future farm policy is designed. 

One, the complexity of such programs makes them unpopular; 

two, such programs can be difficult for USDA to implement which 

in turns delays payments to farmers; three, including livestock in 

such programs adds an additional layer of complexity that can be 

cumbersome to overcome; and last, the paperwork and confidential 

information that can be required to sign up for a revenue program 

is daunting to farmers and often discourages participation. Having 

said that, we at American Farm Bureau are doing research and 

analysis on different provisions related to whole farm revenue insurance. 

In conclusion, we appreciate the hard work of this Committee to 

provide America’s farmers with a practical safety net that allows 

us to continue to produce the safest, most abundant, least expensive food supply in the world. Thank you for the opportunity to be 

with you this morning. I look forward to questions. 

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

97 in the appendix.] 

Chairman LINCOLN. Well, thanks to both of you, gentleman, for 

being here and for your continued availability for us to work with 

you in the Committee as we move forward on the 2012 Farm Bill 

in months to come. 

Just listening to Mr. Stallman’s testimony, Mr. Johnson, in your 

written testimony, you characterized direct payments as the least 

effective way to smooth farm income. So I guess what would be 

your response to farmers described as, say, Mississippi in the testimony here who have described direct payments as the only program they can rely on and the only one classified as green box 

under WTO rules? 

Mr. JOHNSON. Well, thank you, Madam Chair. Obviously, a lot 

of the issues that Mr. Stallman mentioned are the same issues that 

our members debate at conventions as they determine what policy 

we ought to be supporting, and we do, in fact, have some states 

who have policies supporting direct payments. But across the country in our organization, we have fairly strong policy with respect 

to direct payments principally because it is so difficult to publicly 

justify when you have farmers in very high income years receiving 

the same payment that they receive in very low income years. 

While that may be WTO legal, one of the reasons that we are 

suggesting that you think about throwing back into the toolbox 

some of the tools that we have used dealing with supply manageVerDate Nov 24 2008 04:25 Jul 28, 2011 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 C:\DOCS\66272.TXT MICHA
40 

ment and reserves is because you may also be able to bring in some 

WTO legal vehicles by doing that. Another feature that we have 

seen is we sort of made this major shift in farm policy beginning 

in the mid to late ’80s and going through the ’90s is that you saw 

pretty much all of the tools looking at a reaction instead of trying 

to prevent the event from occurring, and so that is another reason 

to include those. 

Our members believe very strongly that you ought to design farm 

policy such that it helps folks when times are tough. That ought 

to be sort of the overriding goal here. And that is why we strongly 

support things like crop insurance, like the SURE Program, 

counter-cyclical payments, some of the supply and reserve programs that I talked on. We would acknowledge that direct payments are WTO legal. Lots of things are, but that does not necessarily make them the best policy. 

The final point I would make, Madam Chair, is that we also 

think, as many have said here today and before, that this Congress 

is going to struggle mightily with figuring out where are you going 

to get the resources to put the right tools in the toolbox for this 

next Farm Bill. You are likely going to be having fewer dollars. 

You are likely going to have even more demands on those dollars. 

And so it requires us to figure out what works best and where 

should we prioritize those dollars. 

Chairman LINCOLN. Well, I thank you very much, and you are 

right. Those are going to be tough questions. Certainly, looking at 

what is the most important safety net programs, for example, is 

crop insurance more valuable than direct payments? I mean, that 

is your question there, but also note that the participation in ACRE 

and certainly, from my area, SURE, have been fairly low. 

How do we improve that? How do we improve on their ability to 

help producers in different areas of the country? Is ACRE more valuable than counter-cyclical in terms of the counter-cyclical payment? 

Mr. JOHNSON. Sure. 

Chairman LINCOLN. And I guess the real question then that we 

must ask, and I would ask both of you-all, is that traditionally, 

Congress has tried very hard to keep the structure of different components of the farm safety net the same across various regions of 

the country. 

In your opinion, is it time for Congress to take a second look at 

that approach? 

Mr. Stallman. 

Mr. STALLMAN. Well, I know Chairman Peterson has talked 

about that to some extent. Our position is that we have to be very 

careful in terms of our overall farm policy structure not to be favoring certain regions or favoring certain commodities over another. 

As a general for our organization, we have to take into account the 

interests of all producers. And it may very well be that the complexity of American agriculture is such that the only way you can 

ultimately design safety net programs that work sort of across the 

board is to take a more targeted approach by commodities, for instance. And so that would be one option that would certainly be 

worth looking at as we move forward in the discussion of this Farm 

Bill. 

41 

Chairman LINCOLN. Thank you. 

Mr. Johnson. 

Mr. JOHNSON. Yes, if I can add to that, I think to more specifically answer your question, Madam Chair, I think the challenge 

that we really have is to figure out how to make crop insurance 

work better because it is—I think there is a lot of support behind 

the principle that government ought to help when times are tough, 

but individuals have an obligation to do what they can to help 

themselves first. That is the important principle behind crop insurance. 

Now, it means we have to design it in such a fashion that it is 

going to—there will be an incentive for farmers in your state to, 

in fact, carry crop insurance. We have to make sure it works for 

them. And if works for them, a lot of these other programs, SURE 

being a perfect example, that are very closely tied to it will work 

much better. 

At the same time, you will avert all sort of the problems that we 

always experience with ad hoc disasters, the political problem of 

trying to get it passed. You have to be extraordinarily capable to 

get that done, and you are making it happen this year, but it is 

not an easy lift. We all know that, and we also know that it tends 

to not always be as targeted in where it helps, that you tend to 

have to write the language so that maybe you help people that 

really we think should not have been helped and maybe it does not 

help as much some of those that should have been. And it depends 

on a crisis happening someplace and enough political—and the crisis happening in enough places that you can get enough political 

gumption together to get something passed. 

Chairman LINCOLN. Well, I certainly appreciate that, but just 

watching and listening to my producers in Arkansas and knowing 

that both ’08 and ’09 disasters have still not been dealt with 

through the programs that are traditional now for that kind of assistance—and certainly knowing the fact that we are maybe perhaps more prone to disasters, but certainly, we are definitely designed to better utilize capital-intensive crops in terms of what we 

grow best. And it is a challenge, and so it is important for us to 

look and make sure that whatever we are designing, that is going 

to be fair and helpful across the country to the diversity of producers that we have in a way that is going to make sure that everyone has the kind of assistance that they need. So we look forward to working with you-all. 

Senator CHAMBLISS. 

Senator CHAMBLISS. Thanks, Madam Chairman. 

I think you-all have pretty well outlined the difficulty that we 

face every five years or six years when we write a farm bill. In theory, Mr. Johnson, what you say is right on target, that Washington 

ought not to be sending out checks to America’s farmers unless 

times are tough. And in the good years, we have seen smaller 

checks going, but with the Direct Payment Program, we still do 

send them out irrespective of whether it is a good year or a bad 

year. 

Obviously, every time we write a Farm Bill, we run head first 

into that WTO issue. And it seems like that exactly the opposite 

ought to be true, and the counter-cyclical ought to be more WTO 

42 

compliant. That is the argument we always make, but the Brazil 

cotton case has taught us a lesson there. And it just happened to 

be cotton that time, and who knows what it is going to be next 

time. 

But we have got to figure this out between now and 2012. And 

as we think in terms of that, this cookie-cutter approach that we 

have had to adopt, whether it is crop insurance or whether it is 

commodity title, is going to have to be looked at and, Lord knows, 

I think we could all agree that the input costs for a bushel of corn 

in Georgia is significantly higher than for a input cost of a bushel 

of corn in Iowa. But how you adjust to that, I do not know. We 

never have been able to figure that out. 

