AGRICULTURE, RURAL DEVELOPMENT, FOOD 

AND DRUG ADMINISTRATION, AND RELATED 

AGENCIES APPROPRIATIONS FOR 2012 

HEARINGS 

BEFORE A 

SUBCOMMITTEE OF THE 

COMMITTEE ON APPROPRIATIONS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND 

DRUG ADMINISTRATION, AND RELATED AGENCIES 

JACK KINGSTON, Georgia, Chairman 

TOM LATHAM, Iowa 

JO ANN EMERSON, Missouri 

ROBERT B. ADERHOLT, Alabama 

CYNTHIA M. LUMMIS, Wyoming 

ALAN NUNNELEE, Mississippi 

TOM GRAVES, Georgia 

SAM FARR, California 

ROSA L. DELAURO, Connecticut 

SANFORD D. BISHOP, JR., Georgia 

MARCY KAPTUR, Ohio 

NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full Committee, and Mr. Dicks, as Ranking 

Minority Member of the Full Committee, are authorized to sit as Members of all Subcommittees. 

MARTIN DELGADO, TOM O’BRIEN, BETSY BINA, and ANDREW COOPER, 

Staff Assistants 

PART 9 

Page 

Secretary of Agriculture ........................................................ 1 

Commodity Futures Trading Commission ........................ 209 

Farm and Foreign Agricultural Services .......................... 291 

Printed for the use of the Committee on Appropriations 


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PART 9—AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, 

AND RELATED AGENCIES APPROPRIATIONS FOR 2012 


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AGRICULTURE, RURAL DEVELOPMENT, FOOD 

AND DRUG ADMINISTRATION, AND RELATED 

AGENCIES APPROPRIATIONS FOR 2012 

HEARINGS 

BEFORE A 

SUBCOMMITTEE OF THE 

COMMITTEE ON APPROPRIATIONS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND 

DRUG ADMINISTRATION, AND RELATED AGENCIES 

JACK KINGSTON, Georgia, Chairman 

TOM LATHAM, Iowa 

JO ANN EMERSON, Missouri 

ROBERT B. ADERHOLT, Alabama 

CYNTHIA M. LUMMIS, Wyoming 

ALAN NUNNELEE, Mississippi 

TOM GRAVES, Georgia 

SAM FARR, California 

ROSA L. DELAURO, Connecticut 

SANFORD D. BISHOP, JR., Georgia 

MARCY KAPTUR, Ohio 

NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full Committee, and Mr. Dicks, as Ranking 

Minority Member of the Full Committee, are authorized to sit as Members of all Subcommittees. 

MARTIN DELGADO, TOM O’BRIEN, BETSY BINA, and ANDREW COOPER, 

Staff Assistants 

PART 9 

Page 

Secretary of Agriculture ........................................................ 1 

Commodity Futures Trading Commission ........................ 209 

Farm and Foreign Agricultural Services .......................... 291 

Printed for the use of the Committee on Appropriations 

U.S. GOVERNMENT PRINTING OFFICE 

68–236 WASHINGTON : 2011 


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COMMITTEE ON APPROPRIATIONS 

HAROLD ROGERS, Kentucky, Chairman 

C. W. BILL YOUNG, Florida 1

JERRY LEWIS, California 1

FRANK R. WOLF, Virginia 

JACK KINGSTON, Georgia 

RODNEY P. FRELINGHUYSEN, New Jersey 

TOM LATHAM, Iowa 

ROBERT B. ADERHOLT, Alabama 

JO ANN EMERSON, Missouri 

KAY GRANGER, Texas 

MICHAEL K. SIMPSON, Idaho 

JOHN ABNEY CULBERSON, Texas 

ANDER CRENSHAW, Florida 

DENNY REHBERG, Montana 

JOHN R. CARTER, Texas 

RODNEY ALEXANDER, Louisiana 

KEN CALVERT, California 

JO BONNER, Alabama 

STEVEN C. LATOURETTE, Ohio 

TOM COLE, Oklahoma 

JEFF FLAKE, Arizona 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

STEVE AUSTRIA, Ohio 

CYNTHIA M. LUMMIS, Wyoming 

TOM GRAVES, Georgia 

KEVIN YODER, Kansas 

STEVE WOMACK, Arkansas 

ALAN NUNNELEE, Mississippi 

————— 

1 Chairman Emeritus 

NORMAN D. DICKS, Washington 

MARCY KAPTUR, Ohio 

PETER J. VISCLOSKY, Indiana 

NITA M. LOWEY, New York 

JOSE ́ E. SERRANO, New York 

ROSA L. DELAURO, Connecticut 

JAMES P. MORAN, Virginia 

JOHN W. OLVER, Massachusetts 

ED PASTOR, Arizona 

DAVID E. PRICE, North Carolina 

MAURICE D. HINCHEY, New York 

LUCILLE ROYBAL-ALLARD, California 

SAM FARR, California 

JESSE L. JACKSON, JR., Illinois 

CHAKA FATTAH, Pennsylvania 

STEVEN R. ROTHMAN, New Jersey 

SANFORD D. BISHOP, JR., Georgia 

BARBARA LEE, California 

ADAM B. SCHIFF, California 

MICHAEL M. HONDA, California 

BETTY MCCOLLUM, Minnesota 

WILLIAM B. INGLEE, Clerk and Staff Director 

(II)


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AGRICULTURE, RURAL DEVELOPMENT, FOOD 

AND DRUG ADMINISTRATION, AND RELATED AGENCIES APPROPRIATIONS FOR 

2012 

TUESDAY, MARCH 1, 2011. 

SECRETARY OF AGRICULTURE 

WITNESSES 

HON. THOMAS VILSACK, SECRETARY OF AGRICULTURE 

KATHLEEN MERRIGAN, DEPUTY SECRETARY OF AGRICULTURE 

JOSEPH GLAUBER, CHIEF ECONOMIST, DEPARTMENT OF AGRICULTURE 

MICHAEL YOUNG, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE 

INTRODUCTION OF WITNESSES

Mr. KINGSTON. The subcommittee will come to order. Today we 

have as our first witness of the year the Secretary of Agriculture, 

the Honorable Tom Vilsack; Deputy Secretary Kathleen Merrigan; 

USDA’s chief economist, Dr. Joe Glauber; and Mike Young, the 

USDA’s budget director. We welcome all of you. 

There are a lot of appropriation hearings taking place today, and 

for a while it looked like we may have to go ahead and do this one 

without any members, but Mr. Farr and I are here, so that is a 

quorum. 

Mr. Secretary, we are always glad to have you on the Hill. We 

certainly enjoy working with you. And as a former state representative, I have a common background—at least, I served in the state 

legislature eight years. And both Mr. Farr and I and other members appreciate on the ground approach to governing, knowing that 

you know how so many of the programs work up close. 

We are interested in your testimony today and want to work with you. We note that you have $1.3 billion less in discretionary 

spending less in fiscal year 2011, but there are some new investments which we may have to discuss, some research and export 

promotion, renewable energy, conservation, and rural infrastructure. 

As you know, the interest on the national debt is set to climb from about $200 billion a year to $685 billion in the next seven 

years, basically a tripling. And I was quick to point out, both in 

Washington and back in my little briar patch in Georgia, that if 

you are looking for blame, all parties have fingerprints on them, 

Republicans, Democrats, and Independents. We have all run up the 

clock. 


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Most of the money is in the health and retirement programs. We 

know that. And yet both parties have been historically reluctant to 

touch those political sacred cows. I think that that time is coming 

near when we are going to have to do that. But in the meantime, 

discretionary money is going to continue to be squeezed. And so we 

have to look at all these programs together. And I am looking forward to working with you, as we have in the past several years already. 

And with that, I would like to yield to Mr. Farr, the ranking 

member. 

Mr. FARR. Thank you very much, Mr. Chairman. Congratulations 

on your first hearing of the new committee. And I am excited that 

we also have the chair and ranking Appropriations member, Mr. 

Dicks and Mr. Bishop, here as well. 

I don’t have an opening statement. I just wanted to comment on 

one thing that I am very interested in hearing, about your leadership in trying to bring this, for lack of a better word, rural strategy 

to America to re-look at rural communities in total about all of the 

effects of all the agencies on them, to try to do really effective recovery. 

I know you have been working on more of a vision for rural 

America, and I want to see if we can use our appropriating process 

to make sure that we are hitting all the right buttons to make it 

work rather than just kind of a traditional let it rain. And maybe 

the tide will rise high enough to do something good for a lot. I 

think you have got a much more holistic approach to it, and I 

would appreciate hearing that. 

But I have no other opening comment. 

Mr. KINGSTON. Thank you, Mr. Farr. 

Mr. Dicks. 

Mr. DICKS. Thank you. Mr. Secretary, we are glad to see you 

here today with your group. And the one thing I hope you can 

touch upon as we go through this budget is we were on the floor 

with H.R. 1 here a week ago and made some significant cuts in 

food safety inspection. I hope you can, during your statement or in 

the questions, address that issue and what the impact would be on 

the Agriculture Department. 

Mr. KINGSTON. Thank you, Mr. Dicks. And I want to welcome the 

former chair, Ms. DeLauro, here. I am now on your right and you 

are now on my left, as we have kind of always been anyhow. 

[Laughter.] 

Ms. DELAURO. No, you really wanted to be on the left. What a 

difference a day makes. 

Mr. KINGSTON. Would you like to say anything or just—— 

Ms. DELAURO. Oh, no, no, no. 

Mr. KINGSTON. Well, I want to thank you—— 

Ms. DELAURO. I am just happy to be on the committee. I love 

this committee. 

Mr. KINGSTON. Well, I want to thank you for your service as 

chair. You did a great job. We enjoyed working with you and your 

staff, and we hope to continue in that relationship. 

My Georgia colleague, Mr. Bishop, we haven’t recognized you. 

But if you want to say anything? 


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Mr. BISHOP. Let me just congratulate you on the chairmanship, 

and I look forward to working with you and the subcommittee as 

we have to make sure that America continues to produce the highest quality, the safest, the most economical food and fiber anywhere in the industrialized world. And of course, what we do here 

will determine whether that happens in that. 

So I am very, very anxious to get to work and to hear from the 

Secretary and for our committee to move forward. 

Mr. DICKS. Mr. Bishop, would you yield to me just for a second? 

Mr. BISHOP. I would be delighted to yield. 

Mr. DICKS. I too want to congratulate Congressman Kingston on 

becoming chairman. He and I have worked together on defense 

over the years, and I know he will take a hard and thoughtful approach to this committee’s important work. 

Mr. KINGSTON. Well, I thank both of you. 

And with that, I want to yield the floor to the Secretary. But one 

last statement, one thing I want to say. You have been joined by 

your hometown or home state colleague, Mr. Latham. I knew he 

wasn’t going to stand you up. 

We are going to stick with the five-minute rule, as we have in 

the past. And we will go back and forth from majority to minority, 

so I will abide by that, and Mr. Farr will, and Mr. Dicks, and everyone else. 

So with that, I would also like to ask anybody who has a BlackBerry or cell phone to please turn it off. 

And Mr. Secretary, the floor is yours. 

OPENING STATEMENT

Secretary VILSACK. Mr. Chairman, thank you very much, and I 

certainly appreciate the opportunity to be with the committee this 

morning. 

Obviously, I would like to have the written testimony that we 

prepared submitted for the record. And rather than reading a 

statement, which is the tradition, I would just simply like to make 

one observation and then go to the questions that you all have. 

Mr. KINGSTON. Without objection. 

Secretary VILSACK. Yesterday I had the privilege of sitting in on 

the meeting that the President of the United States had with the 

nation’s governors. It was an opportunity for the President to have 

interchange with the nation’s governors. 

And during the course of his remarks to the nation’s governors, 

he said something which I think basically summarizes our challenge. And I say ‘‘our challenge’’ because I think we have a shared 

responsibility, a mutual responsibility, to craft a budget that reflects the values and the priorities of the American people, and particularly those who live, work, and raise their families in rural 

communities. 

What the President suggested was that any budget decision, 

whether it is in the 2011 debate or the 2012 debate, really has to 

be a reflection of shared sacrifice and shared opportunity. And I 

think that that is an appropriate way to frame our conversation 

today. 

There is no question that the budget that we submitted, the 

budget that you all are considering, reflects a good deal of sacrifice 


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that will be asked of Americans, of those who live in rural communities. But there is also an opportunity for us to continue the 

growth and the expansion of the economy that we have recently 

seen in rural America as a result of a very strong agricultural economy and a reduction of the unemployment rate at a rate faster 

than the rest of the country. 

So I look forward to working with the committee. Our team is 

assembled here and prepared to respond to the questions you have 

today. And if we can’t get a full answer today, we will certainly be 

glad to supplement our conversation in writing. 

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INITIATIVES

Mr. KINGSTON. Well, thank you, Mr. Secretary. And let me begin 

with asking you a question about some of your new initiatives. 

As you know, the House originally said we are not going to have 

any earmarks. And then the Senate came along and eliminated 

about $400 million in earmarks. But it is my understanding that 

that money, rather than go into deficit reduction, the administration plans to use that to fund new initiatives. 

Is that correct, or am I missing something? And if that is not correct, where does the offset for new initiatives come from? 

Secretary VILSACK. Depending upon the mission area, Mr. Chairman, we can establish for you that the elimination of earmarks, it 

does in fact go to reducing our discretionary spending. Let me take 

the National Institute of Food and Agriculture (NIFA), for example. 

We obviously are very interested in increasing competitive grants 

under the Agriculture and Food Research Initiative (AFRI) program because we think that that is the most significant and best 

way to leverage resources with our universities in the private sector. 

Having said that, that increase in AFRI research is offset by the 

elimination of earmarks that have been designated by Congress in 

the past. And the net result of NIFA is a reduction of $138 million 

over what it was in 2011, as proposed. 

In the Agricultural Research Service (ARS), we increase commitments to regional biofuel feed stock research because we think that 

is appropriate, to expand an industry that we believe has great potential for rural America in terms of job growth and providing additional opportunities and income for farmers. That is offset by $41 

million in earmarks that have been eliminated under the ARS portion of the budget. 

So I could go through each line item of the budget, each area and 

mission area. But I think what you will find is the Animal and 

Plant Health Inspection Service (APHIS) earmarks basically offset 

some of the marketing and regulatory programs that we are proposing to increase because of invasive species and pests and disease that we think have significant impact on the economy of particular crops. 

So I think we could go through all of these. But I can assure you 

that the bottom line is a net reduction in discretionary spending, 

which the President has directed us to do and I know the Congress 

is interested in seeing as well. 

Mr. KINGSTON. So the money, though, does come from what really has already been eliminated, in that the earmarks aren’t there. 

Is that correct? 

Secretary VILSACK. We were working off of a budget that included specific allocations for projects—for example, specific research projects, for example, where money was being accumulated. 

That has been reduced. We made an effort to try to prioritize, as 

best we could, programs which we thought either—let’s take 

APHIS, for example. 

We prioritized programs in APHIS where we thought perhaps we 

had already made sufficient progress, or perhaps we had based our 

view on an eradication strategy, when in fact the science would tell 


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us that eradication is probably not going to work, so we need a containment strategy. We tried to prioritize as best we could. Obviously, Congress is going to have a potentially different set of priorities, but this is a starting point for conversation and discussion on 

a budget. 

Mr. DICKS. Mr. Chairman. 

Mr. KINGSTON. Yes. 

Mr. DICKS. If you would yield, just to ask a question on this 

point. 

The money you are talking about is fiscal year 2010 money, isn’t 

that correct, where the administration made a decision to not 

spend the earmarked funding until they could see what happened 

with the 2011 budget? 

Secretary VILSACK. It is correct it is the 2010. 

Mr. DICKS. So that is the money we are talking about. And so 

the earmarks were not done, but that money was still there. How 

much was that amount? 

Secretary VILSACK. Well, it depends on which mission area you 

are talking about. If I can ask Mike. 

Mr. DICKS. Thank you for yielding. 

Mr. KINGSTON. Yes. Let me ask the gentleman a question because it is my impression that the President’s budget has already 

acknowledged that earmarks would be gone, and therefore that 

money is not in there. 

Mr. DICKS. In 2012, right? 

Secretary VILSACK. Correct. 

Mr. KINGSTON. So then this would just—those increases actually 

are not offset because that money is not in the budget. 

Secretary VILSACK. In some cases, Mr. Chairman, there was 

money that was allocated in previous budgets that is being essentially wiped out, if you will. 

CROP INSURANCE

Mr. KINGSTON. Well, let me ask you another question. You had 

talked about the crop insurance savings being $6 billion. 

Secretary VILSACK. Yes. 

Mr. KINGSTON. Four billion went to deficit reduction. Where did 

the other two go? 

Secretary VILSACK. The other $2 billion portion of it went into 

expanding crop insurance products for range and pasture and 

grassland areas. Roughly 14,000 additional policies have been sold 

as a result of that expansion. 

A portion of it is going to go to a premium reduction program for 

good performers to encourage—— 

Mr. KINGSTON. Mr. Secretary, my own time has expired and I 

have to call the clock on me. But I get the gist of what you are saying. 

Mr. Farr. 

RESEARCH FACILITIES

Mr. FARR. I will follow up a question on that. So all of the money 

that went through earmarks, for example to build facilities, have 

been wiped out for your ag research stations? 


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Secretary VILSACK. That is correct. And the reason—and I understand that there is obviously a great deal of interest in research, 

and you specifically have a great deal of interest in it, as you 

should. 

The problem has been that we have not really prioritized these 

research projects, and what we are going through right now with 

ARS is a discussion and a review and a study of exactly how to 

prioritize research and research facilities so that we make decisions 

based on what we think is in the best national interest, as opposed 

to something that has been earmarked specifically by a Member of 

Congress in the past and which the administration essentially 

agreed to in the past. 

Mr. FARR. So even meritorious earmarks that will pass that test 

will—— 

Secretary VILSACK. Well, I think there is no question that there 

is a need for improved research facilities in this country. And there 

is no question that we are going to have to invest in those facilities. 

Research is extremely important in terms of a multitude of areas— 

to rebuild rural America, to make sure that we continue to invest 

in crop productivity and livestock protection, and so forth. 

So there has to be research facilities. But my belief is that you 

have got to prioritize, and you can’t prioritize if you continue to 

provide small amounts of money to build up an account that, over 

time, eventually gets to a point where you can build a facility with 

it. 

Mr. FARR. And once that decision is made that you have set 

these priorities, then where will the money come from? 

Secretary VILSACK. Well, it will come from essentially whatever 

you do with budgeting. You have got to make decisions and you 

have got to establish priorities. And if in year 2013 or 2014, whatever the year might be, we make a determination that four or five 

research facilities are extremely important to be done, then it will 

be up to us to find resources in the budget to offset or additional 

income revenue sources to provide the resources to build those facilities. 

Mr. FARR. Will you be working with other federal agencies like 

the Food and Drug Administration—FDA—to see where you might 

collaborate in research facilities? 

Secretary VILSACK. We do, and we are working very closely right 

now with the Department of Homeland Security on a facility, a specific facility in Kansas. So yes. 

Mr. FARR. So those factors will go into your prioritization as 

what other partners you have in—— 

Secretary VILSACK. Partners, and I think it is fair to say that to 

the extent that we become, I think, creative about leveraging resources—I mean, we are getting to a point now where I think we 

have to be very careful about money we spend. And if we are able 

to leverage those resources with additional investment outside of 

government, that is something that—that is a factor that also 

ought to be considered. 

Mr. FARR. Well, I appreciate that approach. I always thought 

that that might be the approach you have used in the past. But I 

really resent the fact that you have worked many, many years to 

try to build up an account to build a facility that I think will pass 


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all the scrutiny that you have just outlined, and then have to start 

all over again. 

Secretary VILSACK. Congressman, I understand the frustration. 

All I can say is that when I came into this office, there had not 

been a review or prioritization of these facilities at all, to my 

knowledge, and that we are in the process of conducting that right 

now, which I think is the prudent approach. 

Mr. FARR. Yes. I think it is a prudent approach. I just don’t like 

throwing the baby out with the bath water. 

Secretary VILSACK. Well—— 

RURAL STRATEGY FOR AMERICA

Mr. FARR. Would you for a moment just explain to the committee 

what you are doing in this kind of rural—what you explained to 

me about the idea of looking at a rural strategy for America—remember, your comment that rural America has not been in a recession, it has been in a depression for about the last 10 years—your 

concept of revitalizing rural America? 

Because in hearing that, I look at this that you are going to zero 

out the Resource Conservation and Development Program. I always 

think, is that being part of an effective strategy for rural America, 

and wonder why you have decided to zero that out. 

Secretary VILSACK. Well, conservation spending overall is going 

to increase when you compare it to the authorized level in the 

Farm Bill. We will increase over what we had last year because it 

is part of the strategy of rebuilding our rural economy. 

The greater the resources invested in conservation, the greater 

the chances are that you can expand outdoor recreation opportunities, which are a significant strategy for rebuilding America. You 

have to prioritize. I mean, we are faced with constraints, and we 

tried to prioritize where we thought the best bang for the conservation buck could be obtained. 

Some of the smaller programs had to go. Some of the guaranteed 

loan programs in conservation had to go. But EQIP was increased. 

We continue to promote the Conservation Reserve Program— 

CRP—which is another place where the crop insurance money 

went, Mr. Chairman, which is what I would have said if my time 

had not expired. 

Mr. KINGSTON. The gentleman’s time has expired. 

Mr. Latham. 

Mr. LATHAM. Well, thank you, Mr. Chairman, and welcome, Secretary. 

FARM BILL

We are starting the process of writing a new Farm Bill, and I 

just wondered if you had set out priorities. Or what do you envision 

as far as changes going forward? 

Secretary VILSACK. Representative, I think it is fair to say that 

we recognize the responsibility that Congress has in writing the 

Farm Bill, and we stand ready to provide the technical assistance 

and support the Congress needs to write a good Farm Bill. 

I can’t say that we have established priorities because we see 

this as a collaborative process. We have set in motion a process 

within USDA to begin taking a look at current Farm Bill provisions 


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to determine if there are things that are inefficient, ineffective, 

complex, confusing, things that need to be straightened out, amplified, modified, so that we have a good list of those programs. 

And then secondly, I think Bob Stallman, at a recent Farm Bureau meeting in Atlanta, I think, summarized it fairly well. I think 

we are confronted—and I say we—are confronted with the challenge—Do we want a safety net system that provides some resources to farmers on an annual basis, regardless of how good the 

agriculture economy might be on that particular year, as opposed 

to something that would provide significant help and assistance 

when it is most needed? 

And I think that is one of the fundamental questions that has 

to be answered. We obviously believe that there is a move towards 

risk management, and more appropriate risk management techniques, and that is reflected, obviously, in our proposal to reduce 

some of the direct payments to some of the higher income farming 

operations. 

But I would say part of our priority is also on this issue that 

Representative Farr began to address, and that is, how do we rebuild the rural economy? I think an expansion of broadband is part 

of that. I think conservation is part of it. And I think clearly, in 

my view, biofuels and renewable energy is a significant part of that 

and needs to be reflected in the Farm Bill. 

Mr. LATHAM. Are you planning a series of hearings around the 

country? Has there been a schedule? Because it is going to start 

pretty quick. 

Secretary VILSACK. Right. I don’t think that we are going to replicate what happened in the past, which is the administration 

doing a series of hearings and then coming up with its own Farm 

Bill. Again, I think we see this as a collaborative process. 

I am sure that we will be out in the field, if you will, listening 

to folks and getting input. But I don’t think it will be quite done 

in the same way that Secretary Johanns did it when he was in this 

position. 

Mr. LATHAM. I would just hope that it is policy-driven, which the 

last Farm Bill was. It tried to determine policy and then fit the dollars in with it. The previous Farm Bill, basically, was all about the 

number of dollars and then trying to fit policy into that. It was reverse. I mean, I think the policy part comes first myself. 

Secretary VILSACK. Well, you know, the reality is that you need 

both. You need the right policy and you obviously—— 

Mr. LATHAM. But the good policy is—that is where we are. 

Secretary VILSACK. I don’t disagree with that. 

Mr. LATHAM. How are we doing? 

Mr. KINGSTON. You have a minute, almost two minutes. 

Mr. LATHAM. Oh, that is plenty of time. 

GRAIN INSPECTION, PACKERS AND STOCKYARDS ADMINISTRATION RULE

The new GIPSA rules that are coming down, I have real concerns 

about the impact that is going to have on a lot of producers. Tell 

us—you are going to do an economic analysis of the impact. 

Secretary VILSACK. Yes. 

Mr. LATHAM. Where is that, and is that going to be subject to 

peer review? 


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Secretary VILSACK. We made the decision to open the proposed 

rule for comment in an effort to try to better shape the economic 

analysis that would take place. We received, I believe, over 60,000 

comments, roughly 30,000 of them unique. They are being categorized and classified and put into categories. 

When that process is completed, Joe Glauber will use that as a 

basis of putting together an appropriate team, and an analysis will 

be done. A thorough analysis will be done. We are anxious to obviously get this done in as appropriate and as thoughtful a way as 

possible, and we think we have had a substantial amount of input 

on this already. 

We recognize there are concerns, but we also have heard—when 

I traveled around the country with the competition hearings with 

Attorney General Holder, we heard a lot of concerns about the current system and the fairness of it. What we are really trying to do 

is establish a fair system and a transparent system. 

Mr. LATHAM. I would just hope that we have enough time to have 

peer review to look at it. Sometimes you have some dramatic unintended consequences. I was just in Marshalltown last Friday. I 

toured the former Swift plant there, and the concern they have is 

right now they are paying additional, but they get over half their 

hogs from one source. They are all uniform. It is economically advantageous for them as far as processing to have that type of product coming through. 

I am more concerned about the little guy out there because I 

think he is going to be put at a real disadvantage long-term. 

Secretary VILSACK. That is not our intent. 

Mr. KINGSTON. The gentleman’s time has expired. 

Mr. Dicks. 

Mr. DICKS. Thank you. 

FOOD SAFETY AND INSPECTION SERVICE

I wanted to ask you about food safety inspection and the effect 

of H.R. 1 on the Department. The Food Safety and Inspection Service—FSIS—is responsible for safety of domestic and imported meat 

and poultry. As noted above, H.R. 1 would hold funding for the 

FSIS to the 2008 levels. 

The administration estimates that this would require a furlough 

of all FSIS employees, including all inspectors, for 30 to 47 working 

days. This would have amounted to 20 to 30 percent of the working 

days left in the fiscal year if the bill were enacted on March 4th. 

Without inspectors available, meat and poultry plants would be 

legally required to stop operating. The administration estimates 

that the economic loss from stopping plant operations at $11 billion. It also expects that consumer prices for meat and poultry 

would rise with curtailed supply. 

Are those comments accurate? 

Secretary VILSACK. Representative, I think it is fair to understand that the FSIS portion of our budget is predominately personnel. Predominately personnel. We have done a study recently 

that is reflected in our 2012 appropriation request in which we 

could, obviously, given enough time, adjust our workforce a bit 

without necessarily resulting in closures of facilities. 


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But if you impose upon FSIS a significant reduction and you give 

us less than a fiscal year, if you give us six months or five months 

in which to manage that reduction, you are going to see personnel 

reductions and you are going to see impacts, obviously, on facilities. 

Our hope and belief is, honestly, the confidence that we have in 

all of you, is that hopefully that won’t happen, that there won’t be 

a reduction of that magnitude, and that there won’t be any kind 

of shutdown or interruption of government. 

Mr. DICKS. Well, we hope that you are right and that in a working-out between the House and Senate on this issue, that this can 

be resolved in a positive way. 

WATER AND WASTE

Under the Water and Waste Direct Rural Utility Services, we see some very significant cuts, from—in 2011 was $1,022,000,000 down 

to $770,000,000 minus $251 million. Grants are cut from $469 million to $409 million. These are programs that are absolutely essential in rural America. And I know we have to make some reductions, but are you concerned about what the impact of these cuts 

will be on rural programs? 

Secretary VILSACK. Well, the reality is we are always concerned. 

Having said that, I think it gets back to my opening comments, 

Representative. I think what we are faced with here is a balance 

between shared sacrifice and shared opportunity. 

These water projects are important to the communities involved, 

and we did a substantial number of them and are in the process 

of completing a substantial number of them as a result of the Recovery Act. Well over 800 projects were funded through the Recovery Act. 

And so it is obviously important to the community. We will do 

the best we can of leveraging those resources at whatever level 

Congress ultimately decides to appropriate. 

Mr. DICKS. Right. Well, I want to say that those programs have 

been very important in Washington State, and the rural communities deeply appreciate the help and assistance that they have received. And what we are worried about is that it is the lowest income areas that we are talking about that may be negatively hit 

by this. 

Secretary VILSACK. Well, we will do our best to make sure that 

we provide resources to those lowest income areas. And I will tell 

you also, this is about economic development and jobs. You cannot 

attract economic development to a community if you don’t have access to water. 

Mr. DICKS. Yes. Again, I want to thank you for coming out to 

Washington State. We enjoyed your visit, and we look forward to 

continuing to work with you. 

I yield back my time, Mr. Chairman. 

Mr. KINGSTON. The gentleman yields back. 

And the chair recognizes Mr. Aderholt, and I want to welcome 

you to this committee. 

Mr. ADERHOLT. Thank you, Mr. Chairman. It is good to be on the 

ag committee, and we appreciate the Secretary and the Department of Agriculture coming over and testifying before the subcommittee today. 


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POULTRY

One of the major agricultural products of the district I represent 

is poultry, and of course knowing that there is fierce protectionism 

from other countries, every time we try to complete a free trade 

agreement or simply arrange sales to another country. What is the 

status of sales of U.S. chicken products to Australia, Russia, and 

China? 

Secretary VILSACK. We have been working—let me start with 

Russia. We have worked to reopen the Russian market. They originally expressed concern about the chlorine wash process that we 

used in poultry treatment. As a result of an elaborate set of conversations with the Russians in Russia about the technical aspects 

of this, we were able to reach an agreement which reopened that 

market, and we are in the process of selling poultry. 

However, having said that, there are a number of steps that the 

Russians have taken recently in connection with specific plants, 

suggesting that there are additional issues that need to be resolved. So there is an ongoing conversation with the Russians 

about reopening the poultry market, and it actually took President 

Obama speaking to the Russian president specifically about this 

during President Obama’s visit to reopen. 

In China, we are obviously continuing to work to reopen. China 

now is our number one trading partner generally in agricultural 

products, surpassing Canada and Mexico. That market is reopened. 

But, you know, it is always fragile. 

We think that there are tremendous opportunities in other parts 

of the country—other parts of the world, rather—to reopen trade 

and to expand trade. I am taking a trip in the spring to Indonesia 

and Vietnam. I think there are tremendous opportunities in that 

region. I think that is the reason why the President has been engaged in the Trans-Pacific Partnership discussions, to sort of create 

a much larger, multilateral arrangement. 

So Korea, obviously, another opportunity for us, and we are anxious to make sure the free trade agreement gets through the process as quickly as possible. 

Mr. ADERHOLT. Anything in particular regarding the status of 

sales in Australia? 

Secretary VILSACK. You know, I will have to get back to you on 

that, Congressman. I am not specifically sure about Australia. Our 

focus has primarily been on China and Russia, where they have 

from time to time created nonscientific barriers that we have to 

kind of knock down. 

[The information follows:] 

Australia currently bans imports of U.S. fresh/frozen chicken and turkey meat due 

to concerns related to infectious bursal disease (IBD). This disease is present in both 

countries; however, as a result of an import risk assessment (IRA) on chicken meat, 

Australia concluded that the U.S. strain is exotic to Australia. The United States 

believes that the IRA overestimates the risk presented by imports of these products. 

In 2009, the United States asked Australia to add market access for U.S. cooked 

turkey meat to the list of issues that USDA is looking to have addressed on a priority basis. USDA continues to press Australia on this issue, and has had recent 

discussions that indicate the matter will be given greater attention by the Australian side going forward. In 2010, the United States exported over $2.5 million in 

poultry products to Australia, the majority of which were eggs and egg products. 


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Mr. ADERHOLT. And certainly I know those would be large markets as well. 

TRADE AGREEMENTS

Just sort of tied into that with talking about the sales and trade 

agreements, a lot of times I talk to constituents and they want to 

know the benefits of these free trade agreements. And a lot of 

times they hear about the impact they have on manufacturing. 

But could you share some examples of where agriculture has actually really flourished when there has been trade agreements—for 

example, under CAFTA and under even NAFTA, but in CAFTA in 

particular, where you have seen some real positive efforts that 

have flowed from these agreements in the past? 

Secretary VILSACK. Representative, what I usually do when I 

talk about trade is to talk about the overall agricultural trade situation. And this year is a good year to talk about it because we had 

a record export year in agricultural trade. We did—and we anticipate this year, the current year that we are in, we will do roughly 

$136 billion worth of agricultural trade. That will be $20 billion 

higher than last year’s effort, and last year’s effort was a record effort in exports. 

Every billion dollars of agricultural sales, export sales, generates 

somewhere between 8,000 and 9,000 jobs. So it is a job creator. Obviously, it is nice to know that we have in this area a trade surplus. We are anticipating the trade surplus this year to be $47 billion. There are not very many parts of our economy where we can 

talk about a trade surplus. 

So we are basically creating wealth from the ground, exporting 

it outside the country to CAFTA countries, to Southeast Asia, to 

Europe, and to certain African countries and South American countries. We are heavily engaged in promoting trade, and we are going 

to continue to be so. 

Our budget does propose additional resources because it can create new opportunities. So across the board, we have seen significant increases in agricultural trade. 

Mr. ADERHOLT. And I would assume that that would be the case 

with the South Korean and Colombian—— 

Secretary VILSACK. Well, there is no question on South Korea. 

We know precisely what will happen. We will see tariffs reduced 

on 60 percent of our agricultural products. It is roughly a $5 billion 

market today. Those tariffs are roughly 53 percent, which are quite 

high. We will see an elimination on 60 percent of those items immediately, and then over a period of time the reduction of the other 

tariffs. So there is no question there is a great opportunity there 

for us. 

It is part of our strategy to focus on countries where there are 

expanding middle classes or countries where we think barriers to 

nonscientific—nonscientific trade barriers can be reduced. And 

Korea obviously has an expanding middle class, and I think will 

provide impetus and momentum for additional trade agreements. 

Mr. ADERHOLT. Thank you. 

Mr. KINGSTON. The gentleman’s time has expired. 

Ms. DELAURO. Thank you very much, Mr. Chairman, Mr. Secretary and staff. Welcome. 


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Just give me five seconds more, Mr. Chairman, just to say thank 

you. It was a hard decision for me to make the choice that I did 

in moving to ranking on HHS. I love the work of this committee. 

I have been very proud of the work that we have all done together 

in a bipartisan way, and it has been a pleasure working with you. 

I am looking forward to working with you again and with my colleague, Mr. Farr, in the ranking position. 

And I just want to say a thank you to the Secretary and his staff 

for the good work I believe we have been able to do over the last 

several years. So thank you. 

Mr. KINGSTON. Thank you. 

FOOD SAFETY AND INSPECTION SERVICE

Ms. DELAURO. With that, let me just follow up on a couple of 

areas that Mr. Dicks began to explore. I really am interested, and 

if we don’t have an answer today, I would like to know, that because of the $88 million cut over the remainder of the year if the 

current Appropriations Bill becomes law, I think we have to—and 

we can’t, and I know you are not suggesting this, Mr. Secretary— 

that we just can’t hope for the best that will come out of this process. 

But just in quantifiable data, which I think we need to know 

something about, is how many inspectors would have to be furloughed for how long a period of time? How many chickens and 

beef carcasses would be destroyed because they will go 

uninspected? What positions are you proposing to eliminate, and 

how would that affect the daily and continuous plant inspections? 

I would like real numbers attached to this and a plan attached 

to this. As I say, I don’t think we can hope for the best here. I 

think we need to have a plan B, and I think everyone here—and 

the public as well—needs to know what the impact of those cuts 

would be. 

When FSIS inspection is inadequate, we get the scandals like 

Westland/Hallmark, that beef debacle that we had in 2008. And as 

an adjunct to that, what are the safeguards on the proposed savings? What is in place? What is in place to assure us that we do 

not have another inspection failure like that was? 

Secretary VILSACK. Well, Representative, let me just say generally—we will provide you the specifics—but generally speaking, 

the concern that I have about all of these conversations about 

budgets and the difficulties that we are having in trying to get a 

2011 budget finished is—Are we going to have sufficient time in 

which to manage whatever you ultimately decide? 

Having been a governor for eight years, having balanced eight 

budgets, if you give me enough time, we can work around. But if 

you try to squeeze into six months a rather substantial cut in an 

area of the budget that is personnel-driven, you have no other recourse. It is not like you can plan. It is not like you can figure out 

how to deal with the situation. 

But if you have time—and by time, I mean an extended period 

of time; that is why the President has suggested and proposed a 

freeze of discretionary spending for several years. That gives his 

managers, his Cabinet members, time to manage it appropriately. 

If you squeeze a substantial reduction in a short period of time, it 


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becomes very difficult to manage. And FSIS is a good example because that is a place where it is very personnel-driven. 

[The information follows:] 

Last week the Senate voted on the House passed version of H.R. 1 and the Senate 

version of the bill that would have funded the government for the remainder of the 

year. As you know, neither proposal had sufficient support to pass the Senate. This 

is an indication of the difficult decisions under consideration. The Administration 

has made it clear it is willing to support a reasonable compromise that makes targeted investments while cutting spending in a measured way that will help us reduce the deficit. This assumes that we will be provided enough time to properly 

manage the implementation of any reductions that ultimately result from these decisions. 

In the case of FSIS, it is important to note that 85% of the FSIS budget is for 

personnel, so a reduction of the magnitude contemplated by H.R. 1 would likely 

have an effect on the FSIS workforce. Since October 1, 2010, the Agency has undertaken a review of all spending and made significant progress in reprioritizing nonessential travel, operating, and staffing to support core mission requirements. These 

re-prioritizations were necessary to provide adequate funding for pay cost increases 

(those merit promotion and within-grade-increases) and unfunded benefit increases, 

such as rising health care costs and an increasing number of FERS employees. As 

part of the FY 2012 budget process, FSIS has also identified several proposals that 

are part of the 2012 budget that will make FSIS more efficient. However, if FSIS 

were to be reduced to FY 2008 levels with five or six months left in the fiscal year, 

there would likely be no way to avoid impacting the FSIS workforce. 

To mitigate an $88 million reduction, the Agency would seek to manage the effects in such a way as to minimize the impact on the Agency’s regulatory responsibilities, on industry, and ultimately the consumer. FSIS would likely need to furlough employees, and in one scenario, FSIS would need to furlough frontline inspection personnel (currently more than 8,000) resulting in approximately 6,200 federally inspected meat and poultry plants being shut down for over one month. 

It is difficult to estimate the exact impact on the industry, but during FY 2010, 

FSIS inspection program personnel ensured public health requirements were met in 

establishments that slaughter and/or process 147 million head of livestock and nine 

billion poultry carcasses. Assuming a similar level of slaughter and processing in FY 

2011, disruption of inspection for over a month would likely result in billions of dollars of impacts. 

Ms. DELAURO. And I will reiterate, but I would like to see the 

numbers. I think it is important to know the numbers. And you as 

an administrator and as a governor know that you have to plan for 

the worst scenario, and I think that that is important. I also would 

just say what the closure of these plants would be, and I think people have got to understand what the effect is on the cost of meat 

and poultry products as a result of that. 

INTERSTATE MEAT RULE

Let me move to state and meat/poultry inspections. The 2008 

Farm Bill directed FSIS to establish a program whereby certain 

meat/poultry establishments currently under state inspection 

would be eligible to ship their products in interstate commerce. 

There was careful negotiation on that among the consumer organizations, state departments of agriculture, the National Farmers 

Union, and labor organizations. 

The comment period for the proposed rule to implement the new 

program closed on December 16, 2009. The Department did not 

send the Final Rule to the Office of Management and Budget for 

final clearance until January 7, 2011. Why was there such a long 

delay in transmitting the Final Rule to OMB, and when do you expect the Final Rule to be published in the Federal Register? 


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Mr. KINGSTON. Mr. Secretary, you have about—actually, time 

has expired, so if you could just summarize it quickly and submit 

the rest of it for the record, that would be helpful. 

Secretary VILSACK. We are expecting it soon from OMB, very 

soon. My hope is—we talked about this just yesterday, about the 

interstate meat rule—our hope is that it gets done very soon. This 

was a pilot project, and I think we just wanted to make sure it was 

done right in terms of the amount of time. 

[The information follows:] 

The comments were substantive and the Agency benefited from a thorough analysis in developing the docket. 

Ms. DELAURO. Thank you, Mr. Chairman. 

Mr. KINGSTON. Thank you. 

Mr. Nunnelee, I want to welcome you to the committee. But inasmuch as Mr. Bishop has been the first one here today, I feel like 

we need to go to him. So if you don’t mind, Mr. Bishop. 

Mr. BISHOP. Thank you very much, Mr. Chairman. I appreciate 

your courtesy. And welcome again, Mr. Secretary. 

RENEWABLE AND CLEAN ENERGY

Although the President’s fiscal year 2012 proposed budget for 

USDA decreased to $23.9 billion from the $27 billion in fiscal year 

2010, you still invest $6.5 billion in support of renewable and clean 

energy. In particular, the Agriculture and Food Research Initiative 

is getting an increase of $8.2 million for a research initiative to develop high-quality, cost-effective feed stocks, as you mentioned, for 

biofuel production. And the Rural Business Cooperative Services, 

which operates the Renewable Energy Loan and Grant Program for 

the purchase of renewable energy systems and energy efficiency 

improvements, will see a combination of mandatory funding and 

grants programs at about $57 million above fiscal year 2011. 

This is laudable, but I am concerned regarding the future of ethanol production as a vehicle alternative fuel source. The ethanol 

plant in my district, which you visited last year, was just forced to 

seek bankruptcy due to a number of factors, and I understand that 

that story is similar around the country. 

I think that we all support ethanol as an alternative fuel source. 

But how can we work to support and strengthen the industry, particularly given the tremendous pressure that it is experiencing 

now, both politically and economically? 

Secretary VILSACK. Representative, first of all, there are over 200 

ethanol production facilities in the country. We had a record 

amount of ethanol produced. Ethanol production is up 23 percent 

this year. So there may very well be, as is the case in your district, 

an individual circumstance where a facility didn’t make it. I think 

in your facility’s case, it is a particular technology concern and 

challenge that they were not able to overcome. 

Having said that, here is why it is important to continue to support biofuels and renewable energy, because if we reach and when 

we reach the 36 billion gallon mandatory amount that you all have 

set as the goal, we will produce roughly a million jobs in rural 

America. A million jobs. And we will see $100 billion invested in 

biorefinery plants across the country. 


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The key here is for us to make sure that we multiply feed stocks 

used and available to produce ethanol. It is not and cannot and will 

not be solely based on corn. There are a number of interesting 

strategies that we are currently investing in that we believe ultimately will result in us being able to produce ethanol and biofuels 

in all parts of the country, utilizing whatever that part of the country has as its feed stock. 

It could be woody biomass in the Northwest. It could be perennial grasses in the Southeast. It could be algae in a facility in the 

Southwest, as we currently are investing in. It could be animal 

waste. It could be landfill waste, which we are investing in, a plant 

in the Deep South. I mean, there are a multitude of ways to do 

this. It is really about rebuilding the rural economy, and you have 

got to provide new products, or you have to differentiate what you 

are producing from everything else that is of a like kind that is 

being produced. 

Mr. BISHOP. I agree with you, Mr. Secretary. And for the past 

several years, the corn price has been pretty much tied to the price 

of oil due to ethanol production, which has become a major concern 

to our pork producers and our cattle producers in terms of feed consumption, feed efficiency, and feed waste. 

How can we better balance and/or differentiate corn production 

and costs for ethanol production versus animal consumption? 

Secretary VILSACK. Well, first of all, fortunately, we are seeing 

good prices in our livestock area. And so we want to obviously continue to expand market opportunities for those livestock producers 

so they have strong markets. 

Secondly, when you are producing ethanol, you are not just producing ethanol. You are also producing a feed supplement that is 

quite efficient and quite effective in cattle in particular. 

So I think there are additional reasons why this is an industry 

that we should continue to support for the livestock industry. Obviously, we are keeping an eye on the livestock industry, but at this 

point in time we seem to be doing okay. And we are going to continue to work hard to make sure markets are available, and that 

we become more efficient, and that we expand the number of feedstocks available so that we don’t rely solely on one feedstock. 

BROADBAND

Mr. BISHOP. I have just a few seconds left. Let me switch to 

broadband right quickly. A number of Georgia residents are waiting for broadband coverage in the service resulting from the 2009 

stimulus program. And we have spoken with the three primary 

service providers who won the contracts in Southwest Georgia. But 

they tell us that while they have submitted all the paperwork, RUS 

hasn’t processed the loans and they haven’t received the funding 

yet. In one case, the paperwork has been pending since the fall. 

What is the total number of funds that are allocated to grantees? 

And is there a way we can expedite the process? 

Secretary VILSACK. The 330 projects, I can’t say specifically as it 

relates to your particular project. If you can allow us to get back 

to you, we will be happy to look into that. There may very well be 

a reason why there has been a delay. 

[The information follows:] 


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Under the Recovery Act, the Rural Utilities Service approved $3.5 billion in funding for more than 300 broadband projects across the country. These projects are 

moving forward on schedule to meet the three-year deadline mandated by the Recovery Act. Of the nine Recovery Act-funded broadband projects in Georgia, funds 

have been made available to one awardee, Flint Cable TV, as RUS has cleared the 

document and environmental review for that particular project. For the remaining 

Georgia projects, RUS is working to clear the documents for three projects and is 

working to finalize the environmental findings for five projects. 

Of the total funds obligated nationwide, $1.974 billion in project funding is available for construction or pending final clearance, and $82 million in funding has been 

drawn down by awardees. In order to ensure responsible administration of Federal 

funding, documentation for these broadband projects undergoes a comprehensive review by RUS loan and grant specialists. We are doing everything in our power to 

expedite these projects to ensure they meet the construction deadline. 

Mr. BISHOP. Thank you, Mr. Secretary. 

Mr. DICKS. Would you yield to me just briefly? 

Mr. KINGSTON. The gentleman’s time has expired. But I am sorry 

unanimous consent to give Mr. Dicks—— 

Mr. DICKS. I have to go on to another meeting. 

ETHANOL

But Mr. Secretary, I think you have got to make that story about 

ethanol—you need to get that out there because there is a lot of 

misinformation being spread all over this country about that program. And you are an expert on it, and the administration needs 

to talk a lot more positively about it, I think. 

Secretary VILSACK. We make every effort to do that, Congressman. You are right. 

Mr. DICKS. Thank you. 

Mr. KINGSTON. Mr. Nunnelee. No questions. 

Mr. Dicks, you have more time. Mr. Nunnelee just yielded back. 

