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HEARING TO REVIEW THE STATE OF THE 

RURAL ECONOMY

HEARING

BEFORE THE

COMMITTEE ON AGRICULTURE 

HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRTEENTH CONGRESS

FIRST SESSION

MARCH 5, 2013

Serial No. 113–1

(

Printed for the use of the Committee on Agriculture 

agriculture.house.gov 

COMMITTEE ON AGRICULTURE 

FRANK D. LUCAS, Oklahoma, Chairman 

BOB GOODLATTE, Virginia, 

Vice Chairman 

STEVE KING, Iowa 

RANDY NEUGEBAUER, Texas 

MIKE ROGERS, Alabama 

K. MICHAEL CONAWAY, Texas 

GLENN THOMPSON, Pennsylvania 

BOB GIBBS, Ohio 

AUSTIN SCOTT, Georgia 

SCOTT R. TIPTON, Colorado 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

MARTHA ROBY, Alabama 

SCOTT DESJARLAIS, Tennessee 

CHRISTOPHER P. GIBSON, New York 

VICKY HARTZLER, Missouri 

REID J. RIBBLE, Wisconsin 

KRISTI L. NOEM, South Dakota 

DAN BENISHEK, Michigan 

JEFF DENHAM, California 

STEPHEN LEE FINCHER, Tennessee 

DOUG LAMALFA, California 

RICHARD HUDSON, North Carolina 

RODNEY DAVIS, Illinois 

CHRIS COLLINS, New York 

TED S. YOHO, Florida 

COLLIN C. PETERSON, Minnesota, Ranking 

Minority Member 

MIKE MCINTYRE, North Carolina 

DAVID SCOTT, Georgia 

JIM COSTA, California 

TIMOTHY J. WALZ, Minnesota 

KURT SCHRADER, Oregon 

MARCIA L. FUDGE, Ohio 

JAMES P. MCGOVERN, Massachusetts 

SUZAN K. DELBENE, Washington 

GLORIA NEGRETE MCLEOD, California 

FILEMON VELA, Texas 

MICHELLE LUJAN GRISHAM, New Mexico 

ANN M. KUSTER, New Hampshire 

RICHARD M. NOLAN, Minnesota 

PETE P. GALLEGO, Texas 

WILLIAM L. ENYART, Illinois 

JUAN VARGAS, California 

CHERI BUSTOS, Illinois 

SEAN PATRICK MALONEY, New York 

JOE COURTNEY, Connecticut 

JOHN GARAMENDI, California 

NICOLE SCOTT, Staff Director 

KEVIN J. KRAMP, Chief Counsel 

TAMARA HINTON, Communications Director 

ROBERT L. LAREW, Minority Staff Director 

(II) 

(III)

C O N T E N T S 

Page 

Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, opening 

statement .............................................................................................................. 1

Prepared statement .......................................................................................... 3

Peterson, Hon. Collin C., a Representative in Congress from Minnesota, opening statement ........................................................................................................ 4

Prepared statement .......................................................................................... 5

WITNESS

Vilsack, Hon. Thomas ‘‘Tom’’ J., Secretary, U.S. Department of Agriculture, 

Washington, D.C. ................................................................................................. 6

Prepared statement .......................................................................................... 8

Supplementary information ............................................................................. 67

Submitted questions ......................................................................................... 68

(1)

HEARING TO REVIEW THE STATE OF THE 

RURAL ECONOMY 

TUESDAY, MARCH 5, 2013

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON AGRICULTURE, 

Washington, D.C. 

The Committee met, pursuant to call, at 10:05 a.m., in Room 

1300 of the Longworth House Office Building, Hon. Frank D. Lucas 

[Chairman of the Committee] presiding. 

Members present: Representatives Lucas, Goodlatte, King, 

Neugebauer, Rogers, Conaway, Thompson, Gibbs, Austin Scott of 

Georgia, Tipton, Crawford, Roby, Gibson, Hartzler, Ribble, Noem, 

Benishek, Denham, Fincher, LaMalfa, Hudson, Davis, Collins, 

Yoho, Peterson, McIntyre, David Scott of Georgia, Costa, Walz, 

Schrader, Fudge, McGovern, DelBene, Negrete McLeod, Vela, 

Lujan Grisham, Kuster, Nolan, Gallego, Enyart, Vargas, Bustos, 

Maloney, Courtney, and Garamendi. 

Staff present: Bart Fischer, John Goldberg, Josh Mathis, Lauren 

Sturgeon, Matt Schertz, Nicole Scott, Pelham Straughn, Pete 

Thomson, Stacey Glasscock, Tamara Hinton, Anne Simmons, C. 

Clark Ogilvie, Lisa Shelton, Liz Friedlander, Mary Knigge, John 

Konya, Merrick Munday, and Caleb Crosswhite. 

OPENING STATEMENT OF HON. FRANK D. LUCAS, A 

REPRESENTATIVE IN CONGRESS FROM OKLAHOMA 

The CHAIRMAN. This hearing of the Committee on Agriculture to 

review the state of the rural economy will come to order. 

Thank you, Mr. Secretary, for appearing before us today. I am 

pleased that the President asked you to continue in your role as 

Secretary. While we may not always agree on every topic, you have 

never been disagreeable, and you are a good friend to American agriculture. I appreciate your hard work to quickly implement the extension of the 2008 Farm Bill and announce the signup for farm 

programs, which gave producers some certainty during a time 

when uncertainty, or when certainty, I should say, is sorely lacking. All of us can agree that an extension was not our preference 

but I want to personally thank you for announcing the signup so 

quickly. 

This country continues to face a fiscal crisis that if not addressed 

will not only harm the agricultural sector in rural America but the 

country as a whole. The agricultural sector wants to be a part of 

the solution to our nation’s debt crisis. We must find commonsense 

solutions without trying to scare the American people with worstVerDate 0ct 09 2002 11:48 Jul 10, 2013 Jkt 041481 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 I:\DOCS\113-01\79934.TXT BRIAN
2

case scenarios. I have confidence in you, Mr. Secretary, to manage 

sequestration without a mass disruption to the rural economy. 

The Committee believes the best way to achieve deficit reduction 

is in the context of reauthorizing the farm bill with sustainable and 

fiscally responsible reforms. This Committee and this Congress 

must pass a comprehensive 5 year farm bill this year. The reforms 

in the House bill are too great, the savings to the taxpayers are too 

important and the benefits to our farmers and ranchers are too 

critical to not complete the process this year. 

Few in the agricultural sector will deny that the agricultural 

economy has done well overall in the last few years, but that wellbeing has not been distributed evenly throughout the entire sector, 

and if history is any guide, we know how fleeting the good times 

are. For example, livestock producers have suffered through multiple years of drought and are operating with no safety net in place. 

Our livestock disaster programs no longer function because the 

2008 Farm Bill only provided 4 years of funding for these important programs. Additionally, record-high prices for some crops have 

hurt the livestock industry tremendously. Now, I am not here to 

place blame, but we have to acknowledge that fact. Crop producers 

in my part of the country and elsewhere are dealing with a third 

straight year or drought, and also rice, peanut, sugar, dairy and 

cotton producers have not enjoyed the consistent record-high prices 

that our friends in the Midwest have. 

We must be careful when we paint a rosy picture with a broad 

brush. While income is up, so is the cost of doing business. Inputs 

continue to rise as do rental rates. So the fact is, farming and 

ranching have been and will continue to be a tremendously risky 

business. 

As we all know, agriculture is highly cyclical, and the agricultural community must be prepared for bad yields, bad prices and 

much lower net farm income in the future. We must be very careful 

in ensuring that we replace direct payments with a policy that 

works for all commodities in all regions of the country. We must 

acknowledge that crop insurance is the backbone of the safety net. 

But we also recognize its limitations in protecting against multiyear price declines. The Committee firmly believes in providing a 

true safety net rather than providing payments regardless of market conditions. 

Mr. Secretary, I was interested in your comments earlier this 

year about the agricultural community’s loss of influence. The 

truth is, the United States is less rural, the Congress reflects that 

reality, and we must adapt. Making the case for production agriculture in rural America is the challenge before us, and we face an 

uncertain future if the agricultural community is divided. Commodity groups must not tear each other down with the ultimate 

goal of seeing who gets the biggest slice of the pie. Conservation 

groups and so-called sustainable groups must realize that for farmers to implement additional conservation practices, they must have 

the resources to do so. Quite simply, the agricultural community 

must accept that no bill is perfect but that should not serve as a 

discouragement. Instead, we must have a rural coalition pushing 

together to get a bill passed and signed into law. 

3

Mr. Secretary, without hesitation, I know you are a great friend 

of agriculture and rural America but I am disappointed to see the 

Administration’s comments on meat inspection. You have stated 

that the sequester provisions of the Budget Control Act will cause 

you to furlough Food Safety Inspection Service inspectors. The 

Members of this Committee have heard from constituents that 

these statements about the interruption of production have affected 

prices, caused concern among the financial markets and alarmed 

buyers and sellers in retail and food service community. I anticipate that my colleagues will have questions for you regarding your 

statements and the evolution of Administration policy in this critical area. Further, I was disappointed to see the Administration favored the Reid-Stabenow proposal to replace the sequester. Fortunately, the Senate failed to pass that proposal, which unfairly targeted agriculture: a proposed 50 percent cut in a single title of the 

farm bill that accounts for six percent of overall agricultural spending and less than one percent of overall spending. It was not balanced and not acceptable. I believe the best way to achieve deficit 

reduction as related to agriculture is in the context of reauthorizing 

the farm bill with sustainable and fiscally responsible reforms such 

as those the Committee passed last year. 

Mr. Secretary, again, thank you for being with us today. I look 

forward to your testimony. 

[The prepared statement of Mr. Lucas follows:]

PREPARED STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN CONGRESS

FROM OKLAHOMA

Thank you, Mr. Secretary, for appearing before the Committee today. 

I am pleased the President asked you to continue in your role as Secretary. While 

we may not always agree on every topic, you have never been disagreeable and you 

are a good friend to American agriculture. I appreciate your hard work to quickly 

implement the extension of the 2008 Farm Bill and announce the sign-up for farm 

programs, which gave producers some certainty during a time when certainty is 

sorely lacking. All of us can agree that an extension was not our preference, but 

I want to personally thank you for announcing the signup so quickly. 

This country continues to face a fiscal crisis that, if not addressed, will not only 

harm the agricultural sector and rural America, but the country as a whole. The 

agriculture sector wants to be part of the solution to our nation’s debt crisis. We 

must find common-sense solutions without trying to scare the American people with 

worst-case scenarios. I have confidence in you, Mr. Secretary, to manage sequestration without a mass disruption to the rural economy. 

The Committee believes the best way to achieve deficit reduction is in the context 

of reauthorizing the farm bill with sustainable and fiscally responsible reforms. This 

Committee and this Congress must pass a comprehensive, 5 year farm bill this year. 

The reforms in the House bill are too great, the savings to the taxpayer are too important, and the benefits to our farmers and ranchers are too critical to not complete the process this year. 

Few in the agriculture sector will deny that the agriculture economy has done 

well overall in the last few years. But that well-being has not been distributed evenly across the entire sector, and if history is any guide, we know how fleeting the 

good times are. 

For example, livestock producers have suffered through multiple years of drought 

and are operating with no safety net in place. Livestock disaster programs no longer 

function because the 2008 Farm Bill only provided 4 years of funding for these important programs. Additionally, record high prices for some crops have hurt the livestock industry tremendously. I am not here to place blame but we have to acknowledge that fact. 

Crop producers in my part of the country and elsewhere are dealing with a third 

straight year of drought. Also, rice, peanut, sugar, dairy and cotton producers have 

not enjoyed consistent, record high prices that our friends in the Midwest have, so 

we must be careful to paint a rosy picture with a broad brush. While income is up, 

4

so is the cost of doing business. Inputs continue to rise, as do rental rates. The fact 

is—farming and ranching have been and will continue to be a tremendously risky 

business. 

As we all know, agriculture is highly cyclical and the agriculture community must 

be prepared for bad yields, bad prices, and much lower net farm income in the future. We must be very careful in ensuring that we replace direct payments with policy that works for all commodities in all regions of the country. We must acknowledge that crop insurance is the backbone of the safety net, but we must also recognize its limitations in protecting against multi-year price declines. The Committee 

firmly believes in providing a true safety net, rather than providing payments regardless of market conditions. 

Mr. Secretary, I was interested in your comments earlier this year about the agriculture community’s loss of influence. The truth is the United States is less rural. 

The Congress reflects that reality and we must adapt. 

Making the case for production agriculture and rural America is the challenge before us. And, we face an uncertain future if the agriculture community is divided. 

Commodity groups must not tear each other down with the ultimate goal of seeing 

who gets the biggest piece of the pie. Conservation groups and so called sustainable 

groups must realize that for farmers to implement additional conservation practices, 

they must have the resources to do so. Quite simply, the agriculture community 

must accept that no bill is perfect, but that should not serve as discouragement. Instead, we must have a rural coalition pushing forward to get a bill passed and 

signed into law. 

Mr. Secretary, without hesitation, I know you are a great friend of agriculture and 

rural America, but I am disappointed to see the Administration’s comments on meat 

inspection. You have stated that the sequester provisions in the Budget Control Act 

will cause you to furlough Food Safety Inspection Service inspectors. Members of 

this Committee have heard from constituents that these statements about the interruption of production have affected prices, caused concern among financial markets, 

and alarmed buyers and sellers in the retail and food service community. I anticipate that my colleagues will have questions for you regarding your statements and 

the evolution of Administration policy in this critical area. 

Further, it was disappointing to see the Administration favored the ReidStabenow proposal to replace the sequester. Fortunately, the Senate failed to pass 

that proposal, which unfairly targeted agriculture. It proposed a 50 percent cut to 

a single title in the farm bill that accounts for six percent of overall agriculture 

spending and less than one percent of overall Federal spending. It was not balanced 

and not acceptable. I believe the best way to achieve deficit reduction, as it relates 

to agriculture, is in the context of reauthorizing the farm bill with sustainable and 

fiscally responsible reforms such as those the Committee passed last year. 

Mr. Secretary, again thank you for being with us today. I look forward to your 

testimony.

The CHAIRMAN. I now turn to the Ranking Member for any opening statement he might have. 

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A 

REPRESENTATIVE IN CONGRESS FROM MINNESOTA 

Mr. PETERSON. Thank you, Mr. Chairman, for holding today’s 

hearing on the state of the rural economy, and welcome back, Mr. 

Secretary, and I echo Mr. Lucas’s comments that we are glad that 

you are on board for another 4 years, I hope, and we think you 

have been doing a good job. 

With the exception of those affected by the continuing drought, 

the rural economy by and large is doing well. And as long as Congress doesn’t screw things up, I am hopeful that the rural economy 

will continue to do well for the foreseeable future. And while last 

year—primarily it was the Republican leadership that kept us from 

getting a farm bill to the Floor—the fact that we had a strong ag 

economy didn’t help our case. Farmers and ranchers weren’t pressuring Congress to act because for the most part, they have been 

doing pretty well. So now we are operating under a 1 year extension of the 2008 bill, and the unfortunate part of the extension is 

5

that it does not address the need for real reforms to the dairy and 

cotton programs. There is no funding for disaster assistance, and 

funding for many of the renewable energy, conservation and rural 

development programs are reduced or eliminated altogether. 

I still think I have a question about how we are going to move 

forward. I agree with the Chairman that we need to get this bill 

done this year, but we need to have some kind of an assurance before we move ahead, number one. Number two, we have to have 

some resolution on what it is we are trying to achieve here, what 

is the number that we are going to be expected to reduce our outlays and hopefully before we get started on writing the bill, we are 

going to have some answers in that regard. I have spoken to the 

Speaker a number of times. In one of those, I said, ‘‘What really 

would help us if you and Harry Reid could come up with a number, 

what it is that is agreed to on what it is you want us to reduce 

the bill.’’ Second, what would really help us if you could come up 

with a number between the two of them on what they want to do 

with SNAP, and if we could get a number, I think it would be relatively easy to get things done. 

So hopefully this will all come together. We will get through this 

budget morass here for the next couple months and have a fairly 

good idea of how we are going to move ahead when we get ready 

to do it. The sequester is a challenge, and neither Republicans nor 

Democrats have put forward a plan to replace it that has a chance 

of getting done, so it is what it is, and there are a lot of questions 

about what it means. We haven’t gotten all the answers yet. Maybe 

we will get some of those today, and I hope that is the case. 

Before I finish, Mr. Secretary, I know you have taken some heat 

from your recent comments about agriculture and rural America, 

but I see where you are coming from. You know, we have had a 

long history of bipartisan success but I think to some extent because we have been successful, that is now causing us problems because we haven’t had the pulling together that we needed to have 

on some of these issues in rural America. I don’t know exactly what 

we do about it but it seems like good times always kind of get us 

into this situation. So we can’t afford to be complacent. There are 

other programs that are very important to rural America, as you 

pointed out, that don’t always get as much attention, and we have 

to come up with a balanced approach that takes care of everybody 

in rural America, not just farmers, if we are going to be able to be 

successful in putting together a bill that is going to stand the test 

of time. 

So again, thank you for being with us, Mr. Secretary. Thank you, 

Mr. Chairman, for holding this hearing and I look forward to the 

testimony and questions. 

[The prepared statement of Mr. Peterson follows:]

PREPARED STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE IN

CONGRESS FROM MINNESOTA

Thank you, Chairman Lucas, for holding today’s hearing on the state of the rural 

economy and welcome back, Secretary Vilsack, to the Committee. 

With the exception of those affected by continuing drought, the rural economy, by 

and large, is doing well. As long as Congress doesn’t screw things up, I am hopeful 

the rural economy will continue to do well for the foreseeable future. 

6

While it was the Republican Leadership that did not bring the farm bill to the 

floor last Congress, the strong ag economy didn’t help our case. Farmers and ranchers weren’t pressuring Congress to act because, for the most part, they’ve been doing 

pretty well. So now, we’re operating under a 1 year extension of the 2008 Farm Bill. 

The unfortunate part of an extension is that it does not address the need for real 

reforms to the dairy and cotton programs. There is no funding for disaster assistance and funding for many renewable energy, conservation and rural development 

programs was reduced or eliminated altogether. 

I still don’t think it’s worth the Committee’s time and effort to mark-up a farm 

bill this year if we don’t have an assurance that the bill will be brought to the floor. 

As it was last year, the budget situation is going to be a huge challenge, which is 

part of the reason I pushed so hard to pass a bill last Congress. CBO just put out 

a new score for the Committee’s farm bill; and instead of saving $35.1 billion over 

10 years, they now say the bill will save $26.6 billion over 10 years. So, we may 

need to reassess our objectives before moving forward. Despite all this, I’m optimistic that we’ll be able to find a way to get this done. 

The biggest challenge, at the moment, is the sequester. Since neither Republicans 

nor Democrats have put forward a balanced plan to replace it, the sequester is in 

effect. There are still a lot of questions about what this means for agriculture; I 

hope today will yield some clear answers. 

Before I finish, Mr. Secretary, you’ve taken a lot of heat for some of your recent 

comments about agriculture and rural America but, I see where you’re coming from. 

Given our bipartisan history and past success, I fear that some in agriculture take 

it for granted that farm policy will always be taken care of—that Congress will pass 

a new farm bill every 5 years or approve disaster aid in a timely manner. We’ve 

seen that this is no longer the case. There is now a significant segment of lawmakers that never met a government program they didn’t want to cut or eliminate; 

the farm bill is no exception. 

Rural America is relevant but we need get past this complacent mindset, look to 

the real issues and speak with a unified voice calling for action. If we can’t do that, 

I’m not sure what the ultimate fate of farm policy will be in this Congress. 

So, again, I thank the Chairman for this hearing and look forward to the Secretary’s testimony.

The CHAIRMAN. And I thank the Ranking Member for his comments. 

The chair would request that other Members submit their opening statements for the record so the witness may begin his testimony and to ensure that there is ample time for questions. 

With that, I would like to welcome our only witness today to the 

table, the Hon. Tom Vilsack, Secretary, U.S. Department of Agriculture, Washington, D.C. Secretary Vilsack, please begin when 

you are ready. 

STATEMENT OF HON. THOMAS ‘‘TOM’’ J. VILSACK, SECRETARY, 

U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Secretary VILSACK. Mr. Chairman, thank you very much, and to 

the Ranking Member, thank you for the opportunity to be here 

today. Let me begin by suggesting that I have submitted a formal 

statement for the record. What I would like to do is just simply 

summarize that in the interest of time. 

And let me start where every hearing in agriculture should begin 

by acknowledging an obvious fact, which is that America has the 

greatest farmers and ranchers in the world. No better evidence of 

that than what happened last year with the drought that was the 

worst drought we have seen since the 1930s, albeit crop production 

was remarkably high, given the circumstances, and it is a testimony to the greatness of our producers. 

As a result of that, and as a result of record exports, record enrollment in conservation programs, record expansion of local and 

regional food systems and expanded opportunity in the biobased 

7

economy, farmers generally enjoyed record farm income, but as the 

Chairman indicated and as the Ranking Member indicated, this 

was not necessarily shared by all in agriculture. There were regional differences and obviously differences between producers. 

Notwithstanding that, I am bullish about this year. Forty-five 

percent of America is still impacted and affected by drought but 

that is the first time that that number has been below 50 percent 

for the last 30+ weeks. We are projecting, with any kind of decent 

weather, record crop production, which should help moderate crop 

prices which in turn should allow dairy and livestock producers to 

return to profitability sometime this year, which is obviously an extraordinarily important thing. 

There is, as the Chairman indicated, a degree of uncertainty. The 

sequester has caused uncertainty, and the impact of sequester will 

be felt in terms of reduced farm credit, reduced conservation efforts, reduced food inspection and reduced exports. In addition, we 

have uncertainty as a result of the lack of a passage of a 5 year 

farm program, and now we find perhaps that work will be even 

more difficult as the Congressional Budget Office has realigned 

some of the savings from previously discussed programs, but I 

would agree with the Chairman that the most significant thing 

that could be done this year would be for us to get a 5 year farm 

program through the process. That will provide the certainty for 

producers and rural America and will reaffirm the importance of 

rural America to the rest of the country. 

But that uncertainty is complicated further by what can happen 

from other countries. We are obviously dealing with trade barriers 

as we speak. Despite the fact that we are anticipating a record export year, we are constantly battling unscientific trade barriers, 

most recently Russia’s decision with reference to ractopamine. 

I know that there will be questions about the sequester but I 

thought I should share with the Committee that we have been taking deficit reduction and budgets very seriously at USDA. Over the 

last 2 years, we have identified and implemented programs that 

have resulted in savings in excess of $700 million. We have reduced 

our workforce by eight percent. We have closed offices and labs. We 

have consolidated rented space. We focused on IT savings. We created a strategic sourcing effort for purchases of supplies, and we 

have significantly reduced travel, conferences, and supply expenditures. We are proud of this effort. It will continue because we recognize the important role of creating greater efficiencies in government. But I tell this to the Committee just simply to make sure 

that you all understand that we do take this very seriously and we 

have taken steps proactively to try to reduce our budget. As a result of the sequester, we are now faced with an operating budget 

that is less than it was in Fiscal Year 2009, and we have had pretty much a flatline budget the last 3 years. So we understand and 

appreciate the importance of being fiscally responsible and we have 

shown good faith in that effort. We will continue that. But the sequester has implications and impacts, some of which cannot be 

avoided, and I would be happy to discuss those impacts with the 

Committee today if that is of importance and significance to the 

Committee. 

8

Mr. Chairman, let me just finish by saying that despite the challenges, despite the difficulties, despite what Mother Nature throws, 

we still do indeed have the greatest farmers and ranchers in the 

country, and the result is that we can be confident that regardless 

of the challenge, rural America is up to it and we will continue to 

provide the food supply for this country, making us a food-secure 

nation. We will continue to promote conservation and water preservation and conservation. We will continue to provide an ever-increasing amount of the fuel and energy this country needs to grow. 

We will continue to create job opportunities not just in rural America but across the country as one out of every 12 jobs is impacted 

and affected in this country by agriculture, and our families will 

continue to disproportionately provide military service to this country as they have throughout history. 

I am proud to be here today as Secretary of Agriculture, and 

while I appreciate the fact that you all think I can be here for 4 

years, I serve at the pleasure of the President. I could be gone tomorrow. We will see how this hearing goes. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Vilsack follows:]

PREPARED STATEMENT OF HON. THOMAS ‘‘TOM’’ J. VILSACK, SECRETARY, U.S. 

DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Mr. Chairman and Members of the Committee, I am pleased to have this opportunity to discuss the state of the rural economy. I believe that the state of the agricultural economy is strong—and that the strength of American agriculture is driving 

further economic opportunity across rural America. Today, I would like to discuss 

why I make this statement, and highlight the significant opportunities that exist 

to continue to grow and strengthen the rest of our rural economy, which plays such 

a vital role in our nation’s overall economic health. 

The U.S. Department of Agriculture (USDA) under President Obama’s leadership 

has taken significant steps to strengthen production agriculture by: providing a 

strong safety net and expanding markets for U.S. exports; enhancing America’s conservation efforts alongside farmers and ranchers; investing in the biobased energy 

and product manufacturing of the future; and strengthening new local and regional 

marketing opportunities for producers. These efforts have already had a significant 

impact in rural America, where the seasonally adjusted unemployment rate fell to 

7.7 percent for the third quarter of Fiscal Year (FY) 2012—down from a peak of 9.5 

percent in late 2009. Going forward, we must step up our efforts to invest in these 

four areas to ensure rural America remains strong and viable long into the future. 

Additionally, it is my hope that Congress will support these efforts and provide 

more certainty for American agriculture by stopping the across-the-board spending 

cuts that went into effect on March 1, and through passage of a comprehensive, 

multi-year Food, Farm and Jobs Bill. 

Supporting Production Agriculture 

America’s rural economy is tied closely to the success of our farmers and ranchers. 

The Administration recognizes the critical role American agriculture plays in 

strengthening our economy, given that one in twelve U.S. jobs is supported by our 

agriculture sector, and we have prioritized the delivery of a strong safety net. 

Thanks to their willingness to innovate, use of technological advances, and smart 

business decisions, producers have kept U.S. agriculture strong in the face of a 

record drought and other disasters over the course of the past year. After adjusting 

for inflation, net farm income is projected to be the highest in 4 decades, and aggregate farm equity is at an all time high. I’m proud of USDA’s record under President 

Obama to provide a strong safety net for producers while expanding markets for 

U.S. products. 

USDA staff has successfully implemented a number of new and complicated programs to ensure the effectiveness of the farm safety net. In 2009 and 2010 the Department expedited implementation of the 2008 Farm Bill disaster programs, which 

provided more than 400,000 payments to producers totaling $4 billion. USDA has 

made record farm loans—more than 134,000 loans totaling $18.6 billion in credit. 

9

And we strengthened the Federal Crop Insurance Program, achieving $4 billion in 

savings while ensuring that many producers had an avenue for assistance in times 

of disaster. 

During the historic drought last summer, the Administration took every possible 

step to strengthen the safety net. For example, USDA shortened the time taken to 

provide Secretarial Disaster Designations, achieving a 40 percent reduction in processing time and quicker assistance for farmers and ranchers. USDA worked with 

crop insurance companies to provide flexibility to farmers within the Federal Crop 

Insurance Program, freeing up about $20 million for producers. USDA opened millions of Conservation Reserve Program acres for emergency haying and grazing—

making an estimated $200 million in additional forage available for producers while 

still meeting our conservation goals. We further expanded credit, effectively lowering the Farm Service Agency (FSA) Emergency Loan interest rate and working 

with the Small Business Administration to extend nearly $7 million in SBA emergency credit for rural small businesses. USDA also purchased over $170 million of 

pork, lamb, chicken, and catfish to help relieve pressure on American livestock producers and bring the nation’s meat supply in line with demand. 

While I am proud of these efforts, it is clear that more must be done to provide 

a complete safety net that comes with the certainty of a multi-year Food, Farm, and 

Jobs Bill. For example, many in the dairy and livestock industries remain severely 

impacted by rising input and feed costs and tight margins as a result of the drought 

and other disasters. Our current farm safety net is centered on crop insurance, 

which is critically important for many farmers but does not provide certainty for 

dairy and livestock producers, or growers of many specialty crops. Additionally, 

without a comprehensive, multi-year farm bill that provides long-term certainty for 

producers, it is difficult to ensure that a strong and viable safety net of programs 

is consistently offered by USDA. 

In addition to our efforts to provide a strong safety net, USDA will work in the 

coming years to support production agriculture by expanding new markets around 

the world, building on three new trade agreements signed by President Obama with 

Korea, Colombia, and Panama. Agricultural exports have increased 43.6% from 2009 

through 2012, from $101.2 billion to a record $145.4 billion. This progress means 

that agriculture is making a strong contribution to achieve President Obama’s goal 

under the National Export Initiative of doubling exports by the end of 2014. Over 

the course of 2013, I am hopeful that the United States can achieve additional trade 

with the European Union and with a number of Asian nations through progress on 

a Trans-Pacific Partnership. 

USDA will also continue to support production agriculture by investing in strong 

agricultural research, particularly as we investigate new measures to adapt agriculture to extreme weather events. Since 2009, USDA has thoughtfully restructured 

its science agencies to ensure the most effective and efficient use of its resources, 

while leveraging the strengths of our partners across the scientific community to 

achieve even more results. For example, the National Institute of Food and Agriculture (NIFA) was created to advance knowledge by supporting research, education 

and extension programs in the Land-Grant Universities and other partner organizations. In 2012, we celebrated 150 years of partnership with the Land-Grant Universities, which have educated more than 20 million students and opened the doors of 

education far and wide. Studies have shown that every dollar invested in agricultural research returns roughly $20 in economic benefits to the nation. 

Unlimited Opportunity for the Rural Economy 

As I mentioned, the rural economy is stronger today—led by the continued 

strength of the agricultural economy and record efforts by President Obama to invest in the prosperity of rural communities. For example, since 2009 USDA has provided nearly 15,000 loans and grants to help more than 60,000 rural businesses 

grow and support more than 320,000 jobs; helped more than 620,000 rural families 

to achieve the dream of homeownership; and invested in nearly 8,000 projects to 

help rural towns and communities provide vital community facilities. 

At the same time, the Administration recognizes the long-standing challenges that 

the decline in rural population, as well as continuing rural poverty, pose to our nation’s well-being. In addition to our continuing support for production agriculture 

that stands at the heart of the rural economy, USDA is focused on helping to 

achieve new markets and new partnerships for local and regional agricultural markets; conservation, natural resources and outdoor recreation; and further development of an advanced biobased economy—all of which will complement the strength 

of production agriculture to create new opportunity in rural America. 

USDA is focusing on providing new local and regional marketing opportunities for 

farmers and ranchers. Our efforts to promote local and regional marketing opportuVerDate 0ct 09 2002 11:48 Jul 10, 2013 Jkt 041481 PO 00000 Frm 00013 Fmt 6633 Sfmt 6621 I:\DOCS\113-01\79934.TXT BRIAN
10

nities have increased the number of farmers’ markets to more than 7,800 nationwide, a 67 percent increase over 2008. We also have taken steps to increase the 

number of regional food hubs to more than 200 in operation nationwide today. We 

will also continue looking for new steps to aid smaller farmers and farm businesses, 

an effort that will complement investments in local and regional marketing opportunities. In January, USDA finalized a new Microloan Program within FSA’s Direct 

Operating Loan program. The program will provide loans up to $35,000 to help 

launch startup farm businesses, provide needed resources, and increase equity so 

farmers can graduate to commercial credit and expand their operations. Access to 

credit is especially important for young farmers who are faced with high start-up 

costs and record land prices. 

USDA will help spur job creation through conservation and management of America’s natural resources. Visitors to National Forests have helped support more than 

200,000 jobs annually in rural communities. By protecting and strengthening these 

National Forest System lands and resources, we can provide even greater opportunities for outdoor recreation in the national forests. In the coming years USDA will 

take new steps to support conservation efforts while providing new opportunity for 

farmers to generate income. For example, USDA set a new goal last year to target 

1 million acres for wildlife habitat to further support hunting, fishing and conservation efforts through the Conservation Reserve Program (CRP). USDA has supported 

states and other partners in their efforts to establish ecosystem trading markets, 

an effort that will continue in 2013. USDA also is further investigating the potential 

use of multi-cropping by farmers to further expand the availability of cost effective 

biofuel feedstocks while reaping significant economic and natural resource benefits. 

USDA will continue to make investments needed to grow opportunity in the 

biobased economy. USDA has helped create markets for advanced biofuels from nonfood, non-feed sources—from the farm field to the end user—and we are taking the 

necessary steps to create more jobs through rural manufacturing. Since 2009 USDA 

has helped jumpstart efforts to provide a reliable supply of advanced plant materials 

for biofuels. USDA has provided incentives to produce advanced feed stocks for 

biofuels; invested in efforts to build advanced new biorefineries; invested in six regional research systems across America to develop advanced biobased energy technology appropriate to every region; and worked with agencies across the government—including the U.S. Navy—to strengthen markets for the use of advanced 

biofuels. Meanwhile, biobased manufacturing is stronger, with 3,000 companies producing more than 25,000 plant-based products today. The Administration has supported this growing industry, prioritizing more than 9,000 ‘‘biobased’’ products for 

Federal procurement. In the coming year, USDA has set a goal to assist 50 additional U.S. companies producing homegrown biobased products. 

The Administration believes that in the wealthiest nation on Earth, no American 

who works hard at a full-time job should live in poverty. Even as we create more 

jobs in rural America, the Administration recognizes that there are areas of persistent poverty across rural areas. In 2013 USDA will continue to expand a pilot 

program—the Strike Force for Rural Growth and Opportunity—to identify persistent poverty communities in pilot states and carry out targeted efforts to increase 

program awareness and opportunity in these areas. USDA piloted the Strike Force 

Initiative in 2010 in the States of Arkansas, Georgia and Mississippi. In 2011, the 

Strike Force expanded to the Southwest adding Colorado, New Mexico and Nevada. 

The efforts to target resources to areas in the pilot have already been successful. 

For example, FSA loans in Strike Force areas were up almost ten percent in 2012 

over the previous year—even when the nation as a whole saw farm lending drop 

ten percent. USDA intends to further expand the Strike Force initiative to additional states in the coming months. 

Conclusion 

Finally today, I want to reiterate the critical nature of providing certainty through 

a balanced and sensible plan to stop the sequester that took effect on March 1, as 

well as a through passage of a comprehensive Food, Farm and Jobs Bill. 

Like all American families, it’s important that USDA and other Federal agencies 

get our job done within a sensible budget. USDA’s efforts have helped to deeply reduce USDA’s operating expenses over the past 2 years. Through the Blueprint for 

Stronger Service we have achieved more than $100 million in cost avoidances already, with efforts underway to achieve $250 million in such savings over the course 

of this year. However, the across-the-board spending cuts known as sequestration 

are now severely limiting our ability to deliver critical programs for the American 

people, and I share the President’s hope that Congress will stop these harmful cuts. 

Through passage of a comprehensive, multi-year Food, Farm and Jobs Bill, Congress would provide much-needed certainty to millions of Americans impacted by 

11

this legislation and USDA programs. The farm bill provides for a great number of 

critical programs delivered by USDA, including programs for farm commodity and 

price support, conservation, research, nutrition, food safety, and agricultural trade. 

Over the course of 2013, I look forward to working with Members of this Committee, 

and with Congressional leaders, to achieve passage of a comprehensive, multi-year 

Food, Farm and Jobs Bill that will allow USDA to continue to provide a strong safety net, combat rural poverty and create even more good jobs in rural America. 

Mr. Chairman and Members of the Committee, thank you for this opportunity to 

speak briefly about the current state of the rural economy in the United States. 

Rural Americans have shown over the past year their resolve and their willingness 

to embrace innovation—and I believe that the same tools that kept the rural economy resilient over the course of an uncertain year will help rural America continue 

to drive the economy forward.

The CHAIRMAN. Thank you, Mr. Secretary, and I would note for 

the record that the Secretary of Agriculture’s position has always 

been one of the most challenging in any Presidential Cabinet, and 

those who serve for a full term or potentially two terms are to be 

greatly respected and admired. 

That said, let us talk for a moment about the February 27 memo, 

but first I should note, the chair would like to remind Members 

that they will be recognized for questioning in the order of seniority 

for Members who were here at the start of the hearing, and after 

that, Members will be recognized in order of arrival. I appreciate 

the Member’s understanding, and I recognize myself for 5 minutes 

for questions. 

Let us talk about that February 27 memo, Mr. Secretary, from 

OMB regarding agency responsibilities in the event of sequestration. It states that agencies must be guided by the principles of 

protecting the agency’s core mission to serve the public to the 

greatest extent practical. Wouldn’t you agree that providing the essential inspection services that protect public health and provide 

wholesome and affordable food is consistent with that directive? 