But you guys, we know how smart you are, and you have smart 

people working for you. And we look forward to you-all figuring out 

these answers and giving them to us. But you are also right on the 

fact that we are going to have less money to work with, and, philosophically, we always run into issues that are more and more difficult to overcome each farm bill, particularly with fewer and fewer 

members of particularly the House coming from truly rural districts. It makes it more and more difficult. 

Though we talk about crop insurance—and I would say that 

when I first came to Congress, we had a crop insurance program 

that was primarily designed for Midwest farmers. I mean, that was 

generally accepted that nobody in my part of the world and I doubt 

in Arkansas bought crop insurance in any big numbers because it 

just did not work. You could not get a return on your investment. 

But we have gradually changed that, and I think we have 

incentivized farmers now all over the country to purchase crop insurance. 

But the demand you talk about, Roger, with respect to the money 

that is going to be there, is there right now with respect to crop 

insurance. We have got a pecan program that is working well. It 

is a good program, but it takes up part of the money. We have got 

demands from specialty crop growers of vegetables, for example. 

Again, I do not know how we deal with that, but it needs to be on 

the table and up for discussion as we move forward into this next 

Farm Bill. 

But before I leave crop insurance, both of you know we have had 

this recent SRA renegotiation. Give me your thoughts here. 

Bob, let’s start with you. What do you think about this new SRA 

agreement? 

Mr. STALLMAN. Well, in terms of budget, obviously, and it was 

already discussed with Secretary Vilsack, is the reduction in the 

budget baseline and taking the dollars and taking them away, basically, if you will, from the Farm Bill. That is of great concern to 

us. 

We have some of the concerns that if you do have the reductions 

that are being talked about in the current SRA proposal that is out 

there, that there may be a tendency to have some cherry-picking 

in certain regions of the country. You may have a tendency for 

more marketing efforts in those parts of the country, which are 

more profitable and those parts of the country where crop insurance is perhaps a little more difficult sell, if you will, that the service there may not be as good. 

43 

Long term, we do have a lot of variability in terms of returns and 

what the premiums are based on what crop prices are and those 

kind of things. I am not sure that the SRA as it exists now adequately takes into account that volatility or that variability over 

the course of a long period of time, but that remains to be seen. 

Our goal is to, once again, have a delivery mechanism and the 

products available that will allow crop insurance to be a successful 

program for our producers. 

Senator CHAMBLISS. Mr. Johnson. 

Mr. JOHNSON. Well, thank you, Senator. I doubt that there is 

much difference between the way the two of us would view this. We 

signed on to a letter early on after the first SRA draft was proposed, expressing a number of concerns, the ones that have already 

been talked about, access, cost, those sorts of things. 

The worry that you may actually see insurance companies pulling out of certain areas, I will say in defense of USDA that as they 

moved forward, it got better. Was it as far as we would have liked? 

Probably not. But we all face these challenges. The challenge they 

faced with that is not unlike the challenge you face with how do 

you put the right mix together for a Farm Bill. 

I know that one of the huge issues that we face from a public 

perception standpoint was that we had—because of the anomaly, 

the extraordinarily high price run-up in ’08 in particular, that you 

had insurance agent commissions that were extraordinarily high. 

And people in your and my home communities knew that and did 

not feel good about that. And so then there is a tendency to say, 

well, we want to make sure that does not happen, and so you tend 

to sometimes overreact. 

Well, public perceptions are that this is the business that youall are in. We all have to react to them, and we have to do it in 

a fashion that, hopefully, is as rational as possible and does not get 

too deep into the heat of the moment. 

At the end of the day, crop insurance has got to be an important 

part of the next Farm Bill. It just has to be. It is the principal part 

of the safety net that we have right now. And you-all have struggled, I think, mightily and bend over backwards over the years to 

make it more and more expansive to pick up different crops, different regions; in some ways, even livestock have been pulled into 

this. And I think it is a process that we will just have to keep 

working on, but it is getting better. 

Senator CHAMBLISS. Well, I thank both of you for your leadership 

of your respective organizations. You are always in constant communication with us, and you truly do represent the folks who are 

the most affected by Farm Bills. And without the correct kind of 

input coming from the ground level, we simply cannot write a very 

positive Farm Bill. So we thank you for your continued dialogue 

with us. Thanks for being here today, and we look forward to staying in touch. 

Chairman LINCOLN. Thank you, gentlemen. We do see you-all are 

going to be a tremendous resource for us as we move forward, and 

we are grateful that you are here today and grateful that you will 

be there as we go through these steps. So thank you very much for 

being here today, and we look forward to continuing to work with 

you. 

44 

I would like to ask the witnesses of the third panel to come forward as the gentlemen are leaving. I will go ahead and get started 

with that. We will probably have an interruption, but I think Senator Chambliss and I will be able to manage with the vote so that 

we can continue the hearing and get through. 

The third panel and final panel is composed of a diverse group 

of producers. They are Dow Brantley from England, Arkansas; 

Thomas ‘‘Johnny’’ Cochran from Sylvester, Georgia; Chris Pawelski 

from Goshen, New York; and Mark Watne from Jamestown, North 

Dakota. 

I just remind all of you-all that your written testimony will be 

submitted for the record. I will also take this opportunity to say 

that members may have questions that they would like to submit. 

I know Senator Harkin had a few questions. It may have been of 

the Secretary, but certainly of either of these second and third panels, they may have questions. And if they do, we will be sure to get 

these questions to you so you can answer them. 

Beginning with Dow Brantley, Dow is third-generation farmer 

and a partner of Brantley Farming Company in England, Arkansas. Dow joined the family operation in 2000 and produces cotton, 

corn, rice and soybeans on approximately 8500 acres. He is active 

in the National Cotton Council, USA Rice Federation, Arkansas Ag 

Council and the Arkansas Farm Bureau. 

Dow, thank you for being here and a very special thanks. Your 

father has been a tremendous mentor to me. I am grateful to all 

of your family for what you-all do for us in Arkansas. So if you will 

give your testimony, then we will continue down. 

STATEMENT OF DOW BRANTLEY, FARMER, ENGLAND, 

ARKANSAS 

Mr. BRANTLEY. Thank you, Chairman Lincoln, Ranking Member 

Chambliss. Thank you for holding this hearing today. I am honored 

to have the opportunity to offer testimony before you concerning 

my views on the current farm policy and the development of the 

2012 Farm Bill. 

The 2008 Farm Bill provides a sound and safe, stable farm policy 

foundation that is essential for our farming operation by continuing 

the traditional mix of safety net features consisting of the Nonrecourse Marketing Loan and Loan Deficiency Payment Program 

and the Direct and Counter-Cyclical Payment Program. 

While the Counter-Cyclical and Marketing Loan programs have 

been helpful in the past, they have recently been overwhelmed by 

the cost of production. If crop prices drop sharply, most producers, 

including me, will be in dire financial straits by the time these program make payments. While there has been much debate about the 

effectiveness of direct payments, I believe they are an integral part 

of our farm program delivery system and should be maintained. 

The 2008 Farm Bill made very substantial changes to the payment eligibility provisions of the safety net, establishing an additional adjusted gross income means test and a very significant 

tightening of actively engaged in farming requirement eligibility. 

In my opinion, the USDA overstepped the intent of Congress in 

payment eligibility provisions and issued regulations that are overly complicated and restrictive. The FSA’s overly restrictive financVerDate Nov 24 2008 04:25 Jul 28, 2011 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 C:\DOCS\66272.TXT MICHA
45 

ing rules, legally incorrect, active personal management rules and 

multiple sets of actively engaged in farming rules, which are inconsistent when applied to different commodity and conservation programs within the same program year, are a few examples of problems that we are facing. Sound farm policy provisions are of little 

value if commercial-size farming operations are ineligible for benefits. 

The 2008 Farm Bill included the addition of ACRE Program as 

an alternative to counter-cyclical payments for producers who 

agreed to a reduction in direct payments and marketing loan benefits. The bill also included SURE Program as a standing disaster 

assistance supplement for federal crop insurance. The support 

mechanisms within ACRE do not provide adequate safety net for 

the cotton or rice producers when compared to traditional DCP Program. 

