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97–628 2016

IMPROVING SIZE STANDARDS FOR SMALL 

FARMERS AND RANCHERS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON AGRICULTURE, ENERGY AND 

TRADE 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

NOVEMBER 19, 2015 

Small Business Committee Document Number 114–031 

Available via the GPO Website: www.fdsys.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

CHRIS GIBSON, New York 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

CARLOS CURBELO, Florida 

MIKE BOST, Illinois 

CRESENT HARDY, Nevada 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

YVETTE CLARK, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRENDA LAWRENCE, Michigan 

ALMA ADAMS, North Carolina 

SETH MOULTON, Massachusetts 

MARK TAKAI, Hawaii 

KEVIN FITZPATRICK, Staff Director 

STEPHEN DENIS, Deputy Staff Director for Policy 

JAN OLIVER, Deputy Staff Director for Operation 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Carlos Curbelo ................................................................................................ 1 

Hon. Grace Meng ..................................................................................................... 2 

WITNESSES 

Hon. Mike Bost, (IL-12), United States House of Representatives, Washington, DC ............................................................................................................. 4 

Nicholas D. Paulson, Ph.D., Associate Professor, Agricultural and Consumer 

Economics, University of Illinois at Urbana-Champaign, Urbana, IL ............ 6 

Mr. Jeff Beasley, Co-owner, Beasley & Sons Livestock, Creal Springs, IL, 

testifying on behalf of the National Cattlemen’s Beef Association .................. 7 

Mr. Larry Burgin, Owner, Mushkoday Farm, Delhi, NY, testifying on behalf 

of the National Council of Farmer Cooperatives ............................................... 9 

Mr. Robert Guenther, Senior Vice President, Public Policy, United Fresh 

Produce Association, Washington, DC ............................................................... 11 

APPENDIX 

Prepared Statements: 

Hon. Mike Bost, (IL-12), United States House of Representatives, Washington, DC ..................................................................................................... 18 

Nicholas D. Paulson, Ph.D., Associate Professor, Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, Urbana, 

IL .................................................................................................................... 20 

Mr. Jeff Beasley, Co-owner, Beasley & Sons Livestock, Creal Springs, 

IL, testifying on behalf of the National Cattlemen’s Beef Association ..... 28 

Mr. Larry Burgin, Owner, Mushkoday Farm, Delhi, NY, testifying on 

behalf of the National Council of Farmer Cooperatives ............................ 33 

Mr. Robert Guenther, Senior Vice President, Public Policy, United Fresh 

Produce Association, Washington, DC ........................................................ 37 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

None. 

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(1) 

IMPROVING SIZE STANDARDS FOR SMALL 

FARMERS AND RANCHERS 

THURSDAY, NOVEMBER 19, 2015 

HOUSE OF REPRESENTATIVES, COMMITTEE ON SMALL BUSINESS, SUBCOMMITTEE ON AGRICULTURE, ENERGY AND TRADE

Washington, DC. 

The Committee met, pursuant to call, at 10:00 a.m., in Room 

2360, Rayburn House Office Building. Hon. Carlos Curbelo [chairman of the subcommittee] presiding. 

Present: Representatives Curbelo, Huelskamp, Gibson, Brat, and 

Meng. 

Chairman CURBELO. Good morning. I call this hearing to order. 

Next week, Americans will gather around tables across the country in an abundance of goodwill for one another to celebrate a timehonored tradition, Thanksgiving. America’s oldest holiday is inextricably linked to American agriculture. Approximately 46 million 

turkeys, 2 billion bushels of wheat, and 750 million pounds of cranberries will be consumed. And I will note that Florida makes significant contributions to our nation’s generous bounty that we will 

all enjoy and share with our friends and families over the Thanksgiving holiday. Florida is the country’s largest producer of squash, 

fresh tomatoes, and fresh snap beans, among a great deal of other 

fruits and vegetables. Obviously, this would not be possible without 

the hard work of our nation’s small farmers and ranchers. So I 

think it is a fitting time that this Subcommittee is discussing legislation that will help ensure that they have access to federal programs and are given appropriate consideration by federal agencies. 

Today, the Subcommittee on Agriculture, Energy, and Trade will 

examine H.R. 3714, the Small Agriculture Producer Size Standards 

Improvements Act of 2015, introduced by our colleague, Mr. Mike 

Bost of Illinois. Small business size standards are used by the Federal Government to determine eligibility to receive certain federal 

contracts and Small Business Administration guaranteed loans. 

They are also used by federal agencies when they analyze the economic impact of new regulations on small businesses. 

The existing size standard for agricultural enterprises, $750,000 

in annual receipts, is established in statute and has not been updated in 15 years. It applies to 46 different agricultural subsectors 

from citrus groves to beef cattle ranching. In contrast, the size 

standards for all other industries are developed through a congressionally mandated rulemaking process that is transparent and allows small businesses to provide input. The Small Business Administration analyzes a number of factors—average firm size, startup 

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costs, and entry barriers, industry competition, and the distribution 

of firms by size—and then proposes changes to small business size 

standards through the notice and comment rulemaking process. 

It seems to me that small farmers and ranchers have been neglected for too long. The size standards setting process for agricultural enterprises needs to be modernized. The existing statutory 

size standard does not account for changes in industry structure, 

cost of production, economic conditions, or other factors. That is 

why I am proud to join Ranking Member Meng in cosponsoring 

H.R. 3714, which was introduced by Representative Bost. The 

Small Agriculture Size Standards Improvements Act of 2015 would 

strike the $750,000 statutory size standard and require the SBA to 

establish size standards for agricultural enterprises through the 

notice and comment rulemaking process. It would also require 

those size standards to be periodically reviewed at least every 5 

years. This will ensure that size standards for small farmers and 

ranchers are up-to-date so that they are able to compete for federal 

contracts, have access to SBA guaranteed loans, and are considered 

when agencies draft new regulation. 

I want to thank Mr. Bost and Ranking Member Meng for their 

legislation and the witnesses for appearing before the panel today. 

I look forward to hearing your thoughts on this important legislation. 

With that, I yield to the ranking member for an opening statement. 

Ms. MENG. Thank you, Chairman Curbelo. 

Small businesses play a critical role in the American economy. 

They make up the vast majority of employer firms and create nearly two-thirds of new jobs. Over the years, Congress has created numerous federal program set-asides, tax preferences, and SBA loan 

programs to help these small businesses succeed. However, the advantages confirmed by these programs have led to heated debate 

over who is truly a small business and acceptable small business 

size standards to govern eligibility. 

Last year, small business were able to access over $28 billion in 

capital using SBA loan programs. Many businesses used loan proceeds to keep their doors open, retain employees, and create new 

jobs. Small business-oriented tax provisions allow firms to write off 

expenses quickly, putting money back in their hands to create new 

avenues for growth. One of the most significant impacts size standards have is on federal agency regulatory changes that have the potential to cause financial hardships to small businesses. The Regulatory Flexibility Act requires agencies to assess whether the rule 

they are contemplating would have a significant economic impact 

on a substantial number of small entities. If a business is not considered small, agencies are under no requirement to review the impact that regulatory changes would have on small firms, nor offer 

alternatives. 

Generally, SBA is tasked with defining size standards that establish eligibility for its programs and the applicability of reg flex. 

While the agency has crafted size standards for over 1,100 individual industries, agriculture has been exempted. Instead, Congress has set a rigid gross revenue base standards for all agriculture industries. Unfortunately, the standard has not been adSBREP-219 with DISTILLER

3 

justed since it was statutorily set to $750,000 in the year 2000 and 

is now woefully out of date. 

