```

[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]

 
   HEARING TO REVIEW THE PROPOSALS OF THE UNITED STATES DEPARTMENT OF
AGRICULTURE FOR THE 2007 FARM BILL WITH RESPECT TO SPECIALTY CROPS AND 
                                ORGANIC
                              AGRICULTURE

=======================================================================

                                HEARING

                               BEFORE THE

          SUBCOMMITTEE ON HORTICULTURE AND ORGANIC AGRICULTURE

                                 OF THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 28, 2007

                               __________

                            Serial No. 110-2

          Printed for the use of the Committee on Agriculture
                         agriculture.house.gov

                  U.S. GOVERNMENT PRINTING OFFICE
48-113                    WASHINGTON : 2009
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                        COMMITTEE ON AGRICULTURE

                COLLIN C. PETERSON, Minnesota, Chairman

TIM HOLDEN, Pennsylvania             BOB GOODLATTE, Virginia
    Vice Chairman                        Ranking Minority Member
MIKE McINTYRE, North Carolina        TERRY EVERETT, Alabama
BOB ETHERIDGE, North Carolina        FRANK D. LUCAS, Oklahoma
LEONARD L. BOSWELL, Iowa             JERRY MORAN, Kansas
JOE BACA, California                 ROBIN HAYES, North Carolina
DENNIS A. CARDOZA, California        TIMOTHY V. JOHNSON, Illinois
DAVID SCOTT, Georgia                 SAM GRAVES, Missouri
JIM MARSHALL, Georgia                JO BONNER, Alabama
STEPHANIE HERSETH, South Dakota      MIKE ROGERS, Alabama
HENRY CUELLAR, Texas                 STEVE KING, Iowa
JIM COSTA, California                MARILYN N. MUSGRAVE, Colorado
JOHN T. SALAZAR, Colorado            RANDY NEUGEBAUER, Texas
BRAD ELLSWORTH, Indiana              CHARLES W. BOUSTANY, Jr., 
NANCY E. BOYDA, Kansas               Louisiana
ZACHARY T. SPACE, Ohio               JOHN R. ``RANDY'' KUHL, Jr., New 
TIMOTHY J. WALZ, Minnesota           York
KIRSTEN E. GILLIBRAND, New York      VIRGINIA FOXX, North Carolina
STEVE KAGEN, Wisconsin               K. MICHAEL CONAWAY, Texas
EARL POMEROY, North Dakota           JEFF FORTENBERRY, Nebraska
LINCOLN DAVIS, Tennessee             JEAN SCHMIDT, Ohio
JOHN BARROW, Georgia                 ADRIAN SMITH, Nebraska
NICK LAMPSON, Texas                  KEVIN McCARTHY, California
JOE DONNELLY, Indiana                TIM WALBERG, Michigan
TIM MAHONEY, Florida

                           Professional Staff

                     Robert L. Larew, Chief of Staff

                     Andrew W. Baker, Chief Counsel

            William E. O'Conner, Jr., Minority Staff Director

        .........................................................

                               __________

          Subcommittee on Horticulture and Organic Agriculture

                DENNIS A. CARDOZA, California, Chairman

BOB ETHERIDGE, North Carolina        RANDY NEUGEBAUER, Texas
LINCOLN DAVIS, Tennessee                 Ranking Minority Member
TIM MAHONEY, Florida                 JOHN R. ``RANDY'' KUHL, Jr., New 
JOHN BARROW, Georgia                 York
KIRSTEN E. GILLIBRAND, New York      VIRGINIA FOXX, North Carolina
                                     KEVIN McCARTHY, California
                                     K. MICHAEL CONAWAY, Texas

                Keith Jones, Subcommittee Staff Director

        .........................................................

                                  (ii)

                            C O N T E N T S

                              ----------                              
                                                                   Page
Cardoza, Hon. Dennis A., a Representative in Congress from 
  California, opening statement..................................     1
    Prepared statement...........................................     2
Goodlatte, Hon. Bob, a Representative in Congress from Virginia, 
  opening statement..............................................     4
Neugebauer, Hon. Randy, a Representative in Congress from Texas, 
  opening statement..............................................     3
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, prepared statement..................................     5

                               Witnesses

Conner, Hon. Chuck, Deputy Secretary, U.S. Department of 
  Agriculture, Washington, D.C...................................     5
    Prepared statement...........................................     8
    Submitted questions..........................................    35

                     THE 2007 FARM BILL WITH RESPECT TO
                      SPECIALITY CROPS AND ORGANIC

                              AGRICULTURE

                              ----------                              

                      WEDNESDAY, FEBRUARY 28, 2007

                  House of Representatives,
          Subcommittee on Horticulture and Organic 
                                       Agriculture,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met at 10:00 a.m. in Room 1302 of the 
Longworth House Office Building, Hon. Dennis A. Cardoza 
[Chairman of the Subcommittee] presiding.
    Members present: Representatives Cardoza, Etheridge, Davis, 
Mahoney, Gillibrand, Neugebauer, Kuhl, McCarthy, and Goodlatte.
    Staff present: Christy Birdsong, Adam Durand, Keith Jones, 
John Riley, Sharon Rusnak, April Slayton, Debbie Smith, John 
Goldberg, and Pam Miller.

 OPENING STATEMENT OF HON. DENNIS A. CARDOZA, A REPRESENTATIVE 
                  IN CONGRESS FROM CALIFORNIA

    The Chairman. We will call this hearing to order. This 
hearing of the Subcommittee on Horticulture and Organic 
Agriculture to review proposals of the U.S. Department of 
Agriculture with respect to specialty crops and organic 
agriculture will now come to order. We would like to welcome 
our guest today, Deputy Secretary Conner. I would like to 
welcome the Members to our first Subcommittee meeting.
    Let me start by saying that overall I think the 
Department's recommendations for the 2007 Farm Bill are very 
thoughtful, coherent, and innovative. You have sent a crystal 
clear message that the Department, under the leadership of 
Secretary Johanns, wants to be a partner with Congress in this 
process, and I commend your eagerness.
    This farm bill will not be an easy one. It is a classic 
case of ``be careful for what you wish for''. Continued high 
farm prices have created a beneficial market scenario for rural 
America on one hand, but on the other hand will now create a 
far lower baseline than anticipated for the farm bill that we 
are tasked with writing. So we have a tough task.
    In addition, there are a number of legitimate crops; many 
covered under this Subcommittee, who have waited far too long 
to become part of the Federal farm program. Specialty crops in 
particular comprise over 50 percent of the farm gate value in 
this country but they receive far less than their fair share in 
Federal support. Organic farmers comprise one of the fastest 
growing sectors of American agriculture but lag behind 
traditional crops in representation at the Federal level.
    However, let us be clear, these growers are not interested 
in traditional subsidy programs afforded to the program 
commodities. In fact, they are dead set against subsidies as 
you know.
    So we are their advocate in Congress. We must be creative 
and think outside the box. We must look for resourceful and 
imaginative ways to weave non-traditional commodities into 
existing programs and create new ones that suit the unique 
needs of these industries. Unfortunately, being creative and 
thinking outside the box has historically not been an easy task 
for Congress. But the Department has made what I believe is a 
good-faith first step in this process. I applaud many of your 
recommendations including the proposals for the research title, 
steps for breaking down trade barriers, and the Department's 
commitment to controlling invasive pests.
    I urge caution on some other proposals such as the 
elimination of the planting prohibition and the lack of 
meaningful programs to improve competitiveness, such as the 
popular Block Grant Program.
    I called this hearing in order to give the Subcommittee 
Members additional time to question the Department on various 
proposals for specialty crops and organics. There are many 
folks on the Committee who are not only new the House Committee 
on Agriculture, but they are new to Congress in general. I 
intend to give every Member as many rounds of questioning as 
Deputy Secretary Conner's schedule allows today. This hearing 
is meant to be informative, thoughtful, and cordial. Committee 
Members can utilize this time to ask the Department their 
thoughts on how certain programs may or may not be implemented 
in the future.
    In turn, the Department can hear from us what 
recommendations in their proposal are welcome for inclusion in 
the 2007 Farm Bill and which ones might need just a little bit 
more work.
    [The prepared statement of Mr. Cardoza follows:]

   Prepared Statement of Hon. Dennis A. Cardoza, a Representative in 
                        Congress from California
    Deputy Secretary Conner, thank you for joining us today. Let me 
start by saying that, overall, I think the Department's recommendations 
for the 2007 Farm Bill are thoughtful, coherent and innovative.
    You have sent a crystal clear message that the Department, under 
the leadership of Secretary Johanns, wants to be a partner with 
Congress in this process and I, commend your eagerness.
    This farm bill will not be an easy one. It is a classic case of 
``be careful what you wish for''. Continued high farm prices have 
created a beneficial market scenario for rural America on the one hand, 
but on the other hand will now create a far lower baseline than 
anticipated for the farm bill we are tasked with writing.
    In addition, there are a number of legitimate crops, many covered 
under this Subcommittee, who have waited far too long to become part of 
Federal farm programs. Specialty crops in particular, comprise over 50% 
of the farm gate value in this country but receive far less than their 
fair share in Federal support. Organic farmers comprise one of the 
fastest growing sectors of American agriculture, but lag behind 
traditional crops in representation at the Federal level. However, let 
us be clear, these growers are not interested in traditional subsidy 
programs afforded to the program commodities. In fact, they are dead 
set against subsidies.
    So as their advocates in Congress, we must be creative, and think 
outside the box. We must look for resourceful and imaginative ways to 
weave non-traditional commodities into existing programs and create new 
ones that suit the unique needs of these industries.
    The Department has made, what I believe is, a good faith first step 
in this process. I applaud many of their recommendations including the 
proposals for the research title, steps for breaking down trade 
barriers, and the Department's commitment to controlling invasive 
pests. I urge caution on some of the other proposals such as the 
elimination of the plating prohibition and the lack of meaningful 
programs to improve competitiveness--such as the popular block grant 
program.
    I called this hearing in order to give the Subcommittee Members 
additional time to question the Department on the various proposals for 
specialty crops and organics. There are many folks on the Committee who 
are not only new to the House Committee on Agriculture, but they are 
new to Congress in general. I intend to give every Member as many 
rounds of questioning as Deputy Secretary Conner's schedule allows.
    This hearing is meant to be informative, thoughtful and cordial. As 
Committee Members we can utilize this time to learn from the Department 
their thoughts on how certain programs may or may not be implemented. 
In turn the Department can hear from us what recommendations in their 
proposal are welcomed for inclusion into the 2007 Farm Bill and which 
ones might need a little work.

    The Chairman. With that I would like to turn this over to 
Ranking Member Neugebauer for his comments and opening 
statement.

OPENING STATEMENT OF HON. RANDY NEUGEBAUER, A REPRESENTATIVE IN 
                      CONGRESS FROM TEXAS

    Mr. Neugebauer. I thank Chairman Cardoza for calling our 
first hearing in the newly-organized Horticulture and Organic 
Agriculture Subcommittee. The addition of this Subcommittee 
reflects the interest many in agriculture have in enhancing 
portions of the farm bill that pertain to fruit and vegetable 
crops. Members of this Subcommittee represent a wide range of 
horticultural crop producers across the country who are asking 
for additional assistance in breaking through export barriers, 
increasing their markets, and improving research.
    I appreciate Deputy Secretary Conner coming today to 
discuss the Department's proposals for specialty crops in the 
2007 Farm Bill. USDA has proposed increased funding for 
technical assistance for specialty crop programs; the Market 
Access Program, Specialty Crop Insurance Initiative, and for 
the purchase of fruits and vegetables for the school lunch 
programs and other nutrition programs. These proposals fall 
across a range of USDA agencies and are similar to many 
proposals put forth by the specialty crop industry in recent 
years. The 2002 Farm Bill added new programs and funding for 
specialty crops. The 2004 Specialty Crop Competitive Act 
authorized an additional $59 million in discretionary spending 
for new Block Grants to states for specialty crop promotion and 
the TASC Program for efforts against pests and diseases. Fruits 
and vegetables at 30 percent of U.S. crop cash receipts are a 
large and important segment of the U.S. agricultural market.
    I think there is a consensus that there is more we can do 
and should do through the farm bill to support specialty crop 
producers, but we also face the reality of working with limited 
resources. This Subcommittee will need to evaluate the 
effectiveness of current programs for specialty crops and 
determine what the most pressing needs are. We will also need 
input from producers to prioritize how we use any new resources 
available so that funds are going where they have the most 
benefit for the specialty crop sector.
    Today's hearing is the first step in our Subcommittee's 
process. I hope to hear from USDA more about the Department's 
proposal, and why they believe these proposals would be best 
uses of our additional resources available in the farm bill for 
fruit and vegetable producers.
    The Chairman. Thank you, Mr. Neugebauer. I appreciate your 
statement. I would also like to offer and welcome the Ranking 
Member, and former Chairman of the full Committee on 
Agriculture and a good friend of mine. We traveled together to 
a lot of farm bill field hearings around the country. Mr. 
Goodlatte, I recognize you to make an opening statement if you 
would like.

 OPENING STATEMENT OF HON. BOB GOODLATTE, A REPRESENTATIVE IN 
                     CONGRESS FROM VIRGINIA

    Mr. Goodlatte. Thank you, Mr. Chairman, and I very much 
appreciate your chairmanship of this newly-formed Subcommittee 
and of your holding this hearing.
    You are absolutely right. This is an area of American 
agriculture that has been given too little attention in 
previous farm bills, and so I am pleased that effort is being 
made to give more attention to it in this farm bill. I am 
especially pleased that the Department, in some of the 
proposals that they have put forward, have definitely raised 
the ante, if you will, on specialty crops.
