U.S. GOVERNMENT PUBLISHING OFFICE

23–592 PDF WASHINGTON : 2018

S. HRG. 114–644 

A REVIEW OF THE 

U.S. LIVESTOCK AND POULTRY SECTORS: 

MARKETPLACE OPPORTUNITIES AND 

CHALLENGES 

HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

MAY 26, 2016 

Printed for the use of the 

Committee on Agriculture, Nutrition, and Forestry 

( 

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

mw42035 on AGRINON012 with DISTILLER

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY 

PAT ROBERTS, Kansas, Chairman 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

JOHN BOOZMAN, Arkansas 

JOHN HOEVEN, North Dakota 

DAVID PERDUE, Georgia 

JONI ERNST, Iowa 

THOM TILLIS, North Carolina 

BEN SASSE, Nebraska 

CHARLES GRASSLEY, Iowa 

JOHN THUNE, South Dakota 

DEBBIE STABENOW, Michigan 

PATRICK J. LEAHY, Vermont 

SHERROD BROWN, Ohio 

AMY KLOBUCHAR, Minnesota 

MICHAEL BENNET, Colorado 

KIRSTEN GILLIBRAND, New York 

JOE DONNELLY, Indiana 

HEIDI HEITKAMP, North Dakota 

ROBERT P. CASEY, JR., Pennsylvania 

JOEL T. LEFTWICH, MAJORITY STAFF DIRECTOR

ANNE C. HAZLETT, MAJORITY CHIEF COUNSEL

JESSICA L. WILLIAMS, CHIEF CLERK

JOSEPH A. SHULTZ, MINORITY STAFF DIRECTOR

(II) 

mw42035 on AGRINON012 with DISTILLER

(III) 

C O N T E N T S 

Page 

HEARING(S): 

A Review of the U.S. Livestock and Poultry Sectors: Marketplace Opportunities and Challenges .............................................................................................. 1 

Thursday, May 26, 2016 

STATEMENTS PRESENTED BY SENATORS 

Roberts, Hon. Pat, U.S. Senator from the State of Kansas, Chairman, Committee on Agriculture, Nutrition, and Forestry ................................................. 1 

Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan ..................... 2 

Klobuchar, Hon. Amy, U.S. Senator from the State of Minnesota ...................... 4 

Heitkamp, Hon. Heidi, U.S. Senator from the State of North Dakota ............... 6 

WITNESSES 

Brunner, Tracy, President, National Cattlemen’s Beef Association, Cow Camp 

Feedyard, Inc., Ramona, KS ................................................................................ 7 

Truex, Ronald, Chairman, United Egg Producers, Creighton Brothers, LLC, 

Atwood, IN ............................................................................................................ 8 

Hill, Howard, Past President, National Pork Producers Council, Breeze Hill 

Farms and H&K Enterprises, Cambridge, IA ................................................... 10 

Goggins, Joe, Producer, U.S. Cattlemen’s Association, Vermilion Ranch Co., 

Public Auction Yards, & Northern Livestock Video Auction, Billings, MT ..... 12 

Zimmerman, John, Producer, National Turkey Federation/Minnesota Turkey 

Growers Association, P&J Products, Northfield, MN ....................................... 14 

APPENDIX 

PREPARED STATEMENTS: 

Leahy, Hon. Patrick J. ..................................................................................... 42 

Thune, Hon. John ............................................................................................. 45 

Tillis, Hon. Thom .............................................................................................. 49 

Brunner, Tracy ................................................................................................. 50 

Goggins, Joe ...................................................................................................... 57 

Hill, Howard ..................................................................................................... 64 

Truex, Ronald ................................................................................................... 77 

Zimmerman, John ............................................................................................ 81 

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

Roberts, Hon. Pat: 

Written letter to Hon. Tom Vilsack concerning rules proposed by Grain 

Inspection, Packers and Stockyards Administration (GIPSA), April 19, 

2016 ................................................................................................................ 88 

Written letter to Hon. Gene Dodaro concerning Foot-And-Mouth Disease 

(FMD), April 28, 2016 ................................................................................... 90 

‘‘A Review of the U.S. Livestock and Poultry Sectors: Marketplace Opportunities and Challenges’’, written testimony of Livestock Marketing 

Association (LMA) ......................................................................................... 92 

mw42035 on AGRINON012 with DISTILLER

Page

IV 

QUESTION AND ANSWER: 

Brunner, Tracy: 

Written response to questions from Hon. Pat Roberts .................................. 100 

Written response to questions from Hon. Joni Ernst .................................... 101 

Written response to questions from Hon. Thom Tillis .................................. 101 

Written response to questions from Hon. John Thune .................................. 103 

Written response to questions from Hon. Patrick J. Leahy .......................... 103 

Written response to questions from Hon. Robert Casey, Jr. ......................... 107 

Goggins, Joe: 

Written response to questions from Hon. Pat Roberts .................................. 108 

Written response to questions from Hon. Joni Ernst .................................... 108 

Written response to questions from Hon. John Thune .................................. 109 

Written response to questions from Hon. Patrick J. Leahy .......................... 111 

Written response to questions from Hon. Robert Casey, Jr. ......................... 114 

Hill, Howard: 

Written response to questions from Hon. Pat Roberts .................................. 116 

Written response to questions from Hon. Thom Tillis .................................. 116 

Written response to questions from Hon. John Thune .................................. 119 

Written response to questions from Hon. Patrick J. Leahy .......................... 120 

Written response to questions from Hon. Robert Casey, Jr. ......................... 125 

Truex, Ronald: 

Written response to questions from Hon. Pat Roberts .................................. 127 

Written response to questions from Hon. John Thune .................................. 128 

Written response to questions from Hon. Patrick J. Leahy .......................... 129 

Written response to questions from Hon. Robert Casey, Jr. ......................... 132 

Zimmerman, John: 

Written response to questions from Hon. Pat Roberts .................................. 135 

Written response to questions from Hon. Thom Tillis .................................. 136 

Written response to questions from Hon. John Thune .................................. 137 

Written response to questions from Hon. Patrick J. Leahy .......................... 138 

Written response to questions from Hon. Robert Casey, Jr. ......................... 142 

mw42035 on AGRINON012 with DISTILLER

(1) 

A REVIEW OF THE 

U.S. LIVESTOCK AND POULTRY SECTORS: 

MARKETPLACE OPPORTUNITIES AND 

CHALLENGES 

Thursday, May 26, 2016 

UNITED STATES SENATE, 

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY, 

Washington, DC 

The committee met, pursuant to notice, at 10:03 a.m., in room 

216, Hart Senate Office Building, Hon. Pat Roberts, Chairman of 

the Committee, presiding. 

Present or submitting a statement: Senators Roberts, Boozman, 

Hoeven, Ernst, Tillis, Sasse, Grassley, Thune, Stabenow, Brown, 

Klobuchar, Bennet, Gillibrand, Donnelly, Heitkamp, and Casey. 

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

STATE OF KANSAS, CHAIRMAN, U.S. COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY 

Chairman ROBERTS. Good morning. I call this meeting of the 

Senate Committee on Agriculture, Nutrition, and Forestry to order. 

We have a variety of farmers and ranchers from across the country here today to give us their perspectives on marketplace opportunities and challenges in the livestock and the poultry sectors. 

Who better to testify before this committee than producer leaders 

representing these industries that play such an important role in 

the economic stability of rural America and certainly in my home 

State of Kansas and in the state of every member that is privileged 

to serve on this committee. 

It has been five years since our last committee hearing on the 

state of the livestock and poultry sectors. Thank you to Senator 

Heitkamp for making this suggestion, and we agreed some time 

back that it was time. I know everyone is interested to hear about 

the many events that have taken place during this period that 

have impacted the economic standing of your industries as well as 

future opportunities and challenges for growth. 

Now, the livestock industry and the poultry sectors, weather ebbs 

and flows every day. One could argue that recent years have seen 

greater volatility and unpredictability than most. Today’s livestock 

and poultry producers are operating in a highly cyclical marketplace. One year, they may receive record prices for their animals, 

and then the next see a dramatic drop in value, like we have seen 

recently in the beef sector. Other events, like the diseases that 

mw42035 on AGRINON012 with DISTILLER

2 

have ravaged the egg, pork, and turkey sectors, can leave our producers with little to no income for months on end. 

Unfortunately, we know there has been significant erosion in 

farm equity due to these disease outbreaks and marketplace volatility. Some producers were unable to weather that storm. Add into 

this equation the reality that this is an industry where the good 

times are typically composed of margins of just a few cents or a few 

dollars per animal and you begin to understand what a tough business animal agriculture is. 

This reality demonstrates just how savvy today’s farmers and 

ranchers must be in order to make a living, and that this is a livelihood not for the risk averse or the faint of heart. Yet I am confident that even in the face of today’s challenges, the industries 

represented here will continue to lead the world in delivering safe 

and affordable meat products to our consumers. 

The importance of this sector to my home State of Kansas is immense, not to mention the home states of everybody on the Committee. Eastern Kansas is known for its rolling Flint Hills, spotted 

with grazing cattle. Western Kansas is home to some of the country’s largest and most modern beef feedlots. Kansas is the third 

largest beef producing state in the country, with deference to Texas 

and Nebraska. I hate to say that, really, but that is true. 

Senator SASSE. You are welcome. 

Senator STABENOW. Uh-oh. 

[Laughter.] 

Chairman ROBERTS. It is also experiencing growth in pork production, which is a boon to many of our small rural communities. 

These sectors present here today are a significant driver of our 

rural economies. In fact, according to the most recent USDA Agriculture Census, the beef, pork, and poultry sectors account for 36 

percent of the total agriculture sales on an annual basis, and that 

number is only going up. Sales of cattle, hogs, poultry, and eggs 

also accounted for $141 billion annually. That is a billion with a 

‘‘B’’, not an ‘‘M.’’ These are impressive numbers. 

Thank you for taking the time away from your farms and your 

ranches and your businesses to educate your elected officials about 

your industries. 

I ask unanimous consent to include in the record, testimony submitted by the Livestock Marketing Association. 

[The statement of the Livestock Marketing Association can be 

found on page 92 in the appendix.] 

Chairman ROBERTS. I now recognize the Ranking Member, the 

distinguished Ranking Member of our committee, Senator Stabenow. 

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

FROM THE STATE OF MICHIGAN 

Senator STABENOW. Well, thank you very much, Mr. Chairman. 

This is a very important hearing and we welcome all of our witnesses and appreciate the chance to highlight a very important 

part of the agricultural economy. 

As we know, the last several years have been challenging, as the 

Chairman said, for livestock producers, and it is one of the reasons 

why the 2014 Farm Bill made many of the important investments 

mw42035 on AGRINON012 with DISTILLER

3 

that help support and bolster this important segment of American 

agriculture. In fact, one of the first uses of the 2014 Farm Bill was 

the activation of the livestock disaster programs, which have paid 

out more than $5.8 billion to date and helped producers across the 

country when they faced extreme weather conditions, like droughs, 

blizzards, and wildfires. 

The Farm Bill also expanded the voluntary conservation programs that give our farmers and ranchers the tools they need to 

address issues on their own instead of regulation. USDA voluntary 

conservation programs make it easier for a rancher in Kansas or 

a turkey producer in Michigan to improve wildlife habitat, livestock 

forage, and water quality through programs like the Environmental Quality Incentive Program or the Agricultural Conservation 

Easement Program. In addition, the new Regional Conservation 

Program provides opportunities for locally led conservation solutions to issues like improving water quality in our Great Lakes and 

addressing endangered species issues like the sage-grouse in the 

West. 

However, for USDA conservation efforts to be successful, I would 

ask today for your continued help to encourage more producers to 

take advantage of these opportunities and tell their story about 

why voluntary conservation is the best way to address resource 

concerns. 

As we look to other issues impacting our livestock industry, we 

know how important it is to make investments in agriculture research. In fact, this need was underscored by last year’s rapid 

emergence of highly pathogenic avian influenza, which affected 

more than 48 million birds in 15 states, and we know what that 

meant. This type of animal health crisis has devastating economic 

impacts on our producers, drives up the cost of food for consumers, 

and threatens international trade. That is why the investments we 

made through the Farm Bill to establish the new Foundation for 

Food and Agriculture Research are so important, and I look forward to seeing the Foundation begin to roll out new programs 

shortly to support your efforts. 

Despite these challenges, however, there are also plenty of reasons for the livestock sector to be optimistic. As I look to my home 

State of Michigan, I see livestock producers breaking new ground 

on processing facilities, expanding into new value-added markets 

like organics. 

Just last summer, the Clemens Food Group broke ground in 

Coldwater, Michigan, on one of the first new Michigan pork processing facilities in decades. They are expected to create 800 jobs 

and will source from producers in Michigan and throughout the 

Midwest. 

Nationwide, the demand for organic eggs has more than doubled 

since 2012, and producers like the Herbruck’s in Michigan have 

continued to step up to meet the need. Now is the critical time to 

ensure that we continue to support these organic producers so organic eggs can continue to be available and affordable for American 

families. 

Lastly, Mr. Chairman, I want to highlight action by this committee last year to unanimously pass and get signed into law a reauthorization of mandatory price reporting, which we did together. 

mw42035 on AGRINON012 with DISTILLER

4 

This authorization made important advances that were supported 

by producers to increase market transparency, and I am pleased we 

are able to do this in an overwhelmingly bipartisan way. 

Mr. Chairman, I appreciate you holding this hearing. Again, I 

stand ready to work with you and our colleagues on the Committee 

to ensure our farmers and ranchers have the tools they need to be 

successful. Thank you. 

Chairman ROBERTS. I thank the Senator. 

A study was just conducted a while back saying that members 

of the Senate are supposed to be in two or three places at the same 

time. 

[Laughter.] 

Chairman ROBERTS. That explains a lot. 

Senator Klobuchar is supposed to be at the Judiciary Committee. 

I note that Senator Grassley is supposed to be, as well. We have 

provided him a muffin and a cup of coffee, but he has not shown 

up—— 

Senator SASSE. Can I have his muffin? 

Chairman ROBERTS. —demonstrated by the distinguished Senator from Nebraska, who took time from reading from the Constitution to demonstrate that. I am going to get in trouble for that. 

[Laughter.] 

Chairman ROBERTS. Senator Klobuchar, I know that you want to 

introduce John Zimmerman, who is a turkey grower, on behalf of 

the National Turkey Foundation from Northfield, Minnesota. Why 

don’t you proceed with that? 

STATEMENT OF HON. AMY KLOBUCHAR, U.S. SENATOR FROM 

THE STATE OF MINNESOTA 

Senator KLOBUCHAR. All right. Well, thank you very much, Mr. 

Chairman and Ranking Member Stabenow, and also Senator 

Heitkamp for suggesting this hearing. I think it is so important, 

and the work that we have done in the Farm Bill on a bipartisan 

basis for our livestock and poultry industries has been key, but also 

there is a lot of work to be doing going forward and I am glad we 

are doing this. 

Minnesota is number one for turkeys. I just always like to say 

that. We are number one for turkeys, as Mr. Zimmerman knows, 

in the country, and number two for hogs, which sometimes surprises people. So, this is pretty important to us. 

John Zimmerman is a second generation Minnesota turkey farmer who also raises corn and soybeans on his farm with his wife, 

Cara, and son, Grant. He has previously served as President of the 

Minnesota Turkey Research and Promotion Council and he is a 

current board member of the National Turkey Federation. He is 

also the current Board Chair of the River Country Co-Op. 

He is a graduate of Iowa State University, which we will not hold 

against him, being from Minnesota, where he earned a Bachelor’s 

Degree in animal science. 

Thank you for being here, John, and I know the Committee will 

benefit from the expertise that you will bring to a turkey farmer, 

and also as a turkey farmer, and also as an industry leader. We 

look forward to hearing from you. 

mw42035 on AGRINON012 with DISTILLER

5 

Chairman ROBERTS. I would like to now proceed with the introduction of the witnesses. 

I am very proud to introduce Mr. Tracy Brunner, President of 

the National Cattlemen’s Beef Association. Mr. President, I am not 

going to go any farther with that. 

Tracy is a fourth generation rancher from Ramona, Kansas. He 

has served as President of his family corporation since its inception 

in 1988, where he manages the feed yard, the yearling grazing operation, cattle and grain marketing decisions, commodity risk management, and customer relations. He is a busy guy. Tracy’s family 

also operates a seedstock enterprise, raising bulls and replacement 

heifers for many ranchers all throughout the United States. 

Tracy graduated from Kansas State University, home of the everoptimistic Fighting Wildcats, with a degree in animal science and 

a Master’s of agribusiness. He has held many leadership positions 

in the U.S. beef industry, including Executive Committee Member 

and President of the Kansas Livestock Association, a member of 

the Kansas Beef Council Executive Committee, a member of the 

Kansas Governor’s Agriculture Advisory Board, as well as Policy 

Division Chair, Executive Committee Member, and Board member 

for the National Cattlemen’s Beef Association for nearly 20 years. 

Tracy, you have been a true leader for our Kansas agriculture 

and the U.S. beef industry. I am very pleased, very proud to welcome you to the Committee today. 

[Pause.] 

Chairman ROBERTS. We will proceed with your statement in just 

a moment. We will introduce the rest of the witnesses. 

Ron Truex, who is Chairman of the United Egg Producers, Atwood, Indiana. Mr. Truex’s career in the egg industry began over 

four decades ago when he joined Creighton Brothers, LLC, an egg 

production, processing, grading, and marketing company. Ron has 

held positions in sales and operations and has served as President 

and General Manager of Creighton Brothers since 1998. 

Ron has held several leadership positions within state and national agriculture organizations, including President of the Indiana 

State Poultry Association, President of the Indiana Egg Board, past 

Chairman of the American Egg Board, and as chairman of several 

committees within the United Egg Producers. 

Thank you so much for being here today Ron, I look forward to 

hearing your views of the egg industry. 

Senator Grassley was supposed to be here to introduce Dr. Howard Hill. He is obviously over at the Senate Judiciary Committee. 

Dr. Hill is the Past President of the National Pork Producers Council from Cambridge, Iowa. Dr. Hill is a pork producer and a veterinarian from Cambridge, Iowa, where he runs a farrow to finish hog 

operation, raises Angus cattle, and grows 2,700 acres of corn, soybeans, and alfalfa. 

Dr. Hill earned his Bachelor’s and Doctorate of Veterinary Medicine degrees from the University of California-Davis and a Master’s 

and Doctorate degree from Iowa State University in veterinary 

microbiology and preventive medicine. He has worked as a veterinary practitioner, a fellow for the National Institutes of Health, 

head of the Microbiological Section of the Iowa State University 

Vet Diagnostic Lab, head of veterinary services for Murphy Family 

mw42035 on AGRINON012 with DISTILLER

6 

farms, and Director of Production and Chief Operating Officer for 

Iowa Select Farms. 

Dr. Hill is the Past President of the National Pork Producers 

Council and the American Association of Swine Veterinarians, a 

former Board member for the Iowa Pork Producers Association, 

and was recently appointed to serve on the U.S. Department of Agriculture’s Advisory Committee on Animal Health. 

Dr. Hill, that is quite a distinguished career. I look forward to 

your testimony. 

Senator Heitkamp, I recognize you to introduce Joe Goggins, a 

producer on behalf of U.S. Cattlemen’s Association from Billings, 

Montana. 

STATEMENT OF HON. HEIDI HEITKAMP, U.S. SENATOR FROM 

THE STATE OF NORTH DAKOTA 

Senator HEITKAMP. Welcome, Joe. Joe is a rancher and auctioneer from Billings, Montana. He is a native Montanan who, in 

addition to working on his family’s ranch, has auctioneered for 

some of the top purebred sales in America and remains directly involved in his family’s livestock auction market. He is the owner of 

J&L Livestock, which merchandises from 3,000 to 5,000 top bred 

commercial Angus females annually. His family’s three livestock 

auction yards and Northern Livestock Video Auction is often cited 

as a primary influencer in the cash cattle market across the nation. 

We are proud to have him, because he is not only an active Montanan, he is also a regular at North Dakota’s bull sales, most notably Ellingson Angus in St. Anthony, Frey Angus in Granville, Prairie Pride in Enderlin, Schaff Angus Valley at St. Anthony, and 

Stuber Ranch in Bowman, and we really appreciate your involvement in North Dakota, and I know that you know that we produce 

some of the best bulls in the world. 

His reach into the cattle industry extends nationwide with his 

family’s widely subscribed publication The Western Ag Report. 

Continuing to be an active member in the livestock industry, he 

served one term as President of Montana’s Livestock Marketing Association and two terms as President of Montana Angus Association. He is currently the Director of the Livestock Marketing Association and a member of the United States Cattlemen’s Association. 

Joe remains very involved in the ebb and flow of the cattle market. With all of that on his plate, he and his family are still able 

to help market 600,000 head of cattle annually, along with his wife, 

Linda, and his three children and 250 employees who help him 

through that process. Quite a record of achievement. 

Welcome to the Committee. We look forward to your testimony. 

Chairman ROBERTS. Thank you, Senator Heitkamp. 

We thank you all again for taking the time to join us today. We 

appreciate your sharing your expertise, firsthand experience as 

leaders of the livestock and poultry sectors. 

Mr. Brunner, Tracy, could you tell me in your perspective how 

we get past this recent downfall in the beef sector. 

mw42035 on AGRINON012 with DISTILLER

7 

STATEMENT OF TRACY BRUNNER, PRESIDENT, NATIONAL 

CATTLEMEN’S BEEF ASSOCIATION, COW CAMP FEEDYARD, 

INC., RAMONA, KANSAS 

Mr. BRUNNER. Well, thank you, Mr. Chairman, members of the 

Committee. Good morning to everyone. 

Always at the mercy of Mother Nature, our industry is rapidly 

recovering from extensive drought. Herd rebuilding and expansion 

are taking place at a rate where U.S. cattle numbers will soon be 

equal to 2012. Additionally, American cattle producers continue to 

be more efficient in producing beef. Today, we can produce the 

same amount of beef that we produced in 1977 at one-third less 

cattle and land. 

The beef supply chain is always focused on the consumer. Our 

cow-calf ranchers tell their seedstock suppliers what they need and 

also ask their stocker and feeder calf buyers what they will pay the 

most for. Cattle feeders, likewise, look to packer processors for 

signs of greatest value, who in turn have an ear for retail and food 

service needs. 

Cattle prices have been a topic of focus for NCBA and our members. In early 2015, we saw record high cattle prices, but soon 

those started back down. One factor was the increase in overall 

protein supplies. Last year, U.S. per capita red meat and poultry 

supplies increased by nearly ten pounds per person. In addition, 

the strong U.S. dollar has impacted our ability to ship beef to our 

international customers. 

All of this additional supply puts downward pressure on our markets, but we are used to the ups and downs of the cattle cycle. In 

order to manage this cycle, we need risk management tools that 

work. We currently rely on market forums like CME Groups, cattle 

futures contracts, to add transparency to our price discovery process. Changing technologies and a transition to automated trading 

and commodity futures have increased market volatility, making 

interpretation of those price signals different than what we are accustomed to in the past. The integrity of our market forums is very 

important to us, for without futures contract integrity, our industry 

will abandon their use. 

We have recognized the volatility and are working directly with 

the CME Group to find ways to address it. We have a joint NCBA– 

CME working group which is analyzing potential changes, such as 

slowing down the market to help ensure a level playing field for 

producers who are using these tools to manage their price risk. 

Today, we ask for no direct action from our government in our 

cattle marketing systems and forums. In fact, I am concerned at 

some of the action that we have seen. 

Secretary Vilsack has announced he is going to dust off the proposed GIPSA marketing rule that resulted from language included 

in the 2008 Farm Bill. This is very concerning to us, because bipartisan efforts already resulted in appropriations language which 

defunded any additional work on or implementation of the ideas included in the draft rule. The proposed GIPSA rule would have 

made USDA the ultimate arbiter on how cattle are marketed. We 

urge USDA to enforce the Packers and Stockyards Act as it exists 

now. We do not need them dictating how we can or cannot market 

our cattle. 

mw42035 on AGRINON012 with DISTILLER

8 

We have worked for years to find ways, new and innovative ways 

to market cattle. Alternative marketing arrangements have been 

studied by USDA and independent groups and the results show 

that these alternative marketing arrangements benefit producers 

and consumers alike. Any Congressional or executive action to 

interfere will only add to our price problems, not solve them. 

Solving our price problems relies on addressing the true issues 

of consequence in our industry. We have capitalized on the growing 

demand for U.S. beef overseas, and Japan has become our leading 

export market. But Australia now has a ten percent tariff advantage over us, resulting in a loss of $300 million. The tariff advantage for Australia will continue to grow until we pass TPP. 

In closing, I would say you could also help our bottom line by 

easing the regulatory burden that our industry is under. Taking action to reform the Endangered Species Act and helping us keep the 

EPA at bay would go a long way in easing the pressures on our 

industry. 

Again, thank you very much for this opportunity to be with you. 

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

50 in the appendix.] 

Chairman ROBERTS. Thank you, Tracy, for a very good statement. 

Mr. Truex. 

STATEMENT OF RONALD TRUEX, CHAIRMAN, UNITED EGG 

PRODUCERS, AND PRESIDENT, CREIGHTON BROTHERS, LLC, 

ATWOOD, INDIANA 

Mr. TRUEX. Thank you, Mr. Chairman. My name is Ron Truex 

and I am an egg producer from Atwood, Indiana. I am also Chairman of United Egg Producers and we appreciate being invited to 

this hearing. 

I would like to talk about two major events that have had a dramatic impact on our industry in the past year. Then I would like 

to mention two current issues where we could use the Committee’s 

help. 

The first event was last year’s devastating outbreak of highly 

pathogenic avian influenza. I have some statistics in my written 

testimony, but I am sure I do not need to tell anyone on this committee what a difficult experience that was. Thankfully, my farm 

was not directly involved, but every single egg producer was affected one way or another, from much more stringent biosecurity 

to a loss in demand for egg products, which we hope is temporary. 

We are still dealing with the aftermath of the HPAI crisis. 

This year has brought another challenge. Our customers in food 

service, food manufacturing, and retail grocery sales are announcing their decisions to source only cage-free eggs in the future. In 

most cases, they have specified a transition period, often as much 

as ten years. 

There are about 300 million hens in the U.S. egg laying flock. 

Today, about 30 million of those, just under ten percent, are cagefree housing. Of those 30 million hens, just under half of those are 

on organic farms, with the remainder in non-organic production. 

The remaining 90 percent of the U.S. flock is cared for in cages, 

the vast majority of which comply with our UEP Certified Program, 

mw42035 on AGRINON012 with DISTILLER

9 

which provides space requirements for each hen. A small but important portion are kept in enriched cages, where space allowances 

are greater and enrichments like perches and nest boxes are provided. 

According to the estimates by USDA, if you add up the current 

egg usage of all companies that have publicly made cage-free commitments, by 2030, 60 percent of the nation’s egg laying flock, not 

the current ten percent, but 60 percent, or 174 million birds, will 

need to be in cage-free housing. USDA also added up the number 

of egg producers that have publicly announced plans to convert 

some or all of their operations to cage-free status. However, those 

commitments only add up to 63 million hens, about a third of the 

174 million requested by our customers. 

Our industry is highly competitive and we will always try to 

produce what our customers want, but it will be extremely difficult 

for us to meet the cage-free demand. The new construction, capital 

investment, additional land acquisition, and higher production 

costs will all be daunting. 

UEP believes, and science shows, that hens can be humanely 

housed in a variety of ways, through conventional cages, enriched 

cages, and in cage-free environments. Good management, not production technique, is the most important variable in hen welfare. 

Now, in the time I have left, let me conclude with two recommendations for Congressional action. Like most other farm 

groups, we are hoping for a national standard on GMO labeling 

that will override state laws. We appreciate the hard work that the 

leaders of this committee are continuing to do and we fully understand it is not an easy task. We would simply like to point out that 

while most of our hens consume genetically engineered feed, the 

corn and the soybeans, neither the hens nor the eggs they lay are 

genetically engineered. Therefore, eggs should not have to be labeled as GE or GMO merely because they were laid by hens that 

consumed GE feed. 

A second way that we hope Congress will help us is by encouraging USDA to carry out a better economic analysis before finalizing a new proposed rule on organic livestock and poultry production. For the egg sector, USDA is proposing to ban production systems that have been approved by that Department since 2002. 

These so-called porch systems provide outdoor access to hens on 

solid floor structures that are open to the air and the sunlight on 

the sides, but have roofs in order to keep out predators and avoid 

contact with wild birds, which are carriers of avian influenza. 

Our farm is not organic, but a number of our UEP members have 

entered organic production in recent years and this is a major issue 

for them. They believe the economic impact of this proposed regulation will be well in excess of $100 million and perhaps more. Besides banning porches, the proposed rule has an outdoor space requirement that will be impossible for many producers to meet without expensive new land purchases. It also requires that outdoor 

areas be at least 50 percent soil, which increases the possibility of 

contact with salmonella as well as animals that carry it, like rodents. 

If this rule is finalized, the supply of organic eggs for consumers 

will fall substantially and many producers will exit organic producmw42035 on AGRINON012 with DISTILLER

10 

tion. This committee’s Chair, Ranking Member, and other members 

have already been very helpful in questioning USDA’s factual basis 

for this rule and we hope you will continue asking questions, filing 

comments, and asking USDA for an extension of the comment period for at least an additional 60 days so the Department will have 

a better factual basis for the final rule. 

Egg producers appreciate this committee taking a strong interest 

in animal agriculture, and thank you for the opportunity to testify. 

[The prepared statement of Mr. Truex can be found on page 77 

in the appendix.] 

Chairman ROBERTS. Dr. Hill, you are recognized next, but I want 

to just say something on behalf of the Ranking Member and myself 

on this latest rule with regards to chickens and this whole exercise 

we are talking about, the big yard and sort of an over-leverage. 

Senator STABENOW. Perches. 

Chairman ROBERTS. We have been talking—I think we might include a requirement that we play Mozart to just sort of calm the 

chickens down. I do not know if that would be helpful or not. 

[Laughter.] 

Chairman ROBERTS. On this comment period, I sure hope you are 

standing up, and I know we are, to make sure that the Department 

hears that this is just—sometimes it is hard to understand what 

happens in our federal government. This is one of those cases. So, 

thank you for your comments on that, and all of us are working 

to solve the GMO problem. I did not mean to interrupt the flow of 

the witnesses here, but thank you for those comments. 

Dr. Hill. 

STATEMENT OF HOWARD HILL, D.V.M., PAST PRESIDENT, NATIONAL PORK PRODUCERS COUNCIL, BREEZE HILL FARMS 

AND H&K ENTERPRISES, CAMBRIDGE, IOWA 

Dr. HILL. Good morning, Chairman Roberts, Ranking Member 

Stabenow, and members of the Committee, and thank you for this 

opportunity to visit with you. I am Dr. Howard Hill, a veterinarian 

and pork producer from Cambridge, Iowa, and Past President of 

the National Pork Producers Council. 

The U.S. pork industry is in pretty good shape right now economically. In the past couple of years, it has overcome some disease issues and weather-related record-high feed grain prices and 

now appears to be moving into a period of cautious calculated expansion. 

Pork production is forecast by USDA to increase this year by two 

percent, to almost 25 billion pounds, and in 2017 by 2.6 percent, 

to more than 25.5 billion pounds. Of course, producers’ fortunes can 

be affected for good or bad by any number of factors, some controllable and some not so controllable, such as disease and weather. 

I am going to first address an opportunity that would be very 

positive for hog farmers like me and that Congress can control, the 

Trans-Pacific Partnership, or TPP. But another issue recently has 

come up that if not addressed would wipe out any of the benefits 

we gain from TPP. 

Pork producers are very concerned about the so-called GIPSA 

rule, which you have heard about from Mr. Brunner. As many of 

you know, the rule was borne out of the 2008 Farm Bill, which inmw42035 on AGRINON012 with DISTILLER

11 

cludes five specific issues, mostly related to the poultry industry, 

but Congress wanted USDA to address. But the Grain Inspection, 

Packers, and Stockyard Administration in 2010 proposed an expansive rule that would have had a significant negative impact on the 

livestock industry. 

In November 2010, an Informa Economics study of the rule found 

it would have cost the pork industry more than $350 million annually. Tens of thousands of comments, including 16,000 from the 

pork producers, were filed in opposition to the rule, and Congress 

several times included riders in the USDA’s annual appropriation 

bill to prevent it from finalizing the regulation. Such an amendment was not included in the USDA’s fiscal year 2016 bill. 

Now, the agency is moving forward with the rule and we have 

grave concern it will mirror the 2010 proposal. If it does, the livestock industry would be fundamentally and negatively changed and 

the increased exports and jobs created from TPP will be negated. 

Additionally, the fact that we have to deal with the GIPSA rule 

issue is diverting valuable resources away from the pork industry’s 

top priority, and that being the approval of TPP. TPP, the benefits 

of which will exceed all past Free Trade Agreements, represents a 

great opportunity for U.S. pork producers and for the entire U.S. 

economy. TPP includes the United States and 11 Pacific Rim countries, and those nations include nearly a half-a-billion consumers 

and represents 40 percent of the world’s GDP. The agreement has 

become the de facto global trade vehicle and other countries in the 

region already are lining up to be part of TPP. Because other AsiaPacific trade agreements are being negotiated, such as China-led 

16-nation regional comprehensive economic partnership, the United 

States cannot afford either to economically or geopolitically walk 

away from the fastest growing region in the world. 

To give you an idea of the importance of Free Trade Agreement 

to the U.S. pork producers, the United States now exports more 

pork to the 20 countries with which we have an FTA than it does 

to the rest of the world combined. Congress must pass TPA and it 

must do so soon. 

Finally, a challenge that would be out of everyone’s control but 

that could be tempered through preparedness is a foreign animal 

disease outbreak, specifically an outbreak of Foot and Mouth Disease. A foot and mouth outbreak in this country would be economically devastating to the pork producers and other food producers. 

USDA and the livestock industry has been working on a plan to 

combat an outbreak, but the only practical way is through the use 

of vaccination. Unfortunately, we currently do not have the ability 

to produce the number of doses needed for an initial outbreak or 

the capacity to produce more vaccine. 

The U.S. pork industry believes, consistent with Homeland Security Presidential Directive 9, that an adequate Foot and Mouth Disease vaccine bank must be established. This would require, one, an 

offshore vendor maintained bank that would have available antigen 

concentrate to produce against all 23 of the most common Foot and 

Mouth Disease types currently circulating in the world. Two, a vendor managed inventory of ten million doses, which is the estimated 

need for the first two weeks of the outbreak. Third, a contract with 

mw42035 on AGRINON012 with DISTILLER

12 

an international manufacturer or manufacturers for the surge capacity to produce at least 40 million additional doses. 

Given the costs of dealing with a Foot and Mouth Disease outbreak and the economic impact on the livestock industry and, indeed, on the entire U.S. economy, Congress should appropriate 

enough money to set up such a vaccine bank. 

Those are a few of the opportunities and challenges pork producers face and I will be happy to answer any questions at the appropriate time. Thank you. 

[The prepared statement of Dr. Hill can be found on page 64 in 

the appendix.] 

Chairman ROBERTS. Thank you, sir. 

Mr. Goggins. 

STATEMENT OF JOE GOGGINS, PRODUCER, U.S. CATTLEMEN’S 

ASSOCIATION, AND VICE PRESIDENT, VERMILLION RANCH 

COMPANY, PUBLIC AUCTION YARDS, BILLINGS LIVESTOCK 

COMMISSION COMPANY, WESTERN LIVESTOCK AUCTION, 

AND NORTHERN LIVESTOCK VIDEO AUCTION, BILLINGS, 

MONTANA 

Mr. GOGGINS. Good morning. It is truly an honor to be here on 

behalf of the livestock industry addressing this distinguished committee and the great people you represent. 

In the next 15 to 20 years, when you look at the massive population growth not only in this country but worldwide, the deal 

maker for the United States of America when it comes to trade 

with our world partners will not be our technology or our energy, 

it will be our food. 

The American producer, feeder, and packer have the know-how, 

work ethic, and pride to produce the highest quality, most affordable, and safest protein in the world. This is why we must demand 

that we in America do everything in our power to keep an open, 

fair, competitive marketplace for our producers and feeders of all 

sizes. Another key component is to assure our domestic livestock 

herd remains safe and free from both domestic and foreign diseases. 

There have been many success stories in the previous Farm Bill 

programs, for example, the voluntary conservation effort that kept 

the sage-grouse from being listed, the beginning farmers and 

ranchers program, the disaster funding program that aided the 

producers in the Dakotas after the Atlas blizzards of 2013, just to 

name a few. 

In the years 2013 and 2014, we all saw our once-in-a-lifetime up 

in the cattle market. Since then, in the last year, I hope we have 

seen our once-in-a-lifetime down. The last year represents the largest loss in equity in the history of the U.S. cattle industry. 

Following are some concerns and challenges that need to be 

looked at and addressed by this committee. We need to find a fairer 

and more competitive way of determining a weekly cash price on 

live fed cattle. There are many avenues by which to do this, but 

we undoubtedly need to create more transparency and competitiveness at the fed cattle level. 