If a revenue-based approach is to find support among us producers, a more reasonable revenue target would have to be established. In my home county, we have 1,650 producers, and no one 

has elected to participate in ACRE. In fact, only two producers in 

the entire state have chosen ACRE. 

The SURE Program has provided little, if any, assistance to row 

crop producers in the mid South who last year suffered significant 

monetary losses due to heavy rains and flooding occurring prior to 

and during harvest. 

I recognize the challenge facing Congress to make improvements 

in this program. Without increased baseline spending authority, 

there will be no funds to even continue the program in the next 

Farm Bill, much less make the necessary improvements for it to be 

an effective disaster relief mechanism. However, I do not support 

relocating existing spending authority from current farm programs 

to apply to SURE. 

Crop insurance as a whole has not worked on our farm or many 

others like ours in Arkansas. Our farm is 100 percent irrigated, 

and on average, our yields are very consistent. Our financial problems occur with the higher production costs due to irrigation or a 

weather event in the fall that disrupts our harvest and ultimately 

affects the quality of our crops. These circumstances cannot be 

hedged against. 

For example, the coverage available under this current mix of 

federal crop insurance policies is not as well suited to rice or other 

mid South crops as compared to producers of other crops in other 

regions. What rice producers need from federal crop insurance are 

products that will help protect against price risk and an increased 

production and input cost, particularly energy and energy-related 

inputs. The rice industry has been working for over a year now to 

develop new generation crop insurance products that we hope will 

provide meaningful risk management tools for rice producers to 

protect against sharp upward spikes in input cost. 

My family has participated in several conservation programs 

over the years, and programs such as EQUIP, WRP and CRP have 

helped us become better stewards of the land and better conserve 

our natural resources. Conservation programs such as the new CSP 

Program, I think, can lead to improved environmental and conVerDate Nov 24 2008 04:25 Jul 28, 2011 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 C:\DOCS\66272.TXT MICHA
46 

servation practices; however, I believe that this program is not succeeding in the way that it could. 

Of all the conservation programs offered by the USDA, the CSP 

Program might have the most potential in terms of actually producing the desired results that are beneficial to both the environment and the farmer. This program is a win-win for everyone; however, it has always been vastly underfunded. The CSP Program has 

been hampered by overly restrictive payment limitations contrived 

by the USDA regulators, restrictions I do not believe are supported 

by the statute. 

In summary, I appreciate the work of this committee in crafting 

the 2008 Farm Bill. I know that the next Farm Bill presents its 

own set of challenges, especially due to inadequate budget authority and international trade obligations. Based on my experience in 

working with the USA Rice Federation, the National Cotton Council and the Farm Bureau, I know they will work closely with this 

committee to ensure that we have an effective farm policy. Thank 

you for the opportunity to present my views today. 

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

72 in the appendix.] 

Senator Chambliss [presiding]. Thank you very much, Mr. 

Brantley. 

Next is Johnny Cochran, from Worth County, which is the adjoining county to my home county and very similar from a production agriculture standpoint. Johnny is a farmer and grows primarily peanuts and cotton and has a livestock operation, also a 

timber farmer, probably used to grow a little tobacco from time to 

time, but now that is a thing of the past in our part of the world. 

Johnny has been recognized as Farm Family of the Year on several 

different occasions and also as Conservation Man of the Year. 

I often talk about the fact that we want folks up here who get 

dirt under the fingernails to explain farming operations, and Johnny is the real deal. He does get dirt under his fingernails and is 

extremely active from a production agriculture standpoint in our 

part of the world. So, Johnny, thanks for being here. We look forward to your testimony. 

STATEMENT OF THOMAS ‘‘JOHNNY’’ COCHRAN, FARMER, 

SLYVESTER, GEORGIA 

Mr. COCHRAN. Chairman Lincoln, Ranking Member Chambliss, 

thank you for holding this important hearing to review U.S. farm 

policy. My name is Johnny Cochran. I am a fourth-generation peanut and cotton farmer from Worth County, Georgia. 

The production, processing and marketing of peanuts and cotton 

are the cornerstones of the economy in my rural county. That is 

why a predictable and stable farm policy is important to me and 

my neighbors. Effective farm policy should adhere to several principles. It should be market oriented. It should allow full production. 

It should provide a predictable, effective financial safety net. It 

should ensure the availability of competitively priced peanuts and 

cotton to domestic and international end users, and it should allow 

participation without regard to farm size or structure. 

A key provision of the cotton and peanut program is the Marketing Loan Program. It gives the lenders the confidence to provide 

47 

operating loans. It provides growers the opportunity to make orderly marketing decisions. The 2008 Farm Bill made significant reforms to cotton program, including revising loan premiums and discounts to enhance market orientation, establishing a ceiling on 

payment storage credits, and provided the Economic Adjustment 

Program for the hard-pressed U.S. textile industry. Cotton is also 

the only commodity that experienced a reduction in target price. 

The peanut program changed dramatically in the 2002 Farm 

Bill. It moved from a supply management quota program to a program similar to other commodities. The 2008 Farm Bill continued 

these changes. For the most part, the program has worked well for 

the peanut industry. 

Unfortunately, the marketing loan has not functioned as it was 

intended because USDA has not followed the Committee’s direction 

to consider international prices when calculating the peanut loan 

repayment rate. Thus, the USDA repayment rate we saw on Tuesday afternoon is not accurate. I ask this Committee to include language in the next Farm Bill that will ensure that prices our international competitors are selling peanuts for will be considered in 

establishing the repayment rate. 

The 2008 Farm Bill made historic changes to payment limitations and program eligibility. Limitations were made more restrictive by eliminating the three entity rule. I understand these reforms, but please remember that full-time farmers like myself must 

be eligible for programs to be effective. 

As evidenced by data from recent sign-ups, the ACRE Program 

is not an attractive alternative for cotton and peanut farmers. 

ACRE’s target revenue does not provide an adequate safety net 

when compared to traditional DCP programs, and growers and 

their landlords are reluctant to accept a permanent reduction in 

loan and direct payment rate to enroll in ACRE programs. 

I support the Natural Disaster Program, but my concerns are 

that SURE does not provide an effective level of assistance for diversified farming operations. 

I want to convey my appreciation to Chairman Lincoln and the 

others in crafting the provisions included in the tax extenders 

package. I hope this legislation will ultimately be approved. 

Conservation programs such as Conservation Stewardship and 

EQUIP and others are attractive to producers and will facilitate 

continued improvements in conservation practices. I commend the 

Committee for including the new crop rotation program as part of 

CRP. Although implementation was delayed, I believe it is an effective option for peanut producers. 

Crop insurance is an essential risk management tool for producers. I believe crop insurance should always be considered a complement to good commodity programs but not a substitute. 

In summary, the 2008 Farm Bill’s cotton and peanut programs 

have generally worked well. You and your colleagues did an excellent job in balancing diverse interests. I recognize the 2012 Farm 

Bill debate will take place with record budget deficits that will put 

intense pressure on funding. 

The findings in the WTO Brazil case put cotton’s Marketing Loan 

and Counter-Cyclical programs under special scrutiny even though 

48 

the U.S. negotiators have crafted an interim agreement that has 

resulted in Brazil temporarily suspending retaliation. 

I would like to thank you, on behalf of all Georgia farmers, for 

the opportunity present these comments, and I will answer your 

questions. 

Senator CHAMBLISS. Thank you very much. 

Next we have Mr. Chris Pawelski. He is a specialty crop farmer 

from the town of Florida in Orange County, New York. Onion farming, like most specialty crop farming, is very hands-on, labor-intensive form of farming, and Chris is involved in all aspects of his 

family’s operation. Currently, he farms with his father Richard and 

his brother Brian. They grow 99 acres of onions and 8 acres of butternut squash. 