    I am pleased with the Department's proposal calling for 
increased conservation spending, including the creation of a 
new conservation enhanced payment option. I think the proposal 
is very interesting. However, I am concerned that specialty 
crop growers may not have the option of participating in the 
program and I would like to hear the thoughts of the Department 
from Deputy Secretary Conner and others on that issue and 
whether that is something that we could expand into this area 
that would be very valuable to apple growers in my part of the 
world and to specialty crop producers in other parts of the 
country.
    I am also very interested in hearing the Department's 
thoughts on what we heard last year during the farm bill field 
hearings that were referenced by the Chairman. We have traveled 
all across the country, as I know Secretary Johanns and the 
Deputy Secretary did as well. We heard a great deal of concern 
from producers about the increase in pest and disease pressures 
facing specialty crop growers, and I notice that thus far the 
Department's proposal does not specifically address how we 
might be able to assist producers in this area. I would be 
interested in the Department's thoughts on that subject as 
well.
    And then finally, the Department makes, and I think this is 
very noteworthy, a significant investment of $2.75 billion over 
10 years in purchasing more fruits and vegetables with Section 
32 funds. This funding is a significant increase, and I guess 
one of the questions I have is this in addition to the fruit 
and vegetable purchases already being made or does it simply 
build on what is already being done? And does this encompass a 
plan to buy more fresh versus processed fruits and vegetables?
    Mr. Chairman, I will be here for the oral testimony of Mr. 
Conner but I am not going to be able to stay for questioning 
due to a scheduling conflict. So if you are unable to address 
all those points during the hearing proceedings we will 
certainly follow up with questions to you and others at the 
Department about that. Overall, we are very interested in the 
Department's proposals and very pleased that the Chairman is 
holding this hearing today.
    The Chairman. Thank you, Mr. Goodlatte. We will certainly 
make sure that you and your staff get this information and 
every Member will be allowed to ask questions after the hearing 
and get the answers back in writing from the Department as 
well.
    We will now go to witness testimony, but first I would like 
to mention to all Members of the Committee that they may submit 
an opening statement for the record if they so desire. Thank 
you.
    [The prepared statement of Mr. Peterson follows:]

  Prepared Statement of Hon. Collin C. Peterson, a Representative in 
                        Congress from Minnesota
    Thank you, Chairman Cardoza for recognizing me to speak and for 
holding this hearing today. I also want to thank USDA Deputy Secretary 
Chuck Conner for testifying here today. The Subcommittee on 
Horticulture and Organic Agriculture has an important role to play as 
we move forward and write a new farm bill this year.
    In today's agriculture economy, the role of specialty crops, 
including fruits, vegetables, tree nuts and nursery crops is 
significant. Last year, specialty crop production accounted for $53.3 
billion, or 44%, of total U.S. crop receipts. There have been many 
proposals that would expand farm bill programs for these industries, 
and the Committee will consider all of those ideas. I am looking 
forward to hearing more about the USDA's proposals on these issues 
today.
    Another growing area of agriculture since we wrote the last farm 
bill has been organic agriculture. According to USDA data, in the past 
ten years, organic farming has been one of the fastest growing segments 
of U.S. agriculture. Current sales for organic products are $15 billion 
annually and are growing by 15-20 percent every year. The increasing 
consumer demand for organic food products represents a growing 
opportunity for agriculture. For example, many beginning farmers are 
expressing interest in organic farming practices, and this may be one 
way to attract younger people to farming.
    The Agriculture Committee has an important responsibility to 
balance the many needs of agriculture producers and consumers in the 
next farm bill. Faced with the challenges of a tight budget and 
expanding priorities for the farm bill, we have our work cut out for us 
to create a bill that is fair and addresses the traditional and new 
areas of growth in agriculture.
    I look forward to hearing more about the Administration's proposals 
related to specialty crops and organic agriculture today. Thank you, 
Mr. Chairman.

    The Chairman. I would now like to formally introduce the 
Honorable Chuck Conner, Deputy Secretary to the United States 
Department of Agriculture, Washington, D.C. Mr. Deputy 
Secretary, welcome. We look forward to your testimony, and 
please feel free to start now.

    STATEMENT OF HON. CHUCK CONNER, DEPUTY SECRETARY, U.S. 
          DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

    Mr. Conner. Thank you very much, Chairman Cardoza. It is 
really an honor for me to be a part of this opening hearing of 
this new Subcommittee. I know the future is going to bring 
great things for this Subcommittee and I am really pleased to 
be part of this opening session.
    I appreciate the opportunity to discuss USDA's efforts to 
assist and promote specialty crops and organic agriculture in 
the Department of Agriculture's farm bill proposals. I have a 
full statement Mr. Chairman that I would ask to be submitted 
for the record, and I will attempt to summarize that statement 
for you.
    As many of you know, we began preparations on the 2007 Farm 
Bill over 18 months ago. We conducted 52 farm bill listening 
sessions across the country and received more than 4,000 
comments. These comments were truly enlightening and were 
really the cornerstone of our proposal that we put forth. We 
listened closely to our producers and to our stakeholders 
across the country and ended up taking a very reform-minded, 
physically-responsible approach to making farm policy more 
equitable, predictable, and protected from future challenge.
    During these sessions we heard comments from producers who 
said that they wanted to see specialty crops as part of the 
2007 Farm Bill. Speaker after speaker came up to the 
microphone, truly as you have noted, Mr. Chairman, not asking 
for cash subsidies, but instead asking for more support in the 
areas of research, trade, and nutrition.
    The sales of fruits, vegetables, tree nuts, and other 
specialty crops do account for approximately half of the U.S. 
cash receipts from farm crops. Specialty crop producers have 
continuously been underrepresented in past farm bills, and 
Secretary Johanns and I believe more can, should, and must be 
done for this sector of U.S. agriculture. Reauthorization of 
the 2007 Farm Bill provides a real opportunity to create 
greater equity in our farm policy. Through our farm bill 
proposals we have provided an unprecedented expansion of 
support for specialty crop growers through an array of changes 
that will enhance their ability to compete in the marketplace 
in the future.
    In the conservation title we do propose increased funding 
of $7.8 billion over 10 years for several conservation programs 
that assist all producers, including specialty crop producers 
in managing their natural resources. This increased funding 
will provide more opportunity for specialty crop producers to 
be protected from urban encroachment, while providing more 
resources geared towards pest management, air quality, water 
conservation issues, and they are certainly a priority that we 
heard around the country.
    In the trade title we recommend increased mandatory funding 
for the technical assistance for specialty crops program, as 
well as establishing a new SPS grant program to further focus 
resources on addressing sanitary and phytosanitary issues. 
International trade and specialty crops has expanded much more 
rapidly than trade in other agricultural commodities, and SPS 
issues are certainly becoming the trade barrier of choice 
around the globe.
    Secretary Johanns and I believe it is critical that we 
dedicate resource to address these issues in a more expedited 
manner. The Department proposed to increase again mandatory 
funding of $250 million for the popular Market Access Program, 
with the increased funding, of course, being focused on the 
non-program commodities. MAP funding has proven to be effective 
in expanding markets for U.S. agricultural products.
    Our nutrition proposals are obviously something we are 
quite pleased with. We have proposed that, again, new mandatory 
funding be provided for the purchase of additional fruits and 
vegetables for the use in the National School Lunch and 
Breakfast Programs. This $500 million represents a net increase 
in the total purchase of fruits and vegetables for school meals 
over levels already available under any other authorities. We 
are also proposing an additional 2.75 billion in funds 
available under Section 32, and it will be utilized to increase 
purchases of fruits and vegetables for our Food Assistance 
Programs.
    The 2005, Dietary Guidelines, Mr. Chairman, for Americans, 
which are developed and published jointly by USDA and the 
Department of Health and Human Services, recommend increased 
fruits and vegetable consumption. These proposals put our 
guidelines into full practice and full action.
    The Department recommends the priority consideration be 
given to project applications involving specialty crops under 
the Rural Development Value-Added grants program, as well as a 
new temporary program to provide $100 million in direct support 
to producers of cellulosic ethanol. Eligibility for this 
program would be restricted to specialty crop waste and other 
cellulosic biomass feed stocks.
    In the research title, Mr. Chairman, we propose that $1 
billion of mandatory money be invested to establish the 
Specialty Crop Research Initiative that would provide science-
based tools for the specialty crop industry. We believe this is 
particularly important to address issues such as food safety, 
pest and disease management, and other issues that have plagued 
our sector over the last several years.
    Finally, let me touch upon our proposal to remove the 
planting restrictions on traditional crop base acres. We know 
this has created some controversy. We believe strongly that 
eliminating planting restrictions does insure that we comply 
with all of our WTO trade commitments and positions us for the 
future to keep our exports, including exports of specialty 
crops, flowing without WTO challenge.
    We also heard comments from producers and consumers 
regarding organic agriculture. U.S. sales of organic food and 
beverages has grown rapidly; a billion dollars in 1990, to an 
estimated almost $15 billion in 2005. With the increased 
consumer demand for organic products, more farmers are 
interested in transitioning from traditional farming to organic 
farming. However, the requirements to be certified organic are 
admittedly lengthy and can be quite costly, especially for 
smaller producers. The Department's farm bill proposals also 
recognize the challenges faced by organic producers and 
identify several initiatives to assist. We propose to expand 
and increase the Cost-Share Certification Reimbursement program 
to all states and to all producers and processors. This program 
has been very helpful to producers in transitioning to organic 
agriculture and organic farming, and expanding this program we 
believe will help the organic sector continue to grow at its 
current pace. We recommend that $1 million be available as well 
until expended to fund the collection and publication of 
organic production and market data. Again, an area where we 
would recognize we have problems within our existing plans. We 
also propose that an additional $10 million be added to fund 
specifically organic product research.
    Mr. Chairman, again, we do thank you for this opportunity 
to appear before this Subcommittee on a very important day to 
you. To summarize, the Administration does believe that a good 
farm bill must address the needs of all of American 
agriculture. We look forward to working with the Subcommittee 
to see this goal truly become a reality. I will be happy to 
answer all the questions the Subcommittee may have this 
morning, Mr. Chairman.
    [The prepared statement of Mr. Conner follows:]

    Prepared Statement of Hon. Chuck Conner, Deputy Secretary, U.S. 
              Department Of Agriculture, Washington, D.C.
    Mr. Chairman, and Members of the Subcommittee, good morning. Thank 
you for the opportunity to discuss USDA's efforts to assist and promote 
specialty crops and organic agriculture. My testimony will provide an 
overview of both of these critical components of U.S. agriculture, as 
well as discuss the Department's farm bill proposals in these two 
areas.
Specialty Crops
     The Congress has defined specialty crops, in the Specialty Crops 
Competitiveness Act of 2004, as fruits and vegetables, tree nuts, dried 
fruits, and nursery crops, including horticulture. The U.S. specialty 
crop sector is comprised of producers, handlers, processors, and 
retailers of fruit, vegetables, tree nuts, and nursery crops. Sales of 
fruit, vegetables, and tree nuts account for nearly \1/3\ of U.S. crop 
cash receipts and \1/5\ of U.S. agricultural exports. When 
floriculture, greenhouse, and nursery crops are included. The specialty 
crops account for approximately half of all U.S. cash receipts of farm 
crops. The specialty crops industry encompasses 250 types of fruit, 
vegetables, tree nuts, flowers, ornamental nursery products, and turf 
grass crops that are produced throughout the United States. The 
industry can be characterized as high risk, high cost farming with high 
labor and input costs. One half of specialty crops are produced on 
irrigated acreage.
    The Department currently administers a number programs that benefit 
specialty crop producers. In the Agricultural Marketing Service (AMS), 
for example, a robust program of price and shipment reporting provides 
several hundred daily reports from shipping areas and terminal markets 
located throughout the country. All data are Internet-accessible 
through a web portal that allows pre-selection reports and downloads of 
data in multiple formats for analysis. AMS also offers national quality 
grading and production process verification services at shipping and 
receiving points on a cost recovery basis. These services are conducted 
using both Federal employees and federally-licensed state employees. 
Growers, shippers, and receivers of fruit and vegetables benefit from 
the enforcement of fair trade practices under the Perishable 
Agricultural Commodities Act program administered by AMS. Specialty 
crop growers also have available an array of marketing tools under 
marketing orders that are created by industry initiative which if 
approved through referendum are enforceable on growers through 
regulation. The Foreign Agricultural Service (FAS) has a number of 
programs that benefit specialty crop producers. The Market Access 
Program (MAP) provides funding for expansion of markets for U.S. 
agricultural products. In addition, the Technical Assistance for 
Specialty Crops (TASC) grant program assists U.S. food and agricultural 
organizations by funding projects that address sanitary, phytosanitary, 
and technical barriers that prohibit or threaten the export of U.S. 
specialty crops.
    Although existing programs do assist specialty crop growers, 
specialty crop producers who do not grow program crops are not eligible 
for support under USDA's farm commodity price and income support 
programs. We believe more can and should be done for this sector of 
U.S. agriculture that accounts for about half of all U.S. farm crop 
cash receipts. Our farm bill proposal addresses specialty crops in the 
areas of conservation trade, nutrition, rural development, energy, and 
research.
USDA Farm Bill Proposals for Specialty Crops
    The Department's farm bill proposal would create greater equity in 
farm policy by increasing support for specialty crop growers through an 
array of changes that will enhance their ability to compete in the 
marketplace.
    Specialty crop producers have traditionally been under-represented 
in farm bill policy. Five program crops receive 93 percent of direct 
farm bill cash subsidies, yet the value of U.S. specialty crops is 
equivalent to the combined value of these five crops. Sixty percent of 
all farmers do not raise program crops and therefore do not receive 
direct subsidies. At USDA's Farm Bill Forums held across the country, 
specialty crop producers did not ask for direct subsidies similar to 
the program crops, instead requesting additional support to address 
sanitary and phytosanitary issues, market promotion, and targeted 
research. For example, Chris, in Washington State, said ``Potato 
growers do not want traditional programs with direct payments but need 
assistance in other program areas.'' Mike, in Rhode Island, said ``We 
need equitable distribution of Federal funds to the areas and to an 
array of producers that do not grow program crops.'' Charles, in 
Georgia, reflecting the comments shared by many other producers, said 
``Mr. Secretary, your assistance is Paramount in assuring the U.S. 
specialty crop industry remains competitive, through proper support of 
research, nutrition, promotion and conservation efforts.''
