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THE STATE OF LIVESTOCK IN AMERICA 

HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION AND FORESTRY 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JUNE 28, 2011 

Printed for the use of the 

Committee on Agriculture, Nutrition and Forestry 

( 

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

COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY 

DEBBIE STABENOW, Michigan, Chairwoman 

PATRICK J. LEAHY, Vermont 

TOM HARKIN, Iowa 

KENT CONRAD, North Dakota 

MAX BAUCUS, Montana 

E. BENJAMIN NELSON, Nebraska 

SHERROD BROWN, Ohio 

ROBERT P. CASEY, Jr., Pennsylvania 

AMY KLOBUCHAR, Minnesota 

MICHAEL BENNET, Colorado 

KIRSTEN GILLIBRAND, New York 

PAT ROBERTS, Kansas 

RICHARD G. LUGAR, Indiana 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

SAXBY CHAMBLISS, Georgia 

MIKE JOHANNS, Nebraska 

JOHN BOOZMAN, Arkansas 

CHARLES E. GRASSLEY, Iowa 

JOHN THUNE, South Dakota 

JOHN HOEVEN, North Dakota 

CHRISTOPHER J. ADAMO, Majority Staff Director 

JONATHAN W. COPPESS, Majority Chief Counsel 

JESSICA L. WILLIAMS, Chief Clerk 

MICHAEL J. SEYFERT, Minority Staff Director 

ANNE C. HAZLETT, Minority Chief Counsel 

(II) 

(III) 

C O N T E N T S 

Page 

HEARING(S): 

The State of Livestock in America ......................................................................... 1 

Tuesday, June 28, 2011 

STATEMENTS PRESENTED BY SENATORS 

Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan, Chairwoman, Committee on Agriculture, Nutrition and Forestry ............................ 1 

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

Panel I 

Almanza, Alfred V., Administrator, Food Safety and Inspection Service, U.S. 

Department of Agriculture, Washington, DC .................................................... 7 

Glauber, Joe, Ph.D., Chief Economist, U.S. Department of Agriculture, Washington, DC ............................................................................................................. 4 

Parham, Greg, Ph.D., Administrator, Animal and Plant Health Inspection 

Service, U.S. Department of Agriculture, Washington, DC .............................. 6 

White, Dave, Chief, Natural Resources Conservation Service, U.S. Department of Agriculture, Washington, DC ................................................................ 9 

Panel II 

Harper, Frank, President-Elect, Kansas Livestock Association, Sedgwick, KS . 35 

Hunt, Steven D., CEO, U.S. Premium Beef, LLC, Kansas City, MO .................. 33 

Jones, Dennis O., Pork Producer, South Dakota Farmers Union, Bath, SD ...... 32 

McPherson, Hans, Rancher and Member, Montana Farm Bureau, Stevensville, MT ................................................................................................................ 38 

Sietsema, Rick, Farmer, Sietsema Farms, Allendale, MI .................................... 30 

Welch, Michael, President and CEO, Harrison Poultry, Inc., Bethlehem, GA ... 36 

APPENDIX 

PREPARED STATEMENTS: 

Boozeman, Hon. John ....................................................................................... 50 

Chambliss, Hon. Saxby .................................................................................... 52 

Harper, Frank ................................................................................................... 54 

Hunt, Steven D. ................................................................................................ 63 

Jones, Dennis O. ............................................................................................... 70 

Mcpherson, Hans .............................................................................................. 85 

Sietsema, Rick .................................................................................................. 90 

Welch, Michael .................................................................................................. 101 

TESTIMONY WAS SUBMITTED COLLECTIVELY FROM USDA FOR THE FOLLOWING

WITNESSESS: 

Alfred V. Almanza, Joe Glauber, Joe, Greg Parham, Dave White ............... 120 

QUESTION AND ANSWER: 

Hon. Debbie Stabenow: 

Written questions to Alfred V. Almanza ........................................................ 136 

Written questions to Joe Glauber ................................................................... 141 

Written questions to Frank Harper: ............................................................... 157 

Written questions to Steven D. Hunt: ............................................................ 160 

Page

IV 

Hon. Debbie Stabenow—Continued 

Written questions to Dennis O. Jones: ........................................................... 162 

Written questions to Hans Mcpherson: .......................................................... 166 

Written questions to Greg Parham ................................................................. 168 

Written questions to Rick Sietsema: ............................................................... 176 

Written questions to Michael Welch: .............................................................. 181 

Written questions to David White .................................................................. 184 

Baucus, Hon. Max: 

Written questions to Alfred V. Almanza ........................................................ 138 

Written questions to Greg Parham ................................................................. 172 

Chambliss, Hon. Saxby: 

Written questions to Alfred V. Almanza ........................................................ 139 

Written questions to Joe Glauber ................................................................... 151 

Conrad, Hon. Kent: 

Written questions to David White .................................................................. 190 

Gillibrand, Hon. Kirsten: 

Written questions to Alfred V. Almanza ........................................................ 138 

Harkin, Hon. Tom: 

Written questions to Joe Glauber ................................................................... 150 

Lugar, Hon. Richard G.: 

Written questions to Joe Glauber ................................................................... 153 

Written questions to Greg Parham ................................................................. 174 

Almanza, Alfred V.: 

Written response to questions from Hon. Debbie Stabenow ......................... 136 

Written response to questions from Hon. Max Baucus ................................. 138 

Written response to questions from Hon. Kirsten Gillibrand ....................... 138 

Written response to questions from Hon. Saxby Chambliss ......................... 139 

Glauber, Joe: 

Written response to questions from Hon. Debbie Stabenow ......................... 141 

Written response to questions from Hon. Tom Harkin ................................. 150 

Written response to questions from Hon. Saxby Chambliss ......................... 151 

Written response to questions from Hon. Richard G. Lugar ........................ 153 

Harper, Frank: 

Written response to questions from Hon. Debbie Stabenow ......................... 157 

Hunt, Steven D.: 

Written response to questions from Hon. Debbie Stabenow ......................... 160 

Jones, Dennis O.: 

Written response to questions from Hon. Debbie Stabenow ......................... 162 

Mcpherson, Hans: 

Written response to questions from Hon. Debbie Stabenow ......................... 166 

Parham, Greg: 

Written response to questions from Hon. Debbie Stabenow ......................... 168 

Written response to questions from Hon. Max Baucus ................................. 172 

Written response to questions from Hon. Richard G. Lugar ........................ 174 

Sietsema, Rick: 

Written response to questions from Hon. Debbie Stabenow ......................... 176 

Welch, Michael: 

Written response to questions from Hon. Debbie Stabenow ......................... 181 

White, Dave: 

Written response to questions from Hon. Debbie Stabenow ......................... 184 

Written response to questions from Hon. Kent Conrad ................................ 190 

USDA: 

Written response to questions from Hon. Debbie Stabenow ......................... 193 

(1) 

THE STATE OF LIVESTOCK IN AMERICA 

Tuesday, June 28, 2011 

UNITED STATES SENATE, COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY, Washington, DC 

The Committee met, pursuant to notice, at 2:48 p.m., in Room 

106, Dirksen Senate Office Building, Hon. Debbie Stabenow, Chairwoman of the Committee, presiding. 

Present: Senators Stabenow, Baucus, Klobuchar, Roberts, Cochran, Johanns, Boozman, Grassley and Thune. 

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

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

Chairwoman STABENOW. Good afternoon and welcome to the 

Committee on Agriculture, Nutrition and Forestry. We very 

much appreciate all of our witnesses. We have two excellent panels 

today, and we very much look forward to your testimony, and we 

thank you for being here. 

Today, we will hear about some of the exciting and innovative 

things happening in the livestock industry, many of which I have 

seen for myself back in Michigan. The livestock industry represents 

a $250 billion industry which supports nearly 2 million jobs nationwide and 40,000 jobs in my State of Michigan. I continue to talk 

about the Farm Bill as a jobs bill because that is exactly what it 

is, and today we are talking about a very important part of our industry. 

We have two great panels of witnesses today to talk about the 

state of the livestock industry. On the first panel, we have senior 

officials from the Department of Agriculture who will cover the 

overall economic outlook for the industry, animal health and food 

safety issues, as well as conservation efforts. On our second panel, 

we will hear from producers and a packer about a number of issues 

including export opportunities, the proposed GIPSA rule, ethanol 

and the permanent disaster programs for livestock that we have 

added in the 2008 Farm Bill. 

One of those producers we will hear from is Rick Sietsema. He 

has an excellent story to tell. I am very proud to have him here, 

representing the State of Michigan. 

And in fact, producers all across Michigan are taking an innovative and responsible approach, thanks in part to a voluntary certification process we have in Michigan called the Michigan Agricultural Environmental Assurance Program, or MAEAP, which helps 

livestock producers adopt practices that manage animal waste and 

2 

nutrient runoff. A central piece of this program is assessing Farm 

Bill conservation programs like the Environmental Quality Incentives Program, EQIP, and the Conservation Stewardship Program. 

And because of the work we have done in Michigan, MAEAP and 

conservation programs are helping farmers find regulatory certain 

for the larger livestock operations. I think MAEAP is a great illustration of how we can work together with producers to find creative 

solutions to challenges that they are facing. 

Throughout the hearing today we will hear more examples of 

how we can work with producers to find effective solutions to the 

challenges we face. For example, the Department of Agriculture 

has worked hard to develop a great new working relationship with 

the industry to ensure a safe supply of food for consumers. The Department has also worked closely with the industry to develop a 

plan to trace disease outbreaks and provide assurance to the countries who buy our meat products. 

And I know there are many people who have concerns with the 

proposed GIPSA rule. I am looking forward to hearing from our 

witnesses about that today. I appreciate and understand the complexity of this issue, especially as it relates to different geographical regions, market structures and species. That said, I will 

be watching and working closely with the USDA, with my friend 

and Ranking Member, Senator Roberts, and will continue to work 

with stakeholders to find a workable solution that does not hinder 

economic development and innovation. 

So again, welcome to the hearing. I would now like to turn to my 

friend and Ranking Member, Senator Roberts, for his opening remarks. 

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

STATE OF KANSAS 

Senator ROBERTS. Madam Chairwoman, I appreciate your calling 

this hearing today which focuses on the center of America’s dinner 

plate and the 860,000 folks that make up this nation’s 100-plus billion livestock industry. 

The livestock sector is a driver of the agriculture economy, also 

a major reason agriculture has had a substantial success in the export market. Unfortunately, despite this unmatched success, the 

livestock industry has been under regulatory attack—those are 

harsh words; I intend them to be—from both the EPA and the Department of Agriculture. This is especially true of the USDA as it 

applies to the proposed GIPSA rule. 

During the last Farm Bill, we had a very strong, spirited debate 

on many of the exact proposals that are included in the proposed 

rule, and we rejected them all during that Farm Bill debate, in 

some cases by a very substantial vote margin. 

Let me repeat that: The exact proposals that are included in the 

proposed rule, and we rejected them all, in some cases by a substantial vote margin. So much for congressional intent. 

Despite the strong, clear bipartisan congressional statements and 

intent on this topic, the Administration went forward in direct opposition to these congressional actions. 

I do not want to call into question anyone’s motives. Let me 

make that clear. But I must say that the actions of the USDA on 

3 

this rule and the past activities of GIPSA Administrator J. Dudley 

Butler as a lawyer in the private sector call into question the Department’s impartiality on this issue. 

Frankly, Secretary Vilsack was not here for the last Farm Bill 

debate. He did not know all of the history behind the congressional 

intent on this topic, and I do not think he got the full story from 

Mr. Butler or others who developed this rule. 

Mr. Butler made a career out of suing many in the livestock and 

processing sectors. To be perfectly blunt, the rule as proposed 

looked like a trial lawyer’s full employment act. Better yet, I will 

read a quote from the Administrator, Administrator Butler, regarding the core of the material in the rule. His quote: ‘‘That is a lawyer’s dream, a plaintiff lawyer’s dream.’’ He was a plaintiff lawyer. 

I understand that part of government service is that folks with 

diverse backgrounds and experience will fill these political positions, and that is usually a good thing. We need people with realworld experience, helping to run our government. The problem is 

that when those serving seem to have trouble checking their past 

agendas at the door. 

In this instance, since we are talking about livestock, it seems 

like the fox is guarding the henhouse and we are missing a few 

hens. As a result, we are looking at a proposed rule that is undoubtedly major in its economic impact and which threatens to 

undo years of livestock marketing arrangements that have benefitted both livestock producers and consumers. 

At a time when many talk about how agriculture is going to help 

lead the rebound for our economic recovery, it makes no sense to 

me why we would try to hamstring this industry and take away 

marketing tools that will have far-reaching implications in both the 

domestic and international marketplace. 

I am disappointed that Mr. Butler is not here today. I do know, 

however, that the USDA Chief Economist, Dr. Joe Glauber, is a 

straight shooter. He is here, and he will give us honest answers to 

our questions. 

I think that probably Secretary Vilsack, my suggestion to him 

would be to put Mr. Butler in the witness protection program, 

under the circumstances. 

I look forward to hearing from Dr. Glauber along with many of 

our witnesses about the very real-world impact of this proposed 

rule. 

I thank the Chairwoman for holding this hearing. 

Chairwoman STABENOW. Thank you very much, Senator Roberts. 

And again, we welcome our first panel. And we realize that we 

have your written testimony. It has been submitted for the record. 

We will ask you to keep your remarks to five minutes. Also, in the 

interest of time today, to make sure we have ample opportunity for 

our second panel, I will ask colleagues to stick to our five-minute 

rule as will I attempt to do my best to do that as well this afternoon. 

So I am pleased to introduce our panelists. First, we have Dr. 

Joe Glauber. Dr. Glauber is the Chief Economist at the USDA. Dr. 

Glauber served as Deputy Chief Economist at USDA from 1992 to 

2007. In 2007, he was named the Special Doha Agricultural Envoy 

4 

and continues to serve as Chief Agricultural Negotiator in the 

Doha talks. 

Second, we have Dr. Greg Parham, and we welcome you. Dr. 

Parham is the Administrator for USDA’s Animal and Plant Health 

Inspection Service. Dr. Parham began his career with APHIS in 

2006 as the agency’s Chief Information Officer and since then has 

held appointments as Deputy Administrator for Marketing and 

Regulatory Programs and Associate Administrator until becoming 

Administrator of APHIS in April of this year. 

Next, we have Mr. Al Almanza, who is the Administrator for the 

Food Safety and Inspection Service. Mr. Almanza’s career began in 

1978 as a food inspector in a small slaughter plant in Dalhart, 

Texas. Since then, he has served through the agency as Deputy 

District Manager, as a Labor-Management Relations Specialist and 

Processing Inspector. We welcome you as well. 

And Chief White is with us—Chief Dave White, Chief of USDA’s 

Natural Resources Conservation Service. Chief White began his career with the Natural Resources Conservation Service over 32 

years ago, was named Chief in March of 2009. Chief White has 

been active in the Farm Bill process, having worked both the 2002 

and 2008 Farm Bill, both time as detailees with our Committee. 

And so, it is good to have you back. 

We thank all of you for joining us, and we will ask Dr. Glauber 

to proceed. 

STATEMENT OF DR. JOE GLAUBER, CHIEF ECONOMIST, U.S. 

DEPARTMENT OF AGRICULTURE 

Mr. GLAUBER. Thanks very much, Chairwoman Stabenow, Ranking Member Roberts and other members of the Committee. Thanks 

for the invitation to discuss current issues and developments in the 

livestock industry. 

Let me begin with my presentation, at least to give you a brief 

overview of the livestock economy and what has been going on over 

the last six months and looking forward. 

