[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
HEARING TO REVIEW THE STATE OF THE RURAL ECONOMY
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
MARCH 5, 2013
__________
Serial No. 113-1
Printed for the use of the Committee on Agriculture
agriculture.house.gov
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COMMITTEE ON AGRICULTURE
FRANK D. LUCAS, Oklahoma, Chairman
BOB GOODLATTE, Virginia, COLLIN C. PETERSON, Minnesota,
Vice Chairman Ranking Minority Member
STEVE KING, Iowa MIKE McINTYRE, North Carolina
RANDY NEUGEBAUER, Texas DAVID SCOTT, Georgia
MIKE ROGERS, Alabama JIM COSTA, California
K. MICHAEL CONAWAY, Texas TIMOTHY J. WALZ, Minnesota
GLENN THOMPSON, Pennsylvania KURT SCHRADER, Oregon
BOB GIBBS, Ohio MARCIA L. FUDGE, Ohio
AUSTIN SCOTT, Georgia JAMES P. McGOVERN, Massachusetts
SCOTT R. TIPTON, Colorado SUZAN K. DelBENE, Washington
ERIC A. ``RICK'' CRAWFORD, Arkansas GLORIA NEGRETE McLEOD, California
MARTHA ROBY, Alabama FILEMON VELA, Texas
SCOTT DesJARLAIS, Tennessee MICHELLE LUJAN GRISHAM, New Mexico
CHRISTOPHER P. GIBSON, New York ANN M. KUSTER, New Hampshire
VICKY HARTZLER, Missouri RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin PETE P. GALLEGO, Texas
KRISTI L. NOEM, South Dakota WILLIAM L. ENYART, Illinois
DAN BENISHEK, Michigan JUAN VARGAS, California
JEFF DENHAM, California CHERI BUSTOS, Illinois
STEPHEN LEE FINCHER, Tennessee SEAN PATRICK MALONEY, New York
DOUG LaMALFA, California JOE COURTNEY, Connecticut
RICHARD HUDSON, North Carolina JOHN GARAMENDI, California
RODNEY DAVIS, Illinois
CHRIS COLLINS, New York
TED S. YOHO, Florida
______
Nicole Scott, Staff Director
Kevin J. Kramp, Chief Counsel
Tamara Hinton, Communications Director
Robert L. Larew, Minority Staff Director
(ii)
C O N T E N T S
----------
Page
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma,
opening statement.............................................. 1
Prepared statement........................................... 3
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 4
Prepared statement........................................... 5
Witness
Vilsack, Hon. Thomas ``Tom'' J., Secretary, U.S. Department of
Agriculture, Washington, D.C................................... 6
Prepared statement........................................... 8
Supplementary information.................................... 67
Submitted questions.......................................... 68
HEARING TO REVIEW THE STATE OF THE RURAL ECONOMY
----------
TUESDAY, MARCH 5, 2013
House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Committee met, pursuant to call, at 10:05 a.m., in Room
1300 of the Longworth House Office Building, Hon. Frank D.
Lucas [Chairman of the Committee] presiding.
Members present: Representatives Lucas, Goodlatte, King,
Neugebauer, Rogers, Conaway, Thompson, Gibbs, Austin Scott of
Georgia, Tipton, Crawford, Roby, Gibson, Hartzler, Ribble,
Noem, Benishek, Denham, Fincher, LaMalfa, Hudson, Davis,
Collins, Yoho, Peterson, McIntyre, David Scott of Georgia,
Costa, Walz, Schrader, Fudge, McGovern, DelBene, Negrete
McLeod, Vela, Lujan Grisham, Kuster, Nolan, Gallego, Enyart,
Vargas, Bustos, Maloney, Courtney, and Garamendi.
Staff present: Bart Fischer, John Goldberg, Josh Mathis,
Lauren Sturgeon, Matt Schertz, Nicole Scott, Pelham Straughn,
Pete Thomson, Stacey Glasscock, Tamara Hinton, Anne Simmons, C.
Clark Ogilvie, Lisa Shelton, Liz Friedlander, Mary Knigge, John
Konya, Merrick Munday, and Caleb Crosswhite.
OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN
CONGRESS FROM OKLAHOMA
The Chairman. This hearing of the Committee on Agriculture
to review the state of the rural economy will come to order.
Thank you, Mr. Secretary, for appearing before us today. I
am pleased that the President asked you to continue in your
role as Secretary. While we may not always agree on every
topic, you have never been disagreeable, and you are a good
friend to American agriculture. I appreciate your hard work to
quickly implement the extension of the 2008 Farm Bill and
announce the signup for farm programs, which gave producers
some certainty during a time when uncertainty, or when
certainty, I should say, is sorely lacking. All of us can agree
that an extension was not our preference but I want to
personally thank you for announcing the signup so quickly.
This country continues to face a fiscal crisis that if not
addressed will not only harm the agricultural sector in rural
America but the country as a whole. The agricultural sector
wants to be a part of the solution to our nation's debt crisis.
We must find commonsense solutions without trying to scare the
American people with worst-case scenarios. I have confidence in
you, Mr. Secretary, to manage sequestration without a mass
disruption to the rural economy.
The Committee believes the best way to achieve deficit
reduction is in the context of reauthorizing the farm bill with
sustainable and fiscally responsible reforms. This Committee
and this Congress must pass a comprehensive 5 year farm bill
this year. The reforms in the House bill are too great, the
savings to the taxpayers are too important and the benefits to
our farmers and ranchers are too critical to not complete the
process this year.
Few in the agricultural sector will deny that the
agricultural economy has done well overall in the last few
years, but that well-being has not been distributed evenly
throughout the entire sector, and if history is any guide, we
know how fleeting the good times are. For example, livestock
producers have suffered through multiple years of drought and
are operating with no safety net in place. Our livestock
disaster programs no longer function because the 2008 Farm Bill
only provided 4 years of funding for these important programs.
Additionally, record-high prices for some crops have hurt the
livestock industry tremendously. Now, I am not here to place
blame, but we have to acknowledge that fact. Crop producers in
my part of the country and elsewhere are dealing with a third
straight year or drought, and also rice, peanut, sugar, dairy
and cotton producers have not enjoyed the consistent record-
high prices that our friends in the Midwest have.
We must be careful when we paint a rosy picture with a
broad brush. While income is up, so is the cost of doing
business. Inputs continue to rise as do rental rates. So the
fact is, farming and ranching have been and will continue to be
a tremendously risky business.
As we all know, agriculture is highly cyclical, and the
agricultural community must be prepared for bad yields, bad
prices and much lower net farm income in the future. We must be
very careful in ensuring that we replace direct payments with a
policy that works for all commodities in all regions of the
country. We must acknowledge that crop insurance is the
backbone of the safety net. But we also recognize its
limitations in protecting against multi-year price declines.
The Committee firmly believes in providing a true safety net
rather than providing payments regardless of market conditions.
Mr. Secretary, I was interested in your comments earlier
this year about the agricultural community's loss of influence.
The truth is, the United States is less rural, the Congress
reflects that reality, and we must adapt. Making the case for
production agriculture in rural America is the challenge before
us, and we face an uncertain future if the agricultural
community is divided. Commodity groups must not tear each other
down with the ultimate goal of seeing who gets the biggest
slice of the pie. Conservation groups and so-called sustainable
groups must realize that for farmers to implement additional
conservation practices, they must have the resources to do so.
Quite simply, the agricultural community must accept that no
bill is perfect but that should not serve as a discouragement.
Instead, we must have a rural coalition pushing together to get
a bill passed and signed into law.
Mr. Secretary, without hesitation, I know you are a great
friend of agriculture and rural America but I am disappointed
to see the Administration's comments on meat inspection. You
have stated that the sequester provisions of the Budget Control
Act will cause you to furlough Food Safety Inspection Service
inspectors. The Members of this Committee have heard from
constituents that these statements about the interruption of
production have affected prices, caused concern among the
financial markets and alarmed buyers and sellers in retail and
food service community. I anticipate that my colleagues will
have questions for you regarding your statements and the
evolution of Administration policy in this critical area.
Further, I was disappointed to see the Administration favored
the Reid-Stabenow proposal to replace the sequester.
Fortunately, the Senate failed to pass that proposal, which
unfairly targeted agriculture: a proposed 50 percent cut in a
single title of the farm bill that accounts for six percent of
overall agricultural spending and less than one percent of
overall spending. It was not balanced and not acceptable. I
believe the best way to achieve deficit reduction as related to
agriculture is in the context of reauthorizing the farm bill
with sustainable and fiscally responsible reforms such as those
the Committee passed last year.
Mr. Secretary, again, thank you for being with us today. I
look forward to your testimony.
[The prepared statement of Mr. Lucas follows:]
Prepared Statement of Hon. Frank D. Lucas, a Representative in Congress
from Oklahoma
Thank you, Mr. Secretary, for appearing before the Committee today.
I am pleased the President asked you to continue in your role as
Secretary. While we may not always agree on every topic, you have never
been disagreeable and you are a good friend to American agriculture. I
appreciate your hard work to quickly implement the extension of the
2008 Farm Bill and announce the sign-up for farm programs, which gave
producers some certainty during a time when certainty is sorely
lacking. All of us can agree that an extension was not our preference,
but I want to personally thank you for announcing the signup so
quickly.
This country continues to face a fiscal crisis that, if not
addressed, will not only harm the agricultural sector and rural
America, but the country as a whole. The agriculture sector wants to be
part of the solution to our nation's debt crisis. We must find common-
sense solutions without trying to scare the American people with worst-
case scenarios. I have confidence in you, Mr. Secretary, to manage
sequestration without a mass disruption to the rural economy.
The Committee believes the best way to achieve deficit reduction is
in the context of reauthorizing the farm bill with sustainable and
fiscally responsible reforms. This Committee and this Congress must
pass a comprehensive, 5 year farm bill this year. The reforms in the
House bill are too great, the savings to the taxpayer are too
important, and the benefits to our farmers and ranchers are too
critical to not complete the process this year.
Few in the agriculture sector will deny that the agriculture
economy has done well overall in the last few years. But that well-
being has not been distributed evenly across the entire sector, and if
history is any guide, we know how fleeting the good times are.
For example, livestock producers have suffered through multiple
years of drought and are operating with no safety net in place.
Livestock disaster programs no longer function because the 2008 Farm
Bill only provided 4 years of funding for these important programs.
Additionally, record high prices for some crops have hurt the livestock
industry tremendously. I am not here to place blame but we have to
acknowledge that fact.
Crop producers in my part of the country and elsewhere are dealing
with a third straight year of drought. Also, rice, peanut, sugar, dairy
and cotton producers have not enjoyed consistent, record high prices
that our friends in the Midwest have, so we must be careful to paint a
rosy picture with a broad brush. While income is up, so is the cost of
doing business. Inputs continue to rise, as do rental rates. The fact
is--farming and ranching have been and will continue to be a
tremendously risky business.
As we all know, agriculture is highly cyclical and the agriculture
community must be prepared for bad yields, bad prices, and much lower
net farm income in the future. We must be very careful in ensuring that
we replace direct payments with policy that works for all commodities
in all regions of the country. We must acknowledge that crop insurance
is the backbone of the safety net, but we must also recognize its
limitations in protecting against multi-year price declines. The
Committee firmly believes in providing a true safety net, rather than
providing payments regardless of market conditions.
Mr. Secretary, I was interested in your comments earlier this year
about the agriculture community's loss of influence. The truth is the
United States is less rural. The Congress reflects that reality and we
must adapt.
Making the case for production agriculture and rural America is the
challenge before us. And, we face an uncertain future if the
agriculture community is divided.
Commodity groups must not tear each other down with the ultimate
goal of seeing who gets the biggest piece of the pie. Conservation
groups and so called sustainable groups must realize that for farmers
to implement additional conservation practices, they must have the
resources to do so. Quite simply, the agriculture community must accept
that no bill is perfect, but that should not serve as discouragement.
Instead, we must have a rural coalition pushing forward to get a bill
passed and signed into law.
Mr. Secretary, without hesitation, I know you are a great friend of
agriculture and rural America, but I am disappointed to see the
Administration's comments on meat inspection. You have stated that the
sequester provisions in the Budget Control Act will cause you to
furlough Food Safety Inspection Service inspectors. Members of this
Committee have heard from constituents that these statements about the
interruption of production have affected prices, caused concern among
financial markets, and alarmed buyers and sellers in the retail and
food service community. I anticipate that my colleagues will have
questions for you regarding your statements and the evolution of
Administration policy in this critical area.
Further, it was disappointing to see the Administration favored the
Reid-Stabenow proposal to replace the sequester. Fortunately, the
Senate failed to pass that proposal, which unfairly targeted
agriculture. It proposed a 50 percent cut to a single title in the farm
bill that accounts for six percent of overall agriculture spending and
less than one percent of overall Federal spending. It was not balanced
and not acceptable. I believe the best way to achieve deficit
reduction, as it relates to agriculture, is in the context of
reauthorizing the farm bill with sustainable and fiscally responsible
reforms such as those the Committee passed last year.
Mr. Secretary, again thank you for being with us today. I look
forward to your testimony.
The Chairman. I now turn to the Ranking Member for any
opening statement he might have.
OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA
Mr. Peterson. Thank you, Mr. Chairman, for holding today's
hearing on the state of the rural economy, and welcome back,
Mr. Secretary, and I echo Mr. Lucas's comments that we are glad
that you are on board for another 4 years, I hope, and we think
you have been doing a good job.
With the exception of those affected by the continuing
drought, the rural economy by and large is doing well. And as
long as Congress doesn't screw things up, I am hopeful that the
rural economy will continue to do well for the foreseeable
future. And while last year--primarily it was the Republican
leadership that kept us from getting a farm bill to the Floor--
the fact that we had a strong ag economy didn't help our case.
Farmers and ranchers weren't pressuring Congress to act because
for the most part, they have been doing pretty well. So now we
are operating under a 1 year extension of the 2008 bill, and
the unfortunate part of the extension is that it does not
address the need for real reforms to the dairy and cotton
programs. There is no funding for disaster assistance, and
funding for many of the renewable energy, conservation and
rural development programs are reduced or eliminated
altogether.
I still think I have a question about how we are going to
move forward. I agree with the Chairman that we need to get
this bill done this year, but we need to have some kind of an
assurance before we move ahead, number one. Number two, we have
to have some resolution on what it is we are trying to achieve
here, what is the number that we are going to be expected to
reduce our outlays and hopefully before we get started on
writing the bill, we are going to have some answers in that
regard. I have spoken to the Speaker a number of times. In one
of those, I said, ``What really would help us if you and Harry
Reid could come up with a number, what it is that is agreed to
on what it is you want us to reduce the bill.'' Second, what
would really help us if you could come up with a number between
the two of them on what they want to do with SNAP, and if we
could get a number, I think it would be relatively easy to get
things done.
So hopefully this will all come together. We will get
through this budget morass here for the next couple months and
have a fairly good idea of how we are going to move ahead when
we get ready to do it. The sequester is a challenge, and
neither Republicans nor Democrats have put forward a plan to
replace it that has a chance of getting done, so it is what it
is, and there are a lot of questions about what it means. We
haven't gotten all the answers yet. Maybe we will get some of
those today, and I hope that is the case.
Before I finish, Mr. Secretary, I know you have taken some
heat from your recent comments about agriculture and rural
America, but I see where you are coming from. You know, we have
had a long history of bipartisan success but I think to some
extent because we have been successful, that is now causing us
problems because we haven't had the pulling together that we
needed to have on some of these issues in rural America. I
don't know exactly what we do about it but it seems like good
times always kind of get us into this situation. So we can't
afford to be complacent. There are other programs that are very
important to rural America, as you pointed out, that don't
always get as much attention, and we have to come up with a
balanced approach that takes care of everybody in rural
America, not just farmers, if we are going to be able to be
successful in putting together a bill that is going to stand
the test of time.
So again, thank you for being with us, Mr. Secretary. Thank
you, Mr. Chairman, for holding this hearing and I look forward
to the testimony and questions.
[The prepared statement of Mr. Peterson follows:]
Prepared Statement of Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Thank you, Chairman Lucas, for holding today's hearing on the state
of the rural economy and welcome back, Secretary Vilsack, to the
Committee.
With the exception of those affected by continuing drought, the
rural economy, by and large, is doing well. As long as Congress doesn't
screw things up, I am hopeful the rural economy will continue to do
well for the foreseeable future.
While it was the Republican Leadership that did not bring the farm
bill to the floor last Congress, the strong ag economy didn't help our
case. Farmers and ranchers weren't pressuring Congress to act because,
for the most part, they've been doing pretty well. So now, we're
operating under a 1 year extension of the 2008 Farm Bill. The
unfortunate part of an extension is that it does not address the need
for real reforms to the dairy and cotton programs. There is no funding
for disaster assistance and funding for many renewable energy,
conservation and rural development programs was reduced or eliminated
altogether.
I still don't think it's worth the Committee's time and effort to
mark-up a farm bill this year if we don't have an assurance that the
bill will be brought to the floor. As it was last year, the budget
situation is going to be a huge challenge, which is part of the reason
I pushed so hard to pass a bill last Congress. CBO just put out a new
score for the Committee's farm bill; and instead of saving $35.1
billion over 10 years, they now say the bill will save $26.6 billion
over 10 years. So, we may need to reassess our objectives before moving
forward. Despite all this, I'm optimistic that we'll be able to find a
way to get this done.
The biggest challenge, at the moment, is the sequester. Since
neither Republicans nor Democrats have put forward a balanced plan to
replace it, the sequester is in effect. There are still a lot of
questions about what this means for agriculture; I hope today will
yield some clear answers.
Before I finish, Mr. Secretary, you've taken a lot of heat for some
of your recent comments about agriculture and rural America but, I see
where you're coming from.
Given our bipartisan history and past success, I fear that some in
agriculture take it for granted that farm policy will always be taken
care of--that Congress will pass a new farm bill every 5 years or
approve disaster aid in a timely manner. We've seen that this is no
longer the case. There is now a significant segment of lawmakers that
never met a government program they didn't want to cut or eliminate;
the farm bill is no exception.
Rural America is relevant but we need get past this complacent
mindset, look to the real issues and speak with a unified voice calling
for action. If we can't do that, I'm not sure what the ultimate fate of
farm policy will be in this Congress.
So, again, I thank the Chairman for this hearing and look forward
to the Secretary's testimony.
The Chairman. And I thank the Ranking Member for his
comments.
The chair would request that other Members submit their
opening statements for the record so the witness may begin his
testimony and to ensure that there is ample time for questions.
With that, I would like to welcome our only witness today
to the table, the Hon. Tom Vilsack, Secretary, U.S. Department
of Agriculture, Washington, D.C. Secretary Vilsack, please
begin when you are ready.
STATEMENT OF HON. THOMAS ``TOM'' J. VILSACK, SECRETARY, U.S.
DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.
Secretary Vilsack. Mr. Chairman, thank you very much, and
to the Ranking Member, thank you for the opportunity to be here
today. Let me begin by suggesting that I have submitted a
formal statement for the record. What I would like to do is
just simply summarize that in the interest of time.
And let me start where every hearing in agriculture should
begin by acknowledging an obvious fact, which is that America
has the greatest farmers and ranchers in the world. No better
evidence of that than what happened last year with the drought
that was the worst drought we have seen since the 1930s, albeit
crop production was remarkably high, given the circumstances,
and it is a testimony to the greatness of our producers.
As a result of that, and as a result of record exports,
record enrollment in conservation programs, record expansion of
local and regional food systems and expanded opportunity in the
biobased economy, farmers generally enjoyed record farm income,
but as the Chairman indicated and as the Ranking Member
indicated, this was not necessarily shared by all in
agriculture. There were regional differences and obviously
differences between producers.
Notwithstanding that, I am bullish about this year. Forty-
five percent of America is still impacted and affected by
drought but that is the first time that that number has been
below 50 percent for the last 30+ weeks. We are projecting,
with any kind of decent weather, record crop production, which
should help moderate crop prices which in turn should allow
dairy and livestock producers to return to profitability
sometime this year, which is obviously an extraordinarily
important thing.
There is, as the Chairman indicated, a degree of
uncertainty. The sequester has caused uncertainty, and the
impact of sequester will be felt in terms of reduced farm
credit, reduced conservation efforts, reduced food inspection
and reduced exports. In addition, we have uncertainty as a
result of the lack of a passage of a 5 year farm program, and
now we find perhaps that work will be even more difficult as
the Congressional Budget Office has realigned some of the
savings from previously discussed programs, but I would agree
with the Chairman that the most significant thing that could be
done this year would be for us to get a 5 year farm program
through the process. That will provide the certainty for
producers and rural America and will reaffirm the importance of
rural America to the rest of the country.
But that uncertainty is complicated further by what can
happen from other countries. We are obviously dealing with
trade barriers as we speak. Despite the fact that we are
anticipating a record export year, we are constantly battling
unscientific trade barriers, most recently Russia's decision
with reference to ractopamine.
I know that there will be questions about the sequester but
I thought I should share with the Committee that we have been
taking deficit reduction and budgets very seriously at USDA.
Over the last 2 years, we have identified and implemented
programs that have resulted in savings in excess of $700
million. We have reduced our workforce by eight percent. We
have closed offices and labs. We have consolidated rented
space. We focused on IT savings. We created a strategic
sourcing effort for purchases of supplies, and we have
significantly reduced travel, conferences, and supply
expenditures. We are proud of this effort. It will continue
because we recognize the important role of creating greater
efficiencies in government. But I tell this to the Committee
just simply to make sure that you all understand that we do
take this very seriously and we have taken steps proactively to
try to reduce our budget. As a result of the sequester, we are
now faced with an operating budget that is less than it was in
Fiscal Year 2009, and we have had pretty much a flatline budget
the last 3 years. So we understand and appreciate the
importance of being fiscally responsible and we have shown good
faith in that effort. We will continue that. But the sequester
has implications and impacts, some of which cannot be avoided,
and I would be happy to discuss those impacts with the
Committee today if that is of importance and significance to
the Committee.
Mr. Chairman, let me just finish by saying that despite the
challenges, despite the difficulties, despite what Mother
Nature throws, we still do indeed have the greatest farmers and
ranchers in the country, and the result is that we can be
confident that regardless of the challenge, rural America is up
to it and we will continue to provide the food supply for this
country, making us a food-secure nation. We will continue to
promote conservation and water preservation and conservation.
We will continue to provide an ever-increasing amount of the
fuel and energy this country needs to grow. We will continue to
create job opportunities not just in rural America but across
the country as one out of every 12 jobs is impacted and
affected in this country by agriculture, and our families will
continue to disproportionately provide military service to this
country as they have throughout history.
I am proud to be here today as Secretary of Agriculture,
and while I appreciate the fact that you all think I can be
here for 4 years, I serve at the pleasure of the President. I
could be gone tomorrow. We will see how this hearing goes.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Vilsack follows:]
Prepared Statement of Hon. Thomas ``Tom'' J. Vilsack, Secretary, U.S.
Department Of Agriculture, Washington, D.C.
Mr. Chairman and Members of the Committee, I am pleased to have
this opportunity to discuss the state of the rural economy. I believe
that the state of the agricultural economy is strong--and that the
strength of American agriculture is driving further economic
opportunity across rural America. Today, I would like to discuss why I
make this statement, and highlight the significant opportunities that
exist to continue to grow and strengthen the rest of our rural economy,
which plays such a vital role in our nation's overall economic health.
The U.S. Department of Agriculture (USDA) under President Obama's
leadership has taken significant steps to strengthen production
agriculture by: providing a strong safety net and expanding markets for
U.S. exports; enhancing America's conservation efforts alongside
farmers and ranchers; investing in the biobased energy and product
manufacturing of the future; and strengthening new local and regional
marketing opportunities for producers. These efforts have already had a
significant impact in rural America, where the seasonally adjusted
unemployment rate fell to 7.7 percent for the third quarter of Fiscal
Year (FY) 2012--down from a peak of 9.5 percent in late 2009. Going
forward, we must step up our efforts to invest in these four areas to
ensure rural America remains strong and viable long into the future.
Additionally, it is my hope that Congress will support these efforts
and provide more certainty for American agriculture by stopping the
across-the-board spending cuts that went into effect on March 1, and
through passage of a comprehensive, multi-year Food, Farm and Jobs
Bill.
Supporting Production Agriculture
America's rural economy is tied closely to the success of our
farmers and ranchers. The Administration recognizes the critical role
American agriculture plays in strengthening our economy, given that one
in twelve U.S. jobs is supported by our agriculture sector, and we have
prioritized the delivery of a strong safety net. Thanks to their
willingness to innovate, use of technological advances, and smart
business decisions, producers have kept U.S. agriculture strong in the
face of a record drought and other disasters over the course of the
past year. After adjusting for inflation, net farm income is projected
to be the highest in 4 decades, and aggregate farm equity is at an all
time high. I'm proud of USDA's record under President Obama to provide
a strong safety net for producers while expanding markets for U.S.
products.
USDA staff has successfully implemented a number of new and
complicated programs to ensure the effectiveness of the farm safety
net. In 2009 and 2010 the Department expedited implementation of the
2008 Farm Bill disaster programs, which provided more than 400,000
payments to producers totaling $4 billion. USDA has made record farm
loans--more than 134,000 loans totaling $18.6 billion in credit. And we
strengthened the Federal Crop Insurance Program, achieving $4 billion
in savings while ensuring that many producers had an avenue for
assistance in times of disaster.
During the historic drought last summer, the Administration took
every possible step to strengthen the safety net. For example, USDA
shortened the time taken to provide Secretarial Disaster Designations,
achieving a 40 percent reduction in processing time and quicker
assistance for farmers and ranchers. USDA worked with crop insurance
companies to provide flexibility to farmers within the Federal Crop
Insurance Program, freeing up about $20 million for producers. USDA
opened millions of Conservation Reserve Program acres for emergency
haying and grazing--making an estimated $200 million in additional
forage available for producers while still meeting our conservation
goals. We further expanded credit, effectively lowering the Farm
Service Agency (FSA) Emergency Loan interest rate and working with the
Small Business Administration to extend nearly $7 million in SBA
emergency credit for rural small businesses. USDA also purchased over
$170 million of pork, lamb, chicken, and catfish to help relieve
pressure on American livestock producers and bring the nation's meat
supply in line with demand.
While I am proud of these efforts, it is clear that more must be
done to provide a complete safety net that comes with the certainty of
a multi-year Food, Farm, and Jobs Bill. For example, many in the dairy
and livestock industries remain severely impacted by rising input and
feed costs and tight margins as a result of the drought and other
disasters. Our current farm safety net is centered on crop insurance,
which is critically important for many farmers but does not provide
certainty for dairy and livestock producers, or growers of many
specialty crops. Additionally, without a comprehensive, multi-year farm
bill that provides long-term certainty for producers, it is difficult
to ensure that a strong and viable safety net of programs is
consistently offered by USDA.
In addition to our efforts to provide a strong safety net, USDA
will work in the coming years to support production agriculture by
expanding new markets around the world, building on three new trade
agreements signed by President Obama with Korea, Colombia, and Panama.
Agricultural exports have increased 43.6% from 2009 through 2012, from
$101.2 billion to a record $145.4 billion. This progress means that
agriculture is making a strong contribution to achieve President
Obama's goal under the National Export Initiative of doubling exports
by the end of 2014. Over the course of 2013, I am hopeful that the
United States can achieve additional trade with the European Union and
with a number of Asian nations through progress on a Trans-Pacific
Partnership.
USDA will also continue to support production agriculture by
investing in strong agricultural research, particularly as we
investigate new measures to adapt agriculture to extreme weather
events. Since 2009, USDA has thoughtfully restructured its science
agencies to ensure the most effective and efficient use of its
resources, while leveraging the strengths of our partners across the
scientific community to achieve even more results. For example, the
National Institute of Food and Agriculture (NIFA) was created to
advance knowledge by supporting research, education and extension
programs in the Land-Grant Universities and other partner
organizations. In 2012, we celebrated 150 years of partnership with the
Land-Grant Universities, which have educated more than 20 million
students and opened the doors of education far and wide. Studies have
shown that every dollar invested in agricultural research returns
roughly $20 in economic benefits to the nation.
Unlimited Opportunity for the Rural Economy
As I mentioned, the rural economy is stronger today--led by the
continued strength of the agricultural economy and record efforts by
President Obama to invest in the prosperity of rural communities. For
example, since 2009 USDA has provided nearly 15,000 loans and grants to
help more than 60,000 rural businesses grow and support more than
320,000 jobs; helped more than 620,000 rural families to achieve the
dream of homeownership; and invested in nearly 8,000 projects to help
rural towns and communities provide vital community facilities.
At the same time, the Administration recognizes the long-standing
challenges that the decline in rural population, as well as continuing
rural poverty, pose to our nation's well-being. In addition to our
continuing support for production agriculture that stands at the heart
of the rural economy, USDA is focused on helping to achieve new markets
and new partnerships for local and regional agricultural markets;
conservation, natural resources and outdoor recreation; and further
development of an advanced biobased economy--all of which will
complement the strength of production agriculture to create new
opportunity in rural America.
USDA is focusing on providing new local and regional marketing
opportunities for farmers and ranchers. Our efforts to promote local
and regional marketing opportunities have increased the number of
farmers' markets to more than 7,800 nationwide, a 67 percent increase
over 2008. We also have taken steps to increase the number of regional
food hubs to more than 200 in operation nationwide today. We will also
continue looking for new steps to aid smaller farmers and farm
businesses, an effort that will complement investments in local and
regional marketing opportunities. In January, USDA finalized a new
Microloan Program within FSA's Direct Operating Loan program. The
program will provide loans up to $35,000 to help launch startup farm
businesses, provide needed resources, and increase equity so farmers
can graduate to commercial credit and expand their operations. Access
to credit is especially important for young farmers who are faced with
high start-up costs and record land prices.
USDA will help spur job creation through conservation and
management of America's natural resources. Visitors to National Forests
have helped support more than 200,000 jobs annually in rural
communities. By protecting and strengthening these National Forest
System lands and resources, we can provide even greater opportunities
for outdoor recreation in the national forests. In the coming years
USDA will take new steps to support conservation efforts while
providing new opportunity for farmers to generate income. For example,
USDA set a new goal last year to target 1 million acres for wildlife
habitat to further support hunting, fishing and conservation efforts
through the Conservation Reserve Program (CRP). USDA has supported
states and other partners in their efforts to establish ecosystem
trading markets, an effort that will continue in 2013. USDA also is
further investigating the potential use of multi-cropping by farmers to
further expand the availability of cost effective biofuel feedstocks
while reaping significant economic and natural resource benefits.
USDA will continue to make investments needed to grow opportunity
in the biobased economy. USDA has helped create markets for advanced
biofuels from non-food, non-feed sources--from the farm field to the
end user--and we are taking the necessary steps to create more jobs
through rural manufacturing. Since 2009 USDA has helped jumpstart
efforts to provide a reliable supply of advanced plant materials for
biofuels. USDA has provided incentives to produce advanced feed stocks
for biofuels; invested in efforts to build advanced new biorefineries;
invested in six regional research systems across America to develop
advanced biobased energy technology appropriate to every region; and
worked with agencies across the government--including the U.S. Navy--to
strengthen markets for the use of advanced biofuels. Meanwhile,
biobased manufacturing is stronger, with 3,000 companies producing more
than 25,000 plant-based products today. The Administration has
supported this growing industry, prioritizing more than 9,000
``biobased'' products for Federal procurement. In the coming year, USDA
has set a goal to assist 50 additional U.S. companies producing
homegrown biobased products.
The Administration believes that in the wealthiest nation on Earth,
no American who works hard at a full-time job should live in poverty.
Even as we create more jobs in rural America, the Administration
recognizes that there are areas of persistent poverty across rural
areas. In 2013 USDA will continue to expand a pilot program--the Strike
Force for Rural Growth and Opportunity--to identify persistent poverty
communities in pilot states and carry out targeted efforts to increase
program awareness and opportunity in these areas. USDA piloted the
Strike Force Initiative in 2010 in the States of Arkansas, Georgia and
Mississippi. In 2011, the Strike Force expanded to the Southwest adding
Colorado, New Mexico and Nevada. The efforts to target resources to
areas in the pilot have already been successful. For example, FSA loans
in Strike Force areas were up almost ten percent in 2012 over the
previous year--even when the nation as a whole saw farm lending drop
ten percent. USDA intends to further expand the Strike Force initiative
to additional states in the coming months.
Conclusion
Finally today, I want to reiterate the critical nature of providing
certainty through a balanced and sensible plan to stop the sequester
that took effect on March 1, as well as a through passage of a
comprehensive Food, Farm and Jobs Bill.
Like all American families, it's important that USDA and other
Federal agencies get our job done within a sensible budget. USDA's
efforts have helped to deeply reduce USDA's operating expenses over the
past 2 years. Through the Blueprint for Stronger Service we have
achieved more than $100 million in cost avoidances already, with
efforts underway to achieve $250 million in such savings over the
course of this year. However, the across-the-board spending cuts known
as sequestration are now severely limiting our ability to deliver
critical programs for the American people, and I share the President's
hope that Congress will stop these harmful cuts.
Through passage of a comprehensive, multi-year Food, Farm and Jobs
Bill, Congress would provide much-needed certainty to millions of
Americans impacted by this legislation and USDA programs. The farm bill
provides for a great number of critical programs delivered by USDA,
including programs for farm commodity and price support, conservation,
research, nutrition, food safety, and agricultural trade. Over the
course of 2013, I look forward to working with Members of this
Committee, and with Congressional leaders, to achieve passage of a
comprehensive, multi-year Food, Farm and Jobs Bill that will allow USDA
to continue to provide a strong safety net, combat rural poverty and
create even more good jobs in rural America.
Mr. Chairman and Members of the Committee, thank you for this
opportunity to speak briefly about the current state of the rural
economy in the United States. Rural Americans have shown over the past
year their resolve and their willingness to embrace innovation--and I
believe that the same tools that kept the rural economy resilient over
the course of an uncertain year will help rural America continue to
drive the economy forward.
The Chairman. Thank you, Mr. Secretary, and I would note
for the record that the Secretary of Agriculture's position has
always been one of the most challenging in any Presidential
Cabinet, and those who serve for a full term or potentially two
terms are to be greatly respected and admired.
That said, let us talk for a moment about the February 27
memo, but first I should note, the chair would like to remind
Members that they will be recognized for questioning in the
order of seniority for Members who were here at the start of
the hearing, and after that, Members will be recognized in
order of arrival. I appreciate the Member's understanding, and
I recognize myself for 5 minutes for questions.
Let us talk about that February 27 memo, Mr. Secretary,
from OMB regarding agency responsibilities in the event of
sequestration. It states that agencies must be guided by the
principles of protecting the agency's core mission to serve the
public to the greatest extent practical. Wouldn't you agree
that providing the essential inspection services that protect
public health and provide wholesome and affordable food is
consistent with that directive?
Secretary Vilsack. It is, Mr. Chairman, so long as there is
adequate appropriations to provide that assistance, and that is
the problem. The sequester, the way it is structured, requires
every account to be reduced by the same percentage amount, and
in the food safety area, there are very few accounts. Eighty-
seven percent of the budget is frontline inspectors and the
support system for those frontline inspectors. We have a
limited period of time in which to implement the sequester, 6,
7 months. The impact of it is basically 10 to 12 percent of our
remaining budget, and no matter how you slice it, no matter how
you dice it, there is nothing you can do without impacting the
frontline inspectors. You don't have the luxury as you do in
normal circumstances of transferring money because there is no
money to transfer based on the way the sequester is structured.