    The Administration is recommending a broad package of proposed 
changes to several farm bill titles many of which will better assist 
specialty crop producers. Major components of our package that are 
either targeted directly toward, or include, the specialty crop sector 
are listed below.
Conservation Title
    We propose increased funding of $7.8 billion over the next 10 years 
for several conservation programs that assist all producers, including 
specialty crop producers in managing their natural resources. These 
include significant increases to the conservation Security Program, the 
Environmental Quality Incentives Program, and the new Private Lands 
Protection Program. This increased funding will provide more 
opportunity for the specialty crop producer to be protected from urban 
encroachment, while providing more resources geared toward pest 
management, air quality, and water conservation issues that are a 
priority for the specialty crop sector.
Trade Title
    We propose the phase-in of $68 million in enhanced mandatory 
funding for the Technical Assistance for Specialty Crops (TASC) 
program, including $4 million in Fiscal Year (FY) 2008, $6 million in 
FY 2009. $8 million in FY 2010, and $10 million thereafter through FY 
2015. In addition, the maximum allowable annual project award would be 
increased from $250,000 to $500,000 and more flexibility would be 
allowed to grant TASC project timeline extensions.
    We propose that mandatory funding for the Market Access Program 
(MAP) be expanded by $250 million over 10 years with the increased 
funding focused on non-program commodities. MAP funding has proven to 
be effective in expanding markets for U.S. agricultural products.
    We propose increased support for a number of initiatives that will 
help address sanitary and phytosanitary (SPS) issues and other trade 
restrictions that affect specialty crop and other producers:

    1. Establish a new grant program investing $20 million over ten 
        years to focus additional resources on international sanitary 
        and phytosanitary issues. With an increasing number of non-
        tariff trade barriers in both developed and developing 
        countries, the SPS issues grant program would be designed to 
        fund projects that address sanitary, phytosanitary, and 
        technical barriers that prohibit or threaten the export of all 
        U.S. food and agricultural products, including specialty crops.

    2. Authorize and provide mandatory funding of $15 million over tell 
        years to increase the U.S. presence in international standard-
        setting bodies, such as the Codex Alimentarius, the 
        International Plant Protection Convention, and the World Animal 
        Health Organization. Increasing in U.S. representation in these 
        and other similar international agricultural health 
        organizations are critical to harmonizing multilateral food, 
        plant, and animal safety standards. By ensuring these 
        international health and safety protection standards are 
        properly designed and implemented, the U.S. can avoid 
        unwarranted technical barriers that threaten opportunities for 
        two-way trade.

    3. Provide enhanced monitoring, analytical support, and other 
        technical assistance to support U.S. agriculture in bringing 
        forward or responding to significant trade disputes and 
        challenges. For example, U.S. specialty crop exports are 
        sometimes threatened by rampant trademark piracy in 
        international markets. USDA technical assistance could help the 
        specialty crop industry address these threats.

Nutrition Title
    We propose that new mandatory funding be provided for the purchase 
of additional fruits and vegetables for use in the National School 
Lunch and Breakfast Programs. This $500 million over 10 years 
represents a net increase in the total purchase of fruit and vegetables 
for school meals over levels available under any other authorities. It 
reflects recent changes in the Dietary Guidelines for Americans and a 
recommendation from the Department's Fruit and Vegetable Industry 
Advisory Committee that endorses a substantial increase in produce 
commodities being offered within the school lunch program to improve 
the nutrition of the nation's school children.
    We propose to establish a new five year, $20 million per year 
competitive grant demonstration program to develop and test solutions 
to the rising problem of obesity in low-income Americans. These funds, 
for example, could be used to examine such things as incentives at 
point-of-sale for purchases of fruits and vegetables by food stamp 
participants.
    We propose the reauthorization or The Emergency Food Assistance 
Program (TEFAP) and recommend more fruits and vegetables be provided 
under Section 32 authority through this program.
Rural Development Title
    We propose the priority consideration be given to project 
applications involving specialty crops under the Rural Development 
Value-Added Grants program.
Energy Title
    We propose that a new, temporary program be initiated to provide 
$100 million in direct support to producers of cellulosic ethanol. 
Eligibility for this program would be restricted to specialty crop 
wastes and other cellulosic biomass feedstocks.
Research Title
    We propose that $1 billion be invested over 10 years to establish a 
Specialty Crop Research Initiative that would provide science-based 
tools for the specialty crop industry. This will support both 
intramural and extramural research programs across the country and 
address the critical needs of specific crops and regions.
Miscellaneous Title
    We propose that an additional $2.75 billion of funds made available 
under Section 32 of the Act of August 24, 1935, be utilized over 10 
years to increase purchases of fruit and vegetables for food and 
nutrition programs.
    It should be noted that the Department's proposal does not mention 
the Specialty Crop Block Grant program. This program is authorized 
through 2009 by the Specialty Crop Competitiveness Act of 2004 subject 
to appropriation. Since this program is in its infancy, we thought it 
best to have a few more years of demonstrable results before 
recommending further action by Congress. The Agriculture, Rural 
Development, Food and Drug Administration and Related Agencies 
Appropriations Act. 2006, provided $7 million for this program. To 
date, grants have been awarded to Texas, Mississippi, North Carolina, 
Oklahoma, and Michigan.
Planting Restrictions
    Finally, let me discuss our proposal to remove planting 
restrictions on traditional program crops base acres.
    The World Trade Organization (WTO) has raised questions as to 
whether planting restrictions on base acres that are tied to commodity 
payments puts our direct payment support for wheat. rice, grain 
sorghum, barley, oats, peanuts, corn, cotton and oilseeds outside of 
WTO green box. Some have c1aimed that, because of planting 
restrictions, direct payments should be considered amber box--which 
could affect our current WTO support limit and our compliance with 
current trade agreements. Eliminating planting restrictions ensures 
that we comply with our WTO commitments and positions us for the 
future, keeping our exports-production from one of every three acres--
flowing without WTO challenge.
    Importantly too many farmers who want to produce specialty crops in 
addition to program crops are already doing so, and the current 
planting restrictions do not appear to inhibit them.
    According to a recent study by USDA's Economic Research Service new 
entrants to the specially crop business have been relatively few in 
number. The reason does not appear to be because of planting 
restrictions, but rather for reasons related to the specialty crop 
business, itself--

   the need for specialized equipment,

   the need for specialized expertise to be successful in 
        producing and marketing specialty crops,

   higher production costs for fruit and vegetables,

   the need for labor to harvest for the fresh market,

   the need to be near a processing plant and have a contract 
        for processing of produce, and

   a limited, seasonal production window in most states other 
        than California, Florida. Arizona, and Texas.

Organic Agriculture
    Congress passed the Organic Foods Production Act (OFPA) in 1990. 
The OFPA required USDA to develop national standards for organically 
produced agricultural products to assure consumers that agricultural 
products marketed as organic meet consistent, uniform standards. The 
OFPA and the National Organic Program (NOP) regulation require that 
agricultural products labeled as organic originate from farms or 
handling operations certified by a State or private entity that has 
been accredited by USDA.
    The national organic standards and organic certification program 
are based on recommendations of the l5-member National Organic 
Standards Board (NOSB). The NOSB is appointed by the Secretary of 
Agriculture and is comprised of representatives from the following 
categories: farmer/grower; handler/processor; retailer; consumer/public 
interest; environmentalist; scientist; and certifying agent.
    The National List of Allowed Synthetic and Prohibited Non-Synthetic 
Substances, a section in the regulation, contains specific guidance on 
substances allowed and prohibited in organic production. Organic crops 
are raised without using most conventional pesticides, petroleum-based 
fertilizers, or sewage sludge-based fertilizers. Animals raised on an 
organic operation must be fed organic feed and given access to the 
outdoors. Animals fed or treated with antibiotics or growth hormones 
may not be used in organic food production. Labeling standards are 
based on the percentage of organic ingredients in a product.
    Certification standards establish the requirements that organic 
production and handling operations must meet to become accredited by 
USDA-accredited organic certifying agents. The standards are designed 
to ensure that all organic certifying agents act consistently and 
impartially.
    Imported organic agricultural products may be sold in the United 
States if they are certified by USDA-accredited organic certifying 
agents. USDA has accredited certifying agents in several countries.
    U.S. sales of organic food and beverages have grown rapidly--from 
$1 billion in 1990 to an estimated $14.5 billion in 2005.
USDA Farm Bill Proposals for Organic Farming
    Demand for organic products is increasing and thus more farmers are 
interested in transitioning from traditional farming to organic 
farming. However, the requirements to be certified organic are lengthy 
and can be quite costly, especially for small farmers. In addition, a 
key to expanded opportunity in organic production is adequate market 
data to inform farmers, processors, wholesalers and retailers. And, 
organic farmers, just like traditional farmers, are looking for 
opportunities in the global marketplace.
    The Department's farm bill proposal recognizes the needs of the 
organic agricultural industry and identities several initiatives to 
assist it. These organic farming initiatives represent $61 million in 
additional funding over 10 years.
    We propose to expand and increase the cost-share certification 
reimbursement program for all states and for all producers and 
processors. Reimbursement would be increased from the current $500 
annually to $750 annually or 75 percent of certification costs, 
whichever is lowest. This program has been very helpful to producers 
transitioning to organic farming, and expanding this program will help 
the organic sector continue to grow.
    We propose that $1 million be available until expended to fund the 
collection and publication of organic production and market data. 
Conventional farmers have access to USDA data that they can use to plan 
crop plantings and make marketing decisions. Organic farmers and those 
wishing to transition into organic fanning currently lack solid data on 
the supply of key organic commodities as well as pricing for these 
commodities.
    We propose to invest an additional $10 million until expended in 
organic research. This new funding would focus on conservation and 
environmental outcomes and new and improved seed varieties especially 
suited for organic agriculture.
    We propose that eligibility for enhanced Environmental Quality 
Incentives Program (EQIP) cost-share assistance include a broad range 
of land uses, including organically farmed land. And obviously, organic 
farmers are fully eligible for participation in the expanded 
Conservation Security Program.
    We propose that funding for the Market Access Program (MAP) be 
increased by $250 million over 10 years with the additional funds being 
focused on non-program commodities, including organically grown non-
program commodities. As is now the case, organic agriculture would be 
allowed to compete for Market Access Program funding to help develop 
and increase the organic export market.
Conclusion
    Thank you again for the opportunity to appear before you today. We 
look forward to working with the Subcommittee and the specialty crops 
and organic industries to continue to assist and promote these very 
important components of U.S. agriculture. I will be happy to answer any 
questions that Members might have for me.

    The Chairman. Thank you, Deputy Secretary Conner. We 
welcome you again and appreciate your comments. We will now 
open it to several rounds of questioning. I will begin, we will 
limit our questions to 5 minutes and take turns around the 
dais.
    The Administration proposes to expand mandatory funding for 
the Market Access Program as you said by $250 million over 10 
years. With a focus of distributing for non-program 
commodities, a similar proposal has been advanced by the 
specialty crop industry. Can you elaborate on how the 
Department could implement such a non-program priority? Would 
you allocate the funding based on crop value or some other 
mechanism, possibly the number of grant applications received 
or what would your criteria be in this regard?
    Mr. Conner. Mr. Chairman, I appreciate the question. As you 
have noted, we do specifically identify the additional funding 
above and beyond the current discretionary funding for MAP as 
being for specialty, the specialty crop sector. We would 
continue to allocate that under the procedures that we use 
currently. Those are competitive procedures, as you know, Mr. 
Chairman, where we evaluate each project. Evaluate it in terms 
of potential for increased market demand for that investment. 
Obviously we do take into account the factors as well how much 
the industry themselves may be putting forth as part of that 
proposal as well. We see those processes not changing, simply, 
though, identifying that this would be additional money 
available just for the non-program crops. But same procedure.
    The Chairman. Okay. Thank you. You propose also $2.75 
billion increase in Section 32 funds----
    Mr. Conner. Yes.
    The Chairman.--over 10 years as you said to purchase fruits 
and vegetables for the National School Lunch Program and other 
nutrition programs. While I certainly support the fruit and 
vegetable purchased by the Federal spending programs, Section 
32 is also used to balance the market. In the case where there 
is overproduction of a certain commodity, would it make sense 
to strengthen the existing Specialty Crop Block Grant Program 
or something similar to improve competitiveness in the 
specialty crop industry thereby reducing the dependence of 
Section 32 bonus buys?
    Mr. Conner. Okay. Let me answer that question, Chairman 
Cardoza, this way. We believe the purchases themselves under 
Section 32 provide obviously a very, very important benefit to 
the specialty crop producers out there. But as well I have to 
tell you that we see it also providing a great benefit to the 
recipient of those commodities. As has been noted in the past, 
obviously, much of what USDA's food and nutrition efforts are 
about is better eating habits for all Americans. These range 
from our USDA food pyramid to our 5-a-day Fruit and Vegetable 
Plan. We are about encouraging greater consumption of fruits 
and vegetables within all of our community.
    So, in this regard making those purchased fruits and 
vegetables available through our feeding program. Feeding 
programs including the School Lunch Program we believe is not 
only beneficial to the growers, but it is very, very consistent 
and beneficial to the recipients of that product as well. So we 
would not want to see that necessarily replaced or I don't 
think phased out.