Since Congress took over setting the standard, agricultural production has shifted dramatically. The midpoint for crops has grown 

88 percent from 589 acres to 1,105, and as of 2011, farms with at 

least 2,000 acres now account for 34.2 percent of crop land. Additionally, with the advent of new technologies, many operating agricultural businesses have been able to increase their production 

rates. 

Yet, during this time there has also been a reduction in the number of small and mid-size farms as crops have been consolidated or 

absorbed by larger farms. According to research by the U.S. Department of Agriculture, the number of farms with at least 

$1,000,000 in sales grew from 24 percent of the value agricultural 

production in 1982 to 59 percent in 2007. During this period, small 

commercial farms with $10,000 to $250,000 in sales, fell by twothirds. 

Properly determining small farm size standards is particularly 

important for New Yorkers. Most of the farmers in my home state 

of New York occurs on smaller farms, and this discrepancy across 

the various sectors of the agriculture industry limits opportunities. 

The Small Agriculture Producer Size Standards Improvements 

Act introduced by Congressman Bost, Chairman Curbelo, and myself, will eliminate the outdated size standard in the year 2000. 

The bill gives the SBA the authority to tailor standards to the wide 

variety of agricultural businesses across our country. What is small 

for a cattleman is not the same for fresh produce producers or 

dairy farmers. Our bill will require SBA to apply their current 

methodology, solicit feedback from industry stakeholders, and implement specific standards that can be tweaked periodically to respond to changes in the industry. 

Today, we will examine how the current size standards are impacting small farms in the real world. We will discuss how H.R. 

3714 will help bring agricultural size standards into the 21st century. It is my hope that H.R. 3714 will give the SBA the tools necessary to set size standards for those in agricultural production 

that are reflective of their industries while ensuring that adjustments are done with careful consideration as to the effects on 

smaller farms. 

In advance of the testimony, I want to thank all the witnesses 

who traveled here today for both their participation and insights 

into this important topic. Welcome, Congressman Bost. 

Thank you, and I yield back, Mr. Chairman. 

Chairman CURBELO. Thank you, Ms. Meng. 

If Committee members have an opening statement prepared, I 

ask that they be submitted for the record. 

I would like to take a moment to explain the timing lights for 

all of you. You will each have 5 minutes to deliver your testimony. 

The light will start out as green. When you have 1 minute remaining, the light will turn yellow. Finally, at the end of your 5 minutes, it will turn red, and I ask that you try to adhere to that time 

limit. 

Our witness for the first panel is someone we know quite well 

around here, the Honorable Mike Bost from Illinois. As a member 

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of both the House Committee on Small Business and the House 

Committee on Agriculture, Mr. Bost has worked hard in Congress 

for small and family-owned farms. Last month, Mr. Bost introduced 

H.R. 3714, the Small Agriculture Producer Size Standards Improvements Act of 2015 in an effort to ensure farms have access 

to the small business programs that help many of them blossom. 

Mr. Bost, we look forward to your testimony. You are now recognized for 5 minutes. 

STATEMENT OF THE HONORABLE MIKE BOST, UNITED STATES 

HOUSE OF REPRESENTATIVES 

Mr. BOST. Thank you, Chairman Curbelo and Ranking Member 

Meng. Thank you for inviting me to testify here today on the Small 

Agriculture Producer Size Standards Improvement Act. My comments will be brief for the sake of everybody’s time and so that we 

can begin hearing from the panelists that are behind us and that 

are on the next panel. 

President Eisenhower once said, ‘‘Farming looks mighty easy 

when the plow is a pencil and you are a thousand miles from a 

corn field.’’ Unfortunately, the quote is accurate for describing the 

statutory established size standard for agriculture producers. 

Agriculture production is an important contribution to the American economy. According to the USDA, the total value of farm products exceeds $390 billion, and the agricultural industry supports 16 

million domestic jobs. Farmers and ranchers provide the food, fiber, 

and fuel that is critical to our daily lives. 

Family-owned farms will account for the majority of farms and 

ranches in the United States. However, the event of new technology has greatly increased productivity, leading to a lower price 

for many commodities. This pressure on commodity prices is expected to grow as newer technologies are adopted. Farming and 

ranching are a low margin industry. This has led to a consolidation 

of many single-family owned operators and operations into larger, 

multifamily-owned operations, but these operations remain small 

businesses. 

Unfortunately, the current small business size standard for agriculture has been set in statute and is outdated. The standard is too 

low for a vast majority of farms and ranches to participate in potential government contracting and subcontracting opportunities. 

In addition, the stationary standard has no rational basis. It appears that the numbers were just picked out of the air by some previous Congress. 

In the 30 years since its enactment, the statutory size standard, 

the Small Business Administration has significantly improved its 

process for determining small business size standards. This should 

address whatever issue previous Congresses had when it established the statutory size standard. 

I believe it is important that Congress and the federal agencies 

promote consistency in policymaking. My legislation will help to ensure that consistency. 

Once again, Chairman Curbelo and Ranking Member Meng, I 

want to thank you for holding today’s hearing and for being original cosponsors of the bill. I also want to thank and welcome your 

questions now, and I will be glad to answer any questions. 

SBREP-219 with DISTILLER

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Chairman CURBELO. Thank you, Representative Bost. I have a 

long list of questions. 

Mr. BOST. Oh, good. I was looking forward to those. 

Chairman CURBELO. But I understand you have another important meeting—— 

Mr. BOST. I do. 

Chairman CURBELO.—that you have to get to. Is there anything else that you have for the record? 

Mr. BOST. No. I want to thank you for bringing this up before 

the Subcommittee, and I would encourage everybody for an aye 

vote to try to move it on to the Full Committee. Thank you. 

Chairman CURBELO. Again, I would like to thank Representative Bost for testifying before the Subcommittee this morning, and 

now we will pause for a moment to have the second panel seated. 

Thank you. 

[Recess] 

Chairman CURBELO. Welcome to all of you. Our next witness 

is Dr. Nicholas Paulson, associate professor of Agricultural and 

Consumer Economics, at the University of Illinois at UrbanaChampaign. Dr. Paulson’s research interests include agricultural finance, farm, and risk management and crop insurance. Dr. 

Paulson received his Ph.D. in Economics from Iowa State University. 

Our second witness is Mr. Jeff Beasley, co-owner of Beasley and 

Sons Livestock in Creal Springs, Illinois. Mr. Beasley’s business is 

located in Mr. Bost’s district. This morning, Mr. Beasley will be 

testifying on behalf of the National Cattlemen’s Beef Association. 

The next witness is Mr. Larry Burgin, owner of Mushkoday 

Farm in Delhi, New York. Mushkoday Farm is a fifth-generation 

family-owned dairy farm. Today, Mr. Burgin will be testifying on 

behalf of the National Council of Farmer Cooperatives. 

And now I yield to our ranking member for the introduction of 

the next witness. 

Ms. MENG. Robert Guenther is a senior vice president of Public 

Policy for United Fresh Produce Association, representing the fresh 

fruit and vegetable industry before Congress, the administration, 

regulatory agencies, and the media. Prior to United Fresh, Robert’s 

political career spanned the halls of Capitol Hill and federal agencies, working for former Representative Gary Condit and at the Environmental Protection Agency. Highly regarded for his bipartisan 

approach and strategic advocacy initiatives, Robert has been appointed to numerous prestigious positions, including the Board of 

Directors of the North American Dispute Resolution Corporation, 

the Minor Crop Farm Alliance, the USDA Agriculture Policy Advisory Committee on Trade for Fruits and Vegetables, and the Food 

and Drug Policy Forum Editorial Advisory Board. Welcome. 

Chairman CURBELO. Thank you all for being here. 