Secretary VILSACK. It is, Mr. Chairman, so long as there is adequate appropriations to provide that assistance, and that is the 

problem. The sequester, the way it is structured, requires every account to be reduced by the same percentage amount, and in the 

food safety area, there are very few accounts. Eighty-seven percent 

of the budget is frontline inspectors and the support system for 

those frontline inspectors. We have a limited period of time in 

which to implement the sequester, 6, 7 months. The impact of it 

is basically 10 to 12 percent of our remaining budget, and no matter how you slice it, no matter how you dice it, there is nothing you 

can do without impacting the frontline inspectors. You don’t have 

the luxury as you do in normal circumstances of transferring 

money because there is no money to transfer based on the way the 

sequester is structured. 

So I agree with you, the inspections are very, very important, 

and we will do everything we can to minimize the disruption, but 

I have to be truthful with this Committee that based on the way 

the sequester is structured, it will impact food inspection. 

The CHAIRMAN. But you will, Mr. Secretary, utilize the maximum 

flexibility you have? I mean, you have substantial inspectors and 

plants all over the country, plants that work on different hour 

schedules. The odds that we would furlough every inspector on the 

same day are rather minuscule, correct? 

12

Secretary VILSACK. Well, the problem, Mr. Chairman, is that it 

is not just a circumstance of flexibility in terms of the facilities. 

There are 6,263 facilities, and the reality is that you have to be 

careful about how you structure this because some facilities are actually dependent upon the work of other facilities, and we are now 

seeing some of these facilities actually reducing their hours because 

of the overall economy, so it is a complicated process that we have 

to go through to determine how and under what circumstances, 

plus this is not just something I can determine by myself. There 

are requirements to bargain with the union that represents the inspectors in terms of the sequencing and the structure of the sequester and how it is implemented. So it is extraordinarily complicated. 

The CHAIRMAN. So if the sequester trumps the food safety Acts, 

which is basically what you are saying, do your union labor agreements trump the sequester act? 

Secretary VILSACK. No, Mr. Chairman. The way I see this is, the 

Food Safety Inspection Act requires companies that want to sell 

meat, process pork whatever, to have those items inspected before 

they can sell them to customers. The law also requires that the 

companies cannot privatize, if you will, that inspection service. It 

has to be done by USDA officials, USDA employees. That is subject 

obviously to having the resources and the appropriations to be able 

to pay for those inspections because you have anti-deficiency issues. 

So it is not a matter of trumping, it is just a matter of the sequencing of this is such that if you don’t have the money to pay for people, you can’t have people on the line, and that is, candidly, where 

we are. 

The CHAIRMAN. So in the circumstance you have described, it 

would sound like there are things that obligate you not to begin immediate furloughs. How far down the road is it before those issues 

will be sorted out? 

Secretary VILSACK. That is a fair question. This week we will 

send out notices to the union representatives that a furlough is 

possible, and one of the challenges is that not every one of our 

workers in this particular area has e-mail, so we actually have to 

hand-deliver a letter or written notification to those employees. 

That has to be followed up under the agreement with oral conferences that have to take place for any employee who requests an 

oral conference. That will be done at the local level by local or regional supervisors. So we are looking at a several-month period, if 

you will, before a furlough could be implemented, assuming that we 

can negotiate with the unions a process, and I obviously don’t know 

when those negotiations will take place, but I am assuming that 

we will be able to get to a resolution of how and under what circumstances. So the industry will have some notice of what will actually happen, which we hope we will be able to some extent, a 

minimal extent avoid the disruption that is going to occur. 

The CHAIRMAN. Mr. Secretary, could your lawyers down at the 

Department—we are going to get questions as Members and as a 

Committee as a whole about how all this works. Could your lawyers provide us with the legal background on how they make their 

decisions on what takes priority over what so that we can understand what is going on? 

13

Secretary VILSACK. Sure. I think Senator Grassley requested an 

evaluation, which we are furnishing today or tomorrow, and we 

would be more than happy to furnish that to the Committee. 

The CHAIRMAN. Thank you, Mr. Secretary. My time has expired. 

I now recognize the Ranking Member for 5 minutes. 

Mr. PETERSON. Thank you, Mr. Chairman. 

So I am trying to understand this. So 87 percent of the money 

goes to inspectors, and you just said it is going to take some matter 

of months before you get through this process, so I don’t know what 

that is, maybe 3, 4 months. 

Secretary VILSACK. Well, it is going to take several months because——

Mr. PETERSON. So my question is this. You have to cut five percent, and you now have by September 30, right? 

Secretary VILSACK. I am sorry. What? 

Mr. PETERSON. By September 30, you have to cut five percent? 

Secretary VILSACK. That is correct. 

Mr. PETERSON. So if it is going to take some number of months, 

you could get down to a situation where you have only have 3 

months left in the year by the time you get this ready to go? 

Secretary VILSACK. That is correct. 

Mr. PETERSON. Does that mean that you are going to have to 

make bigger reductions in order to meet the five percent? Is that 

the reality of what the situation is? 

Secretary VILSACK. If you have 6 months left to implement this, 

you have, in essence, a ten percent reduction of your remaining resources. If there are 3 months, you have a 15 percent reduction of 

your remaining resources. 

Mr. PETERSON. So that is how it is going to work? 

Secretary VILSACK. Well, we may have a bit more than 3 months 

but it won’t be a lot more than 3 months, and that is one of the 

problems. 

Mr. PETERSON. Now, last year, a year ago, FSIS issued a proposed rule on modernization of poultry inspection, and according to 

your data, establishments operating under this HACCP-based inspection model project called HIMP, a pilot project, that performs 

as well or better than traditionally inspected plants, and furthermore, the rule created additional poultry plant jobs and will have 

budgetary savings for FSIS. Can you give us an update on when 

USDA plans to issue a final rule on this? 

Secretary VILSACK. Well, we are hopeful of getting this through 

the process this year, Congressman. This is an important opportunity for us to improve the safety of food inspection in poultry 

plants. It really hasn’t changed for probably 60 years. It is an opportunity for us to really focus on where we think the risk of pathogens is greatest. It does require a shifting of responsibility with 

companies assuming more responsibility for examining defects of 

poultry that are not necessarily tied to food safety, and that would 

free up our inspectors to actually do a better job of inspecting the 

entire plant. We do believe it will save money and we believe, 

based on the experience, that it will reduce illnesses and the risk 

of death. 

Mr. PETERSON. But it won’t happen before September 30th? 

Secretary VILSACK. No, no. 

14

Mr. PETERSON. A few weeks ago, Deputy Secretary of Defense 

Ashton Carter testified regarding the sequester that if they had additional flexibility, well, I guess he testified that at this late date 

would do little to offset the effects of sequestration, even if they 

had flexibility. Is the Department seeking any legislation to give it 

flexibility? I know we have had discussions that if you had some 

flexibility, you might be able to avoid some of the problems with 

the meat inspectors, for example. Are you able to pursue anything, 

or where are you all with all of that? 

Secretary VILSACK. Well, respecting the process here, knowing 

that you all are going to be faced with a circumstance in a couple 

of weeks of having to decide what to do with the continuing resolution and discussions that will take place in terms of the farm bill. 

Our focus has been on basically implementing the sequester, focusing on what we would do in the event the continuing resolution is 

not continued and trying to do the best we can to deal with the extension of the farm bill and to work with this Committee and the 

Senate Committee to try to get a farm bill through. That is where 

our focus has been. 

You know, we will work with whatever Congress provides us but 

you have to give us the tools, and the reality is that there are 

micro problems and macro problems with the sequester. You know, 

$85 billion taken out of the economy in addition to the payroll tax 

increase that took place at the 1st of the year is a pretty significant 

hit to the economy. It is going to probably impact growth. We are 

trying to avoid that the best we can. 

Mr. PETERSON. But bottom line, if you had some flexibility, you 

might be able to soften some of the problem with the meat inspection situation? 

Secretary VILSACK. Well, the reality of a sequester is that it 

doesn’t allow you any ability to prioritize. 

Mr. PETERSON. Right. So if you had flexibility to move things 

around, it might not be as big of an issue with the meat inspectors? 

Secretary VILSACK. We would obviously recognize the important 

role of mission first and we would do everything we could to make 

sure that the most important missions were completed and done. 

We don’t have that capacity today. That is why this is recognized 

by all as bad policy. 

Mr. PETERSON. Thank you. Thank you, Mr. Chairman. 

The CHAIRMAN. The gentleman’s time has expired. The chair now 

recognizes the gentleman from Iowa, Mr. King, for 5 minutes. 

Mr. KING. Thank you, Mr. Chairman, and thank you, Mr. Secretary for your testimony and your service as our Secretary. 

I am following up on the gentleman from Minnesota’s questions. 

The viewpoint I would have would be that if you had more—what 

I am hearing is, if you had more flexibility, you could diminish the 

effect of the potential furlough of our meat inspectors, and I don’t 

hear you say yes to the question, have you submitted a plan or proposal as to where you might take that money if you had full flexibility within the Department. Can you tell us here today where you 

would take that money from if you had full flexibility? 

Secretary VILSACK. Congressman, I am a little reluctant to do 

that because I would like to obviously have the opportunity to understand precisely what flexibility I have, what directions Congress 

15

is providing to me and what our staff has to say. These are difficult 

choices that we make. Do we take it from the Foreign Agricultural 

Service and reduce exports? That is not a particular——

Mr. KING. But I am really interested in what you might do, and 

rather than what would be a bad thing to do, and as I watch the 

Pentagon, they seem to be able to propose that they can furlough 

civilian employees with a significant amount of flexibility. I am 

going to expect that they went to OMB for analysis of the sequestration language. Have you had any directives from OMB that 

would illuminate this thing in such a way that you have less flexibility than the Pentagon, perhaps? 

Secretary VILSACK. Well, no. The Pentagon—the difference, Congressman, is depending upon how many accounts you have in a 

particular area. So, for example, NRCS in my world has far more 

accounts than the food safety account and so you do have some degree within the NRCS world of being able to prioritize because you 

have different accounts. But with food safety, you only have a couple of accounts and they are all basically people, and most of them 

are people on the front lines. 

Mr. KING. I do understand that, and that has been part of your 

public statement over the last few days. I would ask you if you 

would be willing to, and just ask you to submit to this Committee 

your recommendations on what you would like to see written into 

the CR to give you the flexibility necessary so that the meat industry no longer has to be concerned about the backup that could be 

caused by furloughs of meat inspectors? 

Secretary VILSACK. Well, the answer to that question is relatively 

easy, Congressman. Just give us the resources. 

Mr. KING. That is not an option, Mr. Secretary, as you well 

know. 

Secretary VILSACK. Well, see, now, that is a choice you all are 

making. 

Mr. KING. That is a choice that was actually recommended by the 

President and it is the current law. I am suggesting this: staying 

within sequestration caps, which you have said that you intend to 

do and follow the law. Do you have a recommendation you would 

be willing to offer this Committee that could go into the CR that 

would alleviate the meat inspection problem that you say is impending? 

Secretary VILSACK. Well, again, if I was going to make a recommendation, it would be to adequately fund that line item of the 

budget. 

Mr. KING. We have reached an impasse on that, Mr. Secretary. 

So let me pose a couple of other things. Can you cite any evidence 

that the School Lunch Program is contributing to the obesity of our 

children? 

Secretary VILSACK. Well, there is an Institute of Medicine study 

that was done prior to the Healthy, Hunger-Free Kids Act passage 

in 2010 that suggested that our School Lunch Programs were providing our youngsters with too much sodium, too much sugar and 

too much fat content, all of which do in fact contribute to obesity. 

Mr. KING. Out there across the people that are providing the food 

to these kids, I can’t find anybody in the industry, in the cafeterias 

16

that would concur that the food they are getting now is contributing to obesity. 

Secretary VILSACK. Well, there is a difference, Congressman. You 

asked if there was evidence——

Mr. KING. You cited the study, and I recognize that. 

Secretary VILSACK. So if you are asking the question today, obviously we are taking steps to improve our meals and providing more 

fruits and vegetables, less sodium, less sugar, less fat, more whole 

grains and low-fat dairy. So we believe that it is making a difference, and the fact that we have seen obesity levels in major cities basically plateau is a good indicator of perhaps——

Mr. KING. I read the First Lady’s op-ed on that. I didn’t see a 

lot of evidence in it, but I saw her op-ed. But can you cite a statutory directive to cap calories or meat in the School Lunch Program, 

or isn’t that an option that you have taken when you wrote the 

rules? 

Secretary VILSACK. Well, one of the concerns obviously is calories 

in and calories out, and what we have done in light of the concerns 

that have been expressed by school officials is to provide some degree of flexibility on this. I think there is greater appreciation and 

greater acceptance of this because of the flexibility we provided. So 

there has been flexibility but we haven’t necessarily sacrificed the 

principles that the Healthy, Hunger-Free Kids Act directed us to 

do. 

Mr. KING. What is the rationale for rationing meat? 

Secretary VILSACK. Well, it is not rationing meat. It is balancing 

the meal, Congressman. It is making sure that there is a balance 

between fruits, vegetables, grains and protein. 

Mr. KING. You have a cap written into it, meat that can be supplemented by other forms of protein, so I would define that as rationing meat. What would the rationale be? 

Secretary VILSACK. Well, it is giving school districts choices in 

terms of their protein choices and making sure that they understand the importance of a balanced plate and a balanced meal. 

Mr. KING. Thank you, Mr. Secretary. I yield back. 

The CHAIRMAN. The gentleman’s time has expired. The chair now 

recognizes the gentleman from Georgia, Mr. Scott, for 5 minutes. 

Mr. DAVID SCOTT OF GEORGIA. Thank you, Mr. Chairman. 

Mr. Secretary, given that in respect to the furloughs of the food 

safety inspectors under sequestration, and the fact that these food 

inspectors do not just stop at the plant but they deal with the 

ranchers, the farmers and ultimately the consumers under sequestration, so it would be very interesting to get your take: will sequestration give the American people cause for alarm about the 

safety of the food they will eat? 

Secretary VILSACK. Congressman, I don’t think it is so much the 

safety of the food in my world, in USDA. Now, if I were the FDA 

Commissioner, I might answer that question a little bit differently. 

But we know that when inspectors leave the plant, the plant shuts 

down. I think it is more about the supply and production of food 

and whether we are faced with higher prices or lower prices as a 

result of disruptions in supply and the impact that it has on producers. I mean, the reality is, if you feed a chicken one more day 

than you should, then basically it creates potential issues with that 

17

chicken going down the line and the equipment and the machinery 

that is used to process. So there are ramifications to this. I think 

it is less about the safety and more about production, but on the 

FDA side, it is more about safety. 

Mr. DAVID SCOTT OF GEORGIA. And you say that given the fact 

that we have had a number of foodborne illnesses, Salmonella outbreaks, given the current status of food inspectors. And now we are 

going to have this furloughing system, and you can give the American people assurances that the food safety will not be jeopardized 

through this sequestration and loss of the number and the availability of man-hours for food safety inspectors? 

Secretary VILSACK. Our number one goal, Congressman, is to 

make sure that product that leaves those plants is safe, and we 

have taken steps in the last couple of years to reduce the risk of 

Salmonella and we are going to continue to work hard to make 

sure that food is safe. I don’t want to—this is not about creating 

great concern among consumers. This is about being very truthful 

about the consequences of sequester, which is that it is going to 

disrupt production in these facilities. 

Mr. DAVID SCOTT OF GEORGIA. So it will disrupt production but 

will not jeopardize food safety? 

Secretary VILSACK. Just simply because it is a situation where 

the production of food is stopped and it creates a clog in the system 

or it creates shortages, which has an impact on consumers and on 

grocery stores and things of that nature. 

Mr. DAVID SCOTT OF GEORGIA. Well, tell us how these furloughs 

will work. That will be helpful. Will they be staggered or will all 

15 furlough days have to be taken continuously? 

Secretary VILSACK. I don’t think that you are going to see a continuous furlough because that would basically shut the pipeline 

down completely. What we are going to try to do is to maintain 

some degree of movement through the pipeline to avoid a more significant disruption. 

Mr. DAVID SCOTT OF GEORGIA. Well, does an individual plant’s 

production cycle have any bearing on when the inspectors assigned 

to that plant will suffer their furlough days? 

Secretary VILSACK. If I understand your question, it is not so 

much the cycle that the plant is on, it is more how we can coordinate the furloughs to make the most sense and to avoid the least 

amount of disruption and to treat all plants equitably. 

Here is the issue. You know, just a hypothetical. Let us assume 

for the sake of discussion we wanted to create a regional impact 

and we would start in the Southeast initially and we would furlough people in the Southeast and then let us assume that Congress decided through a CR or the farm bill or some other mechanism to provide resources to end the sequester or to change the sequester or to create greater flexibility. If you don’t treat everybody 

the same, you have a situation where some plants will be inequitably treated, and we think it is important as a principle of this 

to try to be as equitable as we can in this process. 

Mr. DAVID SCOTT OF GEORGIA. And your process of dealing with 

the furloughing of these food inspectors that you have outlined so 

far is basically categorized by the $85 billion sequester that will go 

through September 30th. Let us suppose that continues. Has any 

18

thought been given to what the impact will be if we go beyond, if 

we are not able to come up with a substitute to the sequester in 

this short period of time? What will happen if it goes on 2 years, 

3 years? 

Secretary VILSACK. That gets back to the Ranking Member’s 

point about the poultry slaughter inspection process. At least as it 

relates to poultry, there are potential savings that could be realized 

with this new system if it is instituted and implemented. That is 

one thing. And obviously in a budget situation without the limitations of a sequester, you obviously have a much greater capacity to 

prioritize. That is one of the reasons why even though our budget 

is below Fiscal Year 2009 total, our operating budget, in the food 

safety area, it is pretty much flatline because there has been a recognition by Congress that that is an area that should not be reduced, but the Farm Service accounts, the Rural Development accounts, some of the other areas of our budget have been significantly reduced. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. DAVID SCOTT OF GEORGIA. Thank you, Mr. Chairman. 

The CHAIRMAN. The chair now recognizes the gentleman from 

Texas, Mr. Neugebauer, for 5 minutes. 

Mr. NEUGEBAUER. Thank you, Mr. Chairman. 

Mr. Secretary, thank you for being here. I don’t want to spend 

a whole lot of time on the food inspection but I want to go to a follow-up. I am a little concerned about the fact that you are going 

to wait 3 months before you begin to implement the sequester and 

so banking basically then on having to do a larger amount of cut 

in the last 3 months. I think the question is, why wouldn’t you 

begin that process almost immediately and sit down with the 

stakeholders and say, ‘‘Where in your plants could we inspect 4 

days rather than 5 days?’’ Because in some areas, as you mentioned, some of the production, the capacity is down in the beef industry, for example. Why wouldn’t you start that now? I am not 

very concerned about the negotiations with the labor unions. What 

I am concerned about is farmers and ranchers all across America 

that are growing livestock or poultry and their ability to take that 

to markets and for the people of this country to be able to have safe 

food. So I am a little confused why you would start this labor union 

process now and possibly make this process more harmful than it 

needs to be. 

Secretary VILSACK. Well, Congressman, first of all, we are contractually required to start the process and we are contractually required to give at least 30 days’ notice. Unfortunately, not all of our 

frontline inspectors have e-mail so those people have to be handdelivered. 

Mr. NEUGEBAUER. I heard that. 

Secretary VILSACK. Okay. 

Mr. NEUGEBAUER. So here is the question. You have known this 

is coming. This is your Administration’s plan. Why did we wait 

until March 1st to begin this process? Why didn’t we begin that 

process sooner? 

Secretary VILSACK. We couldn’t begin until the President signed 

the order, Congressman. That was what actually triggered the Act 

and gave us the authority to then begin the process. If I can just 

19

say one thing in response to your question to clarify this, it really 

doesn’t make any difference in terms of the number of furlough 

days whether we do it in 3 months or 6 months. The number of 

furlough days is a finite amount of days based on the amount of 

savings that we have to accomplish. What it does provide is notice 

to the industry and producers a long enough period of time. To the 

extent they can prepare or adjust, they have a little bit more time 

to do that. And we are expecting that the furlough days might be 

in the neighborhood of 11 to 12 days at this point. 

Mr. NEUGEBAUER. I want to move on. As you alluded to in your 

testimony, recently the CBO updated their scores for the House 

and Senate farm bills from last year that were passed out of committees but did not become law. In their analysis, both the House 

and Senate bills for nutrition funding, CBO stated that CBO now 

estimates that spending on nutrition programs under Title IV of 

the legislation would be $4 billion more in the next 10 years than 

it was estimated in 2012, primarily because of a change in our estimate of a provision regarding utility allowance, LIHEAP, I guess 

it is referring to, in the Supplemental Nutrition Assistance Program. CBO has obtained new information on states’ practices and 

the USDA’s interpretation of the current law with respect to how 

households qualify for utility allowances, and accordingly, CBO 

now believes that the states would have more flexibility under proposal than was assumed from the previous estimates. This is a 

quote from the CBO report. ‘‘Thus, now CBO expects that these 

provisions will bring little or no reduction to the cost of nutrition 

programs.’’ I think that is very troubling because that was probably 

one of the most bipartisan aspects of the farm bill both in the 

House and the Senate, but what is troubling is, basically they went 

back and reevaluated how you are interpreting that provision, and 

it is how you are interpreting that provision that is causing them 

to say that this program is going to cost more money. How would 

you respond to that? 

Secretary VILSACK. Well, I would say this, Congressman. With 

due respect to the CBO, I think that this issue is far from settled, 

and the reason I say that is, that it is not a situation where CBO, 

as I understand it, went out to all 50 states to find out precisely 

how they were administering this utility allowance. They only contacted two states. I think that we may have a small sampling here, 

and our view is that perhaps a larger sampling might result in a 

different conclusion. 

Mr. NEUGEBAUER. What are you going to do proactively to—this 

is a major setback for the farm bill, and it is a major setback for 

the American people—if in fact it is becoming too easy for states 

to utilize this loophole, if you would call it that. This is a program 

that, as you know, when you look at the graph, is increasing at an 

alarming rate. Some people say one in seven Americans are now 

on food stamps, but at a time when were trying to cut back, making it easier for states to somehow game the food stamp program 

is a little disheartening. 

Secretary VILSACK. Well, we are certainly not interested in having folks game the system. I would point out that there are many 

reasons for the increased number. Part of it is an economy that for 

many has not been what it needs to be. Part of is an aging popuVerDate 0ct 09 2002 11:48 Jul 10, 2013 Jkt 041481 PO 00000 Frm 00023 Fmt 6633 Sfmt 6601 I:\DOCS\113-01\79934.TXT BRIAN
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lation. Seniors now comprise an ever-increasing amount of food 

stamp recipients. In fact, 80 percent of those who receive SNAP 

benefits are either senior citizens, people with disabilities, children 

or those who are actually in the workforce but simply are working 

at jobs that aren’t paying enough. 

I think the goal here, Congressman, and we would be happy to 

work with you on this, is ways in which we can figure out those 

people who are working at jobs, if we could get them to a better 

job with a little more training and a little more education, maybe 

we could get them out of the program which is to me the best way 

to do this is to get folks so they don’t need the program, and we 

are happy to work with you on that. 

The CHAIRMAN. The gentleman’s time has expired. The chair now 

recognizes the gentleman from California, Mr. Costa, 5 minutes. 

Mr. COSTA. Thank you very much, Mr. Chairman. A lot of questions, a little time. Thank you, Mr. Secretary, for your willingness 

to continue to serve as our Secretary of the United States Department of Agriculture, an important job. 

Just an observation. I mean, we are still spinning who is responsible for the sequestration. Let us all remember that we all agreed 

to this a couple years ago, and while we may not like various aspects, we did so under the feeling that it would not be implemented. Well, it is here and now the fact is, we are all responsible, 

period, and the American public gets it. 

On the issue of—and I am not going to beat this horse to death, 

but on the issue of our USDA inspectors, the carring out of their 

services, the Office of Management and Budget in the past has determined this to be an essential service. Now, how we handle this 

and the conversation that we just had is based on what happens. 

I am clear about that. But you deem that these services are not essential, and I am trying to understand, Mr. Secretary, why we 

would not deem these services as being essential. 

Secretary VILSACK. Well, Congressman, that option is not available in a sequester circumstances. Here is the difference. When we 

are dealing with——

Mr. COSTA. I think they are essential. 

Secretary VILSACK. Well, I do too, but that is not the issue. The 

issue is, you are asking in a continuing resolution where we are 

looking at a shutdown or lapse in budget, there is an expectation 

and anticipation that there are going to be a budget and there are 

going to be resources to essentially reimburse the food safety folks 

because you are going to have a budget and you will be able to reimburse, you will have the flexibility to do this. In this situation, 

we are not talking about a lapsed budget; we are talking about a 

cut in the budget. And so you have not provided sufficient resources to pay for the inspectors. It is not about their classification 

as essential or non-essential, it is that there simply is not enough 

money to pay them for the service that they have to provide. 

Mr. COSTA. All right. I want to move on. You talked in your 

opening comments about the impacts of the drought throughout the 

country, and regionally they have been very difficult, devastating 

in some communities. We are finding a situation back in California 

where the last 2 months, January and February, have been the driest 2 consecutive months since 1925. I am wondering under your 

21

definition of drought whether or not because nine percent of California is irrigated, whether or not we qualify under the definition 

of drought, because I can tell you, we just last week received a 25 

percent allocation for water under the projects, 40 percent right 

now at the state. That may be cut back. And we are facing a very 

difficult situation, a possible repeat of 2009 and 2010 where we had 

over 40 percent unemployment levels in some communities. 

Secretary VILSACK. Our definition of drought is based on the 

Drought Monitor and it is based on factors that are taken into consideration, and that Monitor is adjusted every week, which is why 

I was in a position to say to the Chairman that for over 30 consecutive weeks we had over 50 percent of America on that Drought 

Monitor. Now we are at 45 percent. It may very well include significant sections of California to make up that 45 percent. 

Mr. COSTA. Okay. I want to follow up with you on that. The definition on rural has been a problem for many of us in this Committee, and we lamented in previous hearings where members of 

the USDA have testified why we didn’t get a more timely response 

on the definition of what is rural. We finally got it last month, and 

I am not so sure that I am pleased. Maybe I will ask you to go back 

to the drawing board. But the fact is, we have oversubscribed accounts. What is the proposed rule on rural definition? What is your 

intent in terms of implementation? 

Secretary VILSACK. Well, the proposed rule basically sets a sort 

of single definition as opposed to the 11 or 12 different definitions 

that we have in law at 50,000 people or less, and it is a reflection 

of what is happening to the demographics in the United States as 

the rural population now represents 16 percent of America’s population and that is the lowest percentage in the history of the country. I think in order for us to make sure that we continue to be 

viable in terms of resource allocation, we have to make sure that 

we have sufficient resources coming into those rural areas. A definition will help in that respect. 

Having said that, I recognize that we are going to have to ensure 

that very, very small communities are able to get their fair share 

of the resources we have, and what we have been attempting to do, 

Congressman, is encouraging small communities to work regionally 

because we are pretty convinced that you get more leverage and 

better bang for your buck and you extend the human and financial 

capital if folks think of themselves as part of an economic region 

as opposed to individual communities. We think we could have 

more success in developing economic opportunity that way. 

Mr. COSTA. All right. My time has expired, but if there is a second round, I would like to talk to you a little bit about trade and 

dairy. 

The CHAIRMAN. The gentleman’s time has expired. The chair now 

recognizes the gentleman from Texas, Mr. Conaway, for 5 minutes. 

Mr. CONAWAY. Thank you, Mr. Chairman. 

Mr. Secretary, welcome. Thank you for your response to my letter. As irritating as it is to have to answer letters to Members of 

Congress, I appreciate you sending your letter March 1st. 

In that letter, you said the Department as a whole has planned 

extensively on how to address sequestration. It has taken all the 

actions feasible to mitigate its impacts. The second paragraph says 

22

also in anticipation of sequestration, FSIS Administrator directed 

the initial Fiscal Year 2013 budget allocations to be reduced across 

program areas. So thank you for those proactive kind of comments. 

It does kind of run counter to some of the answers earlier when 

you said you really couldn’t do anything until March 1st. You 

couldn’t put out notices, you couldn’t let folks know that this was 

in fact coming as part of your fiduciary responsibility as the leader 

of that organization. You have $1.9 billion that you have to trim 

in planned spending. Can you tell us this morning where you stand 

against that $1.9 billion based on all the good things that you did 

from October 1st through the end of February in terms of lessening 

the impact of the last 7 months of the year with things that you 

did the first 7 months? 

Secretary VILSACK. Congressman, if I understand your question, 

we were taking proactive steps to control our budget, not necessarily because of sequester but because of the fact that——

Mr. CONAWAY. Thank you, sir. I have limited time. 

Secretary VILSACK.—we have flatline budgets. I want to make 

sure that we are talking about——

Mr. CONAWAY. From October 1st forward, there was a petition 

for sequestration and there wasn’t really a lot of movement away 

from it, and dollars saved between October 1st and February 18th 

count against that $1.9 billion, so can you tell us this morning, and 

maybe you don’t know. 

Secretary VILSACK. I don’t think they count against the $1.9 billion, Congressman, and the reason they don’t is because we were 

dealing with the consequences of Congress reducing budgets from 

the previous year and the year before that. 

Mr. CONAWAY. You had a budget to start the year, right? 

Secretary VILSACK. Yes, sir. 

Mr. CONAWAY. Okay. 

Secretary VILSACK. Well, we had a continuing resolution. 

Mr. CONAWAY. Yes. You had funding authorized and appropriated to start the year. 

Secretary VILSACK. For a section of the year, portion of the year. 

Mr. CONAWAY. Right, through the 27th, so it is your testimony 

this morning that to the extent that you spent less than that in the 

first 5 months, that that does not count against the sequestration 

cut in spending? I don’t want to use the word savings because that 

is an inappropriate term. Those funds don’t count against the $1.9 

billion that you are going to have to not spend this year? 

Secretary VILSACK. The resources that we were able to save in 

travel and supplies and things of that nature allowed us to fit within the budget that you all gave us. 

Mr. CONAWAY. All right. So your testimony is, in spite of the letter, that you have mitigated the impact of sequestration, your testimony orally this morning is in fact you have not——

Secretary VILSACK. No, I don’t agree with that, Congressman. I 

think what we are trying to say is that the steps that we have 

taken, a lot of people say well, surely, there is a lot of fat and a 

lot of—what we were trying to suggest to you is that we have already taken those steps because of the——

23

Mr. CONAWAY. The letter says as well that those steps have resulted in savings that allow you to cut the number of days potentially for furlough by 1⁄2. Secretary VILSACK. Well, furlough——

Mr. CONAWAY. So you can’t tell me two things at the same time, 

Mr. Secretary. 

Secretary VILSACK. Furloughs obviously would have been higher——

Mr. CONAWAY. Right. So how much——

Secretary VILSACK. I think it is $30 million, Congressman. 

Mr. CONAWAY. Thirty million dollars out of the $1.9 billion that 

you have to come up with? 

Secretary VILSACK. Right. 

Mr. CONAWAY. Now, back on the union issue, can the unions 

drag their heels and force sequestration to occur in the last 15 days 

of September? 

Secretary VILSACK. No. There is a——

Mr. CONAWAY. Why can’t they? 

Secretary VILSACK. There is an impasse process. If after a week 

or so of negotiations and discussions——

Mr. CONAWAY. Okay. And that week starts March 1st? 

Secretary VILSACK. No, sir. You have to get a 30 day notice. 

Mr. CONAWAY. Okay. And that notice has gone out? 

Secretary VILSACK. I believe it goes out today or tomorrow. 

Mr. CONAWAY. Why wouldn’t it have gone out on the 1st? 

Secretary VILSACK. It is going to go out today or tomorrow, and 

unfortunately, we can’t necessarily get everyone an e-mail, which 

would have been the most efficient way to——

Mr. CONAWAY. They all get paid, Mr. Secretary. That argument 

that the union negotiators don’t have e-mail, really? 

Secretary VILSACK. It is not negotiators, sir. It is every worker. 

Mr. CONAWAY. Well, I understand, but you aren’t negotiating furloughs with each and every worker, do you? 

Secretary VILSACK. Well, actually, the G7s have to receive notice, 

and not all G7s have e-mail. So you have to actually hand-deliver 

or mail them a notice. Thirty days after they have all been notified, 

the clock starts on 30 days, and then during that 30 day period we 

can start the process of negotiation, and it is not about stopping 

the furloughs, it is how you are going to implement the furloughs. 

After that, there are oral conferences that are required under the 

contract, so if an employee says I want an oral conference, you 

have to do that, and that will be done at the local level. So, we are 

going to try to do this as quickly as we can but it isn’t going to 

impact the number of days. 

Mr. CONAWAY. You said that earlier, but 12 days spread over 6 

months is less of an impact than 12 days taken all in September. 

Secretary VILSACK. We are not going to have them all in September. 

Mr. CONAWAY. But you said that early on in February. You said 

the implication was you were going to shut the entire process down 

for 15 days. 

Secretary VILSACK. No, sir, that is basically how you interpreted 

it. That is not what I said, with due respect. What I said was, there 

was going to be——

24

Mr. CONAWAY. You did not mention the word furlough until late 

February. 

Secretary VILSACK. Well, the furlough——

Mr. CONAWAY. The staggered furlough until late February. 

Secretary VILSACK. Well, no. What I said was, there were going 

to be so many days of furloughs. I never said they were going to 

be continuous. You interpreted that, and I am sorry that you did 

that because——

Mr. CONAWAY. Well, I am not the only one. 

Secretary VILSACK. Well, I am sorry that anybody did it because 

I was making a truthful statement. There were going to be furlough days, to give everyone notice of the fact that what was going 

to happen with the sequester, and it is not something we want to 

do, sir. It is something we have to do. 

Mr. CONAWAY. I understand. It is the law. Thank you, Mr. Chairman. 

The CHAIRMAN. The gentleman’s time has expired. The chair now 

recognizes the gentleman from Minnesota for 5 minutes. 

Mr. WALZ. Thank you, Mr. Chairman, and Mr. Secretary, thank 

you for being here, and thank you not just for being a friend of agriculture but being a friend of rural America. And I go back to—

it is interesting, this hearing is titled Review of the State of the 

Rural Economy and yet as the American people see, we are in the 

minuti# of idiocy on policy instead of allowing us to have a vision 

that grows the country, grows rural America, lets us create the jobs 

that allow families to live where they want to, and I am thankful 

that you continue to stay focused on that. 

I have two questions that I think would go a little broader than 

what the title of the dang hearing was about. A diverse rural economy is the strongest hedge we have against economic downturn 

and natural disaster. When we put all of our eggs in one basket, 

it becomes a problem. You are doing things through USDA that I 

believe is broadening that economic diversity. Two programs or two 

things I would like to just mention and get your feeling on as to 

the future of these beyond sequestration when we get back to actually wanting to govern and get beyond crisis mode. What is the future of the RUS program in creating energy efficiency, job creation, 

stability and that, and then how do you see, Mr. Secretary, the energy title portion of the farm bill and the ability to create jobs and 

make sure we are energy independent in rural America through 

those programs? 

Secretary VILSACK. There are four cornerstones to revitalizing 

and renewing the rural economy. One of those is production agriculture and exports, local and regional food systems, conservation 

and outdoor recreation, and the biobased economy. Within the 

biobased economy, there are tremendous opportunities for taking 

our plant material, livestock waste, grasses and converting them 

into energy and converting them into fuel and converting them into 

chemicals, plastics, polymers, fabrics, fibers, a whole wide variety 

of manufacturing opportunities. So it is important to have an energy title that is a bit extended to include biobased products. We 

have 3,100 companies located throughout the country that are in 

this biobased space and that number is growing. We as the Federal 

Government are trying to purchase biobased products in a BioPreVerDate 0ct 09 2002 11:48 Jul 10, 2013 Jkt 041481 PO 00000 Frm 00028 Fmt 6633 Sfmt 6601 I:\DOCS\113-01\79934.TXT BRIAN
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ferred Program that we are running. We have doubled the number 

of products that we can purchase, and we also have a bio-labeling 

program, which is basically giving people, consumers the awareness that when you are buying something, you are helping an 

American farmer, producer out. 

As far as RUS is concerned, that combined with the REAP program, I can tell you in the last 4 years, we have done 6,600 energy 

efficiency and renewable energy projects that are individualized to 

farms and businesses. They have saved or generated over 7 billion 

kilowatt-hours of electricity, which obviously is important to the 

RECs that are out there providing good utility service. We have improved 91,000 miles of electric transmission lines and we are creating a development through our rural development housing effort 

and RUS to sort of reenergize and create more efficient homes. Our 

housing stock in rural America, there are a lot of energy efficiency 

opportunities there and there are training and job opportunities 

that are connected to retrofitting homes with energy efficiency. So 

there is a lot of activity in this space but a 5 year program would 

provide the certainty, especially if there is an energy title that is 

adequately funded and we have an expanded opportunity to move 

into the biobased area. 

Mr. WALZ. Well, I appreciate that vision, and just for the record, 

I want to make it clear, this Committee did pass a farm bill and 

at any given time it could have been brought to the Floor for an 

up-or-down vote. It did not happen. Our commitment to making 

that happen is certainly strong. Thank you, Mr. Secretary. 

