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85–328 PDF 2003

S. HRG. 107–884

FARM BILL ISSUES

HEARING

BEFORE THE

COMMITTEE ON AGRICULTURE,

NUTRITION, AND FORESTRY

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

OCTOBER 27, 2001

Printed for the use of the

Committee on Agriculture, Nutrition, and Forestry

(

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

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

TOM HARKIN, Iowa, Chairman

PATRICK J. LEAHY, Vermont

KENT CONRAD, North Dakota

THOMAS A. DASCHLE, South Dakota

MAX BAUCUS, Montana

BLANCHE L. LINCOLN, Arkansas

ZELL MILLER, Georgia

DEBBIE A. STABENOW, Michigan

BEN NELSON, Nebraska

MARK DAYTON, Minnesota

PAUL DAVID WELLSTONE, Minnesota

RICHARD G. LUGAR, Indiana

JESSE HELMS, North Carolina

THAD COCHRAN, Mississippi

MITCH MCCONNELL, Kentucky

PAT ROBERTS, Kansas

PETER G. FITZGERALD, Illinois

CRAIG THOMAS, Wyoming

WAYNE ALLARD, Colorado

TIM HUTCHINSON, Arkansas

MICHEAL D. CRAPO, Idaho

MARK HALVERSON, Staff Director/Chief Counsel

DAVID L. JOHNSON, Chief Counsel for the Minority

ROBERT E. STURM, Chief Clerk

KEITH LUSE, Staff Director for the Minority

(II)

(III)

C O N T E N T S

Page

HEARING(S):

Farm Bill Issues ...................................................................................................... 01

Saturday, October 27, 2001

STATEMENTS PRESENTED BY SENATORS

Crapo, Hon. Mike, a U.S. Senator from Idaho ...................................................... 01

Otter, Hon. C.L. ‘‘Butch’’, a Representative in Congress from Idaho .................. 03

WITNESSES

Panel I

Ball, Gary, Past President, National Potato Council ............................................ 06

Little, Brad, Sheep Producer .................................................................................. 09

Pline, Clinton C., Minor Crop Producer ................................................................. 07

Takasugi, Pat, Director, Idaho State Department of Agriculture ....................... 05

Panel II

Evans, Jim, Chairman, USA Dry Pea and Lentil Council ................................... 26

Hayes, Evan, Wheat Grower, on behalf of Duane Grant, President, Idaho

Grain Producers Association ............................................................................... 22

Kauffman, Clark, Chairman, Idaho Barley Commission ..................................... 24

Meuleman, Perry, President, Idaho Sugarbeet Growers Association .................. 20

Panel III

Davis, Eric, Past President, Idaho Cattle Association, Current Vice President 36

Vander Stelt, Dennis, United Dairymen of Idaho ................................................. 34

Panel IV

Hopkins, Tim, Chairman, Idaho Chapter of the Nature Conservancy;

accompanied by Jeff Eisenberg, World Senior Policy Advisor, The Nature

Conservancy .......................................................................................................... 49

Hubbard, Douglas, Idaho Ducks Unlimited .......................................................... 51

Koester, Kevin, Director, Idaho Association of Soil and Conservation Districts,

Division Five ......................................................................................................... 47

APPENDIX

PREPARED STATEMENTS:

Otter, Hon. C. L. ‘‘Butch’’ ................................................................................. 70

Koester, Kevin .................................................................................................. 72

DOCUMENT(S) SUBMITTED FOR THE RECORD:

Anderson, Joe .................................................................................................... 88

Bedke, Bud ........................................................................................................ 90

Chambers, Bonnie ............................................................................................ 110

Clugey, KC ........................................................................................................ 106

Page

IV

DOCUMENT(S) SUBMITTED FOR THE RECORD—CONTINUED

Esplin, Keith ..................................................................................................... 115

Glanbia Foods, Thomas, Dave ......................................................................... 100

Glover, Arnold ................................................................................................... 111

Idaho Fish & Game, Rod Sando ...................................................................... 86

Idaho Honey Industry Association .................................................................. 112

Juarez, Adelaita ................................................................................................ 107

Kempthorne, Hon. Dirk ................................................................................... 98

Merrill, Susan ................................................................................................... 105

Northwest Federation of Community Organizations, Terri Sterling ........... 104

Spears, Rose ...................................................................................................... 109

Travis, Hank ..................................................................................................... 108

‘‘When the well’s dry, we know the worth of water’’, William Graves ......... 116

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FARM BILL ISSUES

SATURDAY, OCTOBER 27, 2001

U.S. SENATE, SUBCOMMITTEE ON FORESTRY, CONSERVATION, AND RURAL

REVITALIZATION, OF THE COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY,

Washington, DC.

The subcommittee met, pursuant to Notice, at 9:22 a.m., in City

Council Chambers, Boise City Hall, 150 North Capitol Boulevard,

Boise, Idaho, Hon. Mike Crapo, [Chairman of the Subcommittee],

presiding.

Present: Senator Crapo.

STATEMENT OF HON. MIKE CRAPO, A U.S. SENATOR FROM

IDAHO

Senator CRAPO. This hearing will come to order. This is a hearing of the Senate Agriculture Subcommittee on Forestry, Conservation, and Rural Revitalization. It’s a formal hearing of the U.S.

Senate Agriculture Committee being held today in Boise City Hall

at the City Council Chambers. This is Saturday, October 27th.

We are glad to welcome with us today from Idaho from the

House of Representatives, Idaho’s First District Representative,

Representative Butch Otter.

Mr. OTTER. Good morning.

Senator CRAPO. Good to have you with us.

Ladies and gentlemen, we’re sorry for our late start. We were

going to be under the gun time-wise anyway, but now we are even

more so under the gun. Let me just lay out a few of the rules of

the hearing and so forth we would like to follow, and then we’ll get

immediately into the testimony.

As you may be aware, this is the first formal hearing of the Farm

bill that the Agriculture Committee has held since the attacks on

September 11th, and I think that there are two significant things

that have happened that have made this hearing extremely timely.

The first is that the terrorist attacks have literally changed the entire paradigm within which we are operating within the country,

which is impacting virtually every aspect of our lives in the country; and our food and fiber policies, our domestic farm policies, our

food stamp policies, and the like, are all very significantly impacted

by the new circumstances that we face.

Second, this hearing is also the first hearing that has been held

since the House bill was evaluated by the White House and the

White House indicated it did not support the approach the House

took in its Farm Bill. This is the first opportunity since then and

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since Senator Lugar and others have been able to put out their proposals, and it’s become evident that the administration and the

Senate are probably going to be looking at some type of revision or

other approach, although who knows just how much and if that

will take place.

This is the first time really for people to kind of comment on the

dynamic that has developed since those things took place, and so

we here in Idaho I think are very fortunate that just by the circumstances of the timing of this hearing that was authorized by

the Chairman of the Committee, we have the first formal opportunity to weigh in with the Senate Committee on the development

of the policy of the nation.

I want to apologize that time today doesn’t permit a more comprehensive hearing. We have I think nine titles in the Farm bill

and we’re only going to be covering formally a couple of them

today, although all the witnesses can certainly discuss any aspect

of the bill they would like to discuss.

I want to state that we do encourage written statements. The

record is going to be held open for 10 days following the hearing,

and any written statements can be sent to my office at 111 Russell

Senate Office,well, maybe that wouldn’t be a good address to send

it to.

[Laughter.]

Senator CRAPO. If you send it there, it’s probably not going to get

delivered. You better send it to my Boise office and I don’t have the

immediate address for that, but I can get that to you and it’s easily

available right here in the phone book. Those should be in within

10 days of the hearing if you have written statements to submit.

I want to give an apology for the Governor of the state of Idaho,

Governor Kempthorne. His schedule would not allow him to attend

in person, but he is submitting testimony for the record.

I also want to specifically point out there are a lot of people who

are submitting testimony, but Joe Anderson in particular who’s a

canola grower from Potlatch has provided testimony, and his insight into the needs of Idaho’s oilseed industry are going to be very

helpful to us.

As we craft the Farm Bill, I think it’s very important for us to

remember that it’s about much more than just farming. It’s about

our national domestic food and fiber policy, and consumers are the

ultimate beneficiaries of this legislation. I think there were a lot

of unmet obligations that we intended to achieve with the FAIR

Act with the 1996 Bill, things like tax relief and tax reform, and

free and fair trade, and regulatory reform, and the like, which we

still need to work on. Despite the criticism of Federal farm policy,

Idaho is fortunate to have very friendly and devoted and effective

USDA employees and those from the FSA and the NRCS, as well

as our rural development officials.

I’d like to also, finally, just to express appreciation for those who

have traveled a long way to get here and taken their time out on

a Saturday to help us develop this policy.

In conclusion, I want to just say that one of the most common

questions we’re being asked right now is whether we will be able

to finish the Farm bill this year. I don’t know what your perspective in the House is, Butch, you may want to address that, but if

3

the Senate is able to conclude its business by mid November, which

is right now a target date that everyone is working on, I think it’s

going to be difficult for us to achieve the complete finalization of

a farm bill in the Senate if a new approach is being worked out

and then have that vetted with the House and have something

come out of confidence. On the other hand, if there is a decided

order for leadership that that has to happen, then of course we

could stay in as long as it takes to get it done. Right now, the answer to that question is a bit up in the air, but I think, to be candid, we have our work cut out for us to achieve that objective. I

think it would be good to be able to get a farm bill done this year,

but I’m trying to be honest with you about what I see as the political dynamic that we’re facing in the Nation right now.

With that, let me turn to Representative Otter for any comment.

STATEMENT OF HON. C.L. ‘‘BUTCH’’ OTTER, A

REPRESENTATIVE IN CONGRESS FROM IDAHO

Mr. OTTER. Well, thank you very much, Mr. Chairman. I appreciate being a part of this hearing. Even though I don’t serve on the

Agriculture Committee of the House, there are a few things and I

have a full statement that I would like to submit, without objection, for the record. I do want to associate myself with the Senator’s remarks about not only the climate that has considerably

changed in Washington, D.C.

When I raised my hand and took the oath of office on January

3rd of this year, I was one of 45 new freshmen of 29 Republicans

and 16 Democrats, and we were the freshmen in the House, we

were the freshmen class of the 107th Congress; but as of the events

of September 11th, we now have 435 freshmen in the House, and

the reason for that is because nobody has ever—in fact, I don’t

even think Strom Thurmond has faced this, this environment that

we have today.

Let me say that the work of the House, the people’s House, has

continued to go on, and Mike Simpson has done a Hercules job. As

you know, he does serve on the House Agriculture Committee and

they did pass the House Resolution No. 2646, which is the Farm

Security Act, providing for $73 and a half billion over the next 10

years, trying, if you will, to cover all the bases. That is the, I would

say, the nucleus of the bill that is now being considered at least

as part of the Senate’s consideration.

I’ve always believed that we’ve got the best farmers in Idaho, and

my experience certainly around the world as representing the state

but also representing one of the larger agribusiness companies in

the state, I found it pretty easy to sell groceries around the world

because of our ability not only to produce the best on the farm, but

also to add the shelf life to preserve portability with our ability to

produce our crops in this state.

That is going to be my emphasis. We’ve got the Trade Bill that’s

coming up, 3005, H.R. 3005 for a trade promotion, and I really believe that’s the answer that is to get us into the markets around

the world, and that’s going to be the place where I’m going to

spend most of my time, trying to get us back into the negotiating

rooms where we’re actually negotiating the contracts and the trade

agreements.

4

Trade agreements in the last I can’t remember how many years

right now, there’s been 128 of them and the United States has been

part of two of them because we have not been in at that table, and

I think giving the President, especially this president, this administration, the opportunity to sit at that table and to provide for the

environment in which we’re going to conduct fair trade is terribly

important, so I’m going to work very hard to make sure that 3005

does pass and we do get our seat at the table, so that we can sell

the groceries that we can produce here in this state.

[The prepared statement of Congressman Otter can be found in

the appendix on page 70.]

Thank you very much again, Mr. Chairman, for letting me be

part of this hearing.

Senator CRAPO. Well, thank you for making the effort to get here.

I should have said at the outset as well that Senator Larry Craig

and Representative Mike Simpson wanted to be here, but as you

know, we all have very busy schedules, and they had prior commitments that they simply were unable to change in order to be here.

They are, nevertheless, very much, every bit as much, interested

in all of the development of these policies as Butch and I are, and

will be very closely following the input that is received here today.

Let me just make a couple of other comments about how we’d

like to run the hearing and then we’ll get right on with it.

I believe all the witnesses have been told that you’re allocated 5

minutes for your verbal testimony. My experience is that there are

some people who can say everything they want to say in 5 minutes,

but there’s not very many. I’m willing to bet that most of you are

going to get to the end of your 5 minutes before you’re to the end

of what you want to say, and because of that, we have to ask you

to try to pay attention to the time. Your written testimony is going

to be read. I’ve already read all of it that has been submitted and

it will be thoroughly evaluated, so don’t think that your oral testimony is the only shot you have on this. Arlen up here is going to

show you some little cards.

Does that little thing ding at the end of the 5-minutes?

Mr. LANCASTER. Yes.

Senator CRAPO. When you hear the little bell, try to finish your

thought.

Then also understand that one of the reasons that we want to

try to keep you to your 5 minutes is that we are going to try to

get in some dialog with you from up here, so that will give us the

time to do that. You will have the opportunity as we ask questions

to continue to make statements or points that you may not have

had the opportunity to do in your formal presentation. I am going

to be pretty tough on the clock, and if any of you tend to go over,

I may rap the gavel and remind you that you need to just finish

that thought and wrap up.

With that, our first panel is Pat Takasugi, the director of the

Idaho State Department of Agriculture; Gary Ball, a potato grower

here in Idaho; Clinton Pline—they’ve got this down here as a minor

crop producer. I always smile when I see that ‘‘minor crop,’’ because they are major crops in my opinion, but I know what it

means; and Brad Little, who’s a wool grower. They have ‘‘sheep

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producer.’’ I don’t know if you go by ‘‘sheep producer’’ or ‘‘wool

grower.’’

Mr. LITTLE. It’s up to you.

Senator CRAPO. Or Senator.

Mr. OTTER. Senator.

Senator CRAPO. But, gentlemen, let’s go in that order, and, Pat,

why don’t you start.

Mr. TAKASUGI. Thank you.

STATEMENT OF PAT TAKASUGI, DIRECTOR, IDAHO STATE

DEPARTMENT OF AGRICULTURE

Mr. TAKASUGI. Senator Crapo, Representative Otter, thanks for

the opportunity today to present testimony and address the Farm

bill issues. I believe I’m the example to be set on the 5-minute curfew, and I’ll be watching Arlen methodically.

In my testimony today, I’d like to quickly cover three areas: And,

one, the National Association of State Departments of Agriculture

Farm Bill Proposals; two, the need for innovative programs to fit

the changing agriculture markets; and the need to safeguard our

national food supply, especially in light of the incidents of September 11th.

In my capacity as Director, I represent Idaho at NASDA. I believe our Farm Bill, the recommendations that are decidedly outof-the-box type of thinking, go a long ways to address the new markets that we face today.

You have copies of the executive summary in my testimony in

the written form, but let me point out a few key components:

There includes a 90 percent Cost of Production Insurance Program that helps farmers make more decisions on the farm and

assures them of having a true safety net.

The Countercyclical Commodity Program that offers support during the lean times and addresses those times when farmers need

it the most.

We also propose an Agricultural Stewardship Block Grant that

puts tools for conservation in the hands of people on the ground

and addresses regional diversified needs at the State level.

Trade and marketing programs we propose that levels the international playing field, something that we really don’t have today.

We also seek to assure food safety for all of America’s security.

An agriculture flexibility and partnership plan termed Ag-Flex to

improve on the efficiencies of the Federal resources.

Yet the Farm bill alone will not sustain American agriculture.

Tax policy reform would go a long way in giving farmers tools to

better compete and to manage their own fiscal matters. Specifically, I recommend an expanded agricultural savings account that

would also serve as a medical savings account and educational savings account and a retirement account.

We also propose increased annual capital expensing; and investment tax credits for research, promotion of U.S. products, conservation, and other programs needed in agriculture today.

Finally, and I say this not only as a farmer, but also as a consumer, that we must establish a national food policy that secures

a safe food supply, encourages and funds environmental and conVerDate 11-MAY-2000 14:50 Mar 31, 2003 Jkt 085328 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 85328.TXT SAG1 PsN: SAG1
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servation efforts, and promotes a sustainable, homegrown American food supply.

In summary, we must have a new Farm Bill, new not only in letter, but also in concept, and agricultural policies that assist in promoting a fair and meaningful sustainability and viability of our

American agriculture.

Again, thank you for this opportunity.

Senator CRAPO. Well, I don’t even think you went 5 minutes, Pat,

but that’s OK.

Mr. TAKASUGI. You know that was new.

Senator CRAPO. Gary.

STATEMENT OF GARY BALL, PAST PRESIDENT, NATIONAL

POTATO COUNCIL

Mr. BALL. Thank you. My name is Gary Ball, and I’m a potato

grower from Rexburg, Idaho, and I’m the past president of the National Potato Council, and I’d like to mention that I also serve as

a representative to the National Potato Council at the North American Plant Protection Organization, and also I serve on the Agricultural Technical Advisory Committee. I mention this because of an

item in my testimony that I want to give later on. And, Representative Otter, I appreciate your comments on trade, because trade is

vital to the potato industry.

First of all, I’d like to say that for potato growers, probably the

single most important provision in the Farm bill pertains to the

Flex Acres Program. The 1996 Farm bill gives producers of program crops limited flexibility with regard to plantings on flex or

contract acres, but expressly prohibits the planting of any fruit or

vegetable crop. Potatoes were specifically mentioned as a crop that

could not be planted on flex acres. The National Potato Council was

instrumental in getting this language inserted in the 1996 Farm

Bill, and strongly supports its inclusion in the new Farm Bill.

We are pleased that this language was included in the Housepassed Farm Bill. Economic studies show that for every 1-percent

increase in acreage planted in potatoes, income is reduced by 7 percent. Any scheme which directly or indirectly results in subsidizing

additional potato production is strongly opposed by the National

Potato Council.

The proposal by Senator Lugar appears to call for a phaseout of

contract payments followed by full planting flexibility, and for a

safety net, reliance on crop insurance policies. We have not studied

the details of the Lugar proposal and without taking a position on

the bill as a whole, we would be concerned over the availability of

any revenue protection policies that also allow full planting flexibility. As you know, with the support of the National Potato Council,

language was put in the Crop Insurance Reform Bill prohibiting

the development of any revenue protection policies for potatoes. If

a program crop grower could purchase a revenue protection policy

with no restrictions and then be able to plant potatoes, we would

still be faced with subsidized overproduction.

The Market Access Program is a cost-sharing partnership between the Federal Government and private industry to promote

U.S. farm exports. MAP has been particularly successful in helping

high-value products like potatoes gain greater access and recogniVerDate 11-MAY-2000 14:50 Mar 31, 2003 Jkt 085328 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 85328.TXT SAG1 PsN: SAG1
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tion in foreign markets. The MAP program is legal under the

GATT, and the National Potato Council therefore strongly endorses

the House-passed Farm Bill’s annual authorization level for the

MAP of $200 million.

The National Potato Council also supports various food aid programs that are reauthorized in the House bill.

The National Potato Council worked with the United Fresh Fruit

and Vegetable Association which submitted a group of testimony to

the House and the Senate, and these include emergency authority

to combat invasive pests and diseases, surplus commodity purchases, technical assistance for specialty crops, environmental quality incentive programs, and country of origin labeling.

With regard to the country of origin amendment, the National

Potato Council strongly supports language in S. 280 that applies to

fresh produce, and urges this language be included in the Senate

Farm Bill. The Consumer Right to Know Act of 2001, S. 280, would

mandate point-of-purchase labeling for fruits, vegetables, and other

fresh perishables. Food service establishments would be exempt.

The bill grants USDA authority to coordinate enforcement with

each state.

In closing, one other item that I mentioned before is the Technical Assistance for Specialty Crops, and H.R. 2646 creates a fund

of over $30 million to address nontariff trade barriers and related

technical obstructions that hinder foreign market development and

international market expansion efforts of U.S. specialty crop producers. The purpose of that is to provide direct assistance through

public and private sector products to facilitate increased exports of

U.S. specialty crops within the global marketplace. With the

NAFTA coming to terms in January 1 of 2003 with Mexico, we’re

already seeing the vital sanitary issues raised strongly; and with

the meeting we just held in Canada 2 weeks ago with the North

American Plant Protection Organization, it was really brought to

the forefront that we are severely underfunded to deal with these

problems as they arise, and if we’re going to expand the foreign

markets for our specialty crops, we’re going to have to have funding

in this area that we can deal with those vital sanitary issues as

they come up.

Thank you for your time, and appreciate the opportunity to testify today.

Senator CRAPO. Thank you very much, Gary. Appreciate that.

Clinton.

STATEMENT OF CLINTON C. PLINE, MINOR CROP PRODUCER

Mr. PLINE. Yes, Mr. Chairman, Senator Crapo, before I get started, I faxed over my testimony to Arlen last night. I happened to

notice that I left out one of my four points, so the copy you have

now is the updated version.

Senator CRAPO. Well, you’re lucky we have 10 days.

Mr. PLINE. Everything you have up to that point has not

changed, as I said, it’s just that.

Senator CRAPO. All right. Thank you.

Mr. PLINE. You’re welcome.