As we enter the second half of 2011, livestock prices are generally higher, supported by strong U.S. agricultural exports and 

very modest increases in production. However, livestock margins 

remain under pressure as weather events and strong demand have 

pushed prices for feed and other inputs to record levels. Economic 

growth, especially in less developed countries, and the reduced 

value of the dollar continue to support global demand and U.S. 

prices for livestock and dairy products. 

Turning to the export picture, USDA’s forecast for U.S. agricultural exports for fiscal 2011, as you may know, is a record high of 

a $137 billion, up from $108.7 billion last year and the previous 

record almost $115 billion in fiscal 2008. 

U.S. exports of livestock, poultry and dairy products are forecast 

to reach a record $26.5 billion in fiscal 2011, up $5 billion from the 

previous year. 

U.S. beef exports for 2011 are forecast at 2.59 billion pounds. I 

note this is the first time that our exports for beef have exceeded 

the level, pre-BSE levels. So after a long time, we finally climbed 

back so that at least our exports for 2011 are forecast above the 

pre-BSE levels. We are expecting a slight decline for 2012 although 

5 

that still, I think, reflects the fact we are anticipating stronger national demand, but total beef supplies will likely be about 4 percent 

lower. 

U.S. pork exports are forecast to increase to 4.9 billion pounds 

in 2011. That is an increase of 15 percent from 2010. U.S. exports 

to South Korea, up 195 percent during the first quarter, are expected to abate later this year as domestic production begins to rebound from recent foot and mouth disease outbreaks there. U.S. 

pork exports in 2012 are expected to decline slightly to 4.8 billion 

pounds as exports to South Korea decline, as pork production recovers in that country. 

For broilers, broiler exports are forecast to decline from 6.77 billion pounds in 2010 to 6.48 billion pounds due primarily to lower 

exports from Russia and China. Broiler exports in 2012 are expected to total 6.7 billion, again up 3.4 percent from the 2011 forecast. 

One of the bigger issues facing livestock producers has been the 

higher feed costs. For the 2011–2012 marketing year, global demand is forecast to exceed global production, causing global stocks 

of grains and oil seeds as a percent of use to fall and crop prices 

to rise. 

As many of you know, on Thursday, NASS will release its acreage report. This has been much anticipated by the market because 

of the interest in how planting delays and flooding have affected 

corn, wheat and soybean plantings. 

Our current estimates for total corn supplies are down 230 million bushels from last year. Lower beginning stocks more than offset the projected increase in corn production. All this contributes 

to lower corn ending stocks for 2011-2012, projected at 695 million 

bushels, or 35 million bushels lower than beginning stocks, and 

that has pushed the farm price for corn to a record $6 to $7 per 

bushel, up from this year’s current record of $5.30. 

And I might add the prices for other feed stuffs are projected to 

remain high. Soybean prices, for example, we are now forecasting 

those at $13 to $14 per bushel for 2011-2012 compared to this 

year’s record of $11.40. And that means soybean yield prices projected at $375 to $405 per ton, again up from 2010 levels. 

And lastly wheat prices, and we are seeing some feeding of wheat 

now for livestock because of its competitiveness with corn. But it 

too, of course, is looking at record prices. We are forecasting those 

at $7 to about $8.40. 

I will close here, but I think the takeaway from this is that feed 

prices have kept margins quite tight. And this has in fact meant 

for livestock, where we would normally see with the high prices 

that we have seen in beef, pork and poultry, where we might expect more expansion, we just have not seen the expansion, and that 

is largely because of the pressures the producers have been under, 

because of these tight margins. And given the tightness in the markets and these low prices, or these low stock levels, I think the 

tightness will continue for some time. 

And with that, let me conclude. Thanks. 

[The prepared statement of the USDA can be found on page 120 

in the appendix.] 

Chairwoman STABENOW. Thank you very much. 

6 

Dr. Parham, welcome. 

STATEMENT OF DR. GREG PARHAM, ADMINISTRATOR, ANIMAL 

AND PLANT HEALTH INSPECTION SERVICE, U.S. DEPARTMENT OF AGRICULTURE 

Dr. PARHAM. Thank you, Madam Chairwoman and members of 

the Committee. 

My name is Dr. Gregory Parham, and I was recently appointed 

the Administrator to USDA’s Animal and Plant Health Inspection 

Service. Although I am new to this role, I am not new to this agency or to USDA. As you heard, I have been with APHIS since 2006 

and with USDA since 1982. 

My father, a veterinarian like me, spent his entire career with 

APHIS and its predecessor agencies. From him, I learned the value 

of public service and especially the importance of safeguarding agriculture. It is with that spirit that I am so proud to be here before 

you today. 

I am also joined today by Dr. John Clifford, the U.S. Chief Veterinary Officer and also the Deputy Administrator for Veterinary 

Services within our agency, and he too shares a strong commitment 

to agriculture and APHIS’s critical mission of safeguarding animal 

health. 

While much of USDA’s focus is on preventing disease, we must 

also be prepared should a foreign animal disease be detected in our 

country. We must be ready to minimize the potentially devastating 

effects on livestock and livelihoods of producers. Key to those efforts is an effective animal disease traceability system. We want to 

be able to identify sick or potentially exposed animals, see where 

they have been and identify other animals with which they have 

been in contact. We could then isolate and treat effectively affected 

animals, securing animal health and helping ensure that markets 

for healthy animals stay open domestically and around the world. 

We are also developing a proposed rule which will provide states 

and tribal nations with enough flexibility to use the methods that 

work best for their producers. What works best in Michigan might 

not be the best for Montana. The system we are designing recognizes that fact. If two states in the West, for example, want to recognize each other’s brands, that is acceptable under our system. 

This flexible approach will help us hold down the costs of the 

overall system. We plan to provide those who choose to use them 

with low-cost ear tags which all States will recognize. These tags 

have been an effective part of our successful disease eradication 

programs over the years. 

Aside from flexibility, the other hallmark of our approach is 

transparency. We have made it a priority to listen to what producers all around the country have to say, incorporating their suggestions on what an effective animal disease traceability approach 

should look like. At every step of the way, we have and will continue to listen to producers and the public. We want to ensure that 

we have as much stakeholder support as possible because participation is central to an effective and successful system. 

Our commitment to listening to and responding to the needs of 

our producers has been key to another APHIS initiative—improving our brucellosis and tuberculosis programs. Together with our 

7 

producer and State partners, we have made great strides in reducing the incidents of both diseases, but in today’s animal health 

landscape we can continue to strengthen these programs while effectively addressing challenges like the prevalence of disease in 

wildlife populations. 

So we have reached out to our partners for their ideas. We published concept papers on new directions for both programs and reviewed the many public comments we received. We followed up 

with State meetings, industry meetings, just to get their input on 

our proposal and what is needed. 

For tuberculosis, we have issued a Federal order in April 2010 

that provides greater options for dealing with TB-affected herds, 

and on brucellosis we issued an interim rule in December of last 

year that allows us to focus the program on high-risk areas. In 

both cases, we now have more flexibility to maintain a State’s status when an infected herd is not depopulated. This saves producers 

time and money because they no longer have to comply with additional testing requirements because of downgraded State status, 

and as we move forward we will continue to review these programs 

with our partners and stakeholders. 

Madam Chairwoman, I again thank you for the opportunity to 

testify today, and I look forward to working with you and members 

of this Committee as we protect America’s agriculture and natural 

resources. Thank you very much. 

Chairwoman STABENOW. Thank you very much. 

Mr. Almanza, welcome. 

STATEMENT OF ALFRED V. ALMANZA, ADMINISTRATOR, FOOD 

SAFETY AND INSPECTION SERVICE, U.S. DEPARTMENT OF 

AGRICULTURE 

Mr. ALMANZA. Thank you, Madam Chairwoman, Ranking Member Roberts and members of the Committee. I appreciate the invitation to appear before you today to discuss FSIS and the ways we 

are improving public health through food safety and encouraging 

businesses to produce the safest products possible. 

FSIS is the public health regulatory agency of the United States 

Department of Agriculture responsible for ensuring that our nation’s domestic and imported commercial supply of meat, poultry 

and processed egg products is safe, secure, wholesome, accurately 

labeled and packaged. Our inspection program personnel are the 

backbone of FSIS’s public health infrastructure, and domestic processing and slaughter establishments, laboratories and import 

houses across the country. In fiscal year 2010, we employed more 

than 9,800 personnel, including more than 8,000 in-plant and other 

front-line personnel protecting public health in approximately 6,200 

federally inspected establishments nationwide. 

As someone who began working on the slaughter line in a beef 

establishment more than 30 years ago, I know firsthand that our 

employees are our greatest asset and our greatest strength. We are 

united, one team with one purpose, to protect consumers from foodbourne illness. 

During fiscal year 2010, our inspection program personnel ensured public health requirements were met in establishments that 

slaughter and/or process 147 million head of livestock and 9 billion 

8 

poultry carcasses. FSIS inspection personnel also conducted 8 million food safety and food defense procedures to verify that the systems at all Federal establishments met food safety and wholesomeness requirements. In addition, during fiscal year 2010, inspection 

program personnel condemned more than 451 million pounds of 

poultry and more than 493,000 head of livestock during antemortem and postmortem inspection. 

Protecting public health and the consumer is our mission. As a 

regulatory agency, we live this mission every day and in every way, 

from our inspectors doing the fundamental work of the agency and 

inspecting the products on the line to policy staff working together 

to ensure that FSIS’s policy is up to date and meeting the demands 

of the present food safety system. 

Even so, we understand the importance of working with industry 

to ensure that establishments produce safe products. Moreover, we 

make an extra effort through our outreach and guidance to help 

small and very small slaughter processing establishments to ensure 

that they comply with FSIS regulations. Establishments with 500 

or fewer employees represent more than 90 percent of the FSIS 

regulated establishments. 

We understand the importance of working together and providing 

them with the information and tools they need in order to be successful. In fiscal year 2010, we launched our small plant help desk 

which responded to 2,277 inquiries during the fiscal year. FSIS 

also distributed 24,000 copies of our Proposed Hazard Analysis and 

Critical Control Point Validation Guidance and the FSIS General 

Food Defense Plan. We also developed 12 new podcasts on food 

safety issues for small and very small operators, and conducted exhibits at 23 industry events to share outreach materials with small 

and very small operators. Through our efforts, we reached about 

55,225 industry operators in fiscal year 2010. 

In addition, we provide information and offer mobile slaughter 

facilities for small livestock and poultry producers in rural areas as 

well as provide the opportunity for State-inspected meat and poultry establishments with 25 or fewer employees to join a new interstate shipment program. 

As previously mentioned, I began working at FSIS on the slaughter line at a beef facility. This experience in the field has given me 

the insight and understanding of the importance of small and very 

small businesses to America’s rural economies. Small and very 

small businesses are the foundation of our rural economies and are 

tangible by providing jobs, direct and indirect, to those in rural 

America that may otherwise not have such opportunities. 

Ensuring that our employees have the proper tools and FSIS’s 

updated policies to prevent food-bourne illness has been a priority 

for me since being named Administrator. It is not our intention to 

impose rules that hinder small and very small businesses from realizing their potential. Rather, we work hard to provide the necessary tools and policies to ensure that businesses produce the 

safest products possible. FSIS can protect consumers without placing unnecessary burdens on businesses. 

Madam Chairwoman, Ranking Member Roberts and members of 

this Committee, thank you for your help in ensuring the safety of 

9 

meat, poultry and processed egg products and for the opportunity 

to testify before you today. 

Chairwoman STABENOW. Thank you very much. 

Chief White, welcome. 

STATEMENT OF DAVE WHITE, CHIEF, NATURAL RESOURCES 

CONSERVATION SERVICE, U.S. DEPARTMENT OF AGRICULTURE 

Mr. WHITE. Greetings. It is grand to be here. It is much more 

comfortable sitting back there though. 

I would like to take just a few minutes to talk to you about three 

areas where conservation is really making a critical difference in 

the livestock sector. 

First is in programs. You all, through the 2002 Farm Bill and the 

2008 Farm Bill, have really given us the tools to assist livestock 

producers. The big boy on the block is the Environmental Quality 

Incentives Program, which you mentioned. If you look at just the 

last I think it is since fiscal year 2005, 150,000 contracts with livestock producers from 2005 to 2010, huge amounts of interest out 

there. It is the workhorse. It is the bricks and mortar program. 

But it has also been joined by another program which was created in the 2008 Farm Bill—the Conservation Stewardship Program. As you know, we can enroll 12.7 million acres a year in that. 

We are in our third year of enrollment. It is going on right now. 

As of yesterday, we had about 34 million acres in that program. 

About 17 million, about half, was livestock related. It is grass and 

pastures, mostly rangeland. So it has gone over huge with the 

ranching community. 

I will just mention two other programs briefly. They are longterm easement programs—the Grassland Reserve and the Farm 

and Ranchland Protection, for those producers who want to hand 

it down to their kids. I was the State director in Montana. I 

thought man, these guys are not going to like easement programs, 

but I was stunned because they want—I am talking ranchers who 

could have sold out and become instant multimillionaires, but they 

really wanted to leave it to their kids. And this provides a mechanism for them to do this, as well as programs like the Wetland Reserve. 

And I would be remiss and be kicked out of the club if I did not 

mention good ole conservation operations technical assistance, 

these two books right here. This is the technical plans for a large 

confined animal feeding operation that meets all of the requirements for the State of Montana’s Department of Environmental 

Quality. 

This right here is a simple little solar panel for a livestock watering facility that precludes the need to string wires five miles back. 

This is a 5.3 mile stockwater system in Utah. This is 2,900 dairy 

head. This is the plans where you were going to line a pond, put 

another separator in there. This meets all the Utah Department of 

Environmental Quality requirements. 

This is the kind of stuff that we do every day with producers. 

The second item is technology. We are doing some cool things. In 

EQIP, we have this Conservation Innovation Grant. My predecessors have used it. We are using it now, doing stuff with WashVerDate Nov 24 2008 01:22 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 C:\DOCS\71631.TXT MICHA
10 

ington State University. Some of the most incredible feed management stuff is coming out of there. 

There is a company called Coaltec. They are working with a producer in West Virginia, a poultry producer, gasifying the chicken 

litter. He is burning it to heat his houses, and his byproduct is 

biochar. He is selling it, and he is making more money selling 

biochar than he is off his chickens now. In fact, this guy was featured in USA Today a few months ago. 

Wisconsin Department of Ag has done some incredible work on 

advancing us in odor control, particularly around dairy operations. 

And then there is Great Lakes Energy Company that has— we 

are working with them on four constructed wetlands. They are taking all the affluent off of a dairy, and by the time it is coming out 

it is dang near drinkable. And they are using some kind of algae 

to really help clean it up. 

So the technology is coming along, especially as you look at stuff 

like precision ag. It is just amazing. 

Third area, risk reduction. And Mr. Roberts, I am just going to 

tell you right now; NRCS is in the Department of Agriculture, not 

EPA, not the Corps, not Fish and Wildlife Service, and you all have 

given us the requirement. 

In the Environmental Quality Incentives Program, one of our 

missions is to help producers beat or avoid regulation. I kind of 

look on NRCS as being kind of the shield arm between producers 

and the regulating community. Now whether it is the Clean Water 

Act, the Clean Air Act, the Endangered Species Act or even new 

areas, Madam Chair, like the Bovine Tuberculosis Project in Michigan, we are trying to keep farmers on the land. 

The reason this is important: Nine billion people coming in the 

next four decades are going to require huge increases in production, and it is up to us to get up early, stay up late and work like 

a dog in between to keep our producers on the land because we are 

going to need them. 

Thank you very much, ma’am. 

Chairwoman STABENOW. Well, thank you very much to each of 

you. We very much appreciate your service, and we appreciate your 

being here. 