The CHAIRMAN. And I thank the gentleman from Minnesota for 

his vote for that farm bill. 

The chair now recognizes the gentleman from Ohio, Mr. Gibbs, 

for 5 minutes. 

Mr. GIBBS. Thank you, Mr. Chairman. 

Mr. Secretary, I know this is a little bit out of your area but I 

want to see how you weigh in on it. Earlier the EPA released raw 

data to certain groups dealing with livestock operations, businesses 

and personal information, it was the raw data, and I know that the 

associations out there are really concerned about that and potential 

for harassment, intimidation, whatever. Did you in your capacity 

weigh in on that to the EPA expressing your thoughts or make 

sure it doesn’t happen, or where do you stand on that? 

Secretary VILSACK. We know that EPA has taken this issue very 

seriously, as they should, and we have indicated to them a concern 

that you have expressed and that has been expressed to them by 

various groups, and I think that they realize that this is something 

that probably shouldn’t have been done. 

Mr. GIBBS. So you expressed your strong opposition to that type 

of thing? 

Secretary VILSACK. Well, we expressed a concern as we always 

do. We have a relationship with the EPA. When we see something 

that they are considering or doing that we think may have an impact on rural America, it is our job, and we have a good line of 

communication. They just recently hired someone from USDA to be 

their ag liaison, Sarah Bittleman, who worked in my office, so we 

will continue to have a close relationship with them in terms of 

being able to communicate concerns or advice. 

26

Mr. GIBBS. All right. I am going to move on. Of course, I am a 

strong believer that we need to have a safety net program, and 

crop insurance is a good vehicle. I was wondering—some of the opponents of crop insurance said the claims might reach $40 billion 

in 2012. Do you know what the claims were? 

Secretary VILSACK. Well, at this point, Congressman, they are a little over $15 billion. 

Mr. GIBBS. Okay. 

Secretary VILSACK. I don’t know that the books have been closed 

on this but it is probably a pretty close estimate. 

Mr. GIBBS. On average over the last 10 years, how much premium was paid compared to the indemnities that were paid out? 

Do you know what the ratio is? 

Secretary VILSACK. Well, the ratio is probably 2 to 1. For every 

dollar that was paid in premiums, there is probably $2 in indemnity payments out, somewhere between $250 billion and $500 billion. 

Mr. GIBBS. I just want to talk a little bit about farm credit. We 

have seen 2011 record net farm income in 2012 even with the 

drought, estimated to be the second highest ever. What kind of default rates does the Farm Service Agency seeing? 

Secretary VILSACK. In past years, the default rates were down a 

little bit in the direct programs. The previous year, they were 6.5 

percent default. This year, 2012, they were 6.3 percent. On the 

guaranteed program, the default rates in 2011 were 1.3 percent, 

and in 2012, they were 1.14 percent. 

Mr. GIBBS. It has been in the press a concern that maybe farm 

income, we were in a bubble. Do you see the potential for a farmland bubble? 

Secretary VILSACK. Well, I am with the Chairman on this. You 

always have to be cautious about this, but this is different than the 

1980s when the debt-to-asset ratio was significantly higher than it 

is today. There is quite a bit of equity that is built up, and we are 

not quite in the same circumstance we were in the 1980s. Obviously, the land price issue is one that concerns me for this reason. 

It is more difficult for beginning farmers to basically get into the 

business or stay in the business, and that is an issue because of 

the aging nature of farmers generally. 

Mr. GIBBS. And high capital costs to get into, right? 

Secretary VILSACK. Correct. 

Mr. GIBBS. What is the status of the MAP and programs in the 

FMD program? 

Secretary VILSACK. Well, both the Market Access Program and 

the FMD program will receive reductions as a result of the sequester, I would estimate somewhere in the neighborhood of $12 to $15 

million in those programs. Every dollar that we use to promote 

trade generates about $35 in trade activity. So if we reduce those 

resources, obviously that is going to have an impact on trade, but 

we are still looking at a record year for exports. 

Mr. GIBBS. For this year, the direct payments and ACRE programs, what is the status or what percent cut would you be looking 

at, do you think, in the sequester? 

Secretary VILSACK. Well, I am not clear about that, and the reason I am not is because we are still in the process of trying to figVerDate 0ct 09 2002 11:48 Jul 10, 2013 Jkt 041481 PO 00000 Frm 00030 Fmt 6633 Sfmt 6601 I:\DOCS\113-01\79934.TXT BRIAN
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ure out precisely how this all works with the CCC and whether or 

not there is any degree of flexibility. Part of the challenge that we 

have with sequester is that some accounts we have already paid 

money out, and the question is, do you have to ask people to return 

the money that you paid to them or is there a way in which you 

can avoid that disruption, and we are still in the process of trying 

to figure out precisely what we can do. But I would anticipate and 

expect that there will be a slight reduction but we are still on 

track. The signup is taking place for both of those programs. 

Mr. GIBBS. Thank you, Mr. Chairman. 

Mr. KING [presiding.] The gentleman yields back. The chair recognizes the gentleman from Oregon, Mr. Schrader. 

Mr. SCHRADER. Thank you, Mr. Chairman. I appreciate it. Thank 

you, Mr. Secretary, for being here. I really enjoy your leadership 

at the Department of Agriculture in some pretty tough times. 

I was generally pleased with the President’s State of the Union 

speech, particularly the bipartisan balanced approach to deficit reduction, but was a little concerned that he didn’t really talk much 

about the rural economy, so I appreciate you being here to clarify 

where the Administration is. And as you know, unemployment has 

been pretty high in rural America, actually for a long time. I would 

argue they have been in a depression, not just a great recession 

here recently. 

In a lot of states out West and some back East, Federal 

forestland plays a key role in potential economic growth in a lot of 

these communities. We tried a variety of approaches to forest policy 

not really working very well, and you wrote a letter to Senator Mikulski, just recently, talking about the effect sequestration would 

have in further reducing in my state the 90 percent reduction that 

has occurred in timber production and an increase in diseased, 

dead, dying forests in much of America—Colorado, New Mexico, 

Oregon, northern California. 

Could you comment briefly on the letter to the Senator and the 

effects that not pursuing a thoughtful forest policy or being able to 

get at it and increasing timber production and cleaning up our forests so that we have a balanced approach? And maybe in this budget-limited environment, using some of the timber harvest receipts 

to actually help pay to hire folks to supplement our Federal tax 

dollars and get the job done for rural America. 

Secretary VILSACK. Congressman, we have actually increased the 

amount of treated wood in this Administration. In our new forest 

planning rule, we understand the multiple uses to which our forests have to be put, and we have indeed increased the amount of 

board feet that we are treating, and we have also increased the 

wood-to-energy opportunities that are created. We have also——

Mr. SCHRADER. But in your letter—I don’t mean to interrupt—

you talked about expected 2.8 billion board feet going down to 2.4, 

which is a 15 percent reduction between 2010 and 2012. 

Secretary VILSACK. I am sorry. I didn’t know you were asking 

about sequester. I thought you were talking about the general policy. The sequester will obviously have an impact on our forests in 

the following respects. Number one, it does indeed reduce our capacity to treat board feet because we actually have to pay people 

to do that. Even though they get the benefit of the lumber, still, 

28

because of the economy, we have to pay people to do that. Second, 

we will probably not be able to work with communities in the interface between the forests and urban areas to reduce the fire risk, 

about 200,000 acres. That too will obviously impact. 

Mr. SCHRADER. So if were able to actually have a forest policy 

modification that allowed for the harvest to actually pay for some 

of the management that you talk about, that would increase our 

opportunity? 

Secretary VILSACK. Well, what we need is Congress to extend the 

stewarding contract capacity, which expires this September. That 

is important that it be extended and also that it would allow us to 

go for longer contract opportunities. If we could go from 10 years 

to 20 year contracts, we think we could provide greater stability. 

Our goal is to treat more wood, it is to create more opportunities, 

to use research to develop new products, and our forest planning 

rule is the right policy. We just need the resources to be able to——

Mr. SCHRADER. And you have shown that because of your support of your green energy building policy, which I really appreciate 

the Administration and you in particular taking on the Department 

of Agriculture over the last couple years. My good friend, G.T. 

Thompson, and I are introducing a Forest Products Fairness Act 

that hopefully would start treating wood as one of our biobased 

products as opposed to having been discriminated against based on 

old 1970s work, and I am sure my colleague will comment on that. 

Last quickie question is, I don’t know if you are aware but the 

DEA has decided that mobile veterinary clinics—I was a veterinarian for 35 years before coming to this job—can no longer carry 

controlled substances, even though there is often a locked ambulatory box in the back of their rig. That poses huge problems for us 

to be able to treat the livestock, give the animals on those farms 

the veterinary care they need in a safe and efficient, humane manner. I hope you take some time and look at that bizarre bureaucratic piece of red tape. I understand the goal behind keeping our 

narcotics locked up, but I think there is a bit of practicality that 

has to ensue or we can’t keep the food safety chain alive and well 

in our country. So I just bring that to your attention. If you had 

a comment, I would appreciate it. If not, please get back to me. 

Secretary VILSACK. Well, Congressman, we appreciate your 

bringing this issue up and we will certainly reach out to our colleagues at DEA to make sure that we understand the policy and 

to see if there is any degree of flexibility in the crafting of that policy. 

Mr. SCHRADER. Thank you very much, and I yield back. 

Mr. KING. The gentleman from Oregon yields back, and the chair 

would now recognize the gentleman from Colorado, Mr. Tipton. 

Mr. TIPTON. Thank you, Mr. Chairman. 

Mr. Secretary thank you for being here for the state of our rural 

economy, particularly out in the West, be it agriculture or some of 

the recreational ends. Water is obviously key. We have a deep concern in the State of Colorado from a directive that was coming out 

of the Forest Service that was going to require as a condition use 

of permit for our ski areas to be able to sign over water rights that 

they had paid for, they had developed and were on their balance 

sheet to the Federal Government. This obviously is contrary to ColVerDate 0ct 09 2002 11:48 Jul 10, 2013 Jkt 041481 PO 00000 Frm 00032 Fmt 6633 Sfmt 6601 I:\DOCS\113-01\79934.TXT BRIAN
29

orado water law, private property rights. It is going to inhibit their 

ability with signing over those water rights to be able to leverage 

their resources, to be able to keep people employed. The directive 

that came out of your agency was struck down in court because it 

did not comply with the Administrative Procedures Act, but yet 

again, we see the Federal Government and your agency going back 

after Colorado water, western water in terms of conditional use of 

permits. Mark Amity’s district out of Nevada had a rancher on 

BLM lands that was required to sign over their water rights. 

So given the subversive nature that this has to state law in Colorado and what this directive will really represent, the potential 

negative impacts to our local communities, I guess I would like to 

have a little better understanding of why your agency feels that 

this is an appropriate use of agency resources. 

Secretary VILSACK. Well, Congressman, as you were asking that 

question, I was thinking about my son, who is a lawyer in Colorado, telling me, the advice he gave me, is never get into water law 

issues, it is complicated. I think the Forest Service learned a lesson 

in terms of approaching this issue. We obviously did not provide 

enough notice and enough clarification and understanding. That is 

why we have gone back and——

Mr. TIPTON. But you are still going to pursue Federal preemption 

of Colorado water rights? 

Secretary VILSACK. Well, we are in the process of reviewing precisely what we were thinking about and seeing whether or not we 

could respond in some way, shape or form to the concerns that 

have been expressed. I will tell you that the focus here is making 

sure that we use our forests, our U.S. forestlands, in the most appropriate way to conserve and preserve water. One of our driving 

principles of forest management is water management because we 

recognize how precious the water is, and I think that the impetus 

for this was really starting with that concern but recognizing that 

we need to balance that with the interests of those who need the 

water for economic purposes, the ski industry specifically. 

Mr. TIPTON. Has there ever been any violation, any sale of water 

other than for those purposes? 

Secretary VILSACK. I can’t tell you that, Congressman. I don’t 

know. 

Mr. TIPTON. I actually know the answer to that question. It is 

no. 

Secretary VILSACK. Okay. 

Mr. TIPTON. So I guess the question actually, Mr. Secretary, is, 

why is the Federal Government continuing to pursue a water grab 

in western states when we already have water law, which works? 

Secretary VILSACK. Well, it may very well——

Mr. TIPTON. It is private property right in our state. 

Secretary VILSACK. It may very well be that that policy is going 

to be different than what we initially proposed because we learned 

from that lesson of not providing adequate notice and an opportunity to be heard. So their folks are looking at this now and trying 

to rethink this. I think the goal for us is making sure that as we 

use our forest areas, we use them in the best possible way to preserve and conserve water resources. 

30

Mr. TIPTON. And I hope there will be heavy consideration again 

for the state water rights, state law and private property rights. It 

should not be preempted by the Federal Government. 

One other area I would like to be able to move on, and I applaud 

some of the efforts to be able to grow some of our exports, and you 

noted that with the President’s sequestration that we may well see 

some impacts actually to our ability to be able to export. San Luis 

Valley, we have a lot of potatoes that we would like to be able to 

export down into Mexico. Can you give us an update on where that 

is at? It seems like in dealing with the Mexican Government that 

we are having a real inability to be able to export our potatoes and 

they are trying to use some issues to be able to inhibit that. 

Secretary VILSACK. Well, this is a good example of those circumstances where barriers are created that have no justification in 

science and we think are contrary to agreements, and we have 

been working with the Mexican Government to create a process by 

which our potato access to their markets would be expanded significantly. 

We had an agreement with Minister Mayorga, who was of the 

previous government, to potentially open up that market. We are 

going through a process with the Mexican Government to sort of 

refine that agreement and the technical aspects of it, and the hope 

is that with the new Administration that we would be able to carry 

that agreement forward and ultimately see access. We have had 

some success in reopening the beef market in Mexico, and that 

gives us some degree of optimism that this is an opportunity for 

us to also reopen that potato market. It is very, very limited and 

we don’t think it is justified. 

Mr. TIPTON. My time has expired. Thank you, sir. 

Mr. KING. The gentleman’s time has expired and now the chair 

would recognize the gentlelady from Ohio, Ms. Fudge. 

Ms. FUDGE. Thank you so much, Mr. Chairman, and thank you 

for being here, Mr. Secretary. 

Mr. Secretary, we all know that building a diverse workforce is 

an extremely effective tool in addressing discrimination. Many of 

the civil rights complaints in the past, particularly those in 

Pigford, might have been mitigated had USDA had a more diverse 

workforce that was better able to interact with minority farmers. 

So to that end, what has USDA done to ensure a more diverse 

workforce? And I am particularly interested in hearing about how 

many African Americans serve in leadership roles within the Department, and before you respond, I just want to remind you that 

I asked this same question almost 2 years ago and have yet to get 

a response, sir. 

Secretary VILSACK. Well, let me see if I can respond to your question here, and I apologize for not responding before that. That is 

something that shouldn’t have happened. We have engaged in a 

process which we refer to as cultural transformation at USDA, and 

every month I get a report on the diversity of our workforce. I can 

tell you that we have seen significant increases in the hiring of African Americans, Hispanics, Asian Americans, Native Americans, 

people with disabilities, and veterans, and that is the focus of this 

report. We are casting a wider net to try to find good, qualified 

folks, and the result of that is that our numbers are increasing. 

31

Within the SES ranks, 17 percent of our SESs, our Senior Executive Service folks, are African American, which is seven percent 

higher than the civilian workforce. 

Ms. FUDGE. Let me just ask you this, and I could be wrong so 

you could please correct me. But it is my understanding that there 

are 12 positions that are Senate-confirmed positions within USDA, 

and one is an African American. 

Secretary VILSACK. I don’t think that is—well, that may be correct now because one of the positions that was Senate confirmed 

is no longer Senate confirmed. But we have an African American 

who is in charge of our entire operations, Dr. Parham, Greg 

Parham. We have an African American who is obviously in charge 

of the civil rights area. We have an African American who is the 

administrator of our largest part of our budget. 

Ms. FUDGE. Well, if we know that, why is it so difficult for me 

to get a report? 

Secretary VILSACK. Well——

Ms. FUDGE. Which I even asked you about as recently as a couple 

of months ago, a chart. 

Secretary VILSACK. Well, I mean, I can give you the cultural 

transformation report if that would be of assistance and help to 

you. 

Ms. FUDGE. Whatever answers my question is what I would like 

to have, sir. 

[The information referred to is located on p. 67.] 

Secretary VILSACK. Well, the other thing——

Ms. FUDGE. I am going to go to my next question. 

Secretary VILSACK. May I just add one other thing, which I think 

is important? 

Ms. FUDGE. As long as you do it quickly. 

Secretary VILSACK. I understand. We have also added minority 

representation on our county committee process, which should address the issue that your question started with, which is the——

Ms. FUDGE. Whatever information you can give me would be 

helpful, sir. 

Let me also ask, has there been any plan to in a very targeted 

fashion address rural hunger in this country? We know that, certainly I am not from a rural community, I am from an urban community, but I do understand hunger, and I know that the rate of 

rural hunger has been increasing. Is there some way you are going 

to target rural communities as it relates to the hunger issues that 

exist today? 

Secretary VILSACK. I would say quickly two answers to that question. One, our Strike Force Initiative, which is now in Mississippi, 

Arkansas, Georgia, Nevada, Colorado, South Dakota, North Dakota, Virginia and North Carolina and New Mexico. This is an effort to really focus on the persistently poor areas of those states 

and part of that involves expanding opportunities in all of our programs. In New Mexico, we saw a rather significant expansion to 

our summer feeding program as a result of Strike Force. 

The second thing is our Healthy Financing Initiative, which is 

designed to address the issue of food deserts in both urban and 

rural areas, and while we don’t have resources appropriated by 

32

Congress, we are using our existing programs to try to advance the 

cause of solving the food desert issues in those rural areas. 

Ms. FUDGE. Thank you. And my last question for you is, how is 

the sequester going to affect TEFAP? 

Secretary VILSACK. We will see a slight reduction in the amount 

of resource available for TEFAP, which obviously will mean that 

we won’t be able to—that the food banks and so forth won’t be able 

to have as much in the form of commodities. We anticipate roughly 

700 million pounds of food being provided. It would be a little bit 

more were it not for sequestration. 

Ms. FUDGE. Thank you very much. I yield back, Mr. Chairman. 

The CHAIRMAN. The gentlelady yields back. The chair now recognizes the gentleman from Arkansas, Mr. Crawford, for 5 minutes. 

Mr. CRAWFORD. Thank you, Mr. Chairman. 

Mr. Secretary, I know that the issue of CAFOs was raised earlier. One of my colleagues had discussed it with you briefly. I just 

want to ask some questions regarding that. 

During the EPA’s rulemaking process, can you tell me if USDA 

raised to OMB and EPA the same biosecurity food supply and producer safety concerns that were raised by the Department of Homeland Security? 

Secretary VILSACK. Our focus in conversations with the EPA 

about that rule was to try to, consistent with their need to protect 

the environment, minimize the disruption in livestock operations. 

Mr. CRAWFORD. Were those concerns conveyed in writing? 

Secretary VILSACK. I am not sure about that. I know what we 

had was, we have a liaison who comes over to the USDA two or 

three times a week to discuss issues, and I am sure there were 

verbal conversations. I am not sure if there was a written message 

but I know that there was clearly verbal conversations about this 

because I was engaged in them as well. In addition, the EPA Administrator and myself met with livestock groups on a regular 

basis and had the opportunity to converse about a variety of issues. 

Mr. CRAWFORD. Okay. If you have those in writing, I would appreciate it if you could supply those to the Committee. Was USDA 

aware that EPA was engaged in this effort after the withdrawal of 

the rule to collect detailed information from livestock and poultry 

operations across the country or that they intended to create this 

comprehensive national and searchable database for the public to 

use? 

[The information referred to is located on p. 67.] 

Secretary VILSACK. Well, I can’t speak for the entire 94,000 people that work for USDA. I think we were generally aware of this. 

Obviously we are not aware of the fact that this could be released 

as it was. 

Mr. CRAWFORD. I guess now the most important thing now that 

this information is out, what will you do as Secretary of Agriculture to protect producers and their operations from the possible 

misuse of this information? 

Secretary VILSACK. Well, I am open to suggestions about this, 

Congressman. Other than basically suggesting that it was an unfortunate circumstance. I am not quite sure what we could do but 

I am open to suggestions. If you have some suggestions, I would 

be more than——

33

Mr. CRAWFORD. Okay. I would love to talk with you about that. 

In the interest of time, I have one more question for you on that 

particular issue. Can you tell us what steps you can take immediately to ensure that the EPA makes no further releases of that 

type of data in the future? 

Secretary VILSACK. Well, expressing to them the concern that 

they heard from a variety of different sources is probably what we 

can do and what we have done. 

Mr. CRAWFORD. I want to switch gears just a little bit and talk 

about catfish, a food safety issue that has gotten a lot of negative 

attention recently. I was hoping you can kind of help me clear the 

air in preparation for the next farm bill markup, but I am kind of 

running out of time. I want to make this clear here. The 2008 

Farm Bill included a provision putting catfish inspection authority 

under the umbrella of FSIS, aligning catfish food safety standards 

with the rest of animal agriculture. This program has been repeatedly mischaracterized as duplicative and trade distorting. As you 

know, catfish inspection authority is simply being transferred from 

FDA to USDA and is in fact not duplicative. I wanted to question 

you on how often foreign countries have retaliated against American goods as a result of USDA’s meat inspection requirements. I 

don’t know if we have time for you to answer that, but I would like 

to say that USDA’s time on implementing this program never 

seems to run out. It has been 5 years now almost since the 2008 

Farm Bill was signed into law, so it is about time for the Department to get to move on this thing, and if you want to comment on 

what you know about foreign countries having retaliated against 

the United States in the context of what I just said, I would like 

to hear your comments. 

Secretary VILSACK. Well, I am not sure this is going to be responsive to your question but it is an attempt. You know, we are confronted with barriers almost every week and every month by countries. I mean, APHIS last year knocked down 175 barriers alone 

just in their department. So there is constant pull and push in 

trade issues and constant barriers being constructed. Right now, 

we are dealing with Russia and China and ractopamine, an issue 

that has no scientific basis, where the international community has 

spoken through Codex Alimentarius Commission, and we still have 

these barriers being constructed. So that is happening all the time, 

and I would agree with you, Congressman, that it is time for us 

to take action on catfish and I would anticipate that that will happen this year. 

Mr. CRAWFORD. Thank you. I yield back. 

Mr. GOODLATTE [presiding.] I thank the gentleman. The chair 

now recognizes the gentlewoman from California, Mrs. Negrete 

McLeod. Oh, she is not here? The Congresswoman from Washington, Ms. DelBene, is recognized for 5 minutes. 

Ms. DELBENE. Thank you, Mr. Chairman, and thank you, Mr. 

Secretary, for being here and for all of your work in support of agriculture. 

You highlighted the importance of investing in strong agricultural research in your submitted testimony. However, in the 1 year 

extension of the farm bill, critical research programs have been left 

without any funding at all including the Specialty Crop Research 

34

Initiative, which is very, very vital to many of the fruit and vegetable growers that farm in my district and throughout our country. 

Can you describe the impacts on the economy for the lack of investment that we have in agricultural research and the long-term impact that might have? 

Secretary VILSACK. Every dollar that we invest in agricultural re- search generates $20 of economic activity so whenever we don’t 

adequately fund research, it has an impact on the economy. But 

more importantly, it makes it more difficult for us to deal with the 

production challenges and the protection challenges that crops face 

every single day. That is why it is important and relevant that we 

have not only a 5 year bill but in that bill there is a strong research title and that you all give us the tools that other areas of 

government in the health area in particular have to leverage and 

to attract additional private sector investment. Ag research has 

been flatlined for far too long and we will pay a penalty for that 

over the long haul in terms of reduced productivity if we don’t 

begin to ratchet that up a little bit. 

Ms. DELBENE. Thank you. And speaking of specialty crops, my 

district is the largest producer of red raspberries, and specialty 

crops are incredibly important in our region but they are also about 

1⁄3 to 1⁄2 of the total value of U.S. crop production and they don’t 

get the same share of attention in our farm bill programs. Now 

with sequestration likely to reduce the overall amount of funding 

for agricultural programs, can you address this issue and what we 

can do or any recommendations you have to make sure we support 

our specialty crop industries? 

Secretary VILSACK. Well, the best advice I could give, Congresswoman, is to get a 5 year bill through and in that bill to do what 

at least the Senate Agriculture Committee bill and the Senate bill 

did last year, which is to make an increased investment in specialty crops, and the reason for this is twofold. One, we are obviously a country that is interested in producing and consuming 

more fruits and vegetables but, two, this is one of the fastest-growing areas of agriculture, and it helps to support local and regional 

food systems, which is also a fast-growing aspect of agriculture. 

The ability to expand farmers’ markets, the ability to have farmto-school programs, all of that is somewhat dependent on our ability to produce and to protect those specialty crops. I think there is 

a growing awareness in the agricultural community of the significance of specialty crops, and would hope that we would speak with 

a single voice about all crops and not just specific commodity crops 

in the farm bill. 

Ms. DELBENE. Thank you for that. When the continuing resolution runs out at the end of the month, four communities in my district will become ineligible for rural housing loans because the 

USDA will revert to a definition that uses a population requirement that is pretty outdated. Changing that threshold shouldn’t 

impact the budget but it would maintain current eligibility. Do you 

have an issue with changing that definition, especially when we 

are talking about a general definition of rural being 50,000? That 

is not currently what is used in this. 

Secretary VILSACK. We have made a concerted effort to try to 

make sure that we didn’t disenfranchise folks from the housing 

35

programs based on a definition until Congress has had a chance to 

speak in the farm bill. I appreciate you raising the issue of the sequester. It is going to have an impact on housing programs generally. We anticipate that over 10,000 folks will probably lose their 

rental assistance as a result and there will probably be obviously 

fewer homes financed as well, which at a time when we want the 

housing market to continue to rebound, it is an unfortunate consequence of sequester. 

Ms. DELBENE. So would you be open to Congressional action that 

would increase the population threshold potentially? 

Secretary VILSACK. Well, I will tell you, what I am interested in 

is simplicity. I just want—it would be helpful if we did not have 

12 different definitions because it makes it really hard to explain 

to people why they qualify for one program and don’t qualify for 

some other program. What we are looking at is, is consistency and 

simplicity, trying to streamline the process, and we are anxious to 

provide as much help and assistance in rural areas as we possibly 

can. So if there is a way the definition could be cleaned up or clarified or to provide greater consistency and simplicity, I am for it. 

Ms. DELBENE. Thank you. Thank you, Mr. Chairman. 

Mr. GOODLATTE. I thank the gentlewoman, and the chair recognizes himself for questions. 

Mr. Secretary, welcome. I want to start with an issue that I am 

not sure Members have asked you about but I am willing to bet 

that most Members of this Committee have seen the clips of the 

mandated sensitivity training that has been taking place at the Department. Could you please explain to the Committee the necessity 

of these trainings where workers are required to recite such things 

as, ‘‘The Pilgrims were illegal aliens.’’ Are these trainings mandatory for employees? 

Secretary VILSACK. Congressman, they are not mandatory. They 

are not—that process is not in play today. The effort was part of 

a larger loss prevention effort to try to reduce the number of program complaints and EEO complaints that we had in the Department when I came in as Secretary. We are now at record lows in 

both the program——

Mr. GOODLATTE. The objective was good but the messenger was 

not too desirable, in my opinion. Can you tell us how much money 

the USDA spent on the training, particularly the ones hosted by 

Samuel Betances? I have heard as much as $400,000 was paid to 

him. 

Secretary VILSACK. I can’t tell you the specific amount. I would 

be happy to provide that to you, Congressman. I would only point 

out, obviously they were provocative statements designed to get 

people to think in the context of how it feels in a diverse circumstance. This is a company that has been used by Fortune 500 

companies and other agencies of the Federal Government. So it is 

not as if we plucked them out of someplace where they hadn’t been 

involved before. 

[The information referred to is located on p. 68.] 

Mr. GOODLATTE. Were you as shocked as many of us were to see 

some of the statements that he made in those sessions on video? 

Secretary VILSACK. Well, I understand that they are provocative 

and I am sure hindsight is always 20/20, but the point of this 

36

should not be lost, and that is, we were faced with multiple billions 

of dollars of claims and multiple——

Mr. GOODLATTE. But then you get a whole new round of claims 

based upon the types of statements and actions that he took in 

those sensitivity training programs. 

Secretary VILSACK. I am not sure about that, Congressman. 

Mr. GOODLATTE. Subjecting people to that kind of nonsense. 

Secretary VILSACK. You know, it wasn’t mandated but it is important for us to reduce the number of these complaints and the 

number of these lawsuits, and we have done that, and that saves 

taxpayer money. 

Mr. GOODLATTE. Well, I would hope, given the sequester, when 

the USDA is considering furloughs of meat inspectors, that the impact on public health of doing something like that compared to 

these trainings, that the trainings would get a healthy cut in this 

process, especially if you say that you are not experiencing the difficulties that you were before. 

Secretary VILSACK. Mr. Chairman, we are reducing conferences, 

as I said earlier. 

Mr. GOODLATTE. Let me ask you about farmers who have recently gotten surveys asking about injuries of youth on their farms. 

Given the DOL rule last year, this has raised concerns among producers about why this information is being collected, and could you 

provide us with background on why producers receive these surveys, many of which have complained bitterly about the intrusiveness of the questions, the length of the survey and want to know 

whether or not they are voluntary. 

Secretary VILSACK. Is this part of the Ag Census, sir? 

Mr. GOODLATTE. Yes. 

Secretary VILSACK. Okay. Well, the Ag Census obviously is something that is a significant effort on the part of USDA to assemble 

an amount of data that will allow us to develop better policy. One 

point six seven million farmers have already responded to the Census, so that represents a significant reaction to the Census and a 

positive aspect of it. The Census, in terms of the Department of 

Labor issue, what we are doing now is we are developing with the 

universities a curriculum for farm safety because we believe that 

education is better than what was being proposed by the Department of Labor. 

Mr. GOODLATTE. So you are saying the surveys are not voluntary 

then if they are part of the Census. Is that correct? 

Secretary VILSACK. Well, people have the ability to return it if 

they want or not return it if they don’t want it. 

Mr. GOODLATTE. But they may face consequences if they don’t return it? 

Secretary VILSACK. No. I mean, the consequence is that we don’t 

get the rich database that we need to be able to make policy decisions that are——

Mr. GOODLATTE. So you are saying if a farmer doesn’t like the 

questions and doesn’t want to return it, they don’t have to? You 

have enough data from the ones who complied? 

Secretary VILSACK. What I am saying is that they have the option, Congressman, Mr. Chairman, and they can exercise that option. We would hope that they would provide responses, because 

37

the more farmers who respond, the better the information we have, 

the better the policies hopefully can be developed because we have 

good data. 

Mr. GOODLATTE. And to the point about the youth injuries, is the 

USDA working with DOL to change those requirements on the 

issue of youth participation in agriculture? 

Secretary VILSACK. As I said, we are working together to put together, along with the Farm Bureau and the National Farmers 

Union and universities and land-grant universities, a curriculum 

similar to what a college would have where there would be basic 

safety courses that could be available, and we are going to then try 

to work with the insurance industry to see if they might be able 

to provide incentives for folks, operations that would exercise——

Mr. GOODLATTE. If you have a small farm and your neighbor’s 

child is working on your farm, are you going to have to have them 

or you participate in a safety program? 

Secretary VILSACK. No, no. It is just we are trying to provide 

education about farm safety because we know that farm families 

are concerned about that. We are trying to provide information and 

then what we hope to have is more sophisticated and more detailed 

safety courses on more complex machinery. The whole goal here is 

to provide education to folks, not to provide mandates. 

Mr. GOODLATTE. Thank you very much, Mr. Secretary. And now 

it is appropriate to recognize the gentlelady from New Hampshire, 

Ms. Kuster, for 5 minutes. 

Ms. KUSTER. Thank you, Mr. Chairman, and thank you, Secretary Vilsack. As I mentioned on the way in, I am very excited to 

be representing the New Hampshire perspective on this Committee 

for the first time in 70 years, and I look forward to working with 

my colleagues on both sides of the aisle to advance commonsense 

solutions and to cut wasteful spending, as you have talked about. 

I am very focused on creating economic opportunity in our rural 

areas. I represent the 2nd District in New Hampshire, which is 

rural with agriculture and biomass and bioenergy projects, and my 

question relates to a project in our district in the City of Berlin, 

New Hampshire, up near the Canada border. A former paper mill 

is being repurposed into a 75 megawatt biomass power plant to 

provide renewable energy and new jobs, both at the plant and businesses, and I was particularly excited to visit recently to see the 

number of jobs. There were over 400 construction jobs while the 

project is in construction, and they expect hundreds of jobs continuing. Can you talk to us today about the impact of the funding 

and the sequester issues on development of energy in our rural 

areas, and in particular bioenergy development? Are we losing 

ground by not moving forward with the farm bill? 

Secretary VILSACK. Well, when the farm bill was extended, it 

didn’t include a reauthorization or additional resources in the energy title. So to that extent, we are sort of in a holding pattern as 

it relates to bioenergy. We still are funding nine biorefineries that 

are using non-food feedstocks. We still have a regional research effort underway. We still are helping advance biofuel producers with 

resources but we are pretty much limited in what we are currently 

doing. We can’t really extend it until we get direction from Congress and resources. 

38

In terms of the sequester, the one vehicle that could be used by 

a company potentially to embrace biomass energy production would 

be the Business and Industry Loan Program or some of our RUS 

programs, Rural Utilities Service programs. All of those are subject 

obviously to the sequester, so to the extent that we have to reduce 

those accounts by five or six percent, whatever it is, that obviously 

limits the amount of projects that we can fund. Just in the last 4 

years, we have had 15,000 grants and loans in that B&I program 

helping over 60,000 businesses and helping to stimulate and support 300,000 jobs. So every time you have fewer resources, you obviously will have fewer projects, which means fewer jobs. 

Ms. KUSTER. Thank you. And then the other question relates to 

conservation, which is a hallmark in our New Hampshire history 

and an important part of managing our forests and farmlands. We 

talked about the importance of USDA’s conservation programs to 

farmers and particularly young farmers who are just beginning 

their operations. I have been involved in some conservation efforts 

to protect small farms so that we don’t lose them in New Hampshire. Will there be impacts on individual farm bill conservation 

programs under the sequestration, and is there enough funding to 

pay out our existing obligations under the contracts that are in 

force right now? 

Secretary VILSACK. There will be sufficient resources to pay out 

on existing contracts. The problem is, we won’t be able to go quite 

a bit further. We estimate 2,600 farmers will not—and that is 

across the country—will not be able to get the help they need to 

even put a plan together because simply, we won’t be filling vacant 

jobs, about 400 jobs. 

Then second, there is somewhere in the neighborhood of 11,000, 

12,000 producers that will probably not get the financial support 

they would have otherwise gotten but for sequester so they won’t 

be able to proceed with their conservation program with the costshare that they were counting on, so that probably will reduce the 

number of projects that move forward. And the problem with all 

that is, it also has a ramification not just on the environment but 

also on our ability to produce outdoor recreational opportunities to 

the extent that we use conservation to increase habitat or increase 

and improve water quality and fishing. That could potentially reduce over time the outdoor recreational opportunities as well. 

Ms. KUSTER. And I am pleased to say that the outdoor recreational opportunities on the farms that we preserved have been 

terrific in terms of building community and creating a total mixed 

use. They have been very, very well received. So thank you very 

much, and I yield back. 

Mr. GOODLATTE. I thank the gentlewoman, and the gentlelady 

from Alabama, Mrs. Roby, is recognized for 5 minutes. 

Mrs. ROBY. Thank you, Mr. Chairman. Thank you for being here 

today, Mr. Secretary. I want to continue along the lines of conservation but specifically the Conservation Reserve Program, which 

we all refer to as CRP. I want to explain a little bit about what 

is happening specifically in Alabama’s 2nd District because the majority of the acreage is designated—the acres designated in Alabama do reside—are part of the 15 counties that I represent. It is 

heavily weighted in southeast Alabama, and what is happening is, 

39

CRP, as you know, was originally there to help preserve marginal 

to highly erodible pieces of property. What is happening now is, we 

have kind of turned it on its head and we are putting highly productive farmland into CRP program. So for the farmers in Alabama 

that lease their property, they are now in competition. So the families that own the property are seeing that they can put in a 40 year 

crop of a long-leaf pine, take that highly productive farmland out 

of production and it is decreasing the number of acres that our 

farmers actually have to farm. 

With that being said, in the last farm bill, we offered up that we 

should reduce over the next 5 years the number of acres, and then 

I even took it a step further and said not only should we reduce 

the number of acres, we should put in some measure to say that 

marginal to highly productive—we left marginal in, but anything 

better than marginal property to highly productive would not qualify for CRP, thus protecting highly productive farmland for our 

farmers to farm. So I just want to ask, what do you see as the future role of CRP and what changes would you like to see in light 

of the facts that I have given you? 