Mr. Pawelski, welcome. 

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

66 in the appendix.] 

STATEMENT OF RICHARD PAWELSKI, FARMER, GOSHEN, NEW 

YORK 

Mr. PAWELSKI. Thank you. I would like to first thank Madam 

Chairman Lincoln and Ranking Member Chambliss first for both 

pronouncing my name correctly. Usually, I tell people say Chris 

something Polish. The fact that both of you pronounced it correctly 

was outstanding, so I would like to thank you for that. 

I would also like to thank my Senator Kirsten Gillibrand for affording this opportunity to address you today as a specialty crop 

farmer from New York who has had extensive experience with the 

Federal Crop Insurance Program, specifically, the Multi-Peril Crop 

Insurance Program or the MCPI policy. 

Though I am testifying alone, my wife Eve who is here with me 

has been full partner over the last 14 years who has worked hard 

with me making the various improvements to our policy, and without her hard work and imagination, I would not be here today. 

On Monday, I received a letter from the head of RMA, Bill Murphy, who was here today, who soundly rejected my wife and my reform proposals for the MCPI policy. I will be including it for the 

record for this hearing. Bottom line, when you read the letter, you 

walk away with the notion there is absolutely nothing wrong with 

the MCPI policy and all is functioning well. Of course, this does not 

explain why Congress the last 15 years has had to pass multiple 

crop loss programs as well as create a permanent disaster aid program as part of the last Farm Bill. 

Since 1996, our region has been struck by a series of catastrophic 

weather events, and over the years, Eve and I have done our very 

best to improve our policy. This has included fixing the expected 

market price, which was set at less than half of what it should be; 

fixing our replant feature, which was set at a fraction of what it 

should be; and getting a pilot program for a no-stages option for 

our New York onion growers, which was done with the hard work 

of our congressman at the time, Bill Gilman. 

Unfortunately, there are two facets of the MCPI policy that we 

have made no headway on, and it is for this reason, for the first 

time since 1996, we on our farm have not purchased buy-up coverage for this year, and so have most of the crop growers in Orange 

49 

County. We believe that the minimal catastrophic coverage is virtually worthless, but we have paid the administrative fee for this 

coverage so as to have access to the USDA programs. 

Crop insurance reform over the years has typically involved increasing the federal subsidy rates to make the policies cheaper to 

the farmer, but there is very little discussion as to why these policies do not pay out, which is a primary reason why farmers are reluctant to participate. Farmers wonder why anyone would think 

making a problematic policy cheaper would entice them to buy it. 

We often ask when will someone address the various problematic 

policy provisions or what I call gimmicks that quite often make the 

policies resemble more of a shell game than insurance. 

There are two main provisions I want to discuss. One is a facet, 

which is an all MCPI policy. It is called Production Account, and 

all decrease drastically in value when a farmer’s actual production 

history or APH starts to plummet due to successive weather disasters. What happened to me last year perfectly illustrates the problem. 

In 2009, I grew 41 acres of onions, and I bought the buy-up level 

coverage of 70/100, 70 percent of my crop at 100 percent the price. 

The premium total was $29,507. I paid $9,924. The rest was paid 

by the taxpayer. 

Last season, we had 28 inches of rain during the summer, which 

meant that most of the onions either did not make a bulb or many 

of them and many were rotten. Due to my successive disaster 

years, my APH was lower, so my loss in real terms, though, was 

roughly in the neighborhood of $115,000. But thanks to my lower 

APH and production account, my indemnity was $6,729. I did not 

make back the premium. The insurance company pocketed the difference as an underwriting gain. I suffered $115,000 crop loss, had 

70/100 coverage, and I still owed a 3,000-dollar premium. You have 

to ask the question what is the purpose of this policy. 

In a hearing held in 2009 by the House Subcommittee for Risk 

Management, the topic of shallow losses repeatedly came up. No 

one seemed to understand why shallow losses are a problem. The 

facet of production account is the reason why shallow losses occur. 

And my wife and I have a proposal, a sound proposal, to reform 

production account to do it, and if you read my written testimony, 

it details it. 

But, essentially, what production account does, it takes a percentage of your crop that is not covered plus also whatever you salvage and what they are calling a deductible, and what they are 

doing is, they are guaranteeing a loss. And it is a sliding scale, and 

the less damage you have, the greater the deductible is. So that is 

how you can think you have 75 percent coverage when, in fact, you 

do not have that. You can have a 25 percent loss and get nothing. 

Our idea, our basic reform idea, is basically whatever you salvage plus your coverage level cannot exceed 100 percent of your 

APH. So you would actually come close to whatever your coverage 

level is. And again, if you refer to my written testimony, you will 

see it in more detail with examples. 

We have again worked on this for 14 years. Quite often, when 

we talk to people in D.C. at RMA, we have been received very positively. Unfortunately, the people who seem to call the shots in KanVerDate Nov 24 2008 04:25 Jul 28, 2011 Jkt 000000 PO 00000 Frm 00053 Fmt 6633 Sfmt 6633 C:\DOCS\66272.TXT MICHA
50 

sas City and Raleigh are not as supportive. There is stonewalling 

and arguments over semantics are endless, and quite often, the 

farmer is to blame. Yet the problem always is still there with the 

MCPI policy. And this is a primary tool for us, for specialty crop 

farmers, especially mono-cropping specialty crop farmers. This is 

the only safety net we have, and it is inadequate. So unless this 

policy provision and the problem with APHs being skewed due to 

successive losses, you are not going to be able to fix it. 

So I also—in my written testimony, you can ask about it as well. 

I have another example of what production account did a couple of 

years ago where I had onions that I destroyed that were immature 

that made no sense against my indemnity. I can explain. 

But in conclusion, I again want to thank you again for this hearing and inviting me to appear before you. Again, my wife and I 

have spent a great deal of time and energy trying to improve our 

MCPI policy, and we firmly believe if APH reform was done and 

our proposal to reform production account was implemented, the 

MCPI policy would be a valuable tool and an integral part of the 

specialty crop producers’ safety net. Thank you. 

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

93 in the appendix.] 

Senator CHAMBLISS. Thank you very much. 

Next, Mr. Mark Watne. Mr. Watne farms 1,500 acres of crop 

land in north central North Dakota. He has a family farm operation and would be considered at about average in size in the state 

of North Dakota. He primarily raises wheat, barley and canola and 

occasionally plants oats, sunflowers, peas and soybeans if market 

conditions appear to be attractive. 

Mr. Watne, welcome. We look forward to your testimony. 

STATEMENT OF MARK WATNE, FARMER, JAMESTOWN, NORTH 

DAKOTA 

Mr. WATNE. Thank you very much, Madam Chairperson Blanche 

Lincoln, Ranking Member Chambliss and the rest of the Senate 

Agriculture Committee for my opportunity to testify here today. 

As stated, I am a family farm operation from North Dakota and 

have a wide variety of crops that I raise. If I could, I would just 

generalize a little bit of the reasons for a Farm Bill and then get 

into specifics. I always think the first consideration of a Farm Bill 

is to identify that it is necessity for our consumers in this country 

to have an inexpensive, very secure food system in this nation. And 

as many people today have stated, we can see very well that we 

are achieving that goal. I have included a chart in my testimony 

that shows that disposable income that everybody talked about, 

showing that we are spending less than 10 percent of our disposable income on food in this country, which is the lowest in the 

world. 

The fact that we in agriculture have the ability to have this 

abundant food supply and the fact that farmers and ranchers are 

efficient at producing this quantity forces prices to be lower than 

what we would like them to be from a farmer’s perspective. Commodity prices reflect the small amount of oversupply beyond demand that is produced each year. This unique scenario creates the 

need for a farm program that addresses low commodity prices 

51 

which hurt farmers. The demand for food does not add an extra 

meal just because food costs less. The family does not necessarily 

add an extra meal because of these lower costs of food. 

