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S. HRG. 112–693 

RISK MANAGEMENT AND COMMODITIES 

IN THE 2012 FARM BILL 

HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION AND FORESTRY 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

MARCH 15, 2012 

Printed for the use of the 

Committee on Agriculture, Nutrition and Forestry 

( 

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

COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY 

DEBBIE STABENOW, Michigan, Chairwoman 

PATRICK J. LEAHY, Vermont 

TOM HARKIN, Iowa 

KENT CONRAD, North Dakota 

MAX BAUCUS, Montana 

E. BENJAMIN NELSON, Nebraska 

SHERROD BROWN, Ohio 

ROBERT P. CASEY, Jr., Pennsylvania 

AMY KLOBUCHAR, Minnesota 

MICHAEL BENNET, Colorado 

KIRSTEN GILLIBRAND, New York 

PAT ROBERTS, Kansas 

RICHARD G. LUGAR, Indiana 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

SAXBY CHAMBLISS, Georgia 

MIKE JOHANNS, Nebraska 

JOHN BOOZMAN, Arkansas 

CHARLES E. GRASSLEY, Iowa 

JOHN THUNE, South Dakota 

JOHN HOEVEN, North Dakota 

CHRISTOPHER J. ADAMO, Majority Staff Director 

JONATHAN W. COPPESS, Majority Chief Counsel 

JESSICA L. WILLIAMS, Chief Clerk 

MICHAEL J. SEYFERT, Minority Staff Director 

ANNE C. HAZLETT, Minority Chief Counsel 

(II) 

(III) 

C O N T E N T S 

Page 

HEARING(S): 

Risk Management and Commodities in the 2012 Farm Bill ................................ 1 

Thursday, March 15, 2012 

STATEMENTS PRESENTED BY SENATORS 

Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan, Chairwoman, Committee on Agriculture, Nutrition and Forestry, Washington, 

DC .......................................................................................................................... 1 

Roberts, Hon. Pat, U.S. Senator from the State of Kansas .................................. 2 

Panel I 

Scuse, Michael, Acting Under Secretary, Farm and Foreign Agricultural Services, U.S. Department of Agriculture, Washington, DC .................................... 5 

Panel II 

Carden, Bob, on behalf of Ruth Gerdes, Crop Insurance Agent, Winter Haven, 

FL .......................................................................................................................... 27

Garetson, Jarvis, Farmer, Copeland, KS ............................................................... 25 

Hills, Hope, Grower, Bangor, MI ............................................................................ 24 

Rutledge, Steve, Chairman, President, and CEO, Farmers Mutual Insurance 

Company, West Des Moines, IA .......................................................................... 28 

Panel III 

Coley, Chuck, Chairman, National Cotton Council, Vienna, GA ......................... 50 

Grissom, Jimbo, President, Western Peanut Growers Association, Seminole, 

TX .......................................................................................................................... 47

Johnson, Pam, First Vice President, National Corn Growers Association, 

Floyd, IA ............................................................................................................... 43 

Satterfield, Travis Henry, Partner, Satterfield Farms; Rice Producer, Bolivar 

County, MS ........................................................................................................... 48 

Wellman, Steve, President, American Soybean Association, Syracuse, NE ....... 42 

Younggren, Erik, President, National Association of Wheat Growers, Hallock, 

MN ......................................................................................................................... 45 

Panel IV 

Best, Ryan, President, Future Farmers of America, Portales, NM ..................... 63 

Johnson, Roger, President, National Farmers Union, Washington, DC ............. 60 

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

DC .......................................................................................................................... 61

APPENDIX 

PREPARED STATEMENTS: 

Lugar, Hon. Richard G.: ................................................................................... 74 

Thune, Hon. John: ............................................................................................ 76 

Best, Ryan: ........................................................................................................ 78 

Page

IV 

PREPARED STATEMENTS—Continued 

Coley, Chuck: .................................................................................................... 98 

Garetson, Jarvis: ............................................................................................... 107 

Gerdes, Ruth: .................................................................................................... 111 

Grissom, Jimbo: ................................................................................................ 135 

Hills, Hope: ....................................................................................................... 141 

Johnson, Pam: ................................................................................................... 148 

Johnson, Roger: ................................................................................................. 161 

Rutledge, Steve: ................................................................................................ 179 

Satterfield, Travis Henry: ................................................................................ 186 

Scuse, Michael: ................................................................................................. 197 

Stallman, Bob: .................................................................................................. 205 

Wellman, Steve: ................................................................................................ 214 

Younggren, Erik: .............................................................................................. 220 

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

Stabenow, Hon. Debbie: 

Crop Insurance Lender letter .......................................................................... 232 

Johanns, Hon. Mike: 

Testimony from Ruth Gerdes, prepared statement ....................................... 233 

Lugar, Hon. Richard G.: 

Canada Sugar Brochure ................................................................................... 235 

Nelson, Hon. E. Benjamin: 

Introduction of Ruth Gerdes ............................................................................ 237 

QUESTION AND ANSWER: 

Stabenow, Hon. Debbie: 

Written questions to Michael Scuse ................................................................ 268 

Roberts, Hon. Pat: 

Written questions to Bob Carden .................................................................... 241 

Written questions to Chuck Coley .................................................................. 244 

Written questions to Jimbo Grissom .............................................................. 248 

Written questions to Hope Hills ...................................................................... 250 

Written questions to Pam Johnson ................................................................. 253 

Written questions to Roger Johnson ............................................................... 256 

Written questions to Steve Rutledge .............................................................. 259 

Written questions to Travis Henry Satterfield .............................................. 265 

Written questions to Michael Scuse ................................................................ 269 

Written questions to Bob Stallman ................................................................. 275 

Written questions to Steve Wellman .............................................................. 280 

Written questions to Erik Younggren ............................................................. 283 

Gillibrand, Hon. Kirsten: 

Written questions to Michael Scuse ................................................................ 272 

Written questions to Bob Stallman ................................................................. 276 

Hon. Klobuchar, Amy: 

Written questions to Bob Carden .................................................................... 243 

Thune, Hon. John: 

Written questions to Ryan Best ...................................................................... 240 

Written questions to Bob Carden .................................................................... 242 

Written questions to Chuck Coley .................................................................. 245 

Written questions to Jimbo Grissom .............................................................. 249 

Written questions to Hope Hills ...................................................................... 250 

Written questions to Pam Johnson ................................................................. 254 

Written questions to Roger Johnson ............................................................... 257 

Written questions to Steve Rutledge .............................................................. 262 

Written questions to Travis Henry Satterfield .............................................. 266 

Written questions to Michael Scuse ................................................................ 272 

Written questions to Bob Stallman ................................................................. 278 

Written questions to Steve Wellman .............................................................. 281 

Written questions to Erik Younggren ............................................................. 283 

Best, Ryan: 

Written response to questions from Hon. John Thune .................................. 240 

Carden, Bob: 

Written response to questions from Hon. Pat Roberts .................................. 241 

Written response to questions from Hon. John Thune .................................. 242 

Written response to questions from Hon. Amy Klobuchar ........................... 243 

Coley, Chuck: 

Written response to questions from Hon. Pat Roberts .................................. 244 

Written response to questions from Hon. John Thune .................................. 245 

Page

V 

Garetson, Jarvis: 

Written response to questions from Hon. John Thune .................................. 247 

Grissom, Jimbo: 

Written response to questions from Hon. Pat Roberts .................................. 248 

Written response to questions from Hon. John Thune .................................. 249 

Hills, Hope: 

Written response to questions from Hon. Pat Roberts .................................. 250 

Written response to questions from Hon. John Thune .................................. 250 

Johnson, Pam: 

Written response to questions from Hon. Pat Roberts .................................. 253 

Written response to questions from Hon. John Thune .................................. 254 

Johnson, Roger: 

Written response to questions from Hon. Pat Roberts .................................. 256 

Written response to questions from Hon. John Thune .................................. 257 

Rutledge, Steve: 

Written response to questions from Hon. Pat Roberts .................................. 259 

Written response to questions from Hon. John Thune .................................. 262 

Satterfield, Travis Henry: 

Written response to questions from Hon. Pat Roberts .................................. 265 

Written response to questions from Hon. John Thune .................................. 266 

Scuse, Michael: 

Written response to questions from Hon. Debbie Stabenow ......................... 268 

Written response to questions from Hon. Pat Roberts .................................. 269 

Written response to questions from Hon. Kirsten Gillibrand ....................... 272 

Written response to questions from Hon. John Thune .................................. 272 

Stallman, Bob: 

Written response to questions from Hon. Pat Roberts .................................. 275 

Written response to questions from Hon. Kirsten Gillibrand ....................... 276 

Written response to questions from Hon. John Thune .................................. 278 

Wellman, Steve: 

Written response to questions from Hon. Pat Roberts .................................. 280 

Written response to questions from Hon. John Thune .................................. 281 

Younggren, Erik: 

Written response to questions from Hon. Pat Roberts .................................. 283 

Written response to questions from Hon. John Thune .................................. 283 

(1) 

RISK MANAGEMENT AND COMMODITIES 

IN THE 2012 FARM BILL 

Thursday, March 15, 2012 

UNITED STATES SENATE, 

COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY, 

Washington, DC 

The Committee met, pursuant to notice, at 9:04 a.m., in room 

SH–216, Hart Senate Office Building, Hon. Debbie Stabenow, 

Chairwoman of the Committee, presiding. 

Present: Senators Stabenow, Baucus, Nelson, Klobuchar, Bennet, 

Roberts, Lugar, Cochran, Chambliss, Johanns, Boozman, Grassley, 

and Thune. 

STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR 

FROM THE STATE OF MICHIGAN, CHAIRWOMAN, COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY 

Chairwoman STABENOW. The Committee on Agriculture, Nutrition and Forestry will come to order. Good morning. We so appreciate all of you being here, and let me first start by apologizing for 

the need to reschedule the hearing today. We appreciate your patience and understanding with the uncertainty of the Senate schedule. But we have a lot of people to hear from today, very, very important testimony on all four of our panels, and we have been looking forward to this. 

Nearly a year ago, we kicked off our farm bill work exploring the 

challenges for feeding the world’s growing population. Today, in our 

final hearing on the 2012 farm bill, we will hear from American 

farmers about the tools they need to continue producing the world’s 

safest, most abundant supply of food, fuel, and fiber. 

Every planting season, America’s farmers take a huge gamble 

that their investment will pay off, that the sun, the rain, the markets will come together in just the right combination so they can 

make a living and support their families. 

We have been lucky these past few years that commodity prices 

have been strong and many farm balance sheets are healthy. Yet 

in the same year that USDA estimates America’s farmers will take 

home a record $100 billion in net income, crop insurance paid out 

over $10 billion in indemnities for losses. 

We cannot forget that high commodity prices are of absolutely no 

use to a farmer whose crop was lost in a drought or flood. One 

storm can wipe out an entire crop and jeopardize a farm in a matter of minutes, whether the crop is Michigan cherries or blueberries 

or Kansas wheat. 

2 

From the very beginning of our farm bill discussions, I have 

urged everyone to focus on principles, not individual programs. In 

every meeting, in every hearing, we have heard loud and clear that 

the main principle for today’s farmers is risk management. At a 

time when all of us are struggling to lower the deficit, we cannot 

be focused on favored programs or share of the baseline. Our farm 

policies must be effective and defensible, not just in this Committee, not just to America’s farmers, but to the public at large. 

That is why the era of direct payments is over. 

We are reforming farm policy and transitioning to risk-based 

tools that help farmers who have suffered a loss. Today farmers 

will tell us about weather and market and input cost risks, how 

they manage them day to day, year in, year out, the decisions they 

wrestle with, and lessons they have learned. 

In the next few weeks, the Committee will make difficult decisions about the future of America’s agriculture policy. We want to 

hear about how you manage tight margins, volatile markets, ever 

rising costs, and the unknowns of weather. 

I have heard over and over again from farmers and ranchers 

across the country—we all have—that crop insurance is the most 

important risk management tool. Today we want to hear more 

about how we can strengthen crop insurance to be more effective 

for you. It is absolutely imperative that we get these policies right. 

Sixteen million people in this country have a job because of agriculture. I urge us to keep those 16 million people in mind today. 

The farm bill is a jobs bill, and no farmer in America should lose 

their job or lose their farm because of conditions beyond their control. 

Thanks to everyone for being here. We look forward very much 

to all of your testimony. 

I want to now turn to my friend and colleague, Senator Roberts, 

and I want to say that I very much have appreciated our working 

together through a very challenging year this past year, and I look 

forward to working with Senator Roberts on this farm bill. I also 

want to say that Senator Roberts has a long history of service to 

the farmers of Kansas and America. I appreciate his work on crop 

insurance, making it such a vital and effective tool for farmers, and 

all of his leadership. Senator Roberts, over to you. 

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

STATE OF KANSAS 

Senator ROBERTS. Well, thank you, Madam Chair. I am sort of 

overwhelmed by that introduction. Thank you so terribly much. I 

think, bottom line, we both know that if we do not work together 

in a bipartisan way, we may not get the best possible bill but the 

best bill possible, and we want to get it moving. Like yourself—and 

I want to associate myself with your remarks, and apologies to the 

witnesses having them stay an extra day. The vagaries of the 

schedule in the Senate are renowned, but seldom do we acknowledge, at least, that some of these times, due to the uncertainty in 

the schedule, it causes a lot of problems for folks who have come 

all the way to the Nation’s capital to testify. So thanks to all the 

witnesses and our apologies. 

3 

I could just sort of say ‘‘ditto’’ to your opening comments. I was 

looking here, when I said, ‘‘I look forward to hearing from everyone 

as we talk about how we can help farmers manage their risk so 

they can continue to produce the safest, most abundant, and least 

expensive food supply in the world.’’ 

We do not have the same speech writer, but I think we are on 

the same page. 

Chairwoman STABENOW. We are on the same page. 

Senator ROBERTS. I hear time and time again, just as you have 

said, that our producers and their lenders, especially important in 

regards to stressing lenders, that crop insurance is the cornerstone 

of the farm safety net. 

Why do you have a farm safety net? I know we get in the weeds 

here in this farm bill hearing on the commodity section and on crop 

insurance and some of the details. We have got to feed 9 billion 

people in the next several decades. We are going to have to double 

ag production if we continue to follow through on our country’s role 

of being a humanitarian country and also to try to provide food and 

fiber to areas of the world that cannot feed themselves. If you show 

me a country that cannot sustain itself in terms of its food production, you have a very chaotic situation, and then you do not have 

any world stability, and you get into the problems that we see 

today, more especially in the Mideast. That is a big-time thing, and 

you have got to really stop and think about the role that the farmers and the ranchers play in that. So it is just not a farm bill. This 

is something that affects, as I have said, world stability and not 

only feeding this country but a troubled and hungry world. 

But let us get back to crop insurance. If you doubt its importance, just look at what crop insurance provided this past year. We 

had the worst drought since the Dust Bowl in Kansas, Oklahoma, 

and Texas, in 2011, last year. We had massive flooding along the 

Mississippi and the Missouri rivers, and hurricanes devastated the 

Northeast. Yet just months after all of this ruin, our producers are 

now tuning up their equipment and preparing their fields to put 

seed in the ground once again. 

It is not because of some day-late or dollar-short ad hoc disaster 

package that the farmers are back on their feet producing the food 

that feeds, as I have said before, a troubled and hungry world. No, 

these farmers are able to put the seed in the ground again because 

they managed their risk and protected their operations from Mother Nature’s destruction through the purchase of crop insurance. If 

that is not a success story of the partnership between Government 

and private industry and America’s farmers, I do not know what 

is. 

But just because the program is successful does not mean there 

is not room for improvement. Crop insurance is a big tent with 

plenty of room under it. The program already protects more than 

250 million acres of cropland in the United States. That is twothirds of the eligible acres. But there are still acres that are not 

protected and producers who cannot afford to purchase the kind of 

protection that they need. The more producers under that crop insurance tent and protected from disaster, the more stable our food 

supply and our rural economies will be. 

4 

We made great progress last fall in the joint committee process 

in improving crop insurance to bring even more people under the 

tent. So I look forward to continuing our work to preserve, protect, 

and strengthen crop insurance and to hearing the thoughts of our 

witnesses on how to improve upon an enormously successful program. 

We are also going to hear from our witnesses about Title I farm 

programs. Let me emphasize that I am committed to working, as 

I know the Chairwoman is and has been, with all of my colleagues 

and those involved in agriculture to find a program or a suite of 

programs that will improve agriculture’s safety net. I am confident 

that we can find solutions that we can live up to our WTO commitments—that is important—and that will be simple for our producers to understand, hopefully, and utilize and, also importantly, 

will be reasonable for the FSA of the Department of Agriculture to 

implement. 

I am also confident we can find solutions that will not drive 

planting decisions and lead farmers to plant for Government programs instead of the marketplace. 

Now, there was a time in the not-so-distant past when our farm 

programs greatly distorted planting decisions and led to a lot of 

WTO complications. I, as Chair of the House Ag Committee some 

years ago, along with others here in the Senate—Senator Grassley 

played a key role. He was here earlier. We did everything we could 

to eliminate those distortions. Senator Lugar as Chairman played 

a key, key role in that effort, and I thank you, sir, for that effort. 

I generally like to talk about the good old days, but in the case 

of farm policy, old is not necessarily good. Madam Chairwoman, we 

have a lot of work ahead of us, and I look forward to hearing from 

our witnesses. I appreciate everybody coming, and I thank you very 

much. 

Chairwoman STABENOW. Thank you very much. 

We will ask any member who would like to submit an opening 

statement for the record to please do so. 

We have four excellent panels today, and in order to be able to 

move through all of them, because they all represent voices that we 

very much want and need to hear from, we are going to enforce the 

5-minute rule both on our witnesses and on ourselves in terms of 

asking questions today. 

I am very pleased to have before us once again our first witness, 

Mr. Michael Scuse, who is the Acting Under Secretary of Farm and 

Foreign Agricultural Services. We are looking forward to taking 

away that first word, ‘‘Acting,’’ and making that permanent. He is 

from the first State, better known as Delaware, and has held various positions in agriculture within the State, including Secretary 

of Agriculture from May of 2001 to September of 2008. While serving as Delaware’s Secretary of Agriculture, Mr. Scuse also served 

as the vice president of the National Association of State Departments of Agriculture and president of the Northeast Association of 

State Departments of Agriculture. 

Mr. Scuse, welcome again to the Committee, and we would look 

forward to hearing from you. 

5 

STATEMENT OF MICHAEL SCUSE, ACTING UNDER SECRETARY, 

FARM AND FOREIGN AGRICULTURAL SERVICES, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, DC 

Mr. SCUSE. Thank you very much. 

Chairwoman STABENOW. Senator Roberts, and members of the 

Committee, I thank you very much for the opportunity to speak to 

you today on risk management and commodity programs in light 

of the 2012 farm bill. 

Strong prices are fueling opportunities in rural America, both on 

and off the farm. However, agriculture continues to face unique 

challenges, particularly in regard to markets and weather. Input 

costs and net returns are volatile, and as we saw in 2011, farmers 

always face significant and unexpected weather events that pose a 

direct threat to their businesses. 

Because of such uncertainty, which always exists, even in the 

good times, maintaining a strong safety net in the next farm bill 

is critical. This is particularly true for beginning farmers and 

ranchers. 

For example, we know that established farmers have nearly 

twice the capacity to repay their debts as young farmers. Differences like this further underscore the need to ensure our safety 

net meets the diverse needs of today’s agricultural producers. 

USDA’s safety net consists of crop insurance administered by the 

Risk Management Agency as well as the farm programs offered by 

the Farm Service Agency. 

The primary tool available when disaster strikes is Federal crop 

insurance. The program is delivered through a successful publicprivate partnership which provides diverse, sound risk management tools. Producers generally have a choice of crop policies with 

coverage that they can tailor to best fit their risk management 

needs. Reflecting the record disasters we experienced last year, the 

program has paid over $10 billion in claims for lost revenue and 

production losses. 

To ensure crop insurance programs are best tailored to the needs 

of a diverse set of producers, RMA works closely with private entities and producer groups to provide products that cover an increasing variety of commodities. RMA has also made changes to premium rates for corn and soybeans, resulting generally in lower premiums. We anticipate that the remaining analytical work will be 

completed in time for any further premium rate changes to be implemented for the 2013 crop year for corn, soybeans, wheat, cotton, 

rice, and grain sorghum. 

Recent improvements to the livestock gross margin for dairy producers resulted in significantly increased participation in the program and exhausting funding in March of fiscal year 2011, then 

again in January of fiscal year 2012. Sales had to be suspended because funding for the livestock insurance products is currently 

capped by the Federal Crop Insurance Act at $20 million in any fiscal year. 

The President has proposed a number of changes to crop insurance as part of his plan for economic growth and deficit reduction, 

focusing on key elements which would account for more than $7.6 

billion in savings over 10 years. In addition to crop insurance, since 

2009 producers have been able to turn to disaster assistance proVerDate Nov 24 2008 11:20 Feb 26, 2013 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 C:\DOCS\78274.TXT MICHA
6 

grams authorized under the 2008 farm bill. These programs have 

paid over $3.8 billion to more than 200,000 producers since their 

inception. All five programs expired on September 30, 2011, and 

this leaves the Noninsured Crop Disaster Assistance Program as 

FSA’s only disaster program. Recognizing the critical nature of reliable disaster assistance, the President’s budget for 2013 would extend the 2008 farm bill disaster programs or implement similar 

programs of similar costs. 

Turning to commodity programs, high market prices have limited 

countercyclical payments and marketing loan benefits, although 

marketing assistance loans are expected to continue providing 

about $7 billion in interim financing to help producers. The President’s fiscal year 2013 budget proposes eliminating direct payments 

which are made regardless of economic need. This would save $31.1 

billion over 10 years. 

Many farmers have been struggling due to tight credit markets, 

and FSA credit programs are a critical piece of the safety net in 

such situations, particularly for beginning farmers and ranchers. 

For fiscal year 2010, use of the guaranteed farm ownership program reached an all-time high with direct operating and farm ownership obligations nearly double those of 2008. About 40 percent of 

the direct operating farm applications are now from first-time borrowers. 

Finally, we recognize that these safety net programs are only as 

strong as our ability to deliver them efficiently to producers. In an 

era of tight budgets and fewer staff, USDA must continue to work 

towards better data sharing and streamlined delivery. We are currently working hard implementing the Acreage Crop Reporting 

Streamlining Initiative, which also involves NASS and NRCS. This 

initiative will result in common data standards for better reporting, 

ultimately easing the reporting burden on our farmers and ranchers. Our long-term vision is to allow producers to provide commonly 

required data just one time instead of two currently. 

I also want to emphasize that we remain committed to investing 

in critical IT improvements through FSA’s MIDAS project. The 

first version should be available in 2013. 

In conclusion, looking to the future, the volatile market and 

weather conditions of recent years underscore the importance of a 

strong safety net to producers. In addition, the safety net should 

also take into consideration there is a difference between those who 

are beginning in farming and those who have been around awhile. 

We need to encourage and enable the next generation the opportunity to make an honest and rewarding life in agriculture. 

Thank you. 

[The prepared statement of Mr. Scuse can be found on page 197 

in the appendix.] 

Chairwoman STABENOW. Well, thank you very much. We appreciate your ongoing efforts in working with the Committee and your 

efforts in the Department. 

Mr. Scuse, if you could talk a little bit about implementation, I 

know that there were some difficulties implementing new farm bill 

programs from the 2008 farm bill. I wonder if you might explain 

what were the biggest implementation challenges, what assurances 

you can give us about timely implementation of any changes we 

7 

would make at this point, and what are the two or three main 

issues that you think we should keep in mind in designing any program from an implementation perspective. 

Mr. SCUSE. Well, thank you, Madam Chairwoman. In the 2008 

farm bill, the one we are currently working under, I believe we had 

to implement 15 new programs. We also had to modify, I believe, 

17 existing programs. 