Mr. DICKS. I got things to do. [Laughter.] 

Mr. KINGSTON. Well, let me welcome you again to the committee. 

PAYMENT ERROR RATES

Mr. Secretary, I wanted to talk to you a little bit about a subject 

you and I have spoken about in the past, and that is the payment 

error rates. And I had noticed that you have brought down the 

error rate for farm programs, and one of the more fascinating hearings that we have each year on this subcommittee is when the Inspector General comes in and talks about people who are gaming 

the system. And it is not just individuals. It can be institutions, 

and it can be our own sloppiness that causes payment errors. 

But I wanted to have you comment on the farm program payment errors and then I want to talk to you about the Supplemental 

Nutrition Assistance Program—SNAP—benefit payment errors because it appears that one of the rates has gone down in farm payments, whereas SNAP has sort of leveled off at about a 4 percent 

rate. And I have some statistics, but let me just ask you to comment on those two. 

Secretary VILSACK. Well, on the farm payment, we have done a 

couple of things. First of all, there was a concern about deceased 

individuals receiving payments. And so we have teamed up with 

the Social Security system to make sure that we are appropriately 

providing resources. There are circumstances where a farmer dies 

during the year and their family is entitled to the payment, and 


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at that point it ought to stop. And we are doing a better job of making sure that we keep an eye on that. 

We have also teamed up, as you well know, with the Internal 

Revenue Service—IRS—to make sure that if folks are above the income thresholds, that we receive notice of that. And we are doing 

that in an appropriate, secure, privacy-protected way. 

We have also taken a look at ways in which we analyze some of 

our disaster programs. The Noninsured Crop Disaster Assistance 

Program—NAP program—for example, had a high error rate. We 

think that might be because of the sampling process that we are 

using, and so we are looking at ways in which we can reduce that. 

So we have seen reductions. 

On the SNAP side, I would just simply say that you have to also 

recognize that there has been a significant increase in the number 

of SNAP recipients in the last two years. Roughly, I believe, 13 million people have been added to the rolls, and so that is a 30 percent 

increase. And we have still been able to maintain a less than 4 percent error rate, or less than 5 percent error rate. The standard is 

less than 6 percent. 

We are going to continue. We have challenged our team to do a 

little bit better this year to continue to increase that percentage of 

proper payments. 

Mr. KINGSTON. Let me ask you this. As I read the IG report on 

both these programs, the farm program and the SNAP program, 

some of it is kind of like the Readers Digest article stuff. There 

was—I believe it was in Detroit, a grocery store where the employees were selling—like swapping cigarettes for electronic benefit 

cards and, you know, just things that seemed outrageous and easy 

to do something about, but it had gone on for years. 

And I am not sure about that particular case. But some of these 

appear to be easier to deal with than others in terms of, you do this 

once, you cannot continue to participate in the program. And the 

thing about the SNAP program is it is $3.6 billion. So the amount 

of money involved for 4 percent—that is not that high, but the 

amount of money is tremendous. 

Secretary VILSACK. I agree with you. And one of the benefits of 

the electronic benefit transfer system is it allows us to essentially 

keep an eye on—one of the incidences that I have heard of recently 

is somebody buying substantial amounts of water, and dumping it 

out and then basically turning in the containers for deposit. 

So there are ways in which we can see if there are a disproportionate number of purchases. We can track that. We can keep an 

eye on it. We can have people in those stores, basically, examining 

and keeping an eye on it. 

So we are committed to this. We know that this is a big number. 

It is a small percentage, but a big number. But given the fact that 

we have seen a 30 percent increase in participation in the program, 

I think it does speak well for our efforts that we have been able 

to at least maintain an error rate that is historically a solid rate. 

SNAP PURCHASES

Mr. KINGSTON. With all the discussion, particularly led by the 

First Lady, on nutrition and proper diet and the new food pyramid 

and all these things, is it time to track electronic benefit purchases 


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with nutrition and health, and tie that in and move in that direction? 

Secretary VILSACK. Well, we are obviously studying the request 

from the City of New York to do something akin to that. It is a lot 

easier said than done, simply because there are over 300,000 products that can be sold in a grocery store. 

We at this point have preferred a more incentive-driven effort. 

We have a pilot project that the Farm Bill basically directed us to 

put together in Massachusetts, in which we are trying to see if by 

encouraging with point-of-sale incentives, we can see increased 

fruit and vegetable purchases as opposed to some of the other purchases. 

Candidly, the studies would show that there is fundamentally no 

difference in terms of purchasing or diet choices between folks who 

are on SNAP and the rest of the population, in large part because 

even the folks on SNAP have cash that they use at the grocery 

store because only 10 percent of the people receiving SNAP are 

cash welfare recipients. So most of them are working and struggling families. 

So I think our view is education and incentives will work more 

effectively than trying to figure out a very complicated—and I will 

just give you one example, and then my time is up. 

But let’s say that you had a system in place where you couldn’t 

buy a certain snack food with SNAP. How do you enforce that? The 

18-year-old cashier who lets it go through, are you going to penalize her or him? Are you going to close the store down? How do you 

enforce it? 

And I think these are very technical, practical questions that, 

again, seems like a great idea, but the implementation of it becomes a lot more difficult than you would expect. 

Mr. KINGSTON. I am sure we will be talking about this as time 

goes on. 

Mr. Farr. 

Mr. FARR. Thank you, Mr. Chairman. 

REVITALIZING RURAL AMERICA

Mr. Secretary, I again want to get back to your sort of explanation of what you are going to do with your leadership. And I 

think your background as governor and mayor are very important 

to this. 

You say in your opening testimony that: ‘‘Rural America offers 

many opportunities, but it also faces a number of challenges that 

have been experienced for decades. Rural Americans can earn less 

than their urban counterparts. They are more likely to live in poverty. More rural Americans are over the age of 65, and they have 

completed fewer years of school, and more than half of America’s 

rural counties are losing population.’’ 

‘‘In addition, improvements in health status have also not kept 

pace, and access to doctors and health services has been a key challenge for rural America. Within the context of a reduced federal 

funding level, our budget proposes to focus resources on the most 

effective means to address the long-term challenges facing rural 

communities in America. A critical element is engaging with the 


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public and private partners to revitalize rural communities by expanding economic opportunities and creating rural jobs.’’ 

I agree with every word. But then you go on, and this is what 

I want to know, is how do you get a better bang out of the buck 

here when you eliminate or cut all these programs? Conservation 

district loans, rural housing programs, rural utilities, rural businesses, watershed flood protection, Watershed Rehabilitation Program, RC&D programs, ARS, Grassroots Source Water Program, 

NIFA, and several programs in NIFA. And I think, in all, 34 programs that affect rural America are being cut. 

How are we going to revitalize rural America by cutting out the 

base? 

Secretary VILSACK. Well, I would say a couple things. First of all, 

on the housing issue, when you take a look at the guaranteed loan 

program that we have—we have substantially increased over the 

course of the last couple of years. When I came into office, I think 

we were doing something in the neighborhood of $4 or $5 billion 

worth of guaranteed loans. We are proposing approximately $20 

billion in guaranteed loans. So our view is that we can meet the 

housing needs with the budget that we have proposed. 

On the—— 

Mr. FARR. Just on that, the problem is getting worse, and you 

can meet it by having fewer loans. Right? 

Secretary VILSACK. Well, actually, I don’t think it is fewer loans, 

sir. I think, actually, you will see the same number or—certainly 

the same number. They will be different types of loans. What we 

have proposed is a reduction in direct loans, and we have increased—a reduction in direct loans, but an increase in guaranteed 

loans. 

So the amount of housing units and home loans that we are able 

to do is going to be roughly the same. We are still looking at something in the neighborhood of 90,000 home loans. So I don’t think 

you are going to see a substantial decrease. 

On the assisted housing, there is a decrease. But part of the reason there is a decrease is because some of these units are going 

into foreclosure, and some of them are being converted to higherincome tenants, which often happens. 

Mr. FARR. Rather than going through all 34 programs and justifying why you think that cut is warranted, is there an overall 

strategy—— 

Secretary VILSACK. Yes. 

Mr. FARR [continuing]. Kind of measurable objectives that one 

can look at, and go back to rural communities and say, well, maybe 

we are eliminating or consolidating silos, but we are going to get 

a better bang for our buck. 

Secretary VILSACK. Well, we have proposed the establishment of 

a regional approach, in which we think we can leverage our resources and our capital more effectively. We also—— 

Mr. FARR. Is that just regional among federal agencies, or does 

it also include state and county? 

Secretary VILSACK. Actually, the local geographic area. So we are 

talking—— 

Mr. FARR. So, for example, as governor of Iowa, you know how 

your counties work and what kind of county offices that may not 


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be federal employees but are doing some very effective—do you— 

thinking about, you know, what kind of collaboratives they can 

enter into? 

Secretary VILSACK. That is part of it. And part of it is working 

with local economic development and Chamber of Commerce folks, 

working with local government officials and state officials, to leverage their resources, the private sector resources; but most importantly, to figure out precisely what that region does best and to invest in what it does best. 

Mr. FARR. So it is individualized by region in the country? 

Secretary VILSACK. There are seven regions that we have selected for a sort of pilot. 

Mr. FARR. That is pilots. Yes. 

Secretary VILSACK. Yes. One of them is actually in Southwest 

Iowa. It is a group of six or seven counties that are working together. 

So there is regionalism. There is also a reflection and an effort 

that we are undergoing to increase capital markets, capital opportunities from the private sector. We think we need to engage the 

capital markets and venture capital more effectively. We need to 

figure out ways in which we can encourage more capital into rural 

America. And that may mean regulatory changes. It may mean 

statutory changes in terms of the permission of Farmer Mac and 

the Farm Credit Administration and community-supported banks, 

a way in which we can figure out how can we encourage you to invest more in rural America. So there are lots of strategies. 

Mr. FARR. Have you published that vision? 

Secretary VILSACK. Pardon. 

Mr. FARR. Have you published your vision? I mean, is it other 

than—it is hard to pull out of all this budget data. Is there more 

than—is there some statement of sort of a rural strategy for America? 

Secretary VILSACK. Well, we are actually working with the White 

House, with my fellow Cabinet members, to essentially establish a 

much broader vision, not just USDA’s vision but a governmentwide vision. 

Mr. FARR. Yes. When do you think that will be out? 

Secretary VILSACK. Well, our hope is in the next couple of 

months. I mean, I can give it to you right now, but—I mean, from 

our perspective I can give it to you right now very easily. And we 

do have it published. It is published in our high-performance goals. 

It is published in our strategic vision for the Department, which we 

will be happy to provide you with. 

[The information follows:] 

The Department of Agriculture, as identified in its Strategic Plan for FY 2010– 

2015 (http://www.ocfo.usda.gov/usdasp/sp2010/sp2010.pdf), is committed to assisting rural communities to prosper so that they become self-sustaining, repopulating, and economically thriving. USDA strives to expand economic opportunities 

in rural America and to create jobs for rural residents. To achieve this vision for 

rural America, USDA has established a high priority performance goal to create, 

strong and local regional communities. As part of the strategy to achieve this goal, 

USDA has identified nine regions to participate in pilot projects that leverage Federal resources in combination with State and local resources. As a result of these 

pilots, USDA is seeking to develop strong regional economic strategies for expanding 

exports; linking farm production to local consumption; producing biofuels and reVerDate Mar 15 2010 01:57 Sep 24, 2011 Jkt 068236 PO 00000 Frm 00046 Fmt 6633 Sfmt 6621 E:\HR\OC\A236P2.XXX A236P2

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newable energy; capitalizing on broadband; and innovatively using natural resources as wealth-building tools for rural places. 

Mr. FARR. Thank you. Thank you, Mr. Chairman. 

Mr. KINGSTON. Mr. Latham. 

Mr. LATHAM. Thank you, Mr. Chairman. Before I ask my question, I just want to express my appreciation to the gentlewoman 

from Connecticut for her kindness and the great job she did as 

chairman. You should be ranking here. You sold us out. [Laughter.] 

Anyway, thank you. 

Ms. DELAURO. Thank you. 

PROPOSED LEGISLATION

Mr. LATHAM. Mr. Secretary, in your budget there is a proposal 

to limit eligibility of direct payments by adjusting the adjusted 

gross income, supposedly to save about $2.5 billion over 10 years. 

You have also got a series of user fees for APHIS and FSIS, 

GIPSA, and NRCS. 

Are you submitting legislation, or is there any effort to reopen 

the Farm Bill to do these things? And if that does not happen, do 

you have other offsets to make up for the funding that you are not 

going to get? 

Secretary VILSACK. We really think if we are going to have a 

good quality discussion about the budget, and we are to establish 

it as a reflection of our values and priorities, there does need to be 

what the President referred to yesterday as shared sacrifice and 

shared opportunity. 

With farm prices as strong as they are today, we think it is appropriate to ask the most successful farmers to consider perhaps 

receiving a little bit less than they have been receiving. And we are 

happy to talk about the process that we would follow to essentially 

have that happen. I am sure Congress has the capacity to make 

that happen. And we think it ought to happen, and we have proposed this the last couple of years. 

On the fees, if I can just say, in many cases those fees are designed, in part—certainly in the FSIS area—to basically pay for facilities where we have to inspect more frequently because of difficulties and problems. So we are asking folks who maybe have not 

lived up to the standard to possibly pay a little bit more for the 

extra work that they are causing. 

Mr. LATHAM. I guess the reality is, though, that they are not 

going to reopen the Farm Bill before they write a new one. And so, 

are there other offsets or something that you are going to use to 

make up for the—if, in fact, you do not get your user fees? 

Secretary VILSACK. We are not going to give up on that, Representative. 

Mr. LATHAM. Okay. 

Mr. KINGSTON. If the gentleman will yield, if the Department has 

a proposal, or knows of a proposal that we could look at that is appropriation legal or germane, we would look at it, because as you 

know, it is always going to be offered on the floor, anyhow. And I 

think we would rather be in a proactive position, working with you, 

than a defensive position. 

Secretary VILSACK. And we are happy to. I mean it is relatively 

simple. We are just simply saying the limits that you have got in 


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the Farm Bill today would be reduced by $250,000, both on the 

non-farm and the farm income. So you could, as a farmer, have 

$500,000 income or $250,000 of non-farm income, and still potentially qualify. 

Mr. LATHAM. I am not debating the merits. 

Secretary VILSACK. Yes. 

Mr. LATHAM. I am just saying the reality is that they are not— 

the authorizers are not going to open up the Farm Bill. 

Secretary VILSACK. Well, it is a new day here. We are talking 

about a lot of things we have never talked about before. 

ENVIRONMENTAL PROTECTION AGENCY

Mr. LATHAM. Yes? I hope so. Well, one thing is, obviously, you 

are familiar, in Iowa and across farm country, everybody is very 

concerned about what the Environmental Protection Agency— 

EPA—is doing, and whether it be the greenhouse gases, particulate 

matter, dust, anything, how much do you work with EPA, as far 

as trying to get some common sense maybe on some of the regulations? Because production agriculture is going to shut down if, in 

fact, some of these ideas are put forth. 

Secretary VILSACK. Well, I think we have had an impact on some 

of the rules that have recently been submitted. The Tailoring Rule 

is a good example of some of the impact that we have, in terms of 

biomass, and suggesting that they really need to take a look at the 

models and study—— 

Mr. LATHAM. Milk spills. 

Secretary VILSACK. Well, and that is another one. And actually, 

I think Administrator Jackson has been open and receptive to my 

comments. We work with our Agriculture liaison on a regular 

basis. He is either in our shop or we are in his shop on a weekly, 

if not daily, basis. 

We do also facilitate conversations between the commodity 

groups, livestock groups, and the EPA administrator, and we are 

suggesting, specifically as it relates to the dust issue that you have 

raised, that there ought to be an opportunity for farmers to basically provide some specific input in the form of hearings or some 

set of meetings. And I think the administrator is open to that. 

And I think she is also willing to go out into farm country and 

sit down and visit with folks, so that there is a clear understanding 

of what is being proposed. Oftentimes there is a misunderstanding 

in listening to some of these conversations. And at times there is 

an opportunity for EPA to be educated about what is actually happening on the farm, and improvements that have already taken 

place on the farm that may not have been factored into consideration. So I think there is an openness. 

Mr. LATHAM. Well, and I hope so. I mean the belief by a lot of 

folks is that you are only going to be able to harvest, like in Iowa, 

corn and soybeans after it is wet and soaked, and obviously, you 

cannot harvest, because—— 

Secretary VILSACK. I do not think that is going to happen. 

Mr. LATHAM. Well, but that is the way the rules are being—I appreciate it, and I am going to have to leave, Mr. Chairman, so 

thank you. 

Mr. KINGSTON. Thank you. Ms. DeLauro. 


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FOOD SAFETY AND INSPECTION SERVICE

Ms. DELAURO. Thank you, Mr. Chairman. Just a quick update. 

If we do have to—and it looks like we will, with an $88 million cut, 

in terms of the inspection FSIS—what that would mean in the 

chairman’s district in Georgia, that means 15 plants would have to 

furlough people. Mr. Latham’s district, 44 plants; Ms. Emerson, 12; 

Mr. Aderholt, 32 plants would deal with furloughs of inspectors in 

those areas. Mr. Nunnelee, 10 plants; Ms. Lummis, Wyoming, has 

no federally-inspected plants, but the state has 22 state-inspected 

meat and poultry plants that receive up to half their funding from 

FSIS. 

When the funding has been tight in the past, FSIS has cut funding to states with state-inspected programs. It just gives you a little bit of the flavor of what the nature of that cut will mean to all 

of us. 

IMPORTATION OF PROCESSED POULTRY PRODUCTS

Let me move to the area of animal and plant health inspection 

service to APHIS. It was because of APHIS’s concern with avian influenza outbreaks in the People’s Republic of China—sound familiar, Mr. Secretary? 

Secretary VILSACK. Yes, it does. 

Ms. DELAURO. That limited the scope of the April 24, 2006 FSIS 

rule to permit the importation of processed poultry products, only 

if the source of the raw poultry came from either the U.S. or Canada. The APHIS interim rule that was published in January permits certain countries that have experienced outbreaks of avian influenza in their poultry flocks. China is included on that list to export poultry products to the U.S. under certain conditions. 

Can you tell us why the USDA changed its position from the one 

taken in 2006? And I find it very interesting, Mr. Secretary, that 

the publication of the interim rule occurred right after the visit of 

Chinese President Hu Jintao to Washington. 

I don’t know whether that was a coincidence, or some sort of an 

understanding that was reached while he was here, that such a 

rule would be published. But we are only going back in history to 

when the first effort on the processed chicken was articulated by 

USDA prior to your time, when it happened just after a visit from 

the Chinese president, and when they had agreed to open up their 

borders to our beef. 

I have a series of other questions on Chinese chicken, but let me 

ask that. I do not know how much time I will have to get to the 

others. 

Secretary VILSACK. I will do my best to answer that question, 

and make sure that if I do not, we will provide you additional information. 

Ms. DELAURO. Okay. 

Secretary VILSACK. Essentially, you know, as a result of legislation, we asked the Chinese to update us on precisely what their 

rules and regulations were, which they did. We then sent an auditing team to China to take a look at their processing facilities, and 

also to have a discussion with them about the opportunity to have 

poultry come into the United States from China. 


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We have done the audit. We had a set of questions which we submitted to the Chinese. Until those questions are answered, and 

until we complete that auditing process, we are not in a position 

to okay and authorize processed poultry from China to come into 

the United States. 

When that happens, the only poultry that will be allowed to come 

into the United States that is processed in China is poultry that 

comes from approved facilities. In other words, the United 

States—— 

Ms. DELAURO. I understand. 

Secretary VILSACK. Okay. 

Ms. DELAURO. Yes, I understand. 

Secretary VILSACK. In terms of poultry coming from China that 

is raised in China, we felt that there was a need for a rule, for opportunity for comment, and that is quite a ways down the road before that gets done. And that is the process we are following. 

So, today there is nothing coming in. We believe at some point 

in the near future, perhaps processed poultry from China that is 

from a source that is an approved source—not Chinese, but an approved source—may come in pursuant to the agreement that we 

reached, based on all the processes that they have gone through. 

If they want poultry that is slaughtered in China to come into the 

United States, they are going to have to go through a much more 

elaborate process. 

Ms. DELAURO. Well, but it says here in your letter, which was 

to Mr. Farr in February, ‘‘Furthermore, if China adequately responds to any potential issues in the slaughter order, the next step 

would be—publish the proposed rule—proposing to add China to 

the list of countries eligible to export slaughtered poultry’’—— 

Secretary VILSACK. Right. 

Ms. DELAURO [continuing]. ‘‘To the United States.’’ 

Secretary VILSACK. Right. 

Ms. DELAURO. That sounds like it is not as far away as you suggest. 

Secretary VILSACK. Well—— 

Ms. DELAURO. My time is going to be up in a second. I will come 

around, because as I say, I have an additional set of questions with 

regard to—— 

Secretary VILSACK. Two steps, one that could happen soon, based 

on facilities that have been approved. 

Ms. DELAURO. That is processing. 

Secretary VILSACK. Right. 

Ms. DELAURO. Right. 

Secretary VILSACK. That have been approved already. And, two, 

at some point in time in the future, assuming that China can comply with our rules and regulations and laws concerning equivalency, at that point they would be authorized. 

Now, whether they can or not, we do not know, because we have 

not gone down that road yet. 

Ms. DELAURO. Mr. Chairman, I hope there will be another 

round. Okay? Thank you. 

Mr. KINGSTON. There will be. The chair welcomes Ms. Lummis, 

another new member to the Committee. Welcome. 

Ms. LUMMIS. Thank you, Mr. Chairman. Hi, Mr. Secretary. 


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CODEX

My first question is something I am just learning about myself, 

and it is about something called Codex, which is a UN-based international commission that sets science-based standards for food 

safety. And I understand USDA is our nation’s interface with 

Codex. 

There seems to be a problem in that there are efforts to change 

certain standards within Codex from science-based to non-sciencebased in a way that could interfere with U.S. exports to foreign 

countries. And so, my question is this. Because Codex is important 

for U.S. ag trade, is the USDA increasing its focus on Codex activities? 

Secretary VILSACK. I would say that we have remained focused 

on Codex activities, and in advocating consistently a science-based 

and rules-based system. In fact, we are in the process now of trying 

to get Codex to approve changes which we think are, indeed, 

science-based, for which there is resistance in other parts of the 

globe. But our approach has always been to emphatically support 

a science-based system. 

Ms. LUMMIS. And do you coordinate that with the U.S. Trade 

Rep? 

Secretary VILSACK. Yes. 

Ms. LUMMIS. Okay. Does the USDA work with Codex to try and 

make sure that they are continuing to focus on science-based 

standards, as opposed to going off on some of these non-sciencebased tangents? 

Secretary VILSACK. Absolutely. I mean we are very consistent 

about that, both in our multi-lateral conversations and our bilateral conversations. It basically is sort of the governing principle of 

our discussions on barriers and trade—phytosanitary standards. 

SNAP CATEGORICAL ELIGIBILITY

Ms. LUMMIS. Thank you very much. My next question is about 

SNAP and the budget, as it relates to SNAP. I know SNAP accounts for a big portion of the Ag’s budget growth. And part of 

what seems to have expanded SNAP is these broad-based, categorical eligibilities that are allowed. So even people who qualify for 

TANF but do not qualify for SNAP, separate and apart from TANF, 

can receive SNAP benefits. 

And we also know, of course, that the number of Americans receiving SNAP has grown by more than 12 million in the last 24 

months. 

Do you know what portion of SNAP growth is the result of these 

categorical eligibilities versus just in increase in regular SNAP participants? 

Secretary VILSACK. I think the primary reason why we have seen 

a SNAP increase is that, as people lose their jobs or are having to 

work part-time jobs or less, fewer hours, they qualify. 

The reason why categorical eligibility is important is because— 

the chairman and I just had a conversation about error rates. One 

of the strategies for dealing with error rates is 40 percent of the 

errors are actually people that should be qualified for SNAP that 

aren’t, 60 percent are folks who are qualified who shouldn’t be. And 


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so, categorical eligibility makes it a little bit easier to make sure 

that we are not making as many mistakes as we have made in the 

past. So that is number one. 

Number two, it is an administrative efficiency. You know, a lot 

of states with strapped budgets are cutting back on their personnel 

that are administering the SNAP program. So this is a way of making sure that we do not have people, lots of people, falling through 

the cracks who need SNAP. 

CONTINUING RESOLUTION

Ms. LUMMIS. Okay. Thanks, Mr. Chairman. My next question is 

about the CR that the House passed two weeks ago. Have you had 

a chance to review it—because we had about five billion in cuts in 

that CR—and compare it to what you are recommending in your 

budget, to see if there is any points of agreement or overlap between what was cut in the CR and what you are recommending? 

Secretary VILSACK. I want to make sure that I understand what 

you are asking me, because I get confused. Are we talking about 

the proposal that was recently announced that would extend things 

for two weeks to give you time to—or are you talking about the bill 

that passed the House? 

Ms. LUMMIS. I am talking about the bill that passed the House. 

Secretary VILSACK. Well, yes. Well, there are substantial reductions. We had a conversation earlier today about the impact on 

FSIS and food inspection, and I think, you know, the reason we 

had that discussion is because, in that area of the budget, it is primarily personnel. 

So, if you reduce that budget by a significant amount, and you 

ask that it be managed in a short period of time, the only way you 

manage it is by dealing with personnel. And the only way you can 

deal with it in a short period of time is through furloughs or layoffs 

which, in that area, shuts down plants. 

Ms. LUMMIS. Mr. Chairman, my actual question is areas of 

agreement. Have you seen any areas where you can agree with the 

cuts that were in the CR that passed the week before last? 

Mr. KINGSTON. If the gentlewoman will yield, since your time has 

expired, we will have another round. I think it is a great question, 

if you can hang out and ask it. 

Ms. LUMMIS. You bet. Thanks. 

Mr. KINGSTON. Thank you. Mr. Bishop. 

GOVERNMENT SHUT DOWN

Mr. BISHOP. Thank you very much, Mr. Chairman. Along the 

same lines, the buzz word the last few weeks has been ‘‘shut 

down.’’ And as the tensions continue to rise with the House, the 

Senate, and the White House on reaching an agreement for the 

rest of the fiscal year before one expires a few days from now, can 

you kind of tell us what a shut-down—and God forbid that we have 

it—will actually look like? 

I know that the President indicated that he had instructed all of 

the agencies to make plans so that there would be a plan in place, 

should there be a shut-down. But thinking back to 1995/1996, there 

were over a million federal workers that were sent home during 

the series of shut-downs then, and major work furloughs happened 


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at the Department of Education, Veterans Affairs, Housing, Social 

Security, and Agriculture. 

So, short-term or long-term government shut-downs would affect 

your department’s programs, particularly those administered by 

FSA, RUS, and the broadband program, as well as rural development. How do you plan to communicate that to constituents? What 

is your plan for it? What will it look like? How do you determine 

what is essential? 

Secretary VILSACK. Well, first of all, part of our challenge is that, 

in 1995, the Agriculture budget had already been approved. And so, 

our history, in terms of the 1995/1996 time period, is a little bit different than some of the other departments. 

Having said that, it obviously—we start with a proposition that 

you all are going to get this worked out. And that is our hope, that 

is our belief, and we hope we are right about that. At the same 

time, we recognize—— 

Mr. BISHOP. We do, too. 

Secretary VILSACK. We recognize that you have to be prepared, 

as Representative DeLauro indicated. You have got to be prepared. 

And so, we have gone through that process of taking a look at how 

this would impact our work. And, frankly, the polestar for this is 

the Antideficiency Act. I mean it essentially tells you what you 

have got to do. You have got to make sure that you are focused on 

protection of people. And we will obviously do that. And that is—— 

Mr. BISHOP. People, meaning your customers, or people, meaning 

your personnel? Or both? 

Secretary VILSACK. People, meaning people who could be hurt if 

things do not get worked out. You know, for example, in the food 

safety area, that would be something we would probably take a 

very long, hard, close look at. 

At the same time, there are strange things that could occur. For 

example, we have a lot of research facilities that are using animals 

in their research. And the question is, do they become emergency 

personnel, that they stay on the job to feed the animals or not? And 

we are in the process, obviously, of working through all those kinds 

of questions and decisions that would have to be made, and to do 

it in a way that is also consistent with collective bargaining arrangements and arrangements to make sure that the work force is 

fully informed and engaged. 

So, we go through that process. And obviously, the time period 

that is involved, you know, complicates it or simplifies it, depending upon how long or short the stoppage would be. But, you know, 

it is fair to say that if there is a stoppage, there are certain loan 

programs. The question would be whether or not you would have 

somebody on board to collect payments so you would avoid defaults 

and foreclosures. These are the kinds of questions that we are asking ourselves right now. 

H–2A GUEST WORKER PROGRAM

Mr. BISHOP. Thank you, Mr. Secretary. I had an opportunity recently to meet with a group of southeastern fruit and vegetable 

growers. And the major issue that they had was among their list 

of concerns—and they had a list of them—is the management of 

the H–2A guest worker program. 


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New regulations were instituted, including an adverse effect 

wage rate, which they say could cost them millions of dollars in inflated wage rates over the prevailing wages, particularly in Georgia 

and Florida. And they have indicated that they would have to consider moving to production offshore or not participating in the H– 

2A program. 

We tried last year—and I was a part of a Georgia delegation urging the Department of Labor to take into consideration the impact 

of these regulations on our producers. We did not get very far. 

Can you help us, offer some guidance on how we can get a better 

handle on the situation, particularly with the need for farm labor? 

Mr. KINGSTON. In 10 seconds, Mr. Secretary. 

Secretary VILSACK. Honestly, you need comprehensive immigration reform. That is the answer. You need comprehensive immigration reform. If you are serious about farm labor—and you should 

be—when you realize how much of our fruit is picked and processed by immigrant hands, you really ought to have a comprehensive immigration proposal that, once and for all, solves these problems. Otherwise, you are going to continue to have situations like 

this. 

Mr. BISHOP. Thank you. That was 10 seconds. 

BROADBAND PROGRAM

Mr. KINGSTON. Mr. Secretary, one of the questions that I have— 

and you may remember; I know Ms. DeLauro remembers—that in 

terms of the rural broadband, I had a lot of questions when that 

was proposed in 2009. 

Now, the Federal Communications Commission—FCC—is proposing another $1 billion program for rural broadband, which I 

know is not under your purview, but you know, there is overlap. 

And one of the questions that I have is how much are you guys 

talking, in terms of the USDA program and their program? 

There has been some concern about coordination and some of this 

stuff that Mr. Bishop kind of alluded to earlier. But if the FCC gets 

another $1 billion, how is that going to work, in your view? Because the inspector general said there were significant problems already in the USDA program. 

Secretary VILSACK. You mean in the past? 

Mr. KINGSTON. Yes. 

Secretary VILSACK. Okay. Well, we are, obviously, providing 

input to the FCC as they put together their proposal. We also work 

with the Commerce Department when they established the recent 

map that was provided, basically shows where the gaps are. 

As much as we did, and as much as we have done, there are still 

significant parts of the country that do not have access to highspeed Internet and, for that matter, to much advanced technology 

at all. And until we get to the President’s goal of 85 percent of our 

rural areas being helped and assisted with rural broadband and 

appropriate telecommunications facilities, you know, we are going 

to continue to promote this, and try to find the resources. 

Within our budget we have got carryover that we intend to use 

in 2012, because we focused on getting the Recovery Act money out 

the door, which we did. We are focused on making sure those 


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projects get completed, and then using the loan guarantee program—the loan programs that we have under the Farm Bill. 

Mr. KINGSTON. Well, I would just suggest that if we are talking 

all the doom and gloom, potentially, of closing down meat and poultry plants, that maybe the FCC should not be borrowing another 

$1 billion—which it is, borrowed money—to extend rural 

broadband. Maybe that could wait a while and come behind—— 

Secretary VILSACK. Here is the trick, though. 

Mr. KINGSTON. And I know that is a different agency. 

Secretary VILSACK. Here is the trick, though, that we have to— 

we, collectively—have to figure out. 

You cannot simply control deficits and get the deficit and the 

debt down by simply cutting spending. You also have to grow the 

economy. So, at the same time you are looking at appropriate reductions or tough questions and choices that you have got to make, 

you also have to invest in the future, so that you can grow the 

economy, so that it can help you grow yourself out of the deficit circumstance. 

And I think one tool for growing, particularly in rural America, 

is expansion of broadband. It helps small businesses expand their 

markets, allows them to have input costs that are less expensive. 

It enables farmers and ranchers to have real-time information so 

they can make more informed decisions about their operations, and 

it creates real distance learning and telemedicine opportunities to 

improve quality of life that, in turn, allows you to promote economic development. 

So, I think you have got to—there is a balance here. And, as the 

President said, it’s a shared sacrifice. But also, the other part of 

it is shared opportunity. And you have got to balance the two. 

Mr. KINGSTON. Well, we did have, what, $7 billion in the stimulus program for it, and now it’s another billion? It was three and 

three, three-and-a-half, three-and-a-half. 

Secretary VILSACK. I do not know what it cost in 2011 dollars to 

put the Rural Utility Service into place in rural America when it 

was in the 1930s and 1940s, but I imagine it was a fairly significant—this is a very large amount of money that is going to be required over a long period of time to get the job done right. 

We still have a lot of places in America that just do not have 

this. And as long as they do not have it, they are going to be second-class citizens, in terms of economic opportunity. 

Mr. KINGSTON. Well, I think we all have, in terms of priority, the 

concern about meat and poultry inspection. It would be, to me, a 

lot more urgent than broadband at this point, after spending this 

$7 billion. 

And I also get concerned about the crony capitalism that seems 

to take place in this town of big businesses who can always cut a 

deal and always get theirs and, you know, you look at the Democrat National Convention or the Republican National Convention, 

it is the same sponsors hosting all the events. And I just wonder 

if this is not something where big businesses figured out, ‘‘Hey, we 

can make a buck on this,’’ and I get concerned about it. 

Secretary VILSACK. Well, a lot of the folks—I cannot speak about 

urban and suburban areas, but a lot of folks who are getting the 

benefit of these resources are relatively small operations in rural 


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areas. And, in some cases, they are small telecommunications companies. 

You know my state, for example, has got 150 small telephone 

companies, and I know several of them received grants to basically 

expand broadband. So I am not sure that in rural America, that 

it is necessarily all large operations that get the benefit of this. 

Mr. KINGSTON. And my time has expired. We will discuss this 

some more, I guess, in time. And Ms. Kaptur. 

Ms. KAPTUR. Thank you, Mr. Chairman. Welcome, Mr. Secretary, 

and officials from USDA. 

FARM PAYMENTS

Mr. Secretary, on page four of your testimony, you make a passing reference to mandatory targeted farm payments. I am wondering if your budget officer might know how much the United 

States, on the mandatory side, pays out, let’s say, in fiscal year 

2011, in mandatory payments to indirect subsidies to farmers 

across this country. Do you happen to have that number? 

Secretary VILSACK. I think I am going to take a stab at that, and 

Joe Glauber can correct me, or Mike can correct me if I am wrong. 

I think we are projecting this year somewhere in the neighborhood of $10 billion, and last year it was somewhere in the neighborhood of $12 billion. And the reason why it is different is that 

we do not anticipate counter-cyclical or loan deficiency payments 

because of the high commodity prices. 

Ms. KAPTUR. Yes, and I noticed you also reference that there is 

a trade surplus in agriculture, which means we are exporting more 

than we are importing. 

Do you have any idea what the largest payment in America is, 

how much it is, and where it goes? Which state? Which producer? 

Do you keep those records? 

Secretary VILSACK. I am sure we probably have something 

along—certainly on the state level. But I do not know, I cannot tell 

you today where the largest amount of the payments go. 

Ms. KAPTUR. Would any of your staff have any enlightenment 

they could provide on that point? 

Secretary VILSACK. We can certainly get it to you. 

[The information follows:] 

The following table provides payment information for the top 10 recipients in fiscal year 2010. It should be noted that payments to entities may exceed relevant payment caps provided that the payments to the individuals who comprise the entity 

do not exceed the payment caps. 

State County Name Program Amount 

Kansas .......... Butler .... Mid America Title Company Inc Grasslands Reserve Program ............................. $1,074,212 

Colorado ....... Bent ...... Bison Title Company ................ Grasslands Reserve Program ............................. 958,346 

Texas ............ Angelina CPT Log Co LLC ........................ Biomass Crop Assistance Program ................... 894,915 

Michigan ....... Ottawa .. Boersen Farms Grain ................ Supplemental Revenue Assistance Program ..... 700,000 

Wisconsin ..... Portage Potter Living Trust .................... Grasslands Reserve Program ............................. 683,578 

Pennsylvania Juniata .. Fogleman, Ned A. ..................... Grasslands Reserve Program ............................. 639,769 

Louisiana ...... Tensas .. Balmoral Farming Partnership 2009 Direct Payments ....................................... 614,388 

Illinois ........... Edgar .... Moody Farms Partnership ......... Supplemental Revenue Assistance Program ..... 612,547 

Ohio .............. Logan .... Heintz Farms Enterprise ........... Supplemental Revenue Assistance Program ..... 600,000 

Indiana ......... Johnson Bright & Kemper Farms ........... Supplemental Revenue Assistance Program ..... 597,733 


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COMMODITY SUPPLEMENTAL FOOD PROGRAM

Ms. KAPTUR. All right. I would appreciate that very much, because I have to say that I am very, very concerned about the cuts 

this year in the Commodity Supplemental Food Program, which are 

proposed for this fiscal year now at $20 million. 

We are spending billions in farm subsidy payments. I would like 

to know where they are going. They are on the mandatory side. We 

cannot get at them in this subcommittee. And yet, I come from a 

state where 20,000 very low-income people are going to be cut off 

of their—I may have that figure wrong, I think it is 4,000—4,000 

in just my state of Ohio, and I think nationally it is 20,000. I may 

have the national number incorrect. But in any case, there will be 

4,000 cuts in my state of Ohio. 

And one of these people is going to be a lady named Kitty in 

Lima, Ohio. And I just want to read this into the record. She is a 

diabetic. She is living on social security. She gets $580 a month on 

her social security. And she spends $250 of that on medicine. And 

she worked, she thought her social security would be enough, but 

it is not. But the food box gives her a chance, when she gets it, to 

pay for her medicine and to help her make ends meet. 

And there are 20,463 Ohioans who rely on that $30 box of food. 

And I just look out there and I say, ‘‘At this point in our country, 

why do we have to cut the Commodity Supplemental Food Program? How many jobs does that create, when we cut the Commodity Supplemental Food Program? How does that create one job 

in America?’’ 

Secretary VILSACK. I may be confused. I’m not sure that we, in 

our budget, were proposing that. Are you talking about the current 

bill that passed the House? 

Ms. KAPTUR. Right. 

Secretary VILSACK. Oh, okay. 

Ms. KAPTUR. Right. The bill that passed the House cut $20 million in the Commodity Supplemental Food Program. 

Secretary VILSACK. Well—— 

Ms. KAPTUR. And in my district alone, 4,000 people are going to 

be impacted by that. And my question for 2012, what are you proposing for CSFP? But, you know, I am just befuddled that these big 

payments go out—— 

Secretary VILSACK. We are—— 

Ms. KAPTUR [continuing]. And I have a hunch it is hundreds of 

millions of dollars—— 

Secretary VILSACK. We are proposing an increase. 

Ms. KAPTUR. Oh, that is good news. But what are you doing this 

year for those places where—can you do anything to make us 

whole, as these proposed cuts on CSFP are implemented at the 

state levels? 

Secretary VILSACK. Well, right now we are trying to manage a 

very difficult circumstance, because we do not really know the direction of the 2011 budget. We are trying to manage it within the 

2010 guidelines, which may or may not be appropriate, depending 

upon the mission area and depending upon what you and Congress 

ultimately decide to do. 


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Ms. KAPTUR. Right. Well, I hope my colleagues on this subcommittee will help me out, because what is going on here is really 

wrong, and it hurts real people, and it hurts—we have got them 

on a list, and we have got them lined up for food. 

COMMUNITY GARDENS

And that gets to my next question, Mr. Secretary. You have been 

a real leader of this, and many of your associates, but I am interested in helping the people who live in the poorest places get food. 

Maybe not only through government food programs, but by raising 

their own food. And what has happened—this is not a new story 

to many of your associates—we are approaching spring now. I am 

wondering what USDA can do to help us produce food in those 

areas where we have high unemployment and poverty. 

I can tell you we hit 120 community gardens last year in our 

community. And in the areas that are the poorest, the seniors come 

and pick them to the ground. They pick them to the ground in the 

heart of the city. Now we need seed, we need technology, and we 

need training. 

I just got back from Israel. I saw the most incredible little solar 

house that they created there, and I know what people in my community are doing, raising 2,300 tilapia, just in one pond that can 

go to needy people—excuse me, Mr. Chairman, I am just going to 

take a couple of extra seconds here—what can USDA do to help us 

with the technology to meet the need where it really exists, and get 

those who are unemployed involved in production of their own 

food? 

Secretary VILSACK. Ten seconds. 

Mr. KINGSTON. Ten seconds. You have done well with 10 seconds. 

Secretary VILSACK. Just one program—there are many, but one 

program—USDA just recently awarded three-quarters of a million 

dollars to Ohio State University to work with beginning farmers 

and ranchers to develop small farming projects which would support the Cleveland Urban Agriculture Incubator Pilot Program to 

work and combine folks with opportunities in the city to be able to 

essentially use urban farming opportunities. 

So that is one, but there are a number, and we would be happy 

to provide you other lists of items that we have got. 

[The information follows:] 


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Ms. KAPTUR. Thank you. Thank you very much. Thank you, Mr. 

Chairman. 

Mr. KINGSTON. Thank you, Ms. Kaptur. Ms. Lummis? 

Ms. LUMMIS. Thank you, Mr. Chairman. And I would follow up 

with the gentlelady who just spoke by adding that government is 

not the only answer to these problems. Meals on Wheels works, 

food banks work, churches work, United Way works, Rotary clubs 

work, cattlemen and cattlewomen’s associations and other farm 

commodity groups work to help alleviate these needs and meet 

these needs. 

And you know, I do think that we have to consider all of the 

available resources, not just government resources, when we are 

looking at the tremendous needs out there. I acknowledge there are 

needs. But there are other providers, other than the Federal Government. And at a time when we are broke, I think it is important 

that we remember that the Federal Government is not the only answer to these problems, albeit the Federal Government plays a 

role. 

CONTINUING RESOLUTION

Mr. Secretary, I would like to go back to the question that I had 

earlier, and that is, at a time when the Federal Government is 

broke, and we have to cut spending—now, maybe you do not agree 

with that premise, but that is the premise that is operating in my 

head—you saw the CR that passed the House of Representatives. 

Obviously, it has not passed the Senate. The President has said he 

is going to veto it. 

But I wonder, after having seen the collective thinking of the 

House of Representatives two weeks ago, and seeing some of the 

cuts that were proposed to agriculture, which amounted to roughly 

$5 billion for the remainder of this fiscal year, are there any areas 

where we agree? 

Secretary VILSACK. That is a difficult question to answer, and 

here is why. Because, you know, on the one hand, if you are asking—are you in agreement with any of the cuts that we have specifically proposed, that is one question. 

Are you asking me if you reduce community facility grants by 

$13 million, you know, does that—is that okay, can you live with 

the rest of whatever is left in the community facility grant program, and is that going to be allowed to continue? 

Here is what I would say. I cannot give you a specific answer 

today, in terms of specifics, because we really—we just analyzed 

what the reaction and the impact would be on the cuts. 

But what I can say is, give us time to manage. When you say 

$5 billion, that does not sound like a lot of money in the scheme 

of things, but when you squeeze it into a four, five, six-month period, it is a large cut. And, depending upon what mission area you 

are cutting, if you are cutting FSIS, all you can do is personnel. 

There is just not much else you can do, and you do not have 

enough time to do, in a thoughtful way, in using supervisory-to-employee ratio control or attrition, substituting people at a lower pay 

scale for a higher pay scale, you do not give us time to do that. 

If you are talking about reducing commitments to rural development, then I would simply say, well, you have got to be careful 


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about that—back to my comments to the chairman—because you 

are basically compromising our capacity to invest in the future, and 

to be able to grow our way, in addition to cutting our way, out of 

this difficulty. 

Honestly, we did not get into this circumstance overnight. And, 

candidly, we are not going to get out of it overnight. Give us time 

to manage. Give us time to manage. I think that is why the President proposed this freeze over a period of five years; it gives us 

time to manage. It gives me sort of a playing field. I know I am 

not going to get any more money, I am not going to get any less. 

I am going to have to figure out for the next couple of years how 

to live within that budget. I can plan, I can make a long-term strategy. 

I cannot do that in four or five months. It is very difficult. So, 

you just basically take a meat axe to things, and you do what the 

Congress directs you to do. And I guarantee you, people are going 

to get hurt. I do not know how many people, I do not know in what 

category, because it ultimately depends on what that bill ultimately looks like. 

Ms. LUMMIS. Well, and Mr. Chairman, I appreciate your answer, 

but I would also suggest that when the country is broke, freezing 

at the highest level that spending has ever been is not the answer. 

And I yield back. 

Secretary VILSACK. Can I just—10 seconds? I think it is fair to 

point out what the President pointed out to the governors yesterday, that if you were to do that, discretionary spending would be 

at its lowest level, as a percentage of the gross domestic product, 

since Dwight Eisenhower was President. 

So, I mean, there are—this is a real proposal. It is not trying to 

window-dress, but it is trying to give people time to manage appropriately. 

Ms. LUMMIS. And, Mr. Chairman, I would suggest that in real 

and nominal dollars, not worried about GDP and percentage of 

GDP, we are at the highest levels we have ever been. Thank you. 

I yield back. 

Mr. KINGSTON. Mr. Farr. 

INVESTMENT IN RURAL AMERICA

Mr. FARR. I would just like to comment. I do not think it is about 

that. I think it is about investment. If you look at the mortgage we 

are all carrying, we are broke. You cannot pay that off by the end 

of the year. If somebody told you you had to pay it off, you would 

go nuts. But if they said, ‘‘Do you have a plan to pay it off over 

the next 30 years, a monthly payment,’’ we all agree then. We are 

not panicked about our mortgage. It is the biggest damn debt we 

have. What is missing here is a plan to pay off the debt. And it 

cannot just be done by cut, squeeze, and trim. 

Mr.—well, Secretary—I would hope—and I think this discussion 

is really appropriate—we need you as a champion for rural America. I mean all the questions Mr. Kingston, Ms. Kaptur, Ms. Lummis has been asking, essentially, is what are these cuts, and what 

is the effect, and yet there is no kind of, I think, strong enough 

statement yet by you by—that we really need to shift our priorities 

in America within the Department of Agriculture. 