Volatility in the marketplace is causing huge problems for everyone in the industry. The Futures Board has always been a very 

mw42035 on AGRINON012 with DISTILLER

13 

good tool for producers and feeders to manage risk. At the present 

time, it no longer can be used because of violent moves in the market, mostly due to, in my opinion, the expanded limits, and high 

frequency algorithmic trading. It is a speculator’s market. For example, just two weeks ago, we sold fed cattle at a $134 to $136. 

The Board the same morning went near limit down on the front 

month June to $121-something. That is a $15 basis Now, that is 

proof fundamentals do not have much to do with this market. 

However, my biggest concern about the volatility in this market 

is how it affects the average producer and young producers that 

have to borrow most of their money from the bank to purchase and 

feed these cattle. The lenders, in turn, are almost 100 percent of 

the time requiring these people to hedge 75 percent of those cattle 

they buy in order to acquire such a loan. These massive, violent 

moves on the Futures Board cause people to pay huge margin calls, 

which drains their available cash, forcing them to get out of the 

hedge at a very unfavorable position. 

I know in our own family feeding operation, currently, we background and feed near 50,000 head of calves a year. The Futures 

Board is no longer a viable tool for us due to the volatility of the 

market and the amount of money it takes to hold a position. This 

may allow us only to feed half as many cattle going forward. 

We need to modernize and update the Packers and Stockyards 

Act of 1921. This 95-year-old Act needs to be modernized. 

Another challenge I would encourage the Committee to be conscientious of is the concerns that come with over-regulation. Too 

much government on the farm and ranch is a major concern in the 

country. One example is the uncertainty surrounding the EPA’s 

Waters of the U.S. rule. 

I would also suggest caution on making too stringent requirements on the trucking and interstate movement of livestock. Livestock are a highly perishable commodity. If we hamper the ability 

to move livestock quickly and efficiently, we might actually limit 

opportunities for producers in parts of this country. 

In closing, as a producer of protein, I challenge this committee 

to address the concerns and issues I have just laid out. Restructure 

restrictive laws. Update outdated laws. Ensure that we have some 

transparency and competitiveness in our industry. Last but not 

least, put some sideboards on the futures market and the influence 

the Board has on the cattle market. 

Keep in mind, in the years to come, trade policies and currency 

values will heavily play on our markets and the nations with the 

capabilities to produce an abundant quality, high quality safe and 

affordable food supply will be the powerhouses in the global economy. 

[The prepared statement of Mr. Goggins can be found on page 57 

in the appendix.] 

Chairman ROBERTS. We thank you, Mr. Goggins. Thank you for 

the challenge. We accept it. 

I would just note that I have been to 18 Kansas counties here 

recently. I was way out there in Western Kansas, in St. Francis, 

and a good friend of mine who I have known a long time put on 

a cowboy hat like Tracy has there, pulled it down, and said, ‘‘Pat, 

mw42035 on AGRINON012 with DISTILLER

14 

you have done a good job, but I have got news for you. I am done.’’ 

He just said, ‘‘I feel ruled. I do not feel governed.’’ 

I think that pretty well sums up some of the concerns that you 

raised. Those of us who serve on this committee in a bipartisan 

fashion want to address all of these concerns, and I thank you for 

pretty well summing them up. 

Mr. Zimmerman. 

STATEMENT OF JOHN ZIMMERMAN, PRODUCER, NATIONAL 

TURKEY FEDERATION/MINNESOTA TURKEY GROWERS ASSOCIATION, P&J PRODUCTS, NORTHFIELD, MINNESOTA 

Mr. ZIMMERMAN. Good morning, Chairman Roberts, Ranking 

Member Stabenow, and members of the Committee. I appreciate 

the opportunity to testify on behalf of the 63,000 men and women 

who put their boots on every day to keep the turkey industry working. Our industry raises approximately 238 million pounds of turkey annually, and USDA’s latest forecast puts 2016 turkey production at an all-time record of 6.4 billion pounds, 14 percent above 

2015. 

This year, the turkey industry has made significant strides and 

learned a lot in recovering from high path avian influenza after 

suffering through the worst animal disease outbreak in U.S. history last year. However, our preparation was tested earlier this 

year in Indiana when a small outbreak occurred in a commercial 

turkey flock. This outbreak was small precisely because of the lessons we have learned. 

The important lesson is that immediate action needs to be taken 

at the local level to limit virus spread. No matter how good the intentions are at the state and federal level, industry must be given 

clear permission to act within minutes, not hours or days, to protect other nearby farms from becoming infected. I must emphasize 

the need for rapid stamping out procedures and methods that ensure humane treatment while eliminating virus spread. Currently, 

there is no one method that achieves perfect results in all circumstances. 

NTF is deeply appreciative of the indemnification program implemented by USDA/APHIS, strongly supported by Congress, that 

helped us manage through this crisis, and I would be remiss if I 

did not take a moment to personally thank my fellow Minnesotan, 

Senator Klobuchar, on behalf of myself, the NTF, and the entire 

turkey industry for all you did to help us last year. Thank you. 

Finally, the billion dollars in losses are well documented. In 

order to prevent future outbreaks, the U.S. needs to adopt a forward looking mandatory animal pest and disease prevention program designed to limit the impacts of foreign zoonotic diseases on 

livestock and poultry producers, and we look forward to working 

with Congress to get this accomplished. 

All poultry exports were severely damaged by the trade restrictions that resulted from the 2015 outbreak. Specifically, last year’s 

turkey exports declined 34 percent and over 33 countries enacted 

some form of ban on U.S. poultry. Without the hard work of 

APHIS, it could have been a lot worse. They reopened closed markets as well as continue to establish protocols that will limit bans 

to regional levels in the future. 

mw42035 on AGRINON012 with DISTILLER

15 

We also continue to see high path outbreaks in Europe, Asia, and 

South America, and now is the time to reengage with our trade 

partners to discuss how HPAI can be treated moving forward. This 

is a global disease, and working with the government, we can develop a plan that minimizes export disruptions now. 

With regard to non-scientific trade barriers, it is important that 

USDA’s FAS continue to work with both APHIS and the turkey industry to fully understand how we differ from chicken and livestock 

production. For example, while never covered under U.S. COOL 

regulations, turkey has now been subjected to COOL-like regulations by both Korea and South Africa, who banned U.S. turkey 

raised and processed in the U.S. just because it was hatched in 

Canada. This is not science-based and is a problem for many companies that hope to expand sales into these promising growth markets. 

Finally, we support TPP as an important step forward in reducing trade barriers and opening new markets for the turkey industry and we encourage Congress to approve this agreement as soon 

as possible. 

Recently, USDA proposed a rule to amend the organic livestock 

and poultry production requirements based on recommendations by 

the National Organic Standards Board. NTF is concerned about the 

potential disruption to existing organic producers and their supply 

chains as well as the impacts this proposed rule may have on ensuring animal health. Before moving forward with the rule, the 

turkey industry feels that USDA should conduct a thorough assessment of the costs of compliance, increased animal health and welfare risks, and alternatives for existing organic growers, producers, 

and supply chains to ensure minimal impact. 

Six years ago, USDA proposed sweeping rule changes on farmer 

contracting. With the expiration of a Congressional prohibition on 

implementing these changes, USDA is once again threatening to 

fundamentally change the rules by which our members operate. We 

believe that the changes would increase costs, reduce productivity, 

and possibly lead to increased live production ownership by integrated poultry companies to the detriment of independent farmers. 

We support the continued prohibition of USDA’s implementation of 

these proposed changes. 

A recent report by the National Academy of Sciences found that 

foods made from genetically engineered crops are as safe to eat as 

those made from conventional crops. Regarding food labeling, NTF 

actively supports two critical components of any GMO bill. One, 

that the bill maintains federal preemption for meat and poultry labeling, which is already regulated by USDA/FSIS, and two, that it 

ensures that animals fed GE feed should not have to be labeled 

GE. We look forward to a bill that prevents a patchwork of state 

rules that create a labeling nightmare for food producers, but these 

two conditions must be met. 

Finally, we have a worker shortage all across this country and 

meat and poultry producers are no different in feeling the pain of 

this shortage. The turkey industry supports immigration reform 

that addresses the needs of year-round meat and poultry producers 

and processors. Our members need access to a pool of legal general 

labor immigrant workers and a visa program that can address 

mw42035 on AGRINON012 with DISTILLER

16 

these needs. However politically difficult it seems, we must get this 

job done. 

Once again, thank you for the opportunity to testify today on behalf of the U.S. turkey industry and I would be happy to answer 

any questions. 

[The prepared statement of Mr. Zimmerman can be found on 

page 81 in the appendix.] 

Chairman ROBERTS. We thank you all for taking the time to join 

us today and appreciate your sharing your expertise, your firsthand experience as leaders within the livestock and poultry sectors. 

Tracy, tell me, in your perspective, what is the best thing we can 

do to get this recent downfall in the beef sector addressed? 

Mr. BRUNNER. Well, Mr. Chairman, the current situation, as I 

have said, is one of growing supplies and we need growing markets, growing market access for our beef to match. Trans-Pacific 

Partnership is the trade agreement of the day. As was said earlier, 

40 percent of the world’s economy. It will level the playing field. 

Currently, we are paying 11 percent higher tariff going in to our 

best customer, Japan, $300 million loss already, and that is only 

going to continue to grow until we pass TPP. 

Then, very briefly, the increasing regulatory burden from EPA, 

Endangered Species Act, and other government agencies. 

Chairman ROBERTS. I would also like to hear your perspective on 

what you have already brought up, along with many of the witnesses here, on the real world impacts of the proposed GIPSA rule. 

I have sent a letter to the Secretary, I think it has been about a 

month ago. Maybe the letter was too, a little too much for him to 

take, but anyway, we have not gotten a reply back. In the House, 

they have taken action on the GIPSA rule and I would expect the 

same effort when we consider agriculture appropriations on this 

side. 

But, I have heard value-added programs stand to face a lot of 

legal threat due to the premiums they pay to producers potentially 

being considered as unfair. In your business, do you utilize any 

unique or niche marketing that you think could be jeopardized by 

the implementation of the GIPSA rule, or do you have other examples like this that you could share? 

Mr. BRUNNER. Mr. Chairman, the GIPSA rule as it was written 

into the 2008 Farm Bill would have severely restricted our ability 

to participate in alternative marketing arrangements. As I had 

said earlier, research has shown that those alternative marketing 

arrangements, value-based marketing, if you will, has encouraged 

our industry and allowed individual producers to meet and be rewarded for consumer demand. 

As a very brief example, our family actively participates in marketing most of our cattle through a value-based marketing system. 

Over time, this has allowed us to not only meet consumer demand 

by developing and producing products that consumers want and 

are willing to pay for, but also receive an average of $50 a head 

premium to the cash market. 

Chairman ROBERTS. Dr. Hill, can you describe in a little more detail some of the recent outbreaks of FMD that have occurred in 

other countries, how your industry and the Department came to 

the conclusion that the best way of addressing an FMD outbreak 

mw42035 on AGRINON012 with DISTILLER

17 

here in the United States is to vaccinate animals rather than trying to stamp out the disease. 

Dr. HILL. Two of the most notable outbreaks have been the recent outbreak in Korea and then several years ago the outbreak 

that was in Great Britain. In the past, APHIS has used the approach of destroying animals and disposing of the carcasses, and if 

you look at the recent outbreak of high path AI, that was one of 

the big challenges, was how they got rid of the carcasses. So, working with APHIS, the industry has come to the conclusion that 

slaughtering these animals, killing these animals and burying 

them or burning them or however you dispose of them is not practical. 

We have about a million pigs on the road in the United States 

every day and about 400,000 cattle. If we have an outbreak of Foot 

and Mouth Disease, we do not think it is going to be an isolated, 

small outbreak. 

Chairman ROBERTS. No, it will not. 

Dr. HILL. So, the only really practical way to try to control the 

disease is to have available vaccines. Fortunately, this is a disease 

that does not affect the humans, so the meat is usable, and if we 

had a vaccine bank available, we could have an aggressive vaccine 

program and try to limit the losses to producers and basically live 

for another day. 

Chairman ROBERTS. I thank you for that. I had a little experience with that as Chairman of the Intelligence Committee when we 

were discussing agroterrorism. Not many people wanted to hear 

about that. We had an exercise exactly as you have described. Acting as President at that particular time—there was not anybody 

else in town—but in doing that exercise, all hell broke loose and 

all of our exports stopped. Then we faced the dilemma of what to 

do with the diseased animals. I am not going to go into the rest 

of it. It just turned into an absolute disaster. But one thing happened. People discovered that their food did not come from grocery 

stores and there was panic everywhere. It shows you just how important this research is. 

I am over time here. I will get back to some of the rest of you 

later. 

Senator Stabenow. 

Senator STABENOW. Well, thank you very much, Mr. Chairman, 

and welcome again. We appreciate your testimony. 

Let me start with Mr. Truex. I wonder if you might speak a little 

bit more about what you talked about in your testimony in terms 

of the organic livestock standards rule, and if you could share some 

of the additional potential costs and impacts beyond purchasing additional land. When we look at those issues, I know that the producers most impacted are those that are actually producing 70, 80 

percent of the organic eggs, and do you think there will be a sufficient number of new egg producers transitioning into organics to 

meet the rising demand? 

Mr. TRUEX. Thank you. I do not. What we are concerned about 

is that, as you said earlier, a large majority of the organic production is relatively new. The facilities are new because of the great 

increase in organic consumption in the past few years. So, the producers have a significant investment in relatively new facilities 

mw42035 on AGRINON012 with DISTILLER

18 

that was totally accepted by USDA until this proposed rule. So, 

they are going to be faced with a lot of changes. 

The other thing that we are concerned about is this rule that 

protects the birds from rodents and birds and all the other things, 

our current practice supports the FDA Egg Safety Rule, and we 

have concerns that if you put the birds out on the ground, let them 

out where they can get access to other birds and rodents, it is going 

to be a real challenge to protect those birds. 

In addition to that, you have the thought that, well, if there is 

an avian influenza problem, we will just put them back inside, but 

unfortunately, as we learned in Indiana this spring, sometimes you 

do not know you have avian influenza until the second day and 

then it is too late. 

So, if you take that in, all those things and add it together with 

the problems in local permitting and building and cost, our members are telling me, and, of course, I am not in organic production. 

In a commercial for your state, I buy my organic eggs from 

Herbrucks—— 

Senator STABENOW. Great. 

Mr. TRUEX. But, the problem is, to maintain the production you 

have, will be impossible with the added space. So even the producers that are in organic are going to have to build additional 

buildings and get additional land, and I think it is going to be very 

challenging for the others that are not currently doing it to get the 

funding and the land purchases and the buildings and the permits 

to build that. So, I believe we would limit the amount of organic 

eggs for the consumer. 

Senator STABENOW. Thank you very much. 

Dr. Hill, the Iowa Pork Producers Association is a leading member, I know, of the Iowa Ag Water Alliance, and working with the 

Iowa Corn Growers and Soybean Association, you are working to 

improve farm conservation and water quality through the locally 

led efforts that we have put together. I wonder if you could explain 

how the Iowa Pork Producers and Iowa Ag Water Alliance have 

worked with other partners using the new Regional Conservation 

Partnership Program to further your water quality goals. 

Dr. HILL. Yes. Well, thank you. The Iowa Pork Producers, of 

course, have worked closely with that group and also with the Department of Agriculture. There are state funds that help producers 

with some technologies, like cover crops. In my area, five, six years 

ago, we saw very few farmers using cover crops. Today, it has just 

had an exponential growth. Some of that is partially supported by 

government funds, but most of it is, I believe, just producers trying 

to do the right thing, especially on highly sensitive soil. 

If there is an ask, I would say the ask would be for more funding 

for research to develop new technologies, different technologies, 

maybe things that we are not doing today that we had not thought 

about. I think there is a big need to—you are not going to solve 

the water quality thing with one technology. Cover crops is not 

going to do everything we want it to do. So, added funding for research, I think, is very, very important, and we appreciate the support you have given us so far. 

mw42035 on AGRINON012 with DISTILLER

19 

Senator STABENOW. Well, thank you, and I hope we are going to 

be able to see more producers get involved in these efforts. I think 

that is very, very important. 

Finally, let me ask, for everyone on the panel, and maybe I will 

start—Dr. Hill, you are a veterinarian, I understand—— 

Dr. HILL. Yes. 

Senator STABENOW. —so let me start with you, as well, again. 

The FDA has taken several steps, as we know, like the Veterinary 

Feed Directive that goes into effect in December, to ensure that 

antibiotics are used judiciously and only when appropriate for animal health. This is going to require more regular relationships between veterinarians and producers and this is an area I have 

worked a lot in, supporting efforts to get more people into veterinary medicine. 

When you look at this, large producers may very well have veterinarians on their staff. I am concerned about smaller cow-calf 

producers or people in remote areas and so on. So, when we look 

at—earlier this month, the USDA announced $2.4 million available 

through a new Veterinary Services Grant Program that I authored 

in the last Farm Bill to support veterinarians in underserved 

areas, and Senator Crapo and I have just introduced another bill, 

a Veterinary Medicine Loan Repayment Program, to provide even 

more incentives. 

But, I am wondering what you think. I mean, what is happening 

here? I continue to hear concerns about not enough veterinarians 

to serve the need, and what more should we be doing to help with 

that? 

Dr. HILL. Yes. Well, first of all, our industry has fully supported 

209 and 213 and producers have already, for the most part, reduced or eliminated feed additives that are of medical importance 

from the diets. 

The concern you have is a real concern, not necessarily in Iowa, 

where I am, because we have a lot of veterinarians. Your concern 

is valid in more remote areas, particularly, I think, in the cattle industry out West. I think any support that you can give for veterinarians working in these under-supply areas would be very, very 

important. 

We work closely, though, to get some of the things with the Feed 

Directives in place, like electronic rather than hand-written things. 

So, there are some ways that we have, working with the government officials, that we expedited the process that will make it easier. But I think there are still some challenges. 

The groups that are working on this on the pork side are the 

American Association of Swine Veterinarians, the National Pork 

Board and NPPC all working together to try to help producers. 

There is a lot of education going on right now about what to expect 

and be ready for January 2017. 

Senator STABENOW. I do not know, Mr. Chairman, if I might just 

ask—Mr. Brunner. 

Mr. BRUNNER. Yes. I just might briefly add, our organization 

worked hand-in-hand with FDA in the formulation of the Veterinary Feed Directive to try and make it as workable as possible for 

the cattle and beef industry. I would also like to point out that our 

even larger concern is with the jeopardy that is being placed on 

mw42035 on AGRINON012 with DISTILLER

20 

some very important technologies that are classified as antibiotics 

but are not—have no application in human medicine, specifically 

ionophores. Ionophores are very important to increasing the efficiency in beef production, but they have been classed as antibiotics. 

We are working with FDA to get clearer interpretation on that, as 

well. 

Then I might summarize by saying that it seems that over time, 

an increasingly higher share or percent of veterinarians seem to be 

going into companion animal practice versus large animal practice 

and a more robust and growing animal agriculture should show 

more opportunity for veterinarians there, as well. 

Senator STABENOW. Thank you. 

Thank you, Mr. Chairman. 

Chairman ROBERTS. Senator Grassley. 

Senator GRASSLEY. Thank you, Mr. Chairman. It is very important that you have a hearing like this. A big industry, agriculture, 

it is very important. 

So, I would first welcome my fellow Iowan, Howard Hill. He has 

been involved with the pork industry probably most of your life. 

Dr. Hill, in your testimony, you mentioned the Waters of the U.S. 

rule, that is a major concern to the pork industry. It is also a major 

concern to most every agricultural group in Iowa and every agricultural organization. Could you share with the Committee a few examples of just common practice within your industry that you— 

where there is uncertainty regarding the Waters of the U.S. rule. 

Dr. HILL. Thank you, Senator Grassley. We do have a lot of concern about it. You know, the swine industry and the cattle industry 

is highly regulated with state requirements with manure application. The way we interpret what the EPA is proposing, it would impact severely how we would be applying manure. It, depending on 

how far they go, it could impact crop production just because of waterways that we use, setbacks. So, in our opinion, it is an overreach 

by EPA that we would strongly oppose. 

Senator GRASSLEY. Mr. Brunner, I have a question for you, because I have heard from numerous Iowans about what has been 

going on in the beef market, and some of these people in Iowa 

would blame industry structure. Others would blame futures contracts. In your testimony, you state that only five or six percent of 

cattle are owned by packers. In addition, we know that nationally, 

only about 21.3 percent of the cattle are traded in the cash market, 

according to USDA data. The percent of cattle traded in the cash 

market has dropped significantly since 2005, when 52 percent were 

traded cash. While cash traded cattle have dropped 30 percent 

since that 2005, the formula based sales with packers are up 23 

percent. 

Do you have any concern that the drop in the amount of cash 

traded cattle has contributed to that contract being more volatile, 

since it is less liquid and represents such a small percentage of the 

overall cattle market today? 

Mr. BRUNNER. Well, thank you, Senator. The increased volatility 

in the futures market, we believe, comes from the advent of and 

administration of new technology, high frequency trading. As I said 

before, our organization is working directly with the CME Group, 

trying to identify possibilities of dampening the effects of the high 

mw42035 on AGRINON012 with DISTILLER

21 

frequency trading on the cattle market. You know, you cannot deny 

the application of an emerging technology. Technology will go on 

regardless and practices will move beyond borders. So, we have to 

be cognizant that we cannot stop progress. 

What we do believe is that we need some data. We need to have 

information from CME. We have asked them to share data and information with us the effects of high frequency trading and are 

working to get that information so that we can better work with 

them on what changes might need to be made in the cattle contract. 

Senator GRASSLEY. Okay. That is my last question, but I have a 

minute left. Let me take a couple seconds for summation. 

In the cattle market today, only 21 percent of the market is traded on the cash market, even though the price discovery from that 

21 percent is utilized for nearly 60 percent of the cattle that are 

marketed through formulas. So, to me, it seems like the cattle market has experienced a structural change over the last decade where 

the tail wagging the dog situation has developed. So, I will continue, Mr. Chairman, to watch this situation. I have heard a great 

deal from cattle producers in Iowa about the current structure of 

the beef industry. 

Thank you, Mr. Chairman. I yield. 

Chairman ROBERTS. I thank the Senator. 

With apologies to Senator Klobuchar, it is your time—— 

Senator KLOBUCHAR. Okay. 

Chairman ROBERTS. —but on WOTUS, I think everywhere we go 

in farm country, whether it be Kansas or wherever we are, the 

number one issue that comes up, Waters of the U.S. I am talking 

about dry creek beds and farm ponds where no self-respecting duck 

would ever land, and it goes on and on. 

I remember the meeting that we had with the Administrator of 

EPA, Gina McCarthy. There were two pages in this bill where it 

said normal farming operations are exempt. Then it had parentheses and it said, see regs, and then there were 88 pages of regulations, probably eight-point. You can hardly read it without a 

magnifying glass. I defy anybody in this room, any of you, any of 

us, any farm organization and any commodity group, any CPA, any 

lawyer, to define what the heck was in those regs. 

We were not successful in the Senate with what we thought was 

an answer to it. We have not given up and we will continue that 

effort. It is before the courts. But, it is the number one issue that 

has been brought up all throughout farm country. We are very cognizant of this and we are trying very hard to find an answer. 

Senator Klobuchar. 

Senator KLOBUCHAR. Thank you very much, Mr. Chairman. 

I was proud to introduce Mr. Zimmerman earlier, and I guess I 

will address my first questions to you and Dr. Hill, and it is about 

the importance of investment in animal health research. We have 

seen some issues with our turkeys. You brought up the scourge, the 

health scourge that we had where so many producers were hit. 

But, Mr. Hill, you spoke about the need for more investment in 

the vaccine bank. Can you elaborate on how the industry has 

worked with APHIS to address this need and how APHIS has—and 

mw42035 on AGRINON012 with DISTILLER

22 

if APHIS has engaged at all with the Department of Homeland Security, as you suggested in your testimony? 

Dr. HILL. Well, I believe APHIS has engaged. Right now, the 

amount of money that is in this bank is a drop in the bucket compared to what is really needed. 

Dr. Roth at Iowa State University has done extensive studies on 

what would happen in an outbreak and how much vaccine we 

would need. The current bank of, not vaccine, but of the virus that 

would make the vaccine, is held at Plum Island. There are 23 

strains that circulate in the world, and I think Plum Island has 

about 14 of those available. 

What would happen is, because we cannot have a live virus in 

the United States, there is a contract to ship that to Europe. They 

would make the vaccine there and ship it back to the United 

States. The company that has that contract says that they can do 

that in a matter of four days. But we are talking about basically 

two million doses. 

Dr. Roth’s study says we would need ten million doses in the 

first two weeks and we would need an expansion of that to 40 million doses within the first month to try to control the disease. This 

is based off of studies that say that we are not going to probably 

have a small little outbreak. 

Senator KLOBUCHAR. Okay. All right. Thank you. 

Mr. Zimmerman, could you just bring me up to speed quickly on 

what is happening with the flocks and the repopulation of flocks 

since last year. 

Mr. ZIMMERMAN. We are almost approaching normal now. It took 

about a year to get our breeder flocks back online, and as of this 

spring, I would say we are back to close to 100 percent production 

in the turkey industry. 

Senator KLOBUCHAR. Yes. 

Mr. ZIMMERMAN. I would like to just take a moment to echo Mr. 

Truex’s thoughts on the organic rule. We talk about avian influenza and all we did with APHIS to limit the possibility of introduction of this virus into our barns, and here AMS brings up a rule 

to increase the outdoor requirements of our birds, which flies in the 

face of everything we have been doing with APHIS to try to limit 

the exposure of our birds to waterfowl and other diseases, so it 

is—— 

Senator KLOBUCHAR. Right, which appeared to have been one of 

the factors. I was just going to ask you about that, so thank you. 

One last topic here, and I think I will put some questions about 

beginning farmers, which has been important, on the record. But 

Cuba, I am carrying the bill in the Senate, along with Senator 

Flake and many others, Senator Heitkamp has worked on this 

issue, lifting the embargo and ways to lift the embargo to Cuba. 

While Cuba is by no means our biggest export market, it is 11 million people 90 miles off our shore. Estimates are five million Americans a year would visit, and my fear is that if we do not lift this 

embargo, our five million Americans are not only going to be sleeping in Spanish hotels, but they are going to be eating food from 

China and Venezuela and other places. 

Could you comment about how—the beneficial effect lifting the 

embargo could have on the industry and poultry in general, as well 

mw42035 on AGRINON012 with DISTILLER

23 

as, I know, beef and other forms of food that we want to send over 

there. 

Mr. ZIMMERMAN. To reiterate what you said, it is a very close 

market, and any time you can open up a new market to our—turkey is the perfect protein and we would be happy, more than happy 

to sell that product to a new market, such as Cuba. So, my understanding is there needs to be some infrastructure put into place 

and building their tourist industry would help tremendously to get 

more people to that country that would, therefore, eat our turkey. 

Senator KLOBUCHAR. Yes. Does anyone else want to comment on 

Cuba? 

Dr. HILL. I recently visited Cuba, and the big—after the 2004 

hurricane, the government allowed food and medical supplies to be 

exported to Cuba. The big problem we have right now, we can export pork, we can export beef, but the problem is the credit, because our government does not let—— 

Senator KLOBUCHAR. That is part of the embargo, right? 

Dr. HILL. Yes. So, that is why we are not exporting pork there 

right now. 

Senator KLOBUCHAR. Exactly, and Senator Heitkamp has a targeted focus on that, on the financing, and, obviously, the easiest 

way to do it overall would be to just lift the embargo, but we are 

looking at compromises to try to get some of our fellow Senators 

on board, although there is just growing support. Representative 

Emmer, who is a Republican over in the House from Minnesota, is 

carrying one of the bills in the House. So, we just see a lot of growing support for this effort and I want to thank you. 

Thanks. 

Chairman ROBERTS. Dr. Hill and Senator, I just want to say I 

have been to Cuba here recently and talked to the Ag Minister 

there, whose main concern was access to our export programs, 

which I would agree that if that would work, certainly it would 

work out very well. However, they are not receiving any help from 

Russia, and I do not think that is going to start any time soon. On 

Venezuela, my question to him is, will you pay it back, and that 

was never answered. So, that is one of the concerns that I have. 

I think we ought to proceed on the best way possible, but that is 

a worry that I have. 

Senator Tillis. 

Senator TILLIS. Thank you, Mr. Chairman. Thank you for holding this important hearing. I know that committees pertaining to 

this subject matter are few and far between and I think it is very 

important. We can talk about trade opportunities, we can talk 

about a number of other things, but if we do not start lifting this 

regulatory burden and the additional barriers that we have, trade 

expansion will be a moot point because our farmers will not be able 

to produce protein and export it. We are reaching a very dangerous 

point. That is something I want to focus on. 

When I travel across North Carolina, back in the day, you would 

be talking about the cost of feed, you would be talking about the 

prices of beef and pork and poultry. Now you talk about EPA regulations. You talk about FDA regulations. You talk about USDA regulations and all the impediments that are making it virtually immw42035 on AGRINON012 with DISTILLER

24 

possible for farmers to continue to do what they want to do, which 

is to produce the most abundant, safe food supply in the world. 

If I appear to be a little bit angry about it, I am. I mean, we have 

had a few committee hearings that almost focus on who is in 

Grant’s tomb. We know who is in Grant’s tomb. We know what regulations need to be changed. We know a number of things we have 

to get focused on and Congress has to act. 

Dr. Hill, I want to start with you on the GIPSA rule. I would like 

for you, if you could, to explain it in kitchen table terms, so people 

can understand how this rule affects farmers and potential consumers. 

After you do that, I would like for you to tell me whether or not 

the USDA has reached out to you and your organization about the 

latest livestock marketing practices and how the 2010 rule, which 

we successfully pushed back, will be updated for 2016 modern practices. 

Also, if you have an opportunity, give me an idea of whether or 

not USDA has indicated to you or your organization what will be 

included in the rule. 

Dr. HILL. Well, thank you. Anticipating this might be a question, 

I contacted the CEO of the National Pork Producers Council and 

asked him if USDA had contacted our organization or the National 

Pork Board, and to his knowledge, we have not had any direct contact with USDA—— 

Senator TILLIS. So we have a sweeping regulation, and have not 

consulted with major organizations to understand what the modern 

rule would need to look like to not be disruptive. 

Dr. HILL. Does that surprise you? 

Senator TILLIS. Not at all. 

Dr. HILL. No. 

Senator TILLIS. It angers me, but it does not surprise me. This 

is just another example of why these regulators need to get out. 

They need to go and talk to farmers and understand that this regulation is disruptive in a time when we have so many other disruptive forces. They need to actually go and talk to the people that are 

producing safe food and modernizing their practices because they 

cannot continue to disrupt what our farmers are doing. 

We will submit another question for the record for you to follow 

up. 

Mr. Brunner and Dr. Hill, I also want to talk about biotech with 

regards to the Vermont law and the patchwork of another 20 or 30 

states that could come into effect. I’m afraid that if proteins are not 

exempted from these labeling practices the food companies are 

going to reformulate. Can you give me some sense of what this is 

going to do to the industry in terms of reformulation practices? You 

know, we had to beat down the COOL regulations last year. This 

could be another mandatory product labeling initiative that will 

place another burden on our farmers. If we do not act, can you give 

me an idea of how this is going to affect your business operations 

and future prices? 

Mr. Brunner, we will start with you. 

Mr. BRUNNER. I think that is a very good example. The mandatory country of origin labeling, failed experiment, left us with increased industry costs and facing $1.1 billion in tariffs from our 

mw42035 on AGRINON012 with DISTILLER

25 

two best trading partners. I believe there is a huge lesson to be 

learned there, from trying to furnish something to consumers that 

they are not willing to pay for. 

Specifically to the beef industry, it takes somewhere in the neighborhood of 70 to 100 bushel of corn per animal to finish those animals—— 

Senator TILLIS. 90-plus percent of the corn produced in the 

United States is a product of biotech engineering, is that correct? 

Mr. BRUNNER. Exactly, sir. 

Senator TILLIS. So you are not going to reformulate since there 

is not enough non AE corn grown to feed these cows. 

Mr. BRUNNER. There is no way to identify preserve without adding very significant cost. It would—it is just commercially impossible. 

Senator TILLIS. Dr. Hill, do you have anything to add to that? 

Dr. HILL. Well, I would think it would have the opposite effect 

on what I think the USDA wants. It would cause—the packers 

would be so fearful of all these regulations, they would increase 

their own production. So, we have a lot of programs, as Mr. Brunner pointed out, that add value for the producer, antibiotic-free, 

ractopamine-free, housing, all different kinds of, like, genetics that 

we get premiums for, and if the GIPSA was—if they implemented 

what was in 2010, that would be a huge problem for those kind of 

programs and would be detrimental to the profitability of not only 

large producers, but small producers, because small producers are 

the ones that really take advantage of some of these niche markets. 

Senator TILLIS. Well, thank you. 

Mr. Zimmerman, I am going to submit for the record some questions on HPAI for you. I know that my state’s Agriculture Commissioner, Steve Troxler, sent officials to Minnesota, to learn from 

practices that were established up there during the outbreak. I 

have got a couple of questions that I will follow up on, but I want 

to personally thank you for your leadership and dedication in this 

area. 

Mr. Chairman, if I appear to be a little bit frustrated, it is because I think that time is running out. We have had enough discussions and we know what the issues are. We have got to solve the 

biotech labeling issue in the near future. We have got to beat back 

GIPSA again. All of these disruptive forces that do not add value, 

do not do one thing to accomplish any progress on food safety. Instead, it puts another burden on our farmers that they cannot possibly afford to have lopped on them. Thank you. 

Chairman ROBERTS. Senator Tillis, I have not noticed any change 

in your demeanor at all. 

[Laughter.] 

Chairman ROBERTS. Senator Stabenow has a brief question. 

Senator STABENOW. Mr. Chairman, I want to follow up on 

this—— 

Chairman ROBERTS. Senator Heitkamp, you are next. 

Senator STABENOW. —if my colleagues would indulge me, because, obviously, the issue was raised and biotech is a very difficult 

issue for all of us who support biotechnology and production agriculture, and at the same time, through no creation of ours, there 

is a growing demand and actions coming from consumers. 

mw42035 on AGRINON012 with DISTILLER

26 

So, I just think it is important as we are wrestling with this to 

be clear, and Mr. Brunner, maybe you can tell us how you are affected by the Vermont law. 

Mr. BRUNNER. You know, I would not be expert on the Vermont 

law. We have not spent a lot of time studying it. I do know 

very—— 

Senator STABENOW. It is my understanding you are exempt. 

Meat is exempt, correct? 

Mr. BRUNNER. That would be a very important aspect of any efforts into genetic labeling. You know, as I—— 

Senator STABENOW. But I just think it is important to know that 

you are exempt, so there is a different kind of urgency around this 

because you guys are exempt from Vermont. 

Mr. BRUNNER. Well, we might also be concerned about what 

might follow, and the press—— 

Senator STABENOW. No, I understand. I just think this complicates the issue for us as we are looking. 

But, I also wanted to just ask anyone who would want to respond, I think there is a general exemption around feed that is 

very important, the feed exemption, but the challenge that is being 

debated is from a consumer standpoint. If we have a can of soup 

that is vegetable soup or a can of soup with beef broth and meat 

in it, one would be labeled and one would not be, which I think is 

probably more of a challenge if we were following the Vermont labeling law, which from a consumer’s standpoint or from a grocery 

manufacturer’s standpoint is a different issue, when you are having 

to go through and sort of figure that out with two cans of soup and 

one is exempt and one is not exempt. 

So, I wonder if anybody would want to speak to how we deal 

with that or why that is a good idea. 

Mr. BRUNNER. Senator, very briefly, could not the voluntary labeling program that we already have serve that need and find out 

if there is a willingness for a significant enough portion of the market to pay for the cost? 

Senator STABENOW. Well, Mr. Chairman, I am not going to go on 

and debate this more at this point in terms of voluntary and mandatory. I think what we are trying to do is how to figure out at this 

point what is coming at us, which is something that is a requirement, and how do we put together a balanced coalition that is 

going to allow us to get something done in a reasonable way that 

addresses very different requests and very, very different needs, 

and this is a tough one. So, just wanted to get your perspective on 

this one issue that has been an issue of concern and trying to work 

through. Thank you. 

Mr. GOGGINS. Senator, if I may add—— 

Senator STABENOW. Yes, sir. 

Mr. GOGGINS. I think, speaking in that regard, I think we 

should—I mean, something needs to be done to get some uniformity—— 

Senator STABENOW. I agree. 

Mr. GOGGINS. —and less confusion for the consumer. 

I think as far as the beef goes, on probably a different note here, 

but I do think we have to remember that these cattle that do eat 

GMO feed are not genetically modified themselves by eating it. 

mw42035 on AGRINON012 with DISTILLER

27 

Senator STABENOW. I agree, and I think there is general agreement on that, so thank you. 