So I agree with you, the inspections are very, very
important, and we will do everything we can to minimize the
disruption, but I have to be truthful with this Committee that
based on the way the sequester is structured, it will impact
food inspection.
The Chairman. But you will, Mr. Secretary, utilize the
maximum flexibility you have? I mean, you have substantial
inspectors and plants all over the country, plants that work on
different hour schedules. The odds that we would furlough every
inspector on the same day are rather minuscule, correct?
Secretary Vilsack. Well, the problem, Mr. Chairman, is that
it is not just a circumstance of flexibility in terms of the
facilities. There are 6,263 facilities, and the reality is that
you have to be careful about how you structure this because
some facilities are actually dependent upon the work of other
facilities, and we are now seeing some of these facilities
actually reducing their hours because of the overall economy,
so it is a complicated process that we have to go through to
determine how and under what circumstances, plus this is not
just something I can determine by myself. There are
requirements to bargain with the union that represents the
inspectors in terms of the sequencing and the structure of the
sequester and how it is implemented. So it is extraordinarily
complicated.
The Chairman. So if the sequester trumps the food safety
Acts, which is basically what you are saying, do your union
labor agreements trump the sequester act?
Secretary Vilsack. No, Mr. Chairman. The way I see this is,
the Food Safety Inspection Act requires companies that want to
sell meat, process pork whatever, to have those items inspected
before they can sell them to customers. The law also requires
that the companies cannot privatize, if you will, that
inspection service. It has to be done by USDA officials, USDA
employees. That is subject obviously to having the resources
and the appropriations to be able to pay for those inspections
because you have anti-deficiency issues. So it is not a matter
of trumping, it is just a matter of the sequencing of this is
such that if you don't have the money to pay for people, you
can't have people on the line, and that is, candidly, where we
are.
The Chairman. So in the circumstance you have described, it
would sound like there are things that obligate you not to
begin immediate furloughs. How far down the road is it before
those issues will be sorted out?
Secretary Vilsack. That is a fair question. This week we
will send out notices to the union representatives that a
furlough is possible, and one of the challenges is that not
every one of our workers in this particular area has e-mail, so
we actually have to hand-deliver a letter or written
notification to those employees. That has to be followed up
under the agreement with oral conferences that have to take
place for any employee who requests an oral conference. That
will be done at the local level by local or regional
supervisors. So we are looking at a several-month period, if
you will, before a furlough could be implemented, assuming that
we can negotiate with the unions a process, and I obviously
don't know when those negotiations will take place, but I am
assuming that we will be able to get to a resolution of how and
under what circumstances. So the industry will have some notice
of what will actually happen, which we hope we will be able to
some extent, a minimal extent avoid the disruption that is
going to occur.
The Chairman. Mr. Secretary, could your lawyers down at the
Department--we are going to get questions as Members and as a
Committee as a whole about how all this works. Could your
lawyers provide us with the legal background on how they make
their decisions on what takes priority over what so that we can
understand what is going on?
Secretary Vilsack. Sure. I think Senator Grassley requested
an evaluation, which we are furnishing today or tomorrow, and
we would be more than happy to furnish that to the Committee.
The Chairman. Thank you, Mr. Secretary. My time has
expired. I now recognize the Ranking Member for 5 minutes.
Mr. Peterson. Thank you, Mr. Chairman.
So I am trying to understand this. So 87 percent of the
money goes to inspectors, and you just said it is going to take
some matter of months before you get through this process, so I
don't know what that is, maybe 3, 4 months.
Secretary Vilsack. Well, it is going to take several months
because----
Mr. Peterson. So my question is this. You have to cut five
percent, and you now have by September 30, right?
Secretary Vilsack. I am sorry. What?
Mr. Peterson. By September 30, you have to cut five
percent?
Secretary Vilsack. That is correct.
Mr. Peterson. So if it is going to take some number of
months, you could get down to a situation where you have only
have 3 months left in the year by the time you get this ready
to go?
Secretary Vilsack. That is correct.
Mr. Peterson. Does that mean that you are going to have to
make bigger reductions in order to meet the five percent? Is
that the reality of what the situation is?
Secretary Vilsack. If you have 6 months left to implement
this, you have, in essence, a ten percent reduction of your
remaining resources. If there are 3 months, you have a 15
percent reduction of your remaining resources.
Mr. Peterson. So that is how it is going to work?
Secretary Vilsack. Well, we may have a bit more than 3
months but it won't be a lot more than 3 months, and that is
one of the problems.
Mr. Peterson. Now, last year, a year ago, FSIS issued a
proposed rule on modernization of poultry inspection, and
according to your data, establishments operating under this
HACCP-based inspection model project called HIMP, a pilot
project, that performs as well or better than traditionally
inspected plants, and furthermore, the rule created additional
poultry plant jobs and will have budgetary savings for FSIS.
Can you give us an update on when USDA plans to issue a final
rule on this?
Secretary Vilsack. Well, we are hopeful of getting this
through the process this year, Congressman. This is an
important opportunity for us to improve the safety of food
inspection in poultry plants. It really hasn't changed for
probably 60 years. It is an opportunity for us to really focus
on where we think the risk of pathogens is greatest. It does
require a shifting of responsibility with companies assuming
more responsibility for examining defects of poultry that are
not necessarily tied to food safety, and that would free up our
inspectors to actually do a better job of inspecting the entire
plant. We do believe it will save money and we believe, based
on the experience, that it will reduce illnesses and the risk
of death.
Mr. Peterson. But it won't happen before September 30th?
Secretary Vilsack. No, no.
Mr. Peterson. A few weeks ago, Deputy Secretary of Defense
Ashton Carter testified regarding the sequester that if they
had additional flexibility, well, I guess he testified that at
this late date would do little to offset the effects of
sequestration, even if they had flexibility. Is the Department
seeking any legislation to give it flexibility? I know we have
had discussions that if you had some flexibility, you might be
able to avoid some of the problems with the meat inspectors,
for example. Are you able to pursue anything, or where are you
all with all of that?
Secretary Vilsack. Well, respecting the process here,
knowing that you all are going to be faced with a circumstance
in a couple of weeks of having to decide what to do with the
continuing resolution and discussions that will take place in
terms of the farm bill. Our focus has been on basically
implementing the sequester, focusing on what we would do in the
event the continuing resolution is not continued and trying to
do the best we can to deal with the extension of the farm bill
and to work with this Committee and the Senate Committee to try
to get a farm bill through. That is where our focus has been.
You know, we will work with whatever Congress provides us
but you have to give us the tools, and the reality is that
there are micro problems and macro problems with the sequester.
You know, $85 billion taken out of the economy in addition to
the payroll tax increase that took place at the 1st of the year
is a pretty significant hit to the economy. It is going to
probably impact growth. We are trying to avoid that the best we
can.
Mr. Peterson. But bottom line, if you had some flexibility,
you might be able to soften some of the problem with the meat
inspection situation?
Secretary Vilsack. Well, the reality of a sequester is that
it doesn't allow you any ability to prioritize.
Mr. Peterson. Right. So if you had flexibility to move
things around, it might not be as big of an issue with the meat
inspectors?
Secretary Vilsack. We would obviously recognize the
important role of mission first and we would do everything we
could to make sure that the most important missions were
completed and done. We don't have that capacity today. That is
why this is recognized by all as bad policy.
Mr. Peterson. Thank you. Thank you, Mr. Chairman.
The Chairman. The gentleman's time has expired. The chair
now recognizes the gentleman from Iowa, Mr. King, for 5
minutes.
Mr. King. Thank you, Mr. Chairman, and thank you, Mr.
Secretary for your testimony and your service as our Secretary.
I am following up on the gentleman from Minnesota's
questions. The viewpoint I would have would be that if you had
more--what I am hearing is, if you had more flexibility, you
could diminish the effect of the potential furlough of our meat
inspectors, and I don't hear you say yes to the question, have
you submitted a plan or proposal as to where you might take
that money if you had full flexibility within the Department.
Can you tell us here today where you would take that money from
if you had full flexibility?
Secretary Vilsack. Congressman, I am a little reluctant to
do that because I would like to obviously have the opportunity
to understand precisely what flexibility I have, what
directions Congress is providing to me and what our staff has
to say. These are difficult choices that we make. Do we take it
from the Foreign Agricultural Service and reduce exports? That
is not a particular----
Mr. King. But I am really interested in what you might do,
and rather than what would be a bad thing to do, and as I watch
the Pentagon, they seem to be able to propose that they can
furlough civilian employees with a significant amount of
flexibility. I am going to expect that they went to OMB for
analysis of the sequestration language. Have you had any
directives from OMB that would illuminate this thing in such a
way that you have less flexibility than the Pentagon, perhaps?
Secretary Vilsack. Well, no. The Pentagon--the difference,
Congressman, is depending upon how many accounts you have in a
particular area. So, for example, NRCS in my world has far more
accounts than the food safety account and so you do have some
degree within the NRCS world of being able to prioritize
because you have different accounts. But with food safety, you
only have a couple of accounts and they are all basically
people, and most of them are people on the front lines.
Mr. King. I do understand that, and that has been part of
your public statement over the last few days. I would ask you
if you would be willing to, and just ask you to submit to this
Committee your recommendations on what you would like to see
written into the CR to give you the flexibility necessary so
that the meat industry no longer has to be concerned about the
backup that could be caused by furloughs of meat inspectors?
Secretary Vilsack. Well, the answer to that question is
relatively easy, Congressman. Just give us the resources.
Mr. King. That is not an option, Mr. Secretary, as you well
know.
Secretary Vilsack. Well, see, now, that is a choice you all
are making.
Mr. King. That is a choice that was actually recommended by
the President and it is the current law. I am suggesting this:
staying within sequestration caps, which you have said that you
intend to do and follow the law. Do you have a recommendation
you would be willing to offer this Committee that could go into
the CR that would alleviate the meat inspection problem that
you say is impending?
Secretary Vilsack. Well, again, if I was going to make a
recommendation, it would be to adequately fund that line item
of the budget.
Mr. King. We have reached an impasse on that, Mr.
Secretary. So let me pose a couple of other things. Can you
cite any evidence that the School Lunch Program is contributing
to the obesity of our children?
Secretary Vilsack. Well, there is an Institute of Medicine
study that was done prior to the Healthy, Hunger-Free Kids Act
passage in 2010 that suggested that our School Lunch Programs
were providing our youngsters with too much sodium, too much
sugar and too much fat content, all of which do in fact
contribute to obesity.
Mr. King. Out there across the people that are providing
the food to these kids, I can't find anybody in the industry,
in the cafeterias that would concur that the food they are
getting now is contributing to obesity.
Secretary Vilsack. Well, there is a difference,
Congressman. You asked if there was evidence----
Mr. King. You cited the study, and I recognize that.
Secretary Vilsack. So if you are asking the question today,
obviously we are taking steps to improve our meals and
providing more fruits and vegetables, less sodium, less sugar,
less fat, more whole grains and low-fat dairy. So we believe
that it is making a difference, and the fact that we have seen
obesity levels in major cities basically plateau is a good
indicator of perhaps----
Mr. King. I read the First Lady's op-ed on that. I didn't
see a lot of evidence in it, but I saw her op-ed. But can you
cite a statutory directive to cap calories or meat in the
School Lunch Program, or isn't that an option that you have
taken when you wrote the rules?
Secretary Vilsack. Well, one of the concerns obviously is
calories in and calories out, and what we have done in light of
the concerns that have been expressed by school officials is to
provide some degree of flexibility on this. I think there is
greater appreciation and greater acceptance of this because of
the flexibility we provided. So there has been flexibility but
we haven't necessarily sacrificed the principles that the
Healthy, Hunger-Free Kids Act directed us to do.
Mr. King. What is the rationale for rationing meat?
Secretary Vilsack. Well, it is not rationing meat. It is
balancing the meal, Congressman. It is making sure that there
is a balance between fruits, vegetables, grains and protein.
Mr. King. You have a cap written into it, meat that can be
supplemented by other forms of protein, so I would define that
as rationing meat. What would the rationale be?
Secretary Vilsack. Well, it is giving school districts
choices in terms of their protein choices and making sure that
they understand the importance of a balanced plate and a
balanced meal.
Mr. King. Thank you, Mr. Secretary. I yield back.
The Chairman. The gentleman's time has expired. The chair
now recognizes the gentleman from Georgia, Mr. Scott, for 5
minutes.
Mr. David Scott of Georgia. Thank you, Mr. Chairman.
Mr. Secretary, given that in respect to the furloughs of
the food safety inspectors under sequestration, and the fact
that these food inspectors do not just stop at the plant but
they deal with the ranchers, the farmers and ultimately the
consumers under sequestration, so it would be very interesting
to get your take: will sequestration give the American people
cause for alarm about the safety of the food they will eat?
Secretary Vilsack. Congressman, I don't think it is so much
the safety of the food in my world, in USDA. Now, if I were the
FDA Commissioner, I might answer that question a little bit
differently. But we know that when inspectors leave the plant,
the plant shuts down. I think it is more about the supply and
production of food and whether we are faced with higher prices
or lower prices as a result of disruptions in supply and the
impact that it has on producers. I mean, the reality is, if you
feed a chicken one more day than you should, then basically it
creates potential issues with that chicken going down the line
and the equipment and the machinery that is used to process. So
there are ramifications to this. I think it is less about the
safety and more about production, but on the FDA side, it is
more about safety.
Mr. David Scott of Georgia. And you say that given the fact
that we have had a number of foodborne illnesses, Salmonella
outbreaks, given the current status of food inspectors. And now
we are going to have this furloughing system, and you can give
the American people assurances that the food safety will not be
jeopardized through this sequestration and loss of the number
and the availability of man-hours for food safety inspectors?
Secretary Vilsack. Our number one goal, Congressman, is to
make sure that product that leaves those plants is safe, and we
have taken steps in the last couple of years to reduce the risk
of Salmonella and we are going to continue to work hard to make
sure that food is safe. I don't want to--this is not about
creating great concern among consumers. This is about being
very truthful about the consequences of sequester, which is
that it is going to disrupt production in these facilities.
Mr. David Scott of Georgia. So it will disrupt production
but will not jeopardize food safety?
Secretary Vilsack. Just simply because it is a situation
where the production of food is stopped and it creates a clog
in the system or it creates shortages, which has an impact on
consumers and on grocery stores and things of that nature.
Mr. David Scott of Georgia. Well, tell us how these
furloughs will work. That will be helpful. Will they be
staggered or will all 15 furlough days have to be taken
continuously?
Secretary Vilsack. I don't think that you are going to see
a continuous furlough because that would basically shut the
pipeline down completely. What we are going to try to do is to
maintain some degree of movement through the pipeline to avoid
a more significant disruption.
Mr. David Scott of Georgia. Well, does an individual
plant's production cycle have any bearing on when the
inspectors assigned to that plant will suffer their furlough
days?
Secretary Vilsack. If I understand your question, it is not
so much the cycle that the plant is on, it is more how we can
coordinate the furloughs to make the most sense and to avoid
the least amount of disruption and to treat all plants
equitably.
Here is the issue. You know, just a hypothetical. Let us
assume for the sake of discussion we wanted to create a
regional impact and we would start in the Southeast initially
and we would furlough people in the Southeast and then let us
assume that Congress decided through a CR or the farm bill or
some other mechanism to provide resources to end the sequester
or to change the sequester or to create greater flexibility. If
you don't treat everybody the same, you have a situation where
some plants will be inequitably treated, and we think it is
important as a principle of this to try to be as equitable as
we can in this process.
Mr. David Scott of Georgia. And your process of dealing
with the furloughing of these food inspectors that you have
outlined so far is basically categorized by the $85 billion
sequester that will go through September 30th. Let us suppose
that continues. Has any thought been given to what the impact
will be if we go beyond, if we are not able to come up with a
substitute to the sequester in this short period of time? What
will happen if it goes on 2 years, 3 years?
Secretary Vilsack. That gets back to the Ranking Member's
point about the poultry slaughter inspection process. At least
as it relates to poultry, there are potential savings that
could be realized with this new system if it is instituted and
implemented. That is one thing. And obviously in a budget
situation without the limitations of a sequester, you obviously
have a much greater capacity to prioritize. That is one of the
reasons why even though our budget is below Fiscal Year 2009
total, our operating budget, in the food safety area, it is
pretty much flatline because there has been a recognition by
Congress that that is an area that should not be reduced, but
the Farm Service accounts, the Rural Development accounts, some
of the other areas of our budget have been significantly
reduced.
The Chairman. The gentleman's time has expired.
Mr. David Scott of Georgia. Thank you, Mr. Chairman.
The Chairman. The chair now recognizes the gentleman from
Texas, Mr. Neugebauer, for 5 minutes.
Mr. Neugebauer. Thank you, Mr. Chairman.
Mr. Secretary, thank you for being here. I don't want to
spend a whole lot of time on the food inspection but I want to
go to a follow-up. I am a little concerned about the fact that
you are going to wait 3 months before you begin to implement
the sequester and so banking basically then on having to do a
larger amount of cut in the last 3 months. I think the question
is, why wouldn't you begin that process almost immediately and
sit down with the stakeholders and say, ``Where in your plants
could we inspect 4 days rather than 5 days?'' Because in some
areas, as you mentioned, some of the production, the capacity
is down in the beef industry, for example. Why wouldn't you
start that now? I am not very concerned about the negotiations
with the labor unions. What I am concerned about is farmers and
ranchers all across America that are growing livestock or
poultry and their ability to take that to markets and for the
people of this country to be able to have safe food. So I am a
little confused why you would start this labor union process
now and possibly make this process more harmful than it needs
to be.
Secretary Vilsack. Well, Congressman, first of all, we are
contractually required to start the process and we are
contractually required to give at least 30 days' notice.
Unfortunately, not all of our frontline inspectors have e-mail
so those people have to be hand-delivered.
Mr. Neugebauer. I heard that.
Secretary Vilsack. Okay.
Mr. Neugebauer. So here is the question. You have known
this is coming. This is your Administration's plan. Why did we
wait until March 1st to begin this process? Why didn't we begin
that process sooner?
Secretary Vilsack. We couldn't begin until the President
signed the order, Congressman. That was what actually triggered
the Act and gave us the authority to then begin the process. If
I can just say one thing in response to your question to
clarify this, it really doesn't make any difference in terms of
the number of furlough days whether we do it in 3 months or 6
months. The number of furlough days is a finite amount of days
based on the amount of savings that we have to accomplish. What
it does provide is notice to the industry and producers a long
enough period of time. To the extent they can prepare or
adjust, they have a little bit more time to do that. And we are
expecting that the furlough days might be in the neighborhood
of 11 to 12 days at this point.
Mr. Neugebauer. I want to move on. As you alluded to in
your testimony, recently the CBO updated their scores for the
House and Senate farm bills from last year that were passed out
of committees but did not become law. In their analysis, both
the House and Senate bills for nutrition funding, CBO stated
that CBO now estimates that spending on nutrition programs
under Title IV of the legislation would be $4 billion more in
the next 10 years than it was estimated in 2012, primarily
because of a change in our estimate of a provision regarding
utility allowance, LIHEAP, I guess it is referring to, in the
Supplemental Nutrition Assistance Program. CBO has obtained new
information on states' practices and the USDA's interpretation
of the current law with respect to how households qualify for
utility allowances, and accordingly, CBO now believes that the
states would have more flexibility under proposal than was
assumed from the previous estimates. This is a quote from the
CBO report. ``Thus, now CBO expects that these provisions will
bring little or no reduction to the cost of nutrition
programs.'' I think that is very troubling because that was
probably one of the most bipartisan aspects of the farm bill
both in the House and the Senate, but what is troubling is,
basically they went back and reevaluated how you are
interpreting that provision, and it is how you are interpreting
that provision that is causing them to say that this program is
going to cost more money. How would you respond to that?
Secretary Vilsack. Well, I would say this, Congressman.
With due respect to the CBO, I think that this issue is far
from settled, and the reason I say that is, that it is not a
situation where CBO, as I understand it, went out to all 50
states to find out precisely how they were administering this
utility allowance. They only contacted two states. I think that
we may have a small sampling here, and our view is that perhaps
a larger sampling might result in a different conclusion.
Mr. Neugebauer. What are you going to do proactively to--
this is a major setback for the farm bill, and it is a major
setback for the American people--if in fact it is becoming too
easy for states to utilize this loophole, if you would call it
that. This is a program that, as you know, when you look at the
graph, is increasing at an alarming rate. Some people say one
in seven Americans are now on food stamps, but at a time when
were trying to cut back, making it easier for states to somehow
game the food stamp program is a little disheartening.
Secretary Vilsack. Well, we are certainly not interested in
having folks game the system. I would point out that there are
many reasons for the increased number. Part of it is an economy
that for many has not been what it needs to be. Part of is an
aging population. Seniors now comprise an ever-increasing
amount of food stamp recipients. In fact, 80 percent of those
who receive SNAP benefits are either senior citizens, people
with disabilities, children or those who are actually in the
workforce but simply are working at jobs that aren't paying
enough.
I think the goal here, Congressman, and we would be happy
to work with you on this, is ways in which we can figure out
those people who are working at jobs, if we could get them to a
better job with a little more training and a little more
education, maybe we could get them out of the program which is
to me the best way to do this is to get folks so they don't
need the program, and we are happy to work with you on that.
The Chairman. The gentleman's time has expired. The chair
now recognizes the gentleman from California, Mr. Costa, 5
minutes.
Mr. Costa. Thank you very much, Mr. Chairman. A lot of
questions, a little time. Thank you, Mr. Secretary, for your
willingness to continue to serve as our Secretary of the United
States Department of Agriculture, an important job.
Just an observation. I mean, we are still spinning who is
responsible for the sequestration. Let us all remember that we
all agreed to this a couple years ago, and while we may not
like various aspects, we did so under the feeling that it would
not be implemented. Well, it is here and now the fact is, we
are all responsible, period, and the American public gets it.
On the issue of--and I am not going to beat this horse to
death, but on the issue of our USDA inspectors, the carring out
of their services, the Office of Management and Budget in the
past has determined this to be an essential service. Now, how
we handle this and the conversation that we just had is based
on what happens. I am clear about that. But you deem that these
services are not essential, and I am trying to understand, Mr.
Secretary, why we would not deem these services as being
essential.
Secretary Vilsack. Well, Congressman, that option is not
available in a sequester circumstances. Here is the difference.
When we are dealing with----
Mr. Costa. I think they are essential.
Secretary Vilsack. Well, I do too, but that is not the
issue. The issue is, you are asking in a continuing resolution
where we are looking at a shutdown or lapse in budget, there is
an expectation and anticipation that there are going to be a
budget and there are going to be resources to essentially
reimburse the food safety folks because you are going to have a
budget and you will be able to reimburse, you will have the
flexibility to do this. In this situation, we are not talking
about a lapsed budget; we are talking about a cut in the
budget. And so you have not provided sufficient resources to
pay for the inspectors. It is not about their classification as
essential or non-essential, it is that there simply is not
enough money to pay them for the service that they have to
provide.
Mr. Costa. All right. I want to move on. You talked in your
opening comments about the impacts of the drought throughout
the country, and regionally they have been very difficult,
devastating in some communities. We are finding a situation
back in California where the last 2 months, January and
February, have been the driest 2 consecutive months since 1925.
I am wondering under your definition of drought whether or not
because nine percent of California is irrigated, whether or not
we qualify under the definition of drought, because I can tell
you, we just last week received a 25 percent allocation for
water under the projects, 40 percent right now at the state.
That may be cut back. And we are facing a very difficult
situation, a possible repeat of 2009 and 2010 where we had over
40 percent unemployment levels in some communities.
Secretary Vilsack. Our definition of drought is based on
the Drought Monitor and it is based on factors that are taken
into consideration, and that Monitor is adjusted every week,
which is why I was in a position to say to the Chairman that
for over 30 consecutive weeks we had over 50 percent of America
on that Drought Monitor. Now we are at 45 percent. It may very
well include significant sections of California to make up that
45 percent.
Mr. Costa. Okay. I want to follow up with you on that. The
definition on rural has been a problem for many of us in this
Committee, and we lamented in previous hearings where members
of the USDA have testified why we didn't get a more timely
response on the definition of what is rural. We finally got it
last month, and I am not so sure that I am pleased. Maybe I
will ask you to go back to the drawing board. But the fact is,
we have oversubscribed accounts. What is the proposed rule on
rural definition? What is your intent in terms of
implementation?
Secretary Vilsack. Well, the proposed rule basically sets a
sort of single definition as opposed to the 11 or 12 different
definitions that we have in law at 50,000 people or less, and
it is a reflection of what is happening to the demographics in
the United States as the rural population now represents 16
percent of America's population and that is the lowest
percentage in the history of the country. I think in order for
us to make sure that we continue to be viable in terms of
resource allocation, we have to make sure that we have
sufficient resources coming into those rural areas. A
definition will help in that respect.
Having said that, I recognize that we are going to have to
ensure that very, very small communities are able to get their
fair share of the resources we have, and what we have been
attempting to do, Congressman, is encouraging small communities
to work regionally because we are pretty convinced that you get
more leverage and better bang for your buck and you extend the
human and financial capital if folks think of themselves as
part of an economic region as opposed to individual
communities. We think we could have more success in developing
economic opportunity that way.
Mr. Costa. All right. My time has expired, but if there is
a second round, I would like to talk to you a little bit about
trade and dairy.
The Chairman. The gentleman's time has expired. The chair
now recognizes the gentleman from Texas, Mr. Conaway, for 5
minutes.
Mr. Conaway. Thank you, Mr. Chairman.
Mr. Secretary, welcome. Thank you for your response to my
letter. As irritating as it is to have to answer letters to
Members of Congress, I appreciate you sending your letter March
1st.
In that letter, you said the Department as a whole has
planned extensively on how to address sequestration. It has
taken all the actions feasible to mitigate its impacts. The
second paragraph says also in anticipation of sequestration,
FSIS Administrator directed the initial Fiscal Year 2013 budget
allocations to be reduced across program areas. So thank you
for those proactive kind of comments. It does kind of run
counter to some of the answers earlier when you said you really
couldn't do anything until March 1st. You couldn't put out
notices, you couldn't let folks know that this was in fact
coming as part of your fiduciary responsibility as the leader
of that organization. You have $1.9 billion that you have to
trim in planned spending. Can you tell us this morning where
you stand against that $1.9 billion based on all the good
things that you did from October 1st through the end of
February in terms of lessening the impact of the last 7 months
of the year with things that you did the first 7 months?
Secretary Vilsack. Congressman, if I understand your
question, we were taking proactive steps to control our budget,
not necessarily because of sequester but because of the fact
that----
Mr. Conaway. Thank you, sir. I have limited time.
Secretary Vilsack.--we have flatline budgets. I want to
make sure that we are talking about----
Mr. Conaway. From October 1st forward, there was a petition
for sequestration and there wasn't really a lot of movement
away from it, and dollars saved between October 1st and
February 18th count against that $1.9 billion, so can you tell
us this morning, and maybe you don't know.
Secretary Vilsack. I don't think they count against the
$1.9 billion, Congressman, and the reason they don't is because
we were dealing with the consequences of Congress reducing
budgets from the previous year and the year before that.
Mr. Conaway. You had a budget to start the year, right?
Secretary Vilsack. Yes, sir.
Mr. Conaway. Okay.
Secretary Vilsack. Well, we had a continuing resolution.
Mr. Conaway. Yes. You had funding authorized and
appropriated to start the year.
Secretary Vilsack. For a section of the year, portion of
the year.
Mr. Conaway. Right, through the 27th, so it is your
testimony this morning that to the extent that you spent less
than that in the first 5 months, that that does not count
against the sequestration cut in spending? I don't want to use
the word savings because that is an inappropriate term. Those
funds don't count against the $1.9 billion that you are going
to have to not spend this year?
Secretary Vilsack. The resources that we were able to save
in travel and supplies and things of that nature allowed us to
fit within the budget that you all gave us.
Mr. Conaway. All right. So your testimony is, in spite of
the letter, that you have mitigated the impact of
sequestration, your testimony orally this morning is in fact
you have not----
Secretary Vilsack. No, I don't agree with that,
Congressman. I think what we are trying to say is that the
steps that we have taken, a lot of people say well, surely,
there is a lot of fat and a lot of--what we were trying to
suggest to you is that we have already taken those steps
because of the----
Mr. Conaway. The letter says as well that those steps have
resulted in savings that allow you to cut the number of days
potentially for furlough by \1/2\.
Secretary Vilsack. Well, furlough----
Mr. Conaway. So you can't tell me two things at the same
time, Mr. Secretary.
Secretary Vilsack. Furloughs obviously would have been
higher----
Mr. Conaway. Right. So how much----
Secretary Vilsack. I think it is $30 million, Congressman.
Mr. Conaway. Thirty million dollars out of the $1.9 billion
that you have to come up with?
Secretary Vilsack. Right.
Mr. Conaway. Now, back on the union issue, can the unions
drag their heels and force sequestration to occur in the last
15 days of September?
Secretary Vilsack. No. There is a----
Mr. Conaway. Why can't they?
Secretary Vilsack. There is an impasse process. If after a
week or so of negotiations and discussions----
Mr. Conaway. Okay. And that week starts March 1st?
Secretary Vilsack. No, sir. You have to get a 30 day
notice.
Mr. Conaway. Okay. And that notice has gone out?
Secretary Vilsack. I believe it goes out today or tomorrow.
Mr. Conaway. Why wouldn't it have gone out on the 1st?
Secretary Vilsack. It is going to go out today or tomorrow,
and unfortunately, we can't necessarily get everyone an e-mail,
which would have been the most efficient way to----
Mr. Conaway. They all get paid, Mr. Secretary. That
argument that the union negotiators don't have e-mail, really?
Secretary Vilsack. It is not negotiators, sir. It is every
worker.
Mr. Conaway. Well, I understand, but you aren't negotiating
furloughs with each and every worker, do you?
Secretary Vilsack. Well, actually, the G7s have to receive
notice, and not all G7s have e-mail. So you have to actually
hand-deliver or mail them a notice. Thirty days after they have
all been notified, the clock starts on 30 days, and then during
that 30 day period we can start the process of negotiation, and
it is not about stopping the furloughs, it is how you are going
to implement the furloughs. After that, there are oral
conferences that are required under the contract, so if an
employee says I want an oral conference, you have to do that,
and that will be done at the local level. So, we are going to
try to do this as quickly as we can but it isn't going to
impact the number of days.
Mr. Conaway. You said that earlier, but 12 days spread over
6 months is less of an impact than 12 days taken all in
September.
Secretary Vilsack. We are not going to have them all in
September.
Mr. Conaway. But you said that early on in February. You
said the implication was you were going to shut the entire
process down for 15 days.
Secretary Vilsack. No, sir, that is basically how you
interpreted it. That is not what I said, with due respect. What
I said was, there was going to be----
Mr. Conaway. You did not mention the word furlough until
late February.
Secretary Vilsack. Well, the furlough----
Mr. Conaway. The staggered furlough until late February.
Secretary Vilsack. Well, no. What I said was, there were
going to be so many days of furloughs. I never said they were
going to be continuous. You interpreted that, and I am sorry
that you did that because----
Mr. Conaway. Well, I am not the only one.
Secretary Vilsack. Well, I am sorry that anybody did it
because I was making a truthful statement. There were going to
be furlough days, to give everyone notice of the fact that what
was going to happen with the sequester, and it is not something
we want to do, sir. It is something we have to do.
Mr. Conaway. I understand. It is the law. Thank you, Mr.
Chairman.
The Chairman. The gentleman's time has expired. The chair
now recognizes the gentleman from Minnesota for 5 minutes.
Mr. Walz. Thank you, Mr. Chairman, and Mr. Secretary, thank
you for being here, and thank you not just for being a friend
of agriculture but being a friend of rural America. And I go
back to--it is interesting, this hearing is titled Review of
the State of the Rural Economy and yet as the American people
see, we are in the minuti# of idiocy on policy instead of
allowing us to have a vision that grows the country, grows
rural America, lets us create the jobs that allow families to
live where they want to, and I am thankful that you continue to
stay focused on that.
I have two questions that I think would go a little broader
than what the title of the dang hearing was about. A diverse
rural economy is the strongest hedge we have against economic
downturn and natural disaster. When we put all of our eggs in
one basket, it becomes a problem. You are doing things through
USDA that I believe is broadening that economic diversity. Two
programs or two things I would like to just mention and get
your feeling on as to the future of these beyond sequestration
when we get back to actually wanting to govern and get beyond
crisis mode. What is the future of the RUS program in creating
energy efficiency, job creation, stability and that, and then
how do you see, Mr. Secretary, the energy title portion of the
farm bill and the ability to create jobs and make sure we are
energy independent in rural America through those programs?
Secretary Vilsack. There are four cornerstones to
revitalizing and renewing the rural economy. One of those is
production agriculture and exports, local and regional food
systems, conservation and outdoor recreation, and the biobased
economy. Within the biobased economy, there are tremendous
opportunities for taking our plant material, livestock waste,
grasses and converting them into energy and converting them
into fuel and converting them into chemicals, plastics,
polymers, fabrics, fibers, a whole wide variety of
manufacturing opportunities. So it is important to have an
energy title that is a bit extended to include biobased
products. We have 3,100 companies located throughout the
country that are in this biobased space and that number is
growing. We as the Federal Government are trying to purchase
biobased products in a BioPreferred Program that we are
running. We have doubled the number of products that we can
purchase, and we also have a bio-labeling program, which is
basically giving people, consumers the awareness that when you
are buying something, you are helping an American farmer,
producer out.
As far as RUS is concerned, that combined with the REAP
program, I can tell you in the last 4 years, we have done 6,600
energy efficiency and renewable energy projects that are
individualized to farms and businesses. They have saved or
generated over 7 billion kilowatt-hours of electricity, which
obviously is important to the RECs that are out there providing
good utility service. We have improved 91,000 miles of electric
transmission lines and we are creating a development through
our rural development housing effort and RUS to sort of
reenergize and create more efficient homes. Our housing stock
in rural America, there are a lot of energy efficiency
opportunities there and there are training and job
opportunities that are connected to retrofitting homes with
energy efficiency. So there is a lot of activity in this space
but a 5 year program would provide the certainty, especially if
there is an energy title that is adequately funded and we have
an expanded opportunity to move into the biobased area.
Mr. Walz. Well, I appreciate that vision, and just for the
record, I want to make it clear, this Committee did pass a farm
bill and at any given time it could have been brought to the
Floor for an up-or-down vote. It did not happen. Our commitment
to making that happen is certainly strong. Thank you, Mr.
Secretary.
The Chairman. And I thank the gentleman from Minnesota for
his vote for that farm bill.
The chair now recognizes the gentleman from Ohio, Mr.
Gibbs, for 5 minutes.
Mr. Gibbs. Thank you, Mr. Chairman.
Mr. Secretary, I know this is a little bit out of your area
but I want to see how you weigh in on it. Earlier the EPA
released raw data to certain groups dealing with livestock
operations, businesses and personal information, it was the raw
data, and I know that the associations out there are really
concerned about that and potential for harassment,
intimidation, whatever. Did you in your capacity weigh in on
that to the EPA expressing your thoughts or make sure it
doesn't happen, or where do you stand on that?