    I would add at this point as well I know Mr. Goodlatte did 
raise this question, the $2.75 billion we see as being 
additional to any current purchases that may be happening under 
Section 32 as well. This is a sizeable amount we feel, and 
again, it has great benefit for the producers but also great 
benefit for the health and nutrition of a lot of different, 
particularly low-income Americans out there.
    The Chairman. I am somewhat concerned about creating a 
situation where growers are completely relying or substantially 
relying on the Federal Government instead of using the Federal 
Government resources to create new markets. As a follow up from 
Secretary Johanns' response at the full Committee hearing, it 
seems that the Department concluded that the Block Grant 
Program was not really a farm bill program.
    I am confused by that answer since there are a number of 
proposals within your recommendations such as the new 
cellulosic energy proposal that looked to me like totally new 
programs.
    Mr. Conner. Yes.
    The Chairman. Do you think this is a viable tool for 
specialty crop agriculture, related to agriculture policy, 
first of all. Second of all, if you could just respond to how 
you believe this program fits within the PAYGO rules and the 
baseline budget questions that we are going to have to deal 
with as Members of Congress to fit this all into this new 
program?
    Mr. Conner. With regard to your question, Mr. Chairman, on 
the Block Grant Program, let me just say we have no beef or 
concern with that program whatsoever. It is authorized through 
2009, I believe. Seven million dollars is available and we are 
in the process of administering in coordination with the 
individual state departments of agriculture. We have already 
issued a few of those grants to some of the state departments 
of agriculture. We are going to continue to administer that 
program according to the law through 2009. So, again, we have 
no concern or hesitancy on that program at all.
    Just in terms of the broader market development issues, 
certainly I agree with your statement that the government 
should not be the developer or the provider of that particular 
market going forward in the future. As you know, Mr. Chairman, 
throughout this bill there are a number of provision that do 
prioritize specialty crops by giving them mandatory funding, 
not funding that is subject to further appropriation, but 
mandatory dollars, including, as I noted in my statement, a 
billion dollars for a new Specialty Crop Research Program that 
we believe will make a huge impact in this area in terms of 
market development. Market development in terms of new 
varieties, market development in terms of food safety, sanitary 
and phytosanitary issues, all the issues we have talked. This 
is a very, very sizeable investment, not subject to further 
action by another committee in this Congress but money 
available immediately.
    The Chairman. Thank you. I will wait for your response on 
the fiscal questions in writing.
    Mr. Conner. If I could, I will just say as Secretary 
Johanns has noted, Mr. Chairman, our farm bill proposals fit 
within the guidelines that have been laid out by the president 
in terms of a balanced Federal budget, within 5 years. We 
worked very, very closely with the Office for Management and 
Budget in terms of coming up with out additional $5 billion 
that we have added to our farm bill proposal over the current 
baseline. It is fully consistent with that plan, and we have no 
problem there at all.
    The Chairman. Thank you. I would just like to note that 
your comment with regard to the research component. I did three 
listening sessions last week: one in California, one in Oregon, 
and one in Washington. In every case the main topic of 
conversation was the research dollars and the need for research 
dollars to stay competitive in the global market.
    I am going to take the liberty of asking one more question. 
It is a very important issue to this Subcommittee and it is one 
that is breaking in the news as we speak. As I am sure you are 
well aware, the current crisis concerning the declining bee 
population and its' impact on specialty crops. Would anything 
in your proposal be effective in mitigating the bee shortage on 
fruit and vegetable production? How can we better provide USDA 
with the tools it needs to respond to these types of somewhat 
obscure and unanticipated challenges? We received testimony, 
and The New York Times yesterday reported that bees are fleeing 
the hives to where, in some cases, over 50 percent of the hives 
are coming up empty. So if you can respond to that I would 
appreciate it.
    Mr. Conner. I would, Mr. Chairman. Let me just say that I 
first became aware of this issue last week, so this is not 
something that has been on our radar screen or my radar screen 
certainly for a long period of time, but I am aware of it. I 
have been advised actually that our Agricultural Research 
Service does have facilities in Beltsville, Logan, Utah, I 
believe in Texas, in Baton Rouge, Louisiana, as well that are 
currently doing agriculture research related to bee activity. 
So this is something very, very relevant to the types of things 
that we are currently doing. I see us having a substantial role 
here in terms of identifying this problem and getting to the 
bottom of it in terms of a potential solution.
    Again, let me just say you mentioned agriculture research 
and the billion dollars that we have proposed. I see this type 
of activity being very relevant to the types of things that we 
see in the future that money going for, in addition to the 
ongoing activities that are currently going on within our own 
ARS facilities.
    The Chairman. Excellent. I am anticipating in the next few 
weeks to have an additional hearing or a segment of a larger 
hearing dedicated to this topic, so I look forward to working 
with the Department on this issue.
    Mr. Conner. Yes. I am sure we have some technical expertise 
that would be very useful to you in that process, Mr. Chairman.
    The Chairman. Thank you very much. I would now like to turn 
it over to my colleague, Mr. Neugebauer, for 5 minutes.
    Mr. Neugebauer. Thank you, Mr. Chairman. Mr. Secretary, in 
regard to some of your nutrition programs and the increasing 
purchase of fruits and vegetables, I think $50 million has been 
set aside for school lunch or school nutrition programs. I 
think in the 2002 Farm Bill there was a pilot program that was 
called for. What has been your experience with the pilot 
program? Second, what kind of reception have you received from 
the schools? And third, is the infrastructure in place to be 
able to deliver these? I am assuming maybe these are fresh 
fruits and vegetables that we are talking about. So could you 
kindly elaborate a bit on that for me?
    Mr. Conner. I will indeed. I think you are correct that in 
the 2002 Farm Bill they did establish a fruit and vegetable 
pilot project that basically became an afternoon snack program 
for fresh fruits and vegetables as part of the School Lunch 
Program. I think that program is a popular program. I don't 
believe we have had testimony from anyone against that 
particular effort. Again, it is consistent with our effort to 
encourage greater fruit and vegetable consumption among school-
aged children.
    The $500 million we propose I think is very, very 
consistent with that relatively small fruit and vegetable pilot 
project. We made a decision in this case to make it available 
to the schools in a less targeted sort of way. The fruits and 
vegetables would be made available, the schools would have the 
flexibility if they wanted to use those as part of their 
breakfast program, part of their school lunch program, or if 
they wanted to continue with the concept of an afternoon snack 
program. Schools would have that flexibility to use the $500 
million in that way. That is how we envisioned it. It was just 
maximum flexibility to the schools with the same purpose of 
encouraging greater consumption.
    Mr. Neugebauer. Who distributes those fruits and vegetables 
to the schools?
    Mr. Conner. We will provide a complete answer to that 
question for the record. Mr. Chairman, the School Lunch Program 
funding is broken out between cash assistance that we provide 
to the schools so they are able to go out and purchase the 
commodities and the food that they need to prepare a meal 
within our guidelines. I believe the figure is 20 percent of 
the help that we provide through the School Lunch Program is 
actually in the form of commodities as well that we purchase 
and make available through local vendors for those schools to 
use as well. So it is cash and commodities.
    Mr. Neugebauer. So what you are saying is maybe 80 percent 
of that would be cash, and they would be able to purchase that 
from a local distributor?
    Mr. Conner. That is correct.
    Mr. Neugebauer. Twenty percent of it may be given in 
commodities where that makes sense.
    Mr. Conner. That is correct.
    Mr. Neugebauer. If you have a little more breakdown on that 
or detail----
    Mr. Conner. I would be happy to provide that for the 
record.
    Mr. Neugebauer. Ok. I think you are proposing an additional 
$10 million by year for specialty crop research. How much are 
we spending for specialty crop research today? Do you have that 
figure?
    Mr. Conner. We can pull together those total figures for 
you.
    Mr. Neugebauer. Somebody just pulled that together for you, 
I think.
    Mr. Conner. Yes. We were anticipating that question. 
According to the data we have for fruits and vegetables, Mr. 
Chairman, for 2006 it is just slightly under $200 million, I 
believe, $199 million.
    Mr. Neugebauer. When I was in the Chairman's district we 
heard as we traveled around, even from the gentleman from New 
York, we heard the research piece over and over again. By 
bringing forth this additional funding, have you identified 
where the gaps are currently in the research? Do you have 
targeted places where you think this additional funding should 
go?
    Mr. Conner. We have not yet, Mr. Chairman. The dollars that 
we are proposing are competitive dollars that will be awarded 
through a competitive process. Determinations would be made in 
terms of the extent of the problem that we are trying to 
address and how much benefit we can provide to the producers as 
a result of that. It is sort of a cost benefit calculation that 
goes through our competitive process. So these are all 
competitive-based dollars that we envision all of our 
institutions having the ability to compete for.
    Mr. Neugebauer. Well, I want to encourage you to do one 
thing, and I know it is one thing that Secretary Johanns and 
yourself have done already; you have reached out to industry 
groups, and when you had issues you brought them in and you 
listened to them. I think it would be very helpful as we are 
talking about additional resources here, that while it would be 
a very competitive process from the universities, and they will 
all have wonderful ideas and ways for you to spend the money, I 
think it would be very beneficial to make sure that these 
additional resources go to what the industry feels are some of 
the key areas where they need additional research to solve some 
of those issues that are going on within the industry.
    Mr. Conner. I agree, Mr. Neugebauer, and as you know, we 
have a number of fruit and vegetable advisory committees within 
the Department of Agriculture that are really very key to how 
we proceed on these fronts. I am reminded as well, just to 
close quickly here, in terms of our additional research versus 
what is currently going on, I think our people and from the 
testimony we received felt that food safety and pest and 
disease were the areas where probably the current research 
dollars aren't adequate enough to address the extent of the 
problems that we have seen develop out there over the last 
couple of years. So while these aren't competitive dollars, we 
certainly see those two areas being ones that are likely to be 
the recipient of those competitive dollars.
    Mr. Neugebauer. Thank you very much.
    The Chairman. Thank you, Mr. Neugebauer. I would like to 
now recognize the gentleman from North Carolina, Mr. Etheridge, 
for 5 minutes.
    Mr. Etheridge. Thank you, Mr. Chairman, and Deputy 
Secretary, thank you for being here. I apologize for not being 
here earlier, but I have two hearings going on at the same time 
this morning as you can appreciate others do as well. So let me 
thank you for your testimony.
    Some of the proposals for increasing the funding for 
conservation would be welcomed. I know you can appreciate that, 
particularly the recommended increases in EQIP because that is 
certainly important to my state where we have an awful lot of 
concentration of poultry, pork, and some dairy. But I must say 
that there should be a serious examination of some of the 
proposed funding pieces used to get the dollars to fund these 
increases.
    Mr. Conner. Yes.
    Mr. Etheridge. In particular, the new payment limitations 
would probably have a pretty serious problem in a number of 
parts of the country, but with respect to specialty crops, this 
is important to my state as well.
    Mr. Conner. Yes.
    Mr. Etheridge. My district is the nation's leading producer 
of sweet potatoes, and we grow a variety of specialty crops, 
especially in the wake of the tobacco buyout. A lot of folks 
are expanding into new ventures. So as you mentioned in your 
testimony the organic food market is booming.
    Mr. Conner. Yes.
    Mr. Etheridge. We have an awful lot of people who have 
taken advantage of that because it is adjacent to some fast-
growing urban areas. Can you tell me some of the ways that EQIP 
funding can be directed to producers to assist them in the 
transition of becoming organic producers, and are there 
unexplored areas where USDA could help these aspiring organic 
farmers in these adjacent areas for marketing, i.e., farm to 
market assistance?
    Mr. Conner. Yes.
    Mr. Etheridge. Is USDA making an effort to integrate these 
healthier foods into the school lunch and the school breakfast 
programs? The latter being very important as we look at the 
challenge our schools face with children on Ritalin and the 
need to make sure they get good, healthy food.
    Mr. Conner. I appreciate the question, Mr. Etheridge. Let 
me just say that we do have a very strong, what I believe is a 
very strong organic section in this bill. First and foremost 
with your question as to EQIP, organic producers are fully 
eligible for those additional, for all of those EQIP dollars. I 
believe that EQIP can play a significant role for those 
producers in terms of meeting those requirements.
    In addition within our organic section we have provided an 
additional $61 million worth of funding, specifically, for 
organic agriculture, focused on a couple of different areas. We 
heard a lot of testimony that producers do have a difficult 
time transitioning to organic agriculture away from traditional 
farming. In this way we have provided some help for those 
producers in the past in certain states. We are expanding that 
help for them in terms of their certification as being organic 
to all 50 states. We have raised the amount of assistance that 
we will be paying them in that regard, as well.
    Mr. Etheridge. When will that be available?
    Mr. Conner. It would be available upon passage of this 
bill. Obviously, we would have to administer and go through a 
process to implement that, but we see that as being a pretty 
straightforward process that wouldn't take too much time at 
all. And so, again, I think that would provide substantial 
help.
    The other area that I did note in my opening remarks, too, 
Mr. Etheridge, is the fact that one of the points that we heard 
in organic agriculture is since this is still a relatively new 
industry, albeit a very rapidly growing one, the amount of data 
and market information that we have within USDA on this is 
pretty limited. Much of our marketing reports and our data 
still does focus upon traditional agricultural methods as you 
might expect, and there is----
    Mr. Etheridge. Well, I think that----
    Mr. Conner.--a need for more data so that these producers 
can use that to make their own projections and analysis in 
terms of markets.
    Mr. Etheridge. Well, I would encourage you to move quickly 
in that area, because I think that area is going to grow.
    Mr. Conner. Absolutely.
    Mr. Etheridge. Before my time runs out let me ask one final 
question.
    Mr. Conner. Yes.
    Mr. Etheridge. Can you tell me what USDA is proposing when 
they propose to bring more specialty crop producers into the 
crop insurance program? Another Subcommittee that I am a part 
of has some jurisdiction on that and everywhere we have been in 
hearings we have heard that. I think the low level 
participation is an indication because the insurance coverage 
is not there for the premium costs. I would be interested in 
your comments on that.