Secretary VILSACK. Well, it is a balance Congresswoman, and actually your question caught me a bit by surprise because we actually have increased the indexing score that we use to determine 

whether or not a contract is going to be awarded based on this 

issue of focusing on more marginal lands and highly erodible lands, 

so it is obviously something we need to look at in relationship to 

your statement. But, the overall policy is consistent with where you 

want it to be, which is focusing on these marginal lands, these 

highly erodible lands. And we fully expect that the number of acres 

that are enrolled in that program are likely to go down. As you look 

for savings, that is one place where you are likely to go. 

In the meantime, though, we are going to—obviously we still 

have the program and we still have the directive from Congress. 

We are going to follow that. And to a certain extent, it helps protect that shrinking baseline within the farm bill, which I think is 

important to everybody on this Committee. 

Mrs. ROBY. Well, in your position as Secretary, are you recommending a cap on the acres that are allowed under the CRP? 

Secretary VILSACK. I am a big fan of CRP because I see the opportunities for these marginal lands to create more outdoor recreational opportunities. You know, it is not so much a recommendation of a cap, it is just a recognition that there is a lot 

of competition now. In other parts of the country, we are seeing 

CRP land being taken out that probably should be in the program 

because people can get $7 a bushel for corn or $15 a bushel for soybeans. So we have sort of the reverse situation in other parts of the 

country. So our goal here is to try to find the right balance——

Mrs. ROBY. I would really like you to take a hard look at how 

this is affecting, particularly in the southeastern portion of the 

United States where you don’t have these large expanse farms, you 

have farms that are divided up and not so much acreage in one 

area, and you hit the nail on the head when it comes to competition 

because our farmers that do lease property are not competing with 

CRP in order to be able to do what they want to do, and that is 

farm, because the landowner sees an opportunity for this 40 year 

40

crop in long-leaf pine. So if you would, please roll down on this because as you said, you are a big fan of CRP. We understand the 

conservation aspects but we also have to feed America and the 

world, and the more land that is taken out, highly productive land 

that is taken out, the harder it becomes for us to do that. 

Secretary VILSACK. Well, it is a fair point, but I would point out 

that we actually have fewer acres in the program than we have 

had for quite some time because of the competition in other parts 

of the country, so it is a balance that we have to——

Mrs. ROBY. Well, let us look at the balance, because if we reduce 

over 5 years the number of acres, which we are not even using the 

full amount that is available now, and if we reduce it over 5 years, 

it equates to savings in the billions of dollars, and in this current 

financial scene that we are in that that is really worth taking a 

look at. 

With that, I yield back. Thank you. 

The CHAIRMAN [presiding.] The gentlelady’s time has expired. 

The chair now recognizes the gentleman from Massachusetts, Mr. 

McGovern, for 5 minutes. 

Mr. MCGOVERN. Thank you, Mr. Chairman, and thank you, Mr. 

Secretary, for being here. 

Mr. Secretary, as you know, there are over 50 million of our fellow citizens who are either hungry or food-insecure, and one of the 

reasons why we don’t have starvation in this country is because we 

have kind of an anti-hunger safety net including SNAP, which provides people of modest benefit to be able to put food on the table. 

SNAP is the most effective and most efficient anti-hunger program 

that we have, and as far as I know, it is one of the most efficient 

programs in the Federal Government. It has the lowest error rate 

in the history of the program, and a large part of the errors are 

actually underpayments. And you never know when you listen to 

some of the rhetoric on this Committee. This program has been demonized and diminished in a way that I think is totally unjustified, 

and since this is a hearing about rural economy, I just want to 

focus there a minute. 

According to USDA statistics, rural areas are poorer than urban 

areas, and according to the latest USDA data, households in rural 

areas are more likely to be food-insecure. While 14.9 percent of all 

households were food-insecure in 2011, 15.4 percent of those households in rural areas were food-insecure. Ten percent of the rural 

population relied on SNAP compared to seven percent of the urban 

population. Children under 18 made up 25 percent of the rural population but made up 40 percent of the rural population participating in SNAP. 

Mr. Secretary, can you tell me if the impact of SNAP is more or 

less likely to reduce poverty? 

Secretary VILSACK. Congressman, there is a study that I think 

was issued last year that indicated that the SNAP program was 

helpful in reducing poverty. I am sorry I don’t have the precise percentage but to my memory, it has reduced it by seven to nine percent as a result of the SNAP program. 

Mr. MCGOVERN. And second, in the last Congress, this Committee made a concerted effort to dramatically cut SNAP. Can you 

talk about how the cuts to SNAP that would range from $16 billion 

41

to $33 billion or more would impact rural America? How would 

these cuts impact the ability of low-income rural families to purchase food? What would these cuts do to local economies? How 

would SNAP cuts impact the school breakfast or lunch programs? 

Secretary VILSACK. Well, the SNAP program is part of the safety 

net, and it provides resources to families to be able to shop. Ninetyfive percent of the SNAP program benefits are spent within the 

first 30 days of receipt, so they get into the economy very quickly 

and they circulate around in the economy. I think part of the focus, 

Congressman, if I might say, obviously people are concerned about 

the overall costs of the program, and I think there is an interesting 

debate that takes place about that but we are missing the point, 

and the point to me is that if you want to reduce SNAP, the one 

way to do it that is the most beneficial is to focus on the individuals who are very close to no longer needing SNAP and figuring 

out a way in which we could assist them with a better-paying job 

or more training that would allow them to access a better-paying 

job so they no longer would need the program. 

Mr. MCGOVERN. I absolutely agree with you. I mean, that is one 

of the reasons why I have been urging the White House to do a 

conference on food and nutrition so that we can connect all the dots 

to not only make sure that people get what they need in the short 

term but that there is a clear path to be able to get off of public 

assistance, to be independent. 

Finally, I just want to say that I think we need the Administration to stand up and fight for this program because I worry as we 

talk about balancing budgets that SNAP has become kind of the 

convenient ATM machine. I hear it in this Committee, I hear it in 

the Budget Committee that if we want to balance the budget, we 

have to dramatically reduce SNAP, which means that millions of 

families who currently receive a benefit will no longer receive a 

benefit, and the Administration did, to its credit, help us in the 

stimulus bill with an uptick in SNAP but we then paid for the 

FMAP bill and for the child nutrition bill with those SNAP dollars, 

and if we do nothing right now, the benefit will actually decrease 

by the end of the year. 

I think we need the Administration to draw a line in the sand 

that enough is enough. We can’t afford a $16.5 billion cut in SNAP 

without adversely impacting a lot of poor people, and I would hope 

that the Administration would draw that line in the sand and 

make it clear to this Committee or any other committee that is 

talking about those kind of dramatic cuts that there is a point 

where you go so far that we are not going to sign that kind of bill 

because it would adversely impact millions of poor people in this 

country. 

Secretary VILSACK. I just want to reiterate, if folks—the thing 

about SNAP is that we know where people are. We know who these 

people are and we know what their circumstances are because we 

have to have that information to be able to know whether they are 

qualified for the program. Since you know where they are and you 

know those who are working, and there is a substantial percentage 

of people receiving SNAP that are actually working, if we could get 

them to a better-paying job opportunity, they would no longer qualVerDate 0ct 09 2002 11:48 Jul 10, 2013 Jkt 041481 PO 00000 Frm 00045 Fmt 6633 Sfmt 6601 I:\DOCS\113-01\79934.TXT BRIAN
42

ify for SNAP and you would get a cut in the program but you 

would get it in a way that wouldn’t necessarily——

Mr. MCGOVERN. Look, I absolutely agree with you. I mean, the 

thing is that the way you reduce SNAP is put people back to work. 

I mean, when the economy is bad, the amount we spend goes up. 

When it gets better, it goes down. But in the short term, it is important that the Administration make it clear that a cut of $16.5 

billion is unacceptable. 

The CHAIRMAN. The gentleman’s time has expired. The chair now 

recognizes the gentlelady from South Dakota, Mrs. Noem, for 5 

minutes. 

Mrs. NOEM. Thank you, Mr. Chairman. 

Mr. Secretary, thank you for being here today. I have an e-mail 

that is dated yesterday from someone in the USDA Animal and 

Plant Health Inspection Service from Raleigh, North Carolina, regional office. It appears to be an e-mail to his regional team, and 

I wanted to read you a part of that e-mail that concerns me. It 

says, ‘‘During the management team conference call this morning, 

I asked if there was any latitude in how sequestration cuts related 

to aquaculture could be managed spread across the region. The 

question was elevated to APHIS BPAS. The response back was, we 

have gone on record with a notification to Congress and whoever 

else that APHIS would eliminate assistance to producers in 24 

states in managing wildlife damage to the aquaculture industry 

unless they provide funding to cover the costs. So it is our opinion 

that however you manage the reduction, you need to make sure 

that you are not contradicting what we said the impact would be.’’

Mr. Secretary, I am very concerned about that last line. I will 

read it to you one more time: ‘‘however you manage the reduction, 

you need to make sure that you are not contradicting what we said 

the impact would be.’’ Mr. Secretary, is it the policy of your Department and within USDA to not use any flexibility that you may 

have in managing the sequester? 

Secretary VILSACK. No, Congresswoman, and I am not sure 

whether that decision is a result of prioritizing and actually using 

flexibility. If we have flexibility, we are going to try to use it to 

make sure that we do sequester in the most equitable and least 

disruptive way. There are some circumstances, and we have talked 

a lot about the meat inspection, where we do not have that flexibility because there are so few accounts, but in other areas, you 

may have multiple accounts and you may have flexibility, in which 

case you have to prioritize what is the most important thing to adequately fund. I am not familiar with that e-mail, obviously, nor am 

I——

Mrs. NOEM. Would you agree that reducing the impact to producers should be a priority? 

Secretary VILSACK. Yes, but if you have limited resources, and 

given the diversity of agriculture, you may have to choose how 

much of an impact you have on any one particular group of producers to be able to maximize the protection of a larger group or 

a group that has broader reach. I just don’t know about that particular issue. I wouldn’t say that we have said no to flexibility but 

there are certain circumstances where we don’t have flexibility. 

43

Mrs. NOEM. My concern from the e-mail is that it intends, I believe, and the way that it is worded is that it prioritizes staying 

consistent with the Administration of what they previously said 

and what they may decide to do to protect producers. I am hopeful 

that that isn’t an agenda that has been put forward that really will 

look at the reductions that we have to deal with and do them in 

the best manner possible to make sure that we protect the industry 

and as many producers as we can. 

Secretary VILSACK. I don’t disagree with that. 

Mrs. NOEM. Thank you. I just wanted to follow up quickly. You 

know that in South Dakota, we have a big problem with the mountain pine beetle, and the Mountain Pine Beetle Response Project 

has been wonderful for us to get that opportunity in the Black Hills 

to help manage that infestation, so I want to thank you for your 

help with that and getting that off the ground. My concern is that 

with sequestration coming, I recognize that there is going to be a 

decrease in logged areas and contracts within the Hills and 

throughout the nation because of those reductions in spending, but 

it appears to me when I look at the numbers that we are going to 

reduce actual board feet harvested to a greater extent than what 

the sequestration cuts would reflect, and I am wondering if you 

could comment on that. 

Secretary VILSACK. Well, it may very well be a result of making 

a determination of what is the most significant thing we can do. 

Do we have to have adequate resources in our fire suppression 

budget? Is it more important to protect the safety of homes and 

people by treating more acres in that interface between the 

wildlands and the urban interface? There are a series of decisions 

within the Forest Service because we have a lot of different accounts that we can make, and I think that that is an estimate in 

terms of what will likely happen with reference to board feet. It 

costs us money when we have lumber treated, and I think there 

is a determination that that is a consequence of sequester. Now, 

whether it is disproportionate or not, I don’t know, but if it is disproportionate, it may be because there is a higher priority related 

to safety in terms of the Forest Service, and we have, obviously as 

you well know, faced a horrendous set of fires in the last couple of 

years and the expectation is with drought and the pine bark beetle, 

that that is not going to go away for a while. 

Mrs. NOEM. Yes, we absolutely have an emergency situation in 

the Black Hills, so communities that live amongst these dead and 

dying trees are a lightning strike away from wiping out an entire 

town or population. And so we are very concerned with that, and 

that is why when we look at the situation, we like to see those 

numbers increased. We would like to see full funding come into the 

programs that as they are allocated and hopefully that they will be 

prioritized within the Forest Service. 

Secretary VILSACK. Well, we want to see more board feet. That 

is the goal. We are trying to get to 3 billion and beyond. We recognize the importance of that. 

Mrs. NOEM. Thank you. I appreciate it. 

With that, Mr. Chairman, I yield back. 

The CHAIRMAN. The gentlelady’s time has expired. The chair now 

recognizes the gentleman from Texas, Mr. Gallego, for 5 minutes. 

44

Mr. GALLEGO. Thank you, Mr. Chairman, and thank you for 

being here, Mr. Secretary. You have a great command of all of the 

issues. 

As a new Member, I am finding it interesting, Congress uses 

power of the purse to cut your budget but doesn’t seem to like the 

idea that that means a reduction in services, and so I appreciate 

the spot that you are in in that sense. 

I want to join in the conversation about the definition of rural.

I heard you say, or perhaps I misunderstood you, that part of the 

philosophy going forward is to talk about it in terms of regions, and 

one of the challenges in the rural part of Texas that I represent 

as an example is Ozona, Texas, has about 3,000 people in it, but 

you have to drive a little over 100 miles to get to Fort Stockton, 

Texas, which has about 10,000 people in it. And so when you are 

talking about doing it regionally, the distances make it a little 

more difficult than perhaps in some of the other regions. Is that 

something that you all will take into consideration or is that——

Secretary VILSACK. The answer is yes, Congressman. I apologize 

for giving you a misunderstanding of this. When I talked about regions, I am suggesting that we are working with self-described—

or it is not that we impose a regional definition. We essentially say 

to communities that can function as a region, you are going to get 

a bigger bang for your buck if you work together as opposed to individual communities doing things in isolation. If you could coordinate what you are doing, it may very well actually result in greater 

economic activity. If you have a situation where there are substantial distances between communities, obviously that won’t work particularly well, so that is why we have a couple things. That is why 

we will focus on individual community grants and loans. That is 

why we have our Strike Force Initiative in some states that can 

really sort of go to those areas of persistent poverty. 

Mr. GALLEGO. And even if you use the MSAs, there is a huge difference, for example, between the rural areas of El Paso County 

and the City of El Paso itself and some of the farming communities. And so even though they may be in the same region, the 

truth is that their interests are totally diverse, and many times 

they are not exactly aligned as well. I would hope that you would 

take that into consideration. 

Let me ask you, with respect to—there has been some recent actions at the FCC to overhaul what is called the Universal Service 

Fund, and as a result of that, there are a number of providers in 

rural Texas that are facing substantial cuts to the USF, and as a 

result, there is a possibility or a danger that they might default on 

some of their USDA loans. I am wondering what steps the USDA 

has taken to prevent those kinds of defaults or potential bankruptcies and what you are doing proactively to help those companies that are going to be impacted by those Universal Service Fund 

decisions at the FCC. 

Secretary VILSACK. Well, I sat down with the Chair of the FCC 

several weeks ago to discuss this issue, and there is a process within the FCC rules, a waiver process that can provide some degree 

of flexibility for the folks that are essentially on the bubble, that 

might find it difficult to comply with the new FCC structure and 

still be able to make their payments. Right now, it is a relatively 

45

small number and so we have been working through those individual issues one by one, but we have acquainted the FCC with the 

concern. 

The second thing that we have decided is that there needs to be 

a coordinated effort between Rural Utilities Service at the USDA 

and the FCC because we speak to a different universe here. The 

FCC is really focused on areas that can be protected and provided 

through the regional Bell Systems, the larger companies. We in 

turn are dealing with those small telecommunications companies. 

I think you are going to see better coordination between the two 

efforts, and we have suggested a couple of things that could be 

done to tweak the FCC approach that might make it a little bit 

easier and more likely that broadband and Internet activities are 

expanded in some of those remote locations. 

Mr. GALLEGO. I look forward to working with you and your office 

on those issues. They are kind of core to the part of Texas that I 

represent, and offline at some point I would also like to have a conversation about some litigation with some Latino farmers in Texas 

and New Mexico that has been ongoing for a period of time. And 

so at some point if you could send your staff over to tell me what 

is going on, that would be wonderful. 

Secretary VILSACK. Actually, I can send the same guy to talk 

about both issues. 

Mr. GALLEGO. That would be great. 

Secretary VILSACK. John Paladino is basically in charge of our 

RUS but he has also been involved in the Hispanic claims process, 

so we will arrange for him to come see you. 

Mr. GALLEGO. Thank you so much. 

The CHAIRMAN. The gentleman’s time has expired. The chair now 

recognizes the gentleman from northern California for 5 minutes. 

Mr. LAMALFA. Thank you, Mr. Chairman, and thank you, Mr. 

Secretary, for appearing before us here today. Also, thank you for 

a recent trip you made to northern California to Trinity County to 

view some of the very difficult issues we have in forestry, and forestry practices or lack of forest management we have there. Two 

thousand and eight was one of the most devastating years for fire 

in California. The air was brown and actually extremely unsafe levels for that county for months up there, so I appreciate your viewing that and seeing what is going on with drug labs and the marijuana growers that are probably a thousandfold more harmful than 

any agricultural activity that may go on. 

California’s issues are many and very diverse and unique with 

our regional, our cost of doing business, foreign and domestic markets as well as the specialty crops we have, olives and olive oil. We 

have a lot of different things going on. I want to drill down on a 

couple specifics that I hear a lot about in my district with dairies 

and with rice. The issue on rice, there are a couple things going 

on here with Japan and in the Trans-Pacific Partnership, Japan 

wanting to come in on that. It is very important that we support 

that as well as that rice be included in any of the negotiations 

going on with fair and free trade through the USTR. So we want 

to be sure that that is included and encourage as much as possible 

Japan and California rice in that. And second, with California’s 

rice situation, we have—again, it is a unique crop compared to the 

46

southern portion of the country. Long grain is grown in the South 

but it is short and medium grain in the West, and so there is a 

different cost structure and price structure for medium and short 

grain that we would like to see addressed as an industry differently 

in that because, again, California’s cost, price, et cetera for that. So 

I would ask for you on both those issues with Japan and the TransPacific Partnership and fair trade that is coming up as well as with 

continued support through the Risk Management Agency a workable solution for California’s uniqueness in rice, so I would ask if 

you could comment or if you could come in on those two issues, 

please? 

Secretary VILSACK. As it relates to TPP and the Japanese involvement as was stated last week, we obviously will continue to 

work with the Japanese to see whether or not they can in fact be 

included in the TPP discussions. One of the hallmarks of inclusion 

in TPP is the willingness to actually reduce a lot of the barriers 

that exist in your country, and the Japanese obviously have to 

work through that process to determine if that is what they want 

to do, but that is sort of the cost of admission into the conversation 

is reducing trade barriers and things that are artificial barriers to 

products. 

As it relates to rice, our RMA folks are constantly looking for 

ways in which we can do a better job of distinguishing between 

products and making sure that the crop insurance program is as 

diverse as the diversity of agriculture. Today we have 132 products 

that are covered, 281 million acres and so this is a constant effort 

on our part, and I think that they have been working on downed 

rice specifically to try to expand coverage, so this is something we 

can take back to them. 

Mr. LAMALFA. Thank you. With regards to our dairies, they are 

really struggling too, and in California too, and California is the 

leading dairy-producing state. You know, it is the cost of feed, purchasing feed and extraordinary prices these days as well as the cost 

structure, especially in California, of milk prices, and it is very important we have that regional production there as opposed to having to bring it in from a long distance—including the jobs in the 

economy for our own state. So any continued effort to find relief for 

dairy producers in California to policy for feed prices as well as 

what we can do with price structure that would help them out, because it is extremely key for our local economy as well as the needs 

of our consumers of the state. So any comment there, sir? 

Secretary VILSACK. Well, first of all, I certainly recognize the 

challenges that dairy has just as a general proposition. The volatility of the market makes it really hard for dairy producers to 

have the stability that other commodities have. We expect and anticipate good production this year, and if that occurs, the expectation is that crop prices will come down, commodity prices will come 

down, which would translate into more profitability for dairy producers. In the meantime, we will administer the program that we 

have to provide help and assistance. 

The MILC program, it may be adjusted a little bit because of sequester, and it is one of those issues that we have to figure out 

folks who have already received their MILC payments whether or 

not there is any kind of reimbursement that has to take place, it 

47

is one of those complexities of sequester but we will continue to administer that program in the hope that when the 5 year farm bill 

is done that you put in place a different program that will work 

more effectively to provide assistance and protection when feed 

costs are high or prices are low or a combination of both. 

Mr. LAMALFA. Thank you. A quick note on that sensitivity training too. I received a lot of calls about that, and——

Secretary VILSACK. I am sorry. On what? 

Mr. LAMALFA. On the sensitivity training. We received a lot of 

calls about that, and being provocative, depending on what racial 

group is being provoked, it could cut across all those lines, so I 

would say that you need to be a lot more careful about that because it could be hurtful or offensive to anybody, no matter who is 

on the receiving end. So thank you for looking into that. 

The CHAIRMAN. The gentleman’s time has expired. The chair now 

recognizes the gentleman from New York, Mr. Maloney, for 5 minutes. 

Mr. MALONEY. Thank you, Mr. Chairman, and I look forward to 

serving with you on the Committee. 

Mr. Secretary, thank you for your testimony today and for your 

extraordinary service to your own citizens in your home state but 

also to all of us in your current position. It is much appreciated. 

I represent the Hudson Valley just above New York City, and we 

have a lot of specialty crop farmers in the Hudson Valley, in Orange County but also on the east side of the river. There is a real 

feeling in my part of the world, as important as the Secretary is 

to feeding New York City and to the economy of the local region, 

that the laws and the Department are oriented in such a way towards the large agribusinesses in other parts of the country that 

they often leave our folks behind. In particular, I have one of my 

constituents here today, Chris Pavelsky, who runs a fourth-generation, I believe, onion farmer from central Orange County. There is 

another couple he introduced me to, Jeff and Adena Bialis, who 

grow 250 crop varieties on 12 acres of land and sometimes they will 

change the crops during the season. They have real problems with 

the crop insurance programs, so I was hoping you might say a word 

about the attention of the Department to specialty crop farmers 

and to the way the crop insurance program works or in many cases 

does not work for those types of farmers. 

Secretary VILSACK. Well, first of all, I am familiar with the Hudson Valley. I went to school in upstate New York, both college and 

law school, so——

Mr. MALONEY. Well, that explains your outstanding service to 

the country. It is all becoming clear to me now. 

Secretary VILSACK. Right. Well, first of all, we continue to expand access to crop insurance. Basically 85 percent of commodity 

producers are covered by crop insurance, and that percentage is 

less for specialty crop producers. It is about 70 percent. Far more 

fruit producers are covered then vegetable producers but that is increasing. We are constantly looking at data and accumulating information that allows us to actuarially develop products and expand those products. We are also significantly expanding one area 

of the specialty crop world, which has not received a lot of attention 

until recently, which is the organic producer. Only about 20 percent 

48

of organic production is covered by crop insurance. So it is unique 

because of the value-added proposition, so it is about really accumulating the data and the information. 

Mr. MALONEY. If I could just interrupt briefly, would you support 

efforts to sort of minimize the—I understand part of the problem 

is getting good actuarial data to provide that type of insurance. 

There are some ideas out there to make this more cost-effective for 

folks in terms of the match and how it is done. Would you support 

those efforts? 

Secretary VILSACK. Well, obviously we are always looking at 

whether or not the rates that are currently being charged for products are appropriate. We have actually had some adjustments in 

products recently as a result of a rate analysis. So that is part of 

our job. 

The other thing is, we have really made a concerted effort to expand market opportunities as well. It is not just providing the risk 

management, it is also creating market opportunities, and that is 

one of the reasons why the local and regional food system effort, 

Know Your Farmer, is important because it creates new market opportunities. It is why the Farm to School Program is important. It 

creates new market opportunities. It is why we have knocked down 

trade barriers to some of our fruits and vegetables because that is 

market opportunity, and it is why we are looking for equivalency 

agreements on organics with the EU and Canada, for example, because it creates market opportunities. So it is a combination of both 

things. 

Mr. MALONEY. If I can ask you as well in the minute and a half 

I have remaining, there is a real concern among my folks that they 

were not helped adequately after Hurricane Irene. You know, with 

all the attention on Superstorm Sandy, there was a hurricane a 

year before and it had a devastating impact in Orange County, 

New York, and so the rubber really met the road on a lot of these 

crop insurance programs, and there is a concern that loan rates 

have been adjusted for folks in light of the drought but not for 

smaller farmers as a result of Irene. Can you comment on that, sir? 

Secretary VILSACK. The disaster loan rates are across the board. 

It isn’t necessarily drought related. What we did do is, we streamlined the disaster declaration process, and anybody who is in a disaster area gets the benefit of that lower interest rate on disaster 

loans, number one. Number two, I actually traveled to upstate New 

York with Hurricane Irene, and there was an issue and continues 

to be an issue with our NAP product, and we are trying to make 

adjustments to make it a little bit more available or making a little 

bit more sense for specialty crop producers. I think it is an evolution, and I think there is a sensitivity in the Department to the 

need for us to continue to find ways to help these producers out because they are an important part of agriculture. 

Mr. MALONEY. Well, thanks, and I would love to get you back in 

the Hudson Valley. 

I yield back, Mr. Chairman. 

The CHAIRMAN. The gentleman yields back. The gentleman’s 

time has expired. The chair now recognizes the gentleman from 

North Carolina, Mr. Hudson, for 5 minutes. 

49

Mr. HUDSON. Thank you, Mr. Chairman, and thank you, Mr. Secretary, for being here today. I really appreciate your time. I would 

like to direct this back to the question raised by the Ranking Member about the poultry inspection rule. You know, it seems as 

though the rule has been properly vetted and gotten widespread 

support. What is sort of holding us back from getting going? We 

have an opportunity for better food safety, for better production but 

also some cost savings there, and it seems to me we would want 

to get that online as quick as we can to start taking advantage of 

those benefits. 

Secretary VILSACK. I don’t disagree, but any time you are proposing something that hasn’t been changed fundamentally for 60 

years, it is an education process, making sure that people understand that it isn’t revolutionizing or changing the process significantly but it is really providing inspectors to do a better job and 

freeing up folks. The cost savings are going to be some adjustments 

in terms of the overall inspection workforce. We are probably over 

a period of time going to have slots that will no longer be necessary 

but we will deal with that through attrition. Some of the inspectors 

will actually get better-paying jobs because there will be more responsibility. So it is a matter of educating people. It is complex, it 

is complicated, and it is a matter of educating, and hopefully we 

are in a better spot, people have a better sensitivity and understanding of what we are actually doing and hopefully you will see 

that rule forthcoming very soon. 

Mr. HUDSON. I appreciate that, and that is certainly an area 

where we can all agree. It is very important in my part of North 

Carolina. 

I wonder, though, as we are looking at sequestration and the 

issues you are having to deal with with inspectors, if we could start 

putting this process in place, would that enable you to—if you are 

going to need to trim back to do that quick enough? 

Secretary VILSACK. We wouldn’t be able to do it in time to make 

a difference in terms of this year because once we issue the rule, 

then there is a notice and comment period that we have to go 

through that administrative process. We would anticipate and expect a lot of people weighing in on this. There may have to be some 

adjustments. It will take time. So I don’t think that this is the vehicle for creating a better circumstance than what we have in food 

inspection, unfortunately. 

Mr. HUDSON. I understand. Well, just ballpark, are we talking 

about next year, implementation, or——

Secretary VILSACK. That is the hope, but to make sure you understand, it is likely that this will be staggered and it is likely that 

not every production facility will use this new system because it 

does depend on the way in which your plant is set up and the space 

of your plant, and it may not work for some plants but we think 

it will work for enough plants that we can save resources and certainly increase food safety. 

Mr. HUDSON. Thank you, sir. I yield back my time, Mr. Chairman. 

The CHAIRMAN. The gentleman very efficiently yields back his 

time. The chair now recognizes our friend from Illinois for 5 minutes. 

50

Mr. ENYART. Thank you, Mr. Chairman. Welcome, Mr. Secretary. 

I am very impressed with your breadth of knowledge. You certainly 

have a firm grasp of the issues. 

Mr. Secretary, the Navy, the U.S. Department of Agriculture and 

the Department of Energy have a Memorandum of Understanding 

in place promoting biofuels. Would you be supportive of expanding 

these efforts to include the United States Air Force as well as the 

Navy? 

Secretary VILSACK. Well, yes, the Air Force is involved in other 

aspects of this initiative, but this specific initiative between the 

Navy, the Energy Department and us is really designed to create 

the infrastructure that will allow us to produce a drop-in aviation 

and marine fuel, which obviously could be used by the Air Force 

and the Army and the Coast Guard. 

Mr. ENYART. So then your understanding would be that once the 

infrastructure is in place, that it would be expanded to the other 

military services as well as the Navy? 

Secretary VILSACK. Well, it would create product that would be 

available, and frankly, would also be available to commercial air. 

We have a Farm to Fly Initiative, which is involving the commercial aviation industry, and they are very interested in this because 

in order to comply with international greenhouse gas reduction 

emissions, they are going to have to need this new fuel, so it is a 

very important thing for commercial aviation as well. 

Mr. ENYART. Mr. Secretary, of particular concern in my district 

in southern Illinois—I like to say that I have the western coast of 

Illinois along the Mississippi River—is moving agricultural products to market via the Mississippi. Now, particularly in light of the 

low water levels that we have experienced recently due to the 

drought that you have spoken of, would you encourage USDA support in encouraging the Corps of Engineers to address the need for 

infrastructure improvements on the river? 

Secretary VILSACK. Yes. 

Mr. ENYART. I love those kinds of answers, as does the Chairman. 

Could you tell me, Mr. Secretary, what is the impact of not having—this goes back to the energy question, the biofuel question. 

What is the impact of not having any funding for most of the energy title program for Fiscal Year 2013? 

Secretary VILSACK. Well, it limits our ability to continue to expand beyond corn-based ethanol to non-food feedstocks, which carry 

economic opportunity in all regions of the country. We think there 

is an opportunity to use woody biomass, plant material, livestock 

waste, crop residue and municipal waste to produce new energy 

sources. To that extent, we would be limited in terms of our current investments if we don’t get additional resources or additional 

authority. 

Second, as I said earlier, it is important to extend that beyond 

just the energy. I think there is a biobased opportunity here. I have 

been to facilities that are taking corncobs and producing plastic 

bottles for Coca-Cola. I think there is just literally unlimited opportunities here for a new manufacturing revolution in rural areas, 

and these biorefineries because of the nature of the biomass that 

is necessary will have to dot the landscape of rural America to creVerDate 0ct 09 2002 11:48 Jul 10, 2013 Jkt 041481 PO 00000 Frm 00054 Fmt 6633 Sfmt 6601 I:\DOCS\113-01\79934.TXT BRIAN
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ate new job opportunities and maybe allow us to stem the population declines that we have seen in many small communities. I 

think there is tremendous opportunity here but we have to have 

the resources and we have to keep encouraging expansion of these 

new products. 

Mr. ENYART. So what you are talking about then is taking what 

is essentially waste products now, turning them into valuable economic opportunities and increasing good job opportunities in rural 

America? 

Secretary VILSACK. That is correct. 

Mr. ENYART. One other question relating to the biofuels and the 

military. Can you tell me why is helping the Navy and the other 

branches of the military increase their use of renewable energy 

such an important goal for your Administration? 

Secretary VILSACK. Well, there are a couple reasons. One, it is 

a national security imperative. If you talk to Secretary Mabus of 

the Navy, he will tell you that he is deeply concerned about the 

ability to adequately fuel the ships and planes necessary to defend 

our country if you have to be reliant on imported sources of that 

energy. Second, since most of—since a high percentage of the military, a higher percentage than the population would suggest, comes 

from these rural areas, a lot of these folks who are serving in the 

military go back into the rural areas that they came from and they 

want to have economic opportunity when they retire or leave the 

service. We are going to have a lot of young people leaving the 

service as a result of these wars being ended and we are going to 

create new opportunities, and I think there is a concern on the part 

of the Navy that those who have served their country admirably 

have economic opportunity back home, that they aren’t necessarily 

compelled to go someplace else if they want to go back home. You 

know, it creates a new industry and there are obviously jobs connected with that new industry, and it creates an opportunity for 

our commercial aviation system to be more competitive internationally. So there are a lot of positives to this. 

Mr. ENYART. Thank you, Mr. Secretary. 

The CHAIRMAN. The gentleman’s time has expired. The chair now 

recognizes another gentleman from Illinois, Mr. Davis, for 5 minutes. 

Mr. DAVIS. Thank you, Mr. Chairman. 

Mr. Secretary, thank you for your time today. It was great to 

meet you before the hearing. I appreciate you taking the opportunity today to educate us on a few different issues too. 

First off, I want to tell you, the number one issue on the minds 

of the farmers in central and southwestern Illinois is crop insurance. As a matter of fact, the President of the Illinois Farm Bureau, Phil Nelson, who has a mighty fine taste in ties, I must say, 

is here in the audience today to reiterate that point. Last fall, some 

opponents of crop insurance, they predicted that crop insurance indemnities would be about $40 billion. What is your latest estimate 

for the total indemnities paid for the 2012 crop year? 

Secretary VILSACK. In terms of what has actually been paid out, it is roughly $151⁄2 billion. You know, I don’t know that all the 

claims have been satisfied but it is certainly substantially less than 

the number that you just quoted. 

52

Mr. DAVIS. So we can easily say about 1⁄2 the estimated cost 

originally? 

Secretary VILSACK. I think that would be safe. 

Mr. DAVIS. Okay. Do you agree crop insurance is working? 

Secretary VILSACK. Absolutely. 

Mr. DAVIS. I am a father of three kids, one is high school, two 

in junior high, and I want to hopefully work with you on an issue 

that a lot of folks are talking to me about back home, and that is 

school nutrition. Our kids are not getting enough to eat at school. 

As a matter of fact, I understand the goal of the recent new 

changes to reduce the calories that the kids are eating, they make 

them make better choices, but it is having the opposite effect. I also 

coach Little League and football, and I know some of these kids are 

just not getting enough to eat at school. As a matter of fact, it is 

backfiring because they go out to the convenience store that is 

right across the street and they eat worse as soon as they leave. 

So I would ask that you give the schools the flexibility they need 

to make sure that they are able to feed the kids, and one size does 

not fit all with our children and the energy they need. Can you 

please comment on what USDA is actually doing to allow more 

flexibility? 

Secretary VILSACK. Well, there are 32 million children that are 

involved in this program and so you aren’t going to have 32 million 

different menus. You are not going to be able to individualize it to 

that point. It is somewhat surprising that people are concerned 

about this because the calorie count is not significantly less than 

what it was the year before this went into effect but it does change 

the makeup of the meal and the makeup of the calories to provide 

a nutritionally balanced meal. That doesn’t prohibit additional a` la 

carte opportunities nor does it prohibit additional snacks nor does 

it prohibit youngsters using vending machines that are in school 

with healthy snacks. So we recognize the need for flexibility and 

so we indicated to school districts that they could adjust within the 

week portion sizes so long as they kept within the basic framework. 

I mean, we do have a serious issue with obesity. A third of our 

children are overweight or obese. That is going to have consequences in the classroom. It is going to have consequences in 

health care. It is going to have consequences in opportunities. It is 

a national security issue. We have had retired generals and admirals come in this very building and testify on behalf of these nutrition standards because they are concerned about the shrinking 

number of young people available to serve in the military. So it is 

an issue, and we have provided flexibility, and I think that there 

is at least perhaps not in your area but at least in many parts of 

the country a greater acceptance and understanding of what we are 

doing, and we have seen particularly among the elementary school 

kids that they are really excited about this. 

Mr. DAVIS. Well, I am not getting that excitement out of the folks 

that are in my district, but I would be happy to work with you and 

let you know some of the individual circumstances that some of our 

schools are facing. 

I have one last question in the balance of my time. You know, 

Mr. Secretary, it was reported in today’s Washington Times that 

the Federal Government has actually posted 400 new jobs yesterVerDate 0ct 09 2002 11:48 Jul 10, 2013 Jkt 041481 PO 00000 Frm 00056 Fmt 6633 Sfmt 6601 I:\DOCS\113-01\79934.TXT BRIAN
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day including three insect production workers to help grow 

bollworms in Phoenix. At a time when this Administration is claiming the sequestration is going to cause flight delays, meat shortages, are you going to still fill those three positions in Phoenix? 

Secretary VILSACK. Well, I am not familiar with those three positions, Congressman, and I will be happy to check on that, but I do 

want to say a couple things in response to your question. 

First of all, we have eight percent fewer workers than we had 

when I took over. We have a budget that is less than it was in Fiscal Year 2009. We have made a lot of changes and a lot of things 

that have created a great deal of difficulty in terms of getting our 

job done but we are getting it done. We are going to continue to 

be mindful of the importance of working with taxpayer dollars, and 

I am pretty proud of the effort at USDA to save and reduce spending by $700 million. 

With due respect, you can pick out one or two items but on balance, you will get a workforce that is very committed——

Mr. DAVIS. Mr. Secretary——

Secretary VILSACK.—to the people of rural America. 