Secretary Vilsack. We know that EPA has taken this issue
very seriously, as they should, and we have indicated to them a
concern that you have expressed and that has been expressed to
them by various groups, and I think that they realize that this
is something that probably shouldn't have been done.
Mr. Gibbs. So you expressed your strong opposition to that
type of thing?
Secretary Vilsack. Well, we expressed a concern as we
always do. We have a relationship with the EPA. When we see
something that they are considering or doing that we think may
have an impact on rural America, it is our job, and we have a
good line of communication. They just recently hired someone
from USDA to be their ag liaison, Sarah Bittleman, who worked
in my office, so we will continue to have a close relationship
with them in terms of being able to communicate concerns or
advice.
Mr. Gibbs. All right. I am going to move on. Of course, I
am a strong believer that we need to have a safety net program,
and crop insurance is a good vehicle. I was wondering--some of
the opponents of crop insurance said the claims might reach $40
billion in 2012. Do you know what the claims were?
Secretary Vilsack. Well, at this point, Congressman, they
are a little over $15 billion.
Mr. Gibbs. Okay.
Secretary Vilsack. I don't know that the books have been
closed on this but it is probably a pretty close estimate.
Mr. Gibbs. On average over the last 10 years, how much
premium was paid compared to the indemnities that were paid
out? Do you know what the ratio is?
Secretary Vilsack. Well, the ratio is probably 2 to 1. For
every dollar that was paid in premiums, there is probably $2 in
indemnity payments out, somewhere between $250 billion and $500
billion.
Mr. Gibbs. I just want to talk a little bit about farm
credit. We have seen 2011 record net farm income in 2012 even
with the drought, estimated to be the second highest ever. What
kind of default rates does the Farm Service Agency seeing?
Secretary Vilsack. In past years, the default rates were
down a little bit in the direct programs. The previous year,
they were 6.5 percent default. This year, 2012, they were 6.3
percent. On the guaranteed program, the default rates in 2011
were 1.3 percent, and in 2012, they were 1.14 percent.
Mr. Gibbs. It has been in the press a concern that maybe
farm income, we were in a bubble. Do you see the potential for
a farmland bubble?
Secretary Vilsack. Well, I am with the Chairman on this.
You always have to be cautious about this, but this is
different than the 1980s when the debt-to-asset ratio was
significantly higher than it is today. There is quite a bit of
equity that is built up, and we are not quite in the same
circumstance we were in the 1980s. Obviously, the land price
issue is one that concerns me for this reason. It is more
difficult for beginning farmers to basically get into the
business or stay in the business, and that is an issue because
of the aging nature of farmers generally.
Mr. Gibbs. And high capital costs to get into, right?
Secretary Vilsack. Correct.
Mr. Gibbs. What is the status of the MAP and programs in
the FMD program?
Secretary Vilsack. Well, both the Market Access Program and
the FMD program will receive reductions as a result of the
sequester, I would estimate somewhere in the neighborhood of
$12 to $15 million in those programs. Every dollar that we use
to promote trade generates about $35 in trade activity. So if
we reduce those resources, obviously that is going to have an
impact on trade, but we are still looking at a record year for
exports.
Mr. Gibbs. For this year, the direct payments and ACRE
programs, what is the status or what percent cut would you be
looking at, do you think, in the sequester?
Secretary Vilsack. Well, I am not clear about that, and the
reason I am not is because we are still in the process of
trying to figure out precisely how this all works with the CCC
and whether or not there is any degree of flexibility. Part of
the challenge that we have with sequester is that some accounts
we have already paid money out, and the question is, do you
have to ask people to return the money that you paid to them or
is there a way in which you can avoid that disruption, and we
are still in the process of trying to figure out precisely what
we can do. But I would anticipate and expect that there will be
a slight reduction but we are still on track. The signup is
taking place for both of those programs.
Mr. Gibbs. Thank you, Mr. Chairman.
Mr. King [presiding.] The gentleman yields back. The chair
recognizes the gentleman from Oregon, Mr. Schrader.
Mr. Schrader. Thank you, Mr. Chairman. I appreciate it.
Thank you, Mr. Secretary, for being here. I really enjoy your
leadership at the Department of Agriculture in some pretty
tough times.
I was generally pleased with the President's State of the
Union speech, particularly the bipartisan balanced approach to
deficit reduction, but was a little concerned that he didn't
really talk much about the rural economy, so I appreciate you
being here to clarify where the Administration is. And as you
know, unemployment has been pretty high in rural America,
actually for a long time. I would argue they have been in a
depression, not just a great recession here recently.
In a lot of states out West and some back East, Federal
forestland plays a key role in potential economic growth in a
lot of these communities. We tried a variety of approaches to
forest policy not really working very well, and you wrote a
letter to Senator Mikulski, just recently, talking about the
effect sequestration would have in further reducing in my state
the 90 percent reduction that has occurred in timber production
and an increase in diseased, dead, dying forests in much of
America--Colorado, New Mexico, Oregon, northern California.
Could you comment briefly on the letter to the Senator and
the effects that not pursuing a thoughtful forest policy or
being able to get at it and increasing timber production and
cleaning up our forests so that we have a balanced approach?
And maybe in this budget-limited environment, using some of the
timber harvest receipts to actually help pay to hire folks to
supplement our Federal tax dollars and get the job done for
rural America.
Secretary Vilsack. Congressman, we have actually increased
the amount of treated wood in this Administration. In our new
forest planning rule, we understand the multiple uses to which
our forests have to be put, and we have indeed increased the
amount of board feet that we are treating, and we have also
increased the wood-to-energy opportunities that are created. We
have also----
Mr. Schrader. But in your letter--I don't mean to
interrupt--you talked about expected 2.8 billion board feet
going down to 2.4, which is a 15 percent reduction between 2010
and 2012.
Secretary Vilsack. I am sorry. I didn't know you were
asking about sequester. I thought you were talking about the
general policy. The sequester will obviously have an impact on
our forests in the following respects. Number one, it does
indeed reduce our capacity to treat board feet because we
actually have to pay people to do that. Even though they get
the benefit of the lumber, still, because of the economy, we
have to pay people to do that. Second, we will probably not be
able to work with communities in the interface between the
forests and urban areas to reduce the fire risk, about 200,000
acres. That too will obviously impact.
Mr. Schrader. So if were able to actually have a forest
policy modification that allowed for the harvest to actually
pay for some of the management that you talk about, that would
increase our opportunity?
Secretary Vilsack. Well, what we need is Congress to extend
the stewarding contract capacity, which expires this September.
That is important that it be extended and also that it would
allow us to go for longer contract opportunities. If we could
go from 10 years to 20 year contracts, we think we could
provide greater stability. Our goal is to treat more wood, it
is to create more opportunities, to use research to develop new
products, and our forest planning rule is the right policy. We
just need the resources to be able to----
Mr. Schrader. And you have shown that because of your
support of your green energy building policy, which I really
appreciate the Administration and you in particular taking on
the Department of Agriculture over the last couple years. My
good friend, G.T. Thompson, and I are introducing a Forest
Products Fairness Act that hopefully would start treating wood
as one of our biobased products as opposed to having been
discriminated against based on old 1970s work, and I am sure my
colleague will comment on that.
Last quickie question is, I don't know if you are aware but
the DEA has decided that mobile veterinary clinics--I was a
veterinarian for 35 years before coming to this job--can no
longer carry controlled substances, even though there is often
a locked ambulatory box in the back of their rig. That poses
huge problems for us to be able to treat the livestock, give
the animals on those farms the veterinary care they need in a
safe and efficient, humane manner. I hope you take some time
and look at that bizarre bureaucratic piece of red tape. I
understand the goal behind keeping our narcotics locked up, but
I think there is a bit of practicality that has to ensue or we
can't keep the food safety chain alive and well in our country.
So I just bring that to your attention. If you had a comment, I
would appreciate it. If not, please get back to me.
Secretary Vilsack. Well, Congressman, we appreciate your
bringing this issue up and we will certainly reach out to our
colleagues at DEA to make sure that we understand the policy
and to see if there is any degree of flexibility in the
crafting of that policy.
Mr. Schrader. Thank you very much, and I yield back.
Mr. King. The gentleman from Oregon yields back, and the
chair would now recognize the gentleman from Colorado, Mr.
Tipton.
Mr. Tipton. Thank you, Mr. Chairman.
Mr. Secretary thank you for being here for the state of our
rural economy, particularly out in the West, be it agriculture
or some of the recreational ends. Water is obviously key. We
have a deep concern in the State of Colorado from a directive
that was coming out of the Forest Service that was going to
require as a condition use of permit for our ski areas to be
able to sign over water rights that they had paid for, they had
developed and were on their balance sheet to the Federal
Government. This obviously is contrary to Colorado water law,
private property rights. It is going to inhibit their ability
with signing over those water rights to be able to leverage
their resources, to be able to keep people employed. The
directive that came out of your agency was struck down in court
because it did not comply with the Administrative Procedures
Act, but yet again, we see the Federal Government and your
agency going back after Colorado water, western water in terms
of conditional use of permits. Mark Amity's district out of
Nevada had a rancher on BLM lands that was required to sign
over their water rights.
So given the subversive nature that this has to state law
in Colorado and what this directive will really represent, the
potential negative impacts to our local communities, I guess I
would like to have a little better understanding of why your
agency feels that this is an appropriate use of agency
resources.
Secretary Vilsack. Well, Congressman, as you were asking
that question, I was thinking about my son, who is a lawyer in
Colorado, telling me, the advice he gave me, is never get into
water law issues, it is complicated. I think the Forest Service
learned a lesson in terms of approaching this issue. We
obviously did not provide enough notice and enough
clarification and understanding. That is why we have gone back
and----
Mr. Tipton. But you are still going to pursue Federal
preemption of Colorado water rights?
Secretary Vilsack. Well, we are in the process of reviewing
precisely what we were thinking about and seeing whether or not
we could respond in some way, shape or form to the concerns
that have been expressed. I will tell you that the focus here
is making sure that we use our forests, our U.S. forestlands,
in the most appropriate way to conserve and preserve water. One
of our driving principles of forest management is water
management because we recognize how precious the water is, and
I think that the impetus for this was really starting with that
concern but recognizing that we need to balance that with the
interests of those who need the water for economic purposes,
the ski industry specifically.
Mr. Tipton. Has there ever been any violation, any sale of
water other than for those purposes?
Secretary Vilsack. I can't tell you that, Congressman. I
don't know.
Mr. Tipton. I actually know the answer to that question. It
is no.
Secretary Vilsack. Okay.
Mr. Tipton. So I guess the question actually, Mr.
Secretary, is, why is the Federal Government continuing to
pursue a water grab in western states when we already have
water law, which works?
Secretary Vilsack. Well, it may very well----
Mr. Tipton. It is private property right in our state.
Secretary Vilsack. It may very well be that that policy is
going to be different than what we initially proposed because
we learned from that lesson of not providing adequate notice
and an opportunity to be heard. So their folks are looking at
this now and trying to rethink this. I think the goal for us is
making sure that as we use our forest areas, we use them in the
best possible way to preserve and conserve water resources.
Mr. Tipton. And I hope there will be heavy consideration
again for the state water rights, state law and private
property rights. It should not be preempted by the Federal
Government.
One other area I would like to be able to move on, and I
applaud some of the efforts to be able to grow some of our
exports, and you noted that with the President's sequestration
that we may well see some impacts actually to our ability to be
able to export. San Luis Valley, we have a lot of potatoes that
we would like to be able to export down into Mexico. Can you
give us an update on where that is at? It seems like in dealing
with the Mexican Government that we are having a real inability
to be able to export our potatoes and they are trying to use
some issues to be able to inhibit that.
Secretary Vilsack. Well, this is a good example of those
circumstances where barriers are created that have no
justification in science and we think are contrary to
agreements, and we have been working with the Mexican
Government to create a process by which our potato access to
their markets would be expanded significantly.
We had an agreement with Minister Mayorga, who was of the
previous government, to potentially open up that market. We are
going through a process with the Mexican Government to sort of
refine that agreement and the technical aspects of it, and the
hope is that with the new Administration that we would be able
to carry that agreement forward and ultimately see access. We
have had some success in reopening the beef market in Mexico,
and that gives us some degree of optimism that this is an
opportunity for us to also reopen that potato market. It is
very, very limited and we don't think it is justified.
Mr. Tipton. My time has expired. Thank you, sir.
Mr. King. The gentleman's time has expired and now the
chair would recognize the gentlelady from Ohio, Ms. Fudge.
Ms. Fudge. Thank you so much, Mr. Chairman, and thank you
for being here, Mr. Secretary.
Mr. Secretary, we all know that building a diverse
workforce is an extremely effective tool in addressing
discrimination. Many of the civil rights complaints in the
past, particularly those in Pigford, might have been mitigated
had USDA had a more diverse workforce that was better able to
interact with minority farmers. So to that end, what has USDA
done to ensure a more diverse workforce? And I am particularly
interested in hearing about how many African Americans serve in
leadership roles within the Department, and before you respond,
I just want to remind you that I asked this same question
almost 2 years ago and have yet to get a response, sir.
Secretary Vilsack. Well, let me see if I can respond to
your question here, and I apologize for not responding before
that. That is something that shouldn't have happened. We have
engaged in a process which we refer to as cultural
transformation at USDA, and every month I get a report on the
diversity of our workforce. I can tell you that we have seen
significant increases in the hiring of African Americans,
Hispanics, Asian Americans, Native Americans, people with
disabilities, and veterans, and that is the focus of this
report. We are casting a wider net to try to find good,
qualified folks, and the result of that is that our numbers are
increasing. Within the SES ranks, 17 percent of our SESs, our
Senior Executive Service folks, are African American, which is
seven percent higher than the civilian workforce.
Ms. Fudge. Let me just ask you this, and I could be wrong
so you could please correct me. But it is my understanding that
there are 12 positions that are Senate-confirmed positions
within USDA, and one is an African American.
Secretary Vilsack. I don't think that is--well, that may be
correct now because one of the positions that was Senate
confirmed is no longer Senate confirmed. But we have an African
American who is in charge of our entire operations, Dr. Parham,
Greg Parham. We have an African American who is obviously in
charge of the civil rights area. We have an African American
who is the administrator of our largest part of our budget.
Ms. Fudge. Well, if we know that, why is it so difficult
for me to get a report?
Secretary Vilsack. Well----
Ms. Fudge. Which I even asked you about as recently as a
couple of months ago, a chart.
Secretary Vilsack. Well, I mean, I can give you the
cultural transformation report if that would be of assistance
and help to you.
Ms. Fudge. Whatever answers my question is what I would
like to have, sir.
[The information referred to is located on p. 67.]
Secretary Vilsack. Well, the other thing----
Ms. Fudge. I am going to go to my next question.
Secretary Vilsack. May I just add one other thing, which I
think is important?
Ms. Fudge. As long as you do it quickly.
Secretary Vilsack. I understand. We have also added
minority representation on our county committee process, which
should address the issue that your question started with, which
is the----
Ms. Fudge. Whatever information you can give me would be
helpful, sir.
Let me also ask, has there been any plan to in a very
targeted fashion address rural hunger in this country? We know
that, certainly I am not from a rural community, I am from an
urban community, but I do understand hunger, and I know that
the rate of rural hunger has been increasing. Is there some way
you are going to target rural communities as it relates to the
hunger issues that exist today?
Secretary Vilsack. I would say quickly two answers to that
question. One, our Strike Force Initiative, which is now in
Mississippi, Arkansas, Georgia, Nevada, Colorado, South Dakota,
North Dakota, Virginia and North Carolina and New Mexico. This
is an effort to really focus on the persistently poor areas of
those states and part of that involves expanding opportunities
in all of our programs. In New Mexico, we saw a rather
significant expansion to our summer feeding program as a result
of Strike Force.
The second thing is our Healthy Financing Initiative, which
is designed to address the issue of food deserts in both urban
and rural areas, and while we don't have resources appropriated
by Congress, we are using our existing programs to try to
advance the cause of solving the food desert issues in those
rural areas.
Ms. Fudge. Thank you. And my last question for you is, how
is the sequester going to affect TEFAP?
Secretary Vilsack. We will see a slight reduction in the
amount of resource available for TEFAP, which obviously will
mean that we won't be able to--that the food banks and so forth
won't be able to have as much in the form of commodities. We
anticipate roughly 700 million pounds of food being provided.
It would be a little bit more were it not for sequestration.
Ms. Fudge. Thank you very much. I yield back, Mr. Chairman.
The Chairman. The gentlelady yields back. The chair now
recognizes the gentleman from Arkansas, Mr. Crawford, for 5
minutes.
Mr. Crawford. Thank you, Mr. Chairman.
Mr. Secretary, I know that the issue of CAFOs was raised
earlier. One of my colleagues had discussed it with you
briefly. I just want to ask some questions regarding that.
During the EPA's rulemaking process, can you tell me if
USDA raised to OMB and EPA the same biosecurity food supply and
producer safety concerns that were raised by the Department of
Homeland Security?
Secretary Vilsack. Our focus in conversations with the EPA
about that rule was to try to, consistent with their need to
protect the environment, minimize the disruption in livestock
operations.
Mr. Crawford. Were those concerns conveyed in writing?
Secretary Vilsack. I am not sure about that. I know what we
had was, we have a liaison who comes over to the USDA two or
three times a week to discuss issues, and I am sure there were
verbal conversations. I am not sure if there was a written
message but I know that there was clearly verbal conversations
about this because I was engaged in them as well. In addition,
the EPA Administrator and myself met with livestock groups on a
regular basis and had the opportunity to converse about a
variety of issues.
Mr. Crawford. Okay. If you have those in writing, I would
appreciate it if you could supply those to the Committee. Was
USDA aware that EPA was engaged in this effort after the
withdrawal of the rule to collect detailed information from
livestock and poultry operations across the country or that
they intended to create this comprehensive national and
searchable database for the public to use?
[The information referred to is located on p. 67.]
Secretary Vilsack. Well, I can't speak for the entire
94,000 people that work for USDA. I think we were generally
aware of this. Obviously we are not aware of the fact that this
could be released as it was.
Mr. Crawford. I guess now the most important thing now that
this information is out, what will you do as Secretary of
Agriculture to protect producers and their operations from the
possible misuse of this information?
Secretary Vilsack. Well, I am open to suggestions about
this, Congressman. Other than basically suggesting that it was
an unfortunate circumstance. I am not quite sure what we could
do but I am open to suggestions. If you have some suggestions,
I would be more than----
Mr. Crawford. Okay. I would love to talk with you about
that. In the interest of time, I have one more question for you
on that particular issue. Can you tell us what steps you can
take immediately to ensure that the EPA makes no further
releases of that type of data in the future?
Secretary Vilsack. Well, expressing to them the concern
that they heard from a variety of different sources is probably
what we can do and what we have done.
Mr. Crawford. I want to switch gears just a little bit and
talk about catfish, a food safety issue that has gotten a lot
of negative attention recently. I was hoping you can kind of
help me clear the air in preparation for the next farm bill
markup, but I am kind of running out of time. I want to make
this clear here. The 2008 Farm Bill included a provision
putting catfish inspection authority under the umbrella of
FSIS, aligning catfish food safety standards with the rest of
animal agriculture. This program has been repeatedly
mischaracterized as duplicative and trade distorting. As you
know, catfish inspection authority is simply being transferred
from FDA to USDA and is in fact not duplicative. I wanted to
question you on how often foreign countries have retaliated
against American goods as a result of USDA's meat inspection
requirements. I don't know if we have time for you to answer
that, but I would like to say that USDA's time on implementing
this program never seems to run out. It has been 5 years now
almost since the 2008 Farm Bill was signed into law, so it is
about time for the Department to get to move on this thing, and
if you want to comment on what you know about foreign countries
having retaliated against the United States in the context of
what I just said, I would like to hear your comments.
Secretary Vilsack. Well, I am not sure this is going to be
responsive to your question but it is an attempt. You know, we
are confronted with barriers almost every week and every month
by countries. I mean, APHIS last year knocked down 175 barriers
alone just in their department. So there is constant pull and
push in trade issues and constant barriers being constructed.
Right now, we are dealing with Russia and China and
ractopamine, an issue that has no scientific basis, where the
international community has spoken through Codex Alimentarius
Commission, and we still have these barriers being constructed.
So that is happening all the time, and I would agree with you,
Congressman, that it is time for us to take action on catfish
and I would anticipate that that will happen this year.
Mr. Crawford. Thank you. I yield back.
Mr. Goodlatte [presiding.] I thank the gentleman. The chair
now recognizes the gentlewoman from California, Mrs. Negrete
McLeod. Oh, she is not here? The Congresswoman from Washington,
Ms. DelBene, is recognized for 5 minutes.
Ms. DelBene. Thank you, Mr. Chairman, and thank you, Mr.
Secretary, for being here and for all of your work in support
of agriculture.
You highlighted the importance of investing in strong
agricultural research in your submitted testimony. However, in
the 1 year extension of the farm bill, critical research
programs have been left without any funding at all including
the Specialty Crop Research Initiative, which is very, very
vital to many of the fruit and vegetable growers that farm in
my district and throughout our country. Can you describe the
impacts on the economy for the lack of investment that we have
in agricultural research and the long-term impact that might
have?
Secretary Vilsack. Every dollar that we invest in
agricultural research generates $20 of economic activity so
whenever we don't adequately fund research, it has an impact on
the economy. But more importantly, it makes it more difficult
for us to deal with the production challenges and the
protection challenges that crops face every single day. That is
why it is important and relevant that we have not only a 5 year
bill but in that bill there is a strong research title and that
you all give us the tools that other areas of government in the
health area in particular have to leverage and to attract
additional private sector investment. Ag research has been
flatlined for far too long and we will pay a penalty for that
over the long haul in terms of reduced productivity if we don't
begin to ratchet that up a little bit.
Ms. DelBene. Thank you. And speaking of specialty crops, my
district is the largest producer of red raspberries, and
specialty crops are incredibly important in our region but they
are also about \1/3\ to \1/2\ of the total value of U.S. crop
production and they don't get the same share of attention in
our farm bill programs. Now with sequestration likely to reduce
the overall amount of funding for agricultural programs, can
you address this issue and what we can do or any
recommendations you have to make sure we support our specialty
crop industries?
Secretary Vilsack. Well, the best advice I could give,
Congresswoman, is to get a 5 year bill through and in that bill
to do what at least the Senate Agriculture Committee bill and
the Senate bill did last year, which is to make an increased
investment in specialty crops, and the reason for this is
twofold. One, we are obviously a country that is interested in
producing and consuming more fruits and vegetables but, two,
this is one of the fastest-growing areas of agriculture, and it
helps to support local and regional food systems, which is also
a fast-growing aspect of agriculture. The ability to expand
farmers' markets, the ability to have farm-to-school programs,
all of that is somewhat dependent on our ability to produce and
to protect those specialty crops. I think there is a growing
awareness in the agricultural community of the significance of
specialty crops, and would hope that we would speak with a
single voice about all crops and not just specific commodity
crops in the farm bill.
Ms. DelBene. Thank you for that. When the continuing
resolution runs out at the end of the month, four communities
in my district will become ineligible for rural housing loans
because the USDA will revert to a definition that uses a
population requirement that is pretty outdated. Changing that
threshold shouldn't impact the budget but it would maintain
current eligibility. Do you have an issue with changing that
definition, especially when we are talking about a general
definition of rural being 50,000? That is not currently what is
used in this.
Secretary Vilsack. We have made a concerted effort to try
to make sure that we didn't disenfranchise folks from the
housing programs based on a definition until Congress has had a
chance to speak in the farm bill. I appreciate you raising the
issue of the sequester. It is going to have an impact on
housing programs generally. We anticipate that over 10,000
folks will probably lose their rental assistance as a result
and there will probably be obviously fewer homes financed as
well, which at a time when we want the housing market to
continue to rebound, it is an unfortunate consequence of
sequester.
Ms. DelBene. So would you be open to Congressional action
that would increase the population threshold potentially?
Secretary Vilsack. Well, I will tell you, what I am
interested in is simplicity. I just want--it would be helpful
if we did not have 12 different definitions because it makes it
really hard to explain to people why they qualify for one
program and don't qualify for some other program. What we are
looking at is, is consistency and simplicity, trying to
streamline the process, and we are anxious to provide as much
help and assistance in rural areas as we possibly can. So if
there is a way the definition could be cleaned up or clarified
or to provide greater consistency and simplicity, I am for it.
Ms. DelBene. Thank you. Thank you, Mr. Chairman.
Mr. Goodlatte. I thank the gentlewoman, and the chair
recognizes himself for questions.
Mr. Secretary, welcome. I want to start with an issue that
I am not sure Members have asked you about but I am willing to
bet that most Members of this Committee have seen the clips of
the mandated sensitivity training that has been taking place at
the Department. Could you please explain to the Committee the
necessity of these trainings where workers are required to
recite such things as, ``The Pilgrims were illegal aliens.''
Are these trainings mandatory for employees?
Secretary Vilsack. Congressman, they are not mandatory.
They are not--that process is not in play today. The effort was
part of a larger loss prevention effort to try to reduce the
number of program complaints and EEO complaints that we had in
the Department when I came in as Secretary. We are now at
record lows in both the program----
Mr. Goodlatte. The objective was good but the messenger was
not too desirable, in my opinion. Can you tell us how much
money the USDA spent on the training, particularly the ones
hosted by Samuel Betances? I have heard as much as $400,000 was
paid to him.
Secretary Vilsack. I can't tell you the specific amount. I
would be happy to provide that to you, Congressman. I would
only point out, obviously they were provocative statements
designed to get people to think in the context of how it feels
in a diverse circumstance. This is a company that has been used
by Fortune 500 companies and other agencies of the Federal
Government. So it is not as if we plucked them out of someplace
where they hadn't been involved before.
[The information referred to is located on p. 68.]
Mr. Goodlatte. Were you as shocked as many of us were to
see some of the statements that he made in those sessions on
video?
Secretary Vilsack. Well, I understand that they are
provocative and I am sure hindsight is always 20/20, but the
point of this should not be lost, and that is, we were faced
with multiple billions of dollars of claims and multiple----
Mr. Goodlatte. But then you get a whole new round of claims
based upon the types of statements and actions that he took in
those sensitivity training programs.
Secretary Vilsack. I am not sure about that, Congressman.
Mr. Goodlatte. Subjecting people to that kind of nonsense.
Secretary Vilsack. You know, it wasn't mandated but it is
important for us to reduce the number of these complaints and
the number of these lawsuits, and we have done that, and that
saves taxpayer money.
Mr. Goodlatte. Well, I would hope, given the sequester,
when the USDA is considering furloughs of meat inspectors, that
the impact on public health of doing something like that
compared to these trainings, that the trainings would get a
healthy cut in this process, especially if you say that you are
not experiencing the difficulties that you were before.
Secretary Vilsack. Mr. Chairman, we are reducing
conferences, as I said earlier.
Mr. Goodlatte. Let me ask you about farmers who have
recently gotten surveys asking about injuries of youth on their
farms. Given the DOL rule last year, this has raised concerns
among producers about why this information is being collected,
and could you provide us with background on why producers
receive these surveys, many of which have complained bitterly
about the intrusiveness of the questions, the length of the
survey and want to know whether or not they are voluntary.
Secretary Vilsack. Is this part of the Ag Census, sir?
Mr. Goodlatte. Yes.
Secretary Vilsack. Okay. Well, the Ag Census obviously is
something that is a significant effort on the part of USDA to
assemble an amount of data that will allow us to develop better
policy. One point six seven million farmers have already
responded to the Census, so that represents a significant
reaction to the Census and a positive aspect of it. The Census,
in terms of the Department of Labor issue, what we are doing
now is we are developing with the universities a curriculum for
farm safety because we believe that education is better than
what was being proposed by the Department of Labor.
Mr. Goodlatte. So you are saying the surveys are not
voluntary then if they are part of the Census. Is that correct?
Secretary Vilsack. Well, people have the ability to return
it if they want or not return it if they don't want it.
Mr. Goodlatte. But they may face consequences if they don't
return it?
Secretary Vilsack. No. I mean, the consequence is that we
don't get the rich database that we need to be able to make
policy decisions that are----
Mr. Goodlatte. So you are saying if a farmer doesn't like
the questions and doesn't want to return it, they don't have
to? You have enough data from the ones who complied?
Secretary Vilsack. What I am saying is that they have the
option, Congressman, Mr. Chairman, and they can exercise that
option. We would hope that they would provide responses,
because the more farmers who respond, the better the
information we have, the better the policies hopefully can be
developed because we have good data.
Mr. Goodlatte. And to the point about the youth injuries,
is the USDA working with DOL to change those requirements on
the issue of youth participation in agriculture?
Secretary Vilsack. As I said, we are working together to
put together, along with the Farm Bureau and the National
Farmers Union and universities and land-grant universities, a
curriculum similar to what a college would have where there
would be basic safety courses that could be available, and we
are going to then try to work with the insurance industry to
see if they might be able to provide incentives for folks,
operations that would exercise----
Mr. Goodlatte. If you have a small farm and your neighbor's
child is working on your farm, are you going to have to have
them or you participate in a safety program?
Secretary Vilsack. No, no. It is just we are trying to
provide education about farm safety because we know that farm
families are concerned about that. We are trying to provide
information and then what we hope to have is more sophisticated
and more detailed safety courses on more complex machinery. The
whole goal here is to provide education to folks, not to
provide mandates.
Mr. Goodlatte. Thank you very much, Mr. Secretary. And now
it is appropriate to recognize the gentlelady from New
Hampshire, Ms. Kuster, for 5 minutes.
Ms. Kuster. Thank you, Mr. Chairman, and thank you,
Secretary Vilsack. As I mentioned on the way in, I am very
excited to be representing the New Hampshire perspective on
this Committee for the first time in 70 years, and I look
forward to working with my colleagues on both sides of the
aisle to advance commonsense solutions and to cut wasteful
spending, as you have talked about. I am very focused on
creating economic opportunity in our rural areas. I represent
the 2nd District in New Hampshire, which is rural with
agriculture and biomass and bioenergy projects, and my question
relates to a project in our district in the City of Berlin, New
Hampshire, up near the Canada border. A former paper mill is
being repurposed into a 75 megawatt biomass power plant to
provide renewable energy and new jobs, both at the plant and
businesses, and I was particularly excited to visit recently to
see the number of jobs. There were over 400 construction jobs
while the project is in construction, and they expect hundreds
of jobs continuing. Can you talk to us today about the impact
of the funding and the sequester issues on development of
energy in our rural areas, and in particular bioenergy
development? Are we losing ground by not moving forward with
the farm bill?
Secretary Vilsack. Well, when the farm bill was extended,
it didn't include a reauthorization or additional resources in
the energy title. So to that extent, we are sort of in a
holding pattern as it relates to bioenergy. We still are
funding nine biorefineries that are using non-food feedstocks.
We still have a regional research effort underway. We still are
helping advance biofuel producers with resources but we are
pretty much limited in what we are currently doing. We can't
really extend it until we get direction from Congress and
resources.
In terms of the sequester, the one vehicle that could be
used by a company potentially to embrace biomass energy
production would be the Business and Industry Loan Program or
some of our RUS programs, Rural Utilities Service programs. All
of those are subject obviously to the sequester, so to the
extent that we have to reduce those accounts by five or six
percent, whatever it is, that obviously limits the amount of
projects that we can fund. Just in the last 4 years, we have
had 15,000 grants and loans in that B&I program helping over
60,000 businesses and helping to stimulate and support 300,000
jobs. So every time you have fewer resources, you obviously
will have fewer projects, which means fewer jobs.
Ms. Kuster. Thank you. And then the other question relates
to conservation, which is a hallmark in our New Hampshire
history and an important part of managing our forests and
farmlands. We talked about the importance of USDA's
conservation programs to farmers and particularly young farmers
who are just beginning their operations. I have been involved
in some conservation efforts to protect small farms so that we
don't lose them in New Hampshire. Will there be impacts on
individual farm bill conservation programs under the
sequestration, and is there enough funding to pay out our
existing obligations under the contracts that are in force
right now?
Secretary Vilsack. There will be sufficient resources to
pay out on existing contracts. The problem is, we won't be able
to go quite a bit further. We estimate 2,600 farmers will not--
and that is across the country--will not be able to get the
help they need to even put a plan together because simply, we
won't be filling vacant jobs, about 400 jobs.
Then second, there is somewhere in the neighborhood of
11,000, 12,000 producers that will probably not get the
financial support they would have otherwise gotten but for
sequester so they won't be able to proceed with their
conservation program with the cost-share that they were
counting on, so that probably will reduce the number of
projects that move forward. And the problem with all that is,
it also has a ramification not just on the environment but also
on our ability to produce outdoor recreational opportunities to
the extent that we use conservation to increase habitat or
increase and improve water quality and fishing. That could
potentially reduce over time the outdoor recreational
opportunities as well.
Ms. Kuster. And I am pleased to say that the outdoor
recreational opportunities on the farms that we preserved have
been terrific in terms of building community and creating a
total mixed use. They have been very, very well received. So
thank you very much, and I yield back.
Mr. Goodlatte. I thank the gentlewoman, and the gentlelady
from Alabama, Mrs. Roby, is recognized for 5 minutes.
Mrs. Roby. Thank you, Mr. Chairman. Thank you for being
here today, Mr. Secretary. I want to continue along the lines
of conservation but specifically the Conservation Reserve
Program, which we all refer to as CRP. I want to explain a
little bit about what is happening specifically in Alabama's
2nd District because the majority of the acreage is
designated--the acres designated in Alabama do reside--are part
of the 15 counties that I represent. It is heavily weighted in
southeast Alabama, and what is happening is, CRP, as you know,
was originally there to help preserve marginal to highly
erodible pieces of property. What is happening now is, we have
kind of turned it on its head and we are putting highly
productive farmland into CRP program. So for the farmers in
Alabama that lease their property, they are now in competition.
So the families that own the property are seeing that they can
put in a 40 year crop of a long-leaf pine, take that highly
productive farmland out of production and it is decreasing the
number of acres that our farmers actually have to farm.
With that being said, in the last farm bill, we offered up
that we should reduce over the next 5 years the number of
acres, and then I even took it a step further and said not only
should we reduce the number of acres, we should put in some
measure to say that marginal to highly productive--we left
marginal in, but anything better than marginal property to
highly productive would not qualify for CRP, thus protecting
highly productive farmland for our farmers to farm. So I just
want to ask, what do you see as the future role of CRP and what
changes would you like to see in light of the facts that I have
given you?
Secretary Vilsack. Well, it is a balance Congresswoman, and
actually your question caught me a bit by surprise because we
actually have increased the indexing score that we use to
determine whether or not a contract is going to be awarded
based on this issue of focusing on more marginal lands and
highly erodible lands, so it is obviously something we need to
look at in relationship to your statement. But, the overall
policy is consistent with where you want it to be, which is
focusing on these marginal lands, these highly erodible lands.
And we fully expect that the number of acres that are enrolled
in that program are likely to go down. As you look for savings,
that is one place where you are likely to go.
In the meantime, though, we are going to--obviously we
still have the program and we still have the directive from
Congress. We are going to follow that. And to a certain extent,
it helps protect that shrinking baseline within the farm bill,
which I think is important to everybody on this Committee.
Mrs. Roby. Well, in your position as Secretary, are you
recommending a cap on the acres that are allowed under the CRP?
