<DOC>
[109 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:99848.wais]
S. Hrg. 109-149
Senate Hearings
Before the Committee on Appropriations
_______________________________________________________________________
Agriculture, Rural
Development, and Related
Agencies Appropriations
Fiscal Year
2006
109th CONGRESS, FIRST SESSION
H.R. 2744
DEPARTMENT OF AGRICULTURE
NONDEPARTMENTAL WITNESSES
Agriculture, Rural Development, and Related Agencies Appropriations,
2006
(H.R. 2744)
S. Hrg. 109-149
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2006
=======================================================================
HEARINGS
before a
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
on
H.R. 2744
AN ACT MAKING APPROPRIATIONS FOR AGRICULTURE, RURAL DEVELOPMENT, FOOD
AND DRUG ADMINISTRATION, AND RELATED AGENCIES PROGRAMS FOR THE FISCAL
YEAR ENDING SEPTEMBER 30, 2006, AND FOR OTHER PURPOSES
__________
Department of Agriculture
Nondepartmental witnesses
__________
Printed for the use of the Committee on Appropriations
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__________
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COMMITTEE ON APPROPRIATIONS
THAD COCHRAN, Mississippi, Chairman
TED STEVENS, Alaska ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico PATRICK J. LEAHY, Vermont
CHRISTOPHER S. BOND, Missouri TOM HARKIN, Iowa
MITCH McCONNELL, Kentucky BARBARA A. MIKULSKI, Maryland
CONRAD BURNS, Montana HARRY REID, Nevada
RICHARD C. SHELBY, Alabama HERB KOHL, Wisconsin
JUDD GREGG, New Hampshire PATTY MURRAY, Washington
ROBERT F. BENNETT, Utah BYRON L. DORGAN, North Dakota
LARRY CRAIG, Idaho DIANNE FEINSTEIN, California
KAY BAILEY HUTCHISON, Texas RICHARD J. DURBIN, Illinois
MIKE DeWINE, Ohio TIM JOHNSON, South Dakota
SAM BROWNBACK, Kansas MARY L. LANDRIEU, Louisiana
WAYNE ALLARD, Colorado
J. Keith Kennedy, Staff Director
Terrence E. Sauvain, Minority Staff Director
------
Subcommittee on Agriculture, Rural Development, and Related Agencies
ROBERT F. BENNETT, Utah, Chairman
THAD COCHRAN, Mississippi HERB KOHL, Wisconsin
ARLEN SPECTER, Pennsylvania TOM HARKIN, Iowa
CHRISTOPHER S. BOND, Missouri BYRON L. DORGAN, North Dakota
MITCH McCONNELL, Kentucky DIANNE FEINSTEIN, California
CONRAD BURNS, Montana RICHARD J. DURBIN, Illinois
LARRY CRAIG, Idaho TIM JOHNSON, South Dakota
SAM BROWNBACK, Kansas MARY L. LANDRIEU, Louisiana
ROBERT C. BYRD, West Virginia
(ex officio)
Professional Staff
John Ziolkowski
Fitz Elder
Hunter Moorhead
Galen Fountain (Minority)
Jessica Arden Frederick (Minority)
William Simpson (Minority)
Tom Gonzales (Minority)
Administrative Support
Dianne Preece
C O N T E N T S
----------
Tuesday, April 12, 2005
Page
Department of Agriculture: Office of the Secretary............... 1
Wednesday, April 13, 2005
Department of Agriculture........................................ 81
Thursday, April 14, 2005
Department of Agriculture........................................ 217
Material Submitted by Agencies................................... 339
Nondepartmental Witnesses........................................ 409
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2006
----------
TUESDAY, APRIL 12, 2005
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:35 a.m., in room SD-124, Dirksen
Senate Office Building, Hon. Robert F. Bennett (chairman)
presiding.
Present: Senators Bennett, Cochran, Bond, Burns, Craig,
Brownback, Kohl, Harkin, Dorgan, and Johnson.