Mr. DAVIS. I appreciate what you have done at USDA and I am 

glad you guys have cut, but with sequestration and what we are 

seeing in the news media today, the fact that we have three positions that are in the USDA—granted, there are many others that 

I think should be pulled down before we start furloughing some of 

the workers that are on your payroll now. I just want to make sure, 

I want to know, can you please look into the fact that we have 

three brand-new positions to actually grow bollworms in Phoenix. 

If we could please look at——

Secretary VILSACK. Well, I will look into that but if you will understand that even if those positions are not filled, it doesn’t have 

any impact on meat inspection. That is the thing that seems to be 

missing here is a recognition of what you all have done. With the 

sequestration the way it is structured, every account item has to 

be cut by a certain percentage and so in the food safety area, there 

are only a couple of accounts and they are almost all labor. So even 

if you eliminate those jobs, it isn’t necessarily going to resolve the 

issue that we are all concerned about. 

The CHAIRMAN. Would the gentleman from Illinois yield to the 

Chairman for a moment? 

Mr. DAVIS. Yes, sir. 

The CHAIRMAN. The Secretary is exactly right. One of the challenges we face here is trying to come up with ways to mitigate the 

effects of sequestration. That was my earlier line of questioning 

about whether the Department had worked with OMB or the appropriators to try to come up with language. We as a Committee 

have been trying to work with the appropriators when there is an 

opportunity in this CR or legislatively to give you the flexibility. 

They say they have heard nothing from the Department or OMB 

or the Administration. That is our concern. 

Thank you, Mr. Secretary. The gentleman’s time has expired. 

The chair now recognizes the gentlelady from New Mexico for 5 

minutes. 

Ms. LUJAN GRISHAM. Mr. Chairman, thank you very much, and 

Mr. Secretary, it is a pleasure. I am delighted to get to meet you 

54

today and to have you before this Committee. I also appreciate that 

several questions today and much of your testimony has been focused on food security issues and hunger and that New Mexico is 

included in your recent efforts, Strike Force, is the language that 

you used, to address this problem. As you are already well aware, 

New Mexico has one of the highest hunger or food insecurity rates 

in the country, and you identified that in food security are a couple 

of those programs, both SNAP and the Commodity Supplemental 

Food Program, that we have a growing number of disabled adults 

and seniors on those programs, and in fact, in New Mexico, what 

you have is another dynamic. Not only do we have some of the 

highest poverty rates among those populations and diversity rates 

among those retirees, but in addition, we have the fastest or one 

of the fastest growing seniors raising or grandparents raising 

grandchildren populations. So you have a double exposure, if you 

will, to a lack of resources, a lack of support and a growing problem 

with hunger. You also mentioned the First Lady’s Let’s Move Initiative and how that could provide some positive impacts in rural 

efforts to address those populations. Can you talk to me about how 

much has been appropriated or funded for that program, the efficacy of that, and can you give me some of those outcomes that are 

working for us in rural America? 

Secretary VILSACK. Well, the First Lady’s Let’s Move Initiative is 

really a function of her outreach to the private sector and it is predominantly being funded by private foundations and private enterprise, private companies. But it has had a profound impact in one 

particular area. We have a thing called the U.S. Healthier Schools 

Challenge where we encourage schools to embrace better nutrition 

as well as physical education and more exercise, more physical 

movement. We have seen a dramatic increase in the number of 

those schools basically reaching the various levels that we have. 

We have a bronze, silver and gold level and a platinum level. We 

have seen thousands of schools participate in that program, and we 

think over time that is going to make a difference, maybe a small 

reason why in some of the major cities we are beginning to see the 

obesity levels abate a bit. 

Ms. LUJAN GRISHAM. Mr. Secretary, I appreciate that. I am going 

to take this to maybe a more complex area to address in that regard. We also have in New Mexico some of the highest type 2 diabetes rates, among adolescent, some of the highest obesity rates. 

Our health disparity issues are problematic, and when I was the 

Secretary of Health, I worked diligently to actually ban junk food 

out of the schools and recognized that all of the research indicates 

that if you want to see better outcomes in education, you can tie 

that directly to a healthier school environment, which goes right to 

nutrition and then saves us billions of dollars in health care costs 

for both those issues. 

But I am really concerned in addition to that effort, and I do see 

great promise at focusing on healthy school initiatives, which include both better nutrition and exercise, but outside the school and 

in rural areas, what are we doing about those families in the summer and what innovations can we take from some of the healthy 

school initiatives and apply to making sure that those kids and 

families get the nutrition that they need in the off-school months? 

55

Secretary VILSACK. Well, we have seen a significant increase in 

summer feeding spots and locations. We have 38,000 locations that 

we are involved in supporting. They serve about 143 million meals 

a year during the summer months. We are continuing to reach out 

to faith-based organizations and the private sector to help fund mobile units that can go to where the kids are as opposed to the kids 

coming to a central location. In a rural area, that is particularly 

important to have a mobile area where you have healthy snacks or 

healthy meals that can wheel around to the Little League diamond 

or the swimming pool or locations where we know kids are congregating and provide them access to decent food. So that is one thing 

that we are encouraging, greater expansion of the summer feeding 

program. 

Ms. LUJAN GRISHAM. And Mr. Secretary, on that point, I appreciate that, and one of your nonprofit partners in New Mexico, 

Appleseed, is doing a fantastic job, but I do worry that sometimes 

the lack of flexibility has stunted some of that innovation and their 

ability and other nonprofit partners to really do their job. I would 

love for the Department to entertain that flexibility, and given that 

I have very little time left, I would also want you to talk about 

with the sequestration and notwithstanding sequester that is my 

sense that we don’t have enough people on the ground in USDA to 

partner productively in those programs or to get any grants and 

loans out either for rural economic development. 

Secretary VILSACK. Well, with due respect on that rural development, we are still going to have people on the ground and still people doing business. We just not going to be able to do as much business because we don’t have the resources. We will see a reduction 

in wastewater and business and industry loan programs and utility 

programs but we are still going to do our job, and we are going to 

continue to focus on getting the job done in rural areas. It is one 

of the reasons why we have focused on process improvement. We, 

for example, reduced the loan application for smaller loans in rural 

development so we don’t have to spend as much time so we can do 

more of those smaller loans. We have created new opportunities in 

the FSA area with microloans to help small farming operations. So 

there is a lot of work being done but we are not going to be able 

to do as much of it, just simply because we don’t have the financial 

resources that we would have had but for sequester. 

The CHAIRMAN. The gentlelady’s time has expired. I would note 

to my colleagues, we have five more Members in the queue. Secretary, your patience has been very much appreciated, and with 

that, I recognize the gentleman from New York, Mr. Collins, for 5 

minutes. 

Mr. COLLINS. Mr. Secretary, we have covered a lot of territory 

today, and I am a little surprised. I represent the 27th District of 

New York, the eight counties on the western part of the state, and 

we have one of the largest dairy-producing counties in the entire 

country. We need jobs. We need to grow the economy. We need 

legal workers. And as the Secretary in the Administration, I hope 

somewhat rhetorically, we are counting on you to be a voice for the 

dairy producers so we can get the legal workers we need 24/7, 365 

as this immigration debate moves forward, and I am just curious 

56

if you have some comments, certainly recognizing that that is the 

issue with the dairy farmers—legal workers. 

Secretary VILSACK. Well, Representative, I talk a lot about this 

issue and the need for comprehensive immigration reform that 

would include and respond to the unique nature of agricultural 

workers. It is something that I have talked to groups about. It is 

something I have talked within the Administration about, so we 

are clearly focused on this, and we understand the unique nature 

of farm work, and our hope and our prayer is that we finally get 

this broken system fixed and get it fixed once and for all, that we 

provide better border security, that we provide a pathway to legitimacy and citizenship for those who are here that we want to stay 

here, that we make sure that people are held accountable by paying fines and paying taxes and learning the language but that we 

get this process fixed and that we get it fixed in a way that doesn’t 

make it cumbersome and difficult for producers to comply with the 

law. One of the concerns we had about e-verify that was discussed 

in past Congresses is that it may apply very well for a large industry but it doesn’t apply particularly well for a small dairy operation, so we are very, very sensitive to this issue. 

Mr. COLLINS. Well, we will be counting on your voice as this 

moves forward. I do think that bipartisan support is there to get 

it done this year, and I hope that is not just optimism. 

Secretary VILSACK. We are counting on your vote, Congressman. 

Mr. COLLINS. Moving forward, we covered a lot of things and 

there were a few questions that I may ask you to go back over, but 

do you consider yourself the CEO of the Department of Agriculture, 

I am assuming? 

Secretary VILSACK. Actually, to a certain extent I have to be 

careful about how I answer that question because the President is 

my boss and the people of this country are my boss, so I am middle-level management in that scenario. 

Mr. COLLINS. Well, I would think and hope you would consider 

yourself more of that, because it goes back to in my world, a CEO 

should be proactive—I think you would agree with that—anticipatory, do contingency planning, and I guess my question is, do you 

do those things? 

Secretary VILSACK. We have done them, Congressman. That is 

why we have been able to deal with a budget that is less than it 

was in 2009 and still provide service. 

Mr. COLLINS. So if you are proactive, anticipatory, you do contingency planning and you are the CEO of the Department of Agriculture, how is it that for 18 months you have done no planning 

related to the sequester and in fact today you can’t even contact 

all your employees. We are 4 days post sequester and you don’t 

even know how to get a hold of your employees. 

Secretary VILSACK. Well, that is not a fair statement, Congressman. First of all, we have done planning. We have been doing planning all along, so we have a good understanding of some of the 

challenges. We know, for example, that we are going to have 1,500 

fewer farm loans as a result of sequester. We know that we are 

going to be able to do a lot less conservation. We know that we are 

going to be able to do a lot less rural development. We know the 

implications of this. What I said in terms of contacting folks is that 

57

folks don’t have e-mail and so there is a process by which we have 

to follow for folks who don’t have e-mail to be able to notify them 

legally pursuant to contracts and pursuant to the law. So we know 

where the folks are. It is just a matter of using different techniques 

to communicate with them. 

Mr. COLLINS. Well, I would suggest had you done some advance 

planning, they could have already been contacted. 

Secretary VILSACK. You can’t contact them until the sequester is 

triggered, Congressman. That is the legality of what we are faced 

with. As soon as the President signed the order, we began the process of notifying people. 

Mr. COLLINS. You know, with 1 minute left, have you heard of 

Lean Six Sigma? 

Secretary VILSACK. Yes, sir. We are using it in process improvement at USDA. We have a number of Lean Six Sigma trainings. 

We have a number of black belts in that process. 

Mr. COLLINS. And are you trying to utilize that as a way to minimize the sequester impacts on, for instance, your meat inspectors 

and a way to improve processes? Because Lean Six Sigma will reduce the need for employees, which could reduce the need for furloughs. 

Secretary VILSACK. I don’t think it would work in this particular 

area but we have used it in other areas. We have used it specifically in our biotech regulatory area is one place where we have 

used it. As I say, we have a number of black belts throughout the 

entire USDA process. I am very keen on this. 

The problem with food inspectors is the amount of time and the 

amount of the cut and the fact that the budget is predominantly 

inspectors, and there is just not much flexibility. It is not like a 

regular budget. It is not like you can prioritize. That is the problem 

that people just can’t get their arms around but that is the reality 

we have to face. 

Mr. COLLINS. Well, respectfully, I do believe Lean Six Sigma 

would help you with meat inspectors, and I request that you take 

a look at it. It will pretty much work everywhere. 

The CHAIRMAN. The gentleman’s time has expired. The chair now 

recognizes the gentleman from Florida, Mr. Yoho, for 5 minutes. 

Mr. YOHO. How are you doing today? 

Secretary VILSACK. All right. How are you? 

Mr. YOHO. I admire you for sitting through this. I learned a long 

time ago that the mind can only absorb what the rear end can endure, and you are doing a great job. 

I have been proud to be associated with agriculture pretty much 

all my life. You know, since I was 16, I have worked around agriculture. I have been a large-animal veterinarian for the last 29 

years, and I have worked with the USDA and I am proud of that 

organization, and you have a tough job and you have been at the 

helm for 3 years. My question kind of goes along with Mr. Collins’s 

here too. Knowing that sequestration was a possibility 2 years ago, 

the planning stage, you have to work out your budget, knowing this 

was coming, I have heard you had the response that you did and 

the steps that you took, and I realize that you did do like a lot of 

the farmers in our area and I did certainly in practice, do more 

with less, and I commend you for that. But again, with your misVerDate 0ct 09 2002 11:48 Jul 10, 2013 Jkt 041481 PO 00000 Frm 00061 Fmt 6633 Sfmt 6601 I:\DOCS\113-01\79934.TXT BRIAN
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sion statement as you stated is to make sure our food supply is safe 

in this country and it is important when we address the topic for 

today’s discussion to review the state of the rural economy, we 

want to make that strong. The small businesses are the backbone 

of this country, and of course, the farmers are the breadbasket of 

this country and a large portion of the world. And so with the 

statements that come out of the Administration or through the 

USDA when you say the money is not there, we are going to have 

to lay off the meat inspectors, I find that somewhat disheartening 

to come out of an agricultural community because by sending that 

message out, you are stating to the rest of the world, not just the 

country, not just the region that our food could possibly not be safe, 

and that is a bad message to send out, and I would caution in the 

future to use different messaging techniques because we are trying 

to expand agriculture. I am proud to be from Florida, which is such 

a strong ag area, that we want to make sure that we continue our 

trade with other countries and I would just like to hear your comments on that. 

Secretary VILSACK. Congressman, we are expecting a record year 

of exports in beef, poultry and pork. We have seen 4 of the best 

export years in the history of this country in the last 4 years. This 

is the reality of the circumstance to give everyone adequate notice 

to be able to begin the process of adjusting to the reality that we 

are going to have to not lay people off but furlough people, and by 

furloughing people, because of the nature of the inspection process 

in this country in which companies are required to have food inspected and are required to have USDA inspectors as opposed to 

their own privately funded inspectors, it is going to cause a reduction in production for a period of time, and that is the unfortunate 

circumstance. We did take steps to try to minimize that, but at the 

end of the day when 87 percent of your budget is that line item, 

there is just not much you can do. 

Mr. YOHO. I realize that, I worked in a slaughterhouse, I have 

worked with the inspector and I have seen that process and I know 

the importance. My concern is the messaging going out to people 

when we are trying to expand exports, and you have done a great 

job, and I commend the government for expanding that, but when 

we send a message out like that, it is kind of like BSE. When they 

hear one cow has BSE, the markets close down, and if the foreign 

countries hear that we are not inspecting our meat, it sends a signal and that is what concerns me, and if we are to keep the rural 

agricultural economy growing——

Secretary VILSACK. It is not that we are—and I don’t think anybody ever said we are not inspecting the meat. We are furloughing 

people and as a result those production facilities are going to shut 

down for a period of time. It is not that food isn’t going to be inspected. 

Mr. YOHO. It is one of those things. I know what we say but we 

don’t know what people hear, and when you hear in the news that 

meat inspectors are going to be laid off not inspecting the meat, it 

sends a signal and that concerns me. 

Secretary VILSACK. Well, we will communicate to our cooperators 

in foreign countries precisely what this is all about, and we actually began that process. We have—another part of sequester which 

59

we haven’t discussed today is the impact on the Brazilian cotton 

situation which is a very serious issue that has to get resolved. We 

are going to have to—sequester applies to that account as well, and 

so we are in the process of reaching out to our foreign friends and 

explain to them precisely what this is, and I don’t anticipate that 

we are going to continue to have a strong, robust commitment to 

exports now. It will be impacted by the fact that not only are we 

dealing with this issue of meat inspection but we are also dealing 

with less money in promotion, which is unfortunate. 

Mr. YOHO. Well, and the other thing is, we need to work together 

for the betterment of not just ag but of the country, and that is a 

bipartisan commitment, and I look forward to doing that. I have 

several other questions but I am going to run out of time, but I 

would like to talk to maybe somebody from your Department on 

immigration, on the Food Stamp Program, as a possibility of cutting back on our expenses since that eats up about 80 percent of 

the farm bill, and I look forward to talking to you at a later date. 

Thank you for your time. 

The CHAIRMAN. The gentleman’s time has expired. The chair now 

recognizes the gentleman from Pennsylvania, Mr. Thompson, for 5 

minutes. 

Mr. THOMPSON. Thank you, Mr. Chairman. 

Mr. Secretary, good to see you again. 

Secretary VILSACK. Nice to see you. 

Mr. THOMPSON. We bumped into each other in an airport not too 

long ago. 

Secretary VILSACK. In the great State of Iowa. 

Mr. THOMPSON. In the great State of Iowa, absolutely. 

Secretary VILSACK. Where your grandchildren are. 

Mr. THOMPSON. My grandson, one of many in the future, I hope, 

but he is the only one there. 

I was actually going to go down the road with Mr. Schrader. We 

work very closely together, but he had already kind of talked about 

the biopreferred bill, the Forest Products Fairness Act. We are 

going to be reintroducing that. I mean, it amazes me that we discriminate against U.S. forest products and yet that program, which 

is a Federal program, promotes foreign products. So we are hoping 

to fix that, and we have some support to do that and we will go 

down that road. 

I wanted to stay with forestry in terms of just some questions for 

you. You know, we are beginning to address the budget issues that 

confront us, and I want to move beyond sequestration because obviously we have a responsibility to operate in a fiscally responsible 

manner, and we all know that. You all have demonstrated a commitment to that with what you have been doing since you became 

Secretary, but one of the areas and the opportunities I just don’t 

see us taking full advantage is is the revenue from our timber production. I am not talking about stewardship cuts because those do 

create local jobs and you can keep some of that money, quite frankly, in the forests for other projects but I am talking about the green 

timber sales. Those are the ones that when U.S. national forests 

were created, it was local folks, my predecessors 100 years ago all 

sat at the table and said, ‘‘Well, how can we make sure we have 

robust rural economies and how we manage our national forests in 

60

a way that they produce timber?’’ You know, we talk a lot in the 

literature about the Forest Service about multiple use. I happen to 

believe that it is all secondary to producing resources. That is what 

those national forests were all about. And we just have never come 

close and we have been on a decline in terms of timber production 

that promotes healthy forests. That is how we prevent, as you 

know, invasive species. We prevent wildfires. We promote healthy 

forests by timbering, and we promote robust rural economies. 

And so are there any thoughts, or what are your thoughts—and 

we are going to have a Subcommittee hearing next week so I will 

really go into depth with Chief Tidwell. Great guy. I enjoy working 

with him. And so we are really going to pursue this. But can you 

update the Committee on what the Forest Service is doing to increase timber sales on Federal forests so that we as U.S. taxpayers 

quite frankly can start to capitalize on our investments, because it 

is not just about healthy forests and healthy rural economies, but 

that is revenue that can come into the Treasury. 

Secretary VILSACK. Well, as I sit here I am thinking of three 

things that we have done. One is, we have increased commitment 

to treat more board feet to get up to 3 billion board feet over the 

course of the next couple of years, and part of that does require a 

process that we have to go through in terms of projects in NEPA. 

What we have done with NEPA is, we try to figure out a way in 

which we could streamline that process so we don’t spend quite as 

much time, and that obviously reduces the amount of work we can 

do, and we have been pretty successful. 

Mr. THOMPSON. I appreciate your steps in that direction, that 

landscape approach. 

Secretary VILSACK. Second, or third, so it is one, increasing sales, 

two, reducing the administrative burdens associated with those 

sales, and then three is actually continuing to research a new product development. You know, I was at the Forest Product Lab recently and saw the development of new tornado shelters, and most 

tornado shelters are made from metal but they are now experimenting with wood shelters that can withstand something going 

into it at 150 miles an hour. I actually saw a 2 x 4, they shot it 

into this facility and it didn’t penetrate the facility. So creating new 

products for wood. We have also seen nanotechnology potentially 

creating armor opportunities and a variety of things that could be 

used in cell phones, the film for cell phones. I mean, it is unlimited 

here. 

So the key here is continuing to increase the sales, understanding that it is consistent with proper forest management, reducing the administrative burdens that can slow this process down, 

and making sure that we are constantly on the edge of researching 

new products. 

Mr. THOMPSON. And new products are important, innovation is 

incredibly important but I would argue that what has been excluded because it has been considered mature is really, it was 

shortsighted when it was put in place. We have lost 300,000 jobs 

in the forest products industry, and so we also have to maintain—

we have a commitment to maintain as well as developing emerging 

markets. 

61

Secretary VILSACK. Well, and obviously we need help from you on 

that to better clarify the definitions so that there is greater flexibility in what we can do there, but we are looking at new and 

emerging market opportunities and if you all change the direction 

and focus on this, we will obviously respond to it. 

Mr. THOMPSON. I appreciate that. And another comment but just 

real briefly. You know, I do have concerns, and I am out of time, 

so I don’t want to set this up and not give you a response time, 

but we can talk later on it. You know, your response to the Senator 

talked about the impact of sequestration. You only projected a $4 

million cut in land acquisition, which quite frankly takes lands off 

the tax rolls and this makes it very challenging for rural communities when they have lands that go into the National Forests and 

off the tax rolls, especially if we are not doing our job with harvesting timber. At the same time, your letter outlined a projected 

15 percent reduction in timber harvesting, and I just have real concerns about that, but that is something I look forward to talking 

to you in the future on. 

The CHAIRMAN. The gentleman’s time has expired. The chair now 

recognizes the gentleman from Georgia, Mr. Scott, for 5 minutes. 

Mr. AUSTIN SCOTT of Georgia. Thank you, Mr. Chairman, and 

Secretary Vilsack, I was happy to hear you talk about research and 

the importance of research. I think it has been an extremely valuable part of agriculture that actually helps us increase our yields 

per acre and allows us to increase export opportunities. So thanks 

for mentioning that. As you know, that falls into kind of that other 

category of the ag bill, if you will, on the spending. 

My question deals with the 2014 budget request that you would 

have submitted to the President. Can you tell us what your topline number is? 

Secretary VILSACK. Congressman, that process has not been completed, and it would be premature for me to respond to that question. We would be more than happy to explain to you the intricacies of our budget after it is published. But let me just simply say 

this. You know, we are continuing to be challenged to do the job 

you all want us to do when we are dealing right now with a budget 

that is less than what it was in Fiscal Year 2009 for operating. 

Mr. AUSTIN SCOTT of Georgia. Let us talk about that for a second 

then because we hear that from pretty much every Administration 

official, but the President’s budget was due February 4th. I didn’t 

ask you for a detailed explanation. I just asked you if you would 

give us the top-line number, and you are telling us that you have 

not turned in your budget to the President yet. Is that correct? 

Secretary VILSACK. No, what I am telling you is that the process 

has not been completed in terms of our discussions. 

Mr. AUSTIN SCOTT of Georgia. Let me ask it this way. Have you 

turned in your budget to the President? 

Secretary VILSACK. Well, the answer to that is yes and no. We 

have turned in information to the White House and to the OMB 

but that process has not been totally locked down yet. 

Mr. AUSTIN SCOTT of Georgia. Okay. So you will have to forgive 

me, Mr. Chairman. It is kind of baffling that you stood there or sat 

there and said what you all have done when the President was 

supposed to deliver a budget to us February 4th and you can’t even 

62

tell us or won’t, I should say, you won’t, because you are making 

a choice to tell us yes and no instead of just saying yes or no. But 

the fact of the matter is this. In 2013, according to your website, 

your total outlays were $155 billion; 2012, $151; 2011, $139; 2010, 

$129; 2009, $95. 

Secretary VILSACK. That doesn’t tell the full story, Congressman, 

because those are——

Mr. AUSTIN SCOTT of Georgia. Sir——

Secretary VILSACK.—eliminated programs, and I am talking 

about operating here. In order to do the programs, we have to do 

have——

Mr. AUSTIN SCOTT of Georgia. Sir, I will ask you the question. 

Do those numbers from your website accurately reflect the total 

spending of the USDA? 

Secretary VILSACK. If they are on the website, I am sure they are 

accurate, Congressman. 

Mr. AUSTIN SCOTT of Georgia. You said that there was a $700 

million cut. If you take $129 from $155, that is a $26 billion increase in spending over the last 4 years. Where is the $700 million 

cut? 

Secretary VILSACK. Congressman, what I said was, our operating 

budget, which is the discretionary part of our budget. Now, we 

have no control over the mandated expenses. They are what they 

are. If SNAP is X, it is X. If other mandated programs are what 

they are, they are. 

Mr. AUSTIN SCOTT of Georgia. What percentage of the farm bill 

do you think should actually go to support production agriculture, 

farm and commodity programs? What percentage of what we call 

the farm bill do you as the Secretary of Agriculture believe should 

go to support those programs? 

Secretary VILSACK. You know, it is an interesting question because what you want me to say is a large number. 

Mr. AUSTIN SCOTT of Georgia. No, sir, I just want an honest answer. 

Secretary VILSACK. Well, it is not an honest question, Congressman. 

Mr. AUSTIN SCOTT of Georgia. Sure it is. 

Secretary VILSACK. No, it is not. It really isn’t. 

Mr. AUSTIN SCOTT of Georgia. It is an honest question. 

Secretary VILSACK. The reason it is not is because you want to 

pit parts of our budget against each other, and that is not right. 

Mr. AUSTIN SCOTT of Georgia. Sir, what is not right is the fact 

that you won’t give a straight answer. Have you given your budget——

The CHAIRMAN. The gentleman——

Mr. AUSTIN SCOTT of Georgia.—to the President or not? 

The CHAIRMAN. The gentlemen will allow each other to answer. 

Secretary VILSACK. The process is that we submit information 

and OMB responds back. So there is a give and take, and that give 

and take has not yet been completed, so I can’t tell you what the 

number is because it hasn’t been finalized. It could be this number 

or they could come back tomorrow and say, ‘‘You know what, we 

need to give the Defense Department X number of dollars and so 

we are taking this from you.’’ You know, it is a process. 

63

Mr. AUSTIN SCOTT of Georgia. I don’t expect this President to 

give any more money to the Defense Department. I am on Armed 

Services as well. The fact of the matter is this: Spending has increased dramatically under your agency, and the other fact is that 

in 2013, the total percentage of funds that went to farm and commodity programs is 16 percent. Sixteen percent is what actually 

went to production agriculture. 

Secretary VILSACK. That is—I could quibble with that number 

and here is why——

Mr. AUSTIN SCOTT of Georgia. This is part of your website. 

Secretary VILSACK. Here is why I can quibble with that——

Mr. AUSTIN SCOTT of Georgia. If the information is not accurate, 

it is because you are putting out false information on your website. 

Secretary VILSACK. No, no, no. It is because I need to explain it 

to you, Congressman. The SNAP program is part of that, right? 

And you are going to suggest that that is not part of the farm programs. It is not technically but——

Mr. AUSTIN SCOTT of Georgia. It is not part of commodity and 

production agriculture. 

Secretary VILSACK. Well, but it helps commodity and production 

agriculture because 16¢ of every food dollar that is spent in this 

country ends up in a farmer’s pocket. So you have to look at the 

totality of the programs in terms of how we support agriculture in 

this country, and the research budget, a part of that is used for 

production agriculture. So I don’t think it is fair to suggest that 

title I or the crop insurance title is the only thing that goes to production agriculture. That is what I am saying. 

The CHAIRMAN. Would the gentleman from Georgia yield? 

Mr. AUSTIN SCOTT of Georgia. Yes, sir, Mr. Chairman, I will 

yield, but that is a long, long stretch of a rubber band right there. 

The CHAIRMAN. I would just note to my good friend from Georgia 

that he cuts to the core issue of what this farm bill debate will be 

about this summer and into the fall and the conference committee 

process: how do we allocate our resources? Is the 80/20 spilt that 

we are operating under right now between programs that help consume food versus in the general sense the programs that help raise 

the food, is that the right balance. There are a good many folks on 

this Committee, and I suspect on the Floor of the United States 

House, who will say that that ratio is out of balance, and we will 

address those issues. The folks in the Senate may have a different 

perspective. But you and I are going to have a lot of fun with this 

topic, sir. 

Mr. AUSTIN SCOTT of Georgia. Well, Mr. Chairman, I appreciate 

that, and what I tell you is my farmers have told me that we no 

longer want to be held hostage. 

The CHAIRMAN. I understand that. 

Mr. AUSTIN SCOTT of Georgia. Thank you, and I yield my time. 

The CHAIRMAN. The gentleman yields back. I recognize the gentleman from New York for our concluding 5 minutes. 

Mr. GIBSON. Well, thanks, Mr. Chairman, and I appreciate the 

opportunity to be part of this hearing, the state of the rural economy, so vitally important to upstate New York. I want to thank the 

Secretary. Good to see him again. I appreciate the work that he 

64

has done for my area, and certainly he has been well received as 

he has traveled in upstate New York. 

We have talked about a number of issues that are important to 

my farmers and to the ag economy. I just want to list some of these 

in terms of my support with this upcoming farm bill. Number one, 

crop insurance for fruit and vegetable growers, this is critically important to them, particularly given the needs of the Northeast, and 

I think the Secretary agrees on that. I just want to echo the comments, and actually associate myself with my neighbor in the Hudson Valley, Mr. Maloney. Research for fruits and vegetables is vitally important. I am proud of my alma mater. I am an alumni of 

Cornell and I am proud of the work that they do with the cooperative extension. I want to see us continue to support that in the 

farm bill. Dairy security, margin, margin insurance, critically important to my dairy farmers. Number four, ag labor. We won’t see 

that in the farm bill but I concur, this is something that I hear 

every time when I meet with my farmers has to be addressed, so 

I appreciate your support for that. Number five is, I want to actually support what the report that your agency or Administration 

came up with with regard to definition of rural. You know, I have 

Kingston in upstate New York and that mayor there, Mayor Gallo, 

is working hard to revitalize parts of his downtown, and among the 

parts of his vision is supporting the agricultural economy by bringing the farmers’ market and so having access—it is 23,000 in Kingston, so having access to that program is going to be helpful. So 

I am going to be supportive of that, and I was in the process here 

during the farm bill. 

I do want to mention three other priorities that are important for 

upstate New York to pose you on these. Number one is broadband. 

I know it was brought up at least tangentially earlier in the hearing but the FCC has found that the Low Interest Loan Program is 

something we have a need for yet, of course, the demand for it 

seems to be declining. I have my own views on it. I will be interested to hear yours in a second. Beginning Farmer Program, critically important. I am so proud of our farmers in upstate New York, 

but we recognize that the average age is 57, so this is a national 

security issue too. We need to inspire a whole new generation to 

come to the farm, and our office is going to be involved in the farm 

bill continuing to strengthen that program, going forward. And 

then Lyme, which is a public health scourge certainly in the Northeast in my district but I would argue around the country, and we 

are working with your folks in terms of ag research service to try 

to make a difference on that. 

So I appreciate the opportunity to express the priorities for upstate New York, Mr. Secretary, and I would be interested in your 

viewpoint on the Low Interest Loan Program for broadband and 

perhaps at this time other follow-up. 

Secretary VILSACK. Well, in terms of USDA’s capacity to provide 

assistance, we are going to focus our attention on the area that is 

not being served as well by the FCC efforts, and as I indicated, the 

FCC is pretty much focused on the regional Bells and where their 

capacity is to expand broadband. There are many areas of the 

country that are served by small telephone companies that don’t 

necessarily fall into that world, and that is the world that we want 

65

to try to help and provide assistance to, and we do it in providing 

loans but we also do it in providing distance learning and telemedicine opportunities. We have had a number of projects, over 1,400 

projects that we funded over the last couple of years in that area. 

That is going to continue. 

I do think there are things that the FCC could potentially do to 

make it a little bit easier for those regional folks to—the rate of 

return for carriers to participate in their program and we have had 

conversations with them about that and we will continue to try to 

have a coordinated effort. 

I appreciate you mentioning the Beginning Farmer Program. I 

would tell you that as we went about closing labs, ARS labs, we 

noticed that there was a great deal of real estate associated with 

those labs, and the process that we have to follow is that we have 

to provide opportunities for land-grant universities that are located 

in and around the lab first dibs, if you will, on the land but we 

made it as a condition of most of the transfers that they establish 

or beef up their Beginning Farmer and development programs. It 

is a way in which we can use a bad situation and a tough financial 

situation to find opportunity. So those land-grant universities are 

going to do an even more extended job on the Beginning Farmer. 

I would encourage you with the mayor to take a look at the Know 

Your Farmer compass on our USDA website. That provides a lot 

of information about the programs that that mayor could potentially use to build a farmers’ market economy in his downtown 

area, and I would agree with you on ag research. The challenge 

will be limited resources and a lot of pests and a lot of diseases and 

a lot of issues, trying to prioritize them as best we can, but this 

area is one area that has been ignored in terms of conversation and 

discussion, which may be in the long term one of the most important areas. 

Mr. GIBSON. I greatly appreciate those remarks. I look forward 

to working with you, your team, and of course this Committee as 

we move forward with this process in the coming weeks and 

months. 

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

The CHAIRMAN. The gentleman yields back. I recognize myself. 

Mr. Secretary, I would note that I will send down to you some 

questions about the Small Watershed Dam Program, one of our 

very successful things that your Department has been a part of 

since the 1940s and look forward to your responses. Other than 

that, thank you for your time today and your insights and your 

interactions with Members of the Committee. This is always a good 

use of our time, and I believe it is a good use of your time too. 

With that, under the rules of the Committee, the record for today’s hearing will remain open for 10 calendar days to receive additional material and supplemental written responses from the witness to any question posed by a Member. 

This hearing of the Committee on Agriculture is adjourned. 

[Whereupon, at 1:12 p.m., the Committee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

67

SUPPLEMENTARY INFORMATION SUBMITTED BY HON. THOMAS ‘‘TOM’’ J. VILSACK, 

SECRETARY, U.S. DEPARTMENT OF AGRICULTURE

Insert 1

Ms. FUDGE. Thank you so much, Mr. Chairman, and thank you for being 

here, Mr. Secretary. 

Mr. Secretary, we all know that building a diverse workforce is an extremely 

effective tool in addressing discrimination. Many of the civil rights complaints 

in the past, particularly those in Pigford, might have been mitigated had USDA 

had a more diverse workforce that was better able to interact with minority 

farmers. So to that end, what has USDA done to ensure a more diverse workforce? And I am particularly interested in hearing about how many African 

Americans serve in leadership roles within the Department, and before you respond, I just want to remind you that I asked this same question almost 2 years 

ago and have yet to get a response, sir. 

Secretary VILSACK. Well, let me see if I can respond to your question here, 

and I apologize for not responding before that. That is something that shouldn’t 

have happened. We have engaged in a process which we refer to as cultural 

transformation at USDA, and every month I get a report on the diversity of our 

workforce. I can tell you that we have seen significant increases in the hiring 

of African Americans, Hispanics, Asian Americans, Native Americans, people 

with disabilities, and veterans, and that is the focus of this report. We are casting a wider net to try to find good, qualified folks, and the result of that is that 

our numbers are increasing. Within the SES ranks, 17 percent of our SESs, our 

Senior Executive Service folks, are African American, which is seven percent 

higher than the civilian workforce. 

Ms. FUDGE. Let me just ask you this, and I could be wrong so you could 

please correct me. But it is my understanding that there are 12 positions that 

are Senate-confirmed positions within USDA, and one is an African American. 

Secretary VILSACK. I don’t think that is—well, that may be correct now because one of the positions that was Senate confirmed is no longer Senate confirmed. But we have an African American who is in charge of our entire operations, Dr. Parham, Greg Parham. We have an African American who is obviously in charge of the civil rights area. We have an African American who is 

the administrator of our largest part of our budget. 

Ms. FUDGE. Well, if we know that, why is it so difficult for me to get a report? 

Secretary VILSACK. Well——

Ms. FUDGE. Which I even asked you about as recently as a couple of months 

ago, a chart. 

Secretary VILSACK. Well, I mean, I can give you the cultural transformation 

report if that would be of assistance and help to you. 

Ms. FUDGE. Whatever answers my question is what I would like to have, sir.

USDA staff met with Rep. Fudge’s staff to provide additional information on April 

18, 2013 and will continue to work with her office to provide updates on hiring within the Department. 

Insert 2

Mr. CRAWFORD. Thank you, Mr. Chairman. 

Mr. Secretary, I know that the issue of CAFOs was raised earlier. One of my 

colleagues had discussed it with you briefly. I just want to ask some questions 

regarding that. 

During the EPA’s rulemaking process, can you tell me if USDA raised to 

OMB and EPA the same biosecurity food supply and producer safety concerns 

that were raised by the Department of Homeland Security? 

Secretary VILSACK. Our focus in conversations with the EPA about that rule 

was to try to, consistent with their need to protect the environment, minimize 

the disruption in livestock operations. 

Mr. CRAWFORD. Were those concerns conveyed in writing? 

Secretary VILSACK. I am not sure about that. I know what we had was, we 

have a liaison who comes over to the USDA two or three times a week to discuss issues, and I am sure there were verbal conversations. I am not sure if 

there was a written message but I know that there was clearly verbal conversations about this because I was engaged in them as well. In addition, the EPA 

Administrator and myself met with livestock groups on a regular basis and had 

the opportunity to converse about a variety of issues. 