The nation of consumers would be negatively impacted if we had 

a food system that was based on just-in-time inventory which 

would hold no surplus to meet needs in case of natural disasters. 

Commodity price fluctuations could cause prices to rise rapidly and 

not level off in time to keep our current inexpensive food system, 

which American consumers enjoy. 

If we were to compare our food program to our energy program, 

we could see wide market variations on pricing when we rely on 

outside sources for energy. We certainly would not want to become 

reliant on other sources of food supply from other nations in the 

world. The small portion we spend on the U.S. agriculture budget 

may be one of the best investments we make for the benefit of our 

Nation. 

So the second consideration is how a farm bill is able to provide 

a safety net for farmers and ranchers when the market prices or 

environmental conditions do not allow for adequate return to cover 

our operational costs. In my written testimony, I have provided a 

chart that shows of 537 producers—this is tracked by our land 

grant university-that would have lost money or had very low significant income from their operations seven of 10 years, if you had 

taken farm program payments and crop insurance out of the mix. 

The current Food and Conservation Energy Act of 2008 and 

many of the preceding farm bills have been relatively successful 

and generally accepted by farmers and ranchers in North Dakota. 

The main concern from farmers regarding these bills is that there 

has not been an adjustment to the counter-cyclical payments and 

loan rates to reflect the higher cost of production that we as farmers and ranchers are currently facing. 

To continue the success—and again, I do believe we have had 

success, and I am very proud to be a farmer when we can feed the 

country very well and the fact that we can continue to oversupply 

the market with abundant food. To continue the success, we need 

to consider a number of items. 

Our Nation’s agriculture policy must be directed toward an economic system that provides citizens the opportunity to own, control 

and work their own land and remain contributing members to their 

communities and to the country. National farm policy should foster 

a fair and competitive environment that allows farmers and ranchers to increase their net farm income, improve the quality of rural 

life and continue to provide a safe, reliable supply of food and fiber 

for this country and the world. Farm policy should also provide 

price production protection, contain stock control mechanisms that 

do not push stocks onto the market at a point when prices are lowest and ensure competition in the marketplace. 

The following objectives should be included in farm policy; a safety net that is counter-cyclical and most importantly, indexed to current production cost; directed program payments at the production 

levels of family farmers; realistic and meaningful payment limitations; the removal of marketing loan caps and upward equalizing 

of commodity marketing loan rates based on historic price shifts 

between commodities and equal to USDA’s cost of production. 

52 

We should maintain planning flexibility. We should continue the 

current permanent disaster programs in the Farm Bill, and they 

should be fully implemented in a timely manner. We should consider establishing a revolving two-year farm loan reserve of commodities to provide an adequate supply of raw materials for use as 

emergency food or renewable energy. We should push for international food reserves, which means both importing and exporting 

nations share the cost of maintaining these reserves. 

We need the continuation improvement of all crop insurance and 

coverage on all crops. The Farm Bill should further encourage the 

development of renewable energy, primarily ethanol and biofuels as 

these tools can enhance income and lower agricultural budget 

costs. 

To just wrap this up, probably the most important thing I want 

to pressure on today is that we continue to strengthen the Crop Insurance Program and continue to maintain permanent disaster. 

North Dakota, we have had some extreme weather conditions as of 

the last few years ranging from ice storms to excessive moisture. 

These seem to be an abnormal pattern but seem to be holding true 

for a number of years. We have a number of farmers, especially in 

the north central part of the state, that are paying a land payment, 

taxes on their land and costs associated with maintaining this 

land, and land is covered in water that they cannot recover any of 

these expenses. 

So from my perspective, if we do have to make major changes in 

the program—and I do believe the programs are working fairly well 

today—we should consider maybe a shift in the direct or decoupled 

payments to better programs that reflect the cost of production 

plus inflationary safety nets. 

I want to thank you for the opportunity to speak today. I think 

counter-cyclical programs that pay when prices are low are much 

more accepted by taxpayers than the direct payments. And again, 

thanks for the opportunity to speak to the Committee today. 

[The prepared statement of Mr. Watne can be found on page 116 

in the appendix.] 

Chairman Lincoln [presiding]. Thank you, Mr. Watne. 

Thank you-all for your patience in terms of our having to juggle 

votes on the floor. 

Again, wanted to welcome Dow Brantley. Obviously, I know him 

from Arkansas. But also want to thank Mr. Cochran. I know he is 

here at the recommendation of Senator Chambliss and grateful for 

your input here today. 

Mr. Pawelski, you are here at the recommendation of Senator 

Gillibrand who speaks very highly of you, and we are grateful that 

you are here today. 

And, Mr. Watne, obviously, at the recommendation of Senator 

Conrad, you are here today. I was with him on the elevator going 

over to the vote, and he wanted to apologize for not being here as 

well. He is at the same Deficit Reduction Commission meeting that 

Senator Baucus had to run off to. 

So I certainly want to tell all four of you-all how much we appreciate your being here. And I would just simply say to you please 

do not underestimate the role that you play as we move forward, 

both you and your colleagues across the country. And your input 

53 

is going to be absolutely vital in being able to get it right in the 

structuring of the 2012 Farm Bill. 

So we appreciate that you are here today but hope that you will 

remain in constant contact with us as we move forward and look 

at how we can do a better job at supporting our farm families and 

ranchers across the country. So we really appreciate that. 

I guess just some kind of generic questions for you-all individually, and I am not sure that you have mentioned it in your testimony or not. But would be curious to know what safety net programs you-all participate in, and if you would, for your region and 

your crop and other circumstances, if you could pick the one that 

is the most important to you and for what reasons and what other 

programs are important to you, but maybe one that is the most important and why. Is it more dependable? Is it something that allows you to manage certain aspects of your production and your operation? 

So, Dow. 

Mr. BRANTLEY. Thank you. I think two of the most important 

programs for me are the Marketing Loan Program and the Direct 

Payment Program. The Marketing Loan, just the ability to have a 

loan to market my crop over the nine months that we are given to 

do that. 

Now, the Direct Payment is a sense of security for us, for our 

banker, that we have some income coming from the farm or from 

the land that we produce these crops on. Those two programs have 

been key for not only us but anybody in Arkansas and across the 

mid South. 

Chairman LINCOLN. Thanks. Do you participate in the other programs? Are there any other programs? 

Mr. BRANTLEY. Not administered through the FSA. We are in 

NRCS, several conservation programs. 

Chairman LINCOLN. Johnny? 

Mr. COCHRAN. Along those same lines, the Marketing Loan Program in cotton as well as in peanuts, both are very important to 

us. The Marketing Loan Program, like Dow said, allows us to market our crop over a nine-month period with having cash flow when 

we harvest the crop, which is much needed. And, of course, crop insurance, we do buy up crop insurance. It is an essential risk management tool in our farm, and we utilize crop insurance to a 

great—— 

Chairman LINCOLN. For all of the crops that you grow? 

Mr. COCHRAN. Yes, ma’am. 

Chairman LINCOLN. Great, thanks. 

Mr. Pawelski. 

Mr. PAWELSKI. For my area, it is mostly on muck soil. It is mostly vegetables that are grown, some sod. So as far as risk management, crop insurance and NAP are what is available. 

Like we mentioned and my written testimony talks about, we 

have done—my wife and I, like I said, worked 14 years to improve 

our policy the best we can. We have hit the wall. One thing I did 

not talk about—it is in the written form. I did not mention orally, 

but just how bizarre the current policy is. 

In ’07, we were wiped out by a flood. The Wallkill River flooded, 

and I had planted. Much of the valley planted, and I replanted 

54 

afterward. I lost 26 acres to the flood, and I replanted afterward. 

And when I replanted, I lost it all again plus an additional 10 

acres, and other people as well all around me, obviously, because 

it was too hot and too dry. 