Dr. Paulson, you are recognized for 5 minutes. 

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STATEMENTS OF NICHOLAS D. PAULSON, PH.D., ASSOCIATE 

PROFESSOR, AGRICULTURAL AND CONSUMER ECONOMICS, 

UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN; JEFF 

BEASLEY, CO-OWNER, BEASLEY AND SONS LIVESTOCK; 

LARRY BURGIN, OWNER, MUSHKODAY FARM; ROBERT GUENTHER, SENIOR VICE PRESIDENT, PUBLIC POLICY, UNITED 

FRESH PRODUCE ASSOCIATION 

STATEMENT OF NICHOLAS D. PAULSON 

Mr. PAULSON. Thank you. Good morning, Mr. Chairman, Ranking Member Meng, Subcommittee members, staff, and observers. I 

would like to thank you for the invitation and opportunity to address the Subcommittee as part of this hearing. My testimony 

today will focus on the Small Business Association’s current size 

standard for agricultural businesses and the appropriateness of adjusting those standards as outlined in H.R. 3714. 

Given my background, I will be addressing this issue from a commodity crop farm perspective and will include some specific examples for a corn and soybean farmer. 

I would first like to comment on commodity prices and the cur- rent size standard of $750,000 per year. This standard is fixed by 

statute and has not been updated for the past 15 years. Over that 

time period, the average price received by farmers for many major 

commodities has increased dramatically. For example, the national 

average price received for corn from 2010 to 2014 was 149 percent 

higher than the average from 2000 to 2004. Average soybean prices 

have also increased by 123 percent. Average barley, oat, rice, sorghum, and wheat prices have all also increased by over 100 percent 

over that time period. For the producers of these crops, higher price 

levels have increased sales values even if no real changes have 

been made to the scale of their farm operations. 

Consider a representative corn and soybean farmer in the U.S. 

The current standard would have implied a maximum small farm 

size of nearly 3,000 acres when the standard was initially established. Over the next 5 years, using projected corn and soybean 

prices, the maximum size for a small corn and soybean farmer will 

have fallen to just under 1,450 acres, or roughly half the size of 

what was considered a small farm when the standard was established. 

While this example is specific to a corn and soybean farm, there 

would be a similar impact for producers of all other crops whose 

prices have increased over the past 15 years. 

The increase in sales levels can also be illustrated nationally for 

all farms. The 2012 Census of Agriculture reports that the number 

of farms with at least $500,000 in sales increased by more than 

38,000 operations, and the number of farms with at least 

$1,000,000 in sales increased by more than 24,000 operations since 

2007. 

These figures suggest a significant number of farms have shifted 

beyond the current size standard, losing eligibility status for SBA 

programs with higher price levels and natural responses that these 

farms must be generating more income and have less need for SBA 

programs. However, production expenses have also increased dramatically. According to USDA data, total expenses have increased 

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by 97 percent for all farms and by over 200 percent for grain farms 

in the U.S. since 2000. 

While U.S. farm income has been higher in recent years, current 

baseline projections provide a short-term outlook with price levels 

below what has been experienced recently for most major commodities. With higher production costs, this implies a return to much 

lower income levels for producers of many of these crops. 

Again, a specific example of a corn and soybean farm may help 

to illustrate crop budget data from my colleagues at the University 

of Illinois shows a significant increase in production costs, and the 

average farmer returns for corn and soybeans were negative in 

2014 and are currently projected to be negative for this year and 

for 2016. As production costs have risen, the working capital and 

credit needs of farmers has also increased. Debt use in terms of 

total dollars has increased significantly over the past 15 years. The 

average current or short-term liability balance per U.S. farm has 

increased more than 90 percent, while noncurrent liabilities have 

increased by 50 percent. The increase in debt use on U.S. grain 

farms is even more pronounced with an increase of over 200 percent since 2000. This provides yet another reason to carefully consider the size standard as the current definition can severely limit 

eligibility for SBA programs during a time of critical need for a significant number of farm operations. 

Finally, I would like to make the Committee members aware of 

the precedent for adjustments to sales-based size definitions used 

in agriculture. In 2010, the USDA revised the definitions of their 

size typology categories to reflect the structural changes which had 

occurred over the preceding 15 years. The large family farm threshold was increased to $1,000,000 per year in sales, shifting more 

than 64,000 operations into the small farm typology category. The 

main justification cited for this revision was a significant increase 

of 41 percent in the producer price index from 1995 to 2010. The 

PPI for farm products has further increased by more than 16 percent since 2010. 

I hope the points that I have outlined and that are included in 

my written testimony have convinced the Subcommittee members 

that sales-based size standards for agriculture should, at a minimum be periodically considered for adjustment. Higher commodity 

prices have significantly increased sales levels for U.S. farms, and 

production expenses and debt needs have also been on the rise. 

Thus, it is critical to have an appropriate definition in place for 

small agricultural businesses to ensure continued access to and eligibility for SBA programs. 

I urge the Committee to carefully consider this issue as deliberations proceed. Thank you again for the invitation to address the 

Committee, and for your time as part of this hearing. 

Chairman CURBELO. Thank you for your testimony, Dr. 

Paulson. 

Now, Mr. Beasley, you are recognized for 5 minutes. 

STATEMENT OF JEFF BEASLEY 

Mr. BEASLEY. Good morning, Mr. Chairman, Ranking Member, 

and members of the Subcommittee. My name is Jeff Beasley from 

Creal Springs, Illinois, and I am the co-owner of Beasley and Sons 

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Livestock. It is my pleasure to be here today on behalf of our family farm and the National Cattlemen’s Beef Association. 

Nearly a century ago, my great grandfather and his siblings purchased land that remains the core acreage of the Beasley Farm in 

Southern Illinois. The farm was passed down to my grandfather 

and my father, and over 20 years ago, I joined the family farm. 

Raising beef cattle is a way of life that we love, but we must also 

be financially successful to continue our family’s legacy. 

Our farm has grown and expanded significantly over the years. 

De pending on the year and circumstances, we have been caring for 

anywhere between 2,000 to 4,000 head of cattle per year on several 

hundred acres of our own land, in addition to leasing and managing two other farms. 

The changes to agriculture in my lifetime have been overwhelming and hard to fathom to say the least. As any business, I 

must accept the reality that we are in a family business, and to 

sustain the business, we have to earn a profit on what we have invested. I truly believe that farming and ranching is the quintessential ‘‘small business,’’ and we should be recognized as such in regard to business regulations that can greatly impact us. 

The amount of capital that we are required to manage these days 

is almost mindboggling. Costs of production have soared. It takes 

a good amount of equipment and facilities to manage and care for 

the cattle, and that comes at a hefty price tag. Feed costs, grass 

and crop seedings, fencing, equipment, maintenance and labor costs 

all add up significantly, not to mention the cost of purchasing cattle. 

While I consider a cattle operation the size and structure of ours 

as a small business, the dollars that we must spend and manage 

far exceed what Congress considers an agricultural small business. 

The current definition is not reflective of today’s agricultural industry and limits our ability to operate on a level similar to other nonagricultural businesses. For us to be able to pass along the family 

farm, we need regulations that are modernized, fair and equitable, 

and that is what I am seeking today. 

The outdated size standards of the Small Business Act clearly do 

not reflect modern agriculture. An average farmer in 1987 would 

have been eligible for a loan through the Small Business Administration by not exceeding the statutory limit of $500,000. However, 

the average farm value in 2012 would vastly exceed the current 

statutory limit of $750,000. The Small Business Administration 

should have the authority to adjust statutory limits on a regular 

basis by using data from the Census of Agriculture, as well as 

other data provided by the U.S. Department of Commerce. 