Mr. CRAWFORD. Okay. If you have those in writing, I would appreciate it if 

you could supply those to the Committee. . . .

68

USDA staff discussed a number of issues with the EPA concerning the draft section 308 rule governing CAFOs, including biosecurity, producers’ concerns about 

publicly available addresses, and others. Because this was a deliberative, interagency rule-making process, we cannot share specific written materials that we provided EPA. If Rep. Crawford would like, USDA staff is happy to set up a meeting 

or phone call to discuss the conversations between USDA and EPA in more detail. 

Please contact the USDA Office of Congressional Relations if this is of interest. 

Insert 3

Mr. GOODLATTE. The objective was good but the messenger was not too desirable, in my opinion. Can you tell us how much money the USDA spent on the 

training, particularly the ones hosted by Samuel Betances? I have heard as 

much as $400,000 was paid to him. 

Secretary VILSACK. I can’t tell you the specific amount. I would be happy to 

provide that to you, Congressman. . . .

APHIS had two separate contracts in 2010 and 2011 with Dr. Betances to provide 

training to employees. Together these contracts amounted to approximately 

$175,000 paid by APHIS to Dr. Betances. 

SUBMITTED QUESTIONS

Response from Hon. Thomas ‘‘Tom’’ J. Vilsack, Secretary, U.S. Department 

Of Agriculture 

Questions Submitted By Hon. Frank D. Lucas, a Representative in Congress from 

Oklahoma 

Question 1. The current Continuing Resolution expires on March 27th. In a letter 

to the Senate Committee on Appropriations dated February 5, 2013, you outlined 

the impact of $53 million in sequestration cuts, detailing the economic effects of a 

15 day period of furloughs. Please provide a copy of all communications with the 

House Committee on Appropriations offering the Administration’s proposed alternative to inspector furloughs. 

Answer. On February 5, 2013 USDA responded to a request from Senator Mikulski, Chair of the Senate Appropriations Committee, asking for additional information on impact of the potential sequester. This letter lists the FSIS furloughs as one 

impact. Subsequently, on February 15, 2013, USDA responded to a request from 

Representatives Sam Farr and Rosa DeLauro, both senior members of the House 

Agriculture Appropriations Subcommittee, asking for clarity on the impact that sequestration may have on USDA’s ability to deliver its services. This response is 

similar to the response to Senator Mikulski, and also lists the FSIS furloughs as 

one impact. Both letters are enclosed with this response. (See Attachments 1 and 

2)

Question 2. According to the economic analysis USDA has conducted regarding 

the proposed Poultry Inspection Rule, what percentage of savings with respect to 

online inspection costs can be achieved while maintaining or exceeding the current 

level of food safety? What would be the percentage savings if a similar rule were 

implemented for other amenable species? What is the current status of the Poultry 

Inspection Rule and when do you anticipate it will be finalized? 

Answer. FSIS calculates that the savings attributable to the proposed Poultry 

Slaughter Modernization Rule, once it is fully implemented, will be approximately 

23% annually ($31 M). This type of savings will not be achievable with other amenable species. The agency is in the process of preparing a final rule on poultry 

slaughter after considering the comments received. It is not possible to provide a 

specific timeline.

Question 3. In the current year, Congress and the President provided the Department $14 million of funds for the Watershed Rehabilitation Program that would be 

used to protect lives and property, while also creating jobs and repairing the nation’s infrastructure. We understand that OMB has blocked the distribution of the 

funding to NRCS. 

What actions are you taking to have OMB release these funds? 

Answer. Under the terms and conditions of the Continuing Appropriations Resolution, 2013 (P.L. 112–175), which provided funding through March 27, 2013, $14.2 

million would have been available for the Watershed Rehabilitation Program (after 

the reduction imposed by the sequester). However, under the terms and conditions 

of the automatic apportionment provided by OMB, these funds were not automatically apportioned since the Senate Appropriations Committee had reported a bill 

69

that would have zeroed out the funding for this program, thus preserving the prerogative of Congress to determine the funding levels for programs. 

The Consolidated and Further Continuing Appropriations Act, 2013 (P.L. 113–6) subsequently provided $13.5 million for this program (after reductions and rescissions). These funds have since been apportioned.

Question 3a. Additionally, would you provide the Committee with a state-by-state 

break-down of the Watershed Rehabilitation projects that you intend to fund once 

the Department receives the funds? 

Answer. It is too early in the project selection process to provide a state-by-state 

break-down of selected projects. We are evaluating funding requests from the NRCS 

State offices. Project selection will be based on such factors as the project’s risk 

index and project phase or readiness (i.e., planning, design or construction). We will 

provide the information requested after the funding is received by the agency. 

Questions Submitted By Hon. K. Michael Conaway, a Representative in Congress 

from Texas 

Question 1. The Committee has seen your response to Senator Grassley’s letter, 

signed by seven additional Senators, asking for ‘‘any written legal opinions you have 

been provided by USDA attorneys, the White House, or the Office of Management 

and Budget, indicating you have the ability to disregard the requirements under 

FMIA and PPIAS and furlough inspectors.’’ Many observers agree with Senator 

Grassley’s public statement that your response was unsatisfactory. Please provide 

these documents for the Committee Record. 

Answer. I consulted with the Office of the General Counsel (OGC) regarding the 

argument that the Federal Meat Inspection Action (FMIA) and Poultry Product Inspections Act (PPIA) require inspection regardless of appropriations available for 

that purpose. OGC informally advised that both Acts were subject to an authorization of appropriations (see, e.g., 21 U.S.C. §§ 469 and 680); and therefore the socalled mandate for inspection exists only to the extent appropriations are provided 

by Congress. Accordingly, to avoid an Antideficiency Act violation, if Congress had 

not provided additional appropriations for inspectors, USDA would have been required to furlough inspectors in order to live within the limits of its appropriations 

provided to carry out the FMIA and PPIA, as reduced by the Budget Control Act 

sequester. No formal legal opinions were prepared. Fortunately, Congress recognized 

the limit of the mandate and provided additional appropriations so that furloughs 

of inspectors will not occur.

Question 2. Please provide a legal analysis explaining the apparent contradiction 

between the Administration’s decision to disregard its statutory obligations to conduct inspections under the FMIA and PPIA as a result of the Budget Control Act 

and the decision to delay the onset of furloughs in order to comply with a lengthy 

union consultation process. 

Answer. There was no relationship between the Department’s decision to abide by 

the limits of its appropriations provided by Congress for carrying out the FMIA and 

PPIA, and to carry out the union consultation process required by FSIS collective 

bargaining agreements (CBAs), and hence there is no contradiction. Fortunately, the 

Department had sufficient remaining time left in the fiscal year that it could have 

complied both with the legal requirements of its CBAs and the Antideficiency Act 

and implemented furloughs to avoid a deficiency in the appropriation at the close 

of the fiscal year; however, as a result of additional funding provided in the Consolidated and Further Continuing Appropriations Act, 2013, Public Law 113–6, that became unnecessary. 

Question Submitted Hon. Bob Gibbs, a Representative in Congress from Ohio 

Question. Mr. Vilsack, you stated in your testimony that you, as head of the 

USDA, officially told the EPA that you did not think that they should be releasing 

private information on farmers who own CAFOs. Could you please provide us with 

the conversations you had with EPA regarding this matter? 

Answer. USDA staff discussed a number of issues with the EPA concerning the 

draft section 308 rule governing CAFOs. Because this was a deliberative, interagency rule-making process, we cannot share specific details of these discussions. 

Questions Submitted Hon. Eric A. ‘‘Rick’’ Crawford, a Representative in Congress 

from Arkansas 

Question 1. I understand that on February 8th you met with FCC Chairman 

Genachowski to discuss the USF Transformation Order. I was pleased the Department supports fully obligating two rounds of Connect America Funds in 2013—that 

will do a great deal to immediately deploy broadband in unserved rural areas. But 

it appears the Department may have some concerns about the impact of the TransVerDate 0ct 09 2002 11:48 Jul 10, 2013 Jkt 041481 PO 00000 Frm 00073 Fmt 6621 Sfmt 6621 I:\DOCS\113-01\79934.TXT BRIAN
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formation Order on broadband investment by RUS borrowers. Can you explain the 

Department’s perspective? What impact have the FCC’s USF reforms had on the 

RUS telecom loan portfolio and why? Is rural broadband buildout endangered? What 

must be done in order to promote a sustainable broadband future in rural America? 

Answer. The economic stability of rural America depends on the availability of a 

resilient and robust broadband infrastructure capable of delivering advanced services to consumers and businesses in rural high cost areas. Rural-based industries 

that produce food, energy, technology, manufactured goods and other services consumed across the country rely on broadband, often provided by Rural Utilities Service (RUS) borrowers, to remain globally competitive. 

As the Federal Government’s longest serving infrastructure lender in rural America, the USDA has an institutional interest the USF/ICC reform order and its potential impact on the ability of existing borrowers to complete their broadband investments across rural un-served areas. While the order and its effects are still being 

examined, there is little doubt that it will have a profound effect on future lending 

for rural telecommunications. 

We remain committed to working with the Federal Communications Commission 

(FCC) to ensure that that the promise of Section 254 of the Telecommunications Act 

of 1996 be fully realized. Sufficient, predictable, and specific USF and Inter-Carrier 

Compensation (ICC) mechanisms can drive investment, improve the quality of life, 

create jobs, and increase economic opportunities in Rural America. 

According to the FCC’s Eighth Broadband Progress Report, nearly 1⁄4 of the rural 

population lacks access to high speed broadband. Yet, demand for RUS loan funds 

dropped to roughly 37% of the total amount of loan funds appropriated by Congress 

in FY 2012. Current and prospective RUS borrowers have communicated their hesitation to increase their outstanding debt and move forward with planned construction due to the recently implemented reductions in USF support and ICC payments. 

Major portions of FCC’s Universal Service Fund (USF) Reform Order took effect 

last July. To date, no RUS borrowers have defaulted on their loans specifically due 

to this action. Rural service providers, state public utility commissions and others 

are challenging the FCC’s Order in the 10th Circuit Court of Appeals and many 

have contacted RUS to seek restructuring authority of their pending loans to accommodate for the shortfall in USF revenues going forward. To date, the FCC waiver 

process has yielded one partial waiver to Allband Communications in Michigan and 

one full waiver with conditions to Accipiter Communications. RUS staff actively engaged with FCC staff in support of waiver relief sought by both. As of February, 

13 petitions seeking relief from the FCC’s USF/ICC rules are pending before the 

FCC, 9 of which are from RUS borrowers. Each assert that default and possible 

bankruptcy will occur if waiver relief is not granted. 

This February, Secretary Vilsack met with the FCC Chairman to share his concerns and hopes for a path forward that ensures a successful outcome for existing 

borrowers and Recovery act awardees. The Secretary outlined his concerns in an ex 

parte filing that highlighted 4 key points needed to restore certainty and predictability for rural broadband investment to continue. 

USDA urged the FCC to enhance as quickly as possible the level of broadband 

investment in rural communities served by mid-sized price-capped carriers, and redeploy the unused incremental CAF Phase 1 funds and combine it with $300 million 

in a second round of CAF Phase 1 for 2013. This effort would accelerate USF resources to rural price-capped carriers seeking to meet customer demand in their 

rural service areas. 

USDA also urged the FCC to correct the structure and data integrity concerns of 

the Quantile Regression Analysis (QRA) benchmarks that caps USF support and 

apply those caps incrementally. Such fixes are necessary to ensure greater transparency, accuracy and predictability in the underlying cost model. Many RUS borrowers affected by the regression-based caps have suggested that the underlying 

data do not properly quantify costs. While the regression analysis may be helpful 

in focusing attention on certain categories of spending, in its current state, it should 

not be used as the sole determinate of costs. These points have been reiterated by 

RUS borrowers to the White House, Congress and the FCC since the Order was 

adopted in November 2011. 

While the USF reforms continue to unfold, RUS is open for business. We want 

to press forward and continue the momentum of the Recovery Act. As a lender we 

are compelled to make conservative assumptions about all carrier revenue streams 

until the USF ecosystem becomes more certain. 

We continue to focus our attention on addressing the challenges, namely cost, density, distance and economic hardship—in delivering affordable, high capacity bandwidth to the most rural and remote portions of our nation. Our ongoing commitment 

71

to expand broadband connectivity, capacity and to extend service to the millions of 

rural communities still lacking affordable access remains our primary objective. 

RUS will continue to meet the high level of demand for affordable broadband access among rural and remote communities seeking to expand into new markets and 

create jobs that in-source the talent and creative spirit that has characterized rural 

America for over a century.

Question 2. In your testimony, you outlined the importance of agriculture research, and explained USDA’s commitment to further research investment. As you 

know, Arkansas is one of the top ten states in agriculture productivity. However, 

in recent years the ARS presence has been out of proportion relative to the size and 

the complexity of the issues affecting Arkansas producers. For instance, the 

Booneville small farms research center has been on the chopping block and deemed 

a lower priority, even though not long ago USDA proposed a large funding increase 

for biofuel research. Additionally, the former Delta Obesity Nutrition Research Unit 

was eliminated entirely. Can you please explain to the Committee how USDA goes 

about prioritizing ARS research funding, and explain why the Arkansas ARS centers have been dismantled at a more rapid rate than other states? Given the uniqueness of Arkansas and its important role in the agriculture sector, especially with 

respect to rice, poultry, and aquaculture, I have a hard time understanding why 

we’ve seen such a large-scale withdrawal of support in proportion to other states. 

Answer. In FY 2011, USDA sustained a reduction of $5.2 million in research support in Arkansas due to the loss of earmark funds and rescissions. The loss to the 

Dale Bumpers Small Farms Research Center in Booneville, AR was substantial, totaling $3.1 million. With the loss of resources, Booneville is no longer financially 

viable and therefore the location is proposed for closure in the FY 2014 budget. 

USDA continues to have a strong research presence in Arkansas with programs 

carried out in the areas of poultry, rice, aquaculture, and nutrition. The FY 2014 

budget proposes $16.9 million for these research programs in Arkansas. In 2012, 

ARS closed the Rice Research Unit in Beaumont, TX and transferred the resources 

to the Dale Bumpers National Rice Research Center in Stuttgart, AR. Accordingly, 

USDA’s research presence in Arkansas is currently greater than it was in FY 2011.

Question 3. I read recently that your Interagency Trade Enforcement Center is 

beginning the process of estimating all of the foreign subsidies and tariffs other 

countries like Brazil, China, and India use to give them an unfair advantage and 

may well violate their trade commitments under the WTO. I think this is an extremely important exercise. I know that there are a couple of academic studies out 

there on this as well. For example, according to a Texas Tech study, Brazil actually 

has a minimum support price for cotton of 75¢ a pound. Yet, Brazil was able to win 

a WTO case against the United States which has an equivalent marketing loan rate 

of 52¢ a pound: 13¢ lower than Brazil’s! Brazil’s case was essentially that the U.S. 

loan rate was suppressing the world market and harming farmers in Brazil even 

though U.S. production has been in decline while Brazilian production has skyrocketed. We are now hearing a lot about some of Brazil’s other subsidy programs, 

including the ‘‘PEP program’’. Mr. Secretary, when do you expect this process of 

cataloguing foreign subsidies and tariffs to be completed and do you anticipate the 

Administration will be aggressive in filing WTO claims where they find violations? 

Answer. USDA is also concerned that our trading partners are increasingly using 

domestic subsidy programs, potentially in violation of their WTO commitments. Our 

attaches overseas publish public reports that include foreign country usage of domestic report programs. For example, Foreign Agricultural Service (FAS)/Brasilia 

issued a report entitled Cotton and Products, dated March 28, 2013. This report, 

available on the FAS website, is one of many with detailed information on Brazil’s 

use of numerous support programs such as the Premium for Product Outflow (PEP) 

program. 

USDA works very closely with the United States Trade Representative (USTR) on 

potential trade violations affecting U.S. agriculture to ensure that our trading partners adhere to the WTO and other trade agreements. We seek to address issues 

through negotiation when possible and litigation where appropriate. 

President Obama established a new trade enforcement unit—the Interagency 

Trade Enforcement Center (ITEC)—specifically to enhance the administration’s capabilities to prioritize and aggressively challenge unfair trade practices around the 

world. USDA supports this effort and has provided detailees, though sequestration 

budget cuts could pose a challenge to continuing that support. 

Question Submitted Hon. Reid J. Ribble, a Representative in Congress from Wisconsin 

Question. Secretary Vilsack, the forest products industry is a significant economic 

engine in Wisconsin, employing over 80,000 people in the state. Because of this, I 

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continue to be concerned that USDA’s Biobased Markets Program does not allow 

most forest products to be treated as ‘‘biobased’’ in the program, leaving forest products out of an important market opportunity. Why does USDA arbitrarily restrict 

the use of the biobased label for forest products, which are in fact made from 

biobased materials? 

Answer. Section 9002 of the Farm Security and Rural Investment Act of 2002 

(FSRIA) originally authorized the BioPreferred program. The Food, Conservation, 

and Energy Act of 2008 reauthorized and strengthened the program. The USDA regulation outlining the procurement preference program was developed based on the 

conference report accompanying FSRIA, which states that the intent of section 9002 

‘‘is to stimulate the production of new biobased products and to energize emerging 

markets for those products.’’ For this reason, USDA’s regulation, ‘‘Guidelines for 

Designating Biobased Products for Federal Procurement,’’ currently excludes mature 

market products from the program. It is generally understood that the forest products industry is mature. However, we recognize the need for as much flexibility as 

possible to develop new markets. As such, USDA proposed amendments to the BioPreferred Guidelines in May 2012 that would eliminate the mature market exclusion and focus the program on creating ‘‘new and emerging markets for biobased 

materials.’’ The proposed rule seeks to provide additional flexibility in considering 

forestry products for inclusion in the BioPreferred program and continues to be consistent with the guidance provided in the FSRIA’s conference report. 

USDA notes that many mature market products already use other well-established and well known labels such as the ‘‘cotton’’ logo and the Forest Stewardship 

Council certification. Additionally, there are 45 forestry products currently in the 

BioPreferred catalog, which contains products in the Federal Procurement Preference Program and the Voluntary Labeling Program. Of these, 21 products participate in the Federal procurement preference program, 16 have received USDA certification under the voluntary labeling program, and eight are both Federally preferred 

and label certified. 

Questions Submitted Hon. Jeff Denham, a Representative in Congress from California 

Question 1. USDA’s own farm income reports say agriculture is doing pretty well 

unless you are a livestock producer purchasing your feed. Dairy producers in California are under tremendous financial pressure because of extraordinary feed prices 

and milk prices that are inadequate to cover milk production costs. What are 

USDA’s specific plans to provide financial assistance and much needed relief to 

dairy producers in California, the nation’s leading dairy state? 

Answer. The Farm Service Agency’s primary support to dairy producers is the 

Milk Income Loss Contract (MILC) program, which provides financial protection in 

times of low milk prices and/or high feed costs. MILC was extended by the American 

Taxpayer Relief Act of 2012 through September 30, 2013. MILC payments to California have totaled $85 million in FY 2009, $19 million in FY 2010, and $36 million 

in FY 2012, and we anticipate payments for production that occurs each month of 

calendar 2013 through August. Because of sequestration, MILC payments for October 2012 and January and February 2013 production were awaiting approval of 

interchange authority; payments resumed May 8, 2013. Direct and guaranteed loans 

are also available to qualifying producers. 

Additionally, USDA has been providing technical assistance to California dairy industry stakeholders, as requested, regarding their interest in establishing a Federal 

Milk Marketing Order.

Question 2. Mr. Secretary, if I am correct the U.S./EU Free Trade Agreement will 

be the largest U.S. Free Trade Agreement. However, as I understand it, the U.S. 

Government negotiators recognize that the European Commission is not very transparent with reference to subsidies for fruit, tree nuts, and vegetables, whereas the 

U.S. is extremely transparent with its fruit and vegetable support programs. Will 

complete disclosure be required before serious negotiations with the European Commission proceeds? 

Answer. Before beginning negotiations with the EU, the Administration first must 

complete its consultations with Congress and the public to ensure the concerns of 

all stakeholders, including as those expressed in your question are addressed, as we 

develop our objectives and strategy for the negotiations.

Question 3. The EPA, USDA, and State Department recently announced a joint 

decision that they would discontinue the nomination of critical uses of methyl bromide under the Montreal Protocol for dried fruits and nuts. Since 2005 the Administration has routinely approved these critical uses based on a lack of suitable alternatives. 

73

Allegedly this decision was made because EPA determined that the industry was 

able to use the alternative Sulfuryl Fluoride (SF). At the same time, EPA currently has a proposed rule out to discontinue or cancel the food tolerances of SF on 

all food uses. 

This puts California’s premier dried fruit and nuts industry at jeopardy of having 

no fumigant for use if the proposed rule is adopted. This would no doubt be devastating and economically ruin these world-class industries. 

First, did USDA concur in the EPA decision to discontinue Critical Use Exemptions for dried fruits and nuts, and what are your plans for this important sector 

if EPA follows through and cancels SF for dried fruits and nuts? 

Answer. The USDA Agricultural Research Service has been conducting research 

on improving the efficacy of sulfuryl fluoride for dried fruits and nuts. Testing on 

a commercial scale using reduced rates of sulfuryl fluoride is planned. Since EPA 

is still evaluating public comments, no decisions on tolerances have been made. 

USDA and EPA recognize the importance of sulfuryl fluoride for dried fruit and 

nuts as well as other commodities. USDA had apprised EPA on its most recent research before the final regulatory decision. USDA is developing alternative approaches including Integrated Pest Management methods to limit insect infestation.

Question 4. Mr. Secretary, I remain concerned about USDA’s continued allowance 

of misleading labels on meat and poultry products. As you know, some processors 

are continuing to engage in the misleading labeling practice of falsely claiming that 

poultry deliberately injected with saltwater or seaweed solutions is ‘‘100% All Natural.’’ 

In July 2011, USDA finally proposed a rule that would address part of this problem by requiring more prominent disclosure on the label of these added saltwater 

solutions. I understand that over 30,000 consumers filed comments supporting the 

USDA proposal. Comments supporting the proposal came from the American Heart 

Association, the National Kidney Foundation, Consumers Union, the California Department of Food and Agriculture, and the California Agricultural Commissioners 

and Sealers Association, among others. I strongly support the proposal as well and 

urge you to finalize the rule without further delay. 

Furthermore, I am still waiting for USDA to address the false and misleading 

‘‘Natural’’ claims on these so-called ‘‘enhanced’’ products. USDA published an Advanced Notice of Proposed Rulemaking over 3 years ago. Since then, I am unaware 

of any further action by USDA. When will USDA finally complete action on these 

long-overdue rules? 

Answer. Thank you for your comments supporting the FSIS proposed rule on the 

‘‘Common or Usual Name for Raw Meat and Poultry Products Containing Added Solutions.’’ FSIS is in the process of developing a final rule. 

On September 11, 2009, FSIS issued an Advance Notice of Proposed Rulemaking 

(ANPR) to assist the agency in defining the conditions under which it will permit 

the voluntary claim ‘‘natural’’ to be used in the labeling of meat and poultry products. The purpose of the ANPR was to solicit more focused comments on a number 

of specific issues. FSIS completed its review of the more than 7,500 comments received. The comments demonstrate that stakeholders continue to have divergent 

views about how the word ‘‘natural,’’ as applied to meat and poultry products, 

should be defined. While FSIS considers how to proceed on this contentious issue, 

companies may continue to submit labels containing ‘‘natural’’ claims for consideration, and each label will be judged on a case-by-case basis.

Question 5. Secretary Vilsack, in your recent statements about poultry inspectors 

being furloughed, you indicated that these employees require a certain timetable for 

pre-notification of a possible furlough. This pre-notification period ranges from 30 

days to a much longer time. Please share your thoughts with the Committee on how 

you foresee this pre-notification working. 

Answer. Before sequestration took effect, the agency engaged in the pre-notification process with employees and the Union. FSIS subsequently engaged the Union 

in Pre-Decisional Involvement. Upon finalization of the sequester, the plan called 

for FSIS to negotiate with the Union. Assuming the Union wished to negotiate, 

management would enter into negotiations with the Union prior to the implementation of the anticipated furloughs. Fortunately, Congress provided enough funding in 

the FY 2013 CR to prevent the need for furloughs of FSIS inspection personnel. 

Thus, FSIS withdrew its request to negotiate with the Union.

Question 6. Currently, domestic olive producers are experiencing the significant 

negative impact of market share declines and economic losses that are a direct result of highly subsidized, low priced imports of canned ripe olives from the European 

Union and Morocco. What additional actions can be taken to create a fair playing 

field for the U.S. table olive industry? 

74

Answer. There is currently a marketing order for U.S. olives, in effect since 1965, 

which seeks to assist the olive industry in overcoming some of their marketing challenges. This order (1) authorizes minimum grade and size requirements for olives 

produced in California, which are also applied to imported olives and (2) authorizes 

production and marketing research and development projects, including paid advertising. 

On March 20, 2013, the Obama Administration notified the U.S. Congress of its 

intent to enter into negotiations on a comprehensive trade and investment agreement with the European Union. The Administration will hold regular and rigorous 

consultations with Congress and stakeholders in developing our objectives and strategy for the negotiations. The Administration values this opportunity to take on 

board the concerns of all our stakeholders, such as those expressed in this question. 

Section 8e of the Agricultural Marketing Agreement Act of 1937 provides that 

when certain domestically produced commodities are regulated by a Federal marketing order, imports of the commodity must meet the same or comparable grade, 

size, quality and maturity requirements. Currently, the list of imported commodities 

subject to Section 8e of the Act includes canned ripe olives.

Question 7. Mr. Secretary, as you know, California agriculture needs a legal work 

force to harvest our crops. What is your Department doing to see that immigration 

reform for agriculture is going to be accomplished? 

Answer. Immigration reform is particularly important to rural communities and 

to a competitive, productive U.S. agricultural sector. I have been and will continue 

to be committed to ensuring that USDA is available to provide whatever technical 

assistance we can as Congress takes up immigration reform. In my view, immigration reform is relevant and important to rural areas of our nation for three key reasons: First, immigration reform will ensure a safe and fair system for farm workers. 

By demanding responsibility from workers and businesses alike, we can protect 

those farm workers who play by the rules—and we can reverse the troubling fact 

that too many workers live in the shadows today. Second, immigration reform will 

help strengthen farm businesses. Many U.S. producers face challenges today, not 

just in the constant struggle to find labor but from trade competitors around the 

world. We need to fix that by ensuring our producers can hire a full contingent of 

workers—and today’s complex and inadequate system too often prevents them from 

doing so. Third, immigration reform will strengthen our communities. A reform of 

today’s broken system will help rural America expand new markets in conservation, 

agriculture, natural resources and the biobased economy. 

Questions Submitted Hon. Collin C. Peterson, a Representative in Congress from 

Minnesota 

Question 1. What impact will sequestration have on the import and export of meat 

and poultry products? Will sequestration impact the ability of the Animal and Plant 

Health Inspection Service or the Agricultural Marketing Service (AMS) to carry-out 

their duties related to imports and exports? 

Answer:

APHIS Response: As part of the National Export Initiative, USDA has made it 

a priority to expand market access and opportunities for businesses overseas. Despite the cuts contained in the Fiscal Year 2013 budget, USDA’s Animal and Health 

Plant Inspection Service (APHIS) continues to make its export-assistance services 

a priority, and the funding decrease will have no impact on these essential services. 

The majority of these activities—such as inspection and certification services—will 

be unaffected by the decreases in the 2013 budget because they are funded through 

user fees. For services funded with appropriated dollars—such as the development 

of international standards and protocols to assist with imports and exports—APHIS 

has taken steps to minimize the impact of the reduced budget on these priority programs. These steps include the implementation of a hiring freeze and cost-cutting 

measures such as the elimination of unessential travel. The Agency is actively monitoring its budget and adjusting these program priorities to ensure that these critical 

import and export functions are maintained. 

AMS Response: Sequestration will not impact AMS’ ability to carry out its Export Verification Programs as they are funded by voluntary user fees which were 

minimally impacted by sequester.

Question 2. How will sequestration affect payments made to producers under the 

Milk Income Loss Contract (MILC) program? 

Answer. Sequestration reduced MILC payments by $14.79 million. In a letter on 

March 19, 2013, Secretary Vilsack proposed to use interchange authority under 7 

U.S.C. 2257 to transfer funds from direct payments to several other programs including MILC to address the reduction from sequestration. Approval of interchange 

authority by Congress will allow, MILC recipients to receive payments as normal. 

75

Without interchange authority, USDA would reexamine how the sequestration reduction is applied; MILC recipients would receive smaller payments and producers 

who received payments in FY13 may be required to return a portion of these payments to meet sequestration funding shortfalls.

Question 3. When will the MILC payments for October 2012 be issued? Will they 

be issued for the full amount, or reduced due to the sequester? 

Answer. Dairy producers received MILC payments of $0.02368 for October 2012; $0.11800 for January 2013; and $0.52224 for February 2013 in May, once the use 

of interchange authority was approved.

Question 4. How will sequestration affect the activities at AMS and the National 

Agricultural Statistics Service (NASS), including activities related to the issuance 

of reports? Which, if any, reports by NASS will be suspended because of sequestration? If any reports are being suspended, how did the agency determine which reports to suspend? 

Answer:

AMS Response: The sequestration reduced AMS’ Marketing Services appropria- tion by $4.1 million which was applied to each program, project, and activity as required. AMS will likely suspend the issuance of three Cotton and Tobacco market 

news reports. The Federal-State Marketing Improvement matching grants funding 

were reduced by $60 thousand. Section 32 activities were reduced by $40.4 million 

for program purchases and administration. The available funding for the Specialty 

Crop Block Grant program was reduced to $52 million from $55 million. 

NASS Response: USDA’s National Agricultural Statistics Service suspended a 

number of statistical surveys and reports for the remainder of the fiscal year due 

to reduced funding caused by sequestration. Before deciding upon the program suspensions, NASS reviewed its survey programs against mission and user based criteria as well as the amount of time remaining in the fiscal year to conduct the surveys with the goal of finding available cost savings and maintaining the strongest 

data in service to agriculture. The decision to suspend these reports was not made 

lightly, but it was nevertheless necessary, given the funding situation, NASS’s top 

priority was to maintain the Principal Economic Indicator Reports. 

NASS reduced reporting frequency when possible, and considered the costs of data 

collection for each report. The Milk Production Report will be produced, but in a 

streamlined version that eliminates farmer surveys.

• NASS suspended the following Agricultural Estimate reports:

➢ All Catfish and Trout Reports including Catfish Feed Deliveries and Catfish 

Processing;

➢ July Cattle Report (This is a principal economic indicator report, but NASS 

determined that its January Cattle Report will be sufficient for this fiscal 

year);

➢ Potato Stocks Reports;

➢ All Non-Citrus Fruit, Nut, and Vegetable Forecasts and Estimates;

➢ June Rice Stocks Reports;

➢ All Hops and Hops Stocks Estimates;

➢ Mink Report; Nursery Report;

➢ June on- and off-farms stocks for Austrian Winter Peas, Chickpeas, Dry Peas 

and Lentils; and,

➢ July acreage forecasts for Austrian Winter Peas, Dry Edible Peas and Lentils.

• Milk Production reports:

➢ streamlined version of the monthly Milk Production Report will be published 

through the end of the fiscal year. This report will contain monthly milk production estimates, but will not contain estimates for number of milk cows and 

the output rate per cow, which requires costly survey data collection. The 

Milk Production Report typically involves a quarterly survey and modeling in 

the interim months. NASS will forgo the survey and instead model for the 

rest of the fiscal year to produce the streamlined report.

➢ The annual Milk Production, Disposition, and Income report will not be produced this year.

• NASS scaled back the following Agricultural Estimates Reports in FY 2013:

➢ Monthly Crop Production: The following items will not be included in this 

year’s reports:

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May 10 Report:

(1) Revision of 2012 almond production

(2) Indicated 2013 production of almonds

June 12 Report: Hops area strung for harvest by variety

July 11 Report:

(1) Planted and harvested area for dry edible peas, Austrian winter peas, 

and lentils

(2) Indicated production of apricots, almonds

August 12 Report:

(1) Indicated area harvested, yield and production as of August 1 for hops

(2) Indicated production of commercial apples, peaches, pears, and grapes

• NASS Suspended the following Census of Agriculture Projects:

➢ NASS is conducting the 2012 Census of Agriculture on Puerto Rico, but due 

to the reduced budget coverage for the other Outlying Areas is suspended. 

The outlying areas consist of:

» Guam,

» the U.S. Virgin Islands,

» Samoa, and

» U.S. Northern Mariana Islands.

➢ Two Census of Agriculture special products are suspended:

» ZIP Code Tabulations

» County Profiles

Question 5. The Office of Management and Budget’s (OMB) sequestration report 

says that the Commodity Credit Corporation Fund will be cut by $329 million. Can 

you give us a breakdown of that figure and the programs it represents? 

Answer. Please refer to below table.

Table 1: CCC Outlays Subject to Sequestration ($) 

Program, Project or Activity Sequesterable 

Amount 

Sequestration 

Amount 

CCC Outlays 5.10%

Total CCC 6,460,280,000 329,474,280

Marketing Assistance Loans 261,996,000 13,361,796 

2013-crop Direct Payments 4,950,904,000 252,496,104

2013-crop Loan Deficiency Payments 1,453,000 74,103 

FY 2013 MILC (H.R. 8) 290,000,000 14,790,000

2013 Non-Insured Assistance Program 165,000,000 8,415,000 

Upland Cotton Econ Adj Assistance 49,318,000 2,515,218

Storage and Handling 213,000 10,863 

Administrative Expenses (Food for Peace Title II) 9,559,000 487,509

Brazilian Cotton Program 147,300,000 7,512,300 

Emerging Market Program 10,000,000 510,000

Foreign Market Development Cooperator Program 34,500,000 1,759,500 

Quality Samples Program 2,500,000 127,500

Technical Assistance for Specialty Crops 9,000,000 459,000 

Market Access Program 200,000,000 10,200,000

Bio-Fuel Program 171,000,000 8,721,000 

Food for Progress Purchase/Transportation 157,537,000 8,034,387

Question 6. Will sequestration impact fee-based programs like the dairy graders? 

If so, will fee-based programs—fees mind you, that cover a significant portion of the 

cost—be subjected to sequestration cuts in the same manner that non-fee based programs are impacted? If so, what will USDA do to mitigate the short and long term 

impacts to our export markets? 

Answer. AMS grading and verification activities are fully financed by user fees. 

Sequestration mandates a reduction of AMS grading programs’ administrative exVerDate 0ct 09 2002 11:48 Jul 10, 2013 Jkt 041481 PO 00000 Frm 00080 Fmt 6621 Sfmt 6621 I:\DOCS\113-01\79934.TXT BRIAN
77

penditures. However, AMS does not expect sequestration to significantly impact the 

delivery of fee-funded services.

Question 7. There have been reports that dairy and livestock futures trading on 

futures exchanges could be shut down because of their dependence on USDA grading and inspection as part of the physical delivery and cash settlement mechanisms 

of those futures products. What can you tell us about this? Has your Department 

been in touch with anyone at the Commodity Futures Trading Commission or with 

any futures exchange about the impact sequestration cuts to USDA services will 

have on futures trading? 

Answer. The passage and signing of H.R. 933 (‘‘Consolidated and Further Continuing Appropriations Act, 2013’’) assures funding of grading and inspection services for FY 2013. Prior to passage of H.R. 933, USDA had numerous discussions 

with the CME futures exchange regarding how sequestration actions may affect 

physical delivery and cash settlement mechanisms of futures products.

Question 8. Will there be impacts on individual farm bill conservation program 

participants under sequestration? Is there enough funding to pay out existing obligations under contracts in force? 

Answer. The Agency estimates that the funding reduction imposed by the sequester will reduce the Agency’s ability to enter into new conservation contracts across 

all programs with approximately 11,000 participants (assuming 2.5 participants per 

contract), covering approximately 3.2 million acres. These are contracts the Agency 

would have been able to enter into but will have to forego because of the reduction 

in funding. 

For most farm bill programs the Agency will have sufficient resources to cover the 

commitments made to our conservation partners in prior years. We are only able 

to do so, however, by reducing the new commitments the Agency makes in the current year. However, for the Conservation Security Program, which does not have the 

authority for new enrollments, the Agency does not have the same flexibility. As a 

result, the Agency is currently exploring the options available to provide additional 

resources for this program, including a possible reprogramming from another mandatory program. Without additional resources, the Agency would be forced to reduce 

the payments on all existing contracts, which would require requesting the return 

of funds from participants who have already received full payment.

Question 9. How is the Department managing and prioritizing Farm Service 

Agency loan funds given the funding levels in the Continuing Resolution? Is demand 

from FSA direct and guaranteed borrowers running ahead or behind previous years? 

Are FSA loans subject to a sequester order? 