    Mr. Conner. If we could, Mr. Etheridge, let me just, I will 
submit a response to you in writing for the record to that 
particular question.
    Mr. Etheridge. If you would, please and if you could also 
make sure every Member on this Committee gets a copy of that. 
That would be great.
    Mr. Conner. Absolutely. We would be happy to do that.
    Mr. Etheridge. Thank you, sir.
    The Chairman. I would like to follow up on the gentleman's 
question that as I have traveled around, especially crop 
producers just simply do not feel that there is value in the 
insurance program as it is currently constructed.
    I would like to now turn it over and recognize the 
gentleman from New York, Mr. Kuhl, for 5 minutes.
    Mr. Kuhl. Thank you for appearing, Deputy Secretary Conner.
    Mr. Conner. Yes.
    Mr. Kuhl. Just for your information, I have submitted a 
list of questions to Secretary Johanns and am anxiously 
awaiting response of those. Anything you can do to stimulate 
the acceleration of those responses would be very greatly 
appreciated.
    Mr. Conner. Absolutely. We will check on the status of 
those.
    Mr. Kuhl. But as I was sitting here listening to your 
comments and your opening testimony, I was very interested in 
the aspect that you outlined without a great deal of 
specificity, and that deals with a billion dollars of new 
research over the next 10 years.
    Mr. Conner. Yes.
    Mr. Kuhl. I was thinking about some of the problems in my 
home district, the 29th Congressional District of New York. It 
is in the Finger Lakes Area, where there is one of the fastest 
expanding and most optimistic enterprises is the grape 
industry. Fifteen years ago we had not more than 15 major 
wineries. Today it is over 260 and it is very competitive. One 
of the issues that confronts us in this world of global warming 
is the severe winters that we are experiencing in upstate New 
York. One of those problems that is reflected in the grape 
industry is the loss of some of the vines and some of the root 
stock, particularly in the Riesling area.
    I am curious as to, from your perspective, if I was a small 
grape farmer growing say 40 acres of Rieslings, and I 
experience severe winters like we have in upstate New York and 
watch 80 percent of my crop get wiped out after the third 
severe winter, knowing that there is a billion dollars out 
there in research, how might I anticipate that the United 
States Department of Agriculture is going to help out my 
industry? I have heard you talk about competitive grants, and 
thinking from a small producer's standpoint, how am I going to 
stay competitive, and how am I going to replace my crop? I am 
aware that one of my producers actually tried to bring in a 
product from Germany to beat the severe winters and he was 
frustrated with the impediments put in place by USDA in 
actually importing those root stocks. I am curious if we are 
not going to be able to do that as an alternative, is research 
going to provide an alternative answer to this person? I would 
be interested in your comments.
    Mr. Conner. I appreciate your question. Let me just say I 
think it is important to note that, initially, given the types 
of winters that you have experienced in upstate New York, I 
don't want to start to sound like a snake oil salesman here and 
say that we have a solution for every circumstance. I mean, 
these have been some awfully compelling conditions, and all 
producers suffer during those types of conditions. So I know 
why you want to characterize our proposal as being able to 
overcome when producers oftentimes can lose all of their crop 
or production in a situation like this.
    But to your point I think genetics, particularly for 
specialty crops, in this case grapes, are a very critical 
aspect of where we see future research taking us. Genetics that 
may be for disease resistance, or for weather resistance, but 
the whole area of research in those plant genetics is very 
critical. We have been investing heavily in our program crops 
via genetics research. I think we are lagging behind in this 
area. I see, again, that $1 billion as having a great deal of 
focus upon plant varieties and the genetics behind those 
varieties to enable producers to better withstand the types of 
conditions that they are facing out there; whether those 
conditions are from the weather, pest, or some other 
combination.
    Mr. Kuhl. Help me understand the practicality of the 
application of this money to the small grape farmer that I 
spelled out? How is he actually going to be able to access that 
money? Is he going to be competitive? Is upstate New York going 
to be competitive with the California wine industry? How are 
you going to determine that competitiveness for an application 
for a grant? Certainly that individual, who is dependent upon 
that produce is not going to be able to do it, so are you going 
to be dependent in the process that you are going to set up for 
this research on universities, like the ag center at Cornell 
University, or some of the other universities? How is that 
going to happen? Help me understand that.
    Mr. Conner. Well, just to give you a practical example, I 
think you probably identified how the process would work in a 
circumstance like this. A very practical example would be an 
institution like Cornell University, a land-grant institution, 
acknowledging these problems out there working with the 
cooperative extension offices that are out there in the 
counties dealing with the producers, putting forth a proposal 
to address that particular need. Cornell University, or some 
other institution, would submit to the Department of 
Agriculture a grant request that would be evaluated on a 
competitive basis. I think that would be a very practical way 
in which you would see funding for this happen. I would not 
necessarily claim that a small producer out there is going to 
get grant funding for his individual operation. Perhaps that 
could happen, but it is probably not likely. I think working 
through his extension office or working through the land-grant 
institution would be a very typical path that would take.
    Mr. Kuhl. Thank you, Mr. Deputy Secretary. I see my time 
has expired. Thank you, Mr. Chairman.
    The Chairman. Now I would like to call on the gentleman 
from Florida, Mr. Mahoney, a new Member of the Committee.
    Mr. Mahoney. Thank you, Mr. Chairman. I have to say that 
the snacks on this Committee are far better than the Financial 
Services Committee.
    The Chairman. We aim to please, sir.
    Mr. Mahoney. I want to begin by thanking the Secretary for 
taking the time in what I hope will be a first step to better 
address the concerns of American specialty crop farmers. I 
represent the Sixteenth Congressional District of Florida, 
which is in central Florida. It runs from Palm Beach County all 
the way to Punta Gorda in Charlotte County. One of the most 
important issues affecting farmers in my district, and around 
the State of Florida, is plant and animal diseases. I recently 
had the opportunity to talk to the Agriculture Commissioner in 
Florida, Mr. Bronson, as he was highlighting to me the 
devastating effects of pests and diseases on Florida's 
agricultural industry, especially pests and diseases that enter 
the state through our numerous ports. In fact, I am told that 
Florida receives an average introduction of one new insect 
species each month. The cost to taxpayers of combating these 
pests and diseases after their introduction is enormous. The 
State of Florida, the Federal Government, and industry spent 
almost a billion dollars last year in eradication efforts for 
just one disease, citrus canker. And a recent GAO report that 
management and coordination problems between the U.S. 
Department of Homeland Security's Customs and Border Protection 
and USDA's APHIS are increasing the vulnerability of specialty 
crops to foreign pests and disease.
    I know you have a limited amount of time, but I was hoping 
that you could address the issue from two perspectives. First, 
what efforts is the Administration taking to improve the 
coordination between CBP and APHIS in order to better protect 
our specialty crops? And second, I noted in the proposal that 
USDA is recommending investing $100 million in annual mandatory 
spending to create a new specialty crop research initiative to 
address the needs of the specialty crop industry. The proposal 
goes on to say that one of the many focuses of the initiative 
will be to continue efforts to identify threats from invasive 
species such as citrus greening.
    Mr. Conner. Yes.
    Mr. Mahoney. Which as you know has, in every country where 
it has hit, it has destroyed the industry. Can you elaborate 
further on how the Administration foresees the money being 
divided between the many focuses that you have to ensure that 
we are getting enough dollars to address this greening problem?
    Mr. Conner. In response to your latter question, Mr. 
Mahoney, let me just say that we are well aware of the threats 
that the Florida citrus industry has been facing over the last 
several years. We have been really a big partner with the 
Florida Department of Agriculture, and with Charlie Bronson, in 
dealing with these issues, particularly the citrus canker 
issue. Our investment in terms of the Department of Agriculture 
has been very substantial.
    With regard to citrus greening as well, we are well aware 
of the potential devastating consequences that it would have, 
and for that reason we actually did highlight it in terms of 
our own explanation of the types of money that we see the 
billion dollars addressing out there. This is a major threat to 
a very large industry in the State of Florida, as you know. 
Again, these are competitive dollars where each sector has to 
compete, but we know that given the size and the magnitude that 
citrus greening could potentially have in Florida, we feel 
pretty confident that some of the billion dollars will go 
toward research activities for Florida citrus. In this case, 
greening, as well as citrus canker, is where we already have a 
very substantial investment with the State of Florida on that.
    In terms of your border patrol situation, this issue did 
come up pretty extensively with Secretary Johanns and our 
testimony yesterday in the Senate. I will tell you that we do 
coordinate. We coordinate closely with the Department of 
Homeland Security in terms of the management of those Border 
Protection individuals that are out there. They work closely 
with our APHIS personnel in this way. In fact, they are trained 
and operate under the guidelines established by APHIS. This is 
something we continue to monitor closely. We want to work with 
this Committee and others to identify areas that they may see 
of concern out there in terms of potential gaps, because we do 
understand the consequences if one of these diseases get in 
this country and gets a foothold, the cost and the investment 
for our agency in controlling that is very substantial. If we 
can prevent it and keep it from coming here, that is far and 
away the most cost-effective means of dealing with that 
problem.
    Mr. Mahoney. But with all due respect, don't you think that 
we should be much more proactive in what we are doing, more 
along the lines of what CDC does with potential threats to 
human health? I mean, given the problems that are coming in and 
continuing to hit our shores, wouldn't that make sense?
    Mr. Conner. Well, I am not going to say that there aren't 
areas that we ought to look at. Obviously, we are always open 
to evaluate our border control activities, but I guess my point 
to you is that we are closely coordinating. Our agency and our 
APHIS personnel who are specialists in this disease control 
area are working very closely with DHS at this point to make 
sure that we have the proper safety net in place to prevent 
these diseases from coming in to the U.S. Again, whether it is 
Avian flu, foot-in-mouth disease, or other agents, I think our 
track record, while we have many problems, our record for 
keeping some of these severe foreign animal diseases out of 
this country has been pretty good at this point. But I wouldn't 
stand here and in any way claim that this is not an ongoing 
effort that we always need to look to how we can improve.
    The Chairman. Thank you, Mr. Mahoney. I would now like to 
recognize and welcome to the Committee the gentleman from 
California, Mr. McCarthy. While he is not a member of the 
Portuguese Caucus, we have welcomed him to the Central Valley 
delegation in any case.
    Mr. McCarthy. Well, I thank the Chairman. He has been very 
kind. Mr. Deputy Secretary, I am from California's Central 
Valley, a little farther south than our Chairman. I would like 
to follow up the gentleman from Florida, because a little later 
this year we are going to have international flights into 
Bakersfield. I understand the movement to Homeland Security for 
doing the inspections, but is there a point that we should 
consider actually moving this back? Have we thought of that? 
Because under Homeland Security you are looking at intentional, 
which rightfully so they should be. But with the unintentional 
when these insects come through, and the one thing I am hearing 
from my constituents is the morale is down. Is there a way that 
we can boost that? Is there any consideration of moving it back 
to APHIS?
    Mr. Conner. We are not in any way reviewing potentially 
changing the current structure for our Border Protection agents 
out there, sir. Again, I will tell you that we don't seek that. 
We feel like we have very open communication, very open 
dialogue with DHS. Again, we share training activities with 
these border agents, with the Department of Homeland Security, 
and where they are located I don't think it is something we are 
considering. We just want to make sure they are trained and 
that they have the personnel and the resources there to do the 
job. Again, I think the track record does tell you that these 
people do their jobs well. I can't speak to the morale, but 
certainly we believe that they have done their job well in the 
past. To the extent we identify gaps, we want to work with you 
to make sure that potential future problems, whether that is in 
Bakersfield or wherever else that we work with the Department 
of Homeland Security to make sure that they have the trained 
personnel looking for the right potential threats at those 
locations.
    Mr. McCarthy. Well, I appreciate that. If I could just 
change course for a second, you talked a little bit about 
lifting the planting restrictions with the flex acreage.
    Mr. Conner. Yes.
    Mr. McCarthy. I come from the Central Valley of California. 
We grow a lot of fresh fruits and nuts. When the Secretary was 
here, I asked him if we have researched the actual dollar 
amount that this would impact. He gave me the Department's 
Economic Research Service article.
    Mr. Conner. Yes.
    Mr. McCarthy. But it didn't give me a specific number of 
the impact, and Cal Poly Specialty Crop Institute in an 
industry study shows that current impact to growers will be in 
excess of $3 billion. Is that a number that the Department 
thinks, or is there a number internally that people have?
    Mr. Conner. Yes. We haven't seen the Cal Poly results. I do 
go back to the Economic Research Service report that I think 
the Secretary gave you from February 2007. I believe there was 
some data in there which suggested contrary to perhaps what you 
may be seeing, and again, we have not seen that particular 
report. Overall, the impact of changing these planting 
restrictions is limited. I think the report did acknowledge 
that there could be some slight regional concerns among certain 
crops where it could be a notable change in that. I will just 
tell you respectfully, we feel very strongly that we have to 
correct this WTO problem. If not corrected, this problem could 
threaten to undermine all of our green payment options that we 
have been making out there, claiming not to have any trade 
distorting aspects. If that is no longer the case, if we don't 
fix that problem, we are threatening all of those payments, 
which means we are threatening the fact that we are in 
compliance with our WTO obligations. Being out of compliance 
with those obligations is not good news for any sector in the 
American farm economy, including the fruit and vegetable sector 
as well. It could have potentially large ramifications.