DEPARTMENT OF AGRICULTURE
Office of the Secretary
STATEMENT OF HON. MIKE JOHANNS, SECRETARY
ACCOMPANIED BY:
KEITH COLLINS, CHIEF ECONOMIST
LAWRENCE WACHS, ACTING BUDGET OFFICER
opening statement of senator robert f. bennett
Senator Bennett. Good morning, all. The subcommittee will
please come to order.
We want to welcome Secretary Johanns. This is his first
appearance before the subcommittee, and we welcome along with
him Dr. Collins and Mr. Wachs, who have been here before.
We appreciate, Mr. Secretary, your changing your schedule
to meet our accommodation of time. The full committee schedule
has forced us to move this hearing from last week, and we are
grateful that you were as flexible as you were.
The USDA request for our subcommittee is about $15.3
billion. That excludes the Forest Service, which is in the
Interior Subcommittee that Senator Burns chairs. And this
represents the third year of declining budgets for the
Department. It coincided with my assuming the chairmanship of
this subcommittee. I do hope there is not a cause-and-effect
relationship there. I have said to Senator Cochran that when he
moved from this subcommittee to Homeland Security, he took all
the money with him. But that does represent a challenge for us,
having the third year of a lower number to work with.
The budget eliminates about $470 million in research and
conservation projects, adds $177 million in new user fees, and
transfers $300 million in Public Law 480 funds currently in the
USDA budget to USAID.
The President's budget calls for an increase of $275
million in WIC, and FSA would get a $67 million increase for
staff support and information technology. Mr. Secretary, I
think we may discuss some of those numbers and whether or not
there might be some flexibility.
Now, before I turn to Senator Kohl, I would hope that all
members of the subcommittee would have any written questions
that they might have from this or the subsequent two hearings
in to the subcommittee by the close of business on April 22.
So, with that, we will hear from Senator Kohl, the ranking
member, after which I would like to open with a round of
questions following the Secretary's statement at 5 minutes
each.
Senator Kohl.
STATEMENT OF SENATOR HERB KOHL
Senator Kohl. Thank you very much, Senator Bennett. I would
like to start by saying how much I am pleased that I will be
working with you and your staff again this year. I know the
agriculture community recognizes the hard work you do every
year on their behalf.
Secretary Johanns, this is your first appearance before our
committee, and we welcome you. There is no doubt that you
stepped into a difficult job. We all understand that. And we do
admire your willingness to take on the many challenges that you
will face. So we all wish you the best of luck, and we look
forward to a good working relationship.
We would also like to welcome back Dr. Collins, with whom
we have worked over the years, and it is very good to see you
again here. And we also welcome Mr. Wachs.
Gentlemen, I regret the fact that the budget proposal again
will place serious constraints on rural America. You mentioned
a need to cut spending, but I must point out that this
subcommittee's resources have been reduced, as Senator Bennett
has said, every year for the past several years in spite of
increased demands.
There are a few highlights in this budget. For example, I
am pleased to see increases for the WIC and child nutrition
programs. I also want to comment on the President's proposal to
extend the MILC program, which is vitally necessary to protect
dairy farmers in my State and all across the country from
volatile price fluctuations. I look forward to working with you
to see that this MILC extension program is reached this year.
However, in this budget there are many programs that our
farmers, ranchers, and all of rural America depend on that have
been deeply cut, if not eliminated entirely. In rural
development, the RCAP program is cut by nearly $200 million,
including a reduction of nearly $80 million for water and waste
grants for low-income communities. Despite the President's
campaign to provide broadband services to all communities by
2007, this budget proposes to scale back the loan program by
more than $180 million and eliminate the broadband grant
program altogether.
Congressional priorities throughout the bill have been
eliminated. Research funding through ARS and CSREES has been
cut by $370 million. Funding for conservation projects
throughout the country is cut by $190 million. Although it is
not unusual for the President's budget to cut congressional
priorities, for the first time programs funded through formulas
or competitive awards are also being cut.
In addition, this budget includes deeper farm bill cuts
than we have ever seen before, and these are only a few
examples of the types of cuts found throughout the USDA budget.