Let me just start off, Chief White, by thanking you. You mentioned the bovine TB situation in Michigan, which has gone way 

too long and is serious, but I want to thank you for your wonderful 

leadership in working with us on creative ways to support our producers. 

I was on a farm not long ago, near Alpena, Michigan and watching what they have been able to do, partnering with USDA and 

moving their feed operations and managing their animal waste, 

and so on, in a different way that is going to allow them to protect 

the herd and be able to keep the farm. And so, I want to thank 

you very much for that. 

And recently, because of the increased efforts in Michigan, we 

have received 73 EQIP applications for the TB initiative, as you 

know. Sixty percent of those are first-time NRCS customers, folks 

that are involved in conservation for the first time. And I was really pleased to see that 15 of the producers are new and beginning 

11 

farmers. So I thought that was also something that was very, very 

positive. 

So thank you very much for that. 

And Dr. Parham as well, thank you for your focus on prevention, 

when you mention prevention, as well as eradication because we 

have got a lot of work to do in this area. 

So I want to thank both of you. 

Let me talk about more about conservation because as you mentioned, Chief White, back in the 2002 Farm Bill, with Senator Harkin as Chair and Senator Lugar as Ranking Member working closely together, Congress made really an unprecedented investment in 

conservation at the time. One of these was EQIP, to help producers 

comply with increased regulations on the farms. At the time, livestock producers were facing increased Clean Water Act total maximum daily load requirements, CAFO permitting requirements and 

Clean Water Act requirements, and we listened to producers and 

created a 60 percent set-aside for the livestock industry. 

I wonder if you might speak a little bit more in terms of how that 

is going. And do you see as you talk to livestock producers, as you 

know, as I know you do every day, are their conservation needs 

changing? Is it more of the same? Are compliance-related issues 

still their primary concern? 

What should we be looking at in terms of the next Farm Bill? 

Mr. WHITE. Some things have not changed since 2002. There is 

still a huge concern on the part of our farmers and ranchers on regulatory issues. 

You mentioned the Clean Water Act. Since the 2002 bill, we have 

written something like 50,000 comprehensive nutrient management 

plans. About 81 percent of them are implemented. In 2008, EPA 

bought off on accepting these comprehensive nutrient plans as 

meeting the requirements for their non-point discharge system, 

with a couple modifications. So there has been huge work there. 

Of course, Chesapeake Bay, that is really a canary in the coal 

mine that we are looking at on regulation. 

I think the emerging issue, particularly out West, is the Endangered Species Act. Some of you up here remember the spotted owl. 

That was parts of Washington and Oregon, two States. The sage 

grouse is a candidate species. It has the same potential as the spotted owl, but it covers 10 times the geographic area, and it could 

disrupt ranching throughout the West because of the 

checkerboarded ownership pattern, the Federal-private. 

So we are putting tremendous resources into trying to keep that 

bird from being listed and working. It is a partnership effort with 

the governors out there. I just got a really great memo from the 

Governor of Wyoming. He loves it. The ranchers love it. The conservation groups love it. We have good support from Fish and Wildlife Service. 

So I think the concern of regulation is still there, but you all 

have given us such a gift through these programs that we are able 

to—I just wonder if we would have had these same programs in 

Bush I, before the spotted owl got listed, could things have been 

different. 

12 

And our commitment you is try and use these programs, strategically array those forces, to make sure that our owners and operators can continue to produce the food and fiber we need. 

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

I am looking here at my time. Thank you very much. 

Mr. WHITE. Sorry. 

Chairwoman STABENOW. Senator Roberts. 

Senator ROBERTS. Dr. Glauber, I have eight questions, five minutes. You ready? 

Mr. GLAUBER. Let’s go. 

Senator ROBERTS. I was especially pleased to hear the Secretary 

has put you in charge of the economic analysis of the proposed 

GIPSA rule. The entire livestock industry was especially glad to 

hear that. 

Where is the Office of Chief Economist in terms of an in-depth 

cost-benefit analysis of this proposed rule? 

Have you identified economic benefit to producers, the livestock 

industry or to consumers? 

Mr. GLAUBER. Thanks very much, Senator. Yes, as you are 

aware, the Secretary did put my office of doing cost-benefit analysis 

for this rule. 

I might add it is a difficult analysis. It is not like the typical sort 

of analysis that my office would do, looking at, say, an increase of 

a loan rate or something like that. The direct costs of any rule, 

they are typically pretty easy to calculate. I mean all things considered— things like putting on regulations to say we will gather 

more data or more supporting evidence. Those things, one can 

make some calculations on. 

I think much more difficult and particularly in the case of this 

rule are the effects of the regulation itself on behavior by packers 

and integrators, et cetera. That is how they might—the regulations 

could—potentially affect the way they do business. A lot of—— 

Senator ROBERTS. Let me interrupt you on that point—— 

Mr. GLAUBER. Yes, please. 

Senator ROBERTS. —because I have a question that pertains to 

that. 

The GIPSA Administrator, who is not here, argues that the rule 

will not prevent customized marketing agreements because the 

rule does not call for an across-the-board ban, but what he fails to 

acknowledge is that the legal risks associated with this rule’s competitive injury provisions will, without question, have a chilling effect on the use of marketing agreements. Will your cost-benefit 

analysis study the effect on the industry, the chilling effect of the 

use of marketing arrangements due to expected litigation? 

And I have another one that follows up on that if the answer is 

yes. 

Mr. GLAUBER. Okay. The answer will be yes, we are reviewing 

the cost, a lot of the comments that were received. This was a very 

big issue that figured in a lot of the comments that were raised by 

reviewers. So we are looking at that. 

Senator ROBERTS. The Administrator said that the new rule will 

be a plaintiff lawyer’s dream. That is his quote. If the rule really 

only expands opportunities for trial lawyers to sue, why in the heck 

are we doing this? 

13 

You do not have to answer that. But will your economic analysis 

attempt to calculate the cost of significant additional litigation on 

the industry? 

Mr. GLAUBER. Again, Senator, I think the one thing I can assure 

you is that our office is spending a lot of time with the comments 

that have been raised. We have been looking at lot at the Informa 

study, the study, the RTI study that was done two or three years 

ago. We also are looking at a lot of the comments by those who 

favor this rule. 

Senator ROBERTS. Those will be counted. I am talking about the 

private sector studies—you just mentioned Informa—that say this 

proposed rule is going to be a disaster. Are these studies accurate? 

What role do they play in your analysis? 

And I am sorry I interrupted you again. 

Mr. GLAUBER. No. We are looking at how these—we are looking 

at these analyses very carefully. I think a lot of it does hinge on 

what the perceived risk of litigation is and if that in fact affects 

behavior. We know from the RTI study the large benefits that come 

from alternative marketing arrangements, et cetera. And I think 

that is what my office now is, in a very real sense, trying to gauge 

and looking at. 

Senator ROBERTS. Well, let me give you an example. Are you 

aware the State of Missouri, the Show Me State, has enacted a law 

similar to the proposed GIPSA rule. I also understand the governor 

called a special session to repeal that law. Will you study the Missouri precedent in your cost-benefit analysis? 

Mr. GLAUBER. I have not looked at the Missouri law in particular. I am aware of it. I should not say that it has not figured 

in on the comments. We are aware of it, and I have looked at articles that have discussed that law, yes. 

Senator ROBERTS. But you will. 

Will your economic analysis be published for public comment? 

Mr. GLAUBER. I believe all I have been asked by the Secretary 

is to perform the economic analysis and to present it with the rule. 

So I will do that. 

Senator ROBERTS. We can talk to the Secretary about that. 

Has the Department finally changed its mind and declared this 

rule economically significant in terms of the Administrative Procedures Act? 

Mr. GLAUBER. I can yes to that. I think there is no doubt, particularly with the comments that have been raised, would suggest 

that the rule has a larger impact than $100 million. Thank you. 

Senator ROBERTS. Reports in the media have leaked that the 

United States has not been successful in defending Canada’s and 

Mexico’s WTO case against our mandatory country of origin labeling law. If this is indeed accurate, what does this mean for the section of the Farm Bill as we prepare for the upcoming Farm Bill discussion? 

Mr. GLAUBER. I would—— 

Chairwoman STABENOW. I would just ask you to be brief. 

Mr. GLAUBER. Okay. I would love to comment on that. We have 

seen a preliminary analysis of that, but the actual decision comes 

out, I believe, tomorrow. And I would be greatly chastised by USTR 

and others if I were to discuss the contents. 

14 

Senator ROBERTS. Well, you can respond to that in writing. 

Mr. GLAUBER. Okay. Thank you. 

Senator ROBERTS. Okay. Thank you. 

Chairwoman STABENOW. Thank you very much. 

Senator Cochran. 

Senator COCHRAN. Madam Chairman, thank you very much for 

convening the hearing. It comes at a time when producers in my 

State are very concerned about marketing prospects and the failure 

of the Administration to make early decisions about what they are 

going to do to respond to a possible breakdown in marketing. I am told that in 2010 alone, in my State, poultry totaled $22.47 

billion in the value of our production, more than double the value 

of the second largest agriculture industry, but that economic prospects in our State are terribly disturbing. Feed costs have reached 

record highs. Exports to countries like Russia and China have seen 

huge declines in purchasing. Poultry growers face a great deal of 

challenge in just maintaining their operations and continuing to try 

to make a living in this important industry. And that is just one 

example though of why it is necessary for Congress to take action. 

We are hoping that we can cooperate with the Administration. 

We have to figure out a way to expand into new markets if the old 

markets are drying up and to stimulate demand for U.S. livestock 

products. This may be a broader problem than many of us had realized. So the convening of this hearing is really important, and I 

hope something specific can come from the Administration in terms 

of a commitment to join with the producers and find a way to restore profitability and predictability to the production and marketing of U.S. agriculture products. 

I guess that is the end of my statement. I did not want to delay 

the panelists, but we wanted to hear what you are proposing, what 

you are recommending. Is there a recommendation or an initiative 

from the Administration to deal with the serious challenge that our 

producers are facing? 

Mr. GLAUBER. Well, let me just say a couple of things. One, you 

are absolutely right about the poultry industry. It has been suffering from very weak margins because of the high feed costs. And 

I think this is true across species, but I think in particular for poultry recently. 

And some of this, poultry also has suffered from a loss of some 

critical export markets. Russia has been one, as you mentioned; 

China, because of the countervailing and antidumping case against 

China. Those two have fallen. 

And to give you some idea, and I know you know these numbers, 

but exports now over this last decade have been between 15 and 

20 percent of production—so very, very important for the industry. 

I think opening up those markets and improving there is a very 

critical activity. 

I think we have been working hard. I know Jim Miller, when he 

was Under Secretary, spent a lot of frequent flyer miles going to 

Russia to try to open that, get chicken flowing back to Russia. But 

I think, unfortunately, the economics of high feed costs, I think, are 

going to be around for a little while. 

What we really need is for some stock rebuilding through higher 

production. I think one good news is I think a lot of the big inVerDate Nov 24 2008 01:22 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 C:\DOCS\71631.TXT MICHA
15 

crease in demand for corn use for ethanol will slow now as we start 

approaching the 15 billion gallon mark under the RFS. So I think 

that we should, with productivity gains, see some increases there. 

But I cannot promise anything on the economic side, at least on 

the feed costs side, that could give you something to take home 

over the next few months for sure. 

Senator COCHRAN. One of the suggestions from livestock producers in my State is the need for a warranty program to be implemented, but they say that their efforts to communicate with and 

establish a dialogue with USDA has not been productive. There 

does not seem to be an interest. We have got to move away from 

herd destruction orders and rely more on some preventive measures, early detection procedures, and they are not getting any help 

from Washington. 

Dr. PARHAM. Senator Cochran, if I could respond to that, thank 

you for the question. And I am aware that Dr. Clifford’s team is 

aware of this particular proposal, and it is my understanding that 

they have now had some contact, and there is an expectation of a 

meeting within the next several weeks. Okay? 

Please be assured that we are interested in any innovative ideas 

that will allow us to continue to manage the risk associated with 

these programs and looking at ways other than just depopulation 

every time we have an issue. So yes, we are aware of it, and we 

will be meeting with the company in the coming weeks. 

Senator COCHRAN. Is there any other witness who can tell us 

something encouraging? 

Mr. WHITE. Do you want to hear about conservation? 

Chairwoman STABENOW. And I will ask you to be brief. Thank 

you. 

Mr. WHITE. I do not know if it directly addresses this, but we are 

trying to work with agriculture in a way where we can get dual 

value. Like in your part of the world last year, when the oil spill 

was going on, we did that migratory bird habitat with rice producers, cotton farmers, where they agreed to flood their land. This 

was working land that produced rice and corn and cotton in the 

summer, and it produced environmental benefits for these animals 

in the winter. And if we can figure out a way to do that more in 

a working land program, I think it would be economically beneficial 

to agriculture. 

Senator COCHRAN. Well, I hope you will work with our staff and 

see if we can put something together that really provides some 

meaningful benefits and provides relief to farmers who really do 

need it. 

Thank you, Madam Chairman. 

Chairwoman STABENOW. Thank you very much. 

Senator Grassley. 

Senator GRASSLEY. Thank you, Madam Chairman. 

I have three questions, one for each of three of you. I will start 

with Dr. Glauber. 

While there are certain provisions of the GIPSA rules that I support, there are other issues that cause me some concern. One of 

those areas is a restriction on livestock dealers, requiring them to 

only buy livestock for one packer. There is real concern that this 

could have a very negative impact on small packers who cannot afVerDate Nov 24 2008 01:22 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 C:\DOCS\71631.TXT MICHA
16 

ford to have their own buyer, and some packers may elect to not 

go to certain sale barns if it proves too costly to send a dealer only 

on their behalf rather than sharing a dealer. 

So, a question. I guess really two questions for you, but I am 

going to ask both of them at the same time. Has GIPSA considered 

what may be the unintended consequences to this part of the proposed rule? 

This part of the rule may actually decrease competition at some 

sale barns. Has GIPSA considered that, and what does GIPSA plan 

to do to respond to these concerns in the proposed rules? 

Mr. GLAUBER. Well, let me—certainly, with the first, in regards 

to the unintended consequences, I think this has been pointed out 

by many of the comments that were submitted to GIPSA. Certainly 

in my review of the comments, that comes up quite frequently. And 

you are absolutely right; that is one thing that is mentioned is the 

adverse effect potential on small firms. 

They are certainly aware of the rule as they are going through 

the rule and reviewing these comments. I know from my standpoint on the economic side that is something that we certainly are 

taking into account. 

Senator GRASSLEY. Well, what about the decreased competition? 

Do you think there would be decreased competition maybe if this 

rule goes into effect where I know your motive is to increase competition? 

Mr. GLAUBER. Yes. 

Senator GRASSLEY. And I applaud that motive. 

Mr. GLAUBER. That was what I was alluding to. 

Senator GRASSLEY. Okay. 

Mr. GLAUBER. I think is the fact that a lot of the comments have 

brought that point to bear. That is that this could potentially decrease competition rather than increase competition. 

Senator GRASSLEY. Mr. Almanza, last year there was a petition 

for rulemaking filed with the Department of Agriculture regarding 

the treatment of nonambulatory hogs at packing plants. Under current law, nonambulatory hogs are still slaughtered, but they are 

separated from the hogs that are able to walk. The petition filed 

with the USDA asks that nonambulatory hogs be euthanized. 

USDA has not responded to the petition. 

I am not aware of any data or study that show euthanized 

downed pigs and not allowing them, that meat, to enter the food 

chain will increase food safety. In fact, it is my understanding that 

most fatigued hogs are able to walk again after they are able to 

rest for short periods. 