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I mean the Department of Agriculture was created by Abraham 

Lincoln. And if you look at America, it was built by the Department of Agriculture. What did we do? We gave away land. We 

made people go West. And if you went West, we would give you 

land. We built the railroads by giving them land. We built the infrastructure, we paid for the roads, public paid for that. We paid 

for the rural communications system. The government paid for 

that. 

I mean, infrastructure of rural America has always been underwritten by government. And it seems to me that the issue here is 

that we are going to have—rural America, where our food and fiber 

comes from, we are going to have to think modernly. And to think 

modernly, it is going to be shifting priorities. 

And I would hope that you come in with a farm bill and radically 

suggest that we drop a lot of these welfare payments to farmers, 

and invest in where people are really working, what is necessary 

to, you know, build a stronger rural—competitive. And, yes, you 

can bring in the service clubs and help. But they all assist in a 

partnership, they cannot do it by themselves. 

ORGANIC RESEARCH

But I want to just—one of the things I want to ask you about 

is that, with Kathleen Merrigan here—and that was one of the best 

appointments you ever made, because I represent a lot of organic 

growers, and certainly she is the national—the queen of organics, 

if that is a—but what I am concerned about is that I do not see 

any emphasis here to sort of bring organics up. It is the fastestgrowing industry out there, and it is in the research area that I 

am really concerned, that we need to make sure that there is parity. 

It should be part of your rural strategy. We have got a lot of— 

organic can be a lot smaller farmer. You may not be producing 

product year-round, but you can get into market. And I am wondering what you can do. It is going to be a farm bill issue, but can 

we look forward to bringing in and bringing up the research for organic to that, at least equivalent to what is going on in traditional 

agriculture? 

Secretary VILSACK. Representative, I think I can say this with 

some degree of confidence, that no administration has done more 

for organic agriculture than this administration, whether it is research, whether it is specialty block grants, whether it is market 

news, whether it is enforcing the standards, whether it is export 

equivalency agreements with Canada, and working on one with Europe to expand exports, whether it is beginning an appropriate dialogue and conversation about the need for organic and conventional 

and genetically engineered agriculture to basically live in the same 

neighborhood together, whether it is using additional resources 

from the conservation programs under the Environmental Quality 

Incentives Program—EQIP—there has been a substantial amount 

of work done in this space, and there will continue to be a substantial amount of work done in this space. 

It is part of the strategy. It is part of our strategy to grow rural 

America. It is part of the regional and local food initiative that is 

part of a five-pronged strategy for rebuilding rural America that inVerDate Mar 15 2010 01:57 Sep 24, 2011 Jkt 068236 PO 00000 Frm 00064 Fmt 6633 Sfmt 6602 E:\HR\OC\A236P2.XXX A236P2

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cludes broadband, conservation, biofuels, export opportunities, and 

local and regional food systems. 

Mr. FARR. Well, I appreciate it. I would look forward to seeing 

how much of that you are going to be advocating for. 

I want to just point out that Napa County has recently created 

a Food Council, made up of all school folks and farm bureaus and 

all, and they are really looking at how do you grow the nutritional 

food in our country and serve it in our county, get it into all the 

institutions, so that all the political and civic actors in that county 

sit on this council. It is a very exciting one, and reports directly to 

the ag commissioner—every county in California has an ag commissioner—and also respectively to the county board of supervisors. 

And maybe we ought to be thinking about creating these councils 

all over the country. 

Secretary VILSACK. We are, and it is part of—food councils are 

being established all over the place. In fact, I was the first governor 

in the country to establish a state food policy council. 

Mr. FARR. Well, good for—— 

Secretary VILSACK. So we are very familiar with that. And I 

think we have sacrificed substantially for California by giving up 

my chief of staff to be your new Secretary of Agriculture. It is the 

least we could do. 

Mr. FARR. And when she calls back, I hope you will just say yes 

to everything she asks for. 

Secretary VILSACK. Well, that may be a problem. 

Mr. FARR. I have another question in the next round. 

FARM BILL

Mr. KINGSTON. Mr. Secretary, I want to follow up on Mr. Latham 

and Ms. Kaptur’s comments about the farm programs, and invite 

you to send us a letter to the Committee on some of the things that 

you think we could look at without waiting for the farm bill. As Mr. 

Latham discussed, you know, it is very hard to open that up. But 

I also think, as a practical reality, as you have said, we might not 

want to wait on those things. 

CONSERVATION RESERVE PROGRAM

I would also ask you to include comments on the CRP, because 

that, as I understand, is now 32 million acres, I think, very oversubscribed. The land was supposed to be highly erodible, and I do 

not believe a lot of it is highly erodible. I think it is paying farmers 

not to farm in many cases. I understand the cost may be as high 

as 50 percent of the crop programs, but it is only 10 percent of the 

acreage. Not sure about that, but I just think that that is one we 

should look at. 

And I also do not think that there is an adjusted gross income 

issue on that, but maybe there should be. Because I know a lot of 

people who own land, who are not farmers, who are participating 

in CRP, who are getting that monthly check for their land. 

And so, you do not have to respond right now, but if you would, 

I would love to—— 

Secretary VILSACK. Can—— 

Mr. KINGSTON. Go ahead. 


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Secretary VILSACK. I just want to respond to one aspect of your 

comment, and that is the notion that CRP is over-subscribed, in 

terms of productive land, and so forth, and not focused on environmentally-sensitive land. Actually, I think we are seeing much more 

focus on environmentally-sensitive land. Because crop prices are as 

high as they are, folks are going to take that more productive land 

and put it into crop production. That allows us to use a scoring system that really does focus on environmentally-sensitive lands. 

I can tell you that eight billion tons of sediment has been prevented, as a result of CRP, going into our roads and streams, which 

makes it a lot less expensive to take care of water quality. I can 

tell you that there are tremendous habitat increases as a result of 

CRP, which encourages more outdoor recreation, and it is part of 

the American great outdoors. We know that this is a multiple hundred billion dollar industry that we can tap into. 

So, you know, I think we have to take a look at CRP, as you have 

suggested. But I do think we are focusing on where it needs to be 

focused. But if you have incidences where that is not the case, I 

am certainly—— 

Mr. KINGSTON. I have concerns about it, and I will say this. They 

are my constituents a lot more than maybe some other people on 

this panel. But I just think that in the spirit of putting things on 

the table, that should also be on the table to take a look at. 

Secretary VILSACK. We have a wonderful program—— 

Mr. KINGSTON. And I am not totally attacking it, either. I am 

just saying I have got some concerns. We should look at it. 

Secretary VILSACK. We have got a wonderful program, of longleaf 

pine that is part of the CRP program that we are excited about, 

which is obviously your area. 

[The information follows:] 


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Mr. KINGSTON. Let me yield to Mr. Farr. 

AGRICULTURAL LAND

Mr. FARR. Mr. Secretary, you ought to look and see whether 

states have used zoning powers, rather than these payment powers. It seems to me that, in an awful lot of cases, we are paying 

for things that just should not be used for farming, because under 

adequate zoning measures they would not allow you to farm that 

way. 

Secretary VILSACK. I could be wrong about this, Representative, 

but I do not think too many states actually zone agricultural land. 

I know my state does not. 

Mr. FARR. Well, we do, in California. We zone it, we preserve, repairing corridors in all the areas, the slopes, and everything like 

that, because of all the areas that do not—to prevent erosion. 

Secretary VILSACK. I am sure that is true in your state, but I do 

not think that is necessarily true in a lot of states. And I am not 

sure there would be a lot of state legislative support for that notion. Nor could we mandate it. 

Mr. FARR. Well, that is an expensive way to lead a horse to 

water. 

Mr. KINGSTON. Let me yield back. Ms. DeLauro. 

NUTRITION ASSISTANCE PROGRAMS

Ms. DELAURO. Thank you, Mr. Chairman. Just let me set the 

record straight for a moment—and I am delighted that the gentlewoman from Wyoming is back in the room—let me note, with regard to SNAP participation, 2007, 27.3 million people; 2008, November, 31.1 million; November 2009, 38.2 million; November 2010, 

43.6 million, 14 percent of the population is taking advantage of 

the food stamp today. This is not because of categorical programs, 

this is because of a recession where people have lost their jobs, or 

their wages have been lessened. They have lost their homes, they 

have lost their health care, businesses. They can no longer even afford to put food on the table. 

Yes, we are looking at the notion that this is a Federal Government going broke. I suggest that it is not a question of not attacking the deficit, which we ought to do, we ought to be willing to shut 

down programs that do not work, that are ineffective. But we also 

ought to be willing to cut the tax subsidies to the very special interest groups. Let me start with the $40 billion that we paid today—and I can cite it chapter and verse—$40 billion in subsidies to the oil industry. The last time I looked, they were pretty fat and happy, that 

they did not need to really have $40 billion of the largesse of the 

Federal Government. We could apply that $40 billion to deficit reduction, and we do not have to touch these programs. 

The other piece that I think is very, very important—and we ought to take a look at $8 billion in agricultural subsidies, or almost $8 billion in the multi-national corporations that take their 

money and they go overseas and they park it there, and they do 

not have to pay any taxes here. That is where we ought to start, 

rather than Ms. Kaptur’s constituent, who cannot deal, because the 

Commodity Supplemental Food Program is going to be shortened. 


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Talk about Meals on Wheels. Because of the budget cut last 

week, it is 10 million less meals on wheels that will be served to 

home-bound elderly. $40 billion for the oil companies and 10 million less meals served to the elderly. 

Another comment with regard to SNAP, in terms of error rates— 

and I mentioned this to the chairman, as well, and the chairman 

and I have gone back and forth on this over the years—the two 

highest states with the highest rate of error, Texas and Indiana. 

And those are the two states that decided that it was a good idea 

to privatize the food stamp program. 

I appreciate where you have gone on the error rate and bringing 

it down. And with that increase that I just cited, it is pretty extraordinary that we have been able to keep that error rate where 

it is. I wish Wall Street had less of an error—that kind of an error 

rate than you all have done with your program. 

Mr. BISHOP. With regard to Ms. Kaptur’s concern, one of the 

things that I have to applaud the Agriculture Department for with 

our commodity support programs is that they were reinforcing and 

restocking the soup kitchens and the food pantries during this recession. The food pantries, because of the numbers that Ms. 

DeLauro just got through citing, were running out of food. But because of the funds that were allocated and set aside by USDA in 

our commodity programs, they were able to restock those organizations that are very, very appreciated, church organizations and others. 

But that is necessary for folks like Ms. Kaptur’s constituent, 

many of them. 

CHINESE POULTRY

Ms. DELAURO. I thank the gentleman. And let me just move, if 

I can—I do not know how much time is remaining—but to Chinese 

poultry. Chinese public found 70 percent of—70 percent of the Chinese folks are not confident about the safety of their country’s food 

supply. Another report stated that Chinese are pursuing their own 

food safety measures by growing their own vegetables. They are 

concerned about pickled vegetables, canned food, dairy products, 

fresh meat, meat products. Contaminated meat products was one 

of the items that topped their list. 

We have seen reports that China has sentenced a food safety activist for two-and-a-half years for organizing parents whose children were sickened in the 2008 Chinese milk scandal. 

You did conduct the audits between December 1st and December 

21st. In conducting the audits, analyzing the results, does FSIS factor in things like the reports I outlined? When will the audits be 

posted on the FSIS website? Did the Chinese Government provide 

you with a list of the six facilities that were visited by FSIS? Will 

the six facilities be eligible to export poultry to the U.S., if there 

is an equivalency determination? I think you answered that question. 

It is my understanding that allowing the Chinese to export products from a slaughtering facility would require a separate rule. 

And, finally, has the USDA calculated how the U.S. poultry industry would be impacted if we had allowed increased poultry exports 

from China? 


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Mr. KINGSTON. The gentlewoman’s time has expired. The chair 

has the time, and will yield one minute to—— 

Ms. DELAURO. I thank the gentleman. Thank you. 

Secretary VILSACK. I wish you had only given me 10 seconds, Mr. 

Chairman. [Laughter.] 

You have asked a lot of questions, and I think we will provide 

you with the specific answers to those questions. 

Ms. DELAURO. Okay. 

Secretary VILSACK. I would say the last question you asked, in 

terms of the impact—— 

Ms. DELAURO. Impact, right. 

Secretary VILSACK [continuing]. You know, a lot of our poultry is 

actually going into China and being processed and brought back. 

So, in that sense, there is some benefit, potentially, to our poultry 

growers. 

We want to make sure that when we do this, if we do it, we do 

it safely. I know that is the concern that you have always had. It 

is what has motivated your concern in this area. We have taken 

it very seriously. And the folks have spent a lot of time and asked 

a lot of detailed questions about these operations. And not every 

operation in China is going to get permission to do this, only those 

that we are confident will meet our standards, or exceed our standards. 

There are some that will meet and exceed our standards. And if 

they do, then we ought to let them participate. If they do not, we 

should not. And that is one of the reasons why we have reservations about poultry coming from China, slaughtered in China. We 

are just not yet comfortable there. And we will not move until we 

are. 

[The information follows:] 

FSIS does not typically incorporate such public survey information into its equivalence analysis process because of the unscientific nature of such data, findings, and 

conclusions, although the Agency does maintain a general awareness of such information from third party sources. Ultimately, FSIS’ approach to a food safety system 

audit relies on a verifiable scientific, data driven analysis of the government’s handling of food safety issues. 

Once the two China audit reports (slaughter and processing) are finalized they 

will be posted on the FSIS website no later than 30 days from the date they are 

finalized, in accordance with the 30-day requirement stipulated in the FY 2010 Agriculture Appropriations Act (P.L. 111–80). 

Ms. DELAURO. Thank you. 

Mr. KINGSTON. The chair yields to Mr. Bishop. 

PEANUT PRICE REPORTING

Mr. BISHOP. Mr. Secretary, in March of 2009 the Inspector General completed an audit of in-shell peanut prices that are paid to 

farmers and reported to the National Agricultural Statistics Service. And FSA, they use this data to calculate the program payments. The OIG believes that the price data that is supplied by the 

peanut buyers is unreliable, and that FSA should seek authority 

for mandatory price reporting of all in-shell peanuts. 

While I look forward to working with the Department to resolve 

this issue, it seemed that any proposal to provide FSA with new 

statutory authority on price reporting should be done in the broader context of the upcoming 2012 farm bill, and that is a single, 


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stand-alone issue. Likely, there will be considerable changes and 

modifications to the current structure of many of our farm programs, and any proposed changes to the peanut program should 

really be a part of that discussion, whenever it occurs. 

I just wanted to sort of share my thoughts with you on this, as 

it is a subject that is very important to me, being from Georgia. 

And not speaking for the chairman, but probably important to the 

chairman, as well. 

Secretary VILSACK. You know, the investigation report indicated 

that perhaps some of those prices were being under-reported, and 

that is obviously a concern, because a lot of decisions are made as 

a result of that information. And so, we want to make sure that 

the data that folks are making very important decisions on is as 

good as it can be. That is why we think that it is appropriate to 

consider seriously a mandatory reporting requirement. 

We are looking for ways in which we can make the process more 

transparent, and provide folks information. And we will work with 

folks to make that happen. If it is part of a larger discussion, that 

is obviously Congress’s wish. But our view is that if we want to get 

correct information to people, we are going to have to have something different than what we have got now. Because what we are 

getting is not necessarily accurate. 

Mr. BISHOP. Thank you. I will yield. 

Mr. KINGSTON. Ms. Kaptur. 

FEDERAL PROGRAM ASSISTANCE

Ms. KAPTUR. Thank you. I am sorry Ms. Lummis left the room. 

I have to react, and just put some data on the record here. The 

TEFAP program alone provides a third of the commodities that we 

have in our food banks in Ohio. 

[The information follows:] 


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And it is obvious that her district must be very different than my 

own, because we could not survive without the federal programs. 

Everybody is strung out: our churches, our Saint Vincent DePaul 

Societies, anybody working in the food area. We have had heart attacks among these seniors working in some of these programs. 

They are literally at the edge. 

And so, I take exception to her remarks. She represents a different part of America. Wyoming is kind of an interesting state. It 

has gotten over a billion dollars in mineral rights subsidies that we 

pay out as a government. Just in her state they have gotten: disaster payments of over $167 million since 1995; and the Conservation Reserve Program, over $125 million; in the wheat subsidy program, $86 million; in the EQIP program over $80 million. I can go 

down all the lists. But Wyoming, in many ways, is a federal preserve. 

I do not represent a federal preserve. We are out there in the 

free market, and times are tough. So I just wanted to place on the 

record that I have deep respect for the people who are trying to 

feed hungry people. And my biggest challenge is trying to work 

with USDA and others to figure out how we can be more self-sufficient inside the boundaries of these communities that are so terribly, terribly impacted with hunger and with need. And I am 

amazed at the patience of the American people in enduring what 

they are being asked to endure. 

And I am very, very worried about food. And our United Way has 

had to cut back projects because of the hunger needs across our 

community. Every single group, every single group. There just is 

not any more, unless we can produce our own. 

And I was very pleased, Mr. Secretary, that you talked about 

what you are trying to do in Cleveland. But that is not the only 

place in Ohio that is so severely impacted. So, I would hope that 

whatever we are able to work out through USDA that we could go 

into these heavily impacted areas, bring new technology, bring seed 

as we embark upon the spring season here. We can produce more 

of our own. 

We need help in aquaculture. All these fancy research projects, 

they keep it down the state capital. They keep it down, wherever. 

They don’t move it out into community is a real problem and we 

are capable of doing this. But we do need USDA’s direct engagement with us through their stakeholders statewide and so forth. 

We have very willing people. We are technology short and training short in areas where we are food short and we can produce it 

ourselves, but we need more focus. We need more prototype 

projects. We need USDA to help us. Our people don’t get all these 

subsidies for mineral rights and everything else. 

So we do live in a different part of America, and we’re there to 

help you with your budget. But to the extent that you can provide 

the information I asked on the first round of who’s getting all these 

big, mandatory payments out there in the country in a time when 

we have to trim in terms of the overall budget and balancing the 

overall budget, it shouldn’t come out of the hides of people who are 

truly living at the edge. And these areas that have got 10, 12, 15 

percent unemployment, we’ve got some neighborhoods in Youngstown and Toledo, 50 percent unemployment. 


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FOOD ACCESS

Recognized reality in the part of America that we come from, and 

USDA is very, very important to us right now, and we have to be 

transformative in what we do. We have whole sections of community with no supermarket. I mean the places aren’t there to buy 

the food, folks. It isn’t like here in Washington, and even parts of 

Washington don’t have supermarkets. So we have got to provide 

food close to where people live and technology has to lead us there. 

I’m saying it as much for the Secretary as for everybody sitting 

out there in the audience representing these different interest 

groups. We have to use our technology to save us. What I saw in 

Israel was phenomenal: little hoop houses, little greenhouses, that 

look like some of those that we are trying to use in our cities now, 

but we’ve got to hook up solar capacity so that we can heat them 

through the winter months. We can make them productive four 

months out of the year. 

USDA, all you have to do is shake up some of these researchers 

that are sitting in these fancy labs all over the state of Ohio, and 

they never come down in our communities. That isn’t good enough 

anymore, because the need is too great. So I make my plea. You’ve 

heard me once and again and again and again, and we can’t get 

these big bureaucracies to move effectively. 

If there’s anybody out there in the audience who wants to come 

to the Ninth Congressional District from Toledo all the way over 

to Cleveland, you’re all invited to come. I invite you, Mr. Secretary. 

Maybe you can get the bureaucracies to really disgorge some of 

that knowledge and make it relevant to people on the street. But 

we don’t have the time. 

We don’t have the luxury right now, and we don’t get the billiondollar mineral subsidies and forestry subsidies, and agricultural 

subsidies like the state of Wyoming. And, probably, some sort of oil 

depletion subsidy that I haven’t figured out yet out there, a gas 

subsidy or something. But we need help in the food sector, and Detroit does and a lot of other places that are really at the edge, and 

I thank you very much for allowing me to put that on the record. 

Mr. KINGSTON. Mr. Secretary, do you want 10 seconds to respond 

to that? 

Secretary VILSACK. Well, I appreciate that, Mr. Chairman. 

I think it is important for us to make sure that you all understand and appreciate we are taking all of these challenges very seriously, and we have a healthy food financing initiative that was 

in our 2011 budget. It is in our 2012 budget designed to address 

the issue food deserts. 

We have done an atlas. We have identified where these food 

deserts are. We have creative programs that are working in Detroit 

and other major metropolitan areas to try to address the food 

desert issue. We are very serious about that. We are very focused 

about it, and we are going to get things done about it. 

We have everything from value-added producer grants to farmer 

market promotion grants, to hunger free community grants, to 

using our business and industry loan programs to try to address 

some of the issues that you’ve addressed in terms of urban farming. 

We have our people’s garden program, which is providing—last 


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year provided 90,000 pounds of donated food to soup kitchens and 

to food banks. 

There is a concerted effort on this, and, you know, one of the 

challenges and one of the frustrations that I have. Since you all 

have been expressing your frustration, let me express one of mine. 

This is a department that has a lot of missions and we are talking 

about a lot of missions all the time. And it is very difficult to focus 

on one piece of our mission to the exclusion of everything else. We 

have got to talk about production and agriculture, because that’s 

important. We have got to talk about rural development. That’s important. We have got to talk about exports. That’s important. We 

have to talk about food safety. That’s important. We have to talk 

about new, creative ways to embrace farming in all parts of the 

country, and we are doing all of that, all of it. 

I would encourage you to take a look at our website. I would encourage you to take a look at these programs in terms of where 

these resources are going. We are very serious about this issue. 

And to the gentlewoman’s comments about the food programs, we 

are proposing an additional amount in these food programs, and I 

would say the state of Texas is a good example. 

They had a horrible record, and we basically went down to Texas 

and said, ‘‘You’ve got a horrible record. We’re here to help.’’ And, 

to their credit, they responded and actually engaged the non-profit 

sector and outreach to encourage more SNAP participation, and 

they’ve seen their numbers increase dramatically. 

And Indiana, to its credit, finally realized that they were making 

a serious mistake in terms of how they were administering their 

program, and they are in the process of transitioning, and that has 

improved the record as well. So we, I think, are on top of a lot of 

these issues. It’s just hard to talk about all of them simultaneously. 

Mr. KINGSTON. Reclaiming my time, Mr. Secretary, one of the 

things I wanted to say for the record in terms of the gentlewoman 

from Wyoming. I know her well and I know that she will measure 

spending with the same yardstick regardless of the social spending 

or mineral rights, or anything else. 

I think that she is going to be an extremely valuable committee 

member in that regard and that she will challenge all of us, which 

I think is very important. But I think, you know, we will all see 

she will go after the Red State, the Blue State Program, the big 

corporation. I think she has that same populace streak the gentlewoman from Ohio has and a very positive populace streak. 

EPA REGULATIONS

Mr. Secretary, on that subject of the USDA and your broad mission, when I think of USDA, I would describe it on a bumper sticker of a resource to farmers, a technical partner to farmers, an information center for farmers. And I think that the farmers in my district would probably say, yeah. That’s right. If I say EPA, it’s totally off the page. It’s just rant and rave. They are against us, they 

are regulatory. They want to play ‘‘I gotcha.’’ 

They are arbitrary and it’s always—not always, but I think in 

the last decade or so that the USDA has kind of been a buffer between the EPA and the farmer, but the EPA is getting more and 

more aggressive. They have issued 25 new regulations and proVerDate Mar 15 2010 01:57 Sep 24, 2011 Jkt 068236 PO 00000 Frm 00079 Fmt 6633 Sfmt 6602 E:\HR\OC\A236P2.XXX A236P2

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posals that affect production of agriculture. And I am not saying 

that is all bad regulation, but farmers would rather deal with 

USDA as they feel that the USDA employees tend to come from 

rural areas and understand farming, and appreciate their mission; 

whereas, EPA, again, comes at it from a regulatory angle. 

They are coming out with a new pesticide general permit that 

has to be in place April 9th that has some concerns. There has 

been a court decision on it. There are some other issues that EPA 

is coming out with last year. We dealt with a potential regulation 

that said that dairy farmers had to have an emergency plan if they 

spilled milk, because it was an oil-based liquid, and things that 

again may be well intended, but still very, very regulatory and difficult for farmers. 

For the record, I would like you to respond to that of what you 

are doing. You had mentioned earlier you dealt with them. You 

talked to them regularly, but I think the farmers back home would 

rather see you step it up a little bit more and help maybe settle 

some differences between EPA, same mission as you guys, but I 

think that you had a better feel for rural America. 

Secretary VILSACK. Mr. Chairman, first of all, Lisa Jackson can 

do a great job of explaining her agency, and no doubt you will have 

an opportunity to visit with her at some point. But let me just simply say that often what they are required to do is not something 

that they have thought they ought to do. It is because Congress has 

directed them to do it, or a court has directed them to do it. 

And, what we faced when we came into this administration was 

a backlog of undecided court cases and undecided mandates, and 

so forth, that this EPA was required by law and by court decision 

to address. So that’s number one. 

Number two, you know, there are ways that you can work within 

the system and outside the system to try to impact and affect, and 

make sure that the regulations are as good as they should be and 

as reasonable as they should be. We have had some good success, 

I think, in making sure that whatever is ultimately decided and ultimately put into effect; not what’s being proposed or what’s being 

discussed, or what the folks in the countryside think might be 

being proposed, but what in fact is proposed. 

I think we have had a pretty good track record of modifying and 

sort of cutting off some of the potentially egregious proposals by 

working with the EPA, by working in partnership by developing 

lines of communication, both between our office and EPA, and most 

importantly between producers and EPA. And we have encouraged 

the administrator to get out into rural America, and she has done 

that and she is going to do more of that. 

So, you know, I think that is a very effective way. If what you 

have and what the desire is that we somehow pound the table and 

criticize openly EPA, I am not sure that that would necessarily be 

as persuasive in the ultimate end result. 

Mr. KINGSTON. Well, my time has expired. I think you are a 

blend of philosophy and common sense, and temperament, and I 

don’t think that’s prevalent at the EPA. And I think that the folks 

back home in rural America see a big difference in the agencies, 

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In between the two, I would see you sometimes as being a referee, and I don’t mean that you’re being remiss on this at all, but 

I’m just saying that I think production agriculture feels like they 

are being besieged by new EPA regulations over and over again, 

and USDA, maybe, could be more of a buffer. 

Secretary VILSACK. I think that they have to understand that one 

of the reasons why they have that perception is because there was 

a lot of things that weren’t done that were sort of backlogged, and 

a lot of things that courts are now saying you’ve got to do, on the 

one you mentioned, the pesticide. EPA went in and said, ‘‘Give us 

a little more time.’’ The court said, ‘‘No, you’ve got to do it now. 

You’ve been given time. You need to do it now.’’ 

So, you know, what are they supposed to do? I mean they got a 

court order telling them they have got to do it. They got to do it. 

And what we try to do is make sure that when they do it, how they 

structure it, that they fully understand or appreciate exactly how 

the impact is going to be, and you can add that to a list of things 

I need to talk more about along with everything else that you all 

talked about. And that’s just the point. There is a lot to talk about 

in this agency. 

Mr. KINGSTON. Yes. My time is expired. Mr. Farr. 

SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, 

AND CHILDREN

Mr. FARR. Mr. Chairman, I have a couple of sort of micro questions, one on the Special Supplemental Nutrition Program for 

Women, Infants, and Children—WIC—breastfeeding and formulas. 

WIC people met with me yesterday and were telling me that we 

put a lot of emphasis in teaching breastfeeding, but the tragedy is 

that about 70 percent of the women after leaving the hospital drop 

the breastfeeding and pick up the formula. 

The concern was that the amount of money being spent in sort 

of advertising formula, and in the formula I guess there are two 

kinds. There’s the super model formula, or the one that’s got all the 

so-called functional ingredients, and it is costing your department 

about $90 million a year just for them to buy that. And the question here is has there been a plan or to study the difference between get some scientific review as to whether the higher-cost 

products are actually as effective as the formula industry claims? 

Indeed, if the generic formula, I guess, for lack of a better word, 

is as good as the super product, the more high-cost product, why 

not just fund that? And have you any interest in looking at the difference between the two formulas in the sense of cost savings? 

Secretary VILSACK. I hope this is a response to your question, 

and if it is not, we will have to get you a specific response. One 

thing I do know is that we have been working with states to slow 

the decline in rebates in this area, and despite our efforts, we have 

seen a drop from 95 percent of wholesale prices to 80 to 85 percent 

in 2009. 

You know, we have revised the package. We are constantly looking for ways to make sure that we provide the best package for the 

most affordable cost. 

Mr. FARR. I think it is not just cost. It is essentially what your 

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culture is the basis of our whole new health care policy in America. 

If we are going to grow healthier Americans, it’s got to start with 

nutrition. And the claims here, obviously, this is not my field. 

The claims here that if the formula is really getting kids addicted 

on sort of an obesity program very early in life and if the emphasis 

here is to really minimize the amount of formula—some people 

have to have formula—but to minimize the formula by really educating people as to the total value of breastfeeding for as long as 

possible. 

Secretary VILSACK. I think we are making an effort to increase 

education in that particular area, and I think the budget proposes 

additional resources for that education program. 

[The information follows:] 

The Healthy, Hunger-Free Kids Act of 2010 requires that we review the WIC food 

packages at least once every 10 years. The last review of the WIC food packages 

was initiated in 2003. As such, we anticipate initiating a new review within the next 

two years. We can certainly include taking a look at enhanced versus non-enhanced 

infant formula as part of the next review. 

We must keep in mind, however, the Food and Drug Administration determines 

the regulatory requirements for infant formulas and determines if a product may 

be marketed in the United States. Due to the array of infant formulas that are produced and in order to ensure infant formula rebate solicitations remain competitive, 

WIC Program regulations require State agencies to issue rebate solicitations for an 

infant formula that is suitable for routine issuance to the majority of generally 

healthy, full-term infants. The infant formula manufacturer determines the formula 

that best meets this requirement.The lowest bidder is awarded the contract and the 

formula that the manufacturer bid is considered the Primary Contract Brand infant 

formula. The Primary Contract Brand formula is considered the formula of first 

choice and all other infant formulas are considered alternative formulas. However, 

all formula in the manufacture’s infant formula product line is considered contract 

formula. But, if the infant formula manufacturer adds a new, more costly formula 

after the contract is awarded, WIC State agencies have the discretion to deny its 

inclusion to the State agency’s allowable food list. 

Mr. FARR. Yeah. And I hope that the point is that maybe some 

savings, if you are going to look for savings, it might be from not 

authorizing this higher cost formula that doesn’t really get a bang 

for the buck. That’s the question. Secondly, on the other micro— 

and this will finish my round—this came from the cattlemen. 

INTERNATIONAL IMPORTATION AND TRADE

Explain to me. South Korea has foot and mouth disease, and 

therefore we don’t import any live—I mean we only import cooked 

meat from South Korea for importing anything right now. 

Secretary VILSACK. I believe that is accurate. There is a certain 

temperature that it has to be cooked in. 

Mr. FARR. But, however, we are importing from Brazil and Argentina that also have foot and mouth disease, but the cattlemen 

don’t want it. Frankly, they don’t want any live meat brought in 

or raw meat brought in from those two countries for the same 

health risk issues as these issues that you have determined 

shouldn’t bring any uncooked meat in from South Korea. 

Secretary VILSACK. We have been able to determine that there 

are certain regions of those countries that are foot and mouth free. 

Mr. FARR. But, how effective are we then? I mean, you know, 

those diseases cross boundary lines so quickly. 

Secretary VILSACK. I think we have been effective so far, because 

we haven’t had that circumstance in the country. 


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Mr. FARR. Yeah. I know that. It seems to me that is a weak response, because, you know, we deal with all these exotic pests and 

we know damned well that they break out from county to county. 

It is very hard to stop that. And I don’t know a lot about foot and 

mouth disease, but it is supposed to be really bad. 

Secretary VILSACK. Yeah. Yeah. I mean there are a series of 

steps in the process. First of all, establishing that it is foot and 

mouth free; secondly, there are inspection processes both in country 

and at the border that APHIS is engaged in and the customs folks 

are engaged in. So, I mean it is not as if we are just not paying 

attention to this. We are paying attention to it, and, obviously, we 

take this very seriously. 

BRAZIL COTTON

Mr. FARR. Well, I think what scares—the bigger picture—is that 

the cattlemen feel very hurt by the fact that it seemed like they 

were a trade-off allowing certain counties in Brazil to export tradeoff for that incredibly dumb deal that we had to make for cotton 

by paying hundreds of millions of dollars. 

Secretary VILSACK. With due respect, Representative, it was not 

a dumb deal, and I will push back on that. And here is why it 

wasn’t a dumb deal. We would have been hit with $800 million of 

penalties as a result of the WTO case. 

$500 million of it would have been additional tariffs on our products, and almost $300 million on intellectual property that would 

have significantly compromised potential agri-business interests in 

terms of our ability to protect our intellectual property. 

Mr. FARR. Why don’t we deal with that in the Farm Bill rather 

than—— 

Secretary VILSACK. Well, we have to deal with the cotton issue 

and we have to deal with the GSM 102 program in terms of whether or not it is providing, in terms of the repayment period and the 

interest rate, whether it is providing a level playing field, if you 

will, for the rest of the world. We will have to deal with that and 

the payments to Brazil stop when it is dealt with in the Farm Bill. 

Mr. FARR. Well, but can we get a better answer than on the importation of cattle from Brazil? 

Secretary VILSACK. I am not sure what you are looking for, sir. 

I mean the reality is we have established that there is no risk in 

these regions. We have established an inspection process in place 

to prevent it, if it does in fact hit us at the border. And we have 

not had an incident. 

Mr. FARR. Well, I don’t know how much, if we look at the amount 

of imports. 

Secretary VILSACK. Well, we can provide you that information. 

Sure. 

[The information follows:] 


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Mr. FARR. Thank you. 

Mr. KINGSTON. Ms. DeLauro. 

Ms. DELAURO. Thank you, Mr. Chairman. 

CHINESE POULTRY

Mr. Secretary, a final question on the Chinese chicken issue, and 

then I want to ask an animal I.D. question. In the past you have 

supported the rider language that has been in the bill with regard 

to Chinese chickens. And let me just ask you if you will continue 

to support that language. 

Secretary VILSACK. I’m sorry. The language? 

Ms. DELAURO. The language that is in the—— 

Secretary VILSACK. That basically provides us—— 

Ms. DELAURO [continuing]. What has been removed in the CR. 

Would you continue to support that language? 

Secretary VILSACK. We are happy to continue to provide you with 

reports, and basically live with the agreement that was reached 

last year, or a year and a half ago, whenever it was. 

Ms. DELAURO. And that’s what the language would require. 

Thank you. Thank you, Mr. Secretary. 

Secretary VILSACK. Yes, I am happy to live with it. 

NATIONAL ANIMAL IDENTIFICATION PROGRAM

Ms. DELAURO. Again, we have had a conversation about animal 

ID in the past, and I noted with regard to the APHIS budget that 

it has been reduced by about $72 million. But eliminating the funding for a number of activities, it includes several increases, including $9 million for the animal ID program. And we have gone 

through this before with $145 million that we have already spent 

there, and my view of it is instead of a strong national program. 

I think what we have here is a fragmented system with standards that are negotiable and applies to some animals moving across 

state lines. And the budget requests more than $14 million. It’s an 

increase of $9 million for the program. 

I value an animal ID program. I really do. I support that effort, 

but I think it is strange to me how we can support the agency’s 

new plan when both its path and its destination, I think, are inadequately defined at this point. And how was the agency work to define outcomes in the past to achieving them to ensure success of 

this program? Are we still moving towards the system that enables 

traceback of any livestock species in two days, and will all beef and 

dairy cattle be included in this program? 

Secretary VILSACK. This is a program that by the very nature of 

it was not very well received, less participation than we had hoped. 

So the determination was made to try a different route. The route 

that we are trying, I think over time, gets to all cattle, but it will 

take some time to get to all cattle. And there are performance 

standards that we are establishing in concert with the state Agriculture commissioners and tribes that we think are doable and 

they allow us to trace back to the state of origin in a relatively 

short period of time. 

There are a variety of standards that we are currently looking 

at, just to give you a sense, in terms of measuring the time required for a state where a diseased animal was found to determine 


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what state or tribe the animal immediately came from. We think 

that eventually we want to get this down to three business days. 

We want to be able to do this in a way that is most effective and 

least costly so that there is more participation and involvement. 

And that’s the reason why the additional money is being asked 

for, because we want to provide incentives and resources to producers in the states so they will be more inclined to accept this program than they were the last program. The last program just 

wasn’t very effective when only 30 percent of the people participated. 

Ms. DELAURO. We will still maintain our differences in this area, 

Mr. Secretary, and we will have many more conversations about it. 

FOOD SAFETY WORKING GROUP

Quick question, if I can, on the food safety working group. The 

budget request is about $4 million less and you all recommended, 

which I support, increased sampling and funding for additional 

baseline studies with regard to the prevalence of pathogens in food 

products. But we see a $4 million decrease in this effort. What is 

different between 2011 and 2012 in those proposals? Are we looking at something of a less robust program of sampling and study 

in light of the pressure to cut spending? 

If we do receive an $88 million reduction like that proposed by 

the House majority, will that result in less sampling and less data 

gathering to identify risk to public safety from contaminated meat 

and poultry products? 

Secretary VILSACK. The sampling, primarily the savings in sampling are the way in which we are conducting the sampling and the 

shipping costs. We had a program called the Save Award, in which 

we asked people to identify where money could be saved. And one 

of the savings had to do with how we shipped back the empty containers that are used in sampling. And someone finally concluded 

it would be just better not to use the most expensive way of shipping those sampling cartons back. So that saves about a million 

and a half dollars. 

Primarily, what we have done with FSIS is we had a study done 

of looking at how we use our workforce and how we can use it more 

efficiently and effectively, and they identified some savings that we 

are applying to offset some increases in FSIS that we are proposing. I don’t anticipate that this is going to result in us doing 

less. In fact, I would anticipate we will probably do more, because 

we were identifying other pathogens that we need to be taking very 

seriously in taking a look at. And we are obviously hopeful that we 

can get the performance standards in the poultry area through the 

process in an expeditious way, so that too will require additional 

scrutiny. 

We are focused, primarily, on establishing a public health information system that will allow us to do a better job of collecting 

data and be able to potentially predict trends and predict problems 

before they occur, and we are trying to work to develop a better 

unified incident command response so that we can respond more 

quickly than we have in the past, and do it in a more coordinated 

fashion with FDA. 


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Ms. DELAURO. Thank you very much, Mr. Secretary, and I will 

just, the rest of the questions, submit for the record. 

Mr. KINGSTON. Ms. Kaptur. 

PAYMENTS AND SUBSIDIES

Ms. KAPTUR. Thank you, Mr. Chairman, and I would like to submit for the record the mineral revenue payments to the states 

where Wyoming leads with over a billion dollars. 

I also want to submit to the record all the USDA subsidies since 

1995 to the present showing very large companies getting over half 

a billion dollars in subsidies. We will submit the top 20, and then 

also a ranking of the way that USDA subsidies go out to all the 

states. I think if I submitted this for the record now, as we proceed 

forward this year, we are going to be able to inject not just efficiency but equity in the kinds of cuts that we make. 

I also wanted to mention that if we look for a state like Wyoming, compared to my own, the state of Wyoming doesn’t even 

have as many people as I have in my congressional district. The 

state of Wyoming has 544,270 people. They rank very high in 

terms of per capita federal spending: $38,705 per resident. This is 

all federal spending in the tiny state of Wyoming—very, very interesting, the distribution of federal dollars. 

And a state like Ohio with 11 million people, many of whom are 

strapped right now, the statewide per capita for us is less than half 

that much. It’s about $15,749 per citizen. So one asks oneself 

what’s going on here in the distribution of federal dollars in a time 

of deep recession—very, very important to look at the whole of 

what’s going on in this country, and why some people don’t feel the 

pain and other places feel it very, very much. 

RENEWABLE ENERGY PROGRAMS

Mr. Secretary, I wanted to ask you a little bit about your renewable energy programs, and I really want to compliment you for the 

work that you dedicated your life to in this area. What do you see 

happening on the energy production front, the pace of research in 

some of our biofuels, the types of contracts, perhaps USDA’s been 

involved in, whether it is solar fields, whether it is wind farms, 

whether it is biofuels, plants? Could you just kind of give us a little 

backdrop on where you see USDA heading in the future in terms 

of these energy programs that are so vitally important to us and 

that could be renewable? 

Secretary VILSACK. Yes. We see this as a critical component to 

rebuilding a rural economy that works for folks. We have five regional research centers. They are virtual centers that are basically 

focusing on trying to identify more efficient ways to use renewable 

energy. 

We are aggressively promoting the Rural Energy for America 

Program—REAP. We have over 4,000 projects that have already 

been funded under REAP. There are 68 feasibility studies that we 

recently announced to look at alternative and more efficient ways 

to produce bioenergy, biofuels, renewable energy. We are working 

with farmers and ranchers to encourage them to incorporate renewable sources on their properties. We have already saved 4.3 billion kilowatts of power by virtue of the programs that we have 


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sponsored. So we are going to continue to see more and more of 

this. 

We are going to continue to see it as a very important part of 

the innovation strategy the President has established. Clean energy is a future opportunity for this country. You know, if you want 

to rebuild an economy, you have to build something or do something that nobody else is doing, or you have to do it better than 

everyone else is doing. And in the clean energy area, there is an 

enormous opportunity for us. 

So it is additional research. It is additional on the ground activities. It is working with these regional partnerships I have talked 

to Representative Farr about to encourage them to incorporate in 

their strategy renewable energy. It is about using the energy programs to build bio refineries to assist producers of feedstocks for 

advanced fuels to be able to do so in an economically feasible way. 

Here is one challenge that I think we have. 

But I think there is a deep sentiment on the part of some in Congress to consider an abrupt end to the kinds of incentives and support that the industries have had in the past, specifically in the 

bio-fuel area. 

My concern with it is that if you have an abrupt end, you are 

going to compromise your ability to continue the progress we have 

seen. 

We saw this with the bio-diesel tax credit; when we basically 

ended that, we lost 12,000 jobs and 50 percent of production capacity, almost immediately. 

This is a maturing industry; it is not a mature industry. And our 

view is that you need to really divide a glide path—not a cliff, but 

a glide path—for reducing the supports and tariffs over time; and 

that you need to think about redirecting some of those resources 

to building additional opportunities for bio-fuels vehicles that can 

use bio-fuel, and a more convenient supply. 

So there is a lot of activity in this space, and we are going to continue to be aggressive about it, because it is a million jobs-plus, 

and $100 billion of capital investment. 

Ms. KAPTUR. Thank you, thank you, Mr. Chairman. 

Mr. KINGSTON. Thank you, Mr. Secretary. 

Mr. Farr, do you guys want one more round? Or do you? Okay, 

one more round? 

GOVERNMENT ACCOUNTABILITY OFFICE REPORT

Let me then ask you a question. You may or may not have seen 

the Wall Street article about a GAO report that is coming out on 

duplication of—— 

Secretary VILSACK. I have read the article. 

Mr. KINGSTON. And I think we will all be looking forward to 

reading that GAO report and we will work with you on any of that 

duplication that you feel is—really, that is not my question so 

much as I just want to mention that when the GAO comes out, 

then we can more intelligently see what these things are. 


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FOREIGN AID

But my question in this open-mike town meeting that you are 

doing so well at, Mr. Secretary: Have you ever read the book, Dead 

Aid by Dr. Dambisa Moyo, who is a Zambian woman? 

Secretary VILSACK. No. 

Mr. KINGSTON. It is actually a very interesting book about foreign aid, and how it is ruining the economies of particularly Africa. 

One example that stuck in my mind—let’s say you are in Senegal, there is a mosquito net maker, and he has got ten employees 

and he pays them $2,000 a year, and those ten employees support 

families with them. 

And so, you know, he is chugging along, the small entrepreneur 

in Senegal. And then comes Bono or celebrity of the day, feeling all 

generous and compassionate, and well intended, and dumps 

200,000 free mosquito nets on the market. And when that happens, 

the Senegalese entrepreneur is dead, because he is selling his nets 

for five bucks each. 

You got free mosquito nets flooding the market now. He is out 

of business. The ten employees are out of work. Their dependents. 

It is a very vicious cycle. And this woman, who was born in Zambia and got her Ph.D. from Oxford or a master’s from Harvard and 

an M.B.A. from American University, who has worked for the 

World Bank and Goldman Sachs, and seems to be really a very intelligent person, has approached it in a very, I would say, thorough 

way, but says that so often our foreign aid is really killing the 

Third World and keeping them from being able to develop. 

I worry about that with food aid, that so often we are putting 

food on the market and benefitting American farmers, and benefitting American shippers; but to the end-user maybe it is keeping 

them from learning how to grow their own food, and running off 

the budding entrepreneurs. 

But that is the discussion that we need to have as a society. 

There are companies, Land O’ Lakes, for example, who are very 

interested in helping develop and nurture the entrepreneur in Africa. And I believe you were there several months ago? 

Secretary VILSACK. I was there last year. Actually my youngest 

son is currently in Namibia, setting up a series of franchising arrangements for women-owned businesses to sell solar-powered 

technology to villagers in areas that have no electricity. 

So I am somewhat familiar with what you are talking about. 

Mr. KINGSTON. Well, the USDA employees that I have met in Africa, I think, are very on-hand, and they are doing a very good job. 

They seem to know the locals and know the local entrepreneurs 

and movers and shakers. 

And it is very interesting to talk to them. 

But I am concerned about that with food aid, that—— 

Secretary VILSACK. Well, if I can, you know, I think one of the 

reasons that you ought to be reassured is that we have got the 

Feed the Future Initiative, which is really designed to build capacity, to build, at least from an agricultural perspective, the capacity 

of people to be more productive agriculturally, and to build the 

markets that would allow for appropriate sale locally. 

Mr. KINGSTON. Mm-hmm. 


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Secretary VILSACK. And to generate the revenue and income and 

to develop credit systems. And I think the Feed the Future Initiative is our effort to try to respond to the concerns at least within 

the agricultural space of capacity-building, as opposed to just simply ‘‘Here is food that you need.’’ 

Obviously there are emergency circumstances in situations where 

that is appropriate, and is necessary. The McGovern-Dole Program, 

I think, is appropriate, because it does create an incentive for kids 

to go to school and they get an education. 

But overarching it is our Feed the Future Initiative with the 

United States Agency for International Development—USAID—to 

try to set up a much more productive agriculture. 

Mr. KINGSTON. I would be interested in working on some pilot 

program concepts with you, if we could pick and choose some areas, 

and maybe look at doing some of these things differently. 

For example, perhaps vouchers to some of the areas. Because I 

do feel that there is a corporate welfare angle to our food aid that 

may be as an unintended consequence, but it is still there. 

Secretary VILSACK. We have got several pilots currently working 

along those lines in four or five different countries: Malawi, Tanzania, Cameroon, and a couple others. 