Mr. Chairman, Representative Otter, I appreciate you bringing

this hearing process out to the people here in Idaho. My biography,

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which is written out for you there in testimony, basically is that

I was raised on a farm that I still farm today. We’ve been there

over 41 years.

You mention specialty crops. I raise quite a few of those. Primarily, concern would be hybrid carrot seed, hybrid onion seed, hybrid sweet corn seed, alfalfa seed, sugar beets, wheat, alfalfa, hay,

we run a small dairy operation and small beef. Sometimes in the

morning if I wake up confused, that’s why: Too much going on.

The four items I want to talk about just very briefly is, one, the

separation and classification of specialty minor crops, seed crops included, from the traditional crops addressed in the past Farm Bills.

The second one is support in the field of plant and animal genetics.

Third item would be Senate support for the funding for a 10-year

USDA Farm Protection Plan, FPP, already approved by the House

of Representatives.

Then if I have a little time, talk about conservation measures in

turn for subsidy.

Whereas, both of you are fairly familiar with agriculture in

Idaho, I don’t need to get into too much discussion of what I have

written here as how minor crops, and in particular where I raise

seed crops—it’s a whole different ball game from major crops. The

analogy I like to draw particularly with seed crop is that I have

to take that plant to a different stage of maturity, and it’s often

like how we find ourselves in our own health field where we get

the more maintenance it takes.

In the field of plant genetics, what I do with these seed crops,

what I have produced, that seed, is genetics and that is tomorrow,

and everything that we can do to propagate these new ideas into

concepts puts us in a position of producing better-quality, healthier,

and safer food for the entire nation and parts of the world.

In Farmland Protection Programs, and I want to read this part

into the record with my testimony, I am including a letter from

Richard Sims, State Conservationist for the State of Idaho NRCS

addressed to Mr. Lynn Tominaga. Mr. Tominaga is Chairman of

the Idaho Food Producers, which in a nutshell is an organization

or organizations that represent different aspects of agriculture.

Over the last several months, I have served as chairman of a committee looking into programs to help counties in our state deal with

the rapid growth and urban sprawl that has been taken over in our

prime ag land areas. As you are probably aware, this is a nationwide problem, and we intend to do what we can to resolve it.

Earlier this October, Mr. Sims’ letter apprised us of a proposal

that is within the Farm bill coming from the House side that will

provide funding under proper circumstances to create a Farmland

Protection Program for states on the either state or even county

level. I believe that we can put those resources to work. The tumbling economy we’re seeing now is going to make it very difficult

to implement on the state side, but it is recognized pretty much

throughout the entire government bodies, be they local or national,

that this urban sprawl thing is a major problem and we need to

begin to work on it.

In closing, on the conservation subsidies, the farm that I have

grown up on over the course of my 41 years has seen lot of

9

changes, and a lot of those have come about through conservation

plans that we have participated in. Originally, I didn’t think too

much of those kind of programs, but over time I’ve seen what those

programs have done for us, and they have been a benefit to either

ourselves as our farming operation, the general public, and the environment, and I encourage Congress to, as a means of making

farm programs more palatable for the general public, finding ways

to tie those incentives for conservation I believe is a good proposition.

Thank you.

Senator CRAPO. Thank you very much, Mr. Pline.

Brad.

STATEMENT OF BRAD LITTLE, SHEEP PRODUCER

Mr. LITTLE. Thank you, Mr. Chairman, Congressman Otter.

These are very trying times for both the U.S. and the Idaho

sheep industry. Myself, personally, after 110 years our family being

in the sheep industry, I’m no longer a sheep producer. I’ve elected

to sell out.

In June, the market for sheep and lambs in Idaho was about 90

cents, which was about break even. Today, the price is somewhere

between 35 and 50 cents, if you can sell your lambs. I’ve got a lot

of my lambs in Denver and I can’t get them sold. They won’t even

kill them and they’re too fat and they’re just basically—I don’t

know if they’re worth the freight. Yet in that same period of time,

retail prices appear to be unchanged.

What’s happened? Well, one thing was the September 11th disaster. The lamb industry, as small as we are in the United States,

we’re very dependent upon the white-tablecloth industry, and with

the loss of the tourism industry and the travel industry, the consumption of high-quality lamb has gone way down.

The other thing which has been something that started in 1996

was an enormous surge in imports. In June alone, imports were up

36 percent.

Wool, one of our other commodities, ironically the commodity

that my grandfather started producing 110 years ago, is now an expense. It’s not worth even the cost of shearing.

The other thing that’s happening in the sheep industry with the

25 percent reduction we’ve had since 1996 in numbers is we’re losing our infrastructure. Lamb processing companies, wool processing

companies, we’ve lost 80 percent of our ability in the United States

to process wool. I blame this precipitous fall on two things, neither

one of them the Ag Committee has jurisdiction over, unfortunately,

but I’m going talk about them anyway with your patience. One of

them is the most important one to me, is exchange rate, and the

other one is foreign subsidies and quotas.

1996, 10 percent of our consumption was imported lamb. Now it’s

somewhere between 34 and 40 percent if we can get our hands on

it. In that same period of time, lamb and sheep numbers are down

25 percent.

Foreign protectionism. In the European Union, the European

countries write a check for $2 billion a year to their sheep producers over there in price supports and subsidies. They have permanent quotas, so other lambs produced elsewhere in the world has

10

to come to America because it can’t go to Europe, and that exacerbates our problem.

The most important thing is the exchange rate issue. In 1980, the Australian dollar was $1.18. We didn’t have any problems competing.

1982 to 1996, it was 70 to 80 cents. We were at a disadvantage,

but we could compete.

Today, the Australian dollar is 50 cents, the New Zealand dollar

is 40 cents. They have a two-to-one advantage over us. You can

read their press. Those guys are making record profits. The farmers are making record profits, the exporters are making record

profits, the processors are making record profits, and we’re starving

to death here in America.

That problem exists for my other constituents in my other job:

The timber industry that we’ve lost out of Central Idaho, the grain

farmers.

I think that if you could carry this message back to the House

and Senate Banking Committee, that’s where the action is, that’s

where we’ve got to do it.

Why do we have this imbalance? There’s two big beneficiaries of

the strong dollar: One of them is the consumers that buy cheap imported food, electronic goods, and oil; and the other one is investors. The overnight Fed funds rate in Japan this week is one onethousandth of 1 percent. If my bank loans your bank a million dollars for a year, you pay me $100. That’s all it is. All that money

is coming here, strengthening our dollar, and ruining the market

for agricultural goods.

That’s all there is, Mr. Chairman, and Congressman Otter. If we

don’t address those two issues, we’re dead in this country.

Thank you.

Senator CRAPO. Thank you very much. We’re going to give ourselves a 5-minute clock too, but then we might take rounds if we

want to keep going. Let me start out, and first of all, I’ll start with

you, Pat.

I note that you have been working on a cost-of-production insurance proposal. We’ve talked about that in the past and as you’re

probably aware, Senator Lugar has recently put out a whole farm

insurance proposal to utilize in connection with phasing out our

commodity programs.

Could you just compare for me, if you know, any of the details

of Senator Lugar’s proposal? Could you tell me the difference between what you’re talking about and what he’s talking about?

Mr. TAKASUGI. I think Senator Crapo, I believe his may be more

in line with one of the pilots they have out there, the adjusted

growth revenue, which is a whole farm policy. Understand that the

cost of production is probably just one tool under the risk management tools available, and that what we’re presenting is an option

that provides that safety net. What he’s providing I believe goes beyond safety net, and when you delve into revenue insurance, I

think you run the risk of doing exactly what Gary Ball talked

about in encouraging people to raise higher-revenue crops and then

get compensated and then flood the market.

I believe that cost of production at 90 percent where there is no

advantage to raise a high-cost crop, you run the risk of losing 10

11

percent; and with our formula, if you’re a new grower of a different

crop, you run a higher risk in premium, and it discourages that

very thing. That’s probably the biggest thing.

Senator CRAPO. You moved right into the question that I was

going to have, because it seemed to me like, as you have said, that

if we are doing a whole farm insurance approach, if we were to

move to that approach, that there would be a strong incentive for

people to make the higher cost production crops.

Explain to me a little bit the reasoning why you believe the cost

of insurance production approach would not generate that tendency.

Mr. TAKASUGI. Senator, for the same reasons: The premiums will

go up. If you’re a new potato producer, never raised potatoes before—we use actual production history in compiling the premium,

and if you don’t have actual production history, then we default to

a different formula and your premium will be higher.

And, two, you can establish the 5-year record. That won’t change.

It discourages people from jumping from, say, wheat into a higher-priced commodity like potatoes because of that very issue. We

are very cognizant of that, and that’s why cost of production provides a safety net from falling out the bottom and losing everything, but it doesn’t encourage people to take advantage of the program, which we found out in other parts of the country. Some

farmers tend to farm the programs instead of farm the crops.

Senator CRAPO. Before I move on to Gary, I want to kind of ask

you some of the same questions from your perspective—but before

I do that, Pat, what is your thought about the portion of Senator

Lugar’s proposal which phases out the commodity programs? I realize you’re saying that the replacement he has is not something that

you think is the best idea, but if a good replacement were achievable, do you think that the idea of moving to a different approach

like he is suggesting is a good idea or a bad idea?

Mr. TAKASUGI. Senator Crapo, I think, I believe, we’re quickly

running out of the rope that we have to enjoy unquestioned subsidies of agriculture products, and that’s why in our proposal, the

stewardship initiative and the block grant concept which I believe

consumers can relate to in clean air, clean water, endangered species preservation, are a lot more sellable than to look at defending

outright grants or subsidies. The proposal that we put forth is one

that I believe is defensible, and affords producers an offset to their

regulatory costs and compliance issues.

Senator CRAPO. And, Gary, I want to move to you before I run

out of time with my first 5 minutes here. I recognize and appreciate the concern you’ve raised about flex acres, and if we move

ahead with a perspective like the House does, I’m confident that

the Senate will continue that language, protecting it.

The question I have is do you agree with Pat’s perception of the

two different insurance approaches and the cost of production insurance would be the better approach to take if an insurance approach is taken?

Mr. BALL. I would have to say that I really don’t believe we

agree. The 90 percent is a form of a subsidy, because you put a

floor under it and a guy is going to guarantee he’s at least going

to get 90 percent back. I appreciate the position the Department

12

of Agriculture has to try to cover a farm that has molded it due

to crops, various crops, but we still think each crop should stands

on its own.

The crop insurance has done a pretty good job with that so far

and we have to work our way through those, and that’s why we do

not oppose insurance for potatoes. I mean, you have your

multiperil, I think you have a loss from hail or insurance or even

quality and yield, those things are all available, but it’s the revenue protection side which is just market distorted, and we oppose

very strongly and we find that that really doesn’t work probably in

any of your perishable commodities.

Senator CRAPO. OK. Thank you. I just heard my time run out,

so Representative Otter.

Mr. OTTER. Well, thank you once again, Mr. Chairman.

Pat, in your earlier testimony and also in your written testimony

that I’ve had a chance to at least review a little bit, you spoke to

the conservation issue. In the House-passed bill, I think we dedicated $16 billion to the conservation side of the Farm bill out of

the 73 billion; I think it was 16 billion that we put into that. Is

that going to be enough?

Mr. TAKASUGI. Representative Otter, unfortunately, we assessed

that the last two years we’ve been working on this proposal, and

the closest figure we could come to the cost of compliance for producers would require, as we propose, an $8 billion annual appropriation. No, what was appropriated in the House version we feel

is not enough. The requirements that we have to comply with today

and in the future with TMDLs and ESA issues has grown and will

continue to grow and be an extreme burden on our producers, and

we felt that that figure was more realistic in trying to offset the

costs of production.

Mr. OTTER. Reason I ask that question, because there was a huge

effort in the House to amend the conservation side of that and to

add a lot more money back into the conservation. However, that

money would have been lost forever in terms of agriculture pursuits, because that would have gone for government acquisition for

wetlands use, and also marginal lands to be reviewed and returned

back into habitat use. so that farm ground, quote/unquote, would

have been lost forever, not only to the pursuit of the agriculture industry, but more importantly, as far as I was concerned, to the detriment of the local level of government, the counties and cities who

actually need those tax bases for their continued revenue stream.

We will be hearing, I’m quite confident, from certain elements

that we passed up a chance to add to the conservation, and probably add up to $8 billion a year instead of what it came out to was

a little less than $2 billion a year, but I just want to remind everybody here that that’s where it would have gone, and that was a

dangerous thing as far as I was concerned. Fortunately, we defeated the amendment.

Mr. TAKASUGI. Representative Otter, we agree with you. We

didn’t agree, as an organization, to support that effort. Our proposal is a block grant to the states to be determined and dispensed

at the state level according to the needs of the commodity organizations, so we would not, especially in Idaho, tie up that money in

purchasing and laying aside land. We would be looking at comVerDate 11-MAY-2000 14:50 Mar 31, 2003 Jkt 085328 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 85328.TXT SAG1 PsN: SAG1
13

pensating for conservation issues much like the dairymen had in

the last 5 years, the beef cattle are going to be doing in the next

five, and row crops soon to be. That was what we were looking at.

We agree with you totally.

Mr. OTTER. Thank you.

Gary and Clinton, my question goes to the kinds of crops that

you were talking about and their relativity to House Resolution

3005, which is going to be the Trade Bill. One of the largest artificial trade barriers that I’ve seen around the world is the invention

of the GMO, the genetically modified organism, and I can’t think

of anything in my short 59 years and the time that I spent farming

and the time that I’ve spent in trade where we haven’t improved.

1935, the average yield on potato crops in the state of Idaho was

6,500 weight to the acre. Now, certainly with nutrients and things

like that and farm practices, we’ve been able to increase on that

considerably, but the largest increase came when we genetically

modified the plant itself.

One of the attacks that we’re going to have—one of the approaches, I should say, that we’re going to have to take on the

Farm bill and on farm trade, farm commodity trade, is going to be

to answer this question on genetically modified organisms. Every

time something comes up, and as you know, it recently did with

corn, we have this tremendous question as to the health side of the

food. We have the same question with the production side of the

seed commodity, and Idaho produces, I know when I was involved

it used to produce about 75 to 85 percent of our total seed for vegetable crops in the United States. I was a big onion seed producer,

and, you know, I could go out and count those umbels and know

just about where my crop was going to come down. It’s a 2-year

crop, as you correctly spoke to.

I think one of the things that we’re going to—— Is that my time up?

Mr. LANCASTER. You’re up.

Senator CRAPO. You didn’t let him answer the question.

[Laughter.]

Mr. OTTER. Let me just ask you the question: How are we going

to answer—— The Senate clock is much shorter than the House.

How are we going to answer the question on genetically modified,

because that’s going to be the key for us.

Senator CRAPO. We only give House members half the time.

Mr. BALL. If I may, there was a little fanfare, a study released

from the EU something like twoweeks ago, and it was a 15-year,

$64-million study on biotechnology, and in essence, what it said

was the findings were that genetically modified foods were probably safer than natural. We were glad to see that. I think——

Mr. OTTER. What’s that report?

Excuse me, Mr. Chairman.

What’s that report?

Mr. BALL. I forget the name. It came out of Brussels. I can get

you a copy that I got out of the Post Register if you would like, I’d

fax that to you.

Mr. OTTER. I would ask, without objection, that that report be

made part of the official record.

14

Senator CRAPO. Without objection, please do.

Mr. OTTER. Thank you.

Mr. BALL. I’ll fax it to your office, Senator Crapo.

Senator CRAPO. Good.

Mr. BALL. Along with that, I see a softening on the biotech approach, more and more need for it. The National Potato Council

and I think agriculture in general support biotechnology that is

done on the basis of sound science; that we do adequate studies by

our Federal agencies to preserve the integrity of the food, that it

is safe; and I think that we finally will break through this barrier

and we will use biotechnologies as we should do, and the ground

swell seems to be moving somewhat in that direction.

Senator CRAPO. Do you want Clinton to respond to that?

Mr. OTTER. Clinton, would you respond to that too from the seed

side?

Mr. PLINE. From the seed side, Mr. Chairman, Representative

Otter——

I was going to ask earlier, What was your question? You ran out

of time.

I believe really it boils down to a public relations situation. One

is we need to convince the public that we have been cross-pollinating plants for years, and that is a genetic modification.

We had a tour early last month for legislators of the state of

Idaho, and I told some of them, if your mother is Swedish and your

father is Italian, you’re genetically modified.

The frustrating part too is that particularly to watch some of the

news reports on the technology and the genetic management of

medicines today and things and how beneficial they are, and the

people just pick that right up, they think that’s great. We start

talking about food, they’re afraid of it. Again, it’s an education

process.

As Mr. Ball mentioned, I see a softening as well, and I think the

time will come along. As you will see in my testimony, I pretty simply state we need the support of the government to help us make

sure there are safe products that come out and to help promote

them, help assure the public that here’s what we’re doing and it

works, and here’s why it’s safe.

Senator CRAPO. Thank you.

Mr. OTTER. I yield back the balance of my time.

Senator CRAPO. Thank you.

[Laughter.]

Senator CRAPO. Obviously, before I go on to some of my additional questions, I want to say that the GMO is something that the

government has to take a strong stand on in our trade negotiations, and I believe our trade negotiators as well as the Department of Commerce are prepared to do that, which is kind of relevant to another question I want to get to in a minute; but before

I get there, Clinton, you talked at the end of your testimony about

the importance of trying to get away from this perspective of farming for subsidies and maybe utilizing conservation programs more

effectively to achieve some of the same objectives of getting resources to the farmers, but also doing so in a way that is a winwin for the environment and for the public.

15

As you may know, I’ve introduced for those very reasons, I’ve introduced a conservation title to the Ag Bill which I’m working very

aggressively on.

Senator Harkin has introduced, I don’t know if he’s actually introduced it yet, but he’s working on another conservation title approach called the Conservation Security Act.

My approach basically takes existing conservation programs like

the CRP and EQIP and WRP and the many others—the grasslands

program that Senator Craig has been working on—and reforms and

strengthens them and gives a new revitalization to them.

Senator Harkin’s, as you may be aware, thinking-outside-the-box

new approach which says that we want to—essentially if I could

describe it, and I probably won’t describe it as well as he would— be flexible and allow conservation resources to go to producers, agricultural producers, for positive conservation improvements in

their area, and it’s much more specific to what’s worked out in the

area where the farmer is operating.

Do you have an opinion on where we should head with regard

to the approach we take with regard to conservation dollars in this

Farm Bill?

Mr. PLINE. Yes. It depends on, of course, what part of the country you’re in. I have a color photograph in here of a map of the

United States and it shows kind of a pictorial water graph of where

all the water is used in this country, and it’s the volume of water

used per capita, and I’ll get that to you later. In our valley here

where we use—or I should say Southern Idaho—where we use irrigation the way we do, there’s a lot of ground to be made up in

water conservation. You know, we have a lot of rolling hills and

whatnot that can be irrigated, so there’s soil conservation measures.

There’s going to need to be a lot of work put into air pollution.

North Idaho is experiencing the wrath of the general public over

that, and I have a great deal of sympathy for them. We don’t see

it as much here from agriculture, but as we have more people live

in this valley and we create more pollution, we are all the cause

of that.

I appreciate hearing you say that—which is what I was thinking,

that the technology, particularly in the last 10 years, have made

a lot of things achievable as far as conservation goals are economically feasible, and a mannerism of just coupling that technology

and programs that are out there with subsidies, that’s—you’re on

the right track.

Senator CRAPO. Thank you.

Brad, you know, you indicated that the two issues you raised

weren’t the jurisdiction of this Committee, although I do sit on the

Senate Banking Committee so I’m very aware of and concerned

about your first and major issue, namely, the exchange rate. What

I would like to ask you about that is, simply, how do we solve it?

I know you said that the way to solve it is in the arena of international financing and so forth, and we do have international authority in the Banking Committee as well over a lot of economic

policy, but as you know, getting a handle on dealing with the exchange rate problems is not only and clearly one of the most important things we must do, but one of the most difficult things, beVerDate 11-MAY-2000 14:50 Mar 31, 2003 Jkt 085328 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 85328.TXT SAG1 PsN: SAG1
16

cause every solution that we might come up with runs into very

strong opposition right here in this country from the consumer-oriented interests or from the security- and investment-oriented interests, and so I just wanted to give you an opportunity to expand on

that a little bit, tell me what we should do.

Mr. LITTLE. Well there’s actually four—and I’m a farmer, not an

international banker, but there’s four things that can be done and

have been done before, and that’s fixed exchange rates, monetary

unions to where currencies are blocked together, and if you’re going

to pursue the North American Free Trade Agreement, that would

be an obvious one would be to fix those three exchanges so there’s

some consistency in it. You know, when you get the big imbalance

that we have now, it just devastates an industry like we have in

the sheep industry where we compete with New Zealand and Australia with this huge imbalance, it just wipes us out.

Countercyclical adjustment, which I understand are a violation of

the World Trade Organization, but that’s part of the negotiation

that Congressman Otter talked about, and temporary market intervention to crop up.

Everybody in their wildest dream thought that at September

11th, the value of the dollar would collapse, but what happened is

all the other currencies and the variation didn’t change. Those are the things, like I say. The 20, 30, $40 billion in the farm program

doesn’t make a hill of beans difference to the sheep industry.

I know there’s a deal on there for the wool thing. If we can’t take

care of the exchange rate, and it’s just—you know, the Statesman

issue on rural agriculture just broke my heart. They just said

Rural America is dead. Well, the reason Rural America is dead, in

my mind, is because of this exchange rate issue. Until we address

that, frankly I don’t think the rest of it is going to make a lot of

difference.