Chairman ROBERTS. Well, Tracy and Mr. Goggins, thank you so 

much for your commentary. It is exactly what I think is appropriate. If any of you are into wine production, maple syrup, ice 

cream, dairy, meat, you do not have to worry about it. So, that is 

an example of what happened in Vermont, which means every 

state could exempt their home products and have about 30 or 40 

labels and the entire food industry would collapse. We are trying 

our very best to reach an accommodation and the Committee has 

already spoken to this and we have already had an attempt on the 

floor of the Senate. The House has already spoken. So, we hope 

that we can find an answer just as soon as we possibly can. 

Tempus is fugiting. Time is a factor. So, thank you for your commentary. 

Finally, Senator Heitkamp. 

[Laughter.] 

Senator HEITKAMP. Thank you, Mr. Chairman and Ranking 

Member. It has been an interesting dialogue. 

I want to make maybe a couple points before I start getting into 

high frequency trading, and one of the reasons why I particularly 

was interested in this hearing, which is the cattle market. 

First off, a lot of the challenge here is your relationship to your 

consumers, whether we are talking about new regulations on 

organics, whether we are talking about antibiotic regulations, we 

have got to have more informed consumers and that has been one 

of our challenges, which is try and maintain a readily available, 

high quality food source in this country that people accept as high 

quality and accept as available to them. 

You know, I would challenge you that as we are dealing with 

these challenges, you need to deal directly with consumer challenges, because even if we eliminate the regulation, I have a feeling 

that consumers are going to continue to demand a label that then 

becomes voluntary and takes us to a place where we erode the 

availability of high quality food. I think there are some real challenges in all of this. 

But where everybody points a finger at government, I would suggest that this movement did not start at USDA. It did not start in 

this committee. This movement started as a consumer information 

movement. If your only response to this is, ‘‘you do not need to 

know,’’ I will tell you, as producers, you will lose. You know, if we 

said that to our constituents, well, you do not really need to know 

what our position is on that, we would probably lose, too. 

These are challenges. I have supported the Chairman and I have 

supported trying to get to some kind of preemption for a label. But, 

I remain frustrated that we have not been able to really drill down 

and do a better job involving consumers in this discussion. 

I also, Mr. Brunner, would tell you I held a hearing, or a meeting 

last week, and one of the answers to the concerns about the cattle 

market was reestablishing COOL. So, we know that is not a unanimous opinion within the cattle industry. 

But, my main focus, I hope, will be on how do we get trust back 

into the cattle market. I know you have just been—your organization, Mr. Brunner, has done yeoman’s work with Chicago Mermw42035 on AGRINON012 with DISTILLER

28 

cantile. They are trying some things right now that they think may 

help kind of correct the market. I think, Mr. Goggins, you know 

what this has cost cattlemen in my country and in Montana. You 

understand what these fluctuations have meant. 

What else should we be doing with the cattle markets to bring 

people back into the markets and stop what I think is speculation 

and start getting to a real cash price that reflects fundamentals? 

I am going to start with you, Mr. Brunner. 

Mr. BRUNNER. Well, as I said in my opening comments, we are 

in the situation of growing cattle numbers, growing beef supplies, 

and not access, not competitive market access to the markets that 

we need. Trans-Pacific Partnership would increase our ability to 

compete on a competitive basis with Australia into Japan. We have 

already lost $300 million into that market and the disparity will 

continue to grow, because Japan and Australia have a bilateral 

agreement that grants them preferential treatment. So—— 

Senator HEITKAMP. I start every one of my discussions about 

trade saying 95 percent of all potential consumers in the world do 

not live in this country. 

Mr. BRUNNER. I believe that is very accurate. 

Senator HEITKAMP. If you think we can continue to be a country 

that is a dominant economic power without accessing markets, we 

are wrong. If you do not think we need to lower trade barriers, you 

are wrong, especially for the products that we grow in North Dakota. 

Mr. Goggins, can you just offer some insights on the current 

problems that we have in the cattle market and what we should 

be doing to fix them. 

Mr. GOGGINS. I think there are quite a few things that are contributing to what we have gone through. I mean, I think the 

strength of the U.S. dollar right now has prohibited our ability to 

export our product, not just beef, but commodities in general. I 

think there is—a huge problem has been the volatility in the Futures Board market. I just—— 

Senator HEITKAMP. So, how do we fix that? 

Mr. GOGGINS. I am not really sure. I think we do things like 

NCBA and people within the industry are doing as far as working 

with CME and coming up with some way to slow the market down. 

Senator HEITKAMP. So, would you not agree that it is a problem 

when—I think the number that was used was about a fourth of all 

cattle actually move through the market this way on a cash basis 

but yet establishes the price, and that is a—when you have a thin 

market, there is always room for mischief in a thin market when 

you do not have enough participation. So my question is, how do 

we expand participation? 

Mr. GOGGINS. I think there are several things going on. Today, 

right now when we are having this hearing, they are having their 

first Internet sale. There are feedyards putting a certain percent of 

their show list on the sale today and they will be sold across that 

video auction, trying to get a truer, more immediate, more transparent way of seeing what these cattle are actually worth. Hopefully, we can get more cattle sold on a cash basis, because it is— 

the cash basis then forwards on to the Futures Bond and that is 

how we are supposed to make our market on the Futures Board. 

mw42035 on AGRINON012 with DISTILLER

29 

Right now, there is—the Futures Board just does not follow the 

fundamentals of what cash is bringing. It is really becoming a serious problem, I think, especially from a risk management side, because I think there has been—I do not think any of us know the 

amount of equity that is going to be lost and has been lost, but it 

is going to be unbelievable—— 

Senator HEITKAMP. Yes. When—— 

Mr. GOGGINS. —what we see in this deal. These bankers, when 

I go in or a young person goes in and wants to get a loan, these 

bankers, the lenders are definitely going to make them get a hedge 

position on that Board. So we have to make it a more stable market. 

Senator HEITKAMP. Well, I do not think there is any doubt about 

it, or people are going to move out of the cattle business, which is 

just going to compound this. 

Mr. Brunner, I will give you the last comment, but I do want to 

applaud your work and your Association’s work with the market. 

You suggested in the beginning of your testimony that you were 

not interested in any changes. You guys are going to watch it. But 

I want you to know that we are watching it very closely. I associate 

myself with Senator Grassley’s remarks. We want to know what 

more we can do to push for a fair and open market so that we do 

not lose equity and that we do not lose producers. 

This is a tough business. Anyone who thinks it is easy being a 

rancher in North Dakota, you are wrong. I mean, when you are 

pulling a calf at 2:00 in the morning and there is a snowstorm on 

the way, that is not an easy life, but it is a life they want to continue living. But if they cannot make a living, that is bad for all 

consumers, it is bad for America, so—— 

Mr. BRUNNER. Senator, very quickly, I think one thing that we 

are discovering is high frequency trading is utilized throughout all 

financial markets and the CFTC has told us that they have been 

observing it, as well. I think in many other markets, it gets covered 

up, because cattle are a somewhat unique commodity. We are a 

perishable commodity. We cannot put the grain back in the bin and 

wait until the market stabilizes. 

I would also like to give due respect to Senator Grassley’s figures, or information that he supplied. I would not directly contest 

any of those, but those are symptoms of an evolving industry that 

is trying to maintain and increase its competitiveness in the global 

economy. As we work to try and achieve efficiencies within our industry, relationships develop as we coordinate up and down the 

value chain. So those decreasing number of animals trading on a 

cash market or spot market is bound to diminish. 

But, it is an industry question. We are very concerned about it. 

I have been thinking about this, worrying about it. It has been 

going on for 20 years and we are going to continue to work on it 

and we will solve it. 

Chairman ROBERTS. Senator Hoeven. 

Senator HOEVEN. Thank you, Mr. Chairman. I appreciate our 

witnesses being here today. 

First question, just—well, actually, the first one is for Mr. Brunner and Mr. Goggins. What is the number one thing we can do to 

mw42035 on AGRINON012 with DISTILLER

30 

help our cattle producers right now with low prices? What is the 

number one thing we can do to help them? 

Mr. GOGGINS. I think the number one thing would be, I really 

think, passing of the TPP will open up our trade with Japan and 

lower our tariffs. I really think that would be a huge thing. 

I also think helping us with stabilizing this market as far as the 

Futures Board would—some way or another, getting it to where it 

is a more viable risk management tool, I think would be huge for 

this industry and for the way we can go forward. 

Senator HOEVEN. Meaning what when you say stabilize the futures market? That would mean doing what? 

Mr. GOGGINS. Well, I think maybe getting the limit—right now, 

the feeder cattle limits are four-and-a-half, and I personally, and 

a lot of us within the industry that trade it every day, believe that 

limit does not fit the industry. The algorithmic trading along with 

that, it causes huge violent moves and it—I mean, when feeder cattle move $13 in one week one way or the other, it might go $15 

one way or the other, there is no way these feeder cattle move that 

much on a cash basis consistently the way it has done the last 

year. 

Senator HOEVEN. Mr. Brunner. 

Mr. BRUNNER. What Mr. Goggins has proposed might help and 

it might not. Our organization believes that it would be fruitless 

and maybe foolish to try something without really studying what 

effect it might have, and that is why we need the data. We need 

data from the CME on what is going on in the futures market, 

what the high frequency trading is really doing to the market, how 

prevalent it is, and how it is moving the market on these large 

move days. 

So, in direct answer to your first question, though, I agree with 

Mr. Goggins. The one thing that you could do is help us pass TPP. 

We need expanded markets for the expanding supplies that we 

have in our industry. 

Senator HOEVEN. So, my next question is for whoever wants to 

take a swing at it, but whether it is cattle or poultry or other livestock, we are seeing growing exports, but at the same time, we are 

seeing prices continuing to go down. So we have low inputs, so you 

have got low feed cost. You have got growing export. How come our 

price continues to go down? We are down about 15 percent, I think, 

since the start of 2015. But think about it. You have got cheap feed 

and you have got growing exports. Why is the price going down? 

Mr. BRUNNER. We do not have—— 

Senator HOEVEN. It is not just cattle now, you know. 

Mr. BRUNNER. I think I said earlier, we had ten pounds of total 

protein available to the domestic consumer last year than we had 

the year before, and this year it will be even an increase. We have 

growing supplies of all proteins, pork, poultry, as well as beef, and 

our export markets are not growing fast enough to take those up. 

Part of the reason, the value of the dollar has been cited. I cannot 

help but go back to TPP. We are on unlevel playing field. Australia 

has—— 

Senator HOEVEN. I think the value of the dollar is the biggest 

problem in terms of our—all exports, certainly ag exports, but all 

exports. The dollar being so strong is really tough on us. 

mw42035 on AGRINON012 with DISTILLER

31 

Mr. GOGGINS. Senator, may I add, according to the USDA, 

through 2015, as far as beef production goes, we had a 500 million 

pound increase over 2015 in our imports. We had a 250 million 

pound decrease in our exports. That is 750 million more pounds 

that is being put on the domestic—— 

Senator HOEVEN. So you are saying import volume is part of this 

price depression, import volume. 

Mr. GOGGINS. I really do. 

Senator HOEVEN. Well, that is important. 

Mr. GOGGINS. I think that is about a three percent increase. So, 

it takes, according to the USDA, it takes—for every one percent 

sway one way or another in supply, it affects your price one-anda-half to two percent. So, I really think that extra 750 million 

pounds of beef product that we had on the domestic, it is our trade 

deficit. 

Senator HOEVEN. Let me—one final question. I am about out of 

time. WOTUS, Waters of the U.S., how does it affect your producers? I would like all of you to take a swing at that one. 

Mr. BRUNNER. It affects our producers’ ability to enjoy their private property rights in the most efficient, economical manner for 

their operations. It is a massive federal government overreach. It 

goes far beyond clean water and navigable waters of the United 

States. It is an intrusion into private property rights. 

Mr. TRUEX. I agree with that. In our industry, it limits the 

amount of land we can apply manure on. It has all kinds of restrictions. There is a lot of overreaching burden that goes with the current regulations. 

Dr. HILL. Yes. The only thing I would add is that I think it will 

be a boom for environmental lawyers because we will be sued until 

who knows what happens. 

Senator HOEVEN. Mr. Goggins. 

Mr. GOGGINS. It affects every sector of agriculture, the rule, and 

it is basically—it touches every state, every corner of this country, 

and I think it takes—it will take due consideration and time for 

the review. I mean, the voluntary conservation has been a really 

good success. I think the best stewards of the land are those of us 

on the land. I think it really affects our property rights, as well. 

Senator HOEVEN. Mr. Zimmerman. 

Mr. ZIMMERMAN. I would concur. Manure management plans will 

be much more difficult and still the unknowns. We really do not 

know how it is going to affect us. There is too much uncertainty 

there. 

Senator HOEVEN. Thank you. 

Chairman ROBERTS. Senator Donnelly. 

Senator DONNELLY. Thank you, Mr. Chairman. 

I would like to thank Mr. Truex for being here. He is a leader 

in Indiana agriculture. He is someone we are very, very proud of, 

and I will tell you, Mr. Truex, since you told the Ranking Member, 

Senator Stabenow, that you buy your organic eggs from Michigan, 

she has become a big fan of yours, as well. 

[Laughter.] 

Senator STABENOW. That is right. 

Senator DONNELLY. I know you have had your hands full with 

the avian flu outbreak. I am very, very proud of how we responded 

mw42035 on AGRINON012 with DISTILLER

32 

in Indiana, how we have worked on this. Can you tell us some of 

the things that you think that were done right in responding to 

that. 

Mr. TRUEX. Yes. I think government, USDA, and the industry 

learned a lot of lessons from the Iowa situation, and as we were 

preparing for this, we had our state vet, Dr. Marsh, speak to the 

entire UEP organization in October of last year about how Indiana 

is prepared for this in our state. Then, unfortunately, as this 

spring, Indiana had its own high path AI outbreak in Southern Indiana, and I think it is a testimony to the lessons that USDA 

learned, that the states learned, that we were able to control that 

outbreak rapidly. It was put away. 

I think the lessons learned are there is a way to control it, and 

I think as Mr. Zimmerman said, the key is instant response. You 

have got to have a plan. You have got to know what you are doing. 

You have got to have it all prepared so you do not get the different 

agencies fighting with each other over what you can do in a state, 

what you can do in a county, and what needs to be done. 

So, I think the industry and USDA is much more prepared to 

deal with any future outbreaks and keep it contained in a much 

smaller area with fewer bird numbers. 

Senator DONNELLY. So, do you think, and it sounds like this is 

one of the keys, that it is not the moment that you learn about the 

fact that avian flu has arrived as it is, in effect, almost preparing 

for the worst, hoping for the best, but having every single thing you 

can think of lined out and ready to go. 

Mr. TRUEX. Absolutely. Our state Poultry Association and our 

state vets’ office have worked together very, very hard and they 

have really put the effort in and we are prepared in the State of 

Indiana too, when we find we have a problem, we will deal with 

it quickly, rapidly, and control it. 

Senator DONNELLY. Let me ask you just to pick up on some of 

the other questions that have come before us so far. I was just wondering the difficulties that you will face and the industry will face 

logistically if we cannot find a federal solution to the labeling of GE 

materials as we move forward, if we are not able to get that done. 

Mr. TRUEX. Well, our industry is very concerned, and as the 

Ranking Member pointed out, thankfully, meat, milk, and eggs are 

exempt at this point in time and we hope it continues that way. 

A patchwork of different states would be a nightmare when it 

comes to—we sell our product in probably 40 or 50 different states, 

along with export. So, a standard has to be set. You cannot label 

your cartons on 30 or 40 different standards. So, a federal level 

that overrides all state regulations has to happen. 

Senator DONNELLY. Thank you. 

Thank you, Mr. Chairman. 

Chairman ROBERTS. Senator Thune. 

Senator THUNE. Thank you, Mr. Chairman. 

Thank you to the panel for being with us today. I appreciate your 

testimony and your responses to all the questions, and I am sure 

a lot of these issues have been probably beat to death by now, but 

I did want to just follow up a little bit on the labeling issue. 

As you know, and I am sure it has been discussed that the Senate is considering a path forward on biotech labeling, and the quesmw42035 on AGRINON012 with DISTILLER

33 

tion I guess I have is does anyone on this panel believe that animal 

products should be included in mandatory labeling of biotech products, or should meat, dairy, and other animal products all be exempt from biotech labeling? 

Let me just say that I know that there has been this argument 

made that consumers really want meat to have mandatory biotech 

labeling, but I guess my question is, is that what they really want 

or is that what they are being told they want by labeling supporters, because that strikes me as that is not something that I 

certainly hear from my constituents out there. 

But, tell me what you all think about whether or not the labeling 

issue that we are having the discussion about here ought to apply 

to meat, dairy, and other animal products, or whether they ought 

to be exempt. 

Mr. BRUNNER. Well, very quickly, our organization does significant consumer market research and the consumers that we talk to, 

they are not telling us that, either. 

Senator THUNE. Okay. Anybody else? 

Mr. TRUEX. We would just like to say that the science of the animals that eat genetically modified grains, there is no scientific evidence that passes through the meat or the product, the egg or the 

milk. So, we would like to stand behind that very firmly. 

Senator THUNE. All right. 

Dr. HILL. Yes, and that is a view that the Europeans take, too. 

So, I think that tells us a lot right there—— 

Senator THUNE. Yes. 

Dr. HILL. —because they tend to be more reactive on these 

issues. 

The other thing is that, the more and more sorting that we ask 

the packing industry to do, the less efficient they become, and 

there is just so much sorting that they can do. If we had non-GE 

and GE meat, it would be a nightmare for them to try to track that 

product through the whole meat chain. That would be a disaster. 

Senator THUNE. Well, it strikes me that, yes, I guess that pretty 

much answers the question. When we are getting to the left of Europe on some of these issues, we are probably out of the mainstream when it comes to this country. 

One of the things when I visit with cattle producers in South Dakota, one concern I hear quite often is regarding the consolidation 

across the beef industry. So, I guess I would direct this to Mr. 

Goggins. What role does consolidation play in the competition in 

the markets, and what trends and producer marketing strategies 

are you seeing in response to consolidation? 

Mr. GOGGINS. Well, I think as far as our organization, I mean, 

with our auction markets, with our video company, we are promoting the highest—and actually in this part of the world, the 

United States, we raise the highest quality, as good of beef cattle 

as there is in the world, and we are putting a pretty good show list 

up. I mean, I grew up in the auction business, not only the ranching business, but went to the stockyards every morning and kind 

of grew up there, and as my father always said, competition is 

good. We need competition in the marketplace. We promote it every 

day and we do the best we can to get competition and buyers in 

the seats every day. We work at it. I think we need to move that 

mw42035 on AGRINON012 with DISTILLER

34 

up the chain as we go, at the fed cattle level, as well. But, we do 

everything in our power to do that. 

Senator THUNE. On a scale of one to ten, regulatory burden of 

government. I know it has all been talked about probably at some 

length today. In terms of the issues that you have to deal with or 

the issues that concern you with regard to the future of the livestock industry in this country, where would that rank? 

Mr. GOGGINS. Twelve. 

[Laughter.] 

Senator THUNE. Okay. 

Mr. BRUNNER. Ten. 

Mr. GOGGINS. It is high. Since you brought that regulatory up, 

in the feeder cattle business, especially in your part of the world, 

South Dakota, Montana, you get especially our way West and 

South, you get further away from the corn belt. You get in the East 

Coast, Florida, where a lot of feeder cattle are, I think we need to 

be real conscious of—we have had the livestock haulers exempt, I 

mean, the movement of these—the interstate movement of these 

feeder cattle, livestock in general. If you load a set of cattle in 

Western Montana and go clear to Kansas with them, it takes more 

than ten hours—— 

Senator THUNE. Right. 

Mr. GOGGINS. —and I think if you get those cattle loaded up, you 

have got to unload them somewhere ten hours down the road and 

then let them stand in a dry old lot, not taken care of very well 

for another ten hours, load them back up. I mean, we always base 

our death loss as far as the feeder cattle that we buy from one to 

two percent. Now, we start unloading these things, because the 

trucker has got to have ten hours of sleep, I think it becomes a real 

animal welfare issue. I think these cattle are—instead of a one or 

two percent death loss, we are going to be looking at ten, 20, 30 

percent death loss on these cattle, which, in turn, it is going to affect the value of these feeder cattle in those areas that are quite 

a way from the feed, and I think it is something that we really 

need to address. 

Senator THUNE. You referenced, I think, in your testimony, the 

commercial livestock hauling, and I want to point out, because I 

serve as Chairman of the Commerce, Science, and Transportation 

Committee, that we were involved in leading the successful effort 

to make hours of service exemption from rest breaks permanent for 

those who are carrying livestock and bees and it—the provision 

takes into account the health of the livestock, which—and the practical reality that these animals should not be left on the roadside. 

So, the exemption was granted, I think, on multiple occasions by 

the FMCSA, the trucking agency, and we made it permanent to 

prevent the need for repeated consideration of these same facts. So, 

there is—it is in Section 5206 of the FAST Act and hopefully that 

will provide some relief on that front. 

But, I know that in terms of regulations, and I am sure it has 

been covered, as I said, at length, Mr. Chairman, but I just have 

to say that when you are trying to make a living in production agriculture these days and the government is constantly your biggest 

enemy, something is wrong. We just see it on every front, and I 

hope that changes. Obviously, we are going to do everything we can 

mw42035 on AGRINON012 with DISTILLER

35 

at this branch of the government to keep that from becoming the 

biggest liability to making a living in agriculture. But we could certainly use some help from a lot of the agencies who evidently have 

way too much time on their hands around here, because it just 

seems like every day, there is something new coming out that 

makes it more expensive and more difficult to do what you do and 

to help us feed the world. So, that has got to change. 

Thank you. Thank you, Mr. Chairman. 

Chairman ROBERTS. Senator Ernst. 

Senator ERNST. Thank you, Mr. Chairman. 

I would like to thank all of our witnesses today for being here, 

especially Dr. Hill. Thank you for coming out from Iowa. It is really 

good to see you again, so thank you. We have got a lot of important 

topics that have been discussed today and I want to thank all of 

you for your input. 

I am glad that you have highlighted the challenges that your sectors are facing right now, whether it is from market volatility, burdensome agency regulations—jeepers, how many times have we 

talked about WOTUS—foreign animal diseases, international trade 

barriers—I am going to come back to that—or labeling requirements that would disparage our products. Let us talk a little bit 

about—I know everybody has wanted to talk about it, TPP. 

About a year ago, I was in Vietnam and Singapore and the topic 

of discussion there, of course—and this was a defense conference 

that I had traveled to in that region—but they wanted to talk 

about TPP, because a number of those world leaders, the military 

leaders, they really wanted to have the United States as a primary 

trade partner, and the push-back was that if you are not our primary trade partner, there is another country in the region that 

does want to be our trade partner, and that, of course, is China. 

So, I would like to hear your thoughts on that in relation to if 

we are not stepping up to the plate, what are the other players out 

there that might fill in the gaps if the United States is not involved 

in trade with these nations, or expanded trade with these nations. 

Mr. Brunner, if you could start, please. 

Mr. BRUNNER. Well, China has their own 16-nation potential 

trade agreement that they are actively promoting in the advent 

that the United States does not go forward with TPP. As has been 

said, TPP would include 40 percent of the world’s economies. It is 

also based on ethical standards and sanitary standards that are 

dictated by the United States and I do not believe we want to abdicate our role in the global community and the Pacific Rim to China. 

You know, it has been pointed out to me, and I firmly agree, that 

we do not maintain world peace and competitive position in the 

world economy by shirking our responsibility. So, we firmly believe 

TPP now. 

Senator ERNST. Very good. 

Mr. Truex. 

Mr. TRUEX. I really do not have a comment on that because of 

our industry does not really play into that so much. Thank you. 

Senator ERNST. Wonderful. 

Dr. Hill, of course. 

Dr. HILL. Well, I would agree with what Mr. Brunner said. You 

know, it is obviously important from an economic standpoint, but 

mw42035 on AGRINON012 with DISTILLER

36 

I think it is equally important from a geopolitical standpoint. Countries that work together, trade together, are going to be able to sit 

down and talk and work out problems a lot better than if they are 

not trading. So, I think it—I do not know if you could say the economic impact or the geopolitical impact of TPP is more important, 

one than the other, but they are both very, very important, and—— 

Senator ERNST. Very good. 

Dr. HILL. —we would encourage the Senate to work hard to get 

it passed as soon as possible. 

Senator ERNST. Absolutely. 

Mr. Goggins. 

Mr. GOGGINS. Yes. I think it is a very positive thing, if we do get 

it passed, for the U.S. cattle producers. I mean, I think it opens up 

the export market back to Japan and reduces our tariffs. I do think 

we need to—there need to be measures in place, though, to address 

the cyclical and the perishable nature of the cattle and beef in addition to protections against dumping. 

Senator ERNST. Very good. 

Mr. Zimmerman. 

Mr. ZIMMERMAN. Well, I have a specific trade barrier example 

that we are dealing with currently and it involves Canada. A lot 

of our poultry, baby turkeys, come from Canada. They are hatched 

in Canada, but then they cross the border and are raised and processed in the United States. Currently, that poultry, when it comes 

in the United States, can no longer be exported to South Africa. 

But if that poult, baby turkey, stays in Canada and is raised and 

processed in Canada, it can be exported to South Africa. 

So, technically, it bans all U.S. turkey from the South African 

market and it is just an incredibly silly rule, and we mix our birds. 

One of my flocks may be ten percent Canadian and 90 percent U.S. 

hatched, but they are all no longer eligible for South African use. 

So, it is an incredibly silly trade barrier that we would really appreciate your help in revisiting and removing. 

Senator ERNST. Absolutely. Thank you. 

I see that my time is expiring, but I do appreciate it. I think we 

do need to look very carefully at the TPP, not only as trade, but 

also as a way to leverage cooperation with other nations out there. 

So thank you very much, Mr. Chairman. 

Chairman ROBERTS. Thank you, Senator Tillis for another round. 

Senator TILLIS. I am not going to ask any questions, just maybe 

a comment, and Mr. Chairman, I hope, without objection, I can 

submit my opening statement for the record. 

[The prepared statement of Senator Tillis can be found on page 

49 in the appendix.] 

Chairman ROBERTS. Without objection. 

Senator TILLIS. Thank you. I just want to go back and maybe 

lower the temperature a little bit, but maybe focus on the one 

theme that I hope comes out of this meeting. 

First, the TPP and trade with Europe and Africa is absolutely essential to our future in farming, and I completely get that. I voted 

for TPA. I hope that we can get the TPP to a point where we get 

support and I will be working to that end. 

Mr. Zimmerman, I will be submitting a question that touches on 

a comment or an answer that you gave to Senator Ernst on the 

mw42035 on AGRINON012 with DISTILLER

37 

sort of barriers to entry with South Africa. I think we have another 

issue with Korea, where the HPAI seems to be used as a pretext 

for them putting up protectionist measures. We will be submitting 

a question for you so that we can better educate our staff and other 

members on those challenges. 

But, I want to go back again to the biotech labeling and something Mr. Brunner said. Mr. Brunner, you said you have not had 

a chance to study the Vermont law in particular. It does turn out 

that in the Vermont law, beef, poultry, milk and eggs have been 

exempted. As a matter of fact, a piece of pizza that has meat on 

it is exempted, but its vegetarian equivalent is subjected to the 

rule. 

This is the sort of mentality that is being used by the states to 

create a patchwork of regulations that will be absolutely burdensome on food companies if Congress does not act. Back to the point 

that Senator Heitkamp made, regarding labeling but doing it in a 

consistent, high value way for the consumer, but with a low impact 

to the producer. That can only be done if Congress does its job and 

acts on preemption. 

On GIPSA, we need to work very hard to see if we can accomplish this Congress what was accomplished in 2010. Either get the 

regulations to a point that you think are fair and can be dealt with 

or do our very best to try and disallow them so that we are not 

adding just another burden on an industry that really cannot afford more burdens. 

Thank you, Mr. Chairman. 

Chairman ROBERTS. I thank the Senator. 

I think both the distinguished Ranking Member and myself have 

additional comments we would like to make with regards to the agriculture biotechnology situation. It is called ABT. It is not called 

a GMO. 

We had a hearing with the USDA. We had a hearing with FDA 

and the EPA, all three. I raised the question, is our food safe? Are 

GMOs safe? The answer was yes, yes, yes. This is not a human 

health problem. This is not a safety problem. This is a marketing 

challenge, and you all know what I am talking about. But, it has 

been very difficult to get this pulled together. We had over 800 organizations come to this committee and ask us to settle this. 

We passed a bill 14 to six in this committee. Unfortunately, we 

were not able to go to the bill. That takes 60 votes in the Senate 

and that has posed—our Founding Fathers wanted us to go a little 

slow as opposed to those folks who were closest to the people, the 

House of Representatives. I understand that, and that is not going 

to change, I hope. 

So, we have 60 votes to overcome to at least go to the bill, which 

was the second bill that we introduced that we tried to draw some 

folks over. The distinguished Ranking Member and I have been 

meeting overtime on this issue. So, I want you to know that this 

committee wants to get an answer. 

I also want you to know that every person on this committee, I 

do not know of any exception, are standing behind efforts to get 

TPP done. Tough atmosphere. Every trade bill that I have ever 

been associated with has been over-criticized and it has been oversold, and it takes hard work. 

mw42035 on AGRINON012 with DISTILLER

38 

Senator Tillis and I were in Australia, Indonesia, Singapore, 

Japan, did not have time to get to South Korea before we could get 

back. That was the number one issue. By the way, the second issue 

was do you have our back, but that is another whole discussion. 

So, with regards to TPP, and now we call it agriculture biotechnology, or just biotech, we are determined to get an answer and 

we will keep working on it. 

I want to thank you all for sharing your experiences related to 

the opportunities and challenges that your industries face. You are 

all leaders of the livestock and poultry sectors and your testimony 

today has been invaluable to this committee. 

To my fellow members, we ask that any additional questions you 

may have for the record be submitted to the Committee Clerk five 

business days from today, or 5:00 p.m. next Friday, June 3. 

This concludes our hearing—— 

Senator STABENOW. Could I say something? 

Chairman ROBERTS. —except for the comments by the distinguished Ranking Member. 

Senator STABENOW. Well, thank you, Mr. Chairman. 

I just want to say thank you to everyone again and to the Chairman for the hearing and just indicate we are working very hard 

on a difficult issue that both Democrats and Republicans voted no 

on when it came to the floor. There was bipartisan support and bipartisan opposition. Because of the nature of the Senate, we are 

looking for that common ground and magic number to be able to 

get to 60, and I remain, as I have been saying now for I do not 

know how many years now, that from my perspective, this is about 

making sure that we stop a 50-state patchwork. We know biotechnology is safe. Thirdly, we have consumers that are moving at 

the state level and are asking for transparency and we have to find 

that, as well. 

This is not an easy issue, because, frankly, we have people coming from very different worlds. Depending on who you talk to, it is 

like a totally different issue, which is one of the challenges as we 

move through all of this. But in the interests of agriculture in our 

country and production agriculture, we need to find a way to come 

together and have common ground and, frankly, be willing to compromise in order to be able to get there, and that is what the 

Chairman and I are working on and we need everybody here being 

willing to do that, as well. Otherwise, it is going to be very difficult 

to get there. 

We are willing to do that and we are working hard and we are 

being asked to basically step up and take on the consumers on behalf of the industries involved and wrestle back and forth with this. 

I am hopeful that part of what happens long term is that we have 

an education effort I have been suggesting to folks for years, to be 

able to truly talk about what biotechnology is so that people understand that. Ignoring that discussion, or not having it in a way that 

addresses the world we live in, in terms of communicating with 

people, it is just not going to work. 

We have to engage people so we understand the positive side, 

what has happened in terms of moving agriculture forward and the 

positive benefits of biotechnology in that process. I would just encourage everybody to make a commitment to tell that story, bemw42035 on AGRINON012 with DISTILLER

39 

cause if that story is not told, this is going to be very difficult going 

forward, I think. So, thanks. 

Chairman ROBERTS. I thank the Senator for her comment. I 

would offer only one observation. The best, most effective form of 

communication from consumers is their pocketbook, perhaps not 

government mandates. 

Senator STABENOW. Sure. 

Chairman ROBERTS. That concludes our hearing. The Committee 

is adjourned. 

[Whereupon, at 12:10 p.m., the Committee was adjourned.] 

mw42035 on AGRINON012 with DISTILLER

mw42035 on AGRINON012 with DISTILLER

(41) 

A P P E N D I X 

MAY 26, 2016 

mw42035 on AGRINON012 with DISTILLER

42 

mw42035 on AGRINON012 with DISTILLER


23592.001

Senator Patrick Leahy - VT 

Statement for the Record 

U.S. Senate Committee on Agriculture, Nutrition, and Forestry 

Review of the U.S. Livestock and Poultry Sectors 

May 26,2016 

I would like to thank the Chairman and Ranking Memher for holding this hearing on the state of 

the livestock industry and thank the witnesses representing the many, varied sectors oflivestock 

industry for testifying and providing their perspectives. I am, however, disappointed that there 

was no witness invited from the dairy sector. While our dairy farms are primarily in the business 

of producing milk, they also produce beef from market cows and bull calves. In fact, sometimes 

as much as 20 percent of the beef produced in the United States comes from dairy animals. 

While dairy is the dominant agricultural commodity in Vermont, we are experiencing a 

renaissance of farmers' markets, farm stands, and other forms of direct sales from farmers to 

consumers. In response to this exciting local foods movement, there is a mounting interest in 

raising more Vermont-grown beef, pork, lamb, goat, and poultry. Traditionally, Vermont's 

agricultural economy thrived on multi-generational family farms, but today we also have many 

newcomers to Vermont that are adding an exciting vigor to the industry and diversifying the 

agricultural landscape in the state. Our livestock producers in Vermont serve as stewards for not 

only the livestock they raise, but also the land and environment that has been entrusted to them. 

While there are opportunities for more local poultry and grass-fed beef in Vermont, there is a 

shortage of slaughter and processing facilities, especially for small farm-to-table producers. I 

hope that as this Committee begins to consider the next Farm Bill we can look for ways to 

address this shortage to better support our country's farmers. 

Organic Livestock and Poultry Practices 

An issue raised by several of the witnesses, and one that is of great interest in Vermont, is the 

proposed rule for the National Organic Program Livestock and Poultry practices that was 

published on April13, 2016. As the father of the organic program, I wrote and lead to passage 

the Organic Foods Production Act (OFPA) as a part of the 1990 Farm Bill. That law has helped 

the organic agriculture industry to grow from what many considered merely a niche market to 

one that is now a more than $39 billion per year sector of the American economy. It was in that 

original 1990 Farm Bill that the Secretary of Agriculture was directed to hold public hearings 

and develop detailed regulations, with notice and public comment, to guide the implementation 

of the standard for livestock products under the National Organic Program. Now, 26 years later, 

we finally have a proposed rule on these livestock and poultry practices. This proposed rule is 

the product of years of numerous meetings and hours of expert witness testimony before the 

National Organic Standards Board and it is subject to public comment. 

I cannot stress enough to these witnesses, to this Committee, and to the entire Senate, that this is 

merely a proposed rule at this point- there remains nearly another month to go before the 

comment period closes. This proposed rule specifically asks the industry for comments on 

whether farmers can readily determine how to comply with the proposed regulations. It also asks 

about the accuracy of the assumptions and estimates in the Regulatory Impact Analysis and 
43 

mw42035 on AGRINON012 with DISTILLER


23592.002

Regulatory Flexibility Analysis pertaining to organic poultry and egg production. Additionally, 

the proposed rule asks for input on the implementation approach and timeframe. So, to those 

witnesses who raised concerns about the impact that this proposed rule could have on their 

industry, I implore you to submit comments to the USDA. If you feel like the economic and 

regulatory analysis missed the mark, then I urge you to comment to the USDA. That is the 

express purpose of the comment period. Please submit your economic analysis if you think the 

figures USDA was using are flawed. If you feel that the five year implementation timeframe 

granted for operations that have been certified for three years is not sufficient, then please submit 

comments to that effect. 

I note that some witnesses and companies have made statements about this proposed rule 

implying that it is full of new ideas that have taken them by surprise. They have suggest that the 

proposed rule does not take science or health concerns into account. The reality is that these 

technical and scientific issues, including avian influenza, have been publically debated by the 

NOSB going as far back as 2002, and even earlier, when the United Egg Producers and several 

of its cooperative members testified before the NOSB on this very issue of outdoor access. And 

yes, while some operations have had screened-in porch systems approved since 2002, some of 

those farms initially ran into problems vvith certifiers who denied them certification because of 

the livestock living conditions and outdoor access. We have clear examples that some agents 

were later directed by USDA headquarters to certify a porch operation over the certifier's 

objections. The past approval of these porch-systems is not as clear cut as some would like to 

make it appear. 