The special provision policy for the onions calls for if over 50 percent of the crop is damaged, you are allowed to destroy the crop 

in the field. And within the rules itself, it says in the—I am not 

making this up. In the onion law stand book, it says that, ‘‘If the 

damage to harvest or unharvested mature onion production exceeds 

the percentage, or is 50 percent, no production will be counted if 

it is not sold.’’ 

So in other words, if you destroy it, it is not counted against you. 

But RMA interpreted the word ‘‘mature’’ is used there. That must 

mean immature should be treated differently. So those little plants 

that were this tall, the 8 or 9 percent that were an inch high, even 

though I destroyed them, they counted against our indemnity and 

subtracted it, even though you are not selling them, even though 

the policy says itself later if you have an onion that makes a bulb 

and you do not sell it, you destroy it, it does not count against you. 

And there is no basis for that in the policy itself. 

Whenever we would raise this issue with—again, we first raised 

it with the administrator’s office at the time, they would say, oh, 

that makes sense what you are saying, but then they would talk 

to Kansas City who would defend this. There is like a level of disconnect there that makes no sense, and that is what we really need 

to—this is the kind of thing we need to get it fixed. 

But, currently, as far as risk management safety net stuff, crop 

insurance, we have a conservation program. We have a proposal 

out there for a conservation of muck soils program. Our congressman, Congressman Hall, got it in the House version last Farm Bill, 

and we are hoping that it will make it in the next version. I know 

Senator Gillibrand will be talking to you about that. 

Chairman LINCOLN. Good. Well, those are the kind of specifics, 

though, that are very helpful for us. As I have mentioned in my 

opening statement, that we look at policy and oftentimes we just 

look at the written words as opposed to thinking about what your 

practices are and what you are actually going through. And those 

are critical examples that really do help us in so many different 

ways to try to figure that out, so we appreciate that. Thank you. 

Mr. Watne. 

Mr. WATNE. On my farm, we participate in just about all the programs. We are active in the Direct and Counter-Cyclical Program, 

the DCP. We have used the loan program in the past, not as much 

as late as market prices have been substantially higher than loan 

rates. And, of course, crop insurance. 

But if I had to rate them, the crop insurance in North Dakota 

is probably the primary, most important. We have a lot of risk and 

a lot of weather conditions that impact our crops, and without 

Multi-Peril Crop Insurance, we could show our lender at least a 

minimum amount of return that we can get to pay back our loans, 

we would not be able to get financing in the state, so federal crop 

insurance is a key. And then, of course, putting SURE on top of 

that adds about 11 percent potential income increase if we have a 

major disaster. 

55 

We did look at the ACRE Program briefly this year, and I wrote 

this in my testimony. I was very tempted to sign up for it because 

I see it as a revenue assurance. Just the fact, though, that I had 

to rely on a state trigger and a farm trigger at the same time is 

what scared me away. There is many times in North Dakota where 

the state will not have an overall impact where a trigger would be 

met and a individual farm could be met simply be a localized 

drought or a localized excessive rain or potentially a hailstorm. But 

I would rate federal —— 

Chairman LINCOLN. So that is what kept you away from the 

ACRE? 

Mr. WATNE. Yes, that state trigger was just too broad. It is very 

likely that you could have a pretty strong loss on your farm and 

not see the state trigger met. So crop insurance, to me, is probably 

our most important one. 

Chairman LINCOLN. But you do participate in the Direct Payment? 

Mr. WATNE. Yes, we do. 

Chairman LINCOLN. I just wanted to—I know that you had some 

concerns about that, and I was not sure if your concerns were really focused on that you wanted to see it changed or did you want 

to see it eliminated. 

Mr. WATNE. What I really want to see is—I think farmers are 

quite proud and they would rather see a system where we were 

paid if we were having a tough time as the market prices or something, so a counter-cyclical type payment. I do not want that money 

taken out of the ag baseline. I would rather see it shifted to a 

counter-cyclical type payment. 

Chairman LINCOLN. Okay. Well, thank you. And just back to 

what you were talking about in terms of that state trigger being 

broad and certainly to what Mr. Pawelski said, in our circumstances in Arkansas, we saw floods, some folks that planted 

twice, some of them three times in the spring after being flooded 

out but then also being flooded out in the fall during harvest, finding that they had—I saw thousands of acres under water for at 

least a week to 10 days right before harvest, which was unbelievably awful. But some of those were localized. Our state probably 

did hit the state trigger because we had so many counties, but 

nonetheless, I could see how it could have been localized even 

worse. 

Well, thank you-all. Just in general, what is your response to the 

concerns of the complication of safety net programs? Do you-all 

find—I mean, many of you have worked with them through the 

years, and Mr. Pawelski, you have certainly expressed concern 

about the application of certain programs. But the complicated nature of that, does anybody want to expand on that? 

Mr. BRANTLEY. The complicated nature of the rules that we have 

been given through the 2008 Farm Bill? 

Chairman LINCOLN. Well, and the safety net programs in general. 

Mr. BRANTLEY. Prior to this Farm Bill, we have been able to do 

all of our own work. My family and I have done our own work ourselves in explaining who we are, meeting the payment eligibility 

rules. This Farm Bill has been complicated and so confusing, we 

56 

have had to, along with everybody else, to hire a lawyer to make 

sure that we were doing what is asked of in this Farm Bill. The 

financing rules, it is just unbelievable. I get confused even today, 

and that is what I spend most of my time working on day in, day 

out is making sure that what we have done is correct. We still are 

waiting to be approved from our state FSA office on our farm 

whether we—or the changes we have made in our operation have 

been approved or not. 

Chairman LINCOLN. Anybody else? 

Mr. PAWELSKI. I would say that we have not applied yet for the 

SURE Program because we had a decent year in ’08. ’09, we will 

be applying, and my understanding is it will not be until December. But I have looked it over, and it has had my head spinning 

already. So the application process, I am not looking forward to. It 

seems extremely complicated. 

Crop insurance, that has just been—understand the bureaucracy. 

Again, it has been 14 years my wife and I have worked on that. 

It has got a heck of a learning curve as far as understanding how 

the maze works. 

Chairman LINCOLN. Did any of you-all apply for the ACRE Program? None? 

Mr. COCHRAN. I was going to allude to the ACRE Program. As 

I understand it, in Georgia, I do not think there is a single farm 

that is enrolled in the ACRE Program. 

Chairman LINCOLN. Dow indicated there is only two in Arkansas. 

Mr. COCHRAN. Yes, with high-input crops, it just does not—the 

revenue does not work out in the program. 

Chairman LINCOLN. Well, just—yes. 

Mr. WATNE. If I could comment about it, the sign-up has actually 

been quite simplified, I think, and for the current existing program. 

I think the confusion has came in when we are trying to recalculate 

what benefits we might get out of SURE or even trying to calculate 

the ACRE Program, the benefits side of it. It was not that it was 

so complicated. It was a little bit hard to try to guess what the 

prices and the market prices might do and how that would impact 

you, and that is where farmers got quite nervous when they were 

looking at it. 

But as far as signing up for the farm program, I found it to be 

quite simple. There is an occasional question or two that makes 

you a little suspicious if they are digging for something that you 

might not want to answer. But the reality has been it is substantially easier to sign up at USDA than it has been in the past. 

Chairman LINCOLN. It has been a general trend, I guess, to develop safety net programs that provide protection against revenue 

loss as opposed to yield losses. What would be your recommendations on the next Farm Bill to continue in that trend or not? 

Mr. COCHRAN. Well, we would certainly have to be considerate of 

the trade relations and the effects that different types of payments 

will make on our relations. And even though the revenue side is 

ultimately the goal, whether it is crop insurance on yield based on 

whether it is a revenue assurance program, we still would have to 

be careful there. But we do need these safety nets. 