So we probably should visit with you about those programs, and 

see whether that is in line with what you are talking about, or if 

you want to do something different, or more expansion of that effort. 

Mr. KINGSTON. And I will invite you to read that book, because 

I know you have no reading material at all. And you are just bored 

out of your minds. 

But I am sure somebody in the Department has read that book 

and is familiar with this woman. And I would like to get her down 

here as a witness to the hearing at some point in the future, because I think this was a very interesting book. 

So I yield back. 

Mr. Farr. 

Mr. FARR. Well, thank you Mr. Chairman. I would like to follow 

up. 

A week ago I was sitting in Jakarta, in the fourth most populous 

country in the world, Indonesia, and certainly the largest Muslim 

country in the world; 17,000 islands and 7,000 which were occupied 

on. 

And one of them near the far end, independent country of East 

Timor, which we visited, was also one of the poorest countries in 

the world. And it really hits you when you do not even see just 

basic material things in a country like this. 

I have been in the Peace Corps, and I have never seen—I would 

not call it abject poverty, because the people are not dejected—but 

just lack of access to any of the, you know, to enough food and 

water, just basics. You know, whole-culture poverty. 

MCGOVERN-DOLE INTERNATIONAL FOOD FOR EDUCATION AND CHILD

NUTRITION PROGRAM GRANTS

And so I am very concerned when the CR that we passed last 

week cut the program, the food aid program, in half, the McGovern-Dole Program. 


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And I wish you would enlighten a little bit more on what those 

kinds of cuts. You cannot go into alternatives, Mr. Chairman, you 

know, with vouchers, unless you have money to vouch. 

And so if we are just whacking that program in half, it is going 

to have world-wide implications on our foreign policy and the reason we got into the food programs in the first place. 

Secretary VILSACK. Twenty-eight million children have been benefitted from that program, somewhere between four and five million on an annual basis, since its inception. 

The best way I can respond to that question is to just relay an 

experience I had with that McGovern-Dole program in Kenya. 

We were at an orphanage, and it was an emotional moment for 

me, because I started out life in an orphanage. And so I, you know, 

in one sense I was trying to relate to these kids, who were in this 

orphanage. 

And I was doling out the food for lunch. And they had the red 

cups in the World Food Program and you put a cupful of sorghum 

and rice into this cup. And for some of these kids, it is the only 

meal that they would get in a day. 

And so I asked them—they were various ages—I said, ‘‘Why do 

you like coming here? Why do you like coming to school?’’ 

You know, if you ask that question in the United States, somebody would say, ‘‘Well, I like it because I want to play football,’’ or 

‘‘I like it because I’m studying chemistry,’’ or ‘‘I like it for music,’’ 

or whatever. 

They would give you some answer. Every single—— 

Mr. FARR. Recess—— 

Secretary VILSACK. Well, unfortunately there are not as many 

schools with recess. That is another issue. 

But every single child I asked had the same answer: ‘‘I like this 

place, because I get fed.’’ 

So you know, if America wants to convey a sense of reaching out 

to people, that would be one program that I think we ought to 

think very seriously about maintaining; because it does create a relationship and it does help kids go to school. And that means they 

will be better educated over time, our hope is. 

I would be very wary about that, from my own personal experience. 

Mr. FARR. Well, sitting in the seat you sit, hopefully you will be 

very vocal about that, as we move on in the year. 

WIC FORMULA PRODUCTS

And lastly, since this is the last round, I want to just get a response. I mentioned to you that you have the authority to commission an independent scientific review to determine whether the 

higher cost formula products are actually as effective as the formula industry claims. Would you be willing to look at that, if it is 

going to save you $90 million? 

Secretary VILSACK. We ought to be always looking at opportunities to save $90 million. 

Mr. FARR. All right. Well, I would like to pursue how you might 

do that. 

I do not have any further questions, Mr. Chairman. Yield back. 

Mr. KINGSTON. Ms. DeLauro. 


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Ms. DELAURO. Thank you, Mr. Chairman. 

FOOD AID

Just to follow up on the food aid issue, which is an area, as you 

know I try to spend a lot of time on. 

And I have to tell you, I think it is unconscionable, the cuts in 

the CR to Food for Peace, and for McGovern-Dole. 

I listened to something the Secretary said. And the fact of the 

matter, McGovern-Dole is about girls, young girls. And if there is 

no program like this, they stay home; they go when this program 

exists, because their families figure that they may even be able to 

bring some food home at the end of the day for the rest of the family. 

But I think we need to take a look at food aid in terms of national security. And that is just not me talking about that. You talk 

to the Defense Department, you talk to—— 

If you are going to want to feed your kid, you are going to take 

it from wherever you can get, be it the Taliban, be it some terrorist 

organization. If they feed your kid, hey, I will do whatever you say, 

lest my kid has to go hungry. 

Now that being said, what we do is we do partner, as the Secretary said. Land O’ Lakes, to be specific, in Tanzania, it’s $8 million from the Federal Government, in order to participate in this 

program. 

CARE, Catholic Relief Services, they do a great job, they do a 

wonderful job. But it’s a partnership. They engage with the Federal 

Government. 

So you’ve got a public/private, whenever it is, you’ve got a partnership here. 

We should not be out of that mix, for our own national security, 

which is so incredible. You know, it sounds good: Cut foreign aid, 

you know. And it’s a great piece of red meat that you throw before 

the public, and it just says, ‘‘Okay, that’s where we’re going.’’ 

That is, it’s unwise in terms of what we do. 

And I’m not saying that these folks would not participate, but 

they couldn’t probably participate, some of these relief organizations, unless there were a federal commitment to this effort. 

So let’s look elsewhere, as I say. Where do we start to make the 

cuts? And there are lots of places we can do that. 

SINGLE FOOD SAFETY AGENCY

I’ll get back to you, I think, on this GAO report, because I want 

to read it first, Mr. Secretary, because you know where I’m going 

to go with this, and that’s a single food agency, because that’s one 

of the areas that they identified. And I will look carefully at what 

they say, and so forth. 

And I think what I will want to ask you as a result of that, is 

how much savings do you think we can capture with a single food 

safety agency? 

So. But I will reserve that until I read the report, and I’m just 

more knowledgeable about what they have said. 


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THE EMERGENCY FOOD ASSISTANCE PROGRAM

The Emergency Food Assistance Program, zeroing out the infrastructure grants, no particular reason, just cost savings, any—— 

Secretary VILSACK. Tough choices. 

Ms. DELAURO. Okay. 

DISCRIMINATION CASE SETTLEMENTS

Women Farmers. Let me just address that for a second. And I 

know you have been working in this area with women and Hispanic farmers. I applaud the move, and you know that I’ve been 

working on this for a while. 

But I do have some concerns about the process. I would be less 

than honest. 

As I understand it, the same total amount of funds as other discrimination case settlements, Pigford, Keepseagle. But it’s spread 

out significantly among a larger number of farmers—not all women 

will be adequately reimbursed for the losses they incur. 

Secretary VILSACK. That’s not correct. 

Ms. DELAURO. Okay. Please—— 

Secretary VILSACK. That’s not correct. 

Ms. DELAURO. Yeah. Okay. How will it work? 

Secretary VILSACK. Well, there are basically two tiers. 

Ms. DELAURO. Mm-hmm. 

Secretary VILSACK. The first tier, depending upon the nature of 

your documentation of discrimination. You have documentation, 

you are entitled to $50,000, you’re entitled to debt relief, and you’re 

entitled to tax relief. And there’s no cap on the number of people 

theoretically that could get that relief. 

Ms. DELAURO. Mm-hmm. 

Secretary VILSACK. So it’s not correct to say that it’s the same 

amount of money, because we don’t know yet, because we don’t 

know how many people will be able to provide the documentation. 

Ms. DELAURO. Mm-hmm. 

Secretary VILSACK. But whatever that number is, you multiply it 

by that amount. So it’s an uncapped amount from the Judgment 

Fund. 

Ms. DELAURO. Mm-hmm. 

Secretary VILSACK. The second category are folks who do not 

have as extensive documentation, but still can establish a claim of 

discrimination. It may not be quite as strong in that case—— 

Ms. DELAURO. Much like Pigford II, if you will? 

Secretary VILSACK. Yes. In that case, basically, there is a $1.2, 

$1.3 billion fund that those folks could basically partake in. 

Ms. DELAURO. Mm-hmm. 

Secretary VILSACK. And depending upon the number that’s in 

that second group, will depend on how much. But they can get up 

to $50,000 in the same level of relief as the first group. 

Ms. DELAURO. Mm-hmm. But Pigford II was not capped in any 

way, as I understand it? Is that right? 

Secretary VILSACK. Oh, Pigford II was capped, because it was 

capped by the appropriations. 

Ms. DELAURO. By the appropriation. 

Secretary VILSACK. Yeah. 


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Ms. DELAURO. I’m going to take another look at this, in terms 

of—— 

Secretary VILSACK. I think, if I can maybe clear up the confusion? 

Ms. DELAURO. Sure—— 

Secretary VILSACK. In Pigford I, you had two categories, you had 

$250,000, and you had something less than that. And the reason 

why you can’t do that in this particular circumstance is because 

these cases were never certified as a class action. 

Ms. DELAURO. I understand. 

Secretary VILSACK. And that’s because there’s a third alternative. 

So you’ve got two tiers. The third alternative is if you don’t like either one of those two tiers, you can pursue your lawsuit in court, 

which was not true in Pigford. 

Once the Pigford settlement occurred, that was it, your rights 

were—you had to take the settlement or not. 

Ms. DELAURO. Right. But you did have another round of Pigford, 

which had people who had filed their claims late. Look, and I supported the Pigford Resolution of what you did. 

Secretary VILSACK. Right. But that’s capped. 

Ms. DELAURO. Mm-hmm. 

Secretary VILSACK. And this is not capped. And you also have the 

right—they can’t go to court—that women and Hispanic farmers, if 

they are not satisfied, can go to court. 

Ms. DELAURO. But it’s awfully difficult to go to court on your 

own, Mr. Secretary, I think you know that. 

Secretary VILSACK. Listen, I’m on—yeah. 

Ms. DELAURO. No, I understand. And I’ll take a closer look at 

that, because I would like to get it resolved. 

There are a very, very larger number of women farmers, who 

over the years have been discriminated against, and they ought to 

all have, you know, equal and fair treatment. And I know you’re 

trying to move in that direction. 

Mr. KINGSTON. [Off mic] The gentlewoman’s time has expired. 

And the Chair recognizes Ms. Kaptur. 

FOOD AID

But I wanted to say this. In terms of the food aid and the relationship, it might be a good exercise to look at the U.N. voting incident relationship with food aid. 

I know, for example—and I think my memory is correct on this— 

that in 2000 we gave Afghanistan about $73 million in food aid. 

And if you look at sub-Saharan South Africa and what the—Botswana votes with us, Rwanda does not. 

Most of them do not vote with us in the U.N. I’ve argued with 

the State Department that the U.N. voting record is irrelevant, if 

we’re not going to use it for any meaningful relationship building. 

So much of the U.N. voting record has to do with Israel and Middle 

East politics, that I think the African countries have a hard time 

identifying with it. 

But if you said, ‘‘Okay, we’re only going to give food aid to those 

who vote with us, we could probably walk away from all of it.’’ 


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Well, half of it. I’m not sure of the numbers are. I know Mr. Gohmert has actually introduced a bill that says: If you don’t vote for 

us 50 percent of the time, we cut you off from all foreign aid. 

And I think he’s doing that to drive a message. But I would say, 

in terms of building relationships, when I have gone to Africa, I 

made it a point to ask them why they don’t vote with us in the 

U.N. And they don’t what the heck I’m talking about. 

And I talk to them about the U.N. voting record. They still don’t 

know what we’re talking about. And that includes somebody whom 

I respect highly, Paul Kagame in Rwanda, for example. 

But, you know, people look at you and say, ‘‘What are you talking about, U.N. voting record?’’ 

And so I don’t think it’s a fair evaluation of our relationship with 

countries. But at the same hand, when we talk about, ‘‘Well, this 

is national security,’’ or ‘‘This is building relationships,’’ there 

should be some metrics on it. 

And I am not putting this on food aid, either. I’m talking in the 

big picture of foreign aid, because it is true that it’s enormously unpopular with constituents. 

And everybody wants to balance the budget, cutting foreign aid, and we all know there’s no money there, in terms of the $3.7 trillion budget. 

But to me, this is a discussion that we should have as a society, 

in terms of you know, ‘‘What is the objective here? What is the 

metrics?’’ 

I used to live in Ethiopia, and when I was there, the population 

was probably at 15 million people. Today it’s 82 million people. And 

Ethiopia, as you know, in the last 50 years, they’ve been up, 

they’ve been down, they’ve had dictators, they’ve had communism, 

they’ve had it all. 

But one of the NGO workers over there told me, when I was at 

an orphanage, as you do—and I like to get out there, and I always 

said I don’t want to leave until I see the plate in the child’s hand— 

but she said, ‘‘Well, this might be the only meal this child receives 

today.’’ 

Which I believe was true. But on the other hand, well how did 

Ethiopia, if they were so, you know, helpless, how did they get from 

15 million to 80 million people? 

You know, we seem to have this, I’d say it’s a celebrity fixation 

of: Oh, if not for us, these poor countries would never get by. 

And I don’t think that necessarily true. I think that’s our assumption so often. 

I’ll also say another element to this is you do have China and 

other countries that are in Africa, that we absolutely have to have 

this presence there. 

I’m a hundred percent for total engagement. But I think we 

should also look at where we are achieving things and where we 

are not achieving things, or what is it that we’re achieving, and 

how are measuring, and so forth. 

But I know of your trip there last year. I think it was a great 

trip. And again, very, very high marks from me to all the USDA 

employees I’ve met, not just in Africa, but all over the world. They 

are really, where they need to be. They are on the ground with the 

people, making a difference. 


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Secretary VILSACK. Thank you. 

Mr. KINGSTON. Ms. Kaptur. Sorry. 

Ms. KAPTUR. Thank you, Mr. Chairman. Thank you for an extra 

round of questioning. 

THE EMERGENCY FOOD ASSISTANCE PROGRAM

I wanted to ask, on the infrastructure program for TEFAP, that the continuing resolution cut $6 million from: Could any of you 

clarify for me what does that mean in terms of the ability to deliver 

food at the local level? 

And also, have you considered ever using USDA’s authority to 

help your CSFP distribution sites, and food banks that receive 

TEFAP, procure fuel at a more competitive price, and bid on vehicles that they use, which are dilapidated and old, and they’re not 

green—that’s for sure—to somehow at their national meetings 

gather them, and figure out a way to use the meager dollars they 

have more efficiently? 

Secretary VILSACK. That’s a very good idea. And I don’t know 

that we have necessarily encouraged that kind of thought process. 

But that is something that we’ll certainly take back and encourage. 

When I think of the infrastructure, I most often think of refrigeration in the capacity that will adequately store foods. And I think 

that’s where a lot of our dollars have gone. 

And you know, the reality is, if we didn’t have to do this, we 

probably wouldn’t. But the reality is—We’ve got to make choices. 

And what we’ve tried to do in this budget—and everyone will have 

a problem with it, and everyone will have a problem with any 

budget that gets passed—when you’re dealing with shared sacrifice 

and shared opportunity, it really is tough to get the priorities right. 

We did our best effort here to try to balance those priorities. But 

when you, something’s got to give. And that, unfortunately, is one 

area, where we felt we could give a little in the short term to try 

to get ourselves back on track. 

Ms. KAPTUR. Thank you, Mr. Secretary. 

You might also interview the places that distribute these commodities on their energy bills, and see if there is a way that some 

of the energy systems that Secretary Chu is looking at, and some 

of the programs that Secretary Solis has, for green energy installation couldn’t help some of these places reduce their overhead longterm, because they do pay significant bills at the local level. 

Again, I have this question of, you know, can bulk whenever, 

bulk purchase of something save money? Whether it’s windows, you 

know, so they’re not leaking heat all the time. You know, how do 

we more efficiently handle all of these sites? 

We’ve asked the military to do that. Well, I don’t go to all the 

meetings when these folks come into town, and have their national 

meetings. But I think it’s something at least to push the envelope 

on, as you move forward. 

And thank you for your receptivity there. 

MONETIZATION OF COMMODITIES

Could you also answer for me, does USDA do any more monetization of commodities under the old Title II, I think it was, you know, 

where our bulk commodities were sent to countries, sold, and if it 


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didn’t disrupt their internals, use those monies for development? Is 

that sort of out the window? 

Secretary VILSACK. It is fairly limited, I think. It’s very limited. 

Ms. KAPTUR. If you could provide some insight on that, because 

we have had surpluses recently. So at least that’s my impression. 

Secretary VILSACK. Surpluses of. 

Ms. KAPTUR. Of commodities in this country. 

Secretary VILSACK. Actually supplies in most cases are very tight 

right now. 

Ms. KAPTUR. Very tight? 

Secretary VILSACK. Yeah. That’s why the prices are high. 

Ms. KAPTUR. Okay. Any insight you could provide on that program would be greatly appreciated. 

[The information from USDA follows:] 

The Title I and Title II programs under the Food for Peace Act, and the Food for 

Progress program provide commodities to private voluntary organizations, international organizations, or foreign governments. Most commodities provided under 

the Food for Progress program are bulk commodities and are monetized. The Title 

II program also provides commodities to be monetized, primarily in non-emergency 

development programs, but most Title II program resources are used for emergency, 

direct feeding programs. Monetized sales proceeds support agricultural development, 

health, and other development activities. The Title I program of the Food for Peace 

Act is not active. 

TRADE AGREEMENTS

And then finally, I want to say with the Chairman, I’m very impressed that he has talked about the impact of U.S. programs 

abroad and what it does to local people. Our food programs globally 

actually, though they are responsible for over half of what’s donated, in one way or another, sort of pale in comparison to many 

of the free trade agreements that we sign. 

So for example, with Mexico, which continues to vex me, the 

NAFTA agreement in 1993 has provided a total of over a trillion 

dollars of trade deficit with the nation of Mexico; but one of the 

most hidden parts of that agreement that has hurt so greatly on 

our continent, are over two million farmers in Mexico, who lost 

their land, and they lost their livelihood. They were living in the 

Ajito System. It was totally disrupted, as our production was 18 

times more efficient more than Mexico’s. 

And so the shipment of yellow corn down there wipes out tens 

of thousands of farmers, who grew white corn. And I think if there 

is a judgment day, I think America will be judged very harshly for 

what was done there, and continues until today with the illegal immigration we suffer as a result of desperate people, seeking desperate means, just to survive. 

All the small businesses that were wiped out. That was the most 

heartless agreement. And it might have benefitted a few companies 

that export, but the harm it did. And all you have to do is read 

the headlines about drug trade now. What are people resorting to? 

Desperation. 

And it is imbedded in that NAFTA agreement, and we refuse to 

go back and look at it. And it’s hurting people every day. 

And I can tell you there are people that I have personally met, 

who have been killed in Mexico, because they tried to deal with the 

labor trafficking issue, which is an ugly underbelly of this agreeVerDate Mar 15 2010 01:57 Sep 24, 2011 Jkt 068236 PO 00000 Frm 00097 Fmt 6633 Sfmt 6602 E:\HR\OC\A236P2.XXX A236P2

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ment. People are trying to survive and being bootlegged, really, 

across the continent. 

We keep closing our eyes to that. 

I hope the Chairman might help this subcommittee be a place 

where eyes are opened as to what is really going on down there. 

I wish their government cared about their people. Obviously, they 

don’t. 

But it seems to me we have a responsibility, because we’re a 

partner to that agreement. 

So I thank you very much for being interested in the impacted 

programs globally, and would encourage you to include some of 

these free trade agreements, and take a close look at them. 

Mr. KINGSTON. I thank the gentlewoman. 

And that concludes our hearing. And I don’t know about you, Mr. 

Secretary, but all this talk about food has made me hungry. 

Thank you very much for being with us. 

Secretary VILSACK. Thank you. 

Mr. KINGSTON. We are adjourned. 


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(209) 

THURSDAY, MARCH 17, 2011. 

COMMODITY FUTURES TRADING COMMISSION FY 2012 

BUDGET 

WITNESS 

GARY GENSLER, CHAIRMAN, COMMODITY FUTURES TRADING COMMISSION 

Mr. KINGSTON. The Committee will come to order. 

I want to welcome Chairman Gary Gensler and the CFTC with 

us here today for a one-man panel. Yesterday we had five people 

at the desk. So you have a lot of answers in your head. 

We are glad to have you here on St. Patrick’s Day. 

CFTC is always of interest to this Committee, and more and 

more we plan to have other CFTC hearings and have more involvement in it this year not just because of Dodd-Frank, but because 

there are so many people that are in it now. It is a tail that really 

and truly wags a huge dog, and $226 trillion, if that is correct, in 

swaps and $36 trillion in futures. So if those numbers are right, 

and I know you know what they are exactly in your head, but it 

is an enormous surprise, has a profound impact. 

You know, we are in tight budget. I know you have asked for a 

two-year appropriation. I do not know that we are going to be doing 

any two-year appropriations, but we will have that discussion and 

are going to work with you throughout this process. 

With that, let me yield the floor to Mr. Bishop and see if he has 

anything. 

Mr. BISHOP. Thank you very much. 

Let me welcome you, Mr. Gensler. Obviously, your area of expertise and your agency has gotten a great deal more attention in the 

last few months than in previous years, and so we are welcoming 

you. 

And I notice that you have requested some significant increases 

over the last, and I would just imagine that it has to do with some 

of your increased responsibilities that have been given to you by 

the Congress. 

So without further ado, we look forward to hearing your testimony and getting into the question and answers. Thank you for 

being here. 

Mr. KINGSTON. And with that, Mr. Gensler, the floor is yours. 

Mr. GENSLER. Thank you so much, Chairman Kingston, Congressman Bishop. 

I thank the Chairman for seeing me last week, and I look forward to having additional meetings with you. I think it is very 

helpful. 

Ranking Member Farr. 


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210 

I thank you for inviting me to speak about the 2012 budget request. I also want to congratulate both Congressman Farr and 

Chairman Kingston on your new roles, and I look forward to working with you. 

The CFTC is a good investment for the American public. Each 

part of our Nation’s country relies on well functioning derivatives 

markets. It is essential that producers, merchants, and other end 

users can manage their risk. And what the derivatives markets 

fundamentally do is to allow those companies to lock in a price in 

the future. Such a price certainty allows those companies to better 

make essential decisions and investments. So it is about price certainty and lowering risk. 

The business certainty that derivatives markets can provide only 

exists to the degree that end users have confidence in the integrity 

of the market. So where does the CFTC fit in? We were created to 

oversee commodity futures markets, initially agricultural markets, 

but ultimately all commodities. So the tens of thousands of farmers, energy users, corporations, municipalities, anyone really who 

wants to hedge a risk could have the basic assurance of fair treatment and the ability to lock in a price. 

The CFTC fulfills this mandate through market surveillance, industry oversight, enforcement. We pursue fraud, such as Ponzi 

schemes and market manipulations, and we oversee the exchanges 

where people buy and sell these instruments, and clearing houses. 

We are also a cop on the beat. That is not our own role because 

we want to make sure there is transparency, but we are a cop on 

the beat to make sure those markets are free of fraud, manipulation, and other abuses. 

So I would also add that though we are not a price setting agency, rising prices and basic commodities, agricultural and energy 

products, highlight the importance of having an effective market 

oversight that insures integrity and transparency. 

Our scope has been traditionally over the futures market that 

has existed for decades. In the 1980s, a new type of derivatives, 

swaps, emerged. Swaps remained unregulated until the DoddFrank passage, and the swaps market, as the Chairman noted, is 

about seven times the size of the futures market that we currently 

oversee, and at close to $270 trillion, is nearly 20 times the size 

of our economy itself, just arithmetic, dollar for dollar. 

So our budget request takes that into consideration. The President asked for $308 million. It is an increase from the 168 or so 

million level that we are operating at under the continuing resolution. To put in context, our agency right now has about 675 people. 

We were at 634 when we peaked in the early 1990s. We were 

shrunk about 25 percent by 2007 and 2008, and only with the help 

of this Committee and Congress did we get back to where we were 

in the 1990s. 

To take on the new responsibilities of the swaps market for the 

first time, the request is to go to 983 people, about 45 percent more 

staff, but also to double our technology so that we can be efficient 

and use that technology wisely, to process applications, conduct 

surveillance, investigate fraud and the like, but we will need technology as well. 


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If I might, before I conclude, spend a moment on 2011 because 

I know you are in the midst of discussing that with your colleagues. The President did request $261 million for the year we are 

in. Of course, we are operating under the continuing resolution, but 

given the size and complexity of the swaps market, seven times the 

size and more complex than the futures market, the current funding of $168 million under the continuing resolution is not sufficient 

for the expanded mission. 

We recognize the budget deficit presents significant challenges to 

Congress and to the American public, but we cannot forget also the 

2008 financial crisis which was very real. An investment in the 

CFTC we think is a good investment. It is warranted because, as 

we saw in 2008, without oversight of the swaps market, billions of 

taxpayer dollars were at risk. 

I thank you. I am happy to take any questions you may have. 

[The information follows:] 


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Mr. KINGSTON. Thank you, Mr. Gensler. 

Mr. Farr, do you have any statements? 

Mr. FARR. No. I just hope that we can really get a clear understanding of the magnitude of your new role, of your extended authority. I mean, $277 trillion amounts of swaps is almost unimaginable. 

Now they are telling us we have got to go vote. 

And I really respect the idea that we have got to have referees 

in this game, and we need to understand, you know, what those 

referees need to have to do their job well. 

But I have no opening statement. 

Mr. KINGSTON. Thank you. 

I think since we have about seven minutes or so before we need 

to go, we could get in at least ten minutes if you want to try. 

But I will start and stay strictly on the time limit. 

SPECULATION

Mr. Gensler, one of the questions that is out there, and this is 

not going to be directly a budget question at the moment, but on 

oil and oil speculation, that is one of the things that when gas 

prices go up, it is the fault of the speculators. 

And it is a huge industry we know. It has to do with all kinds 

of different factors, but could you comment on that question? It has 

even been suggested in other committees that the CFTC has not 

done enough to rein in oil speculators. 

So I guess the question would be: can oil speculators drive up the 

price of oil? And how do they do that? And is the CFTC the proper 

agency to monitor it or prevent it if it is abused? 

Mr. GENSLER. The CFTC plays a key role in overseeing markets 

where hedgers meet speculators. It could be somebody who is a 

farmer who wants to lock in a price and get certainty for the price 

of corn or wheat at harvest time, and then a speculator might be 

the party on the other side, and that allows that farmer to invest 

and buy the feed and grain. 

So similarly in the oil market, so speculators and hedgers meet 

in the marketplaces, and they both have a role in the marketplace 

in energy markets. 

The role of the CFTC is to make sure those markets are transparent; that they’re free of fraud and manipulation. They are, in 

essence, fair to the public, and that is a key role and, I think, the 

higher prices sort of highlight the importance of our engagement. 

Congress also gave us something called position limit authority. 

That is to limit the burdens that might come from what is called 

excessive speculation. That is how Congress has laid it out since 

the 1930s. The Dodd-Frank Act expanded that to swaps as well, 

and part of the reason we have asked for an increase in funding 

is to help us actually aggregate the positions across the swaps and 

the futures market so that we can do our surveillance for manipulation in the energy markets across swaps and futures; that we can 

aggregate the positions for the position limits as well. 

Mr. KINGSTON. All right. Now, the position limit authority, is 

that for one blanket industry or is that for individual traders? 

Mr. GENSLER. The way Congress laid it out, again, back in the 

1930s and revised it a bit recently is that it relates to parties who 


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are not bona fide hedgers. A bona fide hedger is somebody who has 

the physical product in a merchandising channel. 

So on the others, if we might call them speculators, it would 

apply to each of them individually, and that is how we have taken 

it up over the decades in working with the exchanges, and we put 

out a proposal in January of 2010 under the then law. We had 

8,200 comments. We re-proposed it under Dodd-Frank, and the 

comment period closes in a week. We hope the public will comment, 

and we have already, I think, 3,500 comments. 

Mr. KINGSTON. Can oil speculators drive up the price of oil? 

Mr. GENSLER. I think speculators are part of a market. So they 

are part of pricing, whether it goes up or goes down. Speculators 

are part of a market. It is our role as an agency to make sure that 

if they meet in a transparent market, no one is cornering and 

squeezing it or manipulating that market, and that it works for the 

American public. 

Mr. KINGSTON. Were they betting on a market trend or are they 

driving a market trend? 

Mr. GENSLER. Well, it is often—— 

Mr. KINGSTON. And I know they can do potentially both. 

Mr. GENSLER. It is often very hard to discern which it is, and 

that is why it is important to have an effective cop on the beat and 

also to have these effective position limits so that somebody is not 

so large in a market that they have a concentrated position in a 

market. 

Mr. KINGSTON. We may come back to this, but I wanted to let 

Mr. Farr get in a round before we need to run. 

All right. Now, Mr. Bishop was here first. So let your conscience 

be your guide. [Laughter.] 

AGRICULTURE

Mr. BISHOP. The CFTC, because of its historical connection to agriculture markets, but the number and scope of non-agriculture 

issues, of course, has dramatically grown over the last few decades. 

And despite the importance of non-agricultural issues, agriculture 

issues are still a critical component of your work. 

I am a little concerned that given the fiscal environment in 

which we are operating today and the inevitable budget reductions 

that every agency is facing in the federal government, including 

yours, that the CFTC’s management of our agriculture markets 

could get the short end of the stick, if you will. 

So how do we make sure that agriculture does not disproportionately pay for the reductions in your budget, combined with the 

growing pressures that you are under to expand your non-agricultural activities? 

Mr. GENSLER. Congressman Bishop, we are honored to be in 

front of the Agriculture Subcommittee of the Appropriations Committee and overseen by the Agriculture Committees in both the 

House and the Senate. I think it is a good working relationship. 

I do have some of the concerns you raise, if we are not able to 

secure the necessary funding. I know it is a challenge for you all. 

I mean, for us to come in and ask for more money, you know, I 

would rather be in another place, but to not secure that extra funding would mean we would have to shift some resources and shift 


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resources from some of the traditional futures market, agriculture 

and energy to the financial markets. 

The interest rate swap market, which makes up 80 to 90 percent 

of that swap market, that is, interest rate swaps, is not agricultural swaps. So what we do do every Friday, we have a surveillance meeting. Our five Commissioners meet in closed doors, hear 

from the surveillance staff. We talk about cotton, corn and wheat, 

soy, cattle, hogs. I mean, each Friday we talk about the agricultural markets almost every Friday, but I do fear what you are saying. 

Mr. BISHOP. How do we assure that? 

Mr. GENSLER. I think the best way to assure it is the president’s request of $308 million, if I might say. 

Mr. BISHOP. And you are trying to get some advanced budgeting, 

too, I think. 

Mr. GENSLER. That is true. In 2011, and I know that you are all 

challenged, and I am not sure I would want your job; it is a difficult job you have, but the President’s 2011 budget was to try to 

start to get some resources, both technology and people, to plan for 

when the swaps market would be coming in under our oversight 

later this fall, and it was for about 240 more people or $261 million. That is correct. 

Mr. BISHOP. If we fool around and do not get that done, then you 

have got to make some other changes in order to comply with the 

congressional mandate. 

Mr. GENSLER. I think we have to make difficult choices like we 

have already made. We have cut our technology budget this year 

from $31 million down to $21 million. It means that we are just 

doing maintenance technology rather than programming. 

I think if we stayed at the $168 million, simply put, we would 

not be able to oversee, as Congress had asked us to oversee, both 

the futures market and the swaps market, this market that is 

about seven times larger than what we currently see. 

Mr. BISHOP. Thank you. 

I am not going to take all of my time. I yield back. 

Mr. KINGSTON. Mr. Farr. 

SWAPS MARKET OVERSIGHT

Mr. FARR. In essence, I mean, this swaps market is a relatively 

new, in historical purposes, responsibility, and you indicated it has 

just outgrown the futures market. I mean, I cannot even comprehend 277 trillion notational swaps, that amount of swaps, and 

you talk about the fact that there are new types of entities. There 

are the swap dealers, the swap execution facilities, the swap data 

repositories. 

And then you go on to say, and this is what I do not understand, 

the swap market is more complex than the futures markets because it includes customized bilateral hedging arrangements. 

Whereas all futures trade on exchanges, some swaps will be traded 

over the counter. 

What are customized bilateral hedging arrangements? 

Mr. GENSLER. It is where a company wants to lock in a price, but 

they want to lock in a price on something that might not be so 

standardized that other people want to do it. An example might be 


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an airline that wants to lock in the price of jet fuel on certain dates 

and months at a certain airport. Maybe it is an airport. I do not 

know your district well enough, if you have a small airport in Carmel. 

Mr. FARR. In Monterey. 

Mr. GENSLER. In Monterey. So the Monterey airport, somebody 

wants to lock in the price of jet fuel on a certain date in July. Well, 

another airline may or may not want to be on the other side. So 

that is an example of something that is customized. 

Mr. FARR. Well, in light of the incredible activity that is going 

on, have you asked for enough money? 

Mr. GENSLER. Well, I am also, I guess, an American citizen and 

conscious of the budget deficit. The President does lay out in the 

budget that in 2013 the thought is we would need to get to about 

1,140 people. 

When we look through each of our areas and said what do we 

need to cover the swaps market, we think that whether we are able 

to work with this Committee and Congress to get there in 2013 or 

later, we will need to be an agency in that 1,100 to 1,200 person 

range, and our technology will need to be significantly higher. 

To put it in context, the financial services industry, the brokerage industry is much larger than CFTC. It has about 800,000 employees in brokerage, or 5.6 million in financial services, and it 

spends in the brokerage industry alone 20 to $25 billion a year on 

technology. We are spending, well, $20 million this year. We are 

asking for $66 million, but in technology. 

Mr. FARR. In the security of the whole economic security of the 

planet, frankly, of the financial institutions depends on these good 

kind of regulators. When you have to do the duty for the intel community as well, I am sure, I mean, they must have some backup 

or monitoring you or just being aware what is going on. 

Mr. GENSLER. Well, we are the first line of oversight for these 

very important markets, and as you said, it is hard to get your 

hands around such a market that is so large. But you can think 

that when you fill up a tank of gas, and it is costing more for a 

tank of gas these days, but if you fill up and you put $80 of gas 

in your tank, you can think somewhere in the economy there might 

be about $1,500 of derivatives behind it. I mean, you just do the 

arithmetic and multiply, and do not know where it was in the supply chain, but every part of the supply chain has benefitted because 

they can get certainty on a price in an otherwise uncertain world. 

Mr. FARR. How do you do this? Is it looking for anomalies? 

Mr. GENSLER. It is often using rule writing to set some broad parameters so that markets have to be transparent. Congress did it 

for us in Dodd-Frank, and then it is using technology, and the technology is the way to aggregate data and then build what is called 

automated alerts to see if something looks manipulative that we 

then investigate. 

Twelve million contracts trade in the futures markets a day. Humans cannot oversee that. You need technology as well. 

Mr. FARR. And that is traded 24-7 in the world globally? 

Mr. GENSLER. The swaps market is. Most of the futures markets 

have a few hours off a day. 

Mr. FARR. I have got some more questions, but we will go. 


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Mr. KINGSTON. We will suspend and be back as soon as possible. 

We have two votes on the floor. So get some coffee. 

Mr. GENSLER. All right. Thank you very much. 

[Recess.] 

DEFINITIONS

Mr. KINGSTON. The hearing will come back to order. 

Our members are somewhere between here and the Capitol, but 

Mr. Farr is about one or two minutes behind me, and he said to 

go ahead and get going. 

I wanted to find out, and this should have been my first question, but some definitions that would be useful for the Committee, 

useful for the record, too. What is a swap? What does a swap do? 

Who is a major swap participant? Who is an end user? Who qualifies for the end user exemption? And for a major swap participant, 

what is a substantial position in swaps? 

I am not sure how long of an answer that requires, but if you 

could walk through those with me. So what is a swap? You know, 

you do not have to define 100 percent of it. If you define 90 percent 

of it, that is helpful. 

Mr. GENSLER. Okay. And if you will help me because I did not 

get the whole list, but I—— 

Mr. KINGSTON. We will just go one by one. 

Mr. GENSLER. Futures contracts started way back in the Civil 

War time and got regulated in the 1920s and 1930s. Swaps started 

in 1981 and have grown in the last 30 years. they are mostly related to interest rates and currencies. It is where somebody, helps 

protect a risk of an interest rate moving up or down or a currency 

rate moving up or down. That is probably 80-plus percent of the 

market. 

The next piece of the market Congress asked us to cover is commodity swaps. It would be if somebody was entering into a risk 

contract for oil at a certain point in time in the future. 

And specifically excluded from swaps, and this is important for 

many end users to a later question, is if somebody is entering into 

contract to actually deliver the product. That is called a forward. 

I will deliver a car to a person. You might think of forwards in this 

case, I will deliver the oil or I will deliver the corn or wheat, or 

even have an intention to deliver. So forwards are excluded from 

the definition of futures and have been since the 1930s. They will 

be also excluded from the definition of swaps. 

Another thing excluded from the definition of swaps is securities 

based swaps, and I see if I caught Chairman Emerson who has the 

other subcommittee and, the SEC has securities based swaps, and 

a lot of credit default swaps are securities based swaps because 

they are on an individual company. They are on an individual company or they are on a narrow group. 

So the CFTC has interest rate swaps, currency swaps where the 

currency could go up or down, oil and gas, agricultural, metal 

swaps, and then a small group of swaps related to securities if it 

is on a broad base of securities, like the S&P 500. 

But if it is on a small group or a narrow group, that is over at 

the Securities and Exchange Commission. 


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It does not include insurance. It does not include commercial 

loans. It does not include things that you think it does not include. 

Mr. KINGSTON. And what about a swap dealer? 

Mr. GENSLER. A swap dealer is defined in the—— 

Mr. KINGSTON. And I want to also ask even though I need kind 

of a working definition for members of the Committee; is there a 

legal definition that is in place so while the comment period is 

being made people know for sure what category they are in or out 

of? 

Mr. GENSLER. There is a legal definition of swap in the statute. 

Congress did this in Section 721 of the statute, if I remember because I read it often, but the SEC and CFTC are working together 

on a joint rule to bring further clarification, and some of that further clarification is just where the dividing line is between the 

CFTC and SEC. And the interest rate swap people understand 

from the statute is covered. 

On the dealer question that you raised, again, Congress addressed that. I do not remember that statute number. It might 

have been the same definitions section, as to what a swap dealer 

is. Somebody who is making markets; you can think of the large 

banks, but you can also think of what AIG once was doing as a 

dealer. 

The CFTC and SEC put out a proposal to give further definition 

to that last fall. The comment period closed a few weeks ago. We 

have 170 comment letters. It’s one of the rules that we think we 

should move early on. 

I gave a speech yesterday when I laid out some sequencing and 

phasing of this, but I think that, as you suggest, Congress laid out 

it pretty specifically. We did the proposal in the fall. We got about 

170 comments. We hope to move on that, finalize that this spring, 

if we can. Of course, it takes ten Commissioners, five at each Commission. 

Mr. KINGSTON. And what is a major swap participant? 

Mr. GENSLER. A major swap participant is a category Congress 

included in the statute that is likely to be a very small group of 

parties. It is somebody who is not a dealer, but would be regulated 

like a dealer, and what Congress laid out is this would be only if 

their net outstanding positions and swaps were such that they are 

so large that if that party failed, if they went bankrupt, it would 

have systemic ramifications. 

I am sort of summarizing it, but again, the SEC and CFTC 

worked together on a proposal in the fall. The comment period 

closed a few weeks ago, but we set a number of thresholds in that. 

If somebody were clearing all of their swaps, they would not likely meet these thresholds, but it was more if they had these customized swaps that Congressman Farr and I were talking about 

before, and they were substantial enough, and they did not have 

a margin or collateral on them and we had a series of numbers. 

Certainly we can get back to you with those numbers. 

I do remember one was that there was $5 billion of overall exposure. So that is not the notional amount. You could have far greater notional amount. You could have hundreds of billions maybe, 

but it is just if you defaulted today, what would be your exposure 

to your counterparties that is not covered. 


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And I think Congress meant it to be a small number. Frankly, 

from the commenters, we think it will probably be maybe a handful 

of parties at most would fall into that category. 

Mr. KINGSTON. Okay. When we get back, I do want to find out 

definitions for end user and talk about the end user exemption a 

little bit and major swap participant and the clearing house or the 

SWF. I think it is just very helpful for our Committee to understand as many of these basic glossary terms as possible. 

Ms. Emerson. 

PROCESS FOR WRITING RULES WITH SEC

Mrs. EMERSON. Thanks, Chairman. 

I am sorry I am late. My own subcommittee is going, and I have 

got to get back to it, but I have got one question just with regard 

to swaps, and then I have something else I want to ask you that 

is sort of a CFTC–SEC question, as you can imagine. 

So do you think that the Dodd-Frank law will, in fact, prevent 

the type of or at least make more transparent the whole credit default swap situation that we encountered with AIG? 

Mr. GENSLER. I think so. I think that the SEC will have a lot 

of that jurisdiction, those types of swaps, but between the CFTC 

and SEC, Congress said let’s bring transparency, and it did it in 

about five or six ways. Those that are standard enough would have 

to be traded on swap execution facilities. 

Mrs. EMERSON. What does ‘‘standard enough’’ mean? 

Mr. GENSLER. If it can be cleared at a clearing house, and there 

would have to be public comment, we have to put all of these 

things out to public comment and run a 60-day process, which I 

think is really helpful. But if it can be cleared at a clearing house 

and then in addition that a trading platform called a swap execution facility makes it available for trading, and lastly, that it is not 

so large to be a block because if it is large enough to be a block, 

then Congress said we do not want to disrupt liquidity there. 

The second way that Congress said that there would be transparency is that all credit default swaps, as well as interest rate 

swaps, after there is trading in it, have to be reported in a timely 

way. It is called real time reporting, and I think that is very important. 

One of the things in AIG that happened that Congress addressed 

as well is AIG and their counterparties could not agree on the values after they entered into these transactions. For years there can 

be valuation disputes. So Congress weighed in, and I think it is a 

really important thing that lowers risk that these swap dealers 

have to share with their counterparties on a daily basis how they 

are valuing the contract for the years to come. 

And we have published some rules, and I know the Securities 

and Exchange Commission has as well, about that daily valuation. 

Mrs. EMERSON. That does sound like it is a stronger incentive to 

do the right thing, I guess. So between you and the SEC, well, the 

SEC has got about 100 new rules that they have got to get done, 

and you have probably a similar amount, but when Chairman 

Schapiro was up here the other day, she made clear that they were 

working through the rules on a very deliberate basis as opposed to 

just trying to get them all done, which I agree with. I think it is 


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much better to take your time and do it right because sometimes 

there are unintended consequences as we all know. 

So do you expect to meet your deadlines? 

Mr. GENSLER. No. 

Mrs. EMERSON. Okay. So what do you do then in the meantime? 

I mean, can you still implement sound policy without having a regulation to force that? 

Mr. GENSLER. What we have been able to do we do not have as 

broad a portfolio as the SEC. 

Mrs. EMERSON. Right. 

Mr. GENSLER. We really swim in this very deep lane called derivatives. We swam in the lane in futures. Those markets worked 

pretty well actually through the crisis. And now Congress has 

asked us to swim in a lane that is 7 times deeper, the swaps lane, 

but it is still derivatives. 

We have put together 30 topic areas to do rules in. We have published 28 of those 30. So we have a little bit of a natural pause 

here. There are more rules because sometimes we publish more 

than one rule on a topic, but I think we have published 42 or 43. 

We have a handful left. To answer your question, we think we 

will take up this entity definition, the end user exception, some 

process rules, and some rules that are actually just a little easier 

to get to, privacy and so forth, the definition of agriculture commodity. In the springtime we are hopeful, but we are not going to 

come to any rule until we adequately summarize public comment, 

we adequately get Commissioner feedback, and we adequately talk 

to other regulators and coordinate. 

So we, too, do not believe in rushing anything. There are the 

other rules that are going to come in the summer and maybe even 

into the fall that will be finalizing rules. So there is a July date 

in the statute. 

Congress has also given us, I think, important latitude to phase 

implementation. So even if we finalize a rule in May or June, it 

might be dependent upon another rule, in a sense, the product definition that the Chairman referred to. So we can finalize a rule and 

say, ‘‘But it is not effective until the other rule is finalized,’’ so that 

people have adequate time to know what the whole mosaic is, and 

then also have an adequate time to change their back office and 

technology and their spending. 

Mrs. EMERSON. Mr. Chairman, can I just ask one quick, quick, 

quick follow-up? 

Mr. KINGSTON. Yes. 

Mrs. EMERSON. So how does the exact process work where you 

and the SEC actually have to both agree on a rule and you have 

got five Commissioners and Mary has got five Commissioners? How 

does this all work? 

Mr. GENSLER. Well, if it is a joint rule, it cannot even be published in the Federal Register until both Commissions vote. So 

what we have done, Chairman Schapiro and I, I mean, I am closest 

with my three daughters and then maybe my fellow Commissioners, but then it comes to Chairman Schapiro and myself. We 

talk often. 

We come to a draft term sheet together. We try to socialize that 

term sheet with our Commissioners, get feedback, and then the 


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staffs start to write the document, and we try to share that full 

document with the ten Commissioners, get feedback, continue to 

negotiate. 

The proposals we try to schedule on the same day. Sometimes 

they are two or three days apart, but we—— 

Mrs. EMERSON. So how long does it take? Well, the easy ones, 

forget that. The more difficult? 

Mr. GENSLER. Well, the product definition rule, in part, is because it has to be joint. 

Mrs. EMERSON. Right. 

Mr. GENSLER. We are still socializing and negotiating. 

Mrs. EMERSON. All right. Thank you very much. 

Mr. KINGSTON. Mr. Farr. 

EFFECT OF CUTS IN FUNDING

Mr. FARR. I would like to sort of put this a little bit into perspective and have a better understanding of, you know, what we have 

been through. I mean, just the title you have of Commodity Futures Trading Commission, I do not think I have many constituents 

that really understand what that is and what you do. Yet they all 

know that we had a huge crisis in this country that sort of started 

on Wall Street, and it had to do a lot with exchanges. 

And out of that Congress had oversight hearings and came up 

with the Dodd-Frank and proposed that we really grow your regulatory role, and we are in the process of doing that, even in a field 

where people do not understand much about it. 

And yet there is already some push-back, that we should not be 

doing this. You are growing too fast, and I notice that in H.R. 1, 

which was the bill that passed the House, there was a $57 million 

cut in your existing budget for this year, 2011. 

What would that cut do, and who are your enemies out there? 

Who does not want you to be able to have a better regulated market? 