I am pleased that I was able to work closely with the Senate Appropriations Committee and 

specifically the Agriculture Subcommittee Chairman and Ranking Member to develop report 

language as part of the Fiscal Year 2017 Senate Agriculture Appropriations bill that directs the 

Secretary of Agriculture to ensure that all comments on the proposed rule are taken into 

consideration when finalizing the regulation. This includes both the comments of those 

producers who believe they would be adversely impacted by the new requirements, as well as 

those producers who feel that they would be adversely impacted if these regulations were not 

finalized as they have been proposed with outdoor access requirements. With the comment 

period still open, I would encourage all organic livestock and poultry producers, and those 

considering transitioning to organic, to comment on this proposed rule. Since the public still has 

ample opportunity to make their concerns and suggestions known, I do not believe that there is 

any need for congressional action at this point on this proposed rule. 

Genetic Engineering 

Since several of the witnesses before the Committee today have raised Vermont's Act 120, 

which requires the labeling of genetically engineered foods sold in Vermont, I would like to clear 

up some confusion about that law. First, while Act 120 takes effect on July I of this year, the 

state has in place a six month grace period through January 1, 2017 to help manufacturers, 

producers, and retailers come into compliance with the law. Next, I hope that each witness before 

this committee and every livestock producer in the country understands that was general 

agreement in Vermont, just as we have before this Committee today; that animals that consume 

GE feed are not genetically engineered themselves, nor is the milk or meat that they produce 
44 

mw42035 on AGRINON012 with DISTILLER


23592.003

Some members of this Committee have claimed that Vermont acted in its own self-interest in 

exempting home state products like maple syrup or dairy. They have tried to stoke fears in the 

industry that other states will enact different requirements, which will lead to 30 or 40 different 

labels across the country. That could not be further from the truth and is a stunning 

misrepresentation of what Vermont's Act 120 actually does and why the Vermont legislature 

made the decisions it did in crafting its law. Vermont and the other two states that have laws on 

the books to require the labeling of foods with genetically engineered ingredients, Maine and 

Connecticut, all carry the same exemptions, as does the European Union, by not requiring labels 

just because food was acquired from animals that consumed GE feed. 

The claims that there is a patchwork of state laws, or that Vermont acted to protect its home state 

products, are blatantly false. Expecting that the state would have challenges to the labeling law, 

the legislature made sure that they were not providing advantages to Vermont businesses. With 

respect to the arguments about a patchwork of laws, I hope the record for this hearing will show 

clearly that all of the states that have passed laws or introduced legislation are looking to 

Vermont for guidance and working to create a seamless system. These laws and bills have been 

carefully crafted so that they are virtually identical specifically to make it easier for producers 

and manufacturers to comply. 

With respect to beef, pork, lamb, turkey, and chicken, the state felt that it was already federally 

preempted by USDA labeling laws for meats so even if a processed food does contain GE 

ingredients, the state was not able to require a label for those foods. This is the so-called 

pepperoni pizza or beef stew example that we have heard raised many times. While an 

incomplete solution, the state's hands were tied on this matter. This was not some effort to create 

home state product protections. The witnesses should understand that their fears of reformulation 

for meat products are unfounded; they are exempt from Vermont's Act 120 not only for whole 

animal products and products produced entirely from an animal, but also for food that currently 

requires USDA approval of its label. 
45 

mw42035 on AGRINON012 with DISTILLER


23592.004

SENATE COMMITTEE ON AGRICULTURE, NUTRITION & 

FORESTRY 

FULL COMMITTEE HEARING 

A Review ofthe U.S. Livestock and Poultry Sectors: Marketplace 

Opportunities and Challenges 

Thursday May 26,2016 

216 Hart Senate Office Building 

Opening Statement 

Senator John Thune 

• Chairman Roberts and Ranking member 

Stabenow, thank you for holding today's hearing 

on "A Review of the U.S. Livestock and Poultry 

Sectors: Marketplace Opportunities and 

Challenges". 

• Based on the testimony from today's witnesses I 

would say the livestock industry is facing more 

challenges than opportunities right now. 
46 

mw42035 on AGRINON012 with DISTILLER


23592.005

• Most of the challenges are linked to an 

overreaching and overzealous regulatory effort 

by several federal agencies that promulgate rules 

without consideration and sensitivity to the 

negative impacts they would have on the 

farmers, ranchers and other livestock producers 

who feed not only this country but a 

considerable share of the rest of the world. 

• Mr. Chairman, the Trans Pacific Partnership or 

TPP is mentioned several times as a vehicle that 

would greatly improve our livestock industry 

outlook - we need to get TPP approved, sooner 

rather than later. 

• And we need to resolve the biotech labeling 

issues and as part of that agreement exempt 

meat, poultry and dairy products from 

mandatory biotech labeling requirements. 
47 

mw42035 on AGRINON012 with DISTILLER


23592.006

• As we think about future ag policy I look 

forward to hearing ideas from these witnesses 

that we can include in the next Farm Bill. 

• Mr. President, I have a few questions for our 

witnesses: 
48 

mw42035 on AGRINON012 with DISTILLER


23592.007

• Mr. Goggins, in reference to your testimony 

about commercial livestock hauling I would like 

to point out that as chairman of the Committee 

on Commerce, Science, and Transportation, I led 

the successful effort to make the hours of service 

exemption from rest breaks permanent for those 

who are carrying livestock and bees. This 

important provision takes into account the health 

of the livestock, and the practical reality that 

these animals should not be left on the roadside. 

The exemption was granted on multiple 

occasions by FMC SA, the trucking agency, and 

we made it permanent to prevent the need for 

repeated consideration of the same facts. 

This can be found in Section 5206 of the Fixing 

America's Surface Transportation (FAST) Act. 
49 

mw42035 on AGRINON012 with DISTILLER


23592.008

Sen. Thorn Tillis's Opening Statement for the Senate Agriculture, Nutrition and Forestry 

Committee livestock hearing on Thursday, May 26, 2016 

Thank you, Mr. Chairman. 

From what I understand, hearings of this nature are few and far between and I thank you 

for your leadership in bringing livestock issues to the forefront. Agriculture is North Carolina's 

number one industry and livestock is a major reason why. Our pork and poultry producers 

compete on the national and global levels and !look forward to hearing how this committee and 

Congress can support those responsible for thousands of jobs across the country and a significant 

portion of our food supply. 

As you can imagine, North Carolina livestock producers remain bewildered that WOTUS 

is still a rule and the January 20'h vote to override the President's veto on the Resolution of 

Disapproval was unsuccessful. Last week, this committee held a hearing to discuss the farm 

economy and the low prices our farmers are experiencing. As I travel through North Carolina 

and speak with our farmers, it is never prices that first come up. 

Over and over again, North Carolina farmers want to talk to me about a specific 

regulation at EPA or USDA or FDA that is hampering their ability to maximize opportunities. 

As with WOTUS, North Carolina farmers cannot wrap their heads around the fact that a response 

to the Vermont law has not yet been finalized by Congress. The resurrection of the GIPSA 

language and this Organic Livestock Rule, which I think is just terrible policy, are additional 

layers of regulations at a time the federal government should be doing everything to help farmers 

survive a bad market. 

The North Carolina livestock sector has a lot to be proud of, but as long as the federal 

government continues its relentless pursuit of overregulation, it will remain hard for farmers to 

survive this downturn. 
50 

mw42035 on AGRINON012 with DISTILLER


23592.009

Testimony on behalf of the 

National Cattlemen's Beef Association 

With regard to 

A Review of the U.S. Livestock and Poultry Sectors: Marketplace Opportunities 

and Challenges 

Submitted to the 

United States Senate- Committee on Agriculture, Nutrition, and Forestry 

The Honorable Pat Roberts - Chairman 

Submitted by 

Tracy Brunner 

President 

National Cattlemen's Beef Association 

May 261

\2016 

~~ / National CaHiemen's 

~ Beef Association 

USA 
51 

mw42035 on AGRINON012 with DISTILLER


23592.010

Mr. Chairman, members of the committee, my name is Tracy Brunner and I am the 

president of the National Cattlemen's Beef Association. I am a fourth generation rancher 

and cattle feeder from the Flint Hills area of Kansas, and our nearest Post Office is at 

Ramona. Our family operation includes three brothers and three sons. We are involved 

in cattle genetics, seed stock, grazing, and finishing cattle. I surely appreciate the 

committee's interest in cattle marketing issues, and it is an honor for me to be asked to 

share our viewpoints. 

The National Cattlemen's Beef Association (NCBA) has for nearly 120 years represented 

America's beef cattle industry. We have over 30,000 direct and 170,000 affiliated 

members nationwide. America's cattle industry is extensive and constitutes the largest 

segment of American agriculture. Always at the mercy of Mother Nature, our industry is 

recovering rapidly from extensive drought. Herd rebuilding and expansion are taking 

place at a pace where U.S. cattle numbers will soon be equal to 2012. Additionally, 

American cattle producers continue to be more efficient in producing beef We can 

produce the same amount of beef that we produced in 1977 with 30% fewer cattle, 18% 

less feed, 12% less water, and 33% less land. However, we need to continue our efforts 

to be more efficient as we strive to do our part in providing 70% more food to meet the 

expected population of9 billion people in 2050. 

Our industry requires extensive tracts ofland to run cattle allowing us to preserve the 

ability for family cattle farms and ranches to stay viable. The beef industry is diverse in 

structure, yet the drive to stay competitive with other proteins has shown us the need to 

coordinate among all the stakeholders from field to fork. Cow/calf ranchers tell their 

seed stock suppliers what they need, and also ask their stocker and feeder calf buyers 

what they will pay most for. Cattle feeders likewise look to packer-processors for signals 

of greatest value, who in turn have an ear for retail and foodservice needs. As a complete 

beef supply chain, we have learned that without ultimate consumer focus, we can soon 

blindly produce our way into irrelevancy. 

Due to the diverse and broad-based nature of the cattle industry operating in an 

environment of increasing need for coordination and cooperation, we have market needs 

more unique than other animal proteins and commodities. We rely on clear and accurate 

price signals to be passed up and down the beef value chain. A cow/calf producer must 

have not only precipitation, but also market confidence that his decision to mate a bull 

and heifer today will be rewarded beyond costs by the time it heads to market nearly two 

years later. Cattle grazers and feeders that purchase those calves need a clear view of 

future prices in order to determine if there is a return on their investment. In addition, 

packer-processors use price discovery and analysis in order to price beef in a way for 

consumers to be assured of a constant supply of the highest quality beef anywhere on 

earth. 

Cattle prices have been a topic of focus for NCBA and our members. 2015 saw a record 

high for cattle prices, but those soon started back down due to several reasons. One 

factor was the increase in overall protein supplies. In 2015, U.S. per capita red meat and 

poultry supplies increased by nearly 10 pounds per person. In addition, the strong U.S. 
52 

mw42035 on AGRINON012 with DISTILLER


23592.011

dollar impacted our ability to ship beef to our international customers. All of this 

additional supply puts downward pressure on the markets. This has been compounded by 

the break in the drought throughout most of the cattle producing areas of this country 

which has resulted in more abundant and cheaper feed, and the resulting decision by 

many producers to increase the size of their herds. Larger supplies always lead to lower 

prices, but we are used to the ups and downs of the cattle cycle. In order to manage this 

cycle, we need risk management tools that work. 

Price discovery is ultimately driven by supply and demand. The fundamentals of markets 

are universal. The cattle industry today relies on transparency of price discovery to send 

clear signals up and down the beef chain. Cattle and beef are a wonderful but perishable 

creation. We are not grain that can be stored for great lengths waiting on fundamentals to 

steady an uncertain market. We currently rely on market forums like CME Group's 

cattle futures contracts as solid information in our price discovery process. Changing 

technologies and a transition to automated trading in commodity futures trading have 

increased market volatility, making interpretation of those price signals different than 

what we were accustomed to in the past. The integrity of our market forums is very 

important, for without futures contract integrity our industry will abandon their use. 

We have recognized the volatility and are working directly with the CME Group to find 

ways to address it. We have a joint N CBA/CME working group which is analyzing 

potential changes which could slow the market down and ensure a level playing field for 

producers who are using these tools to manage their price risks. Today we ask for no 

direct action from our government in our cattle marketing systems and forums. In fact, I 

am concerned at some of the action we have seen from USDA and the Senate. 

Secretary Vilsack has announced that he is going to dust off the proposed GIPSA 

marketing rule that resulted from language included in the 2008 Farm Bill. This is 

concerning to us because bi-partisan efforts resulted in appropriations language which 

defunded any additional work on, or implementation of, the ideas included in the draft 

rule. The provisions in the draft rule would have taken away our ability to market cattle 

the way we want to. The proposed GIPSA rule would have made USDA the ultimate 

arbiter of how cattle are marketed. We urge USDA to enforce the Packers and 

Stockyards Act as it exists now. We do not need them dictating how we can or can't 

market our cattle. 

I am also aware of the recent introduction of a bill to ban packer ownership of cattle. 

This is another solution in search of a problem which has been tried, and defeated, many 

times before. Over the past decade, USDA's Mandatory Price Reporting has shown that 

only five to six percent of cattle are packer owned. This is not the source for the 

downward market. 

We have worked for years to find new and innovative ways to market cattle. Alternative 

marketing arrangements have been studied by USDA and independent groups, and the 

results show that these alternatives benefit producers and consumers alike. Any 
53 

mw42035 on AGRINON012 with DISTILLER


23592.012

Congressional or Executive action to interfere will only add to our price problems, not 

solve them. 

Solving our price problems relies on addressing the true issues of consequence to our 

industry. Beef trade is one of those issues. Globalization is not feared by the American 

beef industry, but embraced. In fact we continue to export an increasing volume and 

value of American beef to destinations worldwide. Last year we exported over 14% of 

all finished cattle value, that's worth over $300 extra for every calf in America. Many of 

you can likely attest that NCBA is always talking about more market access for the 

ability to sell more beef. Our beef does compete on the global market, however our 

industry is not easily replicated globally. 

If Congress passes TPP this year, the U.S. beef industry will be one of the biggest 

winners in agriculture. At the same time, if Congress fails to pass TPP or delays action 

on TPP, the U.S. beef industry will be one of the biggest losers in agriculture, and here's 

why that is the case. 

Roughly 80 to 85 percent of the beef we produce is for the American market. American 

consumers love the ribeyes, tenderloins, and briskets from our cattle, but not all cuts of 

the carcass can be sold domestically at a premium. The small percentage of beef that we 

export are cuts like tongues and short plates that are not desirable to the American 

consumer. Rather than send these cuts to a landfill or process them into pet food, we 

have found that Asia has proven to be a great destination for these cuts. 

As a result, we have capitalized on the growing demand for U.S. beef overseas and Japan 

has become our leading export market. In 2015 the Japanese purchased $1.3 billion of 

U.S. beef and was one of the leading export markets for beef tongue. Even with a 38.5 

percent tariff rate on our beef, we have seen a tremendous growth in export sales to Japan 

over the past four years and we have been able to gain significant market share because 

of the quality and price of our beef. 

Our leading competitor in the Japanese beef market is Australia. In January 2015 the 

Japan-Australia Economic Partnership Agreement took effect and gave our leading 

competitors a 10 percent tariff advantage over us in our leading export market. In other 

words, the Japanese tariff on U.S. beef is 38.5 percent and the Japanese tariff on 

Australian beef is less than 28 percent. This disadvantage for U.S. beef in Japan resulted 

in nearly $300 million in lost sales to Japan in 2015. The tariff rate advantage for 

Australia will continue to grow for the next decade unless something is done to level the 

playing field in Japan. The good news is TPP will level the playing field for U.S. beef in 

Japan by lowering the tariff rate on U.S. beef to match Australia's tariff rate upon 

implementation ofTPP and will continue to decrease to 9 percent over 16 years. This the 

greatest beef market access ever negotiated into Japan. 

Japan market access is not the only highlight ofTPP. TPP eliminates tariffs on U.S. beef 

exports to other countries including Vietnam and Malaysia, and also includes a strong set 

of rules that prevent governments from putting in place non-science based barriers and 
54 

mw42035 on AGRINON012 with DISTILLER


23592.013

technical barriers to trade. TPP also gives us leverage over countries like Indonesia, 

Taiwan, the Philippines-all countries who want to join TPP and all are countries where 

U.S. beef has outstanding issues with market access. 

The benefits of TPP are great, but so are the costs of inaction. If the United States fails to 

enact TPP, then we will send a strong message to our allies in the Pacific Rim that we are 

no longer willing to lead in the Pacific and the United States will simply resign our 

position ofleadership to China regarding international trade and the geopolitical affairs of 

the Pacific Rim. 

Unfortunately China already has leverage over the United States in terms of beef market 

access and has exerted that leverage since it banned U.S. beef in 2003 following the 

classical BSE case involving a Canadian-born cow in the state of Washington. In 2006, 

China unilaterally re-opened its market to de-boned beef from cattle under 30 months of 

age with the stipulation that US beef imports meet 22 requirements that included 

traceability of the animal to place of birth and the exclusion of meat from cattle that were 

of Mexican-origin. A year later, in 2007, China expanded access for U.S. beef to include 

bone-in beef from cattle under 30 months of age, subject to the same 22 conditions they 

introduced in 2006. The U.S. beef industry did not agree to meet these non-science based 

and commercially restrictive terms and worked to educate the Chinese government on 

how these unnecessary requirements did nothing to address food safety or animal health 

concerns. In 2012, the United States received negligible risk status for BSE from the 

World Organization for Animal Health (OlE); this is one of the highest levels of safety 

awarded by the OlE. Even with our negligible risk designation, China has not modified 

its BSE restrictions on U.S. beef and we are still prohibited from the Chinese market. 

Regaining market access to the large and growing Chinese beef market is essential to the 

future health of the U.S. beef industry. For several years the U.S. government has been 

meeting with Chinese officials to discuss re-opening the Chinese market to U.S. beef. 

Unfortunately whatever progress has been made in these meetings has simply led to 

further questions and delays. Despite the frustrating process, NCBA remains strongly 

committed to working with the U.S. government to address China's concerns. With the 

guidance and direction of our volunteer leaders we will continue to provide the necessary 

advice that our government needs to arrive at an agreement that will address China's 

concerns and help us regain access for beef. One of the points of concern for China is the 

U.S. capacity to identify at the slaughter plant the birth premise of every animal from 

which beef is certified for export to China. The U.S. beef industry and the U.S. 

government have worked extensively to find a solution that does not place mandatory 

production requirements on producers regarding traceability. We believe there are 

existing voluntary marketing programs that address China's concerns and look forward to 

our negotiators being able to find a common-sense solution and restore access to China. 

Even if there is a consensus position to address China's concerns, China may bring up 

other potential roadblocks that will have to be addressed at that time. A healthy dose of 

caution is needed in working with China. 
55 

mw42035 on AGRINON012 with DISTILLER


23592.014

Other actions can also be taken to help our industry recover from downward prices. We 

continue to be hit with over burdensome regulations which hamper our ability to be as 

efficient as possible. One such over burdensome regulation is the Endangered Species 

Act. Despite being essential to protecting habitat for wildlife everywhere, cattle 

producers throughout the country continue to suffer the brunt of regulatory and economic 

uncertainty as a result of the US Fish & Wildlife's implementation of the Endangered 

Species Act. 

Simply put, the ESA is broken. Years of abusive litigation by radical environmental 

groups have taken a toll, and the result is a system badly in need of reform. Today more 

than two thousand species are listed as either Threatened or Endangered, with new 

petitions stacking up by the hundreds due to groups that have set up "petition assembly 

lines" to churn out new filings by the dozen. When the Fish and Wildlife Service fails to 

respond to this avalanche of procedural paperwork, the groups sue, tying up the court 

system and sapping the agency of money that should be used for species recovery and 

de listing efforts. 

lf we want to fix the Endangered Species Act we are going to have to get serious about 

ending this taxpayer-funded litigation abuse. The Equal Access to Justice Act and the 

ESA Judgement Fund were not created to serve as bank accounts for activist groups, yet 

that's how they are being used. Every time the FWS settles a lawsuit or enters a 

settlement agreement like the infamous 2011 "mega-settlement" with the Center for 

Biological Diversity and WildEarth Guardians, these "factory litigants" receive a 

windfall profit, which only reinforces their action and encourages more abuse. 

The result of this cycle of abuse is a dismall.4% recovery rate for listed species- a 

failure by any standard. Since all available resources are devoted to listing petitions and 

litigation, virtually nothing remains for recovery and delisting efforts. Some species have 

been listed for 15 years or more without a valid recovery plan or recovery benchmarks in 

place. For cattle producers operating in the range of a listed species, that means playing a 

game we can't win using rules we're not allow to see. 

After 40 years, Congress must step in to reform this broken law. We need to restore 

balance to the ESA by making recovery plans and de listing benchmarks a requirement to 

list a new species. Certainly if the Service has enough information to determine that a 

species is threatened, it should also have enough information to determine what 

"recovered" looks like. Congress must also ensure that effective conservation tools like 

Candidate Conservations Agreements with Assurances (CCAAs) aren't marginalized 

through the rulemaking process. The assurances provided to producers through such 

instruments are critical to effective preemptive conservation efforts on the ground. With 

clear guidance, realistic recovery goals, and a focus on truly threatened species, cattle 

producers stand ready to continue their work on the front lines of species conservation. It 

is my hope that Congress will act to provide the Fish and Wildlife Service that badly 

needed guidance. 
56 

mw42035 on AGRINON012 with DISTILLER


23592.015

When we talk of over burdensome regulations, we always need to talk about the 

Environmental Protection Agency (EPA). Cattle producers rely on clean water, clean air, 

and clean land to run successful businesses. We pride ourselves on being good stewards 

of our country's natural resources. Since our livelihood is made on the land, through the 

utilization of our natural resources, being good stewards of the land not only makes good 

environmental sense; it is fundamental for our industry to remain strong. We maintain 

open spaces, healthy rangelands, provide wildlife habitat, and feed the world, but to 

provide all these important functions, we must be able to operate without excessive 

federal burdens. Unfortunately, the livestock industry is threatened daily by urban 

encroachment and natural disasters, and the last thing we need is additional regulatory 

burden and government overreach. 

The Waters of the U.S. (or "WOTUS") rule continues to be a top concern for cattle 

producers, despite the temporary court-ordered stay. I am extremely concerned about the 

devastating impact this rule could have on me and other ranchers and farmers. As a 

livestock producer, I can tell you that the rule has the potential to impact every aspect of 

my operation and others like it by regulating every tributary, stream, pond, and dry 

streambed on my land. What's worse is the ambiguity in the rule that makes it difficult to 

determine just how much of my operation will be affected. 

WOTUS is just the tip of the iceberg for incoming environmental rules that impact beef 

producers. Another pending regulation is the Spill Prevention, Control, and 

Countermeasure (or "SPCC") rule for farms, which requires farmers to develop and 

certify a control plan and install secondary containment structures for oil storage. 

There's also the new ozone standard which can impact a rancher's ability to conduct a 

prescribed bum, which is an environmentally beneficial practice for bum-dependent 

ecosystems. I'll also mention the Resource, Conservation & Recovery Act a law 

desigued by Congress to regulate landfills - which for the first time ever was determined 

by a federal court judge to apply to agricultural operations. Ironically, these regulatory 

and enforcement regimes ultimately disenfranchise agricultural producers instead of 

incentivizing conservation efforts. 

As I explained earlier, our industry is quite diverse and independent by nature, but by 

necessity we come together to solve our challenges. I sincerely appreciate your invitation 

and attention for these few minutes today. We want to work with you to ensure that 

legislation passed and regulations promulgated are ones which help producers, not hinder 

us. 
57 

mw42035 on AGRINON012 with DISTILLER


23592.016

Testimony of Joe Goggins 

Vice President 

Vermilion Ranch Co., Public Auction Yards, Billings Livestock Commission Co., 

Western Livestock Auction, & Northern Livestock Video Auction 

On Behalf of the United States Cattlemen's Association 

Submitted to the U.S. Senate 

Committee on Agriculture, Nutrition, and Forestry 

"A Review of the U.S. Livestock and Poultry Sectors: 

Marketplace Opportunities and Challenges" 

May26,2016 

Washington, D.C. 
58 

mw42035 on AGRINON012 with DISTILLER


23592.017

Introduction 

Mr. Chairman, Ranking Member Stabenow, Members of the Committee, I am Joe Goggins, Vice 

President of Vermilion Ranch Co., Public Auction Yards, Billings Livestock Commission Co., 

Western Livestock Auction, and Northern Livestock Video Auction based in Billings, Montana, 

and serving thousands of ranchers and feeders across the United States. I come from a family of 

six kids. Most all of our spouses, children and grandchildren are involved in some aspect of rnnning 

our current businesses which include ranches, feedlots, livestock auctions, a video auction and our 

75 year old weekly livestock newspaper, Western Ag Reporter. I have spent nearly every day of 

my life involved in the production, management and marketing of livestock. I appreciate the 

invitation to represent U.S. cattle producers on this panel. 

I am here today on behalf of the United States Cattlemen's Association (USCA). USCA represents 

cow-calf producers, backgrounders, and feedlot operators from across the country. USCA was 

founded on the idea that a grassroots effort by U.S. cattlemen can work positively and effectively 

with the U.S. government to reform U.S. agriculture policy and ensure a fair, competitive 

marketplace. USCA has spent the last decade charting a course for the long-term health and vitality 

of the U.S. cattle industry. Our interest is in the future of the industry-not just 5, 10, or 15 years 

from now, but for the century ahead. 

Agriculture is the strongest card in our country's deck. The next generation of Americans will see 

monumental advances made in the fields of technology and energy, but none will grow to he as 

important as our agricultural industries. Our producers hold America's greatest strength within 

their operations-the ability to cultivate a safe, affordable, and abundant food supply. For this 

reason, we need to ensure that our producers are able to operate in a fair and virtuous marketplace. 

U.S. cattle producers strive every day to produce a high-quality product; let's provide them with 

an honest and common sense set of principles that will take the industry into the 21" and 22nd 

centuries with the ability to tackle the challenges and opportunities that lie ahead. 

Background 

In the last five years, the U.S. cattle industry experienced a period of strong demand and high 

prices for both cattle and beef. However, within the last year, there was a steep drop in prices 

resulting in the largest loss of equity in the history of the U.S. cattle industry. The cattle market 

experienced abnormal price adjustments during this period. The following sections represent areas 

that have played, and continue to play, a key role in the overall state of the industry. 

U.S. Livestock Herd 

The U.S cattle producer, feeder, and packer produce the highest quality, most affordable, and safest 

protein in the world. An increase in proposed import rnles with countries that have a history, or 

direct risk, of Foot-and-Mouth Disease (FMD) is a threat to the overall health of the U.S. cattle 

herd. The domestic industry must not be compromised at the sake of expanded trade; we must 
59 

mw42035 on AGRINON012 with DISTILLER


23592.018

ensure that FMD is not brought across U.S. borders. It has been calculated by the World 

Organisation for Animal Health (OlE) that a FMD outbreak within the United States could result 

in $14 billion in losses, calculated to include both farm income and the effect on consumers and 

international trade relations. USCA opposes any action that jeopardizes the health and well-being 

of the U.S. cattle herd. 

Free Trade Agreements 

It is vital for the U.S. to continue to export its beef products globally. However, our trade 

agreements must reflect the unique nature of the cattle and beef industry. Cattle and beef are 

perishable products, meaning the duration and shelf life of beef products immediately decreases 

upon processing. Perishable agriculture products, such as beef and finished cattle, have limited 

and time-sensitive marketing periods and, therefore, face unique challenges in obtaining relief 

when trade is injurious, either from dumping, subsidies, or related surges. 

Past Trade Promotion Authority (TPA) measures have promised the inclusion of specific language 

for perishable and cyclical agricultural products, including cattle and beef. Unfortunately, these 

guidelines have not always been included in final negotiated trade agreements. The lack of 

guidance on this issue in the current Trans Pacific Partnership is concerning. US trade laws must 

represent the same policies and protocol that govern and regulate our domestic markets. 

Meaningful and timely countervailing and anti-dumping Jaws are imperative to maintain a level 

playing field and ensure that international trade is not detrimental to our domestic US cattle 

industry. These laws are in place only to address those countries not adherin'g to trade protocol. 

If countries are found to be subsidizing production which in turn creates artificially cheap product~, 

or are dumping at below their cost of production into the US markets, then there must be 

mechanisms in place to correct and address these violations immediately. US trade laws, 

especially those pertaining to the beef industry, must recognize the highly fragmented aspect of 

our industry, which includes downstream players who may actually benefit from such trade 

violations. Additionally, more timely resolution and reactionary measures must be in place to 

account for the perishable nature of our industry's product. Currency manipulation must also be 

a component of our trade laws as it will continue to distort the flow of trade if left as-is. 

The U.S. government and the World Trade Organization (WTO) must address this within any trade 

agreement that is negotiated and implemented. Significant and timely dumping and countervailing 

laws and remedies must be in place to ensure U.S. producers are not disadvantaged by injurious 

dumping, subsidies, and import surges. Too often, trade distortions that artificially suppress 

domestic prices are looked at on a short-term basis as highlighted by their resulting reduction in 

costs to consumers. However, when reviewed over a longer period of time, the results often show 

the subsequent detrimental effects to the state of domestic production. This decline in domestic 

production compromises not only food security in this country, but also the long-term vision of 

encouraging production for a growing global population and production needs. The U.S. cattle 

industry cannot continue to give access to gain access. 
60 

mw42035 on AGRINON012 with DISTILLER


23592.019

Determining Weekly Cash Price & Volatility in the Market 

Markets are the driving force of any commodity. Over the past 12 months, the U.S. cattle industry 

has faced unusual volatility and uncertainty in the marketplace. Prices have risen dramatically to 

historic levels and then bottomed out to figures reminiscent of three years prior. The livestock 

industry is a historically up and down, ever-changing marketplace due to its dependence on foreign 

market factors, domestic and international policies, and consumer trends; however, today's 

marketplace has created an unstable and non-transparent arena for U.S. producers. We ask the 

Committee to review all of the factors contributing to today' s marketplace, both the marketspecific driven factors and industry concerns alike. 

We must come to consensus on a more competitive, and fair, means by which weekly cash price 

on live fed cattle are determined. Transparency and competition must be achieved at the fed cattle 

level, and it must be addressed. 

The futures board has always been a tool for producers and feeders to help mitigate risk. However, 

recent volatility in the futures market has led to uncertainty across the industry, which has 

consequently deterred members of the cattle industry from using these markets because of the risk 

of losing capital. Risk mitigation plays a key role for the entire industry; but most importantly for 

our average and young producers who borrow the majority of their operating funds from banks. 

Without confidence in the ability to hedge risk in a volatile futures market, producers will not be 

able to secure operating loans from lenders. 

Additionally, we request this Committee work with the Commodity Futures Trading Commission 

and relevant market participants to ensure disruptive trading practices are prohibited so as to not 

compromise the foundation and role of the futures market as a risk management tool for cattle 

producers. 

There is a severe disconnect within the cattle market as to the true fundamentals of what should be 

driving the prices versus what prices are actually being offered. Cattle marketing agreements and 

livestock commodity trading are all essential to the health and vitality of the industry. 

Packers and Stockyards Act; Mandatory Price Reporting Law 

Every five years, the Mandatory Price Reporting law is reauthorized, presenting new opportunities 

to modernize the cattle industry. As producers, our members develop a product consisting of slowchanging fundamentals. However, formula cattle contracts and automated trading in the futures 

marketplace has introduced a new paradigm that USCA believes should be closely monitored to 

ensure market transparency, stability, and accurate price discovery. 

The Packers and Stockyards Act (P&S Act) must continue to modernize and change as the industry 

evolves. I operate three livestock auction markets that are all regulated under the P&S Act; as the 

business has changed over the years, so too must the laws governing it. Specifically, the current 
61 

mw42035 on AGRINON012 with DISTILLER


23592.020

law dictates prompt payment as a check in the mail by the close of the next business day or a wire 

transfer of funds. Other forms of electronic payment such as ACH payments must also become an 

option. 

As online and video auctions continue to be a prominent form of marketing cattle, clarification on 

whether these formats fall under the P&S Act, and how funds must be handled, is necessary. A 

law that exists without a definition and authority to carry it out is without standing, no matter the 

issue. USCA proposes long-overdue modernizations and revisions to the P&S Act via the 2018 

Fann bill and the 2020 Price Reporting reauthorizing bill. 

Opportunities in the 2018 Farm Bill 

We have seen great success in the implementation of Farm Bill programs. From supplementary 

conservation funding and programs to disaster-relief funds and beginning farmer and rancher 

support, the public-private relationships driving our industry today could not be stronger. In 2015, 

we saw ranchers and USDA-NRCS, along with conservation and sportsmen's groups, work 

together to conserve Greater Sage Grouse habitat and prevent a listing of the species. Publicprivate relationships and a strong industry commitment to habitat and species conservation 

cemented the reality of the statement "What's good for the bird is good for the herd" campaign. 

The successful model employed in the Greater Sage Grouse effort is now being reflected elsewhere 

in non-species listings, due to successful habitat conservation, such as the Lesser Prairie Chicken. 

Across the country, livestock producers continue to be at the mercy of adverse weather and climate 

events. The importance and need for effective, and fully funded, disaster relief programs was more 

apparent than ever during the aftermath of the 2013 Atlas Blizzard. We worked with several cattle 

producers that suffered devastating losses from this storm. The availability of funds allocated 

specifically to feed and livestock reimbursement through the Livestock Indemnity Program 

enabled producers to support surviving herds and recoup losses once the storm and recovery efforts 

had passed. The timing of the Atlas Blizzard fell directly during the 2013 government shutdown 

and prior to the passage of the current Farm Bill. The importance of government support and 

funding of Farm Bill programs was made clear and remains a priority for producers across the 

country. 

A true bright spot in the industry has been the success of the Beginning Farmer and Rancher 

program. As our industry continues to transition to the next generation, opportunities and avenues 

for success must be a priority. The continued inclusion of this program, and expansion on its 

fundamentals, must be a component of the 2018 Farm Bill. 

As the industry and Congress look to drafting the next Farm Bill, the focus will be on the 

development of a livestock-specific title including many of the items noted above. The 2018 Farm 

Bill provides a vehicle to address many of the issues we are discussing today, including revised 
62 

mw42035 on AGRINON012 with DISTILLER


23592.021

and enhanced market reporting and market transparency; continued emphasis on public-private 

partnerships in conservation; and addressing industry concerns such as transportation and 

environmental regulations. In January of 2017, USCA will announce its livestock title overview 

detailing specific opportunities and partnerships designed to enhance and assist the industry. 

Updated Federal Grazing Laws 

Public lands are intended for sustained, multi-use purposes, including hunting, hiking, and 

livestock grazing. The most imminent threat to our public lands are incremental decreases in 

federal budgets that erode the ability of agency officials to continue necessary upkeep and 

management of federal lands. "Special Interest" groups that "specialize" in litigating against the 

management of public lands remain a danger to all of those who use and enjoy public lands. Federal 

grazing laws must ref1ect the current legal environment. The success we have seen first-hand in 

private-public partnerships on federal lands represents a means by which to overcome the 

challenges of managing land for multiple uses. We can continue to build on these successes and 

maintain the multiple use aspect of our federal lands to the benefit of producer and the general 

public. 

Commercial Livestock Hauling 

The Federal Motor Carrier Safety Administration is removing an exemption that allows livestock 

transporters to forgo portions of the Hours of Service rules, in the best interests of the animals on 

board. The lifting of this exemption will harm the commercial independent livestock haulers by 

requiring mandatory breaks, regardless of whether they are hauling live cattle, and placing 

additional regulations on what constitutes an hour of drive time, thereby decreasing their ability to 

travel longer distances without stopping. 

Livestock are a highly perishable commodity. If we hamper the ability to move livestock quickly 

and efficiently, we might actually limit opportunities for producers in many parts of this country 

by reducing the number of people interested in buying their livestock. USCA, in coordination with 

other interested groups, will be forming a working task force to address the concerns of this critical 

segment of the beef production industry in a positive and productive manner. 

Updated the Endangered Species Act 

It has been consistently demonstrated that wildlife, soil, and water quality all benefit when 

managed livestock grazing plans are implemented. However, ranchers continue to face regulatory 

threats and pressures due to the Endangered Species Act (ESA). The ESA must be revised to ref1ect 

the new era of conservation and partnerships between agency officials and livestock producers. 

Increased regulation is no longer the answer; producer-driven partnerships and producer-inspired 
63 

mw42035 on AGRINON012 with DISTILLER


23592.022

solutions result in the best outcomes for the land and industry. The recent successes of the Greater 

Sage Grouse and Lesser Prairie Chicken non-listings are testament to this work. 

EPA's Waters of the U.S. Rule 

The Environmental Protection Agency's "Waters of the U.S." rule has proven to be a divisive 

issue. The livestock industry prides itself on the importance of clean water for healthy herds. The 

rule is currently being held up in the courts, where producers and the industry will continue to 

monitor its movement. The Administration and Congress must continue to involve industry 

stakeholders in regulation-based discussions in order to secure transparent and effective decisions. 

The success of any regulation is dependent on the information, facts, and stakeholder knowledge 

backing it; the Waters of the U.S. rule is a prime example of this disconnect. 