Answer. For those programs which have a significant backlog of approved, unfunded applications, funding provided for Farm Service Agency (FSA) farm loans by 

the Consolidated and Further Continuing Appropriations Act, 2013 will be distributed by date order of application, subject to the funding reserves for socially disadvantaged and beginning farmers as prescribed by statute. For programs without 

application backlogs, funds will be allocated to states according to formula, again 

subject to the statutory reserves for targeted groups. 

Demand for direct loan funding is running slightly ahead while demand for guaranteed loan funds is consistent with a year ago at this time. 

The budget authority which supports farm loan programs is subject to sequestration, and the additional 2.5% rescission mandated in P.L. 113–6.

Question 10. New enrollments in the Conservation Security Program (CSP) have 

been shut down for Fiscal Year 2013. Can you explain to us why you aren’t able 

to do any new sign-ups? 

Answer. Under the terms and conditions of the Continuing Appropriations Resolution, 2013 (P.L. 112–175), there would have been sufficient funding to provide payments on contracts entered into in previous years, and to provide the required oversight to ensure that all such payments were properly made, prior to the reductions 

imposed by the sequester. However, the funding restraint enacted in Section 726(1) 

of the Consolidated and Further Continuing Appropriations Act, 2012 (P.L. 112–55) 

was carried forward under the continuing resolution, and constrained USDA’s ability to enroll new acreage in the program. 

The full-year appropriation passed in March will allow the Natural Resources 

Conservation Service (NRCS) to proceed with a 2013 CSP enrollment period. Based 

on the latest projections, the agency estimates an enrollment of 11.3 to 11.8 million 

new acres this fiscal year.

Question 11. In discussions with OMB regarding the Administration’s list of 

anomalies that were submitted to the Appropriations Committees to be considered 

for inclusion in the continuing resolution, did the Department and OMB consider 

requesting an adjustment for CSP? 

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* Editor’s note: The hyperlink to the official referenced document in PDF format, Modernization of Poultry Slaughter Inspection, Proposed Rule, FEDERAL REGISTER, Vol. 77, No. 18, Friday, 

January 27, 2012, Part II is: http://www.gpo.gov/fdsys/pkg/FR-2012-01-27/pdf/2012-1516.pdf.

Answer. Under the terms and conditions of the Continuing Appropriations Resolution, 2013 (P.L. 112–175), there would have been sufficient funding to provide payments on contracts entered into in previous years, and to provide the required oversight to ensure that all such payments were properly made, prior to the reductions 

imposed by the sequester. However, the funding restraint enacted in Section 726(1) 

of the Consolidated and Further Continuing Appropriations Act, 2012 (P.L. 112–55) 

was carried forward under the continuing resolution, and constrained USDA’s ability to enroll new acreage in the program. In order to preserve Congress’ prerogative 

to determine the funding level for the program, USDA decided to operate the program within the funding level provided under the CR until passage of the full-year 

appropriation determined the final funding level. 

The Consolidated and Further Continuing Appropriations Act, 2013 (P.L. 113–6) 

did not include the funding constraint enacted in Section 726(1), and USDA will be 

able to enroll new acreage in FY 2013. NRCS requested an apportionment for these 

funds.

Question 12. Please provide an analysis for the record of the economic benefit to 

industry and consumers as a result of the poultry slaughter modernization rule. 

Answer. FSIS estimates that participating establishments will see lower production costs resulting in a shared benefit to consumers and industry of about $250 million annually. For further information, please refer to the full discussion of benefits 

in the proposed Poultry Slaughter Modernization Rule at http://1.usa.gov/

10WZP7w.* 

Question 13. In developing the proposed rule for poultry slaughter modernization 

and in moving towards a final rule, what steps have been taken to analyze worker 

safety issues in both HACCP-based Inspection Models Project (HIMP) plants and 

non-HIMP plants? 

Answer. As a public health agency our core mission is to protect the food supply. 

This is the driving force behind our proposal to modernize poultry inspection. USDA 

has been inspecting poultry in largely the same way since the 1950s. The science 

to detect pathogens has advanced considerably since then. Now, we are leveraging 

that science to better protect public health by proposing the Poultry Slaughter Modernization Rule. We believe that we have an obligation to do our best to ensure food 

safety. We have demonstrated that this new, modernized system could help us reduce pathogens—potentially preventing 5,000 foodborne illnesses annually. 

In order to ensure worker safety, we are working with our Federal partners that 

have oversight responsibility and regulatory authority over this area. The following 

are examples of how we have partnered with other Federal agencies:

• USDA has asked the National Institute for Occupational Safety and Health 

(NIOSH) to study the effects of line speeds on plant workers.

• USDA has been coordinating with Occupational Safety and Health Administration (OSHA) to explore how we can assist that agency within our legal authority, including training FSIS inspectors to report plant worker safety concerns 

to OSHA.

• USDA also encourages industry to collaborate with OSHA and NIOSH.

Question 14. What are the potential public health advantages associated with the 

poultry slaughter modernization rule? 

Answer. As we outlined in the proposed rule, FSIS would focus its inspection personnel on critical food safety tasks, such as pathogen testing and verifying HACCP 

and sanitation standard operating procedures, and the quality assurance tasks 

would be turned over to the company. FSIS would continue to inspect every carcass, 

as required by law, but our inspection personnel would focus on the conditions that 

present public health concerns and not on quality defects. We estimate that the new 

poultry inspection system would avert about 5,000 illnesses from Salmonella and 

Campylobacter each year.

Question 15. Knowing that USDA faces sequestration and tight budgets, how does 

the poultry slaughter modernization rule help you operate in a fiscally constrained 

environment? Are there increased costs with implementation and/or cost savings? 

Answer. FSIS estimates that modernization of poultry slaughter inspection, if 

fully implemented as proposed, would save taxpayers approximately $90 million 

over a 3 year period after implementation begins.

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Question 16. An impressive aspect of the USDA Food for Progress program is that 

it has market-driven approaches to strengthen food systems and incomes. Could you 

provide examples of how this program has contributed to economic development and 

a favorable environment for private sector investment? 

Answer. In FY 2012, USDA completed a 4 year, $5.7 million Food for Progress 

investment in micro lending capital and small business loans in Tanzania. Small 

holder producers and small businesses used loans to expand food processing operations, buy new equipment, buy supplies in bulk, improve transportation to markets, and install greenhouses and irrigation infrastructure. As loans were repaid on 

a seasonal basis, these funds were re-cycled an average of three times. The growth 

in the USDA loan capital allowed the number of loan recipients to grow from 15,000 

initial borrowers to more than 46,000 borrowers at the end of the project. The success of the program encouraged other lenders, such as the World Bank and Credit 

Suisse Bank, to invest an additional $18.8 million in the project. The investment 

from other lenders supported an additional 382,000 loans valued at more than $206 

million. Most important, the loan fund has turned into a sustainable operation that 

will continue to provide credit to producers and businesses even though USDA support has ended. 

In FY 2012, implementation of a Food for Progress program in Kenya was completed. The $8 million grant boosted Kenya’s dairy value chain through improvements in production and marketing. USDA worked with Land O’ Lakes in improving agricultural productivity by providing training to small farmers in improved 

livestock practices and water conservation schemes. The project also improved small 

farmers’ access to financial services. On the marketing side, the Food for Progress 

program supported the construction and refurbishment of cold chain storage facilities, training in efficient and safe methods for handling bulk milk, and improvements in the technical capacity and infrastructure of dairy cooperatives. The 

project’s activities reached approximately 78,000 farmer beneficiaries. Milk production per cow rose from 6.9 liters to 9.6 liters (a 12.7 percent increase). Net farmer 

income rose by 745 percent over the life of the project, and 86,200 jobs were created 

or sustained. 

Looking ahead, USDA plans to support a $22.2 million Food for Progress grant 

to increase productivity, trade, and value of cashew production by small holder 

farmers in Mozambique. Key features of the project include developing in-country 

cashew roasting and processing capacity, as well as linking producers directly to 

international retailers. The project will train producers to improve cashew yields 

and quality, establish seed nurseries, improve business process management, and 

provide loans for needed capital inputs. On the sales end, the Food for Progress program will help processors to achieve food safety standards and certifications and establish purchasing contracts with international retailer private labels (e.g., Whole 

Foods, Costco). Purchasing contracts emphasize the use of innovative ‘‘shared value’’ 

models where profits are partially diverted back into community investments for 

farmers. The project is expected to boost the incomes of 340,000 beneficiaries by 

about 74 percent.

Question 17. If the Food for Peace program is changed to an international procurement program, what would be the potential impact on U.S. agricultural, transportation and other jobs and on U.S. economic activity? 

Answer. The Administration’s FY 2014 Budget proposal would transfer $1.47 in 

P.L. 480 Title II funds to the U.S. Agency for International Development. Commercial business generated by the Food for Peace program in the United States is relatively small, and we would not expect substantial economic impacts in the agricultural and transportation sectors. Of the $1.4 billion in Title II funding, only about 

40 percent is spent on commodities, which is less than one percent of recent U.S. 

agricultural exports. The potential impact is further mitigated by due to the FY 

2014 Budget proposal to use at least 55 percent of the funding for the USAID food 

program to purchase U.S. products. 

Other parts of the FY14 budget proposal would help to further mitigate any economic impact in the United States. First, the Administration proposes to provide 

$330 million through the Community Development and Resilience Fund, which 

would help to continue the development programs of nongovernment organizations. 

Second, the budget proposal would provide $25 million in additional subsidy 

through the Maritime Security Program. This increase would increase the per-vessel 

subsidy by about 25 percent on average and could prevent a loss of up to 425 jobs 

over time. Third, up to $10 million will be available for worker adjustment training 

for affected workers.

Question 18. In Africa, wheat has been an important commodity for food aid programs since it is not produced in appreciable amounts. Since it cannot be locally 

80

procured, where would it be bought if not provided from the United States? Which 

other countries would be suppliers? 

Answer. Following the implementation of the Administration’s FY 2014 Budget 

proposal, the Administration would review market situations and food assistance 

needs in recipient countries to determine the best type of response and source of 

commodity. The budget proposal envisions that U.S. wheat and other products 

would continue to be used in food assistance programs. If local and regional sources 

of wheat are not sufficient to meet the needs, then U.S. wheat would likely be used.

Question 19. Just a few years ago, 70% of the corn crop in Kenya was declared 

contaminated by aflatoxin. Reports by the Partnership for Aflatoxin Control in Africa show that high levels of aflatoxin are common in Africa, found in many basic 

foods, like corn, sorghum, cassava and peanuts, which undermines local purchase 

programs. More worrisome is that contamination controls and enforcement are lacking, so unsafe products regularly seep into the food supply. While the USDA Local 

and Regional Procurement Pilot Study report indicates that small amounts can be 

bought locally, it does not address the large procurements that are more typical for 

food aid. How would that be achieved ‘‘locally’’ and with assured quality and safety? 

Answer. Organizations and donor agencies employ a number of best practices to 

ensure the quality and safety of the commodities, including extensive testing requirements for all commodities. Recent experiences by USDA and USAID demonstrate that testing is successful in assuring quality and safety. In USDA’s Local 

and Regional Procurement Pilot Study, USDA required that all commodities procured be tested for aflatoxin. USDA found that most countries had testing facilities 

with the ability to conduct this type of testing. Under the Emergency Food Security 

Program (EFSP), USAID requires that all cereals and cereal product commodities 

be tested for aflatoxin and have moisture content certified. The maximum acceptable total aflatoxin level is 20 parts per billion, which is the U.S. Food and Drug 

Administration action level for aflatoxin in human foods. USAID requires that all 

organizations are required to contract established inspection services prior to shipment and distribution and retain a copy of each certificate for their records. 

While procurements under the USDA Local and Regional Food Aid Procurement 

Pilot Project involved smaller tonnages due to the available funding under the 

project, other programs and organizations have been successfully procuring large 

quantities of commodities in developing country markets across the globe. For example, in 2012, the United Nations World Food Programme (WFP) procured 1,806,899 

metric tons (MT) of food aid commodities from Low Income Countries or Middle Income Countries. Of this amount, WFP procured 706,249 MT in Africa. The WFP and 

other organizations have found testing to be successful in assuring quality and safety. 

Questions Submitted Hon. Mike McIntyre, a Representative in Congress from North 

Carolina 

Question 1. Mr. Secretary, thank you for the work you have done to focus on the 

economy of rural America. One major issue facing my district and most of rural 

America is the lack of adequate infrastructure that is necessary for our rural communities to compete in the global economy. For instance the backlog of pending applications for USDA Rural Development’s water/waste water projects is $3.2 billion. 

I have worked to include mandatory funding for this backlog in the farm bill. How 

will your Department work to address this issue? 

Answer. Thank you for your support of our Water and Waste Disposal (WWD) 

Loan and Grant Programs. Since 2009 USDA, Rural Development, Rural Utilities 

Service has invested $8 billion in new and improved infrastructure that will benefit 

4.5 million households and businesses and 12.4 million rural residents. 

USDA will use any additional funds received to address the backlog of requests 

for funding. Rural Development will also continue to encourage its State Offices to 

partner with other state and Federal funding sources to address pending funding 

requests.

Question 2. Now that the $85 billion in sequester cuts have taken effect, how will 

USDA’s Rural Development programs be impacted, and how will you minimize the 

impact of the sequester on rural communities? 

Answer. Because of the sequester and the additional rescission in the final FY13 

appropriations measure, Rural Development staffing and programs will experience 

a third year of significant reductions. The two most significant budget lines for 

Rural Development to be affected are its Salaries and Expense account and the 

Rental Assistance account. For Salaries and expenses, after already reducing the 

workforce by 18 percent over the last 18 months (or over 1,000 people), RD is looking for ways to manage the approximately 7.8% reduction in S and E by minimizing 

the impact on its workforce. We are doing so by cutting all other expenses and conVerDate 0ct 09 2002 11:48 Jul 10, 2013 Jkt 041481 PO 00000 Frm 00084 Fmt 6621 Sfmt 6621 I:\DOCS\113-01\79934.TXT BRIAN
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sidering how to utilize our interchange authority to shift resources into Salaries and 

Expenses. Further, USDA recognizes how important the rental assistance program 

is to our multifamily housing partners and tenants, and we are committed to providing as much assistance to borrowers as possible. We are working to ensure our 

multifamily housing properties continue to be financially healthy as possible and are 

able to provide affordable housing to rural residents. We will work with our borrowers to explore every available step to mitigate the effects of these cuts, including 

working with borrowers to alleviate as much as possible the negative consequences 

of the loss of rental assistance from project income.

Question 3. Rural development stakeholders in my district are concerned that 

many rural communities in NC lack the infrastructure needed to grow or even sustain businesses and industries in their communities. As a result, they are losing 

population as many younger folks leave to find jobs, and this in turn further slows 

economic growth. This is true for the family farm as well—up-and-coming generations are moving away and farms that have traditionally been family-owned are 

being sold to corporations or developers. What are USDA’s plans to continue to help 

rural committees secure jobs and promote economic development moving forward? 

Answer. As you know, USDA Rural Development is the leading Federal agency 

for rural America. RD supports rural communities and enhances the quality of life 

for rural residents by improving economic opportunities and community infrastructure. Rural Development has loan, grant, and technical assistance programs that 

help create sustainable jobs and lay a strong foundation for rural America to participate fully in the global economy. Our programs support a wide variety of infrastructure projects that include, but are not limited to, improving and expanding the rural 

electrical grid; providing clean drinking water to rural communities; providing access to and improving Internet service to rural families and to businesses; and constructing, converting, enlarging, repairing, and modernizing access streets and 

roads, parking areas, utilities, and pollution control and abatement facilities. 

To help rural communities move forward, Rural Development will continue our 

successful outreach to our stakeholders through our 47 state offices through both 

our business programs and our cooperative programs. For example, RD has an extensive storehouse of educational material that covers all aspects of the cooperative 

business model and is used by RD employees, cooperative developers, government 

officials, academics and the general public to better understand and use cooperatives as an economic development tool in rural areas. Additionally, RD staff has expertise in conducting research, providing technical assistance, and developing educational and outreach activities that support cooperative approaches for family 

farms to increase income and maintain viability. 

In addition, Rural Development is:

• Embarking on several new Capital Markets initiatives associated with Rural 

Business—Cooperative Service programs for improving rural access to capital at 

both the regulatory and policy levels. For example, RD is also looking for opportunities to improve the rate at which funds in revolving loan funds established 

under the Intermediary Relending Program can be re-loaned. To increase the 

utilization of these funds, RD is engaging its intermediaries to understand the 

difficulties in lending the money and to encourage them to be more active. Our 

State Offices are holding lender/re-lender forums during the first half of FY 

2013 to engage intermediary lenders and encourage them to be more active and 

to lend their balances, and to identify ways to improve the program. In addition, 

the National Office is emphasizing with the State Offices the potential for 

transferring balances from non-performing intermediaries to performing intermediaries. Just recently, this effort with our intermediaries has paid off with 

$750,000 in loans being made to four recipients in Montana.

• Continuing to prioritize assistance to beginning and socially disadvantaged producers and small and medium-sized farms structured as family farms within 

the Value-Added Producer Grant program. This prioritization addresses some of 

the out-migration issues in rural communities by providing the resources necessary to develop profitable and sustainable agricultural businesses and expand 

employment opportunities.

Rural Development Section 502 housing programs have a significant impact on 

the quality of life in rural America. These programs are among the largest provided 

by USDA and are estimated to have created more than 250,000 jobs in rural communities in FY 2012—and more than 1 million jobs in the last four years. A strong 

housing sector is critical to health of the rural economy, and the USDA Rural Housing Service (RHS) is committed to promoting a vibrant rural housing market. Combining very manageable fees with an appealing no-down payment mortgage strucVerDate 0ct 09 2002 11:48 Jul 10, 2013 Jkt 041481 PO 00000 Frm 00085 Fmt 6621 Sfmt 6621 I:\DOCS\113-01\79934.TXT BRIAN
82

ture, the program has enabled hundreds of thousands of eligible low and moderateincome borrowers to become successful homeowners. 

Additionally, through our Water and Waste Disposal Loan and Grant Programs, 

we ensure that rural communities have the critical infrastructure they need to support the needs of rural residents and provide opportunities for business development. We will continue to fund as many of these critical projects as possible and 

to partner with other funding programs to do so. These investments will provide immediate and long term job opportunities in rural America.

Question 4. Livestock and meatpacking are both major industries in my district. 

The livestock products in my district have a market value greater than $2 billion 

annually, and the largest meat processing facility in the world is located in Bladen 

County. The people who work and depend on these industries are middle class 

Americans with families, who have mortgages and bills to pay every month. I am 

concerned by the impact that sequestration will have on FSIS frontline inspectors. 

You previously indicated that inspectors might be furloughed up to 15 days because 

of sequestration. When these inspectors are furloughed, the meat processing facilities cannot run, and the employees and farmers do not get paid. 

Absent any changes to the statute that triggered sequestration, what, if any, administrative tools are available to mitigate the impact of sequestration on the furloughing of FSIS inspectors and the impact to the meat processing industry? Could 

inspectors be furloughed on a staggered schedule, such that processing activities are 

perhaps slowed, but not completely disrupted? If not, could inspectors be furloughed 

for half days, spaced over several months, to prevent complete disruptions?

Question 4a. What is the practical timeline for when all of this will take place? 

It is important that companies and growers have time to plan and prepare for this.

Question 4b. How can Congress and the affected industries assist you in fixing 

this problem? 

Answer 4–4b. Fortunately, Congress provided enough funding in the FY 2013 CR 

to prevent the need for furloughs of FSIS inspection personnel. Thus, industry operations will not be disrupted.

Question 5. Can you relay any suggestions you have for livestock producers who 

may be dealing with more livestock than they have barn space now that the sequester has gone into effect and meat inspectors are set to be furloughed? This is a question I’ve been getting from producers in NC, who operate under very tight schedules 

on how they move their livestock. Typically they have a date scheduled with the 

packer to receive their hogs. Then they spend about 2 days cleaning, sanitizing and 

drying barns before the next group of livestock move in. I’m concerned that if a furlough situation continues for 2 or 3 days that there will be no place to put these 

livestock, and this could pose a huge biosecurity and welfare risk for livestock producers. 

Answer. Fortunately, Congress provided enough funding in the FY 2013 CR to 

prevent the need for furloughs of FSIS inspection personnel. Thus, industry operations will not be disrupted.

Question 6. Many rural development stakeholders in my district have expressed 

concern that a large number of key personnel in state Rural Development offices 

will soon be retiring. How will you address the issue of replacing the critical staff 

(such as engineers) in these offices as they retire? 

Answer. Thank you for your question. The reduced staff has strained our ability 

to protect the RD portfolio and deliver RD programs. We are making the best use 

of the resources we have and within the current budget constraints. We are addressing the reductions in staffing in four ways. First, we are working with our state offices and conducting training for staff that have, or will be, reassigned from other 

program areas to work on water and waste loans and grants. Second, we are helping 

to facilitate, where possible, the sharing of resources across state offices. For example, our South Carolina Rural Development Office is receiving assistance from one 

of the three engineers on our North Carolina staff. We are also exploring longerterm solutions that will allow for regional staffing approaches to address staffing 

shortages where they exist for engineers in particular. Finally, we are also evaluating requests for backfilling of key positions within current budget constraints.

Question 7. Back in 2010, you were kind enough to join me in my Congressional 

district to announce almost $20 million in USDA Federal funds for Lumbee River 

Electric Membership Corporation (LREMC) for rural broadband services. The announcement brought broadband to 27,000 people in my district, 1,600 businesses 

and 100 community institutions, and it created or saved 51 jobs. Going forward, 

what is the potential for USDA investments in broadband given our national budget 

situation? 

83

Answer. USDA will continue to support the Administration’s goals for broadband 

deployment in rural communities. This mission is critically important to the future 

of rural America. The 2014 Budget provides $8.3 million in budget authority to support $63 million in broadband loans, $10 million for Broadband grants, $25 million 

for grants under the Distance Learning and Telemedicine Program and $690 million 

in program level funding for telecommunications infrastructure. For FY 2013, RUS 

has available more than $700 million in program level funding for broadband infrastructure for rural residents, businesses and community institutions. RUS is diligently monitoring the progress of funded projects and ensuring that funds are used 

appropriately, while managing a $4.6 billion loan portfolio. Access to broadband is 

essential for the economic development and quality of life in rural communities and 

is recognized by the Secretary as a key initiative. We are working in several areas 

to encourage public/private partnerships to leverage Federal resources with state 

and local governments, industry, other Federal agencies and key rural constituencies to maximize the impact of public and private funding for broadband services.

Question 8. In his ‘‘Outlook for Agriculture in 2013’’ address, USDA Chief Economist Joe Glauber discussed an expected drop in commodity prices. How will this impact the livestock industry going forward, and will it spur more planting in nongrain crops like tobacco cotton and peanuts? 

Answer. On March 28, 2013, USDA released its Prospective Plantings report. The 

report indicates that producers intend to plant 97.3 million acres of corn in 2013, 

which, if realized, will be the highest planted acreage since 1936. Soybean planted 

area is estimated at 77.1 million acres, down slightly from last year but the fourth 

highest on record, if realized. All wheat planted acres are estimated at 56.4 million 

acres, up 1 percent from 2012. All cotton planted area for 2013 is expected to total 

9.82 million acres, down 18 percent from last year. All tobacco area for harvest in 

2013 is estimated at 349,630 acres, up 4 percent from 2012. Flue-cured tobacco is 

estimated at 218,000 acres, up 6 percent from 2012. 

The outlook for 2013 calls for a rebound in crop yields resulting in record production levels for corn and soybeans, and by autumn 2013, lower prices for most grains 

and oilseeds. Lower crop prices should lead to lower feed costs and improved profitability for the livestock, dairy and poultry sectors.

Question 9. In rural communities, there are many challenges to capital access. 

Does the lack of capital call for a continued commitment in rural development programs that offer capital to rural business owners? 

Answer. RD agrees that rural business owners continue to face many challenges 

in accessing capital and that this situation calls for a continued commitment in our 

rural development programs that offer capital assistance to rural business owners. 

The need for access to capital, especially for small and mid-sized businesses, is one 

of the key findings made by the National Governors Association in their January 

2013 report, ‘‘Making’’ Our Future—What States are Doing to Encourage Growth in 

Manufacturing through Innovation, Entrepreneurship, and Investment. This report 

discusses, in part, gaps in access to capital for innovation, commercialization, and 

business expansion. The need to continue funding rural development programs is 

further illustrated by the fact that many of our programs frequently have more demand for financial assistance than we can meet.

Question 10. What is your team doing to resolve China and Russia’s decisions to 

enforce zero-tolerance standards for trace amounts of ractopamine, which has effectively banned U.S. beef, pork and turkey imports in those countries? 

Answer. USDA repeatedly expresses our stalwart disagreement with the Russian 

Government on its actions related to ractopamine, through official meetings in 

Washington and Moscow and official correspondence. USDA and USTR will continue 

to press Russia to adopt the international standards for ractopamine minimum residue levels in beef and pork. 

USDA is coordinating with U.S. industry on a strategy for supplying ractopaminefree beef, pork and turkey meat shipments to Russia. While China is not demanding 

ractopamine-free certification from USDA and exports of ractopamine-free pork continues to flow, China has demanded that all U.S. pork shipments departing the 

United States on or after March 1, 2013 be tested prior to importation to demonstrate that they do not contain ractopamine. We continue to consult with U.S. industry associations and USTR on the best way to address these demands.

Question 11. Your efforts as chair of the White House rural council have made 

improving the rural economy a priority. I appreciate your efforts to better coordinate 

Federal agencies efforts in rural America. What plans do you have for the White 

House rural council moving forward and how will you ensure rural stakeholders are 

able to provide input? 

84

Answer. The White House Rural Council (WHRC) was established to better coordinate Federal programs and maximize the impact of Federal investment to promote 

economic prosperity and improve the quality of life in rural communities. The 

WHRC will work with stakeholders to identify challenges and develop solutions to 

improve opportunities and the quality of life in rural areas. In 2013 efforts will continue to be focused on following four areas:

• Improving the flow of capital to rural areas, job creation, and workforce development;

• Increasing telecommunications, renewable energy and new markets opportunities in rural communities;

• Expanding access to quality health care, education, and housing, and particularly in persistent poverty counties and tribal areas; and

• Developing outdoor recreational opportunities that contribute to economic 

growth.

Question 12. Nearly a year ago, FSIS issued its proposed rule on Modernization 

of Poultry Inspection. According to USDA’s data, establishments operating under 

the HIMP pilot program perform as well as, or better than, traditionally inspected 

plants. Furthermore, the rule will create additional poultry plant jobs, and will have 

substantial budgetary savings for FSIS. Can you give us an update on when USDA 

plans to issue the final rule? 

Answer. The agency is in the process of preparing a final rule on poultry slaughter 

after considering the comments received. It is not possible to provide a specific 

timeline, although I have said publicly that we hope to get the final rule out by September 2013.

Question 13. I’m also concerned about how certain green building standards, especially the U.S. Green Building Council’s LEED system, affects our rural economies. 

As you’re aware, the LEED system discourages the use of forest products—which 

is not good for states like North Carolina—where the forest products industry is the 

4th largest industry and employs over 60,000 people, many of whom are in rural 

communities. Recently, I learned that despite this, USDA continues to use the 

LEED system for its buildings—including a recent building on the Mars Hill ranger 

station in my home state. Why is USDA using a green building system that discourages the use of forest products—are you concerned with the impact this could have 

on rural economies? What is USDA doing to help correct this problem as the Department responsible for supporting rural economies and American agriculture and 

forestry? 

Answer. Thank you for your question regarding building construction certification 

standards and the use of wood products in the new Appalachian Ranger District office located in Mars Hill, North Carolina. Forest Service policy was changed in May 

2011 to also allow for Green Globes certification, while LEED certification is still 

an option and has been in effect for several years. Even though Agency policy permits 3rd party certification of either standard, we currently recommend that all new 

construction projects be reviewed for Green Globes certification. The policy change 

in 2011 also encourages projects to be designed and constructed with domestically 

harvested wood products, ideally locally sourced and from National Forest System 

lands, wherever practicable and to the maximum extent feasible. The Southern Region is following this direction and is currently on track to complete the agency’s 

first Green Globes certified project, a renovation of, and addition to, the Enoree 

Ranger District Office, located in Whitmire, SC. 

The change in policy did not occur before the design of the new office in Mars 

Hill was completed in 2007. Construction began in 2011 once funding was received 

for the project and was completed in 2012. Although, the building contractor was 

not required by the design to use certified wood to construct the building; a substantial amount of locally purchased wood was used in the construction, including framing, trim, roof decking, windows, and cabinetry. The majority of the building materials, in all of our construction projects, is wood and wood products. 

Questions Submitted Hon. Kurt Schrader, a Representative in Congress from Oregon 

Question 1. My colleague, Mr. Glenn Thompson and I have reintroduced the Forest Products Fairness Act (H.R. 979), a bill to fix the discrepancies against most forest products in the USDA biobased markets program. I continue to believe this program was developed to encourage the use of all biobased products and should promote all agriculture and forest products. With that in mind, can you respond to the 

following questions: 

85

How USDA is currently managing the Biobased Markets Program with no mandatory funds provided in the recent farm bill extension? What elements are you implementing and what are on hold? 

Answer. USDA is implementing the Biobased Markets Program using employee 

staff resources in the absence of funding for technical support. To the extent feasible, we are continuing to develop regulations to designate additional categories of 

biobased products for preferred Federal procurement. This effort involves regulation 

writing for products for which biobased content testing has already occurred. No 

new testing is possible without funding. USDA is also conducting training and outreach activities locally in Washington, D.C. or by telephone. USDA suspended the 

labeling program on January 31, 2013 due to lack of funding for our third party 

independent certification organization.

Question 1a. Can you explain what is meant by ‘‘mature’’ and how you account 

for the continuous improvement and change in the production and manufacturing 

of forest products? 

Answer. USDA’s Guidelines for Designating Biobased Products for Federal Procurement indicate in 7 CFR 3201.5(c)(2) that ‘‘USDA additionally will not designate 

items for preferred procurement that are determined to have mature markets. 

USDA will determine mature market status by whether the item had significant national market penetration in 1972.’’ USDA has adopted this same definition for the 

voluntary labeling program. The Department evaluates label applications for forest 

products with the assistance of the Forest Service Forest Products Laboratory in the 

determination of the mature market exclusion.

Question 1b. You also have a rule-making underway to consider changing ‘‘mature’’ to ‘‘new and emerging markets.’’ I remain concerned that this proposed change 

does not address my belief that this USDA program should promote all products 

that support strong rural economies, jobs, and America’s forest and agriculture land 

owners regardless of how new or old the products are. Can you provide an update 

on the Department’s plans for finalizing this rule? 

Answer. USDA is evaluating comments received on the proposed rule to amend 

the Program Guidelines and drafting a final rule; however this effort is hampered 

by the lack of technical support as described above. Nevertheless, once this effort 

is completed the draft final rule will undergo internal USDA review and a 90 day 

review by the Office of Management and Budget prior to its promulgation.

Question 2. In 2011, the USDA changed its green building policy to call for use 

of all credible green building rating systems, not just LEED, and you announced 

plans to prefer wood products in USDA buildings. Can you provide an update on 

what the Department has done to implement this? How many buildings have been 

built with wood, and how many have used rating systems other than LEED—which 

discourages wood use? What additional research and demonstration is being done 

to have wood products more widely used by other Federal agencies and the building 

community? 

Answer. Since May 2011, the Forest Service policy is that all new building construction projects for regional offices supervisor’s offices, district offices, visitor centers, and research offices or laboratories where the building is 10,000 gross square 

feet or greater in size, must be registered and certified using either the U.S. Green 

Building Council’s Leadership in Energy and Environmental Design (LEED) rating 

system (minimum Silver certification), Green Globes (minimum Two Green Globes 

certification) or other third-party certification system. All other buildings, whether 

new or major renovations, must be designed to incorporate sustainable principles 

into the systems and components appropriate to the building type and project scope. 

This requirement applies to buildings on an individual basis, and the most recently 

issued version of the third-party certification system must be used. We encourage 

construction projects to be designed and constructed with domestically harvested 

wood products ideally locally sourced and from National Forest System lands, whenever practicable and feasible. We currently are recommending that all new construction projects be considered for Green Globes certification. 

The following facilities were designed prior to May 2011 and constructed since 

May 2011. The majority of building materials used in these facilities is wood and 

wood products:

• Angeles National Forest Supervisor Office, Arcadia, CA

• Camino Real Ranger Station, Carson National Forest, Pen ̃ asco, NM

• Corvallis Forest Science Laboratory and Siuslaw National Forest HQ Office, 

Corvallis, OR

• Arcata Lab, CA

• Juneau Lab, AK

86

• Wood Products Insect Laboratory, Starkville, MS

• White Mt. Forest Supervisor’s Office, NH

• Francis Marion Ranger District Office, Huger, SC

• Deschutes Forest Supervisor’s Office, OR

• Appalachian Ranger District Office, NC

• Walker Ranger District Office, MN

These are larger facilities; however there have also been some small buildings 

constructed that also contain a majority use wood and wood products. The majority 

of the building materials, in all of our construction projects, are wood and wood 

products. We estimate that wood makes up approximately two thirds of all building 

materials used for new facilities and large scale renovation projects. 

In December 2011, the Forest Service Forest Products Laboratory published 

‘‘Science Supporting the Economic and Environmental Benefits of Using Wood and 

Wood Products in Green Building Construction’’. This report summarizes the scientific findings that support the environmental and economic benefits of using wood 

and wood products in green building construction. It addresses a general lack of recognition that wood is a renewable resource, helps mitigate climate change, promotes 

healthy forests and is a green construction material. The report also:

• Provides solutions to advance wood as a green building material, including:

» Scientific advancement in the area of life cycle analysis

» Development of new technologies for improved and extended wood use

• Outlines benefits in helping achieve USDA objectives, including:

» Creating domestic jobs

» Bolstering the competitive position and long-term economic stability of the 

wood industry

» Reducing U.S. dependence on foreign oil

• Offers recommendations on how to accomplish:

» Research and development—life cycle analysis

» Technology transfer—carbon and green building benefits of typical wood 

structures 

Questions Submitted Hon. Joe Courtney, a Representative in Congress from Connecticut 

Question 1. The USDA’s ‘‘Report on the Definition of Rural’’ explains that your 

agency is ready to use the 2010 Census figures for Rural Development programs. 

Under this path the ‘‘rural in character’’ exceptions that were made under the last 

farm bill will expire on March 28th. Hundreds of RD mission areas that have 

unique characteristics warranting this exemption would become ineligible overnight. 

It is my understanding from the Committee on Appropriations that the ‘‘rural in 

character’’ grandfathering will be continued under a new CR without any changes 

to the current legislative language. Do you intend to continue the status quo of 

grandfather in target areas that utilize older Census data to determine ‘‘rural in 

character’’ eligibility or would new CR language need to be tailored to ensure the 

status quo?

Answer. The Consolidated and Further Continuing Appropriations Act of 2013 

(CR) signed into law on March 26, 2013 extends the eligibility of communities for 

housing programs administered by the Rural Housing Service (Single Family and 

Multi Family Housing Programs) on September 30, 2012 to September 30, 2013 

(Title VII, Section 731). All other Rural Development programs will use the 2010 

Census data to determine eligibility for rural areas beginning on March 27, 2013.

Question 2. It is my understanding that USDA has proposed a new formula for 

the allocation of full-time equivalent (FTE) slots in local RD offices. The formula announced would use new factors to determine what staffing an office might have. The 

three main determinants of FTE slots would be geographical size of the state, the 

amount of rural population in the state, and the amount of rural poverty in the 

state. I also understand that there would be more weight put towards rural population and rural poverty than geography. While I recognize the difficult fiscal position USDA currently finds itself and understand the need your agency has to allocate RD resources to those areas that need it most, I am concerned that this formula targets specific geographic areas at the expense of others. Will there be consideration given in this new formula for factors such as the number of jobs created, 

the amount of productivity in the state, or the amount of contract servicing needed 

87

in the state? Also, does your agency intend to utilize a similar formula beyond the 

RD office, perhaps to NRCS or FSA? 

Answer. Thank you for your question. RD has undergone an examination of how 

to allocate its FTE’s in times of diminishing resources and has arrived at a working 

model that is much more transparent then the allocations in the past. While the 

three main variables are rural population, poverty, and service area, RD is also 

looking at how to incorporate the size of the state’s portfolio and workload. This is 

a work in progress and we look forward to working with Congress on how to best 

use our human resources. 

ATTACHMENT 1

February 5, 2013

Hon. BARBARA MIKULSKI, 

Chairwoman, 

Senate Committee on Appropriations, 

Washington, D.C.

Dear Madam Chair:

Thank you for your letter of January 18, 2013, requesting additional information 

on the impact of potential across-the-board spending cuts on the Department of Agriculture’s (USDA) operations. Like you, I am very concerned about the impact of 

the March 1 sequester on the American economy, specifically in the areas of food, 

agriculture, natural resources, rural development, nutrition, and related issues. 