When you look at the issues that we face, just the complexity of 

trying to implement these programs and to write the software that 

was needed to implement these programs, two very complex programs that I will use as an example would be ACRE and SURE. 

These programs are very complex, very different than what we had 

done in the past. The data that is required to make the payments 

under those programs, the information that has to be provided by 

the producers, it created a tremendous burden on the staff at 

USDA to come up with an implementation process for those programs. 

We would encourage the Committee to have as simple and as 

easily understandable programs as possible going forward so that 

we can implement them in a timely manner and that our farmers 

and ranchers across the United States will have a better understanding, an easier understanding of what we are trying to accomplish. 

Chairwoman STABENOW. Well, thank you. I know this is something that both Senator Roberts and I are very concerned about 

achieving, both from the standpoint of the Department, but particularly from the standpoint of farmers being able to use what it 

is we put into place and have it be effective. 

When we talk about risk and the tenets of risk management, reducing the risk for farmers—which is what we are all talking about 

now, how do we provide that risk management—how do you see 

the various programs within the current farm bill meeting those 

criteria of risk management? 

Mr. SCUSE. Well, again, I think crop insurance, as Senator Roberts pointed out, is a key component for managing risk today. It is 

very important. It is used by a large percentage of our farmers and 

ranchers today across the United States. Even those 14 underserved States historically, if you look at the numbers, the farmers 

in those areas have been increasing their participation. So I think 

it is recognized pretty much across the United States, the important role that crop insurance plays in managing the risk. 

I know that the SURE program has been one of controversy because it actually has paid out a year in arrears. But when you look 

at what the SURE program has also accomplished, in those areas 

where we have had major disasters, where there has been a secretarial declaration, this provided additional assistance to those 

farmers in areas that did have a devastating disaster. So that 

helped, on top of the regular crop insurance that they have had. 

So I think that those two programs have been very important. 

If you look at other programs, I think, the President has asked 

that in his budget the five programs that expired in September be 

renewed or programs similar at a similar cost. If you look at what 

these programs have also done for our livestock producers around 

the United States, I think for the first time ever, 2008 really 

8 

helped our livestock producers for those that suffered losses, weather-related losses in areas around the United States, and it was 

used extensively. So these programs have been very helpful in our 

farmers and ranchers managing the risk that they have on a daily 

basis. 

Chairwoman STABENOW. Great. Well, thank you very much. 

Rather than ask another question, I am going to yield back 20 seconds in the interest of efficiency on the Committee. 

Senator Roberts. 

Senator ROBERTS. Something very rare for a Chairperson of a 

Committee. 

Chairwoman STABENOW. That is right. Remember that. 

Senator ROBERTS. I will try to remember that. 

Chairwoman STABENOW. That is right. Remember that. 

Senator ROBERTS. Michael, I had a lot of concerns with the farm 

bill last fall. That is the one we submitted to the super committee. 

But I was generally pleased with the improvements we were able 

to make to crop insurance during that process, and I want to really 

thank you for all the technical help that you and your staff and 

that of the general counsel provided during that process. 

Do you have any feedback or comments on the work we did on 

the crop insurance last fall? Your answer is, ‘‘Yes, and it was wonderful work.’’ 

Mr. SCUSE. Yes, and it was wonderful work, Senator. 

Senator ROBERTS. Thank you. I appreciate that. 

[Laughter.] 

Mr. SCUSE. I hope the rest of the questions are that easy. 

Senator ROBERTS. You know, that did not quite go the way I 

wanted it, but at any rate. 

[Laughter.] 

Senator ROBERTS. All right. Let me talk a little bit about the 

President’s budget, and it is a blueprint. I know the Majority Leader has indicated that that is not going to be considered in the Senate, but at least it is a blueprint. It took money away from crop 

insurance, and it reinvested it in a disaster program, where you 

have indicated in the case of SURE you have to wait 18 months 

for little, if any, help. 

I have not had a single farmer tell me that they prefer a disaster 

program to crop insurance. My question is: Have you? 

Mr. SCUSE. No, I cannot honestly say, Senator, that I have, although in my conversations with members of the agricultural community, where they have received some of the payments such as 

the SURE payments, they have been very appreciative of what 

they have, in fact, received. 

Senator ROBERTS. I am sure they have, but the process involved 

involves a lot of paperwork, and as you have indicated, a year to 

18 months away, that is when you get the payment. I am not sure 

the lender really appreciates that. It would seem to me that we 

could come up with a better way of addressing this, if, in fact, the 

Crop Insurance Program that we have tried to strengthen and improve in our markup and what we did for the super committee. Obviously, if you have some kind of revenue program layered on top 

of that, or wherever it would be, certainly we could hope to do a 

little better in terms of the delivery. 

9 

I am not trying to pick on the SURE program. I know it is very 

helpful, especially in the Northern States. 

The budget proposal just did not take cuts to the companies. 

That is an easy target, although the number of companies has really dramatically been reduced down through the years or fallen 

down through the years. But that budget proposal cut the premium 

assistance to farmers and ranchers, and that is right out of the producers’ pocket, and I just wanted to make that comment. 

How do you think the private delivery system of crop insurance 

is actually working? 

Mr. SCUSE. Thank you for that question because I think it is the 

very best example that we have of a private-public partnership. 

Our delivery system, in my opinion and in the opinion of many others, is outstanding. We are doing a great job working with industry 

to deliver an outstanding product to farmers and ranchers across 

the whole United States. It has worked. It has been very effective. 

I think that for the most part everyone is happy with the way that 

we are currently delivering our crop insurance products. If I would 

have one thing to request, it would be going forward that the Risk 

Management Agency and the Crop Insurance Board be given some 

additional flexibility in helping to develop new programs, new products for our farmers and ranchers going forward. 

So I would ask for that flexibility going forward, but I think the 

current delivery system is one that is outstanding. 

Senator ROBERTS. Well, thank you for that comment. Do you 

think the RMA is making too many unilateral decisions and not 

really soliciting the industry’s input? We hear that from the companies, the agents, all those folks that are responsible for delivering 

the crop insurance. What do you think? 

Mr. SCUSE. Senator, I have to disagree with that. I think we are 

listening. We are meeting with industry. In fact, I just had a meeting with industry in the past 6 weeks. I have agreed to personally 

sit down with them on a quarterly basis and go over the issues, inform them of the direction that RMA is headed and solicit their 

input. My door has always been open, as has Administrator Bill 

Murphy’s door always been open. 

So we have regular contact with industry, and we do listen to the 

industry, and we do want and solicit their input in the decisionmaking process. 

Senator ROBERTS. All right, sir. Thank you. 

Chairwoman STABENOW. Thank you very much. 

Senator Baucus. 

Senator BAUCUS. Thank you, Madam Chairwoman, and thank 

you, Mr. Scuse, very much for attending. I just have two points I 

would like to explore with you: one is the livestock disaster assistance programs and, second, the need for greater assistance for beginning farmers. You have touched on both. 

It is very clear to me that the disaster programs we enacted in 

2008 are an improvement over prior years. In prior years, whenever there was a disaster, producers, whether grain or livestock, 

had to wait for Congress to decide whether or not there was going 

to be any assistance. When Congress finally did act, if it did, then 

producers had to choose between certain years, and it was kind of 

10 

a hodgepodge, frankly, in my judgment, inappropriate for a sophisticated farm program. 

I would just like you to tell us the degree to which you think the 

current disaster—I am talking now about livestock, in particular— 

indemnity, forage, so forth, the plans work and the degree to which 

you think they should be continued. As you answer the question, 

let me tell you that with the disasters we have had, whether it was 

the Mississippi Basin flooding or the drought we have had, in 

Texas especially, it seems to me that the livestock programs have 

helped significantly, provided some certainty, some assurance to 

producers. 

So your thoughts on the livestock programs, the livestock disaster programs, the degree that they should be continued or perhaps even improved? 

Mr. SCUSE. Thank you, Senator. I could not agree with you more. 

These programs are essential to our livestock producers. The issues 

that we have faced since 2008 with extreme cold in areas of the 

country like yours to the flooding that we have experienced this 

past year, the droughts that occurred this past year in the southern part of the United States, we have been able through the 

Emergency Livestock Assistance Program since 2008 to provide $30 

million to our producers. For the Livestock Forage Program, that 

number is $550 million to help our livestock producers obtain hay 

and other grain or forage products to feed the livestock in these 

areas where we are facing these tremendous droughts or where 

flooding has occurred and have not been able to pasture. The Livestock Indemnity Program, Senator, has paid out $145 million so 

far. 

So if you look at the assistance that we have been able to provide 

our livestock producers, it is extremely important in my mind, and 

that is one of the reasons why the President has recognized the importance of these programs, and that is why he has asked for a 

continuation of these or similar programs. They have been very 

helpful for livestock producers. 

Senator BAUCUS. Would you have any suggestions to improve 

them? Or do you think they are working pretty well? What do you 

think? 

Mr. SCUSE. Senator, I do not know of anything that we cannot 

improve upon, and we would be more than willing to work with you 

and with the Committee to look at ways that we can improve upon 

these very important products for our livestock producers. 

Senator BAUCUS. I appreciate that because, I can tell you, in my 

home State of Montana it has made a big difference. There has 

been a lot of flooding at times and drought, and I have talked to 

a lot of producers who are very grateful, frankly, that there is 

something there. It is, not full indemnification, but there is something there that has helped. 

Mr. SCUSE. It is. At least there is something there to help these 

producers get them through to the next year. But, again, we would 

be more than willing to work with you and the members of the 

Committee—— 

Senator BAUCUS. I appreciate that. How do we get more younger 

people into agriculture? You know, with land prices going up so 

much and input costs going up so much, it is tough to get into it. 

11 

Then with younger farmers to some degree competing with the 

Government under CRP, I know we have this transition program. 

What do you advise, how do we help get younger Americans into 

farming? 

Mr. SCUSE. Well, we are helping young and beginning farmers 

enter into agriculture through our loan program at the Farm Service Agency. As you know, it is very difficult for a young or beginning person to obtain the credit necessary to get into agriculture 

today because of the high costs. So we are there with the Farm 

Service Agency to help them obtain credit to help their young and 

beginning farmers get started. 

We are exploring ways to help those getting into agriculture, 

make crop insurance more affordable for them, and we will probably be coming to the Committee and working 

with the Committee on suggestions to help them obtain crop insurance as well. 

Senator BAUCUS. My time has expired, but I have got to tell you, 

kids come to me and say, ‘‘What can we do?’’ It just happened yesterday. Some kids from Terry, Montana, out in the eastern part of 

the State, that was their main question: ‘‘What can we do? We are 

young and we want to get into agriculture.’’ So I hope you will 

work really aggressively on that. 

Thank you. 

Chairwoman STABENOW. Senator Baucus, just to reinforce that, 

we have Ryan Best, who is the president of the FFA, joining us 

later today. We are going to ask him exactly that. 

Senator BAUCUS. Good. 

Chairwoman STABENOW. That is such a critical question, so 

thank you very much. 

Senator Johanns. 

Senator JOHANNS. Thank you, Madam Chair. Good to see you. 

One of the things that occurs to me about this farm bill process 

is that you think about the debt and the deficit and everything else 

going on, and keeping it simple is very, very important in delivering a farm bill that is thoughtfully crafted, straightforward policy, not wasteful. All of those things just make a tremendous 

amount of sense if we are to get a farm bill done this year. So let 

me ask you some questions specifically about keeping it simple relative to risk management. 

The first question: Do you see raising target prices as an appropriate risk management tool? 

Mr. SCUSE. That is a very good question, Senator, and I think 

that in Senator Roberts’ opening statement, he pointed out that 

sometimes there are things that are done by the Government that 

have unintended consequences. So whatever is done in the farm 

bill, we have to be very careful that we do not have those unintended consequences. 

Senator JOHANNS. I will just be very honest with you. I think it 

is a bad idea, and the reason I do is because I think it is market 

distorting. I think it sends the wrong signals. Instead of managing 

risk, you are enticing people to plant a certain crop because of a 

Government program. That is what occurs to me about raising target prices. Is that what you were referring to in reference to Senator Roberts’ testimony? 

12 

Mr. SCUSE. Yes. Again, there is the opportunity that if things are 

done that go too far, they could have some unintended consequences, so, again, that would distort the market. So we have to 

be very careful going forward and crafting the next farm bill, and 

that is why we are willing to work with the Committee, provide 

staff any information that the Committee needs going forward to 

help in crafting a farm bill that I think you pointed out, it has to 

be simple. We want a farm bill that is fair across all the commodities from one part of the United States to the other and one that 

is defensible. You have pointed out we need to be able to defend 

this to our consumers and to the taxpayers of the United States. 

Senator JOHANNS. Let me go to my second question then, and it 

relates to the SURE program. I suspect you know that I am on 

record many, many times being very critical of the SURE program. 

I thought it was—when the idea surfaced, it looked enormously 

complicated to implement. I think you have substantiated that 

today. I agree with Senator Roberts. I have been all over Nebraska 

asking farmers about risk management. They talk about crop insurance. Nobody supports SURE. It is seriously delayed in getting 

help to the farmer. I mean, it is just a very, very flawed program. 

Doesn’t it make more sense—and this is absolutely opposite of what the administration proposed—instead of spending $7 billion, 

or whatever it was, on a program that farmers do not even support, 

to take that and improve the Crop Insurance Program and do the 

things that maybe farmers say about crop insurance, like multiyear disaster, and try to deal with those situations versus investing 

it in a program, SURE, that does not work for farmers? 

Mr. SCUSE. Well, Senator, we are going to continue to try to do 

what we can to improve our Crop Insurance Program. Over the last 

3 years, we have developed new programs; we have come out with 

pilot programs. We have actually done the rate review and looked 

at our methodology so that we could take a look at rates that farmers and ranchers are currently paying. So we are going to continue 

to make those improvements with crop insurance to provide more 

and better products for our farmers and ranchers across the United 

States. 

Having said that, though, in areas of extreme disaster, which we 

have seen this past year, crop insurance may not help some of our 

farmers and ranchers get entirely through to the next year. 

Senator JOHANNS. But my point is that in areas of extreme disaster they are going to wait an eternity for any kind of help. So 

if you have now been flooded, like we were along the Missouri all 

last summer, waiting until a year and a half to get support does 

not make a lot of sense. 

Mr. SCUSE. That is the complaint that I have heard from the agricultural community as well. The SURE program was developed as 

a whole-farm revenue where we look at the revenue from the whole 

farm during a disaster to determine what the payments are. So you 

have to wait for the marketing year to end so you can determine 

what the revenue for the farm was, and I understand that. But we 

will work with the Committee to help develop something that will 

fit the Committee and the farmers’ needs. 

Senator JOHANNS. Thank you, Madam Chair. 

Chairwoman STABENOW. Thank you. 

13 

Senator JOHANNS. I took your 20 seconds plus. 

Chairwoman STABENOW. That is all right. Thank you. 

Senator Bennet. 

Senator BENNET. Thank you, Madam Chair, and thank you for 

having this series of hearings. Mr. Scuse, thank you for your service. 

As you know, the Chairman and the Ranking Member I think 

worked extremely hard to present the super committee with some 

recommendations about what we ought to do with respect to agriculture. Unfortunately, they did not do their job, and now we are 

facing an expiration date for the farm bill this year. 

I wonder if you could share your thoughts with the Committee 

about what from your perspective the administrative challenges 

might be if we do not reauthorize, if we do not pass a bill. What 

would the USDA face if we delay reauthorization? What might it 

mean for Farm Service Agency offices working with producers in 

Colorado, just to take one State that I am familiar with? 

Mr. SCUSE. Senator, as a farmer, I am more concerned about the 

impact of not having a farm bill on the farm community. With the 

high cost of production today, with the risk that our farmers and 

ranchers face, be it weather related or market oriented, to go into 

next year without a farm bill, without any certainty of what the 

programs are going to be, I think would have a huge negative impact and a tremendous burden on our farmers and ranchers across 

the United States. 

We really and truly do need a farm bill going into next year, so 

my concern is not with USDA and what is going to happen to us. 

My concern is what is going to happen to our farmers and ranchers 

if we do not have a farm bill and they do not have the information 

that they need to make good, sound business decisions. 

Senator BENNET. I think that is very well said. What will that 

lack of predictability cause for farmers, do you think? 

Mr. SCUSE. The uncertainty on what types of crops to plant; a 

great deal of uncertainty as to when to market those products that 

you intend to grow; planting, what can and cannot be planted on 

certain acreage. So it would create a tremendous hardship. 

Senator BENNET. You know, one thing I hear a lot is people talk 

at home about they just simply cannot understand the dysfunction 

in Washington. I say often that one of the bright spots is the work 

on the Agriculture Committee where we have a very bipartisan approach to what we are trying to do. So I am very optimistic that 

we are going to be able to get this done, and I think you are right 

to focus our attention on our farmers and ranchers as the people 

that are most affected if we fail to get it done. 

I wanted to follow up on that question that Senator Baucus was 

asking you about the next generation of farmers in this country. 

We know that only 6 percent of farmers and ranchers in the United 

States are 35 years of age or younger. In my home State of Colorado, agriculture generates $40 billion in economic activity, and it 

is frightening to me to think that we are struggling to find the next 

generation to carry on this vital and historic State industry. So we 

need to continue to try to break down the barriers that prevent 

young people from pursuing agriculture, and I wonder if you could 

speak with more specificity about how the agency’s risk manageVerDate Nov 24 2008 11:20 Feb 26, 2013 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 C:\DOCS\78274.TXT MICHA
14 

ment tools like crop insurance and others are helping to accomplish 

this goal? 

Mr. SCUSE. Senator, there are a lot of different ways that we can 

help, in my opinion, to get young people involved in agriculture. 

Right now I think that the best thing that we have going for us 

today is our market prices. When you look at commodity prices 

where they are today, when you look at the livestock prices and 

where they are today, there is hope that they are going to be able 

to actually make a living in farming. Unlike in past years with low 

commodity prices, low livestock prices, our young people were going 

to be going out there working with no hope of ever really making 

a decent living. Today, with the prices, I think that is one encouragement. 

Through our loan programs at USDA, where our young people 

are having difficulty obtaining credit from traditional commercial 

lending institutions, we are there to provide assistance for them. 

And, again, we are looking at ways through the Risk Management 

Agency to make crop insurance more affordable for them, so once 

they obtain the credit that we can help them buy the coverage that 

they need to protect their investment. So we are looking into doing 

that, but there are things that we are looking at doing going forward to encourage and help our young people. 

Senator JOHANNS. Thank you. Thank you for your testimony. 

Thank you, Madam Chair. 

Chairwoman STABENOW. Thank you very much. 

Senator Grassley. 

Senator GRASSLEY. Thank you, Madam Chairman. Thank you, 

Mr. Secretary, for coming to my office where we had a chance to 

visit and get acquainted. I appreciated it very much. I have just a 

couple questions, two different subjects. 

There are still people who are attempting to meet the actively 

engaged test by simply saying that they are involved in the management of a farming operation, but the participation seems to be 

one or two conference calls a year with other partners in the farming operation. These so-called managers—and I use that word 

loosely—of the farms who do not really provide any necessary function in my judgment should not be receiving farm payments. You 

know I have been involved in that issue for a long period of time, 

and we passed some legislation in the last farm bill that we 

thought would take care of it. But I do not think it has really taken 

care of it in a very good way. 

Wouldn’t you agree that people who are not providing any real 

management for the farm should not be allowed to get farm payments? If you agree with that, do you have any comments about 

what FSA is actively doing to close the loophole? 

Mr. SCUSE. Well, Senator, I would agree that we should only be 

making payments to those who should, in fact, be receiving them. 

I know that there was an attempt in the last farm bill to close and 

restrict it additionally. There is a feeling, as you just indicated, 

that maybe that did not happen. But we are willing to work with 

you and the members of the Committee to see what can be done 

for further clarification. 

Senator GRASSLEY. I do not think you have to work with members of the Committee. I just think you have to carry out the intent 

15 

and spirit of what we passed in the last farm bill. But if you want 

to consult with us, I will be glad to consult with you. 

Mr. SCUSE. We would appreciate the opportunity for that conversation, Senator. And, again, we thank you for the comment. 

Senator GRASSLEY. Okay. The Crop Insurance Program has been 

a true success story. Farmers have skin in the game by paying part 

of the premium, and we are able to help ensure farmers make it 

through tough times and severe crop losses and a lot of other 

things that are beyond the control of farmers, like politics, international things, energy policy, the Strait of Hormuz being closed, 

and who knows what is going to affect farmers’ income. So that is 

where the Crop Insurance Program comes in very well. It helps ensure that we continue to have a safe and abundant food supply as 

well. 

That being said, I continue to hear from independent crop insurance agents regarding frustrations with the SRA process. It seems 

to me the biggest complaint is the lack of input that these agents 

feel that they had in the process. Do you have any suggestions for 

improving the SRA process if, in fact, you feel it needs to be improved, and if so, addressing some of the concerns of the independent agencies? Or might you think that the agents might not 

have a point? Although I want you to know that I believe they do 

have a point. Go ahead. 

Mr. SCUSE. Thank you, Senator. As I stated before, my door is 

always open, as is Administrator Bill Murphy’s door, to listen to 

the agents as well as the companies. I have taken several meetings 

with the agents, as has Mr. Murphy, but in the negotiation for the 

Standard Reinsurance Agreement, that is an agreement between 

the Government and the companies, not the agents, because the 

agents are working for the companies. So that agreement has to be 

done between the Government and the agents—or the companies. 

You know, we have had discussions with the agents. I do understand that there is some frustration by some of the agents on the 

whole process. But, again, that is a process that because of the way 

it is structured, it has to be done between the Government and the 

companies. 

Senator GRASSLEY. Madam Chairman, I will yield back time, except I am going to go down to Judiciary now, and I hope I do not 

lose my order, because when I come back here to ask a couple questions of the next panel, then I have got to go to the Finance Committee. 

Chairwoman STABENOW. Absolutely. Well, we will protect your 

ranking here in terms of the ability to ask questions. So thank you 

very much, Senator Grassley. 

Senator Klobuchar. 

Senator KLOBUCHAR. Well, thank you very much, Madam Chairman. I will tell you that I was just with a number of farmers at 

my weekly Minnesota morning meeting, and they are really excited 

that we are moving ahead with these hearings. I know we have a 

wheat grower testifying later today, so I want to thank you and 

Senator Roberts for holding these hearings and moving ahead on 

this really important bill. 

16 

Minnesota is the Land of 10,000 Lakes, but it could easily be 

called the ‘‘Land of 80,000 Farms.’’ We are sixth in the country for 

agriculture. 

Mr. Scuse, in your testimony you point out something that all 

farmers are facing now, and that is the high input costs for fertilizer, seed, obviously gas. High input and farmland costs mean 

that farmers need more tools, not less, to manage risk. What risk 

do you think that this Committee should focus on as we consider 

the work that we need to do to reauthorize the farm bill? 

Mr. SCUSE. Thank you, Senator. Again, I think the production 

side in the last 5 years, as you have pointed out, in many cases 

our production has doubled, which increases a tremendous risk on 

our farmers and ranchers, regardless of what you are producing. 

Even in the livestock industry, if you look at the cost of the livestock industry, it basically has doubled as well in the last 5 years. 

Then the price volatility, yes, we have experienced several years of 

very good prices, but as members of this Committee know, that can 

change, and that can change very quickly. But we need to make 

sure that we have sound, safe programs available that are, again, 

simple to administer and easy to understand and that are, in fact, 

defensible to the taxpayers and the consumers. 

Senator KLOBUCHAR. Very good. I know that Senator Johanns 

and Senator Roberts asked you about crop insurance, and I oppose, 

as many members of this Committee do, the proposal in the President’s budget that would cut $8.4 billion from the Crop Insurance 

Program. I do support the work we have been doing with the $23 

billion in cuts, but I think we actually need to strengthen the Crop 

Insurance Program. 