Chairman LINCOLN. Anybody else? 

57 

Mr. WATNE. If I could comment, the revenue insurance, it makes 

a lot of sense that we could have that option, but I do get a little 

fearful because when you start doing it in a light of an insurancetype program, that we tend to write underwriting rules or things 

that are based upon avenues to save money. And then, of course, 

it all depends on where you base the primary starting point, the 

price point. If we can do that off of a cost of production, the USDA 

cost of production or something, and not based on average market 

prices from a time frame when the prices do not represent the true 

cost of production would make a big difference. 

So revenue insurance can work, but it needs to have some basis 

behind cost of production. And then, of course, it has got to be 

based at a level where the farm itself can qualify rather than having to see a large region qualify before you trigger the payments. 

Chairman LINCOLN. Sure. 

Mr. BRANTLEY. I just might add that it would need to be regionalized. The cost of production does not need to be represented for 

the state or the mid South. You need to break it—it would need 

to be broken down into the counties, per se. Although our production, our goal of raising rice is the same in Arkansas as it is in 

California, our costs are vastly different, and those things would 

need to be regionalized. 

Chairman LINCOLN. Well, thank you. 

I will turn it over to Senator Chambliss. 

Senator CHAMBLISS. Thanks very much. All of you were sitting 

here when we had the conversation with Secretary Vilsack relative 

to getting younger farmers into agriculture, and I was in Roberta, 

Johnny, last Saturday with 200 Georgia young farmers. And I dare 

say that 100 percent of the folks who were there that day are 

young people who are returning to their own family farm versus individuals just going out on their own, deciding they want to get 

into farming, and being able to do so. 

This is a real problem, and I just want to throw it out there if 

any of you have any comments, suggestions or whatever that we 

might think about. All of you obviously have had experience, 

whether you went back to your family farm or whether you began 

on your own. And I notice in the case of a couple of you there, you 

have children that may be thinking about coming back and going 

into your operation. 

What are your general thoughts—Mr. Brantley, we will start 

with you—relative to the availability of agriculture for young people? 

Mr. BRANTLEY. I am fortunate that I was able to join a family 

farm, and you alluded to that fact that most young people coming 

back are able to join a family farm. And it has been very difficult 

for individuals who want to start out on their own, for young individuals, to go to the FSA office and receive some funding to start 

a viable operation. I think for someone to get in the business today 

you almost need a mentor. You need someone who can help you get 

started. 

It would take a unique individual today to decide that he or she 

wants to farm and to have the capital to do that. I do not know 

how. I am not that person. Again, I was fortunate to join a family 

operation. There are plenty of those operations around that are 

58 

looking for young people today. Maybe we can think of a creative 

way to start a mentor-type program, and that is not the proper 

word, but some type of a program to allow someone that is ready 

to retire or slow down to have a young person who is interested to 

come in and join their operation. 

Mr. COCHRAN. In Chairman Lincoln’s opening remarks, I thought 

I was in the wrong room when she said she had an outstanding 

panel of young farmers. 

[Laughter.] 

Mr. COCHRAN. That is a problem in Georgia. It is a problem I am 

experiencing in my family. I have a son that has decided that after 

all these years of low wages on the farm, he is seeking other avenues. 

But I would venture to say that the biggest problem we have in 

getting a young person established on a farm, a mentor idea would 

be excellent. It is extremely hard for a young person with all the 

desire in the world to go out and get started farming on his own. 

I do not know whether RMA could come up with some type of yield 

program where if you do not have a history, you have to start with 

a T yield, which is traditionally a very low yield. Financing is a 

problem. Crop insurance could help cover some of the financial risk 

certainly for a beginning farmer. 

But there are very few avenues for a young person with a true 

desire to farm to have the ability to start farming in our community. 

Mr. PAWELSKI. I started working on the farm when I was five 

years old. My first job was picking up onions that fell out of a 

crate, which I hated. I started driving heavy farm equipment on 

the road by the time I was 11, trucks with no doors and stuff like 

that. And aspects I liked, but by the time I was older, I grew tired 

of it, and I actually went away. My bio mentioned I did my graduate work at the University of Iowa, who had a great year last 

year, by the way, in college football. But I was a PhD student in 

broadcasting and film studies. I actually studied James Bond. 

But after I got married, I had office jobs, and I would look out 

the window at the guys mowing the lawn. And I was wishing I was 

outside doing what they did, so I moved back to the farm. My poor 

wife who I met in Iowa grad school did not have this background 

from Wisconsin, and I kind of feel sorry for her because she has 

been dragged into this. And it has been year after year of disaster 

and scraping by, and she does all the finances. I do not even look. 

I just work, and I come inside, and she pays the bills somehow and 

credit card to credit card and so on and so forth. 

Going back to what Secretary Vilsack said, the best way to get 

people young working on the farms and staying on the farms is 

make it profitable. And the thing is, I am not looking to be a Elmer 

J. Fudd millionaire and own a mansion and a yacht. I would just 

like to make a living. That is what I am looking for, making a living. 

There is aspects of farming. I am an hour north of New York 

City, and a lot of people that I know and friends of mine commute 

down to the city. As a matter of fact, my brother, he farms parttime and he also is a head hunter. He places people in international equities markets in Europe and Asia, so he farms partVerDate Nov 24 2008 04:25 Jul 28, 2011 Jkt 000000 PO 00000 Frm 00062 Fmt 6633 Sfmt 6633 C:\DOCS\66272.TXT MICHA
59 

time and he goes down to the city and meets people and places 

them in these sorts of jobs. A lot of my friends commute. 

My commute, I walk outside five feet out the door, and I am in 

my yard where my farm, my barn is. I drive tractors and trucks 

which I love. I wear funny suits where I wear nice Tyvek suits and 

helmets and stuff and spray. I love the work. I see my family all 

the time. I see my boys every day. That is stuff that you—my wife’s 

family, where her father used to work outside of Chicago, she never 

had. All I want to do is make enough of a living that I can provide 

for my family. 

And if we can get things like a little better or a safety net and 

I can get a better return on my onions, things that was talked 

about a little later when you were talking Mr. Stallman and Mr. 

Johnson about as far as the—I think it was Senator Roberts was 

talking about the return and the possibility of concentration and 

such. Well, I have got the same thing in my crop with how my 

product is sold, where I am getting $6 for 50 pounds, and I look 

in the grocery store at what the price is going there, a heck of a 

lot more for something that is virtually nothing value added. But 

all I am looking for is just to make a living, and if we can make 

it a little bit more profitable, I think you will see a lot more people, 

including my kids, staying on the farm. 

Mr. WATNE. I really think it is as simple as your last statement 

there. We have to make some reward for the risk that is taken in 

agriculture. We have to get back to profit potential. It has been interesting in our state that we are finally seeing some young people 

wanting to come back, and the parents instead of telling them 

whatever you do, do not come back to the farm, they are starting 

to talk maybe you should come back to the farm. 

Of course, we see this rapid rise in the price of commodity prices 

and expectations that we may reach new plateaus. I am not 100 

percent comfortable we have seen these new plateaus because we 

have seen barley prices drop down to LDP rates just last year 

again, but that optimism, the potential for optimism and ability for 

people to make a profit. 

Somewhere along the line, we have to start thinking how we can 

price the amount that we actually need each year on what its fair 

value is rather than pricing every bit of production on that small 

amount of overproduction that we ship into either the export market or it sits in storage. I really think we have a backwards system 

in that light. If we have one bushel extra production of wheat, we 

price all the bushels on the one bushel of extra production. I said 

it in my testimony, we need some reserve system that does not 

force the consumer to be reliant on a just-in-time inventory but 

also does not burden the marketplace that we drive our prices so 

low that there is no reward for the risks that farmers and ranchers 

take. 