Senator CRAPO. Well, frankly, as you know, for the last three

years, I—and frankly through Don Dixon of my office primarily— have been holding county meetings and other farm meetings

around the state of Idaho, and it is clear to me that you’re right.

I think there would be virtually unanimous agreement that the exchange rate problem is central to the issues that we are dealing

with in agriculture right now. There are some other big ones too,

but the exchange rate is right there at the top. It’s also right there

at the top of being the most difficult one to get the political momentum to solve. I appreciate that.

Let me move on quickly to another issue, and the second issue

you raised was subsidies and import quotas that are being provided

by the governments who are basically, in my opinion, engaging in

predatory trade conduct and the United States has to respond to

that. We are working very pressingly. We recognize in Washington

that another one of those extremely high, critically important

issues is our international trade posture and what we’re dealing

with there, and I believe that we are at a point where, frankly,

with the last administration we were getting there quite well with

Charlene Barschesky and the trade negotiators, and in this administration we have pretty strong commitments from not only the

trade representative’s office but also from the Department of Commerce to stop using agriculture as a trading ship and to start getVerDate 11-MAY-2000 14:50 Mar 31, 2003 Jkt 085328 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 85328.TXT SAG1 PsN: SAG1
17

ting much better policies toward getting parity on the subsidies

and tariffs and other related issues.

I have, to this point, not yet supported giving the President trade

promotion authority, or fast track authority as we used to call it,

for the very reason not that I don’t support the idea and see the

importance of giving the President that authority, but because I

had not yet been confident that giving the President that authority—well, that the President, through his trade negotiators, would

negotiate adequately for agriculture and for other critical issues in

America. My point being that I’m not against trade negotiations,

I’m not against trade agreements; what I’m against is bad trade

negotiations and bad trade agreements that don’t protect us adequately. I have told both administrations that at the point where

I am convinced that they understand that well enough and they

are willing to negotiate as tough as they need to negotiate and not

concede issues, that I’m ready to then consider giving trade promotion authority.

The question I have for you—and actually when we get time, I’d

like to ask everyone on every panel today this question—is it time

to give trade promotion authority to the President, or do we still

need to have a little bit of proof as to whether the administration

is going to negotiate tough enough? What are your thoughts, Brad.

Mr. LITTLE. Well, Mr. Chairman, I think bad trade authority is

when you lose and the other guy wins, and so if you win, then it’s

all good trading. That’s what trading is, is trading, so somebody

wins and somebody loses.

You know, don’t get me wrong. I’m all for, like Congressman

Otter—world trade is the absolute, quintessential—we have to

have it. I mean, we wouldn’t have our sons and daughters in Afghanistan if Afghanistan was a big trading partner with the rest

of the world. Trade is essential. Somehow—and it’s just tough. It’s

just sit down across the table. It’s like me selling Congressman

Otter potatoes: You just sit around and slug it out until you come

up with a deal.

That trade authority, you know, and particularly we minor crop

people are very concerned about it because we look at New Zealand

and Australia, there’s 250 million sheep and goats in China, and

there’s four million sheep in the United States. Who’s going to win?

Who’s going to win and lose at that point in time?

The alternative of not having trade is worse, so I’ll give you a

real good answer like, I don’t know.

Senator CRAPO. My time is up and I don’t want to take another

round because we are running busy, but can I—if you don’t mind,

Butch, let me just ask for a one-sentence answer from the rest of

you. Do you think we should support trade authority and trade promotion authority now? Clinton.

Mr. PLINE. Well, kind of depends on who your president is.

You mentioned agriculture being used as the bargaining chip.

The more elements you put in as element chips, I think the better

blend you’re going to get. You’re not going to see the catastrophic

effect it has on the ag industry.

Senator CRAPO. Thank you. Gary.

Mr. BALL. Senator, I agree with your statement 100 percent and

the National Potato Council has been that way. We think trade

18

agreements are good, however, you may not like the rest of my

statement. You’ve got to, in my opinion, make some serious

changes in the tradeoffs, because if you go in there tomorrow and

say, I want to do something, and the first thing they’ll say to you,

What do you want to tradeoff in order to get what you want? You

feel like slapping the guy upside the head and say, No, you’re the

United States, we’re the United States, we’ve already traded off everything we got; you go to work for us and not the other country.

Every time you sit down with those people, you feel like, first of

all, they’re working against you and for the other country, and in

essence, they are. We need to really get that philosophy all the way

down to the bottom through the Trade Department.

Senator CRAPO. Thank you. Pat.

Mr. TAKASUGI. Well, I’d like to agree with Brad. It’s a difficult

question.

What I could throw out is if we don’t get the trade promotional

authority, the countries are going through Canada and Mexico to

ship into us anyway. They’re going around the horn.

I think we need to look at possibly granting money to the states

so that they can develop a domestic marketing program, because

we I think need to differentiate between Idaho-produced and foreign-produced. If we can maintain our domestic market—I would

advocate we’re losing our domestic market, and we need to maintain and regain our foothold in our own market. We are the biggest

market. In that line, I would say TPA is probably a nonissue because they’re going to come in anyway, but I would say we need

to look at supporting our domestic marketing programs.

Senator CRAPO. Thank you.

Butch, do you have another round?

Mr. OTTER. Yes.

Brad, it breaks my heart that you’re going out of that business,

it really does. I know that it’s probably what little romance there

is left in the agriculture business, it’s in that business, and so I feel

for you and I’m sorry to hear that, I truly am, because we’ve had,

between my ground and your ability to graze, I’ve had an awful lot

of wildfire that I prevented, an awful lot of noxious weeds I’ve had

removed as a result of your grazing my ground. I question or I

wonder now if we do remove four million sheep in the United

States and we no longer graze some of the public ground, some of

the Forest Service ground, how are we going to control the $1.6 billion noxious weed backlog program that we already have just on

public ground if we don’t do it with your industry?

Mr. LITTLE. Well, the sheep are still there. There’s a tougher guy

than me that ended up with it, so he might be tougher to trade

with than I was.

Mr. OTTER. My point goes back to your point that there’s half a

billion in China and there’s four million in the United States, and

to the extent that those dropped even more. We have the tendency

to think of sheep as just producing meat and wool when they do

a lot more, and they do a lot more good for us and especially on

areas like public land. I just wanted to make that statement.

One of the problems that we’ve got in setting fixed rates and in

setting the exchange rate is the World Bank, which we subsidize,

and it seems to be we’re subsidizing ourself—and I served on the

19

Agricultural Advisory Committee for the World Bank for two years,

and we could not get them obviously to listen to our side, nor could

we get the foodstuffs, the food security for the United States—was

an advisory committee—I also served in—to get them to understand that we were actually subsidizing all these foreign producers.

When we hand out the billions to the people of food stamps, the

people that need it, they go into that grocery store and they buy

an item off that grocery store. It doesn’t say Produced in the

United States of America, so we end up subsidizing an awful lot

of these crops from other countries. In Albertson’s 67,000 square

feet, 44,000 items, to the extent that some of those are foreign produced and foreign commodities, our dollars through the Food

Stamp Program are actually subsidizing these foreign produces,

which is—and I don’t know how you sort that out, I really don’t.

It seems to me that the World Bank is part of the problem, but

yet the World Bank does an awful lot of good. It’s kind of like AID.

AID is—it causes a lot of problems in being able to sell our commodities around the world by going over and subsidizing, if you

will, through capitalization, farmers in other parts of the world to

compete against our farmers.

If we were, what would it look like? Who should control this on

the exchange rate? I tell you right now, the Banking Committee

can’t control it. I think they would like to, but they can’t control

that, because if—unless you take all your money back and all your

support away from the World Bank.

Mr. LITTLE. Well, Mr. Chairman, there are things that the Treasury Department can do to narrow up that gap, that exchange rate.

They have done, you know—well, look what Japan is doing every

day to try and keep the value of their dollar, their yen, low, and

it would be worse, but then you go through that washout, and you

go through that washout and things will equalize.

As far as trade promotion authority if the commodities are close,

we’re going to be able to compete market-wise, so if we get the exchange rates close, then—and get those big discrepancies out of

there, then they’ll buy our product because it’s the best product

and reasonably priced. Right now, they’re not buying our product

because it’s so high-priced. That’s the problem.

The problem with the exchange rate is there’s so much debt in

the United States, we’ve got to have that foreign money to come

in and augment our debt. One thing about it, you can’t wipe out

that debt. It’s a big problem.

That’s why I left the sheep industry: I don’t see any solution to

it. Because I can compete on the cattle deal on the world market,

I can compete on the dairy, I can’t compete on the grain deal but

the USDA helps me out there, but the sheep deal, the discrepancy

is so wide I don’t see—that’s why I left is—and the fact that we’re

a minor crop and I know we’re going to get out traded.

Mr. OTTER. Pat, and the whole panel, I’m going to get back on

trade here with my remaining time because I think it’s terribly important. Pat, I want to remind you of a trip that we took to Argentina and Chile and Brazil. When we hit Argentina, we had a problem getting Idaho cherries into Chile.

Senator CRAPO. There’s your time.

20

Mr. OTTER. One of it was because—and we sat at that table and

said, Now listen, why won’t you adopt for Idaho cherries the brown

sugar test on the—what was it, the fly or the worm or the larva

that was inside the cherry and they have a brown sugar test, and

we sat right there and got the deal done because we had the authority. You were there, I was there, and we had the cherry guy

there.

One of the things that I’ve been trying to promote in House Resolution 3005 is that when our USTR people do sit there at the

table—and I’ve talked to Ann Veneman about this and I talked to

Huntsman about it in the USTR Office—is that I want a commodity person at the table when they’re negotiating these agreements,

because quite frankly—and I’ve got a lot of faith in Veneman and

Huntsman, but the people they put on are trade specialists, they’re

not agricultural specialists, and that really concerns me that we’ve

got somebody that sits there that eats potatoes and think they

know everything about potatoes and are willing to go back on the

basis of that knowledge.

If I came to a day and I could fashion a USTR final package, it

would be that they never negotiate a agreement without a commodity person. Maybe it’s the executive director of your national association, but we’ve got to have our voice at the table so that we

know what all of the nuances and considerations and passions that

go into these agreements.

I guess that was more of a statement.

Senator CRAPO. I’ll agree with you. Well, because of time, we’re

going to conclude with this panel. We have other questions—at

least I do; I would suspect that Butch does, and if you all don’t

mind, we might submit some questions to you in writing to ask if

you would just supplement the record with them at some point.

We’d like to thank you all for coming. Your input today and in the

past and I know we will receive in the future has been and will

continue to be very helpful to this committee.

Thank you very much.

Senator CRAPO. Our second panel is Perry Meuleman, sugar beet

grower—and come on up as I call your name; Evan Hayes, wheat

grower; Clark Kauffman, a barley grower; and Jim Evans, a pea

and lentil grower.

Before we begin this panel, I mentioned earlier that Senator

Craig and Representative Simpson could not be here. I’ve just been

notified that they do have some of their staff here. Ken Burgess

and Mike Matthews are here for Senator Larry Craig, and Charlie

Barnes is here for Representative Mike Simpson, so we appreciate

them being here with us.

Perry, why don’t you begin.

STATEMENT OF PERRY MEULEMAN, PRESIDENT, IDAHO

SUGARBEET GROWERS ASSOCIATION

Mr. MEULEMAN. Thank you, Senator Crapo.

My name is Perry Meuleman. I’m a third-generation Idaho farmer in Nampa. I operate our family farm that was homesteaded in

1904. I farm 560 acres of irrigated land on which I grow sugar

beets, alfalfa, and small grains. I presently serve as president of

21

the Idaho Sugarbeet Growers, and treasurer of the American Sugarbeet Growers Associations.

Today, I’m representing over 775 farm families who raise over

175,000 acres of sugar beets in Idaho. In addition to their land and

specialized equipment, our growers have a direct investment in our

cooperatively owned sugar processing company. Senator, I know

that you are very aware of the issues facing this Idaho sugar beet

industry and have been working hard to help resolve our problems.

Want to publicly thank you and your staff for all the support and

hard work you have done for us.

In preface to my comments on the proposal of the sugar policy

of the new Farm Bill, I’d like to re-emphasize three basic points:

First, the U.S. sugar industry is efficient and globally competitive. Beet sugar produced in the U.S. is the second lowest cost

among sugar producers worldwide.

Second, the world sugar market is a dump market. The price of

sugar on the world market does not reflect its cost of production.

Sugar policy in the U.S. has been a proper response to the predatory trade practices of other nations.

Third, lower sugar prices are not passed on to consumers. Over

and over, this fact has borne out. Low prices for farmers mean

higher profits for big commercial users of sugar and not lower

prices for consumers.

American sugar producers, including Idaho sugar beet growers,

are in a crisis. We face economic, domestic policy, and trade policy

crises that profoundly threaten our existence. Producer prices for

sugar began falling in 1997 and 1998, and plummeted in 1999 and

2000. Last year, for the first time in nearly two decades, sugar producers forfeited a sitting quantity of sugar to the government. The

government is no longer able to limit sugar imports sufficiently to

support prices and avoid sugar loan forfeitures. Barring resolution

of the import problems with Mexico, no domestic policy solution for

the U.S. sugar will work.

The policy that we recommend has four basic elements:

One, continuation of a nonrecourse loan program with wheat and

sugar cane loan rates increased.

Two, retention of the Secretary’s authority to limit imports under

the tariff rate quota system consistent with WTO and NAFTA import requirements.

Operation of the program at little or preferably no cost to the

government.

Four, an inventory management mechanism administered by the

government to balance domestic sugar markets with domestic demand and import requirements, and provide stable market prices

at a level sufficient to avoid sugar loan forfeitures.

The Farm Security Act approved by the House on October the

5th includes most of the sugar provisions that we would like to see

in any Farm Bill. We are generally pleased with its structure and

only add a few changes to fine-tune it and bring it into greater

alignment with the industry recommendations. They are:

A, do not renew the one-cent forfeiture penalty.

B, renew the grower bankruptcy provisions similar to those contained in the 1985 Farm Bill.

22

C, revise the minimum grower payment for sugar beets so that

it shall not exceed the rate of payment provided under contracts

negotiated by the sugar beet growers with processors.

D, clarify the methodology to be used by the Secretary to divide

the beet allocations to individual companies and the transferability

of all allocations.

Increase the loan rate.

We have also been asked to respond to Senator Lugar’s farm bill

proposal. We strongly oppose this proposal for the following reasons:

One, the bill does not recognize the need to maintain a viable

sugar processing industry. Without a processor, growers are out of

business.

The bill is antifarmer cooperative. By driving wholesale prices

substantially lower, more money from the market will have to be

kept by the cooperative to cover costs to survive, leaving virtually

no returns to the grower.

The banking industry would avoid investment in our industry because of substantial higher risk and lower return.

Prices for sugar—prices for sugar farmers have been at 20-year

lows for three of the last five years, and growers received no direct

government payment or assistance for those losses during that

time. Using the last five years of average gross farm revenue to

calculate the producers’ annual voucher value would set government income transfers at levels that will not sustain producers.

Five, the proposal unilaterally disarms U.S. producers against

unfair foreign trade practices.

The proposal would eliminate leverage that can be used to force

other countries to reform or eliminate their unfair trade practices

that distort the world market.

In conclusion, thank you very much for convening this timely

hearing and providing opportunity to present testimony.

Senator CRAPO. Thank you very much, Perry.

Evan.

STATEMENT OF EVAN HAYES, WHEAT GROWER, ON BEHALF

OF DUANE GRANT, PRESIDENT, IDAHO GRAIN PRODUCERS

ASSOCIATION

Mr. HAYES. I’m Evan Hayes. I’m a barley producer from Soda

Springs, Idaho. I’m reading the testimony for President Duane

Grant, president of the Idaho Grain Producers Association. Duane

would like to apologize for not being here: He had a death in the

family and he’s at the funeral today.

Thank you for organizing this hearing and for the opportunity to

provide our comments on what Idaho’s wheat and barley growers

would like to see included in the next Farm Bill.

The Idaho Grain Producers Association maintains a membership

organization in each of the 24 largest grain-producing counties in

Idaho. IGPA is the only grass-roots voluntary membership organization in Idaho whose sole purpose is to develop policy and represent the needs of the Idaho wheat and barley farmers. IGPA is

active both in the National Association of Wheat Growers and the

National Barley Growers Association.

23

Senator we’ve been busy doing our homework for the past three

years, holding meeting after meeting with members, hammering

out agreement on what is required for Idaho wheat and barley producers to survive and prosper under the new Farm Bill. The position and views I express here today are the fruit of this long debate. IGPA, along with NAWG and with the National Barley Growers Association, have presented the same information at official

hearings in both the U.S. Senate and the U.S. House of Representatives.

Under the farm policy part of it, I would begin by saying we

must elevate the discussion and importance of this new Farm bill

to be included as part of the nation’s renewed focus on security.

The ability of our farmers to produce safe, abundant food for the

U.S. and our trading partners is of paramount importance to the

security and state stability of our citizens and our global friends.

Full care and precaution should be taken in writing the new Farm

bill so that we do not jeopardize the ability of our nation’s farmers

to supply our food.

Senator Crapo, we will use our limited time to present comments

on just three aspects of the Farm Bill, the first being the commodity title. ‘‘A’’ under that is the decoupled fixed payments.

IGPA believes that decoupled fixed payments for traditional farm

program crops must continue as part of the next Farm Bill. These

decoupled payments are treated favorably under WTO rules, and

more importantly, provide a much-needed measure of financial stability to producers. IGPA has endorsed the fixed payment schedule

suggested by the NAWG’s farm bill proposal. For wheat growers,

this fixed payment would be set at 64 cents a bushel, and for barley at 27 cents a bushel.

Under B, wheat loan rate, the commodity-specific marketing loan

program has served producers well under the 1996 Farm Bill, enabling producers to obtain much-needed liquidity during the marketing season; however, the caps placed for budgetary reasons on loan

rates under the 1996 Farm bill are too low, in many cases not covering cash expenditures for producers. In order to provide greater

liquidity to producers during the marketing season, IGPA supports

an increase in the wheat loan rate floor to $2.85 a bushel.

Under the barley loan rate, barley producers in Idaho and the

U.S. have been especially disadvantaged under the 1996 Farm bill

because our barley loan rate has been tied to corn. This artificial

lowering of the value of barley has resulted in a shift by producers

away from planting the crop. IGPA, the Idaho Barley Commission,

and the National Barley Growers all support a loan rate for barley

that is calculated by using the same formula as for other crops. The

rate should be 85 percent of the Olympic average barley price for

the previous five years, with a floor of $2.04 a bushel. Without this

change, U.S. barley production will continue to decline.

Countercyclical support system. The IGPA, NAWG, and National

Barley all support the development of a countercyclical support system to provide stability to producers in times of serious depressed

prices. We propose using $4.25 a bushel as a support level for

wheat, and 72 cents for barley.

24

Under planning flexibility, IGPA, NAWG, and National Barley

continue to support the planning flexibility that is included in the

1996 Farm Bill.

Under the conservation side of it, IGPA opposes Farm bill proposals that convert traditional program support payments into conservation payments as proposed by the Senate. IGPA policy supports conservation programs like the program you have proposed,

which is very close to the proposal in the House bill.

Senator Crapo, Congressman Otter, we certainly appreciate the

opportunity that we’ve had today to come and visit with you. You

have our full testimony in the written testimony. The only thing I

would like to add to make special emphasis to, if it is at all possible

for us to complete this Farm bill in this year, it would certainly be

advantageous to the agricultural industry of Idaho.

Thank you.

Senator CRAPO. Thank you very much, and we understand that

too. Clark.

STATEMENT OF CLARK KAUFFMAN, CHAIRMAN, IDAHO

BARLEY COMMISSION

Mr. KAUFFMAN. Senator Crapo, Representative Otter, it’s a pleasure to be here today and provide this Idaho Barley perspective on

the new farm Federal legislation.

My name is Clark Kauffman. I farm in Twin Falls County. I

grow barley, hay, alfalfa seed, beans, sugar beets, and sweet corn.

I also currently serve as chairman of the Idaho Barley Commission,

an organization that represents nearly 5,000 barley producers in

research, market development, grower education, and policy formulation. We are also members of the National Barley Growers Association.

US barley harvested acres have plummeted 18 percent this year

to under five million acres, the lowest in 50 years. I guess our message today is simple: U.S. barley is fast becoming an endangered

crop. With acreage steadily declining in the past 15 years from 13

million acres to less than five million today, this is largely the result of inequitable Federal farm supports that favor competing

crops in our traditional northern growing regions, and today we’d

like to invite you to help us restore equity to the Federal Barley

Farm Program, specifically in the Marketing Assistance Loan Program.

Modification of the Marketing Loan Program is the top priority

of the National Barley Growers Association for very good and

transparent reasons. Without these adjustments, Federal farm programs will continue to provide economic incentives to shift barley

acreage into wheat in the Western United States, and into corn

and soybeans and other oilseed crops in the Northern Plains.

The National Barley Growers Association has proposed a simple

solution, as Evan said. The barley rate should be decoupled from

corn. Instead, it should be based on 85 percent of the most recent

5-year Olympic average of USDA’s all-barley price. We believe this

is the simplest and fairest way to put barley on the same footing

as other grain crops, and will go a long way in removing the current planting disincentives that are crippling the U.S. barley production.