What efforts are you undertaking at the USDA, understanding 

the cuts we have already seen, to help improve data-sharing capabilities to streamline the implementation of crop insurance and 

other farm safety net programs? 

Mr. SCUSE. Well, thank you. There are several things that we are 

doing, Senator. We have the Comprehensive Information Management System, which is an information system shared by the Farm 

Service Agency and the Risk Management Agency. That will help 

us do the data mining that is necessary to look at some of the 

spending that currently takes place within the programs. We have 

an initiative, the Acreage Crop Reporting Streamlining Initiative, 

right now that we are in the middle of working on. That is a 

project between FSA, RMA, NASS, and NRCS where we are coordinating information, as well as streamlining how we identify things. 

What this ultimately will do is it will allow our farmers and 

ranchers to do a single crop report rather than currently reporting 

their acreage to the FSA office and their agent, to do one crop report and then that information will, in fact, be shared. This will 

also help NRCS and NASS as well in their jobs. Then there is the 

MIDAS project. 

So ultimately where we would like to be is for a farmer and 

rancher to actually do a crop report at home that would go to the 

Farm Service Agency as well as to their crop insurance agent. 

Senator KLOBUCHAR. Even though we have had a strong agriculture economy with record receipts and exports, you have said 

that you have seen an unusually high number of producers applyVerDate Nov 24 2008 11:20 Feb 26, 2013 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 C:\DOCS\78274.TXT MICHA
17 

ing for direct operating loans from the USDA. What are lending 

conditions like now? What issues are banks and the Farm Credit 

System looking at when deciding on whether to lend to farmers? 

Mr. SCUSE. Well, Senator, credit still remains tight in the agricultural community, and one of the reasons is because of the high 

cost. The amount of money that an individual today has to go to 

a bank and borrow for operating costs is tremendous. Because of 

the risk that is associated with farming, many of our traditional 

commercial lending institutions are very reluctant to lend money to 

those that they deem even a slight risk, or especially to a young 

or beginning farmer. So that is why we have seen the increase in 

the use of our programs over the last couple of years. 

Senator KLOBUCHAR. Very good. I am going to ask a dairy question, but I am going to let my colleagues go on. I will put this in 

writing. I know you will look forward to getting it. 

Mr. SCUSE. Thank you. 

[The question of Senator Klobuchar can be found on page 243 in 

the appendix.] 

Senator KLOBUCHAR. Thank you. 

Chairwoman STABENOW. Thank you very much. 

Senator Thune. 

Senator THUNE. Thank you, Madam Chairwoman and Senator 

Roberts, for having the hearing, and I appreciate we have got a 

good cross-section of people who are going to be testifying today 

and providing some guidance as we prepare to write this farm bill, 

and so I look forward to the testimony. 

Representing South Dakota, agriculture is our number one industry, so I take my position on this Committee very seriously and 

want to make sure that we get a farm bill put in place that ensures 

we have a good economic safety net when production and economic 

downturns occur, but also it preserves the Nation’s food security 

and current affordability levels for food. I know farmers are very 

concerned about the issue of deficit reduction as well. I think that 

is something that people across this country, particularly in farm 

country, get and want to make sure that we are doing our part. 

I want to thank you, Mr. Secretary, before I start my questions, 

first of all, by saying that the decision was made—I know you 

worked with Secretary Vilsack in the recent announcement—for an 

additional 1 million continuous CRP acres in the United States. I 

look forward to seeing more SAFE and duck-nesting habitat acres 

added to South Dakota’s portfolio of CRP acres, but that was a 

really important announcement and one that we very much appreciate. 

Let me just say, if I might, I think we ought to have several 

goals in this farm bill, particularly with regard to the commodity 

title. First off, we have got to make sure that agriculture continues 

to do its part in reducing the Federal deficit, which I mentioned 

earlier; provides an economic safety net only when needed; provides 

equitable treatment across all sectors of commodity production and 

does not affect farmers’ planting decisions; and, finally, helps and 

encourages farmers to protect the sustainability of their land. 

Those are the five goals that I think we ought to have in mind as 

we write the commodity title in this farm bill. 

18 

I wanted to ask you, Mr. Secretary, about the ACRE program 

and perhaps your ideas and guidance as we look at what might fill 

the role in the commodity title in this bill. The ACRE program required that producers bring in 5 years of production records as part 

of determining acre eligibility and also utilized marketing year 

averages to calculate prices. If a revenue protection program would 

be created in the next farm bill to replace ACRE, SURE, and direct 

and countercyclical payments that is not restricted by fruit and 

vegetable plantings, that is not capped by base acres on a farm, 

and which utilizes existing records already available at USDA— 

and when I say that, that would include actual production history 

records from RMA, crop reporting district yields from NASS, RMA 

harvest prices, or an average of the first 5 months of the marketing 

year for a crop if harvest prices are not available—would you agree 

that developing a program using those parameters would be easier 

for FSA to administer than ACRE and SURE and more likely to 

provide timely payments? 

I know there was a lot loaded in that question, but if you had 

something that sort of followed those basic parameters, would that 

make more sense than what we have today? 

Mr. SCUSE. Senator, there is no doubt that ACRE and SURE 

were very, very difficult for us to administer. I think if you look at 

the low participation in ACRE, it was because it was so hard for 

our producers across the country to fully understand and comprehend. I am not too sure that even today I fully understand it. 

So it was a very difficult program to understand, and I think that 

is one of the reasons why we had low participation, and it was also 

very difficult to implement. 

But, we are more than willing to work with the Committee to 

help in the development of programs that are going to be easy and 

that can be understood and easily implemented. So, we are looking 

for, going forward, something that we can administer and we can 

get out in a timely manner. So we are more than willing to work 

with the Committee to help develop something that can get the 

Committee and the members of this Committee to where they want 

to be. 

Senator THUNE. Okay. Well, as some of my colleagues know, I 

have worked with some of my colleagues on this Committee to develop a program that sort of fits within those parameters I mentioned that is more timely delivered and easier to administer, I 

would believe, for FSA and certainly easier to understand for producers. So the ARRM program is the program to which I am referring. 

In your opinion, is there a danger of having too much dependency on crop insurance as a safety net for production agriculture? 

Let me give you an example. If you had certain farm bill proposals 

out there that would add additional layers of crop insurance on existing coverage, will that make crop insurance an even greater target by increasing subsidy costs and potential indemnities further 

beyond the $10 billion-plus that is going to be a record that we set 

here in 2011? 

Chairwoman STABENOW. I would ask you to be brief in your response. 

Mr. SCUSE. Very brief. We are out of time. 

19 

Senator, we would have to take a look at it. Again, we would be 

more than willing—the Risk Management Agency and Farm Service Agency—to take a very hard look and provide you with an answer. 

Senator THUNE. Okay. Thank you. 

[The following information can be found on page 272 in the appendix.] 

Chairwoman STABENOW. Thank you. 

Senator Lugar. 

Senator LUGAR. Thank you. Thank you very much, Chairman. 

Let me just focus on one specific part of the farm situation, and 

that is, the Sugar Act. I want to include in the record with your 

permission, Madam Chairman, a brochure recently submitted by 

the trade people in Canada, and it says, ‘‘North America’s location 

of choice for confectionary manufacturers.’’ 

The Canadians point out that manufacturers of confectionary 

goods in the United States ought to move to Canada, or if they are 

going to invest any more, they surely ought to invest in Canada. 

They cite the fact that the cost of sugar is 30 to 40 percent less 

in Canada and, furthermore, to indicate how much of a movement 

has occurred with these products freely traded in the NAFTA Treaty, they say the balance of payments just on confectionary goods 

alone has shifted to a $700 million advantage for Canada in the 

last year. In the charts, they show a graph that shows a huge 

change year by year for the last 10 years. 

Now, in large part, this is because of our Sugar Act, which leaving aside confectioners and the jobs and the manufacturing that 

are involved, that means that each one of us who had a spoonful 

of sugar this morning in coffee paid 30 or 40 percent more than we 

should have for it because of the Sugar Act, essentially. 

I raise this because it is a very specific part of farm legislation, 

but it seems to me a totally indefensible one, and I state that asking for your opinion as to whether the Department of Agriculture 

would favor removing that from the farm bill in which we are now 

involved. Or is there some aspect of the Sugar Act that you would 

like to defend? 

Mr. SCUSE. Well, Senator, there are many factors that go into the 

price for sugar. We are required to run the sugar program at no 

cost, so we have to be very careful about the amount of sugar that 

we import on a yearly basis. But, there are a lot of factors that go 

into what affects the sugar price. There have been weather-related 

issues in other parts of the world that have caused a spike in the 

world sugar price. If you look at some of the countries in South 

America that traditionally have supplied sugar, that sugar has 

gone into ethanol production. 

If you look at what has happened to the United States with our 

sugar production, just this past year alone, weather-related issues, 

there was a decrease in our beet crop this year. So there are a lot 

of factors that go into this. 

There are many people that are very happy with the way that 

we are currently running the program, and, again, it is being run 

at no cost to the taxpayers of this country. We are trying to manage it as best we can, to be fair not just for the growers, not just 

for the refiners, but the end users as well. 

20 

Senator LUGAR. That has always been the defense, that there 

was no cost, and other parts of the bill cost money. The cost is to 

each one of us as consumers. As I stated earlier, if you used a 

spoonful of sugar this morning, as an American citizens you paid 

a whole lot more for it than you should have by any sort of supply 

and demand. 

As a matter of fact, confectioners in this country imported sugar 

at very unreasonable cost, over and above all that is mandated by 

USDA, just to stay in business, and that is the reason the Canadians are making a plea, and it is a fairly successful one. We are 

talking about jobs now moving out. That affects Americans. That 

is a cost and the cost to each of us as consumers. 

Now, I make this point because the Sugar Act is sort of hidden 

beneath the covers in a way. There is, as you say, no cost to it, the 

question of very complex administration. But clearly it is an act 

that raises the price of sugar for those who are growing sugar in 

America. It keeps out sugar so that that price remains much higher 

than it should by any market standards, even up and down in the 

world. 

So I ask for your reconsideration of this. I hope you will reconsider it as we deliberate in this Committee. 

I thank you. 

Chairwoman STABENOW. Thank you very much, and the document, Senator Lugar, that you asked about will be included in the 

record. 

[The document can be found on page 235 in the appendix.] 

Chairwoman STABENOW. Senator Boozman. 

Senator BOOZMAN. Thank you, Madam Chair. 

Thank you for being here. You just mentioned in regard to sugar 

a number of other factors that determine price and problems with 

production. In regard to target prices, I would really encourage us 

to keep that on the table in the sense that certainly, it depends on 

the price, it depends on the crop. There are a number of different 

issues that go into that. Also, as you mentioned, there are trade 

issues that distort the market. So if you look at any program that 

we do, I think you can make the argument that if you go too far, 

you can have a distortion of the market. Certainly none of us wants 

that in the sense we do not want everybody growing the same 

thing. But I would really encourage us to keep target prices on the 

table as we go forward and try and figure it out. 

You also mentioned the importance of getting something that 

was equitable for everyone. The problem is that with our crops of 

today and the different input costs, the different input costs 

throughout the different parts of the country and how you are 

farming, it is really difficult to have a one-size-fits-all program. So 

I hope that you would be, amenable to that. 

The other thing is you mentioned a lot of, decrease in funding 

in your testimony. What does all that total up to ag? 

Mr. SCUSE. As decreases in funding for—— 

Senator BOOZMAN. In the President’s budget. 

Mr. SCUSE. I think it is about a $32 billion decrease. 

Senator BOOZMAN. Now, I am an optometrist, and so we planned 

ahead. You know, we have 85 employees. What are you planning— 

what would be next year’s decrease? 

21 

Mr. SCUSE. Well, that is the decrease that the President is recommending for the farm bill, the decrease, which would include—— 

Senator BOOZMAN. But ag has kind of taken it on the chin the 

last couple of years under the current farm bill. 

Mr. SCUSE. Well, outside of the farm bill, in our daily operations 

of funding, the Farm Service Agency has experienced since 2010 

roughly a 40-percent reduction. 

Senator BOOZMAN. Okay. 

Mr. SCUSE. So it has been substantial, but we have also seen a 

tremendous decrease in personnel since 2003. So we are, in fact, 

being very responsible, and we are doing more with less all across 

USDA, but especially at the Farm Service Agency. 

Senator BOOZMAN. In regard to the Farm Service Agency, you 

made the point that you are listening to a number of different 

groups throughout the country. You had all of the hearings, and 

FSA is so important in implementing these programs. But, you 

made the point that you are listening, and yet throughout the 

country you had all of the input, you had farmers coming to meetings and things, and the reality is that nothing was changed. You 

know, I do not think a single reversal of FSA closures happened 

as a result of all of those meetings throughout the country. The law 

is pretty clear in regard to the 20-mile limit and some other things, 

and I guess what I would encourage is we need to listen, but we 

also need to act on what we are hearing. 

Mr. SCUSE. I appreciate your words, Senator, but a final determination has not actually been done. We did do what was required 

by law, which is to notify Congress of the action that was taken. 

But that is not a final determination. That will not come for 90 

days after the notice of Congress. 

So there have been a lot of comments that were offered up that 

are in review. In fact, I took a phone call yesterday regarding one 

of the offices. But Congress has been notified, but a final determination has not yet been made. 

Senator BOOZMAN. Well, in regard to the law, it is pretty clear 

the law says 20 miles. 

Mr. SCUSE. Yes, sir. 

Senator BOOZMAN. Okay. If I were talking to you about 20 miles, 

I would not be talking generally as the crow flies. Is that—— 

Mr. SCUSE. We had to use a determination, and the determination that we used at FSA was as the crow flies from one office to 

the other. That is how we determined the 20 miles. 

Senator BOOZMAN. Now, I know that is how you determined it. 

I am just saying that in general conversation and general meaning, 

that would not be the case. I do not think, if we were visiting about 

20 miles as farmer to farmer or Congressman to whomever, that 

we would have that connotation of as the crow flies. 

So, anyway, thank you, and I appreciate your being here. 

Mr. SCUSE. Thank you. 

Chairwoman STABENOW. Well, thank you very much, Mr. Scuse. 

We appreciate your time again and your input and the ability to 

work closely with you as we fashion the farm bill. I will say in conclusion that you mentioned wanting more flexibility on new products under crop insurance, and certainly someone representing a 

22 

diversity of crops, like specialty crops, and certainly I know other 

Senators who represent rice, peanuts, other areas where crop insurance currently does not provide the risk management they need, 

we intend to work with you to give you that flexibility and to be 

able to expand on new products that are very, very important to 

making risk management successful. 

So thank you very much, and we will excuse you and ask our second panel to come forward. 

Mr. SCUSE. Madam Chair and members of the Committee, we 

look forward to working with you in the future. Thank you very 

much. 

Chairwoman STABENOW. Thank you very much. 

Well, good morning. We appreciate all of you being here and, 

again, your patience as we have had to reschedule today, so I hope 

you have enjoyed an extra day in Washington and maybe seeing 

some of the cherry blossoms that we had come out just for you because you had to wait a day. So we are very appreciative that you 

are here as we begin the second panel. 

Before I introduce our witnesses, I would like to submit for the 

record a letter from the American Bankers Association, Independent Community Bankers of America, and the Farm Credit 

Council detailing their support for the Federal Crop Insurance Program and its importance for our Nation’s farmers and ranchers as 

a vital risk management tool. So, without objection, I will submit 

that for the record. 

[The letter can be found on page 232 in the appendix.] 

Chairwoman STABENOW. Now let me introduce our first panelists. We will introduce all four of you and then ask each of you to 

give 5 minutes of opening testimony. 

Our first panelist is Hope Hills. She is from my home State of 

Michigan where she and her husband grow blueberries on their 

213-acre family farm. The farm is located in Bangor, Michigan, and 

has been in her family since the late 1930s. The Hills are a member of the MBG Marketing-The Blueberry People and market all of 

their blueberries through their co-op. Mrs. Hills and her husband, 

Mike, have two children and three grandchildren. We very much 

appreciate your testimony and your being here today and appreciate your work in Michigan. 

I am now going to turn to Senator Roberts to introduce our next 

witness. 

Senator ROBERTS. Thank you, Madam Chairman. I welcome Jarvis Garetson to Washington. Jarvis is a producer from Copeland, 

Kansas, in the southwest corner of our State, and it is an area that 

was devastated by drought last year. We are hoping that Mother 

Nature will be kinder to us. Jarvis asked me to come out and do 

a rain dance in Dodge City and Copeland, and we did get a little 

moisture. I better get out there again. 

He is a diversified farmer who raises irrigated corn, milo wheat, 

triticale, and soybeans and cotton, as well as dryland wheat, and 

milo and cotton. So he is diversified. 

He and his family also have an interest in grain storage facilities, ethanol plants, and a cotton gin. He is a leader in his farming 

community and currently served as the Haskell County Farm Bureau President, and I would be remiss, of course, if I did not menVerDate Nov 24 2008 11:20 Feb 26, 2013 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 C:\DOCS\78274.TXT MICHA
23 

tion that Jarvis is a graduate of the ever optimistic Fighting Wildcats of Kansas State University. 

Chairwoman STABENOW. I have heard of Kansas State before. 

[Laughter.] 

Senator ROBERTS. Even wore a purple scarf at one time, as I recall. 

Chairwoman STABENOW. I did, but did you see Michigan State in 

the Big 10? I just want to put that in there for the record. 

[Laughter.] 

Senator ROBERTS. It would be a long list here if we start this. 

Chairwoman STABENOW. I know. I am sorry. 

Senator ROBERTS. Sorry, I started it. But, at any rate, Jarvis, 

thank you for joining us today, and I look forward to hearing about 

your farm and how it utilized crop insurance to make it through 

the worst drought since the Dust Bowl. 

Madam Chairman, we talk about no hope. Well, Jarvis is a perfect representative of the hope that we have out in southwest Kansas and, for that matter, our entire State. I think that question was 

raised by Chairman Baucus. 

He and his wife, Amber, have five boys, and they farm the farm 

that was homesteaded by his great-granddad in 1902. That is over 

100 years. His parent, Jessie and Jerra, farm with him, and his 

brother, Jay. That is the kind of operation that you have to build 

and put together to survive during these very difficult times. So I 

am very proud that he is here. But if anybody doubts the ingenuity 

and the perseverance and the hope that farmers have, just let them 

listen to Jarvis. 

Chairwoman STABENOW. Great. Well, thank you so much. 

Our next witness is Mr. Bob Carden, who is from central Florida. 

He is sitting in today for Ruth Gerdes, who unfortunately had to 

go back to Nebraska today, and as many of you know, she went 

back because of the crop insurance closing data, and so Mr. Carden 

is a long-time leader in the crop insurance industry. We appreciate 

your flexibility and willingness to sit in today on short notice, and 

we very much appreciate Ruth Gerdes’ willingness to be with us 

and, again, regret that we had to change the schedule. But we are 

very, very happy that you are here with us. 

Finally, we have Mr. Steve Rutledge, who is here, and I know 

that Senator Harkin and Senator Grassley had hoped to be here. 

I know they will be coming back to be able to greet you and welcome you as well. Mr. Steve Rutledge is chairman of Farmers Mutual Hail in West Des Moines, Iowa. Mr. Rutledge managed to 

build a solid foundation of experience over the past 30 years, which 

included positions in all three of Farmers Mutual Hail’s major departments—crop hail, multi-peril, and reinsurance— and then becoming president and CEO. He has since retired but will continue 

as chairman until the end of this year. 

So we welcome all of you, and we would ask you, Ms. Hills, to 

proceed with your testimony. 

STATEMENT OF HOPE HILLS, SPICEBUSH CREEK FARMS, 

BANGOR, MICHIGAN 

Ms. HILLS. Chairwoman Stabenow, Ranking Member Roberts, 

and other members of the Committee, thank you for inviting me 

24 

here today to talk about crop insurance. Chairwoman Stabenow, on 

behalf of Michigan’s growers, I want to thank you for being a 

champion of the specialty crop industry and for your strong support 

of farmer co-ops. I am humbled to be here before the Committee. 

Today I am here on behalf of the National Council of Farmer Cooperatives and as a member of MBG Marketing-The Blueberry People. 

My husband, Mike, and I are third-generation blueberry growers 

in Bangor, Michigan. Mike’s grandfather first planted blueberries 

in the late 1930s and became a MBG member in 1943. 

Back in the 1930s, some local people thought Mike’s grandfather 

was nuts. ‘‘What do you want to plant those for? You will never 

make any money at that.’’ Seventy-five years later, those same 

bushes are still producing. They have provided income for thousands of people through the years and have pumped millions of dollars into the economy. 

We started our farm in 1984 with cuttings from those bushes 

first planted by his grandfather. In fact, our MBG grower number 

is the same one his grandfather had. We farm on 213 acres, 120 

of which are cultivated blueberries. The balance of our farm is 

woodland, wetlands, a packing facility, and farm buildings. 

Being a grower is full of risk, and without crop insurance it becomes a gamble, a roll of the dice. Our operation, our livelihoods 

are too much to gamble on. We believe strongly in crop insurance 

as a safety net for our operation. We began purchasing crop insurance in 2002 and have continued each year since. 

The best safety net, however, is one that you never have to use. 

Like most producers today, our risk management goes far beyond 

crop insurance. On our farm, we have invested heavily to mitigate 

the risks we face and give ourselves the best chance possible to 

have a strong crop each year. 

My written testimony contains details of other things we do to 

mitigate risk. All of these things are the first line of defense. Crop 

insurance is the second. 

We all know that agriculture is an unpredictable business due to 

factors far beyond any of our control. Having crop insurance brings 

stability to an otherwise volatile business and allows producers to 

continue farming in the event of a disaster. Even though crop insurance is our fourth largest annual expense, we continue to purchase it. That is how important it is to us. 

In 2008, prices fell considerably for blueberries, and we knew it 

was going to be a lean year. We considered dropping our crop insurance due to the cost. But we decided that the cost of not having 

it was far too great. We have been fortunate not to have filed a 

claim in the past 10 years. 

Because we have crop insurance, our lender is more willing to finance our operation, which in turn allows us to continue to invest 

in our business and bring money into our local economy. That said, 

it is worth noting that the cost of crop insurance without the USDA 

subsidy would be unaffordable. 

Additionally, the availability of crop insurance is especially important for beginning farmers and growers, given the investment 

involved in establishing a farm. 

25 

While crop insurance works for my operation, it may not work 

for all 300 different specialty crops. Addressing the sheer number 

of crops and the nuances of each industry is a challenge. Crop insurance for specialty crops is complicated for a number of reasons, 

including the fact that most are relatively small markets; most do 

not have futures or options contracts for price discovery; most have 

complicated good farming practices compared to row crops; there 

are differences in potential market impacts between perennial 

crops like mine and annual or semiannual crops; and a large number of non-weather-related risks have to be taken into consideration. 

Nevertheless, specialty crop growers must have access to a safety 

net. Those of us who need crop insurance really do need it. 

In fact, some growers are interested in an insurance product that 

would protect against market disruptions, like a food safety incident that caused harm to an industry. There is room for innovation 

to meet the needs of specialty crops in the crop insurance arena. 

Another issue surrounding crop insurance is whether conservation compliance should be required to participate in the program. 

NCFC opposes linking conservation compliance to crop insurance. 

I would like to mention two other issues. 

First, agriculture needs access to a legal, stable workforce. None 

of the issues that I have discussed in my testimony matter if there 

are not people to harvest, pack, and process these crops. 

Second, given the critical nature of expanding international markets and exports, farm bill programs like the Market Access Program are very important. 

In conclusion, agriculture is Michigan’s second largest industry, contributing $71 billion to the economy annually. It also supports 

one of every four jobs across the State. We need to support American agriculture so that Americans can buy produce here. We need 

to have policies in place that allow American agriculture to thrive. 

Thank you again for the opportunity to be here today to share 

my experience with crop insurance. 

[The prepared statement of Ms. Hills can be found on page 141 

in the appendix.] 