I mean, where I come from certainty is investment, and in politics all my life, local government, State government, and federal 

government, the rulemaking, the laws that we make essentially are 

to provide some certainty that bad things will not happen and that 

if you do these things and follow the rules, you will have a fair 

game, a level playing field. 

I thought it was interesting in your comment to the Chairman— 

you are both Chairman, but to this Chairman, our Chairman—and 

I would like to hear more about it, that essentially in the oil, 

whether the trading creates a higher price for gasoline, for oil, and 

your response was, well, our role is to make a level playing field, 

at least to have transparency so that the fairness of the game is 

understood. 

Mr. GENSLER. Right. 

Mr. FARR. So what happens if we get a $57 million cut out of 

your existing budget, plus do not give you the more, when, indeed, 

you are talking about a whole new world opening up there with derivatives and swaps and stuff that we have never really deal with 

in the past? 

Mr. GENSLER. Well, it depends somewhat when it would happen. 

If it were to actually happen in fiscal 2011 and we were to have 


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to go to $112 million funding for the whole 12 months, though we 

are six months into the year, we would not only have to go back 

to the head count that we had in 2008, which was about 440 and 

we are at 670 now. We would have to actually cut not just 230 people, but probably twice that because we are halfway through the 

year. 

It is arithmetic, but I mean, it is—— 

Mr. KINGSTON. If the gentleman will yield though, you have 

enough staff right now to write the rules. So we are not talking 

about the rulemaking. We are talking about moving from that 

point on. 

Mr. GENSLER. Mr. Chairman, you are absolutely right. At the $168 million funding, we have enough staff to write the rules, and 

they are talented, dedicated staff. 

To Congressman Farr’s question, if we were to actually go to $112 million, we would not have that. We would actually probably 

have to do a reduction of force of 60 or 70 percent of our people 

if it happened midyear for the full year. 

Now, that is just arithmetic, and I know that your question is 

more toward going forward. If we stayed at the 168—— 

Mr. FARR. Well, I mean, obviously as the Secretaries have said, 

if this cut takes place right now, your only ability is to cut personnel because you do not have time to do any planning. 

Mr. GENSLER. Yes, we are not an agency with grant money. So 

we really just have a little over 60 percent of our budget is staff; 

about 18 percent is technology; and 7 or 8 percent is space. You 

know, you have the leases. 

So if it were to happen in the middle of the year, and so that 

the markets that we oversee would not have an effective oversight, 

the exchanges work well in the futures market right now, but they 

work with an effective regulator called the CFTC. We would not be 

able to take up anything in the swaps marketplace, of course, and 

even our ability to oversee the future marketplace. 

I do not think the public could have the confidence in the futures 

market at $112 million. 

Mr. FARR. There would be less certainty and more speculation 

and more risk, and so on. But what about who are your enemies? 

Who does not want this to happen? 

Mr. GENSLER. Well, I think that we are a good investment to the 

American public. I think that it helps because transparency levels 

the playing field, and all of the companies that want to get certainty can work in a marketplace that does not have manipulation 

and fraud and has competition. 

It does shift some of the information advantage from large institutional participants in the financial markets. 

Mr. FARR. Because of transparency. 

Mr. GENSLER. Because of transparency, and I think that is what 

Congress addressed in the reform bill, that there will be transparency and will lower risk through the use of clearing houses. So 

it shifts some of the advantage actually to the farmers and ranchers and energy users and the corporations and local governments 

in all your districts because they can rely on a market that they 

have more confidence that it is fair. 

Mr. FARR. Thank you. A good answer. 


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Mr. KINGSTON. Mr. Nunnelee. 

AUTOMATED SURVEILLANCE

Mr. NUNNELEE. Thank you, Mr. Chairman. 

Thank you for being here. I am new and I am still learning, but 

I do bring my experience in private business. 

In your budget request you request funding technology to automate surveillance. What kind of surveillance are you going to be 

conducting and when does it stop? 

Mr. GENSLER. The surveillance we do now, we are fortunate in 

the markets we do oversee to get the entire positions and the 

transactions on a next day basis. So, for instance, when the May 

6th events occurred, when the markets gyrated quite dramatically 

that day, the very next morning our staff was able to have the data 

files, very large data files, and use computers to look through them. 

But we also do surveillance in the cotton markets, the wheat and 

corn markets, as well as the financial markets, and meet as a Commission on a closed-door basis every Friday to hear from the surveillance staff. Sometimes it is a position limit violation. Sometimes it is something that is called a wash sale or trade practices. 

Sometimes it is a potential manipulation, and we have to dig into 

it. 

Most of the markets work well, but there are thousands of participants. So there is always somebody doing something I can tell 

you from the Friday meetings. So that is the nature of surveillance, 

and it gives confidence to the market that there is somebody looking closely at the markets. 

We also aggregate the data, and we try to put it out. Every Friday we put out something called a Commitment of Traders report. 

It is in the futures market. We would like to extend that to the 

swaps market, and a lot of the data you will see, whether it is on 

the nightly news or even members of Congress use it in their letters to us, quotes our Commitment of Traders report because it aggregates the data, and you start to have transparency that way as 

well. 

Mr. NUNNELEE. All right. So who monitors your surveillance? 

Who is looking over your shoulder? 

Mr. GENSLER. Well, you are, Congress. I mean, we welcome the 

oversight. I think it is a good thing for the American public. We 

have an independent Inspector General as well. We have, of course, 

annual audits. 

And in terms of the surveillance of the markets, the exchanges 

themselves have a self-regulatory function, and we do rely on them 

often as a first line of defense as well, that the markets themselves, 

the Chicago Mercantile Exchange and the Intercontinental Exchange and so forth. 

Mr. NUNNELEE. I am reminded of a store we had in Mississippi 

40 or 50 years ago. The governor sent prisoners from the penitentiary in Parchman, MS up to Little Rock to get mules. They were 

trustees in the penitentiary. So he felt comfortable doing that. 

Well, they made it to Little Rock and enjoyed their freedom, and 

instead of coming back home, they went on to Texas. Eventually 

they were apprehended, but the governor made the observation. He 

said if you cannot trust the trustees, who can you trust. 


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So I just think it is important that I ask that question. 

A final question. As you are adding automated surveillance, 

other companies in the marketplace are replacing personnel with 

automation, and that is the way they are achieving efficiencies. But 

you are asking for money for additional automation for surveillance 

as well as additional personnel. Why can’t you make do in the 

same manner that private business is doing all over America? 

Mr. GENSLER. It is an excellent question, but if I can analogize, 

our market share is growing. We cover something called the futures marketplace that has existed for about 150 years, but we do 

not cover the swaps marketplace that existed for 30 years, and 

those are both in this lane of derivatives. And so we are being 

asked by Congress to take on something about seven times the size 

of what we are taking on now. 

So thus, we have asked for about a doubling of technology and 

45 percent increase in staff. I wish it was just all technology, but 

it still takes some people to oversee the markets and bring the 

Ponzi scheme cases and the like. 

Mr. NUNNELEE. All right. Mr. Chairman, I have got other questions about personnel, but I will get those in the next round. 

Mr. KINGSTON. Mr. Bishop. 

SWAP EXECUTION FACILITIES

Mr. BISHOP. Thank you very much. 

I am interested in exploring the line of questioning that Mrs. 

Emerson had started. As part of the Dodd-Frank bill, swaps trades 

are required to be done through the swap execution facility, a swap 

SEF. Most market participants will then have to register with the 

CFTC, namely, swaps dealers and major swaps participants. 

As I understand it, swap execution facilities will be regulated 

jointly by the SEC and the CFTC. If this is correct, I am curious 

to know how the oversight will be divided and who will have the 

final call when issues arise. 

How do you plan to avoid the issues of regulatory arbitrage and 

agency sapping by the regulated entities? 

With the budget situation being as difficult as it is, to what extent are you going to cooperate with the SEC to create and maximize efficiencies and to avoid redundancies? 

Mr. GENSLER. We are working very closely with the Securities 

and Exchange Commission at all levels. What Congress did, and we 

are following is to draw a bit of a dividing line. So some products 

will be clearly regulated by the SEC if it relates to a single security 

or a basket of securities. 

We are a regulatory agency that oversees risk markets, and they 

oversee capital formation and investor. The risk market’s interest 

rate swaps would just be, for instance, over at the CFTC, hedging 

of risk of an interest rate moving up and down, as would the oil 

markets and agricultural markets. 

So mostly it is just divided by product, and that will avoid a lot 

of, as you say, the regulatory arbitrage. I wondered if I might say 

one other thing. We will regulate the swap dealers. We estimate 

there may be in the order of 200 or so legal entities that will be 

swap dealers. In some cases there will be three or four in the same 


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bank. So it is actually fewer than the 200, and for major swap participants we estimate just a handful. 

The tens of thousands of users of these products we will not be 

directly regulate. 

Mr. KINGSTON. Thank you, Mr. Bishop. 

END USERS

Mr. Gensler, getting back to my question on what an end user 

is and, therefore, who qualifies for the end user exemption. 

Mr. GENSLER. In the statute if somebody is not a financial entity 

and is using the swaps for commercial hedging, they do not have 

any requirement to use a clearing house. So we published a rule 

in the fall. It is one of those that we hope to try to finalize in the 

early phase. 

And we gave more clarification. We in essence said if this commercial firm is hedging an input, hedging a liability, hedging something now or in the future, hedging a currency, we gave a long list 

of things; you are out. I think we were broad enough, but we got 

a lot of comment letters, and we will still summarize those comment letters, but the congressional intent as we understand it is 

if you are not a financial entity and you are hedging something, almost anything—the Congress did not say what—then you do not 

have to use a clearinghouse. 

To go further, Congress separately gave authority in regulating 

the dealers, these maybe 200 or so swap dealers, to set margin at 

these swap dealers; that the swap dealers might collect or pay margin to lower risk in the system. And as we move forward with this, 

we only oversee the non-banks and the SEC similarly the nonbanks, but it is our intent to try to publish this in April, but consistent with congressional intent in the clearing requirement, these 

end users would be outside of the margin requirements as well. 

SEQUENCING

Mr. KINGSTON. Well, this slowly gets us back to Mr. Bishop’s and 

Mrs. Emerson’s question in terms of the sequencing of the rulemaking because we do have people telling us that these definitions 

are not set quite clearly enough for them to comment because they 

are not sure which direction they are going in. 

And one of the statements, and I am not sure what the independent estimate came from, but CFTC said that the cost benefit 

analysis for confirmation portfolio reconciliation and portfolio compression rule was going to be $2,400 an entity, but one study said 

it actually could be millions of dollars per entity. 

And then for regulations establishing and governing the duties of 

swap dealers and major swap participants, the CFTC said it should 

be about 11 percent of one full-time employee, but an independent 

study showed it could be as many as five employees would need to 

do that. So it is a pretty big difference. 

Mr. GENSLER. One of the things that we have directed staff to 

do is to summarize all that we hear from the public on cost benefit 

analysis, a very important part of our rulemaking. In fact, it is in 

our statute itself, the Commodities and Exchange Act, to do cost 

benefit analysis. 


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The best place to hear it from is actually market participants, 

and before we move forward on any final rules, we will be not only 

summarizing them but considering them, and each of the five Commissioners will take that into account. 

Some of those facts and figures you mentioned might be also that 

we also do estimates in the paperwork reduction piece of rulemaking. So I am not sufficiently familiar with each of the estimates 

in each of the rules for this hearing, but sometimes the commenters address that. 

MAJOR SWAPS PARTICIPANT

Mr. KINGSTON. Okay, and then major swap participant and a 

substantial position in swaps, what are those definitions? 

Mr. GENSLER. A substantial position in swaps is in the statute 

only as it relates to this definition of major swap participant. 

Mr. KINGSTON. And that is the smaller group that is regulated 

like a dealer but does not deal in it? 

Mr. GENSLER. That is correct, and it is really meant to be a very 

small group that might have a systemic effect on the whole country. The numbers—— 

Mr. KINGSTON. Those are the major kind of name brand Wall 

Street firms? 

Mr. GENSLER. The major Wall Street firms are most likely to be 

dealers. I mean, they have been dealing in the trillions of dollars 

of swaps. I think that—— 

Mr. KINGSTON. Who are some of the names of them? 

Mr. GENSLER. Of dealers? 

Mr. KINGSTON. Of a major swap participant. Just who are some 

of those? Are those household? Because if I understood you now, 

you are saying swap dealers are more the kind of Main Street/Wall 

Street dealers. 

Mr. GENSLER. That is correct. That is correct. 

Mr. KINGSTON. And so who would be the major swap participants? And does everybody know where they fall at this point? 

Mr. GENSLER. Tens of thousands of people know because they are 

not. The two or three or four who think they might be have been 

coming in either to the Securities and Exchange Commission and 

CFTC to comment on the role and even at the end of the day they 

might not be. You know, it is really just that few. 

Mr. KINGSTON. Okay. And my time has expired, but getting back 

to the Emerson-Bishop line of questioning on these definitions and 

on the sequences of the time, because you are looking at so many 

rules, I think what we were kind of moving toward is, well, which 

rules do you really think will be in place, and when and which ones 

will not, but we can have another round on that. 

Mr. GENSLER. Okay. I think I could address it for any member 

whenever you wish. 

Mr. KINGSTON. Mr. Farr. 

PROBLEMS RELATED TO DERIVATIVES

Mr. FARR. Well, go ahead. I mean, it seems to me, I mean, I am 

pretty naive at all of this, but I mean, swaps are a general term 

for all kinds of instruments, derivatives, and all, and it is just an 


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exploding market. I mean, you indicated that it is how many bigger 

than the futures market? 

Mr. GENSLER. About seven times the futures market. 

Mr. FARR. And growing exponentially? 

Mr. GENSLER. It is growing pretty quickly. 

Mr. FARR. And, therefore, this is a whole new area that we are 

getting into and regulating, right? 

Mr. GENSLER. That is correct. 

Mr. FARR. And so people are saying, well, go really slow and do 

not spend a lot of money to do it, and others are saying we are way 

behind. Get as many referees in there as you can, and it seems to 

me at least you are able to defend the request. 

I would think that it is not even near enough because what we 

have not been talking about, it has been pretty technical, but all 

of the Ponzi schemes that have been broken up, and perhaps you 

ought to talk about some of the enforcement and why is it that people do not want this to be regulated? 

I mean, you said that there are some big actors in there that 

they know how to play the game, but in the process there may be 

some injury, uncertainty, a lack of transparency, and people get 

hurt. And the people you talked about getting hurt are the small 

people, are the farmers and producers. 

Mr. GENSLER. Well, I would actually go further. The people who 

got hurt were the American taxpayers. I mean, there is over seven 

million people still out of work that do not have jobs. 

Mr. FARR. Not all because of the futures market though. 

Mr. GENSLER. No, but a lightly regulated company called AIG 

was very heavily involved in the swaps market and it was ineffectively regulated, and it was a big gap in our regulatory structure. 

It was not the only reason for the financial crisis. We had an asset 

bubble. We had a lot of things going on in the housing markets, 

a lot of things, but the swaps market played a critical role in this 

crisis, and millions of people are still out of work and other millions 

of people have homes that are worth less than their mortgages. 

Mr. FARR. Well, much less the pensions lost, the tuition for their 

children. I mean it is the tragedy of all of these kinds of Ponzi 

schemes which happened all around me. I mean, in my area it is 

dramatic the number of people that were taken. 

Mr. GENSLER. So we currently in our enforcement area bring 

cases called Ponzi schemes where somebody is putting themselves 

out as an investment advisor but usually using an investor’s money 

to defraud somebody else and saying, ‘‘I have got these returns.’’ 

And we bring dozens a year, and usually in the foreign currency 

area. You see them also in the commodity space. We only do that 

in futures. We do not have oversight yet to the swaps marketplace. 

It is a very important thing. 

We are asking for resources in our enforcement area. We have 

about 165 to 170 people. Right now our 2012 request is to take that 

to 235 people, about 65 more people in that area because of the expansion of the marketplace. 

Congress also gave us new authority in the anti-manipulation 

area that will help in markets, in the energy markets and the like, 

for the first time; that we would have a broader anti-manipulation 

authority as well. 


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Mr. FARR. How could you step in and tell somebody who might 

speculate on these oil prices that you might be able to, with your 

rules and regulations, be able to step in if, indeed, it was doing 

something that is not authorized? 

Mr. GENSLER. We picked up in the manipulation area some authority similar to what the Federal Trade Commission and FERC 

and the SEC have to pursue what is called fraud based manipulation. 

Mr. FARR. Enron. 

Mr. GENSLER. Well, historically we have had a price based manipulation authority, and I think Congress saw that what the 

FERC, and the FTC, and the SEC had might be good for us to have 

as well, and so it is basically if somebody is using fraud to manipulate the markets. We have a proposed rule out, we have not finalized that yet, but it is a broadening of our authority that I think 

will be important in these markets. 

Mr. FARR. Thank you. My time has expired. 

Mr. KINGSTON. Mrs. Emerson. 

Mrs. EMERSON. This is really hard to do in five minutes, Chairman. 

Mr. KINGSTON. We will have lots of rounds. 

INTERNATIONAL

Mrs. EMERSON. I know. I know. Okay. Let me just ask you one 

more question. With regard to AIG, this is not my line of questioning, but Mr. Farr’s question prompted my interest. 

With regard to AIG, do you believe that if we had not gotten rid 

of Glass-Steagall that AIG would have been able to engage in the 

types of activities it did? 

Mr. GENSLER. I think AIG probably started their Financial Products Unit before that law was passed. 

Mrs. EMERSON. Before. 

Mr. GENSLER. If I remember the history, and that AIG was an 

insurance company. So I think, respectfully, I think they were already in this. 

Mrs. EMERSON. Okay. I just wanted to know. 

Mr. GENSLER. I think. 

Mr. KINGSTON. And if the gentlewoman will yield. 

Mrs. EMERSON. Yes, sir. 

Mr. KINGSTON. It was AIG, London primarily, wasn’t it? 

Mr. GENSLER. AIG Financial Products was in Connecticut and 

London. It happened to be that the head of it was in London. You 

are correct, but they had personnel both in Greenwich, Connecticut 

and London. 

Mr. KINGSTON. And I was going to follow that line later, but I 

just wanted to—— 

Mrs. EMERSON. No, no, no. that is okay because I am going to 

go back to something else. 

Mr. KINGSTON. Because one of my questions does have to do with 

you are dealing with multinational countries, and a Dodd-Frank 

here might not help in Germany, for example, you know, or a company that is located in Germany or London. 

Mrs. EMERSON. And I was actually going to ask, and we can 

share the time and then you can give me extra. [Laughter.] 


rfrederick on DSK29S0YB1PROD with HEARING
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So all of the regulations that we will put in place to try to at 

least know what is going on better in the marketplace, you are coordinating it with your counterparts in the G20 countries? 

Mr. GENSLER. Yes, we are. We actually had a group of 18 different countries join a CFTC conference just two days ago, but that 

is just an example. I will be in Brussels next week. I am able to 

take my daughters. It is vacation, too, but I am going to go to Brussels and Paris and coordinate more there. 

We are making very good progress. The European parliament is 

taking up a bill actually this spring to do things very similar to the 

derivatives portion of Dodd-Frank, not the other portions, but derivatives. 

TECHNOLOGY

Mrs. EMERSON. All right. Because obviously, the more coordinated we are, the more opportunity we have to prevent another 

meltdown like we had before. 

Let me ask you about the flash crash last year and/or algorithmic 

trading, which is a word that I have trouble saying. I know that 

the committee that you all set up with the SEC suggests that regulators need to be more forward thinking toward these emerging 

trends, and so my question is: do you have the tools necessary to 

keep up with, you know, every new trend that emerges? 

Mr. GENSLER. Frankly, not yet. What has happened in the last 

ten years is the markets have increasingly gone electronic. I mean, 

the American public thinks of the floor of the New York Stock Exchange or the floor of the Chicago Mercantile, but now well over 

80 percent, about 85 percent of our futures markets we oversee are 

electronic trading. That does not mean they are algorithmic, but 

they are electronic. 

And so we have to enhance our technologies, as other members 

have said, but also our people to stay abreast of that and to aggregate that data and properly surveil that data. 

Mrs. EMERSON. Yes, and I think you did a good job in going 

through the new investment in technology and really going through 

step by step by step, but interestingly enough, my subcommittee, 

we just had Vivek Kundra of the CIO for OMB and really for the 

entire Government and the GAO and GSA to talk about technology 

and the fact that we have squandered billions and billions and billions of dollars. 

And so my question is with this very detailed plan that you have 

for new investments in technology, has that, number one, been coordinated through OMB? I mean, one of the things that Kundra 

told us is that, you know, you are wanting to do this. We know 

about the flash crash that happened last May-ish or whenever it 

was, and the fact is that it takes so long to get the new plans 

through OMB and/or all of the people that you need to get it 

through that when you get your new equipment, if in fact it is the 

right thing, then it is going to be obsolete already, and so obviously 

they are trying to make a lot of changes, and I applaud that greatly. 

But is this all coordinated, I mean? And have you coordinated 

with the private sector? Because obviously if you need to do something that can keep up with what is being traded on Wall Street, 


rfrederick on DSK29S0YB1PROD with HEARING
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then private sector expertise is the best thing for you to use at 

least for ideas. 

Mr. GENSLER. Right. So we do coordinate with OMB and the $66 

million request and the details behind that with OMB. The actual 

implementation as an independent regulator, and this is true at 

the SEC, we are not then going back on every contract with them. 

Our coordination with the private sector is very real, especially 

on data feeds. We are going to need to link data feeds to these data 

repositories, and I think it was good that Congress said the data 

could actually be held outside of our agencies. The SEC, CFTC, we 

do not have to build the data repositories, but we have to build 

links and then Congress actually included something I really like. 

It said those data repositories have to provide us direct electronic 

links, but we still have to build them, pay for them, make sure that 

the computers can talk to each other. 

Mrs. EMERSON. And how long do you anticipate this is going to 

take? 

Mr. GENSLER. I think it is a multi-year process, and the reason 

is, of course, we have to finish the rule writing, which I think hopefully we will do this year. We are human. I mean, the date is July, 

but some of this is going to be well into the fall, and I think that 

the data repositories then have to get up and running and we have 

to, working with you, get appropriate funding. 

I mean, a lot of it is a funding challenge as well. 

Mrs. EMERSON. Well, Mr. Kundra did say that they are really 

trying to push everybody toward cloud computing because it is 

much, much more efficient, much faster, and certainly a lot cheaper, and that way you do not have to build entire, huge IT systems 

for yourself, but rather you can use the cloud computing or the 

Internet based platform, if you will. 

Mr. GENSLER. Well, in this case, though I would not use his 

term, I think Congress had foresight in saying there could be outside data repositories. They can charge others for that data service, 

but they have to have a direct feed to the regulators so we can look 

into that data and have transparency to police the markets. 

Mrs. EMERSON. Okay. I appreciate that. Thanks. 

Mr. KINGSTON. Mr. Bishop. 

Mr. BISHOP. Thank you. Along those lines, earlier you mentioned 

the resources, and you compared and contrasted the resources you 

have, the resources that you’re requesting with the resources of the 

entities that you’ll be regulating. 

Could you kind of go back through and kind of lay that out 

again, to make it clear? Because it appears that even with what 

you’re requesting to accomplish, particularly with the IT—and I 

think you talked about the investment that the commercial entities 

are putting into their IT, which makes yours really look antiquated, that, you know, you’re going to have all you could do to 

keep up with it, even if you got what you’re asking for with personnel and IT updates. 

So I’m really wondering, how are you going to assume that we 

go through this process? Will you effectively be able to keep up, 

and do what you’re charged with doing, without being so far behind, because they’re expending so much more resources on the 

best IT, so that they actually can run faster than you can. 


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Mr. GENSLER. Right. The Commission has a technology advisory 

committee chaired by one of our Commissioners, Scott O’Malia. 

And recently, they reported to us, as to a lot of technology issues. 

But the TAB group talked at that—that’s an outside consulting 

group—and said that they estimate the brokerage industry spends 

$20 to $25 billion per year on their technology. We spent $31 million last year. We spent less than the industry 

spends in a few hours. 

Mr. BISHOP. I’m sorry, the industry spends how much? 

Mr. GENSLER. $20 to $25 billion a year. 

Mr. BISHOP. Billion. And you spend $25 million. 

Mr. GENSLER. And we spent $31 million last year and $20 million this year under the—so my math isn’t quick enough, but it’s 

probably what they spend in, you know, five to ten hours. 

The point is not the relationship, the point it is a very large industry with hundreds of thousands of employees, and millions of 

transactions per day. We’re not asking for more than $66 million in that category. I 

know that your challenges are enough that we won’t ask for more 

than that. 

But what we’re looking to do is try to build over a number of 

years the pipelines, the interfaces with these outside data repositories. The outside data repositories will probably be spending very 

many multiples of what we’re doing. 

And I think Congress had foresight. Let the outside build the 

data repositories. At least, we have the data links, and then we 

have to build the software. That $66 million, the increase of about 

$35 million, most of that is for software applications, to build the 

applications to do, in essence automated alerts into the data; but 

let somebody build the warehouses, and so forth. 

Mr. BISHOP. Yeah. But you also got to have the personnel to analyze that, once it’s captured. 

Mr. GENSLER. That is correct. And the personnel in some circumstances to bring enforcement actions. 

Mr. BISHOP. Exactly. 

Mr. GENSLER. Because judges want people in front of them, not 

computers, of course. 

Mr. BISHOP. Right. So unless you get all of that, you still can’t 

do what Congress had mandated that you do? 

Mr. GENSLER. It’s a large market. We have excellent staff. But 

I am in front of this committee, suggesting if, with your help, that 

we try to build the resources to be sufficient for the mandate that 

we have. 

Mr. BISHOP. You’re so diplomatic. Thank you. 

Mr. KINGSTON. Mr. Nunnelee. 

CONSUMER EDUCATION

Mr. NUNNELEE. Thank you, Mr. Chairman. 

In your testimony, you talked about enhancing consumer education, consolidating consumer education, and protection functions 

into a single office. Can you elaborate about what that would entail? 

Mr. GENSLER. We had shrunk in our staff in the last decade. And 

this is something that a number of the Commissioners and I have 


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talked about for the last couple of years, that we really would want 

to have a dedicated function here. 

We’re a little different than the Securities and Exchange Commission, where there’s a broad investor public. But still we think 

there’s a role to play to help the public understand and protect 

themselves against fraud and Ponzi schemes—basically bad actors 

out there, pretending to make a return—like Bernie Madoff did in 

a very bad way—but pretending to make a return, investing in foreign currency or in commodities. 

And so it would be a very small office. We could get the exact 

numbers. I just don’t recall them. But Mark Carney, our Chief Financial Officer, is here, and maybe could help me while I’m sitting 

here. I can’t remember the exact numbers in the office. 

[Discussion was held off the record.] 

Mr. GENSLER. Yeah, so it’s initially three to five people in the office. 

Mr. NUNNELEE. How will you go about communicating this information to the consumers? 

Mr. GENSLER. We haven’t stood up the office yet. So we think it’s 

a very real need to have the office. We also have a new whistleblower responsibility, or authority, that we have to stand up, as 

well. 

So I think some of those plans are yet to be formulated. But certainly, we’d have to leverage with just a few people. We’d have to 

leverage the Internet and leverage, you know, public messaging 

that way, so that people can better understand and protect themselves. 

Mr. NUNNELEE. All right. And then you’re asking for roughly 300 

new employees? 

Mr. GENSLER. That’s correct. 

Mr. NUNNELEE. My concern is this first step, and you’ll be back 

next year, asking for more, and it’s going to lead to more buildings 

and leases, and equipment, et cetera. Can you help me with concern? 

Mr. GENSLER. We’ve included in the budget what we think is 

adequate space in leasing. I feel quite good about that. 

In terms of the people, if I could use an example. We currently 

oversee fourteen clearinghouses. A clearinghouse stands between 

two parties to these transactions, so that if one of them defaults, 

the taxpayers don’t have to pick it up, basically. 

I mean, that’s the core of what Congress said. 

We expect that to grow to 20 or 21 clearinghouses. We already 

have the six knocking on our doors. I mean, this is not just an estimate, that is a guess. I mean, actually I could name them for you, 

and so forth. 

And so the example, as we have about 40 people currently, who 

oversee those 14 clearinghouses. It’s growing by 50 percent. We 

think we need 70. That’s 30 more people. 

And so the detailed budget goes through each of the areas’ estimates. We’re trying to be like a businessman. And I grew up, my 

dad had a small business. And I was on Wall Street for 18 years. 

We’ve tried to sort of think through in each place these numbers. 

And that’s just one example. 

Mr. NUNNELEE. All right. Thank you, Mr. Chairman. 


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Mr. KINGSTON. Thank you. 

OWNERSHIP LIMITS

Mr. Gensler, I wanted to ask a little bit about a question specifically about the Lynch amendment, which was added to the DoddFrank bill in the House on a narrow vote. It has to do with CEF 

ownership limits. And it was not in the original bill. And then it 

fell out in conference. 

But I understand that you guys are pursuing it, even though it 

wasn’t part of the final package. Is that correct? Or what are you 

guys doing on it? 

Mr. GENSLER. The final bill included Senate language, that specifically is a provision on conflict of interest. Over there they might 

call it the Senator Sherrod Brown provision. 

But conflict of interest was in the bill. And so the SEC and CFTC 

made proposals in the fall with regard to ownership limits. And 

we’re still sorting through those comments. But it does have ownership limits on swap execution facilities, as the chairman asked, 

where no one party could have more than 20 percent ownership, 

but there’s no aggregate limit. 

Mr. KINGSTON. Well, if it was specifically rejected by the Senate, 

then isn’t that a statement that they did not want that? Are you’re 

saying, ‘‘Well, they dropped it because it was elsewhere in the bill’’? 

Mr. GENSLER. No, actually the conflict of interest provision, I believe all of the rules we’ve proposed are consistent with what Congress has asked, and certainly we’re looking for your comments and 

the public comments, so that the final rules will be different. 

They’ll change, based on those comments. 

But this area, Congress spoke specifically to conflict of interest, 

and it explicitly talks about ownership limits. It doesn’t set any of 

those limits. It leaves it to the regulators to make proposals. And 

so—— 

Mr. KINGSTON. Yeah. Why don’t we both go back. Because I’m 

confused on that. As I understand, it did pass the House, but it 

was rejected by the Senate, and so maybe we could figure out why 

it was rejected. 

Mr. GENSLER. Right. It’s correct that it’s not—it was a different 

provision from the Senate. 

Mr. KINGSTON. And here’s what I’m concerned about. These businesses are almost liquid, you might say. They rent facilities, their 

offices. But their product, if anything, is somewhat in their head 

and on their computer and in their laptop. 

And if our regulations get to be too onerous, they’re multinational, they close up in America, they reopen elsewhere. And at 

the 2009 G20 meeting, it was discussed that we’ll all walk together 

and be in sync. 

But elsewhere you’ve said we’re going to be ahead, and maybe as 

much as a year and a half or at least a year ahead on rules and 

regulations. And it would appear to me during that gap, that 

American-based companies would be at a competitive disadvantage 

internationally, because they would be living under, you know, the 

brand new set of rules that their international counterparts don’t 

have to abide by. 


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Or they could just say, ‘‘Well, you know, there’s a lot of money 

to be made in that one-year period of time. Let’s just relocate for 

a year and see what happens.’’ 

And you know, we see this in lots of industries, when the regulatory burden gets too much in America, they move. But this group, 

since they really don’t have plants and machinery and huge labor 

issues, they can transplant pretty quickly. 

Mr. GENSLER. U.S. companies, I believe, will benefit from the 

provisions in Dodd-Frank. Markets work best when they’re transparent, open, and competitive. 

The Wall Street firms, to which I think you may be referring, 

whether the Wall Street firms—I mean, tens of thousands of American companies will benefit from what Congress has done and the 

rule-writing the SEC and we are doing. 

The Wall Street firms—you’re right—may say, ‘‘Well, maybe I 

can move to London, or Frankfurt,’’ or something like that. Well, 

in fact, the way the bill was written, it says, ‘‘If you’re dealing with 

a U.S. party, you’re still covered.’’ 

So if they want to deal from London with a U.S. customer—you 

know, somebody in your district in Georgia, they still have to make 

sure that is reported and it’s transparent, and it comes under, you 

know, the various protections. 

Mr. KINGSTON. But there still would be the tax advantage of 

being elsewhere, right? 

Mr. GENSLER. I’m not going to swim outside my lane. I’m not an 

expert on taxes. 

Mr. KINGSTON. We do that all the time, Mr. Chairman. 

Mr. GENSLER. I’m trying not to, I’m trying to just say—this derivatives lane is pretty deep. 

Mr. KINGSTON. Well, my time has expired. 

Mr. Farr. 

FUNDING CUTS

Mr. FARR. Did you see the movie, Inside Job? 

Mr. GENSLER. I have not yet seen it, but I understand it won an 

academy award. 

Mr. FARR. It won an academy award. And when I saw it, I was 

just appalled. I think Congress looked pretty good in that movie, 

because we were doing our oversight job. But I’ll tell you, the administration—and not just the government administration—but 

certainly the administration of Wall Street and enforcement and all 

that, just seemed to be asleep at the switch. 

And everybody, I mean, people were just so disgusted, walking 

out of that movie. Like ‘‘What happened?’’ 

I mean, this committee doesn’t have jurisdiction over SEC. But 

Congress does. And Congress enacted the Dodd-Frank. You’re only 

a portion of that. 

But I want to go back to H.R. 1, because our House has taken 

the stance of cutting $57 million out of your budget. That’s existing 

this year’s budget. Not even talking about the new increase of 139 

million. 

If indeed we’re not going to cut those for the SEC—because we’ve 

seen the movie, Inside Job, and we know that’s where most of the 

knowledge about exchanges exist, and where people’s 401ks and all 


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those things that they follow are there—in essence, you’re really in 

kind of esoteric field. 

And as I understand, you really don’t have that many players. 

I mean, people who do this are a small number, compared to the 

people that play in the stock market. 

So there’s just probably more transparency, because the press 

covers it, because people take an interest in it. 

Mr. GENSLER. Mm-hmm. 

Mr. FARR. So what happens if we cut your budget—I mean, Congress, this House has voted to do that—and that may portend to 

what may come out of the next year’s budget, where they cut $57 

million, or they don’t give you your $139 million increase. 

And you’ve indicated that it’s a lot of speculation going on here— 

there’s Ponzi schemes going on. Does it suggest that perhaps if we, 

having seen Inside Job, that we’re going to regret not giving you 

the resources that you need, because there’s going to be more 

fraud? 

Mr. GENSLER. I think it does. I think it’s a little bit like the patient who doesn’t take the daily tab that the doctor says to take. 

You don’t know when you might regret that you haven’t taken 

your Lipitor, or something. 

We’re a very small, as you said, possibly esoteric Agency. We 

cover this deep but important market that all across this great 

land, people can rely on these markets to get certainty and make 

their investments. 

I agree with you, the regulatory system and the financial system 

both failed the American public. That’s why millions are still out 

of work, and the economy still has challenges, such great challenges. 

I agree with you that it’s hard sometimes to connect what we do 

with the American public. My 84-year-old mother sometimes asks 

me this. 

But I do think that if we were cut 35 percent in funding, this 

year halfway through the year, we’d have to cut two-thirds of our 

staff, and we could not ensure confidence in these markets, and the 

confidence in the pricing of oil, the confidence in the pricing of 

wheat, cotton, corn, interest rates, currencies. 

And those run throughout the country’s economy; they’re important for investment, for job growth. 

But we’re somewhat esoteric, as you say. 

And you might not see it immediately. It might take some time 

for the problem to emerge. It might be well past this Congress before it emerges. 

Mr. FARR. And it’s your market that controls the energy futures, 

not the stock market. Right? 

Mr. GENSLER. It’s our oversight of those markets that relates to 

the price of gas at the pump, yes. 

Mr. FARR. Well, it seems to me, Mr. Chairman, that it’s pretty 

scary if we don’t give them the tools they need, in light of what 

we’ve just experienced, that if, indeed Congress has enacted the 

laws to ensure better oversight, better transparency, a more fair 

playing field, that we need to hire the referees to go in there to 

make the game played right. 


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So I would hope that when we do adopt our budget this year, our 

appropriations bill, that we will give you the money you’ll need to 

hire the referees. 

Mr. KINGSTON. Ms. DeLauro. Or Mr. Bishop. 

Mr. BISHOP. Ms. DeLauro. 

IMPORTANCE TO THE ECONOMY

Ms. DELAURO. Thank you, Mr. Chairman, and thank you, Mr. 

Bishop and Mr. Farr. My apologies to you, Chairman. The Labor, 

Health, Human Services and Education Subcommittee just completed its hearing, so I’m sorry to be delayed. 

But I welcome you and thank you very, very much for the good 

work and efforts that you have been making in this area. 

It used to be that the work of the Commodities Futures Trading 

Commission never saw the light of day in the not-too-distant past. 

But we clearly now understand its functions and what it does and 

its ability to deal with speculation and oil, et cetera, and a whole 

lot of other areas, which are critically important to our future economy, and the regulation of the markets here against fraud. 

Now you may have answered this, so I just will be very quick. 

And that is about the cut to the FCTC funding, $112 million. 

My view is that would cripple your ability to police the markets, 

and you’d would be impaired, less able to deal with high-risk traders, et cetera. 

And Agency staff—and if you have answered this, I apologize, 

but then answer quickly—Agency staff that would have to be furloughed or terminated, what percentage of your staff? 

Mr. GENSLER. If it happened mid-year, about two-thirds of our 

staff would have to be RIF’d. 

Ms. DELAURO. Okay. And what’s the number that’s attached to 

it? 

Mr. GENSLER. Oh, I’m sorry, we have about 675 people we’d have 

to get down into the low 200’s. 

Ms. DELAURO. Hundreds, got you. Okay. 

Mr. GENSLER. And again, if it happened mid-year for the full 

year. 

Ms. DELAURO. Yeah. 

Mr. GENSLER. If it was only for the remaining part, it would be 

different. 

Ms. DELAURO. Impact. The agency’s work on Ponzi schemes—I 

know Mr. Farr mentioned that—would it be more difficult to find 

the next Bernie Madoff? 

Mr. GENSLER. I don’t think that we would have an ability to find 

any, small or big. I think if we had to a 60 to 70 percent head 

count reduction, the 200-plus people left would have such low morale, we could not give Americans confidence in our oversight. 

Ms. DELAURO. You couldn’t get there from here? 

Mr. GENSLER. No, we’d have to rebuild the morale. 

Ms. DELAURO. Okay. 

Mr. GENSLER. We’ve never been an Agency that small. 

Ms. DELAURO. Mm-hmm. 

And what about the implementation of the Dodd-Frank Wall 

Street reform? 


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Mr. GENSLER. If we stayed at the staff we are currently at, we 

can finish the rules, but we can’t effectively oversee the markets. 

If we were, as you say, cut, we would even have a challenge there. 

Ms. DELAURO. You couldn’t even then—okay. 

Mr. GENSLER. Well, I’d stick around. And the Commissioners 

would be there. A little harder to read all the comments. 

Ms. DELAURO. No, no. But I’m just saying is with regard to 

Dodd-Frank, you really couldn’t get anywhere with it, if you’re cut 

at the level that’s being discussed? Or passed in H.R. 1? 

Mr. GENSLER. Yeah. I mean, we’d dust ourselves off and we’d 

continue to effectively read comments and try to do the rule-writing 

Congress has asked us to do. But it would be delayed. 

Ms. DELAURO. All right. 

A question on a key component of the Wall Street reform is that 

it will require data collection, publication through the clearinghouses to improve market transparency, provide regulators with 

important tools for monitoring and responding to risks. 

If CTFC does not have adequate resources, would this mean that 

the data would go uncollected and unpublished, and thus continue 

what caused the problem, a less transparent market? 

And if you’re unable to monitor and respond to risk, because of 

funding cuts, what kind of environment does this create in terms 

of those who would abuse the system the way that some have, and 

have allowed them to prosper, but create havoc? 

Mr. GENSLER. It’s why this is such a good investment, I believe, 

for the American public—in this large country, to expend what 

were asking for, as the President asked for $300 million—is a good 

investment. 

So we can do that data collection, so we can monitor the markets, 

so we can publish data, as we do in the futures market, on a weekly basis. 

For the first time, people could see what’s the aggregate positions 

in the swaps markets in oil, in natural gas, and cotton? 

Nobody can see that right now. It’s not doable. 

Ms. DELAURO. And we would not be able to see that? That would 

be the impact? 

Mr. GENSLER. We need adequate resources to be able to do it. 

Ms. DELAURO. Resources to be able to do it. That was my next 

question. 

Mr. GENSLER. To aggregate it and publish it. 

Ms. DELAURO. So that’s that. Right, so less—they’re being registered, regulated, there’s transparency peace in that. 

Mr. GENSLER. A big transparency peace. 

Ms. DELAURO. Mm-hmm. 

Mr. GENSLER. And markets work best when they’re transparent. 

Ms. DELAURO. And would the swap dealers, could they operate 

outside the clearinghouses? Would we know? 

Mr. GENSLER. Well, I think the law is very clear that they have 

to operate with clearinghouses; but we wouldn’t be able to monitor 

or oversee them. 

Ms. DELAURO. Mm-hmm. 

Mr. GENSLER. Those clearinghouses or the dealers. 

Ms. DELAURO. How do you think the derivatives market would 

be impacted? 


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Mr. GENSLER. I think that the derivatives marketplace will work 

best if there’s an effective and well-funded Agency, because I think 

it instills confidence in the users of the products. 

I think when there’s not, and there’s less confidence, many of the 

companies in your district and every district, state governments, 

then would have to guess whether the market’s going to work for 

them. 

So when it’s a fair market, it’s a level playing field, and it’s 

transparent, free of manipulation and fraud, there’s more use of 

the market, people can get price certainty; it’s really an important 

factor to grow an economy. 

Ms. DELAURO. Mm-hmm. 

Mr. GENSLER. It’s part of our modern financial system. 

But the I think the derivative markets—I’m saying it in the positive—will benefit by a well-resourced CFTC, even still, we’re talking about a relatively small agency—you know, the 980 people and 

the $66 million of technology is relatively small compared to the 

hundreds of billions of dollars—I mean, the financial industry, the 

top 25 banks holding companies in the America have $800 billion 

of revenues. 

So you can give a sense of, you know, the size we are, compared 

to the financial industry. 

Ms. DELAURO. Mm-hmm. Let me say thank you to the chairman, 

but thank you, Mr. Gensler, again for your work. And I for one 

want to make sure that you get the resources that you need, because it seems to be addressing the specific issues that got us into, 

you know, this financial crisis. 

And seems to me that if we would abrogate our responsibility if 

we didn’t use the resources to provide you with the tools that we 

need to make sure it doesn’t happen again. 

Thank you. And thank you, Mr. Chairman. 

Mr. GENSLER. Thank you. 

Mr. KINGSTON. Mr. Bishop. 

Mr. BISHOP. I’ll pass. 

MARGIN REQUIREMENTS

Mr. KINGSTON. Mr. Chairman, I wanted to find out a little bit 

more in terms of the margin requirements on end-users—and I’m 

not sure if there’s ambiguity about it, or not, but because I know 

this was another issue that was debated on the floor—as I understand it, that you have ‘‘exempted some end-users from clearing 

and exchange trading requirements, but not issued a rule governing margin requirements for non-cleared and non-exchanged 

traded swaps.’’ 

Is that correct? 

Mr. GENSLER. It’s very clear in my mind and amongst our Commissioners, because I’ve testified on behalf of them, that when we 

publish a rule—and we hope to do this in April—that consistent 

with Congressional intent, that these commercial end-users would 

not be brought up or caught up into this margin rule. 

We only cover the non-bank swap dealers at the CFTC. But with 

regard to the ones we cover, that’s where we are. 


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RULEMAKING

Mr. KINGSTON. Okay. 

You probably have this somewhere, but just to kind of sort out 

the rules, as I understand, in Dodd-Frank, there were 21 mandatory provisions, and there were 31 discretionary provisions. And 

you have identified 31 areas for proposing rules. 

You had mentioned earlier there were something like 42. And 

were those rules? Or are those provisions? 

So I guess what I need to know is: In 21 versus 31 versus 42, 

what is what and what is your sequence? 

Mr. GENSLER. Okay. All good questions. 

When the President signed the bill, we went through it, and we 

identified 30 topic areas. It was a good way to inform the public. 

A topic area could be like clearinghouses, for instance. 

And we published that on our website, and we took public meetings, and we’ve had at least 600 public meetings, and about 3,000 

comments from the public, even before we made any proposals. 

We knew that Congress gave us 12 months, and we’re human, 

we’ll be beyond that 12 months when we finish. But so we thought 

we’d take the first six or seven months, and try to put proposals 

out there, just like this Congress puts proposals out and gets feedback. 

And so we have successfully working with the public and the 

SEC and others put out just over 40 proposals in 28 of those topic 

areas. 

Again to use clearinghouses, we decided to actually put the proposals out, and I think it was four different proposals. Most of 

them were a just a proposal per topic area; but a couple of times 

we split it, just as a committee might split their work. 

We’re going to consolidate those clearinghouse ones later, when 

we go to a final rule. But we put them out separately, so that we 

can get public comment. 

The comment periods have been very helpful. We have public 

roundtables. If somebody, for instance, still had a comment on a 

rule where the periods closed, we have discretion to still take that 

comment, and we have been putting those comments in the comment file. 

In sequencing the final rules—I know this was an earlier question of yours, Mr. Chairman—on sequencing the final rules, we 

think three things will have to happen before we move on any of 

them: 

One is that we actually summarize the public comments sufficiently on cost benefit analysis, on the law, on the policy, and so 

forth. 

Two is get Commissioner feedback. We’ve benefitted from wonderful Commissioner input, everybody thoughtfully engaging. 

And three is working with international and domestic regulators 

to get their feedback. 

And then putting a final rule out. We don’t see any final rules 

this month of March. I don’t think we’ll move any in April. 

I laid out in a speech yesterday—I was talking to Martin right 

before we came in, your staff director. 


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Mr. KINGSTON. The man who knows every line in the bill. 

[Laughter.] 

Mr. GENSLER. And I want to know him. 

That we’ve started to talk amongst the Commissioners about 

thinking about an early phase, a middle phase, and a late phase 

of finalizing rules. 

But this should not be confused with how they’re implemented. 

Because even if we just finalize something early, it could be implemented well out there. And two of them that we think we should 

move to finalize early are those that you’ve raised: 

The definitions for entities. 

Who’s a swap dealer? 

The end-user exception. 

You know, those are things that we would like to finalize early 

some time this spring, if we’re able to. If we’re not able to, we’ll 

do it later, obviously. 

But we think those are really important to move early. 

REGULATOR AND REGULATED

Mr. KINGSTON. One of the things that always is a concern of Congress, and members have different perspectives on it, is the regulator and the regulated. Sometimes there is an ivory tower view of 

the world by the regulator. Or is it a chummy relationship? 