Senator CHAMBLISS. As Mr. Cochran knows, we have what we 

call the Southeastern Agricultural Expo in my hometown every 

year. It is the largest farm equipment show east of the Mississippi 

River, and I am always amazed at that show as to the advancement of technology when it comes to agriculture. 

60 

Mr. Watne, let’s start with you. From a technology standpoint, 

what is your biggest asset? Where do you see technology with respect to agriculture production going? 

Mr. WATNE. Well, there is two areas. One is in just simply the 

way we plant our crop. We are using GPS. We are using very large 

tractors. We do what would be considered a minimum tillage, onepass operation. It has brought our expenses down, which has enabled us to continue to produce at these lower prices in comparison 

to what inflation should have did with the prices of commodities. 

The second area is genetics. I really think genetics is going to allow 

a wider area of crop selections that we can grow in our state and 

make us able to choose from different crops. 

But all in all, it gets me back to my earlier point. I do not believe 

that there is any worry that we can produce what the world needs 

in food. I also believe we can supply a vast percentage of the energy for this nation. I am not the least bit concerned that we can 

meet that demand because technology will allow it. So I think that 

we really have to really rethink our pricing mechanisms so we can 

try to figure out the avenue to continue to grow this. 

Technology is very important to our farm, and it has been the 

only savior that has been able to keep our expenses in line to keep 

our farm operational. 

Senator CHAMBLISS. Mr. Pawelski. 

Mr. PAWELSKI. We still use ACGs from the 1950s and all the 

crawlers, we have a Cat 22, so we are not as advanced as that. We 

have some newer tractors, but technology comes in being that we 

are fruit and vegetables and such, a lot of times the development 

of seeds and stuff, we are on the lower end of the scale as far as 

timewise. We are still waiting for some GMO crops. If there was 

a Roundup ready onion, I would grow that in a heartbeat because 

on muck soils especially, the amount I have to apply two different 

pre-emerge chemicals three times and two different post-emerge 

materials two, three, four times. So if I had a one-time spray 

Roundup ready, I would be doing that. 

We do have some advancements as far as some of our hybrids 

and the like. Technology is more important for me as far as on the 

public policy end. The stuff that I do with this kind of thing, with 

crop insurance, or the stuff I have worked on where I have met you 

one time before on the labor issue when you had that meeting set 

up a few years ago regarding the Immigration H2A reform, that I 

was Senator Clinton’s designee at that meeting, which was an excellent meeting. I worked with your staffer Camila Knowles over 

the years who is excellent on that issue. 

The technology enabled me and my wife, the changes that we 

were able to do with the crop insurance, we never would have done 

20 years ago or 15 years ago. It has all been we have been able 

to do because of the computer, the Internet, e-mail and the like. If 

it was not for that, we simply would have been able to do all of 

this public policy stuff. That is where it has come in handy for us, 

which has been a benefit not just for our farm but for our whole 

region and in some aspects for our state. We are hoping that the 

other things will happen to us down the road more so for our crops, 

our onion crop as well. But that is where it has come into play for 

us. 

61 

Mr. COCHRAN. We also use GPS-guided tractors, which is an 

added benefit for the skill—it is a double-edged sword for the skill 

of the operator needed. He needs to have computer skills to a degree, but he does not need as good steering wheel skills. But that 

along with the genetically modified cotton that we are using has 

been a tremendous increase in yield, which is allowed us to stay 

in production with the prices that we have seen that are not much 

higher than they were 10 years ago, whereas in the last 10 years, 

the average yield on the farm has just about doubled due to genetically altered seed. And we are also implementing strip till, which 

is a very fuel efficient way of agricultural production for us. 

Mr. BRANTLEY. I would reiterate a lot of what they said. We try 

to use all the technologies that are available today from the computer to the guidance systems. You name it, we will try it. Anything that can lower our production cost, we are going to give it 

a try. But it is really exciting to know that the technology is there 

for us to feed and clothe the world the next 40 years through doubling our output that we are today. 

What we need or what I need is a simple farm program that will 

back us up in those tough times, a program that is simple to understand and operate that allows me to spend most of my time 

growing these crops that we do. 

Senator CHAMBLISS. Well, gentlemen, I cannot thank you enough 

for taking your time, particularly in the middle of a busy growing 

season to come up and give us the benefit of your thoughts. This 

is the first in a number of hearings that we are going to have as 

we lead up to the 2012 Farm Bill. So this will not be the last time 

we look to you for advice and input as to some of the issues that 

we are going to have to be dealing with, so thanks to each of you 

for taking time to come and share your thoughts with us today. I 

hope all of you have your best yields ever and the best prices ever. 

Chairman LINCOLN. Thank you, Senator Chambliss. 

I, too, want to add my thanks and would just reiterate, please 

do not underestimate the role that you play as we move forward. 

We hope that we will continue to have contact with you-all and you 

can share your ups and downs with us on how we can better improve the Farm Bill in 2012. And more importantly, I hope you will 

encourage your colleagues and your organizations that you are 

participatory in, in being able to weigh in as well because that is 

very important for us to hear from you. So thank you all so much 

for taking time to be with us today. 

With that, our hearing is adjourned. 

[Whereupon, at 12:56 p.m., the Committee was adjourned.] 

(63) 

A P P E N D I X 

JUNE 30, 2010 

64 


66272.050
65 


66272.051
66 


66272.052
67 


66272.053
68 


66272.054
69 


66272.055
70 


66272.056
71 


66272.057
72 


66272.001
73 


66272.002
74 


66272.003
75 


66272.004
76 


66272.005
77 


66272.006
78 


66272.007
79 


66272.008
80 


66272.009
81 


66272.010
82 


66272.011
83 


66272.012
84 


66272.013
85 


66272.014
86 


66272.015
87 


66272.016
88 


66272.017
89 


66272.018
90 


66272.019
91 


66272.020
92 


66272.021
93 


66272.022
94 


66272.023
95 


66272.024
96 


66272.025
97 


66272.026
98 


66272.027
99 


66272.028
100 


66272.029
101 


66272.030
102 


66272.031
103 


66272.032
104 


66272.033
105 


66272.034
106 


66272.035
107 


66272.036
108 


66272.037
109 


66272.038
110 


66272.039
111 


66272.040
112 


66272.041
113 


66272.042
114 


66272.043
115 


66272.044
116 


66272.045
117 


66272.046
118 


66272.047
119 


66272.048
120 


66272.049
(121) 

DOCUMENTS SUBMITTED FOR THE RECORD 

JUNE 30, 2010 

122 


66272.058
123 


66272.059
124 


66272.060
125 


66272.061
126 


66272.062
127 


66272.063
128 


66272.064
129 


66272.065
(131) 

QUESTIONS AND ANSWERS 

JUNE 30, 2010 

132 


66272.066
133 


66272.067
134 


66272.068
135 


66272.069
136 


66272.070
137 


66272.071
138 


66272.072
139 


66272.073
140 


66272.074
141 


66272.075
142 


66272.076
143 


66272.077
144 


66272.078
145 


66272.079
146 


66272.080
147 


66272.081
148 


66272.082
149 


66272.083
150 


66272.084
151 


66272.085
152 


66272.086
153 


66272.087
154 


66272.088
155 


66272.089
156 


66272.090
157 


66272.091
158 


66272.092
159 


66272.093
160 


66272.094
161 


66272.095
162 


66272.096
163 


66272.097
164 


66272.098
165 


66272.099
166 


66272.100
167 


66272.101
168 


66272.102
169 


66272.103
170 


66272.104
171 


66272.105
172 


66272.106
173 


66272.107
174 


66272.108
175 


66272.109
176 


66272.110
177 


66272.111
178 


66272.112
179 


66272.113
180 


66272.114
181 


66272.115
182 


66272.116
183 


66272.117
184 


66272.118
185 


66272.119
186 


66272.120
187 


66272.121
188 


66272.122
189 


66272.123
190 


66272.124
191 


66272.125