It is difficult to conclude that this budget will not be
very harmful to many parts of rural America. I am afraid that
if these cuts continue, the programs will eventually be not
able to function. I remain hopeful, however, that this year is
not that time, and I intend to work hard with the chairman to
protect the important programs funded by USDA.
So we welcome you here again today, and we look forward to
your testimony.
Secretary Johanns. Thank you, sir.
Senator Bennett. All right. Unless some member of the
subcommittee has a schedule problem and wants to make an
opening statement before we go to your testimony, I would
prefer to leave the opening statements with the chairman and
the ranking member and go directly to the witness.
Senator Burns. Mr. Chairman, I have sort of a time thing.
Senator Bennett. All right. That is why I--go ahead.
STATEMENT OF SENATOR CONRAD BURNS
Senator Burns. I will just make a statement on where this
budget, I think, is right now pretty much--the way they have
allocated their money is a little wrong-headed right now. But
we will finally get there.
I know that we have not used a lot out of farm programs the
last couple of years because of market conditions. And just
like any other bureaucracy and any other department, the monies
that we allocate for programs become a ceiling rather than a
floor. We look at those dollars as a floor, and you look at
them as a ceiling, and we have got to work those things out.
No, we did not use all the farm programs the last couple of
years because of market conditions. That is not to say that
negative market conditions could not happen in this next year.
And I am not willing to see money come out of those programs,
your agencies and programs, the Farm Service Agency and the
Risk Management Agency, I don't want to see those dollars come
out. I want those dollars there in the event that we need them.
And I run on the theory that if you have got a healthy rural
America, you do not need this other rural development business.
That money will be out there. Everything else kind of takes
care of itself.
PREPARED STATEMENT
So that is my statement, and if I have to leave early, then
I will have some questions to submit to the Secretary, and I
appreciate that.
[The statement follows:]
Prepared Statement of Senator Conrad Burns
Mr. Chairman, thank you for holding this hearing today to begin the
process of examining USDA's budget for fiscal year 2006. As you well
know, this is a tough budget year, and the President's budget includes
a lot of difficult choices. I look forward to working with you to make
fiscally responsible decisions that treat our farmers and ranchers
fairly, and keep the Farm Bill intact.
I do want to briefly touch on a few issues that are of particular
concern to me. First, of course, are the proposed cuts to commodity
programs. Federal spending needs to be reduced--there is no question
about that. But cuts to commodity programs are coming at a particularly
difficult time. Montana is entering its 7th year of drought. Diesel
prices are well over $2 per gallon, and the cost of fertilizer is
through the roof. Farmers who are relying on Farm Bill programs just
can't afford to absorb any more costs. I worked with Chairman Gregg and
Chairman Chambliss on the floor to limit the impact of budget cuts as
much as possible, and I will continue to work with this Committee to
ensure our farmers and ranchers are not unfairly harmed by the need to
cut the budget.
Second, I was disturbed to see the substantial cuts proposed for
formula funding for land grant universities. Hatch Act and McIntire-
Stennis funds are highly valued by Montana's universities. The research
conducted at land grant universities contributes greatly to the
advancement of science for agriculture, forestry, and rural
development. I appreciate the intent of the changes--to bring about
performance and accountability through competitive grants. Competitive
grants have their place in the larger scheme of Federal research funds,
but they can't be the total package. A long-term investment our land
grant universities is needed to create high quality, fundamental
programs. Competitive grants too often focus on exciting, trendy,
cutting edge research, leaving less exciting topics understudied.
Formula funds allow universities to engage in long-term planning, and
to devote research dollars to ``meat-and-potatoes'' research that still
needs attention, even as the ``next best thing'' appears on the
horizon.
Finally, I am concerned about the direction of USDA's efforts to
implement a National Animal ID system. In my opinion, clear goals and
expectations are missing. Some funds for pilot projects have been
distributed, but it is unclear what those projects are expected to
achieve. It is also not clear how the Department expects to connect a
patchwork of pilot projects together into a national system. And if a
national system is put together, how does USDA intend to protect the
confidentiality of data? Will the information be held by the Federal
Government, or--as I would prefer--by the States, accessible by USDA as
needed in times of disease outbreak? I am not comfortable appropriating
funds to a project as murky as Animal ID seems to be right now, and I
hope to learn more about the Department's plans during these hearings.