And I suppose there are plenty of reasons that you can have 

downed hogs. But I remember when I worked at the Rath Packing 

Company back in the 1950s for 6 or 7 years they would be overheated from the hot weather coming in, and you know, they would 

be like down and out, but you let them rest for a while and get 

their breath back and their heat, temperature down, they would 

get up and be okay. 

So what is the status of USDA’s position on this matter, and can 

you shed any light on what health concerns USDA would be addressing if it changes the current law and treatment of downed 

pigs at packing plants? 

17 

Mr. ALMANZA. Yes, sir, and thank you for the question. 

We are still reviewing that proposal. But you are absolutely 

right; the concerns with swine are totally different than with 

downed beef animals. And so there are some different concerns 

that we are looking at, and we certainly will be addressing that in 

the near future. 

Senator GRASSLEY. Do you have any science at this point that 

tells you that the meat may not be as safe as for a hog that is not 

downed? 

Mr. ALMANZA. No, sir, not that I am aware of. 

Senator GRASSLEY. Okay. I would like to ask Dr. Parham. Market research suggests that overseas markets are more important 

than ever for American meat producers. U.S. producers need access 

to foreign markets, but we are hearing rumblings that the U.S.’s 

lack of a comprehensive BSE rule is being used by some countries 

as a barrier for U.S. beef. 

It is my understanding that USDA has indicated it is working on 

a comprehensive rule. So Dr. Parham, would you agree that the 

U.S. needs a comprehensive BSE rule, and if so, when could we expect it to be issued? 

Dr. PARHAM. Thank you, Senator Grassley, and yes, indeed we 

do believe that we do need a comprehensive rule. One of the things 

that we have done is actually combined two previous rules into one 

that would be comprehensive, that would also give us then compliance on the world markets, and we are working on that. It is in 

the process of clearance right now. While I do not want to give a 

specific date, certainly we have that as one of our top priorities, 

and we do expect to get a rule out certainly I would say within fiscal year 2012. 

Senator GRASSLEY. Okay. 

Chairwoman STABENOW. Thank you very much. 

Senator GRASSLEY. Thank you. 

Chairwoman STABENOW. Thank you. 

Senator Klobuchar. 

Senator KLOBUCHAR. Thank you very much, Madam Chairman. 

Thank you for holding this hearing. 

Livestock producers are really the original value-added agricultural product. They are key in my State. We are first in turkeys, 

third in pork and sixth in dairy production, and our livestock industry produces over $6 billion worth of products and also accounts 

for nearly 40 percent of the value of our State’s agricultural production. The producers also support prices for our grain farmers 

and create thousands of jobs at processing plants like Hormel, 

Gold’n Plump and Jennie-O. 

My first question really is one of the things that I have seen 

some improvement with some of our plants and our producers is 

just because of some of the markets opening up. And we continue 

to see, however, frivolous barriers to trade, like when China decided to ban American pork products because of the H1N1 virus or 

because of numerous Russian trade barriers to our poultry products. 

Mr. Glauber, I guess I would ask this of you. How do you think 

we should proactively address this issue to better protect our producers from unfair and unscientific agriculture trade barriers? 

18 

Mr. GLAUBER. Well, again, I would just stress how important 

these markets are for U.S. livestock and poultry producers because 

as opposed to, say, 30 years ago where we were exporting very little, now these are very big, big markets. 

And you are right; I think if we look at two of our larger markets—China and Russia—we have had some fairly major issues 

that we are trying to resolve, poultry being a big one in Russia. 

But as you mentioned, in China of course we have had problems 

with beef, getting any beef in there, because of— we have had a 

number of discussions with USTR and USDA, have gone and met 

with counterparts in China. 

On the H1N1, thankfully, there, it looks that we are seeing some 

reopening of the market for pork, but for poultry we still have 

problems because of the antidumping and countervailing duties on 

U.S. chicken products, which were of course grossly—we had a very 

strong market for poultry in China, but that dropped by 75 percent 

last year. 

I think what we need is again strong bilateral engagement. You 

know. To the degree that there may be improper imposition of duties, et cetera, then there is always recourse through the WTO. But 

again, at least for China. Of course, not for Russia. But in the 

meantime, I think bilateral work. 

And we are sending teams, preparing to send teams. 

Senator KLOBUCHAR. Okay. Thank you. I have more questions. 

Mr. GLAUBER. Thanks. 

Senator KLOBUCHAR. Conservation programs, permanent livestock disaster programs—the House bill passed by the Ryan budget 

would actually cut commodity programs by $30 billion and conservation programs by $18 billion over 10 years. 

Dr. Glauber, how would these drastic cuts affect the health of 

rural communities and the abilities of producers to rebound after 

natural disasters like those we just saw over the weekend in North 

Dakota, as well as what we have seen with tornados and historic 

droughts? 

Mr. GLAUBER. Well, I may let Chief White chime in here on the 

conservation programs. 

Certainly, just the magnitude of those programs in terms of dollars are income to producers and to rural communities. And to the 

extent that those may hit some regions disproportionately, we have 

not yet done an analysis of how those impacts might be felt, but 

they are considerable sums. 

Senator KLOBUCHAR. Okay. 

Mr. WHITE. Thanks, Senator. I hope I do not see what the underside of the bus looks like here in answering this. 

With less money, we are going to reach fewer farmers; there will 

be less conservation applied to the land. So our task will be to 

manage whatever you all allocate, and we will do that in the most 

effective way we can, to hopefully do a better job of spending the 

money so it does the best use for conservation. 

Senator KLOBUCHAR. Okay. Thank you. 

Dr. Parham, on food safety, does the USDA believe that the program to track and minimize livestock diseases will improve our 

ability to keep our markets open and protect producers with 

healthy animals from financial ruin? 

19 

Dr. PARHAM. Yes, Senator Klobuchar. I believe you are speaking 

about animal disease traceability and our ability then to be able to 

trace these animals, yes? 

Senator KLOBUCHAR. Yes. 

Dr. PARHAM. What we have done with that particular program 

is really go back to the drawing board, so to speak, and build on 

the strengths of what was done before, to look at where some gaps 

were and to really hear from States, from partners, from tribal nations as to what would work best. 

As I stated in my testimony, we believe that transparency and 

flexibility are the keystones of our approach now, and our intent 

is indeed to make sure that we are able to protect healthy animals 

as well as to be able to trace those that are diseased because, 

again, we believe it is not only a matter of prevention, but in the 

event of an outbreak we want to be able to trace those animals as 

quickly as possible and to take the appropriate measures when we 

do. 

Senator KLOBUCHAR. Thank you. 

Chairwoman STABENOW. Thank you. 

Senator KLOBUCHAR. One last, just I can ask it later. Dr. White, 

I just want to give you a heads-up from some dairy producers in 

the southern part of my State that are concerned about some of the 

compliance measures. This is energy from livestock issues, the livestock waste, and they really want to get it going, but there are 

some red-tape issues with technologies. And I will simply put it in 

writing, and you can answer it. 

Thank you. 

Chairwoman STABENOW. And we will be happy—we are actually 

going to give everybody one second round on a question, and so you 

can wait and hold it then if you would like to do it as well. 

Senator Boozman. 

Senator BOOZMAN. Thank you, Madam Chair. I have a statement 

that I would ask unanimous consent that we put in the record. 

Chairwoman STABENOW. Without objection. 

[The the following information can be found on page 50 in the 

appendix.] 

Senator BOOZMAN. Thank you very much for having the hearing, 

and I appreciate all of you all being here and really do appreciate 

the hard work that you do on behalf of our Agriculture Committee. 

Dr. Glauber, you mentioned that there were a number of factors—the flooding. This has been such an unusual year. You have 

got flooding. You have got drought—that have affected the corn 

production. 

And you also mentioned the ethanol. How much does ethanol affect the price of corn? 

Mr. GLAUBER. Well, I think there is no question that it has an 

impact on corn prices. You know, I think if we were talking about 

corn exports increasing by 2 billion bushels, I do not think anybody 

would have—there would not be a debate. We would say, yes, it 

definitely has an impact. 

Certainly, if you look over the last few years where most of that 

demand has been met has been through increased supply. We have 

increased corn area planted, and we have increased—and yields 

have increased. Also, remember that from—there is also significant 

20 

increase in distillers dried grains and the byproducts of ethanol 

that go into feed production. 

The impact on food prices, on the other hand, I think is much 

smaller, and that is for a number of reasons. The impact, of course, 

is carried through by higher feed costs which cause smaller production than would normally occur. And because of that, the farm 

value of retail food in general is pretty small, but we know that 

that is how it passes through. And so, the overall impact on food 

prices, I think, has probably been fairly small. 

Over time, I think the impact—the good news is I think the impact will be lessened. One is that corn used for ethanol begins to 

flatten out certainly in our projections because of the fact the cap 

on the amount of corn-based ethanol that can be applied towards 

the renewable fuel standard is capped at 15 billion gallons. And 

then I think that over time, if we look at yield increases, which we 

anticipate to be about 1 percent per year, fairly conservative, but 

that we should see some stock rebuilding, and I think some alleviation of this tight stock situation we see right now. 

Senator BOOZMAN. Thank you. 

The other thing I would just comment; we really do not have an 

energy policy right now. We are not using the resources that we 

have been given. And as a result, with these very increased energy 

costs, certainly that is going to have a major impact. And I guess 

you can comment on that in a second, and again, that truly is going 

to be a major factor. 

I am an optometrist, an eye doctor, and we used to measure a 

lot of things just like you are measuring. And your statistics are 

very good. I guess if I came home at the end of the year and told 

my wife that I had seen 4,500 patients this year and only seen 

4,000 last year, she would say: Great, but how are we doing? You 

know. What is our income? 

So your numbers are good. 

I guess the question I have got; you know, this is the state of the 

community. Are farmers, is their income going up? Is it staying the 

same or are they losing money? 

And then in light of the absence of trade deals, in light of the 

high corn prices for whatever reason, and in light of the high energy prices, and the list goes on and on, what is your forecast for 

the future, dollar-wise, percentage-wise? 

Mr. GLAUBER. Yes. Certainly for net cash income, which is an aggregate measure for the sector, we are forecasting that at a nominal record. Now if you adjust for inflation, you can go back a few 

years and find higher things. That is for the sector, and I think 

there is probably a good optometrist analogy here. 

But as one goes into the details and you see that the crop side 

of the ledger is doing very, very well, the livestock side of the ledger is doing better than it was doing certainly in 2009 when we saw 

very negative margins for hogs and dairy in particular, but it still 

is a very tight situation in terms of profit margins. 

Senator BOOZMAN. So, not so great. The trade deals that we are 

trying to work would help that? 

Mr. GLAUBER. Absolutely. If you look at the benefits for Korea, I think something, are estimated at something like $1.9 billion. 

Beef is about half of that. And even Colombia, which is of course 

21 

much smaller, still we are looking at 30 to 40 percent increases, 

projected increases for livestock products. So I think these are very 

important particularly for the future as we look out over the next 

10 years. 

Senator BOOZMAN. And then having an energy policy where we 

lower the price, long-term, would be helpful, I guess? Certainly? 

Mr. GLAUBER. As you said, certainly energy prices play a number 

of roles here. One is I think that for all the talk about energy, a 

number of things on the ethanol side, do not forget that high energy prices have made ethanol production very, very profitable. So 

I think that is a very important component. 

And if you look at food inflation, energy plays a very major role 

there as well. 

Senator BOOZMAN. Thank you, Madam Chair. 

Chairwoman STABENOW. Thank you very much. 

Senator Johanns. 

Senator JOHANNS. Thank you, Madam Chairman. 

Let me start out and use my perch on the Senate Ag Committee 

and express my appreciation to all the folks at USDA. I look out. 

I see familiar faces. That is always reassuring. I cannot tell you 

how much respect I have for the career people that are there, including you, Dr. Glauber. My temptation is to call you Joe, after 

traveling the world, but I will show you the respect that I think 

you have richly earned and refer to you as Doctor. 

I want to focus, if I could, on the GIPSA rule to start out with 

at least. The proposed rule, as you know, in its inception was not 

deemed economically significant. Knowing the arduous process that 

a rule typically goes through at USDA and knowing the many discussions that we have had about the need for economic analysis in 

rulemaking, I cannot imagine, Dr. Glauber, that you would have 

agreed with that assessment. Am I right about that? 

Mr. GLAUBER. Senator, as you do remember I am sure, what happens in this process is an agency, when it is doing its work plan 

for OMB in terms of here is the regulatory stream that we foresee 

for the year, they will give—they will list the rules that they intend 

to promulgate and then give a designation of what that rule should 

be. 

This rule was deemed by the agency as significant, and it went 

to OMB as such, and OMB agreed that it was a significant rule. 

It was not deemed economically significant. 

I think from my standpoint, in looking at certainly the costs, that 

you certainly you see this in the comments in particular that have 

been raised by a number of the people who have written, show significant costs on the order of billions of dollars. So I think there 

is no question, and I think the designation on this rule will be 

changed to economically significant. 

Senator JOHANNS. Yes, that is the kind of answer I would expect 

from you, and I appreciate your candor about that. 

Now I want to take even a further step backwards. I cannot even 

remember or count the number of times where somebody from the 

legal department would be in my office and we would be talking 

about a course of action for the USDA and the advice I would get 

was: Look, as much as you might want to do this, Mr. Secretary, 

22 

you cannot because you do not have a grant of authority from Congress. 

And that pretty well stopped the debate. Why? Because I had a 

lot of respect for these folks. 

I happen to be on this side of the dais now and I know the process by which you get here, and it is not easy. And I am very mindful of the fact that policy gets made here. 

So I look down through the grant of authority given to the USDA 

by the 2008 Farm Bill, and in item after item it says establish criteria, establish criteria, establish criteria, and I do not see a grant 

of authority, to be very blunt, for a fair amount of what is in that 

proposed rule. And again, I think I know USDA well enough to 

know that there has to be a raging debate going on about whether 

USDA is exceeding its authority. 

Let me just ask you, Doctor, where do you fall on that debate? 

Do you feel this proposed rule has exceed the authority we have 

granted to the USDA, number one? 

And then number two, and equally as important, would it be possible as this rule progresses to pull out those areas where you have 

exceeded the grant from Congress and stay within the limitations 

of our grant of authority? 

Mr. GLAUBER. Senator, the only thing I can say is that I am pretty good when it comes to the economic questions. I think asking me 

about the law, and asking me about how extensive this is and 

whether or not it exceeded it, frankly, I am less good there, and 

I would defer to legal counsel. I am not trying to duck this. I would 

just—that is not something I answer or can answer as well as I can 

an economic question. 

Senator JOHANNS. I can see your uneasiness, and I think I understand it. USDA has gone beyond its authority here, has it not? 

Mr. GLAUBER. Well again, Senator, I think that again the agency 

certainly in putting forward the rules did not feel so, and that is 

what I can tell you. I have not been involved in legal discussions 

on this bill. 

Senator JOHANNS. I see everybody behind you very uncomfortable by this line of questioning. 

Thank you, Madam Chair. 

Chairwoman STABENOW. You are welcome. Thank you very 

much. 

Senator Thune. 

Senator THUNE. Thank you, Madam Chairwoman, and I appreciate our panel being with us today and thank you for convening 

this hearing along with the Senator from Kansas. 

It is an important subject as we get into the next Farm Bill. And 

like every segment of agricultural production, the livestock industry is facing multiple challenges, including this year, natural disasters resulting in record-setting flooding in some areas of the country and record-setting drought in others. 

And I would suggest, Madam Chair, as we begin the debate, the 

upcoming Farm Bill, that along with drafting a bill that provides 

assistance for each sector of the agriculture community we need to 

look at the overall landscape of crop, livestock, energy and conservation programs to make certain that Federal farm program 

23 

policies do not result in inequitable treatment within agriculture or 

distort commodity and livestock prices and markets. 