    Mr. McCarthy. Just to follow up, I do agree with you that 
we have a concern there, but are you thinking of any other 
creative options of other ways besides just doing the blanket 
lifting? Are there any other ideas that can meet that criteria 
with----
    Mr. Conner. Well, let me just say as well that I think it 
is important to note that under our proposal obviously we are 
purchasing a very substantial amount of fruits and vegetables 
under our plan. Now, we purchase those fruits and vegetables, 
first of all, based upon the need and the demand out there in 
the marketplace. But, secondly, obviously, we are always 
looking to procure those commodities that are in surplus 
supply, where the price is good and readily available. We think 
that is a prudent use of government resources to buy the 
commodities in demand that happen to be a very good price at 
this particular time. We believe that purchase requirements 
would give us a lot of flexibility to, if there was a 
particular sector out there that for some reason was identified 
as having a potential impact as a result of this change, we 
believe we have the tools to help to mitigate that impact on 
that particular sector with our purchase requirement as well.
    So, again, we feel very confident in saying that the impact 
is minimal. In that regional, and in that very isolated 
circumstance where it may not be minimal, we have the tools to 
deal with that. But fundamentally we have to deal with this WTO 
problem.
    Mr. McCarthy. Well, I think it might be minimal but 
regionally it could be a very large impact. But thank you very 
much. Thank you, Mr. Chairman.
    The Chairman. I would like to thank the gentleman from 
California and also acknowledge both the gentlemen from Florida 
and from California for talking about the inspection situation. 
In the EAT Healthy America Act that both these gentlemen, most 
of the Members of the Committee, and I are cosponsors of, we 
do, in fact, propose to move the inspections back to APHIS from 
DHS. Our experience in the real world out there is saying it is 
not working at all under the current structure of the 
Department. And we are very concerned about the implications 
for specialty crops and, frankly, all crops in the country.
    I would now like to recognize the gentlelady from New York, 
Kirsten Gillibrand, for 5 minutes and welcome her to the 
Committee.
    Mrs. Gillibrand. Thank you, Mr. Chairman. It is my honor to 
be here. I come from upstate New York, and we have a lot of 
apples, fresh produce, dairy, and some organic farming. So your 
testimony today is particularly interesting. One question I 
have about the President's and the Administration's proposals 
about the conservation title, some of our farmers are concerned 
by the proposal of the President to combine working lands and 
conservation programs. They are worried that doing this is 
somehow going to result in less funding overall. Can you 
explain the Administration's intention? And can you please 
comment on whether or not it will reduce funding for these 
kinds of programs?
    Mr. Conner. No. We do consolidate a number of programs. 
EQIP is the result of a consolidation of a few different 
programs. Our easement programs are consolidated into one 
working lands effort as well, farmland protection effort as 
well. But I think in all of those cases we took the combined 
funding of all of those programs and then increased the funding 
on top of that combined level. So there is no----
    Mrs. Gillibrand. There will be no shortfall?
    Mr. Conner. There is no consolidation and then cut from 
that consolidation. The funding is above and beyond anything 
that each of those combined programs would have represented.
    Mrs. Gillibrand. Thank you. That is good news.
    Mr. Conner. Yes.
    Mrs. Gillibrand. I would also like to ask a couple of 
questions about the energy title.
    Mr. Conner. Yes.
    Mrs. Gillibrand. You have directed $100 million for direct 
support for producers of cellulosic ethanol. In our district 
there is a lot of potential for cellulosic ethanol, not only 
with switchgrass but the wood pulp fibers that aren't used in 
the paper-making process, and other biomass feed stocks. My 
concern is that this really isn't enough, because there is so 
much money that is being put up towards ethanol, in general, 
that the corn markets are going up, so for our farmers, our 
dairy farmers, their grain prices are going up. So if we really 
want to move this market to get a more diverse market where we 
are looking at these other sources that, in fact, may be more 
cost efficient over the long term once we begin the research 
and development and figure out how to do it cost effectively, I 
am concerned that this is not enough to really move that market 
in a different direction.
    Mr. Conner. Well, let me just say that we believe we have a 
very substantial investment under our energy title. We see it 
as having three different components for the promotion of 
cellulosic ethanol. The first is a research component. 
Cellulosic ethanol, we have been told and advised in some of 
our meetings is basically trying to use technologies and 
enzymes, if you will, that oftentimes are devised for a corn-
based type process in terms of the development of this 
industry. And so, you just need some basic research going on 
out there on enzymes, processes, all this type of stuff 
designed specifically for cellulosic ethanol, and we have that 
investment in this bill.
    The second part of it is, obviously, that there needs to be 
some work done, in terms of the producers' growing of this 
particular product so that it is--if the option is $4 corn, 
$4.50 corn, versus rolling the dice on some kind of other 
cellulosic-type product, it is going to be tough to get those 
producers to switch. And so in our proposal we have a number of 
options to provide incentives for those producers to actually 
grow the crops that the plants will need.
    Then the third component, which we regard as the key 
component to this, is obviously these are new ventures. The 
capital investments are large, so we have a very substantial 
$2.1 billion loan guarantee program for the actual construction 
of the plants themselves, which we believe will provide that 
incentive in working with private capital markets to remove 
some of that risk from them that the loan guarantee provides, 
so that the construction of these plants can go forward.
    So it is research, it is the producers, and then finally 
the plant construction, and, again, there is a very substantial 
investment in our proposal for that purpose. All mandatory 
dollars, I might add, so that, as I noted earlier during one of 
the Chairman's questions, this is not subject to some other 
appropriations process or some limitation later on. These are 
dollars that would be immediately available for that purpose.
    Mrs. Gillibrand. Thank you for your time. I am very 
grateful.
    The Chairman. Thank you very much. I would now like to 
recognize my good friend, the gentleman from Tennessee, Mr. 
Davis, for 5 minutes.
    Mr. Davis. Mr. Chairman, thank you very much, and it is 
certainly good to serve on this Subcommittee with you and see 
you with the gavel. You and I came to the House in 2003, both 
elected to Congress in 2002, and it is an honor to serve on 
your Subcommittee and to be here today as this testimony is 
being given.
    Secretary Conner, I am pleased to see you here today as 
well. When I look at the hearing, we are talking about 
horticulture and organic agriculture. When I was a kid growing 
up, we used a lot of that organic fertilizer from the barnyard 
in much of our farming, so we understand the organic fertilizer 
in rural Tennessee where I grew up. We had a fertilizer back 
then that was 396. They called it Old Black Joe. It was 
actually Armour fertilizer that produced that, and the 396, you 
know what I am talking about when I talk about--or do you?
    Mr. Conner. I don't. I don't.
    Mr. Davis. And you are in Agriculture?
    Mr. Conner. It wasn't an Indiana term, I guess.
    Mr. Davis. It was basically 18 pounds of nutrients, 3 
pounds of nitrogen, then you had phosphate and potassium, those 
numbers identify what the ingredients are as far as the 
nutrients that go, the rest of it is just filler. I will have 
to teach you something about agriculture.
    Thanks for being here. I represent a very rural area in 
Tennessee. We have timber industry, with hardwoods and some 
softwood. We have a lot of beef cattle and dairy cattle. We 
have a lot of wineries, quite frankly. A lot of California wine 
and New York wine or juice and Alabama juice comes to Tennessee 
to make the wines, the farm wines that we have. I think it is 
better than the other areas where you make it, but some of you 
folks would disagree with that. But we also have soybeans and 
cotton, and one of the areas that I represent has probably one 
of the largest horticulture industries, the nursery industry, 
in the world. It is kind of known in our area as being the most 
dominant, and we ship a lot of products from outside of our 
state to other parts of the nation. A real concern that we have 
as we, as I look at this farm bill, is that when we start 
looking at pests and invasive species, do you believe that when 
it comes to specialty crops that there is, in this farm bill 
that it adequately addresses funding levels as needed for 
research and development to find new ways of protecting us from 
the invasive species and from the pests?
    Mr. Conner. I believe we have gone a long way towards 
meeting that fundamental commitment, sir. As has been noted one 
of the key parts of our research title is that we have 
identified a billion dollars of mandatory money, not subject to 
further action, to be made available for research on specialty 
crops. It has been noted earlier in the hearing, in the area of 
plant disease, pest protection is one of those areas where we 
feel like our current dollars for specialty crop research are 
not going far enough. So we see that as being a very targeted 
use of the billion dollars of mandatory money that we are 
making available to it. So, again, in this business you never 
totally solve the problem, but we believe we have moved the 
ball forward very substantially here with this commitment of 
resources.
    Mr. Davis. Okay. And stepping away from the farm bill for 
just a moment, one of the major issues to the nursery producers 
and the horticulturists in the district that I represent is the 
fire ant that is rapidly moving northward. If you have a plant 
that is in a 5 gallon or 10 gallon pot you can pretty well 
control that. But if you are actually burlapping or balling the 
trees, and if there is a fire ant located on one of those, and 
you try to ship that across the state lines, you are in a heap 
of trouble. Quite frankly, there may be an embargo placed on 
your entire farm, and the entire area could get to the point 
where they couldn't ship their product to other areas of the 
state. There is a chemical called BioFriendTM. 
Filosar or Telesar is the common name used for it. There are 
some folks who feel like we need to start looking to the fast 
tracking of chemicals to make those approved by USDA or FDA for 
actual using them to maybe stamp out, eradicate, or control the 
fire ants. Is that working adequately with the Department of 
Agriculture? Do we need to introduce legislation, or are you 
making rules that could make fast track become a possibility?
    Mr. Conner. Well, in terms of fast tracking that approval, 
I assume that that would probably occur under EPA jurisdiction, 
the Federal Insecticide, Fungicide, Rodenticide Act, which 
would not be in the Department of Agriculture. But I will tell 
you that we do work closely with EPA under that statute because 
there are certain authorities that the state has to request 
emergency approvals in the event that you have an outbreak of a 
particular pest. We do a lot of the economic analysis data for 
those approvals to show that it is indeed an emergency that is 
costing the producers. That is a role we are going to continue 
to play.
    Mr. Davis. My time is up, but Triple 19 is one of the 
better fertilizers. That is what my brother uses.
    Mr. Conner. Is that right? I will remember that.
    Mr. Davis. It makes it grow a whole lot better, but when we 
first started, the fertilizer was actually 396. So you need to 
go back.
    Mr. Conner. 396.
    Mr. Davis. If you are going to work in Agriculture, you 
have to learn at least what we used to produce with. Thank you, 
sir.
    Mr. Conner. Thank you.
    The Chairman. Mr. Davis, I was thinking that when you 
mentioned 396, that might be the ear tag for old Bessie.
    Mr. Davis. No, that would be, that would have been last 
year she was born. She wouldn't have been Bessie. She is 
probably hamburger by now if she was born then.
    The Chairman. I want to thank the gentleman for his 
questions. With regard to the fire ants, I just want to make 
the Deputy Secretary aware that there is significant concern on 
the Committee. Mr. Etheridge has asked me to look into that as 
well. He is very concerned about some issues in his district. 
There are other Members of the Committee, Mr. McIntire as well, 
that are concerned. So we will be contacting the Department 
further about the fire ant question.
    Mr. Conner. Okay.
    The Chairman. And how we can better deal with that 
challenge in a number of states.
    Let us start the second round of questioning now. I would 
like to ask the Administration, as you mentioned in your 
testimony, proposes to establish a new grant program that would 
invest $20 million over 10 years to further focus resources on 
addressing international sanitary and phytosanitary issues.
    Mr. Conner. That's right.
    The Chairman. Has USDA given significant thought to the 
mechanics of this grant program, such as organizational 
eligibility and where it might be located within USDA and how 
it would be applied? I think there are some concerns.
    Mr. Conner. We have not provided too much more detail or 
gotten thought just in terms of the administering agency at 
this point, Mr. Chairman. Again, it is our view that these 
sanitary and phytosanitary rules are really, have been and are 
going to continue to be what our foreign trading partners use 
as the means to keep our product out. So, from our standpoint 
it is going to require a lot of careful collaboration between 
our Foreign Agricultural Service, which is going to be on the 
front lines out there in terms of promoting the product, 
dealing with the foreign government that may be imposing the 
unfair restriction as well as our own Agricultural Marketing 
Service. Then Agricultural Research Service in the event that 
there is actual research being done will collect the data that 
is necessary to show that our produce is safe for those foreign 
countries to be purchasing. So, this is not one of those areas 
that we see being under one particular jurisdiction, but it is 
going to require a number of different mission areas within 
USDA.
    The Chairman. Well, I applaud USDA for putting the dollars 
in. I think we are going to have some questions and further 
input on how we locate this program and how we implement it. I 
know Mr. Costa has raised questions about Japan precluding our 
beef from being imported there. They have 10 times the amount 
of issues that we do in VST and other things.
    Mr. Conner. Yes.
    The Chairman. I remember my opponent in my first electoral 
campaign for the legislature nearly lost his farm while we were 
running because he had a load of cherries that sat on the docks 
in Japan. You don't need to hear too many of those cases of 
people being totally wiped out with a perishable commodity to 
know that we need to do something in this area. I applaud you 
for your work. We just need to figure out how we could put the 
money there. If we don't have the ability to act quickly when 
we do have a farmer that has his crop on the docks in a foreign 
country and not be able to get it through, we can spend all the 
money in the world, and it won't have any positive effect.
    Mr. Conner. We agree.
    The Chairman. Thank you. You have also proposed increases 
to funding the TASC Program, Technical Assistance for Specialty 
Crops, and to create another grant program to address SPS 
issues abroad. Beyond this the proposal does not address plant 
pests in any other way. The SPS issues are more than just trade 
issues. Several states have serious domestic pest emergencies. 
Why did your farm bill proposal not address those issues more 
specifically as a way to protect U.S. agriculture from pests?
    Mr. Conner. Well, I think we do offer that protection, and 
that occurs in a variety of those proposals, including the two 
programs that you have identified in terms of sanitary and 
phytosanitary requirements. I would point you, Mr. Chairman, to 
a third proposal that we do discuss extensively as well, and 
that is to increase our involvement with some of these 
international standard-setting bodies, which we see as being 
critical to the future of trade and dealing with a lot of these 
sanitary and phytosanitary requirements. As you know, a number 
of examples out there, beef being a pretty good one, where 
there needs to be international standards by which those 
participating and trading partners have agreed to live by those 
standards. It is very relevant to the fruit and vegetable 
industry in terms of a mitigation effort that we may take here 
that meets international standards it is only as good as the 
country you are trying to ship to acknowledging that that 
particular mitigation does meet those standards. So we believe 
we have to increase our role in that as well.