Secretary Vilsack. I am a big fan of CRP because I see the
opportunities for these marginal lands to create more outdoor
recreational opportunities. You know, it is not so much a
recommendation of a cap, it is just a recognition that there is
a lot of competition now. In other parts of the country, we are
seeing CRP land being taken out that probably should be in the
program because people can get $7 a bushel for corn or $15 a
bushel for soybeans. So we have sort of the reverse situation
in other parts of the country. So our goal here is to try to
find the right balance----
Mrs. Roby. I would really like you to take a hard look at
how this is affecting, particularly in the southeastern portion
of the United States where you don't have these large expanse
farms, you have farms that are divided up and not so much
acreage in one area, and you hit the nail on the head when it
comes to competition because our farmers that do lease property
are not competing with CRP in order to be able to do what they
want to do, and that is farm, because the landowner sees an
opportunity for this 40 year crop in long-leaf pine. So if you
would, please roll down on this because as you said, you are a
big fan of CRP. We understand the conservation aspects but we
also have to feed America and the world, and the more land that
is taken out, highly productive land that is taken out, the
harder it becomes for us to do that.
Secretary Vilsack. Well, it is a fair point, but I would
point out that we actually have fewer acres in the program than
we have had for quite some time because of the competition in
other parts of the country, so it is a balance that we have
to----
Mrs. Roby. Well, let us look at the balance, because if we
reduce over 5 years the number of acres, which we are not even
using the full amount that is available now, and if we reduce
it over 5 years, it equates to savings in the billions of
dollars, and in this current financial scene that we are in
that that is really worth taking a look at.
With that, I yield back. Thank you.
The Chairman [presiding.] The gentlelady's time has
expired. The chair now recognizes the gentleman from
Massachusetts, Mr. McGovern, for 5 minutes.
Mr. McGovern. Thank you, Mr. Chairman, and thank you, Mr.
Secretary, for being here.
Mr. Secretary, as you know, there are over 50 million of
our fellow citizens who are either hungry or food-insecure, and
one of the reasons why we don't have starvation in this country
is because we have kind of an anti-hunger safety net including
SNAP, which provides people of modest benefit to be able to put
food on the table. SNAP is the most effective and most
efficient anti-hunger program that we have, and as far as I
know, it is one of the most efficient programs in the Federal
Government. It has the lowest error rate in the history of the
program, and a large part of the errors are actually
underpayments. And you never know when you listen to some of
the rhetoric on this Committee. This program has been demonized
and diminished in a way that I think is totally unjustified,
and since this is a hearing about rural economy, I just want to
focus there a minute.
According to USDA statistics, rural areas are poorer than
urban areas, and according to the latest USDA data, households
in rural areas are more likely to be food-insecure. While 14.9
percent of all households were food-insecure in 2011, 15.4
percent of those households in rural areas were food-insecure.
Ten percent of the rural population relied on SNAP compared to
seven percent of the urban population. Children under 18 made
up 25 percent of the rural population but made up 40 percent of
the rural population participating in SNAP.
Mr. Secretary, can you tell me if the impact of SNAP is
more or less likely to reduce poverty?
Secretary Vilsack. Congressman, there is a study that I
think was issued last year that indicated that the SNAP program
was helpful in reducing poverty. I am sorry I don't have the
precise percentage but to my memory, it has reduced it by seven
to nine percent as a result of the SNAP program.
Mr. McGovern. And second, in the last Congress, this
Committee made a concerted effort to dramatically cut SNAP. Can
you talk about how the cuts to SNAP that would range from $16
billion to $33 billion or more would impact rural America? How
would these cuts impact the ability of low-income rural
families to purchase food? What would these cuts do to local
economies? How would SNAP cuts impact the school breakfast or
lunch programs?
Secretary Vilsack. Well, the SNAP program is part of the
safety net, and it provides resources to families to be able to
shop. Ninety-five percent of the SNAP program benefits are
spent within the first 30 days of receipt, so they get into the
economy very quickly and they circulate around in the economy.
I think part of the focus, Congressman, if I might say,
obviously people are concerned about the overall costs of the
program, and I think there is an interesting debate that takes
place about that but we are missing the point, and the point to
me is that if you want to reduce SNAP, the one way to do it
that is the most beneficial is to focus on the individuals who
are very close to no longer needing SNAP and figuring out a way
in which we could assist them with a better-paying job or more
training that would allow them to access a better-paying job so
they no longer would need the program.
Mr. McGovern. I absolutely agree with you. I mean, that is
one of the reasons why I have been urging the White House to do
a conference on food and nutrition so that we can connect all
the dots to not only make sure that people get what they need
in the short term but that there is a clear path to be able to
get off of public assistance, to be independent.
Finally, I just want to say that I think we need the
Administration to stand up and fight for this program because I
worry as we talk about balancing budgets that SNAP has become
kind of the convenient ATM machine. I hear it in this
Committee, I hear it in the Budget Committee that if we want to
balance the budget, we have to dramatically reduce SNAP, which
means that millions of families who currently receive a benefit
will no longer receive a benefit, and the Administration did,
to its credit, help us in the stimulus bill with an uptick in
SNAP but we then paid for the FMAP bill and for the child
nutrition bill with those SNAP dollars, and if we do nothing
right now, the benefit will actually decrease by the end of the
year.
I think we need the Administration to draw a line in the
sand that enough is enough. We can't afford a $16.5 billion cut
in SNAP without adversely impacting a lot of poor people, and I
would hope that the Administration would draw that line in the
sand and make it clear to this Committee or any other committee
that is talking about those kind of dramatic cuts that there is
a point where you go so far that we are not going to sign that
kind of bill because it would adversely impact millions of poor
people in this country.
Secretary Vilsack. I just want to reiterate, if folks--the
thing about SNAP is that we know where people are. We know who
these people are and we know what their circumstances are
because we have to have that information to be able to know
whether they are qualified for the program. Since you know
where they are and you know those who are working, and there is
a substantial percentage of people receiving SNAP that are
actually working, if we could get them to a better-paying job
opportunity, they would no longer qualify for SNAP and you
would get a cut in the program but you would get it in a way
that wouldn't necessarily----
Mr. McGovern. Look, I absolutely agree with you. I mean,
the thing is that the way you reduce SNAP is put people back to
work. I mean, when the economy is bad, the amount we spend goes
up. When it gets better, it goes down. But in the short term,
it is important that the Administration make it clear that a
cut of $16.5 billion is unacceptable.
The Chairman. The gentleman's time has expired. The chair
now recognizes the gentlelady from South Dakota, Mrs. Noem, for
5 minutes.
Mrs. Noem. Thank you, Mr. Chairman.
Mr. Secretary, thank you for being here today. I have an e-
mail that is dated yesterday from someone in the USDA Animal
and Plant Health Inspection Service from Raleigh, North
Carolina, regional office. It appears to be an e-mail to his
regional team, and I wanted to read you a part of that e-mail
that concerns me. It says, ``During the management team
conference call this morning, I asked if there was any latitude
in how sequestration cuts related to aquaculture could be
managed spread across the region. The question was elevated to
APHIS BPAS. The response back was, we have gone on record with
a notification to Congress and whoever else that APHIS would
eliminate assistance to producers in 24 states in managing
wildlife damage to the aquaculture industry unless they provide
funding to cover the costs. So it is our opinion that however
you manage the reduction, you need to make sure that you are
not contradicting what we said the impact would be.''
Mr. Secretary, I am very concerned about that last line. I
will read it to you one more time: ``however you manage the
reduction, you need to make sure that you are not contradicting
what we said the impact would be.'' Mr. Secretary, is it the
policy of your Department and within USDA to not use any
flexibility that you may have in managing the sequester?
Secretary Vilsack. No, Congresswoman, and I am not sure
whether that decision is a result of prioritizing and actually
using flexibility. If we have flexibility, we are going to try
to use it to make sure that we do sequester in the most
equitable and least disruptive way. There are some
circumstances, and we have talked a lot about the meat
inspection, where we do not have that flexibility because there
are so few accounts, but in other areas, you may have multiple
accounts and you may have flexibility, in which case you have
to prioritize what is the most important thing to adequately
fund. I am not familiar with that e-mail, obviously, nor am I--
--
Mrs. Noem. Would you agree that reducing the impact to
producers should be a priority?
Secretary Vilsack. Yes, but if you have limited resources,
and given the diversity of agriculture, you may have to choose
how much of an impact you have on any one particular group of
producers to be able to maximize the protection of a larger
group or a group that has broader reach. I just don't know
about that particular issue. I wouldn't say that we have said
no to flexibility but there are certain circumstances where we
don't have flexibility.
Mrs. Noem. My concern from the e-mail is that it intends, I
believe, and the way that it is worded is that it prioritizes
staying consistent with the Administration of what they
previously said and what they may decide to do to protect
producers. I am hopeful that that isn't an agenda that has been
put forward that really will look at the reductions that we
have to deal with and do them in the best manner possible to
make sure that we protect the industry and as many producers as
we can.
Secretary Vilsack. I don't disagree with that.
Mrs. Noem. Thank you. I just wanted to follow up quickly.
You know that in South Dakota, we have a big problem with the
mountain pine beetle, and the Mountain Pine Beetle Response
Project has been wonderful for us to get that opportunity in
the Black Hills to help manage that infestation, so I want to
thank you for your help with that and getting that off the
ground. My concern is that with sequestration coming, I
recognize that there is going to be a decrease in logged areas
and contracts within the Hills and throughout the nation
because of those reductions in spending, but it appears to me
when I look at the numbers that we are going to reduce actual
board feet harvested to a greater extent than what the
sequestration cuts would reflect, and I am wondering if you
could comment on that.
Secretary Vilsack. Well, it may very well be a result of
making a determination of what is the most significant thing we
can do. Do we have to have adequate resources in our fire
suppression budget? Is it more important to protect the safety
of homes and people by treating more acres in that interface
between the wildlands and the urban interface? There are a
series of decisions within the Forest Service because we have a
lot of different accounts that we can make, and I think that
that is an estimate in terms of what will likely happen with
reference to board feet. It costs us money when we have lumber
treated, and I think there is a determination that that is a
consequence of sequester. Now, whether it is disproportionate
or not, I don't know, but if it is disproportionate, it may be
because there is a higher priority related to safety in terms
of the Forest Service, and we have, obviously as you well know,
faced a horrendous set of fires in the last couple of years and
the expectation is with drought and the pine bark beetle, that
that is not going to go away for a while.
Mrs. Noem. Yes, we absolutely have an emergency situation
in the Black Hills, so communities that live amongst these dead
and dying trees are a lightning strike away from wiping out an
entire town or population. And so we are very concerned with
that, and that is why when we look at the situation, we like to
see those numbers increased. We would like to see full funding
come into the programs that as they are allocated and hopefully
that they will be prioritized within the Forest Service.
Secretary Vilsack. Well, we want to see more board feet.
That is the goal. We are trying to get to 3 billion and beyond.
We recognize the importance of that.
Mrs. Noem. Thank you. I appreciate it.
With that, Mr. Chairman, I yield back.
The Chairman. The gentlelady's time has expired. The chair
now recognizes the gentleman from Texas, Mr. Gallego, for 5
minutes.
Mr. Gallego. Thank you, Mr. Chairman, and thank you for
being here, Mr. Secretary. You have a great command of all of
the issues.
As a new Member, I am finding it interesting, Congress uses
power of the purse to cut your budget but doesn't seem to like
the idea that that means a reduction in services, and so I
appreciate the spot that you are in in that sense.
I want to join in the conversation about the definition of
rural. I heard you say, or perhaps I misunderstood you, that
part of the philosophy going forward is to talk about it in
terms of regions, and one of the challenges in the rural part
of Texas that I represent as an example is Ozona, Texas, has
about 3,000 people in it, but you have to drive a little over
100 miles to get to Fort Stockton, Texas, which has about
10,000 people in it. And so when you are talking about doing it
regionally, the distances make it a little more difficult than
perhaps in some of the other regions. Is that something that
you all will take into consideration or is that----
Secretary Vilsack. The answer is yes, Congressman. I
apologize for giving you a misunderstanding of this. When I
talked about regions, I am suggesting that we are working with
self-described--or it is not that we impose a regional
definition. We essentially say to communities that can function
as a region, you are going to get a bigger bang for your buck
if you work together as opposed to individual communities doing
things in isolation. If you could coordinate what you are
doing, it may very well actually result in greater economic
activity. If you have a situation where there are substantial
distances between communities, obviously that won't work
particularly well, so that is why we have a couple things. That
is why we will focus on individual community grants and loans.
That is why we have our Strike Force Initiative in some states
that can really sort of go to those areas of persistent
poverty.
Mr. Gallego. And even if you use the MSAs, there is a huge
difference, for example, between the rural areas of El Paso
County and the City of El Paso itself and some of the farming
communities. And so even though they may be in the same region,
the truth is that their interests are totally diverse, and many
times they are not exactly aligned as well. I would hope that
you would take that into consideration.
Let me ask you, with respect to--there has been some recent
actions at the FCC to overhaul what is called the Universal
Service Fund, and as a result of that, there are a number of
providers in rural Texas that are facing substantial cuts to
the USF, and as a result, there is a possibility or a danger
that they might default on some of their USDA loans. I am
wondering what steps the USDA has taken to prevent those kinds
of defaults or potential bankruptcies and what you are doing
proactively to help those companies that are going to be
impacted by those Universal Service Fund decisions at the FCC.
Secretary Vilsack. Well, I sat down with the Chair of the
FCC several weeks ago to discuss this issue, and there is a
process within the FCC rules, a waiver process that can provide
some degree of flexibility for the folks that are essentially
on the bubble, that might find it difficult to comply with the
new FCC structure and still be able to make their payments.
Right now, it is a relatively small number and so we have been
working through those individual issues one by one, but we have
acquainted the FCC with the concern.
The second thing that we have decided is that there needs
to be a coordinated effort between Rural Utilities Service at
the USDA and the FCC because we speak to a different universe
here. The FCC is really focused on areas that can be protected
and provided through the regional Bell Systems, the larger
companies. We in turn are dealing with those small
telecommunications companies. I think you are going to see
better coordination between the two efforts, and we have
suggested a couple of things that could be done to tweak the
FCC approach that might make it a little bit easier and more
likely that broadband and Internet activities are expanded in
some of those remote locations.
Mr. Gallego. I look forward to working with you and your
office on those issues. They are kind of core to the part of
Texas that I represent, and offline at some point I would also
like to have a conversation about some litigation with some
Latino farmers in Texas and New Mexico that has been ongoing
for a period of time. And so at some point if you could send
your staff over to tell me what is going on, that would be
wonderful.
Secretary Vilsack. Actually, I can send the same guy to
talk about both issues.
Mr. Gallego. That would be great.
Secretary Vilsack. John Paladino is basically in charge of
our RUS but he has also been involved in the Hispanic claims
process, so we will arrange for him to come see you.
Mr. Gallego. Thank you so much.
The Chairman. The gentleman's time has expired. The chair
now recognizes the gentleman from northern California for 5
minutes.
Mr. LaMalfa. Thank you, Mr. Chairman, and thank you, Mr.
Secretary, for appearing before us here today. Also, thank you
for a recent trip you made to northern California to Trinity
County to view some of the very difficult issues we have in
forestry, and forestry practices or lack of forest management
we have there. Two thousand and eight was one of the most
devastating years for fire in California. The air was brown and
actually extremely unsafe levels for that county for months up
there, so I appreciate your viewing that and seeing what is
going on with drug labs and the marijuana growers that are
probably a thousandfold more harmful than any agricultural
activity that may go on.
California's issues are many and very diverse and unique
with our regional, our cost of doing business, foreign and
domestic markets as well as the specialty crops we have, olives
and olive oil. We have a lot of different things going on. I
want to drill down on a couple specifics that I hear a lot
about in my district with dairies and with rice. The issue on
rice, there are a couple things going on here with Japan and in
the Trans-Pacific Partnership, Japan wanting to come in on
that. It is very important that we support that as well as that
rice be included in any of the negotiations going on with fair
and free trade through the USTR. So we want to be sure that
that is included and encourage as much as possible Japan and
California rice in that. And second, with California's rice
situation, we have--again, it is a unique crop compared to the
southern portion of the country. Long grain is grown in the
South but it is short and medium grain in the West, and so
there is a different cost structure and price structure for
medium and short grain that we would like to see addressed as
an industry differently in that because, again, California's
cost, price, et cetera for that. So I would ask for you on both
those issues with Japan and the Trans-Pacific Partnership and
fair trade that is coming up as well as with continued support
through the Risk Management Agency a workable solution for
California's uniqueness in rice, so I would ask if you could
comment or if you could come in on those two issues, please?
Secretary Vilsack. As it relates to TPP and the Japanese
involvement as was stated last week, we obviously will continue
to work with the Japanese to see whether or not they can in
fact be included in the TPP discussions. One of the hallmarks
of inclusion in TPP is the willingness to actually reduce a lot
of the barriers that exist in your country, and the Japanese
obviously have to work through that process to determine if
that is what they want to do, but that is sort of the cost of
admission into the conversation is reducing trade barriers and
things that are artificial barriers to products.
As it relates to rice, our RMA folks are constantly looking
for ways in which we can do a better job of distinguishing
between products and making sure that the crop insurance
program is as diverse as the diversity of agriculture. Today we
have 132 products that are covered, 281 million acres and so
this is a constant effort on our part, and I think that they
have been working on downed rice specifically to try to expand
coverage, so this is something we can take back to them.
Mr. LaMalfa. Thank you. With regards to our dairies, they
are really struggling too, and in California too, and
California is the leading dairy-producing state. You know, it
is the cost of feed, purchasing feed and extraordinary prices
these days as well as the cost structure, especially in
California, of milk prices, and it is very important we have
that regional production there as opposed to having to bring it
in from a long distance--including the jobs in the economy for
our own state. So any continued effort to find relief for dairy
producers in California to policy for feed prices as well as
what we can do with price structure that would help them out,
because it is extremely key for our local economy as well as
the needs of our consumers of the state. So any comment there,
sir?
Secretary Vilsack. Well, first of all, I certainly
recognize the challenges that dairy has just as a general
proposition. The volatility of the market makes it really hard
for dairy producers to have the stability that other
commodities have. We expect and anticipate good production this
year, and if that occurs, the expectation is that crop prices
will come down, commodity prices will come down, which would
translate into more profitability for dairy producers. In the
meantime, we will administer the program that we have to
provide help and assistance.
The MILC program, it may be adjusted a little bit because
of sequester, and it is one of those issues that we have to
figure out folks who have already received their MILC payments
whether or not there is any kind of reimbursement that has to
take place, it is one of those complexities of sequester but we
will continue to administer that program in the hope that when
the 5 year farm bill is done that you put in place a different
program that will work more effectively to provide assistance
and protection when feed costs are high or prices are low or a
combination of both.
Mr. LaMalfa. Thank you. A quick note on that sensitivity
training too. I received a lot of calls about that, and----
Secretary Vilsack. I am sorry. On what?
Mr. LaMalfa. On the sensitivity training. We received a lot
of calls about that, and being provocative, depending on what
racial group is being provoked, it could cut across all those
lines, so I would say that you need to be a lot more careful
about that because it could be hurtful or offensive to anybody,
no matter who is on the receiving end. So thank you for looking
into that.
The Chairman. The gentleman's time has expired. The chair
now recognizes the gentleman from New York, Mr. Maloney, for 5
minutes.
Mr. Maloney. Thank you, Mr. Chairman, and I look forward to
serving with you on the Committee.
Mr. Secretary, thank you for your testimony today and for
your extraordinary service to your own citizens in your home
state but also to all of us in your current position. It is
much appreciated.
I represent the Hudson Valley just above New York City, and
we have a lot of specialty crop farmers in the Hudson Valley,
in Orange County but also on the east side of the river. There
is a real feeling in my part of the world, as important as the
Secretary is to feeding New York City and to the economy of the
local region, that the laws and the Department are oriented in
such a way towards the large agribusinesses in other parts of
the country that they often leave our folks behind. In
particular, I have one of my constituents here today, Chris
Pavelsky, who runs a fourth-generation, I believe, onion farmer
from central Orange County. There is another couple he
introduced me to, Jeff and Adena Bialis, who grow 250 crop
varieties on 12 acres of land and sometimes they will change
the crops during the season. They have real problems with the
crop insurance programs, so I was hoping you might say a word
about the attention of the Department to specialty crop farmers
and to the way the crop insurance program works or in many
cases does not work for those types of farmers.
Secretary Vilsack. Well, first of all, I am familiar with
the Hudson Valley. I went to school in upstate New York, both
college and law school, so----
Mr. Maloney. Well, that explains your outstanding service
to the country. It is all becoming clear to me now.
Secretary Vilsack. Right. Well, first of all, we continue
to expand access to crop insurance. Basically 85 percent of
commodity producers are covered by crop insurance, and that
percentage is less for specialty crop producers. It is about 70
percent. Far more fruit producers are covered then vegetable
producers but that is increasing. We are constantly looking at
data and accumulating information that allows us to actuarially
develop products and expand those products. We are also
significantly expanding one area of the specialty crop world,
which has not received a lot of attention until recently, which
is the organic producer. Only about 20 percent of organic
production is covered by crop insurance. So it is unique
because of the value-added proposition, so it is about really
accumulating the data and the information.
Mr. Maloney. If I could just interrupt briefly, would you
support efforts to sort of minimize the--I understand part of
the problem is getting good actuarial data to provide that type
of insurance. There are some ideas out there to make this more
cost-effective for folks in terms of the match and how it is
done. Would you support those efforts?
Secretary Vilsack. Well, obviously we are always looking at
whether or not the rates that are currently being charged for
products are appropriate. We have actually had some adjustments
in products recently as a result of a rate analysis. So that is
part of our job.
The other thing is, we have really made a concerted effort
to expand market opportunities as well. It is not just
providing the risk management, it is also creating market
opportunities, and that is one of the reasons why the local and
regional food system effort, Know Your Farmer, is important
because it creates new market opportunities. It is why the Farm
to School Program is important. It creates new market
opportunities. It is why we have knocked down trade barriers to
some of our fruits and vegetables because that is market
opportunity, and it is why we are looking for equivalency
agreements on organics with the EU and Canada, for example,
because it creates market opportunities. So it is a combination
of both things.
Mr. Maloney. If I can ask you as well in the minute and a
half I have remaining, there is a real concern among my folks
that they were not helped adequately after Hurricane Irene. You
know, with all the attention on Superstorm Sandy, there was a
hurricane a year before and it had a devastating impact in
Orange County, New York, and so the rubber really met the road
on a lot of these crop insurance programs, and there is a
concern that loan rates have been adjusted for folks in light
of the drought but not for smaller farmers as a result of
Irene. Can you comment on that, sir?
Secretary Vilsack. The disaster loan rates are across the
board. It isn't necessarily drought related. What we did do is,
we streamlined the disaster declaration process, and anybody
who is in a disaster area gets the benefit of that lower
interest rate on disaster loans, number one. Number two, I
actually traveled to upstate New York with Hurricane Irene, and
there was an issue and continues to be an issue with our NAP
product, and we are trying to make adjustments to make it a
little bit more available or making a little bit more sense for
specialty crop producers. I think it is an evolution, and I
think there is a sensitivity in the Department to the need for
us to continue to find ways to help these producers out because
they are an important part of agriculture.
Mr. Maloney. Well, thanks, and I would love to get you back
in the Hudson Valley.
I yield back, Mr. Chairman.
The Chairman. The gentleman yields back. The gentleman's
time has expired. The chair now recognizes the gentleman from
North Carolina, Mr. Hudson, for 5 minutes.
Mr. Hudson. Thank you, Mr. Chairman, and thank you, Mr.
Secretary, for being here today. I really appreciate your time.
I would like to direct this back to the question raised by the
Ranking Member about the poultry inspection rule. You know, it
seems as though the rule has been properly vetted and gotten
widespread support. What is sort of holding us back from
getting going? We have an opportunity for better food safety,
for better production but also some cost savings there, and it
seems to me we would want to get that online as quick as we can
to start taking advantage of those benefits.
Secretary Vilsack. I don't disagree, but any time you are
proposing something that hasn't been changed fundamentally for
60 years, it is an education process, making sure that people
understand that it isn't revolutionizing or changing the
process significantly but it is really providing inspectors to
do a better job and freeing up folks. The cost savings are
going to be some adjustments in terms of the overall inspection
workforce. We are probably over a period of time going to have
slots that will no longer be necessary but we will deal with
that through attrition. Some of the inspectors will actually
get better-paying jobs because there will be more
responsibility. So it is a matter of educating people. It is
complex, it is complicated, and it is a matter of educating,
and hopefully we are in a better spot, people have a better
sensitivity and understanding of what we are actually doing and
hopefully you will see that rule forthcoming very soon.
Mr. Hudson. I appreciate that, and that is certainly an
area where we can all agree. It is very important in my part of
North Carolina.
I wonder, though, as we are looking at sequestration and
the issues you are having to deal with with inspectors, if we
could start putting this process in place, would that enable
you to--if you are going to need to trim back to do that quick
enough?
Secretary Vilsack. We wouldn't be able to do it in time to
make a difference in terms of this year because once we issue
the rule, then there is a notice and comment period that we
have to go through that administrative process. We would
anticipate and expect a lot of people weighing in on this.
There may have to be some adjustments. It will take time. So I
don't think that this is the vehicle for creating a better
circumstance than what we have in food inspection,
unfortunately.
Mr. Hudson. I understand. Well, just ballpark, are we
talking about next year, implementation, or----
Secretary Vilsack. That is the hope, but to make sure you
understand, it is likely that this will be staggered and it is
likely that not every production facility will use this new
system because it does depend on the way in which your plant is
set up and the space of your plant, and it may not work for
some plants but we think it will work for enough plants that we
can save resources and certainly increase food safety.
Mr. Hudson. Thank you, sir. I yield back my time, Mr.
Chairman.
The Chairman. The gentleman very efficiently yields back
his time. The chair now recognizes our friend from Illinois for
5 minutes.
Mr. Enyart. Thank you, Mr. Chairman. Welcome, Mr.
Secretary. I am very impressed with your breadth of knowledge.
You certainly have a firm grasp of the issues.
Mr. Secretary, the Navy, the U.S. Department of Agriculture
and the Department of Energy have a Memorandum of Understanding
in place promoting biofuels. Would you be supportive of
expanding these efforts to include the United States Air Force
as well as the Navy?
Secretary Vilsack. Well, yes, the Air Force is involved in
other aspects of this initiative, but this specific initiative
between the Navy, the Energy Department and us is really
designed to create the infrastructure that will allow us to
produce a drop-in aviation and marine fuel, which obviously
could be used by the Air Force and the Army and the Coast
Guard.
Mr. Enyart. So then your understanding would be that once
the infrastructure is in place, that it would be expanded to
the other military services as well as the Navy?
Secretary Vilsack. Well, it would create product that would
be available, and frankly, would also be available to
commercial air. We have a Farm to Fly Initiative, which is
involving the commercial aviation industry, and they are very
interested in this because in order to comply with
international greenhouse gas reduction emissions, they are
going to have to need this new fuel, so it is a very important
thing for commercial aviation as well.
Mr. Enyart. Mr. Secretary, of particular concern in my
district in southern Illinois--I like to say that I have the
western coast of Illinois along the Mississippi River--is
moving agricultural products to market via the Mississippi.
Now, particularly in light of the low water levels that we have
experienced recently due to the drought that you have spoken
of, would you encourage USDA support in encouraging the Corps
of Engineers to address the need for infrastructure
improvements on the river?
Secretary Vilsack. Yes.
Mr. Enyart. I love those kinds of answers, as does the
Chairman.
Could you tell me, Mr. Secretary, what is the impact of not
having--this goes back to the energy question, the biofuel
question. What is the impact of not having any funding for most
of the energy title program for Fiscal Year 2013?
Secretary Vilsack. Well, it limits our ability to continue
to expand beyond corn-based ethanol to non-food feedstocks,
which carry economic opportunity in all regions of the country.
We think there is an opportunity to use woody biomass, plant
material, livestock waste, crop residue and municipal waste to
produce new energy sources. To that extent, we would be limited
in terms of our current investments if we don't get additional
resources or additional authority.
Second, as I said earlier, it is important to extend that
beyond just the energy. I think there is a biobased opportunity
here. I have been to facilities that are taking corncobs and
producing plastic bottles for Coca-Cola. I think there is just
literally unlimited opportunities here for a new manufacturing
revolution in rural areas, and these biorefineries because of
the nature of the biomass that is necessary will have to dot
the landscape of rural America to create new job opportunities
and maybe allow us to stem the population declines that we have
seen in many small communities. I think there is tremendous
opportunity here but we have to have the resources and we have
to keep encouraging expansion of these new products.
Mr. Enyart. So what you are talking about then is taking
what is essentially waste products now, turning them into
valuable economic opportunities and increasing good job
opportunities in rural America?
Secretary Vilsack. That is correct.
Mr. Enyart. One other question relating to the biofuels and
the military. Can you tell me why is helping the Navy and the
other branches of the military increase their use of renewable
energy such an important goal for your Administration?
Secretary Vilsack. Well, there are a couple reasons. One,
it is a national security imperative. If you talk to Secretary
Mabus of the Navy, he will tell you that he is deeply concerned
about the ability to adequately fuel the ships and planes
necessary to defend our country if you have to be reliant on
imported sources of that energy. Second, since most of--since a
high percentage of the military, a higher percentage than the
population would suggest, comes from these rural areas, a lot
of these folks who are serving in the military go back into the
rural areas that they came from and they want to have economic
opportunity when they retire or leave the service. We are going
to have a lot of young people leaving the service as a result
of these wars being ended and we are going to create new
opportunities, and I think there is a concern on the part of
the Navy that those who have served their country admirably
have economic opportunity back home, that they aren't
necessarily compelled to go someplace else if they want to go
back home. You know, it creates a new industry and there are
obviously jobs connected with that new industry, and it creates
an opportunity for our commercial aviation system to be more
competitive internationally. So there are a lot of positives to
this.
Mr. Enyart. Thank you, Mr. Secretary.
The Chairman. The gentleman's time has expired. The chair
now recognizes another gentleman from Illinois, Mr. Davis, for
5 minutes.
Mr. Davis. Thank you, Mr. Chairman.
Mr. Secretary, thank you for your time today. It was great
to meet you before the hearing. I appreciate you taking the
opportunity today to educate us on a few different issues too.
First off, I want to tell you, the number one issue on the
minds of the farmers in central and southwestern Illinois is
crop insurance. As a matter of fact, the President of the
Illinois Farm Bureau, Phil Nelson, who has a mighty fine taste
in ties, I must say, is here in the audience today to reiterate
that point. Last fall, some opponents of crop insurance, they
predicted that crop insurance indemnities would be about $40
billion. What is your latest estimate for the total indemnities
paid for the 2012 crop year?
Secretary Vilsack. In terms of what has actually been paid
out, it is roughly $15\1/2\ billion. You know, I don't know
that all the claims have been satisfied but it is certainly
substantially less than the number that you just quoted.
Mr. Davis. So we can easily say about \1/2\ the estimated
cost originally?
Secretary Vilsack. I think that would be safe.
Mr. Davis. Okay. Do you agree crop insurance is working?
Secretary Vilsack. Absolutely.
Mr. Davis. I am a father of three kids, one is high school,
two in junior high, and I want to hopefully work with you on an
issue that a lot of folks are talking to me about back home,
and that is school nutrition. Our kids are not getting enough
to eat at school. As a matter of fact, I understand the goal of
the recent new changes to reduce the calories that the kids are
eating, they make them make better choices, but it is having
the opposite effect. I also coach Little League and football,
and I know some of these kids are just not getting enough to
eat at school. As a matter of fact, it is backfiring because
they go out to the convenience store that is right across the
street and they eat worse as soon as they leave. So I would ask
that you give the schools the flexibility they need to make
sure that they are able to feed the kids, and one size does not
fit all with our children and the energy they need. Can you
please comment on what USDA is actually doing to allow more
flexibility?
Secretary Vilsack. Well, there are 32 million children that
are involved in this program and so you aren't going to have 32
million different menus. You are not going to be able to
individualize it to that point. It is somewhat surprising that
people are concerned about this because the calorie count is
not significantly less than what it was the year before this
went into effect but it does change the makeup of the meal and
the makeup of the calories to provide a nutritionally balanced
meal. That doesn't prohibit additional a la carte opportunities
nor does it prohibit additional snacks nor does it prohibit
youngsters using vending machines that are in school with
healthy snacks. So we recognize the need for flexibility and so
we indicated to school districts that they could adjust within
the week portion sizes so long as they kept within the basic
framework.
I mean, we do have a serious issue with obesity. A third of
our children are overweight or obese. That is going to have
consequences in the classroom. It is going to have consequences
in health care. It is going to have consequences in
opportunities. It is a national security issue. We have had
retired generals and admirals come in this very building and
testify on behalf of these nutrition standards because they are
concerned about the shrinking number of young people available
to serve in the military. So it is an issue, and we have
provided flexibility, and I think that there is at least
perhaps not in your area but at least in many parts of the
country a greater acceptance and understanding of what we are
doing, and we have seen particularly among the elementary
school kids that they are really excited about this.
Mr. Davis. Well, I am not getting that excitement out of
the folks that are in my district, but I would be happy to work
with you and let you know some of the individual circumstances
that some of our schools are facing.
I have one last question in the balance of my time. You
know, Mr. Secretary, it was reported in today's Washington
Times that the Federal Government has actually posted 400 new
jobs yesterday including three insect production workers to
help grow bollworms in Phoenix. At a time when this
Administration is claiming the sequestration is going to cause
flight delays, meat shortages, are you going to still fill
those three positions in Phoenix?
Secretary Vilsack. Well, I am not familiar with those three
positions, Congressman, and I will be happy to check on that,
but I do want to say a couple things in response to your
question.
First of all, we have eight percent fewer workers than we
had when I took over. We have a budget that is less than it was
in Fiscal Year 2009. We have made a lot of changes and a lot of
things that have created a great deal of difficulty in terms of
getting our job done but we are getting it done. We are going
to continue to be mindful of the importance of working with
taxpayer dollars, and I am pretty proud of the effort at USDA
to save and reduce spending by $700 million.
With due respect, you can pick out one or two items but on
balance, you will get a workforce that is very committed----
Mr. Davis. Mr. Secretary----
Secretary Vilsack.--to the people of rural America.
Mr. Davis. I appreciate what you have done at USDA and I am
glad you guys have cut, but with sequestration and what we are
seeing in the news media today, the fact that we have three
positions that are in the USDA--granted, there are many others
that I think should be pulled down before we start furloughing
some of the workers that are on your payroll now. I just want
to make sure, I want to know, can you please look into the fact
that we have three brand-new positions to actually grow
bollworms in Phoenix. If we could please look at----
Secretary Vilsack. Well, I will look into that but if you
will understand that even if those positions are not filled, it
doesn't have any impact on meat inspection. That is the thing
that seems to be missing here is a recognition of what you all
have done. With the sequestration the way it is structured,
every account item has to be cut by a certain percentage and so
in the food safety area, there are only a couple of accounts
and they are almost all labor. So even if you eliminate those
jobs, it isn't necessarily going to resolve the issue that we
are all concerned about.
The Chairman. Would the gentleman from Illinois yield to
the Chairman for a moment?
Mr. Davis. Yes, sir.