Chairwoman STABENOW. Thank you so much. 

Mr. Garetson. 

STATEMENT OF JARVIS GARETSON, PRODUCER, HASKELL 

COUNTY, KANSAS 

Mr. GARETSON. Chairwoman Stabenow, Ranking Member Roberts, and other Senators that are here on the Committee, thank 

you so much for having us here today. What a joy to be in our own 

capital. It is great to have great people sitting on a Committee as 

important as this Ag Committee is, and I just want to thank you 

so much for the opportunity to allow me as a producer to share my 

story. 

As Senator Roberts pointed out, in 1902 my great-grandfather 

homesteaded in Haskell County, Kansas, broke out the sod. 

Through blood, sweat, and tears, keeping hold of his bootstraps to 

keep them pulled up and trodding through the plains of Kansas 

and then his tilled fields, to raising my grandfather, to him raising 

my father, my father raising myself and my brother or sisters, and 

26 

now my wife and I raising our five boys on that original homestead 

means a lot. 

We have got our blood in this land. It means the world to us, and 

the opportunity to continue operating the same soil for another 

100-plus years is one of my brother and my goals of our operation. 

With that, as Senator Roberts alluded to, we went through the 

most devastating crop year in history. We had on our farm less 

than 5 inches of rain in 18 months concluding on the last year of 

2011. That is by far less than what we received through the Dust 

Bowl in Haskell County. So you take a record low annual rainfall. 

We had the most 100-degree days in a growing season and the 

highest average wind speed through a growing season and the 

stars perfectly aligned for a major farm disaster. Without Federal 

crop insurance, specifically the enterprise units that we use on our 

farm, we would be having a farm sale this spring instead of preparing to plant the next crop. 

With that, my brother and I use Federal crop insurance as a 

major portion of our risk management on our farm. My brother and 

I started farming with money at risk in 1994 when our grandfather 

retired. We continue to make those payments, and without the Federal crop insurance this past year, well, absolutely we would not 

have been able to make them, let alone our annual payments to 

our lenders for our real estate, our equipment loans, and our operating loans. 

Federal crop insurance is paramount to the success and longevity 

of our farm, and our lender has made it very clear that he wishes 

all of his customers carried crop insurance as we do. 

My grandfather, bless his heart, decided he could afford to be 

self-insured. Times were a little different when he was starting. As 

has been alluded to, the high price of inputs, we just cannot run 

the risk, as Ms. Hills stated, not to carry it, and we would love to 

pay the premium and never have to use it. However, we all have 

insurance on our car or our house for just in case. 

One item that I would like to suggest the Committee consider for 

improving the Crop Insurance Program is I would highly encourage 

to have the ability to have enterprise units by practice, meaning 

enterprise units for our irrigated farmland and enterprise units for 

our dryland acreage as a separate policy. That would allow us the 

flexibility that we would need to make better cropping rotation decisions based on what insurance available we would have. 

I would also like to suggest that—it is not even a suggestion. I 

would reiterate the previous testimony of how efficient the delivery 

of our Crop Insurance Program has been through our agents. If 

there is a bad agent, they do not last long. We have excellent 

agents in our county, and I would reiterate that the delivery is very 

good, and I would hate to see it move away from the private sector. 

Thank you. 

[The prepared statement of Mr. Garetson can be found on page 

107 in the appendix.] 

Chairwoman STABENOW. Thank you very much. 

Mr. Carden. 

27 

STATEMENT OF BOB CARDEN, CROP INSURANCE AGENT, 

CARDEN & ASSOCIATES, INC., WINTER HAVEN, FLORIDA, ON 

BEHALF OF RUTH GERDES, PRESIDENT, THE AUBURN AGENCY CROP INSURANCE, INC., AUBURN, NEBRASKA 

Mr. CARDEN. Chairwoman Stabenow, Senator Roberts, and members of the Committee, my name is Bob Carden, and I am a crop 

insurance agent in Winter Haven, Florida. I am here today to 

pitch-hit for my friend, Ruth Gerdes, who is an agent in Auburn, 

Nebraska. Ruth was supposed to testify yesterday, but she had to 

go back home because today is the sales closing date for Nebraska 

farmers. 

The testimony I offer is on behalf of CIPA, the Big ‘‘I,’’ the PIAA, 

and the Agents Division of AACI. If Ruth were here, she would tell 

you that years ago she and her husband almost lost their family 

farm after suffering back-to-back crop losses and how she figured 

out that they would not have been in that fix if they had proper 

crop insurance. 

Well, Ruth ultimately became an agent because she did not want 

anyone else to suffer what she and her family had suffered. 

Now, I have been through the same ordeal. After a freeze devastated our citrus groves in 1989, I had a lot of sleepless nights 

worrying if I could pay the bills. At one point I even worked three 

jobs to hold on to that farm. I can remember thinking then, if only 

we had a decent crop insurance policy. 

Well, today you could fill football stadiums with families whose 

farms have been saved by crop insurance. In fact, one of the best 

witnesses on how indispensable crop insurance is to the family 

farm is not at this table. Yesterday he would have been seated behind Ruth, but he, too, had to get back to work. His name is Mike 

Woltemath. Mike and his family farm outside of Hamburg, Iowa. 

They saw their land, their home, their equipment, and everything 

they worked for all their lives go underwater during last spring’s 

flooding. 

The picture you have and the testimony you received from Ruth 

of Mike’s farm is deceiving because it still looks beautiful in that 

picture. But those around this table who have seen the devastation 

of flooding know the wreckage that it leaves behind. 

Mike and producers across this country are what crop insurance 

is all about. It is not about agents or companies or anyone else. It 

is about the farmers. 

So I wish that each of you could have visited with Mike today 

because he traveled all this way to carry just two messages. 

The first is: Do no harm to crop insurance. Do not cut crop insurance but build on it. 

And, second, do not let the Government take over the delivery of 

crop insurance. While Government can take years to pay a producer on a loss, under private delivery of crop insurance farmers 

are paid in a matter of a few weeks. 

As agents, we are not 9:00 to 5:00 employees. We are judged on 

the quality of risk management advice and service that we provide 

on some very high stakes decisions— decisions that could make or 

break a producer’s operation. We are part insurer, part financial 

adviser, part risk management and mitigation team, part farm bill 

28 

interpreter, and part shoulder of a friend to lean on during tough 

times. 

As agents, we are not judged by when we punch in or punch out 

but by the results of the advice we give and being there whenever 

our customers call, and sometimes even when they do not. 

Crop insurance was created in 1938 because, without Federal involvement, farmers would not have insurance. But run by the Government, it languished for 42 years. What happened next is what 

made crop insurance what it is today. In 1980, Congress turned delivery of the program over to the private sector. In 1994 and 2000, 

Congress passed sweeping improvements, thanks in part to the 

leadership of this Committee’s Ranking Member. In 1996, Kansas 

State Professor Art Barnaby worked within industry to develop 

revenue products. 

Crop insurance, which today covers $114 billion in liability and 

which farmers say is their most important risk management tool, 

stands on the shoulders of people like those seated around this 

table. 

Since the 200 crop insurance bill, I believe the Government has 

made some mistaken policy choices that could undermine the success of crop insurance. But I am not here to dwell on these points 

today except to point out that we never know what we have got 

until we lose it. 

Instead, like every farmer, I must look forward, hopefully and 

with confidence and faith, and see opportunity in the toughest challenges. Budget constraints and critics of farm policy that threaten 

to undo the important work that people around this table have 

done over so many years to ensure that people like Mike from 

Hamburg, Iowa, can continue to do what he does every day. To 

feed, clothe, and fuel this country and millions around the world 

are certainly tough challenges. But I have seen the people around 

this table in action before, and I have faith, hope, and confidence 

that you will overcome these challenges and, yes, find opportunity 

along the way, not only to protect crop insurance but to improve 

it for all our Nation’s farmers. 

Thank you, and thank you for letting me be here. 

Chairwoman STABENOW. Thank you very much. 

Mr. Rutledge, welcome. 

STATEMENT OF STEVE RUTLEDGE, CHAIRMAN, FARMERS MUTUAL HAIL INSURANCE COMPANY, WEST DES MOINES, IOWA 

Mr. RUTLEDGE. Madam Chairwoman, Ranking Member Roberts, 

and members of the Committee, I am here today to speak on behalf 

of the 15 companies who deliver the Federal Crop Insurance Program, and I do thank you for this opportunity. 

Going last, it seems we do sing the same song a bit, but, nonetheless, you have my written testimony, and from that you know 

that I have been in the crop insurance business for a very long 

time. Many of those earlier years were spent as an adjuster, and 

I cannot tell you how many times I have seen the relief and gratitude on a farmer’s face when they realize that, because of crop insurance, they will be back in the fields in the spring and their lives 

will go on uninterrupted. 

29 

This past year was no different. 2011 was perhaps one of the 

most destructive weather years in recent history. With large farm 

losses and record high indemnity payments, farmers who might 

otherwise be out of business are already back in the fields preparing for what we all hope will be a much better 2012 crop year. 

When farmers and ranchers are left picking up the pieces after 

disasters, we are proud to help them by providing prompt delivery 

of indemnity benefits, often within 30 days or less, compared to up 

to 30-month delivery with other programs. The responsiveness of 

the private sector delivery system and the Crop Insurance Program 

itself is truly unmatched. 

However, crop insurance is more than just periodic indemnity 

payments. It is the key to financial stability for America’s farmers 

and ranchers, enabling them to supply our country with food, fiber, 

feed, and fuel. It helps provide a farmer access to operating capital, 

which might otherwise be highly restricted. And, equally important, farmers have also integrated crop insurance and marketing to 

the point where they are very willing to buy crop insurance at high 

coverage levels to ensure the adequacy of resources to cover forward marketing commitments should disaster strike. 

This has not always been the case. Congress has taken great 

steps to enhance crop insurance over the years. Reform legislation 

enacted in 1994 and again in 2000 strengthened the public-private 

partnership of program delivery and encouraged greater farmer 

participation. These steps put us on the path to success by combining Federal dollars with farmers’ premiums to make otherwise 

cost-prohibitive policies affordable to farmers of all sizes and all 

backgrounds, including those of limited resources and social disadvantage. 

I want to share some figures with you to demonstrate just how 

you have made a positive impact on farmers and ranchers. In 2011, 

crop insurance provided over $113 billion in liability protection. 

That is compared with only $28 billion in 1998. Also in 2011, nearly 265 million acres were insured compared with about 180 million 

acres in 1998. In terms of the level of protection producers are buying, well over half the coverage is now at the 75-percent level or 

greater, and about a fourth is at the 80-or 85-percent level. 

Today crop insurance is the cornerstone of risk management and 

provides coverage for more than 100 crops across the country. As 

development of the 2012 farm bill progresses, crop insurance is in 

a unique situation. Crop prices and price volatility are expected to 

remain well above historical levels, posing significant risks. With 

this vulnerability comes an increasing sensitivity to further 

changes to the program and the delivery system. 

We respectfully caution against changes to crop insurance that 

could negatively impact farmers and ranchers. Since 2008, crop insurance has taken more than $12 billion in Federal funding cuts, 

which sets agriculture apart as one of the only sectors, if not the 

only, to take repeated budget cuts in order to help reduce the deficit. 

Additional cuts such as those proposed in the President’s budget 

could have the unintended effect of impairing the delivery system, 

reducing service, and even limiting coverage to producers. In short, 

30 

we risk undoing the great progress made in protecting U.S. agriculture. 

What Mother Nature or the extremely volatile commodity markets have in store for farmers and ranchers this year is unknown. 

But those of us in the crop insurance delivery system will be ready 

to help ensure their survival when disaster does strike. 

Thank you again. 

[The prepared statement of Mr. Rutledge can be found on page 

179 in the appendix.] 

Chairwoman STABENOW. Well, thank you so much to all of you. 

Ms. Hills, let me start with you. You talked about the fact that 

you have never had an indemnity payment, but that it was important for you beyond the payment to have crop insurance. You mentioned that a little bit, but I wonder if you might talk a little bit 

more about why from your perspective it is important to have crop 

insurance even though you have been fortunate and not had a payout. 

Ms. HILLS. The most important thing is peace of mind, especially 

this time of year when you wake up in the morning and you do not 

know. This year we have already had extreme temperatures fluctuating up to 40 degrees above normal. I talked to my husband yesterday. He said the bushes are moving way too far. So this may be 

a year that we do need it, and we need that protection. 

Our lender is more willing to loan us that money that we need 

to finance our operation. We take that financing, and we invest it 

back into risk management, such as wind machines, irrigation, pest 

and disease management. Those are all things that we need, and 

we need that financing, and he is willing to do that. 

Chairwoman STABENOW. Great. Well, thank you very much, and 

I share your concern, watching the weather, that we do not get an 

April frost or snowstorm in Michigan like we have done in the past 

that has wiped out crops. So let us hope we do not. 

Mr. Rutledge, could you talk a little bit more about the context 

for—put in context the numbers you talked about. Of course, we 

have talked about the $10 billion in payout for 2011, and you mentioned the total liability in acres, but a little bit more context from 

the standpoint of the kind of crops and farmers covered and the 

amount of the losses that you have seen in the last year. 

Mr. RUTLEDGE. In 2011, out of slightly over 1 million policies in 

the country, there were about 380,000 that suffered losses. Not all 

of those were total losses. Some were partial. But they covered over 

77 different crops, over 72 million acres, and out of the 380,000 

that had claims, I imagine there had to be tens of thousands who 

probably would have had the farm for sale, as Mr. Garetson talked 

about, had it not been for crop insurance. 

Chairwoman STABENOW. Thank you. 

Mr. Carden, talk from an agent’s standpoint. What are the major 

factors and issues that you work through with farmers as they decide what to purchase? How has your advice in their purchase decisions changed over the last 5 or 10 years? 

Mr. CARDEN. Well, I think the changes go—I will address it in 

reverse order. 

Chairwoman STABENOW. Sure. 

31 

Mr. CARDEN. The changes really come with the level of complexity in the program, some of which ties to just the general complexity of farming in general, the increase in input costs and some 

of the different risks that are out there now that maybe were not 

there 10 or 12 years ago. I know I mainly work in a specialty crop 

environment with citrus, vegetables, and things like that. They 

have had a number of nonnative invasive pests and things like that 

that have come into the area, and how to manage that, we cannot 

really control those with crop insurance in those policies, but we 

do control the other sides of it and how to weigh out their expenses 

on the one side versus their expenses for the things that we can 

insure them for. So we will spend a lot of time doing that. 

With those in the tree and bush crops, with the diseases that are 

there, it is really critical to know the numbers of trees that you actually have producing and things like that, so trying to go over 

those, to make sure we have got an accurate picture of what we 

are really insuring and that they are actually protected the way 

that they should be. So it is things like that. It is a process that— 

in our case our sales closing date is April 15th. That is a process 

that we started with our people in November. Then we will go 

through the summer reassessing at certain point what they have 

and making adjustments accordingly. 

Chairwoman STABENOW. Great. Thank you. 

Just briefly, Mr. Garetson, when you are talking about the benefits of crop insurance, could you talk about how this helps you as 

it relates to marketing your crop or your ability to get operating 

loans from the bank and the other ways in which this is important? 

Mr. GARETSON. Yes. In terms of marketing our crops, we carry 

the 85-percent enterprise unit level, and it allows us to go out and 

market up to 85 percent, in essence, of what we believe we will 

raise or what the insured amount is. So we can be more aggressive 

on the marketing of our crops, so we do not have to be exposed to 

more of that market risk. Then on the lending side, as I stated, it 

is just paramount because, in essence, it is guaranteed income to 

our lender, and our lender recognizes that value and is willing to 

loan us more money because we have got that guarantee versus if 

we carried either a lower level or no crop insurance at all, the 

amount that we would be authorized to borrow would be much less. 

Chairwoman STABENOW. Thank you very much. I am over my 

time. 

Senator Roberts. 

Senator ROBERTS. Madam Chairwoman, I want to acknowledge 

that you have already submitted for the record the letter we received from the lending community, specifically the American 

Bankers Association, the Farm Credit Council, and the Independent Community Bankers regarding crop insurance as an important component of lending decisions, and I think we have certainly mentioned that more than once here during this hearing. 

Senator Thune brought up an interesting situation where he said 

if we strengthen and improve crop insurance to the point or add 

more on to it, it does not become a better target or a greater target. 

And, of course, all of agriculture is a target when people talk about 

cutting spending. 

32 

I just want the record to show that we cut—‘‘we.’’ I did not. We did cut in the farm bill in 2008 $6 billion, SRA cut $6 billion, that 

is $12 billion we have already cut. I know Mr. Rutledge has some 

real feelings about that. I just would like to ask you, Jarvis, you 

are sitting around the kitchen table there with Jay and your parents, and you are going through another dry year. You are talking 

about target prices, and that is not going to do you any good. Then 

the countercyclical program is not going to do you any good. The 

SURE program is one where you do not get a payment for 18 

months, and the FSA Director has already testified he still does not 

understand the ACRE program. 

So what do those programs do for you as opposed to crop insurance and the whole strengthen and improve it and maybe add a 

revenue program on top of that if that is possible? We are, looking 

at those options. But I do not understand this business of how if 

we strengthen and improve our crop insurance so that you are sitting around the kitchen table and you can go another year, hopefully, and hopefully we get some moisture. But of the four that 

have been mentioned, if you take all of that, it has no effect on you. 

Is that correct? 

Mr. GARETSON. That is correct. A high target price is great, but 

if you do not have any bushels, it does not do much good either. 

The SURE payment, waiting 18 months, as stated earlier in previous testimony, does not do much for my lender. So those are kind 

of unacceptable risk management strategies. The direct payments, 

however nice, they do not fix a disaster. And, obviously, as a producer, I do not want to give up any benefit that I currently have. 

However, knowing the Federal budget situation and knowing that 

I need to be involved in helping to fix that, I am definitely willing 

to prioritize where I want the cuts to come and what I am willing 

to give up. 

As I stated, I am willing to give up everything except crop insurance, and I will lobby or fight or testify or whatever I need to do 

for however long to make sure that that stays intact. 

Senator ROBERTS. I appreciate that. 

Mr. Rutledge, there is a lot of talk these days about reconfiguring 

the Title I farm programs to center on a revenue program. The 

Chairwoman and I have been wrestling with that for quite a while. 

Does this concern you at all? If so, can you discuss and rank some 

of the specific things we can do as we develop a revenue program 

to minimize your concerns? 

Mr. RUTLEDGE. As I understand most of the proposals, they 

would provide benefits similar to those of crop insurance, particularly at the higher coverage levels. I think this would lead farmers 

to buy down, buy lower levels of coverage. 

After Congress having spent 30 years or more building the program up to the level that we currently have, I see that as potentially a step backward for crop insurance. So that would be one of 

our primary concerns. 

Senator ROBERTS. Am I out of time or is the timer off? 

Chairwoman STABENOW. I am sorry. We were just—something 

happened with the timer, and I think that we were down to zero 

and it went back up to 5 minutes, and I would object to Senator 

Roberts getting an additional—— 

33 

Senator ROBERTS. That is just like running the clock up at the 

University of Nebraska with Kansas State plays. 

[Laughter.] 

Chairwoman STABENOW. I think you were just about at zero, 

Senator Roberts. 

Senator ROBERTS. I had one more tremendously important question, but I will have to submit it for the record. Thank you. 

[The question of Senator Roberts can be found on page 259 in the 

appendix.] 

Chairwoman STABENOW. Thank you very much, and I apologize 

for that. We will make sure that does not happen again. 

Senator Johanns. 

Senator JOHANNS. You know, I think, Madam Chair, I was called 

on ahead of time—or ahead of Senator Grassley last time, but he 

was actually sitting here when I walked in, so I think he is ahead 

of me. 

Chairwoman STABENOW. Well, our list had you ahead of Senator 

Grassley, but if that is wrong, we will—— 

Senator JOHANNS. I will yield to the Senator from Iowa. 

Chairwoman STABENOW. Senator Grassley. 

Senator GRASSLEY. I will tell you how I was operating, maybe 

like some other Committee does. When the gavel goes down, that 

establishes the seniority for the questioning. 

Chairwoman STABENOW. That is supposed to do that and—— 

Senator GRASSLEY. So I walked out just as soon as you started 

to talk, not because I did not want to hear you. 

Chairwoman STABENOW. Okay. I will remember that. 

[Laughter.] 

Senator GRASSLEY. Mr. Rutledge, farmers continue to tell me 

that the crop insurance is a vital tool for managing risk, and they 

want to keep it the way it is because they know, as I think you 

have said, $12 billion has already been contributed from crop insurance to paying down the national debt. 

My question: I certainly support maintaining crop insurance, but 

is there anything, in your opinion, that we can do to improve crop 

insurance for Iowa farmers? But maybe I should not just limit it 

to Iowa farmers. Any suggestions you have? 

Mr. RUTLEDGE. Well, I think the major crops have fairly good 

programs available to them. There is always a need for new products to be developed for some crops that we just do not have a real 

good fit for. I think that as we work with the Risk Management 

Agency—Under Secretary Scuse mentioned the frequent meetings 

that we plan to have going forward. It would help, as we have 

those meetings, if we are able to be provided information on a little 

bit more timely basis sometimes. This past year, we were somewhat surprised by the timing of the announcements of the rate 

changes, which caused some scrambling around to buy reinsurance 

for some companies. 

But I think the program works very well. The biggest fear we 

have, I guess, would be that changes would harm the program 

going forward. 

Does that answer your question, Senator? 

Senator GRASSLEY. Yes. I would follow up, just from what you reminded me of something. Do you feel that we have the number of 

34 

people that it takes to administer the program? Very basic to the 

Crop Insurance Program was that we wanted to be able to service 

the farmers. 

Mr. RUTLEDGE. Efficiency is the primary goal of most of the 15 

companies that are left, and, actually, where we have—as a company, the bulk of our employees are in our IT department. It is a 

very complex program, as Mr. Garetson and Mr. Carden talked 

about. If there was any way that we could simplify it, make it work 

a little bit more smoothly, that would be beneficial. But it does 

take a tremendous number of people, not just from the company’s 

perspective, but I think there are between 12,000 and 13,000 

agents across the country. They are busy. Well, as you know, Ms. 

Gerdes had to go home for sales closing. We cannot really afford 

to lose any of the people we have and have this program continue 

as it is. 

Senator GRASSLEY. Okay, my last question is about whatever we 

end up with a new commodity title, and I am not sure how much 

you have followed some of the proposals that have been floating 

around. I am not asking about any particular proposal, but if you 

are familiar with any of them in general, what aspects of the Revenue Assurance Program’s proposals cause the crop insurance industry the most concern? 

Mr. RUTLEDGE. As I tried to answer Senator Roberts when the 

clock went kerblooey, most of those proposals, as I understand 

them, do have benefits that are similar to crop insurance, and the 

concern would be that they would buy down coverage, buy less crop 

insurance. After having spent over 30 years building up the program to where it is now, that would seem like a step backward to 

me. So that would be our primary concern. 

Senator GRASSLEY. Okay. I will yield back my time. I do not 

think I will be able to be here for the next panel. We have an 

Iowan on there. Would you welcome him for me? 

Chairwoman STABENOW. I absolutely will, yes. 

Senator GRASSLEY. Thank you. 

Chairwoman STABENOW. Thank you very much. 

Senator Johanns. 

Senator JOHANNS. Madam Chair, thank you. 

Madam Chair, thank you so much for mentioning Ruth Gerdes. 

She is somebody I go to when I have questions about crop insurance. We had a roundtable with farmers, and just so we get the 

benefit of her time in Washington, I would ask that the statement 

she prepared be made part of the record. 

Chairwoman STABENOW. Without objection. 

Senator JOHANNS. Great. 

[The prepared statement of Ms. Gerdes can be found on page 111 

in the appendix.] 

Senator JOHANNS. Mr. Rutledge, let me follow right up with you 

because I think you are making a very, very important point here. 

Then I am going to, if I could, turn to—is it Mr. Garetson? 