And we need to have the balance. 

EPA recently or a year ago came out with a regulation 

classifying milk as oil, because there is some oil in it; and a dairy 

farmer would have to have an emergency response plan if their 

truck spilled milk, even on the farm. 

A little ridiculous. 

Chairman Obey, at the time, led the effort to get that clarified. 

It was a bipartisan feeling of Congress that it was a regulatory 

overreach. 

We’re having an issue right now regarding grain inspection in 

stockyard, the GIPSA rule, where the members of Congress on a 

bipartisan basis feel that there might be an overreach on the interpretation of what the Farm Bill called for. 

And that’s the balance that we’re concerned with, because this 

stuff is very technical, and you’re talking about being in your lane, 

you know. I always say Congress is the ultimate paradise for attention disorder, because you go from military issues to medical issues 

to education issues to this committee, from food stamps, to foreign 

programs, the FDA, to CFTC. 

And so we are several miles wide, and not as deep as we want 

to be. But that’s one of the things that we’re very concerned about, 

is to make sure that there is an appropriate balance, an arm’s 

length distance between you and the Wall Street firms, but at the 

same time that it is not ivory tower. 

And that’s just sort of a philosophical discussion. 

But my time is expired. 

Ms. DeLauro. 

Ms. DELAURO. I don’t have any questions, Mr. Chairman. But I 

would say with regard to that—and I would just say this about 

Chairman Gensler—that I think this is someone who understands, 

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stands what is needed in this crisis that we have been through, 

and how we might, in an appropriate way, if you will, address the 

issue. 

Now that may not make, you know, some of the folks happy. But 

it is not an ivory tower view of how we need to make sure that we 

don’t deal with the risk we’ve had over the years, and put some 

pieces in place that can prevent those things to happen together, 

how we might be able to make this a transparent market, how we 

can lower the risk factor, how we can ferret out those who would 

abuse the system. 

So I think—and I would have to believe—that while there could 

be some tensions, but that this is an instance, with the Chairman 

at that head of this Commission, that we are looking at what is 

real, and reality in terms of fostering the kinds of regulations that 

we are looking at, which is what leads me, and has led myself— 

and I know in a bipartisan way what we did was to talk about the 

resources that were necessary in order for this regulator, for this 

Agency, to be able to do the work that is being laid out. 

Otherwise, I think we find ourselves moving backward in a process, which really needs to have some certitude, and some realitybased initiatives that we can move forward on. 

Mr. GENSLER. I thank you. It’s good to see you again, too, by the 

way. Thank you for that compliment. 

One of the things we have done is we’ve decided early to post on 

our website every meeting we had, even if it wasn’t required to 

have, you know, that transparency. And it’s well over 600 meetings. 

And you will see, naturally—because large institutions tend to 

come and knock on the door more than investor advocates—that 

the bulk of those meetings are with either end-users, or the financial community, or the trading community, or hedge fund, and so 

forth. 

And we post all the meetings, the topics discussed, who’s there, 

and so forth. 

I think that’s been helpful to gain transparency, and I know that 

your staff could take a look at it to see. 

So we have a very open process. And then we’ve taken a commission that actually only had one public meeting a year for ten years, 

and we’re doing everything in public meetings, as you do. 

I mean, which I think is the right thing to do. 

And we have five Commissioners. I think we’re a benefit. I think 

the Commissioner structure is a good thing for America, that you 

have that debate and that sometimes there are differences. Hopefully we bridge those differences, you know, as best we can, in a 

bipartisan way. 

Mr. KINGSTON. Mr. Bishop. 

Mr. BISHOP. I have no questions. 

COMMODITY PRICES

Mr. KINGSTON. I wanted to get back—and I think this will be my 

last round—but you’ve probably heard this song before about the 

boll weevil. And there’s a line in it that the merchant got the cotton, the boll weevil took the rest. Nothing left for the farmer’s wife, 

but one old cotton dress, and it was full of holes. 


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And often, particularly for Mr. Bishop and me—and you know, 

we’ve gone to the MERC, we’ve gone to the Chicago Board of Trade, 

we’ve gone to New York, and there’s such a distance between them 

geographically and culturally and in other ways in terms of the cotton market might be good up in Chicago and New York, but it’s not 

good down home on the farm. 

And often it seems like the traders do well, but the farmer 

doesn’t benefit from it. And so can you comment on that? And right 

now, you know, my opening question was about gas, the price of 

gas. We are hearing from those who say that speculators are driving up the costs at the pump. 

And so talk to me about the benefit to the farmer and why 

they’re not always sharing in the price fluctuations. And I understand the hedge-in concept, but it still seems like sometimes they’re 

the afterthought. 

Mr. GENSLER. Yeah. Right. 

These markets at their core are about those producers and the 

merchants. So the cotton farmer, if we use that, to plant the crop, 

and even to buy the land, and know what you’re doing, you want 

to be able to say: ‘‘I need certainty on the price at harvest time.’’ 

I mean, that’s the fundamental core of this market. 

And in the oil markets, it’s very similar that the energy producer 

has some certainty, and the grain company has certainty of the 

market. 

And cotton is an example right now. There are those in the cotton markets that are very concerned. There’s been a great deal of 

volatility in the cotton markets recently as cotton’s moved up to 

$2.00 and so forth. 

Sometimes it’s up-limit. That means it goes up the limit of the 

day. Or down-limit the very next day. And it’s very difficult for 

them to hedge. 

So these markets at their core really have to work for that cotton 

farm, or that cotton merchant, wheat, corn, and soy in the agricultural markets; as well, even in the interest rate markets. 

Because their speculators have a big role in markets. The markets can’t be just solely 100 percent hedgers; you need somebody 

on the other side of the trade. 

Over the last ten years, speculators have taken a greater percentage of the market. As markets become more electronic, they become more global, there’s more index investment in these markets. 

And parties have started to think, ‘‘Well, maybe cotton is an asset 

class, I should invest in cotton’’—maybe not cotton specifically, but 

agricultural markets—the same way I invest in an emerging market debt. You know, it just becomes an asset class. 

So our role, this small Agency’s role, is to ensure that when those 

speculators and hedgers meet in a marketplace, it’s a fair and open 

market to police the manipulation—because there will be somebody 

in a marketplace, someplace, that’s a bad actor—and make sure 

that they’re transparent. 

That’s the core of what we do, and why I think we’re a good investment, so that cotton farmer can have the certainty and greater 

confidence in a market than sometimes you would have, given the 

volatility. 


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And as say, there are such great geographic and cultural distances between that cotton farmer in Georgia and New York. 

And so we help, I think—we don’t bridge that gap completely— 

but we help build confidence in the market that they’re fair and 

transparent. 

Mr. KINGSTON. Mr. Bishop and I might invite you and your 

daughters to do a little South Georgia tour with us sometime. 

Mr. GENSLER. I’d be honored to go. 

Mr. KINGSTON. I know the girls would find that interesting. 

Mr. Bishop. 

Mr. BISHOP. I have no further questions. 

Mr. KINGSTON. Well, Mr. Gensler, thank you very much for your 

testimony today. Thank you for the time. We will stay in touch and 

be talking. 

Mr. GENSLER. Yes. And I thank you for our consideration of a 

budget request that I know is difficult with the American deficit, 

that we’ve actually asked for more money. So I thank you for your 

consideration. 

Mr. KINGSTON. The two-year ask is going to be a problem. But 

we want to work with you, and we don’t want to derail things. But 

we do want to have some input and watch the rules as they go 

along. 

And that’s why the sequencing is important. And I will be following up with some written questions on that. 

Mr. GENSLER. And if you’d like, I’d be glad to come up and walk 

you through the sequencing and lay out some charts, if you think 

that would help you. 

Mr. KINGSTON. That might be a good idea. 

Mr. GENSLER. All right. I look forward to that. Thank you. 

Mr. KINGSTON. Well, thanks a lot. 

The committee stands adjourned. 


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WEDNESDAY, MARCH 30, 2011. 

FARM AND FOREIGN AGRICULTURAL SERVICES 

WITNESSES 

MICHAEL T. SCUSE, ACTING UNDER SECRETARY FOR FARM AND FOREIGN AGRICULTURAL SERVICES 

JOHN D. BREWER, ADMINISTRATOR, FOREIGN AGRICULTURAL SERVICE 

VAL DOLCINI, ACTING ADMINISTRATOR, FARM SERVICE AGENCY 

WILLIAM J. MURPHY, ADMINISTRATOR, RISK MANAGEMENT AGENCY 

MICHAEL YOUNG, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE 

OPENING REMARKS

Mr. KINGSTON. Seems like everybody had the great idea that 10 

o’clock Wednesdays was the proper time to have all hearings. So 

people are picking and choosing and Mr. Farr is on his way. Folks 

will kind of come and go. Your testimony has been submitted, so 

you are welcome to sum it up. 

But I will turn the gavel over to you, but have a couple of comments that I wanted to say on the outside. With our budget situation, increases in budget are going to be very difficult to come by. 

And so I think one of the things that we are going to be doing with 

you through this process is, you know, are there areas that you can 

reduce and if not, there might be people who will reduce it for you. 

So it is always better if we sit down at the table and talk. 

And with that, I will go ahead and yield the floor to you, and the 

committee will be in order, and we will go ahead and convene. 

OPENING STATEMENT

Mr. SCUSE. Thank you, Mr. Chairman. Mr. Chairman and members of the subcommittee, I am pleased to be with you today to 

present our 2012 budget and program proposals for the Farm and 

Foreign Agricultural Services—FFAS. And accompanying me today 

on my far right I have William Murphy, who is the Administrator 

of our Risk Management Agency. To my immediate right I have 

John Brewer, who is the Administrator for the Foreign Agricultural 

Service. To my immediate left is Acting Administrator for the Farm 

Service Agency, Val Dolcini. And to my far left, I have Michael 

Young, the Director of the Department’s Office of Budget and Program Analysis. So these are the gentlemen that will help me today 

hopefully answer the questions that are posed to us. 

Mr. Chairman, we appreciate the difficulties of today’s budget 

environment and the need to reduce the Federal deficit as you 

spoke to in your comments. We have reviewed our programs and 

developed budget proposals for 2012 that will streamline agency 

operations, improve efficiency, and reduce our administrative costs. 


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Turning first to the Farm Service Agency—FSA, the budget request for salaries and expenses for FSA reflects our focus on 

streamlining processes, investing in more efficient systems, and 

evaluating our internal costs to maximize efficiency. The total request for appropriated sources is $1.7 billion, a net increase of $143 

million over the 2011 annualized continuing resolution level. Within the request is a decrease of $41 million to be achieved 

through a proposed reduction of 504 Federal staff-years, a decrease 

in funding for non-IT service contracts, and a decrease for travel 

and relocation expenses. FSA has taken aggressive action over the 

past several years to reduce discretionary administrative expenditures and will continue to do so during 2012. The budget also provides increases of $60 million for civil rights settlement costs and 

$2 million for new initiatives to improve tribal relations. 

For critically needed information technology improvements, the budget includes increases of $96 million to continue the agency’s 

Modernize and Innovate the Delivery of Agricultural Systems initiative, or as we call it MIDAS, and $26 million to support the Department’s effort to modernize and upgrade the common computing 

environment for the service center agencies. 

FSA also plays a critical role in our Nation’s agricultural producers by providing a variety of direct loans and loan guarantees 

to farm families who would otherwise be unable to obtain credit 

they need to continue their farming operations. The 2012 budget 

proposes a total program level of about $4.7 billion, reflecting credit 

usage forecast at the time that this budget was developed. In 2012, the Crop Insurance Program provided about $78 billion 

in protection on 256 million acres. I think that shows the importance of the Risk Management Agency—RMA. Our current projection is that indemnity payments to producers on their 2010 crops 

will be about $3.5 billion on a premium volume of just over $7.5 

billion. Our current projection for 2012 shows the value of protection will rise considerably largely due to commodity price increases. For salaries and expenses of RMA, $82 million in discretionary 

spending is proposed, an increase of $2 million above the 2011 

annualized continuing resolution amount. The request includes additional funding for maintenance of the RMA IT system. 

Our Foreign Agricultural Service—FAS, I would like to turn to 

FAS, the lead agency for the Department’s international activities 

and the forefront of our efforts to expand and preserve overseas 

markets and foster global food security. The 2012 budget is designed to ensure that FAS has the resources needed to continue to 

represent and advocate on behalf of American agriculture on a 

global basis and create new market opportunities overseas. The 

budget provides a program level of $236 million, an increase of $49 

million above the 2011 annualized continuing resolution amount. 

The budget provides an increase of $20 million for FAS trade expansion and promotion activities as part of the National Export 

Initiative. The FAS budget includes funding of $14.6 million for the 

management and support of the Department’s participation in reconstruction and stabilization activities, including Provincial Reconstruction Teams in Afghanistan and Iraq. 

For the International Food Assistance Program, the budget includes appropriated funding of just under $1.9 billion, including 


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$200 million for the McGovern-Dole International Food for Education and Child Nutrition Program and nearly $1.7 billion for 

Food for Peace Title II grant food assistance programs. 

Mr. Chairman, I thank you for the opportunity to present our 

2012 budget and program proposals. I would be pleased to answer 

any questions that you and other members of the subcommittee 

may have. 

[The information follows:] 


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Mrs. EMERSON [presiding]. Thank you very much. 

Ms. DeLauro, did you have a statement that you wanted? Questions you wanted to start with? Go ahead and start with your questions. 

Ms. DELAURO. Thank you very much. Good morning and welcome, Madam Chair, and I welcome all of you to the subcommittee. 

It is good to see you. 

FOOD AID PROGRAMS

And what I want to do is to talk a little bit about the nutrition 

international food aid programs. The budget maintains funding for 

Food for Peace at the 2010 program level but trims the McGovernDole program from $209.5 million in 2010 to $205 million for 2012. 

However, the House continuing resolution proposal cut Food for 

Peace by $687 million and McGovern-Dole by $109 million. That is 

a 42 percent cut. 

According to some estimates, the cuts would eliminate over 15 

million people from the Food for Peace Program and an additional 

21⁄2 million food aid recipients would be dropped from McGovernDole. We are talking about almost 18 million people being dropped 

from the food aid programs. 

And McGovern-Dole is about children and particularly about 

girls. The importance of these programs cannot be emphasized 

enough, in my view. The Food for Peace Program targets communities where there is persistent hunger; 30 percent or more children are undernourished. Reductions in the programs would severely limit our ability to provide assistance in response to conflicts, to drought, and to other disasters, and we know that this has 

serious national security implications. Reductions in McGovernDole will prevent many young girls from attending schools. 

Given the proposed cuts, given the fact that world food prices are 

increasing dramatically again, can you outline what kind of impact 

this would have on world hunger and how would the cuts impact 

our national security efforts? And I might add that we are feeding 

some of the poorest and hungriest people in the world. 

Mr. SCUSE. Thank you. I think that you yourself very eloquently 

outlined what would happen should these cuts be put in place. And 

I think you recognize the fact that over the years we have been 

able to serve about 28 million people through McGovern-Dole. Projections for this next year we would be able to feed, if we receive 

their funding, about 5 million children in the world. So it would be 

a dramatic impact on our programs should we see cuts of that nature. 

The only thing that I can say—— 

Ms. DELAURO. Let me just ask you to be more specific about that 

because you are on the front lines. You know what is going out. 

Let’s talk a little bit about that impact. 

Mr. SCUSE. If I may, I think I would like to reiterate what Secretary of State Clinton said in a letter to the House Appropriations 

Committee just a couple of months ago, that cuts to foreign operations in humanitarian assistance accounts would be devastating to 

our national security and damage our leadership around the world, 

that coupled with the fact that there would be many people around 


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the world that we wouldn’t have the ability to provide assistance 

for. 

As you and members of the panel know, today for the first time, 

there are approximately a billion people today that are hungry, 

that are in need of some sort of food assistance. 

So today, I think our programs are more important than ever before. And unfortunately, that number probably will grow. So we 

need to be able to provide all the assistance that we possibly can. 

Ms. DELAURO. Well, I hope you will work with us to speak out 

against what this 42 percent cut will mean to 18 million people. 

And quite frankly, it is probably the bulk of the people are women 

and children. 

Mrs. EMERSON. Will you yield to me for just a second? 

Ms. DELAURO. Absolutely. 

GLOBAL HUNGER

Mrs. EMERSON. I am very concerned about this issue myself. And 

I wonder, has USDA actually put together any numbers on connections between hunger and the growth in radical organizations 

around the world? In other words, I mean can you actually quantify, are you able to quantify? 

Mr. SCUSE. I have not seen any work that we have done in 

USDA that would actually quantify that. But there are those that 

believe that there is a direct correlation between those areas of the 

world where there is extreme hunger and the potential for terrorist 

activities. 

Mrs. EMERSON. So given the fact that you stated just a moment 

ago that we will see a rising need for more food because of prices 

and perhaps some other external challenges going on, how can your 

Department respond, if necessary, given the state of the budget requests? 

Mr. SCUSE. I mean, we are looking at using all of the tools that 

we have available to us to respond to the growing needs of those 

around the world where we are facing extreme shortages for food. 

And one of those areas, one of the things that we are doing in a 

government-wide program is our Feed the Future Program, where 

USDA has targeted five countries in two regions of the world to 

bring together our programs not just in the USDA but across government to help us look at how we are delivering assistance. 

Can we do a better job of delivering food assistance? And if you 

don’t mind I would like to turn to Administrator Brewer, who is 

Administrator for the Foreign Agricultural Service, for a bit more 

detail on food assistance. 

Mrs. EMERSON. I am happy to do that and I will give you your 

time back since I stole it, but I wanted to continue the line of questioning. 

Mr. SCUSE. It is a very important issue and we appreciate the 

opportunity. 

Mr. BREWER. Yes, ma’am. I just wanted to add something to 

what the Secretary amplified, some of the things that the Under 

Secretary said. 

Again, while we do not ourselves do projections on global hunger 

trends, we do follow it closely via the work of the Economic Research Service within USDA as well as our work with Food and AgVerDate Mar 15 2010 01:57 Sep 24, 2011 Jkt 068236 PO 00000 Frm 00313 Fmt 6601 Sfmt 6602 E:\HR\OC\A236P2.XXX A236P2

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riculture Organization—FAO—in Rome who follow these things. So 

through our work with them, we do get some idea and some updates on this. Again, we don’t follow it, we don’t produce those ourselves, but we do try and get that input and apply that as we use 

our food aid programs and as we look and try and target our countries and priorities. So we do get that input. 

Mrs. EMERSON. Ms. DeLauro, you have probably time for another 

question. 

NATIONAL SECURITY

Ms. DELAURO. I would just add this. I think the national security 

aspect that Congresswoman Emerson has talked about and which 

has to do with—I am back from Afghanistan where we are looking 

at how we are trying to stave off militarily the Taliban. And I 

think there is an adage here and I don’t care where you are and 

where you go, if you can’t feed yourself and you can’t feed your kids 

and you have some organization, be it a terrorist or nonterrorist organization help you and assist you with that process of feeding 

your children, you are going to take advantage of it. 

So I believe we can both tap into both the Department of Defense 

and the State Department that will confirm that there is a relationship between the hunger issue and the issue of security and accepting assistance from wherever you can get it. Clearly I think 

each one of us here if our kids were in jeopardy and we had the 

opportunity to get food for them, we would take it and do that. 

So I think one has to consider both of these pieces. It is just 

not—to feel good, you know, if you can’t do this on the humanitarian side of it and look at that aspect of it with 18 million people 

who would be—and I have a problem with your cutting back on 

McGovern-Dole right out. But dealing with 18 million people, most 

of whom are women and children, is a problem. But then take a 

look at it from a national security emphasis. 

And I thank the gentlewoman for her comments. I will come back 

in a second round with other questions. 

Mrs. EMERSON. Thank you, Ms. DeLauro. 

Mr. Graves. 

Mr. GRAVES. Thank you, Madam Chair. 

Mr. Under Secretary, I appreciate you being here. Thank you for 

your presentation. 

FUNDING LEVELS

Could you help us a little bit with understanding the relationship 

with the requests for this year in comparison to 2010, 2008? We 

have been looking from an office perspective and haven’t been able 

to find that difference. So what is the total request for 2012 and 

then maybe what was it in 2010 and 2008 and what are the 

variances there? 

Mr. YOUNG. Bear with us one minute. 

Mr. GRAVES. Sure. 

Mr. YOUNG. Okay. Sir, what I have here available is the enacted 

level for 2008. That is about $3.1 billion for this entire mission 

area. For 2010, that number is $3.9 billion and for the 2012 budget 

it is $4.0 billion. 


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Mr. GRAVES. Okay. That is great. Thank you for sharing that 

with me. 

FUNDING REDUCTIONS

And the reason I ask I think everyone knows the situation we 

are in as a nation fiscally and this committee has been working extremely hard, as I am sure you have as well, to find out where we 

can operate more efficiently and effectively as a government. 

And part of our objective and ultimate goal is to try to move back 

to those 2008 levels, and that looks like that would be a considerable reduction as well for you but probably falls in line with sort 

of my questioning. And that is as each agency has come before us 

I ask them all if they would help us, if they would work with us 

and if they would be willing to look to see how they can operate 

and accomplish the core mission but with reduced resources in the 

amounts of 10 percent and 20 and 25 percent to allow the subcommittee an opportunity to work with you in a partnership at how 

you can accomplish your missions. But we cannot make those decisions for you. And most have been very willing and cooperative and 

already communicating back on with our office. 

So I guess the question for you is would you be willing to do that 

to help us a little bit and provide some options as to how you could 

accomplish your goals and missions at a reduction of 10, 20, and 

25 percent budgets. 

Mr. SCUSE. Thank you for the question, Congressman. A little bit 

about my background. I was Secretary of Agriculture for the State 

of Delaware and, as you recognize, the states have been reducing 

budgets for a number of years. So I have been part of the process 

to reduce budgets and reduce spending. 

This administration, I think you all are aware, supports cutting 

spending and doing it in a measured way, making reductions over 

a period of time so that we will have the ability and our stakeholders will have the ability to absorb those cuts. So the answer 

to your question is yes. I mean, we are looking for ways to reduce 

the spending, but do it in a way that we can all live with it. 

We also believe that the sacrifice needs to be shared by all. And 

if I may at this time point out that our mission area at USDA, 

FFAS, through the Risk Management Agency, has already provided 

$4 billion in deficit reduction with the renegotiation of the Standard Reinsurance Agreement—SRA. So we have stepped up to the 

plate, Congressman. 

Mr. GRAVES. So did I understand you to say yes, you would help 

us and provide us with alternatives in how you could reach those 

three goals for us as a subcommittee? Doesn’t mean we will lock 

you into any of those, but it gives us a working document with 

which to work from. 

Mr. SCUSE. We will look at ways to work with Congress to reduce 

our budget. 

Mr. GRAVES. Particularly this subcommittee, I hope. 

And just to follow up, you are right about it is being shared by 

all because this question is being asked to all. And we would hope 

that all would work with us on this because I can assure you that 

if those choose not to, we will have to do it ourselves and we would 

rather be a working partner with you. And as I have done with 


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each, I have a letter to submit for the record here, of which I have 

asked this request to the chair. If that is okay, Madam Chair. 

Mrs. EMERSON. Without objection. 

[The information follows:] 


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Mr. GRAVES. Thank you, Mr. Under Secretary. 

Mrs. EMERSON. Mr. Farr. 

Mr. FARR. Yes. I just for the new members of this committee one 

of the things you might want to use in this back shelf is the explanatory notes that goes into all the details of each Department 

and what the expenditures are line by line. It is a very, very good 

background for looking at the intricacies of a hundred billion dollar 

agency. 

AGRICULTURE PAYMENTS BY STATE

Thank you very much for your presence here. I read your testimony and you start out by thanking us for the $117 million that 

was spent on IT last year. Can you break out with that all of that 

new IT what essentially the domestic and foreign, the two sort of 

arms of your agency, how that trickles down to the products, to the 

ag crops that are grown in each of our congressional districts? 

Mr. SCUSE. A breakdown per cost per congressional district? 

Mr. FARR. How much aid comes in by—because in all due respect 

to all of the price and income support and the farm credit assistance, it doesn’t go to everybody. 

Mr. SCUSE. We can provide you with a breakdown for dollars per 

your district, but overall, if you look at our IT costs, especially for 

the—— 

Mr. FARR. The point is there is a lot of discussion in your testimony about how good this new IT is and how you are working on 

getting everybody trained and essentially implementing it all for 

greater credibility, a lot of discussion about implementing configuration changes but very little on what the products are that you 

could produce that you couldn’t produce before. 

One of the difficulties—you have been a State ag commissioner. 

California is still the leading ag State. We produce over 400 crops. 

Most States don’t even come close to that. I produce 85 in my one 

county. $4 billion. We don’t get much help at all. In fact, I can’t 

tell the farmers you know what does USDA do for us in this county 

with $4 billion in agriculture, because it is specialty crops, not commodity crops. 

And I think there is a lack of understanding of exactly how you 

help on the ground. And coming from a State in all of those different counties that you had to manage, I am very interested in 

how the breakdown—Washington is very bad at being able to tell 

Members of Congress what we do for you. Government is here to 

help. Well, then tell us what you are doing. 

Mr. SCUSE. Congressman, we will be more than glad to provide 

you a breakdown. 

[The information follows:] 

Because of the nature of IT investments, we are not able to provide you with a 

state by state breakdown of the benefit that these dollars convey. We can, however, 

provide you with a state by state programmatic breakdown of the payments that 

we are able to make as a result of those IT investments. The table follows. It represents outlays made during FY 2010, which are not necessarily the same as obligations made during FY 2010. 


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Mr. FARR. I would like to know by crop and by congressional district; if not, at least by State and by crop. 

FSA IT MODERNIZATION

Mr. SCUSE. Okay, and if I may address part of your question 

with IT. We are in the process of our modernization project, which 

is MIDAS. Our county offices are dealing with technology and 

equipment that dates back to the 1980s. 

Mr. FARR. I am not questioning that. I am all for IT. 

Mr. SCUSE. Okay. I must have misunderstood part of the question, Congressman. 

Mr. FARR. No. You thanked us for the money and you are doing 

it. I am just wondering what can we get out of it. How is it going 

to be useful for this committee and for members of this committee 

to be able to go back home and explain to people what all of these 

programs are that are—the farm loan programs. The administration is thinking about putting out new regulations on homeowner 

mortgages and loans and things like that that require a 20 percent 

down payment. How much is required for your direct loans that the 

lender has to put in for your direct loans for farm families? 

DIRECT FARM LOANS

Mr. SCUSE. Congressman, I don’t believe that our lenders are required to put down anything for our direct loans. And I think you 

understand the importance of those loan programs to our producers. 

Mr. FARR. Does the same size fit all, different States have different values of—I mean, you can’t get into farming in California 

without a million bucks, but I don’t think anybody would qualify 

for these loans. 

Mr. SCUSE. And you are right. Our programs are targeted to the 

family farms, the smaller family farms. But in all the States—— 

Mr. FARR. We have small family farms; it is just that the real 

estate is so expensive. 

Mr. SCUSE. But the real estate is so expensive in your State, and 

we understand that. But our programs are targeted towards those 

producers who are unable to obtain credit from commercial lending 

institutions. 

Mr. FARR. Could we see what States, how that boils out by State 

breakdown? 

Mr. SCUSE. Yes, sir. Not a problem. 

Mr. FARR. I also want to do it for the other—— 

Mr. SCUSE. Administrator Dolcini. 

Mr. DOLCINI. Most recently, I was the State Director in California of the Farm Service Agency there. And over the last couple 

of years and really prior to my tenure, we have done a really good 

job I think in our counties—and you have got two service centers 

in the 17th Congressional District—about reaching out to socially 

disadvantaged—SDA—farmers in California. And fully 40 percent 

of our loan portfolio in the State of California, which for the last 

fiscal year was around $120 million or so, went to SDA borrowers. 

So the folks that work in the Salinas office and the Hollister office and other offices up and down the State and really many ofVerDate Mar 15 2010 01:57 Sep 24, 2011 Jkt 068236 PO 00000 Frm 00332 Fmt 6601 Sfmt 6602 E:\HR\OC\A236P2.XXX A236P2

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fices around the country have done a great job in reaching out to 

new customers. 

Mr. FARR. That is great. I want to know about it. I am the Congressman who represents that district, and I still don’t have that 

information. So how many loans and if it is public as to who is getting them, just give us the list. 

Mr. DOLCINI. We will get that to you. 

[The information follows:] 


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Mr. FARR. It would be nice to be able to brag about it. 

Mrs. EMERSON. Mrs. Lummis. 

FSA COUNTY OFFICES

Mrs. LUMMIS. First some questions about FSA. 

In Wyoming, there are only 17 FSA offices, and in States like 

Kansas, they are like Starbucks. There is one on every corner. So 

my question is, is there flexibility, if there are budget reductions, 

to close FSA offices in States that have FSA offices like Starbucks 

without affecting the States like mine where ranchers and farmers 

have to drive 100 miles to the FSA office? 

Mr. SCUSE. I understand what the appearance is, but it is also 

you deal with the number. It also has something to do with volume. 

And if you look at some of the areas where we have the higher concentrations of county offices, you are dealing with very large numbers of producers. And in your State you have few producers who 

control huge tracts. So that is part of the response. 

But our budget request does not include office closures for the 

2012 budget year. 

COUNTY OFFICE LEASES AND PROCUREMENT

Mrs. LUMMIS. Thanks. I met with some FSA employees a couple 

weeks ago, and they told me that they had lost the flexibility to 

renew county leases and that they can’t buy supplies from local 

non-listed vendors. They have to buy supplies from certified vendors. And across Wyoming, there are a lot of small communities 

that don’t have certified vendors. 

And can’t we provide local FSA offices the flexibility to renew 

their own leases and purchase goods from local vendors of their 

choice? Is there a cost savings to this? 

Mr. SCUSE. Thank you for bringing the first issue up anyway 

about the office leasing. 

My understanding is that issue was addressed in the 2008 Farm 

Bill—the 2002 Farm Bill—I had my years mixed up—where the 

authority was given through the leasing to GSA and taken from 

the Farm Service Agency to do those leases. So that authority was 

taken away from the Farm Service Agency and given to GSA. 

As far as the other issue with us, with our procurement of supplies, I can’t answer that question, but I assure you that we will 

look into it and see what that issue is. 

[The information follows:] 

All Federal Agencies, which would include FSA County Offices, are required to 

follow the Federal Acquisition Requirements (FAR) and its updates. In accordance 

with Agriculture Acquisition Regulations (AGAR) Advisory 97, the process for purchasing of goods and supplies is as follows: 

Through the Federal Strategic Sourcing Initiative (FSSI), the U.S. General Services Administration (GSA) has awarded 15 Blanket Purchase Agreements (BPAs) for 

office supplies. Thirteen of these BPAs were awarded to small business entities. 

Patronization of these BPAs represents a great opportunity for our agencies to 

achieve significant savings. By leveraging the buying power of the federal marketplace, the GSA Federal Strategic Sourcing Initiative has obtained discounted pricing 

on all office supplies, including paper and toner. Under these BPAs, discounts increase as the agencies procure more items. Beginning January 3, 2011, all Department of Agriculture office supply purchases must be made through the GSA Office 

Supply FSSI BPAs or USDA’s AbilityOne Supply Store, Paperclips Etc. 


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These new BPAs are easy to use, provide additional discounts to the negotiated 

prices already available on GSA’s Schedule 75 for office supplies, and provide the 

federal government with a fast and effective way to order, while ensuring prompt, 

cost-effective delivery and quality customer service. Additional benefits include: 

• ensuring compliance with applicable regulations, including the AbilityOne 

Program; 

• fostering new markets for sustainable technologies and environmentally 

preferable products; and 

• simplifying data collection and enhancing transparency by enabling agencies to better manage spending and cost savings for office supplies. 

For those purchases where the use of the BPA is not practical or emergency needs 

exist, the purchase card may be used within the limitation of the purchase card 

holder’s purchasing authority. 

FARM LOAN PROGRAMS

Mrs. LUMMIS. Thank you. As you guys know, there is rural and 

then there is rural. And in Wyoming we are really rural. A question about duplication of programs. This has to do with your loan 

program. 

Mr. Farr asked whether there was a down payment required for 

FSA loans. The answer was you don’t think so. 

Mr. SCUSE. We don’t believe so. 

Mrs. LUMMIS. What is the subsidy rate for the U.S. taxpayers on 

these farm credit programs? What is the interest rate, for example? 

Mr. SCUSE. The interest rates for our programs vary from direct 

farm ownership loans, 4.5 percent, joint financing would be 5 percent, and other farm ownership loans, emergency loans would be 

4.5 percent. 

Mrs. LUMMIS. The GSA, Farm Credit Services, doesn’t this duplicate what Farm Credit Services does, these USDA loan programs? 

Mr. SCUSE. No. 

Mrs. LUMMIS. Tell me the difference. 

Mr. SCUSE. We are lending money to borrowers who don’t have 

the ability to obtain commercial credit. 

Mrs. LUMMIS. Okay. 

Mr. SCUSE. They have been denied the ability to get funding 

from commercial banks. 

Mrs. LUMMIS. Even Farm Credit Services. If we get a preferred 

rate—you know normally if you don’t qualify for credit, you are at 

farm credit or something like that or a commercial bank, you would 

have to pay more for credit. And yet what we are saying is if you 

don’t qualify for credit, we will give it to you cheaper. So in other 

words, that seems to be a disincentive to good operators. 

Mr. FARR. Based on how much default you have. 

Mr. SCUSE. And I think if you will look at those costs or those 

interest rates, I think a lot of those interest rates are in line with 

the commercial banks now and what they are lending our producers money for. I think that cost is comparable. So I don’t know 

that we are giving a discount for those loans to those producers. 

Mrs. LUMMIS. Thank you. 

Madam Chairwoman, one more question, this one about trade, or 

should we wait around? 


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FARM LOAN DEFAULTS

Mrs. EMERSON. It would be helpful if you could give us information on the percentage of loans that default as well. You can get 

back to us on that. 

Mr. SCUSE. Thank you. We will be more than glad to provide you 

that. I think you will be very pleased to see our default, the rate 

compared to the commercial industry. We have done a very, very 

good job of managing our lending operation at FSA, and our default 

is extremely low. 

[The information follows:] 


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Mrs. EMERSON. Mr. Nunnelee. 

NATIONAL EXPORT INITIATIVE

Mr. NUNNELEE. Thank you, Mr. Secretary, for being here. 

Shift gears a little bit. The President has said the National Export Initiative that he wants to double exports over the next 5 

years. Obviously ag exports are going to play a huge role in that, 

and that is pretty important for the people I represent in Mississippi. 

Could you specifically talk about your agency’s role in achieving 

that goal and what resources you are going to need to achieve that 

goal? And then in general, talk about the role that ag exports will 

play in achieving that goal. 

Mr. SCUSE. Thank you. Agriculture exports we believe are part 

of the safety net for our farmers and ranchers throughout the 

United States, not just for the work that Farm Service Agency does 

or the Risk Management Agency, but our exports are vital to keeping our farmers and ranchers productive. I think you have probably 

all seen the numbers, the projections for this year. We are projecting trade, agricultural trade at $135.5 billion, which is above 

the record year of 2008, which was $114.9 billion, by $20 billion. 

So agriculture trade is going very, very well. We work very hard 

to open up doors for our commodities that our farmers and ranchers produce, break down barriers, work with other countries to develop free trade agreements. 

So to give you more specifics on what we are actually doing with 

those, I will let the Administrator, John Brewer, give you some 

more specifics on exactly how we accomplish that. 

Mr. BREWER. Thank you, sir. 

Congressman, there is not a whole lot to add to what the Under 

Secretary said. Basically again through our export promotion programs, we are contributing to the National Export Initiative— 

NEI—effort. We are certainly collaborating very closely with other 

members of the President’s export cabinet, Treasury, Commerce, et 

cetera, to work to make sure that we as a government achieve that 

goal of doubling exports by 2014. Agriculture plays a part of that 

role, and certainly we are doing all we can to contribute to it. 

Within the 2012 budget requests, all of you have seen the effort we have, which is the additional $20 billion to deepen and broaden 

our efforts to continue to work toward achieving the goal of doubling exports. And I can get into more details if you would like during the course of the rounds with the committee. 

Mr. SCUSE. But it is just not the work that we are doing here 

in Washington as well. We have 98 offices in 75 countries. We have 

staff overseas to help us deal with the issues and facilitate trade. 

If there are issues in a foreign country, we have staff there to address those issues as soon as they arise so that we can get our 

products moving again in other countries. So it is a broad effort to 

facilitate trade for agriculture products. 

Mr. NUNNELEE. Thank you, Madam Chair. 

AGRICULTURE TRADE

Mrs. EMERSON. Coming from an agricultural district myself, the 

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ing exports by as much as you possibly can. What concerns me, 

however, is the non-tariff barriers. And that is something we 

should probably discuss and how you coordinate with FDA and the 

like on phytosanitary/sanitary regulations, all of those barriers, in 

spite of having a very laudable goal of increasing exports. 

Mr. Latham. 

Mr. LATHAM. Thank you. Just to kind of follow up with that. 

How much difference is there in bushels exported? What happens 

when there is worldwide restriction of supply? The U.S. is kind of 

a supplier of last resort. Prices are very high. How much is the increase in price related rather than bushel related? 

Mr. SCUSE. To give you an exact dollar amount I can’t at this 

time comment on exactly what that breakdown would be. I posed 

basically the same question because my concern was, okay, are we 

getting the increase in trade simply because we are getting the additional price from the rising cost of the commodities. Corn, soybeans, cotton are at or near record highs. And the answer that I 

received was no. The $135.5 billion is not based just on price increases. It also comes from volume increases. 

Mr. LATHAM. Which is related to less worldwide supply obviously, and we are normally the supplier of last resort to a lot of 

these places. And as it is restricted elsewhere, we pick up and certainly with corn where it is, soybeans where they are today, that 

is a big part of the whole equation. I am not sure that we are actually shipping that many more bushels. 

Mr. SCUSE. I think we are. If you look at our trade with China 

last year as an example and the amount of soybean exports, we exported a record amount of soybeans to China last year. So we are 

exporting a tremendous amount of product. Personally, I don’t believe that we are the supplier of last resort. 

Mr. LATHAM. Well, historically we have always had increases 

with world shortages in the U.S. 

Mr. SCUSE. In a trip trade mission that I took to Peru last month 

going and visiting a feed company for the largest poultry producer, 

there was a mountain of soybeans there. And when I posed the 

question as to why because it was located so close to other countries, the response was because of the quality. We had the best 

quality and we were providing a product that had the best feed 

value for them. So we are producing great products here in this 

country. 

Mr. LATHAM. Did you ask them if they were Latham brand soybeans? 

Mr. SCUSE. Next time, Congressman, I will ask. And I will find 

out next time. 

Mr. LATHAM. Okay. Thank you. 

CROP INSURANCE

Mr. Murphy, with the Standard Reinsurance Agreement last 

year we have seen a lot of consolidation as far as local agencies and 

fewer agents out there. I don’t know if you have concerns about the 

consolidations and what that means to service to farmers. 

Mr. MURPHY. We haven’t noted that much consolidation going on 

out there. I pick up anecdotal information as well. I have not heard 

of any growers unable to find an agent. We have consolidations 


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within the program as a normal rule. Even in 2008, a year the 

companies made more money than any other previous year, we had 

major consolidation. 

Mr. LATHAM. You are talking about agents. 

Mr. MURPHY. Yeah. But I haven’t heard that much consolidation 

going on. I think what is going on is there have been some agencies 

being purchased by the companies, but not fewer agencies. But I 

will look into that. 

Mr. LATHAM. What do you see? We have a Farm Bill coming up, 

there is going to a big push by a lot of people to do away with direct events. There is going to be a much larger emphasis on risk 

management. Do you have any proposals out there? What do you 

see happening? 

Mr. MURPHY. With the upcoming Farm Bill? At this point our position has been to work with the committees on any questions that 

they have going forward. I know there is a lot of interest. 

Mr. LATHAM. Is that like a universal answer? I have been 2 days 

now with Transportation trying to figure out what they are going 

to do with the Highway Bill. We will sit down and visit. Okay. Let’s 

visit. 

Mr. MURPHY. There is a lot of interest out there. Producers, I 

think the program has improved tremendously for them. There is 

a lot of interest from the lenders to maintain crop insurance going 

forward. So I would expect that and we are prepared to meet the 

demand that is out there. 

Mr. LATHAM. Is there any discussion of the Department taking 

over risk management entirely from the private sector? 

Mr. MURPHY. None that I have been involved with, sir. 

Mr. LATHAM. I asked the Secretary last year and he wouldn’t 

give me an answer. 

Mr. MURPHY. The private agent system, private company system 

has been extremely successful in the program. So I haven’t entered 

into discussions on another. 

Mr. LATHAM. Has there been any debate in the Department? 

Mr. MURPHY. There was some debate when we were doing the 

SRA initially but not within the Department. 

Mr. LATHAM. Where was it then? 

Mr. MURPHY. It was above the Department. 

Mr. LATHAM. Well, we could do that like the student loans. Apply 

it to health care. 

Mr. MURPHY. Insurance is a different animal. I think you have 

to have an understanding of the concepts of insurance to be able 

to work with the growers on the proper coverage levels they should 

have. So I think it is critical that we maintain the agent system. 

Mr. LATHAM. I see I am out of time. Thank you. 

CROP INSURANCE PARTICIPATION

Mrs. EMERSON. I am going to go ahead and ask a follow-up question about that because in my congressional district we grow a lot 

of rice and a lot of cotton and, consequently, the farmers in my part 

of the country simply have argued forever that crop insurance policies don’t work for them. And because of the coverage being tied 

to yields and to revenue, the insurance unfortunately really can’t 

account for irrigation costs, other types of inputs. 


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And so I would love to know exactly how RMA is working within 

USDA to address the disparity if you can tell us exactly why this 

does exist. And obviously you see it but what kind of efforts you 

all are making to better incentivise producers to use this as a risk 

management tool because the northern part of my State, Missouri, 

it is totally different, down in the southern, mid-south, agriculture, 

and it is very frustrating I think to a lot of my producers and certainly those folks who aren’t engaged in agriculture on a day-to-day 

basis simply can’t understand why crop insurance wouldn’t work. 

Mr. MURPHY. Right. We have been concerned about this as well. 

In fact, Chairman Peterson, the former chairman, he was very concerned and said we had to move forward to address this. We have 

been. We have initiated some studies to look at why producers are 

purchasing a lower level. The good news is it has actually been increasing participation levels. 

Mrs. EMERSON. Let me say this, at the University of Missouri 

and other institutions their most recent study says that only 63 

percent of my producers have crop insurance in my district. 

Mr. MURPHY. Right. It is lower than any other part of the country by all means. We are working with the individual commodity 

groups, such as the rice growers and cotton growers, for specific 

ways we can improve the policies. We are working on an addendum 

to the rice policy right now. Hopefully that will be developed within 

the next couple of years. We are working with the different practices down there to make sure that the rates do reflect the practices being—there is an increase in irrigation throughout the south, 

so what we are taking a look at is can we have a different structure for irrigated acreage versus non-irrigated acreage and address 

the fact that the producers are already instituting measures to 

guard against the risks that they have. Can we reflect that in a 

premium, that sort of thing. 

So we are putting a lot of effort in there. A big issue down there 

has been the transitional yields. If you don’t have the history on 

a particular land. We are hopefully within the next year or two to 

be expanding the personal field concepts that we are piloting in 

North Dakota. Right now I think that will help a lot there. Rate 

reviews are going on for the crops down there. In fact we did one 

on sugarcane a couple of years ago and we actually reduced the 

rates by 50 percent. So we are looking for ways to work with the 

groups. 

ACREAGE CROP REPORTING

Mrs. EMERSON. It seems to me that a lot of my producers say it 

is too expensive and unwieldy. But the fact of the matter is when 

you are dealing with the whole administrative costs of crop insurance—and I realize that it is fairly significant in a lot of respects. 

We give the Farm Service Agency folks the same information that 

the crop insurance people want. And it seems that if you all could 

get better coordinated, it would certainly make the life of our producers not only much easier but it would save a ton of money. And 

it is just absolutely the most frustrating, ridiculous thing that I 

have ever seen. So is it that hard? 

Mr. SCUSE. Thank you for bringing that up. As a farmer, it has 

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port to two different agencies. We started last summer an initiative, Acreage Crop Reporting Streamlining Initiative, where we are 

bringing the agencies together on a single report. That is FSA, 

RMA, National Agricultural Statistics Service (NASS), and Natural 

Resources Conservation Service (NRCS). We are using different 

identifiers for land. We don’t need to be and should not be doing 

that. We are going to consolidate that and use one identifier for 

land. Another part of that project is when I walk in to give a report 

to the Farm Service Agency, that report will be shared to my crop 

insurance agent. So I don’t have to go do that reporting twice. 

So we are headed down that road. That is our objective. And to 

take that one step further, with today’s technology, why should I 

have to actually physically visit an office when I can sit at home 

and then put my information on the computer and do a download? 

That is another part of this project where we are not going to require producers to actually visit our offices. They will be able to do 

their reports at home. So we are headed down that path. 

Mrs. EMERSON. Timetable? 

Mr. SCUSE. We hope to have it done in—part of it will be done 

in 2 years. 

Mrs. EMERSON. Why the heck does it take 2 years to do that? 

Mr. SCUSE. Well, it has taken us a long time to get to where we 

are today. But in order to bring all of the systems for all of the 

agencies and make the changes necessary, that is going to take us 

about 2 years. 

Mrs. EMERSON. So it is an IT issue sort of? 

Mr. SCUSE. It is an IT, it is an inputting issue. It is changing 

the way that the four agencies actually do their business and 

records. 

Mrs. EMERSON. Are you moving to cloud computing so that we 

don’t have to have our farmers stacked up, 4 o’clock they call on 

the east side of my district, at 5 o’clock they call on the west side 

of my district, or log into the computer when it is sunny. 

Mr. SCUSE. Ultimately, that is where we are headed, and the 

Congresswoman brought up a good point, provided we have the 

funding to do this, and that is the direction that we are headed in. 

Mrs. EMERSON. It seems to me at the end of the day a little bit 

of investment here will save a whole lot. And I might add that it 

will be helpful if you could use one power of attorney for each one 

of—I mean, if there is one power of attorney at FSA, there is no 

need for NRCS to have one and another one and another one and 

another one. 

Mr. SCUSE. And as we do these consolidations, then things that 

make sense, like the power of attorney issue where we can share 

that between the agencies, we will be able to do which we can’t do 

today. 

Mrs. EMERSON. Isn’t this embarrassing? 

Mr. SCUSE. Yes, it is. And that is why we are headed in that direction to better serve our farmers and ranchers, but not only to 

better serve our farmers and ranchers, but think about what it is 

going to do to our office staff and the burden that it will lessen on 

the office staff. We know we are not going to get any more human 

resources in the field. We have to do it better and we have to do 

it smarter and more efficiently. This will allow us to do that. 