With those concerns in mind, I will conclude. I look forward to
hearing testimony today, and throughout the week, on USDA's budget
proposals.
Senator Bennett. Thank you.
Senator Bond indicates he has a conflict as well. Senator
Johnson, can you wait for the round?
Senator Johnson. Absolutely.
Senator Bennett. Okay. Senator Bond.
STATEMENT OF SENATOR CHRISTOPHER S. BOND
Senator Bond. Thank you, Mr. Chairman, Senator Kohl, and I
do want to hear the Secretary's testimony, but I do have to be
someplace at 10:00.
I welcome you to the subcommittee. I think there is a point
that needs to be made about the budget. Everybody is talking
about, well, we need to cut farm programs, the price support
programs. Well, we should not be unilaterally disarming our
farmers when we are facing subsidies and competition from our
trading competitors who provide similar subsidies.
If the Trade Representative is successful in negotiating
away those subsidies from others, then I think that the
President's proposed cuts in farm payment supplements can be
removed. But I hope that we realize doing that we have to
maintain the quantitative and qualitative edge that our farmers
have. And, number one, the most important thing we can do for
farmers is continue research--research across a broad area. I
have already mentioned to you my enthusiasm for plant
biotechnology, and we welcome you at any time you want to come
to Missouri and look at that. We need to have the research and
we need to have the transportation.
And I hope that you can weigh in with your fellow Cabinet
members. This is not going to take money out of your budget,
but last week, Mr. Connor testified before the Committee on
Agriculture on his nomination to be deputy. My colleague asked
him if he would be an advocate in the administration for
modernizing our Mississippi and Illinois river locks. His
response was, I will. It is not important, Senator. It is
absolutely essential. We flat out have to get our agricultural
bulk commodities out of the Midwest, down to New Orleans to a
point of export, or we are absolutely dead in the water. So I
will be an advocate of that within the administration, I assure
you.
We heard his answer. We liked his answer. But OMB has not
heard it. We have introduced bipartisan legislation. It will be
marked up tomorrow in WERDA. The folks in the Corps of
Engineers who manage to keep the most efficient, effective
means of transporting bulk commodities going into the world
market where we enjoy a trade surplus depend upon replacing our
70-year-old locks on the Mississippi and Illinois River that
were designed to last 50 years and are leaking worse than
sieves. So that area I hope you can help us.
I thank you, Mr. Chairman, for the time.
Senator Bennett. Senator Craig, we are foregoing opening
statements except for those who have conflicts. Do you have a
conflict or can you go with the program?
Senator Craig. I will forego.
Senator Bennett. Okay. Thank you.
Senator Craig. I am just sitting here thinking: Am I
conflicted?
PREPARED STATEMENTS
No, not really. I have problems I want to discuss with the
Secretary. I will ask that my full statement be a part of the
record, Mr. Chairman. Thank you.
Senator Bennett. Without objection.
The subcommittee has received statements from Senators
Cochran, Craig, and Johnson which will be placed in the record.
[The statements follow:]
Prepared Statement of Senator Thad Cochran
Mr. Chairman, thank you for holding this hearing on the fiscal year
2006 Agriculture Appropriations programs and I welcome Secretary
Johanns to the Committee. Since Secretary Johanns' swearing in on
January 21, he has shown great leadership in moving the interests of
America's agriculture industries forward.
I am especially pleased by the recent announcement that Iraq will
purchase 60,000 tons of U.S. rice. Historically, Iraq has long been an
important market for the U.S. rice industry. This purchase is an
indication that regaining the export markets in the Persian Gulf area
is a tangible benefit of our foreign policy. I want to thank Secretary
Johanns and the USDA staff for their help in making this purchase of
U.S. rice possible.