Garetson. I want to kind of ask this question of both of you. As I 

visit with farmers in our State, and some other States, too, they 

talk about risk management in kind of a holistic sort of way. It is 

crop insurance. You know, they like their crop insurance. The mesVerDate Nov 24 2008 11:20 Feb 26, 2013 Jkt 000000 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 C:\DOCS\78274.TXT MICHA
35 

sage I get out of the forums I have done is do everything you can 

to protect what we have. 

But then they also do some work on the boards. They are sophisticated and smart people, and they understand this better than I 

do, to be honest about it. So they are also managing their risk 

there. 

Is that your experience, Mr. Rutledge, as you work with the industry, that there is kind of a multifaceted approach to risk management? 

Mr. RUTLEDGE. Absolutely. The insurance portion is a very important part, but the revenue protection that is provided allows 

farmers to forward contract with minimal risk. There was a time 

when I think less than 5 percent of farmers had a marketing plan, 

and I think that number now has grown multifold with the ability 

to forward contract because they have the protection from the crop 

insurance policy. So it really does do far more than just pay for loss 

of bushels. It provides that flexibility to run your business the way 

you want to, to forward market, to have a marketing plan that fits 

your operation, and—— 

Senator JOHANNS. The banker typically expects it, too. 

Mr. RUTLEDGE. Absolutely. 

Senator JOHANNS. A banker is not going to loan a lot of money 

without you having some risk protection, a plan in terms of how 

you are going to deal with risk. 

Mr. RUTLEDGE. Absolutely. I do not know that you could get a 

loan—— 

Senator JOHANNS. Otherwise. 

Mr. RUTLEDGE. Yes, without crop insurance. In earlier questions 

to Under Secretary Scuse, I think the question was asked about beginning farmers. They need a lot of money to get started, and without crop insurance, they would never be able to get a loan. You 

know, that would be primary, I think, for them as beginning farmers. 

Senator JOHANNS. Mr. Garetson, do you agree with Mr. Rutledge’s assessment on this? Is this how you are managing your risk 

with your operation? 

Mr. GARETSON. Yes, it is. I do agree with Mr. Rutledge, and it 

is exactly how we manage our risk. What the crop insurance revenue guarantees, it allows us to go out and forward contract a 

higher percentage of our expected bushels based off of our APHs, 

and with the assurance that if we have a crop failure or a hailstorm that hits half our farm and we lose bushels there, it would 

put us below our ability to deliver those bushels. We have got the 

crop insurance behind that to provide us with revenue to buy out 

of those contracts or to buy bushels to deliver in place of our own. 

Senator JOHANNS. Yes. Very, very important testimony, because 

it leads me to an observation. I have only got 35 seconds left so I 

will not ask this in a question, but it leads me to an observation. 

Farmers tell me, ‘‘Crop insurance is working. Please protect it.’’ All 

of the ideas, then, about plussing it up or adding to it or whatever 

I think have a real risk for crop insurance. I think you could end 

up taking a very good product that farmers have learned to work 

with, with the crop insurance and marketing and working with 

their banker, and you literally could disrupt that balance. Like I 

36 

said, I have run out of time so I cannot even ask you about that 

observation, so write me a letter and let me know what you think 

about that. 

Thank you, Madam Chair. 

Chairwoman STABENOW. Thank you. Thank you very much. 

Senator Klobuchar. 

Senator KLOBUCHAR. Well, thank you very much, Madam Chairman and Senator Roberts. Thank you all for being here. 

As Co-Chair of the Congressional Farmer Co-op Caucus with 

Senator Thune, I was interested to hear more about the importance 

of crop insurance for farm co-ops, so I thought I would ask you 

that, Ms. Hills. Understanding that co-ops are as diverse as the 

farmers that they serve, how do you see crop insurance helping to 

mitigate the risk your farmer owners face? How does this benefit 

the strength of the co-op? 

Ms. HILLS. Well, if we have crop insurance, of course, then we 

are able to survive from year to year, and it allows us to continue 

to be with the co-op. 

I am sorry. Could you kind of ask me that again? Then I 

could—— 

Senator KLOBUCHAR. Well, no, that is fine. It is just that I think 

people do not always understand that co-ops are very different depending on the farmers that they serve, the importance of farmers’ 

co-ops, and the fact that crop insurance really helps you to mitigate 

the risk when you have—with the weather volatility, market volatility, whatever there is, crop insurance is especially necessary for 

smaller farmers that would join together in a co-op. 

Ms. HILLS. Yes, it is. 

Senator KLOBUCHAR. Okay. Very good. Thank you. Good answer. 

Then, Mr. Garetson, I thought I would ask you about precision 

farming, and in your testimony you talked about developments in 

precision agriculture. At our conservation hearing that we had back 

in February, there was a farmer from Minnesota who testified, and 

he talked about how the technology actually saves him money and 

produces environmental benefits in addition to saving money. How 

do you think we can encourage FSA and RMA to do a better job 

using data from precision agriculture to help increase the delivery 

efficiency of our farm programs? 

Mr. GARETSON. Yes, on our farm we were early adopters of technology, and I believe with the communications available now, especially through wireless communication with cell phones or 

smartphones and then with the GPS reference technology, I do not 

think FSA, given the right steps, would have to do much of a measurement service anymore because on our farm we put in boundaries that we record with GPS locations that identify how many 

acres are within that field by crop. And—— 

Senator KLOBUCHAR. Could you just explain for the viewers at 

home—like 50 people—how you actually do this, like how you use 

the GPS technology? 

Mr. GARETSON. On our equipment, tractors or sprayers or combines—or I have even adapted it to use in my pickup; some use it 

on their four-wheelers or ATVs—you have a receiver that receives 

signal from the satellites that are in orbit. Typically, there are 7 

to 12 that you are getting a signal from which cross-references your 

37 

position on the face of the Earth, and then it just records that position as you drive at whatever interval you want, if you want it 

every 1 second or half second or a tenth of a second. Then it has 

a program within it that, once you make that boundary or border, 

figures the area within that circle or rectangle or polygon or whatever shape your field is. So real briefly, that is how you make that 

map of the field, and when I take that into FSA and compare that 

to how they draw their maps out, a few times I am two-tenths too 

many acres or two-tenths too less. But I do not know that I have 

ever been more than half an acre just off of what I do versus what 

they come up with. 

So it can get real close and very accurate, and then with the 

technology, with cell phones, smartphones, or uplink with the satellites that are already communicating, I think we can get realtime data collection on whether it is bushels or acres or absolutely 

planting dates and crop. 

Senator KLOBUCHAR. Right, so it just—I am going to move on to 

Mr. Carden here, but it just helps to make it more economical and 

do your smartest planting, I would guess, having that information. 

Okay. Mr. Carden, crop insurance is often compared to car insurance or home insurance when people who are not as familiar with 

it talk about it and are trying to estimate the cost it should take 

for private companies to deliver it. How does the delivery of crop 

insurance differ from the other types of insurance like car or home 

insurance? Then could you also answer the question about the volatility that we have seen in today’s marketplace and how it has 

changed the relationship with the agents and the producers? Are 

you seeing producers significantly re-evaluating their risk? 

Chairwoman STABENOW. I will have to ask you to make that very 

short, please. 

Mr. CARDEN. Okay. Well, basically I think there is a great deal 

of difference between a comparison between crop insurance and 

auto insurance. Auto insurance is basically something you write 

once, and you simply renew it at its same level year after year in 

most cases. You may have a visit with your agent annually afterwards to look at what is there, but it is usually a pretty short 

meeting. At least when I meet with my auto insurance agent, that 

is the way it goes. 

With crop insurance, I meet with a grower at least—we have at 

least five contacts a year, and there is no way to get around that, 

no matter what. In most cases we have more than that. It just 

takes that much to keep up with what they are doing and make 

sure they are adequately protected and that they understand the 

protection that they have. 

Chairwoman STABENOW. Thank you. 

Senator KLOBUCHAR. All right. Thank you. I will do the second 

question in writing. 

[The question of Senator Klobuchar can be found on page 243 in 

the appendix.] 

Senator KLOBUCHAR. Thanks. 

Chairwoman STABENOW. Thank you very much. 

Senator Lugar. 

Senator LUGAR. Madam Chair, I want to ask a question of Mr. 

Rutledge, although others may have some more thoughts. 

38 

On the Lugar farm in Indianapolis, Indiana, we have three basic 

situations: soybeans, corn, and hardwood trees. Now, last year, I 

purchased the 85-percent level of crop insurance, and that was a 

blessing because our corn was knocked over by very bad winds in 

one field, and we lost 50 percent of the crop, and we had prompt 

payment from the crop insurance people, for which we are grateful. 

But nothing happened to any of my trees, but you hear from time 

to time about the ash bore or at least in the case of my black walnuts some disease is coming close to us, so this has led me to wonder what I ought to be doing with regard to my trees. This is 

shared by other walnut growers throughout Indiana or other tree 

people with whom I visit. 

Let me expand that question and pick up Ms. Hills’ thought. 

There are fruits and vegetables on many farms, and I think you, 

Mr. Carden, mentioned there may be 71 different types of crops. It 

is not clear at all to most of us how all of this can be covered. Some 

would say there are lots of complications—you did so in your testimony—about doing blueberries the same way that you do corn, for 

example. But if we are as a Committee trying to think of wholefarm insurance, whatever happens on the farm, how do we go 

about that as a practical matter? Senator Johanns has said you do 

not want to jeopardize a program that is working well, apparently, 

with the major crops, and I do not want to do that. At the same 

time I am impressed by constituents who really want to know if 

this is the way the farm bill is going, the end of various other situations, how do we provide a sense of whole-farm insurance in 

which something happens at the Federal level, but you can buy additional insurance for whatever your crop or your specialty may be? 

Do you have any thoughts about that, Mr. Rutledge? 

Mr. RUTLEDGE. Senator, I know you can buy whole-farm crop insurance. I am not sure if your trees would be included in there, to 

be truthful. 

Senator LUGAR. Probably not, but should they be? In other 

words, I have got a farm; I have got income coming from each of 

these situations. So that is very important to me to figure out, and 

so while we are writing a farm bill, I want to think about trees as 

well as blueberries and apples and whatever. I think we better 

think of all of this because we are in basic reform here, I think, 

in this farm bill. We are moving really toward the insurance and 

the liabilities that come whatever you do on the farm. What would 

you do, Ms. Hills, given your situation? 

Ms. HILLS. Well, we only grow blueberries on our farm. 

Senator LUGAR. Yes. 

Ms. HILLS. So I can only speak for those? 

Senator LUGAR. Are those insured? 

Ms. HILLS. Yes, they are. They are insured through our crop insurance. We have an AGR 6575 policy and a CAT policy, so it is 

multi-peril. Whole farm, because we only grow blueberries, but if 

I had a farm that had multiple crops on it, I would probably want 

the ability to have insurance to cover all those—everything that 

brings me money on that farm. 

Senator LUGAR. Is that doable given your experience as professionals in this business? 

Ms. HILLS. I do not see why it could not be doable. 

39 

Mr. RUTLEDGE. If I may, the one difficulty with whole-farm insurance is the marketing aspect that we talked about with Senator 

Johanns. With enterprise units you have an entire crop covered, 

and you know exactly what you can market. You can do some of 

that with whole-farm insurance. But when you include crops where 

there is no reference prices and that type of thing, that impacts the 

marketing plans that you might have. So it is something that 

needs some work, I guess. 

Senator LUGAR. So if we were writing the bill, we would need to 

find some reference of pricing for each of these situations. At least 

that would be one point, I suppose, to help you administer the payments and so forth. 

Mr. RUTLEDGE. I think that is the case with a number of specialty crops, you need a reference price to provide revenue coverage, which crop insurance can do. You just need that. 

Senator LUGAR. Thank you. Thank you all—yes, go ahead. 

Mr. CARDEN. Senator, I was going to say there is a product out 

there that RMA has called ‘‘AGR,’’ which is adjusted gross revenue. 

It is based on your revenue shown on your tax returns over the last 

5 years. It is a product that they have not really expanded or ever 

utilized maybe as well as it could be. It is definitely only offered 

in a very limited area and a very limited basis. But that could be 

potentially an all-encompassing thing because it comes right off the 

Schedule F. 

Senator LUGAR. Total farm, total tax return. 

Mr. CARDEN. Total farm revenue, that is right. 

Senator LUGAR. Thank you. 

Chairwoman STABENOW. Well, thank you all very much, and we 

will proceed to our third panel, unless Senator Nelson had a question for this panel. If not, we will proceed to our third panel. Thank 

you very much. This is very helpful. Thank you. We will ask our 

third panel to join us at this time. 

Well, good morning. We are very pleased to have you with us 

and, again, appreciate your staying an extra day to be able to be 

here for this very important testimony. 

I am going to ask Senator Nelson to introduce our first witness. 

I know Senator Johanns would also like to make a comment. So, 

Senator Nelson? 

Senator NELSON. Well, thank you, Madam Chairwoman. Before 

I begin, I would request unanimous consent that my introductory 

remarks for Ruth Gerdes, who was unable to testify during today’s 

panel because of the hearing’s changed date, be entered into the 

record as well. 

Chairwoman STABENOW. Without objection. 

Senator NELSON. Thank you. 

[The remarks of Senator Nelson follow:] 

Senator NELSON. Chairwoman Stabenow and Ranking Member 

Roberts, I have a particular honor and am very pleased today to 

introduce and welcome Steve Wellman, president of the American 

Soybean Association, to testify before the Committee this afternoon. Steve farms near Syracuse, Nebraska, where, in addition to 

soybeans, he grows corn, winter wheat, and alfalfa, and also manages a cow-calf herd. 

40 

Since 2006, he has served the American Soybean Association in 

a number of roles. In addition to his working with ASA, he has 

been active with Nebraska’s corn growers and cattlemen and has 

served as both president and vice president of his local cooperative. 

Through Steve’s many leadership roles in agriculture, I have had 

the opportunity to work with him on a number of issues important 

to both soybean producers and Nebraska’s other farmers and 

ranchers. I am confident that today he will provide a sound understanding of how farm programs work and the benefits of Federal 

crop insurance as a risk management tool, while laying out proposals on how the Committee can maintain a strong safety net 

which benefits farmers and rural communities. 

It is truly my honor today to welcome Steve and have this opportunity to introduce him as a Nebraskan. Thank you. 

Chairwoman STABENOW. Thank you very much. 

Senator Johanns. 

Senator JOHANNS. Thank you, Madam Chair. Let me do two 

things very quickly. 

The first thing I would like to do is to acknowledge Pam Johnson 

who is here. Pam and I actually went to high school together in 

Osage, Iowa, where I grew up on a small dairy farm, and, Pam, if 

you are back there in Osage and they are wondering, tell folks I 

found work in Nebraska. All right? 

Chairwoman STABENOW. I am going to be asking for some private stories you can use along the way. 

Senator JOHANNS. Be careful, Pam. 

[Laughter.] 

Senator JOHANNS. Then I also want to add my words of welcome 

to Steve Wellman. Steve is a successful farmer near Syracuse, Nebraska. He really embodies what we love about values of rural 

America. Not only is he eyeball deep in managing the farm and 

doing the work necessary there, but he has been active in the Soybean Association and other community matters. 

I might also mention that Steve’s daughter, Sarah, worked for 

me recently and just did a wonderful job. 

So, Steve, glad to have you here. I do a weekly media call, so I 

need to step out to take care of that, but thank you for this opportunity. 

Chairwoman STABENOW. Well, thank you very much. 

Now it is my pleasure to introduce Ms. Pam Johnson, and I know 

that you heard from Senator Grassley, who was here earlier, that 

he sends his best wishes and thanks, as well as Senator Harkin as 

well. It is great to see you again and to have you on the panel. 

Currently the vice president of the National Corn Growers Association, Ms. Johnson lives in Floyd, Iowa, where she and her husband raise corn and soybeans. She also manages a seed business 

and invests in value-added businesses such as ethanol and biodiesel. Mrs. Johnson also serves as director of the Iowa Corn Growers Association and is former chairwoman of the Iowa Corn Promotion Board. We are so glad you are here. 

I would like to now turn to Senator Klobuchar for the next introduction. 

Senator KLOBUCHAR. Well, thank you very much, Madam Chairman. I am pleased to introduce a witness from my home State who 

41 

is going to talk about his experience with crop insurance and farm 

safety net programs on his farm in Minnesota. That is Erik 

Younggren. He is a fourth-generation farmer in Hallock. Hallock is 

really far up north in Minnesota. It gets a little cold. He farms 

alongside his two cousins and his wife, Angela. Mr. Younggren 

raises a variety of crops, including wheat, sugar beets, and soybeans. 

On March 3rd, Mr. Younggren was elected as the president of 

the National Association of Wheat Growers. He has been an active 

member of the Minnesota Association of Wheat Growers, and he 

has represented his State on the Wheat Growers Domestic and 

Trade Policy Operations and Planning and Budget Committees. He 

is a graduate of Minnesota State University at Moorhead with a 

bachelor’s degree in finance and a minor in economics. 

I want to thank Erik for being here today to testify. 

Chairwoman STABENOW. Great. Well, thank you very much. 

Next we have Mr. Jimbo Grissom. Mr. Grissom is the president 

of the Western Peanut Growers Association and has been farming 

since 1978—when you were 5 years old, right? 

[Laughter.] 

Chairwoman STABENOW. He has grown everything from peanuts 

to corn to cotton to wheat. He credits his wife for not only taking 

care of him and his family, but also being a good hands-on business 

partner. We welcome you here today. 

Now I believe Senator Cochran had wanted to make the following introduction but is not here, and so I am pleased to be able 

to introduce Mr. Travis Satterfield. Mr. Satterfield is a partner 

with Satterfield Farms in Benoit, Mississippi. He has held multiple 

positions, including chairman and director on various farm policy 

task forces, Farm Bureau federations, and committees in Mississippi and Arkansas. We are very pleased to have you here with 

us today as well. 

Then we have Mr. Chuck Coley, and again—I just introduced— 

Senator Cochran, I do not know if you want to say a word. I just 

introduced Mr. Satterfield who is from your home State of Mississippi, and so I think I was just a minute ahead of your getting 

here, but certainly you are welcome to say a word of greeting. 

Senator COCHRAN. Well, I am happy to join you in welcoming the 

panel of witnesses. Their testimony is very important to our understanding of the challenges faced by producers, and I am glad you 

are including rice producers and a very fine representative from 

our State who is knowledgeable and successful in spite of the unusual challenges that that vocation presents. 

Thank you. 

Chairwoman STABENOW. Thank you very much. 

Last, but certainly not least, Mr. Chuck Coley is currently Chairman of the National Cotton Council of America in Vienna, Georgia. 

In addition, he is the president of Coley Gin and Fertilizer Company. Mr. Coley and his wife have a son and a daughter, and we 

very much appreciate your being on the panel today. 

We will turn first to Mr. Wellman. Welcome. 

42 

STATEMENT OF STEVE WELLMAN, PRESIDENT, AMERICAN 

SOYBEAN ASSOCIATION, SYRACUSE, NEBRASKA 

Mr. WELLMAN. Well, thank you, Madam Chairwoman and members of the Committee. A special thanks to Senator Nelson and 

Senator Johanns for the fine introduction. 

The American Soybean Association represents soybean farmers 

on national and international issues, and it is certainly my pleasure to appear before you all today to discuss to discuss commodity 

programs and risk management for the 2012 farm bill. 

First of all, I want to explain why an income safety net is essential for production agriculture. U.S. agriculture has been and remains based on the family farm. As mentioned, my farm consists 

of several crops. We have a fourth-generation farm, over 1,800 

acres and a cattle herd. We do have one full-time employee. 

In 1995 and 1996, prices were relatively high, and Congress decided to phase out the target price program to reduce costs. Three 

years later, prices for most commodities fell sharply in the wake of 

the Asian financial crisis. By 2001, they were down by 45 percent, 

and Congress stepped in with emergency assistance. On my farm, 

during 1998 to 2003, Government support exceeded my net income 

from grain farming. Government support, including crop insurance 

indemnities, was vital to keeping my neighbors and myself in business. 

With one out of every 12 U.S. jobs tied to agriculture, a positive 

trade balance for ag products, renewable fuel production, plus the 

security of a large portion of our country’s food supply grown here, 

farming is an essential asset for our Nation’s economy and security. 

Government support for risk management and crop insurance programs are investments to protect our country’s valuable asset. 

Farmers want to make their living from the market, not from the 

Government. We support policies that allow and encourage us to 

respond to market signals. We believe we provide our country and 

a growing world with an abundant supply of high-quality food, 

feed, fiber, and fuel at reasonable prices. 

When I started farming in 1981, in order to be eligible for payments, we were restricted to growing crops on acreage bases determined for each farm. This resulted in planting distortions and overproduction of crops already in surplus. It prevented farmers from 

responding to market signals that called for production of crops 

which did not have acreage bases, including soybeans. 

In 1996, Congress enacted the Freedom to Farm legislation. The 

Government safety net was decoupled from planting decisions, and 

producers were allowed to plant any program crop on their farm. 

The result has been a return to competitiveness and greater profitability for U.S. agriculture. Soybean plantings grew from 60 million 

acres in 1995 to 75 million acres in 2010. For soybeans, maintaining planting flexibility is of paramount importance. 

Now to ASA’s position on completing a new farm bill in 2012. We 

recognize that agriculture should do its fair share to lower Federal 

spending. We also recognize that cuts in commodities will come 

from elimination of the direct payment program and that existing 

programs will need to be restructured. 

ASA supports a revenue-based program that complements the 

existing crop insurance program. Losses that exceed a specified 

43 

revenue threshold would be partially offset. This approach includes 

a single farm-level trigger under which farmers would be required 

to document losses on a commodity-specific basis, so payments 

would be made only when actual losses occur. 

While payments under this program would be tied to currentyear production, we believe it will not distort planting decisions 

and production. Documenting actual losses in order to receive revenue payments would be a deterrent to ‘‘planting for the program.’’ 

Additionally, using recent average prices to determine the revenue 

threshold would make the program responsive to market price 

movements over time. Also, revenue payments would be made on 

a percentage of actual revenue losses, thereby further limiting the 

possibility of planting distortions. 

We acknowledge that a revenue-based program may not be appropriate for all producers of certain commodities or in areas where 

yield variability is relatively low, so we support providing flexibility 

or alternative programs for these producers. However, they must 

not have the potential to affect planting decisions and reduce planting flexibility. 

ASA strongly supports the existing Crop Insurance Program as 

the foundation of risk management. Soybean producers actively 

participate in crop insurance and oppose any restructuring of the 

program or reductions in its baseline. Also, ASA opposes subjecting 

crop insurance participation to conservation compliance requirements. 

In summary, I emphasize the importance of completing the farm 

bill now, keeping crop insurance as the foundation for the safety 

net, and complementing it with a revenue program. Farm policy 

must maintain planting flexibility and limit the possibility of planting distortions. Allowing producers to respond to markets while 

managing risk has been the most valuable policy provided under 

the current farm program and must be maintained. 

I thank you for the opportunity and look forward to answering 

questions. 

[The prepared statement of Mr. Wellman can be found on page 

214 in the appendix.] 

Chairwoman STABENOW. Thank you very much. 

Ms. Johnson. 

STATEMENT OF PAM JOHNSON, FIRST VICE PRESIDENT, 

NATIONAL CORN GROWERS ASSOCIATION, FLOYD, IOWA 

Ms. JOHNSON. Madam Chairwoman, Ranking Member Roberts, 

and members of the Senate Ag Committee, on behalf—— 

Senator ROBERTS. Mic. 

Ms. JOHNSON. On behalf of the National Corn Growers Association—— 

Senator ROBERTS. It is still not on. 

Chairwoman STABENOW. The microphone is not on for some reason. 

Ms. JOHNSON. Mine says—can you hear me? 

Chairwoman STABENOW. There it is. 