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Mrs. EMERSON. I appreciate that. I wish we could speed it up. 

Two years seems like a ridiculous amount of time. 

Mr. MURPHY. If I could add to that. Moving to a single acreage 

report will have about 90 percent of the programs on the same 

acreage reporting data in 2012. So we are moving ahead very 

quickly on that aspect. 

Mrs. EMERSON. It is just common sense, though. 

Mr. Bishop. 

CONSERVATION RESERVE PROGRAM (CRP)

Mr. BISHOP. Thank you very much. Let me apologize for my delinquency. Let me just ask you a little bit about the CRP program, 

sir. 

The purpose of it is to assist farm owners and operators in improving and competing with our resources of our environmentally 

sensitive land from agricultural production and keeping it under 

long-term resource conserving cover. 

CRP participants enroll for 10 to 15 years to return for low payments annually along with cost share technical assistance. Over 

the years, the program has become a target for anybody that is not 

particularly knowledgeable about conservation but for rates both 

the farmers as well as Federal support for farmers and the CRP 

will likely again be targeted for reductions and elimination as we 

move forward to the 2012 Farm Bill. 

So could you give us your view of the CRP program, its national 

importance as a proponent of our national conservation strategy 

and can you tell me whether or not the administration will continue to fight the CRP in the 2012 Farm Bill? 

Mr. SCUSE. Thank you, Congressman, for the opportunity to address a very important issue. The CRP program which started, as 

you know, about 25 years ago, we believe is an extremely important program in protecting our natural resources and our environment. Since its inception 25 years ago, we believe that that program has saved 8 billion tons of topsoil from eroding. On top of 

that, we have protected 200,000 miles of rivers and streams and 

improved the water quality in those areas. 

Just last year alone, CRP land sequestered 51 million tons of carbon, and you add to that the wildlife benefits that CRP provides 

and the opportunities for sportsmen to take advantage of those opportunities and additional income. We believe that the CRP program is in fact one of the most important programs that we have. 

Yes, we know in the last Farm Bill it was reduced from 36 million acres down to 32 million. But we have a commitment to try 

and keep our CRP land at as close to 32 million acres as we possibly can. 

We started signup on March 14th for the next round, there is 4.4 

million acres that come out of CRP, and that signup will run until 

April 15th. So hopefully we will get enough land enrolled to stay 

near that cap. But it is a very important program, and we look forward to working with Congress and continuing a very important 

program. 

AGRICULTURAL RESEARCH

Mr. BISHOP. Thank you very much. 


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Mr. Brewer, I would like to welcome you to the subcommittee 

and it is a pleasure to see a brother doing God’s work. The United 

States is blessed with some of the best agriculture research in the 

world, technology, biotechnology. We have the most talented farmers in the world. And in my district, for example, peanuts and cotton are king and of course we believe that we have got the best in 

the world. 

My question how can the subcommittee and the Congress help 

you utilize all of the wonderful resources you have in ag research 

to strengthen our ties overseas with our foreign friends and to 

serve our products better, to maintain that, given the fact we are 

facing budget cuts? 

My experience, traveling oversees, is that American agriculture 

is the highest quality anywhere in the world and because of that, 

once they get there, because of our 2-year research, we are able to 

make it a high quality. 

How are we going to continue that competitive edge in foreign 

agriculture with the budget cuts that we are facing with ag research, ARS? 

SCIENTIFIC EXCHANGE PROGRAMS

Mr. BREWER. Sir, thank you very much for your question. It is 

good to see you again. 

Regarding research, to step back a little bit and just kind of tell 

you what we are doing to share that research, because I agree with 

you, we have a great research capability here within the United 

States. A lot of that is being shared via our various scientific exchange programs. 

We have the Norman Borlaug Program, in which we bring and 

share or allow foreign scientists and foreign folks in the agricultural community in other countries to come and train here in the 

United States. We have our Cochran Exchange Program, allowing 

for opportunities for foreign scientists and agricultural professionals to come and train and spend some time in the United 

States to learn about a specific area of agriculture that may be 

their area of expertise. 

We also have specific scientific exchange programs with China. 

I believe we have one as well with Taiwan to have that exchange 

of ideas, exchange of research, exchange of issues. 

So we are certainly, through our various programs within the 

agency, are certainly sharing that, also within our capacity building program and our capacity building efforts that we work in conjunction with AID, USAID, to again build the capacity of other 

countries to ensure two-way trade. I mean, you have got to have 

two-way trade for them to want to buy our products. They have to 

have the opportunity to sell to us as well, so in our capacity building we do that as well. 

NATIONAL EXPORT INITIATIVE (NEI)

The second part of your question about selling our products, certainly peanuts, as well as pecans or other horticultural, as well as 

cotton. Again, our involvement in the NEI effort is certainly something that we are strongly engaged in and are doing a great deal 

to promote our products. Our offices overseas are being very much 


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engaged in and can do more and want to do more to put the foreign 

buyer with the American seller of our products. So our overseas 

presence is something very important with that as well. 

I can engage more with you about other issues, but that is certainly there. 

Mr. BISHOP. I think my time is up, but I am wondering how this 

is going to be impacted by the budget cuts that we face. 

Mr. BREWER. I would be glad to talk to you about that. 

Mrs. EMERSON. Mrs. Lummis. 

FOOD AID PROGRAMS

Mrs. LUMMIS. Thank you, Madam Chairman. 

Back to foreign food aid, as I understand it there are three major 

programs, McGovern-Dole, Food For Peace, Food for Progress, are 

those the three majors? Okay. 

Which of those do you think is the most efficient and effective at 

supporting long-term development across the globe? If you had to 

prioritize those three programs, how would you do it? 

Mr. SCUSE. I will defer to the Administrator on that. 

Mr. BREWER. Ma’am, let me step back. The programs have different focuses. Certainly the McGovern-Dole program is focused on 

education, which is something I think we can all agree is very, very 

important. The Food for Progress is for educational, I am sorry, 

economic development, so again you are focusing on another angle 

that we believe is very important, and then Food For Peace is for 

emergency response, as humanitarian efforts. So, each of those are 

priorities, each of those are important. 

So to weigh them against one another is difficult because they 

are focusing on different areas. There are three different areas. 

Mr. SCUSE. There are three different programs and it is almost 

impossible because they have three different purposes and missions 

and purposes. 

Mrs. LUMMIS. I hear you, but of course we are spending money 

we don’t have and we are going to cut spending. So we are put in 

a position if the agencies don’t tell us how to prioritize spending 

cuts or expenditures, we are going to prioritize them. And I would 

so much rather hear agencies come and help us prioritize these 

programs, because we are going to cut them. And we can do the 

across-the-board gig, but I don’t know that that is the best way to 

go. So I am really hoping that agencies will help us figure out how 

to do these cuts. 

Let me ask it this way then. 

What characteristics define the most successful program and how 

could those characteristics be applied to the other food assistance 

programs? 

Mr. BREWER. Well, again, Congresswoman, we have got three different programs with three different priorities. If I can step back 

and kind of touch base on something. 

Mrs. LUMMIS. You know what, I will just switch over to free 

trade. 

Mr. SCUSE. Thank you. 

Mrs. LUMMIS. It would, however, help us if you would help us 

prioritize. 


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Mr. SCUSE. And we would love to be able to help you do that but, 

you know, those three programs are so important and so critical. 

Mrs. LUMMIS. So it would be better to do across-the-board cuts 

to those programs? 

Mr. SCUSE. I don’t know how we would be able to single one program out over another because the nature of those three programs 

is so different. 

Mrs. LUMMIS. Okay. 

Mrs. EMERSON. I am just going to say one thing to Mrs. Lummis 

and something that you all probably should have said was that at 

least on the Public Law 480 piece. This is helping the American 

farmer as well because it is our commodities that are being donated and so that is helpful when we have excess commodities for 

our farmers, and that is the one piece that makes that program 

much different. 

So, go ahead, I am sorry. 

Mr. SCUSE. Thank you for your assistance. 

FREE TRADE AGREEMENTS

Mrs. LUMMIS. Thank you. I am not saying every program is going 

to get cut, but I am saying we do have to prioritize, because we are 

not going to be able to spend the same amount of money we have 

in the past. That is all I am saying. 

Okay, let me switch to free trade and here is one that is a fun 

question. How much is each of the pending free trade agreements 

projected to increase agriculture’s positive trade balance? I am 

talking about South Korea, Colombia and Panama, because I see 

these as programs where many agribusinesses support them, they 

argue for quick approval because of the Obama administration’s 

National Export Initiative, and that that is a government-wide goal 

of doubling U.S. exports over the next 5 years, which seems to me 

you know the way, you know, we want to grow our way out of the 

economic malaise we are in. We want to expand free trade. We 

want to sell more of our commodities overseas. We know this produces jobs in the U.S. So I am all about it. 

So have you studied these and how they will affect American 

farming and ranching? 

Mr. SCUSE. Yes, there are some projections out there. The Korean Free Trade, South Korean Free Trade Agreement is projected 

to increase agricultural sales from, anywhere from $1.9 billion to 

as much as $3.8 billion currently. That is a $5.2 billion market. 

The Colombia Free Trade Agreement is projected to increase sales just under $700 million, and I believe the Panama FTA is 

projected to increase sales just under $200 million. 

Mrs. LUMMIS. Thank you very much. That is good news for U.S. 

agriculture and for our balance of trade, so I appreciate that. 

One more about CRP. Whoops, my time is expired. 

Mr. KINGSTON. Your time has expired. Ms. DeLauro. 

TRADE WITH CUBA

Ms. DELAURO. Thank you, Mr. Chairman. I would also like to 

ask you if you could tell us what, by lifting the embargo on Cuba, 

how much that would add to our agricultural opportunities, and 

they are so close we wouldn’t have to go the distances with our 


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products that we now have to. So if you could get that information 

to me I would appreciate it. 

Mr. SCUSE. Yes, I don’t have that at the top of my head. 

[The information follows:] 

Agricultural trade with Cuba is permitted under terms of the Trade Sanctions Reform and Export Enhancement Act (TSRA) of 2000. While trade is permitted, no 

U.S. government assistance or programs can be used to promote agricultural exports 

to Cuba. 

Starting at zero in 2000, U.S. agricultural exports to Cuba grew steadily through- out the decade, peaking at $685.5 million in 2008. In 2009, exports declined to 

$525.9 million and again in 2010 to $360.6 million. In the last few years, the United 

States was the largest foreign supplier of agricultural products to the citizens of 

Cuba. 

There is evidence of demand in Cuba for numerous agricultural products. In 2010, poultry led U.S. agricultural exports to Cuba with sales valued at $109.1 million, 

and corn exports were the second largest export at $94.8 million, followed by oilseeds at $83.7 million. 

Ms. DELAURO. No, just get it to me about lifting the embargo on 

Cuba and what that would mean in terms of U.S. agricultural 

products. 

IMPROPER FARM PAYMENTS

I would like to talk about some priorities that we can look at in 

terms of cutting, and that has to do with improper farm payments. 

We have a GAO report released earlier this month, extensive report, Opportunities to Reduce Potential Duplication in Government 

Programs, Save Tax Dollars, and Enhance Revenue. The report 

noted that taxpayer dollars can be saved with strengthened oversight of farm program payments, including direct payments. 

I might add that the State of Wyoming, 544,000 people, 31,285 of them are compensated with a subsidy. That is about $678 million, so the average is about $21,672 per person in terms of subsidies. So I think it is important to know that when we try to take 

a look at what payments are going where and where we can begin 

to look at what our priorities are in terms of cutting back. 

Let me go back to improper farm payments. I can list for you, 

GAO did, USDA provided farm program payments to thousands of 

individuals, incomes exceeding income eligibility caps. Some of the 

examples, founder, former executive of an insurance company, received more than $300,000 in farm program payments in a 4-year 

period that should have been subject to income limits. 

Individual with ownership interest in a professional sports fran- chise, more than $200,000 in payments that should have been 

barred by income limits. There are a number of others. I can provide you with those examples. I am sure you read the GAO report 

and you know what those examples are. 

The conclusion was that reducing or eliminating direct payments 

to farmers, particularly those to large farming operations, could 

achieve cost savings of approximately $5 billion per year, significant savings for our taxpayers. I thought it was awfully interesting 

to note as well when I read the GAO report that direct payments 

were expected to be transitional, transitional. 

In addition, direct payments go to farmers regardless of risk factors. That means that you need to lose crops, there needs to be no 

decline in prices, you just get the payment. When I say transitional, accordingly the payments were scheduled to decrease over 


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time and expire in 2002. However, subsequent Farm Bills have 

continued these payments. 

Now, what are some of the actions that FSA has taken to reduce 

the error rate for farm payments and, if and when FSA is able to 

achieve a stable IT infrastructure, would it be able to reduce erroneous farmer payments? Do we want to take a look at priorities to 

reduce the deficit? 

Let’s not take it out of the mouths of the hungriest people in the 

world or people here in the United States, for that matter, who are 

hungry today. Let’s go where there are improper payments and 

capture that funding in order to be able to reduce our deficit. Tell 

me about FSA and being able to do this. 

One highlight, July 2007, USDA paid $1.1 billion in direct payments to more than 170,000 deceased individuals. Can we get the 

house in order and be able to reduce the deficit through improper 

payments? Please respond to the question. 

INCOME ELIGIBILITY

Mr. SCUSE. Okay. I think there are several different questions 

there. The issue with the improper payments going to those that 

should not receive them, we believe that we have addressed that 

issue the last 2 years. Now, our producers, when they sign up for 

a program, have to sign a form where we are then having the Internal Revenue Service—IRS—to look at the income levels of those 

individuals. 

Ms. DELAURO. Excuse me for one second. The recent GAO report 

came out in March, here it is, Opportunities to Reduce Potential 

Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue. That is what I was quoting from when I dealt with 

this current list of improper payments. Right now, it is still existing. 

Mr. SCUSE. Well, as I said, Congresswoman, we have started a 

process where those individuals that are participating in our programs now have to sign a form giving the IRS permission to go 

back and look at their records to make sure that they are, in fact, 

income eligible. We believe that will go a long way if not totally 

eliminating the abuse of the program for those that make more 

money and that are participating in our programs that should not 

be. 

DECEASED FARMERS

The second part of your question on deceased farmers, there is 

a reason why deceased individuals are, in fact, receiving payments. 

They signed up for our programs. They started the farming operation so they or their estate is entitled for payment of that money 

because their farms did, in fact, participate in the program. 

Mr. KINGSTON. The gentlewoman’s time has expired. Mr. 

Latham. 

Mr. LATHAM. I thank the gentleman. 

Farmers are not immortal. 

Mr. KINGSTON. Well, would the gentleman yield a minute. If the 

gentlewoman would yield. I think, actually, with unanimous consent I would like to ask for the time to let you answer the question 


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of dead farmers, because there is a question about eligibility for the 

family of the deceased, isn’t there? 

Ms. DELAURO. Yes. Let’s talk about the food stamps and you die 

and whether or not your family is entitled still to be able to get 

them. 

Mr. KINGSTON. Well, I only want to know the explanation. Is 

there an explanation on it? 

Mr. BISHOP. For the dead farmer? 

Mr. KINGSTON. For the dead farmer. 

Mr. SCUSE. For the deceased farmer. They signed their farm up 

for a program, for a farm program. They, in fact, participated in 

that farm program for that crop and year. So at the conclusion of 

that year, that farm, that farmer or his estate is, in fact, entitled 

to the funding for that program. 

Ms. DELAURO. Subsequent years though are at issue. 

Mr. SCUSE. No, not for subsequent. 

Ms. DELAURO. Well, but this has gone on for subsequent years. 

Mr. SCUSE. Okay. Unless, Congresswoman, it is for a long-term 

program, long-term funding such as an Environmental Quality Incentives Program—EQIP—or a CRP program, those are long-term 

programs that they have put their farms, enrolled their farms in, 

which they would be entitled to a payment. 

DIRECT PAYMENTS

Ms. DELAURO. The issue here is then, and as long as the gentleman kept the time open for a second here—and I really would 

like an answer from you on direct payments that were supposed to 

go out of existence in 2002. 

Should those direct payments go out of existence, in your view, 

in terms of no risk involved, you get paid regardless of risk and in 

addition to which you don’t have to have a crop decline, you don’t 

have to have any loss of crop, you just get a payment? Should we use and save $5 billion in this program? 

Mr. SCUSE. Well, Congresswoman, that issue was debated in the 

2008 Farm Bill right here in Congress. 

Ms. DELAURO. I am asking your opinion. You are in charge of 

this program. 

Mr. SCUSE. You know—— 

Mr. KINGSTON. He is acting. 

Mr. SCUSE. Yes, and my opinion is immaterial. That decision is 

for Congress to make, and it was debated strenuously in the 2008 

Farm Bill. 

Ms. DELAURO. True. I would concur it is Congress’ decision. And 

if we are looking for places where we can cut, where there is no 

risk, you just get a payment because you get a payment. You have 

to take no risk at all. 

Mr. KINGSTON. If the gentlewoman will yield back. 

Ms. DELAURO. I will yield back, Mr. Chairman. You got my 

point. 

Mr. KINGSTON. Yes. And I think what we would be interested 

in—— 

Ms. DELAURO. You got my point. 

Mr. KINGSTON. As the entire committee would, and I am sure 

you are as well, on those areas where there is clearly abuse, if you 


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have some language recommendation and we could dare to authorize an appropriation bill, we might want to float that language. Because I think improper payments is something that we are all concerned about and that is where you could come up with a lot of bipartisan consensus on ways to reduce spending. 

RECORDS CHECK

Mr. DOLCINI. Sir, I just have one more data point to add on the 

dead farmer issue. The Social Security Administration has something called the death master file that FSA cross-checks four times 

a year. That is twice what we are required to do statutorily, just 

to make sure that our records are as accurate as we can possibly 

make them, Congresswoman. 

Mr. SCUSE. If I may—— 

Mr. KINGSTON. If you will, we will work with you on whatever 

language it would take to help us all get there. 

Mr. SCUSE. Well, the point of what the administrators have made 

and what I did with our IRS records is the fact that we are, you 

know, we are making, you know, a great deal of effort in trying to 

prevent those payments from being made. But with this, with the 

Social Security records, with the IRS, we are making great 

progress. 

[The information follows:] 

As a result of Executive Order 13520, Reducing Improper Payments, issued in November 2009 and the Improper Payments Elimination and Recovery Act (IPERA) 

passed in July 2010, a number of actions were initiated by the Office of Management and Budget for FY 2010. One of those was the designation of fourteen ‘‘higherror programs’’ that significantly contributed to the government’s improper payments. GAO, in the subject report, and based on Agency Performance and Accountability Reports for FY 2010, cited ten of the fourteen high-error programs as accounting for the majority of the reported improper payments for FY 2010. None of 

the FSA programs are categorized as high-error programs. 

It must be noted that the GAO report stated that, based on the continued improvement of FSA programs with regard to improper payments, the Marketing Assistance Loan Program was applauded for reducing projected improper payments by 

$50 million dollars from FY 2009 to FY 2010. Comparable improvement in other 

programs has also been achieved for other FSA programs. 

Ms. DELAURO. We need a response to the GAO report from you 

about direct payments, about direct payments. This is a recent one 

and specifically directed toward reducing duplication, saving tax 

dollars, and enhancing revenue without—— 

Mr. KINGSTON. The gentlewoman’s time has expired. We have got 

to go to the Republicans to get some questions here. 

Ms. DELAURO. You have not been here, Mr. Chairman. The Republicans have all been asking questions. 

Mr. KINGSTON. I know. I am about to bring up foreign aid with 

my friend from Atlanta. 

Mr. SCUSE. Mr. Chairman, just one second here, personal privilege, I do have a response to your Cuba question. 

Mr. KINGSTON. You have no personal privilege on that right now. 

We will have to let Ms. DeLauro get the time back. We know what 

her position is on Cuba. 

Mr. Latham. 

Ms. DELAURO. Thank you very, very much. He can come around 

and ask it. That is okay. We can have another round and ask it. 

Mr. SCUSE. Yes, we will get it. 


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Mr. KINGSTON. I am confident that you will. 

DIRECT PAYMENTS

Mr. LATHAM. Do I finally get a chance? I think we have learned 

that farm programs can be deadly, anyway, and I think the gentlewoman will be pleased to hear that there is a growing consensus, 

certainly, like in the Iowa Farm Bureau, to do away with direct 

farm payments. And that is going to be a major bone of contention, 

I think, in the next Farm Bill. We are certain it is more of a regional issue than it is maybe—than anything else. 

NEW PRODUCTION ACREAGE

But I was curious earlier, talking about the benefits response to 

Mr. Bishop’s question about the CRP. There are estimates by 

USDA we are going to have 9.8 million acres come into production 

in 2011 to meet increased demand from commodities, so where are 

those acres coming from? 

Mr. SCUSE. That is a very good question. 

Mr. LATHAM. Well, it is your projection. 

Mr. SCUSE. And if you ask that question tomorrow at this time 

I can give you an answer, because our crop reporting, crop intentions report comes out tomorrow morning, which will give us an 

idea of the acreage that is going to be planted by the various crops. 

That report will be signed at 8:30 tomorrow morning. That is, in 

fact, a very good question. 

You know, we need to see. Is it going to come from the vegetable 

industry? Are we going to lose acreage from rice plantings to go to 

cotton? 

At this time, I don’t know exactly where that acreage is going to 

come from, but we will be able to get you an answer this time tomorrow. 

Mr. LATHAM. Please come by. 

Mr. SCUSE. I will make sure. 

[The information follows:] 

In the baseline for the FY 2012 President’s Budget, USDA projected that plantings in 2011 will be 9.8 million acres higher than 2010. The recently released ‘‘Prospective Plantings’’ report is roughly in line with this projection, as farmers indicated they will increase plantings of the 8 major crops (corn, wheat, soybeans, cotton, rice, barley, sorghum, and oats) by 8.6 million acres, based on the annual National Agricultural Statistics Service (NASS) survey conducted around March 1, 

2011. The most significant difference between the projection and the intended acreage was for soybeans, which was 1.4 million acres lower. This may reflect further 

gains forecast for Brazilian soybean production now being harvested and some cancellations of soybean purchases by China, slightly dampening soybean market expectations. 

Very strong prices for virtually all the crops are providing market incentives to 

plant more this year. When prices increase, farmers will bring additional land into 

production, as they have done in the past, generally tapping more marginal lands. 

The 8-crop total of 253.8 million acres of intended plantings for 2011, if realized, 

would still surpass the 2008 total of 253.1 million acres, another year of very high 

prices. This is not surprising, with several crop prices at record or near record 

highs. In addition, current CRP enrollment, 31.2 million acres, is 3.4 million acres 

lower than in 2008. The planted crop mix varies by year, reflecting prospective returns for each crop, rotations, fallow needs, double cropping, and weather effects. 

Compared with 2008, the intended planting choices in 2011 show less hay, dry 

beans, peanuts, and sunflower. 

Mr. LATHAM. Okay. 


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IMPACT OF GIPSA RULE ON TRADE

With the FAS, there is a proposed rule for GIPSA that is pending 

out there. Is that going to have any impact as far as trade? 

Mr. BREWER. Congressman, can we give you an answer for the 

record? I am thinking right now on what that will be. 

[The information follows:] 

On June 22, 2010, GIPSA published a proposed rule in the Federal Register. The 

purpose of the new regulations is to describe and clarify conduct that violates the 

Packers and Stockyards Act, and is intended to increase fairness in the poultry and 

livestock industries. USDA does not believe the proposed changes would have an impact on trade; however, the agency received over 60,000 comments during a 150 day 

comment period and will closely review any such comments that were raised in regard to trade issues. 

Mr. LATHAM. Okay. Well, in the proposed rule, buying and selling of livestock. And I don’t know what, if that is going to have any 

impact as far as your operations. I don’t know if maybe the acting 

is not a real under secretary but he plays one here today. 

Mr. SCUSE. The Grain Inspection Packers and Stockyards Administration—GIPSA—role deals primarily with domestic production. 

Mr. LATHAM. Right, yes. Do you see any—okay. Are you involved 

with that as far as the rule? 

Mr. SCUSE. The GIPSA rule, no, sir. 

Mr. LATHAM. Well, there is obviously a lot of concern with that 

in the community. Actually, Jack, why don’t you go ahead. I think 

for now I will submit some questions for later, but that is fine. 

Mr. KINGSTON. I think the Secretary would like you to continue 

because he knows Ms. DeLauro is getting back up there. 

Mr. Farr. 

CONSERVATION RESERVE PROGRAM (CRP)

Mr. FARR. Thank you. Both Mr. Bishop and Mr. Latham talked 

about the CRP program, and I just would like to better understand 

it. I understand that they are to assist essentially best management practices so that we don’t degrade soil, water and air and 

wildlife habitat, riparian, and so on. 

But I understand, if California is a big State and has an awful 

lot of resources, there is only $47,000, I think, in California in the 

CRP program, where the biggest user in the country is Iowa. Now, 

Mr. Latham is a really effective Congress Member. 

Mr. LATHAM. Tell the folks at home that. 

Mr. FARR. I am saying it right now on the record. But I just can’t 

for the life of me understand why Iowa has better, more conservation resources to protect than California? And I would like to ask 

Mr.—I mean, you talk about getting long-term resources. Aren’t 

there any carrots in this? Don’t you require zoning practices? 

I mean if it is wildlife habitat, riparian, I think you shouldn’t be 

able to farm on that. That is just not good management practices. 

Why do we have to pay people to preserve what is essentially 

against the law if it was Federal land or, in California, you could 

never do it because you have to do local zoning practices that have 

to outline where these things are. 

You can’t farm on steep lands. You can’t farm, you can graze. 

You can’t cut down riparian corridors by loggers or anything beVerDate Mar 15 2010 01:57 Sep 24, 2011 Jkt 068236 PO 00000 Frm 00353 Fmt 6601 Sfmt 6602 E:\HR\OC\A236P2.XXX A236P2

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cause you have got to save the fish habitat, which is also a big 

business for salmon fishermen and other anadromous fish types. 

So I don’t understand why this program is so important and 

what kinds of assurances you get out. There is no long term, other 

than you get an annual rental payment, for not doing what you 

shouldn’t do anyway. 

Mr. SCUSE. Well, let’s not lose sight of the fact this is a voluntary 

program, okay. We don’t mandate that anyone go—— 

Mr. FARR. But how do you ensure it is long-term protection? Do 

you have a Williamson Act—— 

Mr. SCUSE. Well, we have signup for a 10- to 15-year period of 

time. 

Mr. FARR. And how do you break that? If you want to come along 

and a developer says I will pay you a gazillion dollars for your land 

because I want to build my next Wal-Mart there and they are in 

the CRP program, what do they do? 

Mr. SCUSE. It is a pretty solid agreement. You are in for the 10- 

or 15-year period of time. I mean, you know that when you go in. 

Mr. FARR. Is it automatically renewed? 

Mr. SCUSE. No, no. 

Mr. FARR. You have to wait for it to run and then renew it? 

Mr. SCUSE. When it comes out then you have the ability to reenroll. Like I said earlier, we have 4.4 million acres. 

STATE PARTICIPATION IN CRP

Mr. FARR. Why shouldn’t we require States that are participating 

in this to be a little more proactive in helping to do land management? 

Mr. SCUSE. Well, one part of the CRP is the Conservation Reserve Enhancement Program—CREP—which we do, in fact, have 

State involvement in. So, I mean, there is part of this program 

where the States are actually putting up some of the funding for 

it. For those areas that are extremely environmentally sensitive 

that the States want to protect, they are in fact our partner in this. 

Mr. FARR. The point is that the Federal Government ought to be 

a leader in recommending those things to the States to implement. 

For example, if you are going to graze on Forest Service lands 

or BLM lands, you have got to do best management practices. We 

require those standards. So what, and those are used, I think, in 

a lot of purposes for just cattle ranching, because they are smart 

things to do to protect the water quality and so on. 

The point is that if the CRP program—is it just going to be a 

payment program or are we really going to provide some leadership 

of knowledge that we have learned over the years of how to do this 

and get it implemented into land use structure in this country? 

Each State has a different land use planning but Mr. Dolcini, you 

know, he knows California, and we have land that you can put into 

ag conservation programs. It is a 20-year contract for Williamson 

Act and is automatically renewed every year unless you opt out. If 

you opt out, it doesn’t expire for the next 20 years. It starts running the day that you opt out. 

But that was more to protect those lands from property taxation 

issues. And I just—and California doesn’t get very much use out 

of CRP. It kind of shocks me. Why not? 


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Mr. DOLCINI. Well, the short answer, Mr. Farr, is that CRP in 

California hasn’t been that attractive because land values are so 

much higher in California than they are in a lot of other States. 

And so rental rates that we would pay a participant under CRP 

just aren’t, you know, they don’t pencil out. 

Mr. FARR. So none of the soil and water and air and wildlife resources get protected? 

Mr. DOLCINI. No, we do work, FSA in California has a great relationship with the Natural Resources Conservation Service and in 

some instances with the State of California and the Department of 

Conservation there to focus on lands that are particularly environmentally sensitive. And CRP does work in San Luis Obispo County, 

in Yolo County, Siskiyou County, a couple of other small pieces of 

the State. 

Mr. FARR. That is because you have incredibly good Farm Service 

folks there to advise the farmers. 

Mr. DOLCINI. Well, that is right. 

Mr. FARR. It is their personalities that make it work dedication. 

Mr. DOLCINI. It is the dedication, frankly, of a lot of great USDA 

employees in the field that have really worked with local farmers 

and ranchers to sell those programs. 

Mr. FARR. Okay, if that is what California learned from the program and has very little usage, why can’t we help other States 

wean themselves off of this? 

Mr. DOLCINI. Well, that is a good question. I mean, certainly, my 

experience in California will hopefully be of benefit to my colleagues around the country. And if I can, you know, if I can talk 

about some of the collaborative work that we have done as an 

agency there in the hopes that it will be replicated elsewhere, as 

I know that it is. 

Mr. FARR. I really appreciate that. That is leadership and I 

would like to see some leadership in this program rather than just 

coming back every year and telling us how many contracts have 

been signed, we put a cap on it. It has got to work better. We have 

got to learn something from it. 

STABILIZATION AND RECONSTRUCTION

Let me switch, because my time is limited, to Mr. Brewer. Are 

you aware of the State Department USAID’s program on stabilization reconstruction? 

Mr. BREWER. Yes, sir. 

Mr. FARR. How do you tie into that? I mean we had General 

Abizaid, when he was the theater commander in the Middle East, 

telling us that he would rather have one USDA native speaking 

language expert than 100 soldiers. 

Mr. BREWER. Yes, sir. 

Mr. FARR. That the value of an agricultural expert who could 

speak the language is more valuable. And so we created that program in the State Department to especially find career people who 

were linguists and were in area studies and say, look it, you can 

specialize in being kind of a special mission, just like you do in special ops that you can do in the military, where you pull all your 

skill sets together regardless of what service you are in. And you 


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go in and do a special operation, whatever that is. It is not always 

just wiping out people, it is some steps to stabilization. 

And the idea is in sub-Saharan Africa, we are going to need people on the ground. You are not going to be able to do any food aid 

programs or anything. They can’t afford it. It hasn’t developed any 

infrastructure for their ability to grow or you are going to have 

massive starvation, according to the CIA and other environmental 

reports, if we don’t build the infrastructure on the ground in subSahara Africa. 

We are going to get people that are going to have to live out in 

the boonies, speak the native languages, for Peace Corps types. 

And I don’t see, I mean, I would like to know how USDA is—you 

are paying for a lot of this, and are you taking advantage of being 

part of that team that USAID and State Department is putting together? They have a training center out here in Virginia where you 

go and get S&R training and you get this big jacket that says you 

have been trained in stabilization and reconstruction. It is a whole 

new career. 

Mr. BREWER. Yes, sir. Thank you for your question, Congressman. 

Where we are involved in the efforts that are being funded 

through the State Department is our activities in Afghanistan, as 

well as—— 

Mr. FARR. Who takes the lead, does the USDA? 

Mr. BREWER. Well, what we are doing is we are providing technical assistance within Afghanistan. We are using, a lot of that is 

being paid for with State Department AID funds. 

Now, within the 2012, our 2012 budget requests, we have a request for $14.6 million. That money is to basically do the management of the funds that we are getting from the State Department 

and from United States Agency for International Development— 

USAID. So that is our role. We are using that $14.6 million to 

manage these other funds. 

Mr. KINGSTON. The gentleman’s time has expired. 

CONSERVATION RESERVE PROGRAM

Mr. Dolcini, I wanted to ask you, on CRP in terms of total crop 

acreage planted, how many acres is that? It is 32 million, right? 

Mr. DOLCINI. 31.9. 

Mr. KINGSTON. That is right. So what percentage of total crop 

acres is that? 

Mr. DOLCINI. I don’t know, sir, off the top of my head. 

Mr. KINGSTON. I am thinking it is 10 percent, if that sounds 

right. 

Mr. DOLCINI. Of all United States crop acreage? 

[The information follows:] 

Currently, there are 31.2 million acres enrolled in the Conservation Reserve Program (CRP), of which, 30.5 million acres are classified as cropland. This represents 

7.5 percent of cropland as defined by the 2007 Census of Agriculture. CRP costs are 

fairly constant over time, and over the last 5 years have averaged $1.9 billion. You 

refer to CRP costs being 50 percent of the crop payment. Assuming this refers only 

to direct payments of $5.4 billion per year, then CRP costs would be 35 percent of 

the direct payment costs. 

You also mention that there is a concern that CRP tree plantings in Georgia are 

over-prescribed. In Georgia, 269,000 CRP acres are planted to trees, representing 


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about 0.3 percent of the private forestland in Georgia. That number includes about 

195,000 acres of ecologically important longleaf pine plantings. Total longleaf pine 

acreage has declined by over 90 percent in the Southeast since European settlement. 

Mr. KINGSTON. Yes. I am thinking that might be right. I don’t 

need to know right now, but here is the other question, what percentage of the payment programs is it because here I have some 

concern. I understand it is about 10 percent of the acres but about 

50 percent of the crop payment. 

And that is where I think the CRP does get disproportional. Flying over the State of Georgia in small planes, just about every 

stand of pine trees you see is now planted and it would appear to 

me that it is over prescribed because it is not all highly erodible 

land, but the $10 an acre, whatever, is something that people are 

pretty happy about and that is where I think we have some concern. 

DIRECT LOAN DELINQUENCY RATE

I want to ask you also, though, on rural development, excuse me, 

on your programs in terms of your loan, direct loan delinquency 

rate is 5.9 percent, but the guarantee programs, the delinquency 

rate was 1.7 percent, which is a pretty big difference. And I was 

wondering what you were doing to reduce your delinquency rate on 

direct loans. 

Mr. DOLCINI. You know, the dollar amount is a little bit lower 

than the total percentage of direct borrower delinquency, so we are 

just working more aggressively these days with borrowers around 

the Nation. We have done a lot of investments in web-based applications that I think are allowing us to keep track of the—— 

Mr. KINGSTON. But do you know why it is so high, why there is 

a difference? 

Mr. DOLCINI. Between the guaranteed and direct, I don’t know, 

sir. 

Mr. KINGSTON. Mr. Scuse. 

Mr. SCUSE. I think if you look at those that are eligible for the 

direct loans versus those, the ones where we do the joint loans for 

the bank, I think there is a difference in financial capabilities, 

number one; and, number 2, if you look at our delinquency rate, 

it is true that the commodity prices the last couple of years have 

been very good, but if you look at what has happened to the livestock industry, especially the dairy industry, and what the pressures that that group has been put under the last couple of years 

as well as up until recently the pork producers, there has been 

some issues. 

Mr. KINGSTON. I think that this committee, as much as the authorizing committee, we are going to want to take real strong looks 

at ag programs in general, the traditional ag programs, and look 

for ways to reduce and that delinquency rate stands out to me, the 

CRP program, and there are some other things and then the GAO 

report. We are all, I think, fairly united on that. 

The other thing that I want to ask you about, MAP comes 

under—I am not ready for you yet, Mr. Brewer, I am coming your 

way. 

Okay. Let me ask you, Mr. Dolcini, but we will start off with 

MAP when we get there. 


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NATIONAL AGRICULTURE IMAGERY PROGRAM

Mr. Dolcini, on aerial photography you spend $10 million a year 

doing that, approximately. 

Does Google pay you for the map? 

Mr. DOLCINI. I don’t think they do, sir. 

Mr. SCUSE. No. 

Mr. KINGSTON. They don’t. You know, the folks spend $10 million 

on lunch at Google, and you can Google, and I think the committee 

has seen this. But this is a USDA map that Google is using basically for commercial purposes. I think that is something we are 

going to take a real strong look at. 

[The information follows:] 


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Mr. KINGSTON. And, you know, if it was for the children’s home 

back in Des Moines, since Iowa gets all the money, we probably 

had a different view. But since Google is using that, not Google, 

but I think that they are going to have a—they are just grabbing 

it. It is public. 

Mr. SCUSE. It is public. They have the ability to have access to 

that and in order to charge for that there would have to be some 

sort of legislation because we don’t have that ability to charge for 

that. 

Mr. BISHOP. We have the ability to legislate that. 

Mr. KINGSTON. Yes. We want to look at that. 

FOREIGN SERVICE OFFICERS

All right, Mr. Brewer, I think my time is about up but I wanted 

to say this with my 6 seconds, I have had the opportunity and insist on the opportunity of seeing your employees whenever I travel, 

including last week in Guatemala. And I have got to tell you, I 

think they are some of the finest public employees there. 

I have questions about the missions, which I want to talk to you 

about, that I think my next question to you is why do we do this 

foreign aid? But I have got to say, your employees have always impressed me. They are on the ground with the folks. They are not 

afraid to take their coat and tie off. They are not just advisers, they 

are friends in the villages and I think that they actually are far 

more effective than the average State Department counterpart. 

State Department are good, too, but I really like that. 

Mr. BREWER. Thank you very much for that, sir. Just to quickly 

let you know, Bob Hoff and Robert Hanson say hello. 

Mr. KINGSTON. Oh, they were all over me. 

Mr. BREWER. And they say hello. I am very proud of them. 

Mr. KINGSTON. I would say you question a program and you get 

a lot of friends. Mr. Farr—I am sorry, Mr. Bishop. Actually, I want 

to say Mr. Farr, who has traveled a lot and does a lot of the onthe-ground stuff, he was with me, too, in it as well. 

Mr. Bishop. 

REGIONAL DIFFERENCES IN AGRICULTURE

Mr. BISHOP. Thank you very much. Let me just quickly respond 

to some of the comments from Mr. Latham and Ms. DeLauro with 

regard to direct payments as we look forward to the Farm Bill discussions. I hope that you and the Department and the administration and my colleagues will understand that these are regional 

issues when it comes to direct payments, when it comes to CRP 

and the overall safety net for the total agricultural portfolio and 

that no cookie cutter approach will work, that there are different 

crop portfolios for different regions of the country and they require 

different kinds of support. 

And when we develop our farm programs, what works in Iowa 

with regard to direct payments may not be the same, have the 

same effect as it would have in Georgia or the Southeast, because 

the portfolio of crops in the Southeast are totally different and the 

farmers have different needs and have a need for different kinds 

of support, including CRP. 


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Let me just shift gears for a moment, though, and you can comment if you like. 

SOCIALLY DISADVANTAGED FARMERS

But I want to talk about the minority farmer support by FSA. 

A big part of the direct and the guaranteed farm operating and 

ownership loan funds is targeted to the socially disadvantaged borrowers based on county level demographic data. Although the targets vary by loan program and by county, about 14 percent of the 

funds are targeted to socially disadvantaged borrowers. A key performance measure for the farm credit programs is the percentage 

of beginning farmers, the racial and ethnic minority farmers and 

women farmers that are financed by FSA. 

Can you tell us what the total percentage of loan farm funds and 

the total dollar amount were that were actually targeted and received by the socially disadvantaged farmers last year? And if you 

have it available, can you provide the data for States of Georgia, 

California, Connecticut, Wyoming, Washington, Mississippi, and 

Iowa? 

Mr. SCUSE. Congressman, to your last question, I don’t have 

those numbers with me, but we will be more than glad to get those 

numbers for you and for the record. 

[The information follows:] 


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AGRICULTURE SAFETY NET

Mr. SCUSE. And to your first comment, you are exactly right. 

There are regional differences in the United States that do affect 

the different programs, whether it be, you know, CRP, direct payments or whatever. So there are regional differences, and that is 

why the discussion needs to take place within Congress for those 

programs because of those regional differences. 

Mr. BISHOP. The bottom line is we have got to make sure that 

for our national security purposes, for our economic security purposes, for our health purposes and our capacity that there is a safety net. When prices are high, the programs perhaps are not necessary, as necessary for our farmers. But if there is some kind of 

disaster, if there is a problem or if there is a supply and demand 

problem, then our farmers will need to have that support so that 

safety net has got to be in place all the time. All the time it may 

not be needed, but whatever framework we put in place has to be 

adaptable to reflect the economic exigencies and other national security exigencies that we may have, because we don’t want to ever 

be in a position of having to be able to get our food and our fiber 

from outside of the country because our own farmers can’t produce 

it. 

We are like that now with national security with the steel industry. We can’t even build battleships with our own steel produced 

here. We got to import it. 

So this is a question I would hope that would be on the table and 

considered when we develop farm policy long term with the Farm 

Bill and with our budgets because we have got to maintain capacity. 

Can you respond to that? 

Mr. SCUSE. As I said in one of my earlier remarks that we believe that this mission area, all three agencies do provide a safety 

net, a critical safety net for our farmers and ranchers throughout 

the United States, whether it be a loan program or the other programs administered by the Farm Service Agency, the Risk Management Agency and the crop insurance they provide or the great job 

that Foreign Agricultural Service does. 

Mr. BISHOP. Let me interrupt you to say that the farmers have 

given good reviews on the last Farm Bill. But if we go and tamper 

with it, you know, something that the farmers think is not broken, 

other than the deficiencies, the fraud, waste and abuse and the 

overpayments, that type of thing, it seems to me like, you know, 

we are fixing something that is not broken. 

Mr. DOLCINI. Mr. Bishop, I do have some good statistics to report 

on that very question. You know, you acknowledge the 14 percent 

goal. FSA has exceeded that goal over the last several years and 

we have gone from about 16 percent in 2007 to about a little over 

19 percent last year. 

I mentioned to Mr. Farr that, you know, we have done a good 

job in California and I think a lot of States can take a lot of credit 

for really going the extra mile when it comes to reaching out to 

farms and ranchers in our loan programs and our farm programs. 

But we will get back with you on the specifics of those other States, 

sir. 


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MARKET ACCESS PROGRAM (MAP)

Mr. KINGSTON. Mr. Brewer, I wanted to ask you about the MAP 

program because there was an amendment on the floor to eliminate 

it and our committee defended it on a bipartisan basis but, you 

know, the $200 million has been called corporate welfare, and I am 

not sure how much longer we can defend it. But you also have the 

National Export Initiative, $20 million. And I am not sure where 

those two overlap and what we can do to help MAP year after year. 

Mr. SCUSE. Can I start while the Administrator, you know, gets 

his paperwork? 

Mr. KINGSTON. Yes. 

Mr. SCUSE. The MAP program and the Foreign Market Development Program both are extremely important, and here is a number 

that I hope will help you defend these programs. 

These two programs, our data shows that for every dollar that 

is invested in these programs there is a return of $35. 

Mr. KINGSTON. Well, and I am going to have to interrupt you on 

that. You know, all programs say that. I mean, if you were in our 

desk for one day you would have five groups from health care to 

education, whatever. 

Mr. SCUSE. That are going to say the same thing. 

Mr. KINGSTON. And that is the problem. And some of them are 

true, and I do think you do have an investment issue here. 

Mr. SCUSE. Congressman, look at our results. I mean, look at 

2008 and the record imports that we had in 2008 of—or exports, 

I am sorry, of $114.9 billion and you look at our exports this year 

projected at $135.5 billion. I mean, we are exporting products. We 

are helping our farmers and ranchers, and we are helping offset 

this Nation’s trade deficit. 

So, you know, I think our numbers prove, and we have got the 

proof to back up those numbers. 

Mr. BREWER. Congressman, if I could add just one thing, you are 

absolutely right about the programs saying that. But in the case 

of MAP, not only is the program saying that but the cooperators 

are saying that. 

U.S. Grains Council has come out with their own study that is 

showing that for the amount, the investment that we put in there, 

they are getting $50 in return in investment. So it is not just the 

program saying that, it is the participants as well. 

Mr. KINGSTON. Once you establish a bulkhead for a product in 

a country, do you withdraw the funding and move to another country and try it? You know, try to expand it or does it just become, 

okay, here is the floor? 

Mr. BREWER. Well, the MAP program is sharing what we put in 

and our cooperators put in as well. We followed the strategy and 

we worked closely with them and worked with their strategy, industry strategy of where they feel they need to be. And so that is 

how the movement goes primarily, is working closely to find out 

what markets are strong for their products. 

Mr. KINGSTON. Politically speaking, we hear from the Washington people only, not from the folks back home on MAP and we 

don’t ever hear from them until Jeff Flake or somebody offers an 

amendment to cut them. 


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I look at programs like that very suspiciously because, you know, 

if we are not hearing it from the grassroots and we are not hearing 

it year around, and if we can’t see it or feel it or touch it, which 

we can’t, it is just—I think that your signal to them right now 

should be MAP is in trouble. 

Mr. BREWER. Sir, interesting you should say that. And I have got 

good news for you, because two of our latest cooperators are actually from Georgia, the Georgia Pecan Growers and the American 

Biomass Trade, both located in Georgia, are new cooperators, participants in MAP. And I will make sure to get the message to them 

that they need to make a little bit more noise, because I am certainly hearing from them and to the value that the MAP program 

is providing. 

Mr. BISHOP. So am I. 

Mr. BREWER. So I will make sure that they need to step up and 

reach out to you. And I will tell them that you said hello and that 

they need to reach out to you. 

Mr. KINGSTON. Yes. Well, tell them that Mr. Flake says hello, 

too. 

FOREIGN AID

Okay. You know, the national objectives to foreign aid—and you 

and I have talked about in a little bit. 

Mr. BREWER. Sure. 

Mr. KINGSTON. But, you know, you did have the goodwill aspect 

from Cold War left over. You had the development from the 1949 

Truman Doctrine saying we are going to help undeveloped countries, and then there was the surplus food—we don’t have surplus 

right now, correct? And then to develop export markets. You know, 

with MAP, with free trade agreements and the money, we kind of 

have number four handled. I think if Truman was alive today and 

looked at what we have gotten for foreign aid, billions of dollars 

and many years later, I think he would have to say we haven’t 

done anything. And I am not even sure about the goodwill. Do you 

feel like we get goodwill? 

Mr. BREWER. Sir, let me again, as I heard your question. 