The Chairman. The Secretary is exactly right. One of the
challenges we face here is trying to come up with ways to
mitigate the effects of sequestration. That was my earlier line
of questioning about whether the Department had worked with OMB
or the appropriators to try to come up with language. We as a
Committee have been trying to work with the appropriators when
there is an opportunity in this CR or legislatively to give you
the flexibility. They say they have heard nothing from the
Department or OMB or the Administration. That is our concern.
Thank you, Mr. Secretary. The gentleman's time has expired.
The chair now recognizes the gentlelady from New Mexico for 5
minutes.
Ms. Lujan Grisham. Mr. Chairman, thank you very much, and
Mr. Secretary, it is a pleasure. I am delighted to get to meet
you today and to have you before this Committee. I also
appreciate that several questions today and much of your
testimony has been focused on food security issues and hunger
and that New Mexico is included in your recent efforts, Strike
Force, is the language that you used, to address this problem.
As you are already well aware, New Mexico has one of the
highest hunger or food insecurity rates in the country, and you
identified that in food security are a couple of those
programs, both SNAP and the Commodity Supplemental Food
Program, that we have a growing number of disabled adults and
seniors on those programs, and in fact, in New Mexico, what you
have is another dynamic. Not only do we have some of the
highest poverty rates among those populations and diversity
rates among those retirees, but in addition, we have the
fastest or one of the fastest growing seniors raising or
grandparents raising grandchildren populations. So you have a
double exposure, if you will, to a lack of resources, a lack of
support and a growing problem with hunger. You also mentioned
the First Lady's Let's Move Initiative and how that could
provide some positive impacts in rural efforts to address those
populations. Can you talk to me about how much has been
appropriated or funded for that program, the efficacy of that,
and can you give me some of those outcomes that are working for
us in rural America?
Secretary Vilsack. Well, the First Lady's Let's Move
Initiative is really a function of her outreach to the private
sector and it is predominantly being funded by private
foundations and private enterprise, private companies. But it
has had a profound impact in one particular area. We have a
thing called the U.S. Healthier Schools Challenge where we
encourage schools to embrace better nutrition as well as
physical education and more exercise, more physical movement.
We have seen a dramatic increase in the number of those schools
basically reaching the various levels that we have. We have a
bronze, silver and gold level and a platinum level. We have
seen thousands of schools participate in that program, and we
think over time that is going to make a difference, maybe a
small reason why in some of the major cities we are beginning
to see the obesity levels abate a bit.
Ms. Lujan Grisham. Mr. Secretary, I appreciate that. I am
going to take this to maybe a more complex area to address in
that regard. We also have in New Mexico some of the highest
type 2 diabetes rates, among adolescent, some of the highest
obesity rates. Our health disparity issues are problematic, and
when I was the Secretary of Health, I worked diligently to
actually ban junk food out of the schools and recognized that
all of the research indicates that if you want to see better
outcomes in education, you can tie that directly to a healthier
school environment, which goes right to nutrition and then
saves us billions of dollars in health care costs for both
those issues.
But I am really concerned in addition to that effort, and I
do see great promise at focusing on healthy school initiatives,
which include both better nutrition and exercise, but outside
the school and in rural areas, what are we doing about those
families in the summer and what innovations can we take from
some of the healthy school initiatives and apply to making sure
that those kids and families get the nutrition that they need
in the off-school months?
Secretary Vilsack. Well, we have seen a significant
increase in summer feeding spots and locations. We have 38,000
locations that we are involved in supporting. They serve about
143 million meals a year during the summer months. We are
continuing to reach out to faith-based organizations and the
private sector to help fund mobile units that can go to where
the kids are as opposed to the kids coming to a central
location. In a rural area, that is particularly important to
have a mobile area where you have healthy snacks or healthy
meals that can wheel around to the Little League diamond or the
swimming pool or locations where we know kids are congregating
and provide them access to decent food. So that is one thing
that we are encouraging, greater expansion of the summer
feeding program.
Ms. Lujan Grisham. And Mr. Secretary, on that point, I
appreciate that, and one of your nonprofit partners in New
Mexico, Appleseed, is doing a fantastic job, but I do worry
that sometimes the lack of flexibility has stunted some of that
innovation and their ability and other nonprofit partners to
really do their job. I would love for the Department to
entertain that flexibility, and given that I have very little
time left, I would also want you to talk about with the
sequestration and notwithstanding sequester that is my sense
that we don't have enough people on the ground in USDA to
partner productively in those programs or to get any grants and
loans out either for rural economic development.
Secretary Vilsack. Well, with due respect on that rural
development, we are still going to have people on the ground
and still people doing business. We just not going to be able
to do as much business because we don't have the resources. We
will see a reduction in wastewater and business and industry
loan programs and utility programs but we are still going to do
our job, and we are going to continue to focus on getting the
job done in rural areas. It is one of the reasons why we have
focused on process improvement. We, for example, reduced the
loan application for smaller loans in rural development so we
don't have to spend as much time so we can do more of those
smaller loans. We have created new opportunities in the FSA
area with microloans to help small farming operations. So there
is a lot of work being done but we are not going to be able to
do as much of it, just simply because we don't have the
financial resources that we would have had but for sequester.
The Chairman. The gentlelady's time has expired. I would
note to my colleagues, we have five more Members in the queue.
Secretary, your patience has been very much appreciated, and
with that, I recognize the gentleman from New York, Mr.
Collins, for 5 minutes.
Mr. Collins. Mr. Secretary, we have covered a lot of
territory today, and I am a little surprised. I represent the
27th District of New York, the eight counties on the western
part of the state, and we have one of the largest dairy-
producing counties in the entire country. We need jobs. We need
to grow the economy. We need legal workers. And as the
Secretary in the Administration, I hope somewhat rhetorically,
we are counting on you to be a voice for the dairy producers so
we can get the legal workers we need 24/7, 365 as this
immigration debate moves forward, and I am just curious if you
have some comments, certainly recognizing that that is the
issue with the dairy farmers--legal workers.
Secretary Vilsack. Well, Representative, I talk a lot about
this issue and the need for comprehensive immigration reform
that would include and respond to the unique nature of
agricultural workers. It is something that I have talked to
groups about. It is something I have talked within the
Administration about, so we are clearly focused on this, and we
understand the unique nature of farm work, and our hope and our
prayer is that we finally get this broken system fixed and get
it fixed once and for all, that we provide better border
security, that we provide a pathway to legitimacy and
citizenship for those who are here that we want to stay here,
that we make sure that people are held accountable by paying
fines and paying taxes and learning the language but that we
get this process fixed and that we get it fixed in a way that
doesn't make it cumbersome and difficult for producers to
comply with the law. One of the concerns we had about e-verify
that was discussed in past Congresses is that it may apply very
well for a large industry but it doesn't apply particularly
well for a small dairy operation, so we are very, very
sensitive to this issue.
Mr. Collins. Well, we will be counting on your voice as
this moves forward. I do think that bipartisan support is there
to get it done this year, and I hope that is not just optimism.
Secretary Vilsack. We are counting on your vote,
Congressman.
Mr. Collins. Moving forward, we covered a lot of things and
there were a few questions that I may ask you to go back over,
but do you consider yourself the CEO of the Department of
Agriculture, I am assuming?
Secretary Vilsack. Actually, to a certain extent I have to
be careful about how I answer that question because the
President is my boss and the people of this country are my
boss, so I am middle-level management in that scenario.
Mr. Collins. Well, I would think and hope you would
consider yourself more of that, because it goes back to in my
world, a CEO should be proactive--I think you would agree with
that--anticipatory, do contingency planning, and I guess my
question is, do you do those things?
Secretary Vilsack. We have done them, Congressman. That is
why we have been able to deal with a budget that is less than
it was in 2009 and still provide service.
Mr. Collins. So if you are proactive, anticipatory, you do
contingency planning and you are the CEO of the Department of
Agriculture, how is it that for 18 months you have done no
planning related to the sequester and in fact today you can't
even contact all your employees. We are 4 days post sequester
and you don't even know how to get a hold of your employees.
Secretary Vilsack. Well, that is not a fair statement,
Congressman. First of all, we have done planning. We have been
doing planning all along, so we have a good understanding of
some of the challenges. We know, for example, that we are going
to have 1,500 fewer farm loans as a result of sequester. We
know that we are going to be able to do a lot less
conservation. We know that we are going to be able to do a lot
less rural development. We know the implications of this. What
I said in terms of contacting folks is that folks don't have e-
mail and so there is a process by which we have to follow for
folks who don't have e-mail to be able to notify them legally
pursuant to contracts and pursuant to the law. So we know where
the folks are. It is just a matter of using different
techniques to communicate with them.
Mr. Collins. Well, I would suggest had you done some
advance planning, they could have already been contacted.
Secretary Vilsack. You can't contact them until the
sequester is triggered, Congressman. That is the legality of
what we are faced with. As soon as the President signed the
order, we began the process of notifying people.
Mr. Collins. You know, with 1 minute left, have you heard
of Lean Six Sigma?
Secretary Vilsack. Yes, sir. We are using it in process
improvement at USDA. We have a number of Lean Six Sigma
trainings. We have a number of black belts in that process.
Mr. Collins. And are you trying to utilize that as a way to
minimize the sequester impacts on, for instance, your meat
inspectors and a way to improve processes? Because Lean Six
Sigma will reduce the need for employees, which could reduce
the need for furloughs.
Secretary Vilsack. I don't think it would work in this
particular area but we have used it in other areas. We have
used it specifically in our biotech regulatory area is one
place where we have used it. As I say, we have a number of
black belts throughout the entire USDA process. I am very keen
on this.
The problem with food inspectors is the amount of time and
the amount of the cut and the fact that the budget is
predominantly inspectors, and there is just not much
flexibility. It is not like a regular budget. It is not like
you can prioritize. That is the problem that people just can't
get their arms around but that is the reality we have to face.
Mr. Collins. Well, respectfully, I do believe Lean Six
Sigma would help you with meat inspectors, and I request that
you take a look at it. It will pretty much work everywhere.
The Chairman. The gentleman's time has expired. The chair
now recognizes the gentleman from Florida, Mr. Yoho, for 5
minutes.
Mr. Yoho. How are you doing today?
Secretary Vilsack. All right. How are you?
Mr. Yoho. I admire you for sitting through this. I learned
a long time ago that the mind can only absorb what the rear end
can endure, and you are doing a great job.
I have been proud to be associated with agriculture pretty
much all my life. You know, since I was 16, I have worked
around agriculture. I have been a large-animal veterinarian for
the last 29 years, and I have worked with the USDA and I am
proud of that organization, and you have a tough job and you
have been at the helm for 3 years. My question kind of goes
along with Mr. Collins's here too. Knowing that sequestration
was a possibility 2 years ago, the planning stage, you have to
work out your budget, knowing this was coming, I have heard you
had the response that you did and the steps that you took, and
I realize that you did do like a lot of the farmers in our area
and I did certainly in practice, do more with less, and I
commend you for that. But again, with your mission statement as
you stated is to make sure our food supply is safe in this
country and it is important when we address the topic for
today's discussion to review the state of the rural economy, we
want to make that strong. The small businesses are the backbone
of this country, and of course, the farmers are the breadbasket
of this country and a large portion of the world. And so with
the statements that come out of the Administration or through
the USDA when you say the money is not there, we are going to
have to lay off the meat inspectors, I find that somewhat
disheartening to come out of an agricultural community because
by sending that message out, you are stating to the rest of the
world, not just the country, not just the region that our food
could possibly not be safe, and that is a bad message to send
out, and I would caution in the future to use different
messaging techniques because we are trying to expand
agriculture. I am proud to be from Florida, which is such a
strong ag area, that we want to make sure that we continue our
trade with other countries and I would just like to hear your
comments on that.
Secretary Vilsack. Congressman, we are expecting a record
year of exports in beef, poultry and pork. We have seen 4 of
the best export years in the history of this country in the
last 4 years. This is the reality of the circumstance to give
everyone adequate notice to be able to begin the process of
adjusting to the reality that we are going to have to not lay
people off but furlough people, and by furloughing people,
because of the nature of the inspection process in this country
in which companies are required to have food inspected and are
required to have USDA inspectors as opposed to their own
privately funded inspectors, it is going to cause a reduction
in production for a period of time, and that is the unfortunate
circumstance. We did take steps to try to minimize that, but at
the end of the day when 87 percent of your budget is that line
item, there is just not much you can do.
Mr. Yoho. I realize that, I worked in a slaughterhouse, I
have worked with the inspector and I have seen that process and
I know the importance. My concern is the messaging going out to
people when we are trying to expand exports, and you have done
a great job, and I commend the government for expanding that,
but when we send a message out like that, it is kind of like
BSE. When they hear one cow has BSE, the markets close down,
and if the foreign countries hear that we are not inspecting
our meat, it sends a signal and that is what concerns me, and
if we are to keep the rural agricultural economy growing----
Secretary Vilsack. It is not that we are--and I don't think
anybody ever said we are not inspecting the meat. We are
furloughing people and as a result those production facilities
are going to shut down for a period of time. It is not that
food isn't going to be inspected.
Mr. Yoho. It is one of those things. I know what we say but
we don't know what people hear, and when you hear in the news
that meat inspectors are going to be laid off not inspecting
the meat, it sends a signal and that concerns me.
Secretary Vilsack. Well, we will communicate to our
cooperators in foreign countries precisely what this is all
about, and we actually began that process. We have--another
part of sequester which we haven't discussed today is the
impact on the Brazilian cotton situation which is a very
serious issue that has to get resolved. We are going to have
to--sequester applies to that account as well, and so we are in
the process of reaching out to our foreign friends and explain
to them precisely what this is, and I don't anticipate that we
are going to continue to have a strong, robust commitment to
exports now. It will be impacted by the fact that not only are
we dealing with this issue of meat inspection but we are also
dealing with less money in promotion, which is unfortunate.
Mr. Yoho. Well, and the other thing is, we need to work
together for the betterment of not just ag but of the country,
and that is a bipartisan commitment, and I look forward to
doing that. I have several other questions but I am going to
run out of time, but I would like to talk to maybe somebody
from your Department on immigration, on the Food Stamp Program,
as a possibility of cutting back on our expenses since that
eats up about 80 percent of the farm bill, and I look forward
to talking to you at a later date. Thank you for your time.
The Chairman. The gentleman's time has expired. The chair
now recognizes the gentleman from Pennsylvania, Mr. Thompson,
for 5 minutes.
Mr. Thompson. Thank you, Mr. Chairman.
Mr. Secretary, good to see you again.
Secretary Vilsack. Nice to see you.
Mr. Thompson. We bumped into each other in an airport not
too long ago.
Secretary Vilsack. In the great State of Iowa.
Mr. Thompson. In the great State of Iowa, absolutely.
Secretary Vilsack. Where your grandchildren are.
Mr. Thompson. My grandson, one of many in the future, I
hope, but he is the only one there.
I was actually going to go down the road with Mr. Schrader.
We work very closely together, but he had already kind of
talked about the biopreferred bill, the Forest Products
Fairness Act. We are going to be reintroducing that. I mean, it
amazes me that we discriminate against U.S. forest products and
yet that program, which is a Federal program, promotes foreign
products. So we are hoping to fix that, and we have some
support to do that and we will go down that road.
I wanted to stay with forestry in terms of just some
questions for you. You know, we are beginning to address the
budget issues that confront us, and I want to move beyond
sequestration because obviously we have a responsibility to
operate in a fiscally responsible manner, and we all know that.
You all have demonstrated a commitment to that with what you
have been doing since you became Secretary, but one of the
areas and the opportunities I just don't see us taking full
advantage is is the revenue from our timber production. I am
not talking about stewardship cuts because those do create
local jobs and you can keep some of that money, quite frankly,
in the forests for other projects but I am talking about the
green timber sales. Those are the ones that when U.S. national
forests were created, it was local folks, my predecessors 100
years ago all sat at the table and said, ``Well, how can we
make sure we have robust rural economies and how we manage our
national forests in a way that they produce timber?'' You know,
we talk a lot in the literature about the Forest Service about
multiple use. I happen to believe that it is all secondary to
producing resources. That is what those national forests were
all about. And we just have never come close and we have been
on a decline in terms of timber production that promotes
healthy forests. That is how we prevent, as you know, invasive
species. We prevent wildfires. We promote healthy forests by
timbering, and we promote robust rural economies.
And so are there any thoughts, or what are your thoughts--
and we are going to have a Subcommittee hearing next week so I
will really go into depth with Chief Tidwell. Great guy. I
enjoy working with him. And so we are really going to pursue
this. But can you update the Committee on what the Forest
Service is doing to increase timber sales on Federal forests so
that we as U.S. taxpayers quite frankly can start to capitalize
on our investments, because it is not just about healthy
forests and healthy rural economies, but that is revenue that
can come into the Treasury.
Secretary Vilsack. Well, as I sit here I am thinking of
three things that we have done. One is, we have increased
commitment to treat more board feet to get up to 3 billion
board feet over the course of the next couple of years, and
part of that does require a process that we have to go through
in terms of projects in NEPA. What we have done with NEPA is,
we try to figure out a way in which we could streamline that
process so we don't spend quite as much time, and that
obviously reduces the amount of work we can do, and we have
been pretty successful.
Mr. Thompson. I appreciate your steps in that direction,
that landscape approach.
Secretary Vilsack. Second, or third, so it is one,
increasing sales, two, reducing the administrative burdens
associated with those sales, and then three is actually
continuing to research a new product development. You know, I
was at the Forest Product Lab recently and saw the development
of new tornado shelters, and most tornado shelters are made
from metal but they are now experimenting with wood shelters
that can withstand something going into it at 150 miles an
hour. I actually saw a 2 x 4, they shot it into this facility
and it didn't penetrate the facility. So creating new products
for wood. We have also seen nanotechnology potentially creating
armor opportunities and a variety of things that could be used
in cell phones, the film for cell phones. I mean, it is
unlimited here.
So the key here is continuing to increase the sales,
understanding that it is consistent with proper forest
management, reducing the administrative burdens that can slow
this process down, and making sure that we are constantly on
the edge of researching new products.
Mr. Thompson. And new products are important, innovation is
incredibly important but I would argue that what has been
excluded because it has been considered mature is really, it
was shortsighted when it was put in place. We have lost 300,000
jobs in the forest products industry, and so we also have to
maintain--we have a commitment to maintain as well as
developing emerging markets.
Secretary Vilsack. Well, and obviously we need help from
you on that to better clarify the definitions so that there is
greater flexibility in what we can do there, but we are looking
at new and emerging market opportunities and if you all change
the direction and focus on this, we will obviously respond to
it.
Mr. Thompson. I appreciate that. And another comment but
just real briefly. You know, I do have concerns, and I am out
of time, so I don't want to set this up and not give you a
response time, but we can talk later on it. You know, your
response to the Senator talked about the impact of
sequestration. You only projected a $4 million cut in land
acquisition, which quite frankly takes lands off the tax rolls
and this makes it very challenging for rural communities when
they have lands that go into the National Forests and off the
tax rolls, especially if we are not doing our job with
harvesting timber. At the same time, your letter outlined a
projected 15 percent reduction in timber harvesting, and I just
have real concerns about that, but that is something I look
forward to talking to you in the future on.
The Chairman. The gentleman's time has expired. The chair
now recognizes the gentleman from Georgia, Mr. Scott, for 5
minutes.
Mr. Austin Scott of Georgia. Thank you, Mr. Chairman, and
Secretary Vilsack, I was happy to hear you talk about research
and the importance of research. I think it has been an
extremely valuable part of agriculture that actually helps us
increase our yields per acre and allows us to increase export
opportunities. So thanks for mentioning that. As you know, that
falls into kind of that other category of the ag bill, if you
will, on the spending.
My question deals with the 2014 budget request that you
would have submitted to the President. Can you tell us what
your top-line number is?
Secretary Vilsack. Congressman, that process has not been
completed, and it would be premature for me to respond to that
question. We would be more than happy to explain to you the
intricacies of our budget after it is published. But let me
just simply say this. You know, we are continuing to be
challenged to do the job you all want us to do when we are
dealing right now with a budget that is less than what it was
in Fiscal Year 2009 for operating.
Mr. Austin Scott of Georgia. Let us talk about that for a
second then because we hear that from pretty much every
Administration official, but the President's budget was due
February 4th. I didn't ask you for a detailed explanation. I
just asked you if you would give us the top-line number, and
you are telling us that you have not turned in your budget to
the President yet. Is that correct?
Secretary Vilsack. No, what I am telling you is that the
process has not been completed in terms of our discussions.
Mr. Austin Scott of Georgia. Let me ask it this way. Have
you turned in your budget to the President?
Secretary Vilsack. Well, the answer to that is yes and no.
We have turned in information to the White House and to the OMB
but that process has not been totally locked down yet.
Mr. Austin Scott of Georgia. Okay. So you will have to
forgive me, Mr. Chairman. It is kind of baffling that you stood
there or sat there and said what you all have done when the
President was supposed to deliver a budget to us February 4th
and you can't even tell us or won't, I should say, you won't,
because you are making a choice to tell us yes and no instead
of just saying yes or no. But the fact of the matter is this.
In 2013, according to your website, your total outlays were
$155 billion; 2012, $151; 2011, $139; 2010, $129; 2009, $95.
Secretary Vilsack. That doesn't tell the full story,
Congressman, because those are----
Mr. Austin Scott of Georgia. Sir----
Secretary Vilsack.--eliminated programs, and I am talking
about operating here. In order to do the programs, we have to
do have----
Mr. Austin Scott of Georgia. Sir, I will ask you the
question. Do those numbers from your website accurately reflect
the total spending of the USDA?
Secretary Vilsack. If they are on the website, I am sure
they are accurate, Congressman.
Mr. Austin Scott of Georgia. You said that there was a $700
million cut. If you take $129 from $155, that is a $26 billion
increase in spending over the last 4 years. Where is the $700
million cut?
Secretary Vilsack. Congressman, what I said was, our
operating budget, which is the discretionary part of our
budget. Now, we have no control over the mandated expenses.
They are what they are. If SNAP is X, it is X. If other
mandated programs are what they are, they are.
Mr. Austin Scott of Georgia. What percentage of the farm
bill do you think should actually go to support production
agriculture, farm and commodity programs? What percentage of
what we call the farm bill do you as the Secretary of
Agriculture believe should go to support those programs?
Secretary Vilsack. You know, it is an interesting question
because what you want me to say is a large number.
Mr. Austin Scott of Georgia. No, sir, I just want an honest
answer.
Secretary Vilsack. Well, it is not an honest question,
Congressman.
Mr. Austin Scott of Georgia. Sure it is.
Secretary Vilsack. No, it is not. It really isn't.
Mr. Austin Scott of Georgia. It is an honest question.
Secretary Vilsack. The reason it is not is because you want
to pit parts of our budget against each other, and that is not
right.
Mr. Austin Scott of Georgia. Sir, what is not right is the
fact that you won't give a straight answer. Have you given your
budget----
The Chairman. The gentleman----
Mr. Austin Scott of Georgia.--to the President or not?
The Chairman. The gentlemen will allow each other to
answer.
Secretary Vilsack. The process is that we submit
information and OMB responds back. So there is a give and take,
and that give and take has not yet been completed, so I can't
tell you what the number is because it hasn't been finalized.
It could be this number or they could come back tomorrow and
say, ``You know what, we need to give the Defense Department X
number of dollars and so we are taking this from you.'' You
know, it is a process.
Mr. Austin Scott of Georgia. I don't expect this President
to give any more money to the Defense Department. I am on Armed
Services as well. The fact of the matter is this: Spending has
increased dramatically under your agency, and the other fact is
that in 2013, the total percentage of funds that went to farm
and commodity programs is 16 percent. Sixteen percent is what
actually went to production agriculture.
Secretary Vilsack. That is--I could quibble with that
number and here is why----
Mr. Austin Scott of Georgia. This is part of your website.
Secretary Vilsack. Here is why I can quibble with that----
Mr. Austin Scott of Georgia. If the information is not
accurate, it is because you are putting out false information
on your website.
Secretary Vilsack. No, no, no. It is because I need to
explain it to you, Congressman. The SNAP program is part of
that, right? And you are going to suggest that that is not part
of the farm programs. It is not technically but----
Mr. Austin Scott of Georgia. It is not part of commodity
and production agriculture.
Secretary Vilsack. Well, but it helps commodity and
production agriculture because 16 of every food dollar that is
spent in this country ends up in a farmer's pocket. So you have
to look at the totality of the programs in terms of how we
support agriculture in this country, and the research budget, a
part of that is used for production agriculture. So I don't
think it is fair to suggest that title I or the crop insurance
title is the only thing that goes to production agriculture.
That is what I am saying.
The Chairman. Would the gentleman from Georgia yield?
Mr. Austin Scott of Georgia. Yes, sir, Mr. Chairman, I will
yield, but that is a long, long stretch of a rubber band right
there.
The Chairman. I would just note to my good friend from
Georgia that he cuts to the core issue of what this farm bill
debate will be about this summer and into the fall and the
conference committee process: how do we allocate our resources?
Is the 80/20 spilt that we are operating under right now
between programs that help consume food versus in the general
sense the programs that help raise the food, is that the right
balance. There are a good many folks on this Committee, and I
suspect on the Floor of the United States House, who will say
that that ratio is out of balance, and we will address those
issues. The folks in the Senate may have a different
perspective. But you and I are going to have a lot of fun with
this topic, sir.
Mr. Austin Scott of Georgia. Well, Mr. Chairman, I
appreciate that, and what I tell you is my farmers have told me
that we no longer want to be held hostage.
The Chairman. I understand that.
Mr. Austin Scott of Georgia. Thank you, and I yield my
time.
The Chairman. The gentleman yields back. I recognize the
gentleman from New York for our concluding 5 minutes.
Mr. Gibson. Well, thanks, Mr. Chairman, and I appreciate
the opportunity to be part of this hearing, the state of the
rural economy, so vitally important to upstate New York. I want
to thank the Secretary. Good to see him again. I appreciate the
work that he has done for my area, and certainly he has been
well received as he has traveled in upstate New York.
We have talked about a number of issues that are important
to my farmers and to the ag economy. I just want to list some
of these in terms of my support with this upcoming farm bill.
Number one, crop insurance for fruit and vegetable growers,
this is critically important to them, particularly given the
needs of the Northeast, and I think the Secretary agrees on
that. I just want to echo the comments, and actually associate
myself with my neighbor in the Hudson Valley, Mr. Maloney.
Research for fruits and vegetables is vitally important. I am
proud of my alma mater. I am an alumni of Cornell and I am
proud of the work that they do with the cooperative extension.
I want to see us continue to support that in the farm bill.
Dairy security, margin, margin insurance, critically important
to my dairy farmers. Number four, ag labor. We won't see that
in the farm bill but I concur, this is something that I hear
every time when I meet with my farmers has to be addressed, so
I appreciate your support for that. Number five is, I want to
actually support what the report that your agency or
Administration came up with with regard to definition of rural.
You know, I have Kingston in upstate New York and that mayor
there, Mayor Gallo, is working hard to revitalize parts of his
downtown, and among the parts of his vision is supporting the
agricultural economy by bringing the farmers' market and so
having access--it is 23,000 in Kingston, so having access to
that program is going to be helpful. So I am going to be
supportive of that, and I was in the process here during the
farm bill.
I do want to mention three other priorities that are
important for upstate New York to pose you on these. Number one
is broadband. I know it was brought up at least tangentially
earlier in the hearing but the FCC has found that the Low
Interest Loan Program is something we have a need for yet, of
course, the demand for it seems to be declining. I have my own
views on it. I will be interested to hear yours in a second.
Beginning Farmer Program, critically important. I am so proud
of our farmers in upstate New York, but we recognize that the
average age is 57, so this is a national security issue too. We
need to inspire a whole new generation to come to the farm, and
our office is going to be involved in the farm bill continuing
to strengthen that program, going forward. And then Lyme, which
is a public health scourge certainly in the Northeast in my
district but I would argue around the country, and we are
working with your folks in terms of ag research service to try
to make a difference on that.
So I appreciate the opportunity to express the priorities
for upstate New York, Mr. Secretary, and I would be interested
in your viewpoint on the Low Interest Loan Program for
broadband and perhaps at this time other follow-up.
Secretary Vilsack. Well, in terms of USDA's capacity to
provide assistance, we are going to focus our attention on the
area that is not being served as well by the FCC efforts, and
as I indicated, the FCC is pretty much focused on the regional
Bells and where their capacity is to expand broadband. There
are many areas of the country that are served by small
telephone companies that don't necessarily fall into that
world, and that is the world that we want to try to help and
provide assistance to, and we do it in providing loans but we
also do it in providing distance learning and telemedicine
opportunities. We have had a number of projects, over 1,400
projects that we funded over the last couple of years in that
area. That is going to continue.
I do think there are things that the FCC could potentially
do to make it a little bit easier for those regional folks to--
the rate of return for carriers to participate in their program
and we have had conversations with them about that and we will
continue to try to have a coordinated effort.
I appreciate you mentioning the Beginning Farmer Program. I
would tell you that as we went about closing labs, ARS labs, we
noticed that there was a great deal of real estate associated
with those labs, and the process that we have to follow is that
we have to provide opportunities for land-grant universities
that are located in and around the lab first dibs, if you will,
on the land but we made it as a condition of most of the
transfers that they establish or beef up their Beginning Farmer
and development programs. It is a way in which we can use a bad
situation and a tough financial situation to find opportunity.
So those land-grant universities are going to do an even more
extended job on the Beginning Farmer. I would encourage you
with the mayor to take a look at the Know Your Farmer compass
on our USDA website. That provides a lot of information about
the programs that that mayor could potentially use to build a
farmers' market economy in his downtown area, and I would agree
with you on ag research. The challenge will be limited
resources and a lot of pests and a lot of diseases and a lot of
issues, trying to prioritize them as best we can, but this area
is one area that has been ignored in terms of conversation and
discussion, which may be in the long term one of the most
important areas.
Mr. Gibson. I greatly appreciate those remarks. I look
forward to working with you, your team, and of course this
Committee as we move forward with this process in the coming
weeks and months.
Mr. Chairman, thank you, and I yield back.
The Chairman. The gentleman yields back. I recognize
myself.
Mr. Secretary, I would note that I will send down to you
some questions about the Small Watershed Dam Program, one of
our very successful things that your Department has been a part
of since the 1940s and look forward to your responses. Other
than that, thank you for your time today and your insights and
your interactions with Members of the Committee. This is always
a good use of our time, and I believe it is a good use of your
time too.
With that, under the rules of the Committee, the record for
today's hearing will remain open for 10 calendar days to
receive additional material and supplemental written responses
from the witness to any question posed by a Member.
This hearing of the Committee on Agriculture is adjourned.
[Whereupon, at 1:12 p.m., the Committee was adjourned.]
[Material submitted for inclusion in the record follows:]
Supplementary Information Submitted by Hon. Thomas ``Tom'' J. Vilsack,
Secretary, U.S. Department Of Agriculture
Insert 1
Ms. Fudge. Thank you so much, Mr. Chairman, and thank you for
being here, Mr. Secretary.
Mr. Secretary, we all know that building a diverse workforce
is an extremely effective tool in addressing discrimination.
Many of the civil rights complaints in the past, particularly
those in Pigford, might have been mitigated had USDA had a more
diverse workforce that was better able to interact with
minority farmers. So to that end, what has USDA done to ensure
a more diverse workforce? And I am particularly interested in
hearing about how many African Americans serve in leadership
roles within the Department, and before you respond, I just
want to remind you that I asked this same question almost 2
years ago and have yet to get a response, sir.
Secretary Vilsack. Well, let me see if I can respond to your
question here, and I apologize for not responding before that.
That is something that shouldn't have happened. We have engaged
in a process which we refer to as cultural transformation at
USDA, and every month I get a report on the diversity of our
workforce. I can tell you that we have seen significant
increases in the hiring of African Americans, Hispanics, Asian
Americans, Native Americans, people with disabilities, and
veterans, and that is the focus of this report. We are casting
a wider net to try to find good, qualified folks, and the
result of that is that our numbers are increasing. Within the
SES ranks, 17 percent of our SESs, our Senior Executive Service
folks, are African American, which is seven percent higher than
the civilian workforce.
Ms. Fudge. Let me just ask you this, and I could be wrong so
you could please correct me. But it is my understanding that
there are 12 positions that are Senate-confirmed positions
within USDA, and one is an African American.
Secretary Vilsack. I don't think that is--well, that may be
correct now because one of the positions that was Senate
confirmed is no longer Senate confirmed. But we have an African
American who is in charge of our entire operations, Dr. Parham,
Greg Parham. We have an African American who is obviously in
charge of the civil rights area. We have an African American
who is the administrator of our largest part of our budget.
Ms. Fudge. Well, if we know that, why is it so difficult for
me to get a report?
Secretary Vilsack. Well----
Ms. Fudge. Which I even asked you about as recently as a
couple of months ago, a chart.
Secretary Vilsack. Well, I mean, I can give you the cultural
transformation report if that would be of assistance and help
to you.
Ms. Fudge. Whatever answers my question is what I would like
to have, sir.
USDA staff met with Rep. Fudge's staff to provide additional
information on April 18, 2013 and will continue to work with her office
to provide updates on hiring within the Department.
Insert 2
Mr. Crawford. Thank you, Mr. Chairman.
Mr. Secretary, I know that the issue of CAFOs was raised
earlier. One of my colleagues had discussed it with you
briefly. I just want to ask some questions regarding that.
During the EPA's rulemaking process, can you tell me if USDA
raised to OMB and EPA the same biosecurity food supply and
producer safety concerns that were raised by the Department of
Homeland Security?
Secretary Vilsack. Our focus in conversations with the EPA
about that rule was to try to, consistent with their need to
protect the environment, minimize the disruption in livestock
operations.
Mr. Crawford. Were those concerns conveyed in writing?
Secretary Vilsack. I am not sure about that. I know what we
had was, we have a liaison who comes over to the USDA two or
three times a week to discuss issues, and I am sure there were
verbal conversations. I am not sure if there was a written
message but I know that there was clearly verbal conversations
about this because I was engaged in them as well. In addition,
the EPA Administrator and myself met with livestock groups on a
regular basis and had the opportunity to converse about a
variety of issues.
Mr. Crawford. Okay. If you have those in writing, I would
appreciate it if you could supply those to the Committee. . . .
USDA staff discussed a number of issues with the EPA concerning the
draft section 308 rule governing CAFOs, including biosecurity,
producers' concerns about publicly available addresses, and others.
Because this was a deliberative, interagency rule-making process, we
cannot share specific written materials that we provided EPA. If Rep.
Crawford would like, USDA staff is happy to set up a meeting or phone
call to discuss the conversations between USDA and EPA in more detail.
Please contact the USDA Office of Congressional Relations if this is of
interest.
Insert 3
Mr. Goodlatte. The objective was good but the messenger was
not too desirable, in my opinion. Can you tell us how much
money the USDA spent on the training, particularly the ones
hosted by Samuel Betances? I have heard as much as $400,000 was
paid to him.
Secretary Vilsack. I can't tell you the specific amount. I
would be happy to provide that to you, Congressman. . . .
APHIS had two separate contracts in 2010 and 2011 with Dr. Betances
to provide training to employees. Together these contracts amounted to
approximately $175,000 paid by APHIS to Dr. Betances.
______
Submitted Questions
Response from Hon. Thomas ``Tom'' J. Vilsack, Secretary, U.S.