Conclusion 

The next generation of agriculture is here. Changes are taking place in farming and ranching as 

families are transitioning roles and parts of the operation to sons and daughters and, in some 

instances, grandsons and granddaughters. The cattle industry needs to begin looking ahead to 21 '' 

century goals rather than short-term objectives. 

My family has been an active member of the livestock industry for multiple generations. The 

concerns facing us today and that have been outlined above are real, but not insurmountable. I ask 

the Chairman, Ranking Member and all Committee Members to review and seriously consider the 

challenges and opportunities that face today's U.S. livestock industry. Today's laws and 

regulations must continue to evolve and reflect the changes in our industry. We must carefully 

consider new market protections and greater transparency in order to further the competitiveness 

and strength of our domestic market. We must keep in mind that in the years to come, the ability 

to produce an abundant, high-quality, safe and affordable food supply will be more important than 

ever. The U.S. livestock industry currently lands at the top of such producing nations and we must 

do everything in our power to remain. 
64 

mw42035 on AGRINON012 with DISTILLER


23592.023

Written Testimony Of 

National Pork Producers Council 

On 

A Review of the U.S. Livestock and Poultry Sectors: 

Marketplace Opportunities and Challenges 

United States Senate 

Committee on Agriculture, Nutrition & Forestry 

May 26,2016 
65 

mw42035 on AGRINON012 with DISTILLER


23592.024

Introduction 

The National Pork Producers Council (NPPC) is an association of 43 state pork producer 

organizations that serves as the global voice for the nation's pork producers. The U.S. pork 

industry represents a significant value-added activity in the agricultural economy and the 

overall U.S. economy. Nationwide, more than 68,000 pork producers marketed more than 115 

million hogs in 2015, and those animals provided total gross income of nearly $24 billion. 

Overall, an estimated $23 billion of personal income and $39 billion of gross national product 

are supported by the U.S. pork industry. 

Economists Daniel Otto, Lee Schulz and Mark !merman at Iowa State University estimate that 

the U.S. pork industry is directly responsible for the creation of more than 37,000 full-time 

equivalent pork producing jobs and generates about 128,000 jobs in the rest of agriculture. It 

is responsible for approximately 102,000 jobs in the manufacturing sector, mostly in the 

packing industry, and 65,000 jobs in professional services such as veterinarians, real estate 

agents and bankers. All told, the U.S. pork industry is responsible for nearly 550,000 mostly 

rural jobs in the United States. The U.S. pork producers today provide 25 billion pounds of 

safe, wholesome and nutritious meat protein to consumers worldwide. 

Exports add significantly to the bottom line of each U.S. pork producer. U.S. exports of pork 

and pork products totaled 2.13 million metric tons in 2015, representing more than 24 percent 

ofU.S. production, and those exports added more than $48 to the value of each hog marketed. 

Exports supported approximately 110,000 jobs in the U.S. pork and allied industries. 

Cautious Expansion, Continued Focus on International Markets 

The state of the U.S. pork industry has been shaped in recent years by disease. Recall the 

H1N1 flu in 2009 and the Porcine Epidemic Diarrhea virus (PEDv). The latter first was 

documented in the United States during the spring of2013, and over the next 18-plus month 

killed between 8 million and 10 million piglets. The dramatic reduction in the supply of 

available market hogs led to record hog prices throughout 2014 after four straight years of 

economic losses primarily because of record-high feed costs. 

Pig mortality since then has fallen dramatically, with the U.S. Department of Agriculture's 

Quarterly Hogs and Pigs report for the fourth quarter of2015 showing the highest level of live 

births per litter in history at 10.53 pigs. 

Seemingly recovered from the worst ofPEDv's catastrophic effect on production, the U.S. 

pork industry appears to be moving into a period of cautious, calculated expansion. Pork 

production in 2015 increased year-on-year by a whopping 7.3 percent, albeit from the PEDvravaged calendar year 2014. Pork production this year is forecast by USDA to increase by 2 

percent to 24.99 billion pounds, and 2017 production is forecast to increase 2.6 percent to 

25.64 billion pounds. The total hog herd in the United States today is 67.6 million head, up 

slightly from 2015. 
66 

mw42035 on AGRINON012 with DISTILLER


23592.025

The typical cycle of barrow and gilt prices peaking in the summer and bottoming out in the 

November-December timeframe was essentially abandoned in 2014 and 2015 but is expected 

to return this year. The annual average for barrow and gilt prices received by producers, at 

$50.23 per carcass weight hundred (cwt.), fell dramatically in 2015 from its 2014 high of 

$76.03/cwt. Prices are expected to remain in the $46-$48/cwt. range for the remainder of the 

calendar year and lose another 6 percent throughout 2017. Estimated returns for farrow-tofinish producers continue to be positive for the year as a whole, with fourth quarter 2016 

forecast at or below breakeven price levels. 

There is currently a tremendous amount of red meat and poultry in the marketplace and 

coming down the pipeline. Per capita consumption of pork registered at just under 50 pounds 

in 2015, and pork retail prices have been historically low relative to beef retail prices over the 

past 18 months. Moving into grilling season (roughly Memorial Day through Labor Day), it 

will be interesting to see what happens to consumer demand and how it plays out in the 

marketplace. 

Per capita consumption of pork is forecast to remain nearly even in 2016 before increasing by 

1.8 percent in 2017. That marginal increase, coupled with the growing production expected 

throughout this year and next, highlight the importance of being able to send pork products to 

consumers outside the U.S. borders. 

But economic growth in importing countries has been lackluster, and the value of the U.S. 

dollar has served as a headwind to growing exports of U.S. pork products, particularly in 

2015. The Russian import ban on Western products and other global geopolitical events also 

have served as barriers to export growth. Total U.S. pork exports fell in 2015 on a value basis 

by 16.4 percent and on a volume basis by 2.1 percent. The top four markets for U.S. pork 

products on a value basis (Japan, Mexico, Canada and China/Hong Kong) all imported less in 

2015 than they did in 2014. U.S. pork producers lost a tremendous amount of market share in 

the Chinese market to European producers, particularly from Germany, Denmark and Spain. 

Through the first quarter of2016, U.S. pork exports were down 9 percent year-to-date on a 

value basis and up 2.5 percent on a volume basis. In particular, the volume of exports to 

China/Hong Kong were up 83 percent year-on-year, marking the largest first quarter pork 

shipments the United States ever has made to that market. 

World economic conditions are expected to improve some, especially in Asian countries. The 

Chinese hog market, for example, currently is in flux, with red hot demand for imported pork 

and Chinese hog farming profits larger than ever. Rapid pork inflation potentially presents an 

opportunity for larger shipments of U.S. product into the Southeast Asian nation, but 

economics does not always drive reality in China. 

USDA forecasts pork export volume to grow 5.2 percent in 2016 and 2 percent in 2017, but 

geopolitical events, the strength of the dollar and removal of non-tariff trade barriers will play 

an important role in realizing those export gains. 
67 

mw42035 on AGRINON012 with DISTILLER


23592.026

Looking forward, there is no shortage of both opportunities and challenges for the U.S. pork 

industry. As the world becomes more globalized, so too do grain and livestock markets. A 

flood in Argentina or a drought in Brazil are felt locally and have an impact on producers' 

bottom line. Since each finished hog consumes approximately 150 pounds of soybean meal 

and 10-11 bushels of com, feed price levels and volatility are of the utmost importance to 

pork producers. The recent run-up in soybean meal prices has caught many by surprise, as did 

the initial estimate of prospective com plantings. 

Total U.S. red meat and poultry production is projected to be above 2016levels. Hog supplies 

will be adequate over the summer and will be plentiful in the fall. Strong competition for 

slaughter hogs by packers could support hog prices, and the prospect of at least four new 

packing plants coming on line in the next couple of years could help boost producers' bottom 

line moving forward. The pace at which these new plants come on line and begin processing 

hogs will be an interesting storyline to watch and will have significant implications for both 

domestic pork supplies and the availability and competitiveness of exports overseas. 

While the vagaries of Mother Nature- diseases affecting production and weather affecting 

feed grains are out of anyone's control, the pork industry's fortunes can be affected, for 

good or for ill, by what passes through the halls of Congress; government policies can and do 

offer opportunities or pose challenges for pork producers. 

Trade and the TPP Benefit Agriculture 

One of the policies that could have a positive effect on the U.S. pork industry- and indeed on 

all of U.S. agriculture-- is trade, specifically expanded trade. 

Through free trade agreements (FTAs) and bilateral and multilateral trade initiatives, the 

United States has been very successful in removing barriers to U.S. exports and increasing 

trade in U.S. goods and services. 

U.S. exports of pork, for example, have increased by 1,550 percent in value and nearly 1,300 

percent in volume since 1989, the year the United States implemented the FTA with Canada 

and started opening international markets for value-added agriculture products. The 

importance of trade deals is evident given that the United States now exports more pork to the 

20 countries with which it has FTAs than to all other nations combined. 

Exports add to the bottom line of producers, spur economic growth and create tens of 

thousands of U.S. jobs. Last year, U.S. pork producers shipped 2.13 million metric tons of 

pork worth $5.6 billion to foreign destinations. Those exports added more than $48 to the 

price producers received for each hog marketed, and they supported more than 110,000 pork 

industry jobs. (USDA's Economic Research Service calculates that every $1 billion in U.S. 

agricultural exports generates more than 7,500 jobs across the U.S. economy.) 

The United States has been, on average, the top global exporter of pork over the past 10 years, 

and given continued economic growth in the world and rising per capita incomes, U.S. pork 

producers stand to benefit significantly from new FTAs that eliminate tariff and non-tariff 

barriers to U.S. exports. 
68 

mw42035 on AGRINON012 with DISTILLER


23592.027

The importance ofFTAs is evident by the fact that the U.S. pork industry now exports more 

product to the 20 countries with which the United States has FTAs than to the rest of the 

world combined. 

That's why the U.S. pork industry has been among the most aggressive pro-trade voices in the 

U.S. private sector and why it is a strong supporter of the Trans-Pacific Partnership 

Agreement (TPP), the benefits of which will exceed all past FTAs. 

NPPC was among the biggest cheerleaders for the U.S.-lead Asia-Pacific regional FTA 

negotiations from the beginning of the Obama administration. It was instrumental in getting 

Japan included in the TPP talks, which were concluded last October after nearly six years of 

negotiations. 

The organization also led agriculture's efforts to gain congressional approval for Trade 

Promotion Authority to permit the administration to carry through with the TPP negotiations 

and conclude an agreement. 

The TPP, which includes the United States, Australia, Brunei, Canada, Chile, Japan, 

Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, presents an opportunity to 

open and expand markets to U.S. pork that include half a billion consumers and nearly 40 

percent of the world's GDP. 

The three key markets for U.S. pork producers in the TPP are Australia, Japan and Vietnam. 

Those countries account for the overwhelming majority of economic benefits that will accrue 

to the U.S. pork industry. While NPPC continues to have TPP implementation concerns, it is 

confident that the issues will be resolved. Here's a look at the benefits U.S. pork will gain 

from the TPP countries: 

• Australia -Tariffs on pork were eliminated under the U.S.-Australia FT A. But while 

pork is the top U.S. agriculture export to Australia, it is not eligible to be sold at retail in 

that country because of non-science-based sanitary-phytosanitary barriers. While the issue 

is not technically part of the TPP negotiations, NPPC is working closely with the U.S. 

government to facilitate a review of the matter in Australia. There is no credible scientific 

reason to prohibit the sale of U.S. pork at retail in Australia. 

• Chile-Tariffs on U.S. pork are zero under the U.S.-Chile FTA. 

• Japan The largest value and second largest volume market in the world for U.S. pork 

exports, Japan will eliminate tariffs on all pork products, including its Gate Price- a 

complex system of protection - on processed pork, in six to II years from entry into force 

of the agreement. For processed products not subject to the Gate Price such as seasoned 

ground pork and sausages (the United States shipped more than $400 million of these 

products in 2014), tariffs will be eliminated in year 6. Japan also immediately will reduce 

the impact of the Gate Price on chilled and frozen pork upon entry into force ofTPP. The 

Gate Price will remain at 524 Yen per kilogram indefinitely. However, the specific duty 

that is assessed when products do not meet the Gate Price will phase down to 50 Yen per 

kilogram in year 10. There will be one safeguard on processed product and two safeguards 

on chilled/frozen pork. These safeguards disappear in year 11. 
69 

mw42035 on AGRINON012 with DISTILLER


23592.028

• Malaysia- Nearly all of Malaysia's tariffs on pork and pork products will be eliminated 

upon entry into force of the agreement. In addition, Malaysia dropped its non-tariffbarriers on U.S. pork in December 2014. 

• New Zealand -Currently, pork exports from Australia, Canada and China enter New 

Zealand duty-free, but the United States must pay an import tariff. Under TPP, New 

Zealand will eliminate all pork tariffs for the United States and other TPP nations upon 

entry into force of the agreement except on hams and shoulders, which will go to zero in 

year 3. 

• Peru- Tariffs on U.S. pork either now are zero or will be within three years under the 

U.S.-Peru FTA. 

• Singapore Tariffs already are zero on U.S. pork as a result of the U.S.-Singapore FTA. 

Separately, NPPC is working with the U.S. government to facilitate a review of certain 

non-tariff measures in Singapore. 

• Vietnam- Despite being a larger consumer of pork than Mexico (the largest volume 

destination for U.S. pork), pork imports represent less than 2 percent of Vietnam's pork 

consumption. U.S. pork exports have been limited by tariffs and a series of non-tariff 

barriers. Under the TPP, Vietnam will eliminate tariffs on pork and pork products, 

currently as high as 30 percent, in five to 10 years. It will eliminate tariffs on frozen cuts 

and shoulders in eight years and on preserved pork, fresh pork cuts and shoulders in I 0 

years. Additionally, Vietnam's non-tariff barriers, which are being eliminated, are the 

subject of a side letter. 

The TPP represents for the U.S. pork industry the biggest commercial opportunity ever 

negotiated. Economist Dermot Hayes, with Iowa State University, estimates that if the deal 

that was concluded last October is implemented that is, if all tariff and non-tariff barriers are 

eliminated on pork in each TPP nation- U.S. pork exports to those countries will increase 

exponentially and more than 10,000 new U.S. jobs tied to those exports will be created. 

But the reality is that if Congress does not expeditiously pass TPP, there will be no 

implementation, and that means the U.S. pork industry and the rest of American agriculture 

not only won't get the benefits of expanded trade but will lose market share in the fastest 

growing economic region in the world. The European Union and other nations are negotiating 

FTAs with Japan and other TPP countries. Of even greater concern is that ifTPP fails, a much 

bigger regional trade agreement is likely to fill the void. The Regional Comprehensive 

Economic Partnership (RCEP) is comprised of 16 countries, including Australia, China, India, 

Japan, Korea and New Zealand as well as the 10 countries of the Association of Southeast 

Asian Nations (ASEAN). It does not include the United States. Make no mistake, U.S. 

exporters will be significantly prejudiced ifTPP is not soon passed by the Congress. 

NPPC urges Congress to quickly pass the Trans-Pacific Partnership Agreement. 
70 

mw42035 on AGRINON012 with DISTILLER


23592.029

Vaccine Bank Needed To Address FMD 

On the disease front, while PEDv is still an issue for the pork industry, producers seem to 

have the disease in check. But other bacterial and viral diseases remain challenges for 

producers. The industry has devoted significant resources to endemic and foreign animal 

diseases, funding more than 120 research projects and spending more than $5 million for 

studying, monitoring and addressing swine diseases over the past 10 years. 

But more must be done, particularly to address foreign animal diseases (FADs), which present 

a significant threat not just to the U.S. pork industry but to the entire animal agriculture sector. 

Increased travel and trade among countries have made the United States increasingly 

vulnerable to several FADs, including African Swine Fever, Classical Swine Fever and Foot 

and Mouth Disease (FMD). 

FMD is one of the most economically devastating foreign animal diseases affecting animal 

agriculture. It is highly contagious and spreads easily through livestock movement, by wind 

currents, on vehicles that have traveled to and from infected farms and even on inanimate 

objects that have come in contact with the virus. It affects all cloven hoofed species, including 

wildlife such as deer and elk. 

FMD is endemic in Africa, Asia, South America and the Middle East. The FMD virus has 

seven viral serotypes and more than 60 subtypes, with wide strain variability. Managing and 

ultimately eradicating FMD requires strain-specific vaccines, making vaccination challenging 

and very expensive. Sporadic outbreaks with different types continue to pop up in countries 

around the world. 

Because North America is free ofFMD, an outbreak of the disease in the United States would 

immediately shut off all exports of U.S. livestock, meat and dairy products, creating a 

precipitous drop in livestock markets. Since U.S. consumers have little knowledge of the 

disease, there also likely would be serious disruptions in the domestic market because of 

decreased demand for those products. According to one recent study, prevention ofFMD is 

estimated to be worth $137 million a year to the U.S. pork industry. 

The House Agriculture Committee Nov. 4, 2015, held a hearing on "American Agriculture 

and National Security" that highlighted the vulnerability of the U.S. food supply to the 

potential for FAD introduction by terrorists or by accident. 

Additionally, the bipartisan Report of the Blue Ribbon Study Panel on Biodefense- the panel 

was co-chaired by former Department of Homeland Security Secretary Tom Ridge and former 

Sen. Joe Lieberman- released Oct. 28,2015, concluded that improvements are needed to the 

U.S. system for protecting the U.S. livestock herd and the nation's food supply from FADs. 

Since 2013, several diseases affecting swine have been introduced into the U.S. herd, 

including PEDv, Delta Corona Virus and Orthoreovirus. Government officials responsible for 

overseeing port-of-entry inspections and disease risk management have been unable to 

specifically identify the source or means of introduction of those viruses even though USDA's 

Animal and Plant Health Inspection Service (APHIS) conducted a root cause investigation. 
71 

mw42035 on AGRINON012 with DISTILLER


23592.030

If there is an unidentified gap in the U.S. safety net that allowed the introduction of these new 

diseases, it also remains open for FMD. 

In a USDA foreign animal disease preparation strategy document on the phases and types of 

an FMD outbreak, Dr. James Roth, professor and researcher at Iowa State University, 

identified four phases of the disease: I) confirmation of an outbreak (typically three days); 2) 

surveillance and epidemiological work necessary to provide timely evidence of the extent of 

an outbreak to support decision making by government officials; 3) recovery from the disease; 

and 4) freedom from the disease (possibly with vaccination). 

He characterized an FMD outbreak as having six types: Type 1, Small Focal; Type 2, 

Moderate Regional; Type 3, Large Regional; Type 4, Widespread or National; Type 5, 

Catastrophic U.S.; and Type 6, Catastrophic North American, which includes Canada and 

Mexico. 

Given the structure of the U.S. livestock industry, the likelihood of having a Small Focal or 

Moderate Regional outbreak is remote. The livestock industry estimates there are 

approximately l million pigs and 400,000 cattle moved daily in the United States, some over 

long distances. In addition, there are numerous auctions, fairs and exhibits that concentrate 

large numbers of animals in a single location, providing the opportunity for one infected or 

exposed animal to spread disease to many animals. Thus, it seems unlikely that, if the United 

States had an outbreak, it would be a Small Focal outbreak that could be controlled without 

widespread administration of vaccine. 

The World Organization for Animal Health (OlE) sets standards for managing and declaring 

freedom from FMD. Those standards range from "stamping out" (killing all infected and 

exposed animals) to being free ofFMD with vaccination. 

After watching countries such as the United Kingdom, Korea and Japan, whose livestock 

populations pale in comparison to the United States, struggle to manage an FMD outbreak by 

killing large numbers of animals, APHIS changed its existing policy on managing the disease 

from "stamping out" to using vaccine to limit the spread. This policy change was endorsed by 

the livestock industry as a cheaper and more practical alternative given the enormous size of 

the U.S. livestock herd and the rapid movement of livestock around the country. The United 

States simply cannot "kill" its way out of an FMD outbreak. 

But after reviewing the impacts of the policy change, it became apparent under the current 

structure of the FMD vaccine antigen bank that APHIS did not have the quantity of vaccine 

needed to implement the new policy, nor could vaccine be obtained in a timely manner in the 

event of an outbreak. 

At APHIS's request, the U.S. livestock industry began a series of meetings with senior APHIS 

officials to develop a strategy for improving the vaccine antigen bank and vaccine availability. 

There has been significant progress in FMD preparedness through the development of secure 

supply plans for milk, pork and beef, and APHIS continues to work with the livestock 

industry to improve its preparedness capability. Fixing the antigen bank capacity and 

improving vaccine availability must be a priority in future preparedness efforts. 
72 

mw42035 on AGRINON012 with DISTILLER


23592.031

Current U.S. law prohibits live FMD virus from being introduced onto the U.S. mainland, so 

foreign production companies are the only source of finished vaccines. It has been suggested 

that recombinant DNA vaccines that do not use live FMD virus can be produced in the United 

States, thus avoiding the legal prohibition of having live virus on the mainland. However, 

current data is not sufficient to determine how quickly, and indeed whether, such vaccines 

provide protection outside of the laboratory environment and for all species. 

The United States likely is years away from the development and commercialization of such 

novel vaccines. But the U.S. livestock industry must have vaccines that are protective against 

the strain ofFMD that might be in a sample sitting at the Plum Island Animal Disease Center 

(PIADC) for analysis at this very moment. 

The United States is the only country in the world to maintain its own antigen bank, located at 

the PIADC. The bank maintains antigen for a limited number of FMD strains. APHIS 

contracts with foreign vaccine production companies to produce finished vaccine from the 

antigen stored at Plum Island. If an outbreak occurs, the antigen is shipped to Europe to 

produce vaccine, and the finished product is shipped back to the United States. Based on the 

current production contract, after three weeks, this process would produce only 2.5 million 

doses of vaccine, and there is no surge capacity to produce more. 

Iowa State's Dr. Roth estimates that the U.S. livestock industry would need 10 million doses 

for the first two weeks of an outbreak. 

The FMD vaccine bank is currently funded at $1.9 million, and there have been no requests 

for a substantial increase in the President's budget despite the fact that Homeland Security 

Presidential Directive 9 (HSPD9) requires an adequate vaccine stockpile to be maintained. 

Although APHIS is the agency charged with managing and controlling FADs, there is no 

logical reason there could not be mutual cooperation with the Department of Homeland 

Security on funding an enhanced vaccine bank and improving vaccine availability. 

Another factor complicating upgrades to the vaccine bank is that it also serves as the North 

American Bank and thus includes Canada and Mexico. NPPC believes it is appropriate to 

include those neighboring countries, but the United States should not wait for negotiations 

with those countries to be completed before making necessary improvements, which are 

critical to the U.S. livestock industry. 

There is concurrence among the livestock sectors that fixing the vaccine bank will require the 

following actions: 1) Contract for an offshore, vendor-maintained vaccine antigen bank that 

would have available antigen concentrate to protect against all 23 ofthe most common FMD 

types currently circulating in the world; 2) Contract for a vendor-managed inventory of 10 

million doses (the estimated need for the first two weeks of an outbreak); and 3) Contract with 

an international manufacturer(s) for the surge capacity to produce at least 40 million doses. 

For more than a year, NPPC and others in the livestock industry have urged APHIS to identify 

changes needed to modernize the antigen bank and increase vaccine availability by requesting 

information from vaccine producers to identify the cost of fixing the vaccine problem. The 

industry anticipates that the agency soon will make that request. 
73 

mw42035 on AGRINON012 with DISTILLER


23592.032

NPPC knows that fixing the vaccine shortage will require a significant increase in budget 

outlays. However, that cost pales in comparison to the cost of an FMD outbreak. Iowa State 

University economist Dermot Hayes estimates revenue losses to just the U.S. pork and beef 

industries from an FMD outbreak at nearly $13 billion per year over a I 0-year period; the 

com and soybean industries are estimated to lose $44 billion and almost $25 billion, 

respectively. A recent study by Kansas State University estimates cumulative losses to 

consumers and livestock producers at $188 billion, with an added cost to the government of 

$11 billion for eradication efforts if vaccination is not employed. If vaccination is employed, 

the study estimates - depending on the strategy used -the losses to consumers and producers 

could be cut by 48 percent. 

The history of government involvement in disasters like an FMD outbreak is that, once an 

outbreak occurs, unlimited resources are committed to getting control of the situation. In the 

case of FMD, there is a clear opportunity to invest in a robust vaccine bank that would limit 

the economic impact on pn,lducers, feed suppliers and consumers and reduce the 

government's cost for control and eradication of the disease. 

NPPC urges the committee and Congress to work with the ad111inistration to address the 

alarming gap in the preparedness for an FMD outbreak. Whether the disease introduction is 

the result of terrorism, careless travelers or carried on traded commodities, the calamitous 

result is the same: devastation to the U.S. livestock industry and a significant hit to the U.S. 

economy. 

Legislation and Regulation 

Finally, the U.S. pork industry is, or can be, greatly affected by federal legislation and 

regulation. 

NPPC works on behalf of America's pork producers to ensure that laws and rules don't 

impose unnecessary costs on the U.S. pork industry, restrict it from meeting consumer 

demands in an economical manner or prevent market-based solutions to issues. The structure 

of the pork production and packing sectors should be allowed to change with the demands of 

the growing global marketplace. This includes allowing producers and packers to adopt new 

technologies and pricing and marketing mechanisms that enable the former to reduce their 

risks and the latter to capture economies of scale. 

The U.S. pork-packing sector is the envy of the world in terms of efficiency and food safety, 

and legislation and regulation should not take away or hamper that source of international 

advantage. Allowing producers and packers the freedom to develop new ways of doing 

business will only enhance the value of U.S. pork products, at home and abroad, and reduce 

costs and risks. 

Today, the U.S. pork industry has developed a wide variety of marketing and pricing methods, 

including contracts, to meet the changing needs of a diverse marketplace. U.S. pork producers 

will not be well served by having certain types of contracting mechanisms eliminated, a move 

that only would force livestock markets to revert to a system used more than half a century 

ago in which animals were traded in small lots and at prices determined in an open-market bid 

system. Such a system was inefficient and makes no economic sense in today's economy. 
74 

mw42035 on AGRINON012 with DISTILLER


23592.033

That is why NPPC is very concerned about the revival of USDA regulations to amend the 

Packers and Stockyards Act, which is administered by the Grain Inspection, Packers and 

Stockyards Administration (GIPSA). The regulations, collectively known as the GIPSA rule 

and first proposed in 2010, would regulate the buying and selling oflivestock and poultry. 

Congress in the 2008 Farm Bill asked USDA to address five specific issues related to 

production contracts: 

• Criteria for determining whether an undue or unreasonable preference or advantage 

has been given to any producer. 

• Whether a poultry dealer or swine contractor has provided sufficient time for a grower 

to remedy a breach of contract that could result in contract termination. 

• Whether a poultry dealer has given reasonable notice of any suspension of delivery of 

birds to a grower under a contract. 

• When a requirement of additional capital investment during the life of a contract 

constitutes a violation of the Packers and Stockyards Act as an unfair practice. 

• The factors that comprise a fair usage of arbitration, including notification and the 

option for producers to opt out of automatic arbitration to resolve disputes. 

U.S. pork producers were stunned in June 2010 when USDA proposed a rule that not only 

went well beyond the five issues Congress asked it to address but included provisions 

considered and rejected by congressional lawmakers during the 2008 Farm Bill debate. 

One provision included in the rule, for example, would have required meat packers to justify 

and document, including with revenue and cost analyses, price differences paid for livestock, 

making it difficult for producers to negotiate premiums based on certain production practices, 

or accept lower prices for livestock of lesser quality. Such a 'justification" provision was 

voted down by the Senate. 

The rule would have had a devastating impact on livestock producers. According to an 

analysis of the regulation conducted by Informa Economics, it would have cost the U.S. pork 

industry more than $350 million annually. Industry analysis of the rule concluded that it likely 

would have had a chilling effect on innovation and flexibility, leading to a race toward 

mediocrity. It would have created legal uncertainty, driving costs higher and causing an 

increase in vertical integration in the livestock sector, forcing producers out of business and 

possibly affecting meat supplies. All of those effects would have harmed the U.S. pork 

industry's international competitiveness, costing U.S. on-farm and pork-processing jobs as 

well as negatively affecting the U.S. balance of trade. 

While there was overwhelming opposition to the GIPSA rule, including more than 16,000 

public comments from pork producers, it took yearly action by Congress to prevent its 

implementation. Unfortunately, no such action- in the form oflanguage in USDA's annual 

appropriation- was forthcoming for fiscal2016. 

In March, at a meeting of the National Farmers Union, which supported the 2010 GIPSA rule, 

Agriculture Sec. Vilsack indicated that his agency will move forward with implementing the 

regulation, and NPPC confirmed last week that several of the regulations are with the White 

House Office of Information and Regulatory Affairs, the last step before rules are proposed 

final or become final. 
75 

mw42035 on AGRINON012 with DISTILLER


23592.034

Pork producers again are very concerned that USDA's GIPSA rule will be too expansive, 

limiting farmers' ability to sell animals, dictating the terms of private contracts, making it 

harder to get farm financing, raising consumer prices and reducing choices, stifling innovation 

and leading to more vertical integration in the livestock industry. 

The U.S. pork industry opposes any legislation or regulation that restricts marketing 

opportunities and interventions into hog markets unless such actions address a clear, 

unequivocal instance of market failure or abuse of market power. To date, USDA has not 

presented any evidence that either is taking place. 

NPPC urges Congress to ensure that any USDA rule to amend the Packers and Stockyards 

Act not restrict producers' ability to sell or packers' ability to buy animals and not limit their 

ability to use technologies and pricing and marketing mechanisms that work for their mutual 

benefit. 

Another regulation that could have a profound negative effect on U.S. pork producers is the 

"Waters of the United States" (WOTUS) rule issued last year by the U.S. Environmental 

Protection Agency and the U.S. Army Corps of Engineers. 

The rule was promulgated ostensibly to clarify the agencies' jurisdiction under the Clean 

Water Act (CW A) over various waters. Historically and based on several U.S. Supreme Court 

decisions, those waters were limited to navigable waters, their tributaries and adjacent water 

bodies that are hydrologically connected or that otherwise affect navigable waters. 

Certainly, pork producers are concerned about water quality, and they take a broad view of 

what it means to be environmentally responsible farmers and business people and have fully 

embraced the fact that their operations must protect and conserve the environment and the 

resources they use and effect. Producers take this responsibility with the utmost seriousness 

and commitment, and it has been in that spirit that they have made major commitments to 

environmental conservation, including meeting EPA's stringent zero-discharge standard that 

is part of the 2008 CAFO (Concentrated Animal Feeding Operation) rule and participating in 

a historic study of air emissions from farms. 

But the WOTUS rule issued by EPA - over some objections from the Corps of Engineers - is 

overbroad, vague and fails to let regulated parties know what conduct violates the law. It 

includes, among other water bodies, upstream waters and intermittent and ephemeral streams 

such as the kind farmers use for drainage and irrigation. It also encompasses lands adjacent to 

such waters. 

The rule, for example, would cover any discemable feature that possesses (or previously 

possessed) a bed, bank and high water mark. This would create uncertainty, confusion and 

significant legal liability for farmers. In short, the regulation as written could affect farmers' 

ability to use their land. Moreover, under the CW A, there is an absolute prohibition on 

discharging any pollutant- whether manure, a chemical pesticide or fertilizer or even a seed 

of com into a WOTUS without a federal permit. Violations of the prohibition are subject to 

significant criminal penalties as well as civil fines of up to $37,500 per day per discharge, 

with the power to enforce the penalties open to private citizens. 
76 

mw42035 on AGRINON012 with DISTILLER


23592.035

It's not so much EPA enforcement but the threat of activist groups suing- using the CWA's 

private right of action over alleged WOTUS violations that will have a chilling effect on 

farmers. 

A number oflawsuits brought at the U.S. District Court level were filed against the regulation, 

which took effect Aug. 28, 2015. (The North Dakota-based District Court in September 2015 

issued a temporary injunction against EPA implementing the regulation in the 13 states that 

brought suit against the rule in that court.) The government wants the District Court cases to 

be consolidated in the U.S. Court of Appeals for the 6th Circuit in Cincinnati, which in 

October 2015 issued a stay of the rule until disposition of the cases before it. 

In reaching its decision to stay the rule, the 6th Circuit found that there's a substantial 

likelihood that the WOTUS regulation fails to comply with the U.S. Supreme Court's 

instructions in previous Clean Water Act cases and that the actions of EPA in the rulemaking 

process, to which NPPC objected at the outset, are "facially suspect." 

Despite its hints about the outcome of the consolidated cases, the possibility exists that the 

appeals court will find that the EPA and the Corps of Engineers were within their discretion in 

promulgating the WOTUS rule. 

So NPPC continues to urge the agencies to withdraw the rule and to work with all affected 

stakeholders, including the agricultural community, to develop a rule that clarifies what 

waters are and are not jurisdictional in a manner consistent with the Supreme Court's rulings 

and that is workable and cost effective for the regulated community. 

Conclusion 

The U.S. pork industry is the lowest-cost producer and No. 1 exporter of pork in the world, 

and U.S. pork producers continue to produce the most abundant, safest, most nutritious pork 

in the world. They have proved very resilient, weathering financial crises and diseases as well 

as the vagaries of a supposedly free-market economy pushed and pulled in various directions 

by government intervention and regulation while investing in and adopting new technologies 

that have promoted animal health, protected the environment and added thousands of jobs and 

billions in national income to the American economy. 

For America's pork producers to continue as leaders in the international and domestic 

economies, for them to take advantage of the opportunities and meet the challenges presented 

to them, Congress and the administration must pursue federal policies and regulations that 

support U.S. pork production rather than hinder its ability to continue to produce safe, lean 

and nutritious pork and pork products for the global marketplace. 
77 

mw42035 on AGRINON012 with DISTILLER


23592.036

Statement of Ron Truex, Chairman 

United Egg Producers 

Before the 

Committee on Agriculture, Nutrition, and Forestry 

United States Senate 

May 26,2016 

Chairman Roberts and Ranking Member Stabenow, thank you for inviting United Egg Producers to testify 

at this hearing. UEP is a cooperative whose farmer-members independently market over 95% of all the 

eggs produced in the United States. My name is Ron Truex and I am president of Creighton Brothers 

LLC, a family-owned egg producer in Warsaw, Indiana. I also have the privilege of serving as chairman of 

UEP. 

In the last two years, the egg industry has been dramatically affected by two major events. The first was 

a disease; the second is a trend in the marketplace. 

First, we continue to recover from what USDA has called the worst animal-health crisis in the nation's 

history: the outbreaks of highly pathogenic avian influenza (HPAI) in 2015. Between December 2014 

and June 2015, this disease was detected in commercial and backyard poultry flocks as well as wild birds 

in 21 states. As a result, 42.1 million layers and pullets had to be depopulated along with 7.5 million 

turkeys. The federal government incurred costs of $950 million, and the state of Iowa alone was 

estimated to have suffered $1.2 billion in lower economic output, including the loss of over 8,000 jobs, 

as outlined in a study commissioned by that state's Farm Bureau. 

Egg producers sincerely appreciated USDA's response to last year's crisis. Both industry and USDA have 

learned painful but valuable lessons from the initial experience, and when a different strain of HPAI 

briefly appeared in Indiana this year, the swift response played a part in containing that outbreak to a 

small area. 

As a result of the 2015 HPAI crisis, egg prices rose sharply and supplies were often short, particularly 

supplies of processed egg products. Our customers were, in some cases, forced either to import eggs 

for processing, or to reformulate away from eggs in their food manufacturing operations. As a result, 

our industry and its organizations, including the American Egg Board, are still working to restore demand 

for egg products. 

This year we have been challenged from another direction. A large number of restaurant and grocery 

chains, food service providers and consumer packaged goods companies have announced their intention 

to source only cage-free eggs. In most cases, these customers have stated that they will phase in cagefree specifications over a period of time, often as much as 10 years. 
78 

mw42035 on AGRINON012 with DISTILLER


23592.037

According to statistics from USDA, today there are 30 million cage-free layers out of a laying flock of 

over 300 million- just under 10%. Of those 30 million, roughly 13.5 million are in organic flocks, and 

16.6 million are in non-organic cage-free flocks. The remainder of the U.S. flock- about 90% --is cared 

for in cages, the vast majority of which comply with our organization's UEP Certified Program and must 

maintain certain minimum space requirements for each bird. Of the caged flock, a small but important 

portion is in enriched cages, where space allowances are greater and enrichments like perches and nest 

boxes are provided. 

USDA has attempted to estimate current egg usage by all the individual companies that have announced 

cage-free commitments. There is obviously some uncertainty in these estimates, but they are quite 

sobering. By 2030, according to USDA, current commitments would require that over 60% of the 

nation's egg-laying flock -174.6 million birds-- be in cage-free housing. 

Remember, today only about 10% of the flock is cage-free. A number of producers have announced 

their plans to convert some or all of their operations to cage-free status, but- again quoting USDAcurrent announcements would only result in about 63 million cage-free birds by 2019. That is a very 

long way from the more than 174 million that USDA says will theoretically be needed by 2030 (and more 

than 168 million by 2025). 