25

I guess the main point I want to state today is that it is both

inappropriate and unfair to continue to base the barley marketing

loan rate on barley’s feed value in relationship to corn. The reason

for this is because barley is a food crop as well as a feed crop. In

fact, more than half of the U.S. barley crop is expected to move into

malt and food channels, and this higher value is totally ignored by

the barley loan rate formula that we have now. Recognizing the

true market value of barley, however, should not be an excuse to

create a separate rate for malting and feed barley. Such a twotiered rate system would be totally unworkable and is not required

of any other program crop.

National Barley Growers Association urges a marketing loan

floor be established at $2.04 a bushel, and urges the committee to

adjust that rate upward appropriately if other rates are rebalanced

in the new Farm Bill.

Unfortunately, the House-passed Farm Security Act of 2001

didn’t take these necessary adjustments—didn’t make these necessary adjustments—in the barley loan rate, and, in fact, we think

they took a step in the wrong direction by establishing a separate

loan rate for feed barley and malting barley. We urge the Senate

Ag Committee to take immediate steps to modify the barley loan

rate provision.

Finally, we urge the Senate Ag Committee to establish a new

Marketing Loan Assistance Program for peas and lentils also.

On trade promotion tools, we strongly support the provisions in

the House bill to boost the funding authorization for both the Market Access Program and the Foreign Market Development Program. We’d like to encourage the committee to go one step further

though and make sure that the funds that are authorized for the

Export Enhancement Program but which remain unused during

the course of the Federal fiscal year be redirected to other useful

export programs. These could include the MAP and the FMD programs, as well as specific tools such as the Quality Samples Program. We’d like to urge you to include specific language directing

the Secretary to transfer unused EEP funds midway through the

Federal fiscal year to other appropriate Green-box type export programs that will help move U.S. grains and oilseeds into world markets, including all grains and oilseed crops and their products. We

would welcome the opportunity to work with you on specific language that would enable us to work—put these funds to work for

U.S. grain farmers, handlers, and exporters in this great country.

In summary, the barley producers support the continuation of

the Market Loan Assistance Program but at a more equitable rate

for barley and decoupled from corn, the continuation of fixed decoupled payments, and the development of a countercyclical program

similar to the House-passed bill.

I want to thank you for the opportunity to bring this testimony

to you today.

Senator CRAPO. Thank you very much, Clark. Good timing.

Jim.

26

STATEMENT OF JIM EVANS, CHAIRMAN, USA DRY PEA &

LENTIL COUNCIL

Mr. EVANS. Thank you, Senator Crapo and Representative Otter,

for the opportunity—— Senator CRAPO. Pull that microphone a little bit closer.

Mr. EVANS. Excuse me. I want to thank you for the opportunity

to speak today, both Senator Crapo and Representative Otter.

My name is Jim Evans. I’m a fourth-generation dryland farmer

from Genesee, Idaho. I produce wheat, barley, dry peas, lentils, and

chickpeas on my farm. I am the chairman of the USA Dry Pea and

Lentil Council Grower Division, and it is an honor for me to

present this statement on behalf of the nation’s dry pea, lentil, and

chickpea industry.

My statement today is the reflection of the Council’s desire to be

included as a full and equal program crop in the 2002 Farm Bill.

Dried peas, lentils, and chickpeas—pulse crops—should be treated

equitably and included for eligibility in the continuation of the

Marketing Loan Program and production flexibility contracts, as

well as any new countercyclical or conservation-based programs.

Dry peas and lentils are facing historically low prices. Since

1996, dry pea prices have dropped 49 percent, lentil prices 42 percent, and chickpeas 25 percent. This dramatic price decline has

forced farmers to shift acreages into program crops that have a

safety net, such as wheat and oilseeds. Production of dried peas,

lentils, and chickpeas will continue to decline if these crops are not

included in the 2002 Farm Bill.

Planting flexibility. One of the positive outcomes of the 1996

FAIR Act was increased planting flexibility. The Council fought

hard to include dry peas and lentils as an eligible crop under the

1996 Farm Bill. We asked to be included as an eligible crop because we believed that farmers needed to have planting flexibility

to respond to market signals and maintain a good crop rotation.

Our crops are subject to the same price volatility as program crops,

but without the safety net to assist us when times are rough.

Acreage shift. We estimate that our industry pumps over $100

million into the rural economy of the Pacific Northwest. The dry

pea and lentil and chickpea industry competes with spring wheat,

spring barley, and spring canola for acreage. The table below shows

that our industry is losing the fight for acreage in the Pacific

Northwest. Since the 1996 Farm Bill, acreage has shifted to spring

wheat and canola, and the Pacific Northwest has increased the

loan deficiency payments by over $3 million. Prices are low for all

of these commodities. The difference is our industry does not have

a safety net in periods of low prices. The importance of establishing

a safety net for our crops is critical to the short- and long-term

health of the entire dry pea and lentil and chickpea infrastructure.

Operating loans for pulses. Agriculture loan officers across the

state are encouraging farmers to cover their risk by planting program crops. Many growers are reporting that bankers are refusing

to loan money to plant dry peas or lentils because it does not have

a Marketing Loan/LDP Program.

Recommendations. The U.S. Dry Pea and Lentil Council supports

the inclusion of a Nonrecourse Marketing Assisted Loan Program

for dried peas and also chickpeas in the next Farm Bill. The marVerDate 11-MAY-2000 14:50 Mar 31, 2003 Jkt 085328 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 85328.TXT SAG1 PsN: SAG1
27

keting loan for these legumes should be equivalent to the other

crops in the program. Based on current loan rates, we support Senate Bill 977, co-sponsored by Senator Craig, Senator Crapo, and

other senators across the northern tier.

Loan deficiency payment. Establishment of the Market Loan/

Loan Deficiency Payment will allow growers to respond to market

conditions while taking into consideration a sustainable crop rotation. Without a Pulse Marketing Loan/LDP Program, acres will

continue to shift out of legumes because it does not provide a safety

net in periods of low prices. The Council estimates the cost of an

LDP Program to be about eight and a half million dollars.

AMTA payments. The USA Dry Pea and Lentil Council supports

being included and treated equally with other program commodities in a continuation or reformulation of AMTA-type payments in

the next Farm Bill. The Council recommends that the next Farm

bill include guaranteed payment for dried peas and lentils and

chickpeas equal to the value of these commodities compared to

other commodities receiving an AMTA payment. We support the

1999 AMTA payment as a baseline.

Countercyclical programs. The Council supports the concept of a

countercyclical program. If Congress decides to pursue this form of

payments, the Council recommends that dried pea and lentils,

chickpea farmers, be included and treated equitably with other

crops in this program. If we use the House Countercyclical Program as a model, we recommend that target prices be set at the

following rates: Wheat, target price of $4.04 a bushel, on the average of 1996 to 2000 marketing years.

Conservation Title. Pulse crops provide an excellent rotation crop

for wheat, barley, and minor oilseeds. The plants fix nitrogen in

the soil and help with weed management, and break disease cycles

in cereal grains like scab and foot rot. Field burning has become

a major issue in the Pacific Northwest, and with the continuation

of planting more cereal crops, field burning is increasing in the Pacific Northwest.

In conclusion, I’d like to say that we support the National Wheat

Growers Association to improve wheat and barley loans. Our organization joins with them in support of a floor rate of 2.85 per bushel and a loan rate for barley based on $2.04 a bushel.

In closing, I want to say we need to get peas and lentils and

chickpeas included in the 2002 Farm bill to give us a good rotation

and good farming practices.

Thank you for your time.

Senator CRAPO. Thank you very much, Jim.

We’ll start the questions this time with Representative Otter.

Mr. OTTER. Thank you very much, Mr. Chairman.

I want to thank the panel for being here this morning. It has

been an educational process for me, especially in the dry pea and

lentil and chickpea industry. Although I’m familiar with it, I’ve

never produced those crops or never dealt with them directly. I do

have a couple of questions, and if anybody on the panel feels like

they want to put some input to this—— Perry, you said your No. 3, or ‘‘C,’’ I guess I should say, was that

the support payments not exceed the sugar beet price negotiated

between the growers’ association and the processor. Explain to me

28

what you meant by that. Do we have—maybe I should ask, do we

have a situation where the government support payments have

gone over what the negotiated price was?

Mr. MEULEMAN. Yes, on what the processors borrow the money

through the CCC at a certain rate, and if you set a limit over what

they can borrow, then they have to go elsewhere. It just puts the

added burden on the financial part end of it, and we just feel like

that’s an added burden that we can’t have right now.

Mr. OTTER. I see.

Clark, in the barley, do you have that same problem in the barley?

Mr. KAUFFMAN. I don’t think so.

Mr. OTTER. In other words, if we satisfied Perry’s problem—if

there is a way to satisfy that—if we satisfied it, do we cause a

problem then for the barley folks?

Mr. KAUFFMAN. I’m not sure I understand Perry’s problem.

Mr. OTTER. Well maybe I don’t either.

Mr. MEULEMAN. Well, maybe I don’t. Typically——

Mr. OTTER. Now we’re really in trouble: Nobody understands it.

Mr. MEULEMAN. Well, when they borrow the money to CC to

start with, you can only borrow money on crystalline sugar.

Mr. OTTER. I see.

Mr. MEULEMAN. You’ve got to have that in storage. At the start

of the season when the payments come due and, you know, October, November, that you haven’t got the sugar, the syrup, processed

in crystalline sugar to put enough of that under loan, so if they—

when the payments come out, if you have to pay more than what

you’ve got to be able to have in your storage tanks, it presents a

problem. That’s why we kind of would like to have it be able to borrow on syrup.

Mr. OTTER. Your price then is set on a partially processed commodity.

Mr. MEULEMAN. Yes.

Mr. OTTER. Your price would not be.

Mr. KAUFFMAN. That wouldn’t affect us, no.

Mr. OTTER. All right. Now I think I understand the problem.

Let me ask you a question on malt barley versus feed barley. Is

there a difference—tell me what it costs to grow an acre of malt

barley.

Mr. KAUFFMAN. I could tell you that——

Mr. OTTER. Let me tell you why I’m asking this question.

Mr. KAUFFMAN. Yes.

Mr. OTTER. If we’re talking about two different kinds of barley

and we’re setting the price different on two different, is that a reflection of the cost of production, or is that just a reflection of the

market forces?

Mr. KAUFFMAN. That’s a reflection of the market forces. The

thing you’ve got to remember, that the unfairness of the two-tiered

system is I grow malt barley, but if my barley is rejected, it’s feed

barley. You’ve got one commodity, the same input costs, just a different end value, market value, because it’s going for a different

use. The two-tiered system is a bad idea.

Mr. OTTER. OK. I understand that now.

29

Jim, what would your proposal for dried peas and lentils and

chickpeas look like? Would it look like the other commodity programs?

Mr. EVANS. Pretty much what we’ve gone over. We’ve went with

models on the countercyclical program to—off the House models.

We haven’t come up with our own specific proposals because we’re

not in a program with anything yet, so it’s kind of hard to come

up with our own specific ideas.

Mr. OTTER. What would your floor price be on those three commodities?

Mr. EVANS. Basically on the loan rates, we’re looking at $5.83 a

hundred for dried peas, and 11 cents a hundred for No. 3 lentils,

and 15 cents for large Kabuli chickpeas, and smaller Desi types

would be seven cents.

Mr. OTTER. OK. Thank you.

Thank you, Mr. Chairman.

Senator CRAPO. Thank you very much.

Let me start out by saying, Perry, with regard to your testimony

on the sugar program, as you know, we’ve been in one context or

another battling over the sugar program on a yearly basis for, well,

at least the last nine years since I’ve been in Congress and probably enter 20 years before that, and I assure you that we are working very hard to make certain that the U.S. sugar policy remains

strong and stable in whatever the Senate does do, and appreciate

the very helpful suggestions that you’ve made in terms of how it

can be improved; and that any actions that we take in the Senate

should be aware that we, one—I know you are aware, but we’re

working closely with the U.S. Trade Representative and Department of Commerce to make sure that they adequately protect us

in the predatory things that we’re seeing come out of Canada and

Mexico right now. I appreciate the very excellent testimony you

provide, and I just want to tell you that it’s been heard in the Senate and we’re advocating that.

Mr. MEULEMAN. One added on there that the Craig-Breaux Bill

I think is essential——

Senator CRAPO. Yes, I agree with you.

Mr. MEULEMAN [continuing]. To stop circumvention of the sugar.

Senator CRAPO. Yes. That’s the molasses.

Mr. MEULEMAN. Yes, the molasses. I feel like we don’t have the

legislation, but somebody will figure out how to go around it.

Senator CRAPO. Right. I just want to ask a couple of questions

with my remaining time to anybody on the panel who would like

to respond.

The dynamic we face right now is that the administration has rejected the general approach of the House bill by saying that they

think our existing commodity programs distort markets too much

and don’t give the needed help to the right places in the agriculture

community, and they have some other objections as well. In the

Senate there are those, as you know—Senator Lugar, for example—who share that perspective and who has, himself, put out a

proposal which phases out the commodity programs.

I’d just like to know what the perspective is for those of you on

the panel with regard to that entire issue. Should we try to stick

with—do you think that our best objective here should be to try to

30

stick with the existing programs and maybe try to refine a little

better, get the dollars where they need to be in a little better way;

or should we try to start thinking outside the box to see if there

is a better approach to getting the resources where they need to

get? Anybody have an opinion there? Evan.

Mr. HAYES. Oh, I certainly would support the program passed by

the House, the three-legged-stool approach of fixed payment to loan

rate and countercyclical. This year, I could give you a personal experience.

I did take revenue assurance insurance on my farm. Dry year,

you know, I thought that was going to be a necessary item. We had

an unusually good crop for the weather that we had; however, just

before harvest, we had a hailstorm, and none of my farms north

of Soda Springs was spared without having hail. I thought probably

out of my pocket, probably about $40,000 out of that crop came out

of my pocket to a loss; however, the insurance coverage that I had

did not pay a dime, because of the fact that the crop was a fairly

good crop. It was above—still above my average yield.

Now, under thinking outside the box, are these coverages covering the real crop that we have, or are they simply trying to cover

the bases? I understand with the problems that we have with the

people molding the rules to fit themselves it’s difficult to do, but

from the producer perspective, you know, we need to be insured for

what we produce. In other words, going back to the three-legged

approach, the AMFA ends up in our pocket and we keep it. The

countercyclical is a downside coverage. The loan gives liquidity.

That’s why we support the NAWG proposal, or the three-legged approach, so completely.

Senator CRAPO. Thank you. Anybody disagree with that or have

a different perspective on the panel?

I do want to just say to both Clark and Jim that your testimony

as well—and, Evan, we’ve been working very closely with the

NAWG proposal and I understand that very well. I do agree and

I assume Representative Otter doesn’t have any beef with it either,

the problem, the issue, of including barley and including the other

crops that we need to include to make sure that we aren’t essentially driving production from one area to another and not achieving the objectives that we want to achieve in our farm policy.

Let me just ask each of you the question I asked the other panel

with regard to trade promotion authority. I won’t go through the

whole routine——

I guess I got my question started before the time ran out, so I

can toss it out there.

Mr. OTTER. You’re the Chairman.

Senator CRAPO. Yes, that’s correct. I’ve got the gavel. Right.

Is it time to give the administration trade promotion authority,

or should some of us who have those concerns about whether the

negotiators for the United States are truly going to do the job well

enough that we can relinquish Congressional oversight, were those

concerns valid? I’m interested in your perspectives on that, if any

of you have any.

Mr. MEULEMAN. Well, I think at this point in time, I can’t see

that we can give him the trade authority on the reason on our past

31

trade agreements. I think before we go in certain perimeters that

we’ve got to clean up the mess we’ve already got.

Senator CRAPO. Well, the sugar program is certainly evidence of

that.

Mr. MEULEMAN. Yes. The other thing I think very strongly of, I

think we, as American farmers, have been shortchanged from our

negotiators, and I think some of the negotiators really don’t understand what we, as farmers, need, and as well we can see now. At

this point, I think we’ve got to clean up the matter before we start

on a new one.

Senator CRAPO. Thank you. Any other answers and perspectives?

Yes, go ahead, Clark, and then Jim and then Evan, if you want to

continue, you can.

Mr. KAUFFMAN. I don’t disagree with Perry, other than the fact

that I think trade promotion authority should be granted. I like

what Congressman Otter said: Put a commodity person at the table

negotiating these. I don’t think if we don’t have trade policy authority, it’s going to be hard for the United States to exert its leadership in these policies. We need to remember that it’s just authority to negotiate trade, it’s not the final agreement. That always

comes back to the economy. As long as we have some guarantees

with the commodity person at the table to represent ag’s interest,

I think we should go ahead and grant the authority.

Senator CRAPO. OK, Jim.

Mr. EVANS. Our organization supports the TBA authority, but

the present administration came out at the summer’s recess and

said that farmers are better off than they were a year ago. That’s

not, in my particular business, it’s not true.

The way that the administration’s come out with their ag policies

that we haven’t seen, how could we endorse something that we

have no idea what their ideas are? Yesterday, President Bush came

out with his press conference that he should have TBA because the

previous presidents had it. There was no reasoning beyond that

to—I want to see more before I buy into it.

Senator CRAPO. I understand. Evan, if you have anything else to

add?

Mr. HAYES. I was just going to say I certainly second what your

feelings are on it that we can support it—didn’t say that we did,

but we can support it—as we watch the administration and we see

the direction that we want to go with it, and I think we just have

to be a little cautious about this one, a free hand.

Senator CRAPO. Thank you.

Did you want another round?

Mr. OTTER. I’ve just got a couple things, very short, Mr. Chairman.

Let me make it very clear in—and I was not successful as far as

the House, I have not been successful, and I am hoping that perhaps I can get me a champion in the Senate to include that. It’s

not unprecedented, because Mike Crapo and several others in the

Senate on the loan, on the moneys that we gave to the World Bank

to provide for moneys to go to Korea, we set a very important

precedent there on our relationship and on that agreement, and

none of that money could be used to bail out the high-tech chip industry in Korea. I’ve been told right now by the USTR that it’s

32

going to take about six and a half billion dollars in new money in

the chip industry in Korea in order to get Hynix back up and running. The only place they can—I don’t know of an investor that

would invest in a company—or, in an industry that’s already lost

$5 billion, is $11 billion in debt, and needs another six and a half

billion dollars in order to just get up and running. The only place

they can get that money happens to be the stopgap that Mike

Crapo—or, that Senator Crapo and his colleagues in the Senate put

in in that case. That’s frankly where I got my idea of putting a negotiation at the table. A trade agreement is a treaty and it’s a treaty that outlines the rules by which we’re going to engage in Congress, and that’s why it has to come back to the House—or, back

to the Congress.

It should not be unusual when we negotiate a treaty at the end

of embattlement we have the right kind of people sitting at that

table, saying we’re going to take care of nuclear waste here and

bioterrorism here, and all of the nuances that go into the final

package, the final agreement to bring peace, and I think that’s—

we ought to—we ought to duplicate that when we have a trade

agreement.

My trade agreement, Perry—and you’re the only one I’ve got to

work on here. I’m kidding.

Mr. MEULEMAN. I wanted to clarify one point here: I stated I

couldn’t approve it now until some of these conditions were met. I

didn’t state I never would.

Mr. OTTER. Yes. Senator Craig’s bill is fashioning a reasonable

approach to some of those problems that we’ve had in the past.

Quite frankly, I have to tell you that had I been a Congressman

in the 1990’s, I would not have given that administration—because

as Evan knows at least in serving on the House and chairman of

the Commodity Commission for the state of Idaho in trade and following NAFTA, GATT, and Canadian free trade and all the rest of

our efforts to engage in commerce from around the world and all

the problems we had, we could never get the administration to

budge on it. They wanted a cheap food policy in the United States

but they didn’t want to pay for it. They got the cheap food policy,

and you all paid for it and are continuing to pay for it.

I just want to make that point that on trade, I think it’s important that we know what the rules are, but that the people who

know the disciplines that’s needed know that all of the other nuances that approach these things, are setting at the table as well

and say that won’t work, so that when they do bring it back to

Congress—because we’ve got a lot of people in Congress that’s

never engaged in international trade, unfortunately, and they

would probably be willing to accept most of those packages carte

blanche. We need to set that in now, and I’m hoping that when the

Senate gets with it after we pass it—and I believe we will and I

believe it will be next week, but I don’t believe it will have the

Otter Amendment attached to it because I think we’ve got a closed

rule coming.

With that, I just wanted to make it clear where I was coming

from and why I was trying to establish that as a precedent, and

that I was actually using our high-tech agreement in the loan monVerDate 11-MAY-2000 14:50 Mar 31, 2003 Jkt 085328 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 85328.TXT SAG1 PsN: SAG1
33

eys that we provided to Korea as a predicate to the final trade

agreement.

Thank you, Mr. Chairman.

Senator CRAPO. Thank you. Let me just say I see this trade promotion authority as one of the most difficult decisions that we have

to make, and probably in the short term if we can get it to the floor

of the Senate as well for all the reasons it’s hard for every one of

the panelists to answer my question, because there are really good

reasons that we need to give the President trade promotion authority. But, in the end, if the President comes back to us with another

agreement like we’ve seen in the past, we will rue the day that we

ever put that on the floor of the Senate or the House because even

though we do get to vote on it, the reality is at that point it’s pretty

much a done deal. You know, we can’t change it and we pretty

much can’t stop it. I have been waiting for the time and trying to

create the time when we could have the confidence in the United

States Trade Negotiators and the Department of—Department of

Commerce that we could feel like we could give them that kind of

authority. I want them to have that kind of authority and I want

to vote for it, and I may vote for it, but I really struggle.