And I appreciate the discussion on the GIPSA rule. That is something, of course, that has generated a lot of discussion in the livestock industry in my state and something that as USDA moves forward I hope that they will seriously consider the unique comments 

received on this rule, perform its own economic analysis of the impacts of the rule and work with those on both sides of the issue 

surrounding it, the rule, to come up with a final rule, and obviously 

one that it is not going to please everybody, but hopefully is workable and does not create administrative burdens or result in a lot 

of unnecessary litigation and the loss of livestock industry jobs. 

Mr. Glauber, if I could, I wanted to ask you a question to come 

back to biofuels. I appreciate that in your testimony you mentioned 

the dried distillers grains, which is byproduct of ethanol, can be 

substituted for corn and other feed grain ingredients in livestock 

rations. 

In my opening statement for today’s hearing, I mentioned just 

previously here that all sectors of the ag community need to be 

treated equitably by Federal farm policy. Would you agree that in 

this whole food versus fuel debate that goes on around the country, 

that USDA could and should be taking a stronger stand and publicizing the fact that 17 pounds of DDGs derived from each bushel 

of corn made into ethanol significantly offset the corn usage dedicated to ethanol production? 

Mr. GLAUBER. Senator, there is no question that the distillers 

dried grains and other byproducts have been very, very important 

additions to the feed market, and this has evolved. Certainly, we 

have seen this rapid increase in corn use for ethanol and as a consequence a rapid increase in distillers dried grains. 

I think the market has taken a little bit of time to adjust. You 

might remember initially most of this was being exported just because it just was not showing up in feeds. Now certainly, it does 

better with beef and hogs, but we are seeing it now where we are 

seeing it show up in feeds pretty much everywhere in the country 

now and is a very, very important component. 

And we do—you know. I think it was mentioned in my testimony 

about the importance of the DDGs. I know the Economic Research 

Service puts out a table every year on feed, various feed stuffs as 

well. 

Senator THUNE. I raise that point simply because critics of corn 

ethanol claim that 38 percent of corn usage is dedicated to ethanol 

production, which is not necessary accurate due to the amount of 

DDGs that are consumed as livestock feed. 

Most would agree that the so-called ethanol push began back in 

2002. Since 2002, according to the USDA, corn harvested acres increased from 76.5 million acres in 2002 to 87 million acres in 2010, 

which is an increase of 10.5 million acres, a production increase 

from 9 billion bushels in 2002 to 12.4 billion bushels in 2010, which 

is an increase of 3.4 billion bushels of corn. How much of this increased corn acreage would you attribute to the growth in the use 

of ethanol. 

Mr. GLAUBER. Well, I think the question that I just answered a 

little earlier; I think that most of that increase has certainly been 

24 

due to ethanol production. We have seen again the increase from 

ethanol use from about 1 billion bushels for corn use for ethanol, 

from 1 billion to the current 5. If you look at that, most of that increase has come through both increased area and increased yields. 

Senator THUNE. What is the average according to your estimations, bushels per acre, today? 

Mr. GLAUBER. In terms of yields? 

Senator THUNE. Yes. 

Mr. GLAUBER. If we are looking at trend yields, somewhere, 162 

or so. 

Senator THUNE. Where do you think that number is 10 years 

from now? 

Mr. GLAUBER. Well, again, if we are looking at—I should look behind me to see my friend who has the baseline here. But we are 

looking at roughly a 20 bushel per acre increase. Essentially, our 

baseline has an increase, again a most increase, of around 1 percent or so, 2 percent. We are looking at about a 2 bushel increase 

per year. 

Senator THUNE. But you think that yields are going to continue 

to increase and technology is going to continue to improve? 

Mr. GLAUBER. Right. 

Senator THUNE. And production in this country. 

Mr. GLAUBER. Right. 

Senator THUNE. Yes, I do not disagree with that. I think that 

much of the success that we have seen in the last 30 or 40 years 

in agriculture. We have been able to become much more efficient 

and get a lot more production for what we invest in it. So I suspect 

that that is going to continue, and I think that the issues that we 

have today, this food versus fuel debate, probably 20 years from 

now are going to look a lot different because of that. 

But I see my time has expired. Madam Chairman, I thank you. 

Chairwoman STABENOW. Thank you very much. 

Because of the interest on the Committee and the members, we 

are going to do a second round of just two minutes if anyone wants 

to ask an additional question. 

And let me just ask one question, Mr. Glauber, and that relates 

to trade, and trade barriers more specifically, because I am very 

concerned that we continue to have many countries that have unscientific trade restrictions on livestock exports—Taiwan and beef, 

as we know; China and beef; Russia and pork. And the USTR’s 

2011 report on SPS measures facing U.S. producers and products 

is over 100 pages long. 

So in your view, what countries with unscientific SPS restrictions 

present the greatest potential for U.S. livestock exports in the future, and what is the USDA doing to help our livestock producers 

gain access to those markets? 

Mr. GLAUBER. I think in general, and I will try to be brief here, 

certainly the growth markets have been Asia, and I think that in 

particular markets like China, Korea, Taiwan, Japan. I mean that 

is where we have seen the growth. Japan, less so now, of course, 

because it is a developed country. 

But also, I think people in a long run look at countries like India 

as potential, certainly for poultry, and let me bring in another livestock product—dairy. 

25 

But I think that what is needed is engagement, bilateral, as it 

takes a lot of work, and then through multilateral. I think trade 

agreements are very important things here. Now again, it is one 

thing to work on a tariff and lower a tariff. That is helpful, but it 

does not help you if you still have some SPS barrier or something 

like that or a technical barrier to trade. And that best can be done 

I think bilaterally, and that just takes a lot of work. 

Chairwoman STABENOW. I agree with that. I also would just say 

we need to keep pushing on those trade barriers as we are moving 

forward and looking more broadly at trade. 

Senator ROBERTS. Senator ROBERTS. Dr. Glauber, I know that you are an economist, and thank you for your contribution. 

Thanks to all of you, and your dedication and your hard work. 

I want to follow up on the commentary by Senator Johanns. It 

troubles me. In April, there was a meeting, and Joe, you were there 

and the Office of General Counsel, others, and the question was 

raised in regards to the GIPSA rule as reflecting just precisely 

what the Congress did not want in regards to congressional intent. 

And I think we were told at that particular that the face of the 

statute was such that congressional intent did not matter. Now 

that is the case. 

I guess my question to all of you, and I am not going to have you 

answer this because it is not within your purview and not your 

pasture. But if that is the case, do conferences matter between the 

House and Senate? Do amendments matter? Do these hearings 

matter? Do we matter? Do votes matter in regards to what was 

passed, what was defeated? 

For the life of me, I do not understand the Office of General 

Counsel or whoever spoke at that particular meeting, or whatever 

group of lawyers spoke at that particular time, telling us that we 

do not matter in regards to congressional intent because the face 

of the statute was such that we did not matter. I tell you the face 

of the statute is an ugly statute. 

Now I do not know if any one of you want to try that one. That 

is just a speech by me with about 23 seconds left to go, but that 

makes me hot. And we got enough lawyers down there that we can 

at least have some maybe come up and visit with us personally, 

but perhaps in a hearing, to explain to me why GIPSA rules are 

passed that are not in terms of congressional intent, and the congressional intent, we are told and staff is told that we do not matter. That is not right. 

I think I will leave it at that. 

Chairwoman STABENOW. Thank you very much. 

We will turn to Senator Grassley. 

Senator GRASSLEY. I do not want to ask a question, but I think 

more take advantage of an opportunity to comment on something 

that Senator Thune just brought up, and not to find any fault with 

any of the answers that were given, but to follow on and say that 

38 percent that Senator Thune talked about really becomes about 

20 or 23 percent of the corn crop that is actually used for ethanol. 

And that brings me to some comments that the next panel is 

going to give. I read here about people that still think corn prices 

in 2006 ought to be $2.50 because by 2008 it costs the industry $1 

26 

billion more to feed them. But I just wonder if the people coming 

up on the next panel realize you cannot raise corn for $2.50 a bushel. You know. Do you want corn or do you not want corn? It costs 

about $4 or a little bit more to raise corn. 

Then I wonder if they realize only about 3 percent of the coarse 

grain worldwide is used for ethanol, just 3 percent. And we are in 

a worldwide market of grain, I hope everybody understands. There 

has got to be some realism brought to this. 

And then finally, there is a statement made that finally we have 

to realize that ethanol is dividing rural America. You know, dividing farmers. Well, it is people like this that do not know the facts 

about ethanol that are really dividing rural America. 

So I want the record to show that I take great exception to the 

testimony that badmouths ethanol when, quite frankly, you have 

got a choice between having ethanol and having higher grain prices 

because the more market for corn, or maybe you want to pay out 

billions and billions of dollars for farmers in the safety net for the 

farm program. 

Thank you. 

Chairwoman STABENOW. Thank you very much, Senator Grassley. 

Senator Baucus, welcome and you are welcome to—we are doing 

a two-minute round, but you are certainly welcome to take five 

minutes if you would like to do that. 

Senator BAUCUS. Thank you, Madam Chairman. 

Basically, I am most concerned about the availability of brands. 

Can States, if they want to use brands as a system to identify the 

cattle, use brands? Will that be recognized by USDA and by other 

States? 

We have a very steep history of brands in our State, in Montana. 

I come from a family ranch. Our ranch brand is Bar O Wine Glass. 

That is Bar Over Wine Glass. And we also have Flying V. 

We are a state that pretty much utilizes brands. Agriculture is 

our number one industry still, and the livestock side drives much 

more revenue even than the grain side. So can somebody answer 

my question as to the degree to which Montana will be able to use 

brands as an international ID system? 

Dr. PARHAM. Thank you, Senator Baucus. And indeed, Montana 

will, and you specifically will be able to, continue to use your 

brand. 

What we have done with the new traceability rule is look at what 

some States were doing traditionally. With the flexibility and the 

transparency we have going forward there are, I believe, 14 States 

that currently use the brand that will still be able to use that 

brand going forward, particularly if those States can agree for any 

animals that are moving in interstate commerce, they will be permitted to use that brand. 

Senator BAUCUS. Is there going to be any concern about that? Is 

that going to be clear? Is there any ambiguity? 

Dr. PARHAM. We do not believe there is any ambiguity, and we 

have taken great strides to educate through the various meetings 

that we have had with producers, with States, with tribes, to make 

it very clear because they are giving us much of the input that we 

are using to go forward with the traceability rule. And we believe 

27 

that it will be very, very clear, abundantly clear, that brands will 

be permitted as we move forward. 

Senator BAUCUS. Good. 

Thank you, Madam Chairman. I have lots of questions, but 

frankly, I am more interested in the next panel. So, thank you very 

much. 

Chairwoman STABENOW. Thank you very much. 

Senator Boozman? 

Senator Johanns? 

You are passing to Senator Johanns? 

Senator JOHANNS. I will go next? 

Senator BOOZMAN. No. Well, I will go and then—— 

Chairwoman STABENOW. Okay. Terrific. 

Senator JOHANNS. Is that all right, Madam Chair? 

Chairwoman STABENOW. That is absolutely fine. 

Senator JOHANNS. Dr. Glauber, as you know, the issues that are 

being analyzed in the GIPSA rule, in the proposed GIPSA rule, 

have been studied on many occasions by the USDA. In fact, at least 

in one area, there was a very a very extensive study that came out 

right about the time that I went back home to run for the Senate. 

Are those studies being factored into your analysis, your economic 

analysis on the GIPSA rule? 

Mr. GLAUBER. Yes, absolutely. The study in particular that you 

are mentioning was often called the RTI study. It was a multimillion dollar study. As you remember, it was contracted out to 30- 

some odd researchers, extensive work done on beef, pork and lamb, 

if I am not mistaken. We have looked at—we have been spending 

a lot of time with that study to look at the economic value of alternative marketing arrangements, which was one of the focal points 

of that study. 

Senator JOHANNS. Let me ask you again just a really direct question. My preference always is to be direct. At the end of all of this, 

let’s say you do your economic analysis and it is contrary to the position that you have heard from the cage, do you feel you will have 

the ability to lay that down and articulate your position on that 

rule? 

Mr. GLAUBER. Senator, the Secretary said to me he wanted me 

to have—he was having a hands-off policy, that he was going to 

allow me to do the analysis, and that is what I intend to do. 

Senator JOHANNS. Good for you. 

Thank you, Madam Chair. 

Chairwoman STABENOW. Thank you very much. 

And now we will return to Senator Boozman. 

Senator BOOZMAN. Thank you, Madam Chair. 

I think the lesson that we have learned today is if you want to 

not have to answer a lot of questions and be safe with your testimony you need to be up here with Dr. Glauber in the future. 

[Laughter.] 

Senator BOOZMAN. I would just like to add, and you can comment, Dr. Glauber. But as an economist, the GIPSA rule, you know 

we are seeing so much uncertainty in the economy right now. People really do not know what the rules are going to be, regardless 

of the profession that you are in. I am in health care. You know, 

it is just up in the air. 

28 

I guess I would say that with this rule, the proposed rule, potentially being so far-reaching. We have established that our producers, our processors, they are not doing great. They are trying 

to hold, to tread water. With the high costs that are going to come 

up in feed stock—you name it—the energy costs, all of these things 

that are pounding away on them besides the flooding, the drought, 

and this and that. It just seems like that the idea of putting such 

a far-reaching thing, creating more uncertainty for the producers, 

the processors, that that is going to be bad for them down the line, 

as far as the uncertainty. 

Can you comment as to what that will do, short-term, to the 

economy of that group because of that? I mean is that a reasonable—— 

Mr. GLAUBER. What I would say, and it addresses your point, is 

I think that certainly you look for regulations to provide clarity so 

that the environment in which you are going to do your economic 

dealings, et cetera, are very clear, how to work through this. And 

I think that is the challenge of a regulation like this is to provide 

that. 

A lot of the comments, in particular for those who oppose the 

rule, opposed it because of the regulatory uncertainty. That is the 

risk of litigation, et cetera, that they thought the rule might impose. Certainly, we are looking at those comments as we do these 

analyses. 

Senator BOOZMAN. Thank you, Madam Chair. 

Chairwoman STABENOW. You are welcome. 

And thank you very much to each of you. We appreciate your 

service. 

Senator BAUCUS. Madam Chair, if I might just be brief. 

Chairwoman STABENOW. Yes, Senator Baucus. 

Senator BAUCUS. I want to recognize Chief White with NRCS, 

from Montana. He spent several years in Montana, where he was 

a State conservationist and did a great job. 

I think, Chief, are you involved in our efforts in Montana to protect the sage grouse so it is not listed? 

Mr. WHITE. Yes, sir, deeply. 

Senator BAUCUS. Okay. Thank you very much. 

I might say that we have a lot of sage grouse in Montana, but 

like a lot of the Endangered Species Act, it is quite controversial. 

But thank you for your efforts. I think we have got it managed up 

to this point, but I want to thank you. 

Thank you. 

Chairwoman STABENOW. Thank you very much. And again, 

thank you to each. We will follow up with any questions that members have in writing, and we would ask our second panel to join 

us at this time. Thank you. 

Welcome. We appreciate all of your joining us today for this very 

important topic. We have your written testimony. We will ask you 

to keep your testimony to five minutes as an opening statement so 

we have enough time to ask questions. 

And I want to start by introducing our first panelist, Rick 

Sietsema. We are so pleased to have you here, Rick, of Sietsema 

Farms in Allendale, Michigan. Rick and his brother, Harley, operate a turkey and swine farm, along with a feeding/manufacturing 

29 

facility. The Sietsema Farm family raises 1.2 million turkeys and 

over 700,000 hogs annually. The farm was also instrumental in creating the Michigan Turkey Producers which is a local co-op in 

Michigan. 