I am also pleased to see the recent news that Taiwan will reopen
its border to U.S. beef. During Secretary Johanns's nomination hearing
before the Senate Agriculture Committee, much discussion centered on
reopening U.S. beef export markets to Asia, especially Japan. U.S.
cattle producers appreciate the continued effort you have made to
reopen these markets and I hope that other countries such as Japan will
follow Taiwan's lead and reopen their borders.
An important aspect of the Agriculture Appropriations bill is the
funding it provides for agriculture research. This research is a
critical part of ensuring U.S. producers remain the leaders in food and
fiber production.
I recently attended the opening of the Agriculture Research
Service's National Biological Control Laboratory in Stoneville,
Mississippi. This is a world class facility that will focus research in
perfecting and expanding methods for controlling insects, weeds, and
microbial pests by using beneficial control technologies. Although the
research conducted at many of the Agricultural Research Service's
facilities center on agricultural applications, the research goals of
facilities like the National Biological Control Laboratory will touch
the lives of almost every citizen. Research focused on the treatment
and the control of kudzu, fire ants, subterranean termites, and
mosquitoes will be conducted at the laboratory. It is important that we
continue to support this research.
Once again, I want to thank Secretary Johanns, for his dedication
to America's farmers and ranchers and look forward to the testimony.
______
Prepared Statement of Senator Larry Craig
Thank you for appearing before the Committee today to discuss the
U.S. Department of Agriculture's fiscal year 2006 proposed budget. In
your short time as Secretary, you have already had to tackle some very
difficult issues, and I appreciate the resolve and straightforward
approach you have given these issues.
We are in a time of restrictive spending where hard decisions must
be made. While I am a major proponent of comprehensive spending
cutbacks, I am very concerned about the disproportionate cuts to
agriculture funding in the President's fiscal year 2006 budget when
compared to other areas in the government. Recently, I joined 50 other
Senators in a letter to Budget Chairman Gregg and Senator Conrad
highlighting this issue.
As you know, Congress is close to conferencing the budget, and I am
supportive of the Senate's proposal on agriculture savings. The budget
will continue to work its way through the process, and hopefully the
outcome will bring agriculture savings to a more proportionate level
with cuts in other areas of the government.
Whatever the budget outcome, I would like to point to some
important issues I believe are important to my State of Idaho and to
our Nation's agriculture industry, food consumers, and rural
communities.
Again, thank you for your work over the first few months of your
term, and for your willingness to consider some of the items of concern
to Idaho.
______
Prepared Statement of Senator Tim Johnson
Thank you Chairman Bennett and Ranking Member Kohl, it is my
pleasure to participate in today's hearing concerning the fiscal year
2006 United States Department of Agriculture (USDA) budget, and I
appreciate the Secretary's time and attention to this important
subject.
I am deeply concerned for what I perceive to be a sorely inadequate
proposed USDA budget. Agriculture is a crucial industry in South
Dakota, with sales of agriculture commodities accounting for $3 billion
each year. By this same token, USDA programs and Federal funding are
crucial for producers when markets are challenging and prices are
depressed. The Farm Bill that was hammered out in 2002 is a contract
with rural America, with South Dakota, to ensure adequate safety nets
and increased opportunities for rural communities. Numerous members of
Congress, as well as agricultural organizations concerned with the
President's proposed budget, have pointed out that the Farm Bill has
come in at $16 billion under projected costs because of solid commodity
prices. It is astonishing to me, then, that at a time when producers
need the contract negotiated by Congress and signed into law by this
President, this Administration would propose limiting the benefits
promised to producers. We cannot, I repeat, we cannot, balance the
national deficit on the backs of our Nation's producers.
We've seen a drastic shift in population concentration in South
Dakota, which is reflected in U.S. Census Bureau and the 2002 Census of
Agriculture data. While the net population of South Dakota continues to
increase, thousands of residents in rural counties have had to relocate
to find economic opportunities. USDA programs are crucial for
maintaining status quo, and there are no substitutes for these
initiatives.