I do have to tell you I was in Seattle with the last effort to jump

start the WTO negotiations, and you all know the kind of riots and

everything that took place there. Following Seattle, there was a

tremendous amount of criticism of what went on there, saying that

it was a failure, and in some ways I think it was. Frankly, I think

that the administration came out and tried to insert some issues

into the negotiating process that caused a tremendous amount of

difficulty worldwide and so forth.

I felt there was one very dramatic element of success in Seattle

that was totally overlooked, and that was for the first time, in my

experience, the United States walked away from the table without

caving in. The reason, notwithstanding the riots and notwithstanding everything else, the reason we did not have a so-called success,

meaning that we didn’t come away from Seattle with a deal—was

because Europe and Japan and—the European Union and Japan—

walked away surprised that they hadn’t been able to get from the

United States what they had gotten every time in the past, and

that was concessions on agriculture that would give them the kind

of incredibly imbalanced trade negotiation postures that we’re now

dealing with in the United States. I was starting to feel that we

were getting to the point where the administration is setting a

track record and maybe we could trust these guys to stay tough.

Now we’ve got a new administration and we just haven’t had

enough of a new track record with the new people for me to feel

totally confident. On the other hand, I’m more confident in general

in this administration. I’m just kind of thinking out loud with you

about where I’m coming from and that’s why I’m asking this question, and I won’t go into it in as much detail in the future, but I’m

going to ask the other panelists today their perspective on it, because hopefully at some point we’re going to get a chance to vote

on it in the Senate.

Anyway, I don’t have any other questions. Do you have any other

questions?

Mr. OTTER. Get this machine.

34

Senator CRAPO. President Bush doesn’t allow cell phones in his

meetings.

[Laughter.]

Senator CRAPO. I can’t do that because I’ve got staff here with

cell phones and there are people all over here trying to conduct

business, which is what we do.

Anyway, I thank this panel, and I appreciate very much the attention and the advice that you have given this issue, and we will

seriously consider it.

Thank you.

Senator CRAPO. Our third panel is only going to be two people,

and that is Dennis Vander Stelt who is with the dairy industry,

and Eric Davis with the cattle industry. I suspect that this panel

will probably take us up to around noon, maybe before that. We

have planned a break at noon, and we actually have to do that for

a short period of time, like maybe a half hour, so for the fourth

panel I—just so you can get a feeling on timing, we might be able

to get at least the testimony of the fourth panel in before noon, it

just depends on how fast things go, and then do the questioning at

around 12:30 or so. Or we may just start the fourth panel right at

12:30, but I don’t think that we will be able to finish the fourth

panel before we have that break at noon that we are going to have

to take.

We’re going to take a very short break here while our court reporter changes paper.

[Recess.]

Senator CRAPO. OK. Dennis, would you like to begin?

STATEMENT OF DENNIS VANDER STELT, UNITED DAIRYMEN

OF IDAHO

Mr. VANDER STELT. Yes, thank you. Thank you, Senator Crapo,

Representative Otter, members of the Idaho delegation for holding

this hearing and inviting me here today.

My name is Dennis Vander Stelt, and my brother and I own and

operate a dairy farm in Kuna, Idaho. My testimony today is on behalf of the United Dairymen of Idaho. That’s a joint board of the

Idaho Dairy Products Commission and the Idaho Dairymen’s Association.

Dairy has now become the largest agricultural enterprise in

Idaho, and we have also been the fastest-growing dairy state in the

country. First, I’d like to say that my testimony today reflects a

need for government involvement in the dairy market to assure

long-term stability for producers, processors, retailers, and consumers alike. We are in a cash-intensive business producing a highly

perishable product. An adequate dairy producer safety net implemented fairly, and on a countercyclical basis, is critical for the survival of our dairy families.

The key element of a dairy producer’s safety is the Dairy Price

Support Program. United Dairymen of Idaho supports a long-term

extension of the Dairy Price Support Program at 9.90 a hundred

weight for the duration of the next Farm Bill. Experience has

taught us that the 9.90 support price is the right level to provide

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35

lating overproduction. No other proposal for a dairy producer’s safety net that we have seen to date offers both of these advantages.

If I could refer you to the charts on Appendix A, maybe you can

better understand the problem we face as producers.

Due to better management, genetics, et cetera, production per

cow has risen 21 percent over 10 years.

The next chart shows a total production increase of 14 percent

over those same years, which is approximately what consumption

of dairy products has increased.

In order to balance the supply that can grow faster than demand,

Appendix B shows that it has required a reduction in milk cows,

which, in turn, reduce dairy producer numbers.

The bottom line is that we will either have to increase sales of

dairy products faster, or continue to reduce cow numbers and dairy

farmers.

With this market dynamic, Idaho is still growing at a brisk pace.

The last Farm bill required a major overhaul of the Federal milk

marketing order system, and that work was only completed last

year. With the Class IV powder correction made by Secretary

Veneman this past June, we feel that this program is good for

Idaho.

I need to make a correction. There was a lawsuit under the Federal milk marketing order yet that was still pertaining to that.

USDA came out either yesterday or day before yesterday with a

recommended final rule. Our dispute was over the butter formula

in the Class III cheese, and USDA’s correction to that will probably

increase producer pay prices on cheese in Idaho by about 25 cents

per hundred weight in the future. We are very happy with that.

OK, a critical factor in helping make the Dairy Price Support

Program work, however, is recognizing that U.S. dairy producers

are being disadvantaged by low-cost, often-subsidized, imported

products in the form of milk protein concentrate. These imports increase the amount of product the Commodity Credit Corporation

must purchase by displacing domestically produced nonfat dry milk

powder. United Dairymen of Idaho encourages the committee to

support Senate Bill 847, which would establish tariff rates and

quotas for imported MPC. This legislation is very generous in the

amount of product that could come into the country with no tariff,

because nonfat powder cannot substitute in every application.

The legislation is also consistent with our commitments under

international trade agreements. MPC is simply a product, but for

all intents and purposes did not exist when those trade agreements

were negotiated. Enacting tariff rate quotas for products that were

not anticipated in trade negotiations is entirely fair, and fairness

to U.S. dairy producers is what S. 847 is all about.

Industry experience shows that—a 600-percent increase in imported MPC over the past six years. Even worse, however, is that

MPC came into this country at its highest rate in the year 2000.

U.S. producers saw the lowest milk prices in two decades. Undoubtedly, those unrestricted imports contributed to lower milk

prices here, kept them lower for a longer period of time, and resulted in increased purchases of nonfat powder by the CCC. To

solve this situation where producers and taxpayers both lose, simply agree to play fair with us and pass Senate Bill 847.

36

United Dairymen of Idaho also want to go on record in strong

support of continuing the Dairy Export Incentive Program, Beef

Program, and increase in Market Access Program funding to help

us do a better job of increasing consumption.

In the animal health area, we would appreciate your full support

of the Johne’s Program. Also, the EQIP Program.

Is my time up?

Mr. LANCASTER. Yes, sir.

Mr. VANDER STELT. If you have any questions, I’d like to help

you out.

Senator CRAPO. Thank you very much, Dennis.

Eric.

STATEMENT OF ERIC DAVIS, PAST PRESIDENT, IDAHO CATTLE

ASSOCIATION, CURRENT VICE PRESIDENT, NATIONAL

CATTLEMEN’S BEEF ASSOCIATION

Mr. DAVIS. Thank you, Senator Crapo, Representative Otter. Appreciate the opportunity to be here today. I’m kind of wearing two

hats today.

My name is Eric Davis, and I’m a rancher in a family operation,

cow-calf feedlot farming operation down in Bruneau, but today I’m

representing both the Idaho Cattle Association and the National

Cattlemen’s Beef Association in my testimony here. I had the opportunity earlier in the year to testify before the Committee on behalf of NCBA, so my introductory remarks will be, I hope, very

brief. Arlen might have to flag me down once I get going.

I again appreciate the opportunity to be here. I’m not as organized as I should be today, and so forgive me as I bounce around

a little bit.

In terms of the beef cattle industry in this country, I think our

position has been well known and hasn’t changed a lot over the

years regarding the commodity program part of the Farm Bill, the

various Farm Bills as they have come along. We believe firmly that

they should be as market-oriented as possible. Understand that

there have been problems in the past between commodities. I guess

our bottom line has been and remains today we feel that the last

Farm bill was an improvement over the one prior to it in terms of

removing some of those inequities, but again, our bottom line will

be that we don’t do anything in the commodity part of the programs or the commodity title that balances one segment of industry’s books against another. We don’t want to be hurt by the program, nor do we want other commodity producers to be hurt by

placing unfair advantages or disadvantages, one against the other.

With that said, we are keenly interested in and supportive of the

conservation title of this Farm bill as it was passed in the House,

and your efforts in the Senate, Senator Crapo, we greatly appreciate. We do think—and that’s detailed in the written testimony.

We strongly support doubling of the ag research funds to the 2.4

billion per year over the next five years, with a lot of that—well,

$350 million for an update of the Ames research center for

diagnostics and surveillance and whatnot. I think some of the

world situations that we’ve seen in the past year or last 10 years

that we’ve been preparing for indicate that we need to stay up to

speed in those areas.

37

We see a need for an overhaul of the EQIP Program so that it

works more efficiently at helping people implement those regulatory—helping us respond to regulatory programs that we are seeing come down the road more every day.

Also, especially dear to our ICA is we agree in the Livestock Assistance Program that the administration of those disaster programs need to make or look at a major overhaul to get those decisions more closer to the local level.

With that, before I get flagged out, Mr. Chairman, I’d be happy

to respond to questions, and sincerely appreciate being here today.

Senator CRAPO. Thank you very much, Eric.

Let me start out first with you, Dennis. You know, one of the

questions that we continuously deal with under the EQIP Program

is there are those in Washington who feel that the funds are going

to the corporate farm, so to speak, or that the small operators are

not getting the adequate mention under it. And, you know, we are

aware that—my understanding is that in Idaho, that the size of the

herds in the dairy industry is much larger than some of the limit

levels that are being discussed in Washington. Could you discuss

with me a little bit about what the—I don’t know if you know averages, but what the size of the operations in Idaho are that we are

dealing with?

Mr. VANDER STELT. Right now, the average dairy size is about

389 cows per dairy. Approximately. One of the problems that we

have with EQIP and most of these programs is, as you say, they

are geared toward the smaller producer. Consequently, there’s caps

in the EQIP fund.

For instance, in my situation, we were milking about 700 cows

and looking at totally redoing our whole waste management system

under the Clean Water Act. I was looking at a project in excess of

$150,000. To justify that type of an expense, I expanded to 1,200

cows to make sense out of it. Where it’s capped and because of our

larger size dairies, yes, we need—if you’re going to help, the caps

for sure need to be either eliminated or increased.

Senator CRAPO. Your position would be to eliminate the caps?

Mr. VANDER STELT. Yes.

Senator CRAPO. Best solution will be to eliminate the caps, and

that way you can help all of the operators here in Idaho. I assume

what you’re saying is that you think the caps don’t really achieve

the objective that they’re seeking in the first place.

Mr. VANDER STELT. No, for most dairymen in Idaho with this

cap, they wouldn’t even bother to mess with it. They would do their

own entirely.

Senator CRAPO. All right. Do you have any suggestions at all—

if not, then just waive the question or whatever—but do you have

any suggestions at all as to a better way for us to price the Class

III milk that we’re currently using?

Mr. VANDER STELT. No. I am president of Western States Dairy

Producers Trade Association, which is the seven western states. We

hired an attorney to present testimony at the hearing in Virginia

on Class III form pricing, spent a lot of time on this issue. The

truth of the matter is what we have under Federal milk marketing

orders where we have a deliberative process as in this process, we

have an attorney, you have a judge presiding, and testimony is

38

given under—and it is testimony that you swear an oath to tell the

truth. It’s a very deliberative process. That’s really important that

if you want to determine what your milk is worth based off of

cheese, you need a process like that that’s honest, it has a lot of

integrity, and it’s transparent.

I do believe we had some problems with as regards Idaho under

Federal milk marketing reform on the Class III issue. For the most

part, they have been resolved because of that deliberative process,

and I think at this point Idaho is looking very good and that’s why

we started to recommend that.

Senator CRAPO. Thank you.

Eric, let me ask you a question about the country of origin labeling issue. How does it work under the proposal that you’re supporting in terms of identifying beef that is American beef, basically? I

mean, isn’t there a question as to how you determine what qualifies and what doesn’t qualify?

Mr. DAVIS. Yes, Mr. Chairman, there is, and that’s a conundrum

that the industry is in and there is not widespread consensus within the industry. I’ll be the first to admit that.

Senator CRAPO. Well I’m glad to know that, because I’m sitting

here trying to figure it out myself and I’m not feeling so bad now,

but go ahead.

Mr. DAVIS. I would say that there is consensus from the consumer right to know standpoint to label our product as US-produced. There is consensus that that’s not a bad deal.

I—where the hang-up in the industry is—and my two-hat approach here today is going to get me in trouble right now, because

the two organizations I’m sitting here for have somewhat different

polices—comes down to the definition of what is U.S. beef, and

from the National Cattlemen’s perspective, that definition is different between a voluntary program and a mandatory program.

From the Idaho Cattlemen perspective, their definition is 90 days

or more in the U.S. would qualify as U.S. produced.

That is acceptable to other parts of the industry on a mandatory

basis, but on the voluntary program that we also have a policy in

support of, under strictly a voluntary system for fresh muscle cuts

and including all other meat products, not just beef, then we had,

well, that, and I think it’s going to hold consensus on born, raised,

and processed.

Senator CRAPO. Born, raised, and processed in the United States.

Mr. DAVIS. On a voluntary basis.

Senator CRAPO. All right.

Mr. DAVIS. The identification part of that, how to track that

through, frankly, I think that’s why—and I’m speaking as an individual now that’s watched that and been involved in it, not a policy

position from either one of the groups I’m representing—but the

ramifications of what we may do here in a mandatory program, I

don’t believe the industry is ready for it, personally. I don’t think

we’ve thought it through far enough in terms of whether we go beyond fresh muscle cuts and include ground beef. Our latest experience with the mandatory program that we ask for on mandatory

price reporting, if we don’t think this through very carefully before

we go mandatory, I’m afraid we might not get where we’re trying

to get. I personally would rather see us take the voluntary apVerDate 11-MAY-2000 14:50 Mar 31, 2003 Jkt 085328 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 85328.TXT SAG1 PsN: SAG1
39

proach at this point, let us work some of these bugs out, before we

jump into a mandatory system.

Senator CRAPO. All right. I have another couple of questions, but

my time is up and I’ll go to Representative Otter.

Mr. OTTER. Dennis, when I was growing up, we milked about 84

head of cows, nothing like, obviously, the operations are today. I

think our yield was probably around 52 pounds and about threeeight butterfat, because we mixed Jerseys and Guernseys in with

Holsteins. The Holsteins gave us the volume.

Mr. VANDER STELT. Right.

Mr. OTTER. The Jerseys and Guernseys gave us the butterfat.

What is the per-cow—I didn’t do the math; I should have done

the math myself—what is the per-cow production today?

Mr. VANDER STELT. In nationwide, it’s about 18,000-pound average, and in Idaho, it’s about 20,000-pound average.

Mr. OTTER. What would that be, 100—little over 100 pounds a

day?

Mr. VANDER STELT. No, it wouldn’t be that high. The national average would be on 18,000 pounds of milk probably 60 pounds of

production per day. Idaho’s average would be closer around 68, 67.

Mr. OTTER. I’m glad I didn’t try to do the math. I was really off.

What’s the butterfat content?

Mr. VANDER STELT. Oh, I generate around three-five, three-six,

but we run all Holsteins.

However, we are seeing because of Federal milk marketing order

reform and they no longer pay you for your nitrogen—you know,

like a urea-based nitrogen, not a protein nitrogen, there we go,

they have tests done, they discount not protein nitrogen—Jerseys

are coming back big time, because Holsteins do run a little higher.

Mr. OTTER. The reason I go to that question, because I also noticed that there are probably not very many 84-head dairies left.

Mr. VANDER STELT. Not a lot, no.

Mr. OTTER. Dennis, the last time we had tried to reduce the

herd, what we did was called the poor producers and then we

butchered them and gave them to Eric’s industry, more or less a

little competition. In an effort to settle one problem, we created disaster in the beef industry.

How would you propose that we would do it this time, because

if you mentioned a dairy—maybe you didn’t mention the term

‘‘dairy buyout,’’ but ‘‘reduction in herd size.’’ How would you propose that that be done without something similar to the disaster

that we had last time?

Mr. VANDER STELT. Actually, Representative Otter, what I was

saying is that the herd continues to decrease on a national basis

under Federal milk marketing orders.

When we did the buyout, there was approximately 11 million

dairy cows. Currently, there are 9,085,000. There has been just

about 20 percent reduction in dairy cows.

Mr. OTTER. What was the per-capita production, per-cow production, when we had the dairy buyout?

Mr. VANDER STELT. Probably around 15,000 or 50 pounds a cow

a day, 15,000-pound average.

Mr. OTTER. The rest of it then is importation?

40

Mr. VANDER STELT. Yes, we used to be, as you know, under dairy

under Section 22 where 2 percent of our market was open to imports. It was raised to 5 percent. I know from the mid nineties,

we’ve gone from about 2.8 million pounds milk equivalent imported

under that; now we’re up to five point—well, projections for this

year are somewhere around 5.3, 5.4 million pounds, but sitting

amount of increased milk. If you do the numbers on an 18,000-

pound herd—or, cow—you’re looking probably at 100—that displaced 120-, 130,000 cows a year.

Mr. OTTER. I see.

Eric, what are we killing a day, 130,000 head?

Mr. DAVIS. No way I’ve been doing that well, but we should be.

Mr. OTTER. Have we got a lot of overweight cattle?

Mr. DAVIS. We’ve got a front-end supply problem, yes.

Mr. OTTER. I did do the math quick and dirty on your 90 days.

It seems to me that if you had a 90-day animal and you locked

them up at a light weight, let’s say at six—a feeder, you locked

them up at 600 pounds and you’ve got three and a half pounds of

dag meat—which is not unusual, right—you need 107 days. Your

suggestion then, that they would be coming in actually off cow-calf

operations in foreign countries, they’d be coming in as light, light

feeders. Right?

Mr. DAVIS. In order to meet the requirement to be labeled as

U.S.-produced, yes.

Mr. OTTER. Is that a reasonable standard? I mean, what are the

cow-calf operators thinking about it? You’re a cow-calf.

Mr. DAVIS. I’m one of those too, but that’s Idaho’s position. There

are those who don’t think that’s strong enough. We hear it all the

time from different parts of the country and there’s a certain

amount of regionalization, and a lot of it goes back to trade and

their perception of whether it’s free and fair basically on the Canadian border. A lot of the people think it should be defined as ‘‘born

and raised,’’ but again, the consensus in the industry, and NCA has

policies supporting both mandatory or voluntary, ICA supports the

definition of ‘‘90 days or more.’’

Mr. OTTER. I have not been a supporter of the old country of origin standard, but because I can also see the problems that that

would cause in the retail business. It would really cause a lot of

not only in the retail business, but in the fast-food industry.

Mr. DAVIS. Food service.

Mr. OTTER. A lot of other industries. We try to solve one problem

in one place, we create all these other problems other places because we’re getting away from the market.

But, I have supported an idea of country of origin in that the

USDA not be allowed to stamp any carcass that comes in with the

USDA stamp. I think a lot of people get very confused when they

go to the grocery store and even though this carcass may have

come from Argentina——

I began my question ahead of the—— Senator CRAPO. You’ve got it.

Mr. OTTER [continuing]. Wouldn’t—if we did not allow the USDA

to use the USDA stamp on not only beef, but on any of the imported red meats, wouldn’t that then not be giving the wrong impression to anybody shopping at the grocery store when they see

41

the USDA seal on that portion of the carcass that is now for sale

in the meat counter?

When I see the USDA seal, I just make an assumption. That assumption is that it’s United States-produced beef. If we didn’t allow

USDA to use that seal on just any other meat, wouldn’t that at

least satisfy a lot of the country of origin problems?

Mr. DAVIS. It would to some degree, Congressman, but first off,

let me make the distinction between the inspection seal and the

grade seal, because it has to be inspected but it doesn’t have to

pack a USDA grade, and I think that’s the issue you’re getting to.

We have policy in both organizations that strongly supports the

repeal of the use of the USDA grade on imported carcasses. We

have a policy that would support not using the grade on cattle imported for immediate slaughter. We understand that that may

raise—what’s the term—‘‘national treatment issues’’ under WTO,

and actually have asked for Office of General Counsel—is that

right—opinion on the legality of not using the grade for cattle imported for immediate slaughter because of the way that the grading

law is written. It says that grading will be done at the plant of kill

and first chill. We think it’s a given that you can’t use it on imported carcasses, but we’re——

Mr. OTTER. That’s not the practice.

Mr. DAVIS. That is the major part of what’s coming into this

country.

Mr. OTTER. Let me just, in conclusion, that’s not the practice;

that may be our understanding of what goes on, but that’s not the

practice, is it?

Mr. DAVIS. Today.

Mr. OTTER. Yes.

Mr. DAVIS. We have petitioned USDA to stop that, but there is

a certain amount of that happening.