It will be extremely difficult for our industry to meet all cage-free demand over the next decade. The 

massive conversion that our customers are asking for will require extensive new construction, new 

capital investment, the acquisition of additional land, the distribution of large fixed costs over 

significantly fewer birds in a given space, and the adoption of a sharply higher production-cost structure. 

Many in our industry would say that "extremely difficult" is too optimistic a phrase, and that it would be 

more accurate to say "virtually impossible." 

That does not mean there is anything wrong with cage-free production. UEP believes- and scientific 

studies have shown- that hens can be humanely housed in a variety of ways: through conventional 

cages, enriched cages and in cage-free settings. Good management, not production system, seems to 

be the most important variable in whether hens are well cared-for. 

Now, so that my testimony does not seem like all doom and gloom, let me tell you some good news 

about eggs, and then suggest two positive steps Congress could take to help our industry. 

For many years, Americans were told to avoid eating too many eggs because they contain cholesterol. 

But today, more and more people realize that the cholesterol in your food does not really influence the 

cholesterol in your blood- and it's the cholesterol in your blood that creates health risks. We now have 

multiple validation of this scientific view. This year, the 2015-2020 Dietary Guidelines for Americans 

dropped the longstanding warning about the amount of cholesterol in your diet. Not long before that, 

the American Heart Association issued its own guidelines, which also did not put limits on dietary 

cholesterol and stated that there was no evidence linking dietary cholesterol with serum or blood 

cholesterol. 
79 

mw42035 on AGRINON012 with DISTILLER


23592.038

Eggs are a great way to get protein, vitamin D, choline and other important nutrients, and of course as 

we all know, they taste great and are easy to prepare. Those are just some of the reasons that per 

capita egg consumption this year will be about 10% higher than it was in 1998. 

Let me conclude with two recommendations for Congressional action. First, like other agricultural 

organizations, we believe there is a need for a national policy on whether or not to label products for 

their genetically engineered (GE) content. Although animal products in their pure form are exempt from 

Vermont's labeling law, they have not been exempted from some proposals in other states. 

Additionally, egg products are used in many processed foods that will have to be labeled in Vermont. 

We commend the bipartisan leadership of this committee for working hard for a solution. We 

understand the difficulty of reaching consensus, but respectfully urge you to keep trying. As you find 

solutions, let me underline one very important point from our standpoint: eggs from hens that consume 

GE feed are not genetically engineered themselves, and they should not have to be labeled as GE or 

GMO. The GE material in corn and soybeans is not present in eggs, any more than it is in meat or milk. 

So it would be illogical to require meat, milk or eggs to be labeled as GE, regardless of the feed 

consumed by the animals. Vermont's law already has such an exemption, and it is also consistent with 

policies in the European Union and other countries. This is our top priority in the GMO debate. 

There is a second way that Congress can help our industry, and that is to encourage USDA to use 

common sense in regulating organic poultry practices. USDA issued a proposed rule that would ban 

certain organic production systems that have been specifically allowed by USDA since 2002. These are 

called "porch systems," and they allow organic hens access to the outdoors on a porch that is open to 

the elements but covered with a solid roof in order to protect against predators and carriers of animal 

disease- such as the HPAI that is carried by wild birds. These systems also help producers comply with 

the Food and Drug Administration's Egg Safety Rule to prevent Salmonella Enteritidis. We support that 

FDA rule and we know that FDA is currently working on guidance for how farmers can comply with their 

rules while still providing outdoor access. For that reason, we were quite surprised to learn that USDA 

did not consult with FDA before issuing this proposed regulation. Basically, FDA learned about it when 

we did. 

In addition, the requirement for increased space for outdoor access (2.25 pounds/ft2 or 2 square feet 

per bird), which does not include existing porch investments, as well as the proposed rule's requirement 

that the outdoor area be at least 50 percent soil, are two of the most problematic aspects of this farreaching regulation. 

With the stroke of a pen, USDA is proposing to ban previously-approved production systems and 

basically stipulate that only pasture-based systems are organic. This proposal would drive a majority of 

current organic production out of business. As a consequence, consumer supplies of organic eggs 

would be restricted, consumer prices would rise, and growth in organic egg demand would be sacrificed 

on the altar of ideological purity. 

This committee has already been helpful on a bipartisan basis by questioning USDA's proposed rule, and 

we very much appreciate the interest of both the chairman and the ranking member, as well as other 
80 

mw42035 on AGRINON012 with DISTILLER


23592.039

members of the committee. We would urge you to continue contacting USDA, including filing 

comments, and ask that the Department extend the comment period for an additional60 days so that a 

final decision can be based on more complete facts. We hope you will also urge the Department to 

conduct additional economic analyses of what the proposed rule's impact will be. 

I am not personally involved in organic egg production, but a number of my fellow-producers are, and 

they are puzzled why USDA would want to take away consumer choice by restricting organic egg 

supplies. This proposed rule is a bad idea, not only for us but for other animal agriculture industries that 

would be affected. 

I would like to close by thanking the committee for taking an interest in the livestock side of U.S. 

agriculture. As you continue to oversee current policies, and begin to prepare for the next farm bill, I 

respectfully ask that you take livestock, poultry and dairy interests into account in all your deliberations. 

Thank you for the opportunity to testify. 
81 

mw42035 on AGRINON012 with DISTILLER


23592.040

Testimony of John Zimmerman on behalf of the National Turkey Federation 

Senate Agriculture Committee Hearing: "A Review of the U.S. Livestock and 

Poultry Sectors: Marketplace Opportunities and Challenges." 

May 26,2016 

Good morning, Chairman Roberts, Ranking Member Stabenow and members of 

the committee. My name is John Zimmerman, and I am a turkey farmer from 

Northfield, Minnesota and past president of the Minnesota Turkey Growers 

Association (MTGA). My family and I raise about 4 million pounds of turkeys 

annually on our farm as well as grow about 500 acres of com and soybeans. I am 

also a board member of the National Turkey Federation, which represents the $32 

billion U.S. turkey industry. I appreciate the opportunity to testifY before you today 

on the state of the turkey industry. The turkey industry raises approximately 238 

million turkeys annually, and provides employment to over 63,000 people 

nationwide, directly associated with breeding, hatching, raising and processing 

turkeys. USDA's latest forecast puts 2017 turkey production at an all-time record 

of6.4 billion pounds, 14% higher than 2015. As an industry, we continue to be 

challenged with a multitude of issues that impact those of us in the turkey business 

and we look forward to working with each of you to address these issues. 

Avian Influenza 

In 2016, the turkey industry has made significant strides in recovering from highly 

pathogenic avian influenza (HP AI), after suffering through the worst animal 

disease outbreak in U.S. history in 2015. The losses from HPAI were personal and 

weighed heavily upon the shoulders of farmers, rural communities, and companies 

from the West coast to the Midwest. 

As an industry, we continue to learn new lessons from the outbreak and guard 

against the potential return of the deadly virus. Our preparation was tested earlier 

this year in Indiana when a small outbreak occurred in a commercial turkey flock. 

This outbreak was so small precisely because of the lessons we've learned. The 

most important lesson is that immediate action needs to be taken at the local level 

to limit virus spread. No matter how good the intentions are at the state and federal 

level, industry must be given clear permission to act within minutes, not hours or 
82 

mw42035 on AGRINON012 with DISTILLER


23592.041

days, to protect other nearby farms from becoming infected. I must emphasize the 

need for rapid "stamping out" procedures and methods that ensure humane 

treatment while eliminating virus spread. Currently there is no one method that 

achieves perfect results in all circumstances. 

NTF is deeply appreciative of the indemnification program implemented by USDA 

and the Animal Plant Health Inspection Service (APHIS) along with the strong 

Congressional support for the turkey industry as we managed through the crisis. I 

would be remiss at this time ifi did not take a moment to personally thank my 

fellow Minnesotan Senator Klobuchar on behalf of myself, NTF and the entire 

turkey industry for all you did to help last year. 

Our industry continues to work with federal and state officials on key areas such 

as: biosecurity, depopulation strategy, disposal, repopulation, vaccine usage and 

future research. However, the road ahead remains long and as an industry we will 

need continued support from Congress to assist USDA/ APHIS on the avian 

influenza front. The 2016 Indiana incident is a stark reminder that HP AI is still out 

there looking for an opportunity to strike again. The 2015 damage to the poultry 

industry exceeded $1 billion, with much of that cost borne by consumers in the 

form of higher turkey and egg prices. 

In order to prevent future outbreaks, the U.S. needs to adopt a forward-looking, 

mandatory animal pest and disease prevention program designed to limit the 

impacts of foreign zoonotic diseases on livestock and poultry producers. We look 

forward to working with Congress to get this accomplished. As the saying goes, 

"an ounce of prevention is worth a pound of cure". 

Exports 

All poultry exports- turkey, eggs and broilers -were severely damaged by the 

trade restrictions that resulted from the 2015 HP AI outbreak. Specifically, 2015 

turkey exports declined to only 533 million pounds, a 34% drop from 805 million 

in 2014. Over 33 countries enacted some form of ban on U.S. poultry during the 

height of the HPAI crisis, and I want to make sure to thank the staff of USDA's 

APHIS for their work in reopening closed markets as well as establishing protocols 

that will limit bans to regional levels in any future cases of avian influenza. We 
83 

mw42035 on AGRINON012 with DISTILLER


23592.042

have seen this hard work pay off in the very limited bans enacted after the two 

cases in 2016. 

However, we continue to see HP AI outbreaks in Europe, Asia and South America. 

Now is the time, to re-engage with our trade partners to discuss how HPAI can be 

treated moving forward. This is a global disease and working with the government 

we can develop a plan that minimizes export disruptions during future outbreaks. 

Additionally, as APHIS knows, there is much more work to be done on the 

international front to protect all sectors from non-scientific trade barriers enacted in 

the name of protecting animal health. It is important that USDA's Foreign 

Agriculture Service (FAS) continue its work with both APHIS and the turkey 

industry to fully understand how our industry differs from chicken and livestock 

production. For example, while never covered under the U.S. COOL regulations, 

turkey has unfortunately seen restrictions in response to COOL, with both Korea 

and South Africa banning U.S. turkey "hatched" outside the U.S. This causes 

significant problems for many companies that hope to expand sales in these 

promising, growth markets. 

Finally, we support the Trans-Pacific Partnership Agreement (TPP) as an important 

step forward in reducing trade barriers and opening new markets for the turkey 

industry. We encourage Congress to approve the agreement as soon as possible. 

Organic Rule 

Recently, USDA proposed a rule to amend the organic livestock and poultry 

production requirements based on recommendations by the National Organic 

Standards Board. NTF is concerned about the potential disruption to existing 

organic producers and their supply chains, as well as the impacts this proposed rule 

may have on ensuring that animal health is fully protected. Before moving forward 

with the rule, the turkey industry feels that USDA should conduct a thorough 

assessment of the costs of compliance, increased animal health and welfare risks, 

and alternatives for existing organic growers so that producers and supply chains 

directly impacted by these changes will be minimally impacted. 
84 

mw42035 on AGRINON012 with DISTILLER


23592.043

USDA's Grain Inspection Packers and Stockyards Administration (GIPSA) 

Six years ago, USDA proposed sweeping rules changes on farmer contracting. 

With the expiration of a Congressional prohibition on implementing those changes, 

USDA is once again threatening to fundamentally change the rules by which our 

members operate. We continue to believe that the changes would increase costs, 

reduce productivity, and possibly lead to increased live production ownership by 

integrated poultry companies, to the detriment of independent farmers. We support 

the continued prohibition of USDA's implementation of the proposed changes for 

the simple fact that the unintended consequences would outweigh any purported 

benefits. 

Food Labeling 

A recent report by the National Research Council- the working arm of the 

National Academy of Sciences, Engineering and Medicine found that foods 

made from genetically engineered crops are as safe to eat as those made from 

conventional crops, and that GMOs generally improve farmers' yields by 

controlling pests and weeds. With regards to food labeling, NTF continues to 

actively support the two critical components of any GMO bill that comes out of 

Congress: 1) That the bill maintains federal preemption for meat and poultry 

labeling, which is already regulated by USDA - FSIS and 2) that it ensures that 

animals fed GE feed should not have to be labeled GE. We look forward to having 

a bill that prevents a patchwork of state rules that create a labeling nightmare for 

food producers. The U.S. needs a single set oflabeling rules that are commonsense and based on the most respected science known. 

Immigration 

We have a worker shortage all across the country, and meat and poultry producers 

are no different in feeling the pain ofthis shortage. The turkey industry supports 

immigration reform that include policies and provisions that will maximize 

benefits to the turkey industry and ensure a strong and durable immigration system 

that meets the needs of the U.S. economy. Most turkey plants are located in rural, 

low-unemployment areas. To fully staff these plants, producers must recruit from 

outside of their local areas and in many instances must rely on first-generation 

Americans. There are very few permanent visas for less skilled workers and the 

existing temporary programs only apply to seasonal labor. This effectively leaves 
85 

mw42035 on AGRINON012 with DISTILLER


23592.044

year-round meat and poultry manufacturers with no good options. Our members 

need access to a pool of legal, general labor immigrant workers, and we support a 

visa program that addresses the needs of the meat and poultry industry. There is 

currently no one bill that provides a "silver bullet," but it is time to resolve the 

immigration debate for the good of the country. 

Once again, thank you for the opportunity to testifY today on the state of the U.S. 

turkey industry and the issue impacting our businesses. I will be happy to answer 

any questions at this time. 
mw42035 on AGRINON012 with DISTILLER

(87) 

DOCUMENTS SUBMITTED FOR THE RECORD 

MAY 26, 2016 

mw42035 on AGRINON012 with DISTILLER

88 

mw42035 on AGRINON012 with DISTILLER


23592.045

PAT ROBERTS. KANSAS 

CHA!f!MAN 

The Honorable Tom Vilsack 

Secretary 

'Bnitcd ~totes ~cnatc COMMITTEE ON 

AGRICULTURE, NUTRITION AND FORESTRY 

WASHINGTON, DC 20510-6000 

202-224-2035 

Aprill9,2016 

U.S. Department of Agriculture 

1400 Independence Ave., SW 

Washington, DC 20250 

Dear Mr. Secretary: 

DEBBIE STABENOW, MICHIGAN RANKING DEMOCRATIC MEMBER 

I write to express concern about recent statements that the U.S. Department of 

Agriculture (USDA) is considering reissuing controversial rules that were originally proposed 

six years ago by the Grain Inspection, Packers and Stockyards Administration (GIPSA). The 

meat, livestock and poultry sectors have long contributed to our country's agricultural economy. 

Ranchers have shaped the rich history of my home state of Kansas where rural communities and 

cities were built on the meat and livestock sectors and are still vibrant today because ofthose 

successes. I am concerned about any administrative actions by USDA that could have negative 

ramifications for these industries that we both view as important stakeholders. Further, it was due 

to this concern that Congress chose to allow implementation of only certain provisions of the 

2010 proposal, while preventing implementation of other provisions that were considered the 

most onerous or beyond congressional intent. 

I caution USDA from finalizing controversial provisions of the 2010 GIPSA rule or 

proposing new regulations related to this subject matter in haste. Extensive departmental 

outreach to impacted stakeholder groups is necessary in creating an informed proposal, and to 

date this has not occurred. Furthermore, simply reviewing industry comments submitted for the 

2010 proposal is unacceptable given the changes in the meat, livestock and poultry sectors over 

the past six years. A current Cost Benefit Analysis (CBA) would also need to be conducted to 

ensure current marketplace conditions are accounted for and the proposal does not result in 

undue costs. As you will recall, industry estimates determined the 20 I 0 proposal had costs 

exceeding $1 billion, and at that time, Congress raised concerns with the development of 

USDA'sCBA. 

Finally, the 2010 proposal allowed !50 days for stakeholders to submit comments. I 

respectfully suggest an equal minimum amount of time for public comment should USDA 

proceed with taking any action, regardless if the provisions are new or were issued as part of the 

20 I 0 proposal. The meat, livestock and poultry sectors deserve the opportunity to take a 

thorough and renewed look at the impacts the proposal will have on their businesses given the 

current marketplace conditions. 

The U.S. meat, livestock and poultry sectors contribute greatly to the vitality of rural 

communities across the country. Finalizing controversial provisions of the 2010 G!PSA rule or 

proposing new, unwarranted regulations related to this subject matter may stifle economic 

opportunity, increase regulatory burdens, and result in significant negative consequences. USDA 
89 

mw42035 on AGRINON012 with DISTILLER


23592.046

needs to collaborate with these stakeholders and not hastily issue far reaching regulations that 

will cause undue harm. I appreciate a response in \\Titing with your view of any widespread 

changes that have occurred in the marketplace that may warrant reconsideration by USDA of 

these same or related measures. Thank you for your time and attention to this matter. 

With every best wish. 
90 

mw42035 on AGRINON012 with DISTILLER


23592.047

PAT ROBERTS, KANSAS CHAIRMAN 

The Honorable Gene Dodaro 

Comptroller General 

'lllnitcd ~tatcs ~cnatc COMMITTEE ON 

AGRICULTURE, NUTRITION AND FORESTRY 

WASHINGTON, DC 20510-6000 

202-224-2035 

April28, 2016 

U.S. Government Accountability Office 

441 G Street, NW 

Washington, DC 20548 

Dear Mr. Dodaro, 

DEBBIE STABENOW, MICHIGAN RANKING DEMOCRATIC MEMBER 

Foot-and-mouth disease (FMD) is a devastating virus that affects cloven-hoofed animals, 

such as cattle, sheep, swine, bison and deer. While FMD does not currently exist in the United 

States, it is prevalent in more than two-thirds of the world and is widespread in parts of Afiica, 

Asia, Europe, South America and particularly Middle Eastern countries. New strains of the 

FMD virus continue to appear in other countries, suggesting this highly contagious disease will 

continue to threaten animal health and the entire agricultural sector for the foreseeable future. 

Consequently, an FMD outbreak in the United States would have a severe impact on our 

economy and lasting trade repercussions. Iowa State University estimates that an FMD outbreak 

in the U.S. would cost the U.S. beef and pork sector approximately $13 billion per year, the com 

sector approxitnately $44 billion per year, and the soybean sector approximately $25 billion per 

year. Such losses in this country would be devastating to our agricultural producers, rural 

communities, food manufacturers and consumers. 

Due to the breadth of problems FMD could cause if introduced in the United States, FMD 

is properly considered a potential agent for agroterrorism. The Department of Agriculture 

(USDA) is responsible for working to protect against introduction ofFMD in our country's 

livestock and it does so by partnering with the Department of Homeland Security, individual 

states and industry organizations. Considerable federal, state and industry resources have been 

devoted to preparing for such an event. Yet, despite these efforts, preparing for introduction of 

this virus within the U.S. will be an on-going and ever-evolving process as we learn from the 

lessons experienced by other countries who have dealt with an outbreak ofFMD. 

In recent years it has become apparent that USDA's long-standing plan for addressing a 

potential outbreak, which included quarantine and slaughter of infected and susceptible animals, 

otherwise known as "stamping out," presents impracticalities. Recent outbreaks in countries such 

as Korea and Japan have been dealt with in this manner, resulting in the slaughter of millions of 

pigs and cattle. However, they have struggled to contain the virus. Most countries are now 

opting to vaccinate rather than attempting to stamp out the disease. Further, carcass disposal, 

movement of animals throughout North America, and impact on other sectors including the grain 

and feed sectors, present distinct and complex challenges that must be considered in FMD 

outbreak preparedness efforts. As such, FMD preparedness plans, both within industry and 

government, have begun to focus on the need to develop an adequate bank of vaccine antigen 
91 

mw42035 on AGRINON012 with DISTILLER


23592.048

concentrate and vaccine stockpile to employ in case of an outbreak. Since an outbreak in the 

U.S. would require millions of doses of vaccine, there must also be an adequate vaccine surge 

production capacity to provide sufficient quantities of vaccine given the size of the U.S.Iivestock 

herd. 

While USDA has devoted considerable resources to creating controls and protections to 

prevent the introduction ofFMD in the U.S., other plans for addressing a potential outbreak of 

FMD have lacked specificity. Among such plans the considerations include how an adequate 

supply of FMD vaccine would be developed, and how a response using vaccines would be 

implemented. Due to the potential of FMD to be used as an agent in an Agroterrorism attack, 

and the devastating effect of such an attack, the federal government needs to increase its 

commitment to protecting this country from the introduction oflivestock viruses. In order to help 

protect the nation's economy, environment, and agriculture sector, 1 respectfully request GAO 

review USDA's efforts to prepare for, respond to, and recover from an FMD outbreak. 

Specifically, I request GAO to examine the following: 

• The strategies USDA intends to use to respond to and recover from a FMD outbreak, 

including development of a bank of vaccine antigen concentrate sufficient to produce 

needed quantities of vaccines, and how USDA plaos to carry out each strategy. 

• Any challenges, including coordination with federal, state and industry partners, which 

could impair a quick and effective response and recovery. 

Any lessons learned from the response and recovery efforts in other countries, such as 

Japan, Korea and the United Kingdom that could be applicable to USDA. 

Thank you for your attention to this matter. I look forward to GAO's work on this issue, 

and receiving an update soon. If you have any questions or you would like to discuss this 

request, please contact Andrew Rezendes of the Committee Staff at 202-224-2035. 

With every best wish. 

cc: The Honorable Debbie Stabenow, Ranking Minority Member 
92 

mw42035 on AGRINON012 with DISTILLER


23592.049

A Review of the U.S. livestock and Poultry Sectors: Marketplace 

Opportunities and Challenges 

Written Testimony of livestock Marketing Association 

Provided to Senate Committee on Agriculture, Nutrition and 

Forestry 

May 26,2016 
93 

mw42035 on AGRINON012 with DISTILLER


23592.050

Chairman Roberts, Ranking Member Stabenow, and Members of the Senate 

Committee on Agriculture, Nutrition, and Forestry: 

These comments are provided on behalf of the Livestock Marketing Association (LMA), 

which is the leading national trade organization for more than 800 livestock marketing 

businesses located throughout the United States. LMA represents more than 75 percent 

of the regularly selling local livestock auction markets in the U.S. livestock auction 

markets serve two important purposes: (1) they sell livestock for producers in a 

competitive bidding environment and (2) they stimulate the economies in local 

communities. 

According to U.S. Department of Agriculture Grain Inspection Packers and Stockyards 

Administration (GIPSA) annual reports, livestock auction markets each year sell more 

than 33,000,000 cattle, 8,000,000 hogs, and 2,800,000 sheep. This amounts to $30 

billion dollars in gross sales of livestock sold in auction markets each year. In talking 

about the opportunities and challenges for the livestock sector, we'll focus on auction 

market businesses but also touch on some important topics for the industry as a whole. 

Key points: 

--The future holds both opportunities and challenges for animal agriculture. 

--The Packers and Stockyards Act needs to be changed. 

-The structure of the livestock marketing industry has changed; but the P&S Act 

has not. Some needed changes can be made on a consensus basis in the short 

term. Other changes will require more in depth analysis. 

-· Market volatility is a serious issue that needs to be studied. 

Opportunities and challenges exist for animal agriculture. 

First, the good news is we see great opportunity for animal agriculture. The United 

States is the premier producer of livestock and livestock products, particularly grain-fed 

beef. We are excited about the opportunities to expand as an industry, especially as the 

middle class populations in many key countries grow. Factors such as lower feed costs 

and much needed moisture in many parts of the country have contributed positively to 

the livestock sector. This positive response is especially evident in the cattle sector by 

the decision of many cattle producers to take part in a rebuilding of numbers in the U.S. 

beef herd. 

From a marketing sector perspective, livestock auction markets see opportunities to 

continue our proud tradition of serving our customers. Markets help producers receive 

the highest price possible for their animals through competitive bidding, sorting, and 

offering livestock in volume. In addition, markets are often where producers receive the 

help and information they need to ensure they are complying with state and national 
94 

mw42035 on AGRINON012 with DISTILLER


23592.051

requirements particularly those relating to animal health, such as health certificates or 

disease testing requirements. 

We also see growth opportunities that come with technology. Many markets have 

expanded their services to include online or video sales. Additionally, our members 

continue to look for innovative ways to help producers realize additional premiums for 

their livestock, such as desirable animal health programs. 

However, we have some challenges to overcome as well. One of the greatest challenges 

for the livestock marketing sector is figuring out how to operate under an outdated and 

cumbersome regulatory structure. Last summer, LMA hosted a nine stop listening tour 

to hear from market owners, managers, and professional livestock buyers. From 

Valdosta, Georgia to Modesto, California, and everywhere in between, the message we 

heard was consistent. First, the laws and regulations governing the livestock marketing 

industry have not kept up with the times. Second, the greatest concern for livestock 

markets is making sure they receive payment for livestock they sell. 

The livestock marketing industry has changed, but the P&S Act has not. 

Our industry has changed greatly over the last 100 years. When the Packers and 

Stockyards (P&S) Act was passed in 1921, livestock were being transported by rail cars 

to a handful of large terminal stockyards in places such as Chicago, St. Louis, Kansas City, 

and Omaha where they were sold by commission firms housed at the stockyards. The 

stockyards often had close ties (or were controlled by) the packers that bought the 

livestock and the railroads on whose lines the livestock had to be shipped. 

Today, approximately 1,000 regularly selling local livestock auctions are spread out 

across the United States, and their connections to the railroad and packing industries 

are completely different from what existed 100 years ago. These auctions have greater 

transparency than the terminal stockyards of years gone by, due to both the nature of 

the auction environment and immediate information sharing. Today, in a community of 

buyers and sellers connected by computers and cell phones used by the markets and 

our customers, the flow of information is almost instantaneous. It is common today for 

livestock markets to broadcast their sales online. Finally, many livestock marketers have 

also added an internet or video sale component to their businesses. 

While the marketing industry has adapted to structural changes in the industry, to 

changes in the banking industry, and to changes in the communications industry, the 

statutory authority of the Packers and Stockyards Act has remained stagnant. It has 

been decades since a wholesale review led to significant statutory or regulatory reform. 

For livestock market owners, this results in GIPSA interpreting and applying laws and 

regulations designed for the terminal stockyards to the business structure that we have 

today. The combination of antiquated statutory and regulatory authority coupled with a 

field staff spread out across the U.S. has lead to differing interpretations between 
95 

mw42035 on AGRINON012 with DISTILLER


23592.052

regions and even individuals within a region. We heard on our listening tour that this 

leaves many market owners and operators feeling like GIPSA compliance is a moving 

target. 

We will readily admit that there has been, and continues to be, significant controversy 

surrounding proposed GIPSA regulations in recent years. We share the concerns of 

many in the livestock industry surrounding recent news that GIPSA is again considering 

regulatory changes similar to those proposed in their 2010 proposed competition rule. 

Any changes along these lines must be thoroughly vetted with industry input to ensure 

that changes intended to increase competition do not unintentionally reduce 

competition instead. This requires significant debate and analysis. 

However, at the same time, common sense, consensus-based changes should be made 

to begin the process of bringing the law into the 21't century. The regulated community 

needs action now in areas completely unrelated to the controversial topics. 

Short-term, targeted changes to the P&S Act are needed. 

Language has been drafted and shared with legislative offices and industry stakeholders 

that would make two targeted changes. 

First, Section 301 should be revised to make it clear that online and video auctions fall 

under the Act. More and more livestock are being sold through online and video sales. 

As the Act is written, it is not entirely clear whether, or to what extent, those online and 

video sales are covered and must comply with the Act. Although LMA members who 

conduct business online already follow the law's requirements when doing so, the lack 

of clear authority of GIPSA to regulate these sales is concerning. Clarifying Section 301 

would ensure that people selling through online and video markets receive the same 

protections as those who sell at fixed-facility livestock markets, including a custodial 

account, prompt payment, and bonding. Section 301 should be narrowly revised so that 

it only applies to those online and video businesses that are charging a commission or 

other fee and handling, or providing a means to handle, funds due to sellers. 

Second, Section 409 should be revised to make it clear that modern electronic payment 

methods are permissible under the Act. Currently, Section 409 refers to only two forms 

of payment to meet the prompt payment requirement of payment within the next 

business day of the sale: checks in the mail and wire transfers. Modern banking 

practices use many different forms of payment, such as Automated Clearing House 

(ACH) and credit and debit cards. Revising Section 409 to make it clear that modern 

electronic forms of payment are permissible will allow for quicker payment, which will 

reduce the risk of defaults. This is especially important because it is taking longer and 

longer to receive checks through the mail. Changing the P&S Act in this way would not 

exclude any current payment options; it would simply allow buyers and sellers flexibility 

by adding modern options. 
96 

mw42035 on AGRINON012 with DISTILLER


23592.053

These changes should be addressed this year, both to make needed updates to the law 

and also to prove that, working together, Congress and industry can address problems 

in a consensus-based manner. 

More long-term, in-depth changes to the P&S Act should be considered. 

A more in-depth review of the P&S Act is needed on two levels. First, Congress needs to 

determine if the Act is fulfilling its purpose. Second, there are specific changes that 

could provide much needed financial protection to sellers of livestock. 

Another issue often raised during LMA's listening sessions was the amount of 

devastating risk sellers of livestock and markets under the P&S Act are exposed to when 

a buyer fails to pay. 

In 2010, Eastern livestock, the largest livestock dealer in the U.S., defaulted on payment 

to hundreds of livestock producers, markets, and other dealers. The Eastern livestock 

default is not a one-time, isolated occurrence in the industry. Since 2010, there have 

been several instances of dealer defaults. As recent as this past Fall, a major dealer 

failed to pay two livestock markets (owing $980,000 to a market in Kansas and $2.9 

million to a market in Nebraska), as well as several producers who sold to the dealer 

directly. 

Producers who sell through a livestock auction market are protected by both the 

market's surety bond and by the market's custodial account (trust account). Producers 

who sell directly to packers are protected by both the packer's surety bond and by the 

Packer Statutory Trust under 7 U.S.C. 196. Producers who sell directly to dealers are 

provided little protection. Under the current law, dealers do not have a custodial 

account or a trust. 

Markets are placed in a highly vulnerable position when it comes to payment. Pursuant 

to 7 U.S.C. 228b, markets are required to pay sellers of livestock by no later than the 

close of the next business day after the sale, even if the markets are not paid by the 

buyer of those livestock. When livestock markets are not paid, they are usually left with 

no feasible way to collect. If the dealer has resold the livestock to a good faith 

purchaser, that second purchaser has clear title to the livestock, even if the dealer has 

not paid for them. In addition, a dealer's bank usually will have a blanket security 

interest on all of the dealer's livestock inventory, which, under current law, will give the 

bank a perfected security interest in the livestock even though the dealer never paid for 

them and the bank never loaned the dealer any money for those specific livestock. A 

producer selling directly to a dealer is in a similar poor position when the dealer fails to 

pay. 
97 

mw42035 on AGRINON012 with DISTILLER


23592.054

When a dealer mails a check, as the law allows, it may be several days before the seller 

(whether livestock market or producer) even gets the check or discovers that a check is 

not coming. In many parts of the country, mail has slowed down significantly, further 

stretching this critical time period. In some cases, a buyer may buy multiple times 

before a payment problem is discovered. 

Although the P&S law attempts to provide financial protection for sellers of livestock by 

requiring dealers to maintain surety bonds, bond claims rarely make up for any 

significant loss. P&S dealer bond claims return, on average, about 15 cents for every 

dollar claimed (1999 -2013 data). This does not include Eastern Livestock claims where 

payout was 4.37 cents on the dollar. 

Additional protection is needed for markets and producers selling to dealers. Financial 

protection already exists for those dealing with packers (Packer Statutory Trust) and 

markets (custodial account) and in other agriculture sectors (statutory trust under the 

Perishable Agricultural Commodities Act). Simply raising bond amounts is not an 

acceptable alternative because it would push legitimate buyers out of the marketplace 

due to the significant assets needed to obtain this type of bond, particularly young and 

beginning market participants. Instead, the Packers and Stockyards Act should be 

amended to establish a dealer statutory trust to provide livestock producers and 

markets financial protection in the event of a dealer default. This would give unpaid 

sellers of livestock first priority to receive livestock and accounts receivable. 

A dealer statutory trust could be modeled after the existing Packer Statutory Trust that 

Congress added in 1976 to address packer defaults. The trust requires packers to hold 

all livestock purchased from cash sellers, and all inventories of, or receivables or 

proceeds from meat, meat food products or livestock products derived from such 

livestock, in a trust fund for the benefit of unpaid sellers. No separate account would be 

needed. Instead this simply would give unpaid sellers priority in livestock and accounts 

receivable for livestock. The need for this protection is more important than ever with 

slowing mail service delivering checks, increased value of livestock at times, and 

volatility within the market. 

Market Volatility is a serious issue that needs attention. 

The final concern we will raise is that of volatility within the futures and, subsequently, 

live cattle markets. Futures contracts offered by the Chicago Mercantile Exchange (CME) 

can be an important risk management tool for livestock producers to hedge against 

changes in the market. In fact, many lenders require farmers and ranchers they work 

with to hedge their livestock. However, in recent months, the amount of volatility in the 

CME has turned it from a risk management tool to a liability in some situations. 

We understand that due to seasonal supply and demand there will be ups and downs in 

the market; but what is difficult to understand is the amount of volatility within the 
98 

mw42035 on AGRINON012 with DISTILLER


23592.055

futures market that does not correspond to the fundamentals of the cattle industry that 

traditionally drive market change. Numerous times in recent months news that should 

logically and historically move the market in one direction was met with a move by the 

futures in the opposite direction. This has raised some serious questions about high 

frequency trading of futures and other trading practices. 

For a market operator, it is devastating to watch our customers experience a significant 

drop in prices received for quality calves simply because the board is down the limit for 

the day or multiple days in a row, with no fundamental reason driving the drop, and 

cash market participants are reacting. It is important to remember that a trip to town to 

market their calves is a producer's main paycheck for the year and, with a perishable 

commodity like cattle, waiting a week to sell is not always a good alternative. 

While there is no specific congressional ask on the topic of market volatility at this time, 

we appreciate the shared concern on this topic. LMA supports Congressional oversight 

as a support to industry discussions on this issue in the hope it is one that may be 

appropriately addressed in the near future. 

Conclusion 

In closing, we appreciate this opportunity to provide written testimony and thank the 

committee for its ongoing interest in helping the livestock industry succeed, whether 

this be through working together to address challenges such as nonpayment and market 

volatility or allowing businesses to thrive without unnecessary government intervention 

by modernizing antiquated requirements, such as those that exist under the Packers and 

Stockyards Act today. 
(99) 

QUESTIONS AND ANSWERS 

MAY 26, 2016 

mw42035 on AGRINON012 with DISTILLER

100 

mw42035 on AGRINON012 with DISTILLER


23592.056

Senate Committee on Agriculture, Nutrition, & Forestry 

A Review of the U.S. livestock and Poultry Sectors: Marketplace Opportunities and Challenges 

Thursday, May 26, 2016 

Questions for the Record 

Mr. Tracy Brunner 

Chairman Pat Roberts 

1. The modern beef and pork sectors in the U.S. demonstrate the ingenuity of our farmers 

and ranchers as it relates to meeting foreign consumer demand. We have programs that 

enable hormone-free beef to go to Europe and ractopamine free pork going to China. Can 

you describe how you think the GIPSA rule could impact these sorts of programs and 

relationships that have evolved to meet consumer demand? 

These programs have been put in place by U.S. producers in order to meet the demand we are 

seeing for specific types of beef. That type might be based on a quality trait, or on a 

production practice as we have seen with non-hormone treated beef into the EU. These 

programs exist because willing buyers and willing sellers put together a deal to produce this 

type of beef. For our efforts as producers to meet the EU demands, we are getting paid a 

premium price. This premium makes it worth our while to put the extra effort into producing 

this niche product. Under the GIPSA rule, however, USDA would be the entity that would 

approve all contracts. I would have to submit my contract to USDA for approval in order for 

them to tell me how I can or can't market my cattle. That takes away my fundamental right as 

a small businessman to create the deal that is best for me. Only I know what kind of market 

helps me stay successful, not USDA. This type of market interference will drive many of these 

programs away and leave us only with a simple commodity market where everybody gets paid 
101 

mw42035 on AGRINON012 with DISTILLER


23592.057

the same. That's not how I produce cattle, and it's not how an industry can respond to 

changing global consumer demands. 

Senator Joni Ernst 

1. You mentioned in your testimony that the beef market is disconnected from fundamental 

supply and demand factors, creating challenges for producers at all levels of the supply 

chain. 

What do you believe should be done to address this? Specifically, what should the role of 

this committee be in ensuring the market is functioning as intended? 

Long-term, markets cannot disconnect from supply and demand. In the short-term, though, markets 

can reflect new technology adaptation such as high frequency trading, which we believe currently is 

contributing to increased volatility. This can result in lack of confidence in the futures market by 

commercial users. I believe that the industry needs to work together to solve our problems 

rather than asking for the Government to fix things for us. That is why NCBA formed a joint 

working group with the CME Group to look at ways to address market volatility to ensure 

that the futures markets truly reflect the market fundamentals. We will continue to update 

you on our progress, and we may need you to help us prod the CFTC at some point in the 

future. Right now, however, I am not seeking any action from the committee. 