American agriculture is a prime example of an industry that has 

evolved to meet market demands by embracing technology, making 

necessary investments, overcoming natural disasters, and becoming 

more efficient than previous generations. Most of our international 

competitors also face similar risk but the one advantage American 

agriculture has had over the years has been our access to credit. 

The majority of agricultural financing is conducted through private 

local banks, the Farm Credit System, USDA-backed credit programs, and other government loans. Our industry appreciates access to these credit opportunities, but it is important to realize that 

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agriculture has evolved over 30 years into businesses that are more 

diversified in order to face less volatility on the balance sheet. 

Agriculture is a unique industry because we provide a basic necessity—food. History is full of stories of nations rising and falling 

by not having access to basic needs. The United States has seen 

its population of farmers fall from 16.5 percent of the total population in 1950, to 1 percent of the population in 2012. At the same 

time, U.S. agriculture production has grown exponentially from 

$109 billion in 1950 to $279 billion in 2012. 

Unlike previous generations who had very little job options other 

than the family farm, today’s agriculture industry primary consists 

of an educated workforce that wants to engage in agriculture. Due 

to the enormous startup and operational costs, it is very difficult 

for new people to enter the agriculture industry. Even though UDA 

has programs to assist young farmers and new farmers, many 

times those loans are not great enough to cover the necessary cost. 

There is no silver bullet that can solve this problem. A common 

sense approach should be applied to small business loans to provide the agricultural sector greater access for small business programs. 

I appreciate the Subcommittee’s interest and time to have this 

hearing today on how small businesses like our family’s cattle farm 

could accurately be represented within the definitions of the Small 

Business Administration. Enacting the Small Agriculture Producer 

Size and Standards Improvement Act is a step in the right direction to recognize small agricultural businesses. 

Thank you for inviting me to be here today, and I look forward 

to your questions later on. 

Chairman CURBELO. Thank you very much, Mr. Beasley. 

Mr. Burgin, you are now recognized for 5 minutes. 

STATEMENT OF LARRY BURGIN 

Mr. BURGIN. Chairman Curbelo, Ranking Member Meng, and 

members of the Subcommittee, my name is Larry Burgin and I am 

honored to be here today. 

Among with my two oldest songs, I milk 150 cows in Delhi, New 

York. We also grow corn for silage, hay, and other crops on our 300 

acres. 

I market my milk through Dairy Farmers of America, a national 

milk marketing cooperative. DFA is a proud member of the National Council of Farmer Cooperatives, who I am representing here 

today. 

Farmer coops handle about 80 percent of the nation’s work production. 

New York is a diverse agricultural state, and is the nation’s third 

largest producer of milk behind California and Wisconsin. New 

York’s dairy industry is also diverse in both farm size and management style. It has approximately 5,600 dairy farms that range from 

10 cows to several thousand cows. 

In the last 5 years, New York’s milk production has increased 

about 10.5 percent compared to 8.8 percent growth nationally. Milk 

cow numbers, however, have declined by approximately 1 percent. 

Since 2008, New York dairy cows have increased their individual 

milk production from under 20,000 to over 22,000 pounds per cow. 

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Producing more milk with less cows is due to better herd management and efficiencies gained through better genetics and feed rations. This is a trend we have experienced on our dairy over the 

past several decades, as well as nationally. 

USDA’s average milk production numbers demonstrate the industry’s increased efficiency. In 1970, the U.S. dairy herd of 12 million cows was spread across nearly 650,000 dairy farms. That herd 

produced approximately 10,000 pounds of milk per cow per year. In 

2012, 9.2 million cows residing on less than 60,000 dairy farms produced more than double that amount. This increase in productivity 

means that farms that were once considered small may be too large 

to qualify for Small Business Administration loan programs. 

The dairy industry and my farm’s success year over year are dependent upon a number of factors I have outlined in my written 

testimony, but I would like to note that increased production costs 

over the past 20 years have been driven by higher input, labor, and 

land costs. Because of those varied factors, on-farm income varies 

from year to year. In 2009, the dairy industry went through a period of historic low milk prices. Dairy farms struggled and a farm 

my size would have qualified for SBA benefits. Jump to 2014. 

Record-high milk prices would have pushed my farm above the 

SBA threshold. In comparison with farms in New York and other 

parts of the country, my dairy would be considered a smaller operation. But the growing efficiency of the dairy herd and volatility of 

milk prices would sometimes skew my farm’s status with the SBA. USDA’s average all-milk price for 2009 was $12.81 per 100 

weight. An average producing dairy in New York could have had 

up to 260 cows before it breached the SBA threshold of $750,000. 

In 2014, when the average milk price was almost $24, 140 cows 

with an average production would have likely have been too big. 

Mr. Chairman, in 2009, a Florida dairy farm with about 280 

cows would have been considered small by the SBA, but by 2014, 

that number would have decreased to about 150. Farming can 

change dramatically from year to year and generation to generation. Therefore, federal programs meant to support an industry 

need to be revised periodically in order to appropriately reflect 

those changes. 

Through the years, my farm has grown in size. It has grown to 

allow me to spread out expenses and to allow for more family member involvement. It has also helped to ensure my wife and I were 

able to provide for our family, but the growth in size was not directly commensurate with the growth in income. Like other businesses, input costs always seemed to rise and margins to shrink. 

SBA programs should acknowledge these unique aspects of agriculture in order to be a partner in our success. 

I appreciate the House Small Business Committee taking interest in this issue. I support the Small Agriculture Producer Size 

Standards Improvements Act of 2015 introduced by Mr. Bost and 

supported by members of this Committee. The dynamics of today’s 

farms and farmers, especially those who farm as their sole source 

of income, have changed dramatically. I believe the SBA size standards should reflect those changes. 

Thank you for allowing me to be here today. I would be pleased 

to take any questions. 

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Chairman CURBELO. Mr. Burgin, thank you very much for your 

testimony. 

Votes have been called, but what we are going to do is take Mr. 

Guenther’s testimony. Then, we will recess the Committee and we 

will reconvene it at the conclusion of votes. 

So Mr. Guenther, you are now recognized for 5 minutes. 

STATEMENT OF ROBERT GUENTHER 

Mr. GUENTHER. Thank you, Chairman Curbelo and Ranking 

Member Meng. My name is Robert Guenther. I am the senior vice 

president of Public Policy for United Fresh Produce Association. 

As you know, United Fresh is the national trade association representing the entire distribution chain of fresh fruits and vegetables production, including growers, shippers, wholesale distributors, processors, and retailers. Since 1904, United Fresh has 

worked with Congress and the administration to help shape legislative and regulatory policies, to provide strong business climate for 

our members that encourages growth and development. We thank 

you for the opportunity to address an issue that impacts the ability 

of many of our United Fresh members to utilize key programs designed to assist small businesses as they seek to develop and diversify their operations. As you know, United Fresh provided testimony last year when this Subcommittee looked at the issue of the 

size standards used by the Small Business Administration. We 

would also like to commend Representatives Bost and Meng, along 

with Chairman Curbelo, for introducing H.R. 3714, to modernize 

the small business size standards for farmers and ranchers by permitting SBA to update methodologies in setting size standards. 

For a variety of reasons, such as changes in the economy or fluctuation in commodity prices, the number of agriculture producer 

operations classified as small businesses has been on a continual 

decline, even though many of these operations made no significant 

changes that would otherwise justify a reclassification. Taking into 

account the current agriculture business models, a standard many 

times higher than the current $750,000 in annual receipts would 

be the norm in today’s agriculture community. More importantly, 

fruit and vegetable producers, like producers of other commodities, 

will tell you that annual gross receipts are not a reliable indicator 

of an operation’s size. Nor is it a good indicator of profitability, in 

light of the cost of inputs and labor, which in fruit and vegetable 

production is significant. 