So, welcome. Glad to have you here. 

And then secondly, our second panelist is Mr. Dennis Jones. Mr. 

Dennis Jones is a fourth generation farmer who operates Jones 

Farms in Bath, South Dakota. Mr. Jones is part of the James Valley Pork Cooperative as well as a member of the South Dakota 

Farmers Union. He has also been on the Board of Directors of the 

National Corn Growers Association, CoBank and the South Dakota 

Wheat Cooperative. 

And I am going to turn to Senator Roberts for our next two introductions. 

Senator ROBERTS. Well, thank you, Madam Chairwoman. 

It is a pleasure to welcome Steve Hunt, the CEO of U.S. Premium Beef back to the Committee. He was one of the founders of 

U.S. Premium Beef way back in 1996, which today is one of the 

great success stories of the beef industry. The USPB producer 

membership is the majority owner of National Beef Packing Company, the nation’s fourth largest beef processor, headquartered in 

Kansas City with operations in Dodge City. 

So, welcome back, Steve. Thank you for your partnership in agriculture, all of your suggestions and your counsel. 

I would also like to welcome Frank Harper. Frank is a farmer 

and beef producer from Sedgwick, Kansas. He is one of our what 

we call up-and-coming leaders in Kansas. He will be the President 

of the all-powerful Kansas Livestock Association next year. 

Welcome, Frank. When you are riding point on that outfit, always make sure you check over your shoulder just to make sure 

they are still there. 

Chairwoman STABENOW. Okay. And we would also like to welcome Mr. Michael Welch. Mr. Welch is the President and CEO of 

Harrison Poultry. Mr. Welch has served on the National Chicken 

Council’s Board of Directors since 2002, was elected Chairman of 

the National Chicken Council in October, 2007, serves as Chairman 

and Director of the Georgia Poultry Improvement Association and 

was Director of the U.S. Poultry and Ag Export Council International Poultry Development Program. 

So we welcome you as well. 

And I will turn to Senator Baucus for the last introduction 

Senator BAUCUS. Thank you, Madam Chairwoman. 

Last, but not least, Hans McPherson is from Stevensville, Montana. For those of you who do not know, Stevensville is in the 

beautiful Ravalli County. A lot of people move to Stevensville and 

throughout Ravalli County. In fact, a lot of Californians move to 

Ravalli County, matter of fact. 

It is diversified farm that Hans has operated since 1953, and a 

long list of accomplishments, and I will just name a few—many 

years, Vice Chairman of the Ravalli County Service Agency, over 

the years 2006 to 2009, Chairman of the Board of Directors of the 

Supply Ditch Association in his home town, and Hans is currently 

serving on the Board of Directors with the Montana Farm Bureau 

and Montana’s Farm Service Agency State Committee. 

30 

We bumped into each other at the airport. What is today? Tuesday. Yesterday morning, and had a little chat in Bozeman, Montana. 

It is good to see you, Hans, and thank you very much for taking 

the time. 

Chairwoman STABENOW. Well, thank you very much to each of 

you, and we will start with Mr. Sietsema. Welcome again. 

STATEMENT OF RICK SIETSEMA, FARMER, SIETSEMA FARMS, 

ALLENDALE, MI 

Mr. SIETSEMA. Thank you. Good afternoon, Chairwoman Stabenow, Ranking Member Roberts and the members of the Committee. 

I am Rick Sietsema, Partner and CFO of Sietsema Farms and our 

related businesses of Allendale, Michigan. I want to thank the 

Committee for inviting me to discuss the state of the U.S. livestock 

industry, and today I will be speaking on behalf of Sietsema Farms 

and the National Turkey Federation. The National Swine Producers are also in support of my testimony. 

Sietsema Farms production facilities are located in West and 

Central Michigan. We are a multigenerational family-owned business that has its roots deeply embedded in agriculture. As a member of the Michigan Turkey Producers Co-Op, we raise nearly a 

quarter of 4.6 million turkeys produced and marketed both domestically and internationally. As a whole, Michigan Turkey Producers 

has an economic impact in Michigan of over $120 million. 

Sietsema Farms and partners are also involved in the swine industry as a genetic producer of Newsham Genetics and supplier of 

Newsham Genetics across the Midwest. The economic impact of 

Michigan and neighboring States and Ontario exceeds $135 million, 

plus that of many, upwards of 100 family-owned and operated 

farms which we contractually grow and finish swine with. 

With our agricultural focus at Sietsema Farms, we have been 

proactively working with NRCS and environmental programs. We 

have enrolled our 1,500 acres and additional conservation practices 

in the Conservation Security Program, and an additional 13 acres 

in field buffer strips in the Conservation Reserve Program, and in 

the EQIP program we have utilized funds to construct several manure storage facilities. 

In the near future, our turkey litter will be delivered to our new 

state-of-the-art biomass gasification facility. With this facility, the 

turkey production will be a closed environmental loop, generating 

our electric and gas needs for our feed production and our feed 

mill, and greatly reducing our carbon footprint. 

USDA Rural Development has been a significant resource contributing to our ability to invest into agriculture. When our market 

for turkeys closed in the late 1990s, USDA Rural Development loan 

guarantees made it possible for us to get access to capital to facilitated the construction of both a turkey processing plant and a further processing and cook plant. USDA Rural Development was also 

significant in our ability to fund the gasifier facility mentioned earlier, which will be the first of its kind in the world. 

One challenge currently facing our livestock industry is production costs, as mentioned earlier by USDA. Feed is the most important of these. With the current runup in grains due to the short 

31 

supply caused by both production and by the ethanol mandate, that 

has put us in uncertain terms for the livestock industry. 

Our biggest reason for the industry not being more optimistic, 

facing some of the stronger prices that we are currently seeing with 

the increase in turkey and pork supply, is to these uncertain input 

costs. Corn and other feed ingredients have risen to new levels, 

corn going from $4, $4.50, $5 to $7 in barely a year, and in this 

past month surpassing the $7 mark. What the livestock industry 

is looking for is reform in the existing ethanol policy, a safety net 

that ensures proper corn prices and availability, with less volatility 

in the future. 

Another challenge today is the marketing rule proposed last 

summer by USDA’s GIPSA. First is the competitive injury position, 

which will make it easier to sue for regulatory action against livestock and poultry processors. Second is the provision that requires 

processors to virtually guarantee growers can recoup an 80 percent 

of any capital investments. The third is a series of provisions that 

would discourage competitive contracts in which growers can receive premiums or deductions based upon the performance of the 

livestock in their care. 

Studies have shown the negative impacts of this GIPSA rule in excess of $360 million annually in the turkey industry and more 

than $400 million in the pork industry. A study conducted by John 

Dunham and Associates showed job losses of 104,000 and a reduction in national gross domestic product by $14 billion annually. 

How can government help? Though most people in the livestock 

industry prefer minimal government involvement, there are ways 

that you have been helping and there are ways that you can continue to ensure the economic viability of our industry. 

Continued funding of EQIP is imperative for our industry’s ability to implement many conservation practices. We are pleased that 

the 2008 Farm Bill kept 60 percent of these funds for animal agriculture and would hope that these funds would continue in the 

next Farm Bill. 

Flexibility to the existing EQIP program for innovative environmental stewardship programs and projects would be a positive development, making it easier for livestock and poultry farmers to access these funds. Farms should not be restricted to the access of 

these resources based upon size, financial benchmarks or animal 

units. 

As a farmer and as American farmers trying to supply food stuffs 

for the world population as we move forward, we need to have 

these tools available to us. 

In Michigan, we have a MAEAP program of which more than 

1,000 farms have been MAEAP-verified and another 10,000 are in 

the process. Through that process, in the seven years Sietsema 

Farms has been involved in the MAEAP program, we have implemented many projects with NRCS and MAEAP, including field 

buffer strips, filter strips, grass waterways, conservation tillage 

and residue management, shallow water wildlife projects, nutrient 

management, irrigation management, manure storage facilities and 

fuel security. 

Thank you for the opportunity to discuss this with you as a Committee, and I will look forward to your further questions. 

32 

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

90 in the appendix.] 

Chairwoman STABENOW. Thank you very much for coming. 

Mr. Jones. 

STATEMENT OF DENNIS O. JONES, PORK PRODUCER, SOUTH 

DAKOTA FARMERS UNION, BATH, SD 

Mr. JONES. Chairwoman Stabenow, Ranking Member Roberts 

and members of the Senate Committee on Agriculture, thank you 

for inviting me to testify today. 

I am a fourth generation cattle and hog operation in South Dakota. Our farm is also part of James Valley Pork, a cooperative. 

Our cooperative finishes 40,000 hogs annually. By being part of a 

larger group of producers, we had hoped to find power in numbers 

to get better prices for our hogs. We found that the collective marketing power of 40,000 hogs was not enough to get a fair price. 

Rural America has lost more than 1.1 million livestock farms in 

the last 30 years. In 1980, there were approximately 1.3 million 

beef cattle operations across the country, but in 2010 there were 

only 742,000. This is a decline of approximately 42 percent. 

In swine, the reduction has been even more dramatic. In 1980, 

there were 660,000 hog farms, but in 2010 there were only about 

67,000 left. That is a 90 percent drop. 

As more and more farms and ranches have closed, concentration 

among livestock producers has become a huge issue, not just for 

prices but for food safety as well as security. Today, there are few 

large buyers of livestock. The top 4 packers have control of 81 percent of the cattle for slaughter in the U.S. The top 4 swine producers control about 65 percent of the hog sales. These statistics 

make it clear that concentration is on the rise in the livestock marketplace and competition is declining. 

A year ago, USDA proposed rules to address related anti-competitive practice in the livestock industry. GIPSA has received approximately 60,000 comments on the proposed rule. The USDA is 

still reviewing these comments and conducting an economic study 

before issuing the final rule. 

The GIPSA rule will help ensure farmers transparency, protection and bargaining rights for producers. This will help restore at 

least a degree of competition in agricultural markets. A lack of 

market power is just one of the reasons there are fewer livestock 

farmers and ranchers. 

The reforms in the GIPSA rule are long overdue. They respond 

to the criticism that has come from the farm groups, the Government Accountability Office, the USDA Inspector General, about the 

lack of enforcement of the PSA. The rule is more important today 

than 80 years ago. The proposed rule defines and clarifies terms in 

the PSA in order to make enforcement more effective and to provide clarity to all players in the livestock market. 

Critics of the proposed rule argue that its definition of unfair 

preference is too broad and therefore will prohibit buyers from paying a premium to livestock producers who produce a premium product. This is not the case. The rule simply requires that packers or 

processors explain why they provide special pricing and contract 

terms to certain producers. 

33 

The GIPSA rule will reduce litigation in the industry by clarifying the PSA. The GIPSA rule, also known as the Farmers’ and 

Ranchers’ Bill of Rights, needs to be implemented without further 

delay. 

The 2008 Farm Bill made a critical and greatly appreciated investment in conservation programs. One program that is popular 

with livestock producers is the Environmental Quality Incentive 

Program, or EQIP. Through EQIP, the Natural Resources Conservation Service provides low-cost share of financial and technical 

assistance to farmers and ranchers to install and maintain conservation practices. Conservation practices like EQIP give farmers 

and ranchers the tools necessary to sustain the natural resources 

we depend on. 

While producers face many challenges in today’s economy, they 

also have many opportunities to benefit. This hearing is an opportunity for all aspects of the livestock sector to be reviewed. As such, 

I urge the Committee to consider the possibility of incorporating a 

grain buffer stocks program, also known as a reserve, in the next 

Farm Bill. Livestock producers ought to be especially interested in 

a mechanism to better control the volatility of feed costs. That 

would make livestock production more conducive to longer-term investment. It would help the next generation of farmers and ranchers get started. 

Thank you for the opportunity to visit with you and share my 

concerns. Please refer to my written testimony for further detailed 

information, and I welcome any questions. 

[The prepared statement of Mr. Jones can be found on page 70 

in the appendix.] 

Chairwoman STABENOW. Thank you very much, Mr. Jones. 

Mr. Hunt. 

STATEMENT OF STEVEN D. HUNT, CHIEF EXECUTIVE 

OFFICER, U.S. PREMIUM BEEF, LLC, KANSAS CITY, MO 

Mr. HUNT. Chairwoman Stabenow, Ranking Member Roberts, 

members of the Committee, I am Steve Hunt, CEO of U.S. Premium Beef. 

Formed in 1996, our company is the producer and majority 

owner of National Beef Packing Company. The intent of our founding members was to create a company that would link producers 

and consumers through ownership of meat processing and marketing. Over 21 producers from 36 States have marketed cattle 

through our company. We have paid more than $183 million in premiums to those producers. Those premiums came as value-based 

premiums through our many programs. 

I would like to address two issues that are critical to the U.S. 

beef industry—trade and the GIPSA rule. 

Much of the success in 2010 and in the future can be tied to our 

export markets. Last year, the industry set a record for the value 

of beef exports of $4 billion. That equated to $153 per head. 

Given the international consumer demand for our products, it is 

critically important that Congress pass free trade agreements with 

South Korea, Colombia and Panama as soon as possible. Yearly exports of U.S. beef to South Korea could increase to as much $1.8 

billion if this agreement is fully implemented. Without the FTA, 

34 

our access to their 49 million consumers will decline as South 

Korea increases trade with other countries with FTAs. 

It is equally important that we continue to work with getting 

Japan to move from accepting cattle of less than 21 months of age 

to at least 30 months of age, which could add $1 billion to our exports. 

Next, I would like to talk about the proposed GIPSA rule. First, 

the proposed rule calls on USDA to scrutinize transactions where 

producers are paid more than an average price. Due to our valuebased strategy, every lot of our cattle will fall under this scrutiny. 

A burdensome requirement to present private profit and loss information to a government agency on every single lot of cattle sold 

will be very burdensome. 

As a result, variable pricing necessary to attract cattle to fit our 

value-based programs—those are programs such as natural cattle, 

age and source-verified and branded--will be replaced with potentially a single-price commodity bid. The method used by USDA to 

administer such practices is critical, but to date unclear. 

We believe the unintended consequences would be especially 

harmful to small producers the rule is purported to support. Our 

records show that producers of all sizes benefit from our valueadded programs. However, it is our smallest producers that have 

earned the largest premiums. 

Here are the facts: Through 2010, we have purchased more than 

8 million head of cattle through our program. In analyzing the top 

25 percent of those cattle delivered since we began, the group of 

producers by segment that delivered the highest premiums were 

those that delivered less than 250 cattle per year, at an average 

premium of $63.48 per head. The second highest, those that delivered less than 100 cattle a year earned the second highest premium. 

Based on our experience, I believe this rule will burden the small 

producers who rely on these value-based programs to compete with 

the economies of scale that large producers enjoy. 

The second issue is lowering the legal threshold requirement 

from proving harm to the marketplace to harming an individual. 

Proponents of this proposed rule believe that if a deal is not 

reached in the marketplace between a cattle producer and processor the producer should have the right to sue the processor instead of the current threshold, which holds substantial legal precedent that the processor is liable if the actions were actually harmful to the entire marketplace. In other words, if negotiations fail 

between a buyer and seller, the producer could make a claim 

against the processor under this proposed rule. 

The broad and general nature of the rule opens the door for frivolous lawsuits. If a single producer can sue based on their thoughts 

of what is unfair, it is likely that price differences based on valueadded characteristics will continue and we will return to a commodity one-price-fits-all system. If that happens, both producers 

and consumers, who by the way have demanded these programs, 

will lose. 

Proponents to the rule responded to these concerns by asserting 

well, you know, processors get their chance to defend themselves 

in court. 