    Obviously, the research side continues to be important, and 
then dealing with those countries in terms of their own, what 
could be erroneous, sanitary and phytosanitary requirements 
that are keeping our product out. So I believe, we want to work 
with you on this. If you have identified something we have 
missed here, we will work closely with you on this. Our 
intention is to make this a very aggressive sanitary and 
phytosanitary push to make sure that our farmers are being 
dealt with fairly.
    The Chairman. Thank you. Since you mentioned it, your 
Administration proposes to authorize and provide long-term 
mandatory funding of $15 million over 10 years to increase the 
U.S. presence in the international standard-setting bodies such 
as the Codex Alimentarius and the International Plant 
Protection Convention----
    Mr. Conner. Right.
    Mr. Cardoza.--and the World Health, World Animal Health 
Organization. Does this funding level place us on par with our 
trading partners, particularly the European Union, with regard 
to resources devoted to participation in these international 
bodies?
    Mr. Conner. We believe that it does put us on par with 
them, and it will provide us with the resources that we need to 
be able to deal with those international bodies and provide the 
technical personnel to work with those bodies. That will, 
obviously, then work with our industries to make sure that we 
are being treated fairly here. I am advised that the EU would 
probably still be putting more resources in there than what we 
would under our plan, but we believe that the technical 
expertise that we would be able to offer with this additional 
funding would be an important step in the right direction.
    The Chairman. Thank you. Mr. Neugebauer, I turn it back 
over to you for further questions.
    Mr. Neugebauer. Thank you, Mr. Chairman. Mr. Secretary, I 
am not a frequent flyer at the grocery store because generally 
when I go to the grocery store, it takes me a long time to get 
through the store and visit with constituents. I was recently 
in some grocery stores, and I was noticing that a large amount 
of shelf space is provided in the grocery stores for organic 
foods. So it is obviously, it is a growing piece of the market 
share.
    I had some people in my office earlier today that were 
talking about the standards that it takes, and I think Ranking 
Member Goodlatte mentioned making sure that young farmers or 
small producers, if they want to move into the organic 
business, have the ability to do that. So I have a couple of 
questions.
    Mr. Conner. Sure.
    Mr. Neugebauer. One of those is what are we doing as far as 
enforcing standards so that somebody just doesn't decide one 
day to just stamp organic on it, and second, one of the things 
that individuals in my office said that it is a difficult 
process to go through to get that. So are there things that the 
Department is doing to help producers, if they want to get in 
the organic business, navigate through this process? Do we have 
uniform standards in place?
    Mr. Conner. Those are good questions. I appreciate it. We 
do play an active role in working with the producer because we, 
as I noted in my opening statement, we acknowledge that the 
organic certification process is difficult to navigate. It is 
not an easy task for some small producer out there trying to 
transition from conventional farming. It is the reason we have 
proposed additional resources in the bill. We have expanded our 
certification help to all 50 states under our proposal, and we 
do increase the amount of money that we actually will 
compensate the producers for in terms of his costs of getting 
through this certification process, significantly under this 
bill as well.
    In terms of certification agents as well, Lloyd Day is with 
me, who is an Administrator of our Agricultural Marketing 
Service, and I will ask him to correct the record if I am 
wrong, but I believe we do certify the, if you will, the 
certification agents out there that are involved in enforcing 
and making sure that when a product is labeled organic, it 
meets the very rigorous standards that we have set in place. I 
believe we have over 96 trained agents that are involved in 
that certification and enforcement process, and we feel 
confident that that is being adequately enforced at this point. 
We are not seeking any change in statute or change in our 
authorities there because we feel like that is being done and 
the law is being enforced.
    Mr. Neugebauer. Are there labeling standards that go along 
with that regulation? In other words, is the consumer, is the 
standard for labels consistent so that when a consumer looks at 
a label, they understand organic, the difference between 
organic and non-organic product?
    Mr. Conner. Yes. Those certification requirements for 
organic are standard requirements that are necessary in order 
to have the USDA label that is on that product as being 
certified organic.
    Mr. Neugebauer. It is a standard label. Is that correct?
    Mr. Conner. That is correct.
    Mr. Neugebauer. I want to move to rural economic 
development, particularly as we, since we are on specialty 
crops, obviously in many of our districts rural economic 
development is an integral part of keeping our regions vibrant. 
As it relates to specialty crops, what value-added is, would 
seem to be a very important piece of that, to be able to do the 
value-added right in those particular regions rather than 
having that processing done in other places? In your proposal 
are there increases in value-added opportunities and grants for 
specialty crops, and if so, what kinds of dollars are we 
talking about?
    Mr. Conner. I am not aware that we have any specific 
dollars targeted toward, I guess what you are describing as 
processing, value-added grants for potential processing 
facilities that may be available out there.
    I will tell you in general as you know in our rural 
development title, I would steer you towards a number of 
proposals that we do have under that title that I would put in 
the category of improving greatly the quality of life in rural 
America for those individuals that are specialty crop producers 
or any others. I think there are a number of provisions in 
there dealing with rural healthcare and the renovation of 
emergency care facilities under that plan. We are proposing to 
take over 1,270 rural hospitals, and make them full-fledged 
rural emergency care facilities. Again, this will have a great 
impact on the quality of life in those regions for all 
producers, including the specialty crops producers. I am 
advised as well that we do give priority to specialty crop 
value-added grants in this proposal, and I believe that is 
under our rural development title as well. So we will provide a 
more detailed response, but there are some rural development 
funds for value-added in that as well.
    Mr. Neugebauer. Just a quick follow up, Mr. Chairman. In 
your response if you have a granting side of it and also a 
loaning side of it or something like that, that as it pertains 
to opportunities of the types of facilities that would qualify 
under your proposal or your plan, I would appreciate that 
information as well.
    Mr. Conner. And I would just point out, I think it was 
noted earlier, Mr. Neugebauer, that in the energy title some of 
our development money in that is specifically targeted at some 
of the by-products associated with the specialty crop sector, 
as well, to be converted into a cellulosic type ethanol. We 
feel that that is going to be an important new market potential 
for these products.
    The Chairman. Thank you, Mr. Neugebauer. I want to 
particularly follow up on your line of questioning with regard 
to the organics, because I am concerned, and I would like the 
Deputy Secretary to respond back to the Committee. We are going 
to follow up on this as well, with regard to foreign countries 
who have agents that inspect them. I am not sure those agents 
act as diligently as USDA does here in the United States, in my 
mind, leading to unfair foreign competition, potentially. So we 
are going to be talking about that, and I will be looking 
forward to working with you on figuring out what the best 
strategy is in order to make sure that American farmers have an 
equal playing field in the international market in that area.
    Mr. Mahoney.
    Mr. Mahoney. Thank you, Mr. Chairman. I would like to 
follow up on something that the gentlewoman from New York was 
talking about with regards to the section on cellulosic bio-
energy, and the proposal to ``Put a temporary program to 
provide $100 million in direct support to producers of 
cellulosic ethanol.'' Question, two questions: One is, how does 
that level of funding compare to funding of the corn-based 
ethanol production?
    Mr. Conner. Well, as you know, this program began as a bio-
energy program that was specifically targeted for corn, in this 
case buying the price of corn down to help make the ethanol 
competitive. In our view----
    Mr. Mahoney. And you were successful?
    Mr. Conner. That has been a successful effort, and that has 
been great for many rural areas of this country. Going forward, 
though----
    Mr. Mahoney. But not my area----
    Mr. Conner.--as has been noted----
    Mr. Mahoney.--in Florida which doesn't have corn.
    Mr. Conner.--cellulosic ethanol we believe is where we need 
to focus our attention as well as focus our resources, going 
forward, because we have created a viable corn-based ethanol 
industry. We do not see any of that money being used for corn 
for that purpose. This would all be for cellulosic product, and 
the corn industry is thriving and, going forward, doesn't need 
this kind of help at this point. We need to do for cellulosic 
what has happened for the corn sector as well.
    Mr. Mahoney. The next question is, I wanted to understand 
what the word temporary means, and was that a similar approach 
that you did for corn-based----
    Mr. Conner. Yes.
    Mr. Mahoney. Is that a temporary program?
    Mr. Conner. Again, like corn, this is not subsidies forever 
in terms of buying the price down. We want the market to 
determine this situation. This is kind of a head start, if you 
will, and again, we expect, as did happen in corn, that 
transition to where you would not need to be subsidizing the 
feed stock for cellulosic ethanol in the future. So that is why 
it is temporary.
    Mr. Mahoney. Given the President's desire to increase the 
amount of ethanol being used in energy as he stated in the 
State of the Union address, have you looked at any actions or 
activities that USDA could take that could spur the additional 
investment in cellulosic ethanol when it comes to meeting the 
goals outlined in the State of the Union address?
    Mr. Conner. We have, Congressman, and let me just tell you. 
We believe that the proposals contained in our farm bill 
recommendations are critical to moving that ball forward and 
meeting the very aggressive goals that the President has laid 
out for bio-energy production in this country. Cellulosic has 
to be a key part of that equation if we are to meet those 
aggressive goals. As I pointed out in response to an earlier 
question, we do quickly see three aspects of that; research to 
develop the product, incentives for the producers to grow the 
cellulosic material, and then, of course, you need the 
incentive for the plant construction through the loan 
guarantees. All three of those are key components to our energy 
title and our recommendations.
    Mr. Mahoney. Has your agency looked at potentially 
mandating that a certain percentage of meeting the President's 
goal come from certain sources of ethanol like cellulosic? If 
not, why not?
    Mr. Conner. No, we have not. This is an aggressive goal 
that is going to take strong performance from all aspects of 
the ethanol sector, if you will, whether corn-based or 
cellulosic. We want to continue to encourage growth from the 
corn-based sector. At the same time, though, we acknowledge 
that to meet those targets cellulosic has to get a strong 
foothold, and that is why we in our proposal, again, it is 100 
percent focused on cellulosic ethanol.
    Mr. Mahoney. Well, one of the things I would like you to 
consider is that when you take a look at the reason why you 
were so successful with corn-based ethanol was the fact that 
not only did you provide research dollars, but you signaled to 
private industry that there was going to be an opportunity for 
investment. I would encourage you to go back and to look at how 
we might be able to use increasing demand or increasing, I will 
use the word quotas in terms of ethanol production, to do the 
same thing for cellulosic. This way we can take the $1.6 
billion that you are proposing and may be able to multiply that 
by encouraging private investment to come into the industry as 
we saw with corn-based ethanol.
    Mr. Conner. I appreciate your point, Mr. Mahoney.
    Mr. Mahoney. Thank you very much, Mr. Chairman.
    The Chairman. Thank you, Mr. Mahoney. You win the award 
today of being the Member who stayed for the most questions 
other than the Ranking Member and the Chairman. So I appreciate 
that.
    Mr. Mahoney. Well, Mr. Chairman, I got to tell you that 
there is nothing more important to the citrus growers and 
specialty crop producers in my district than what we are doing 
here today.
    The Chairman. Well, as Mr. Neugebauer was mentioning, we 
have almonds here from California and Florida orange juice from 
Mr. Mahoney's district. So we are happy to provide the snacks 
today.
    Mr. Mahoney. Being from California that was a big 
concession, Mr. Chairman. I appreciate that very much.
    The Chairman. We don't have any oranges this year. They all 
froze, I'm sorry to say. I have two more questions that I want 
to mention, two more areas of concern. As I traveled among the 
western states this past week, two issues were raised that were 
of pretty serious concern among specialty crop growers. The 
first one is the Administration's proposal on flex acres.
    Mr. Conner. Right.
    The Chairman. Would you like to address that? And well, let 
us do that one at a time. Go ahead.
    Mr. Conner. Well, again, I think, Mr. Chairman, as we have 
noted we feel that it is just extremely important that we 
address this issue of the WTO concerns that have been raised 
about the flex acre planting restriction provisions in current 
law. We have a very substantial direct payment program under 
our commodity title. Under our plan those direct payments are 
actually increased, again, pretty substantially to the tune of 
$5.5 million. We want and we must have those payments be 
considered a green box. If they are not, if that is called into 
question in any way, we do have major WTO problems that I have 
noted will have economic consequences for all of agriculture, 
including the fruit and vegetable sector. So we feel it is just 
paramount that we address those WTO concerns as part of this 
package by working with you to get those flex acre planting 
restrictions lifted.
    The Chairman. As we move forward I think the Chairman of 
the Full Committee has some concerns, and I do as well. We will 
have to have further discussions on this topic, because I 
recognize the Administration's concerns, and I also recognize 
the farmer in the fields' concerns about the impact that this 
could have. All of the marketing and all the other work that we 
do could go for naught if there are too many acres planted in 
some of these different commodities.
    So the second question that I have, the other concern that 
I repeatedly got this past week was of the programs, for 
example, EQIP, too many farmers felt that the funds were hard 
to access, that they had good proposals that just didn't fit 
within parameters, or there was a significant amount of 
frustration with red tape or with access ability to these 
programs on the individual farmer level. So I just share that. 
I don't know if you have a response, but how to make government 
more user friendly to those who are paying the bills, our 
taxpaying citizens, is something that I am concerned about.
    Mr. Conner. Absolutely. I share that point. Let me just say 
in our travels, Mr. Chairman, we did find a lot of strong 
support for EQIP out there.
    The Chairman. Oh, you are absolutely right. There is a lot 
of support for it.
    Mr. Conner. Yes. EQIP is a program where it is very heavily 
dependent upon your interaction with your local NRCS office, 
and that may be the source of some of the isolated concerns. 