Since Fiscal Year (FY) 2010, USDA’s operating budget has been reduced by about 

$3 billion, or 12 percent. As part of our Blueprint for Stronger Service, USDA has 

saved taxpayers millions in travel and printing costs and is consolidating more than 

700 different cell phone contracts into about 10. We are also pursuing other cost reduction efforts in several areas such as sourcing uniforms from the AbilityOne Strategic Alliance, standardizing bulk mail and processes, and implementing a ‘‘Shared 

First’’ acquisition policy to consolidate IT-related acquisitions. What’s more, the Department is achieving significant savings by closing more than 250 domestic and foreign offices while ensuring that the vital services they provide are not cut. 

If Congress does not act before March 1, it is estimated that the across-the-board 

spending cuts would indiscriminately reduce funding for USDA programs further by 

almost $2 billion in FY 2013. About 2⁄3 of these cuts would come from programs 

funded by discretionary appropriations under the Committee’s jurisdiction. While 

the Department is still developing plans on how to operate under a sequester, agencies have already taken actions—in addition to those mentioned above—to prepare 

for additional funding reductions through prudent practices such as hiring freezes 

and limiting operating costs. Should a sequestration occur, we would likely need to 

implement furloughs impacting about 1⁄3 of our workforce, as well as other actions. 

These furloughs and other actions would severely disrupt our ability to provide the 

broad range of public services we administer. Examples of these programmatic impacts include:

• A reduction of 600,000 low-income women and children who could receive nutrition assistance and associated nutrition education and breastfeeding support 

through the Special Supplemental Nutrition Program for Women, Infants, and 

Children (WIC). WIC has been shown to provide important improvements in nutrition of women and children, lower health care costs, and improved cognitive 

development of children.

• A nationwide shutdown of meat and poultry plants during a furlough of inspection personnel. The furlough could result in as much as 15 days of lost production, costing roughly over $10 billion in production losses, and industry workers 

would experience over $400 million in lost wages. Consumers would experience 

limited meat and poultry supplies, and potentially higher prices, and food safety 

could be compromised.

• Elimination of rental assistance for more than 10,000 very low income rural 

residents, generally elderly, disabled, and single female heads of households. 

With an average monthly income of approximately $803, these Americans are 

the least able to absorb rent increases and would face very limited options for 

alternate housing if landlords increase rents to cover the loss of the rental assistance payments.

• A curtailing of conservation technical and financial assistance to approximately 

11,000 producers and landowners, thereby limiting benefits to water quality and 

quantity, soil erosion, and wildlife habitat that benefit the public.

88

• Increased risk to communities from wildfires with as many as 200,000 fewer 

acres treated for hazardous fuels.

• A loss of over $60 million resulting in more than 100 fewer grants awarded for 

agricultural research conducted by both university scientists and private partners, disrupting critical progress being made in many topical areas such as 

water, nutrient management, bioenergy production, animal and plant disease, 

and childhood obesity.

• A reduction in assistance to states for pest and disease prevention, surveillance, 

and response, potentially leading to more extensive outbreaks and economic 

losses to farmers and ranchers.

• Furloughs and other reductions in a number of USDA agencies that would limit 

the ability to provide program oversight, leading to potentially higher levels of 

erroneous payments and/or fraud. Even small increases in improper payments 

have large public costs given the magnitude of programs involved.

Additional information on impacts covering selected accounts is enclosed. 

In addition to impact to programs under the Committee’s jurisdiction, 1⁄3 of 

USDA’s sequestered funds would come from mandatory programs, including those 

authorized through the farm bill. While plans are still being developed on how the 

sequester would be implemented for these programs, reductions have the potential 

to impair important elements of support for agriculture and the environment, including disaster assistance, conservation, and export enhancement programs. 

I deeply hope that Congressional leaders will reach an agreement to achieve deficit reduction while averting an across-the-board cut. I look forward to working with 

Congress to preserve the many priorities of rural America while making sensible 

program reforms and reductions that will lead to deficit reduction. 

Again, thank you for writing. 

Sincerely,

Hon. THOMAS J. VILSACK, Secretary. 

Additional Sequestration Information 

Bureau: Food and Nutrition Service 

Program: Special Supplemental Nutrition Program for Women, Infants, 

and Children (WIC) 

Sequestration Amount: $333 million 

Impact:

Grants to States

• WIC is a federally funded program. If funding is inadequate to maintain the 

current caseload—as it would be under sequestration—State WIC programs 

would have to reduce participation and establish waiting lists using the priority 

system provided in regulation.

• A full year continuing resolution, coupled with sequestration, will result in a 

budget authority of about $6.3 billion. Using all available resources, including 

carryover and all contingency funds, will allow the program to support about 

8.6 million participants—a reduction of approximately 300,000 participants on 

an annual basis from last year or about 600,000 participants if the reductions 

are compressed in the last two quarters of the fiscal year.

• Even before sequestration occurs, states may begin to implement cost-cutting 

strategies sometime in February. These strategies could range from reducing 

clinic hours, closing clinics, to establishing waiting lists as a last resort.

• When funds are not sufficient to support caseload, WIC agencies implement a 

priority waiting list of individuals. The first to lose benefits would be nonbreastfeeding postpartum women and individuals certified solely due to homelessness or migrancy. African-American women have the lowest breastfeeding 

rates so they are more likely to represent a significant proportion of these 

women.

• Nutrition Services and Administration funding provided to states would be reduced by about $75–$100 million from the Fiscal Year (FY) 2012 level, which 

could result in up to 1,600 state and local jobs lost.

Bureau: Food Safety and Inspection Service (FSIS) 


11301001.eps
89

Program: Salaries and Expenses 

Sequestration Amount: $51 million 

Impact: Sequestration would result in an across-the-board furlough of as much as 

15 days for all FSIS employees, including inspectors. Since Federal law mandates 

inspection of meat, poultry, and egg products, production will shut down for that 

time period, impacting approximately 6,290 establishments nationwide. Due to lost 

production volume of more than 2 billion pounds of meat, an additional 2.8 to 3.3 

billion pounds of poultry and over 200 million pounds of egg products, the industry 

would experience a production loss of over $10 billion. Consumers would experience 

a shortage of meat, poultry, and egg products available for public consumption, and 

the shortage may result in price increases for these products. Restaurants, grocers, 

local merchants, and others who rely on FSIS-inspected products would suffer multiplier effects from the shortfall in production. The impact could force smaller businesses and merchants out of business. Industry workers would also be furloughed, 

resulting in over $400 million in lost wages. The livestock industry would also incur 

additional costs for disruption of the pipeline from farms to production establishments as farmers and livestock producers would have to feed and store animals 

longer than anticipated. 

FSIS would also eliminate export inspections, resulting in losses for U.S. producers and causing additional storage costs and or loss of product. Export inspections could adversely affect other nations since the volume of products would decline. Furthermore, public food safety could be compromised by the illegal selling 

and distribution of uninspected meat, poultry, and egg products. Because FSIS is 

also responsible for verifying the safety of imported products, cutting import inspections would result in a reduction of 154 to 178 million pounds of imported meat, 

poultry, and egg products entering the country, in addition to the lost production 

capacity within the United States. Cutting import inspections might be construed 

as an international trade issue. Moreover, there is limited storage space along the 

border so that unless foreign countries stopped shipments, chill/frozen storage capacity and refrigerated truck/train/ship capacity would be compromised.

Bureau: Rural Development, Rural Housing Service 

Program: Rental Assistance 

Sequestration Amount: $46 million 

Impact: The Rental Assistance Program provides assistance to eligible low-income 

tenants in USDA-financed multi-family housing so that Americans pay no more 

than 30 percent of their incomes for rent. Approximately 286,000 tenants receive the 

benefit of rental assistance in almost all of the apartment complexes financed by 

Rural Development. The sequestration would cause more than 10,000 current recipients to lose rental assistance. The average monthly income of families and individuals receiving rental assistance (generally female-headed households, elderly, and 

the disabled) is approximately $803. These Americans are the least able to absorb 

any increase in the rent due to the loss of rental assistance. Loss of this rent supplement may cause property owners to increase rents, making the units unaffordable 

to the very low income residents who have few options for decent, affordable housing. 

With the loss of rental assistance, or higher vacancies resulting from very lowincome Americans being unable to afford higher rents, many properties will be unable to pay all of their operating costs. Owners may be unable to maintain the property and allow it to fall into disrepair, or the properties may become delinquent in 

their loan payments. Potentially, 411 projects may become delinquent by October 

2013. Ongoing delinquencies will lead to defaults and foreclosure and may result in 

long-term loss of affordable housing in rural communities in future years. 

The loss of rental assistance supporting new construction of Farm Labor housing 

would result in the loss of affordable housing for approximately 28 farm workers 

and their families; the loss of rental assistance supporting construction of multifamily assisted housing would result in the loss of affordable housing opportunities 

for 17 low or very low income families.

Bureau: Natural Resources Conservation Service (NRCS) 

Program: Conservation Operations and Farm Security and Rural Investment Programs 

Sequestration Amount: $222 million 

Impact: NRCS will implement a hiring freeze and reduce travel and other costs. 

This will impact NRCS’ ability to ensure timely, complete conservation planning activities and delivery of financial assistance, which would affect program accomplishments and service to farmers and ranchers nationwide. This would result in longer 

timeframes to address these challenges continuing to put at risk the business operations of the agency. In addition, NRCS would implement significant cuts in agreeVerDate 0ct 09 2002 11:48 Jul 10, 2013 Jkt 041481 PO 00000 Frm 00093 Fmt 6621 Sfmt 6621 I:\DOCS\113-01\79934.TXT BRIAN
90

ments and contracts with non-Federal entities by over $20 million in technical assistance and about $109 million in financial assistance. These reductions will have 

a deleterious impact on the ability to provide technical and financial assistance services to conservation customers, resulting in reduced conservations opportunities and 

reduced natural resource benefits with short and long effects on the nation’s private 

lands. 

Overall, these cuts will undercut the ability to support priorities including landscape-scale conservation, water quality improvements, wildlife habitat protection, 

open space protection, as well as natural infrastructure restoration, carbon sequestration, weather prediction capacity, plant material development and other programs and services that support extreme weather and climate change adaptation 

and mitigation.

Bureau: Farm Service Agency (FSA) 

Program: Farm Loan and Salaries and Expenses 

Sequestration Amount: $80 million 

Impact: Sequestration would require reductions of $80 million in FSA salaries and 

expenses and Farm Credit programs. The following highlights address some of the 

impacts of these reductions.

FSA Program Management

The sequestration would reduce the spending authority for FSA salaries and administrative expenses by about $75 million. In order to accomplish this reduction, 

FSA will implement a number of actions including hiring freezes, reducing contract 

operations for both Information Technology (IT) and non-IT operations, eliminating 

states flown in the National Aerial Imagery Program, and furloughing employees up 

to 5 days. FSA employees are responsible for managing a wide range of programs 

including farm loans, conservation and disaster activities with budgets totaling over 

$11 billion annually. Reduced ability to effectively manage these major nationwide 

programs will limit the ability to provide timely support to producers during the ongoing extreme, widespread drought and will erode the capability to provide oversight to limit erroneous payments.

Farm Loan Programs

FSA provides direct loans to family farmers and ranchers who cannot obtain commercial credit from a bank or other lender. The program is an important source of 

credit for beginning farmers, who tend to have limited resources and as a result, 

are less likely to meet commercial credit standards. Extreme drought conditions prevailing in significant areas of the nation that have weakened the financial condition 

of agricultural producers significantly increase the importance of these loan programs. Operating loans are used to purchase items such as livestock, feed, farm 

equipment, fuel, farm chemicals, insurance, minor improvements or repairs to buildings, refinance farm-related debt excluding real estate and other operating costs, including family living expenses. Sequestration would reduce the budget authority for 

Farm Credit Programs by approximately $5.4 million ($35.6 million in program 

level), meaning that 890 fewer direct farm operating loans and 661 other farm loans 

could be made. The sequestration of farm loan funding could result in a loss of over 

1,650 private sector jobs (plus the hundreds of farmers that would be forced out of 

farming and into the off-farm job market), reduce the GDP by more than $259 million, and could reduce household income by $44 million.

Bureau: Forest Service 

Program: Wildland Fire Management 

Sequestration Amount: $134 million 

Impact: This level of reduced funds would result in an appropriated funding level 

that is $42 million below the calculated 10 year average of fire suppression costs 

for FY 2013. In addition, a reduction of Preparedness funds typically increases suppression costs since the initial attack success will be reduced. Additionally, 2012 fire 

transfer funds are subject to sequestration, which results in needing to recover $20 

million of funds repaid. The agency would complete as many as 200,000 fewer acres 

of hazardous fuel treatments, resulting in an increased risk to communities from 

wildfires. 

Certain decisions may result in increased costs in the end. For example, the agency could reduce up-front costs by reducing use of Exclusive Use aviation contracts, 

115 engines, and 10 hotshot crews. However, this could result in larger fires, which 

will result in higher expenditures.

Bureau: Forest Service 

Program: National Forest System (NFS) 

Sequestration Amount: $78 million 

91

Impact: The agency’s essential services to the public will be reduced for a variety 

of high demand activities (recreation, forest and watershed restoration, grazing, 

mining and oil/gas operations) as a result of reduced operations at campgrounds, 

visitor information centers, and offices. This would largely occur during the peak 

use seasons in spring and summer. Thousands of private sector jobs in rural communities across the nation would be lost due to a reduction of recreation opportunities, and minerals and oil and gas operations, which are completed through contracts, grants, and agreements. 

The agency would close up to 670 public developed recreation sites out of 19,000 

sites, such as campgrounds, picnic areas, and trailheads. Closing this many recreation sites would reduce an estimated 1.6 million recreation visits across the country, thereby harming the economies of remote rural communities that depend on 

recreationists’ economic activity, and eliminating convenient vacation opportunities 

for rural residents. 

Increased risks to health and safety for visitors to the 193 million acres of public 

lands would occur as a result of reductions of 35 sworn law enforcement officers, 

leaving 707 total officers to control drug trafficking organizations, prevent crime, 

and protect and serve the public. The reduction in sworn officers would result in 

an increase of illegal activities on National Forest System lands, like arson during 

fire season, timber theft, and other natural resource crimes. 

Forest and watershed restoration work would be curtailed. Timber volume sold 

would be reduced to 2,379 million board feet from 2,800 million board feet proposed 

for FY 2013. The agency would restore 390 fewer stream miles, 2,700 fewer acres 

of lake habitat and improve 260,000 fewer acres of wildlife habitat.

Bureau: National Agricultural Statistics Service (NASS) 

Program: Census of Agriculture and Agricultural Estimates 

Sequestration Amount: $8 million 

Impact: NASS is responsible for the collection and analysis of a broad range of 

agricultural statistics and completion of the Census of Agriculture. These statistics 

provide information critical to decisionmaking by a wide population of stakeholders 

and ultimately benefit all consumers by enhancing orderly and unbiased market 

conditions for agricultural products. Sequestration would stop FY 2013 scheduled 

activities for the Census, causing data processing to be placed on hold and potentially not recoverable. Data will become incomplete and will not be statistically 

sound for publication. Not having the 2012 Census will negatively affect decisions 

made by farmers, businesses, and governments and ultimately will bring volatility 

to food markets and impact prices consumers pay. Data collected by the Census includes the number of farms, value of land, market value of agricultural production, 

and inventory of livestock and poultry. 

NASS’ annual agricultural estimates reports are critically important to assess the 

current supply and demand in agricultural commodities. These unbiased, timely reports are extremely valuable to producers, agribusinesses, farm organizations, commodity groups, economists, public officials, and others who use the data for decisionmaking. The statistics disseminated by NASS support fairness in markets ensuring 

buyers and sellers have access to the same objective official statistics at the same 

pre-announced time. This prevents markets from being influenced by ‘‘inside’’ information, which might unfairly affect market prices for the gain of an individual market participant. The efficiency of commodity markets is enhanced by the free flow 

of information, which minimizes price fluctuations for U.S. producers. Statistical 

measures help the competitiveness of our nation’s agricultural industry and have 

become increasingly important as producers rely more on world markets for their 

sales. There is no other source for the statistical surveys, estimates, and reports 

NASS produces. 

ATTACHMENT 2

February 15, 2013

Hon. ROSA L. DELAURO, 

U.S. House of Representatives 

Washington, D.C.

Dear Congresswoman DeLauro:

Thank you for your letter of February 6, 2013, cosigned by Congressman Sam 

Farr, requesting additional information on the impact of potential across-the-board 

spending cuts on the Department of Agriculture’s (USDA) operations. Like you, I 

am very concerned about the impact of the March 1 sequester on the American 

92

economy, specifically in the areas of food, agriculture, natural resources, rural development, nutrition, and related issues. 

Since Fiscal Year (FY) 2010, USDA’s operating budget has been reduced by about $3 billion, or 12 percent. As part of our Blueprint for Stronger Service, USDA has 

saved taxpayers millions in travel and printing costs and is consolidating more than 

700 different cell phone contracts into about 10. We are also pursuing other cost reduction efforts in several areas such as sourcing uniforms from the AbilityOne Strategic Alliance, standardizing bulk mail and processes, and implementing a ‘‘Shared 

First’’ acquisition policy to consolidate IT-related acquisitions. What’s more, the Department is achieving significant savings by closing more than 250 domestic and foreign offices while ensuring that the vital services they provide are not cut. 

If Congress does not act before March 1, it is estimated that the across-the-board 

spending cuts would indiscriminately reduce funding for USDA programs further by 

almost $2 billion in FY 2013. About 2⁄3 of these cuts would come from programs 

funded by discretionary appropriations under the Committee’s jurisdiction. While 

the Department is still developing plans on how to operate under a sequester, agencies have already taken actions—in addition to those mentioned above—to prepare 

for additional funding reductions through prudent practices such as hiring freezes 

and limiting operating costs. Should a sequestration occur, we would likely need to 

implement furloughs impacting about 1⁄3 of our workforce, as well as other actions. 

These furloughs and other actions would severely disrupt our ability to provide the 

broad range of public services we administer. Examples of these programmatic impacts include:

• A reduction of 600,000 low-income women and children who could receive nutrition assistance and associated nutrition education and breastfeeding support 

through the Special Supplemental Nutrition Program for Women, Infants, and 

Children (WIC). WIC has been shown to provide important improvements in nutrition of women and children, lower health care costs, and improved cognitive 

development of children.

• A nationwide shutdown of meat and poultry plants during a furlough of inspection personnel. The furlough could result in as much as 15 days of lost production, costing roughly over $10 billion in production losses, and industry workers 

would experience over $400 million in lost wages. Consumers would experience 

limited meat and poultry supplies, and potentially higher prices, and food safety 

could be compromised.

• Elimination of rental assistance for more than 10,000 very low income rural 

residents, generally elderly, disabled, and single female heads of households. 

With an average monthly income of approximately $803, these Americans are 

the least able to absorb rent increases and would face very limited options for 

alternate housing if landlords increase rents to cover the loss of the rental assistance payments.

• A curtailing of conservation technical and financial assistance to approximately 

11,000 producers and landowners, thereby limiting benefits to water quality and 

quantity, soil erosion, and wildlife habitat that benefit the public.

• Increased risk to communities from wildfires with as many as 200,000 fewer 

acres treated for hazardous fuels.

• A loss of over $60 million resulting in more than 100 fewer grants awarded for 

agricultural research conducted by both university scientists and private partners, disrupting critical progress being made in many topical areas such as 

water, nutrient management, bioenergy production, animal and plant disease, 

and childhood obesity.

• A reduction in assistance to states for pest and disease prevention, surveillance, 

and response, potentially leading to more extensive outbreaks and economic 

losses to farmers and ranchers.

• Furloughs and other reductions in a number of USDA agencies that would limit 

the ability to provide program oversight, leading to potentially higher levels of 

erroneous payments and/or fraud. Even small increases in improper payments 

have large public costs given the magnitude of programs involved.

Additional information on impacts covering selected accounts is enclosed. 

In addition to impact to programs under the Committee’s jurisdiction, 1⁄3 of 

USDA’s sequestered funds would come from mandatory programs, including those 

authorized through the farm bill. While plans are still being developed on how the 

sequester would be implemented for these programs, reductions have the potential 

to impair important elements of support for agriculture and the environment, including disaster assistance, conservation, and export enhancement programs. 

93

I deeply hope that Congressional leaders will reach an agreement to achieve deficit reduction while averting an across-the-board cut. I look forward to working with 

Congress to preserve the many priorities of rural America while making sensible 

program reforms and reductions that will lead to deficit reduction. 

Again, thank you for writing. A similar letter is being sent to Congressman Farr. 

Sincerely,

Hon. THOMAS J. VILSACK,

Secretary. 

ATTACHMENT

February 15, 2013

Hon. SAM FARR, 

U.S. House of Representatives 

Washington, D.C.

Dear Congressman Farr:

Thank you for your letter of February 6, 2013, cosigned by Congresswoman Rosa 

L. DeLauro, requesting additional information on the impact of potential across-theboard spending cuts on the Department of Agriculture’s (USDA) operations. Like 

you, I am very concerned about the impact of the March 1 sequester on the American economy, specifically in the areas of food, agriculture, natural resources, rural 

development, nutrition, and related issues. 

Since Fiscal Year (FY) 2010, USDA’s operating budget has been reduced by about 

$3 billion, or 12 percent. As part of our Blueprint for Stronger Service, USDA has 

saved taxpayers millions in travel and printing costs and is consolidating more than 

700 different cell phone contracts into about 10. We are also pursuing other cost reduction efforts in several areas such as sourcing uniforms from the AbilityOne Strategic Alliance, standardizing bulk mail and processes, and implementing a ‘‘Shared 

First’’ acquisition policy to consolidate IT-related acquisitions. What’s more, the Department is achieving significant savings by closing more than 250 domestic and foreign offices while ensuring that the vital services they provide are not cut. 

If Congress does not act before March 1, it is estimated that the across-the-board 

spending cuts would indiscriminately reduce funding for USDA programs further by 

almost $2 billion in FY 2013. About 2⁄3 of these cuts would come from programs 

funded by discretionary appropriations under the Committee’s jurisdiction. While 

the Department is still developing plans on how to operate under a sequester, agencies have already taken actions—in addition to those mentioned above—to prepare 

for additional funding reductions through prudent practices such as hiring freezes 

and limiting operating costs. Should a sequestration occur, we would likely need to 

implement furloughs impacting about 1⁄3 of our workforce, as well as other actions. 

These furloughs and other actions would severely disrupt our ability to provide the 

broad range of public services we administer. Examples of these programmatic impacts include:

• A reduction of 600,000 low-income women and children who could receive nutrition assistance and associated nutrition education and breastfeeding support 

through the Special Supplemental Nutrition Program for Women, Infants, and 

Children (WIC). WIC has been shown to provide important improvements in nutrition of women and children, lower health care costs, and improved cognitive 

development of children.

• A nationwide shutdown of meat and poultry plants during a furlough of inspection personnel. The furlough could result in as much as 15 days of lost production, costing roughly over $10 billion in production losses, and industry workers 

would experience over $400 million in lost wages. Consumers would experience 

limited meat and poultry supplies, and potentially higher prices, and food safety 

could be compromised.

• Elimination of rental assistance for more than 10,000 very low income rural 

residents, generally elderly, disabled, and single female heads of households. 

With an average monthly income of approximately $803, these Americans are 

the least able to absorb rent increases and would face very limited options for 

alternate housing if landlords increase rents to cover the loss of the rental assistance payments.


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• A curtailing of conservation technical and financial assistance to approximately 

11,000 producers and landowners, thereby limiting benefits to water quality and 

quantity, soil erosion, and wildlife habitat that benefit the public.

• Increased risk to communities from wildfires with as many as 200,000 fewer 

acres treated for hazardous fuels.

• A loss of over $60 million resulting in more than 100 fewer grants awarded for 

agricultural research conducted by both university scientists and private partners, disrupting critical progress being made in many topical areas such as 

water, nutrient management, bioenergy production, animal and plant disease, 

and childhood obesity.

• A reduction in assistance to states for pest and disease prevention, surveillance, 

and response, potentially leading to more extensive outbreaks and economic 

losses to farmers and ranchers.

• Furloughs and other reductions in a number of USDA agencies that would limit 

the ability to provide program oversight, leading to potentially higher levels of 

erroneous payments and/or fraud. Even small increases in improper payments 

have large public costs given the magnitude of programs involved.

Additional information on impacts covering selected accounts is enclosed. 

In addition to impact to programs under the Committee’s jurisdiction, 1⁄3 of 

USDA’s sequestered funds would come from mandatory programs, including those 

authorized through the farm bill. While plans are still being developed on how the 

sequester would be implemented for these programs, reductions have the potential 

to impair important elements of support for agriculture and the environment, including disaster assistance, conservation, and export enhancement programs. 

I deeply hope that Congressional leaders will reach an agreement to achieve deficit reduction while averting an across-the-board cut. I look forward to working with 

Congress to preserve the many priorities of rural America while making sensible 

program reforms and reductions that will lead to deficit reduction. 

Again, thank you for writing. A similar letter is being sent to Congresswoman 

DeLauro. 

Sincerely,

Hon. THOMAS J. VILSACK,

Secretary. 

Additional Sequestration Information 

Bureau: Food and Nutrition Service 

Program: Special Supplemental Nutrition Program for Women, Infants, 

and Children (WIC) 

Sequestration Amount: $333 million 

Impact:

Grants to States

• WIC is a federally funded program. If funding is inadequate to maintain the 

current caseload—as it would be under sequestration—State WIC programs 

would have to reduce participation and establish waiting lists using the priority 

system provided in regulation.

• A full year continuing resolution, coupled with sequestration, will result in a 

budget authority of about $6.3 billion. Using all available resources, including 

carryover and all contingency funds, will allow the program to support about 

8.6 million participants—a reduction of approximately 300,000 participants on 

an annual basis from last year or about 600,000 participants if the reductions 

are compressed in the last two quarters of the fiscal year.

• Even before sequestration occurs, states may begin to implement cost-cutting 

strategies sometime in February. These strategies could range from reducing 

clinic hours, closing clinics, to establishing waiting lists as a last resort.

• When funds are not sufficient to support caseload, WIC agencies implement a 

priority waiting list of individuals. The first to lose benefits would be nonbreastfeeding postpartum women and individuals certified solely due to homelessness or migrancy. African-American women have the lowest breastfeeding 

rates so they are more likely to represent a significant proportion of these 

women.


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• Nutrition Services and Administration funding provided to states would be reduced by about $75–$100 million from the Fiscal Year (FY) 2012 level, which 

could result in up to 1,600 state and local jobs lost.

Bureau: Food Safety and Inspection Service (FSIS) 

Program: Salaries and Expenses 

Sequestration Amount: $51 million 

Impact: Sequestration would result in an across-the-board furlough of as much as 

15 days for all FSIS employees, including inspectors. Since Federal law mandates 

inspection of meat, poultry, and egg products, production will shut down for that 

time period, impacting approximately 6,290 establishments nationwide. Due to lost 

production volume of more than 2 billion pounds of meat, an additional 2.8 to 3.3 

billion pounds of poultry and over 200 million pounds of egg products, the industry 

would experience a production loss of over $10 billion. Consumers would experience 

a shortage of meat, poultry, and egg products available for public consumption, and 

the shortage may result in price increases for these products. Restaurants, grocers, 

local merchants, and others who rely on FSIS-inspected products would suffer multiplier effects from the shortfall in production. The impact could force smaller businesses and merchants out of business. Industry workers would also be furloughed, 

resulting in over $400 million in lost wages. The livestock industry would also incur 

additional costs for disruption of the pipeline from farms to production establishments as farmers and livestock producers would have to feed and store animals 

longer than anticipated. 

FSIS would also eliminate export inspections, resulting in losses for U.S. producers and causing additional storage costs and or loss of product. Export inspections could adversely affect other nations since the volume of products would decline. Furthermore, public food safety could be compromised by the illegal selling 

and distribution of uninspected meat, poultry, and egg products. Because FSIS is 

also responsible for verifying the safety of imported products, cutting import inspections would result in a reduction of 154 to 178 million pounds of imported meat, 

poultry, and egg products entering the country, in addition to the lost production 

capacity within the United States. Cutting import inspections might be construed 

as an international trade issue. Moreover, there is limited storage space along the 

border so that unless foreign countries stopped shipments, chill/frozen storage capacity and refrigerated truck/train/ship capacity would be compromised.

Bureau: Rural Development, Rural Housing Service 

Program: Rental Assistance 

Sequestration Amount: $46 million 

Impact: The Rental Assistance Program provides assistance to eligible low-income 

tenants in USDA-financed multi-family housing so that Americans pay no more 

than 30 percent of their incomes for rent. Approximately 286,000 tenants receive the 

benefit of rental assistance in almost all of the apartment complexes financed by 

Rural Development. The sequestration would cause more than 10,000 current recipients to lose rental assistance. The average monthly income of families and individuals receiving rental assistance (generally female-headed households, elderly, and 

the disabled) is approximately $803. These Americans are the least able to absorb 

any increase in the rent due to the loss of rental assistance. Loss of this rent supplement may cause property owners to increase rents, making the units unaffordable 

to the very low income residents who have few options for decent, affordable housing. 

With the loss of rental assistance, or higher vacancies resulting from very lowincome Americans being unable to afford higher rents, many properties will be unable to pay all of their operating costs. Owners may be unable to maintain the property and allow it to fall into disrepair, or the properties may become delinquent in 

their loan payments. Potentially, 411 projects may become delinquent by October 

2013. Ongoing delinquencies will lead to defaults and foreclosure and may result in 

long-term loss of affordable housing in rural communities in future years. 

The loss of rental assistance supporting new construction of Farm Labor housing 

would result in the loss of affordable housing for approximately 28 farm workers 

and their families; the loss of rental assistance supporting construction of multifamily assisted housing would result in the loss of affordable housing opportunities 

for 17 low or very low income families.

Bureau: Natural Resources Conservation Service (NRCS) 

Program: Conservation Operations and Farm Security and Rural Investment Programs 

Sequestration Amount: $222 million 

Impact: NRCS will implement a hiring freeze and reduce travel and other costs. 

This will impact NRCS’ ability to ensure timely, complete conservation planning acVerDate 0ct 09 2002 11:48 Jul 10, 2013 Jkt 041481 PO 00000 Frm 00099 Fmt 6621 Sfmt 6621 I:\DOCS\113-01\79934.TXT BRIAN
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tivities and delivery of financial assistance, which would affect program accomplishments and service to farmers and ranchers nationwide. This would result in longer 

timeframes to address these challenges continuing to put at risk the business operations of the agency. In addition, NRCS would implement significant cuts in agreements and contracts with non-Federal entities by over $20 million in technical assistance and about $109 million in financial assistance. These reductions will have 

a deleterious impact on the ability to provide technical and financial assistance services to conservation customers, resulting in reduced conservations opportunities and 

reduced natural resource benefits with short and long effects on the nation’s private 

lands. 

Overall, these cuts will undercut the ability to support priorities including landscape-scale conservation, water quality improvements, wildlife habitat protection, 

open space protection, as well as natural infrastructure restoration, carbon sequestration, weather prediction capacity, plant material development and other programs and services that support extreme weather and climate change adaptation 

and mitigation.

Bureau: Farm Service Agency (FSA) 

Program: Farm Loan and Salaries and Expenses 

Sequestration Amount: $80 million 

Impact: Sequestration would require reductions of $80 million in FSA salaries and 

expenses and Farm Credit programs. The following highlights address some of the 

impacts of these reductions.

FSA Program Management

The sequestration would reduce the spending authority for FSA salaries and administrative expenses by about $75 million. In order to accomplish this reduction, 

FSA will implement a number of actions including hiring freezes, reducing contract 

operations for both Information Technology (IT) and non-IT operations, eliminating 

states flown in the National Aerial Imagery Program, and furloughing employees up 

to 5 days. FSA employees are responsible for managing a wide range of programs 

including farm loans, conservation and disaster activities with budgets totaling over 

$11 billion annually. Reduced ability to effectively manage these major nationwide 

programs will limit the ability to provide timely support to producers during the ongoing extreme, widespread drought and will erode the capability to provide oversight to limit erroneous payments.

Farm Loan Programs

FSA provides direct loans to family farmers and ranchers who cannot obtain commercial credit from a bank or other lender. The program is an important source of 

credit for beginning farmers, who tend to have limited resources and as a result, 

are less likely to meet commercial credit standards. Extreme drought conditions prevailing in significant areas of the nation that have weakened the financial condition 

of agricultural producers significantly increase the importance of these loan programs. Operating loans are used to purchase items such as livestock, feed, farm 

equipment, fuel, farm chemicals, insurance, minor improvements or repairs to buildings, refinance farm-related debt excluding real estate and other operating costs, including family living expenses. Sequestration would reduce the budget authority for 

Farm Credit Programs by approximately $5.4 million ($35.6 million in program 

level), meaning that 890 fewer direct farm operating loans and 661 other farm loans 

could be made. The sequestration of farm loan funding could result in a loss of over 

1,650 private sector jobs (plus the hundreds of farmers that would be forced out of 

farming and into the off-farm job market), reduce the GDP by more than $259 million, and could reduce household income by $44 million.

Bureau: Forest Service 

Program: Wildland Fire Management 

Sequestration Amount: $134 million 

Impact: This level of reduced funds would result in an appropriated funding level 

that is $42 million below the calculated 10 year average of fire suppression costs 

for FY 2013. In addition, a reduction of Preparedness funds typically increases suppression costs since the initial attack success will be reduced. Additionally, 2012 fire 

transfer funds are subject to sequestration, which results in needing to recover $20 

million of funds repaid. The agency would complete as many as 200,000 fewer acres 

of hazardous fuel treatments, resulting in an increased risk to communities from 

wildfires. 

Certain decisions may result in increased costs in the end. For example, the agency could reduce up-front costs by reducing use of Exclusive Use aviation contracts, 

115 engines, and 10 hotshot crews. However, this could result in larger fires, which 

will result in higher expenditures.

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Bureau: Forest Service 

Program: National Forest System (NFS) 

Sequestration Amount: $78 million 

Impact: The agency’s essential services to the public will be reduced for a variety 

of high demand activities (recreation, forest and watershed restoration, grazing, 

mining and oil/gas operations) as a result of reduced operations at campgrounds, 

visitor information centers, and offices. This would largely occur during the peak 

use seasons in spring and summer. Thousands of private sector jobs in rural communities across the nation would be lost due to a reduction of recreation opportunities, and minerals and oil and gas operations, which are completed through contracts, grants, and agreements. 

The agency would close up to 670 public developed recreation sites out of 19,000 

sites, such as campgrounds, picnic areas, and trailheads. Closing this many recreation sites would reduce an estimated 1.6 million recreation visits across the country, thereby harming the economies of remote rural communities that depend on 

recreationists’ economic activity, and eliminating convenient vacation opportunities 

for rural residents. 

Increased risks to health and safety for visitors to the 193 million acres of public 

lands would occur as a result of reductions of 35 sworn law enforcement officers, 

leaving 707 total officers to control drug trafficking organizations, prevent crime, 

and protect and serve the public. The reduction in sworn officers would result in 

an increase of illegal activities on National Forest System lands, like arson during 

fire season, timber theft, and other natural resource crimes. 

Forest and watershed restoration work would be curtailed. Timber volume sold 

would be reduced to 2,379 million board feet from 2,800 million board feet proposed 

for FY 2013. The agency would restore 390 fewer stream miles, 2,700 fewer acres 

of lake habitat and improve 260,000 fewer acres of wildlife habitat.

Bureau: National Agricultural Statistics Service (NASS) 

Program: Census of Agriculture and Agricultural Estimates 

Sequestration Amount: $8 million 

Impact: NASS is responsible for the collection and analysis of a broad range of 

agricultural statistics and completion of the Census of Agriculture. These statistics 

provide information critical to decisionmaking by a wide population of stakeholders 

and ultimately benefit all consumers by enhancing orderly and unbiased market 

conditions for agricultural products. Sequestration would stop FY 2013 scheduled 

activities for the Census, causing data processing to be placed on hold and potentially not recoverable. Data will become incomplete and will not be statistically 

sound for publication. Not having the 2012 Census will negatively affect decisions 

made by farmers, businesses, and governments and ultimately will bring volatility 

to food markets and impact prices consumers pay. Data collected by the Census includes the number of farms, value of land, market value of agricultural production, 

and inventory of livestock and poultry. 

NASS’ annual agricultural estimates reports are critically important to assess the 

current supply and demand in agricultural commodities. These unbiased, timely reports are extremely valuable to producers, agribusinesses, farm organizations, commodity groups, economists, public officials, and others who use the data for decisionmaking. The statistics disseminated by NASS support fairness in markets ensuring 

buyers and sellers have access to the same objective official statistics at the same 

pre-announced time. This prevents markets from being influenced by ‘‘inside’’ information, which might unfairly affect market prices for the gain of an individual market participant. The efficiency of commodity markets is enhanced by the free flow 

of information, which minimizes price fluctuations for U.S. producers. Statistical 

measures help the competitiveness of our nation’s agricultural industry and have 

become increasingly important as producers rely more on world markets for their 

sales. There is no other source for the statistical surveys, estimates, and reports 

NASS produces.

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