Mr. OTTER. Thank you, Mr. Chairman.

Senator CRAPO. Thank you.

Let me go back just quickly, Eric, to the question I was asking

you: You had indicated you personally—I don’t know if you were

speaking for either the NCBA or the Idaho Cattlemen—but that

you personally had some concern about whether we were ready for

a mandatory country of origin labeling requirement. Is that something that is the position of either of the organizations you’re representing here? In other words, are you—I’m hearing from you——

Mr. DAVIS. I’m crossing myself I think.

Senator CRAPO. Did I get you in trouble?

Mr. DAVIS. No, I’ll get myself in trouble.

NCBA has a policy supporting mandatory and also has a policy

supporting voluntary. ICA’s policy supports I believe it’s voluntary

with the 90 day. It may be mandatory, I’m sorry. I’m blank right

now. The hang-up is the definition of what is U.S. produced.

Senator CRAPO. What you’re saying is you don’t——

Mr. DAVIS. What I said personally, I meant personally, not either

organization. Personally, the lack of consensus in the industry on

the definition and what I fear to be a rush to judgment for maybe

the wrong reasons, I’m fearful—I don’t believe we’re ready to implement a mandatory system.

42

Senator CRAPO. All right. Let me switch gears a little bit and for

both of you go back into the areas that we’ve been talking about

with some of the other panels. First, trade promotion authority.

Like I promised, I won’t give my speech again, but do either of you

have an opinion on whether we should grant the President trade

promotion authority at this time?

Mr. VANDER STELT. I would not—as far as the dairy industry is

concerned, we believe in fair trade. However, as my father always

says, Don’t follow the rhetoric, follow the money. Who’s the

wealthiest man in this country? Mr. Wal-Mart. Why? They import

over 70 percent of their stuff. The money today is outsourcing and

importing cheap goods for the consumer. The consumer does well,

the stockholder does well.

Under that environment, trying to trade or sell with the strong

dollar which satisfies that stockholder, that consumer, is not really

very viable. Instead of talking free trade, we should be talking protection.

Now, I don’t like protection; I hate that word. I’d love to free

trade. Until the United States comes to a determination are we

going to be a consumer country or a producing country, that determination and that economic policy has to be done to make trade

work. Until you come to a conclusion what our country is going to

be about, is it going to be consuming or producing, that would depend on whether you’re going to be protecting as trade as far as

ag is concerned, or go back to the Nixon years with planning where

we were pushing agricultural products.

We want free trade and we don’t want to go to protectionism, but

as Mr. Little expressed earlier, with our strong dollar against New

Zealand and Australia, can we really come up with a better deal?

We’ve already lost from 2 percent to 5 percent, plus we’ve got the

MPC issue which brings in another couple percent. We’re losing

ground.

Everybody in the world wants the American consumer. He’s the

wealthiest person in the world. He’s got the most money. If I was

producing anyplace else in the world, I’d want a piece of that

American consumer, and that’s what we’re fighting.

Senator CRAPO. Eric.

Mr. DAVIS. Thank you, Mr. Chairman. Again, I have a two-billed

cap on this particular question.

Idaho Cattle Association’s position is very similar to yours. Until

some of the problems we see that confront the industry today are

taken care of, they oppose—the terminology is ‘‘fast track’’ but

today it’s ‘‘TPA’’ I guess, but in the policy, they oppose the fast

track until some of the last or the former mistakes have been fixed.

NCBA strongly supports granting the President trade promotion

authority, and the arguments I think are valid on everything that’s

been said here today.

I guess my question back to you, if I can answer a question with

a question, as I understand what I’ve heard today, you don’t have

a lot of faith that Congress would stop what agriculture may perceive as a bad deal if the President negotiated that or his people

did under fast track or TPA. That concerns me.

Senator CRAPO. I’ll answer that question, and the answer is, you

are correct. I don’t have a lot of confidence that Congress would be

43

able to stop a bad deal for agriculture. The reason I say that is the

experience we had with NAFTA where we clearly identified some

really bad pieces of the deal and the pressure to move NAFTA forward at the point when the deal was struck was overwhelming,

and I believe that the same would be true with regard to any other

agreement that the President might negotiate. There are a lot of

other pieces of the American industry than just agriculture. Agriculture is going to be the central focal point of this round of negotiations, but that is because a lot of us have drawn a line in the

sand and said, You’re not going to do another deal like last time.

Mr. DAVIS. We appreciate that, but can we do another deal at all

if we don’t move away from being stuck with what we’ve got?

Senator CRAPO. That’s the conundrum that we’re dealing with,

because there are really strong arguments on the side of giving the

President the authority to do this, and there’s a lot of good reasons

that we better get involved, you know, because other nations are

going to be doing it and all the reasons that I won’t go back into.

On the other hand, somehow we have to be sure that this administration, as well as the past administration, are prepared to stand

tough. You know, in Seattle, the European Union and Japan and

some of the other nations were flabbergasted that for the first time,

they were not able to walk out of the trade negotiation round and

basically have what I call this, you know, the U.S. agreeing—what

they wanted was for them to have their tariffs and subsidies which

average something like over ten times what ours are stay in place,

and have us leave ours at a place low and have us agree to pro

rata reductions so our average of 5 percent would go down to 4.5

percent and their average of 50 percent would go down to 45 percent. When our trade negotiators said, No, we’re working for parity,

the deal fell apart. Well, as long as we can be confident that our

negotiators are no longer going to basically agree to this, then I’m

fine with trade negotiation authority.

Mr. DAVIS. You get no argument out of me on that either; however, the best way to get there is where we need to go.

Senator CRAPO. Right. On the other side is we can’t just sit here

and not negotiate it, so it’s a really, really difficult question.

To give you a little more positive confidence there, as I said at

the outset, I am getting to where I am getting the confidence in our

negotiators. I was getting there with Charlene Barschesky under

President Clinton, and I think that Ambassador Zoellick has shown

to this point that he gets it. I’d like to see him in action a little

bit more before I’m sure, but at least from what he’s saying and

some of the other things like that, he’s showing that he gets it.

Maybe we’re at a point where we can do it.

Mr. OTTER. Just a couple things, Mr. Chairman.

Dennis, when I was still here as Lieutenant Governor, I know we

went through about three years where we really worked on the

high nitrates and the pollution problem, quote/unquote, that we

had with the larger the dairies, the bigger the problem got, the

more concentrated obviously the problem was. Is there anything in

this Farm bill that’s going to help solve that problem?

Mr. VANDER STELT. I think probably some of the dairies will use

some of the funding to increase their waste management systems;

however, in Idaho, we have, as far as I know and being president

44

of the Western States Group, we do a lot of comparing on environmental issues. The joint MOU we have with EPA, DEQ, Department of Ag, we pretty much have put ourselves on a zero runoff

standard anymore. I know I was just at a conference with the

Texas Association of Dairymen and their problems in Texas, Waco

Lake, and they could not even fathom how we had a zero runoff

standard in Idaho, and they said, That’s not possible. We do. As far

as Idaho solving our discharge, our nitric problems, we’ve probably

been the leader in the country in a proactive way.

Mr. OTTER. Thank you.

Eric, one other question, and of course this has to do with the

trading and where we’re going with it. Would you feel more comfortable if we did have our trade folks sitting at the table; that you,

representing the National Cattlemen’s Beef Association, were also

sitting at the table and could listen to the questions, could listen

to some of the solutions and the resolves that they were arriving

at? Would you feel a little more comfortable with that?

Mr. DAVIS. You bet. I would feel more comfortable with somebody

besides myself, but—— [Laughter.]

Mr. DAVIS [continuing]. But, yes, I think that’s a grand idea, and

if that’s part of what it takes to put that pressure on the administration, I think that’s a step in the right direction.

Mr. OTTER. Well, I would agree with Senator Crapo that there’s

not much we can do when it comes back, because the push is just

so great and we don’t want all the work and everything to go to

waste, so there’s 51 percent good and 49 percent bad and away we

go. All they need is 217 or 218 in the House and it’s gone, and they

need 51 in the Senate and it’s gone. We can condition the people

that sit at that table, and I think that is our best source of input

from a Congressional point of view that this is going to be a treaty,

and we can say who goes to discuss the treaty and I think if we

condition the whole concept of trade on who is going to be doing

the negotiating, and I’ve got a high level of comfort. Quite frankly,

Eric, I disagree with you: I’d like to have you at that table.

Thank you, Mr. Chairman.

Senator CRAPO. Thank you. You know, you mentioned John

Huntsman. I should tell you, he does have roots in Idaho, as one

of the other members of that team. I think his father is from Blackfoot, I believe.

Mr. OTTER. Blackfoot.

Senator CRAPO. There are some people on that team that have

some common sense developing in there, and I really do believe

that we’re getting a team together that we can start to have more

confidence in, it’s just that I want to see something first. I’d like

them to play the first game so we can see if they’re really as good

as they look.

I just have one other question that I’d like to go into and it gets

back to again a question that I’ve talked about with some of the

other panels, and that is the new dynamic that we’re facing right

now in Washington with regard to the fact that the administration

has opposed the House bill and is suggesting a whole new look at

commodity programs and safety nets and so forth, raises the question of is that perception something that is supported out here. In

45

that context, I also throw into my question Senator Lugar’s bill if

you know it very well or have a position on it. If either of you have

an opinion, I just appreciate you sharing it.

Do you believe that we should push for the House bill or something along the same model as the House bill, or should we look

at something like the Lugar Bill or some other approach to our

farm policy?

Mr. VANDER STELT. Last week when Senator Lugar’s draft version of his bill come out, I received a call from Carol DeMar from

Senator Lugar’s office. A conference call was set up with I believe

Texas, Idaho, California, and New Mexico were involved in that

conference call with Carol. We went over it as far as the dairy industry is concerned.

Some of the things that it presses for is an 80-percent, 5-year average of guaranteed income level. We can already do those things

and many people do through forward contracting either directly

through plants or we work futures. We already have those mechanisms.

They have a cap system here once again, and because of our larger-size dairies, we never get much benefit out of a capping system.

There was some other issues we discussed in there.

She took a poll at the end of that conference call, and it was

unanimous that we would probably not support that; that we would

prefer the Federal milk marketing system, which we really believe

was written to product producers.

Senator CRAPO. All right. Eric, do you have a thought on that?

Mr. DAVIS. I don’t. I have not seen Senator Lugar’s proposal; I’ve

heard bits and pieces.

The beef industry was not unhappy with the House version of

the bill in general, I think that’s safe to say.

At this point in time—and NCBA has signed on to the letter saying it’s OK to put it off till 2002, and that’s going to be the Senate’s

call. I think at this point in time, both from the State and National

organizational standpoints, it’s more—timing is probably not as important as knowing where we’re starting in the Senate—whether

it’s the House bill, whether it’s Mr. Harkin’s, whether it’s Mr.

Lugar’s, whether there’s something else out there—and nobody

have time to have a good delivery and process, and not just jump

into things that we haven’t already talked about I guess.

Senator CRAPO. Well let me just take that as a question and give

you this perspective on where we are in the Senate: There are a

number of senators who support the House version or something

along the House version; there are a number of senators who don’t

and support the administration’s perspective that we need to start

creating a new approach to farm policy, Senator Lugar being one

of those, and there are some who support his bill; and as you indicated, Senator Harkin is also working on some other approaches.

It is right now very hard to tell if there is a majority position in

the Senate on the Ag Committee, and it’s also very hard to tell

whether that would translate into a majority position on the Senate floor. Things are very much in the developmental stage in the

Senate right now. In fact, I think we were closer to being able to

bring something together six or eight weeks ago than we are now

46

in terms of knowing what the mood of the Senate Ag Committee

is.

Do you have any other questions?

Mr. OTTER. I would only say about that, Mr. Chairman, that it’s

been my impression thus far that if we wait until next year, if the

Senate waits until next year, you’re going to see an entirely different texture vote come out of the House. Budget restraints as a

result of the last six weeks are going to be huge in terms and

there’s no way that I could possibly conceive that a 2002 Agriculture Bill is going to be near as generous, even close to as generous, and is going to hurt in a lot of areas, including conservation

that we were just talking about and some of the other problems.

Senator CRAPO. I think that’s a very significant concern that a

lot of us share.

Mr. DAVIS. We too.

Mr. VANDER STELT. We also.

Senator CRAPO. All right. We would like to thank this panel very

much. We appreciate it.

Mr. DAVIS. Thank you, Mr. Chairman.

Mr. VANDER STELT. Thank you also, Mr. Chairman.

Senator CRAPO. We have one more panel; however, as I indicated

earlier, we must break at noon for about 30 minutes, so I apologize

to our last panel. We’re going to have to have a break now for

about 30 minutes. Hopefully that will give you a chance to run out

and get a bite to eat or something. I’m going to try as close to 12:30

as we can to crank it back up, and we encourage everybody to come

back. We’re going to be focusing on conservation elements and

issues in this last panel.

At this point, we’ll be recessed until 12:30.

[Luncheon recess.]AFTERNOON SESSION

Senator CRAPO. The hearing will come to order. We appreciate

everyone’s patience, and we will now move to our fourth panel,

which is Kevin—is it Kuster—— Mr. KOESTER. Koster.

Senator CRAPO. I’ve never been quite sure if I’ve got it pronounced right. I thought it was ‘‘Kuster.’’ Mr. KOESTER. Kevin Koester with the Idaho Association of Soil

and Water Conservation.

Senator CRAPO. Tim Hopkins who’s here from Idaho Falls, but

he’s here representing the Idaho Chapter of The Nature Conservancy.

Mr. HOPKINS. Yes, Senator. Thank you.

Senator CRAPO. Douglas Hubbard who is with Ducks Unlimited

from Boise.

We appreciate all of you being here with us. Before we turn it

over to you, I’ll remind everybody we want to try to get you to keep

your oral testimony to 5 minutes so we could have a lot of give and

take, and if the little beeper goes off, just try to finish your thought

and we will proceed.

What I want to say just as a kickoff for this panel is quite often

when people in the country hear us say we’re working on the ‘‘Farm Bill,’’ they think we’re talking about commodity programs

for farmers; and definitely that is a part of the Farm Bill. The

Farm bill really has a number of titles that are very critical and

47

reach much more broadly than that, and frankly I believe that the

Farm bill is probably the most significant pro-environmental piece

of legislation that Congress works on on a regular basis. It also has

sitting other elements such as the credit title, the conservation title

I just mentioned, the rural development aspects, market promotion,

research, the food and nutrition issues which we talked about a little bit about this morning with some of the food stamp folks who

were here concerned with the food stamp program, and energy

matters. This is a bill that has a very broad range of concern. The

focus we have right now on this panel which will be on the conservation title, again, I say is one of the most sitting things that

we do in this country with regard to environmental improvement

and conservation, and so we welcome all of you to the panel.

Let’s just start out with—we don’t have you sitting in the order

that I said it, but we’ll go in the order I said it, and that will be

Kevin and then Tim and then Douglas.

STATEMENT OF KEVIN KOESTER, DIRECTOR, IDAHO

ASSOCIATION OF SOIL AND CONSERVATION DISTRICTS,

DIVISION FIVE

Mr. KOESTER. Thank you, Senator, Congressman Otter, and staff

members. It is my pleasure to be here to talk a little bit about conservation, especially in Idaho.

My name is Kevin Koester, and I am currently serving as the director of the Idaho Association of Soil and Conservation Districts

from Division Five, which is in Southeastern Idaho. I also serve on

the board of directors of the National Association of Conservation

Districts, and as a member of that board, I’m currently in my second term as Pacific Region chairman, which is an area of nine

western states and territories. In the past, I have served as IASCD

director for eight years, and just last week led to another 2-year

term. In those eight years, I have served two years as vice president, and the last two years as Idaho’s director to NACD. With and

because of this experience, I would like to direct my comments to

the conservation title of the Senate Farm Bill.

With the great diversity of Idaho ag products and land uses, I

would not presume to speak to all of their needs and wishes. The

one thread that ties all of them together is conservation and its

many forms. These include, and by no means are limited to, land

treatment in the North, to better water management in seed-growing regions, to better management in the row crop areas, to livestock waste and nutrient management throughout the state. The

one constant is conservation.

Over the last several years, ag, in general, has taken many and

varied hits, from poor or stagnant prices to weather-related disasters, to numerous increases in our cost of protection. As if that

weren’t enough, the public and government, both Federal and

State, are making requests, and in some cases demands, for clean

water, clean and better-smelling air, clean water, with the added

burden of protecting species that may or may not be endangered.

Unfortunately, in most cases, the choice was to write laws and regulations without providing the necessary funds or technical support

to help land users and ag producers to comply with their issues.

A few examples would be TMDLs and ESA.

48

While the previous Farm bill did provide some Federal funding

for conservation, many of those programs were a good place to

start, but now we have an opportunity to improve on them and

take them forward. EQIP was a good starting place, but like many

new programs, it needs some improvement.

NRCS can continue in making these improvements and apply

them in a practical way. Senator Crapo’s suggestions go a long

ways to addressing all those needs, and we would like to see them

go farther.

When EQIP was first promoted in 1996, we all hoped it would

be the answer, but experience has shown the program was good but

underfunded. For example, Idaho’s needs alone amount to six and

a half million dollars a year, current requests exceeding funding by

a three-to-one ratio.

One of the examples of how EQIP can and should work in Idaho

happened in Idaho. Many small dairies would have not been able

to implement their dairy waste and nutrient management plan

without EQIP assistance, which could potentially have cost $8.4

million in revenue because of State laws. Because of the focus from

NRCS to use those EQIP dollars to enable those dairies to stay in

business, they had to focus their entire 3-month effort on EQIP

funding and were unable to do other projects in the state. If CTA,

or Conservation Technical Assistance, is not available, then the

process stops or at the very least slows down.

One way to address this problem is to provide full funding for

technical assistance for all conservation programs. Third-party vendors that had the ability to contract with outside sources could help

to speed this process along. Of course, we would like to recommend

that local soil conservation districts serve as that third-party vendor. No one has the network of information and the history of cooperation that we do.

We would also recommend that NRCS, our Federal partner, have

technical oversight for those vendors. After all, we work with them

every day.

We would all like to eliminate priority areas, but the reality is

without adequate funding, we cannot. EQIP could be compared to

a part-time employee: Very skilled, good worker. If we could just

support him or her, where could we go?

One of the issues that we talked about in our NACD Farm bill

Task Force is conservation initiatives. An example of this would be

develop producers, convert to no-till or direct seed. It’s a very expensive conversion, but it can have a sitting effect on air and water

quality.

As far as conservation goes, we believe the following basic principles need to be addressed in the 2002 Farm bill to effectively and

efficiently address our nation’s conservation concerns for the next

five- to 10-year period:

We need a flexible, locally led, incentive-based program;

A well-funded technical assistance program that will reach our

land users regardless of program or nonprogram participation;

Provide adequate funding;

Allow for programs to use for technical assistance in the event

that CCC technical account funds are not adequate to fully support

the financial assistance program;

49

Funding a farm safety net;

Broad-based incentive programs.

Let us all remember that the American consumer needs to be reminded: Food does not come from Albertson’s, and the only way we

can keep a plentiful supply that is safe and inexpensive and readily

available is with a strong agriculture.

I thank you.

[The prepared statement of Mr. Koester can be found in the appendix on page 72.]

Senator CRAPO. Thank you very much, Kevin.

Tim. Why don’t you pull that microphone over too.

Mr. HOPKINS. May I have a water?

Mr. KOESTER. Everybody wants my water.

Mr. HOPKINS. It’s a very valuable commodity.

Senator CRAPO. I’ll tell you, water is going to become an increasingly scarce commodity worldwide, I think.

STATEMENT OF TIM HOPKINS, CHAIRMAN, IDAHO CHAPTER

OF THE NATURE CONSERVANCY; ACCOMPANIED BY JEFF

EISENBERG, WORLD SENIOR POLICY ADVISOR, THE NATURE

CONSERVANCY

Mr. HOPKINS. Thank you, Senator, and thank you, Congressman

Otter, for the opportunity to be here and to present testimony on

behalf of The Nature Conservancy to your committee.

The Nature Conservancy strongly believes that conservation

should play an important role in agriculture policy. Conservation

programs under the Farm bill are an important component of the

future for Rural America, programs that promote healthy rural

economies while conserving the natural resources they rely on.

With me today is Jeff Eisenberg, who is senior policy advisor of

The Nature Conservancy throughout the world. He will help me

when it comes time for your questions to make sure we’re responding adequately to what you may be interested in.

The Nature Conservancy of Idaho has been a part of Idaho for

over 25 years and, as Idaho’s largest conservation organization, has

more than 6,500 members in this state. In cooperation with landowners in communities throughout Idaho, The Nature Conservancy

has helped preserve some of the state’s most beautiful and biologically rich places: Kootenai Valley, for example, in Northern

Idaho; Henry’s Fork in your own Eastern Idaho, Senator Crapo;

and the Owyhee Canyonlands in Southwestern Idaho that I know

Congressman Otter is close to.

Our conservation work is grounded in sound science, built on

strong partnerships, and committed to tangible results. The Nature

Conservancy’s 50 years of experience in private land conservation

has taught us that habitat protection in a strong farming and

ranching economy can go hand in hand. One of the chief threats

to wildlife facing Idaho and the Nation is the fragmentation of

habitat resulting from subdivision of existing farms and ranches for

nonagricultural uses. Maintaining working farms and ranches

helps protect existing wildlife migration corridors, winter range,

and other crucial habitat features. Moreover, we find that habitat

enhancement efforts, whether through private initiatives or public

programs such as the Wetland Reserve Program, are far more efVerDate 11-MAY-2000 14:50 Mar 31, 2003 Jkt 085328 PO 00000 Frm 00053 Fmt 6633 Sfmt 6633 85328.TXT SAG1 PsN: SAG1
50

fective on large, intact landscapes than areas where lands are held

by a multitude of owners in a variety of uses. Our conservation

work will find lasting success only where there is strong support

in the local community.