Again, nationally speaking we got very favorable comments about 
the program from the producers. We are always willing to work 
with you and deal with what, hopefully is in that case, may be 
some isolated circumstances where there might a disconnect 
between the, our local agent perhaps, and the producer. But we 
want all these guys to have full access to what is, I believe, 
a very popular program out there and obviously, one that we are 
proposing to be even more important to the producers in the 
future.
    The Chairman. Absolutely. I applaud expansion of the 
program, and we just have to make sure that it works for all 
different segments of agriculture.
    Mr. Conner. Yes. Absolutely.
    The Chairman. It was interesting as I went around the 
different states, it was different, dairy seemed to be very 
happy with it, but some other folks just didn't feel like their 
programs fit into the little boxes, either by USDA or the local 
challenge that they were under.
    Mr. Conner. Well, we always will work with you to address 
those.
    The Chairman. Thank you very much. Deputy Secretary Conner, 
thank you for taking your time. I am going to turn it over for 
a closing statement from Ranking Member Neugebauer.
    Mr. Neugebauer. Well, thank you, Mr. Chairman, and thank 
you, Secretary Conner, for coming over. I felt that this was 
very informative. As the Administration has made some 
additional new commitments to this important area in 
agriculture, I will look forward, along with the Chairman, to 
working with you as we put together a farm bill that is broad 
in coverage, that makes sure that everybody involved in 
American agriculture feels that this Congress supports them. I 
look forward to working with you and the Chairman as we set 
about that process. Thanks again for your comments.
    Mr. Conner. Thank you very much.
    The Chairman. I thank the Ranking Member. Thank you very 
much, sir, for your taking the time out of your busy schedule 
to spend additional time with us today, walking us through the 
Administration's proposal. I think we have accomplished a great 
deal here today, and this exercise will give the Members of 
this Subcommittee a foundation to be able to work on the farm 
bill process, as we move forward. Having open and frank 
conversations like we did today allows us to certainly pave a 
way for greater collaboration down the road, and I applaud 
that. I am deeply committed to insuring that this Subcommittee 
writes a responsible, equitable, and innovative component to 
the farm bill for specialty crops and organics, and your 
presence here was a tremendous step in the right direction on 
that.
    Under the rules of the Committee the record of today's 
hearing will remain open for 10 days to receive additional 
material and supplemental written responses from the witness to 
any question posed by a Member of the panel. This hearing of 
the Subcommittee on Horticulture and Organic Agriculture is 
adjourned.
    [Whereupon, at 12:01 p.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
                         Submitted Questions *
Questions submitted by Committee on Agriculture Majority Staff
---------------------------------------------------------------------------
    * At the time this hearing went to press the responses were not 
submitted.
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Section 32
    Question 1. Considering the authority to use Section 32 funds for 
export subsidy have not been used in over 100 years, is there benefit 
to maintaining this authority?

    Question 2. What activities have been funded under the authority to 
provide direct payments to growers to ``restore purchasing power?'' 
What commodities have benefited?

    Question 3. It is our understanding that Section 32 fund year end 
un-obligated balances roughly average $150-$200 million annually. It is 
our understanding also that under the Department's planned increase in 
Section 32 purchases of $2.75 billion over 10 years transfers to Food 
and Nutrition Service's Child Nutrition Programs would be reduced by an 
identical amount. How will specific nutrition programs be impacted by 
this action?
Organic Agriculture
    Question 4. Current USDA-REE agency resources applied specifically 
to organic agriculture total about $12 million annually or 
approximately 0.6% of total agricultural research. U.S. organic 
consumer demand continues to double every 3-4 years and total organic 
market share is expected to exceed 10% by FY 2012. Does the 
Administration's proposal on organic research add an additional $10 
million to the existing $12 million in USDA-REE programs associated 
with organic agriculture? What is the Department's long-term strategy 
to address the growing research needs of the organic sector and the 
current inequitable distribution of research funds?

    Question 5. What research and extension priorities or trends have 
emerged or been identified from the Integrated Organic Research Program 
at CSREES?

    Question 6. Minnesota and other states have used EQIP funding to 
cost share transitions to organic production. This innovative approach 
has resulted in many stories of producers successfully transitioning to 
organic production. Is there any consideration within USDA in having 
NRCS make a national commitment to use EQIP funds for organic 
transition?

    Question 7. Organic consumers must have confidence in the organic 
brand, in general and USDA certification in particular in order for 
organic products to maintain their premium value. Over the past few 
months we have seen news articles assert that USDA has little idea of 
the number of violations associated with non-compliance of its organic 
regulations. Please describe the process used by USDA to identify and 
document violations including time-frames for correction. Has USDA 
performed any internal assessment of violations such as numbers and 
trends associated with specific producers, handlers, regions or foreign 
countries?

    Question 8. A uniform understanding of the NOP regulations among 
accredited agents worldwide is critical in ensuring a consistent level 
of regulatory compliance. Please describe USDA's current effort in 
post-accreditation training of certification agents?

    Question 9. Many Federal programs have adopted procedures for 
issuing guidance as to how their respective regulations are to be 
interpreted. These procedures usually contain an opportunity for public 
comment to ensure the guidance language is clear and widely understood. 
Does the NOP have formal or informal procedures for issuing guidance to 
its accredited certification agents? Please respond on how well these 
procedures are working?

    Question 10. Organic farmers in this country are at full capacity 
in supplying organic food, so retailers are sourcing supplies from 
foreign countries. More and more products are being imported from 
countries such as China. Please describe the oversight process used by 
USDA to assure that imported organic products are produced and handled 
in accordance with USDA standards.
Questions submitted by Committee on Agriculture Minority Staff
Trade
    Question 1. I notice you are gradually increasing the funding for 
the Technical Assistance for Specialty Crops (TASC) program. What is 
the total dollar amount of applications currently being received by the 
Department for TASC?

    Question 2. The Department's proposal provides funding to increase 
the U.S. presence in international-standard setting bodies, and I was 
hoping you could tell me exactly how this funding will be used and how 
it will help specialty crop producers?

    Question 3. I know the Market Access Program (MAP) is an important 
program for specialty crop producers but as you know, MAP is a valuable 
program for other agriculture commodities. Can you tell us what 
percentage of MAP funds currently assists the specialty crop industry 
in promoting their products overseas?
Planting Prohibition
    Question 4. Your testimony states that a USDA/ERS study finds that 
new entrants to the specialty crop business will be relatively few in 
number. However another recent study finds that the costs to the 
industry will be nearly $4 billion. That seems to be a serious impact 
that should be considered. Can you comment on how these two studies 
found vastly different results?
Conservation
    Question 5. The Department's proposal calls for an increase in 
conservation spending including the creation of a new ``Conservation 
Enhanced Payment Option.'' I think this proposal sounds very 
interesting. However, I am concerned that specialty crop growers may 
not have the option of participating in this program. I wonder whether 
you would consider structuring the program in such a way that non 
program crop growers could also qualify?

    Question 6. The 2002 Farm Bill included language in the 
Conservation Security Program (CSP) directing that funds may be used to 
help producers with air quality, pest management, and invasive species. 
As you know, for producers to participate in the CSP, they must be in 
select watersheds designated by NRCS. Are the needs of specialty crop 
producers being met with limited enrollment to watersheds?
Rural Development
    Question 7. The Value-Added Grant Program has been quite popular 
among producers and in rural communities, and I see the Department 
proposes giving a priority to specialty crop-related applications. 
Under the current grant program, what percentage of funds has been 
awarded to specialty crop projects?
Questions submitted by the Honorable Lincoln Davis, Member of Congress 
        from Tennessee
    Question 1. How does the USDA's farm bill proposal address the 
threat of pests to specialty crops? Are there specific programs, either 
in existence, or proposed, to deal with the eradication of pests 
currently threatening specialty crop farms (not including research 
proposals)?

    Question 2. Does the Secretary currently have enough authority to 
access necessary CCC (Commodity Credit Corporation) funds to deal with 
emergency pest eradication?

    Question 3. Did the Secretary consult with the Administration in 
the creation of this farm bill proposal on the creation of a permanent, 
mandatory fund to deal with pest eradication that could deal with 
outbreaks and compensate growers who suffer great losses in times of 
emergency? Would such a fund be helpful?

    Question 4. Mr. Conner can you please describe the Specialty Crop 
Research Initiative? How would it work? Who is eligible? What kind of 
research would be allowed?

    Question 5. Mr. Conner in your written testimony you mention the 
risks involved in specialty crop production. Does the current crop 
insurance program adequately address these risks? Can you briefly 
describe the proposed changes?

    Question 6. Can you explain in a little detail how the Private 
Lands Protection Program would work?
Questions submitted by the Honorable Tim Mahoney, Member of Congress 
        from Florida
Disaster Assistance for Specialty Crop Producers
    Question 1. As you know, Florida farmers and ranchers have been hit 
hard in the last 3 years due to the 2004 and 2005 hurricanes. We are 
grateful for the resources that USDA and Congress provided to Florida 
producers during that time, however we found that many of the existing 
disaster assistance programs offered by USDA are of little benefit to 
specialty crop growers, who have higher input and labor costs than 
traditional program crop producers, either due to payment limits or 
adjusted gross income limitation associated with these programs.
    What provisions are included in USDA's farm bill proposal to insure 
equitable disaster assistance availability to specialty crop producers 
given that many of these commodities are not eligible for crop 
insurance such as the Non-insured Assistance Program (NAP) either 
because of the uniqueness of crops they grow or because of the gross 
income levels of the producers of these highly valuable crops?
Plant Pest and Disease Compensation
    Question 2. The Animal Health Protection Act requires the Secretary 
to compensate livestock producers for animals that are ordered 
destroyed to contain an animal disease outbreak. The Plant Protection 
Act provides the Secretary with compensation authority for plants but 
does not specifically direct he/she to do so. When compensation has 
been provided for plant pests/diseases, the funding has come from 
Section 32.
    Given that Section 32 is the primary funding mechanism by which 
USDA purchases fresh fruits/vegetables for feeding programs, is there 
anything in USDA's farm bill proposal that would allow for plant pest/
disease compensation without utilizing Section 32 funding? If not, does 
USDA intend to continue providing compensation to affected producers 
out of Section 32 funds which may impact future fresh fruit/vegetable 
purchases as envisioned by USDA's farm bill proposal?
Specialty Crop Block Grants
    Question 3. Deputy Secretary Conner stated in his testimony to the 
Subcommittee that USDA did not have a problem with the Specialty Crop 
Block Grant program and is moving forward in awarding the block grants 
as appropriated in FY 2006. If that is the case, why specifically were 
the block grants not included in USDA's farm bill proposal?
Questions submitted by the Honorable Dennis A. Cardoza, Member of 
        Congress from California; on behalf of the Honorable Lynn C. 
        Woolsey, Member of Congress from California
    Question 1. In 7 C.F.R. part 205.508, the USDA regulations 
stipulate that site evaluations of USDA-accredited certifiers of 
organic products must be conducted several times between the time of 
initial accreditation and when they apply for renewal of their 
accreditation. How often have the site evaluations been performed for 
both domestic and foreign certifying agents?

    Question 2. 7 C.F.R. states that ``Site evaluations [of accredited 
certifying agents] shall include an on-site review of the certification 
agent's certification procedures, decisions, facilities, 
administrative, and production and handling operations certified by the 
certifying agent'' (emphasis added). I understand that visiting a 
representative sample of USDA-certified organic farms overseas many 
times requires diplomacy and delicacy in approaching foreign 
governments, and that the logistics of traveling overseas poses 
problems of its own--but I remained concerned that USDA officials have 
still not conducted on-site review of foreign farms in each country 
from which we import USDA-certified organic products. Please provide 
the name of the specific foreign countries where USDA has performed on-
site review of production and handling operations and the number of 
site visits performed within each country.
Questions submitted by the Honorable John R. ``Randy'' Kuhl, Jr., 
        Member of Congress from New York
    Question 1. I noticed with interest that you farm bill proposal 
includes several provisions for specialty crops. We grow a number of 
them in New York. We held a field hearing last summer in my district, 
and I think that many of my colleagues were surprised to learn that New 
York has agriculture.
    What I heard during that hearing from your specialty crop growers 
is that they face challenges like never before. From sky rocketing land 
costs to a near agriculture trade deficit, ever-increasing regulations 
and labor shortages, it is a new era and if we are to retain our 
domestic specialty crop industry we need to invest more money in 
programs designated to help them stay competitive. That is why last 
session I cosponsored H.R. 6193--The EAT Health America Act, and we are 
getting ready to reintroduce that bill very soon.
    Your proposal represents a step in the right direction, 
particularly the emphasis on research. However, there were some 
programs, that were missing, programs that I have heard a lot about 
from my growers. Specifically:
    Your proposal would increase funding by $50 million annually for 
schools to purchase fruits and vegetables. In announcing your farm bill 
proposal, you suggested that schools would have the option to choose 
whether to use these funds from among the fruit and vegetable snack 
program or school meal programs. However, your actual proposal appears 
to exclude the snack program. I hope it would be included. Can you 
please clarify your proposed use of this $50 million?

    Question 2. Your proposal does not include any funding for the 
Specialty Crop Block Grant Program. The block grant program, authorized 
under the Specialty Crop Competitiveness Act, provides funding to the 
states departments of agriculture to be used by grower groups and 
specialty crop producers for programs that enhance competitiveness.

    In FY06, this program received $7 million in appropriations, or 
just over $100,000 for New York. Given our current budget constraints 
it is not realistic to expect a program like this to depend on the 
appropriations process each year. This is the kind of program that out 
to receive mandatory funding (for stability and continuity) under the 
farm bill. This program recognizes the diversity of specialty crops 
from state to state, offering maximum flexibility for projects that 
support research, promotion, exports, consumer health, and food safety. 
Could you please explain why the Administration chose not to provide 
mandatory funding for this program?

                                  
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