Senator Thom Tillis 

1. Mr. Brunner, as we continue this debate on biotech labeling in reaction to the Vermont 

law, I continue to hear from North Carolina livestock producers on their fears of animal 

feed being included. I would be interested in hearing from you on the consequences of a 

national standard that required meat to be labeled as biotech if the feed the animal ate 

included biotech products. 
102 

mw42035 on AGRINON012 with DISTILLER


23592.058

a. In your opinions, would there be a rush to reformulate feed so as not to need to 

label? 

Yes, there would be a rush to try and reformulate feed, but the problem we have is that most 

corn we use in our feedstuffs has some sort of biotech trait. Therefore, it is not so easy to just 

reformulate the feed. We would have to tell the corn producers to stop growing biotech corn, 

which would take at least another season to do. What do we do in the meantime? Also, we 

have to keep in mind that corn has been modifYing itself for thousands of years. Do we have 

to label that, too? 

b. Would there be a non-biotech grain supply large enough for our livestock 

producers to reformulate their feed? 

There is no way we could reformulate given the feed stocks in place and the corn already 

planted this year. It would be a disaster. 

c. If 60-70% of the input costs in your industries is feed, how would the crop price 

fluctuations that would be inevitable affect producers? 

It would put significant strain on our bottom line because of the increased inputs it takes to 

grow non-GMO corn. That higher price means lower prices for cattle producers. 

We just went through a mandatory labeling fight last year with COOL so I know there is 

a great deal of fatigue around these labeling issues, but I think it would be beneficial for 

members to hear how requiring meat to carry a biotech label would affect the industry. 

Mandatory COOL was a failed experiment. We were continually being told that the consumer 

wanted to know where their beef came from. The fact is that the vast majority did not. As 

such, we had a mandatory, government-run program that added costs to our beef production 

system and cost us money. It also threatened the trading relationship with Canada and 

Mexico, two of the largest export markets for U.S. beef. Had those two countries retaliated 

against us, the low prices we are seeing for cattle now would be even worse. Mandatory, 

government-run COOL was simply the government telling us that they know our consumer 
103 

mw42035 on AGRINON012 with DISTILLER


23592.059

better than we do. That was false and we are still feeling the negative effects it had on our 

industry. It will take us years to recover the losses from six failed years of COOL. 

Senator John Thune 

1. As you know the Senate is considering a path forward on biotech labeling. 

Do you believe animal products should be included in mandatory labeling of biotech 

products? Or should meat, dairy, and other animal products all be exempt from biotech 

labeling? 

Animal feed and beef should be exempt from biotech labeling. There is no evidence that 

shows that an animal changes just because it eats biotech feed. Labeling it so would be selling 

a false message to the consumer. In addition, the Federal Meat Inspection Act already covers 

the labeling of our product. Another statute to address labeling is not warranted. 

2. What is the greatest challenge facing the beef industry that you would suggest this 

Committee or Congress attempt to resolve? 

Now? 

Over-regulation by our Federal agencies. WOTUS by EPA is a great example. Keep the 

agencies off of the backs of the producers. That will help our bottom line more than you 

know. 

In the next farm bill? 

Don't add any additional regulation in the next farm bill that restricts our ability to produce 

high quality beeflike we do now. 

Senator Patrick Leahy 

1. In your testimony, and in response to several questions at the hearing, you mentioned 

the proposed regulations that USDA put forward in 2010 under the Packers and 

Stockyards Act to address reported abusive and anti-competitive practices in the 

livestock and poultry sectors (the "GIPSA rule"). I am confused by some of the points 

you made at the hearing regarding the farmer protections proposed by USDA and how 
104 

mw42035 on AGRINON012 with DISTILLER


23592.060

these protections could potentially result in lower prices for farmers. That does not 

seem to track with what I have seen in the USDA's past proposals or with what Secretary 

Vilsack has said that he would like to improve transparency in the industry and ensure 

a level playing field for all producers. 

I would like to ask you a few questions about the actual, common sense regulations that 

were proposed by USDA as part of the GIPSA rule, which I hope will become final in the 

near future, and how they would affect your farmer members. 

a. One of the regulations proposed as part of the GIPSA rule would prohibit 

meatpackers and poultry companies from forcing farmers to give up their legal right 

to a jury trial to address future disputes with the company. {proposed Section 

201.210(a)(4)(i)] 

This rule would align with the intent of provisions that I strongly supported in the 

2008 Farm Bill to amend the Packers and Stockyards Act to prohibit the use of 

mandatory arbitration clauses in livestock and poultry contracts. Instead, the Farm 

Bill provision requires packers and poultry companies to allow farmers an up-front 

choice about whether or not they would like to settle any future dispute using 

arbitration. This ensures that farmers are not forced to give up their legal rights and 

remedies as part of a take-it-or-leave-it contract arrangement that denies them their 

constitutional right to protect themselves in court. 

Soon after that provision became law, farmers came forward with their worries that 

some poultry companies had started to include new clauses in their contracts that 

would prohibit the grower from seeking a jury trial to settle any future dispute with 

the company. The grower would only be allowed to a ruling from the judge, not a 

jury. 

Your organization has been promoting a legislative rider in the annual 

appropriations process that would prohibit USDA from finalizing or enforcing this 

commonsense protection for farmers. Why should farmers be denied the same 

legal rights and full access to our judicial system that is enjoyed by other citizens 

and businesses? 
105 

mw42035 on AGRINON012 with DISTILLER


23592.061

b. One of the regulations proposed by USDA as part of the GIPSA rule would prohibit, 

under the Packers and Stockyards Act, meatpackers and poultry companies from 

retaliating against farmers for exercising their rights to free speech and/or 

association. [proposed Section 201.210(a)(2)] 

This was written to provide protections for farmers who speak out publicly, including 

communication with USDA officials or Members of Congress, about what is taking 

place on their farms and with their contracts. As we have heard directly from 

farmers, the threat of retaliation is very real for contract farmers who speak out, or 

who try to form associations with other growers to bargain for better contracts. This 

retaliation fear is the main reason that it is difficult for poultry growers, for instance, 

to talk to their Members of Congress about the abuses addressed in the proposed 

GIPSA rule. We also saw this play out when USDA and the Department of Justice 

held joint public workshops to explore competition issues affecting the agricultural 

sector. Farmers in some parts of the country were fearful of speaking at these 

workshops out of fear of retaliation from the companies for which they raise hogs or 

broilers. 

Your organization has been promoting a legislative rider in the annual 

appropriations process that would prohibit USDA from finalizing or enforcing this 

seemingly commonsense protection for farmers. Can you explain to me why that 

is? Why should a farmer not be allowed to speak to their elected officials out of 

fear retaliation? 

c. Another regulation proposed by USDA as part of the GIPSA rule was a regulation to 

require meatpackers and poultry companies to give farmers statistical information 

and data about how their pay is calculated, if the farmer requests such information. 

[proposed Section 201.210(a)(3}) 

Often times farmers have complained that the payment mechanism under their 

production contracts can be very vague and complicated, making it difficult for 

farmers to make good business decisions to increase their profits in future years. 
106 

mw42035 on AGRINON012 with DISTILLER


23592.062

This regulation sought to give farmers full transparency into the factors that 

determine the payment for their services and the animals they raised. 

I understand that your organization has been promoting a legislative rider in the 

annual appropriations process that would prohibit USDA from finalizing or enforcing 

this commonsense protection for farmers. Do you agree with me that price and 

payment transparency is a basic free market principle that is important for any 

business, especially our farmers? Why would your organization seek to deny this 

right to U.S. farmers? 

Unfortunately, as the stakeholders who were subject to the proposed rule then, and expect to 

be su~;ect to the new rule, we don't have the luxury of breaking out the individual components 

the way you have asked your questions. Therefore, we have to look at the rule as a whole. As 

a whole, the GIPSA rule was a disaster for livestock producers. It would have taken away our 

ability to market cattle the way which is best for us as producers. lfyou will commit to 

stepping up and helping us stop the rule from going forward, then maybe we can have a more 

productive discussion about individual components of the Packers and Stockyards Act which 

can be revised to be more effective in protecting producers. 

2. As this Committee considers the next Farm Bill what suggestions do you have for how 

we can try to address the slaughterhouse "bottleneck" that is often one of the industry's 

most critical problems in some of our states where we have a scarcity and limited 

capacity of the existing facilities that is a barrier to efficient, lucrative production for the 

livestock sector, especially for small farms? Could more support for mobile 

slaughter/processing units help address some of these challenges for small diversified 

operations and offer farmers a greater profit? 

Mobile slaughter plants already exist, so it would be more important to evaluate their success 

or failure before looking to add to their ranks. Some have questioned the ability of USDA to 

provide adequate food safety inspection in mobile processing facilities as well. Unfortunately, 

I will need more background on the perceived "bottleneck" to give you a more complete 

answer. We do know that seasonal differences in regional harvest-ready cattle supplies and 
107 

mw42035 on AGRINON012 with DISTILLER


23592.063

corresponding near proximity harvest capacity will likely always exist. Some producers invest 

in forward contracts and/or supply agreements to assure access to timely harvest of their 

animals. 

Senator Robert Casey 

1. You mentioned that your industry has increased efficiency in production. Can you 

provide more information on ways that the cattle industry has improved efficiency and 

where additional improvement might be found? 

Over the years, we have improved the genetic make-up of our cattle in order to breed the traits 

which make cattle more tolerant to environmental extremes, to use feed more efficiently, and 

to produce higher quality beef. We have found ways to handle our cattle better in order to 

make them more efficient, too. Programs like Beef Quality Assurance have helped us with 

that. Technological advancement has lowered overall use ofwater,feed,fuel, and nutrients. 

As I have said, today we produce the same quantity of beef as in 1972 with 113/ess cattle and 

land. From a governmental level, continued USDA investment in the baseline and secondary 

production research will help further our industry's progress. We must remember, consumers 

are the ultimate beneficiaries to industry efficiency gains. 

2. How has your industry specifically been affected by the transition to automated trading 

systems? 

We do believe that automated trading has caused much of the market volatility we are seeing 

today. We are working together with the CME Group in order to find ways tofu: the issue. 
108 

mw42035 on AGRINON012 with DISTILLER


23592.064

Senate Committee on Agriculture, Nutrition, & Forestry 

A Review of the U.S. Livestock and Poultry Sectors: Marketplace Opportunities and Challenges 

Thursday, May 26, 2016 

Questions for the Record 

Mr. Joe Goggins 

Chairman Pat Roberts 

1. Mr. Goggins, your written testimony mentions your online or video based auction 

business. I'm interested in hearing about this modern business development and other 

changes that have occurred in recent years in the livestock marketing sector. Can you 

describe some of those changes? 

Modern technology has played a major role in the advancements surrounding the 

marketing of cattle. The video sale has helped reach a wider audience of bidders 

and buyers, directly connecting cattle producers with buyers. We also do 

livestream weekly cattle auctions, allowing buyers at our auctions to be 3 feet or 

3,000 miles away. Again, this technology has made a positive impact in expanding 

the bidder and buyer base for cattle. 

Technology can also be a bit of a two-edged sword. As referenced in my 

testimony, the rise of the algorithmic trader has made it very challenging to ensure 

a transparent and competitive marketplace. The US cattle industry has evolved 

and embraced the positive role that new technology brings, however, it's critical 

that our legislative and regulatory framework modernizes along with technology. 

Modernizing the Price Reporting law and the Packers and Stockyards Act is critical. 

When it comes to new technology that is being utilized in sale barns the proposed 

P & S changes that are currently advocated by the livestock Marketing Association 

need to be implemented sooner, rather than later. 

Senator Jon I Ernst 

1. You mentioned in your testimony that the beef market is disconnected from fundamental 

supply and demand factors, creating challenges for producers at all levels of the supply 

chain. 

What do you believe should be done to address this? Specifically, what should the role of 

this committee be in ensuring the market is functioning as intended? 

It would be beneficial to have the Committee request that both the CME and CFTC 

come before the Committee and outline the problems relayed via my testimony. 

Our cattle markets are tied to new age speculator and profiteering schemes that 

need modernized oversight and regulation. As referenced in my testimony, I do 

believe the limits should be decreased. Currently, the highs and lows are not 

restricted. That needs to change. As a cattle producer, it's hard to say what the 

exact remedies should be, which is why it would be very useful for the committee 

to hear directly from the CFTC and CME on this topic. 
109 

mw42035 on AGRINON012 with DISTILLER


23592.065

Senator John Thune 

1. As you know the Senate is considering a path forward on biotech labeling. 

Do you believe animal products should be included in mandatory labeling of biotech 

products? Or should meat, dairy, and other animal products all be exempt from biotech 

labeling? 

If an animal consumes bio-tech produced feed it should be exempt from bio-tech 

labeling. It is important to ensure consistency and a uniform labeling system. The 

consumer is king and we in the cattle industry take a great deal of pride in 

producing a product that meets the consumer's wishes and demand. A common 

sense labeling program is always a compliment to high quality production 

standards. 

2. As I visit with cattle producers in South Dakota one concern I hear quite often is regarding 

the consolidation across the beef industry. What role does consolidation play in the 

competition in the markets, and what trends in producer marketing strategies are you 

seeing in response to the consolidation? 

My Dad always said "never fear competition". Consolidation in the beef industry is 

a concern. We need more competition in the marketplace, which is why we work 

hard to promote high quality cattle. Our sale barns and video sales strive to 

present impressive show lists that expand and encourage the bidder base. We 

need to continue looking for ways to increase competition throughout all facets of 

the industry. Everyone benefits in a marketplace operating with informed and 

active participants. 

3. Management of federal lands is a key issue that has attracted quite a bit of attention, and in 

your testimony you allude to the need for a multi-use priority in their management. From 

your perspective what changes in federal grazing policy could be made to ensure that 

grazing is better utilized on federal lands? 

It could be argued that the policy is not the problem. It is the implementation of 

the policy. Congress has mandated through the Taylor Grazing Act and USFS policy 

that grazing and timber are priority uses of public lands. However, in practice, 

agencies put other uses first. Some of this is due to fear of litigation. Some is due 

to the friction of massive amounts of (sometimes conflicting) regulation. 

On wild horses, the Act is clear, the agencies are to control numbers. The agencies 

have failed to do so and blame Congress. Congress has withheld funding to deal 

with excess horses, creating a catch 22 situation where no one and everyone are to 

blame. 

Local management does not just mean local federal employees, it extends to local 

governments, stakeholders, permit holders, and others in the community. 

Agencies have complicated the NEPA compliance process to the point of paralysis 

through analysis. Failure to act because there is too much regulation is a form of 

management. However, it is a form of management that cannot use science or 
110 

mw42035 on AGRINON012 with DISTILLER


23592.066

judgement to do the right thing; rather, it halts any type of management from 

being used. 

4. Futures and options trading are a critical part of mitigating risk for commodities. One of 

disadvantage that livestock has is disparities in basis for producers. Do you believe that the 

development of basis contract and option products could shield the industry from price 

volatility? 

The development of basis contracts and option products is not a viable solution, as 

the problem is far greater than what these factors can address. The CME Board, in 

its current form, is broke. The supposed role of the CME is to mitigate risk, not 

agitate it, and yet using it invites too much financial risk and liability. The price 

volatility, without market-based influencers, creates a major strain on the entire 

price-setting mechanisms for the U.S. cattle industry. Congress needs to engage 

with the CME, CFTC, and the U.S. cattle industry to outline solutions. 

5. Mr. Goggins, there are insurance products available through Risk Management Agency for 

grazing and forage lands. They use either a vegetative index or rainfall index. Grazing 

livestock producers also may qualify for the 2014 Farm Bill's livestock Forage Program when 

severe droughts. How are the current RMA and Farm Bill grazing loss programs working? 

The PRF is an extremely useful and critical risk management tool for cattle 

producers. 1 would like to offer the following PRF program improvement ideas: 

1. Multiple Benefit Exclusion 

a. Background -The Farm Service Agency excluded PRF indemnity payments 

from the multiple benefit exclusion rule on 10.26.15 allowing producers to 

receive NAP and PRF indemnities on the same acres for the same intended 

use of Grazing for the 2015 and 2016 Crop Years. However, for 2017 

producers enrolling in both NAP and PRF on the same acres for the same 

intended use of grazing must choose whether to receive the benefit under 

the pilot product or NAP, but not be eligible for both. 

b. Problem- The Rainfall Index only covers one peril (lack of rainfall) while 

NAP covers multiple perils, therefore requiring producers to choose one 

benefit over the other will significantly reduce their risk management 

options. Additionally, under this rule most Western producers with 

extensive acres will enroll in NAP and Not PRF because NAP covers 100% of 

their acres at a reduced cost. 

c. Solution - Allow PRF coverage to be excluded from the multiple benefit 

exclusion rule 

2. Policy feature ·drought monitor endorsement (endorsement to base PRF 

coverage) 

a. Background- A 1 to 2-day precipitation event during a producer's critical 

grazing intervals has significantly reduced indemnity payments during a severe 

drought. 
111 

mw42035 on AGRINON012 with DISTILLER


23592.067

b. Solution - create the following endorsement for the PRF program - If the 

Drought Monitor Index (http://droughtmonitor.unl.edu/l reaches D2, D3, or 

D4 status where PRF coverage is purchased (In the Grids and during a covered 

interval) an additional %indemnity is paid to the policy holder at the following 

suggested levels 

i. D4 Status = 100% coverage less actual PRF loss ratio 

1. Example - If the actual PRF indemnity is a 70"Ai loss ratio the 

Drought Monitor endorsement would pay an additional 30% 

(100-70) 

ii. D3 Status = 90% coverage less actual PRF loss ratio 

iii. D2 Status = 80% coverage less actual PRF loss ratio 

c. A less expensive (and simplified) Drought Monitor endorsement would pay an 

additional indemnity if the Grid was in D2, D3 or D4 status all year long. 

3. PRF Policy feature- allow producers the option to choose between VI and Rl 

coverage in the 2015 VI states and/or allow for Vegetative Index coverage on nonirrigated hay in the intermountain West. 

a. Background- Producers in the Intermountain West now have a "mediocre" 

risk management tool with the Rainfall Index compared to the Vegetative 

Index they were previously able to access. Quite simply, the historic 

average rainfall in these areas is already so low the actual precipitation 

needs to be virtually non-existent in order for an indemnity to trigger. The 

Vegetative Index is a better risk management tool for the Intermountain 

West. However, agents with ONLY an understanding of the Rainfall Index 

ignorantly applied their Rainfall Index understanding to the Intermountain 

West producer with a Vegetative Index offer. Thus unreasonable 

expectations were established and these producers were harmed. 

b. Solution - allow producers the option to choose between VI and Rl 

coverage in the 2015 VI states. 

Senator Patrick Leahy 

1. In 2010, USDA proposed a set of regulations under the Packers and Stockyards Act to 

address abusive and anti-competitive practices in the livestock and poultry sectors (the 

"GIPSA rule"). 

When some of the livestock industry groups talk about this proposed rule, it comes 

across as a very different regulation than what Secretary Vilsack has said he would like 

to move forward to improve transparency in the industry and ensure a level playing field 

for all producers. 

Therefore, I'd like to ask you a few questions about the actual, common sense 
112 

mw42035 on AGRINON012 with DISTILLER


23592.068

regulations that were proposed by USDA as part of the GIPSA rule, which I hope will 

become final in the near future. Specifically: 

a. One of the regulations proposed by USDA as part of the GIPSA rule was a prohibition on 

meatpackers and poultry companies from forcing farmers to give up their legal right to a 

jury trial to address future disputes with the company. [proposed Section 

201.210(a)(4)(i)] 

This rule would align with the intent of provisions that I strongly supported in the 2008 

Farm Bill to amend the Packers and Stockyards Act to prohibit the use of mandatory 

arbitration clauses in livestock and poultry contracts. Instead, the Farm Bill provision 

requires packers and poultry companies to allow farmers an up-front choice about 

whether or not they would like to settle any future dispute using arbitration. This 

ensures that farmers are not forced to give up their legal rights and remedies as part of 

a take-it-or-leave-it contract arrangement that denies them their constitutional right to 

protect themselves in court. 

Soon after that provision became law, some poultry companies started to include new 

clauses in their contracts with poultry growers what would prohibit the grower from 

seeking a jury trial to settle any future dispute with the company. The grower would 

only be allowed to a ruling from the judge, not a jury. 

Does your organization have a position on the regulation proposed by USDA in 2010 to 

protect farmers' access to a jury trial, and if so, what is that position? Do you agree with 

me that farmers should not be denied the same legal rights and full access to our judicial 

system that is enjoyed by other citizens and businesses? 

The US Cattlemen's Association has historically supported several of the proposed 

GIPSA rule changes. As the witness testifying_ I do not have a direct position on the 

proposed GIPSA rule. 

b. One of the regulations proposed by USDA as part of the GIPSA rule was a regulation to 

make it a prohibited practice under the Packers and Stockyards Act for meatpackers and 

poultry companies to retaliate against farmers for exercising their rights to free speech 

and/or association. [proposed Section 201.210(a)(2)] 

This was written to provide some protection for farmers who speak out publicly, 

including communication with USDA officials or Members of Congress, about what is 

taking place on their farms, with their contracts, and how they are being treated under 

their contract. The threat of retaliation is very real for contract farmers who speak out, 

or who try to form associations with other growers to bargain for better contracts. This 

retaliation fear is the main reason that it is difficult for poultry growers, for instance, to 

talk to their Members of Congress about the abuses addressed in the proposed GIPSA 

rule. This issue came up when USDA and the Department of Justice held joint public 

workshops in 2010 to explore competition issues affecting the agricultural sector. 

Farmers in some parts of the country were fearful of speaking at these workshops out of 

fear of retaliation from the companies for which they raise hogs or broilers. 

Some livestock industry organizations have been promoting a legislative rider in the 
113 

mw42035 on AGRINON012 with DISTILLER


23592.069

annual appropriations process that would prohibit USDA from finalizing or enforcing this 

commonsense protection for farmers. Does your organization have a position on the 

so-called "GIPSA rider", and if so, what is that position? Does your organization have a 

position on the retaliation protection regulation proposed by USDA in 2010, and if so, 

what is that position? Does your organization believe that farmers, like all other U.S. 

citizens should be able to speak to their elected representatives without fear of 

retaliation? 

It's never good policy to place a long standing "rider" that prevents the agency 

tasked with oversight of the Packers and Stockyards Act from doing its job. 

Democracy and transparency in the marketplace functions best when individuals 

can freely disclose information without fear of retaliation from companies or 

individuals. 

c. Another regulation proposed by USDA as part of the GIPSA rule was a regulation to 

require meatpackers and poultry companies to give farmers statistical information and 

data about how their pay is calculated, if the farmer requests such information. 

[proposed Section 201.210(o)(3)] 

The payment mechanism under many production contracts can often be very vague and 

complicated, making it difficult for farmers to make good business decisions. This 

regulation sought to give farmers full transparency into the factors that determine the 

payment for their services. In my view, price and payment transparency a basic, free 

market principle that is important for any business. 

Does your organization have a position on this payment transparency protection 

proposed by USDA in 2010, and if so, what is that position? 

I am not aware of a payment mechanism like this that plays a role in marketing of 

cattle. To my knowledge this provision is more aligned with the poultry contract 

setting. 

I would like to summarize my thoughts on the role of both the Packers and 

Stockyards Act and the livestock Price Reporting rule. We must come to 

consensus on a more competitive, and fair, means by which weekly cash price on 

live fed cattle are determined. Transparency and competition must be achieved at 

the fed cattle level, and it must be addressed. 

Every five years, the Mandatory Price Reporting law is reauthorized, presenting 

new opportunities to modernize the cattle industry. As producers, our members 

develop a product consisting of slow-changing fundamentals. However, formula 

cattle contracts and automated trading in the futures marketplace has introduced 

a new paradigm that USCA believes should be closely monitored to ensure market 

transparency, stability, and accurate price discovery. The Packers and Stockyards 

Act (P&S Act) must continue to modernize and change as the industry evolves. It 

will be critical to advance a long-overdue modernizations and revisions of both 

P&S Act via the 2018 Farm bill and the 2020 Price Reporting reauthorizing bill. 

2. As this Committee considers the next Farm Bill what suggestions do you have for how we 

can try to address the slaughterhouse "bottleneck" that is often one of the industry's most 
114 

mw42035 on AGRINON012 with DISTILLER


23592.070

critical problems in some of our states where we have a scarcity and limited capacity of the 

existing facilities that is a barrier to efficient, lucrative production for the livestock sector, 

especially for small farms? Could more support for mobile slaughter/processing units help 

address some of these challenges for small diversified operations and offer farmers a 

greater profit? 

Additional options for processing cattle is always a good thing. Support for mobile 

slaughter/progressing units makes sense and should be advanced in a practical 

manner. 

Senator Robert Casey 

1. Are there agreements in process right now that could potentially expose the United States 

to imports of Food and Mouth Disease? What should we be aware of? 

The Administration has proposed, and allowed for, the opening of our markets to 

beef from regions in Brazil and Argentina, despite the ongoing regionalization and 

risk of FMD affected areas in the countries, and surrounding regions. The 

continued "bad acts" ofthese countries in regards to international trade protocols 

and following set standards is cause for immediate concern. The level of trust that 

these countries will adhere by the strict animal health standards and precautions 

to keep FMD out of the US cattle herd is low. The opening of markets with these 

countries should be opposed due to the irreparable harm that could be done by an 

FMD outbreak. 

2. You mentioned that online and video auctions are not currently regulated by the Packer and 

Stockyards Act. How does this uncertainty affect your industry? 

The Packers and Stockyards Act (P&S Act) must continue to modernize and change 

as the industry evolves. I operate three livestock auction markets that are all 

regulated under the P&S Act; as the business has changed over the years, so too 

must the laws governing it. Specifically, the current law dictates prompt payment 

as a check in the mail by the close of the next business day or a wire transfer of 

funds. Other forms of electronic payment such as ACH payments must also 

become an option. 

As online and video auctions continue to be a prominent form of marketing cattle, 

clarification on whether these formats fall under the P&S Act, and how funds must 

be handled, is necessary. A law that exists without a definition and authority to 

carry it out is without standing, no matter the issue. 

3. You mentioned the success of the Beginning Farmer and Rancher program. In addition to 

continued inclusion in the next Farm Bill, how can we continue to promote and support this 

program, both on the ground and in Congress? 

Greater awareness and promotion of the program is needed. Many young 

producers aren't aware of the benefits and opportunities available. Efforts to 

promote the program via extension officers, local NRCS offices should continue, 

however, additional efforts to publicize the programs offered should be taken at 
115 

mw42035 on AGRINON012 with DISTILLER


23592.071

the university level to reach those young producers who will enter the workforce. 

Additionally, cost of land and production continues to rise. Many of the programs 

offered won't begin to cover the costs needed by a beginning/young producer, 

greater access to funds, tax incentives, and new approaches should be considered. 
116 

mw42035 on AGRINON012 with DISTILLER


23592.072

Senate Committee on Agriculture, Nutrition, & Forestry 

A Review ofthe U.S. Livestock and Poultry Sectors: 

Marketplace Opportunities and ChaJJenges 

Thursday, May 26, 2016 

Questions for the Record 

Dr. Howard Hill 

Chairman Pat Roberts 

1. The modem beef and pork sectors in the U.S. demonstrate the ingenuity of our 

farmers and ranchers as it relates to meeting foreign consumer demand. We have 

programs that enable hormone-free beef to go to Europe and ractopamine free pork going 

to China. Can you describe how you think the GIPSA rule could impact these sorts of 

programs and relationships that have evolved to meet consumer demand? 

In today's marketplace, producers are tasked with meeting a growing array of 

consumer tastes and preferences. To help get these products to market, packers and 

processors often offer incentives (higher prices) to producers willing to meet 

consumer demands. The GIPSA rule could negatively impact these sorts of incentive 

programs and customer relationships that have evolved to meet consumer demands 

because many packers likely would forgo the hassle of "justifying" and documenting 

prices- as would be required under the GIPSA rule- and simply pay one price to 

all producers. Not only would producers be left worse off because of lower prices, 

consumers would be denied product choices to match their tastes, preferences and 

values. 

Senator Thorn Tillis 

1. Dr. Hill, being from North Carolina, a state with significant hog and poultry 

operations, I wanted to make sure you had an opportunity to respond to the 

announcement earlier this year by USDA that the department will be moving forward 

with the GIPSA rule. I was not in Congress in 2010, but I was in the State House and 
117 

mw42035 on AGRINON012 with DISTILLER


23592.073

remember the anxiety and concern our livestock producers and packers were 

experiencing before efforts were successful to roll this rule back. 

Unfortunately, it sounds like this bad policy is back again and I am interested if: 

a. USDA reached out to you and your organization to learn about the latest livestock 

marketing practices or how the rule from 2010 would need to be adjusted to better suit 

the 2016 marketplace? 

No, NPPC did not receive any outreach from USDA on a new or revised GIPSA 

rule. 

b. If so, what did you tell the department? 

N/A 

c. Has USDA indicated to you or your organization what will be included in this 

rule? 

NPPC has not been brought in by USDA to discuss the rule or bow a workable 

solution may be brought forth. 

2. Dr. Hill, as we continue this debate on biotech labeling in reaction to the Vermont 

law, I continue to hear from North Carolina livestock producers on their fears of animal 

feed being included. I would be interested in hearing from you on the consequences of a 

national standard that required meat to be labeled as biotech if the feed the animal ate 

included biotech products. 

a. In your opinion, would there be a rush to reformulate feed so as not to need to 

label? 
118 

mw42035 on AGRINON012 with DISTILLER


23592.074

NPPC firmly believes that no livestock product should be labelled as "GMO" or be 

required to use any other biotech label simply because livestock are fed GMO feeds. 

Such a label would not be warranted from a scientific, safety or wholesomeness 

basis. It would not be feasible for U.S. pork producers to reformulate feeds to avoid 

such a label- the entire U.S. feed crop-producing sector has made too much of an 

investment in biotech crops, and the rewards of those crops have been crucial to 

providing the American public with a safe, high-quality and affordable food supply. 

b. Would there be a non-biotech grain supply large enough for our livestock 

producers to reformulate their feed? 

Following on the above comments, there is unquestionably not a large enough 

supply of non-biotech grain or other feed sources to supply even a fraction of the 

U.S. pork producers. In fact, the limited availability of non-biotech feed is currently 

an obstacle to any further significant growth in "organic" livestock production. This 

would not be an option for the vast majority of U.S. pork, and indeed all livestock, 

producers. 

c. If 60-70% of the input costs in your industries is feed, how would the crop price 

fluctuations that would be inevitable affect producers? 

The resulting market disruption from any move to produce significantly more nonbiotech feed crops would be dramatic. The lower yields, variable quality and higher 

cost of non-biotech feeds- to say nothing of the availability concerns already noted 

-would significantly increase feed costs for producers and present critical 

challenges to the profitability of U.S. pork production. (Some of the higher cost of 

production would be passed on to consumers.) 

We just went through a mandatory labeling fight last year with COOL so I know there is 

a great deal offatigue around these labeling issues, but I think it would be beneficial for 

members to hear how requiring meat to carry a biotech label would affect the industry. 
119 

mw42035 on AGRINON012 with DISTILLER


23592.075

Senator John Thune 

I. As you know the Senate is considering a path forward on biotech labeling. 

Do you believe animal products should be included in mandatory labeling of biotech 

products? Or should meat, dairy, and other animal products all be exempt from biotech 

labeling? 

NPPC strongly believes that any biotech labelling mandate must be firmly grounded 

in science and based solely on the inherent characteristics of the product in question. 

Therefore, any labelling program that requires livestock products to bear a biotech 

label simply because livestock were fed biotech-derived feed or provided any other 

biotech-derived input is untenable. NPPC also believes that any livestock produced 

through biotech methods that also could be produced (at a slower pace) through 

conventional breeding techniques (in other words, biotechnology used to speed the 

dissemination of desirable genetic characteristics native to the pig genome) should 

be exempt from any labelling requirements. There are currently no pork products 

being marketed in the United States that would require any sort of biotech labelling 

under these parameters. 

2. In your testimony you say that the GIPSA rule will hamper the pork industry's 

ability to evolve and develop innovative business practices that ensure consumer demand 

and food safety requirements can be met. 

Could you explain this further? Especially how the GIPSA Rule would hamper the pork 

industry's ability to evolve. 

Pork production is about more than simply producing pounds of meat; it is about 

producing a healthy, wholesome and nutritious food product to feed consumers 

worldwide. In today's marketplace, producers are tasked with meeting a growing 

array of consumer tastes and preferences. To help get these products to market, 

packers and processors often offer incentives (higher prices) to producers willing to 
120 

mw42035 on AGRINON012 with DISTILLER


23592.076

meet new consumer demands. These incentives have given rise to programs that 

focus on specific husbandry practices and feed ration developments. The GIPSA 

rule could negatively impact these sorts of incentive programs and customer 

relationships that have evolved to meet consumer demands because many packers 

likely would forgo the hassle of"justitying" and documenting prices and simply pay 

one price to all producers. Not only would producers be left worse off because of 

lower prices, consumers would be denied product choices to match their tastes, 

preferences and values. 

Senator Patrick Leahy 

l. In your testimony, and in response to several questions at the hearing, you 

mentioned the proposed regulations that USDA put forward in 2010 under the Packers 

and Stockyards Act to address reported abusive and anti-competitive practices in the 

livestock and poultry sectors (the ·'GIPSA rule''). I am confused by some of the points 

you made at the hearing regarding the farmer protections proposed by USDA and how 

these protections could potentially result in lower prices for fam1ers. That does not seem 

to track with what J have seen in the USDA's past proposals or with what Secretary 

Vii sack has said --that he would like to improve transparency in the industry and ensure 

a level playing field for all producers. 

I would like to ask you a few questions about the actual, common sense regulations that 

were proposed by USDA as part of the GIPSA rule, which I hope will become final in the 

near future, and how they would affect your fanner members. 

a. One of the regulations proposed as part of the GJPSA rule would prohibit 

meatpackers and poultry companies from forcing fanners to give up their legal right to a 

jury trial to address future disputes with the company. [proposed Section 

201.21 0(a)(4)(i)] 

This rule would align with the intent of provisions that I strongly supported in the 
121 

mw42035 on AGRINON012 with DISTILLER


23592.077

2008 Farm Bill to amend the Packers and Stockyards Act to prohibit the use of 

mandatory arbitration clauses in livestock and poultry contracts. Instead, the Farm Bill 

provision requires packers and poultry companies to allow fanners an up-front choice 

about whether or not they would like to settle any future dispute using arbitration. This 

ensures that farmers are not forced to give up their legal rights and remedies as part of a 

take-it-or-leave-it contract arrangement that denies them their constitutional right to 

protect themselves in court. 

Soon after that provision became law, farmers came forward with their worries 

that some poultry companies had started to include new clauses in their contracts that 

would prohibit the grower from seeking a jury trial to settle any future dispute with the 

company. 111e grower would only be allowed to a ruling from the judge, not a jury. 

Your organization has been promoting a legislative rider in the annual 

appropriations process that would prohibit USDA from finalizing or enforcing this 

commonsense protection for fanners. Why should farmers be denied the same legal 

rights and full access to our judicial system that is enjoyed by other citizens and 

businesses? 

First, it should be noted that grower and producer protections were included in a 

201l GIPSA rule that took effect Feb. 7, 2012, and that generally was supported by 

the livestock industry. 

In the 2010 proposed rule, Section 201.210(a)(4)(i) would have created a new 

contract grower bill of rights, which typically is applicable only to production 

contracts. It was very unclear if this section also was intended to apply to marketing 

agreements. Violations of these provisions would have constituted an unfair practice 

under the PSA and, therefore, be within the jurisdiction of the federal courts. It was 

unclear if GIPSA considered the costs to producers and packers of federal litigation 

in the e-valuation of this proposal. Did GIPSA consider the length of time it would 

take to resolve a simple contract dispute at the federal court level? Likely not. The 
122 

mw42035 on AGRINON012 with DISTILLER


23592.078

vagueness and unintended consequences of the rule created consternation across not 

only the pork industry, but the entire livestock and poultry sector. 

Regardless, the 2011 GIPSA rule did contain reforms to arbitration clauses in 

contracts, including the ability of growers to opt out of arbitration. 

b. One of the regulations proposed by USDA as part of the GIPSA rule would 

prohibit, under the Packers and Stockyards Act, meatpackers and poultry companies from 

retaliating against fanners for exercising their rights to free speech and/or association. 

fproposed Section 201.210(a)(2)] 

This was written to provide protections for fanners who speak out publicly, 

including communication with USDA officials or Members of Congress, about what is 

taking place on their farms and with their contracts. As we have heard directly from 

fanners, the threat of retaliation is very real for contract fanners who speak out, or who 

try to form associations with other growers to bargain for better contracts. This 

retaliation fear is the main reason that it is difficult for poultry growers, for instance, to 

talk to their Members of Congress about the abuses addressed in the proposed GIPSA 

rule. We also saw this play out when USDA and the Department of Justice held joint 

public workshops to explore competition issues affecting the agricultural sector. Fanners 

in some parts of the country were fearful of speaking at these workshops out of fear of 

retaliation from the companies for which they raise hogs or broilers. 