In the Farm Bills that you are considering, The Nature Conservancy is seeking authorization and funding for three programs: The

Wetland Reserve Program, proposed Grassland Reserve Program,

and the Conservation Reserve and Conservation Reserve Enhancement Programs. These programs and activities benefit agriculture

and the environment, and deserve the thoughtful support of the

committee in formulating long-term agricultural policy for the next

Farm Bill.

Because of its many important benefits, The Nature Conservancy

considers the Wetland Reserve Program to be the most important

conservation program authorized by the Ag Committee, and the

case for expanding the program is strong. At one time, there were

more than 220 million acres of wetlands in this country. This number has now been reduced to 110 million acres on private land and

approximately 20 million acres on public land. To date, the Wetland Reserve Program has restored one million of these acres, and

demand for participation in the program far outstrips the availability of funding. In Idaho, for example, 1,200 acres of emergent

marsh and forested wetland were restored in this past year. Pending Idaho landowner requests for enrollment in that program are

now valued at more than $5 million.

In Idaho, as elsewhere, wetland protection and restoration can

play a crucial role in achieving water quality goals by filtering out

sediment and nutrients. For example, the Idaho Chapter has

worked with the Northside Canal Company to establish wetlands

to treated agricultural return flows before they reach the Middle

Snake near Twin Falls.

We have also used wetland reserve to restore wetlands for water

quality and fishery enhancement in the Henry’s Fork area in Eastern Idaho.

Producers embrace the WRP for a number of reasons. Some producers simply love the land; they have worked all their lives on

their land and want to reserve its natural character. Some producers decide to retire flood-prone or marginal lands and use WRP

money to purchase more productive land. Others use the money to

make additional capital investments in their operations or to contribute to their retirement. Many producers generate additional income through the program by renting WRP land to hunting groups.

Regardless of their motive, farmers have found ways to integrate

wetlands restoration into their farming businesses, a true win-win

outcome for both agriculture and conservation.

Senator CRAPO. Time always runs out before you do, but take another.

Mr. HOPKINS. Senator Crapo, we both share the laws of profession. I know of the importance of those red lights in our Supreme

Court and I respect them in this branch of government as well, a

limitation that is imposed for good reasons.

Let me conclude by saying simply that we likewise endorse the

Grassland Reserve Program that was, we are proud in Idaho to

say, introduced by Senator Craig and co-sponsored by Senator

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Crapo, and we believe its elements are essential to the future of

conservation in the state of Idaho, for that matter throughout

America, and particularly throughout the West where that program

is uniquely important.

Then in addition, the Conservation Reserve Program that is a

well-known tool for conservation purposes within the agricultural

framework, and again, we endorse its continuation and its expansion, and recommend 45 million acres for enrollment in that program.

In conclusion, let me thank Senator Crapo and Representative

Otter for your attention and for the opportunity to present this testimony to you today, and Mr. Eisenberg and I will be prepared to

address your questions when ready.

Senator CRAPO. Thank you.

Douglas.

STATEMENT OF DOUGLAS HUBBARD, IDAHO DUCKS

UNLIMITED

Mr. HUBBARD. Senator Crapo, Representative Otter, I appreciate

the opportunity to speak here today. I would like to, on behalf of

Ducks Unlimited, give a special thank you to Senator Crapo and

his staff for holding this important hearing on the 2002 Farm Bill,

and for their splendid help and cooperation in bringing this bill

closer to a reality.

As a farmland owner, I know firsthand the importance of a comprehensive farm bill even though my land does not qualify for any

voluntary program such as CRP, WRP, GRP.

America has now lost half of its original wetlands and continues

to lose the most productive vegetated wetlands at a rate of more

than 100,000 acres per year. Since the loss of jurisdiction by the

Corps of Engineers over the draining and filling of prairie potholes

and other wetlands, I fear this loss may even be greater in the future. Not only must we keep pace with these losses, but we must

reverse the total of 170 years of loss of wetlands and upland habitat. The goals of CRP, WRP, GRP, and WHIP can do this. CRP and

WRP are very popular programs for farmers, as you well know,

farmers and ranchers, and the demand to enroll far exceeds the

amount of acreage to be enrolled.

While CRP and WRP are conserving millions of acres of critical

wildlife habitat, we must not forget the economic safety net for

thousands of small family farmers. With commodity prices falling

to historic levels, the payments associated with CRP, WRP, and

hopefully GRP help farmers to pay farm mortgages and living expenses. These payments are a dependable source of income during

times of drought and poor crop production, and, conversely, during

periods of good production and low market prices.

Since most of the acreage enrolled especially in CRP and WRP

are at high risk for erosion, flooding, and poor crop production,

these programs provide farmers, ranchers, and taxpayers a more

cost-effective and sustainable option for use of that land.

American agriculture is a victim of technology. It can produce far

more from the land and marketplace—than the marketplace can

support. American agriculture needs this 2002 Farm bill to provide

good living from the land, and satisfy the checks and balances

52

found in nature and in economics. We must remember that soil and

water are not renewable resources.

I believe it’s beneficial to note that the economy and ecology have

the same Greek root word—oikos—which means ‘‘house.’’ We assume then a wise decision like the 2002 Farm bill would be beneficial for the economy and for the house which we Americans reside. All Americans benefit from these programs, and we should be

proud of their successes. The value received by society is greater

than the cost to the taxpayer.

I thank you very much for your time.

Senator CRAPO. Thank you very much.

Before I turn to Representative Otter, I need to correct an oversight here. I have not made note to the audience that we have with

us Idaho Representative Doug Jones, who is the chairman of the

House Ag Committee. Thank you for being here with us.

Representative Otter is going to go first. He’s got a meeting that

he needs to get to, so I told him that he could go first. Then I’ll

get you all to myself after he leaves.

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

the testimony from this panel, as I have enjoyed and appreciate the

testimony from all the previous panels, but let me start my questioning period with a different aspect pretty unique to me and I’m

sure pretty unique to the hearing process, and I’d like to start off

my portion of this with an apology. I made this apology to Tim in

his capacity as the chairman of The Nature’s Conservancy, and I’ve

also made it to Ducks Unlimited on a national basis.

Forgive me, as a freshman, a poor choice of words that I used

during a press conference on my endorsement of a group called

Green Watch. Green Watch, which limits some—or, lists some 528

agencies—or groups, I guess I should say—I used the word ‘‘extremist,’’ and I used that in a very poor way. What I should have

said and what I meant to say was that this list had some people,

had some groups on it, that held some extreme positions. I have

apologized to Tim and I have apologized to Doug and Ducks Unlimited for those poor choices of words, and I do again publicly. Having

said that, let’s move on.

I certainly appreciate your comments about the Farm Bill, especially in light of I think we all share the enthusiasm for the Farm

bill because it is an environmental bill, because it is a national security bill in terms of our foodstuffs, and it is a bill which I believe

could provide an awful lot of economic stimulus.

We did have an effort during the negotiations and the debate in

the House on considerably broadening the conservation part of it,

and I don’t know if you folks are aware of this, but Idaho I think’s

would have gone up I think 40 percent of the funds that would

have been available.

One of the things that that amendment offered by my good friend

from Maryland Wayne Gilberts, one of the things that it didn’t address is that in the process of saving the wetlands, in the process

of conserving these other areas, when that became the sole use,

how were we going to provide for the aspect of private property,

No. 1. No. 2—because I believe wetlands is a great natural filter

for problems in our water, but on the other hand, if the government, any level of government, wants some of my land to build a

53

road on, they have to pay me for it. That comes under the Fifth

Amendment, just compensation for property taken. When we limit

the use to such an extent in some cases, I think we’re going to have

to make a provision for paying for the private format that we want

to put to a natural use such as all you folks suggest.

My first question would go to how do we provide for an erosion

of the local tax base, which I know my property out along the

river—I’ve got 60 acres—a lot of it is taxed on the basis of its potential development even though it’s all in the floodplain where we

would actually be planting houses instead of crops, but it concerns

me that when take the property for a much less use, the tax receipts for local county and to the local city, local units of government who only count primarily on property tax for their revenue

streams, this amendment to the Farm bill did not provide for that.

I have not seen a Farm bill in the conservation side which by and

large provides for keeping the local tax base whole, and at the

same time, providing for just compensation to the private property

owner.

I guess, that’s a question for all of you, but, Tim, I would start

with you.

By the way, I am very familiar with the Kootenai County project,

and your folks up there have just done a tremendous job. In fact,

I brag about that project several times in several of my committees.

Would you respond to my question?

Mr. HOPKINS. I will indeed, Congressman, and pleased to have

the opportunity to do that.

As you know, The Nature Conservancy is an organization whose

efforts in conservation are really cooperative and collaborative.

While our reputation may have been developed originally for privately purchasing lands and then doing conservation on those

lands, that is not necessarily the only thing we do. We collaborate

with a number of other private organizations, private landowners,

as well as public agencies, in efforts of conservation. That work

continues.

Specifically with respect to the tax base, which obviously is a

concern, would be a concern of government at any level, The Nature Conservancy in Idaho has, as a matter of policy, always left

all of the lands it acquires for conservation on the tax base so that

they are taxed and continue to be taxed exactly as they had previously been taxed as private farms or rangelands, whatever their

use may have been prior to the time that they were taken for conservation. I say that to agree with you that there is concern in that

respect and to say to you that The Conservancy, as a matter of policy, continues to pay its tax on the lands it continues to own.

Of course, with respect to lands that may be subject, for example,

to a Federal program, like the Wetlands Reserve Program, oftentimes that compensation for the purpose of reserving wetlands and

characterized that way for a special purpose that does not have to

do with production like the remaining farmlands may for that

given farmer, nonetheless provide a source of income to him for

those lands that he would not have had otherwise and they are, so

long as they remain in his private ownership, taxed by the County

in the same fashion as they may have been taxed previously. The

only thing that is not being done is reducing those wetlands to proVerDate 11-MAY-2000 14:50 Mar 31, 2003 Jkt 085328 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 85328.TXT SAG1 PsN: SAG1
54

duction agriculture, which would take them away from the conservation purpose and add to the subsidy problem that you all face

on another side of the Agriculture Bill.

It’s not a matter of a taking in the sense that it goes into public

ownership. It remains in private ownership. There is compensation

paid which presumably sees a tax on the income tax side, and it

leaves it in a place that it continues to be taxed on a local basis.

While it may not have been addressed specifically in the debate

in the House that you’ve described for us, I believe there is a rationalization of those interests in a very logical way between these

programs and the interest of the government in maintaining a tax

base of its operations.

Mr. OTTER. Kevin.

Mr. KOESTER. Congressmen, as you’re both aware of, the National Association of Conservation Districts did not support any

amendments to the House Ag Bill as it came out. I guess in fairness, I should add that we also told the House Ag Committee that

once that bill was passed, all bets are off. We do not think that is

necessarily the starting place for conservation on this next Farm

Bill. We did not support any of the amendments that were presented at the time it was voted on.

Mr. OTTER. Doug.

Mr. HUBBARD. Ducks Unlimited’s policy is very nearly the same

as The Nature Conservancy as far as the tax base is concerned.

Ducks Unlimited rarely buys the land outright. It’s on a small percentage, very small percentage, if we do that. The land that we develop or enhance is generally under some type of a Federal program that we’re looking at through grants and others like that, so

that remaining tax base at least involving the land that we’re involved with still remains there for the County or whatever jurisdiction that it’s in.

From the Federal standpoint, the grants that we get to retire

marginal land or other nonproductive land I think reduces the

amount you have to pay out in commodities for that, so given inflation and a few other things, I don’t think it’s a wash, but it really

reduces the commodity dollars that are paid out when we go to

these grants like that.

For the most part that the tax question that you have for revenue, we’ve pretty much taken care of that just like The Nature

Conservancy does. We’re aware of that, we’re aware of that, taking

that out of the rolls, especially in today’s environment.

Mr. OTTER. Let me just ask the question I guess generally in a

different way: If in the event that a public policy such as could

have been created with the Farm Bill—the amendment, Kevin,

that your organization didn’t support, which did, in fact, provide for

a taking by strictly limiting the use, would your organizations support payment for that taking at a reasonable market price for what

that land that we might take from a private property owner, would

your agencies or would your organizations then support the Federal

Government paying for whatever paid for that land?

Mr. HUBBARD. Yes, we would.

Mr. KOESTER. I don’t believe so. That’s one of the problems that

NACD’s had with the caribou is that there is some language in

55

there that involves taking, and we have several resolutions we

passed, we passed not in support of that document.

Mr. HOPKINS. Congressmen, Mr. Eisenberg is specifically familiar

with this privilege, and I’d like him, if he may, to respond.

Mr. EISENBERG. Just, I’d like to say that something like WRP is

a voluntary program and the only people who are being involved

are those who decided that this is the best economic use of their

land. To the extent there’s any diminishment in their use of the

land, that’s specifically what they are being compensated, and so

of course we agreed with you that they should be compensated for

the diminishment of the land just as a practical matter. We don’t

believe it’s a taking situation in the first instance, because the only

people who are doing it are those who want to, and they have the

best property rights protection they could have, which is just to say

‘‘no’’ if they don’t want the program.

Mr. OTTER. I agree with you, and as long as all the agencies approach that on a willing and a voluntary base, but we happen to

have agencies that don’t approach it that way.

Mr. EISENBERG. Where’s the point of voluntary conservation.

Mr. OTTER. Thank you. Right.

Mr. Chairman, my apologies to the panel for having to leave

early and to those folks in the crowd, but I want to thank you very

much for including me in this hearing, and it’s good to work with

you.

Senator CRAPO. Well, thank you. We appreciate you being here

with us today, and you are certainly excused to get on to the next

one.

Mr. OTTER. OK.

Senator CRAPO. Let me start out my questions first of all with

you, Kevin.

You indicated in your testimony a number of improvements to

the conservation title of the Farm bill that could be made, and each

of them I thought was very helpful in terms of those suggestions.

No. 6 was that you would be in favor of including a broad-based

incentive program that would provide rewards to farmers and

ranchers for practicing good stewardship in private land areas.

That sounds, to me, similar to the concept that Senator Harkin is

talking about. Am I correct in that, that concept is the same one

you’re talking about?

Mr. KOESTER. Yes, Senator. In fact, I don’t know if it’s accurate,

but we’re very proud that we have that support of Senator Harkin.

Senator CRAPO. You mean his is very similar to yours?

Mr. KOESTER. Yes, that’s the way we’re going to look at it.

The bottom line for that is that we feel that it’s time that society

starts rewarding those farmers who are willing to participate in

best management practices even though there may be an added

cost burden to protect soil, water, and air; and in the past, sometimes the commodity programs, under past programs, have rewarded all farmers. We think it’s time we make that difference between the good farmers and those who are just farming for the programs, and that’s what we’re considering is calling conservation

issues.

Senator CRAPO. As I understand it, you’re not suggesting that existing conservation programs be phased out in terms of instituting

56

a new program like this, but that we supplement existing programs

with a new program like this?

Mr. KOESTER. Senator, that would be correct. We feel like we

have a real good base but we need to build on, and now is the time

to do that.

Senator CRAPO. Well, as I’m sure you are aware, I have introduced a conservation title that focuses on reforming and strengthening the existing programs, many of which you all have talked

about here today, and Senator Harkin has either introduced or is

formulating a program along the lines of these incentive-based programs that you have discussed. I don’t believe it’s his intent either

that we replace existing programs, but that we supplement them.

I guess the question I have, which is just to ask you to speculate

on this a little bit if you would: I am assuming that if we have a

limited number of dollars, that we may run into a problem in terms

of how much strengthening of existing programs do we do versus

funding of a new approach to these voluntary incentive programs.

Do you have a position on that?

Mr. KOESTER. Senator, I do, and I have several, unfortunately.

I have one position as a small grain producer in Southeastern

Idaho. I, particularly after two years of extreme drought, I’m highly

in favor of commodity-based programs. As a conservationist and becoming a devotee of that, I think there are other things we can

spend the money on.

I realize that there is probably going to be a finite amount of dollars. I’m not certain that we need to support only those traditional

commodity programs. I think we can support better farm practices

through a conservation incentive program, and we may have to

split the pie up, but the better corn farmers if they’re using no-till

practices are still going to have approximately the same amount of

dollars in return, it’s just we’re going to reward them for doing better practices.

Senator CRAPO. If I understand what you’re saying, you know,

please correct this or improve it—you’re saying that the notion of

the broad-based incentive programs, if correctly implemented, could

reward farmers financially in ways that could benefit their bottom

line in terms of the economic operation of their farms, while also

improving the environment through proper farming practices or

conservation incentive programs.

Mr. KOESTER. Exactly, Senator. That’s one of these things that

we’ve been beating on this drum for several years now and it’s just

finally getting out there. With public demands for clean water,

clean and better-smelling air, there are farm practices out there

that can help and do promote those ideals. As we’ve discussed in

the past, one way that society can participate in that is with Federal dollars, and if society demands that upon agriculture and upon

source polluters, then the way they can participate and help to

solve that is through sharing of dollars.

Now, I’m not suggesting that one program has to suffer because

of the other. I think there is a way to make everyone happy. That

isn’t going to happen, I’m sure, because we’ve had some interesting

floor fights in our own National organization based on this very

conversation.

57

It’s not an easy element to discuss, but we firmly believe a conservation incentive program, now is the time to start that and to

fund it in a mechanism that would be preferred.

Senator CRAPO. Tim or Doug, do you have any desire to jump in

on this?

Mr. HUBBARD. I can’t add too much to that, because I agree with

both of these gentlemen. I think in the past that our guaranteed

price support systems that we had for agriculture was an incentive

for agriculture to produce a lot more at taxpayers’ expense. That

has since not become near of an abusive thing that was seen before, but I think because the conservation efforts in agriculture

itself are so intertwined together that agriculture is good for the

land, it’s good diversity. The thing we’ve got to avoid is the

monoculture or intensive agricultural farming. That’s going to lead

to not only ecological problems, but certainly low market prices

similar to what we’re certainly seeing now. What Tim and Kevin

have said now, I think we’d have to echo 100 percent with them.

Senator CRAPO. Tim, did you want to add anything?

Mr. HOPKINS. I wasn’t sure I’d been heard yet, but if Doug

thought it was good——

Mr. HUBBARD. I’m thinking back to the last one, I guess. I’m

sorry.

Mr. HOPKINS. I would like to say, Senator, that we are here

today, of course, to really endorse the programs that we know: Wetlands Reserve, Grasslands Reserve, and the Conservation Reserve

Programs that have worked well. I think at this point we’re not familiar enough with the new proposal contained in Senator Lugar’s

legislation to really comment.

Senator CRAPO. All right. Thank you.

Tim, let me move to you for just a minute. In the context of the

Grasslands Reserve Program, could you expand a little bit on the

issue there of resource protection versus development potential of

these lands and what we’re seeking to achieve? It’s my understanding there’s a pretty sitting concern with regard to the fact that

given the current economics and the environmental pressures and

so forth that our ranchland owners and the grassland owners face,

that they don’t have the resources to continue, many of them, continue operating them effectively as ranch or grazing land and

there’s pressure to develop them, and that there’s a way we could

maybe solve some of that concern by the Grasslands Reserve Program and other efforts in that context.

Mr. HOPKINS. Well, the Grasslands Reserve Program really is designed for the large-scale landscape of the type that we know in

Idaho, of the type the West knows, and we’re particularly well-suited to understand the value of extensive grassland areas. Not so

much concerned with the intrusion of suburb or even recreational

development into those lands, because while in more populous

areas that probably is the principal concern in terms of conservation, here we’re talking about areas like the Owyhee Canyonlands,

for example, where there are literally millions of acres of land that

are covered by sagebrush and junipers and serve as grazing base

for the economy of that region but which are not threatened in a

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ment, and neither has recreational development taken an interest

in that kind of landscape.

The Grasslands Reserve Program, as certainly you know well

and Senator Craig knows well, is something designed to protect

those genuinely vast areas of open country that Idaho still has, Nevada still has, and other regions in the West still have, and not so

much concerned about the intrusion of Suburban America that

other programs, frankly, address.

I do understand there is some thought in the Congress that existing programs could accommodate the idea of this grasslands protection, and we’re of the mind that that isn’t the case, that these

really or that this proposed legislation is focused on different kinds

of land, the type I’ve described.

Senator CRAPO. Thank you.

Doug, this is for the whole panel really, in the context of the entire issue of whether we should stick with existing conservation

programs or move to new, more-general conservation incentive programs, I’m hopeful that the budget that we deal with ultimately

will not have to cause us to make a choice between programs such

as the one I’ve proposed to strengthen existing portfolio of programs, versus the effort to try to move into some of the new areas

that you discussed, Kevin.

If we have to face a difficult budget decision and decide between

the two, should we pair back the dollars that can—the additional

dollars that can be moved into the existing programs in order to

try establish an incentive-based program, or should we wait for a

time when we have a better budget climate in order to do that and

to try to really bolster as much as possible our existing programs?