Department Of Agriculture
Questions Submitted By Hon. Frank D. Lucas, a Representative in
Congress from Oklahoma
Question 1. The current Continuing Resolution expires on March
27th. In a letter to the Senate Committee on Appropriations dated
February 5, 2013, you outlined the impact of $53 million in
sequestration cuts, detailing the economic effects of a 15 day period
of furloughs. Please provide a copy of all communications with the
House Committee on Appropriations offering the Administration's
proposed alternative to inspector furloughs.
Answer. On February 5, 2013 USDA responded to a request from
Senator Mikulski, Chair of the Senate Appropriations Committee, asking
for additional information on impact of the potential sequester. This
letter lists the FSIS furloughs as one impact. Subsequently, on
February 15, 2013, USDA responded to a request from Representatives Sam
Farr and Rosa DeLauro, both senior members of the House Agriculture
Appropriations Subcommittee, asking for clarity on the impact that
sequestration may have on USDA's ability to deliver its services. This
response is similar to the response to Senator Mikulski, and also lists
the FSIS furloughs as one impact. Both letters are enclosed with this
response. (See Attachments 1 and 2)
Question 2. According to the economic analysis USDA has conducted
regarding the proposed Poultry Inspection Rule, what percentage of
savings with respect to online inspection costs can be achieved while
maintaining or exceeding the current level of food safety? What would
be the percentage savings if a similar rule were implemented for other
amenable species? What is the current status of the Poultry Inspection
Rule and when do you anticipate it will be finalized?
Answer. FSIS calculates that the savings attributable to the
proposed Poultry Slaughter Modernization Rule, once it is fully
implemented, will be approximately 23% annually ($31 M). This type of
savings will not be achievable with other amenable species. The agency
is in the process of preparing a final rule on poultry slaughter after
considering the comments received. It is not possible to provide a
specific timeline.
Question 3. In the current year, Congress and the President
provided the Department $14 million of funds for the Watershed
Rehabilitation Program that would be used to protect lives and
property, while also creating jobs and repairing the nation's
infrastructure. We understand that OMB has blocked the distribution of
the funding to NRCS.
What actions are you taking to have OMB release these funds?
Answer. Under the terms and conditions of the Continuing
Appropriations Resolution, 2013 (P.L. 112-175), which provided funding
through March 27, 2013, $14.2 million would have been available for the
Watershed Rehabilitation Program (after the reduction imposed by the
sequester). However, under the terms and conditions of the automatic
apportionment provided by OMB, these funds were not automatically
apportioned since the Senate Appropriations Committee had reported a
bill that would have zeroed out the funding for this program, thus
preserving the prerogative of Congress to determine the funding levels
for programs.
The Consolidated and Further Continuing Appropriations Act, 2013
(P.L. 113-6) subsequently provided $13.5 million for this program
(after reductions and rescissions). These funds have since been
apportioned.
Question 3a. Additionally, would you provide the Committee with a
state-by-state break-down of the Watershed Rehabilitation projects that
you intend to fund once the Department receives the funds?
Answer. It is too early in the project selection process to provide
a state-by-state break-down of selected projects. We are evaluating
funding requests from the NRCS State offices. Project selection will be
based on such factors as the project's risk index and project phase or
readiness (i.e., planning, design or construction). We will provide the
information requested after the funding is received by the agency.
Questions Submitted By Hon. K. Michael Conaway, a Representative in
Congress from Texas
Question 1. The Committee has seen your response to Senator
Grassley's letter, signed by seven additional Senators, asking for
``any written legal opinions you have been provided by USDA attorneys,
the White House, or the Office of Management and Budget, indicating you
have the ability to disregard the requirements under FMIA and PPIAS and
furlough inspectors.'' Many observers agree with Senator Grassley's
public statement that your response was unsatisfactory. Please provide
these documents for the Committee Record.
Answer. I consulted with the Office of the General Counsel (OGC)
regarding the argument that the Federal Meat Inspection Action (FMIA)
and Poultry Product Inspections Act (PPIA) require inspection
regardless of appropriations available for that purpose. OGC informally
advised that both Acts were subject to an authorization of
appropriations (see, e.g., 21 U.S.C. 469 and 680); and therefore the
so-called mandate for inspection exists only to the extent
appropriations are provided by Congress. Accordingly, to avoid an
Antideficiency Act violation, if Congress had not provided additional
appropriations for inspectors, USDA would have been required to
furlough inspectors in order to live within the limits of its
appropriations provided to carry out the FMIA and PPIA, as reduced by
the Budget Control Act sequester. No formal legal opinions were
prepared. Fortunately, Congress recognized the limit of the mandate and
provided additional appropriations so that furloughs of inspectors will
not occur.
Question 2. Please provide a legal analysis explaining the apparent
contradiction between the Administration's decision to disregard its
statutory obligations to conduct inspections under the FMIA and PPIA as
a result of the Budget Control Act and the decision to delay the onset
of furloughs in order to comply with a lengthy union consultation
process.
Answer. There was no relationship between the Department's decision
to abide by the limits of its appropriations provided by Congress for
carrying out the FMIA and PPIA, and to carry out the union consultation
process required by FSIS collective bargaining agreements (CBAs), and
hence there is no contradiction. Fortunately, the Department had
sufficient remaining time left in the fiscal year that it could have
complied both with the legal requirements of its CBAs and the
Antideficiency Act and implemented furloughs to avoid a deficiency in
the appropriation at the close of the fiscal year; however, as a result
of additional funding provided in the Consolidated and Further
Continuing Appropriations Act, 2013, Public Law 113-6, that became
unnecessary.
Question Submitted Hon. Bob Gibbs, a Representative in Congress from
Ohio
Question. Mr. Vilsack, you stated in your testimony that you, as
head of the USDA, officially told the EPA that you did not think that
they should be releasing private information on farmers who own CAFOs.
Could you please provide us with the conversations you had with EPA
regarding this matter?
Answer. USDA staff discussed a number of issues with the EPA
concerning the draft section 308 rule governing CAFOs. Because this was
a deliberative, interagency rule-making process, we cannot share
specific details of these discussions.
Questions Submitted Hon. Eric A. ``Rick'' Crawford, a Representative in
Congress from Arkansas
Question 1. I understand that on February 8th you met with FCC
Chairman Genachowski to discuss the USF Transformation Order. I was
pleased the Department supports fully obligating two rounds of Connect
America Funds in 2013--that will do a great deal to immediately deploy
broadband in unserved rural areas. But it appears the Department may
have some concerns about the impact of the Transformation Order on
broadband investment by RUS borrowers. Can you explain the Department's
perspective? What impact have the FCC's USF reforms had on the RUS
telecom loan portfolio and why? Is rural broadband buildout endangered?
What must be done in order to promote a sustainable broadband future in
rural America?
Answer. The economic stability of rural America depends on the
availability of a resilient and robust broadband infrastructure capable
of delivering advanced services to consumers and businesses in rural
high cost areas. Rural-based industries that produce food, energy,
technology, manufactured goods and other services consumed across the
country rely on broadband, often provided by Rural Utilities Service
(RUS) borrowers, to remain globally competitive.
As the Federal Government's longest serving infrastructure lender
in rural America, the USDA has an institutional interest the USF/ICC
reform order and its potential impact on the ability of existing
borrowers to complete their broadband investments across rural un-
served areas. While the order and its effects are still being examined,
there is little doubt that it will have a profound effect on future
lending for rural telecommunications.
We remain committed to working with the Federal Communications
Commission (FCC) to ensure that that the promise of Section 254 of the
Telecommunications Act of 1996 be fully realized. Sufficient,
predictable, and specific USF and Inter-Carrier Compensation (ICC)
mechanisms can drive investment, improve the quality of life, create
jobs, and increase economic opportunities in Rural America.
According to the FCC's Eighth Broadband Progress Report, nearly \1/
4\ of the rural population lacks access to high speed broadband. Yet,
demand for RUS loan funds dropped to roughly 37% of the total amount of
loan funds appropriated by Congress in FY 2012. Current and prospective
RUS borrowers have communicated their hesitation to increase their
outstanding debt and move forward with planned construction due to the
recently implemented reductions in USF support and ICC payments.
Major portions of FCC's Universal Service Fund (USF) Reform Order
took effect last July. To date, no RUS borrowers have defaulted on
their loans specifically due to this action. Rural service providers,
state public utility commissions and others are challenging the FCC's
Order in the 10th Circuit Court of Appeals and many have contacted RUS
to seek restructuring authority of their pending loans to accommodate
for the shortfall in USF revenues going forward. To date, the FCC
waiver process has yielded one partial waiver to Allband Communications
in Michigan and one full waiver with conditions to Accipiter
Communications. RUS staff actively engaged with FCC staff in support of
waiver relief sought by both. As of February, 13 petitions seeking
relief from the FCC's USF/ICC rules are pending before the FCC, 9 of
which are from RUS borrowers. Each assert that default and possible
bankruptcy will occur if waiver relief is not granted.
This February, Secretary Vilsack met with the FCC Chairman to share
his concerns and hopes for a path forward that ensures a successful
outcome for existing borrowers and Recovery act awardees. The Secretary
outlined his concerns in an ex parte filing that highlighted 4 key
points needed to restore certainty and predictability for rural
broadband investment to continue.
USDA urged the FCC to enhance as quickly as possible the level of
broadband investment in rural communities served by mid-sized price-
capped carriers, and redeploy the unused incremental CAF Phase 1 funds
and combine it with $300 million in a second round of CAF Phase 1 for
2013. This effort would accelerate USF resources to rural price-capped
carriers seeking to meet customer demand in their rural service areas.
USDA also urged the FCC to correct the structure and data integrity
concerns of the Quantile Regression Analysis (QRA) benchmarks that caps
USF support and apply those caps incrementally. Such fixes are
necessary to ensure greater transparency, accuracy and predictability
in the underlying cost model. Many RUS borrowers affected by the
regression-based caps have suggested that the underlying data do not
properly quantify costs. While the regression analysis may be helpful
in focusing attention on certain categories of spending, in its current
state, it should not be used as the sole determinate of costs. These
points have been reiterated by RUS borrowers to the White House,
Congress and the FCC since the Order was adopted in November 2011.
While the USF reforms continue to unfold, RUS is open for business.
We want to press forward and continue the momentum of the Recovery Act.
As a lender we are compelled to make conservative assumptions about all
carrier revenue streams until the USF ecosystem becomes more certain.
We continue to focus our attention on addressing the challenges,
namely cost, density, distance and economic hardship--in delivering
affordable, high capacity bandwidth to the most rural and remote
portions of our nation. Our ongoing commitment to expand broadband
connectivity, capacity and to extend service to the millions of rural
communities still lacking affordable access remains our primary
objective.
RUS will continue to meet the high level of demand for affordable
broadband access among rural and remote communities seeking to expand
into new markets and create jobs that in-source the talent and creative
spirit that has characterized rural America for over a century.
Question 2. In your testimony, you outlined the importance of
agriculture research, and explained USDA's commitment to further
research investment. As you know, Arkansas is one of the top ten states
in agriculture productivity. However, in recent years the ARS presence
has been out of proportion relative to the size and the complexity of
the issues affecting Arkansas producers. For instance, the Booneville
small farms research center has been on the chopping block and deemed a
lower priority, even though not long ago USDA proposed a large funding
increase for biofuel research. Additionally, the former Delta Obesity
Nutrition Research Unit was eliminated entirely. Can you please explain
to the Committee how USDA goes about prioritizing ARS research funding,
and explain why the Arkansas ARS centers have been dismantled at a more
rapid rate than other states? Given the uniqueness of Arkansas and its
important role in the agriculture sector, especially with respect to
rice, poultry, and aquaculture, I have a hard time understanding why
we've seen such a large-scale withdrawal of support in proportion to
other states.
Answer. In FY 2011, USDA sustained a reduction of $5.2 million in
research support in Arkansas due to the loss of earmark funds and
rescissions. The loss to the Dale Bumpers Small Farms Research Center
in Booneville, AR was substantial, totaling $3.1 million. With the loss
of resources, Booneville is no longer financially viable and therefore
the location is proposed for closure in the FY 2014 budget.
USDA continues to have a strong research presence in Arkansas with
programs carried out in the areas of poultry, rice, aquaculture, and
nutrition. The FY 2014 budget proposes $16.9 million for these research
programs in Arkansas. In 2012, ARS closed the Rice Research Unit in
Beaumont, TX and transferred the resources to the Dale Bumpers National
Rice Research Center in Stuttgart, AR. Accordingly, USDA's research
presence in Arkansas is currently greater than it was in FY 2011.
Question 3. I read recently that your Interagency Trade Enforcement
Center is beginning the process of estimating all of the foreign
subsidies and tariffs other countries like Brazil, China, and India use
to give them an unfair advantage and may well violate their trade
commitments under the WTO. I think this is an extremely important
exercise. I know that there are a couple of academic studies out there
on this as well. For example, according to a Texas Tech study, Brazil
actually has a minimum support price for cotton of 75 a pound. Yet,
Brazil was able to win a WTO case against the United States which has
an equivalent marketing loan rate of 52 a pound: 13 lower than
Brazil's! Brazil's case was essentially that the U.S. loan rate was
suppressing the world market and harming farmers in Brazil even though
U.S. production has been in decline while Brazilian production has
skyrocketed. We are now hearing a lot about some of Brazil's other
subsidy programs, including the ``PEP program''. Mr. Secretary, when do
you expect this process of cataloguing foreign subsidies and tariffs to
be completed and do you anticipate the Administration will be
aggressive in filing WTO claims where they find violations?
Answer. USDA is also concerned that our trading partners are
increasingly using domestic subsidy programs, potentially in violation
of their WTO commitments. Our attaches overseas publish public reports
that include foreign country usage of domestic report programs. For
example, Foreign Agricultural Service (FAS)/Brasilia issued a report
entitled Cotton and Products, dated March 28, 2013. This report,
available on the FAS website, is one of many with detailed information
on Brazil's use of numerous support programs such as the Premium for
Product Outflow (PEP) program.
USDA works very closely with the United States Trade Representative
(USTR) on potential trade violations affecting U.S. agriculture to
ensure that our trading partners adhere to the WTO and other trade
agreements. We seek to address issues through negotiation when possible
and litigation where appropriate.
President Obama established a new trade enforcement unit--the
Interagency Trade Enforcement Center (ITEC)--specifically to enhance
the administration's capabilities to prioritize and aggressively
challenge unfair trade practices around the world. USDA supports this
effort and has provided detailees, though sequestration budget cuts
could pose a challenge to continuing that support.
Question Submitted Hon. Reid J. Ribble, a Representative in Congress
from Wisconsin
Question. Secretary Vilsack, the forest products industry is a
significant economic engine in Wisconsin, employing over 80,000 people
in the state. Because of this, I continue to be concerned that USDA's
Biobased Markets Program does not allow most forest products to be
treated as ``biobased'' in the program, leaving forest products out of
an important market opportunity. Why does USDA arbitrarily restrict the
use of the biobased label for forest products, which are in fact made
from biobased materials?
Answer. Section 9002 of the Farm Security and Rural Investment Act
of 2002 (FSRIA) originally authorized the BioPreferred program. The
Food, Conservation, and Energy Act of 2008 reauthorized and
strengthened the program. The USDA regulation outlining the procurement
preference program was developed based on the conference report
accompanying FSRIA, which states that the intent of section 9002 ``is
to stimulate the production of new biobased products and to energize
emerging markets for those products.'' For this reason, USDA's
regulation, ``Guidelines for Designating Biobased Products for Federal
Procurement,'' currently excludes mature market products from the
program. It is generally understood that the forest products industry
is mature. However, we recognize the need for as much flexibility as
possible to develop new markets. As such, USDA proposed amendments to
the BioPreferred Guidelines in May 2012 that would eliminate the mature
market exclusion and focus the program on creating ``new and emerging
markets for biobased materials.'' The proposed rule seeks to provide
additional flexibility in considering forestry products for inclusion
in the BioPreferred program and continues to be consistent with the
guidance provided in the FSRIA's conference report.
USDA notes that many mature market products already use other well-
established and well known labels such as the ``cotton'' logo and the
Forest Stewardship Council certification. Additionally, there are 45
forestry products currently in the BioPreferred catalog, which contains
products in the Federal Procurement Preference Program and the
Voluntary Labeling Program. Of these, 21 products participate in the
Federal procurement preference program, 16 have received USDA
certification under the voluntary labeling program, and eight are both
Federally preferred and label certified.
Questions Submitted Hon. Jeff Denham, a Representative in Congress from
California
Question 1. USDA's own farm income reports say agriculture is doing
pretty well unless you are a livestock producer purchasing your feed.
Dairy producers in California are under tremendous financial pressure
because of extraordinary feed prices and milk prices that are
inadequate to cover milk production costs. What are USDA's specific
plans to provide financial assistance and much needed relief to dairy
producers in California, the nation's leading dairy state?
Answer. The Farm Service Agency's primary support to dairy
producers is the Milk Income Loss Contract (MILC) program, which
provides financial protection in times of low milk prices and/or high
feed costs. MILC was extended by the American Taxpayer Relief Act of
2012 through September 30, 2013. MILC payments to California have
totaled $85 million in FY 2009, $19 million in FY 2010, and $36 million
in FY 2012, and we anticipate payments for production that occurs each
month of calendar 2013 through August. Because of sequestration, MILC
payments for October 2012 and January and February 2013 production were
awaiting approval of interchange authority; payments resumed May 8,
2013. Direct and guaranteed loans are also available to qualifying
producers.
Additionally, USDA has been providing technical assistance to
California dairy industry stakeholders, as requested, regarding their
interest in establishing a Federal Milk Marketing Order.
Question 2. Mr. Secretary, if I am correct the U.S./EU Free Trade
Agreement will be the largest U.S. Free Trade Agreement. However, as I
understand it, the U.S. Government negotiators recognize that the
European Commission is not very transparent with reference to subsidies
for fruit, tree nuts, and vegetables, whereas the U.S. is extremely
transparent with its fruit and vegetable support programs. Will
complete disclosure be required before serious negotiations with the
European Commission proceeds?
Answer. Before beginning negotiations with the EU, the
Administration first must complete its consultations with Congress and
the public to ensure the concerns of all stakeholders, including as
those expressed in your question are addressed, as we develop our
objectives and strategy for the negotiations.
Question 3. The EPA, USDA, and State Department recently announced
a joint decision that they would discontinue the nomination of critical
uses of methyl bromide under the Montreal Protocol for dried fruits and
nuts. Since 2005 the Administration has routinely approved these
critical uses based on a lack of suitable alternatives.
Allegedly this decision was made because EPA determined that the
industry was able to use the alternative Sulfuryl Fluoride (SF). At the
same time, EPA currently has a proposed rule out to discontinue or
cancel the food tolerances of SF on all food uses.
This puts California's premier dried fruit and nuts industry at
jeopardy of having no fumigant for use if the proposed rule is adopted.
This would no doubt be devastating and economically ruin these world-
class industries.
First, did USDA concur in the EPA decision to discontinue Critical
Use Exemptions for dried fruits and nuts, and what are your plans for
this important sector if EPA follows through and cancels SF for dried
fruits and nuts?
Answer. The USDA Agricultural Research Service has been conducting
research on improving the efficacy of sulfuryl fluoride for dried
fruits and nuts. Testing on a commercial scale using reduced rates of
sulfuryl fluoride is planned. Since EPA is still evaluating public
comments, no decisions on tolerances have been made. USDA and EPA
recognize the importance of sulfuryl fluoride for dried fruit and nuts
as well as other commodities. USDA had apprised EPA on its most recent
research before the final regulatory decision. USDA is developing
alternative approaches including Integrated Pest Management methods to
limit insect infestation.
Question 4. Mr. Secretary, I remain concerned about USDA's
continued allowance of misleading labels on meat and poultry products.
As you know, some processors are continuing to engage in the misleading
labeling practice of falsely claiming that poultry deliberately
injected with saltwater or seaweed solutions is ``100% All Natural.''
In July 2011, USDA finally proposed a rule that would address part
of this problem by requiring more prominent disclosure on the label of
these added saltwater solutions. I understand that over 30,000
consumers filed comments supporting the USDA proposal. Comments
supporting the proposal came from the American Heart Association, the
National Kidney Foundation, Consumers Union, the California Department
of Food and Agriculture, and the California Agricultural Commissioners
and Sealers Association, among others. I strongly support the proposal
as well and urge you to finalize the rule without further delay.
Furthermore, I am still waiting for USDA to address the false and
misleading ``Natural'' claims on these so-called ``enhanced'' products.
USDA published an Advanced Notice of Proposed Rulemaking over 3 years
ago. Since then, I am unaware of any further action by USDA. When will
USDA finally complete action on these long-overdue rules?
Answer. Thank you for your comments supporting the FSIS proposed
rule on the ``Common or Usual Name for Raw Meat and Poultry Products
Containing Added Solutions.'' FSIS is in the process of developing a
final rule.
On September 11, 2009, FSIS issued an Advance Notice of Proposed
Rulemaking (ANPR) to assist the agency in defining the conditions under
which it will permit the voluntary claim ``natural'' to be used in the
labeling of meat and poultry products. The purpose of the ANPR was to
solicit more focused comments on a number of specific issues. FSIS
completed its review of the more than 7,500 comments received. The
comments demonstrate that stakeholders continue to have divergent views
about how the word ``natural,'' as applied to meat and poultry
products, should be defined. While FSIS considers how to proceed on
this contentious issue, companies may continue to submit labels
containing ``natural'' claims for consideration, and each label will be
judged on a case-by-case basis.
Question 5. Secretary Vilsack, in your recent statements about
poultry inspectors being furloughed, you indicated that these employees
require a certain timetable for pre-notification of a possible
furlough. This pre-notification period ranges from 30 days to a much
longer time. Please share your thoughts with the Committee on how you
foresee this pre-notification working.
Answer. Before sequestration took effect, the agency engaged in the
pre-notification process with employees and the Union. FSIS
subsequently engaged the Union in Pre-Decisional Involvement. Upon
finalization of the sequester, the plan called for FSIS to negotiate
with the Union. Assuming the Union wished to negotiate, management
would enter into negotiations with the Union prior to the
implementation of the anticipated furloughs. Fortunately, Congress
provided enough funding in the FY 2013 CR to prevent the need for
furloughs of FSIS inspection personnel. Thus, FSIS withdrew its request
to negotiate with the Union.
Question 6. Currently, domestic olive producers are experiencing
the significant negative impact of market share declines and economic
losses that are a direct result of highly subsidized, low priced
imports of canned ripe olives from the European Union and Morocco. What
additional actions can be taken to create a fair playing field for the
U.S. table olive industry?
Answer. There is currently a marketing order for U.S. olives, in
effect since 1965, which seeks to assist the olive industry in
overcoming some of their marketing challenges. This order (1)
authorizes minimum grade and size requirements for olives produced in
California, which are also applied to imported olives and (2)
authorizes production and marketing research and development projects,
including paid advertising.
On March 20, 2013, the Obama Administration notified the U.S.
Congress of its intent to enter into negotiations on a comprehensive
trade and investment agreement with the European Union. The
Administration will hold regular and rigorous consultations with
Congress and stakeholders in developing our objectives and strategy for
the negotiations. The Administration values this opportunity to take on
board the concerns of all our stakeholders, such as those expressed in
this question.
Section 8e of the Agricultural Marketing Agreement Act of 1937
provides that when certain domestically produced commodities are
regulated by a Federal marketing order, imports of the commodity must
meet the same or comparable grade, size, quality and maturity
requirements. Currently, the list of imported commodities subject to
Section 8e of the Act includes canned ripe olives.
Question 7. Mr. Secretary, as you know, California agriculture
needs a legal work force to harvest our crops. What is your Department
doing to see that immigration reform for agriculture is going to be
accomplished?
Answer. Immigration reform is particularly important to rural
communities and to a competitive, productive U.S. agricultural sector.
I have been and will continue to be committed to ensuring that USDA is
available to provide whatever technical assistance we can as Congress
takes up immigration reform. In my view, immigration reform is relevant
and important to rural areas of our nation for three key reasons:
First, immigration reform will ensure a safe and fair system for farm
workers. By demanding responsibility from workers and businesses alike,
we can protect those farm workers who play by the rules--and we can
reverse the troubling fact that too many workers live in the shadows
today. Second, immigration reform will help strengthen farm businesses.
Many U.S. producers face challenges today, not just in the constant
struggle to find labor but from trade competitors around the world. We
need to fix that by ensuring our producers can hire a full contingent
of workers--and today's complex and inadequate system too often
prevents them from doing so. Third, immigration reform will strengthen
our communities. A reform of today's broken system will help rural
America expand new markets in conservation, agriculture, natural
resources and the biobased economy.
Questions Submitted Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Question 1. What impact will sequestration have on the import and
export of meat and poultry products? Will sequestration impact the
ability of the Animal and Plant Health Inspection Service or the
Agricultural Marketing Service (AMS) to carry-out their duties related
to imports and exports?
Answer:
APHIS Response: As part of the National Export Initiative, USDA has
made it a priority to expand market access and opportunities for
businesses overseas. Despite the cuts contained in the Fiscal Year 2013
budget, USDA's Animal and Health Plant Inspection Service (APHIS)
continues to make its export-assistance services a priority, and the
funding decrease will have no impact on these essential services. The
majority of these activities--such as inspection and certification
services--will be unaffected by the decreases in the 2013 budget
because they are funded through user fees. For services funded with
appropriated dollars--such as the development of international
standards and protocols to assist with imports and exports--APHIS has
taken steps to minimize the impact of the reduced budget on these
priority programs. These steps include the implementation of a hiring
freeze and cost-cutting measures such as the elimination of unessential
travel. The Agency is actively monitoring its budget and adjusting
these program priorities to ensure that these critical import and
export functions are maintained.
AMS Response: Sequestration will not impact AMS' ability to carry
out its Export Verification Programs as they are funded by voluntary
user fees which were minimally impacted by sequester.
Question 2. How will sequestration affect payments made to
producers under the Milk Income Loss Contract (MILC) program?
Answer. Sequestration reduced MILC payments by $14.79 million. In a
letter on March 19, 2013, Secretary Vilsack proposed to use interchange
authority under 7 U.S.C. 2257 to transfer funds from direct payments to
several other programs including MILC to address the reduction from
sequestration. Approval of interchange authority by Congress will
allow, MILC recipients to receive payments as normal. Without
interchange authority, USDA would reexamine how the sequestration
reduction is applied; MILC recipients would receive smaller payments
and producers who received payments in FY13 may be required to return a
portion of these payments to meet sequestration funding shortfalls.
Question 3. When will the MILC payments for October 2012 be issued?
Will they be issued for the full amount, or reduced due to the
sequester?
Answer. Dairy producers received MILC payments of $0.02368 for
October 2012; $0.11800 for January 2013; and $0.52224 for February 2013
in May, once the use of interchange authority was approved.
Question 4. How will sequestration affect the activities at AMS and
the National Agricultural Statistics Service (NASS), including
activities related to the issuance of reports? Which, if any, reports
by NASS will be suspended because of sequestration? If any reports are
being suspended, how did the agency determine which reports to suspend?
Answer:
AMS Response: The sequestration reduced AMS' Marketing Services
appropriation by $4.1 million which was applied to each program,
project, and activity as required. AMS will likely suspend the issuance
of three Cotton and Tobacco market news reports. The Federal-State
Marketing Improvement matching grants funding were reduced by $60
thousand. Section 32 activities were reduced by $40.4 million for
program purchases and administration. The available funding for the
Specialty Crop Block Grant program was reduced to $52 million from $55
million.
NASS Response: USDA's National Agricultural Statistics Service
suspended a number of statistical surveys and reports for the remainder
of the fiscal year due to reduced funding caused by sequestration.
Before deciding upon the program suspensions, NASS reviewed its survey
programs against mission and user based criteria as well as the amount
of time remaining in the fiscal year to conduct the surveys with the
goal of finding available cost savings and maintaining the strongest
data in service to agriculture. The decision to suspend these reports
was not made lightly, but it was nevertheless necessary, given the
funding situation, NASS's top priority was to maintain the Principal
Economic Indicator Reports.
NASS reduced reporting frequency when possible, and considered the
costs of data collection for each report. The Milk Production Report
will be produced, but in a streamlined version that eliminates farmer
surveys.
NASS suspended the following Agricultural Estimate reports:
b All Catfish and Trout Reports including Catfish Feed Deliveries
and Catfish Processing;
b July Cattle Report (This is a principal economic indicator
report, but NASS determined that its January Cattle Report
will be sufficient for this fiscal year);
b Potato Stocks Reports;
b All Non-Citrus Fruit, Nut, and Vegetable Forecasts and Estimates;
b June Rice Stocks Reports;
b All Hops and Hops Stocks Estimates;
b Mink Report; Nursery Report;
b June on- and off-farms stocks for Austrian Winter Peas,
Chickpeas, Dry Peas and Lentils; and,
b July acreage forecasts for Austrian Winter Peas, Dry Edible Peas
and Lentils.
Milk Production reports:
b streamlined version of the monthly Milk Production Report will be
published through the end of the fiscal year. This report
will contain monthly milk production estimates, but will
not contain estimates for number of milk cows and the
output rate per cow, which requires costly survey data
collection. The Milk Production Report typically involves a
quarterly survey and modeling in the interim months. NASS
will forgo the survey and instead model for the rest of the
fiscal year to produce the streamlined report.
b The annual Milk Production, Disposition, and Income report will
not be produced this year.
NASS scaled back the following Agricultural Estimates
Reports in FY 2013:
b Monthly Crop Production: The following items will not be included
in this year's reports:
May 10 Report:
(1) Revision of 2012 almond production
(2) Indicated 2013 production of almonds
June 12 Report: Hops area strung for harvest by variety
July 11 Report:
(1) Planted and harvested area for dry edible peas, Austrian
winter peas, and lentils
(2) Indicated production of apricots, almonds
August 12 Report:
(1) Indicated area harvested, yield and production as of August
1 for hops
(2) Indicated production of commercial apples, peaches, pears,
and grapes
NASS Suspended the following Census of Agriculture Projects:
b NASS is conducting the 2012 Census of Agriculture on Puerto Rico,
but due to the reduced budget coverage for the other
Outlying Areas is suspended. The outlying areas consist of:
Guam,
the U.S. Virgin Islands,
Samoa, and
U.S. Northern Mariana Islands.
b Two Census of Agriculture special products are suspended:
ZIP Code Tabulations
County Profiles
Question 5. The Office of Management and Budget's (OMB)
sequestration report says that the Commodity Credit Corporation Fund
will be cut by $329 million. Can you give us a breakdown of that figure
and the programs it represents?
Answer. Please refer to below table.
Table 1: CCC Outlays Subject to Sequestration ($)
------------------------------------------------------------------------
Sequesterable Sequestration
Program, Project or Activity Amount Amount
------------------------------------------------------------------------
CCC Outlays 5.10%
------------------------------------------------------------------------
Total CCC 6,460,280,000 329,474,280
Marketing Assistance Loans 261,996,000 13,361,796
2013-crop Direct Payments 4,950,904,000 252,496,104
2013-crop Loan Deficiency Payments 1,453,000 74,103
FY 2013 MILC (H.R. 8) 290,000,000 14,790,000
2013 Non-Insured Assistance Program 165,000,000 8,415,000
Upland Cotton Econ Adj Assistance 49,318,000 2,515,218
Storage and Handling 213,000 10,863
Administrative Expenses (Food for 9,559,000 487,509
Peace Title II)
Brazilian Cotton Program 147,300,000 7,512,300
Emerging Market Program 10,000,000 510,000
Foreign Market Development 34,500,000 1,759,500
Cooperator Program
Quality Samples Program 2,500,000 127,500
Technical Assistance for Specialty 9,000,000 459,000
Crops
Market Access Program 200,000,000 10,200,000
Bio-Fuel Program 171,000,000 8,721,000
Food for Progress Purchase/ 157,537,000 8,034,387
Transportation
------------------------------------------------------------------------
Question 6. Will sequestration impact fee-based programs like the
dairy graders? If so, will fee-based programs--fees mind you, that
cover a significant portion of the cost--be subjected to sequestration
cuts in the same manner that non-fee based programs are impacted? If
so, what will USDA do to mitigate the short and long term impacts to
our export markets?
Answer. AMS grading and verification activities are fully financed
by user fees. Sequestration mandates a reduction of AMS grading
programs' administrative expenditures. However, AMS does not expect
sequestration to significantly impact the delivery of fee-funded
services.
Question 7. There have been reports that dairy and livestock
futures trading on futures exchanges could be shut down because of
their dependence on USDA grading and inspection as part of the physical
delivery and cash settlement mechanisms of those futures products. What
can you tell us about this? Has your Department been in touch with
anyone at the Commodity Futures Trading Commission or with any futures
exchange about the impact sequestration cuts to USDA services will have
on futures trading?
Answer. The passage and signing of H.R. 933 (``Consolidated and
Further Continuing Appropriations Act, 2013'') assures funding of
grading and inspection services for FY 2013. Prior to passage of H.R.
933, USDA had numerous discussions with the CME futures exchange
regarding how sequestration actions may affect physical delivery and
cash settlement mechanisms of futures products.
Question 8. Will there be impacts on individual farm bill
conservation program participants under sequestration? Is there enough
funding to pay out existing obligations under contracts in force?
Answer. The Agency estimates that the funding reduction imposed by
the sequester will reduce the Agency's ability to enter into new
conservation contracts across all programs with approximately 11,000
participants (assuming 2.5 participants per contract), covering
approximately 3.2 million acres. These are contracts the Agency would
have been able to enter into but will have to forego because of the
reduction in funding.
For most farm bill programs the Agency will have sufficient
resources to cover the commitments made to our conservation partners in
prior years. We are only able to do so, however, by reducing the new
commitments the Agency makes in the current year. However, for the
Conservation Security Program, which does not have the authority for
new enrollments, the Agency does not have the same flexibility. As a
result, the Agency is currently exploring the options available to
provide additional resources for this program, including a possible
reprogramming from another mandatory program. Without additional
resources, the Agency would be forced to reduce the payments on all
existing contracts, which would require requesting the return of funds
from participants who have already received full payment.
Question 9. How is the Department managing and prioritizing Farm
Service Agency loan funds given the funding levels in the Continuing
Resolution? Is demand from FSA direct and guaranteed borrowers running
ahead or behind previous years? Are FSA loans subject to a sequester
order?
Answer. For those programs which have a significant backlog of
approved, unfunded applications, funding provided for Farm Service
Agency (FSA) farm loans by the Consolidated and Further Continuing
Appropriations Act, 2013 will be distributed by date order of
application, subject to the funding reserves for socially disadvantaged
and beginning farmers as prescribed by statute. For programs without
application backlogs, funds will be allocated to states according to
formula, again subject to the statutory reserves for targeted groups.
Demand for direct loan funding is running slightly ahead while
demand for guaranteed loan funds is consistent with a year ago at this
time.
The budget authority which supports farm loan programs is subject
to sequestration, and the additional 2.5% rescission mandated in P.L.
113-6.
Question 10. New enrollments in the Conservation Security Program
(CSP) have been shut down for Fiscal Year 2013. Can you explain to us
why you aren't able to do any new sign-ups?
Answer. Under the terms and conditions of the Continuing
Appropriations Resolution, 2013 (P.L. 112-175), there would have been
sufficient funding to provide payments on contracts entered into in
previous years, and to provide the required oversight to ensure that
all such payments were properly made, prior to the reductions imposed
by the sequester. However, the funding restraint enacted in Section
726(1) of the Consolidated and Further Continuing Appropriations Act,
2012 (P.L. 112-55) was carried forward under the continuing resolution,
and constrained USDA's ability to enroll new acreage in the program.