Ms. JOHNSON. Madam Chairwoman, Ranking Member Roberts, 

and members of the Senate Ag Committee, on behalf of the National Corn Growers Association, I thank you for the opportunity 

44 

to share our views today on the importance of risk management 

programs for family farmers. 

My name is Pam Johnson. I am a sixth-generation farmer from 

Floyd, Iowa, where I raise corn and 

soybeans with my husband and two sons. I serve as first vice 

president of the NCGA. 

When we farmers go to the field this year to plant, tend, and 

harvest a crop, we are putting many dollars, a whole year’s work, 

and our entire yearly income at risk. Traditionally, we worry about 

the risks from drought, floods, plant disease, and pests, but now 

the risks are broader, deeper, and larger. We are all interconnected 

on a global scale. Risks to agriculture come from many unexpected 

and diverse places: international incidents, economic crises around 

the world, world trade policies, and the price of a barrel of oil. The 

list goes on. We may do everything right with the decisions that 

we make on our farm for management, but there are still years 

when we cannot cover the losses. 

These threats are hard on me, but they are even more devastating to young farm families like my two sons who are just getting started in agriculture. The ability to purchase Federal crop insurance and have access to flexible, revenue-based risk management programs to mitigate these risks is even more critical today. 

The context for the 2012 farm bill and strong risk management 

is this: U.S. agriculture must be prepared to take on an even greater role in meeting growing demands of consumers, both here and 

abroad. Billions of people in the world are hungry, and the numbers rise. We simply cannot afford to underestimate these challenges as well as our ability to help respond to meet the needs for 

food and energy. 

NCGA has invested time and resources to develop and analyze 

concepts for a new farm bill that would help farmers in time of 

need and be a good investment for taxpayer dollars. So what did 

we learn? That risk management is priority number one and that 

Federal crop insurance is the cornerstone of a sound farm safety 

net for the future. 

Secondly, we recognize the need for a supplemental risk management tool to protect against multi-year revenue losses from adverse 

weather or price declines not adequately covered by crop insurance, 

such as happened in the 1980s farm crisis or the Asian financial 

collapse. 

NCGA has called for a transition away from direct payments to 

a revenue-based risk management tool that complements crop insurance. Our growers have decided that it is time to move toward 

a farm policy that better addresses today’s production and volatile 

market risks. We support building on the revenue-based program 

reforms that were adopted in the 2008 farm bill. In our view, we 

believe that the Aggregate Risk Revenue Management Program 

proposed by Senators Brown, Thune, Lugar, and Durbin builds on 

that reform to effectively address the risk management needs well 

into the future. ARRM would use crop reporting districts as the 

area to determine payments. Our analysis shows that using a crop 

reporting district would better serve farmers in their times of need. 

45 

Some growers prefer having a trigger closer to the farm, but the 

tradeoff is lower price protection that would be necessary to meet 

budget constraints. 

While NCGA supports an area-wide revenue program, we realize 

that producers in every region of the country face different risks. 

We look forward to working with them and other commodity organizations to develop a revenue protection program for all areas of 

the country. 

There are certain things that the Federal Government must do 

for its citizens. Providing food security is one of them. Countries 

around the world understand the important role that agriculture 

plays in their economies. They, too, provide assistance to farmers 

when they need it and robustly invest in ag programs and research. The 2012 farm bill presents an opportunity to advance 

needed improvements in the commodity title that can work more 

effectively with a strong research crop—with a strong Federal Crop 

Insurance Program. 

NCGA appreciates the difficult task before your Committee to 

write a comprehensive and balanced farm bill, especially under the 

current budget situation. But we urge Congress to pass a farm bill 

this year. 

I thank you for your time today and your consideration of our 

policy recommendations. 

[The prepared statement of Ms. Johnson can be found on page 

148 in the appendix.] 

Chairwoman STABENOW. Thank you very much. 

Mr. Younggren, welcome. 

STATEMENT OF ERIK YOUNGGREN, PRESIDENT, NATIONAL 

ASSOCIATION OF WHEAT GROWERS, HALLOCK, MINNESOTA 

Mr. YOUNGGREN. Madam Chairwoman, Ranking Member Roberts, and members of the Committee, thank you for the opportunity 

to address you today. I am Erik Younggren, a fourth-generation 

wheat farmer from Hallock, Minnesota. I also serve as current 

president of the National Association of Wheat Growers. 

We know you and your staffs have been working diligently since 

last fall to craft an appropriate and well-functioning 2012 farm bill. 

Today I hope to share some of my experiences in working my family’s farm as well as the National Association of Wheat Growers’ 

afety net policy priorities. 

First and foremost, the Nation’s wheat farmers call on you to reauthorize this legislation this year before the expiration of the current bill on September 30th. Our farmers will head into their fields 

to begin planting the 2013 crop as soon as August of this year. 

They need to know what the Federal farm safety net will look like 

to make appropriate business decisions. 

I am also here to reiterate a message you have heard for months 

and even today on this panel. We strongly oppose any reductions 

to the baseline available for the Crop Insurance Program. My 

farm’s history shows how important crop insurance has become. We 

farm in the Red River Valley in the northwest corner of Minnesota. 

Our land is prone to frequent spring flooding, heavy thunderstorms, and late or early killing frosts. Our humid summers are 

also conducive to yield-robbing rains. 

46 

Because of these factors, crop insurance has been an important 

tool over the decades. In 1985, my dad insured 65 percent of his 

APH that would have paid a maximum of $115 per acre for a premium of $4.57. Comparatively, in 2011, I paid $11.40 an acre for 

coverage of $326 in revenue. Still, this left me with unprotected expected revenue of more than $220 an acre. 

During the mid-1990s, our wheat yields were hit a tragic blow 

with a disease called Fusarium head blight, commonly known as 

‘‘scab.’’ Yields waffled between 15 and 25 bushels per acre, maybe 

up to 30, and we were thrilled to hit 40. Because crop insurance 

is based on historical yields, our insurance protection dropped to 

somewhere between $90 and $100 an acre. 

By the early 2000s, researchers had started to make headway on 

scab, but we were predominantly wet, so our yields continued to 

suffer. Insurance that provided $115 of protection in 1985 shrunk 

to provide only $91 of protection by 2000. We started purchasing 

crop revenue coverage, and this allowed me to insure revenue for 

the first time, as opposed to just yield. Although this is a better 

tool, through the 2000s our crop insurance protection continued to 

decline while we fought to rid our insurance guarantee calculation 

of low yields suffered through the 1990s. Because of our crop rotation, we plant wheat only two or three times every 5 years. This 

means it can take 15 years to get a low yield worked out of our 

APH calculation. Some well-timed disaster programs kept many 

farms in our area afloat through the low production years of the 

late 1990s and early 2000s. 

On behalf of the farmers in my area, I would like to thank the 

Committee members for creating revenue-based crop insurance. 

These products have evolved over time to provide economical options for the premium that is shared between farmers and the Nation’s taxpayers. 

While our farm has benefited tremendously from the evolution of 

the Crop Insurance Program, the National Association of Wheat 

Growers realizes crop insurance by itself is not a fully functioning 

safety net. We recognize different production areas of the country 

rely on different farm programs. Therefore, we support multiple 

safety net programs, including a disaster program in Title I. As you 

modify Title I in the 2012 bill, we urge you to outline programs 

that follow these principles: they must be dependable and understandable for farmers and their farm partners; they must be affordable and defensible to the taxpayer; they must be defensible to our 

Nation’s trading partners; and we ask you to ensure that spending 

within Title I, including funding for direct payments, remains in 

Title I. 

NAWG supports a revenue-based program modeled on ACRE and 

SURE, with an on-farm trigger and coverage by commodity on as 

many planted acres, versus base acres, as possible. We believe coverage close to the farm provides a more effective safety net for 

farms with losses than coverage at the State, crop report district, 

or county levels. 

We also ask you to ensure that any program changes do not affect planting decisions and allow producers planting flexibility, 

which has been a central tenet to the last three farm bills. 

47 

On behalf of the Nation’s wheat farmers, I appreciate your attention to my perspective on our Nation’s agricultural risk management programs and that of the National Association of Wheat 

Growers. We are committed to working with you and the vast 

array of other stakeholders in the coming months as you outline a 

path forward through these serious and uncharted fiscal times. I 

am happy to answer any questions you may have. 

[The prepared statement of Mr. Younggren can be found on page 

220 in the appendix.] 

Chairwoman STABENOW. Thank you very much. 

I just have to say as an aside, Mr. Younggren, that the very first 

bill I introduced in the House in 1997 as a freshman was on wheat 

scab. It was creating the research project that was developed, and 

then I had to explain to my constituents that my first bill was on 

wheat scab and explaining what that was. But I am very glad that 

we did that, and we have actually come a long way since then. 

Mr. Grissom, welcome. 

STATEMENT OF JIMBO GRISSOM, PRESIDENT, WESTERN 

PEANUT GROWERS ASSOCIATION, SEMINOLE, TEXAS 

Mr. GRISSOM. Good morning, Madam Chairman, Ranking Member, and Committee members. Thank you for the opportunity to be 

here today and speak on behalf of the three peanut-growing regions: the Southeast, the Virginia-Carolinas, and the Southwest. I 

am here to testify as a proponent for crop insurance. 

From recent firsthand experience, I can say without reservation 

that I would not be able to farm this coming year if it were not 

for the availability and purchasing of a revenue insurance policy on 

cotton that I planted last year. This type of revenue insurance policy is not the only risk management tool that is needed by any 

means, but it is necessary and a valued tool. 

As you are aware, the Southwest suffered from one of the worst 

droughts in our history. In West Texas, in the area in which I live 

and farm, for the entire year I received 1.2 inches of rain on my 

farm, and it fell two-or three-tenths of an inch at a time. 

In addition to the drought, we had extreme winds and excessive 

heat throughout the 2011 growing season. Winds of 20 to 40 miles 

per hour were almost a daily event in the early growing season, 

plus there were several days on which the 60-mile-per-hour winds 

were sustained. 

We had 131 days with temperatures that were 90 degrees or 

higher. Consistent high temperatures and no humidity will cause 

peanuts to quit producing. Mine and many other peanut yields 

were cut by two-thirds, with fields normally producing 5,000 

pounds per acre only yielding 1,700 pounds. Some crops appeared 

or looked good, but when pulled up there was nothing there to harvest. 

I am a peanut farmer, a third-generation peanut farmer. It is the 

commodity that I identify myself with as to what I farm. I would 

like to be able to continue to farm peanuts and pass the legacy on 

to my children, as my father did for me. 

Peanuts are also a healthy treat, providing consumers with one 

of the cheapest sources of protein available. To keep producing peanuts, there is no doubt that we need to improve our risk manageVerDate Nov 24 2008 11:20 Feb 26, 2013 Jkt 000000 PO 00000 Frm 00053 Fmt 6633 Sfmt 6633 C:\DOCS\78274.TXT MICHA
48 

ment tools, starting with the need for a viable insurance program 

through RMA. 

We need to have a revenue insurance policy similar to that which 

is currently available to other commodities. In the past, we have 

been told we could not have a policy like other commodities because the price of peanuts is not established by a futures market 

or a futures contract. We researched the possibility of our commodity being traded on the futures market, but were told that peanuts were too thinly traded so it was not possible. 

We accepted this until 2–1/2 years ago when growers from across 

the Nation began working with RMA and private industry to develop a pricing mechanism and a peanut revenue policy. The good 

news is that we have found a pricing mechanism. Industry experts 

believe the Rotterdam price offers the best equitable solution to develop a revenue insurance program. We will be submitting the final 

proposal to RMA the first part of April. 

What we are asking for in the next farm bill, since most of the 

commodity options that are being discussed this year seem to be 

based on the existence of revenue crop insurance as a foundation 

of the policy, we solicit your support for the proposal we are submitting to RMA, which uses the Rotterdam price. It is critical that 

we get a viable peanut revenue insurance program in place for the 

2013 crop. We also ask that the relative price for all four peanut 

varieties be adjusted from the Rotterdam price. 

In addition to these new improvements in peanut revenue crop 

insurance, we need to provide peanut farmers with a producer’s 

choice between a countercyclical type program with a $534-per-ton 

target price and a $355-per-ton marketing loan, or a new revenue 

program based on the Rotterdam price with a $355-per-ton marketing loan. 

We also ask the Agriculture Committee to continue all other elements of the peanut title from the 2008 farm bill. 

We thank you for your time. We look forward to working with 

the Committee to fix the peanut crop insurance this year and at 

the same time craft a new peanut program that will work for all 

peanut growers. 

Thank you. 

[The prepared statement of Mr. Grissom can be found on page 

135 in the appendix.] 

Chairwoman STABENOW. Well, thank you very much, and we look 

forward to working with you on this. 

Mr. Satterfield. 

STATEMENT OF TRAVIS HENRY SATTERFIELD, PARTNER, 

SATTERFIELD FARMS, BOLIVAR COUNTY, MISSISSIPPI, ON 

BEHALF OF U.S. RICE PRODUCERS ASSOCIATION AND USA 

RICE FEDERATION 

Mr. SATTERFIELD. Chairwoman Stabenow, Senator Roberts, and 

members of the Committee, thank you for holding this hearing. I 

appreciate the opportunity to offer the perspective of America’s rice 

producers to you. 

My name is Travis Satterfield. I am a rice, corn, soybean, and 

wheat producer from Benoit, Mississippi, and I have been farming 

now for 42 years. I serve as an officer in a number of farm groups, 

49 

including the Mississippi Rice Council, the Mississippi Farm Bureau, and the Delta Council. 

Rice is produced in 10 States and has a presence in 23 States where we contribute to the economy and jobs, including $34 billion 

in annual economic activity and supporting 128,000 jobs. We export 

40 to 50 percent of our crop each year. That helps our agriculture 

ease part of America’s mammoth trade deficit. Rice is good for the 

environment, creating a habitat for millions of migratory birds, and 

rice is good for your health as recommended by the Federal Dietary 

Guidelines. 

Last year, we as producers spent $320 billion in communities across the country to produce $410 billion in farm goods, and as 

Senator Roberts has spoken many times about how important agriculture is to national and global security, with the population expected to surge to 9 billion in just a short while, farm policy is important for all these reasons, plus some others. Without U.S. farm 

policy, American producers would be hurt by global markets, markets distorted by high foreign subsidies and tariffs that two separate studies show are sharply increasing even as funding for U.S. 

farm policy sets record lows. 

U.S. farmers and ranchers are locked out of markets promised to 

us under trade deals passed. We are locked out under the very 

terms of these same deals. We are even locked out by our own Government when it prohibits us from selling food to another country. 

U.S. farm policy has operated under budget for over a decade and 

has been cut by about $18 billion and today accounts for only about 

one-quarter of 1 percent of the total Federal budget. Meanwhile, 

American consumers are spending a smaller percentage of their 

hard-earned disposable income on groceries that are cheaper than 

anywhere else in the world. 

We in agriculture appreciate what our congressional leaders were 

able to accomplish last fall. The amount of deficit reduction agreed 

upon in the super committee process was significant, while still 

providing amounts necessary to develop a comprehensive farm program. 

I want to express our gratitude for the 2008 farm bill and for 

standing by it against heavy headwinds, and we thank you. 

Looking ahead for the 2012 farm bill, I think rice farmers feel 

disadvantaged because of one component of the current U.S. policy 

that has effectively worked for rice is the direct payment, and that 

is apparently going away. Rice farmers strongly support existing 

farm policy, and our preference is for a proportional reduction in 

existing policy. However, we understand that the existing political 

climate is not conducive to that policy option. We wish that crop 

insurance worked effectively for rice, and many in our industry 

have been working for 4 years trying to make this happen. Currently we do not have an effective policy. 

So what are we looking for in a farm bill? Well, for one thing we 

would like very much the ability for any farmer to have options to 

choose from a menu of risk management tools that will work best 

on addressing real perils that he faces on his own farm. The other 

thing that we think is incredibly important is to be sure that the 

options out there have price protection that is meaningful to today’s cost and price environment. This is what farm bills are for. 

50 

Although I do not know all the details of the 2011 package developed by the Ag Committee, I think the reported framework is about 

right. Give producers a choice. Help producers deal with prolonged 

price losses and that uninsured deductible. Push to make crop insurance work for all of us, and then hope like heck that we have 

a healthy farm economy that we will not need any of that. 

I think we need a 5-year farm bill in 2012. I believe that the political environment makes it a tall order. But if we in agriculture 

on and off the Hill can manage to come together on a bill, that 

would at least give us a fighting chance. 

Thank you for the opportunity to offer my thoughts. 

[The prepared statement of Mr. Satterfield can be found on page 

186 in the appendix.] 

Chairwoman STABENOW. Thank you very much, and we look forward to working with you. 

Mr. Coley. 

STATEMENT OF CHUCK COLEY, CHAIRMAN, NATIONAL 

COTTON COUNCIL, VIENNA, GEORGIA 

Mr. COLEY. Chairwoman Stabenow and Ranking Member Roberts—— 

Senator CHAMBLISS. Madam Chairman? 

Chairwoman STABENOW. Yes, Senator Chambliss? 

Senator CHAMBLISS. Since I just walked in, can I say a word 

about my good friend, Mr. Coley? 

Chairwoman STABENOW. You may go right ahead. 

Senator CHAMBLISS. Chuck Coley is a dear friend of mine, has 

been for many, many years. He is a farmer in the middle part of 

our State, operates a gin in Vienna, Georgia. Nobody could be more 

appropriate to be before our Committee today to talk about cotton 

and other related issues relative to Southern crops. His son actually was on my staff during the last farm bill, so we took advantage 

of Chuck’s expertise then. 

So I am very pleased to have him here today making a presentation to the Committee. Thanks, Chuck. 

Mr. COLEY. Thank you, Senator Chambliss. 

Chairwoman STABENOW.and members of the Committee, I want 

to thank you for holding this hearing and for allowing me to 

present testimony on behalf of the U.S. cotton industry. My name 

is Chuck Coley, and I am a farmer and ginner from Vienna, Georgia. We have submitted detailed written testimony, so I will use my 

limited time to express our industry’s strong support for a balanced, predictable, and sustainable commodity policy that allows 

farmers, their bankers, and downstream processors to manage risk 

over which we and they have little or no control. 

We also join the other commodity and farm groups in respectfully 

urging you and your colleagues to be as expeditious as possible 

with this farm bill. 

As most of you know, Texas, Oklahoma, and parts of Kansas continue to experience a prolonged drought so severe that even operations with irrigation have been unable to produce crops. Fortunately, those producers have had access to crop insurance products 

which will enable them to preserve sufficient resources to plans 

and harvest crops when the drought finally breaks. 

51 

I can cite the specific example of former Council Chairman 

Woody Anderson, who farms in Colorado City, Texas. Woody has 

invested in drip irrigation, biotech, and precision ag equipment. 

Even with that investment, he was unable to harvest a single acre 

of cotton due to the drought. Without crop insurance and other assistance, he would not be able to continue to operate his third-generation family farm. 

The availability of effective risk management tools like crop insurance is important, even in so-called normal years, to provide 

tools that underpin the producers’ ability to invest in inputs, technology, and equipment necessary to produce a market crop at a 

price and quality that allows the U.S. to be the most reliable cotton 

producer in the world. 

Weather and other uncontrollable risks are one of the main reasons the council supports the development of a revenue insurance 

policy that complements current insurance products. I farm with 

my son, and I own and operate a cotton gin which I manage with 

my wife. As a ginner, I am responsible for preserving the value and 

quality of the cotton produced by my customers. I also assist them 

in marketing the crops. The increasing volatility of the commodity 

markets, particularly cotton, has made the risk of marketing the 

crop incredibly challenging. Even those of us who utilize futures 

markets and devote significant time to studying markets find market volatility increasingly difficult to manage, and the expenses associated with hedging drains our capital resources. 

I would also add in the case of cotton that the traditional marketing assistance loan, set well below the market, provides important collateral for production loans and allows orderly marketing 

with minimal net cost to the Government and no disruption of market signals. 

The farm bill is also important to U.S. textile manufacturers who 

purchase nearly 100 percent of the cotton they process and the cotton products from U.S. farmers. The ability of U.S. growers to invest in the varieties, technology, and equipment necessary to 

produce a top-quality cotton enables our yarn spinners to compete 

on price and quality in world markets and to provide top-paying 

manufacturing jobs. 

The U.S. cotton industry recognizes that future farm policy must 

fit ever-shrinking budget parameters. In addition, I want to emphasize that the U.S. cotton industry is committed to working with 

Congress and the administration to find a permanent resolution to 

the longstanding U.S.-Brazil WTO case. We have proposed a risk 

management product that significantly changes the structure of the 

cotton program and is estimated to significantly reduce outlays 

compared to previous years. It is also a 30-percent reduction compared to extending the existing cotton program. The changes are 

substantial and will require adjustment in every segment of the 

cotton industry, but they are necessary for us to move forward. 

I want to thank you today for your attention and the consideration of my remarks. I look forward to answering any questions 

you have about my testimony or the cotton industry. Thank you. 

[The prepared statement of Mr. Coley can be found on page 98 

in the appendix.] 

52 

Chairwoman STABENOW. Well, thank you very much to each and 

every one of you. 

Mr. Coley, let me follow up on your testimony because, of course, 

cotton is in a unique position because of the WTO case that we lost 

to Brazil. So I wonder if you might speak a little bit more from 

your perspective about why the proposal from the cotton growers— 

and we very much appreciate your working to come up with something very important to us in our process last fall. But why do you 

believe that this achieves the goal as it relates to the WTO case? 

Mr. COLEY. The WTO Brazil case was in two parts: the Export 

Credit Guarantee Program and the Upland Cotton Program. Our 

proposal, STAX, the insurance product, makes changes to our marketing loan and the countercyclical payment. It would eliminate 

the target price and introduce a formula that would allow the marketing loan to adjust lower at times of low prices. After accounting 

for the impacts of deficit reduction and baseline funding, the industry has proposed a revenue insurance product as a replacement for 

the DCP and ACRE program. 

As part of the WTO case, Brazil challenged the insurance program for cotton, but the WTO panel did not find any fault with the 

insurance programs in terms of distorting production, trade, or 

price. 

STAX is only triggered by a loss in revenue, and support is established and based on the current prevailing futures market. The 

product does not provide support above the market but simply allows the producer to insure a portion of the expected market returns. 

If the provisions of this plan of STAX was in the marketing loan 

adjustments in the year 1999 through 2005, the years in question 

with the WTO case, we would have had a 60-percent reduction in 

support in the programs that were deemed to be economic injury 

by the panel. 

We understand the Framework Agreement between the U.S. and 

Brazil calls for resolution of the dispute as part of the development 

of the 2012 farm bill. Our proposal addresses cotton, but not the 

findings regarding the Export Credit Guarantee Program, and we 

look forward to working with Congress and the Committee to resolve this dispute. 

Chairwoman STABENOW. Okay. Thank you very much. 

Mr. Younggren, in talking about managing risk, why is the 

wheat growers’ proposal structured around planted acres rather 

than base acres? Could you speak a little bit more about that? 

Mr. YOUNGGREN. We believe that what we have backed would 

help farmers that have an actual loss on what they are actually 

growing, and we know that base acres were set in the mid-1980s, 

and crop rotations and plantings have changed significantly since 

then. 

Chairwoman STABENOW. All right. Thank you. 

Mrs. Johnson, the corn growers have really led the way on our 

revenue program, and I wonder if you might speak a little bit more 

about why you believe that a supplemental revenue program is 

needed that goes beyond crop insurance. 

Ms. JOHNSON. Well, as we all heard this morning, we pretty 

much agree on the cornerstone and the foundation should be crop 

53 

insurance. But we found through our research that there are certain times when crop insurance does not cover a lot of the losses, 

and those times happened back in the 1980s farm crisis or in the 

financial collapse. 

When a farmer needs more than 1 year’s snapshot of what is 

going on in the marketplace and with a revenue-based risk management program you have a 5-year Olympic average to look at 

what is going to happen with those losses to revenue, and it gives 

the farmer a chance to adjust to those downward trends, and especially if you are looking at multi-year rental agreements or purchases or investments on your farm. 