In addition to being an unrealistic representation of many agriculture operations, the current SBA standards put agriculture 

small business operators at a disadvantage in their ability to avail 

themselves of assistance that they could utilize to grow and adapt 

their operations. The current $750,000 size standard applied to agriculture operations limits small agriculture producers’ access to 

SBA assistance programs and federal contracting preferences for 

small prime and subcontractors. Key SBA programs that may 

prove useful to produce operations include loans to start, acquire 

or expand a small business or loans that provide long-term, fixedrate financing for assets such as land or buildings, among others. 

As you are aware, in the United Fresh testimony from 2014, we 

suggested that Congress and the administration consider alterSBREP-219 with DISTILLER

12 

natives that would eliminate the current standard and allow SBA 

to review industries currently considered to be small agriculture 

producers. Following that review, SBA could then propose new size 

standards through the normal regulatory process which would 

allow agriculture operators to comment and provide recommendations for a new standard. United Fresh believes that such a proposal would allow SBA to routinely review and update the standard and keep pace with the variations in the agriculture community such as changes in the commodity markets. As a result, the 

correct and appropriate size standard will be in place, better allowing producers to have access to SBA programs and ensure agriculture producers’ needs are better reflected in a variety of regulatory initiatives. In addition, in 2014, we also suggested, and still 

believe, that it would be very helpful if there was greater harmonization of standards used by SBA and the U.S. Department of Agriculture. For example, USDA uses acreage as a determination factor 

of how an operation is categorized. We believe that is a more accurate indicator of whether a business can be considered small and 

should be incorporated in any determination of what category an 

agriculture operation should be included. 

While we still believe that such an initiative by SBA would bring 

about needed changes to size standards that apply to farmers and 

ranchers, we also believe that H.R. 3714 would also result in a 

much-needed modernization of agriculture size standards that reflect present-day farm operations and the current farm economy, 

and we support its passage. We also estimate that approximately 

10 to 15 percent of our members would have better access to SBA 

programs if this legislation were enacted. 

Again, thank you, Chairman Curbelo, Ranking Member Meng, 

for holding this hearing and for allowing me to share United’s position with you today. We look forward to working with you, and I 

will be happy to take any questions. 

Chairman CURBELO. Thank you very much, Mr. Guenther, for 

your testimony, and all of you for your testimonies and for sharing 

your personal stories. After votes, we will open it up to member 

questions. I assume we will be back sometime around 11:20 perhaps. 11:20, 11:30 at the latest, hopefully. 

So with that, we will adjourn, and we will reconvene after votes. 

[Recess] 

Chairman CURBELO. The hearing is called back into order. 

Thank you all for your patience, and I thank my colleagues for 

their cooperation. 

I have a question. Mr. Guenther, in June, the Subcommittee held 

a hearing that focused on current challenges affecting small citrus 

growers, including a bacterial disease called HLB or citrus greening. The cost of producing an acre of citrus have increased from 

$850 to $2,250 due to the cost of treating trees to fight HLB. It 

seems to me that if size standards were periodically reviewed by 

SBA, they could account for the increased cost of producing crops. 

This is a major concern in my area. Do you agree? 

Mr. GUENTHER. Definitely, Chairman Curbelo. I mean, I think 

this is a huge issue down in Florida, and as you know, and from 

the hearing you did this summer, it is spreading to Texas, CaliSBREP-219 with DISTILLER

13 

fornia. I mean, this is a widespread issue that is really affecting 

the country’s citrus industry in particular. 

I will give you a personal perspective that I mentioned earlier to 

some folks. My family is a small citrus farm in Florida. I talked 

to my parents just in the last week and my father is kind of, you 

know, he has got greening and he has decided to probably try other 

products, like peaches and persimmons because it is just not viable 

right now because of the increased costs in terms of keeping a citrus operation running. So, I mean, I just had that conversation. 

Chairman CURBELO. And you view this legislation as a potential solution for those growers? 

Mr. GUENTHER. Exactly. Exactly. Because it gives them more 

diversity in terms of potential programs. It helps them keep those 

crops viable. 

Chairman CURBELO. Thank you very much. 

I would like to now recognize the ranking member for questions. 

Ms. MENG. Thank you, Mr. Chairman. 

I had a question in general. Well, one of Mr. Guenther and then 

anyone who would like to answer. 

One of the major advantages of having SBA set size standards 

for the agriculture industry is increasing eligibility for the agency’s 

7(a) and 504 loan programs. Is access to capital something small 

produce farms or any farm struggles with? And how can SBA’s program fill the gap in the USDA loan programs? 

Mr. GUENTHER. Very good question. I think where there are 

opportunities that a vast majority of farmers use a lot of the different programs at USDA. But there are, you know, kind of those 

areas where the Small Business Administration or the Small Business loan and grant programs that they have can also supplant 

kind of infrastructure investments and things like that that potentially can help them build and increase infrastructure areas that 

potentially USDA cannot apply for. 

So I think, again, to the point we were just talking about this 

legislation, provides, you know, if it was passed and put into law, 

it provides opportunity for a much broader set of agriculture, small 

agriculture producers to benefit from SBA that really cannot right 

now. They are limited in terms because of the size issues related 

to that. 

Ms. MENG. Thanks. Anyone else? 

Mr. BEASLEY. I would address that. In my statement, I mentioned that we have access, all in agriculture, to private local 

banks—Farm Credit, and USDA, for example. However, this would 

give us an alternative, an additional option. One thing that we 

have found—and we deal with local banks, local community 

banks—access to financing is more difficult now than it used to be, 

and that is primarily because of federal regulations on the banking 

industry affecting the smaller banks. So because their hands are, 

I will say ‘‘tied’’ to some extent, and they have trouble dealing with 

the regulations, that is sort of passed on to the farmers like myself, 

and Larry, in having to deal with these banks. So not that we still 

do not have that opportunity, but being able to work with the SBA 

would give us an additional option. And I think could prove to be 

very beneficial. 

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Mr. BURGIN. I would like to comment on that as well. I think 

the SBA would be able to offer producers help in developing business plans and such for expansions or moving into on-farm processing or on-farm marketing as well. 

Ms. MENG. The last time SBA was in control of agricultural size 

standards it tried to reduce the definition to just 100,000 in revenue, which promoted Congress to step in. What is your level of 

confidence that the SBA will do a better job this time around? And 

if you had a wish list, what is your advice to give them to ensure 

that your industries are accurately assessed? 

Mr. BURGIN. I would like to speak to that. I believe that each 

one of the agricultural industries is very unique in its scope and 

size of operations and therefore, the standards should be reviewed 

for each one of those industries to give each producer in each one 

of those industries the access to the SBA funding and counseling 

that is available. 

Mr. BEASLEY. I would agree with the statement. What we see 

is that we just have so many restrictions now. For example, let’s 

say that we wanted to diversify our family operation. If we want 

to go through Farm Credit, they are focused on agriculture only. 

But let’s say that my family wanted to take its beef operation and 

expand, maybe do retail, restaurant, grocery, whatever. Through 

Farm Credit, that might not be a possibility. With SBA, we could 

possibly work with them. So that, again, gives us more opportunities to diversify and have additional finance. So, again, I just think 

that would be truly a good benefit for us. 

Ms. MENG. Thank you. I yield back. 

Mr. GIBSON. Well, thank you. I will yield myself 5 minutes and 

say that I really appreciate this hearing. Thank you very much for 

the testimony. I think it has been very informative. 