35 

Well, Madam Chairwoman, that is just simply not acceptable. 

When we are sued, our employees do not sleep, our bankers do not 

sleep, our investors do not sleep and I do not sleep. But more importantly, our customers do not sleep. They depend on us to supply 

products to their shelves at night, so when they open their doors 

in the morning they are open for business. 

The increased threat of frivolous lawsuits that this proposed rule 

will create is a risk no business can withstand. 

And by the way, this will change our behavior, in answer to the 

question earlier. 

In closing, I urge the Committee to insist on another comment 

period once the pending economic analysis is completed. This allows additional input on the rule to identify changes that will minimize the damage. 

I would encourage the Committee to make sure we put ourselves 

in a position to compete for export business. At the same time, I 

would ask you to scrutinize proposed government regulations that 

will result in rolling back the vast improvements that have helped 

make U.S. beef the product of choice, not only in the United States 

but around the world. 

Thank you. 

[The prepared statement of Mr. Hunt can be found on page 63 

in the appendix.] 

Chairwoman STABENOW. Thank you very much. 

Mr. Harper. 

STATEMENT OF FRANK HARPER, PRESIDENT–ELECT, KANSAS 

LIVESTOCK ASSOCIATION, SEDGWICK, KS 

Mr. HARPER. Madam Chairman, Senator Roberts and members of 

the Committee, my name is Frank Harper, and I have a cow-calf 

and cattle backgrounding and a farming operation near Sedgwick, 

Kansas. I am President-elect of the Kansas Livestock Association. 

I serve on the Board of Directors of the National Cattlemen’s Beef 

Association, of which KLA is an affiliate. I am very pleased to be 

here today. 

KLA is a trade organization representing nearly 5,500 members 

on legislative and regulatory issues. KLA members are involved in 

many aspects of the livestock industry, including seed stock, cowcalf and stocker production, cattle feeding, dairy production, grazing land management and diversified farming operations. The beef 

industry is a key segment of the Kansas economy, and the Kansas 

beef industry is a major piece of the U.S. beef industry. 

KLA members believe the livestock industry is best served by the 

process of free enterprise and free trade. Even with its imperfections, free trade is relatively more equitable than regulated and 

subsidized markets that tend to retard innovation and distort production and market signals. KLA members oppose attempts to narrow the business options or limit the individual freedom of livestock producers to innovate in the management and marketing of 

their production. 

KLA and NCBA continue to strongly oppose the proposed regulation commonly referred to as the GIPSA rule issued by the Grain 

Inspection, Packers and Stockyards Administration last year. In 

short, U.S. producers are concerned the GIPSA rule would greatly 

36 

expand the role of government in marketing livestock and eliminate producers’ ability to market livestock, to capture the benefits 

of their efforts to improve the quality of their livestock. 

Over the years, I have invested in genetics that have helped me 

improve the quality and consistency of the calves I produce. To capitalize on this investment, I retain ownership of the majority of my 

calves and feed them in a commercial feed yard. This allows me to 

market my calves through U.S. Premium Beef as certified Angus 

beef and other programs that allow me to earn premiums for my 

high quality cattle. 

The GIPSA rule would require purchasers of my cattle to justify 

paying more than a standard price for my livestock. If my competitors do not agree with the justification the packer offers for paying 

me more than the standard price, the packer may be sued. 

Common business sense tells me it would not be long before the 

packer no longer would be interested in our agreement. This means 

I will be back to selling cattle for the same average price as everyone else. My investment in superior genetics would be lost. 

It is clear to us the proposed rule will make forward contracting 

and other alternative marketing arrangements subject to so many 

regulatory hurdles and legal risks that the effect, whether intended 

or not, is the elimination of these marketing options. Without the 

consistent supply provided by these arrangements, processors likely 

will be forced to reduce or eliminate branded and natural beef programs that have helped lead a resurgence in beef demand. 

The rule also goes far beyond the intent of Congress. Members 

of this Committee will recall several of the proposals contained in 

this rule were either defeated or withdrawn during consideration 

of the last Farm Bill. We strongly urge you to take action to prevent the implementation of this rule. 

Another area of concern is country of origin labeling. Recent reports indicate the World Trade Organization will rule in favor of 

Canada and Mexico in their complaint against the U.S. mandatory 

COOL program. It is in the interest of the U.S. beef industry to resolve this dispute before retaliatory action is taken. KLA strongly 

encourages the inclusion of language in the next Farm Bill to address the WTO finding. 

For additional issues, including comments regarding the next 

Farm Bill, I would refer you to my written comments. 

Again, thank you for the opportunity to testify here today, and 

I welcome any questions when the time is appropriate. Thank you. 

[The prepared statement of Mr. Harper can be found on page 54 

in the appendix.] 

Chairwoman STABENOW. Thank you very much. 

Mr. Welch. 

STATEMENT OF MICHAEL WELCH, PRESIDENT AND CEO, 

HARRISON POULTRY, INC., BETHLEHEM, GA 

Mr. WELCH. Good afternoon, Chairman Stabenow, Senator Roberts and members of the Committee. Thank you for the opportunity 

to participate in this important and timely hearing on the issues 

impacting the state of livestock and poultry and on behalf of the 

National Chicken Council. My name is Michael Welch, and I am 

President and Chief Executive Officer of Harrison Poultry in BethVerDate Nov 24 2008 01:22 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 C:\DOCS\71631.TXT MICHA
37 

lehem, Georgia. I have been President of Harrison Poultry since 

1992. 

Harrison Poultry is a small, privately held, 52-year-old company 

operating 1 slaughter plant, producing a variety of products with 

more than 1,000 outstanding employees. Over 125 family farmers 

contract to grow broilers, and an additional 40 family farmers contract to produce hatching eggs for the company-owned hatchery. 

Each week, Harrison Poultry processes more than 6 million pounds 

of broilers on a live-weight basis. Some of Harrison Poultry growers 

have been growing broilers since Harrison Poultry became 

vertically integrated more than 40 years ago, even though the company contract is considered a flock-to-flock arrangement. 

Madam Chairman and Committee members, as you can appreciate, there are many issues impacting the state of the chicken industry as I speak to you today. The main issues of concern to the 

poultry industry: 

Number one is the corn-based ethanol policies and rules need realignment. The policies and rules of the game for corn-based ethanol must be rebalanced and the playing field must be leveled to 

permit chicken producers and other animal agriculture producers 

to more fairly compete for the very limited supplies of corn this 

year and most likely for the next few years. For more than 30 years 

the ethanol industry has had an opportunity to learn how to compete in the marketplace. It is now time, actually well beyond a reasonable time, for ethanol manufacturers to move beyond government subsidies, federally mandated usage and market protection 

from foreign competition. 

Broiler companies since last October, when the sudden, unexpected runup in corn and other feed ingredient costs incurred, have 

tried to weather the storm of very high, volatile corn prices, but 

now companies can no longer withstand the storm. Companies are 

trimming their production plans which means growers will receive 

fewer chicks to grow into market-ready broilers and processing 

plant work shifts are being reduced or even eliminated. With less 

work time, more and more workers are being laid off. 

A broiler company in Georgia just announced 300 workers will no 

longer be needed. 

Also, this month a fourth generation family broiler company in 

Delaware filed for bankruptcy protection while it works to secure 

another owner for its assets. 

Further, another company in Arkansas last week announced 

plans to consolidate two processing plant operations into one location and will similarly combine two hatcheries into a single facility. 

This consolidation will result in 223 jobs being eliminated. The 

company, in its announcement, indicated that eliminating these 

jobs will give it a better chance to survive. 

Earlier this year, a third generation broiler company with a complex in North Carolina and another complex in Arkansas succumbed to the financial stress of high feed costs. The result in this 

case is that its complex in North Carolina is now owned by a foreign company and the Arkansas complex is now owned by another 

broiler company that not only had the borrowing capacity to purchase the assets but reserves that will undoubtedly be necessary to 

38 

carry financial losses until the broiler market improves to at least 

a break-even point. 

Banks and other lending institutions are telling these companies 

enough is enough, meaning sell your assets and repay your outstanding debt. I receive inquiries weekly, if not more often, from 

financial firms, broiler companies and others inquiring about my 

company’s interest in acquiring troubled assets in the broiler industry. What some analysts say about the broiler industry of 10 companies in 10 years may become a reality and perhaps sooner than 

in a decade. 

Although the Volumetric Ethanol Excise Tax Credit for cornbased ethanol is scheduled to sunset at the end of this calendar 

year, along with the import duty on ethanol, a sunset not so far 

on the horizon would be prudent. An Iowa State University study 

determined that VEETC results in 4 percent more ethanol, or 500 

million gallons, this year. This means that the VEETC costs about 

$11 per gallon for that additional ethanol. 

The provision of the Energy Independence and Security Act of 

2007 that generates the real demand for corn-based ethanol is the 

Renewable Fuels Standard. The RFS is essentially an immovable 

object even when there is an irresistible force. That is when the 

shortfall in corn supplies, as is in the current situation, RFS continues to be immune to the crisis in poultry and livestock. A more 

realistic trigger mechanism is needed to adjust the RFS. 

Madam Chairwoman, that is our number one issue. 

Our number two issue is the GIPSA that has been well stated 

here already in terms of the reasonable step to call a timeout and 

take over as the intent of the Congress we do not feel has been met 

by the agency, and then the three pending free trade agreements 

we would hope that Congress would take action. 

The National Chicken Council appreciates the chance to present 

here, and improving the state of the poultry industry not only helps 

poultry companies and poultry farmers, but more importantly will 

allow consumers of poultry products to continue to enjoy an ongoing adequate supply, appropriately priced, of animal protein at reasonable prices. 

[The prepared statement of Mr. Welch can be found on page 101 

in the appendix.] 

Chairwoman STABENOW. Thank you very much. 

Mr. McPherson. 

STATEMENT OF HANS MCPHERSON, RANCHER AND MEMBER, 

MONTANA FARM BUREAU, STEVENSVILLE, MT 

Mr. MCPHERSON. Thank you, Madam Chairwoman Stabenow and 

Ranking Member Roberts and members of the Committee for 

the opportunity to travel to Washington, D.C. today and participate in this hearing and voice my concerns about agriculture. I 

would also like to thank the man all Montanans know simply as 

Max for the invitation to come here. 

Mr. BAUCUS. Thank you, Hans. Appreciate that. 

Mr. MCPHERSON. You are welcome. 

I would like to ask you to look at my face. I want you to see the 

face of a 58-year-old American family farmer. I am the median age 

of the American family farmer. 

39 

I am, by no means, rich. I do not own a trophy ranch. I do not 

live in a trophy house or drive a trophy pick-up. I feel I am a pretty 

typical family farmer. 

I get out of bed each day with more to do than I will ever get 

done and often have to figure out how to do more with less, 

prioritizing what can wait and what needs to be done right now. 

I go to bed at night without the aid of sleeping pills but with a 

prayer and a belief that better days are ahead. Many people want 

to refer to the good old days. I have never been more optimistic 

about the future of farming. That is why I came here today to testify and to answer your questions. 

When Senator Baucus’s staffer, Alexis Taylor, called and extended the invitation to me, I did not immediately jump for joy and 

say oh, yes, I will hurry right over. I first had to figure out how 

I would pay for the trip, and did I feel, did I really feel that I would 

make an impact on you. My wife and I decided that it was worth 

the investment of time and money to give you the opportunity to 

hear from a real down-to-earth Bitterroot farmer. 

I feel that even though you hear from highly polished lobbyists 

with very elegant speeches on a daily basis, in reality, you probably 

are not much different from me and many other Americans who 

are tired of the lobbyists and activists. I do not want to totally 

downplay the importance of lobbyists because, in reality, organizations like the Farm Bureau and others are often the single voice 

of thousands of American farmers like myself, banded together to 

be heard. 

While I am very passionate about the future of agriculture, I also 

realize in reality that rural America is under attack by people who 

often have little understanding about the life and struggles on the 

farm. With issues like animal rights, horse slaughter, farm labor, 

banking, the American family farm needs your help. I also realize 

that there is great need to trim budgets. So as you and your staff, 

Senators, take the task of writing a new Farm Bill, it is with my 

hope that you will be able to protect those of us who provide the 

American people with the most abundant, safest and affordable 

food in the world. 

I hope that you have weighed my testimony and gave my 

thoughts careful consideration. It was written by me, not by a staff 

of researchers. 

Again, I want to thank you for your time and consideration 

today. I hope that you understand what I am trying to say, and I 

have to tell you it sounded a lot better on the tractor seat. 

[Laughter.] 

Mr. MCPHERSON. Thank you. 

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

85 in the appendix.] 

Chairwoman STABENOW. Well, thank you, Mr. McPherson. We 

really appreciate your being here, and everyone that is here and 

took the time, Mr. Sietsema as well, each of you, to be a part of 

this because this ultimately is about how we support all of your 

and how does the Farm Bill, how does it work for each of you. You 

are literally right where the rubber meets the road, and that is 

why we have these hearings, and that is why we very much appreciate your coming in. 

40 

I want to take a moment just to ask each of you as we look at 

the future, as we look at economic opportunity, and ask each of you 

what you think is the biggest opportunity for economic growth. 

Where is the opportunity? 

Mr. McPherson, you said you were optimistic. And maybe I will 

just start here and go this way across the panel. 

I also want, Mr. Sietsema, for you to talk about some of the innovations on your farm because it is really a tribute to you and your 

family, and what you have been able to do in the vast potential 

within the livestock sector to diversify and create value-added opportunities. 

But Mr. McPherson, let me start with you. You said you are optimistic about the future. What is the number one opportunity, do 

you think, that there is as it relates particularly to the livestock 

industry for economic growth? 

Mr. MCPHERSON. Well, I am optimistic—— 

Chairwoman STABENOW. You might need to push the button. 

Mr. MCPHERSON. Okay. I am optimistic about the future of farming and the future of livestock. We run a small cow-calf operation. 

We have about 250 mother cows. We sell the calves off of those 

cows in the fall and run about 500 yearlings. So we buy about 500 

yearlings each fall and feed them over the winter and run them on 

grass, and then we send them back to the Midwest to one of these 

other gentlemen’s States to finish them. 

The thing that gives me the most optimism about the future is 

the amount of people in the world that are hungry and that have 

money. And they are in developing countries, and they want to eat, 

and they want to eat American—well, I hope they all want to eat 

Montana beef, but they want to eat American beef and pork and 

chicken. 

I believe that the other area that gives me lots of hope is the research that has been done and the research that continues to be 

done, the crops that are being raised. In Eastern Montana, we have 

many sugar beet farmers, and their production with Roundup 

Ready sugar beets has raised their yields considerably, oftentimes 

making it more economical for them to stay in the sugar beet business. That is just one area of research. 

Chairwoman STABENOW. Well thank you. I appreciate that. So, 

research and global markets. 

I am going to ask just quickly before my time is up. 

Mr. MCPHERSON. Sure. 

Chairwoman STABENOW. Mr. Welch, if you were to name an economic opportunity for the future, related to livestock, what would 

it be? 

Mr. WELCH. Well, the condition of the poultry industry right now 

is survival at the moment, but the evidence of history proves that 

in the last 25 years the chicken industry has doubled its production 

and head count from 80 million chickens a week to now about 160 

million chickens a week, at the same time improved the—increased 

the live weight from 4 pounds average per bird to almost 6 pounds 

now. 

So if you take the head count and the weight increase, in a mere 

25 years we have tripled the production of broilers in the United 

States, which is a testimony to the animal itself and technology 

41 

and genetics that a chicken now can—we can make a live chicken 

with a little bit less than two pounds of feed to make a pound of 

live weight, which is incredible, efficient and cost effective. I would 

expect those situations to continue if we can get through this economic distress. 