Chairwoman STABENOW. Thank you. 

Mr. Wellman, could you talk a little bit more about how we can 

provide price protection without creating planting distortions? 

Mr. WELLMAN. Yes, thank you for that question. We believe that 

a safety net program does need to protect against price declines, 

but it also needs to allow for planting flexibility and not distort 

planting decisions. We have seen programs in the past that have 

been tied to target prices with the results of distorting planting 

and plantings taking place for the program and not for the marketplace. 

A revenue program with a rolling average of actual revenue 

would reflect the current marketplace and the current price structure and would have a minimal effect on any planting distortions. 

Chairwoman STABENOW. Great. Thank you very much. 

Senator Roberts. 

Senator ROBERTS. Thank you. 

Mr. Younggren, we are going to be working on a yield plug kind 

of proposal to help your situation with the lower yields due to the 

yield loss. We did a lot of work on that when we submitted our first 

proposal to the super committee, which was not very super, but at 

any rate, I wanted to let you know that. 

There seems to be this myth floating around that if we just eliminate the direct payments, conservation compliance mysteriously 

disappears as well. In reality, we know that conservation compliance can be attached to any title and farm program, and it is also 

attached to disaster programs and conservation programs like 

EQIP. It seems very thorough to me. 

Do you think that conservation compliance is working? Do you 

believe that we need to add conservation compliance to even more 

programs or specific situations in regards to a farming operation? 

Mr. YOUNGGREN. Yes, I agree with what you said. Conservation 

compliance is already tied, could be continue to be tied to Title I 

programs. We already have the conservation title with EQIP and 

those things, so we believe that what is happening now is very sufficient. 

Senator ROBERTS. Mr. Grissom, I do not know whether we sent 

that trouble down south or whether you sent it up north, but, boy, 

we sure do not want to go through that again. 

Mr. GRISSOM. No, sir. 

Senator ROBERTS. Thank you for your very graphic description of 

what happened to your industry. I know that you are not getting 

much help from the countercyclical program. I know certainly of 

your interest in a target price program, but let me just ask if you 

54 

believe that a revenue crop insurance program would help you improve your risk management strategies. 

Mr. GRISSOM. Yes, sir, it would. In West Texas, sure enough. We 

compete with cotton acres, and without a crop revenue type insurance program, peanuts have to compete with cotton. When you go 

to your banker and you ask for a loan to farm, the first thing they 

ask is, ‘‘What is the safety net, peanuts versus cotton?’’ Some people have been turned down. 

Senator ROBERTS. Explain the Rotterdam situation to me again. 

Mr. GRISSOM. The Rotterdam price is a methodology used to determine peanut prices, and it is the same as when it was used by 

the USDA and AMS, when they were reporting a U.S. shelled price 

for peanuts. It was a very good price that was used, even USDA 

used this price, and that was something that we reflected back 

upon, along with Dr. Stanley Fletcher who worked on it for the 

presentation to RMA in April. 

Senator ROBERTS. So you are going to be presenting that to RMA 

in April? 

Mr. GRISSOM. Yes, sir. 

Senator ROBERTS. Well, I hope we can expedite that, and I hope 

we can be of help to you. 

Mr. GRISSOM. Thank you. 

Senator ROBERTS. That would be extremely helpful in solving a 

lot of problems. 

Madam Chairwoman, I have a couple of questions for Mr. 

Satterfield, but I can ask those for the record. 

[The questions of Senator Roberts follow:] 

Senator ROBERTS. I did want to thank Mr. Coley. I am searching 

here for his son’s name who used to work for us. I am sure that 

Saxby will be able to say that. But thank you for his—Matt, yes, 

Matt Coley. What a great young man, and thank you so much. 

Thank you for being so proactive in tackling all the challenges we 

face. Cotton led the way. You have sent a real message to the rest 

of the commodity groups and the farm organizations. You have already explained why you went from the commodity program to the 

Crop Insurance Program and the WTO situation, so thank you so 

much for your testimony, and for Matt. 

Chairwoman STABENOW. Okay. Thank you very much. 

Senator Chambliss. 

Senator CHAMBLISS. Thanks, Madam Chair. You are right. I was 

talking about Matt earlier there, Mr. Ranking Member, and he is 

a good young man, and he has made Chuck a granddaddy, too, 

which is more significant than working on the farm bill. We just 

want to make sure that young man still has a job after this farm 

bill is completed and he can provide for that little baby. 

Mr. Younggren, in your testimony you stated that the Countercyclical Price Program has been rendered largely ineffective due to 

a target price for wheat that is far below the cost of production and 

it really has not been triggered in 10 years or so. Would an updated target price that reflects current market conditions and cost 

of production make it more effective, in your opinion? 

Mr. YOUNGGREN. We would be concerned about the planting intentions and how the other target prices are set as well. 

55 

Senator CHAMBLISS. Well, is that a yes or no as far as making 

it more effective? 

Mr. YOUNGGREN. Yes, it would probably make it more effective. 

Senator CHAMBLISS. You also recognized in your testimony that 

different production regions of the country rely on a variety of farm 

programs to protect the safety net, and you just alluded to that. Do 

you think that a producer choice between a Countercyclical Price 

Program and a Revenue Protection Program would address regional differences? 

Mr. YOUNGGREN. A choice between the Countercyclical Program 

as we have now or a revenue—— 

Senator CHAMBLISS. Well, basically something similar to—— 

Mr. YOUNGGREN. Yes, we are interested in the revenue programs 

that work off of crop insurance. We feel that there are some holes 

in crop insurance that the revenue program would fill. 

Senator CHAMBLISS. Okay. Mr. Coley, do any of the proposals 

proposed by the other commodity groups or members provide an 

adequate safety net? Do they seem to be configured to work better 

for particular commodities rather than to treat everybody equitably? 

Mr. COLEY. Senator, other revenue products that are offered will 

not work for cotton because the Olympic average prices do not offer 

an effective safety net for cotton due to the fact that we had extreme prices and yield and variations in the calculated years. It 

would reduce the budget baseline, as I have said. A reserve product 

requires a producer’s premium, and using current crop year prices 

and futures market leads to a more effective and a more bankable 

safety net for our cotton producers. 

Senator CHAMBLISS. Mr. Grissom, apart from the improvements 

you listed for crop insurance, you said you would like producers to 

have a choice between a revenue program and a countercyclicaltype program, some sort of price protection program. Can you amplify on that a little bit and tell us how you came up with that conclusion? 

Mr. GRISSOM. Well, we as the industry got together on a lot of 

these proposals and this is one that was agreed upon. One of the 

reasons for raising the target price to $534, is due to the cost of 

production. Cost of production in peanuts has grown so much since 

2008, and we were just wanting it to be an either/or, alternative 

with a revenue type program for peanuts as the options. 

Senator CHAMBLISS. Do you feel like that kind of flexibility will 

give peanut farmers the opportunity, in Texas versus Georgia or 

Arkansas versus South Carolina, the opportunity to sit down with 

their banker and figure out, as you said earlier, what is the best 

proposal for me to be able to repay my loan? 

Mr. GRISSOM. I think it would be very good when you have the 

choice, a farmer is better off in all growing regions, whether it is 

in the Southeast or whether it is in the Southwest. 

Senator CHAMBLISS. Okay. You also mentioned that you grow 

other crops, cotton in particular, I think, and I recognize you are 

here to represent peanuts, but do you believe providing this producer choice idea and making that available to other commodities 

is a good direction to go in? 

Mr. GRISSOM. Yes, sir. 

56 

Senator CHAMBLISS. Okay. Ms. Johnson, you stated in your testimony that a farmer who suffers a complete yield loss will not receive a payment under a price-based program that is tied to current production. Now, doesn’t the current Crop Insurance Program 

cover yield loss? 

Ms. JOHNSON. The current Crop Insurance Program does cover 

yield loss, and if I might add, our position of why we support the 

revenue program is I have lived through a time of farm bills when 

we have had countercyclical payments and target payments, and 

the question is for all of us, I think, how do you set a meaningful 

target price that provides a safety net and then does not yet cause 

planting distortions. I think I have heard some of that up and 

down the table, and I believe what I hear is that what we are all 

in support of and I think the general consensus is we are looking 

to expand those revenue management programs that would be 

more effective for each crop that sits at this table. 

Senator CHAMBLISS. Thank you very much. 

Chairwoman STABENOW. Thank you. 

Senator Cochran. 

Senator COCHRAN. Madam Chair, we appreciate your leadership 

on our Committee, and I think the presence of this panel illustrates 

how complicated and challenging the writing of a farm bill is going 

to be for this Committee and working with our colleagues over on 

the House side to resolve differences. I think it is very valuable for 

us to have the benefit of your observations here. This panel is experienced and involved in agriculture, production agriculture, and so 

the writing of a farm bill is really a sink or swim proposition here. 

If we make a mistake, we really hurt people, and we hurt our economy, and we cause disruptions in the job market and labor market. 

So it is a very serious undertaking. 

I think that is another reason why we have seen over the years 

a lot of transition in agriculture, particularly in the Deep South. 

When I was growing up, cotton was a very important crop for my 

grandparents, my mother’s parents, on their farm near Utica, Mississippi. Over time the family got out of the row crop business except for gardens and truck farming to a small extent. We went and 

borrowed some money and bought calves to put out on that nice 

fertile soil and grow rye grass and learn to do what you have to 

do to be in the cattle business. It took us about 10 years to get out 

of the cattle business. Some of you may have had similar experiences in the Deep South. 

But we are going to look at what you have suggested to us, the 

entire panel. You do not agree among yourselves on everything. We 

noticed that, and that is natural. We benefit from the broad, wide 

range of diversity that this panel represents. 

So I just want to thank you and assure you that we are going 

to be very careful and take care in the drafting of a farm bill. We 

will continue to depend on your reactions as challenges during that 

process develop. 

Thank you very much. 

Chairwoman STABENOW. Senator Boozman. 

Senator BOOZMAN. Thank you, Madam Chairman, and we appreciate you all being here. I think one of the concerns I have is that 

we have heard from the administration and ag has kind of taken 

57 

it on the chin the last couple years in doing their part to help us 

with the financial situation we are in. One of the concerns I have— 

and you might want to comment on this just with your own personal stuff—is if we go forward with draconian cuts, what does that 

do to the price of food? We are so blessed with the country that we 

are in where food is very affordable as compared to the rest of the 

world. My concern is, what does that do to all of us, but specifically 

single moms, people on fixed incomes and things where they cannot 

keep up. 

So how will that affect your—do you have any thoughts about 

the potential for that? Do you see that happening with significant 

decreases in the safety net? What will that do to the price of food, 

the price of the things you produce? Does anybody want to tackle 

that? Yes, Ms. Johnson. 

Ms. JOHNSON. Well, not just by fortune, but those of us at this 

table that represent many commodities as American farms have 

been able to be successful because we have been on the cutting 

edge, whether it is technology or genetics or whatever helps our industry, and also what the Government helps us do that we cannot 

do individually on our farm. 

So in order to be the most productive, competitive farmer in a 

changing global marketplace, I think you have hit the nail right on 

the head. 

Senator BOOZMAN. Very good. Again, somebody can jump into 

this. Understanding the significant differences in production costs, 

practices, and yield variability across different crops and regions 

even within crops, do you feel like there is a widespread recognition that trying to force a one-size-fits-all approach to farm policy 

will leave some producers in some regions without the effective risk 

management tools that you need in order to compete in today’s environment? Now, that is one you can sink your teeth into. There 

have been lots of comments. 

Mr. WELLMAN. Certainly there is a lot of diversity here, but we 

do have some common things that we definitely agree on. I think 

another common thing that really has not—it has been mentioned, 

but the current situation with target prices where they are now 

really give us no revenue protection at all compared to the pricing 

situation, our market prices and the cost of production, the current 

cost of production. So that, we also share that same situation, too. 

To address that, we may have to look at alternatives in different 

types of programs that will suit the needs of our producers across 

the board. But I think we also will agree that we want to maintain 

that planting flexibility to react to the marketplace and not distort 

planting decisions based on a Government program. 

Specifically for soybeans, we have seen global consumption of 

soybeans increase 152 percent since 1990, so the ability for the 

U.S. farmer to be able to react to that global consumption and global demand has been very important. We would hate to see the soybean industry here in the United States, if we could not have reacted properly to that market demand and that production would 

have ended up in other areas of the world. 

Senator BOOZMAN. Does anybody else want to jump in on that? 

Mr. Satterfield. 

58 

Mr. SATTERFIELD. Senator, I thank you. As has been testified 

here, we all know that there is a great diversity in agriculture in 

this country. We have different crops. We have different farming 

practices. We have different rainfall seasons. We have a lot of variables. So I think it is very, very difficult to have one program that 

fits everybody. I think, as I alluded to in my testimony, we need 

a program that is meaningful, financially meaningful, to the producers, and I think the best way to do that is have that section of 

the country or that group or that commodity to craft a program 

that best fits their needs. It may not be the best for everybody, but 

it fits—— 

Senator BOOZMAN. Why does—— 

Mr. SATTERFIELD. —a certain segment. 

Senator BOOZMAN. I do not mean to interrupt, but why does crop 

insurance not work for rice as well? 

Mr. SATTERFIELD. Well, crop insurance basically—the first component, I think, in protection of crop insurance is yield. We do not 

have a variability in yield that you have in other crops. In an irrigated crop, our yield is fairly constant. So our main support from 

a Crop Insurance Program would have to be a revenue type of program which would not be so much a yield protection, but as a price 

component. That is why we have grappled with trying to find a 

Crop Insurance Program that would fit in our rice situation where 

you have a pretty standard yield. But variability in price is a big 

factor. 

Senator BOOZMAN. Good. Thank you. I am going to get gaveled 

on by the Chair, so thank you. 

Chairwoman STABENOW. Thank you very much, and I want to 

take the prerogative of the Chair and take a minute from Senator 

Cochran that he did not use, Mr. Satterfield, to ask you a question 

also as well, because in your testimony you described the different 

needs for rice growers in different regions, and I have had different 

conversations. Down in Louisiana, folks said, ‘‘Just open up Cuba 

and we are fine.’’ Our in California, other rice growers are looking 

for a county-level revenue program. So I am wondering why that 

approach does not work for rice growers in other regions. 

Mr. SATTERFIELD. Well, along that line, we have a great rice— 

consumer of rice in your State, the Kellogg company. 

Chairwoman STABENOW. Absolutely. 

Mr. SATTERFIELD. We appreciate their interest in rice very much. 

Chairwoman STABENOW. Absolutely. 

Mr. SATTERFIELD. We need another Kellogg’s. That would help 

us. 

The big problem in rice is that basically in the U.S. we have two 

types of rice: we have long grain, which, as you mentioned, Louisiana and the mid-South are basically the producers of long-grain 

rice; California producers have medium or short grain, which is almost—they are different types and they go into different markets. 

California, their market, the medium-grain rice has a more stable 

type market, and it is not as—the market for long grain has a lot 

more flexibility. It changes quite a bit. So in order to craft a revenue program, you need a constant price in situations that you do 

not have in long-grain rice as you do in medium grain. So it is a 

little different. Although it is the same commodity, it is a different 

59 

type, and there are different marketing situations. That is why we 

have some differences of opinion in the rice industry. 

Chairwoman STABENOW. Well, thank you very much, and thank 

you to each and every one of you. This is very important input we 

are receiving, and, we are moving forward on the farm bill and the 

commodity title. We would love if everyone at this table and every 

other commodity was able to come together on one approach. We 

know the challenges related to that and the flexibility that we 

need. But we are moving forward, and so we welcome and need 

your input as we do that. Our obligation is to move forward and 

make sure farmers have the certainty they need in the marketplace, and we are looking forward to working with you to do that. 

Thank you very much. 

Last, but absolutely no least, our fourth panel, we are asking our 

fourth panel to come forward, as they say, batting cleanup, very 

important leaders that will provide a summary today for us. 

[Pause.] 

Chairwoman STABENOW. Well, I was going to say, ‘‘Good morning,’’ but it is now afternoon, and so thank you to all of you for 

being here. As I said, certainly the fourth panel, last but not least, 

we appreciate the leadership of all of you, the members you represent. After hearing this morning, we want you to have an opportunity to kind of bring this all together for us. We are hoping you 

all have the solutions. That is what we are looking for, to clean 

things up today. 

Let me first start with our first panelist, who certainly is no 

stranger to all of us on our Committee, Mr. Roger Johnson. He is 

the president of the National Farmers Union and a third-generation family farmer from North Dakota. Mr. Johnson’s involvement 

with NFU is longstanding, participating in youth programs. He 

was a county president. Professionally he has also served as North 

Dakota Agriculture commissioner and president of the National Association of State Departments of Agriculture. Roger and his wife, 

Anita, are the proud parents of three children and three grandchildren, so welcome. 

Mr. Stallman, also no stranger to this Committee, and we very 

much appreciate your leadership. Since 2000 he has served as the 

elected president of the American Farm Bureau Federation. He has 

also served the organization as the president of the Texas Farm 

Bureau. Mr. Stallman has served on the board of trustees and advisory committees of many agricultural organizations. Mr. 

Stallman and his wife, Tracy, have two daughters, two sons-in-law, 

and eight grandchildren. 

Mr. Best, I hope you do not have any grandchildren yet. 

[Laughter.] 

Chairwoman STABENOW. Last, but certainly not least—and we 

redheads have to stick together, Ryan—Mr. Ryan Best, the current 

president of the Future Farmers of America. He leads an organization of more than half a million students in 7,489 chapters across 

the United States, many in Michigan. Mr. Best is currently a junior at New Mexico State University pursuing a major in agricultural and extension education and a minor in agricultural economics and business. 

60 

We welcome all three of you, and we will ask Mr. Johnson to proceed first. 

STATEMENT OF ROGER JOHNSON, PRESIDENT, NATIONAL 

FARMERS UNION, WASHINGTON, DC 

Mr. JOHNSON. Thank you—is my mic on or is it off? Talk, red. 

Okay. 

Thank you, Chairwoman Stabenow, Ranking Member Roberts, 

and members of the Senate Ag Committee. The National Farmers 

Union is grassroots organization of about 200,000 farm family 

members. We are organized in 33 States around the country. Our 

policy positions are developed by our members. Our members voted 

on and formally adopted our principles for this next farm bill in 

two special orders of business that are attached to my testimony 

just under 2 weeks ago at our 110th anniversary convention near 

Omaha, Nebraska. 

Every family farmer, livestock producer, and consumer benefits 

from a strong, effective safety net for our commodities. If we have 

learned anything from the past, it is that commodity prices never 

stay high and do not always return a profit to our producers. When 

prices fall—and we know they will—it is critical that a price-based 

safety net be in place, because history tells us that low market 

prices generally last much longer than high prices. 

An effective safety net, including crop insurance, allows our producers to continue to produce a safe and abundant food supply. 

Crop insurance is a necessary risk management tool that should be 

provided to a larger variety of commodities and specialty crops. 

Unlike most businesses, food, fiber, and fuel production faces 

more uncontrollable variables than most other businesses. Therefore, a strong risk management system must be in place. 

A strong safety net also needs to address extreme price volatility 

in commodity markets. We know that long-lasting decreases in 

commodity prices and artificially high price peaks are harmful to 

the entire production supply chain, both domestically and internationally. 

NFU commissioned the University of Tennessee’s Ag Policy Analysis Center to help us develop a farm program that would moderate extreme price volatility in commodity markets while allowing 

farmers to receive their income from the marketplace rather than 

from Government payments, saving the Federal Government a significant amount of money in the process. I would like to draw your 

attention to the special orders of business attached to my testimony 

that talk about the benefits of the Market-Driven Inventory System, MDIS. It is an ag commodity program that mitigates price volatility, provides advantages to livestock producers, the biofuels industry, and to hungry people in this country and around the world. 

In addition, it would reduce Government expenses. It would increase the value of crop exports and would maintain net farm income over time. 

The central feature of MDIS is a voluntary, farmer-owned, and 

market-driven inventory system based on recourse, not non-recourse, loan rates, set at a level below total costs of production but 

at a level above variable costs. Once crops are placed under loan, 

they would receive storage payments and would be required to reVerDate Nov 24 2008 11:20 Feb 26, 2013 Jkt 000000 PO 00000 Frm 00066 Fmt 6633 Sfmt 6633 C:\DOCS\78274.TXT MICHA
61 

main off the market until a release level set at 160 percent of the 

loan rate is reached. At that time storage payments would stop, 

and the loans would be called on a first-in, first-out basis. 

Inventory stocks activity would only be activated when crop 

prices become so low or so high that normally profitable agricultural firms are not provided with reasonable investment and production signals. 

During the 1998–2010 time period studied, actual Government 

payments for the eight major program crops totaled $152 billion. If 

MDIS had been in place during this time frame, farmers would 

have received $56 billion from the Government, principally in storage payments, while earning roughly the same net farm income 

over the period as historically received, and taxpayers could have 

saved $100 billion. 

Dr. Ray’s analysis shows that if MDIS were in place, Government payments could similarly be reduced in the future by about 

60 percent. 

The MDIS program could have a positive impact on reducing the 

Federal budget deficit, provide a workable safety net for farmers 

for less money, including for beginning farmers, who most need 

market certainty; mitigate high feed costs for livestock producers; 

reduce our dependence on foreign oil due to the benefits to the 

biofuels industry; and, most importantly, reduce the number of 

food-insecure families in this country and around the world. 

As a final thought, MDIS could work very well with the various 

proposals that are being considered by your Committee. 

Thank you very much for the opportunity to testify, and I look 

forward to your questions. 

[The prepared statement of Mr. Johnson can be found on page 

161 in the appendix.] 

Chairwoman STABENOW. Thank you very much. 

Mr. Stallman. 

STATEMENT OF BOB STALLMAN, PRESIDENT, AMERICAN 

FARM BUREAU FEDERATION, WASHINGTON, DC 

Mr. STALLMAN. Chairwoman Stabenow, Senator Roberts, thank 

you for the opportunity to share the views of the American Farm 

Bureau regarding the development of our new farm bill. 

While some take a simple view of the current agricultural economy and conclude farmers do not need a safety net, we all know 

that current market prices will not continue for some commodities. 

We all know that weather disasters will occur in some places. History proves this. 

The challenge we all face is how to draft a farm program that 

provides a strong, consistently viable safety net that protects farmers against crippling revenue declines, whether caused by falling 

markets or Mother Nature, while at the same time remaining cognizant of budget deficit challenges and changing public sentiment. 

To help meet this challenge, the Farm Bureau proposes the following principles be considered when writing the 2012 farm bill: 

The new farm bill must be a fiscally responsible package that 

meets spending reduction targets and assures taxpayers that 

America’s farmers are making wise use of tax dollars. 

62 

Continuation of a multi-legged stool remains the best approach 

for providing a fair and effective safety net, which should consist 

of a strong crop insurance program, continuation of the current 

marketing loan provisions, and a catastrophic revenue loss program. 

Marketing loans and crop insurance provide individual risk protection at the farm level. Directing the third leg toward protecting 

area-wide risk coverage at the county or crop reporting district 

level protects against deep losses while minimizing the potential 

for moral hazard and at the same time decreasing administrative 

costs. 

While ours is a deep loss program, it would not provide producers 

with payments as often as other proposals contemplated. It would 

provide more coverage in times of catastrophic losses when assistance is most critical. Because the deep loss program would take 

some of the risk off the table for crop insurance providers, individual policies would be re-rated with crop insurance policy premiums paid by farmers decreasing by 9 to 22 percent per year, 

every year, regardless of the payout under the deep loss program. 

As a general farm organization, we place high priority on ensuring the new farm bill benefits all American agricultural commodity 

sectors in a balanced, coordinated manner. To highlight this, our 

proposal would include coverage for five fruits and vegetables: apples, tomatoes, grapes, potatoes, and sweet corn. Conceptually, our 

proposal can cover all specialty crops that have crop insurance 

available, but we thought it best to learn to walk before we run. 