Mr. HUBBARD. My feeling is that we need to stick with the programs, bolster what we have, because these programs like WRP

and CRP have been wildy successful. They have probably been

some of the most successful government programs that have ever

existed, and they benefit everyone. They’re not just narrowly focused on the farmer or the conservationist or anybody, because

they benefit everybody, right down through the taxpayers, and certainly environment.

My feeling is given the prospect that we may have a limited

budget to deal with, as you say, then I say we need to reinforce

these programs and wait until the later time to expand upon the

incentive programs and those type which I think do show some

merit.

Senator CRAPO. Right.

Kevin.

Mr. KOESTER. Senator, before I answer this question, would you

look behind me and see how many consumer groups are back

there?

[Laughter.]

Mr. KOESTER. If there are some commodity groups, I may be in

a little bit of trouble here.

Senator CRAPO. Since it’s after the lunch break, you’re actually

pretty lucky.

Mr. KOESTER. I may be in good shape.

If it comes down to it—and my gut tells me that it probably will

come down to a choice, it will be an either/or situation—one of the

59

problems they’re having back in the Midwest with land values is

that land values are increasing very rapidly because of high commodity incentive programs, so what’s happening, according to some

information I’ve received from some friends of mine back there,

these smaller operators are being pushed out because they can’t afford to land rent or the purchase of property. The larger operators

are buying because of the commodity programs, subsidy programs.

Given that, we need both, and I still think there’s a way to share

that. If we have to make a cut in the traditional commodity programs, I think that the individual producer can still retain that

same value by practicing good conservation.

Maybe that’s not a very good answer, but it’s safe.

Senator CRAPO. I hear you. What if we, in the conservation arena

though, as opposed to commodity programs between the broadbased incentive programs and the existing programs like CRP and

WRP and so forth, do you feel we would have to make a choice

there?

I guess the question is we’re probably going to have some amount

of budget. If the amount of money we have in that part of the

budget is not enough to do all the bolstering we would like to do

on the existing programs, should we back off a little bit on that and

fit in a new section for the broad-based incentive conservation programs, or should we push for the maximum strengthening of the

existing programs?

Mr. KOESTER. Senator, if I may, our National Association is on

record that we are not very enthusiastic about any further land retirement programs, and we count CRP in that type of program. We

think there are better ways to manage that land through conservation and still keep it productive, and so, therefore, if it came down

to increasing a delay on CRP or conservation issues, we would support conservation issues rather than land retirement programs.

Senator CRAPO. OK.

Tim.

Mr. HOPKINS. Senator, if I may, I’d like to defer again to Mr.

Eisenberg, because I know this is an issue he is currently dealing

with and has a national position to express.

Senator CRAPO. OK. Go ahead, please.

Mr. EISENBERG. Tim has basically said, you know, we’re supporting those three programs, and that’s the case. We think the incentive program has merit, but believe that we’re really seeking to

support the resource-oriented programs.

I’d like to say something: It’s a little bit inconsistent to say that,

I recognize, and also talk about the Grassland Reserve Program

which has not been out of the gate yet.

Senator CRAPO. New program, right.

Mr. EISENBERG. To say something on its behalf, which is basically that it’s a rare example when you have a commodity and conservation groups working hand in hand to pull something together

that’s going to address common problems and, you know, they want

big ranches and we want big grass, maybe that’s not a good enough

reason to support that program and not others. Budget-wise, grass

is much, much smaller than the incentive program is. We think the

Conservation Incentive Program is a good—I mean, Harkin’s proVerDate 11-MAY-2000 14:50 Mar 31, 2003 Jkt 085328 PO 00000 Frm 00063 Fmt 6633 Sfmt 6633 85328.TXT SAG1 PsN: SAG1
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posal is a good thing, but really we’re really looking at resourceoriented programs that are going to better serve our mission.

Senator CRAPO. Well, thank you. Senator Harkin and I have

talked about this issue, and he believes and I believe and I hope

that we are right, that we’re going to have the ability to do both.

But, I’m just trying to get a feel for how people feel in the event

that it doesn’t turn out that way, because it’s clear that we’re going

to be in deficit spending this year. Eight weeks ago we were looking at over $170 billion surplus; and now with the terrorist attacks

and the response to that, plus the impact on the economy and the

adjusted economic numbers in any event, we’re looking at only hav- ing about a $52 billion surplus at this point; and that is even going

to go down, in my opinion, when they adjust the economic numbers

the next time, and we’re talking about $100 billion surplus or economic stimulus package. When you do the math on that, it’s pretty

clear that Congress is contemplating deficit spending right now.

Now, in one sense, as one who was elected to Congress and has

fought for the 9-years I’ve been in Congress to balance our budget

and has been very proud that we’ve balanced our budget for the

last five or six years, I don’t like to see that happen. On the other

hand, one of the exceptions that we have always acknowledged is

time of war, when you have to do what you have to do to protect

your national security.

But, still, leaving all of those broader budget issues aside, I’m

just a little concerned that as we look at the commodity programs

versus the conservation programs versus the nutrition programs

versus the rural development programs, the energy programs, and

so forth, all of which are in this bill, there’s going to be a competition for limited dollars, and already there’s a big debate on Capitol

Hill with regard to the money that was allocated in the budget that

we had agreed to before September 11 that we have over the next

10 years provided somewhere in the neighborhood of $75 billion of

new dollars for these types of programs and now that’s all up in

the air and up for questioning.

That’s the reason I’m postulating this. We’ve got to decide how

to make the balance again between the commodity side and the

conservation side and the rural development side, the research

side, the energy side, and the food stamp and nutrition side, and

it’s going to become difficult, in my opinion. I don’t think that we

had yet grappled with it to the level that we are going to end up

having to face it.

I was just trying to get a feel from you as to where you’d come

done on some of these priorities, and I think I have a good answer

there. If anybody wants to elaborate on that at all before I move

on to another issue, please feel free to do so.

OK. I don’t have a whole lot more right now, other than to say

that as we move forward, it will be very helpful to have input from

you on the way things are developing. What I mean by that is each

of you has very effectively pointed out the areas where you think

we ought to put our emphasis on and our focus, and I think you

provided very wise counsel. I know that, for example, in the conservation title that I have suggested that most of you are happy

with what I have done and would be happier if I did more, and

there may be an opportunity for that or there may be a requireVerDate 11-MAY-2000 14:50 Mar 31, 2003 Jkt 085328 PO 00000 Frm 00064 Fmt 6633 Sfmt 6633 85328.TXT SAG1 PsN: SAG1
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ment that we do some adjusting, depending on what develops, and

so I look forward to your continued input on this as it moves along.

I’d like to conclude by talking a little bit on something that is

really not specifically related to the Farm Bill, and that is the collaborative effort which we’ve kind of hit on here a little bit; and,

in other words, in the context of the agreement that has been

worked out between the grassland owners and those who are advocating conservation efforts on the grassland and have come up with

the Grasslands Reserve Program. To me, I see that as a collaborative success on a very broad scale in terms of finding a win/win

solution for at least two pieces of the equation here.

We’ve just started the Owyhee initiative, which I want to thank

The Nature Conservancy for its involvement and effort in trying

help make that possible and to help make it work, and the ranching community who has been so willing to work together and try

to find a way to get across or get past some of the more difficult

issues that we face.

I guess maybe this question is coming mostly to you, Tim: You

said that you believe very strongly that habitat protection and a

strong farm economy can go hand in hand, and I think that in one

way or another that’s what Kevin and Doug have said also, which

I strongly agree with. I personally believe that the way we will get

there is through collaborative decisionmaking, and let me tell you

what I mean by that and I’m just going to ask you each to give

your thoughts on this.

My opinion, collaborative decisionmaking is not just decisionmaking where we invite everybody in like this. In my opinion, this

is not collaborative decisionmaking that’s going on right now. I’m

listening to what you have to say, but then I’m going to go back

with the Senate Ag Committee and we’re going to do what we’re

going to do. This is a public hearing in which you have the opportunity to give input and comments, and if I do my job right, your

input and comment will have an impact on the policymaking that

happens at another time in another place.

What I’m talking about in terms of collaborative decisionmaking

is if we were all sitting around the same table with our different

perspectives on an issue, and we had everybody at the table in the

sense that we would have all of the interest groups at the table and

entities at the table who were involved in making that decision and

we talk through issues, which is a sometimes very difficult process.

In fact, just figuring out who should be sitting at the table is often

an issue that becomes so divisive that it almost makes it difficult

to achieve the collaboration. But, I’m—when I say ‘‘collaboration,’’

I mean creating that table and then having the work product of the

people sitting at that table be binding in a sense that it is what

the policy is. When they develop it, they achieve the consensus,

then it’s not submitted to somebody else for approval; it is the decision. And, I contemplate that that table is generally going to be

made up of people who are from the area where the issue is. Now,

it’s not always going to be the case, because there will be Federal

agencies sitting at that table and there will be State agencies sitting at that table and there will be others sitting at that table, and

it’s not going to be 100 percent local, but I believe the people who

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live where the issue is have the best ability to figure out the way

to solve the problem and to identify the common ground.

Anyway, with that description of what I mean when I say ‘‘collaborative decisionmaking,’’ I would just like to toss it out and see

whether you feel, each of you, that, A, that that’s the way that we

should be moving; and if so, what we might be able to do, whether

it’s in the Farm bill or in some other context of regulatory reform

or whatever, to facilitate that happening in our Federal system.

I know that’s a tall order, but an important question. Anybody

want to jump up first?

Mr. HOPKINS. I’m——

Senator CRAPO. Go ahead, Tim.

Mr. HOPKINS. Senator, thank you for the opportunity really to

speak to that question, because, firstly, it gives us an opportunity

to thank you for your leadership in the Owyhee Canyonlands, because that is genuinely an example of collaborative effort. You have

the farmer/rancher community—principally ranchers—you have

the conservation community, you have the various Federal agencies

that have extensive interests in that area, and you have the public

officeholders as yourself who are bringing together that kind of a

diverse group for the purpose of collaborative problem solving and

hopefully decisionmaking that will result in some solution for the

problems that beset that area.

The Nature Conservancy endorses that and strongly endorses

what you have suggested was so essential to planning of this kind,

and that is community-based conservation. It has to be close to the

assets that people generally value for conservation purposes. I don’t

believe that’s done at a distance. I believe that’s done in our back

yard, so to speak, where we know the problems, where we love the

mountains, where we fish the streams, and where we otherwise revere the place in which we live. Collaboration in working toward

those solutions is something that is essential I think to the philosophy of The Nature Conservancy, and one that we want to endorse

as a part of your efforts at problem solving with us and with the

other agencies and the people involved.

A perfect example of that I’m sure you’re well aware of is the

Henry’s Fork Watershed Council which has operated in the upper

reaches of the Snake River on the Henry’s Fork in exactly that

fashion. No one could possibly have dreamed of a group as diverse

as that coming together to genuinely make decisions that affect the

water flows and the management of that great river which is so essential to the agricultural community, and at the same time such

a revered asset of the sportsmen’s community and all of which

needs to be conserved for future generations of people to be thrilled

by and to be utilized. We’re for it.

How exactly the Federal Government comes together with that

spirit and that sense to genuinely lead it I think depends, frankly,

on the initiatives of people, Senator, in places like your own who

can give genuine personal energy and leadership to the collaboration of those very diverse groups, because there has to be a catalyzing force, there has to be someone who brings together those people

displaying an open mind and an interest in problem solving above

partisan issues and politics, someone who can bring together those

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people in a way that they are inspired to collaborate to solve the

problems.

Senator CRAPO. Thank you.

Kevin.

Mr. KOESTER. Senator, for the want of a different term, in soil

conservation, we call that ‘‘locally led,’’ and we’ve been doing that

now for 60-some years. Yes, we do favor that collaborative process.

Maybe in answer, I’d like to read just a portion of our mission

statement for the Idaho Association of Soil Conservation Districts.

It says Providing action at the local level to promote growing wise

and beneficial conservation of natural resources, with emphasis on

soil and water.

One of the things that has been very interesting over the last 10

or 12 years is our emphasis no longer is strictly agriculture. For

example, in the Portneuf Soil and Water Conservation District,

which I am the supervisor on it, the last 18 months our focus has

been almost entirely on rural lands and rural development.

We are no longer strictly an ag-based organization. We are using

the collaborative process in dealing with cities, the small ranchette

type operations, as well as food producers.

We think the process works. The only thing we’re not too happy

with is when someone from Connecticut tells us how to use grazing

lands in Idaho.

Senator CRAPO. I understand that feeling.

Mr. HUBBARD. I think collaboration is the only way to go. Conservation organizations in the past when I first got really interested in this stuff, which was about 40 years ago, you know, it was

a big deal then. There was a lot of hand ringing and headbutting

in the organizations themselves, and then you got to realize we’re

basically going for the same basic thing that we wanted to say, although come around to it in a different direction. Now it’s come to

a point, I’ll trade you a cow for two mallards. You can’t beat it.

Ducks Unlimited is a good example of that. The original founding

of that was strictly for waterfowl, but now it’s branched off into everything. It’s even involving fish.

And, Tim, your example of the Henry’s Fork project is a shining

example of collaboration if there ever was one out here.

We take this so much for granted out here in our wide-open expanses as compared to your Connecticut example, that we’ve got to

bring it all in in this collaborative effort. That’s the only way to do

it. That’s the only way you can do it in today’s environment, political, economical, and otherwise. You have to collaborate, you have

to get together and ring it out and beat your head on the wall for

a while, but it will all come together and I’m encouraged.

We’re extremely fortunate in this state to have the representatives that we have in Washington like yourself and Representative

Otter and Senator Craig that we’re just really, really fortunate,

and I think we should really count our blessings there. I hope that

doesn’t sound like a hyperbole, but that’s my feeling on it anyway.

Senator CRAPO. Well, I could sure agree with that testimony.

[Laughter.]

Senator CRAPO. You know, I appreciate your comments on this,

and I realize that this isn’t specifically Farm bill related, although

I’d like to figure out a way to put something in the Farm bill to

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promote this; but every time I have an opportunity to establish

more of a record in the Federal proceedings on this I take the opportunity, because I really believe that after having been involved

in Idaho politics now for a long time and from even before I was

elected to office being involved in Idaho politics in one context or

another, I am increasingly convinced that we see conflict between

people who in their hearts agree on an awful lot of stuff, and the

conflict is, in my opinion, sometimes created and even orchestrated

by the rules and the laws which force us into the decisionmaking

modes that we have to fit into.

What I mean by that is that I think most Idahoans believed, as

you have all three said, that we have a tremendous heritage. I

mean, we live here because of the beautiful, beautiful environmental heritage that we have, the clean water and the clean air,

the mountains, the rivers, the streams, the hunting, the fishing,

the kayaking, whatever it may be. It’s a quality of life. Whether

you’re a rancher or a farmer or someone who works in an urban

area like Boise, there is a commonality there among us in terms

of wanting to preserve and protect this, and yet we seem to have

conflict so often. I’ve stepped back and looked at it, and I actually

believe that it happens a lot because we have rooms set up like this

where there’s somebody up here making a decision and everybody

down there trying to influence the decisionmaker, and the decisions

are often very rigid in terms of how they have to be achieved. I’m

increasingly convinced that we’ve got to find a way to get the Federal system of environment law to facilitate a different mode of decisionmaking than we now facilitate. We’ve looked at a lot of different things, we’ve tried a lot of different pilot projects, and we’re

starting to win.

I’ll tell you just another little bit of this, and then we’ll wrap this

up.

Back about five years ago, I won’t tell you the issue or details

or I’ll start another fight, but there was an issue on which I approached supporting in a collaborative approach and actually we

had some people together who were going to collaborate, and I and

the collaborator just got beat to a pulp from all sides. Everybody

thought that we were trying to pull one on them. I learned a lesson

then. In fact, I learned the first time I tried it. That’s why it was

hard to even figure out who should sit at the table.

The first time I tried it, I got beat up because I didn’t have all

of the right people at the table. The second time, I had everybody

I could think of at the table, but then we got beat up because nobody trusted what was going on. At that time, I concluded that we

had to get some successes in place so that we could point to something and say, OK, this is what we’re talking about and it works,

and we now do.

The Henry’s Fork situation is a good example. That’s why I’m so

hopeful that the Owyhee initiative that is now started will succeed.

I recognize there’s a lot of distance that has to be traveled there

before it can be declared a success, but that’s what this is all about.

I’m convinced that once we get enough examples in place—and

they’re happening around the country now—once we get enough examples in place, then the trust level will be a little easier to

achieve and we can maybe try to get some things established at the

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Federal level where we actually promote this rather than have to

figure out a way to get around the Federal system in order to get

it to happen.

I’ll just finish my little tirade on this by saying that, again, going

back about six years now when we first started to try to really go

in in a gung ho way to change some of the Federal decisionmaking

processes, one side didn’t want to change it because they thought

they were starting to get an advantage they hadn’t had for a long

time, and another side didn’t want to change it because they didn’t

trust State and Local governments to care about the environment,

and another side didn’t want to change it because they had the advantage and didn’t think the other side was going to get the advantage.

I sit back and think as long as we approach this from the perspective that we don’t trust people who live where the issues are,

who care about where they live, and we are trying to figure out a

win/lose scenario where we win and somebody else loses, then we’re

just not thinking about it in the right way, and I still believe that

we’re not out of that mode yet. We’re starting to break out and

we’re starting to find successes that can help people see that there

is a win-win.

Said another way, I believe that there are solutions in the

Owyhees and everywhere else that are better for the environment

and better for the economy than what we are doing right now, and

it’s those kinds of solutions that we need to achieve.

Anyway, I appreciate you taking that little trip with me off of the

Farm bill into that area, but one of these days we’re going to get

that so that it’s a part of the Federal law in a better way, and it’s

going to be because of the work of people and organizations like

you and yours and the others who have testified here today that

we’re going to make it happen.

Anybody want to have a last word before we wrap up?

Mr. KOESTER. Senator, if I may—and this is for Don Dixon; I

hope he’s in the room. When it comes time to title the new Farm

Bill, I am going to be so bold as to suggest that you call it the Consumers’ Food Protection Act, because that’s what it is.

Senator CRAPO. That’s right. I appreciate that, and I have heard

that 100 times from Don; in fact, it’s on my notes here for this

hearing.

Mr. KOESTER. We’ve made sure that Don’s heard that too.

Senator CRAPO. Well, that’s so important.

Did either of you want to make a comment before I wrap up?

Mr. HOPKINS. Only to thank you, Senator Crapo, for the opportunity.

Senator CRAPO. Well, thank you.

Mr. HUBBARD. Thank you very much. It’s most appreciative.

I like to look at some Federal agencies. I was the chairman of

Southwest Area Focus on the part of the North American Waterfowl Management Act.

I had to try to get together the Forest Service and on and on and

on, and it was the most frustrating experience I ever had in my life

because they don’t talk to each other.

Senator CRAPO. I know.

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Mr. HUBBARD. I thought a good analogy to that—and it’s probably something you experience every day—is that if I run up and

I hit my head on a brick wall, I back off and there’s a little blood

and a little skin left there. Now if I run into this Federal agency,

it’s like a huge chocolate pudding wall: I run into it, go clear up

to my shoulders, I back out; I can’t even see where I’ve been.

It’s changed. It certainly has changed.

Senator CRAPO. I’ll maybe use that some day.

Mr. HUBBARD. Feel free to.

Senator CRAPO. Well, it certainly creates an image, doesn’t it?

Mr. HUBBARD. Yes, a mental image.

Senator CRAPO. Again, thank you all very much for coming

today. We’re facing some really tough times in America right now,

and without trying to get overly emotional about it or whatever,

I’m not sure that we’ve seen all of what we’re going to see in terms

of the reality of the fact that we are at war. That is something that

I, in my lifetime, have not experienced even with the Vietnam War

being in my time. It was not fought on American soil, and part of

this war will be fought on American soil. The Vice President said

this may be one of those times in which the civilian casualties exceed the military casualties, and it’s a very, very difficult dynamic

for us to deal with emotionally and even intellectually, but it’s also

having its ramifications in virtually every other decisionmaking

element that we are in. I mean, in the Small Business Committee

on which I sit, it’s security issues that are now critical or things

to help the small businesses deal with the economic ripples of the

terrorist activities. In the Farm Bill, significant focus is now there

on food safety. And, you know, you just cannot underestimate the

way that this is going to impact a change in our lives, and it’s

going to have an effect on the Farm bill itself, if in no other way

than the budgetary impacts that we’ve talked about.

I believe it’s important for us, as Americans. I believe the way

we’ll avoid the panic and the very exact response that the terrorists

would like us to have is to be informed and to recognize that we

are living in the greatest nation in the world, and that although

we are not necessarily prepared for it—we probably weren’t prepared for everything when World War II started—but we are a nation that knows how to deal with and grapple with problems, and

we are a nation of strong people; and although we probably have

some difficult times ahead of us, we are a strong people who can

deal with those difficult times, and the way we will deal with them

is by being prepared so that we can know that we are doing and

that our government is doing the things that are necessary to protect us.

Once again, I think that issues like those we are grappling with

in the Farm bill arena right now are very, very intimately related

to us maintaining that strength as a nation, and in our economy,

and in our response to protecting ourselves in a new paradigm of

threat in the world.

I again thank you all for coming here today, and I look forward

to working with you in the future on this. Unless there’s anything

else, we will conclude the hearing.

Mr. HUBBARD. Thank you.

Senator CRAPO. This hearing is adjourned.

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[Whereupon, at 1:46 p.m., the committee adjourned.]

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