Mr. KINGSTON. My time has now expired. Here is what I am 

going to do. I will come back. You are going to tee it off with that. 

Just write that down. We will have our continued dialogue about 

it. 

Ms. DeLauro. 

DIRECT PAYMENTS BY STATE

Ms. DELAURO. Thank you very much, Mr. Chairman. 

I would like to make a request. I would like to get a list by State 

of the direct payments that we put out. I don’t know if there is a 

way to identify who is getting direct payments. That may be proprietary information. 

But to the extent possible, what I would like to do is to know 

about those direct payments and, again, because—and I say this to 

my colleague from Georgia, this is a payment regardless of risk 

that is involved and it doesn’t mean crop loss. It doesn’t mean decline in price or anything else, which I understand. That is a difVerDate Mar 15 2010 01:57 Sep 24, 2011 Jkt 068236 PO 00000 Frm 00365 Fmt 6601 Sfmt 6602 E:\HR\OC\A236P2.XXX A236P2

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ferent system. But the direct payment system is one that I think 

we need to take a hard, a hard look at. 

Let me just ask a couple of questions on just the cuts that are 

forthcoming in H.R. 1, depending on what happens. 

Well, anyway, the bill that was passed in the House in two areas, 

the FSA and in FAS. You have FSA, 2,200 county offices, 50 State 

offices, a large number of mandatory discretionary programs. 

FUNDING REDUCTION IMPACTS

According to USDA, funding at the 2008 level would result in at 

least a 39-day furlough for all FSA employees. In return, that 

would result in delays in processing payments and loans. After the 

proposed cuts in H.R. 1 become law, how many FSA employees 

would have to be furloughed and for how long? If you don’t have 

that answer now, I would like to get that answer. 

How many local county offices would close? All of them? If these 

offices are closed, where would farmers go for information about 

their payments, loans or disaster assistance? And would the cuts 

result in delays in processing payments and loans? 

Comparable to FAS, you have got 100 overseas offices, a major 

mission is to facilitate the export of U.S. agricultural products; 

2011 budget proposed a $54 million increase for export promotion 

activities as part of the administration’s NEI. It also included $14.6 

million, as you pointed out, for reconstruction, stabilization in Afghanistan, Pakistan, Iraq and Haiti. 

If the proposed cuts in H.R. 1 become law, how many employees 

would have to be furloughed and for how long? Would it lead to closure of some overseas offices? How would the cuts impact the agriculture reconstruction and stabilization work in Afghanistan, Pakistan, Iraq and in Haiti? 

WORK IN AFGHANISTAN

I just mentioned to you that I came back from Afghanistan. I was 

there last weekend. And I will just tell you that the people that I 

met with, agricultural team OIC, USDA, Eric Grant, USAID Afghanistan. I met with the minister in Laghman Province who deals 

with Ministry of Agriculture, Irrigation and Livestock and the parliamentarians that have jurisdiction over the agriculture section, 

an area I was particularly interested in from several points of view. 

One, I want to know what we are doing and what the production 

piece is. And, by the way, I would compliment your folks as well. 

These are people who came to me while I was there saying do not 

cut back, whether it is USAID or USDA, because we are beginning 

to take root, no pun intended here. 

And the other piece for me is how integrated women are becoming into the farming efforts as well because the world’s farmers are 

women. 

And I also asked, what are we paying for? I would like to know 

what we are paying for. They do not need tractors. They need basic 

farming tools to teach people basic agricultural training, to make 

the land more productive and sustainable, and how that, in fact, 

what we will leave when we do leave, which we need to transition 

as quickly as we can so that they can, the Afghans can take care 

of themselves, in my view. 


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But that is why the importance of understanding what these cuts 

mean overall. So I would like to get that data and that information 

from you as quickly as possible before we move further on what 

these cuts are going to be, whether it is for April 8 or beyond, 

where we are going to be in terms of these efforts and the FSA 

piece as well. 

DIRECT CONSERVATION LOANS

I would just reinforce the loan issue. I have a couple of questions 

about crop insurance, but maybe I can do those for the record. I 

don’t know how long we are going to be here. But to support my 

colleague from Georgia here on the direct conservation loan program, I would just lay out these questions, because zeroing out the 

direct loans skews the program to larger loans, larger operations 

away from those who have the most difficult time securing credit 

to begin with. 

Has the Department done any analysis on how it would fulfill 

their priority mission contained in the Farm Bill if it did not have 

direct conservation loan funds? Do you have an analysis of which 

categories of borrowers would and would not get funded with a single guaranteed loan option, and what is the justification for having 

both the direct and guaranteed loan options for farm operating 

loans and farm ownership loans, but having only one option for the 

conservation loans? 

And I will get those to you in terms of answers for the record. 

Thank you, Mr. Chairman. 

Mr. SCUSE. Thank you, Congresswoman. 

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Mr. KINGSTON. Thank you. 

Mr. Brewer, the floor is yours. 

FOOD AID PROGRAMS

Mr. BREWER. Okay. Thank you, Congressman. 

I think what I wrote down is why do we still do these food aid 

programs? I think that is the gist of your question. 

The bottom line, we strive to promote self-sufficiency in the country that we work in and work with sustainability, self-sufficiency. 

These are things not only in the interest of the country that we 

prioritize, that we work with, that we—part of our tool kit is food 

aid, that we do. Sustainability is something that is just extremely 

important. It helps us in our trade area, it addresses our trade interests, it addresses our humanitarian concerns. It addresses our 

concerns about women and education and just those issues are in 

their interests and in our interests. 

PERFORMANCE METRICS

Mr. KINGSTON. Do you have a metrics that shows progress? One 

of the things that we had last year, very telling, we had the GAO 

in and asked them which NGOs were effective and they did not 

have an answer. The reason they did not have an answer is they 

did not have a clear signal as to what we were trying to accomplish. 

And one of the criticisms is, I think is a solid criticism, on our 

foreign policy, particularly as respects the Middle Eastern war is 

well, what are the metrics of progress and what is the vision here? 

And I think the vision is cloudy and the results are a little cloudy. 

You know, it has been suggested that, well, we get friends in there 

looking at the Sudan. And one of the things I am always interested 

in is Sudan votes with us 10 percent of the time in the U.N. But 

they get $569 million in Public Law 480. 

Ecuador gets zero in Public Law 480, and they vote with us 25 

percent of the time. So they are doing better and they don’t get 

anything from us. 

Bolivia gets zero and they vote with us 30 percent of the time. 

Togo gets zero and they vote with us 46 percent of the time. 

Colombia votes with us 60 percent of the time and we are not 

moving on a free trade agreement with them, which is a huge problem in Colombia and Panama and in South Korea right now in 

terms of if we want to make friends in three countries, there is 

three countries right now that we are really disappointing. 

Nambia gets zero and they vote with us 27 percent of the time 

compared to Ethiopia, which votes with us 17 percent of the time 

and they get $413 million in aid. 

So, you know, the argument promoted not necessarily by USDA, 

but by State Department as we get friends, we get goodwill. There 

is no result in that that you can see in the U.N. Voting record. It 

would be, I think, helpful to us if in your discussions with the State 

Department that you say, hey, look, what is the deal on this, because our constituents use this voting record as a way to figure out 

who our friends are and who our friends aren’t. 

And the voting record really, the information that goes into it 

needs to be changed or modified because this isn’t a fair picture, 


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I don’t think, when you say Ethiopia is with us 17 percent of the 

time. I know that they are with us more than that on things that 

are of our interest, but this is where our constituents are going to 

go, and that is why some of the polling numbers that we have right 

now say the number one thing you should cut is foreign aid, you 

know, and foreign aid is a small percentage of the budget but it is 

enormously popular in terms of all the problems of the world in 

terms of cutting spending. 

You know, stability, the Ivory Coast right now is possibly going 

to have a civil war or very close to it right now. We have foreign 

aid to them, but it hasn’t helped in terms of stability. 

Here is an interesting one. Nigeria doesn’t get Public Law 480 

money. They vote with us 63 percent of the time, which I am not 

even sure if that is accurate. We will have to double-check that 

one. 

But I really feel very strongly that we have to have metrics. We 

go look at these programs and the typical approach to charity is 

kind of a celebrity in charity. Oh, I am going to come here because 

I am from the West, and I am going to feel real good and I am 

going to give the villagers some food and I am going to walk back 

and my halo has never shined brighter. And, you know, 20 years 

down the road nothing has happened. 

I was in Zimbabwe once, I think I told you this, looking at a 

small plot of food. And, Rosa, this is something that I think I mentioned to you, seven NGOs in the backyard of a guy who had a 

yard smaller than this room teaching him how to plant tomatoes 

and lettuce and all that. 

And I would say you know what, the folks in Zimbabwe aren’t 

that dumb and they are not that dependent. What you have done 

is you have kept seven NGOs busy and all the people who come 

over there feel good about themselves, but you are not helping this. 

And the irony is right across the street, if you call it a street, was 

a guy who had a little barber shop going. And he had generated 

electricity because, as you know, they don’t have electricity all the 

time. And he was cutting hair out in his yard and he had a chair 

and he had a little mirror up on a tree. And he had a little bamboo 

kind of room that people walked in. And I thought that is the guy 

you ought to be helping. He is the entrepreneur. He is the guy who 

could go out there and create jobs. 

He doesn’t get a nickel of it and the other guy has seven NGOs 

in his backyard banging into each other of college students who 

were telling him how great he can be. I have a feeling he knew how 

to plant tomatoes. And that is something that haunts the heck out 

of me, especially coming off the book ‘‘Dead Aid,’’ which if you 

haven’t read, I am hoping you will. If you haven’t, I will send it 

to you. Have you read it? 

Mr. BREWER. I have not read it. 

Mr. KINGSTON. My time has expired. I will get back to preaching 

with you in a minute. You and I have had these conversations before. We are going to continue to. 

Mr. Farr. 


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AGRARIAN REFORM

Mr. FARR. Well, Mr. Chairman, I will just follow up on it. I was 

a Peace Corps volunteer in Latin America. And all of the countries 

that we are dealing with that are sort of at-risk issues are agrarian 

countries and we have got—it seems to me interesting to be talking 

to Mr. Brewer some day that we have got this conflict where we 

want to make the world dependent on our food and that is why we 

set up these great export programs and loan people money to buy 

food from us. At the same time in order to stabilize these countries, 

we are going to have to get them to grow food that is going to sell 

in the world market. Yucca, there is not a lot of—there is not a 

world demand for yucca, which is the staple of Colombia, but so 

and I don’t think you are going to stabilize these countries until 

you can get their agrarian section in productive agriculture. And 

some of that—a lot of it is they don’t necessarily grow the products 

that we grow and certainly aren’t going to grow it to—but we are 

not going to get papayas from many places in the United States 

nor bananas nor coffee or any other kinds of things that we import. 

So it is about getting the people who can be on the ground who 

can speak the language and, first of all, see if the farmers even 

want to grow this stuff. You can’t make people grow something 

they don’t want to grow. They are not going to be good at it. And 

if it is for their own market, we have all these cultural biases about 

food. So first thing I learned is it is really hard to change cultural 

habits about eating. We can see that in how Americans have to 

struggle with dieting. But just try to deal with other countries who 

don’t even want to eat the crops that we grow. So it gets down to 

the ground in how we have the right kind of people. And I just 

hope that our foreign aid presence evolved really ought to be in 

agrarian countries, as Mr. Kingston is saying and Ms. DeLauro 

talked about and Mr. Sanford. It needs to be almost a lead agency. 

Diplomacy is not what is going to bring these countries to some 

kind of economic stability. It is going to be in agrarian reform that 

allows people to have ownership of land and they can go out and 

start financing their land like everybody else. Small farmers can 

become very successful. You don’t necessarily have to have a big 

corporate farm to be successful. 

So I would hope that we use our limited dollars a lot smarter and 

leverage with other Federal agencies. They need us more than we 

need them. Now, if the military recognizes that economic development isn’t going to begin just by the military. It is going to begin 

by, as General Abizaid said, an ag expert. 

MARKET PROMOTION

Anyway, one of the things that I would like to just ask is our 

market promotion, you said it is essentially—we are in about five 

major export markets. Is Mexico one of those? 

Mr. BREWER. I am sorry, sir, five major—— 

Mr. FARR. You are reducing non-trade barriers in five major export markets, increasing agriculture exports by $2 billion per year. 

Is Mexico one of them? 

Mr. BREWER. Yes, sir. I believe it is one. 


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Mr. FARR. It is the number one trade partner with California. 

Because I am very interested in how you do that. A lot of it has 

to do with border issues, inspections. We are trying to get a lot of 

product over there as fast as possible because it is all fresh stuff, 

the same thing getting—we have a lot of California growers who 

are growing in Mexico and will continue to do so particularly with 

labor issues and being able to get Mexican labor here. If we can’t 

get Mexican labor in the United States then the United States is 

going to go hire Mexican laborers in Mexico. The biggest tomato 

grower in the country is now all in Mexico. They have abandoned 

its U.S. investments. 

TRADE WITH MEXICO

Mr. SCUSE. We meet with the Mexican Government through the 

Consultative Committee on Agriculture—CCA—to look at barriers 

and how to work through some of the issues. You know that there 

has been an issue with Mexican trucking and the tariffs that were 

put on. The administration has worked very hard with the Mexican 

Government to resolve that situation, and we look forward to that 

being resolved in the very near future. But we continue to have 

dialogue with the Mexican Government just like we do other governments where there are issues or barriers that are preventing 

our products from getting into those countries. So we continue to 

have the dialogue and open up—hopefully open up some of those 

markets. 

Mr. FARR. I think what you are hearing from us as a committee 

is, if you are going to deal with cuts, and there are going to be 

other members of this committee who want to cut across the board, 

we need to know what the impacts are going to be, particularly if 

this is so fundamental to our foreign policy, our trade policy, our 

relationships with our NAFTA partners and hopefully our partners 

in FTA and others. I think the Ag Department may be able to have 

a better voice here on the Hill than the State Department on those 

issues. 

Mr. SCUSE. We need that ability to have that dialogue with those 

countries that have barriers in place so that we can go through 

those and increase our trade or reopen some of the markets that 

have been closed to us. 

Mr. KINGSTON. The gentleman’s time has expired, but I do want 

to say I think on the truck issue that the people who are directly 

involved in it need to be talking more about it far more than the 

MAP beneficiaries because it is a huge issue and it is so important 

to our friends and neighbors in Mexico that this thing work. But 

if we want to help Mexico and these South American countries get 

away from—having a little more independence from the drug cartels and some of the other things that are hurting their economy. 

That is one of the ones that really is so important to Mexico. But 

we don’t hear from constituents on it. Now you might in California. 

Mr. FARR. Yes, I do. 

Mr. KINGSTON. But we don’t hear what I think we should be 

hearing. 

Mr. Bishop. 

Mr. BISHOP. Thank you very much. 


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FSA STAFF REDUCTION

Let me just move to the FSA employment reduction issue. FSA 

is projected to execute a structured buyout of 504 Federal employees to meet a proposed 10 percent reduction of the Federal workforce in fiscal year 2012, which is expected to lead to a net $27 million reduction in salaries and benefits in 2012 and a total savings 

of $174 million through 2015. 

I am more interested in the rationale and the plan behind the 

proposed reduction of the 504 employees. Can you share with us on 

a regional basis where the reductions will occur around the country, and if you don’t have the information can you submit it for the 

record by region and by State? 

Can you tell the subcommittee if the agency also proposes to reduce the number of FSA State offices concurrent with the reduction 

of the 504 employees and, if so, how many and where, which 

States? Are there any levels that are targeted staff performance 

goals in terms of loan servicing by program and other related goals 

and objectives by State and by individual offices, and will those objectives need to be modified if there is a reduction of the 504 employees pursuant to your plans? 

Mr. SCUSE. Thank you, Congressman. 

We are not proposing in that to reduce or close any State or 

county offices. Let me start by saying that. 

Mr. BISHOP. That is good news. 

Mr. SCUSE. I knew it would be. 

We are looking at our Federal staff that is here in Washington, 

D.C. as well as other Federal offices, Kansas City would be another 

example of where we have Federal staff that we need to look at the 

jobs that are being done and how we can downsize government and 

be more effective and make it more cost effective. So we are going 

to be looking at all of our Federal agencies other than those that 

are in the State and county offices to get this reduction of 504 

which, as you mentioned, is 10 percent of our workforce. 

Mr. BISHOP. Thank you. I appreciate that very much because I 

am particularly concerned with the ground level where the rubber 

meets the road in terms of the delivery of services and the mission 

of your agency and the convenience, the customer-friendly operation of those offices is very, very vitally important to the folks in 

our area, particularly throughout the Southeast and in my district 

and in Georgia. 

So that is a very, very serious concern to me, and I appreciate 

your comments there because there is lot of angst right now about 

the possibility of offices being closed or consolidated which will 

hamper even with the budget cuts, particularly with budget cuts, 

the ability of your customers to access the services that the agency 

provides. 

Mr. SCUSE. Mr. Dolcini has something he would like to add. 

Mr. DOLCINI. We are engaged in looking at the series and classifications of these Federal positions and where they would be easiest to achieve. 

But Mr. Bishop, I just want to echo your comments about the 

dedicated county office staff around the Nation. When I came to 

Washington, I had managed 30 county offices and about 200 emVerDate Mar 15 2010 01:57 Sep 24, 2011 Jkt 068236 PO 00000 Frm 00375 Fmt 6601 Sfmt 6602 E:\HR\OC\A236P2.XXX A236P2

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ployees in the State of California to a network of 2,248 county offices with roughly 15,000 or so Federal and county office employees. These are the men and women who for the last 7 or 8 decades 

have delivered farm programs across the counter to the Nation’s 

farmers and ranchers. And I was telling Mr. O’Brien that most 

FSA county offices are like coffee shops in many respects. You go 

to talk with your fellow farmers and ranchers to learn a little bit 

more about local agricultural issues. They really perform an essential service throughout rural America. 

So I appreciate your comments. 

Mr. KINGSTON. Ms. DeLauro. 

Ms. DELAURO. Thank you, Mr. Chairman. I am going to submit 

questions for the record on crop insurance and the issue of improper payments. 

CROP INSURANCE ERROR RATE

Mr. KINGSTON. If the gentlewoman will yield. Is this your last 

question? 

Ms. DELAURO. I am going to wrap up. 

Mr. KINGSTON. I think you might want to throw something at 

Mr. Murphy. He has had a free ride, and he has been sitting there. 

Ms. DELAURO. But I am going to submit them for the record because I want to make another point, and I know we have gone over 

the time already. 

Two North Carolina farmers this week were sentenced for their 

part in a multimillion dollar crop insurance fraud scheme. Earlier 

this month a California farmer was found guilty of defrauding the 

Crop Insurance Program, faces 30 years in prison and a million 

dollar fine. And I understand the $6 billion saved, $4 billion, there 

is $2 billion that also in fact does add to the baseline of the Farm 

Bill, which we are going to deal with next year. I will put that 

aside for the moment. 

But I will submit my questions with regard to the budget cuts, 

your ability to improve quality control, reduce improper payments. 

And while the error rate for crop insurance is 5 percent, it is higher 

than the error rate for the nutrition programs, which is 41⁄2 percent. And what are some of the measures that you are going to be 

taking to reduce the error rate. 

FOOD AID PROGRAMS

I would like to just get back and I will wind up with this. This 

is on the foreign aid issue and the food aid programs. 

What we do is we feed starving people, and it is based on need. 

I suspect that these starving people haven’t any idea how many 

times that their government votes with the United States or not. 

And yes, we do this because it has to do with regional stability, 

which is a reality. And I think our defense people would be the 

first to talk about regional stability and food aid programs. 

Mr. Kingston and I have talked about this a lot, so we are 

friends underneath all of this that we get engaged in here. But he 

often brings up the book that was written by Dambisa Moyo from 

Zambia, Ph.D. In economics, and she talks about the book is what, 

‘‘Dead Aid.’’ 


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But I will say that what she does is that when she talks about 

foreign aid, Ms. Moyo said that she means systematic bilateral or 

multilateral aid. On page 7 of her book she says, ‘‘This book is not 

concerned with emergency and charity-based aid.’’ She is concerned 

that these types of aid can encourage the view that all aid is good. 

She recognizes they are comparatively small efforts and that emergency aid in particular has, ‘‘obvious and fundamental merits.’’ 

Food for Peace is largely an emergency program. The World Food 

Program is an emergency program and we have found many times 

over that of nations who have been the recipients of aid during a 

crisis have become donor countries when they are out of that crisis 

and there are other areas of the world that need that help. 

McGovern-Dole she talks positively about foreign aid programs 

that she calls conditional cash transfers and provided only if the 

recipient does some specific good thing. He or she, and it is mostly 

‘‘she’’ attend school regularly. If you saw the faces of those little 

girls in Afghanistan and what that education means to them and 

their families sending them because there is a food component. 

Otherwise these little girls do not get the advantage of being either 

educated or fed. 

So her criticisms do not apply to McGovern-Dole or to most of the 

Food for Peace. It is important to recognize that when we do talk 

about aid. 

I would also add that she strongly criticizes farm subsidies in the 

United States and in the European Union, particularly—and it is 

not pointed in any direction—cotton and sugar subsidies, making 

it impossible for African farmers to compete in the global marketplace. And I have her words here. America’s cotton farmers receive 

more in subsidies than the entire GDP of Burkina Faso, three 

times more in subsidies than the entire U.S. Aid budget for Africa’s 

500 million people. 

I could go on. Sugar subsidies hurt Africa. OXFAM estimated 

that the regime has deprived Ethiopia, Mozambique, Malawi in potential export earnings. So we need to talk about the aid and look 

at it in its broadest perspectives of what we do with the food aid 

that we provide and today, quite frankly, we are providing it on an 

emergency basis. 

SUSTAINABILITY

One of the things we are trying to do in Afghanistan and other 

places with USDA presence and with USAID presence is the opportunity for these farmers to become sustainable, that their land becomes more productive with some of the talent that we have. That 

is what Norman Borlaug was all about and what we fund in this 

bill. So that in fact they can raise their productivity, feed themselves so that we can lessen what we do here. But it has a regional 

stability that we can not buy anywhere in terms of our own security. 

Mr. KINGSTON. Now if I were a smart aleck, I might say like in 

Rwanda or the Ivory Coast, that kind of stability. 

Ms. DELAURO. Ivory Coast is a different entity. 

Mr. KINGSTON. What about Rwanda? What about Afghanistan? 

They got food aid before 2000. $73 million. 


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Ms. DELAURO. And quite frankly, we should have done more 

about Rwanda than we did at that time and I hope we have 

learned some lessons from Rwanda. 

Mr. KINGSTON. I do, too. 

Rosa, you are finished? Mr. Sanford. 

Because I do want to take another round and I might respond 

to some of this. 

FOOD AID INCENTIVES

Mr. BISHOP. In conjunction with the line that the gentlelady just 

finished, with regard to our aid having conditions attached to it, I 

would like to put it in the context of our global competitor, China, 

that is engaging in aid all across the globe now, particularly in Africa where they give their aid without any strings attached. So it 

places us in a difficult competitive position to try to attach strings 

and requirements and conditions upon some of the aid that we give 

to these countries in Africa if we want to generate goodwill, which 

obviously we want to, and create stability, which obviously we 

would like to have. But to do it by the carrot-and-stick approach 

with the incentives as conditions when we have got China on the 

other hand with a pocket full of money, not experiencing the kind 

of budget shortfalls that we are, and they are giving their aid without any strings attached at all. 

How do we deal with that? 

Mr. BREWER. Should I respond to that rhetorical? 

Mr. BISHOP. In the context of some of the suggestions that Ms. 

DeLauro was making. 

Mr. BREWER. Congressman, I think, again, I don’t want to compare our way of giving aid and our values and why we have done 

it to China because we have given much more than China. I mean, 

according to statistics from World Food Program we have given 41 

percent and they give less than 1 percent. So I mean we are getting 

the job done. We are clearly showing the value and the importance 

we give on this. 

Certainly for the effectiveness of our programs, again as I said 

earlier in response to an earlier question, our three major food aid 

programs have specific purposes behind them. And so to not have 

a strategy or incentives in which to graduate and which to go for 

economic development, et cetera, kind of defeats the value of the 

program. So there is merit to that. But I understand what you are 

saying. 

Mr. BISHOP. I agree with you. There is merit and obviously we 

would like to encourage certain behavior and would like to utilize 

our help as an incentive to encourage that behavior. However, it 

makes it much more difficult when we have another actor in the 

global scene, the global neighborhood that is giving out the goodies 

without strings attached. And to that extent, it creates friends 

where we may be losing our influence. 

And apparently at the escalating pace that is developing with the 

Chinese involvement now nationwide and our beginning to look at 

pulling back, particularly with our budget crisis, it seems to be putting us in a less competitive situation going forward. 


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FOREIGN AID

Mr. KINGSTON. All right. Are you finished? 

Let me say this. I think, number one, I think it would be good 

to have a hearing just about foreign aid in terms of USDA. I think 

that would be helpful. 

Also, I am in agreement with emergency aid. However, I would 

argue that on your tenth year, it is not emergency aid. Ethiopia 

was mentioned, I think, 11 times in the Old Testament; it is one 

of the oldest countries in the world. When I lived there, the population was 14 million. Today it is 80 million. And I think that there 

is a certain view in the West that, oh, well, we are coming here, 

we are going to feed you because we feel guilty about ourselves and 

you are undeveloped still and you can’t take care of yourself. You 

know, the example in the book, and I am hopeful you will get past 

page 7. But I am very glad that my good friend has that book. I 

want to sign it for you. I am going to give one to Mr. Brewer, too. 

Ms. DELAURO. I don’t think I will pay any attention to what you 

say. 

FOOD AID AND ENTREPRENEURISM

Mr. KINGSTON. I am glad you are reading good literature. But it 

gives an example of okay, you are in Senegal, and I have been to 

your guy there on the ground, his name is David something, absolute champ of a guy. We went out to a feeding program, and by the 

way, where did it go—we used to have our stack of rice that we 

give. It is not called rice. Can’t quite read it. That was something 

that this committee did. And to me I think it is nice that when you 

talked about the adventurism of China, for us to go into remote 

spots and see the package of food that says ‘‘USDA’’ on it, I think 

that promotes good will. But the example in this book was okay, 

you got a guy in Senegal and he has a mosquito net company and 

he’s got five people and they are sitting around and they are making nets and they sell these nets for $20 each. Each of the employees has five or six dependents and so of the five employees maybe 

you could say there are actually 20 to 30 people who are living off 

the mosquito net business. 

And then celebrity of the week comes through and says oh, they 

are having mosquito and malaria problems in Senegal. Why don’t 

we dump on the market 200,000 free mosquito nets? Celebrity goes 

home feeling real good and makes all the right circuits, the cocktails, the halo again shining brightly. But what happens to that entrepreneur? We have killed him. What happens to those five employees? They are out of work. What happens to the 25 dependents? They are gone, too. We have an angle on a lot of our food aid, 

and I didn’t really realize how strong it was until I got this gavel. 

And guess who is a big proponent because I have said why don’t 

we do vouchers; if we really want to teach people how to fish, why 

don’t we do vouchers? Suddenly do you know who is calling on me 

is American shippers. Interesting. I have been on this committee 

for many years. Never heard from them. Did you know they had 

such a dog in the fight? Did you know they were so involved with 

food aid? 


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Ms. DELAURO. They ship it, and it is by law they ship it on U.S. 

carriers. 

Mr. KINGSTON. They are extremely charitable about it, and I 

know they ship it at cost. Isn’t that right? How much do we spend 

for American shipping of this food aid? How much do you think it 

is? How much of your budget goes to shipping? 

Mr. BREWER. I know in one of our programs we have $40 million—I think it is the Public Law 480 program, we have $40 million in Commodity Credit Corporation—CCC—funds that are for 

that. And then when that—— 

Mr. KINGSTON. How many programs have vouchers where you 

are actually doing what we are pretending to do, letting people become independent by giving them vouchers to create their own 

mosquito net type companies but for food? 

REGIONAL FOOD PURCHASES

Ms. DELAURO. That is different than food. USAID was different, 

it is foreign aid. This is food aid. But your point is well taken because we had a pilot program, I think it is $25 million, to deal with 

this committee to look at how you dealt with regional purchases, 

et cetera. Now the next Farm Bill will be an opportunity to look 

very—I think you know, you are right. I mean, this is what the 

point is. Food aid is different. 

INTERNATIONAL NEEDS

Mr. Kingston, if you are starving, there is, if you are starving for 

a year, you could be starving for 5 years. We have got places in the 

world where they are starving and it has been continuous. Do you 

say well, hey, the food aid is there for 5 years; you can starve after 

that. Because that is not the point. 

Mr. KINGSTON. But the point would be for a country as old as 

Ethiopia that, okay, because of the Italians and the Nazis—I mean 

they had some real problems in Ethiopia with stability and okay, 

there has to be metrics that are moving folks towards this independence where they don’t have to rely on American food. 

Ms. DELAURO. Your book talks about Ethiopia and Malawi, et 

cetera, and says here is why cotton and sugar subsidies hurt Africa. This is OXFAM. Estimates that the regime has deprived Ethiopia, Mozambique of potential export earnings of $238 million since 

2001. 

Mr. KINGSTON. I am not here to defend cotton or sugar. 

Ms. DELAURO. But I am just saying—— 

Mr. KINGSTON. And absolutely because I will up you one, too. 

Why don’t we do—because Colombia, I don’t know the product that 

Mr. Farr talked about, but they export the heck out of flowers and 

they will do a lot more with FTA which we can’t seem to move. If 

we want to help Panama and Colombia right here in our own hemisphere, move the FTA. 

Ms. DELAURO. Cuba. 

Mr. KINGSTON. Oh, now you have gone too far. 

Mr. BISHOP. With regard to sugar let me remind the gentlelady 

that charity does begin at home. 

Ms. DELAURO. There are two sides of the argument. 


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Mr. KINGSTON. We are going to have my friend Mr. Brewer back 

and you might be the official Secretary at that point, so you can 

come back, too. I know you are looking forward to that. 

Mr. SCUSE. I appreciate that. 

Mr. KINGSTON. And we are going to give each other book reading 

assignments, and we are going to talk about it. But I have a concern, and I can tell you that the interesting thing about Ms. 

DeLauro and me is that we don’t always vote, which you probably 

had no clue on this, we don’t always vote together but when we 

start talking—what is scary—the closer we get to each other in 

terms of these things, and I can promise you that fair-minded people could come up with reforms on food aid that everybody could 

be happy about and go home and talk about proudly. 

But I have great concerns of what we are doing to entire regions 

and continents. And I want to ask you one question. 

SOUTH SUDAN

South Sudan, biggest country in the world, how long is it going 

to take us to get there? Anything on that? Any thought process on 

that? Now that one could be an emergency. I don’t know. 

Ms. DELAURO. South Sudan. You still have Somalia today. You 

mentioned the Ivory Coast. We have met with the AFRICOM people, the people who now have the military responsibility for looking 

at this area and what is happening in these places which are emergency situations. 

Mr. KINGSTON. Well, with that, this hearing is—I don’t think we 

really want you to talk. We were having a good time. 

Mr. SCUSE. I want to thank you and thank the committee and 

the membership for the questions today. Very good questions. I 

know that we owe you some responses, but I want to thank you for 

the opportunity to be here and to meet everyone. 

Mr. BREWER. I was going to say, your South Sudan question, 

whatever happens first it will be AID would go in on an emergency 

basis and we would follow based on the eligibility of our programs. 

Mr. KINGSTON. Well, thanks a lot. 

Mr. BREWER. We will monitor that. 

Mr. KINGSTON. We will stay in touch with all of that, and the 

committee is now closed. 

[The statement of Mr. Brewer follows:] 


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[The statement of Mr. Dolcini follows:] 


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407 

[The statement of Mr. Murphy follows:] 


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(i) 

W I T N E S S E S 

Page 

Brewer, J. D ............................................................................................................. 291 

Dolcini, Val ............................................................................................................... 291

Gensler, Gary ........................................................................................................... 209 

Glauber, Joseph ....................................................................................................... 1 

Merrigan, Kathleen ................................................................................................. 1 

Murphy, W. J ........................................................................................................... 291 

Scuse, M. T ............................................................................................................... 291 

Vilsack, Hon. Thomas .............................................................................................. 1 

Young, Michael......................................................................................................... 1, 291 


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(iii) 

INDEX 

Page 

Secretary of Agriculture ..................................................................................... 1 

Acreage Crop Reporting .......................................................................................... 342 

Administrative Claims ............................................................................................ 193 

Advisory Committees ............................................................................................... 143 

Aerial Photography .................................................................................................. 462 

Agency’s Core Mission ............................................................................................. 485 

Agrarian Reform ...................................................................................................... 373 

Agricultural Land .................................................................................................... 69 

Agricultural Technology Innovation Partnership ................................................. 205 

Agricultural Trade Data .......................................................................................... 487 

Agricultural Trade/Exports ..................................................................................... 108 

Agriculture ............................................................................................................... 222 

Agriculture Payments by State .............................................................................. 318 

Agriculture Research ............................................................................................... 345 

Agriculture Research and Biomass ........................................................................ 180 

Agriculture Safety Net ............................................................................................ 363 

Agriculture Trade .................................................................................................... 339 

Amendments ............................................................................................................ 153 

Animal Traceability ................................................................................................. 188 

APHIS ....................................................................................................................... 201 

Automated Surveillance .......................................................................................... 231 

Beef Trade With China ........................................................................................... 478 

Brazil Cotton ............................................................................................................ 83 

Broadband............................................................................................................... 41, 195

Broadband ................................................................................................................ 54 

Budget Constrained ................................................................................................. 419 

CFTC Rulemaking Impact on Agriculture Producers ........................................... 252 

Chinese Poultry................................................................................................ 70, 85, 184 

Civil Rights .............................................................................................................. 205 

CLERK’S NOTE ....................................................................................................... 102 

Climate Change ....................................................................................................... 473 

Cochran and Borlaug Fellowship Programs .......................................................... 490 

CODEX ........................................................................................................... 51, 147, 477 

Commodity Futures Trading Commission ..................................................... 209 

Commodity Prices .................................................................................................... 249 

Commodity Supplemental Food Program ............................................................ 57, 197 

Common Computing Environment Refresh ........................................................... 153 

Community Gardens ................................................................................................ 58 

Congressional Relations....................................................................................... 121, 155 

Conservation ............................................................................................................ 497 

Conservation Reserve Program ............................................................ 65, 344, 353, 356 

Consumer Education ............................................................................................... 239 

Continuing Resolution ..................................................................................... 52, 62, 192 


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Cooperative Programs ............................................................................................. 506 

Country Strategy Support Fund ............................................................................. 467 

County Office Leases and Procurement ................................................................. 335 

Crop Insurance....................................................................................... 30, 340, 376, 499 

Crop Insurance for Environmentally Sensitive Areas .......................................... 516 

Crop Reporting ......................................................................................................... 495 

Cultural Transformation ......................................................................................... 160 

Dairy Exports ........................................................................................................... 493 

Dairy Import Assessments ...................................................................................... 493 

Deceased Farmers .................................................................................................... 349 

Definitions ................................................................................................................ 225

Delinquent Loans ..................................................................................................... 123 

Department-Wide/Cross-cutting Issues .................................................................. 118 

Direct Conservation Loans .................................................................................. 367, 504 

Direct Loan Delinquency Rate ................................................................................ 357 

Direct Payments................................................................................................... 350, 352 

Direct Payments by State ....................................................................................... 365 

Disaster Programs ................................................................................................... 511 

Discrimination Case Settlements ........................................................................... 93 

Early Outs and Buyouts .......................................................................................... 146 

Earmark Funding .................................................................................................... 192 

Effect of Cuts in Funding ........................................................................................ 229 

Emergency Funding ................................................................................................. 172 

End Users ................................................................................................................. 233 

End Users and Margin Requirements ................................................................... 273 

Energy Programs ..................................................................................................... 202 

Environmental Protection Agency .......................................................................... 48 

EPA Regulations ...................................................................................................... 79 

Error Rates ............................................................................................................... 114 

Ethanol ..................................................................................................................... 42

Exceptions from Transfer of Functions .................................................................. 153 

Farm and Foreign Agricultural Services ....................................................... 291 

Farm Bill................................................................................................................... 32, 65 

Farm Bill Programs ................................................................................................. 513 

Farm Loan Defaults ................................................................................................ 337 

Farm Loan Programs .............................................................................................. 336 

Farm Payments ........................................................................................................ 56 

Farm Program Payments ........................................................................................ 513 

Farm Service Agency ............................................................................................... 191 

Federal Program Assistance ................................................................................... 72 

FETRA Assessment ................................................................................................. 465 

Financial Management Modernization Initiative ................................................. 156 

Food Access .............................................................................................................. 78 

Food Aid................................................................... 92, 94, 183, 346, 371, 376, 378, 470 

Food Aid and Entrepreneurism .............................................................................. 379 

Food Aid Programs .................................................................................................. 312 

Food Labeling Initiative .......................................................................................... 106 

Food Safety ........................................................................................................... 170, 182 

Food Safety Working Group .................................................................................... 86 

Food, Nutrition and Consumer Services ................................................................ 109 

Foreign Agricultural Service Cuts in H.R. 1 ......................................................... 501 

Foreign Aid ............................................................................................................... 89 

Foreign Aid ............................................................................................................... 365 

Foreign Aid ............................................................................................................... 379 

Foreign Market Development Program Success Stories ....................................... 476 


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Foreign Service Officers .......................................................................................... 360 

Forestry Initiatives .................................................................................................. 181 

Formula Funds ........................................................................................................ 179 

Free Trade Agreements ........................................................................................... 347 

FSA County Offices.............................................................................................. 335, 507 

FSA Cuts in H.R. 1 .................................................................................................. 501 

FSA Loan Programs ................................................................................................ 419 

FSA Security ............................................................................................................ 495 

FSA Staff Reduction ................................................................................................ 375 

FSIS ............................................................................................................ 34, 38, 49, 200

FSIS Inspection Program ........................................................................................ 171 

FSIS Retention Rate ................................................................................................ 170 

Funding Cuts ........................................................................................................... 242 

Funding Levels ........................................................................................................ 314 

Funding Reduction Impacts .................................................................................... 366 

Funding Reductions ................................................................................................. 315 

FY 2011 .................................................................................................................... 273

GIPSA Rule .............................................................................................................. 33 

Global Agriculture Development ............................................................................ 509 

Global Hunger .......................................................................................................... 313 

Government Accountability Office Report ............................................................. 88 

Government Shut Down .......................................................................................... 52 

H–2A Guest Worker Program ................................................................................. 53 

Headquarters Employees ........................................................................................ 161 

Homeland Security .................................................................................................. 159 

Horse Protection ...................................................................................................... 176 

HR 1 Impacts ........................................................................................................... 287 

Impact of GIPSA Rule on Trade ............................................................................. 353 

Implementation of ACRE and SURE ......................................................... 462, 496, 511 

Importance to the Economy .................................................................................... 244 

Importation of Processed Poultry Products ........................................................... 49 

Improper Farm Payments ................................................................................... 348, 502 

Income Eligibility ..................................................................................................... 349 

India .......................................................................................................................... 109 

Initiatives ................................................................................................................. 29

Intentional Program Violations .............................................................................. 115 

International ............................................................................................................ 236 

International Importation and Trade .................................................................... 82 

International Needs ................................................................................................. 380 

Interstate Meat Rule ............................................................................................... 39 

Investigations ........................................................................................................... 287 

Investment in Rural America ................................................................................. 63 

IT Modernization ..................................................................................................... 422 

Japan and Trans-Pacific Partnership .................................................................... 478 

Legislative Proposal for User Fees ......................................................................... 285 

Loans Written Off .................................................................................................... 124 

Major Swap Participants ......................................................................................... 234 

Margin Requirements .............................................................................................. 246 

Market Access Program....................................................................................... 364, 474 

Market Promotion .................................................................................................... 373 

McGovern-Dole International Food for Education and Child Nutrition 

Program .............................................................................................. 90, 189, 484, 499 

Monetization of Commodities ................................................................................. 96 

More Regulation for Exchanges that Performed Well During Crisis .................. 280 

National Agriculture Imagery Program ................................................................. 358 


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National Animal Identification Program ............................................................... 85 

National Export Initiative ................................................................................... 339, 345 

National Security ..................................................................................................... 314 

New Production Acreage ......................................................................................... 352 

NIFA Research ......................................................................................................... 100 

Non-Rural Communities ......................................................................................... 507 

Non-Traditional Farmers ........................................................................................ 505 

Nutrition Assistance Programs .............................................................................. 69 

Nutrition Education Crosscut ................................................................................. 155 

Obligations Under Other USDA Appropriations .................................................. 490 

OIG ........................................................................................................................... 174 

Opening Statement—Hon. Secretary Vilsack ........................................................ 3 

Opening Statement—Mr. Brewer, FAS ................................................................. 382 

Opening Statement—Mr. Gensler, CFTC .............................................................. 209 

Opening Statement—Mr. Kingston ........................................................................ 1 

Opening Statement—Mr. Kingston ........................................................................ 209 

Opening Statement—Mr. Kingston ........................................................................ 291 

Opening Statement—Mr. Scuse, FFAS .................................................................. 291 

Opening Statement—Mr. Dolcini, FSA .................................................................. 396 

Opening Statement—Mr. Murphy, FCIC .............................................................. 408 

Organic Research ..................................................................................................... 64 

OSEC Staffing .......................................................................................................... 125 

Outside Legal Counsel ............................................................................................ 144 

Ownership Limits .................................................................................................... 241 

Pay Scale and Merit Based Compensation Adjustments ..................................... 281 

Payment Error Rates ............................................................................................... 42 

Payments and Subsidies ......................................................................................... 87 

Peanut Price Reporting ........................................................................................... 71 

Performance Metrics ................................................................................................ 371 

Personnel and the IT Budget .................................................................................. 253 

Pest Disease Programs ............................................................................................ 172 

Pigford II/WIC Unobligated Balances ........................................................ 101, 193, 463 

Position Limits ......................................................................................................... 282 

Poultry ...................................................................................................................... 36 

Presence in Foreign Countries ................................................................................ 480 

Problems Related to Derivatives ............................................................................ 234 

Process for Writing Rules with SEC ...................................................................... 227 

Proposed Legislation ................................................................................................ 47 

Public Affairs ........................................................................................................... 118 

Public Health Information System ..................................................................... 171, 187 

Questions for the Record—Mr. Aderholt ............................................................... 495 

Questions for the Record—Mr. Bishop ................................................................... 191 

Questions for the Record—Mr. Dicks ..................................................................... 179 

Questions for the Record—Mr. Kingston ............................................................... 99 

Questions for the Record—Mr. Kingston ............................................................... 99 

Questions for the Record—Mr. Kingston ............................................................... 419 

Questions for the Record—Mr. Kingston ............................................................... 252 

Questions for the Record—Mr. Latham ................................................................. 493 

Questions for the Record—Mr. Rogers ................................................................... 176 

Questions for the Record—Ms. DeLauro ............................................................... 182 

Questions for the Record—Ms. DeLauro ............................................................... 499 

Questions for the Record—Ms. Emerson ............................................................... 181 

Questions for the Record—Ms. Kaptur .................................................................. 197 

Questions for the Record—Ms. Kaptur .................................................................. 505 

Questions for the Record—Ms. Kaptur .................................................................. 287 


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Records Check .......................................................................................................... 351 

Re-Establishment of Agricultural Policy Advisory Committee ............................ 469 

Regional Differences in Agriculture ....................................................................... 360 

Regional Food Purchases ........................................................................................ 380 

Regional Innovation Initiative ................................................................................ 206 

Regulations Governing Poultry Imports............................................................. 185, 201 

Regulator and Regulated ......................................................................................... 248 

Renewable and Clean Energy ................................................................................. 40 

Renewable Energy ................................................................................................... 100 

Renewable Energy Programs .................................................................................. 87 

Research Facilities ................................................................................................... 30 

Resource Constraints/Lack of Planning ................................................................. 252 

Resources Devoted to Rulemaking ......................................................................... 274 

Revitalizing Rural America ..................................................................................... 44 

Rising Farmland Prices ........................................................................................... 100 

Rulemaking .............................................................................................................. 247 

Rural Strategy for America ..................................................................................... 32 

Scientific Exchange Programs ................................................................................ 345 

Sequencing ............................................................................................................... 233 

Single Food Safety Agency ...................................................................................... 92 

SNAP ........................................................................................................................ 110 

SNAP Categorical Eligibility .................................................................................. 51 

SNAP Purchases ...................................................................................................... 43 

Socially Disadvantaged Farmers ............................................................................ 361 

Sod Saver Program .................................................................................................. 517 

South Sudan ............................................................................................................. 381 

Special Supplemental Nutrition Program for Women, Infants, and 

Children............................................................................................................... 81, 110 

Speculation ............................................................................................................... 221 

Stabilization and Reconstruction ............................................................................ 355 

Standard Reinsurance Agreement ......................................................................... 514 

State Participation on CRP ..................................................................................... 354 

Strategic Watershed Action Teams ........................................................................ 179 

Study to Restructure and Streamline the Federal Government .......................... 486 

Sustainability ........................................................................................................... 377 

Swap Execution Facilities ....................................................................................... 232 

Swap Execution Facilities ....................................................................................... 284 

Swaps Market Oversight ......................................................................................... 223 

Taiwan ...................................................................................................................... 479 

Tariffs on American Products ................................................................................. 107 

Technical Assistance and Agricultural Research .................................................. 510 

Technology ................................................................................................................ 237 

TEFAP .............................................................................................................. 93, 96, 198 

Tomatoes .................................................................................................................. 194 

Trade Agreements.................................................................................... 37, 97, 107, 472 

Trade with China ..................................................................................................... 109 

Trade with Cuba ...................................................................................................... 347 

Trade with Mexico ................................................................................................... 374 

U.S. Agriculture Export Strategy ....................................................................... 467, 470 

U.S. Implementing Derivatives Regulations ......................................................... 284 

Unauthorized Programs .......................................................................................... 103, 154 

Undue Preference Rule ........................................................................................... 201 

Unfair Agricultural Trade Barriers ........................................................................ 469 

Urban Farmer Outreach ......................................................................................... 507 

US School’s Challenge/Let’s Move Initiatives ....................................................... 103 


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viii 

Value Added Agriculture ......................................................................................... 506 

Vulnerability of the Food Supply to a Terrorist Attack ....................................... 157 

Water and Waste ..................................................................................................... 35 

Web Based Supply Chain Management System ................................................... 173 

WIC ........................................................................................................................... 199 

WIC EBT .................................................................................................................. 116 

WIC Formula Products ............................................................................................ 91 

WIC NSA Costs ........................................................................................................ 118 

Women Farmers ................................................................................................... 186, 503 

Work in Afghanistan ............................................................................................... 366 

Working Capital Fund and Greenbook .................................................................. 163 

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