The new farm bill must ensure that producers continue to take 

production signals from the marketplace rather than incentivizing 

them to chase Federal program benefits. Approaches that allow 

producers to pick and choose between various program options 

would impose severe challenges on U.S. lawmakers to ensure that 

one option does not provide more Government benefits than the 

next, thus driving production decisions. 

The new farm bill should not allow the benefits from the various 

safety net components to overlap. This is why our concept requires 

that any payment received from the deep loss area coverage offset 

any corresponding indemnity received under an individual crop insurance policy. 

The new farm bill should protect producers from deep loss events 

that typically are beyond any producer’s control. Our concepts benefits would come into play only when they are needed rather than 

being an expected annual supplement to farm income. It would 

eliminate the need for ad hoc disaster programs. 

There should be no changes to current farm bill payment limitations or means-testing provisions. Conservation compliance should 

not be required as a condition for purchase of crop insurance. The 

new farm bill should include the concept of Representative Collin 

Peterson’s bill to reform and improve the dairy program. 

We recognize developing a new farm bill requires flexibility from 

all participants in order to achieve these principles, and just last 

week the AFBF board reaffirmed our continued belief that our deep 

loss concept is the best farm policy option, particularly in light of 

the budget realities that face the writing of a new farm bill. 

63 

Given the difficulties inherent in this debate, our board did indicate an openness to discussing an approach that would combine the 

current crop insurance and marketing loan programs with a supplemental area insurance program that sits on top of individual 

crop insurance coverage. But I want to be clear that we do have 

a number of concerns about this type of approach. 

To summarize and close, our deep loss proposal is one leg of a 

three-legged safety net that includes existing crop insurance and 

marketing loan programs. It protects farmers from deep systemic 

risk from weather or markets, and thus eliminates the need for ad 

hoc disaster assistance. It provides to farmers crop insurance premium reductions of 9 to 22 percent each and every year in addition 

to any indemnity payments. It would deliver policies through private crop insurance providers with payments occurring at the same 

time as other indemnity payments. It does not allow overlap of payments with individual insurance loss payments. It provides coverage beyond program crops to specialty crops. It would likely qualify to be notified in the green box non-trade-distorting category 

under the rules of the WTO. It is a fiscally responsible package 

that provides taxpayers and America’s farmers with the maximum 

bang for the buck. 

Thank you for the opportunity to present our views. We look forward to working with this Committee to craft a new farm bill that 

meets the future needs of America’s farmers and ranchers. 

[The prepared statement of Mr. Stallman can be found on page 

205 in the appendix.] 

Chairwoman STABENOW. Thank you very much. 

Mr. Best. 

STATEMENT OF RYAN W. BEST, NATIONAL PRESIDENT, 

FUTURE FARMERS OF AMERICA, PORTALES, NEW MEXICO 

Mr. BEST. Thank you, Chairwoman Stabenow, Ranking Member 

Roberts, and members of the Committee, for the opportunity to 

speak with you today about something that is very important to 

me, and that is, the future of American agriculture. 

I am Ryan Best, and I am privileged to serve this year as president of the national FFA organization. I was raised on a production 

sheep farm in Portales, New Mexico, and I am currently a junior 

at New Mexico State University majoring in agricultural and extension education. 

As part of my FFA and agricultural education program in high 

school, I developed an enterprise around sheep and diversified livestock production. For me, agriculture is not just an occupation, but 

it is a way of life. My family has been involved in production agriculture for seven generations. Production agriculture is in my 

blood, and that is what brings me here today. It is my goal to share 

with you the perspectives of the young men and women I represent 

as president of the FFA. 

Today nearly a million students are enrolled in secondary agricultural education courses and are preparing for careers in agriculture. The U.S. will need the best and brightest of its young people to drive the innovation and efficiencies in agriculture that will 

achieve production goals and meet growing demand. We already 

64 

have in place a pipeline to attract and prepare the talent needed 

to grow our future. 

These are the more than half a million student members of the 

FFA and agricultural education. They are students like Cole 

Vculek, FFA’s 2011 American Star Farmer. Cole rented land from 

neighbors to grow two acres of red onions. He quickly added more 

land to raise potatoes, and in 2009 he acquired 200 more acres for 

a corn and soybean rotation. Recently, Cole purchased a 640-acre 

farm from a neighbor. He plans to acquire more cropland and continue his business incorporating sugar beets. A fifth-generation 

farmer, Cole epitomizes the innovation and growth American agriculture will need to sustain in the coming years. 

While many people are familiar with the FFA, less is known 

about the agricultural education program of which FFA is an integral part. Today there are 7,400 FFA chapters in all 50 States, 

Puerto Rico, and the Virgin Islands. Students are preparing for 

more than 300 careers in the science, business, and technology of 

agriculture, including production. 

It is understandable if some believe that members of FFA—formerly known as the Future Farmers of America—come primarily 

from rural farming communities and small towns. However, this is 

not accurate. Today’s FFA is as diverse as today’s agriculture. We 

are reaching nontraditional agricultural education students in 

rural, suburban, and urban communities alike, including New 

York, Philadelphia, Houston, and Chicago. In fact, the Chicago 

High School for Agricultural Sciences was home to Corey Flournoy, 

the first African American National FFA President. Today’s agricultural education reaches students from all backgrounds. 

FFA and agricultural education are helping students to establish 

successful careers in production agriculture. Our supervised agricultural experience program provides opportunities for students to 

set career goals in high school and then pursue post-secondary education and training for entry into production agriculture. Wesley 

Davis from the Mason County Vocational FFA Chapter in West 

Virginia raises farm fresh eggs as a part of his enterprise. He says 

his supervised agricultural experience allows him to see the viability and profitability of supplying consumers in his community with 

locally grown fresh eggs. Wesley plans to turn his project into a 

full-time career. 

FFA and agricultural education have a major role in ensuring 

that we have the producers, researchers, entrepreneurs, and 

innovators to meet the challenges we face. That is why Secretary 

Vilsack invited last year’s national FFA officer team to offer recommendations for the farm bill with perspective to the youth. After 

consulting with FFA members and stakeholders, the officers delivered their report to the Secretary last December. It is attached to 

my comments, but it comes down to these key points: 

First, the USDA and other Federal agencies should assist beginning farmers to start or continue in production agriculture. 

Next, USDA should help transition farms from older farmers to 

younger or beginning farmers who may not come from a farm. 

Next, USDA should help keep young people in rural communities 

and make rural communities an even more important part of our 

Nation’s economy and society. 

65 

And, finally, the USDA should strengthen the capacity of agricultural education to produce more students who pursue production 

agriculture as well as related careers. 

In closing, I want to underscore that agricultural education and 

FFA have been assets to American agriculture for the past 85 

years. Given the challenges facing American as well as global systems of agriculture, investments for tomorrow must be made today. 

The next farm bill provides an opportunity for Congress to demonstrate that it, like FFA members across the Nation, believes in 

the future of agriculture ‘‘with a faith born not of words, but of 

deeds.’’ 

Thank you, and I look forward to your questions. 

[The prepared statement of Mr. Best can be found on page 78 in 

the appendix.] 

Chairwoman STABENOW. Well, thank you very much, Mr. Best. 

You give us great confidence in the future. I was not in FFA, but 

I was in 4H for all my time growing up, and I know how important 

leadership programs like that are, and so we thank you for being 

here. We wanted to make sure we had our current leaders with our 

future leader today. 

Let us start by talking about that. I want to certainly talk about 

the current farm bill, but we are talking about a 5-year farm bill, 

but we should be talking about 50 years from now, what are we 

going to see in agriculture. And, Mr. Johnson, from your perspective—and Mr. Stallman as well, and then we will ask Mr. Best— 

obstacles in terms of our future farmers? Opportunities? I mean, 

what should we be focused on? 

Mr. JOHNSON. Well, thank you, Madam Chair. There are a number of things. I think, the previous panels have all talked about 

flexibility. I think that is really very important. They have also 

talked a lot about risk management. That is also critically important. If you are talking about beginning farmers in particular, beginning farmer leadership programs such as FFA and 4H are important. But so, too, are things like the Beginning Farmer Institute 

that we do where we take actual beginning farmers and match 

them up with other beginning farmers in other parts of the country 

to give them a broader perspective. I know lots of our organizations 

do those sorts of things. 

Credit programs are very important because, as a beginning 

farmer, the one thing that you almost certainly do not have is equity, and so you are highly leveraged, and it is important that we 

have programs that are going to take some of these extreme 

variabilities out of the way of your business plan. That is why I 

would point to one of the central features of the program that we 

are proposing that price variability is really important for us to 

deal with. 

You know, people sometimes forget that we had 6, 7 years of $2 

corn not very long ago. The market is a whole lot higher today. 

During those low-price periods, farmers make suboptimal economic 

decisions. And, conversely, during these very, very high-price periods, we also make suboptimal economic decisions. 

The exuberance that we are all experiencing at land prices is a 

good example of that. If there is anything certain about very high 

commodity prices, it is that the input costs go up instantly along 

66 

with them. We can just look across the board, and we will come to 

understand that. 

Chairwoman STABENOW. Thank you. I know Senator Conrad had 

hoped to be here to introduce you today. He is one of our great agricultural leaders on the Committee, but he wanted to send his 

best to you as well. 

Mr. JOHNSON. Thank you. 

Chairwoman STABENOW. Mr. Stallman. 

Mr. STALLMAN. Madam Chairwoman, that is an interesting question. I contend that agriculture as an industry is changing faster 

than policy can keep up with in many respects. The one thing we 

have to do for our young farmers and ranchers that are coming up 

is obviously encourage them with leadership programs, try to get 

them familiar with what they are facing as they want to enter agriculture, and we do a lot of that as an organization. But the best 

thing we can do for the future is to create a business environment 

for them that is conducive for them to be able to pursue their 

dreams of being in the business of agriculture. That includes 

watching the regulatory environment to be sure that those restraints are not too burdensome. My colleague talks about price 

variability. I would point out that price variability provides the opportunity for profit, too. 

So what we must do is provide those tools, and revenue risk 

management tools are a very good one to help adjust to that volatility, to deal with it and manage it. But you always want to be 

sure that Government policy does not restrict what the marketplace opportunities can offer, and I think overall, for the next 50 

years, that is the best gift we can give to our young farmers and 

ranchers. 

Chairwoman STABENOW. Thank you. 

Mr. Best, what would you suggest that we be doing? 

Mr. BEST. I feel that the best way to contribute to young people 

getting involved in agriculture is to continue and strengthen support for agricultural education. In agricultural education, we are 

not just providing students with data. We are not just providing 

students with the overall concept of what agriculture is. Students 

are able to actually dive in and get involved on a firsthand basis 

in what agriculture is. We place them on a pathway into a career 

in agriculture, and then we see them through that pathway 

throughout their years in agricultural education. So I feel that that 

is the best way to contribute to adding to the youth getting into 

agriculture. 

With that being said, I feel that it is important that we convey 

to them that it is an exciting time to be in agriculture. Never before have we had such advances in technology and innovations that 

have promoted us to being the most efficient we have ever been. 

It is an exciting time to be involved in that and know that we have 

a place within that industry. 

Chairwoman STABENOW. Thank you. 

I am going to ask one more question. I think with the two of us 

here it would take just another minute. 

Mr. Johnson and Mr. Stallman, you both represent large, very diverse groups of producers and very important voices in terms of 

farmers and ranchers across the country. You have heard today 

67 

from folks from all kinds of commodities and parts of the country. 

What would you at this point say in terms of bringing all of this 

together from what you have heard today? That is what we really 

have to struggle with, how we take a very diverse country, regions 

of the country, various commodities, the need to be fair and effective for all of them. What would you suggest after listening today? 

Mr. Johnson. 

Mr. JOHNSON. Well, I am glad I am not in your shoes. 

[Laughter.] 

Mr. JOHNSON. I guess I would say a couple of things. 

First of all, we have been very supportive of the effort that I 

know you and others have been struggling with trying to figure out 

how do you get the right combination of programs. It is not an easy 

task. 

We have for a long time been strong supporters of permanent 

disaster programs. I think if there is anything we share in common 

here, going back to ad hoc disaster programs is really a mistake, 

and we need to create an environment that makes it less likely 

that that will happen. 

I would also provide this observation: There was a lot of conversation about crop insurance, and we all support crop insurance. 

Most crop insurance policies sold today are revenue-based products, 

and they work very well when you have high market prices. In 

some cases they might even work a little bit better than what we 

would like them to work. 

I had the opportunity to buy $11.06 price protection on my wheat 

in North Dakota several years ago. I am not the best farmer in the 

county, but I know my costs are not anywhere close to that. So we 

need to guard against those sorts of very difficult price decisions. 

More importantly, when the market collapses, and if it collapses 

for a long period of time, the revenue products that we have been 

talking about simply do not provide that long-term price protection, 

and we will find a hue and cry coming from the countryside, as we 

did in the late 1990s and early 2000s, when we had extended periods of low prices and we did not have policies that were going to 

deal with them. So it is important to focus on that, in our judgment. 

Chairwoman STABENOW. Thank you. 

Mr. Stallman. 

Mr. STALLMAN. Well, the best thing about being a general farm 

organization is being one. The worst thing is also being one, because we have to balance all of these regional and commodity interests that this Committee will have to balance in determining what 

the farm bill is. We looked a lot at that in coming up with our proposal. That is why, we do not have the luxury as a general farm 

organization of looking at an individual commodity and saying, this 

is what we need for this individual commodity. So we tried to look 

at the aggregate and what is best in the environment that we are 

dealing with today, which, frankly, could be called revolutionary. 

Our proposal has been called revolutionary, and it is if you look at 

the pace of normal change in farm bills. 

But these times with the budget and fiscal deficits that we are 

dealing with, with changing public sentiment about the role of agriculture, having high-price support programs which generate checks 

68 

to producers on an annual basis is something the public is rejecting. That is what has happened with direct payments. Unfortunately. I am a rice producer. I understand direct payments very 

well. But the reality is that we have to look to the future and what 

the changes in this environment are, and, therefore, we do need 

something that provides a risk management tool, and that is why 

we looked at what was the best way of approaching that with limited Federal dollars to help provide assistance. 

Once again, we must have a strong Crop Insurance Program for 

us to do that risk management. That is going to be key. But I think 

the days of us crafting separate programs for separate producers 

and, trying to find ways to prop up incomes where maybe the marketplace is not indicating that, I think those days are difficult and 

may be past. 

Chairwoman STABENOW. Thank you very much. 

Senator Roberts. 

Senator ROBERTS. Thank you, Madam Chairwoman. 

Bob, thank you for the 12 years of leadership that you have been 

the head of the American Farm Bureau. Thank you to your staff 

that has been very highly respected and ongoing. You have right 

behind you somebody that has your back that is now on your staff 

who got his teeth cut on the House Ag Committee, then with the 

cattlemen, and has been serving as top gun to several Secretaries. 

I think he set the record for that. He is also a renowned rodeo 

rider, which explains a lot, if you know Dale Moore. It is good to 

see you, Dale. 

Bob, I understand from your written testimony the Farm Bureau 

sees the option of stacking area-wide insurance policies on top of 

individual policies is something that could provide value to growers, and I see that type of policy that would offer some benefits to 

growers in places like Kansas. Can you tell me a little more about 

how the Farm Bureau sees this program in terms of benefitting 

farmers across the country? 

Mr. STALLMAN. Well, our board had a lot of discussion, and as 

I have indicated, we are willing to discuss that approach. Our concerns are on several levels. One is the level at which that top layer 

is set. I mean, the devil is always in the details. We are concerned 

that if you set the level of coverage too high—and there have been 

some proposals about 90-and 95-percent coverage levels—you are 

really taking too much risk out from the producer. When you do 

that, the law of unintended consequences kicks in. You have farmers that are willing to, leverage their equity a whole lot more than 

they would otherwise without that. You have the bidding up of 

cash rents and land prices and the normal things that occur from 

a purely agricultural economics perspective. Then that we believe 

will make it more difficult for young farmers and ranchers. 

We also want to be sure that we do this, if we do go down this 

path, on an area basis as opposed to a farm-level trigger. We are 

very concerned that farm-level triggers at that high a level of coverage—there is the risk of moral hazard, and obviously the costs 

go up when you use a farm trigger as opposed to an area-wide trigger. 

So what we are saying is we are willing to look at some of these 

proposals, and if the parameters are right, maybe it is something 

69 

that we can come to consensus on. We still fundamentally believe 

that flipping it around and letting the Government take the deep 

loss and then giving the producers the responsibility of crafting 

their own risk management with existing crop insurance tools at 

a lower premium presents a better option because it has producers 

with more skin in the game, if you will, as opposed to the Government take the top layer of losses and the producers taking lower 

levels. 

Senator ROBERTS. I appreciate that. 

President Best, Mr. President, you say, ‘‘I hope to be a positive 

influence in the lives of fellow FFA members,’’ ‘‘excited about the 

opportunity,’’ ‘‘being an ambassador to the public to share the story 

of agriculture to Americans,’’ ‘‘speaking on behalf of half a million 

of the FFA membership.’’ 

Mr. President, do not share it. Tell it. Shout it to everybody that 

moves in this town. The Chairwoman and I, when we sit down and 

talk to fellow members and say, ‘‘Could you just spare a moment? 

We would like to talk to you a little bit about the farm bill,’’ we 

have 17 seconds before there is a high glaze. Some people, when 

you say, ‘‘I want to share some talk about a farm bill,’’ they simply 

say, ‘‘Well, just pay it.’’ That is the level of understanding. 

Now, you, on the other hand, can make a difference. People are 

going to listen to you because of your position, your presentation, 

and the fact that you are a young farmer and the fact that you are 

a president. I know that the Government’s impact on farmers and 

ranchers in some areas has nothing to do with the Department of 

Agriculture, but there are a lot of other times when regulations 

stemming from places like the EPA and the Department of Labor 

place higher hurdles in your path. 

The Department of Labor actually proposed new regulations for 

how our young people can work and learn about agriculture, and 

there is not anybody on this Committee or anybody in this room 

that does not care or have the utmost concern for the safety and 

well-being of our young people, all those involved in industry, but 

this proposal has really gone too far. Your organization has some 

feeling about this as well. Could you just tell us a little bit about 

how the FFA views this rule from the Labor Department? 

Mr. BEST. Yes, sir. As a part of our three-circle model in agricultural education, we have a classroom and laboratory section, which 

is where students learn basic skills, followed by the Supervised Agriculture Experience Program, and that is our experiential learning 

tactic where students can go out and gain hands-on experience 

within a job occupation. Finally is FFA, and that is the leadership 

aspect that comes into it as well as providing incentives for that 

hands-on experience. 

So with that being said, FFA is very interested in protecting the 

student learner exemption within the Department of Labor regulations as that does affect students within our supervised agriculture 

experience projects. 

There are four areas that supervised agriculture experience can 

fall under, and that would be agroscience, production agriculture, 

placement, and entrepreneurship. Of those four, one-third of all 

SAEs fall under the placement category, and that definitely affects 

the student learner exemption within the Department of Labor regVerDate Nov 24 2008 11:20 Feb 26, 2013 Jkt 000000 PO 00000 Frm 00075 Fmt 6633 Sfmt 6633 C:\DOCS\78274.TXT MICHA
70 

ulations because it does limit FFA members from having the opportunity to get involved in a placement type situation within their 

SAE. So we are definitely interested in protecting those rights, but 

at the same time maintaining that our students are safe and well 

taken care of while they are doing their projects. 

Senator ROBERTS. Do you have any neighbors across the road 

where you live? 

Mr. BEST. Yes, sir. 

Senator ROBERTS. Do you feel safe crossing that road and going 

there to help them during the harvest even though they have motorized vehicles over there? 

Mr. BEST. I do myself, yes, sir. 

Senator ROBERTS. Good. I hope the Department of Labor certainly lets you do that. 

When you meet with fellow FFA leaders, what are the burning 

issues that are discussed? What do your peers see as the biggest 

challenge to maintaining the strongest agriculture economy in the 

world for now and, more importantly, in the future? What is the 

big burning issue? 

Mr. BEST. The big burning issue for us comes down to what we 

have been talking about, getting young people to pursue a career 

in agriculture. FFA has been dedicated to doing that for the past 

85 years, teaching students about the benefits of going into agriculture, and we feel that that is one of the biggest issues. But we 

are taking steps to overcome that with the recent release of new 

curriculum, which is allowing for advanced pathways within agriculture. We are directing students down those pathways. It is not 

just about telling them about a career. It is about motivating them 

to go into a career. You can sit and talk to them all you want, but 

they are not going to just wake up one day and say, ‘‘You know 

what? I want to be a farmer.’’ No. They have to be motivated to 

want to go do that. That is what our more than 11,000 agriculture 

education instructors are doing every day. They are motivating 

their students to go into a career in agriculture. 

Senator ROBERTS. I especially liked your comment on different 

pathways. Everybody does not have to be on the farm. 

Mr. BEST. No, sir. 

Senator ROBERTS. There has been a lot of consolidation, a lot of 

economies of scale, and they are doing amazing work in terms of 

precision and production agriculture. But you can have some in 

your family and other friends that go into other areas of agriculture that are just as important. 

Mr. BEST. Yes, sir. 

Senator ROBERTS. Well, thank you very much. I appreciate it. 

Mr. BEST. Thank you. 

Senator ROBERTS. Thank you, Madam Chairman. 

Chairwoman STABENOW. Well, thank you to each of you. We appreciate your leadership on an ongoing basis and look forward to 

working with you. 

We now move to the next process in terms of putting together 

our recommendations and legislation, and your input will continue 

to be very important to us. 

We will end the hearing today. Any additional questions for the 

record should be submitted to the Committee clerk 5 business days 

71 

from today, which is 5:00 p.m. on Thursday, March 22nd. And, 

again, thank you very much, and, Mr. Best, we know the future is 

in good hands, and we thank you for being with us. 

The meeting is adjourned. 

[Whereupon, at 12:59 p.m., the Committee was adjourned.] 

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A P P E N D I X 

MARCH 15, 2012 

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78274.125
199 


78274.126
200 


78274.127
201 


78274.128
202 


78274.129
203 


78274.130
204 


78274.131
205 


78274.132
206 


78274.133
207 


78274.134
208 


78274.135
209 


78274.136
210 


78274.137
211 


78274.138
212 


78274.139
213 


78274.140
214 


78274.141
215 


78274.142
216 


78274.143
217 


78274.144
218 


78274.145
219 


78274.146
220 


78274.147
221 


78274.148
222 


78274.149
223 


78274.150
224 


78274.151
225 


78274.152
226 


78274.153
227 


78274.154
228 


78274.155
229 


78274.156
230 


78274.157
(231) 

DOCUMENTS SUBMITTED FOR THE RECORD 

MARCH 15, 2012 

232 


78274.158
233 


78274.159
234 


78274.160
235 


78274.161
236 


78274.162
237 


78274.163
238 


78274.164
(239) 

QUESTIONS AND ANSWERS 

MARCH 15, 2012 

240 


78274.165
241 


78274.166
242 


78274.167
243 


78274.168
244 


78274.169
245 


78274.170
246 


78274.171
247 


78274.172
248 


78274.173
249 


78274.174
250 


78274.175
251 


78274.176
252 


78274.177
253 


78274.178
254 


78274.179
255 


78274.180
256 


78274.181
257 


78274.182
258 


78274.183
259 


78274.184
260 


78274.185
261 


78274.186
262 


78274.187
263 


78274.188
264 


78274.189
265 


78274.190
266 


78274.191
267 


78274.192
268 


78274.193
269 


78274.194
270 


78274.195
271 


78274.196
272 


78274.197
273 


78274.198
274 


78274.199
275 


78274.200
276 


78274.201
277 


78274.202
278 


78274.203
279 


78274.204
280 


78274.205
281 


78274.206
282 


78274.207
283 


78274.208
284 


78274.209