And I want to say to Mr. Burgin, who is a constituent of mine, 

how proud I am of him and also his family. I think farmers represent all that is good in our country, and I think you made a very 

compelling case why sticking with $750,000 does not make sense. 

Just because, as you pointed out, just given the business cycle of 

what the 100 weight is going for, you will either be eligible or not 

eligible potentially several times in one year. So that is really not 

the level of certainty that we want to have for our business plans 

going forward. 

My question is, for the record, I would love to hear from Mr. 

Burgin and Mr. Beasley to talk about how you leverage federal programs in general because I think this is very important for the 

American people to hear the public-private partnership. I think it 

is very important that an independent nation needs to be able to 

grow and consume ideally locally, but certainly, produce its own 

food. And that is one of the reasons why we work so hard on a farm 

bill which we do in collaboration with small business, but I think 

it will be worthwhile to hear from both of you how you engage federal programs to ensure the viability of your programs. 

We will begin with Mr. Burgin, and then Mr. Beasley. 

Mr. BURGIN. Well, our farm accesses federal programs mainly 

through the MPP program at this point. It provides us with an insurance for our business. Over the past several years, we have 

done quite a bit of reinvesting in our business, and investing in 

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new technology, and the MPP program allowed us to have an insurance, so to speak, that if milk prices took a severe downturn, 

or the margin caused by milk prices being reduced, if those margins decreased, that we would have enough cash flow in our operation to cover our commitments to the financing required for those 

assets. We also do participate in the countercyclical programs 

through USDA as well for the row crop portion of our operation as 

well. 

Mr. BEASLEY. We, likewise, utilize a lot of USDA services. Primarily, we have worked with FSA, Farm Service Agency. They 

helped administer the drought—the Disaster Assistance Program. 

Probably more so, we work with NRCS, National Resource Conservation Service. They have been valuable because one thing that 

is important to farmers and ranchers is to conserving the soil, the 

land. That is what we make our living off of. We certainly do not 

want to abuse it and there are some good tools working within RCS 

to help us make it more sustainable. So I think it is great that we 

have those options and there are some good programs. I guess 

while I have the opportunity, I will say there is a bit of a downside 

and sometimes working through the federal agency there are a lot 

of hoops to jump through. Time is not always of the essence seeming with them, whereas it may be of the essence with the farmer 

to try to get something accomplished. So make it more user friendly, for lack of a better term, I think would be helpful to farmers 

like ourselves. But certainly, they play a role in helping our operations. NRCS has been out at my farm several times this year as 

we are implementing some conservation practices that are vital to 

the long-term future of our farm. So I think that is very important. 

Mr. GIBSON. I appreciate the testimony of both you gentlemen, 

indeed. It echoes or mirrors some of the things I hear when I am 

out there all the time, mentioning on conservation, how important 

these programs are. They are incentivizing to make these practices 

that are good for our business plans and also good for the earth. 

And I think it also showcases farmers who are premier conservationists, and I think that helps us when we get into conversations 

about, as you indicated or alluded anyway, Mr. Beasley, sometimes 

when government may be very aggressive or looking to move down 

an angle, say with like Waters of the U.S. And when I engage on 

your behalf, I say, ‘‘Look, no one is a stronger conservationist than 

farmers because they know that if they ruin their land, they basically ruin their business plan. So thank you for making that testimony for the record. 

And Dr. Paulson, can you give me an example of some factors 

present today that were not present 15 years ago when these 

standards were set in stone that have significantly impacted prices 

and how these changes have affected financial reporting for small 

farms? 

Mr. PAULSON. So I would say maybe the biggest factor from the 

price perspective is just the amount of volatility that exists in the 

market, and this is kind of echoing some of the statements that 

were made and some of the other panelists’ responses. I covered 

how price levels have increased for many major commodities, but 

it is really the level at which we can see those prices vary. And 

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your comment about how dairies may move in and out of the standard within a year, that is very true for crop producers as well. 

Some of the market factors that I think have been big for crop 

production would be some areas of additional demand that have 

been created, both on the export side and for some alternative domestic uses for crops, and that has created higher competition for 

land across all commodities and just increase that volatility factor 

in addition to moving market prices up. 

Mr. GIBSON. Well, I thank you. And before we close, what I 

would like to do is give each of you an opportunity to have a moment for the record. I mean, we have already got good records of 

what you have said so far, but this is going to be shared far and 

wide, not only within the Committee and the professional staff, but 

it is available then for colleagues as we move bills towards the 

floor. 

So really, I want to start with Mr. Guenther, and just allow you 

to make any closing remarks that can be germane to this bill or 

anything else you think you would want to share to members of 

Congress. 

Mr. GUENTHER. I usually have a lot to share with members of 

Congress. I do want to thank the Committee for allowing us to testify, allowing to hear from producers across the country, different 

parts of agriculture to, you know, this issue is very important to 

a lot of producers and a lot of people within the agriculture community. You know, trying to make sure good, common sense legislation is passed that helps our federal regulatory agencies really address key issues that are important to us. So, again, we want to 

thank you for the opportunity to do this as always and we think 

this bill is extremely important to move forward through the House 

and hopefully through the Senate to be implemented in near future. 

Mr. GIBSON. Thanks, Mr. Guenther. 

Mr. Burgin? 

Mr. BURGIN. I would echo what Mr. Guenther has said in terms 

of the importance of this SBA legislation. I think from the perspective of our farm, the thing that is most concerning to us right now 

is the Waters of the U.S. that the EPA is imposing upon us, and 

quite frankly, I do not know about Mr. Beasley, but on our farm, 

that scares us half to death because of what it could do to our operation. 

I would like to thank this Committee for allowing me the opportunity to testify here today as well. Thank you. 

Mr. GIBSON. Thanks, Mr. Burgin. 

Mr. Beasley? 

Mr. BEASLEY. I will agree with him on the WOTUS comment. 

I think this legislation that Mr. Bost has put forward is very important. 

If you were to come to our farm, you would see that it is a small 

business. It is myself, my father. We have two full-time employees, 

one part-time employee. But we are, as I mentioned in the statement, the quintessential small business by all means. The $750,000 

threshold, however, is way below the level of business that we do. 

So this has definitely got to be addressed. I think it has got to be 

raised significantly because to think that I would not fall under the 

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category of a small farmer I think is ridiculous. So that definitely 

needs to be given consideration, raised substantially, and to make 

farmers like Mr. Bergen and myself eligible for SBA consideration. 

So I want to thank you all for hearing our testimony. It has been 

an honor to be here today, and I appreciate your time and consideration. 

Mr. GIBSON. Thank you. And well said. 

Dr. Paulson? 

Mr. PAULSON. So again, I will maybe try to give a crop producer’s perspective on this. In addition to working with crop producers in Illinois and throughout the Midwest, I also grew up on 

a corn and soybean farm. And as I was preparing some of the numbers in my testimony, I found it kind of coincidental how well my 

family farm kind of fit into that acreage example that I showed 

where in 2000, my father would have been considered a small 

farm. His farm has not changed, but because of what we have seen 

with commodity prices, he would no longer be considered a small 

farm by the definition under statute. So I would just like to reiterate some of the point that have already been made, but just the 

fact that we have had increasing prices but on also the expense 

side, the need, the sheer volume that farmers need in terms of 

working capital, farmers are literally working with twice as many 

dollars, and in the short-term it looks like we are back to very low 

margins. So just the need for access to credit is very critical. So I 

think it is a very important time to reconsider this definition and 

set it at an appropriate level. 

Thank you. 

Mr. GIBSON. Thank you, Doc. Before we close, does the ranking 

member have any final comments? 