Not only agriculture is one of our country’s proudest industries, 

and not only feed our own population. The effect we have had on 

feeding the world, we honestly hope that our task can continue in 

that. 

Chairwoman STABENOW. Absolutely. 

Mr. Harper? 

Mr. HARPER. Well, I see probably the biggest opportunity is 

meeting the challenge of providing food for a growing world. I think 

we have the opportunity to do our best to meet that demand, I 

think, and we can do that by not only utilizing but protecting our 

natural resources in the process. I think we have been blessed here 

in the United States with an abundance of natural resources. 

And I think some of the comments previously. I think we have 

been able to produce more with less, and I think that will continue 

to be what we strive to do, specifically in the beef industry, and we 

have to do that by the help of you folks up here in Washington 

kind of somewhat keeping your hands off and letting us do business the way we know how to do it best. 

Chairwoman STABENOW. Okay. Great. 

And I am going to ask that Mr. Hunt take just a moment to answer the same question. 

Mr. HUNT. Well, at the risk of being redundant, certainly the opportunities in Southeast Asia in our export markets are tremendous. As we see a growing middle class, they are going to want to 

upgrade their diets. And we in the Midwest in the United States, 

I am just so optimistic with the potential of agriculture producers, 

whether it be livestock or grain. 

I think we need to be cautious of laws like COOL that are counterproductive to those export markets, and we need to pass FTA. 

Chairwoman STABENOW. Thanks. 

Mr. Jones? 

Mr. JONES. I think technology—— 

Chairwoman STABENOW. You want to push the button there. 

Mr. JONES. I pushed the button the last time. 

I think technology is going to be one of the leaders in agriculture 

today that is going to make us competitive. 

The question is though who is going to be there to share that? 

When you look at the trends of less producers across America, it 

is a trend you cannot deny. 

So who is going to be there to be in the sharing of that? It is 

going to be the fewer and the bigger and the more concentrated. 

That is what bothers me. 

But as far as growth and demand, it is going to be there, but it 

is who is going to share that. 

Chairwoman STABENOW. Thank you very much. 

And finally, Mr. Sietsema, again, I appreciate your testimony 

and your innovation on your farm. What would you say is the biggest? 

42 

Mr. SIETSEMA. Sure. Opportunities I see also are the global marketplace. It was talked earlier today by USDA about trying to find 

these markets, create these markets. Well, in my opinion, markets 

will find us because we create, we produce the highest quality meat 

products in the world. 

But we have to do it at a reasonable cost. Regulations and the 

GIPSA rule only are counteractive to reducing our costs of production, plain and simple. 

The other opportunities are if you as a Committee are to move 

away from conservation reserve type programs in natural resources 

to conservation practices and programs for working lands. That 

would be similar to what we use the REAP program for, which is 

Rural Energy for America, for a gasification facility that we have 

put up for our turkey program, as well as rural development funds 

and availability for loan guarantees to allow our co-op to exist. 

Chairwoman STABENOW. Thank you very much. 

I have gone over, so I am going to add two minutes to Senator 

Roberts and Senator Baucus since I took an additional two minutes 

in that. Thank you. 

Senator ROBERTS. Max, I think your witness ought to be from 

Dodge City. I do not know—— 

Senator BAUCUS. It could be any place in America. 

Senator ROBERTS. Let the record show there is one optimistic 

farmer from Montana. 

Senator BAUCUS. We are upbeat. 

Senator ROBERTS. We are going to have to pass the hat for him 

to get back and farm, but at any rate. 

I am just happy to hear one, two, three, four, five, six optimistic 

producers here, from many sizes, segments, and some opinions of 

agriculture, which is very encouraging. 

Steve, my understanding that although the GIPSA rule does not 

explicitly ban the more than 50 grid-pricing formula, pricing or alternative marketing arrangements used by the beef industry, there 

are others that assert that the actual effect, the practical effect 

here of this proposed rule will cause these arrangements to be reduced down to 2 or 3. So from your viewpoint, how does this rule 

impact these marketing arrangements? 

Mr. HUNT. Senator, again, thank you for the kind introduction 

earlier. 

By the way, I am not attorney, but I believe you are right. I do 

not believe anywhere in the rule does it explicitly say that these 

value-based opportunities are eliminated. 

I think many of us on the panel have alluded to this, but the 

plain and simple facts are for those of us that have worked hard, 

with the direction of our consumers and the requests of the producers, have come to processors and say let’s develop these valueadded programs, our costs will go up and our risks will go up. 

Now it does not take a very smart person to say if that is the 

case what will happen over time is to eliminate that risk and protect the investment that we have. We have to narrow that band 

and width of price differentiation. 

And how narrow that band gets is how aggressive the proponents 

are of this rule in their litigation and taking advantage of the gate 

swinging wide open. If it is real aggressive, they will be eliminated. 

43 

We cannot stand the risk. We cannot stand the costs to protect our 

investment. 

Senator ROBERTS. Well, we certainly hope that does not happen. 

Let me ask a real quick follow-up. Did we not actually see this 

happen—I referred to it earlier—in Missouri in 1999? 

Mr. HUNT. Yes, Senator. 

Senator ROBERTS. By the way, I think Kansas State beat Missouri in 1999, but I just want to throw that out. 

Mr. HUNT. Well, as one with my money in Missouri and my heart 

in Kansas today, that may be true. 

Missouri did in 2001. The legislature passed a law that had 

many of the same aspects of the GIPSA rule. 

And I think it is Professor Ron Plain of the University of Missouri will recognize that, Senator. 

Senator ROBERTS. Right. 

Mr. HUNT. He indicated that this was a horrible action on the 

part of the legislature and cost the producers $1 million per month 

while it was enacted. They called a special legislative session later 

on that fall and reversed that decision and repealed that law. 

So you know, history is a pretty good indicator of future action, 

and I think history tells us we should learn from that, that this 

could have a devastating impact. 

Senator ROBERTS. Frank, let me just ask you this question. If 

these alternative marketing arrangements go away, does it change 

your business model and the type of cattle you raise? 

Mr. HARPER. Oh, absolutely. I have been retaining ownership I 

think since around 1996, and basically by doing that I have 

learned, number one, what my cattle were at that time. And by 

getting the information back that I have received from participating in these arrangements, in these marketing arrangements 

and getting the premiums that the market has offered, I have been 

able to modify my genetics, and that is the way I base my business 

model. 

If those options were eliminated or even somewhat compromised, 

I think that definitely would lend me to completely looking differently at how I would move forward with my cow-calf operation. 

Senator ROBERTS. What is your priority list of items that would 

need to be in the Farm Bill, and I am specifically asking do we 

need a livestock title in the next Farm Bill? 

Mr. HARPER. Well, I think that is a very fair question. And my 

concern with the livestock title is based on what might come out 

of that. And when we see things like GIPSA and the mandatory 

COOL, I think that makes us in the beef cattle industry pretty 

nervous about a livestock title in the upcoming Farm Bill. So I do 

not know if that answers your question. 

You know, we like to see some of the—we would like to see a robust conservation title and a robust research title, but the livestock 

title is the one that we move forward with, with some caution. 

Senator ROBERTS. I think the Chairwoman and I are big supporters, without question, of EQIP. 

Chairwoman STABENOW. Yes. 

Senator ROBERTS. We are going to take a good hard look at that 

and see if we cannot be helpful there, if we can ever get to a Farm 

Bill with the way things are going. 

44 

I want to thank all the panelists, and I am going to quite with 

two minutes ahead. 

Chairwoman STABENOW. All right. Thank you very much. 

Senator Baucus. 

Senator BAUCUS. Thank you, Madam Chairwoman. 

I am heartened that so many of you talked about the need to increase our beef export market and also the free trade agreements 

that need to be passed. Several hours ago, I announced that the Finance Committee is going to mark up the free trade agreements on 

Thursday to get them all rolling, get things going here, because we 

have been delaying this a bit too long. 

And they will help us export more beef; there is no question. Certainly, the Korean agreement will help export more beef. My goal 

is to then put more pressure on other Asian countries, especially 

China and Japan, so they eventually—not eventually, very soon— 

take all ages, all cuts because that is a huge opportunity for the 

American producer. 

I urge you though when you talk about these FTAs—the Korean 

and Colombian and the Panama—to also recognize that they will 

pass only if trade adjustment assistance is also passed, and they 

are all together. And we are not going to get the FTAs, whether 

it is Korea or any of the other two, unless trade adjustment assistance is also passed. It is all or nothing, and my judgment is it is 

a package that is worth pursuing. 

So I urge all of you when you are talking to your colleagues and 

your friends and the industry, and so forth, just you might advise 

them that heck, if we are going to get these FTAs, part of the deal 

is we also have trade adjustment assistance as part of it. Then I 

think we can start putting more pressure on these other countries. 

I must tell you it was hard getting the extra beef provisions in 

the Korean bill. It was very hard. I ran into a lot of resistance in 

different quarters, but we got some bump-up in Korea. So that is 

a good precedent I hope for future agreements. 

I would just like to know, standing back a little bit. We talked 

about the Ag Bill, and for some of you, the livestock title. What 

other factors really affect your viability? 

I mean there are going to be tax issues, I am sure. We talked 

about trade. I am just curious. When you think about your operation, you think about your family, you think about your future, 

how much of it is just cost, the cost of production? 

How much of it is tax provisions, including the Federal and State 

tax? 

How much of it is marketing opportunities overseas? 

Just what about the sense of space? 

In my State, in Montana, we Montanans do what we can to keep 

farms and ranches operating mostly for the operators and the owners and the producers, but also we in Montana like the space. We 

like all that land that people can drive through and drive around 

rather than having it subdivided. 

So when you think, I am just curious what some of the thoughts 

are and do you prioritize them? 

Mr. Hunt? 

45 

Mr. HUNT. Senator, one thing I would mention related to tax, I 

do not know how many members understand that many of our ag 

companies are formed in pass-through entities. 

Senator BAUCUS. Right. 

Mr. HUNT. These are entities that the owners pay the tax, not 

the company. So when we think about corporate America and paying corporate taxes and so on, and personal income taxes, actually 

for many companies like ours, our producer-owners are actually 

paying the tax for the company. So when you talk about raising 

personal income taxes, that is actually raising the taxes on the 

owners of these business. 

Senator BAUCUS. Okay. Other thoughts? 

Hans, you have some ideas about that? And thank you for coming 

Mr. MCPHERSON. Yes, thank you, Senator. 

Senator BAUCUS. Your testimony sounded just as good here as it 

did in your tractor, believe me. 

Mr. MCPHERSON. Okay. Thank you. 

I think one of the things that affects our operation is new—and 

it was in the last Farm Bill, and it is just you Chief White talk 

about it here earlier—was the CSP program. The Conservation 

Stewardship Program is a program that really benefits livestock 

producers. We were able to take advantage of that. 

Programs like CRP got tweaked back in, I think, 2002 to allow 

some rotational grazing and some rotational hay on it. That helps 

livestock producers. In our State right now, with the flooding, CRP 

ground has been able to be used for some calving and to move 

calves, or the cows, off the lower ground where it is flooded. So I 

think that is a good program. 

But for my personal operation, the CSP program has been very, 

very beneficial, and it has helped us. 

Senator BAUCUS. Do you use EQIP? 

Mr. MCPHERSON. Yes, we have used EQIP? 

Senator BAUCUS. That has been helpful too? 

Mr. MCPHERSON. Absolutely. 

The other livestock disaster programs, I stated in my written testimony that I feel very fortunate that I do not have very much experience in the livestock disaster programs. So that is personal experience. 

I have seen it in my experience with the county FSA office and 

with the State FSA committee, to where these livestock disaster 

programs have made the matter of whether a family eats this summer or not over some disaster with livestock. 

Senator BAUCUS. I would just be interested in your thoughts in 

addition to what you just said because when we wrote the last 

Farm Bill, frankly, I insisted on a disaster section of the bill, so we 

have a permanent agriculture disaster assistance program. The 

thought being that we have got to get away from the ad hoc. You 

know, some years we get disaster assistance, some years we do not, 

and it just waiting for Congress to act, and so on and so forth. 

Now nothing is perfect, but just your honest assessment of 

whether the provisions that are currently in the Farm Bill with respect to livestock indemnity or forage, or what not, do they tend 

to work or not? Would you suggest improvements? 

46 

Mr. MCPHERSON. Well, I believe they work very, very well. And 

prior to 2008, it seemed to me like all the Farm Bills were written 

for the corn and soybean producers and wheat producers. I will not 

win many friends with them guys today, but it is nice to have 

something in the Farm Bill that is for the livestock producer or the 

diversified farmer. 

Senator BAUCUS. So you find that it is better than earlier practice where sometimes Congress acted and sometimes Congress did 

not act? 

Mr. MCPHERSON. I believe that is true, yes. 

Senator BAUCUS. Okay. What about others? I am curious what 

others think about the disaster provisions in the Farm Bill. 

Mr. SIETSEMA. I would go along with the personal tax issue that 

was brought up earlier. Our entities also are pass-through entities. 

With increasing personal tax rates, there can be large profits in an 

organization of different sizes, and they are not realized cash profits. They are corn in a bin or they are livestock in a feed operation. 

They have not turned into cash yet. But with the current volatility 

in the markets these past few years, you could have a substantial 

profit on December 31 and have it all vaporize by April 1st of the 

following year, but you paid a tax liability on that dead date of December 31st. 

Senator BAUCUS. My time is expiring, but I would just be curious. Are all of you organized as pass-through companies? Are any 

of you C corporations? Are you pass-throughs? I am just curious 

how you all are organized from a business tax perspective. 

Mr. HUNT. LLC. 

Senator BAUCUS. LLC, so you are pass-through. 

Mr. SIETSEMA. And the other would be the estate tax issue. 

Senator BAUCUS. Okay. Are any of you C corps? 

So you are all pass-throughs. Sub-chapter S, another passthrough. Okay. 

Mr. SIETSEMA. And the estate tax issue. We have got three generations working in our farm operation, shoulder to shoulder. And 

as we continue to grow and expand our operations it is going to be 

more and more difficult to maintain those operations without having to sell a chunk off to send Washington a check so that I can 

maintain the balance of my operation for myself and my next generation. 

Senator BAUCUS. There was a change in the State and Federal 

estate tax law last year, last December. Have you looked at that? 

It was a big change in your favor. 

Mr. SIETSEMA. Yes, in our favor, but there are still some areas 

there that—— 

Senator BAUCUS. I am just curious. 

Mr. SIETSEMA. —it is amazing how large a farm can be valued 

today also. 

Senator BAUCUS. Yes. Right. Okay. Thank you very much. 

Chairwoman STABENOW. All right. Well, thank you. 

Senator BAUCUS. Thank you. 

Chairwoman STABENOW. Thank you very much to all of you for 

coming forward. This certainly is not the last time we are going to 

be talking about the importance of the livestock industry and the 

47 

issues that you are facing. We appreciate your raising all the issues 

you face. 

And as we go forward in the Farm Bill we want to make sure 

that we are doing the right thing to be able to be your partners, 

to be able to make sure that you have every opportunity to continue to be successful and move forward. We are looking—whether 

it is GIPSA or other issues that affect the industry we talked about 

today, we are going to continue to be involved and engaged in the 

discussions with the Department. 

And I would just say in closing that we need to remember again 

that the livestock industry supports two million jobs nationally, 

and we need to make sure that each of you and the people you represent have the tools and the support to be successful because it 

is important for all of us. 

So, thank you very much. 

The meeting is adjourned. 

[Whereupon, at 5:19 p.m, the hearing was adjourned.] 

(49) 

A P P E N D I X 

JUNE 28, 2011 

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