Your organization has been promoting a legislative rider in the annual 

appropriations process that would prohibit USDA from finalizing or enforcing this 

seemingly commonsense protection for fanners. Can you explain to me why that is? Why 

should a fanner not be allowed to speak to their elected officials out of fear retaliation? 

I am unaware of a situation in the pork industry where this sort of retaliation from 

companies has occurred or exists. In the 2010 proposed rule, it was unclear if 

Section 201.210(a)(2) applied to both production and marketing contracts. In 
123 

mw42035 on AGRINON012 with DISTILLER


23592.079

addition, it was unclear what actions would have constituted a disadvantage to 

producers. The rule did not make clear what would be used to determine whether 

an action was coercive or intimidating. Certainly this determination could not be 

based solely on the perspective of the plaintiff. But because of the vagueness of the 

rule, any sort of balancing of interests was left up in the air. 

c. Another regulation proposed by USDA as part of the GIPSA rule was a regulation 

to require meatpackers and poultry companies to give farmers statistical information and 

data about how their pay is calculated, ifthe farmer requests such information. fproposed 

Section 201.210(a)(3)j 

Often times farmers have complained that the payment mechanism under their 

production contracts can be very vague and complicated, making it difficult for fam1ers 

to make good business decisions to increase their profits in future years. This regulation 

sought to give fanners full transparency into the factors that detennine the payment for 

their services and the animals they raised. 

I understand that your organization has been promoting a legislative rider in the 

annual appropriations process that would prohibit USDA from finalizing or enforcing this 

commonsense protection for farmers. Do you agree with me that price and payment 

transparency is a basic free market principle that is important for any business, especially 

our farmers? Why would your organization seek to deny this right to U.S. fam1ers? 

NPPC has long fought for transparent market information to be available for the 

purpose of making marketing decisions. This is evidenced by our longstanding work 

in conjunction with Congress and USDA AMS in reauthorizing and, from time-totime, tweaking Livestock Mandatory Reporting to provide the most accurate, timely 

and transparent market information available. We are not aware of complaints 

from pork industry participants with regard to price discovery in contracts. 

Certainly any rules involving proprietary pricing information must be kept 

confidential and confined to the parties involved. 
124 

mw42035 on AGRINON012 with DISTILLER


23592.080

A final comment on the proposed 2010 GIPSA rule provisions that have been 

blocked through riders to the annual USDA appropriations process: Those 

regulations proposed by GIPSA went well beyond the scope of the 2008 Farm Bill 

and included language that was considered and rejected by Congress. The 

provisions would have been so onerous and caused so much legal uncertainty that 

many packers told us they likely would have responded by raising more of their own 

bogs rather than relying on producers, as they do now. That would have decreased 

competition in the pork industry and increased - not decreased -vertical 

integration in pork production, the opposite of the rule's purported intent. 

2. As this Committee considers the next Farm Bill what suggestions do you have for 

how we can try to address the slaughterhouse "bottleneck" that is often one of the 

industry's most critical problems in some of our states where we have a scarcity and 

limited capacity of the existing facilities that is a barrier to efficient, lucrative production 

for the livestock sector, especially for small farms? Could more support for mobile 

slaughter/processing units help address some of these challenges for small diversified 

operations and offer farmers a greater profit? 

NPPC appreciates that limited access to slaughter facilities is a concern to some U.S. 

livestock producers, and packing capacity certainly is an issue we're watching as 

pork production continues to expand. We currently are in an era of expansion in the 

pork industry, with two new packing facilities set to open by the end of the year and 

another two to be constructed within the next 18 months. So capacity should become 

less of an immediate concern in the medium term. America's pork producers are 

among the most efficient and safest in the world today. It is unclear whether mobile 

slaughter/processing units would help improve this efficiency without sacrificing the 

high food quality standards we are accustomed to in our country today. 

We support USDA FSIS's intent to issue a Pork Slaughter Modernization Rule that 

would allow for more rapid and efficient adoption of new technologies and 

inspection protocols, thereby spurring growth in slaughter capacity in the U.S. pork 
125 

mw42035 on AGRINON012 with DISTILLER


23592.081

sector. NPPC similarly supports other efforts that would increase U.S. slaughter 

capacity such as providing increased assistance to help new small or very small 

facilities come online, with the critical caveat that the facilities must continue to be 

subject to inspection by FSIS or a state equivalent inspection program. NPPC will 

not support any initiative that would allow for the commercial sale of pork products 

that were subject to abbreviated or even no food safety inspection. 

Senator Robert Casey 

I) You mentioned that while there have been improvements, PEDv is still an issue. 

Can you provide some insight into the spread of this disease? Are there biosecurity 

practices that farmers can implement to prevent the introduction or spread of diseases or 

are cases more isolated on the farm? 

The spread of PED has slowed since the initial outbreak in 2013. We have learned a 

lot about managing the disease. Biosecurity plays a big role in keeping it out of our 

farms. In addition, many farmers are treating feed for their breeding stock in an 

attempt to kill any pathogens, such as PED, that may be contaminating the feed. 

Research done by Dr. Scott Dee and South Dakota State University has shown that 

certain feedstuffs can support the transport of viruses during over-water shipping 

from China to the United States. We are anxious to see how full implementation of 

the FSMA Foreign Supplier Verification Rule will impact this potential risk. 

2) How can we improve our surveillance efforts for diseases like Foot and Mouth 

Disease at port-of-entry inspections and what resources are necessary to accomplish this? 

Surveillance for FMD needs to start at the country of origin and continue all the 

way to our farms. I believe that special attention needs to be paid to feed 

ingredients, including but not limited to grain, soybean meal, minerals, amino acids 

and vitamins. The inspection of such ingredients should include a consideration of 

steps taken to produce a pathogen-free product and to prevent recontamination. 
126 

mw42035 on AGRINON012 with DISTILLER


23592.082

Customs and Border Patrol should coordinate on the FSMA Foreign Supplier 

Verification program implementation and have access to information on the 

verification of suppliers of the above mentioned products. 

That said, we will be hard pressed to prevent the entry of FMD into the United 

States through inspection only. We need to be prepared to respond to an outbreak 

in a timely and efficient manner. That is why it is so important to have a fully 

stocked and functional FMD vaccine bank that is managed by an offshore vendor. 

We also need to have our National Animal Health Laboratory Network (NAHLN) at 

full capacity to not only do the tests required to identify FMD but also to do all the 

surveillance testing that would be required during an outbreak. And finally, the 

ability to communicate test results needs to be seamless among the laboratory, the 

state animal health officials and federal animal health officials. We cannot continue 

to count on communication via spread sheets on these critical issues. The data 

management piece of this puzzle cannot be overstated. 
127 

mw42035 on AGRINON012 with DISTILLER


23592.083

Senate Committee on Agriculture, Nutrition, & Forestry 

A Review of the U.S. Livestock and Poultry Sectors: Marketplace Opportunities and Challenges 

Thursday, May 26, 2016 

Questions for the Record 

Mr. Ronald Truex 

Chairman Pat Roberts 

l. Mr. Truex, your testimony cited concerns regarding aspects of the proposed organic 

livestock rule. In addition to the negative effects that rule would have on animal health, 

prices for consumers, and organic feed producers, could you talk a little about the effects it 

would have on family farmers in your respective industries? 

Farmers have made hundreds of millions of dollars of investments in facilities that were 

clearly allowable for organic production under current USDA rules. These investments 

are now in jeopardy because of the new proposed organic rule. The profitability and 

even viability of some family-owned operations will be at risk under the proposed rule. 

If implemented, the rule will drastically reduce the flock size of organic hens, this 

reduction or elimination will not only effect the egg producers but also the family farms 

producing organic grains. The proposed rule also puts these producers into the 

middle of a conflict between two agencies. Egg farms are required by a binding 

regulation of the Food and Drug Administration to take steps to prevent Salmonella 

Enteritidis. The prohibition on protective structures under the proposed organic rule 

will make it extremely difficult for producers to both meet USDA's demands for organic 

production and simultaneously comply with FDA's food safety requirements. The 

requirement for enrichments to entice the birds to go outside will also entice wild birds, 

rodents, and other vectors of Salmonella Enteritidis to the outdoor area leading to 

noncompliance with the FDA Rule. Producers are amazed that two agencies that both 

regulate the egg industry did not coordinate their approach on these issues. A further 

potential conflict could arise over the outdoor space requirement because that practice 

could be curtailed in the event of an HPAI outbreak. 
128 

mw42035 on AGRINON012 with DISTILLER


23592.084

2. llrnow the Department has taken several important steps to protect against future 

outbreaks of Highly Pathogenic Avian lnflumza and to irrprove disease outbreak preparedness 

and response efforts. In your view, what remains unaddressed, if anything, or what 

recommendations do you have for the Department? 

Both USDA and our industry learned a number of lessons from last years' experience. 

When we had an HPAI outbreak in Indiana earlier this year, the response was quick 

and effective. For the future, we recommend that USDA ensure that outbreak response 

will not be delayed due to disagreements with state or local officials about proper 

disposal, as sometimes occurred in 2015. In addition, we would encourage USDA to 

complete making all payments owed to producers affected by the 2015 outbreak. In 

some cases, these payments have not been fully made, although more than a year has 

passed. USDA can also expedite the process of finalizing draft guidance documents and 

support materials for producers affected by HPAI in the future. 

Senator John Thune 

1. As you know the Senate is considering a path forward on biotech labeling. 

Do you believe anirml products should be included in mandatory labeling of biotech 

products? Or should meat, dairy, and other animal products all be exempt from biotech 

labeling? 

Animal products (including eggs) should not be required to bear a GMO or GE label 

merely because the animals consumed GE feed. It 1:~ well-known that genetically 

engineered material has not been detected in meat, milk or eggs from such animals. 

For this reason, UEP supports a clear statutory exemption from biotech labeling 

requirements for animal products and definitely prefers to avoid being part of any 

USDA rulemaking on this specific issue. 
129 

mw42035 on AGRINON012 with DISTILLER


23592.085

2. Do you believe the USDA was appropriately and timely responsive to egg producers 

whose flocks were depopulated due to the avian influenza? 

Both USDA and our industry learned a number of lessons from last years' experience. 

When we had an HPAI outbreak in Indiana earlier this year, the response was quick 

and effective. For the future, we recommend that USDA ensure that outbreak 

response will not be delayed due to disagreements with state or local officials about 

proper disposal, as sometimes occurred in 20I5. In addition, we would encourage 

USDA to complete making all payments owed to producers affected by the 20I5 

outbreak. In some cases, these payments have not been fully made, although more 

than a year has passed. 

Senator Patrick Leahy 

1. In your testimony before the Committee you raised concerns about the proposed rule for 

the National Organic Program for Livestock and Poultry Handling Practices. 

Isn't it correct that Congress set up a process within the National Organic Program 

specifically to make decisions on issues like the Livestock and Poultry Practices 

proposed rule that you mentioned in your testimony? 

In this case, I understand that the NOation a I 0 rganic Standards Board (N 0 S B) un animo usly 

agreed to the pro posed change regarding porches, outdoor space, and other practices for 

poultry and livestock that are certified as organic. after hearing testimony from countless 

producers, certifiers, consumers, and national organizations. USDA then issued the 

proposed rule implementing the NOSB decision in April. That unanimous decision came 

after years of debate and consideration by the NOSB and its Livestock Subcommittee, a 

Subcommittee that United EggProducerstestified before in 2002 and 2007. 

I further understand that the comment period on that proposed rule is still open so you and 

your m em hers have yet another opportunity to share your concerns within the regular 

process. Finally. I understand that language also has been included in both the House and 
130 

mw42035 on AGRINON012 with DISTILLER


23592.086

Senate Agriculture Appropriations reports directing Secretary Vilsack to ensure that all 

comments on the proposed rule are taken into consideration when finalizing the regulation, 

both for those producers who believe they would be adversely impacted by the new 

requirements and those that feel they would be adversely impacted ifthese regulations were 

not finalized as they have been proposed with outdoor access requirements. !flam 

correct, I was told that UEP even supported this report language. So it seems to me that you 

still have ample opportunities to makeyourconcerns known without requiring any further 

Congressional action at this point. Would you not agree, and will you be submitting 

your detailed comments to USDA? 

We respect the role of the NOSB. However, NOSB recommendations are just thatrecommendations. They are not intended to simply be adopted by USDA and the 

Agencies are mandated by law to consider both economic impacts and other 

statutory concerns like the FDA egg safety rule and APHIS requirements to protect 

against H PAl. AMS certainly has the right to consider what portion of those 

recommendations to implement through notice- and-comment rulemaking. We have 

the right to make our views known during that process, and are doing so. Members 

of Congress similarly have the right to take part in this process. 

We have never asked Congress to prohibit completion of the proposed rule. We have 

asked Congress to call on USDA to conduct additional economic and other analyses, 

in part because we believe the impact of the rule substantially exceeds $100 million 

per year and it should therefore be considered a major rule under longstanding law. 

It is also correct that we supported report language in the House and Senate 

appropriation bills. That language, particularly the House language, is reflective of 

the same concerns we have repeatedly expressed: USDA has not adequately 

considered the negative impact of the proposed rule on family farms, existing 

producers, future organic egg supply, consumers and food safety, and needs to 

conduct additional analysis. 

We have also appreciated the efforts of Members of Congress who requested an 

extension of the comment period on the rule, partly because of the need for mare 

information as noted above. We were gratified that USDA did announce a 30-day 
131 

mw42035 on AGRINON012 with DISTILLER


23592.087

extension, and while we would have preferred a longer period that would have allowed 

for f1Wre thorough compilation of relevant facts, we nevertheless believe the extension 

announced will be helpful UEPstrongly requests a through comprehensive economic 

analysis be conducted prior to the rule making process f1WVing forward. 

2. In your testimony you mentioned that as a cooperative, the United Egg Producers supply 95 

percent of eggs to the market. You also made several comments on the proposed rule for the 

National 0 rgan ic Program for Livestock and P ou !try Hand I in g Practices, a ru le that a p pI ies 

only farms that voluntarily choose to participate in theN ational Organic Program and have 

their operations certified as organic. Can you share with the Committee the number of 

members UEP has that are currently certified as organic? And to the best of your 

knowledge, do any of those UE P members who are certified as organic en rrently 

offer outdoor access that is not just confined to a "porch- system," so that it 

would meet the outdoor access requirements of the proposed rule? 

Due to this being a specialty market and the sensitivity around production figures 

among members, UEP's dues structure is set up so that farmers are not assessed 

differently if they produce conventional eggs, organic eggs or other specialty eggs. For 

this reason, we do not maintain records on the mix of organic and conventional 

production on our members' farms. UEP does have an Organic Committee, all of 

whose members are actively engaged in organic production. We know the U EP 

members serving on the Organic Committee have at least some organic production. 

Among these farmers are some who utilize porch systems and others who have 

pasture-based operations. UEP's consistent position has been that we support a 

range of organic production systems as long as they are capable of complying with 

FDA's Egg Safety Rule. This is the basic reason we have opposed the proposed rule's 

ban on certain systems, notably those utilizing porches, which provide access to the 

open air but also protect against predators and vectors for Salmonella Enteritidis and 

Highly Pathogenic Avian Influenza. 
132 

mw42035 on AGRINON012 with DISTILLER


23592.088

3. From the economic an a lysis that lJEP has been conducting on the proposed rule for 

livestock and poultry practices, what do you believe is the percentage of currently certified 

organic egg operations that would need to make substantia I changes to their farms in order 

to come into compliance with the proposed rule as initially drafted for outdoor access? 

Meaning, what percentage of the current number of farms producing organically certified 

eggs rely on porch-systems today for organic egg production outdoor access? (Again, 

percentage of total farms, not total egg production). Do you feel that a longer time frame 

than the five years currently in the proposed rule is required for these farms to come into 

compliance with the outdoor access requirements? Would additional time it help these farms 

meet the new regulations, or are you saying that either their farms must have porches or 

they camot continue as organic? 

UEP does not maintain the numbers for these specific types of production systems our 

members utilize nor the types of eggs produced. But, one must look at the percentage 

of organic egg production this would effect and not just the number of farms as the 

percentage of production will drive supply and price whereas the number of farms 

does not. Based on the decision by USDA in 2002 to accept the porch as outdoor 

access, farms were built with fun ding from fin an cia/ institutions utilizing production 

estimatesfortheseflocks. With the reduction of flock size by as much as 213 due to 

how these farms were constructed, to comply with the proposed rule, these systems 

could not be economically feasible thus resulting in decreased organic egg supply 

and increased pricing for consumers. 

Senator Robert Casey 

I. Do you know what the total dollar impact wiU be to the Organic Egg Industry if the proposed 

Organic Livestock and Poultry rule becomes regulation? 

On the basis of conversations with our organic members, we believe the impact will be 

well in excess of $100 million/year, and perhaps several times that. Anecdotally, we 
133 

mw42035 on AGRINON012 with DISTILLER


23592.089

are aware of hundreds of million dollars in investment that has been made in organic 

porch production, an amount that is more than the statutory threshold for the rule 

to be considered a major rule. If the USDA estimates are correct for organic hens at 

5 million, utilizing a conservative lay rate of 75%, over 114 million dozen organic eggs 

are produced each year. The result of eliminating a significant percentage of these 

eggs from the organic supply at the current premium paid for these will provide the 

bulk of the $100 million dollar threshold needed to makethis rule significant. 

2. We have heard from several small family owned farms in Pennsylvanil that produce organic 

pasture-based systems and are already in compliance with the USDA proposed rule for 

animal welfare standards for organic livestock and poultry. Shouldn't small producers be 

able to distinguish their premium product for consumers? 

We have no issue with small producers distinguishing their product, however, in 2002 

when USDA recognized porches as outdoor access, the commercial industry expanded 

with systems to meet the standards approved by certifiers and allow the organic egg 

market to thrive thus allowing smaller producers to take advantage of the market due 

to the commercial availability of organic eggs. U EP's concern is that we do not believe 

that the proposed rule improves the welfare {Or laving hens. UEP supports a range of 

organic production systems as long as they can meet requirements of the FDA's Egg 

Safety Rule. We do not seek to ban any production system, which is why we oppose 

USDA's proposed rule that would ban systems that USDA has previously approved and 

in which family-owned farms have invested their savings. 

We also have members who use pasture-based systems and we support their ability to 

distinguish their product. We have no objection at all to the use of "pasture-raised" 

or similar terms to describe and differentiate these systems. In our comments to 

USDA, one of the points that U EP will make is that the intent of this rule could easily 

be achieved simply by labeling each different organic production process and letting 

consumers decide which they prefer. It is not the role of government to separate 

and distinguish one producer over the other simply based on the size of the farm. 
134 

mw42035 on AGRINON012 with DISTILLER


23592.090

3. As an industry, how do you assess and prepare for an outbreak, like avian influenza, that 

could come at any time? Is it challenging to maintain biosecurity and remain vigilant when it 

is unclear if or when the next outbreak could occur? 

Industry's preparation is fundamentally one of enhancing biosecurity. For most farms, 

this means strict limits on visitors, including requiring that visitors not have been on 

another farm premises for a certain number of days prior to their visit. Biosecurity 

also means strict requirements for workers and other personnel, which may include 

showering in and out of work; special protective clothing; restrictions on movement 

from one building to another; and other measures. 

Good biosecurity wilt also involve taking steps to restrict access for wild birds, since 

they are vectors of avian influenza. (This is one reason we are so troubled by USDA's 

proposal to ban porch systems from organic certification, since these are designed to 

limit wild bird exposure.) Another absolutely necessary biosecurity measure involves 

restricting the access of vehicles to farm property, and sanitizing vehicles before entry 

when they must come onto the property. 

These and other biosecurity measures are integral to such systems as the Secure Egg 

Supply, already adopted by several states. To further .111pplement these and other 

efforts, U E Ph as formed a B iosecu rity Task Force that continues to adva nee best 

practices and industry understanding in this area. Our members have also hired 

consultants and made heavy investments in attempt to reduce the th real of their 

operations being impacted by HPAI. 

Over the years, the funding of USDA /APHIS has seen some significant budget cuts 

requiring the agency to reduce staff. The absence of these subject matter experts 

during the outbreak of 2015 were felt by everyone. UEP encourages you to 

reevaluate the funding opportunities and make necessary adjustments to ensure the 

animal health experts needed within this agency are provided and supported moving 

forward. 
135 

mw42035 on AGRINON012 with DISTILLER


23592.091

Senate Committee on Agriculture, Nutrition, & Forestry 

A Review of the U.S. livestock and Poultry Sectors: Marketplace Opportunities and Challenges 

Thursday, May 26, 2016 

Questions for the Record 

Mr. John Zimmerman 

Chairman Pat Roberts 

1. Mr. Zimmerman, your testimony cited concerns regarding aspects of the proposed 

organic livestock rule. In addition to the negative effects that rule would have on animal 

health, prices for consumers, and organic feed producers, could you talk a little about 

the effects it would have on family farmers in your respective industries? 

Answer: We are concerned that the proposed changes will reduce the availability of organic 

turkey products and drastically increase the price for consumers. In some cases, our family 

farms will no longer be able to raise organic birds. This new rule as proposed will eliminate 

much of the progress made in building the organic turkey market over the last several years. 

While the stated purpose of the new rule is to create greater consistency in organic production, 

it in fact creates an unnecessary financial burden on the producers of all sizes. Worst of all, it 

needlessly exposes birds to diseases that are otherwise preventable. Frankly, it's unacceptable. 

After the largest animal disease outbreak in American history, USDA -AMS has now proposed a 

rule to increase our turkeys' exposure to wild birds, rodents, and other animals. This goes 

against all the advanced bio-security principles that we have worked so hard with USDA- APHIS 

to develop in order to limit our birds' exposure to disease. Supposedly these new regulations 

are intended to improve the health and welfare of the animal, so it is odd that AMS admits that 

mortality rates will substantially increase. How is increasing mortality rate improving animal 

welfare? Second, letting birds have significantly increased access to land outside barns where 

water runoff is controlled will certainly require new state and national water permitting 

requirements. 

2. I know the Department has taken several important steps to protect against future 

outbreaks of Highly Pathogenic Avian Influenza and to improve disease outbreak 

preparedness and response efforts. In your view, what remains unaddressed, if 

anything, or what recommendations do you have for the Department? 
136 

mw42035 on AGRINON012 with DISTILLER


23592.092

Answer: First of all there is no silver bullet, but the industry needs assurance that we have 

access to all tools available so we can eliminate the virus within hours not days. Farmers need 

to know they have USDA's support to act immediately Further research needs to be done on 

stamp out procedures that are the most efficient form of virus elimination and as well tools 

that help prevent a future outbreak such as vaccines. 

Senator Thorn Tillis 

1. Mr. Zimmerman, thank you for attending this hearing. During the HPAI outbreak, the 

North Carolina Commissioner of Agriculture, Steve Troxler, sent officials to Minnesota 

and Iowa to help on the ground. We all came away impressed by the resiliency of the 

industries in those states and wish you nothing but the best. 

You mentioned industry and government continue to review existing protocols for 

eliminating foreign zoonotic diseases like HPAI. I was hoping you could expand and 

discuss what you-as a turkey producer-would like to see considered in discussions, 

for example, are there existing technology limitations that need to be examined? 

The state of Minnesota has firsthand experience with an outbreak and as my home state 

of North Carolina continues to modify its protocols, I am interested in your opinion. 

Answer: First of all there is no silver bullet, but the industry needs assurance that we have 

access to all tools available so we can eliminate the virus within hours not days. Further 

research needs to be done on stamp out procedures that are the most efficient form of virus 

elimination so that we have the support to act immediately. 

2. Mr. Zimmerman, you mention in your testimony that as a result of last year's HPAI 

outbreak, several countries-notably South Korea and South Africa-have placed a new 

restriction on poultry imported from the United States that is not born, raised, and 

slaughtered in the U.S. What is the impact of such a regulation? 

Answer: Today, a poult born in Canada can enter the South African market if it is processed in 

Canada. If that poult comes to the U.S., however, it is no longer eligible for export to South 

Africa. This is a result of last-minute language inserted into the U.S.-South Africa trade deal 

requiring all U.S. poultry products to be verified as "hatched and raised in the US". A large 

percentage of U.S. turkey poults are actually hatched in Canada and brought over the border at 

one day of age. These new restrictions in South Africa, and similarly in South Korea, add an 
137 

mw42035 on AGRINON012 with DISTILLER


23592.093

unnecessary layer of difficulty for U.S. producers seeking to export their products. These new 

requirements are arbitrary, non-scientific trade barriers that severely limit the turkey industry's 

ability to export to these two important markets. In short, if two poults are born side by side, 

and separated at one day of age, only the one that remained in Canada will be eligible for the 

South African market. The one raised by U.S. farmers will not be. It will be difficult to correct 

this language, and I must stress that this situation could have been avoided if U.S. trade 

negotiators had been informed regarding U.S. turkey production. We look forward to working 

with Congress to fix this issue. 

Senator John Thune 

1. As you know the Senate is considering a path forward on biotech labeling. 

Do you believe animal products should be included in mandatory labeling of biotech 

products? Or should meat, dairy, and other animal products all be exempt from biotech 

labeling? 

Answer: With regards to food labeling, NTF continues to actively support the two critical 

components of any GMO bill that comes out of Congress: 1) That the bill maintains federal 

preemption for meat and poultry labeling, which is already regulated by USDA- FSIS and 2) 

that it ensures that animals fed GE feed should not have to be labeled GE. We look forward to 

having a bill that prevents a patchwork of state rules that create a labeling nightmare for food 

producers. The U.S. needs a single set of labeling rules that are common-sense and based on 

the most respected science known. 

2. You mention two regulations in your testimony, the proposed Organic livestock and 

Poultry rule and the GIPSA rule, and others on this panel mention WOTUS or Waters of 

the US rule. 

Based on all the concern expressed by you and others on this panel are you of the 

opinion that the current federal agency rulemaking processes pay little to no regard to 

comments and concerns from those in the agriculture industry these rules impact the 

most? 

Answer: In most cases, the federal agencies utilize the notice and comment rulemaking process 

in a thoughtful, reasonable manner to inform their rulemaking and take into account important 

information and opinions necessary to produce a workable, effective final rule. However, in 

some instances the proposed regulation is driven less by factual necessity than by political 

desire. In these cases, agencies can meet the letter of the law, procedurally, in their responses 

to the comments of agricultural producers, without having to actually functionally address 

these comments or conform their proposals to reality. 
138 

mw42035 on AGRINON012 with DISTILLER


23592.094

Senator Patrick Leahy 

1. In your testimony before the Committee you raised concerns about the proposed rule 

for the National Organic Program for livestock and Poultry Handling Practices. 

Isn't it correct that Congress set up a process within the National Organic Program 

specifically to make decisions on issues like the Livestock and Poultry Practices 

proposed rule that you mentioned in your testimony? 

In this case, I understand that the National Organic Standards Board (NOSB) 

unanimously agreed to the proposed change regarding porches, outdoor space, and 

other practices for poultry and livestock that are certified as organic, after hearing 

testimony from countless producers, certifiers, consumers, and national organizations. 

USDA then issued the proposed rule implementing the NOSB decision in April. That 

unanimous decision came after years of debate and consideration by the NOSB and its 

livestock Subcommittee, a Subcommittee that United Egg Producers testified before in 

2002 and 2007. 

I further understand that the comment period on that proposed rule is still open so you 

and your members have yet another opportunity to share your concerns within the 

regular process. Finally, I understand that language also has been included in both the 

House and Senate Agriculture Appropriations reports directing Secretary Vilsack to 

ensure that all comments on the proposed rule are taken into consideration when 

finalizing the regulation, both for those producers who believe they would be adversely 

impacted by the new requirements and those that feel they would be adversely 

impacted if these regulations were not finalized as they have been proposed with 

outdoor access requirements. If I am correct, I was told that UEP even supported this 

report language. So it seems to me that you still have ample opportunities to make your 

concerns known without requiring any further Congressional action at this point. Would 

you not agree, and will you be submitting your detailed comments to USDA? 
139 

mw42035 on AGRINON012 with DISTILLER


23592.095

Answer: We respect the notice and comment process and will certainly submit our concerns to 

USDA. As we read the proposed rule, the proposed changes will reduce the availability of 

organic turkey products and drastically increase the price for consumers. In some cases, our 

family farms, just now recovering from last year's outbreak, will no longer be able to raise 

organic birds. This new rule as proposed will eliminate much of the progress made in building 

the organic turkey market over the last several years. While the stated purpose of the new rule 

is to create greater consistency in organic production, it in fact creates an unnecessary financial 

burden on the producer. We also are very worried about the biosecurity lapses this regulation 

will promote, as well as the significant trade impacts it will have. 

2. In your testimony, and in response to several questions at the hearing, you mentioned 

the proposed regulations that USDA put forward in 2010 under the Packers and 

Stockyards Act to address reported abusive and anti-competitive practices in the 

livestock and poultry sectors (the "GIPSA rule"). I am confused by some of the points 

you made at the hearing regarding the farmer protections proposed by USDA and how 

these protections could potentially result in lower prices for farmers. That does not 

seem to track with what I have seen in the USDA's past proposals or with what Secretary 

Vilsack has said --that he would like to improve transparency in the industry and ensure 

a level playing field for all producers. 

I would like to ask you a few questions about the actual, common sense regulations that 

were proposed by USDA as part of the GIPSA rule, which I hope will become final in the 

near future, and how they would affect your farmer members. 

a. One of the regulations proposed as part of the GIPSA rule would prohibit 

meatpackers and poultry companies from forcing farmers to give up their legal right 

to a jury trial to address future disputes with the company. [proposed Section 

201.210(a)(4)(i)] 

This rule would align with the intent of provisions that I strongly supported in the 

2008 Farm Bill to amend the Packers and Stockyards Act to prohibit the use of 

mandatory arbitration clauses in livestock and poultry contracts. Instead, the Farm 

Bill provision requires packers and poultry companies to allow farmers an up-front 

choice about whether or not they would like to settle any future dispute using 
140 

mw42035 on AGRINON012 with DISTILLER


23592.096

arbitration. This ensures that farmers are not forced to give up their legal rights and 

remedies as part of a take-it-or-leave-it contract arrangement that denies them their 

constitutional right to protect themselves in court. 

Soon after that provision became law, farmers came forward with their worries that 

some poultry companies had started to include new clauses in their contracts that 

would prohibit the grower from seeking a jury trial to settle any future dispute with 

the company. The grower would only be allowed to a ruling from the judge, not a 

jury. 

Your organization has been promoting a legislative rider in the annual 

appropriations process that would prohibit USDA from finalizing or enforcing this 

commonsense protection for farmers. Why should farmers be denied the same 

legal rights and full access to our judicial system that is enjoyed by other citizens 

and businesses? 

Answer: As the National Turkey Federation has stated on many occasions, its support of the 

"legislative rider" is based on a concern that the proposed rule, taken as a whole, could have 

significant unintended consequences that would be detrimental to growers as well as 

processors. I do not think the current system is perfect, nor do I know of many growers who 

do. However, we also are aware that processors have options for raising poultry that do not 

include contracting with family farmers. If the regulatory and legal liability associated with 

contracting becomes too great, many of these processors undoubtedly will consider such 

options, and at that point the proposed rule will become largely irrelevant anyway. In the six 

years since the rule was first proposed, I have yet to personally see any evidence that USDA or 

Congress has seriously contemplated this possibility. History is full of examples of wellintentioned rules that created worse problems than the ones they were intended to correct. 

No one has been able to provide satisfactory assurance to me that this is not what will happen 

here. 

b. One of the regulations proposed by USDA as part of the GIPSA rule would prohibit, 

under the Packers and Stockyards Act, meatpackers and poultry companies from 

retaliating against farmers for exercising their rights to free speech and/or 

association. [proposed Section 201.210{a)(2)] 

This was written to provide protections for farmers who speak out publicly, including 

communication with USDA officials or Members of Congress, about what is taking 
141 

mw42035 on AGRINON012 with DISTILLER


23592.097

place on their farms and with their contracts. As we have heard directly from 

farmers, the threat of retaliation is very real for contract farmers who speak out, or 

who try to form associations with other growers to bargain for better contracts. This 

retaliation fear is the main reason that it is difficult for poultry growers, for instance, 

to talk to their Members of Congress about the abuses addressed in the proposed 

GIPSA rule. We also saw this play out when USDA and the Department of Justice 

held joint public workshops to explore competition issues affecting the agricultural 

sector. Farmers in some parts of the country were fearful of speaking at these 

workshops out of fear of retaliation from the companies for which they raise hogs or 

broilers. 

Your organization has been promoting a legislative rider in the annual 

appropriations process that would prohibit USDA from finalizing or enforcing this 

seemingly commonsense protection for farmers. Can you explain to me why that 

is? Why should a farmer not be allowed to speak to their elected officials out of 

fear retaliation? 

Answer: I believe, as does the National Turkey Federation, that a farmer, or any citizen, should 

be free to speak to their elected officials. It is a protected First Amendment right. Our support 

of the "legislative rider" has nothing to do with the free-speech question. 

c. Another regulation proposed by USDA as part of the GIPSA rule was a regulation to 

require meatpackers and poultry companies to give farmers statistical information 

and data about how their pay is calculated, if the farmer requests such information. 

[proposed Section 201.210(a)(3)} 

Often times farmers have complained that the payment mechanism under their 

production contracts can be very vague and complicated, making it difficult for 

farmers to make good business decisions to increase their profits in future years. 

This regulation sought to give farmers full transparency into the factors that 

determine the payment for their services and the animals they raised. 

I understand that your organization has been promoting a legislative rider in the 

annual appropriations process that would prohibit USDA from finalizing or enforcing 
142 

mw42035 on AGRINON012 with DISTILLER


23592.098

this commonsense protection for farmers. Do you agree with me that price and 

payment transparency is a basic free market principle that is important for any 

business, especially our farmers? Why would your organization seek to deny this 

right to U.S. farmers? 

Answer: I have been raising turkeys for many years, and l have never personally had a problem 

understanding payment mechanisms in the contracts I've signed. l do not personally know of 

any fellow grower who has had trouble understanding these arrangements. Perhaps some 

have difficulty. However, the National Turkey Federation previously has not opposed GIPSA 

proposals aimed at enhancing transparency. This is not the central issue of the current debate. 

3. As this Committee considers the next Farm Bill what suggestions do you have for how 

we can try to address the slaughterhouse "bottleneck" that is often one of the industry's 

most critical problems in some of our states where we have a scarcity and limited 

capacity of the existing facilities that is a barrier to efficient, lucrative production for the 

livestock sector, especially for small farms? Could more support for mobile 

slaughter/processing units help address some of these challenges for small diversified 

operations and offer farmers a greater profit? 

Answer: At this time, mobile slaughter units do not fit the structure of NTF member companies 

and we do not utilize this process. Mobile slaughter units can have a economic impact for the 

rural farmer. Poultry is unique in that if less than 20,000 birds are produced, FSIS personnel 

does not have to be present during slaughter. Given the smaller size of poultry compared to 

livestock, they are easier to process in the smaller space of the mobile unit. Usually these units 

are overseen by state authorities. USDA Rural Development also helps with the development 

of these units, and guidelines and plans for the units are available from USDA FSIS. 

Senator Robert Casey 

1. You mentioned that USDA should consider alternatives for existing organic growers 

under the USDA proposed rule for organic livestock and poultry systems. Can you 

provide more information on what types of alternatives would be helpful for the turkey 

industry? 

Answer: NTF is concerned about the potential disruption to existing organic producers and their 

supply chains, as well as the impacts this proposed rule may have on ensuring that animal 

health is fully protected. Before moving forward with the rule, the turkey industry feels that 

USDA should conduct a thorough assessment of the costs of compliance, increased animal 
143 

mw42035 on AGRINON012 with DISTILLER


23592.099

health and welfare risks, and alternatives for existing organic growers so that producers and 

supply chains directly impacted by these changes will be minimally impacted. 

2. As an industry, how do you assess and prepare for an outbreak, like avian influenza, that 

could come at any time? Is it challenging to maintain biosecurity and remain vigilant 

when it is unclear if or when the next outbreak could occur? Do you think that turkey 

avian influenza should be handled differently than egg laying hens or broiler chickens? 

Answer: Our growers have long been committed to implementing comprehensive biosecurity 

procedures, and doing everything that we can do in order to keep their birds healthy. 

Biosecurity is not a single task, but an integral part of every farm's daily operations. Although 

turkey growers have implemented the most up-to-date biosecurity procedures to address the 

threats we know of, outbreaks such as those from last spring remind us that new threats may 

arise at any point. It is imperative that the industry, and our government partners, remain 

vigilant for new diseases that may emerge, and to ensure that the proper resources are available not 

just for response efforts, but also for proactive research. Although the specifics of a farm's biosecurity 

plan may change depending on the type of operation, these principles are universal across the poultry 

industry. Plans must be tailored to the individual farm, but the need for robust, comprehensive 

biosecurity is the same. 

0