One especially troublesome proposal is the Administration's
treatment of our Federal formula funds. South Dakota State University
(SDSU), a land-grant university in Brookings, South Dakota, relies
heavily on Hatch, McIntire-Stennis, and Animal Health Federal formula
funds. SDSU is especially concerned for the impact of the President's
proposed cuts on their research centers and ability to function in an
effective manner. The President's proposed budget would cut 45 faculty
and staff at SDSU, with a 25 to 50 percent reduction in graduate
students. These cuts will result in the closure of at least one SDSU
research farm, and at least one SDSU public service laboratory. The
Administration's emphasis on competitive grants is a bad idea for our
land-grant institutions, and as a member of this subcommittee, I will
work with my colleagues to rectify this flawed proposal.
The Resource, Conservation, and Development Program (RC&Ds) are
funded at only $25 billion, a reduction from fiscal year 2005 funding
at $51 billion. RC&Ds are important options in rural communities that
foster economic activity, and use resources available to our rural
communities to accomplish this. Decreased funding means fewer
opportunities for economic growth.
While the Special Supplemental Nutrition Program for Women,
Infants, and Children (WIC) will see a proposed increase from fiscal
year 2005 funding levels of $5.2 billion to $5.5 billion for fiscal
year 2006, I am concerned that this increase will not actually provide
the dollars necessary to ensure our nutrition programs are fully
funded. We're seeing a drastically increased need for these types of
programs and a marginal increase in funding that doesn't offset that
need.
The Commodity Supplemental Food Program (CSFP) that impacts so many
of our Nation's seniors, and impacts a significant number of South
Dakotans, was funded at only $106 million in the President's proposed
budget, when nearly $146 million is needed to maintain the current
caseloads. This proposed hit would drastically impact the number of
folks, including seniors who rely on this program for vital nutrients
in addition to social contact, in South Dakota who could participate in
the program. A proactive agenda on programmatic dollars with nutrition
programs is crucial, as increased costs on the front end lead to
decreased expenses with health care--maintaining quality of life should
be a priority by this United States Congress.
Last year, $33 million was devoted to an animal identification
system via the Omnibus spending bill, and for fiscal year 2006, the
President has proposed an additional $33 million for the initiative.
Given the tremendous size and scale of this program, and the projected
costs, I fail to see how this dollar value will be significant. If USDA
is going to lead the charge, especially without a Congressional
mandate, the Department needs to ensure adequate communication with
Congress and consideration of stakeholder concerns.
I retain significant concerns for the proposal to cut marketing
loan gains, direct, and counter-cyclical programs by 5 percent across
the board. The Loan Deficiency Payment (LDP) program is an incredibly
popular program in my State. The Administration's proposal to base this
program on historical production penalizes a producer. It prevents the
producer from recouping anything after a good year.
I am encouraged that the President, and this Administration, has
proposed common-sense payment limitations. I introduced legislation
with Senators Grassley, Dorgan, and Hagel that would lower the payment
limitation to $250,000, from its current level of $360,000. Lowering
the payment limit would save millions of dollars, and would allow Farm
Bill programs to be targeted to producers who truly need these payments
to stay in the fold. In my home State of South Dakota, in 2002, 20,259
farms with subsidies received an average of $16,518--a far cry from the
hundreds of thousands of dollars some farms receive. While I realize
the differences in production input costs depending on commodity, it is
my hope that $250,000 can be seen as an equitable proposal and as a
practical solution to our funding shortfall.
Once again, I would like to thank Secretary Johanns for appearing
before the Subcommittee and Chairman Bennett and Ranking Member Kohl
for holding today's hearing on the fiscal year 2006 Agriculture Budget.
Senator Bennett. Mr. Secretary, thank you for being here,
and we turn to you for your comments.
STATEMENT OF MIKE JOHANNS
Secretary Johanns. Thank you very much, Mr. Chairman.
Mr. Chairman and distinguished members of the Committee, I
want you to know it is a great honor for me to be here the
first time as Secretary of Agriculture to discuss the fiscal
year 2006 budget. I look forward to serving as Secretary, but I
also look forward to working with this Committee to carry out
our work to serve the interests of agriculture.
As you have noted, I am joined by two very experienced
individuals: Larry Wachs, the Acting Budget Director, and Dr.
Keith Collins, our Chief Economist.