The full-year appropriation passed in March will allow the Natural
Resources Conservation Service (NRCS) to proceed with a 2013 CSP
enrollment period. Based on the latest projections, the agency
estimates an enrollment of 11.3 to 11.8 million new acres this fiscal
year.
Question 11. In discussions with OMB regarding the Administration's
list of anomalies that were submitted to the Appropriations Committees
to be considered for inclusion in the continuing resolution, did the
Department and OMB consider requesting an adjustment for CSP?
Answer. Under the terms and conditions of the Continuing
Appropriations Resolution, 2013 (P.L. 112-175), there would have been
sufficient funding to provide payments on contracts entered into in
previous years, and to provide the required oversight to ensure that
all such payments were properly made, prior to the reductions imposed
by the sequester. However, the funding restraint enacted in Section
726(1) of the Consolidated and Further Continuing Appropriations Act,
2012 (P.L. 112-55) was carried forward under the continuing resolution,
and constrained USDA's ability to enroll new acreage in the program. In
order to preserve Congress' prerogative to determine the funding level
for the program, USDA decided to operate the program within the funding
level provided under the CR until passage of the full-year
appropriation determined the final funding level.
The Consolidated and Further Continuing Appropriations Act, 2013
(P.L. 113-6) did not include the funding constraint enacted in Section
726(1), and USDA will be able to enroll new acreage in FY 2013. NRCS
requested an apportionment for these funds.
Question 12. Please provide an analysis for the record of the
economic benefit to industry and consumers as a result of the poultry
slaughter modernization rule.
Answer. FSIS estimates that participating establishments will see
lower production costs resulting in a shared benefit to consumers and
industry of about $250 million annually. For further information,
please refer to the full discussion of benefits in the proposed Poultry
Slaughter Modernization Rule at http://1.usa.gov/10WZP7w.*
---------------------------------------------------------------------------
* Editor's note: The hyperlink to the official referenced document
in PDF format, Modernization of Poultry Slaughter Inspection, Proposed
Rule, Federal Register, Vol. 77, No. 18, Friday, January 27, 2012, Part
II is: http://www.gpo.gov/fdsys/pkg/FR-2012-01-27/pdf/2012-1516.pdf.
Question 13. In developing the proposed rule for poultry slaughter
modernization and in moving towards a final rule, what steps have been
taken to analyze worker safety issues in both HACCP-based Inspection
Models Project (HIMP) plants and non-HIMP plants?
Answer. As a public health agency our core mission is to protect
the food supply. This is the driving force behind our proposal to
modernize poultry inspection. USDA has been inspecting poultry in
largely the same way since the 1950s. The science to detect pathogens
has advanced considerably since then. Now, we are leveraging that
science to better protect public health by proposing the Poultry
Slaughter Modernization Rule. We believe that we have an obligation to
do our best to ensure food safety. We have demonstrated that this new,
modernized system could help us reduce pathogens--potentially
preventing 5,000 foodborne illnesses annually.
In order to ensure worker safety, we are working with our Federal
partners that have oversight responsibility and regulatory authority
over this area. The following are examples of how we have partnered
with other Federal agencies:
USDA has asked the National Institute for Occupational
Safety and Health (NIOSH) to study the effects of line speeds
on plant workers.
USDA has been coordinating with Occupational Safety and
Health Administration (OSHA) to explore how we can assist that
agency within our legal authority, including training FSIS
inspectors to report plant worker safety concerns to OSHA.
USDA also encourages industry to collaborate with OSHA and
NIOSH.
Question 14. What are the potential public health advantages
associated with the poultry slaughter modernization rule?
Answer. As we outlined in the proposed rule, FSIS would focus its
inspection personnel on critical food safety tasks, such as pathogen
testing and verifying HACCP and sanitation standard operating
procedures, and the quality assurance tasks would be turned over to the
company. FSIS would continue to inspect every carcass, as required by
law, but our inspection personnel would focus on the conditions that
present public health concerns and not on quality defects. We estimate
that the new poultry inspection system would avert about 5,000
illnesses from Salmonella and Campylobacter each year.
Question 15. Knowing that USDA faces sequestration and tight
budgets, how does the poultry slaughter modernization rule help you
operate in a fiscally constrained environment? Are there increased
costs with implementation and/or cost savings?
Answer. FSIS estimates that modernization of poultry slaughter
inspection, if fully implemented as proposed, would save taxpayers
approximately $90 million over a 3 year period after implementation
begins.
Question 16. An impressive aspect of the USDA Food for Progress
program is that it has market-driven approaches to strengthen food
systems and incomes. Could you provide examples of how this program has
contributed to economic development and a favorable environment for
private sector investment?
Answer. In FY 2012, USDA completed a 4 year, $5.7 million Food for
Progress investment in micro lending capital and small business loans
in Tanzania. Small holder producers and small businesses used loans to
expand food processing operations, buy new equipment, buy supplies in
bulk, improve transportation to markets, and install greenhouses and
irrigation infrastructure. As loans were repaid on a seasonal basis,
these funds were re-cycled an average of three times. The growth in the
USDA loan capital allowed the number of loan recipients to grow from
15,000 initial borrowers to more than 46,000 borrowers at the end of
the project. The success of the program encouraged other lenders, such
as the World Bank and Credit Suisse Bank, to invest an additional $18.8
million in the project. The investment from other lenders supported an
additional 382,000 loans valued at more than $206 million. Most
important, the loan fund has turned into a sustainable operation that
will continue to provide credit to producers and businesses even though
USDA support has ended.
In FY 2012, implementation of a Food for Progress program in Kenya
was completed. The $8 million grant boosted Kenya's dairy value chain
through improvements in production and marketing. USDA worked with Land
O' Lakes in improving agricultural productivity by providing training
to small farmers in improved livestock practices and water conservation
schemes. The project also improved small farmers' access to financial
services. On the marketing side, the Food for Progress program
supported the construction and refurbishment of cold chain storage
facilities, training in efficient and safe methods for handling bulk
milk, and improvements in the technical capacity and infrastructure of
dairy cooperatives. The project's activities reached approximately
78,000 farmer beneficiaries. Milk production per cow rose from 6.9
liters to 9.6 liters (a 12.7 percent increase). Net farmer income rose
by 745 percent over the life of the project, and 86,200 jobs were
created or sustained.
Looking ahead, USDA plans to support a $22.2 million Food for
Progress grant to increase productivity, trade, and value of cashew
production by small holder farmers in Mozambique. Key features of the
project include developing in-country cashew roasting and processing
capacity, as well as linking producers directly to international
retailers. The project will train producers to improve cashew yields
and quality, establish seed nurseries, improve business process
management, and provide loans for needed capital inputs. On the sales
end, the Food for Progress program will help processors to achieve food
safety standards and certifications and establish purchasing contracts
with international retailer private labels (e.g., Whole Foods, Costco).
Purchasing contracts emphasize the use of innovative ``shared value''
models where profits are partially diverted back into community
investments for farmers. The project is expected to boost the incomes
of 340,000 beneficiaries by about 74 percent.
Question 17. If the Food for Peace program is changed to an
international procurement program, what would be the potential impact
on U.S. agricultural, transportation and other jobs and on U.S.
economic activity?
Answer. The Administration's FY 2014 Budget proposal would transfer
$1.47 in P.L. 480 Title II funds to the U.S. Agency for International
Development. Commercial business generated by the Food for Peace
program in the United States is relatively small, and we would not
expect substantial economic impacts in the agricultural and
transportation sectors. Of the $1.4 billion in Title II funding, only
about 40 percent is spent on commodities, which is less than one
percent of recent U.S. agricultural exports. The potential impact is
further mitigated by due to the FY 2014 Budget proposal to use at least
55 percent of the funding for the USAID food program to purchase U.S.
products.
Other parts of the FY14 budget proposal would help to further
mitigate any economic impact in the United States. First, the
Administration proposes to provide $330 million through the Community
Development and Resilience Fund, which would help to continue the
development programs of nongovernment organizations. Second, the budget
proposal would provide $25 million in additional subsidy through the
Maritime Security Program. This increase would increase the per-vessel
subsidy by about 25 percent on average and could prevent a loss of up
to 425 jobs over time. Third, up to $10 million will be available for
worker adjustment training for affected workers.
Question 18. In Africa, wheat has been an important commodity for
food aid programs since it is not produced in appreciable amounts.
Since it cannot be locally procured, where would it be bought if not
provided from the United States? Which other countries would be
suppliers?
Answer. Following the implementation of the Administration's FY
2014 Budget proposal, the Administration would review market situations
and food assistance needs in recipient countries to determine the best
type of response and source of commodity. The budget proposal envisions
that U.S. wheat and other products would continue to be used in food
assistance programs. If local and regional sources of wheat are not
sufficient to meet the needs, then U.S. wheat would likely be used.
Question 19. Just a few years ago, 70% of the corn crop in Kenya
was declared contaminated by aflatoxin. Reports by the Partnership for
Aflatoxin Control in Africa show that high levels of aflatoxin are
common in Africa, found in many basic foods, like corn, sorghum,
cassava and peanuts, which undermines local purchase programs. More
worrisome is that contamination controls and enforcement are lacking,
so unsafe products regularly seep into the food supply. While the USDA
Local and Regional Procurement Pilot Study report indicates that small
amounts can be bought locally, it does not address the large
procurements that are more typical for food aid. How would that be
achieved ``locally'' and with assured quality and safety?
Answer. Organizations and donor agencies employ a number of best
practices to ensure the quality and safety of the commodities,
including extensive testing requirements for all commodities. Recent
experiences by USDA and USAID demonstrate that testing is successful in
assuring quality and safety. In USDA's Local and Regional Procurement
Pilot Study, USDA required that all commodities procured be tested for
aflatoxin. USDA found that most countries had testing facilities with
the ability to conduct this type of testing. Under the Emergency Food
Security Program (EFSP), USAID requires that all cereals and cereal
product commodities be tested for aflatoxin and have moisture content
certified. The maximum acceptable total aflatoxin level is 20 parts per
billion, which is the U.S. Food and Drug Administration action level
for aflatoxin in human foods. USAID requires that all organizations are
required to contract established inspection services prior to shipment
and distribution and retain a copy of each certificate for their
records.
While procurements under the USDA Local and Regional Food Aid
Procurement Pilot Project involved smaller tonnages due to the
available funding under the project, other programs and organizations
have been successfully procuring large quantities of commodities in
developing country markets across the globe. For example, in 2012, the
United Nations World Food Programme (WFP) procured 1,806,899 metric
tons (MT) of food aid commodities from Low Income Countries or Middle
Income Countries. Of this amount, WFP procured 706,249 MT in Africa.
The WFP and other organizations have found testing to be successful in
assuring quality and safety.
Questions Submitted Hon. Mike McIntyre, a Representative in Congress
from North Carolina
Question 1. Mr. Secretary, thank you for the work you have done to
focus on the economy of rural America. One major issue facing my
district and most of rural America is the lack of adequate
infrastructure that is necessary for our rural communities to compete
in the global economy. For instance the backlog of pending applications
for USDA Rural Development's water/waste water projects is $3.2
billion. I have worked to include mandatory funding for this backlog in
the farm bill. How will your Department work to address this issue?
Answer. Thank you for your support of our Water and Waste Disposal
(WWD) Loan and Grant Programs. Since 2009 USDA, Rural Development,
Rural Utilities Service has invested $8 billion in new and improved
infrastructure that will benefit 4.5 million households and businesses
and 12.4 million rural residents.
USDA will use any additional funds received to address the backlog
of requests for funding. Rural Development will also continue to
encourage its State Offices to partner with other state and Federal
funding sources to address pending funding requests.
Question 2. Now that the $85 billion in sequester cuts have taken
effect, how will USDA's Rural Development programs be impacted, and how
will you minimize the impact of the sequester on rural communities?
Answer. Because of the sequester and the additional rescission in
the final FY13 appropriations measure, Rural Development staffing and
programs will experience a third year of significant reductions. The
two most significant budget lines for Rural Development to be affected
are its Salaries and Expense account and the Rental Assistance account.
For Salaries and expenses, after already reducing the workforce by 18
percent over the last 18 months (or over 1,000 people), RD is looking
for ways to manage the approximately 7.8% reduction in S and E by
minimizing the impact on its workforce. We are doing so by cutting all
other expenses and considering how to utilize our interchange authority
to shift resources into Salaries and Expenses. Further, USDA recognizes
how important the rental assistance program is to our multifamily
housing partners and tenants, and we are committed to providing as much
assistance to borrowers as possible. We are working to ensure our
multifamily housing properties continue to be financially healthy as
possible and are able to provide affordable housing to rural residents.
We will work with our borrowers to explore every available step to
mitigate the effects of these cuts, including working with borrowers to
alleviate as much as possible the negative consequences of the loss of
rental assistance from project income.
Question 3. Rural development stakeholders in my district are
concerned that many rural communities in NC lack the infrastructure
needed to grow or even sustain businesses and industries in their
communities. As a result, they are losing population as many younger
folks leave to find jobs, and this in turn further slows economic
growth. This is true for the family farm as well--up-and-coming
generations are moving away and farms that have traditionally been
family-owned are being sold to corporations or developers. What are
USDA's plans to continue to help rural committees secure jobs and
promote economic development moving forward?
Answer. As you know, USDA Rural Development is the leading Federal
agency for rural America. RD supports rural communities and enhances
the quality of life for rural residents by improving economic
opportunities and community infrastructure. Rural Development has loan,
grant, and technical assistance programs that help create sustainable
jobs and lay a strong foundation for rural America to participate fully
in the global economy. Our programs support a wide variety of
infrastructure projects that include, but are not limited to, improving
and expanding the rural electrical grid; providing clean drinking water
to rural communities; providing access to and improving Internet
service to rural families and to businesses; and constructing,
converting, enlarging, repairing, and modernizing access streets and
roads, parking areas, utilities, and pollution control and abatement
facilities.
To help rural communities move forward, Rural Development will
continue our successful outreach to our stakeholders through our 47
state offices through both our business programs and our cooperative
programs. For example, RD has an extensive storehouse of educational
material that covers all aspects of the cooperative business model and
is used by RD employees, cooperative developers, government officials,
academics and the general public to better understand and use
cooperatives as an economic development tool in rural areas.
Additionally, RD staff has expertise in conducting research, providing
technical assistance, and developing educational and outreach
activities that support cooperative approaches for family farms to
increase income and maintain viability.
In addition, Rural Development is:
Embarking on several new Capital Markets initiatives
associated with Rural Business--Cooperative Service programs
for improving rural access to capital at both the regulatory
and policy levels. For example, RD is also looking for
opportunities to improve the rate at which funds in revolving
loan funds established under the Intermediary Relending Program
can be re-loaned. To increase the utilization of these funds,
RD is engaging its intermediaries to understand the
difficulties in lending the money and to encourage them to be
more active. Our State Offices are holding lender/re-lender
forums during the first half of FY 2013 to engage intermediary
lenders and encourage them to be more active and to lend their
balances, and to identify ways to improve the program. In
addition, the National Office is emphasizing with the State
Offices the potential for transferring balances from non-
performing intermediaries to performing intermediaries. Just
recently, this effort with our intermediaries has paid off with
$750,000 in loans being made to four recipients in Montana.
Continuing to prioritize assistance to beginning and
socially disadvantaged producers and small and medium-sized
farms structured as family farms within the Value-Added
Producer Grant program. This prioritization addresses some of
the out-migration issues in rural communities by providing the
resources necessary to develop profitable and sustainable
agricultural businesses and expand employment opportunities.
Rural Development Section 502 housing programs have a significant
impact on the quality of life in rural America. These programs are
among the largest provided by USDA and are estimated to have created
more than 250,000 jobs in rural communities in FY 2012--and more than 1
million jobs in the last four years. A strong housing sector is
critical to health of the rural economy, and the USDA Rural Housing
Service (RHS) is committed to promoting a vibrant rural housing market.
Combining very manageable fees with an appealing no-down payment
mortgage structure, the program has enabled hundreds of thousands of
eligible low and moderate-income borrowers to become successful
homeowners.
Additionally, through our Water and Waste Disposal Loan and Grant
Programs, we ensure that rural communities have the critical
infrastructure they need to support the needs of rural residents and
provide opportunities for business development. We will continue to
fund as many of these critical projects as possible and to partner with
other funding programs to do so. These investments will provide
immediate and long term job opportunities in rural America.
Question 4. Livestock and meatpacking are both major industries in
my district. The livestock products in my district have a market value
greater than $2 billion annually, and the largest meat processing
facility in the world is located in Bladen County. The people who work
and depend on these industries are middle class Americans with
families, who have mortgages and bills to pay every month. I am
concerned by the impact that sequestration will have on FSIS frontline
inspectors. You previously indicated that inspectors might be
furloughed up to 15 days because of sequestration. When these
inspectors are furloughed, the meat processing facilities cannot run,
and the employees and farmers do not get paid.
Absent any changes to the statute that triggered sequestration,
what, if any, administrative tools are available to mitigate the impact
of sequestration on the furloughing of FSIS inspectors and the impact
to the meat processing industry? Could inspectors be furloughed on a
staggered schedule, such that processing activities are perhaps slowed,
but not completely disrupted? If not, could inspectors be furloughed
for half days, spaced over several months, to prevent complete
disruptions?
Question 4a. What is the practical timeline for when all of this
will take place? It is important that companies and growers have time
to plan and prepare for this.
Question 4b. How can Congress and the affected industries assist
you in fixing this problem?
Answer 4-4b. Fortunately, Congress provided enough funding in the
FY 2013 CR to prevent the need for furloughs of FSIS inspection
personnel. Thus, industry operations will not be disrupted.
Question 5. Can you relay any suggestions you have for livestock
producers who may be dealing with more livestock than they have barn
space now that the sequester has gone into effect and meat inspectors
are set to be furloughed? This is a question I've been getting from
producers in NC, who operate under very tight schedules on how they
move their livestock. Typically they have a date scheduled with the
packer to receive their hogs. Then they spend about 2 days cleaning,
sanitizing and drying barns before the next group of livestock move in.
I'm concerned that if a furlough situation continues for 2 or 3 days
that there will be no place to put these livestock, and this could pose
a huge biosecurity and welfare risk for livestock producers.
Answer. Fortunately, Congress provided enough funding in the FY
2013 CR to prevent the need for furloughs of FSIS inspection personnel.
Thus, industry operations will not be disrupted.
Question 6. Many rural development stakeholders in my district have
expressed concern that a large number of key personnel in state Rural
Development offices will soon be retiring. How will you address the
issue of replacing the critical staff (such as engineers) in these
offices as they retire?
Answer. Thank you for your question. The reduced staff has strained
our ability to protect the RD portfolio and deliver RD programs. We are
making the best use of the resources we have and within the current
budget constraints. We are addressing the reductions in staffing in
four ways. First, we are working with our state offices and conducting
training for staff that have, or will be, reassigned from other program
areas to work on water and waste loans and grants. Second, we are
helping to facilitate, where possible, the sharing of resources across
state offices. For example, our South Carolina Rural Development Office
is receiving assistance from one of the three engineers on our North
Carolina staff. We are also exploring longer-term solutions that will
allow for regional staffing approaches to address staffing shortages
where they exist for engineers in particular. Finally, we are also
evaluating requests for backfilling of key positions within current
budget constraints.
Question 7. Back in 2010, you were kind enough to join me in my
Congressional district to announce almost $20 million in USDA Federal
funds for Lumbee River Electric Membership Corporation (LREMC) for
rural broadband services. The announcement brought broadband to 27,000
people in my district, 1,600 businesses and 100 community institutions,
and it created or saved 51 jobs. Going forward, what is the potential
for USDA investments in broadband given our national budget situation?
Answer. USDA will continue to support the Administration's goals
for broadband deployment in rural communities. This mission is
critically important to the future of rural America. The 2014 Budget
provides $8.3 million in budget authority to support $63 million in
broadband loans, $10 million for Broadband grants, $25 million for
grants under the Distance Learning and Telemedicine Program and $690
million in program level funding for telecommunications infrastructure.
For FY 2013, RUS has available more than $700 million in program level
funding for broadband infrastructure for rural residents, businesses
and community institutions. RUS is diligently monitoring the progress
of funded projects and ensuring that funds are used appropriately,
while managing a $4.6 billion loan portfolio. Access to broadband is
essential for the economic development and quality of life in rural
communities and is recognized by the Secretary as a key initiative. We
are working in several areas to encourage public/private partnerships
to leverage Federal resources with state and local governments,
industry, other Federal agencies and key rural constituencies to
maximize the impact of public and private funding for broadband
services.
Question 8. In his ``Outlook for Agriculture in 2013'' address,
USDA Chief Economist Joe Glauber discussed an expected drop in
commodity prices. How will this impact the livestock industry going
forward, and will it spur more planting in non-grain crops like tobacco
cotton and peanuts?
Answer. On March 28, 2013, USDA released its Prospective Plantings
report. The report indicates that producers intend to plant 97.3
million acres of corn in 2013, which, if realized, will be the highest
planted acreage since 1936. Soybean planted area is estimated at 77.1
million acres, down slightly from last year but the fourth highest on
record, if realized. All wheat planted acres are estimated at 56.4
million acres, up 1 percent from 2012. All cotton planted area for 2013
is expected to total 9.82 million acres, down 18 percent from last
year. All tobacco area for harvest in 2013 is estimated at 349,630
acres, up 4 percent from 2012. Flue-cured tobacco is estimated at
218,000 acres, up 6 percent from 2012.
The outlook for 2013 calls for a rebound in crop yields resulting
in record production levels for corn and soybeans, and by autumn 2013,
lower prices for most grains and oilseeds. Lower crop prices should
lead to lower feed costs and improved profitability for the livestock,
dairy and poultry sectors.
Question 9. In rural communities, there are many challenges to
capital access. Does the lack of capital call for a continued
commitment in rural development programs that offer capital to rural
business owners?
Answer. RD agrees that rural business owners continue to face many
challenges in accessing capital and that this situation calls for a
continued commitment in our rural development programs that offer
capital assistance to rural business owners. The need for access to
capital, especially for small and mid-sized businesses, is one of the
key findings made by the National Governors Association in their
January 2013 report, ``Making'' Our Future--What States are Doing to
Encourage Growth in Manufacturing through Innovation, Entrepreneurship,
and Investment. This report discusses, in part, gaps in access to
capital for innovation, commercialization, and business expansion. The
need to continue funding rural development programs is further
illustrated by the fact that many of our programs frequently have more
demand for financial assistance than we can meet.
Question 10. What is your team doing to resolve China and Russia's
decisions to enforce zero-tolerance standards for trace amounts of
ractopamine, which has effectively banned U.S. beef, pork and turkey
imports in those countries?
Answer. USDA repeatedly expresses our stalwart disagreement with
the Russian Government on its actions related to ractopamine, through
official meetings in Washington and Moscow and official correspondence.
USDA and USTR will continue to press Russia to adopt the international
standards for ractopamine minimum residue levels in beef and pork.
USDA is coordinating with U.S. industry on a strategy for supplying
ractopamine-free beef, pork and turkey meat shipments to Russia. While
China is not demanding ractopamine-free certification from USDA and
exports of ractopamine-free pork continues to flow, China has demanded
that all U.S. pork shipments departing the United States on or after
March 1, 2013 be tested prior to importation to demonstrate that they
do not contain ractopamine. We continue to consult with U.S. industry
associations and USTR on the best way to address these demands.
Question 11. Your efforts as chair of the White House rural council
have made improving the rural economy a priority. I appreciate your
efforts to better coordinate Federal agencies efforts in rural America.
What plans do you have for the White House rural council moving forward
and how will you ensure rural stakeholders are able to provide input?
Answer. The White House Rural Council (WHRC) was established to
better coordinate Federal programs and maximize the impact of Federal
investment to promote economic prosperity and improve the quality of
life in rural communities. The WHRC will work with stakeholders to
identify challenges and develop solutions to improve opportunities and
the quality of life in rural areas. In 2013 efforts will continue to be
focused on following four areas:
Improving the flow of capital to rural areas, job creation,
and workforce development;
Increasing telecommunications, renewable energy and new
markets opportunities in rural communities;
Expanding access to quality health care, education, and
housing, and particularly in persistent poverty counties and
tribal areas; and
Developing outdoor recreational opportunities that
contribute to economic growth.
Question 12. Nearly a year ago, FSIS issued its proposed rule on
Modernization of Poultry Inspection. According to USDA's data,
establishments operating under the HIMP pilot program perform as well
as, or better than, traditionally inspected plants. Furthermore, the
rule will create additional poultry plant jobs, and will have
substantial budgetary savings for FSIS. Can you give us an update on
when USDA plans to issue the final rule?
Answer. The agency is in the process of preparing a final rule on
poultry slaughter after considering the comments received. It is not
possible to provide a specific timeline, although I have said publicly
that we hope to get the final rule out by September 2013.
Question 13. I'm also concerned about how certain green building
standards, especially the U.S. Green Building Council's LEED system,
affects our rural economies. As you're aware, the LEED system
discourages the use of forest products--which is not good for states
like North Carolina--where the forest products industry is the 4th
largest industry and employs over 60,000 people, many of whom are in
rural communities. Recently, I learned that despite this, USDA
continues to use the LEED system for its buildings--including a recent
building on the Mars Hill ranger station in my home state. Why is USDA
using a green building system that discourages the use of forest
products--are you concerned with the impact this could have on rural
economies? What is USDA doing to help correct this problem as the
Department responsible for supporting rural economies and American
agriculture and forestry?
Answer. Thank you for your question regarding building construction
certification standards and the use of wood products in the new
Appalachian Ranger District office located in Mars Hill, North
Carolina. Forest Service policy was changed in May 2011 to also allow
for Green Globes certification, while LEED certification is still an
option and has been in effect for several years. Even though Agency
policy permits 3rd party certification of either standard, we currently
recommend that all new construction projects be reviewed for Green
Globes certification. The policy change in 2011 also encourages
projects to be designed and constructed with domestically harvested
wood products, ideally locally sourced and from National Forest System
lands, wherever practicable and to the maximum extent feasible. The
Southern Region is following this direction and is currently on track
to complete the agency's first Green Globes certified project, a
renovation of, and addition to, the Enoree Ranger District Office,
located in Whitmire, SC.
The change in policy did not occur before the design of the new
office in Mars Hill was completed in 2007. Construction began in 2011
once funding was received for the project and was completed in 2012.
Although, the building contractor was not required by the design to use
certified wood to construct the building; a substantial amount of
locally purchased wood was used in the construction, including framing,
trim, roof decking, windows, and cabinetry. The majority of the
building materials, in all of our construction projects, is wood and
wood products.
Questions Submitted Hon. Kurt Schrader, a Representative in Congress
from Oregon
Question 1. My colleague, Mr. Glenn Thompson and I have
reintroduced the Forest Products Fairness Act (H.R. 979), a bill to fix
the discrepancies against most forest products in the USDA biobased
markets program. I continue to believe this program was developed to
encourage the use of all biobased products and should promote all
agriculture and forest products. With that in mind, can you respond to
the following questions:
How USDA is currently managing the Biobased Markets Program with no
mandatory funds provided in the recent farm bill extension? What
elements are you implementing and what are on hold?
Answer. USDA is implementing the Biobased Markets Program using
employee staff resources in the absence of funding for technical
support. To the extent feasible, we are continuing to develop
regulations to designate additional categories of biobased products for
preferred Federal procurement. This effort involves regulation writing
for products for which biobased content testing has already occurred.
No new testing is possible without funding. USDA is also conducting
training and outreach activities locally in Washington, D.C. or by
telephone. USDA suspended the labeling program on January 31, 2013 due
to lack of funding for our third party independent certification
organization.
Question 1a. Can you explain what is meant by ``mature'' and how
you account for the continuous improvement and change in the production
and manufacturing of forest products?
Answer. USDA's Guidelines for Designating Biobased Products for
Federal Procurement indicate in 7 CFR 3201.5(c)(2) that ``USDA
additionally will not designate items for preferred procurement that
are determined to have mature markets. USDA will determine mature
market status by whether the item had significant national market
penetration in 1972.'' USDA has adopted this same definition for the
voluntary labeling program. The Department evaluates label applications
for forest products with the assistance of the Forest Service Forest
Products Laboratory in the determination of the mature market
exclusion.
Question 1b. You also have a rule-making underway to consider
changing ``mature'' to ``new and emerging markets.'' I remain concerned
that this proposed change does not address my belief that this USDA
program should promote all products that support strong rural
economies, jobs, and America's forest and agriculture land owners
regardless of how new or old the products are. Can you provide an
update on the Department's plans for finalizing this rule?
Answer. USDA is evaluating comments received on the proposed rule
to amend the Program Guidelines and drafting a final rule; however this
effort is hampered by the lack of technical support as described above.
Nevertheless, once this effort is completed the draft final rule will
undergo internal USDA review and a 90 day review by the Office of
Management and Budget prior to its promulgation.
Question 2. In 2011, the USDA changed its green building policy to
call for use of all credible green building rating systems, not just
LEED, and you announced plans to prefer wood products in USDA
buildings. Can you provide an update on what the Department has done to
implement this? How many buildings have been built with wood, and how
many have used rating systems other than LEED--which discourages wood
use? What additional research and demonstration is being done to have
wood products more widely used by other Federal agencies and the
building community?
Answer. Since May 2011, the Forest Service policy is that all new
building construction projects for regional offices supervisor's
offices, district offices, visitor centers, and research offices or
laboratories where the building is 10,000 gross square feet or greater
in size, must be registered and certified using either the U.S. Green
Building Council's Leadership in Energy and Environmental Design (LEED)
rating system (minimum Silver certification), Green Globes (minimum Two
Green Globes certification) or other third-party certification system.
All other buildings, whether new or major renovations, must be designed
to incorporate sustainable principles into the systems and components
appropriate to the building type and project scope. This requirement
applies to buildings on an individual basis, and the most recently
issued version of the third-party certification system must be used. We
encourage construction projects to be designed and constructed with
domestically harvested wood products ideally locally sourced and from
National Forest System lands, whenever practicable and feasible. We
currently are recommending that all new construction projects be
considered for Green Globes certification.
The following facilities were designed prior to May 2011 and
constructed since May 2011. The majority of building materials used in
these facilities is wood and wood products:
Angeles National Forest Supervisor Office, Arcadia, CA
Camino Real Ranger Station, Carson National Forest, Penasco,
NM
Corvallis Forest Science Laboratory and Siuslaw National
Forest HQ Office, Corvallis, OR
Arcata Lab, CA
Juneau Lab, AK
Wood Products Insect Laboratory, Starkville, MS
White Mt. Forest Supervisor's Office, NH
Francis Marion Ranger District Office, Huger, SC
Deschutes Forest Supervisor's Office, OR
Appalachian Ranger District Office, NC
Walker Ranger District Office, MN
These are larger facilities; however there have also been some
small buildings constructed that also contain a majority use wood and
wood products. The majority of the building materials, in all of our
construction projects, are wood and wood products. We estimate that
wood makes up approximately two thirds of all building materials used
for new facilities and large scale renovation projects.
In December 2011, the Forest Service Forest Products Laboratory
published ``Science Supporting the Economic and Environmental Benefits
of Using Wood and Wood Products in Green Building Construction''. This
report summarizes the scientific findings that support the
environmental and economic benefits of using wood and wood products in
green building construction. It addresses a general lack of recognition
that wood is a renewable resource, helps mitigate climate change,
promotes healthy forests and is a green construction material. The
report also:
Provides solutions to advance wood as a green building
material, including:
Scientific advancement in the area of life cycle
analysis
Development of new technologies for improved and
extended wood use
Outlines benefits in helping achieve USDA objectives,
including:
Creating domestic jobs
Bolstering the competitive position and long-term
economic stability of the wood industry
Reducing U.S. dependence on foreign oil
Offers recommendations on how to accomplish:
Research and development--life cycle analysis
Technology transfer--carbon and green building
benefits of typical wood structures
Questions Submitted Hon. Joe Courtney, a Representative in Congress
from Connecticut
Question 1. The USDA's ``Report on the Definition of Rural''
explains that your agency is ready to use the 2010 Census figures for
Rural Development programs. Under this path the ``rural in character''
exceptions that were made under the last farm bill will expire on March
28th. Hundreds of RD mission areas that have unique characteristics
warranting this exemption would become ineligible overnight. It is my
understanding from the Committee on Appropriations that the ``rural in
character'' grandfathering will be continued under a new CR without any
changes to the current legislative language. Do you intend to continue
the status quo of grandfather in target areas that utilize older Census
data to determine ``rural in character'' eligibility or would new CR
language need to be tailored to ensure the status quo?
Answer. The Consolidated and Further Continuing Appropriations Act
of 2013 (CR) signed into law on March 26, 2013 extends the eligibility
of communities for housing programs administered by the Rural Housing
Service (Single Family and Multi Family Housing Programs) on September
30, 2012 to September 30, 2013 (Title VII, Section 731). All other
Rural Development programs will use the 2010 Census data to determine
eligibility for rural areas beginning on March 27, 2013.
Question 2. It is my understanding that USDA has proposed a new
formula for the allocation of full-time equivalent (FTE) slots in local
RD offices. The formula announced would use new factors to determine
what staffing an office might have. The three main determinants of FTE
slots would be geographical size of the state, the amount of rural
population in the state, and the amount of rural poverty in the state.
I also understand that there would be more weight put towards rural
population and rural poverty than geography. While I recognize the
difficult fiscal position USDA currently finds itself and understand
the need your agency has to allocate RD resources to those areas that
need it most, I am concerned that this formula targets specific
geographic areas at the expense of others. Will there be consideration
given in this new formula for factors such as the number of jobs
created, the amount of productivity in the state, or the amount of
contract servicing needed in the state? Also, does your agency intend
to utilize a similar formula beyond the RD office, perhaps to NRCS or
FSA?
Answer. Thank you for your question. RD has undergone an
examination of how to allocate its FTE's in times of diminishing
resources and has arrived at a working model that is much more
transparent then the allocations in the past. While the three main
variables are rural population, poverty, and service area, RD is also
looking at how to incorporate the size of the state's portfolio and
workload. This is a work in progress and we look forward to working
with Congress on how to best use our human resources.
attachment 1
February 5, 2013
Hon. Barbara Mikulski,
Chairwoman,
Senate Committee on Appropriations,
Washington, D.C.
Dear Madam Chair:
Thank you for your letter of January 18, 2013, requesting
additional information on the impact of potential across-the-board
spending cuts on the Department of Agriculture's (USDA) operations.
Like you, I am very concerned about the impact of the March 1 sequester
on the American economy, specifically in the areas of food,
agriculture, natural resources, rural development, nutrition, and
related issues.
Since Fiscal Year (FY) 2010, USDA's operating budget has been
reduced by about $3 billion, or 12 percent. As part of our Blueprint
for Stronger Service, USDA has saved taxpayers millions in travel and
printing costs and is consolidating more than 700 different cell phone
contracts into about 10. We are also pursuing other cost reduction
efforts in several areas such as sourcing uniforms from the AbilityOne
Strategic Alliance, standardizing bulk mail and processes, and
implementing a ``Shared First'' acquisition policy to consolidate IT-
related acquisitions. What's more, the Department is achieving
significant savings by closing more than 250 domestic and foreign
offices while ensuring that the vital services they provide are not
cut.