Ms. MENG. No. I just want to thank all of you for being here, 

and obviously, to Congressman Bost and Chairman Curbelo for 

pushing this and supporting this important piece of legislation. As 

a New York City member, I obviously do not have farms in my district, but as a New Yorker, and as a mom of two children, I thank 

you for your work. 

Mr. GIBSON. Well, that is awesome. And we appreciate that 

very much that we show a united front on all of this. 

I want to thank all the witnesses for taking time away from their 

businesses to participate in today’s hearing. It was, indeed, very informative. I am proud to be a cosponsor as well, and I know the 

chairman and the ranking member will be recommending to Chairman Chabot that the Committee on Small Business markup H.R. 

3714 as soon as possible. 

And I ask unanimous consent that members have 5 legislative 

days to submit statements and supporting materials for the record. 

Without objection, so ordered. 

And I would also like to wish all the panelists here a very Happy 

Thanksgiving. We certainly are very thankful for you. And with 

that, this hearing is adjourned. 

[Whereupon, at 12:04 p.m., the Subcommittee hearing was adjourned.] 

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Mr. Chairman, Ranking Member, and members of the subcommittee, my name is Jeff Beasley and I am the co-owner of 

Beasley & Sons Livestock from Creal Springs, Illinois. It is my 

pleasure to testify before your subcommittee to discuss my family’s 

beef cattle operation. Nearly a century ago my great-grandfather, 

along with his four siblings and families came together to purchase 

the land that remains as the core acreage of the Beasley Farm in 

Southern Illinois. Times were really tough then for my family and 

the older children worked for friends and family to earn enough 

money, over time, to fulfill their hope of farming their own land. 

The siblings worked together to grow crops and hay, raising cattle, 

hogs, horses and mules. Over the next several decades, they were 

able to scratch out a living and provide for their families, but had 

achieved what they set out to do, and that was farm the land they 

owned and raise livestock. My grandfather, his brother and cousin 

helped work the farm, and eventually the farm was passed down 

to them. Then my grandfather and father became proprietors of the 

farm together. I remember helping work on the farm as a boy, then 

as a teenager and then as a young man. More than twenty years 

ago I joined my father in working and managing the farm. Our 

dream of raising beef cattle and crops is now a reality; we pursued 

the goal of living the life and work that we loved, yet knowing that 

it was a business that must be financially viable to survive. 

Our farm has grown and expanded significantly over the years. 

Depending on the year and circumstances, we have been caring for 

anywhere between 2,000–4,000 head of cattle per year on several 

hundred acres of our own land in addition to leasing and managing 

two other farms. Because of our love for raising cattle, well over 

ninety percent of our farm income is derived from cattle sales. We 

are focused on growing grass, raising and feeding beef cattle that 

we know consumers around this country and the world need and 

desire as their delicious and healthy source of protein. 

The legacy of the Beasley’s cattle raising continues, but the 

changes to agriculture in my lifetime have been overwhelming and 

hard to fathom to say the least. Living and working on a cattle 

farm is a wonderful way of life, and a great place to raise a family. 

You must have a strong desire, passion and good work ethic to accept this challenge of raising livestock. I’ve never had anyone tell 

me they got into agriculture to get rich, but rather because they 

loved doing this work. However, we in agriculture can’t live solely 

on dreams. We must accept the reality that we are in a business, 

and to sustain the business we have to profit on what we have invested I truly believe that farming and ranching is the quintessential ‘‘small business’’. We should be recognized as such and we need 

to be treated as such, in regard to business regulations that can so 

greatly affect us. 

The amount of capital that we are required to manage these days 

is almost mind boggling. Costs of production have soared. It takes 

a good amount of equipment and facilities to manage and care for 

the cattle, and that comes at a hefty price tag. Feed costs, grass 

and crop seedings, fencing, equipment, maintenance and labor costs 

all add up significantly. This doesn’t even take into account the 

cost of purchasing cattle. 

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So while I consider a cattle operation the size and structure such 

as ours as a small business, the dollars that we must spend and 

manage far exceed what Congress considers an agricultural small 

business. The current definition is restrictive and limits our ability 

to operate on a level that other non-agriculture businesses operate. 

For us to be sustainable, to expand and profit in order to pass 

along the family farm, or for young persons to enter and start their 

own farm or livestock enterprise, we need regulations that are fair 

and equitable, and that is what I am seeking today. 

The Small Business Act of 1953 authorized the Small Business 

Administration to establish the standards for determining the financial eligibility assistance of small businesses. The definition of 

a small business has been somewhat subjective over the years and 

varies by industry. Under the Small Business Act, a small business 

is determined by number of employees, dollar volume of business, 

net worth, net income, a combination thereof, or other factors. The 

definition is meant to be relative to each industry and reflect the 

differing characteristics among industries. 

In effort to keep up with an evolving economy, the Small Business Administration has proposed comprehensive size standards reform on five different occasions—three of which have occurred since 

the last revision to the agriculture standards for SBA loans. In 

1984, the Small Business Administration proposed changing the 

definition of ‘small’ to farms with cash receipts less than $100,000. 

Congress responded in 1985 by removing SBA’s ability to establish 

a small business size standard for agriculture by enacting a statutory level of $500,000 that was later increased to $750,000 by Congress in 2000. The authority to update the standards has not been 

transferred back to the Administrator of the Small Business Administration. The Small Agriculture Producer Size and Standards 

Improvement Act is a bill I support to amend the Small Business 

Act and return the authority to the Small Business Administration 

to establish size standards for agriculture based on the same process as other small businesses. 

Agriculture is one of the oldest industries in the world, and many 

of our daily concerns haven’t changed: weather, soil, the health of 

my farm animals, debt, natural disasters, and taxes are still my 

priorities. As a cattle farmer, I adjust to the daily challenges and 

try to be successful given the conditions I face. The cattle operation 

my family owns today looks very different from how it started 

when you consider the market conditions and cost of production 

have changed significantly over time. 

The outdated size standards of the Small Business Act clearly do 

not reflect the needs of modern agriculture. Here are some comparisons from USDA’s 1987 Census of Agriculture and USDA’s 

2012 Census of Agriculture for my state, Illinois (see attachment). 

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1987 2012 

Total Number of Farms 88,766 75,087 

Average Farm Size 321 acres 359 acres 

Farms owned by families 85% 86% 

Farmer as primary occupation 64% 50% 

Average Age of Farmer 50.4 years old 57.8 years old 

Average Value of Farm $402,970 $2.26 million 

Average Value of Farmland $1,262/acre $6,305/acre 

Avg. Value of Farm Equipment $60,935 $203,192 

Total Farm Expenses $4.56 billion $13.46 billion 

Market Value of Products Sold $6.37 billion $17.19 billion 

You can see that many farm operations, like mine, are still family owned and operated, but the cost of doing business has increased tremendously; as has the average age of the farmer has 

also increased. By this account, an average farmer in 1987 would 

have been eligible for a loan through the Small Business Administration by not exceeding the statutory limit of $500,000. However, 

an average farm value in 2012 would vastly exceed the statutory 

limit of $750,000 established in 2012. The Small Business Administration should have the authority to adjust statutory limits on a 

regular basis by using data such as the Census of Agriculture that 

is conducted every five years, as well as other data provided by the 

U.S. Department of Commerce. 

Throughout America’s history, our economy has been resilient 

due to our willingness to take risks seeking success when previous 

attempts have failed. In spite of the increasing regulatory and tax 

burdens and the frivolous abuse of the legal system, American continues to be a fertile ground for the entrepreneurial spirit and 

multi-generational, family-owned businesses. For many Americans, 

including myself and my family, this is our pursuit of happiness 

and it is the foundation of the American Dream; something that 

each generation has fought to protect. 

American agriculture is a prime example of an industry that has 

evolved to meet market demands by embracing technology, making 

necessary and often times risky investments, overcoming natural 

disasters and becoming more efficient than previous generations. 

Most of our international competitors also face similar risks, but 

the one advantage American agriculture has had over the years 

has been our access to credit. The majority of agricultural financing 

is conducted through private local banks, the Farm Credit System, 

USDA-backed loans and other government loans. Our industry appreciates access to these credit opportunities, but it is important to 

realize that agriculture in the 21st Century has evolved over 30 

years into businesses that have diversified in order to face less volatility on the balance sheet. 

Agriculture is a unique industry because we provide a basic necessity—food. History is full of stories of nations rising and falling 

by not having access to basic needs. The United States has seen 

its population of farmers fall from 16.5 percent of the total population in 1950, to one percent of the population in 2012. At the 

same time, our production has grown exponentially from $109 billion in 1950 to $279 billion in 2012. Imagine that, less than two 

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percent of the U.S. population is engaged in agriculture and yet we 

are able to feed America and many other nations. We provide stability that most people take for granted. 

Unlike previous generations who had very little job options other 

than the family farm, today’s agriculture industry primarily consists of an educated workforce that wants to engage in agriculture. 

Even still, the average age of farmers continues to increase, and we 

face a growing trend of urbanization that continues to draw the 

next generation away from the farm. Due to the enormous startup 

and operational costs it is very difficult for new people to enter the 

agriculture industry. Even though USDA has programs to assist 

young farmers and new farmers, many times those loans are not 

great enough to cover the necessary costs. So how do we feed the 

entrepreneurial spirit of those who want to stay involved or become 

involved in food production? 

There is no silver bullet that can solve this problem alone but 

one thing our industry has learned over the years is when we are 

confronted challenge we can work together to find a reasonable solution. That same common-sense approach should be applied to 

small business loans to provide the agricultural sector greater access for small business loan programs. Improving the existing tools 

available through the Small Business Administration to modernize 

definition of a small agricultural business. I appreciate the subcommittee’s interest and time to have this hearing today on how 

small businesses like our family’s cattle farm could accurately be 

represented within the definitions of the Small Business Administration. Enacting the Small Agriculture Producer Size and Standards Improvement Act is a step in the right direction to recognize 

small agricultural businesses. Thank you for inviting me to be here 

today. 

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Thank you Chairman Curbelo and Ranking Member Meng, I am 

Robert Guenther, Senior Vice President of Public Policy for the 

United Fresh Produce Association. As you know, United Fresh is 

the national trade association representing the entire distribution 

chain of the fresh fruit and vegetable production including, growers, shippers, wholesaler-distributors, processors and retailers. 

Fruit and vegetable farms account for nearly 10 million acres of 

production with a $57 billion market value and nearly 80 percent 

of fruit and vegetable farms are family owned. Since 1904, United 

Fresh has worked with Congress and the Administration to help 

shape legislative and regulatory policies to provide a strong business climate for our members that encourages growth and development. We thank you for the opportunity to address an issue that 

impacts the ability of many of our United Fresh members to utilize 

key programs designed to assist small businesses as they seek to 

develop and diversify their operations. As you know, United Fresh 

provided testimony last year when this subcommittee looked at the 

issue of the size standards used by the Small Business Administration (SBA). We would also like to commend Representatives Bost 

and Meng for introducing H.R. 3714, to modernize small business 

size standards for farmers and ranchers by permitting SBA to updated methodologies in setting size standards. And on a personal 

note, I grew up on a small family farm which is located in North 

Central Florida and has focused on citrus and nursery production 

for over 100 years. So this issue does take on a personal appeal for 

me. 

For a variety of reasons such as changes in the economy or fluctuations in commodity prices, the number of agriculture producer 

operations classified as small businesses has been on a continual 

decline, even though many of these operations made no significant 

changes that would otherwise justify a reclassification. Taking into 

account current agriculture business models, a standard many 

times higher than the current $750,000 in annual receipts would 

be the norm in today’s agriculture community. More importantly, 

fruit and vegetable producers, like producers of other commodities, 

will tell you that annual gross receipts are not a reliable indicator 

of an operation’s size. Nor is it a good indicator of profitability— 

in light of the cost of inputs and labor, which in fruit and vegetable 

production, is particularly significant. 

In addition to being an unrealistic representation of many agriculture operations, the current SBA standard puts agriculture 

small business operators at a disadvantage in their ability to avail 

themselves of assistance they could utilize to grow and adapt their 

operations. The current $750,000 size standard applied to agriculture operations limits small agriculture producer’s access to 

SBA’s assistance programs and federal contracting preferences for 

small prime and subcontractors. Key SBA programs that may 

prove useful to produce operations include loans to start, acquire 

or expand a small business or loans that provide long-term, fixedrate financing for assets such as land or buildings, among others. 

More importantly when you look at the wide variety of programs 

available at the U.S. Department of Agriculture to help fresh 

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motion and export assistance, technical assistance for conservation 

compliance, nutrition programs, rural and infrastructure development, new and beginning farmers, or organic programs, we believe 

it is important to ensure that there is a level of consistency between USDA and other federal agencies when it comes to a small 

business definitions. 

Finally, among the most significant challenges that agriculture 

operations face, like any business, is compliance with government 

regulations. Some agencies use SBA size standards to assess the 

impact of their proposed regulations in accordance with the Regulatory Flexibility Act. However, the current standard for agriculture operations to qualify as a small business of annual receipts 

of no more than $750,000 was set by Congress in 2000. As discussed earlier, given the enormous changes in agriculture since 

that time, a review of the small business standard, which would 

provide agriculture producers with justifiable regulatory relief, is 

long overdue. 

As you may be aware, in United Fresh’s testimony from 2014, we 

suggested that Congress and the Administration consider alternatives that would eliminate the current standard and allow SBA 

to review industries currently considered to be small agriculture 

producers. Following that review, SBA could then propose new size 

standards through the normal regulatory process, which would 

allow agriculture operators to comment and provide recommendations for a new standard. United Fresh believes that such a proposal would allow SBA to routinely review and update the standard and keep pace with variations in the agriculture community 

such as changes in the commodities markets. As a result, the correct and appropriate size standard will be in place, better allowing 

producers to have access to SBA programs and ensure that agriculture producers’ needs are better reflected in a variety of regulatory initiatives. In addition, in 2014 we suggested and still believe that it would be very helpful if there was greater harmonization of the standards used by SBA and the Department of Agriculture (USDA). For example, USDA uses acreage as a determining 

factor in how an operation is categorized. We believe that is a more 

accurate indicator of whether a business can be considered small 

and should be incorporated in any determination of what category 

an agriculture operation should be included. 

While we still believe that such an initiative by SBA would bring 

about needed changes to size standards that apply to farmers and 

ranchers, we also believe that Reps Bost’s and Meng’s legislation 

would also result in a much-needed modernizing of agriculture size 

standards that reflect present-day farm operations and the current 

farm economy and we support its passage. We also estimate that 

approximately 10 percent of our members would have better access 

to SBA programs if the Bost-Meng legislation were enacted. As has 

been noted, the standard for agriculture producers has been updated only once, in the year 2000; a review is long overdue. We 

agree with the statement made by the National Council of Farmer 

Cooperatives that Representative Bost and Meng’s legislation 

means that ‘‘...farmers, ranchers and growers have greater access 

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to the SBA’s programs and expertise and it will help promote economic activity and job growth across rural America.’’ 

Again, thank you Chairman Curbelo and Ranking Member Meng 

for holding this hearing for allowing me to share United’s position 

with you. We look forward to working with you and I will be happy 

to take questions. 

Æ 

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