If Congress does not act before March 1, it is estimated that the
across-the-board spending cuts would indiscriminately reduce funding
for USDA programs further by almost $2 billion in FY 2013. About \2/3\
of these cuts would come from programs funded by discretionary
appropriations under the Committee's jurisdiction. While the Department
is still developing plans on how to operate under a sequester, agencies
have already taken actions--in addition to those mentioned above--to
prepare for additional funding reductions through prudent practices
such as hiring freezes and limiting operating costs. Should a
sequestration occur, we would likely need to implement furloughs
impacting about \1/3\ of our workforce, as well as other actions. These
furloughs and other actions would severely disrupt our ability to
provide the broad range of public services we administer. Examples of
these programmatic impacts include:
A reduction of 600,000 low-income women and children who
could receive nutrition assistance and associated nutrition
education and breastfeeding support through the Special
Supplemental Nutrition Program for Women, Infants, and Children
(WIC). WIC has been shown to provide important improvements in
nutrition of women and children, lower health care costs, and
improved cognitive development of children.
A nationwide shutdown of meat and poultry plants during a
furlough of inspection personnel. The furlough could result in
as much as 15 days of lost production, costing roughly over $10
billion in production losses, and industry workers would
experience over $400 million in lost wages. Consumers would
experience limited meat and poultry supplies, and potentially
higher prices, and food safety could be compromised.
Elimination of rental assistance for more than 10,000 very
low income rural residents, generally elderly, disabled, and
single female heads of households. With an average monthly
income of approximately $803, these Americans are the least
able to absorb rent increases and would face very limited
options for alternate housing if landlords increase rents to
cover the loss of the rental assistance payments.
A curtailing of conservation technical and financial
assistance to approximately 11,000 producers and landowners,
thereby limiting benefits to water quality and quantity, soil
erosion, and wildlife habitat that benefit the public.
Increased risk to communities from wildfires with as many as
200,000 fewer acres treated for hazardous fuels.
A loss of over $60 million resulting in more than 100 fewer
grants awarded for agricultural research conducted by both
university scientists and private partners, disrupting critical
progress being made in many topical areas such as water,
nutrient management, bioenergy production, animal and plant
disease, and childhood obesity.
A reduction in assistance to states for pest and disease
prevention, surveillance, and response, potentially leading to
more extensive outbreaks and economic losses to farmers and
ranchers.
Furloughs and other reductions in a number of USDA agencies
that would limit the ability to provide program oversight,
leading to potentially higher levels of erroneous payments and/
or fraud. Even small increases in improper payments have large
public costs given the magnitude of programs involved.
Additional information on impacts covering selected accounts is
enclosed.
In addition to impact to programs under the Committee's
jurisdiction, \1/3\ of USDA's sequestered funds would come from
mandatory programs, including those authorized through the farm bill.
While plans are still being developed on how the sequester would be
implemented for these programs, reductions have the potential to impair
important elements of support for agriculture and the environment,
including disaster assistance, conservation, and export enhancement
programs.
I deeply hope that Congressional leaders will reach an agreement to
achieve deficit reduction while averting an across-the-board cut. I
look forward to working with Congress to preserve the many priorities
of rural America while making sensible program reforms and reductions
that will lead to deficit reduction.
Again, thank you for writing.
Sincerely,
Hon. Thomas J. Vilsack,
Secretary.
Additional Sequestration Information
Bureau: Food and Nutrition Service
Program: Special Supplemental Nutrition Program for Women, Infants,
and Children (WIC)
Sequestration Amount: $333 million
Impact:
Grants to States
WIC is a federally funded program. If funding is inadequate
to maintain the current caseload--as it would be under
sequestration--State WIC programs would have to reduce
participation and establish waiting lists using the priority
system provided in regulation.
A full year continuing resolution, coupled with
sequestration, will result in a budget authority of about $6.3
billion. Using all available resources, including carryover and
all contingency funds, will allow the program to support about
8.6 million participants--a reduction of approximately 300,000
participants on an annual basis from last year or about 600,000
participants if the reductions are compressed in the last two
quarters of the fiscal year.
Even before sequestration occurs, states may begin to
implement cost-cutting strategies sometime in February. These
strategies could range from reducing clinic hours, closing
clinics, to establishing waiting lists as a last resort.
When funds are not sufficient to support caseload, WIC
agencies implement a priority waiting list of individuals. The
first to lose benefits would be non-breastfeeding postpartum
women and individuals certified solely due to homelessness or
migrancy. African-American women have the lowest breastfeeding
rates so they are more likely to represent a significant
proportion of these women.
Nutrition Services and Administration funding provided to
states would be reduced by about $75-$100 million from the
Fiscal Year (FY) 2012 level, which could result in up to 1,600
state and local jobs lost.
Bureau: Food Safety and Inspection Service (FSIS)
Program: Salaries and Expenses
Sequestration Amount: $51 million
Impact: Sequestration would result in an across-the-board furlough
of as much as 15 days for all FSIS employees, including inspectors.
Since Federal law mandates inspection of meat, poultry, and egg
products, production will shut down for that time period, impacting
approximately 6,290 establishments nationwide. Due to lost production
volume of more than 2 billion pounds of meat, an additional 2.8 to 3.3
billion pounds of poultry and over 200 million pounds of egg products,
the industry would experience a production loss of over $10 billion.
Consumers would experience a shortage of meat, poultry, and egg
products available for public consumption, and the shortage may result
in price increases for these products. Restaurants, grocers, local
merchants, and others who rely on FSIS-inspected products would suffer
multiplier effects from the shortfall in production. The impact could
force smaller businesses and merchants out of business. Industry
workers would also be furloughed, resulting in over $400 million in
lost wages. The livestock industry would also incur additional costs
for disruption of the pipeline from farms to production establishments
as farmers and livestock producers would have to feed and store animals
longer than anticipated.
FSIS would also eliminate export inspections, resulting in losses
for U.S. producers and causing additional storage costs and or loss of
product. Export inspections could adversely affect other nations since
the volume of products would decline. Furthermore, public food safety
could be compromised by the illegal selling and distribution of
uninspected meat, poultry, and egg products. Because FSIS is also
responsible for verifying the safety of imported products, cutting
import inspections would result in a reduction of 154 to 178 million
pounds of imported meat, poultry, and egg products entering the
country, in addition to the lost production capacity within the United
States. Cutting import inspections might be construed as an
international trade issue. Moreover, there is limited storage space
along the border so that unless foreign countries stopped shipments,
chill/frozen storage capacity and refrigerated truck/train/ship
capacity would be compromised.
Bureau: Rural Development, Rural Housing Service
Program: Rental Assistance
Sequestration Amount: $46 million
Impact: The Rental Assistance Program provides assistance to
eligible low-income tenants in USDA-financed multi-family housing so
that Americans pay no more than 30 percent of their incomes for rent.
Approximately 286,000 tenants receive the benefit of rental assistance
in almost all of the apartment complexes financed by Rural Development.
The sequestration would cause more than 10,000 current recipients to
lose rental assistance. The average monthly income of families and
individuals receiving rental assistance (generally female-headed
households, elderly, and the disabled) is approximately $803. These
Americans are the least able to absorb any increase in the rent due to
the loss of rental assistance. Loss of this rent supplement may cause
property owners to increase rents, making the units unaffordable to the
very low income residents who have few options for decent, affordable
housing.
With the loss of rental assistance, or higher vacancies resulting
from very low-income Americans being unable to afford higher rents,
many properties will be unable to pay all of their operating costs.
Owners may be unable to maintain the property and allow it to fall into
disrepair, or the properties may become delinquent in their loan
payments. Potentially, 411 projects may become delinquent by October
2013. Ongoing delinquencies will lead to defaults and foreclosure and
may result in long-term loss of affordable housing in rural communities
in future years.
The loss of rental assistance supporting new construction of Farm
Labor housing would result in the loss of affordable housing for
approximately 28 farm workers and their families; the loss of rental
assistance supporting construction of multi-family assisted housing
would result in the loss of affordable housing opportunities for 17 low
or very low income families.
Bureau: Natural Resources Conservation Service (NRCS)
Program: Conservation Operations and Farm Security and Rural
Investment Programs
Sequestration Amount: $222 million
Impact: NRCS will implement a hiring freeze and reduce travel and
other costs. This will impact NRCS' ability to ensure timely, complete
conservation planning activities and delivery of financial assistance,
which would affect program accomplishments and service to farmers and
ranchers nationwide. This would result in longer timeframes to address
these challenges continuing to put at risk the business operations of
the agency. In addition, NRCS would implement significant cuts in
agreements and contracts with non-Federal entities by over $20 million
in technical assistance and about $109 million in financial assistance.
These reductions will have a deleterious impact on the ability to
provide technical and financial assistance services to conservation
customers, resulting in reduced conservations opportunities and reduced
natural resource benefits with short and long effects on the nation's
private lands.
Overall, these cuts will undercut the ability to support priorities
including landscape-scale conservation, water quality improvements,
wildlife habitat protection, open space protection, as well as natural
infrastructure restoration, carbon sequestration, weather prediction
capacity, plant material development and other programs and services
that support extreme weather and climate change adaptation and
mitigation.
Bureau: Farm Service Agency (FSA)
Program: Farm Loan and Salaries and Expenses
Sequestration Amount: $80 million
Impact: Sequestration would require reductions of $80 million in
FSA salaries and expenses and Farm Credit programs. The following
highlights address some of the impacts of these reductions.
FSA Program Management
The sequestration would reduce the spending authority for FSA
salaries and administrative expenses by about $75 million. In order to
accomplish this reduction, FSA will implement a number of actions
including hiring freezes, reducing contract operations for both
Information Technology (IT) and non-IT operations, eliminating states
flown in the National Aerial Imagery Program, and furloughing employees
up to 5 days. FSA employees are responsible for managing a wide range
of programs including farm loans, conservation and disaster activities
with budgets totaling over $11 billion annually. Reduced ability to
effectively manage these major nationwide programs will limit the
ability to provide timely support to producers during the ongoing
extreme, widespread drought and will erode the capability to provide
oversight to limit erroneous payments.
Farm Loan Programs
FSA provides direct loans to family farmers and ranchers who cannot
obtain commercial credit from a bank or other lender. The program is an
important source of credit for beginning farmers, who tend to have
limited resources and as a result, are less likely to meet commercial
credit standards. Extreme drought conditions prevailing in significant
areas of the nation that have weakened the financial condition of
agricultural producers significantly increase the importance of these
loan programs. Operating loans are used to purchase items such as
livestock, feed, farm equipment, fuel, farm chemicals, insurance, minor
improvements or repairs to buildings, refinance farm-related debt
excluding real estate and other operating costs, including family
living expenses. Sequestration would reduce the budget authority for
Farm Credit Programs by approximately $5.4 million ($35.6 million in
program level), meaning that 890 fewer direct farm operating loans and
661 other farm loans could be made. The sequestration of farm loan
funding could result in a loss of over 1,650 private sector jobs (plus
the hundreds of farmers that would be forced out of farming and into
the off-farm job market), reduce the GDP by more than $259 million, and
could reduce household income by $44 million.
Bureau: Forest Service
Program: Wildland Fire Management
Sequestration Amount: $134 million
Impact: This level of reduced funds would result in an appropriated
funding level that is $42 million below the calculated 10 year average
of fire suppression costs for FY 2013. In addition, a reduction of
Preparedness funds typically increases suppression costs since the
initial attack success will be reduced. Additionally, 2012 fire
transfer funds are subject to sequestration, which results in needing
to recover $20 million of funds repaid. The agency would complete as
many as 200,000 fewer acres of hazardous fuel treatments, resulting in
an increased risk to communities from wildfires.
Certain decisions may result in increased costs in the end. For
example, the agency could reduce up-front costs by reducing use of
Exclusive Use aviation contracts, 115 engines, and 10 hotshot crews.
However, this could result in larger fires, which will result in higher
expenditures.
Bureau: Forest Service
Program: National Forest System (NFS)
Sequestration Amount: $78 million
Impact: The agency's essential services to the public will be
reduced for a variety of high demand activities (recreation, forest and
watershed restoration, grazing, mining and oil/gas operations) as a
result of reduced operations at campgrounds, visitor information
centers, and offices. This would largely occur during the peak use
seasons in spring and summer. Thousands of private sector jobs in rural
communities across the nation would be lost due to a reduction of
recreation opportunities, and minerals and oil and gas operations,
which are completed through contracts, grants, and agreements.
The agency would close up to 670 public developed recreation sites
out of 19,000 sites, such as campgrounds, picnic areas, and trailheads.
Closing this many recreation sites would reduce an estimated 1.6
million recreation visits across the country, thereby harming the
economies of remote rural communities that depend on recreationists'
economic activity, and eliminating convenient vacation opportunities
for rural residents.
Increased risks to health and safety for visitors to the 193
million acres of public lands would occur as a result of reductions of
35 sworn law enforcement officers, leaving 707 total officers to
control drug trafficking organizations, prevent crime, and protect and
serve the public. The reduction in sworn officers would result in an
increase of illegal activities on National Forest System lands, like
arson during fire season, timber theft, and other natural resource
crimes.
Forest and watershed restoration work would be curtailed. Timber
volume sold would be reduced to 2,379 million board feet from 2,800
million board feet proposed for FY 2013. The agency would restore 390
fewer stream miles, 2,700 fewer acres of lake habitat and improve
260,000 fewer acres of wildlife habitat.
Bureau: National Agricultural Statistics Service (NASS)
Program: Census of Agriculture and Agricultural Estimates
Sequestration Amount: $8 million
Impact: NASS is responsible for the collection and analysis of a
broad range of agricultural statistics and completion of the Census of
Agriculture. These statistics provide information critical to
decisionmaking by a wide population of stakeholders and ultimately
benefit all consumers by enhancing orderly and unbiased market
conditions for agricultural products. Sequestration would stop FY 2013
scheduled activities for the Census, causing data processing to be
placed on hold and potentially not recoverable. Data will become
incomplete and will not be statistically sound for publication. Not
having the 2012 Census will negatively affect decisions made by
farmers, businesses, and governments and ultimately will bring
volatility to food markets and impact prices consumers pay. Data
collected by the Census includes the number of farms, value of land,
market value of agricultural production, and inventory of livestock and
poultry.
NASS' annual agricultural estimates reports are critically
important to assess the current supply and demand in agricultural
commodities. These unbiased, timely reports are extremely valuable to
producers, agribusinesses, farm organizations, commodity groups,
economists, public officials, and others who use the data for
decisionmaking. The statistics disseminated by NASS support fairness in
markets ensuring buyers and sellers have access to the same objective
official statistics at the same pre-announced time. This prevents
markets from being influenced by ``inside'' information, which might
unfairly affect market prices for the gain of an individual market
participant. The efficiency of commodity markets is enhanced by the
free flow of information, which minimizes price fluctuations for U.S.
producers. Statistical measures help the competitiveness of our
nation's agricultural industry and have become increasingly important
as producers rely more on world markets for their sales. There is no
other source for the statistical surveys, estimates, and reports NASS
produces.
attachment 2
February 15, 2013
Hon. Rosa L. DeLauro,
U.S. House of Representatives
Washington, D.C.
Dear Congresswoman DeLauro:
Thank you for your letter of February 6, 2013, cosigned by
Congressman Sam Farr, requesting additional information on the impact
of potential across-the-board spending cuts on the Department of
Agriculture's (USDA) operations. Like you, I am very concerned about
the impact of the March 1 sequester on the American economy,
specifically in the areas of food, agriculture, natural resources,
rural development, nutrition, and related issues.
Since Fiscal Year (FY) 2010, USDA's operating budget has been
reduced by about $3 billion, or 12 percent. As part of our Blueprint
for Stronger Service, USDA has saved taxpayers millions in travel and
printing costs and is consolidating more than 700 different cell phone
contracts into about 10. We are also pursuing other cost reduction
efforts in several areas such as sourcing uniforms from the AbilityOne
Strategic Alliance, standardizing bulk mail and processes, and
implementing a ``Shared First'' acquisition policy to consolidate IT-
related acquisitions. What's more, the Department is achieving
significant savings by closing more than 250 domestic and foreign
offices while ensuring that the vital services they provide are not
cut.
If Congress does not act before March 1, it is estimated that the
across-the-board spending cuts would indiscriminately reduce funding
for USDA programs further by almost $2 billion in FY 2013. About \2/3\
of these cuts would come from programs funded by discretionary
appropriations under the Committee's jurisdiction. While the Department
is still developing plans on how to operate under a sequester, agencies
have already taken actions--in addition to those mentioned above--to
prepare for additional funding reductions through prudent practices
such as hiring freezes and limiting operating costs. Should a
sequestration occur, we would likely need to implement furloughs
impacting about \1/3\ of our workforce, as well as other actions. These
furloughs and other actions would severely disrupt our ability to
provide the broad range of public services we administer. Examples of
these programmatic impacts include:
A reduction of 600,000 low-income women and children who
could receive nutrition assistance and associated nutrition
education and breastfeeding support through the Special
Supplemental Nutrition Program for Women, Infants, and Children
(WIC). WIC has been shown to provide important improvements in
nutrition of women and children, lower health care costs, and
improved cognitive development of children.
A nationwide shutdown of meat and poultry plants during a
furlough of inspection personnel. The furlough could result in
as much as 15 days of lost production, costing roughly over $10
billion in production losses, and industry workers would
experience over $400 million in lost wages. Consumers would
experience limited meat and poultry supplies, and potentially
higher prices, and food safety could be compromised.
Elimination of rental assistance for more than 10,000 very
low income rural residents, generally elderly, disabled, and
single female heads of households. With an average monthly
income of approximately $803, these Americans are the least
able to absorb rent increases and would face very limited
options for alternate housing if landlords increase rents to
cover the loss of the rental assistance payments.
A curtailing of conservation technical and financial
assistance to approximately 11,000 producers and landowners,
thereby limiting benefits to water quality and quantity, soil
erosion, and wildlife habitat that benefit the public.
Increased risk to communities from wildfires with as many as
200,000 fewer acres treated for hazardous fuels.
A loss of over $60 million resulting in more than 100 fewer
grants awarded for agricultural research conducted by both
university scientists and private partners, disrupting critical
progress being made in many topical areas such as water,
nutrient management, bioenergy production, animal and plant
disease, and childhood obesity.
A reduction in assistance to states for pest and disease
prevention, surveillance, and response, potentially leading to
more extensive outbreaks and economic losses to farmers and
ranchers.
Furloughs and other reductions in a number of USDA agencies
that would limit the ability to provide program oversight,
leading to potentially higher levels of erroneous payments and/
or fraud. Even small increases in improper payments have large
public costs given the magnitude of programs involved.
Additional information on impacts covering selected accounts is
enclosed.
In addition to impact to programs under the Committee's
jurisdiction, \1/3\ of USDA's sequestered funds would come from
mandatory programs, including those authorized through the farm bill.
While plans are still being developed on how the sequester would be
implemented for these programs, reductions have the potential to impair
important elements of support for agriculture and the environment,
including disaster assistance, conservation, and export enhancement
programs.
I deeply hope that Congressional leaders will reach an agreement to
achieve deficit reduction while averting an across-the-board cut. I
look forward to working with Congress to preserve the many priorities
of rural America while making sensible program reforms and reductions
that will lead to deficit reduction.
Again, thank you for writing. A similar letter is being sent to
Congressman Farr.
Sincerely,
Hon. Thomas J. Vilsack,
Secretary.
attachment
February 15, 2013
Hon. Sam Farr,
U.S. House of Representatives
Washington, D.C.
Dear Congressman Farr:
Thank you for your letter of February 6, 2013, cosigned by
Congresswoman Rosa L. DeLauro, requesting additional information on the
impact of potential across-the-board spending cuts on the Department of
Agriculture's (USDA) operations. Like you, I am very concerned about
the impact of the March 1 sequester on the American economy,
specifically in the areas of food, agriculture, natural resources,
rural development, nutrition, and related issues.
Since Fiscal Year (FY) 2010, USDA's operating budget has been
reduced by about $3 billion, or 12 percent. As part of our Blueprint
for Stronger Service, USDA has saved taxpayers millions in travel and
printing costs and is consolidating more than 700 different cell phone
contracts into about 10. We are also pursuing other cost reduction
efforts in several areas such as sourcing uniforms from the AbilityOne
Strategic Alliance, standardizing bulk mail and processes, and
implementing a ``Shared First'' acquisition policy to consolidate IT-
related acquisitions. What's more, the Department is achieving
significant savings by closing more than 250 domestic and foreign
offices while ensuring that the vital services they provide are not
cut.
If Congress does not act before March 1, it is estimated that the
across-the-board spending cuts would indiscriminately reduce funding
for USDA programs further by almost $2 billion in FY 2013. About \2/3\
of these cuts would come from programs funded by discretionary
appropriations under the Committee's jurisdiction. While the Department
is still developing plans on how to operate under a sequester, agencies
have already taken actions--in addition to those mentioned above--to
prepare for additional funding reductions through prudent practices
such as hiring freezes and limiting operating costs. Should a
sequestration occur, we would likely need to implement furloughs
impacting about \1/3\ of our workforce, as well as other actions. These
furloughs and other actions would severely disrupt our ability to
provide the broad range of public services we administer. Examples of
these programmatic impacts include:
A reduction of 600,000 low-income women and children who
could receive nutrition assistance and associated nutrition
education and breastfeeding support through the Special
Supplemental Nutrition Program for Women, Infants, and Children
(WIC). WIC has been shown to provide important improvements in
nutrition of women and children, lower health care costs, and
improved cognitive development of children.
A nationwide shutdown of meat and poultry plants during a
furlough of inspection personnel. The furlough could result in
as much as 15 days of lost production, costing roughly over $10
billion in production losses, and industry workers would
experience over $400 million in lost wages. Consumers would
experience limited meat and poultry supplies, and potentially
higher prices, and food safety could be compromised.
Elimination of rental assistance for more than 10,000 very
low income rural residents, generally elderly, disabled, and
single female heads of households. With an average monthly
income of approximately $803, these Americans are the least
able to absorb rent increases and would face very limited
options for alternate housing if landlords increase rents to
cover the loss of the rental assistance payments.
A curtailing of conservation technical and financial
assistance to approximately 11,000 producers and landowners,
thereby limiting benefits to water quality and quantity, soil
erosion, and wildlife habitat that benefit the public.
Increased risk to communities from wildfires with as many as
200,000 fewer acres treated for hazardous fuels.
A loss of over $60 million resulting in more than 100 fewer
grants awarded for agricultural research conducted by both
university scientists and private partners, disrupting critical
progress being made in many topical areas such as water,
nutrient management, bioenergy production, animal and plant
disease, and childhood obesity.
A reduction in assistance to states for pest and disease
prevention, surveillance, and response, potentially leading to
more extensive outbreaks and economic losses to farmers and
ranchers.
Furloughs and other reductions in a number of USDA agencies
that would limit the ability to provide program oversight,
leading to potentially higher levels of erroneous payments and/
or fraud. Even small increases in improper payments have large
public costs given the magnitude of programs involved.
Additional information on impacts covering selected accounts is
enclosed.
In addition to impact to programs under the Committee's
jurisdiction, \1/3\ of USDA's sequestered funds would come from
mandatory programs, including those authorized through the farm bill.
While plans are still being developed on how the sequester would be
implemented for these programs, reductions have the potential to impair
important elements of support for agriculture and the environment,
including disaster assistance, conservation, and export enhancement
programs.
I deeply hope that Congressional leaders will reach an agreement to
achieve deficit reduction while averting an across-the-board cut. I
look forward to working with Congress to preserve the many priorities
of rural America while making sensible program reforms and reductions
that will lead to deficit reduction.
Again, thank you for writing. A similar letter is being sent to
Congresswoman DeLauro.
Sincerely,
Hon. Thomas J. Vilsack,
Secretary.
Additional Sequestration Information
Bureau: Food and Nutrition Service
Program: Special Supplemental Nutrition Program for Women, Infants,
and Children (WIC)
Sequestration Amount: $333 million
Impact:
Grants to States
WIC is a federally funded program. If funding is inadequate
to maintain the current caseload--as it would be under
sequestration--State WIC programs would have to reduce
participation and establish waiting lists using the priority
system provided in regulation.
A full year continuing resolution, coupled with
sequestration, will result in a budget authority of about $6.3
billion. Using all available resources, including carryover and
all contingency funds, will allow the program to support about
8.6 million participants--a reduction of approximately 300,000
participants on an annual basis from last year or about 600,000
participants if the reductions are compressed in the last two
quarters of the fiscal year.
Even before sequestration occurs, states may begin to
implement cost-cutting strategies sometime in February. These
strategies could range from reducing clinic hours, closing
clinics, to establishing waiting lists as a last resort.
When funds are not sufficient to support caseload, WIC
agencies implement a priority waiting list of individuals. The
first to lose benefits would be non-breastfeeding postpartum
women and individuals certified solely due to homelessness or
migrancy. African-American women have the lowest breastfeeding
rates so they are more likely to represent a significant
proportion of these women.
Nutrition Services and Administration funding provided to
states would be reduced by about $75-$100 million from the
Fiscal Year (FY) 2012 level, which could result in up to 1,600
state and local jobs lost.
Bureau: Food Safety and Inspection Service (FSIS)
Program: Salaries and Expenses
Sequestration Amount: $51 million
Impact: Sequestration would result in an across-the-board furlough
of as much as 15 days for all FSIS employees, including inspectors.
Since Federal law mandates inspection of meat, poultry, and egg
products, production will shut down for that time period, impacting
approximately 6,290 establishments nationwide. Due to lost production
volume of more than 2 billion pounds of meat, an additional 2.8 to 3.3
billion pounds of poultry and over 200 million pounds of egg products,
the industry would experience a production loss of over $10 billion.
Consumers would experience a shortage of meat, poultry, and egg
products available for public consumption, and the shortage may result
in price increases for these products. Restaurants, grocers, local
merchants, and others who rely on FSIS-inspected products would suffer
multiplier effects from the shortfall in production. The impact could
force smaller businesses and merchants out of business. Industry
workers would also be furloughed, resulting in over $400 million in
lost wages. The livestock industry would also incur additional costs
for disruption of the pipeline from farms to production establishments
as farmers and livestock producers would have to feed and store animals
longer than anticipated.
FSIS would also eliminate export inspections, resulting in losses
for U.S. producers and causing additional storage costs and or loss of
product. Export inspections could adversely affect other nations since
the volume of products would decline. Furthermore, public food safety
could be compromised by the illegal selling and distribution of
uninspected meat, poultry, and egg products. Because FSIS is also
responsible for verifying the safety of imported products, cutting
import inspections would result in a reduction of 154 to 178 million
pounds of imported meat, poultry, and egg products entering the
country, in addition to the lost production capacity within the United
States. Cutting import inspections might be construed as an
international trade issue. Moreover, there is limited storage space
along the border so that unless foreign countries stopped shipments,
chill/frozen storage capacity and refrigerated truck/train/ship
capacity would be compromised.
Bureau: Rural Development, Rural Housing Service
Program: Rental Assistance
Sequestration Amount: $46 million
Impact: The Rental Assistance Program provides assistance to
eligible low-income tenants in USDA-financed multi-family housing so
that Americans pay no more than 30 percent of their incomes for rent.
Approximately 286,000 tenants receive the benefit of rental assistance
in almost all of the apartment complexes financed by Rural Development.
The sequestration would cause more than 10,000 current recipients to
lose rental assistance. The average monthly income of families and
individuals receiving rental assistance (generally female-headed
households, elderly, and the disabled) is approximately $803. These
Americans are the least able to absorb any increase in the rent due to
the loss of rental assistance. Loss of this rent supplement may cause
property owners to increase rents, making the units unaffordable to the
very low income residents who have few options for decent, affordable
housing.
With the loss of rental assistance, or higher vacancies resulting
from very low-income Americans being unable to afford higher rents,
many properties will be unable to pay all of their operating costs.
Owners may be unable to maintain the property and allow it to fall into
disrepair, or the properties may become delinquent in their loan
payments. Potentially, 411 projects may become delinquent by October
2013. Ongoing delinquencies will lead to defaults and foreclosure and
may result in long-term loss of affordable housing in rural communities
in future years.
The loss of rental assistance supporting new construction of Farm
Labor housing would result in the loss of affordable housing for
approximately 28 farm workers and their families; the loss of rental
assistance supporting construction of multi-family assisted housing
would result in the loss of affordable housing opportunities for 17 low
or very low income families.
Bureau: Natural Resources Conservation Service (NRCS)
Program: Conservation Operations and Farm Security and Rural
Investment Programs
Sequestration Amount: $222 million
Impact: NRCS will implement a hiring freeze and reduce travel and
other costs. This will impact NRCS' ability to ensure timely, complete
conservation planning activities and delivery of financial assistance,
which would affect program accomplishments and service to farmers and
ranchers nationwide. This would result in longer timeframes to address
these challenges continuing to put at risk the business operations of
the agency. In addition, NRCS would implement significant cuts in
agreements and contracts with non-Federal entities by over $20 million
in technical assistance and about $109 million in financial assistance.
These reductions will have a deleterious impact on the ability to
provide technical and financial assistance services to conservation
customers, resulting in reduced conservations opportunities and reduced
natural resource benefits with short and long effects on the nation's
private lands.
Overall, these cuts will undercut the ability to support priorities
including landscape-scale conservation, water quality improvements,
wildlife habitat protection, open space protection, as well as natural
infrastructure restoration, carbon sequestration, weather prediction
capacity, plant material development and other programs and services
that support extreme weather and climate change adaptation and
mitigation.
Bureau: Farm Service Agency (FSA)
Program: Farm Loan and Salaries and Expenses
Sequestration Amount: $80 million
Impact: Sequestration would require reductions of $80 million in
FSA salaries and expenses and Farm Credit programs. The following
highlights address some of the impacts of these reductions.
FSA Program Management
The sequestration would reduce the spending authority for FSA
salaries and administrative expenses by about $75 million. In order to
accomplish this reduction, FSA will implement a number of actions
including hiring freezes, reducing contract operations for both
Information Technology (IT) and non-IT operations, eliminating states
flown in the National Aerial Imagery Program, and furloughing employees
up to 5 days. FSA employees are responsible for managing a wide range
of programs including farm loans, conservation and disaster activities
with budgets totaling over $11 billion annually. Reduced ability to
effectively manage these major nationwide programs will limit the
ability to provide timely support to producers during the ongoing
extreme, widespread drought and will erode the capability to provide
oversight to limit erroneous payments.
Farm Loan Programs
FSA provides direct loans to family farmers and ranchers who cannot
obtain commercial credit from a bank or other lender. The program is an
important source of credit for beginning farmers, who tend to have
limited resources and as a result, are less likely to meet commercial
credit standards. Extreme drought conditions prevailing in significant
areas of the nation that have weakened the financial condition of
agricultural producers significantly increase the importance of these
loan programs. Operating loans are used to purchase items such as
livestock, feed, farm equipment, fuel, farm chemicals, insurance, minor
improvements or repairs to buildings, refinance farm-related debt
excluding real estate and other operating costs, including family
living expenses. Sequestration would reduce the budget authority for
Farm Credit Programs by approximately $5.4 million ($35.6 million in
program level), meaning that 890 fewer direct farm operating loans and
661 other farm loans could be made. The sequestration of farm loan
funding could result in a loss of over 1,650 private sector jobs (plus
the hundreds of farmers that would be forced out of farming and into
the off-farm job market), reduce the GDP by more than $259 million, and
could reduce household income by $44 million.
Bureau: Forest Service
Program: Wildland Fire Management
Sequestration Amount: $134 million
Impact: This level of reduced funds would result in an appropriated
funding level that is $42 million below the calculated 10 year average
of fire suppression costs for FY 2013. In addition, a reduction of
Preparedness funds typically increases suppression costs since the
initial attack success will be reduced. Additionally, 2012 fire
transfer funds are subject to sequestration, which results in needing
to recover $20 million of funds repaid. The agency would complete as
many as 200,000 fewer acres of hazardous fuel treatments, resulting in
an increased risk to communities from wildfires.
Certain decisions may result in increased costs in the end. For
example, the agency could reduce up-front costs by reducing use of
Exclusive Use aviation contracts, 115 engines, and 10 hotshot crews.
However, this could result in larger fires, which will result in higher
expenditures.
Bureau: Forest Service
Program: National Forest System (NFS)
Sequestration Amount: $78 million
Impact: The agency's essential services to the public will be
reduced for a variety of high demand activities (recreation, forest and
watershed restoration, grazing, mining and oil/gas operations) as a
result of reduced operations at campgrounds, visitor information
centers, and offices. This would largely occur during the peak use
seasons in spring and summer. Thousands of private sector jobs in rural
communities across the nation would be lost due to a reduction of
recreation opportunities, and minerals and oil and gas operations,
which are completed through contracts, grants, and agreements.
The agency would close up to 670 public developed recreation sites
out of 19,000 sites, such as campgrounds, picnic areas, and trailheads.
Closing this many recreation sites would reduce an estimated 1.6
million recreation visits across the country, thereby harming the
economies of remote rural communities that depend on recreationists'
economic activity, and eliminating convenient vacation opportunities
for rural residents.
Increased risks to health and safety for visitors to the 193
million acres of public lands would occur as a result of reductions of
35 sworn law enforcement officers, leaving 707 total officers to
control drug trafficking organizations, prevent crime, and protect and
serve the public. The reduction in sworn officers would result in an
increase of illegal activities on National Forest System lands, like
arson during fire season, timber theft, and other natural resource
crimes.
Forest and watershed restoration work would be curtailed. Timber
volume sold would be reduced to 2,379 million board feet from 2,800
million board feet proposed for FY 2013. The agency would restore 390
fewer stream miles, 2,700 fewer acres of lake habitat and improve
260,000 fewer acres of wildlife habitat.
Bureau: National Agricultural Statistics Service (NASS)
Program: Census of Agriculture and Agricultural Estimates
Sequestration Amount: $8 million
Impact: NASS is responsible for the collection and analysis of a
broad range of agricultural statistics and completion of the Census of
Agriculture. These statistics provide information critical to
decisionmaking by a wide population of stakeholders and ultimately
benefit all consumers by enhancing orderly and unbiased market
conditions for agricultural products. Sequestration would stop FY 2013
scheduled activities for the Census, causing data processing to be
placed on hold and potentially not recoverable. Data will become
incomplete and will not be statistically sound for publication. Not
having the 2012 Census will negatively affect decisions made by
farmers, businesses, and governments and ultimately will bring
volatility to food markets and impact prices consumers pay. Data
collected by the Census includes the number of farms, value of land,
market value of agricultural production, and inventory of livestock and
poultry.
NASS' annual agricultural estimates reports are critically
important to assess the current supply and demand in agricultural
commodities. These unbiased, timely reports are extremely valuable to
producers, agribusinesses, farm organizations, commodity groups,
economists, public officials, and others who use the data for
decisionmaking. The statistics disseminated by NASS support fairness in
markets ensuring buyers and sellers have access to the same objective
official statistics at the same pre-announced time. This prevents
markets from being influenced by ``inside'' information, which might
unfairly affect market prices for the gain of an individual market
participant. The efficiency of commodity markets is enhanced by the
free flow of information, which minimizes price fluctuations for U.S.
producers. Statistical measures help the competitiveness of our
nation's agricultural industry and have become increasingly important
as producers rely more on world markets for their sales. There is no
other source for the statistical surveys, estimates, and reports NASS
produces.