I will summarize my statement, and then I would ask that my
full written remarks be included in the record.
Senator Bennett. Without objection.
Secretary Johanns. While I am new to the Federal budget
process, I do know firsthand the challenges presented in
enacting budgets at the State level, and the local level, for
that matter. As a Governor, I had the experience of making
difficult decisions.
Mr. Chairman, I can relate. I left Nebraska in January. The
Forecasting Board met right after I left and raised the
forecast and said more revenues would be coming in. Some of my
friends asked why it took me so long to leave the State.
I know that the President and the Congress are facing
similar challenges. I am here to say that I support the
President's budget. It meets our most important priorities
while exercising the fiscal discipline that is necessary to
deal with the deficit.
Reducing the deficit is a critical part of the President's
economic plan. The long-term stability of the economy depends
on whether we act now. Farmers and ranchers know the importance
of a healthy economy. It raises income. It increases the demand
for their products.
At the same time as we reduce the deficit, we must work
hard to leverage our other tools, such as an aggressive trade
agenda and tax policy to maintain a strong farm economy.
In his February 2nd State of the Union address, the
President underscored the need to restrain spending in order to
sustain economic prosperity. The budget savings and reforms in
the budget are important components of achieving the
President's goal of cutting the budget deficit in half by 2009,
and we urge Congress to support the reforms.
The fiscal year 2006 budget includes more than 150
reductions, reforms, and terminations in nondefense,
discretionary programs government-wide. The Administration
wants to work with Congress to achieve these savings.
The President's budget, which was released on February 7,
indicates that the USDA outlays are estimated to increase from
about $72 billion in 2004 to nearly $95 billion in 2005 and
then to remain roughly at that level in 2006. The increase in
2005 was due to higher mandatory outlays in farm programs as
well as nutrition assistance programs.
For the Department's discretionary budget, the overall
budget authority request is $19.4 billion. This compares to $22
billion provided in 2005, which included $1 billion in one-time
disaster funding for wildfire management and hurricane
assistance. That is not continued in the 2006 budget. The
appropriation request pending before the Committee, which does
not include the Forest Service, is $15.3 billion.
Because the discretionary budget is very tight, we have had
to make recommendations for the reduction or termination of
some programs based upon best judgment concerning priorities in
program effectiveness, and these proposals are detailed in my
formal statement. I will offer a few specific highlights.
I have stated that my immediate top priority as Secretary
is to get American beef exports moving back into Japan. We need
to do all we can, however, to prevent a further incident of
BSE. We want to ensure that our agricultural imports and
exports are safe for consumers, not only at home but abroad as
well.
The Department has been engaged in a one-time enhanced
testing program during 2004-2005. I can tell you that we
checked just before the hearing started today, and we have
tested about 314,000 animals in this program, all negative.
The Department is also in the process of implementing a
National Animal Identification System. For 2006, the budget
proposes continued funding for the implementation of the System
and for ongoing BSE testing. Once we have evaluated the
enhanced testing program, a decision on the number of animals
needed to be tested in the future will be made.
The budget provides $7.5 million in additional
appropriations to increase our scientific understanding of the
disease and to develop the technology needed by regulatory
agencies to establish science-based policies and control
programs.
Turning to the threats to our food supply, the budget
proposes a government-wide effort of nearly $600 million for
the President's Food and Agriculture Defense Initiative. For
USDA's part, the budget proposes $317 million for program
activities and $59 million to complete construction of the
National Center for Animal Health in Ames, Iowa. Program
funding includes a $140 million increase above 2005 to
strengthen the networks for responding to food emergencies and
plant and animal diseases, conducting additional research, and
enhancing monitoring and surveillance efforts to quickly detect
pests and disease.
The President's budget proposes that the Department's farm
programs also contribute to the government-wide deficit
reduction effort. There are several proposals cited in the
budget to accomplish that objective. These proposals are
equitably spread across the agriculture production sector,
designed to work within the existing structure of the 2002 Farm
Bill, and to achieve savings between 3 and 5 percent from
baseline spending over the 10-year period. Together, our
proposals would save about $587 million in 2006 and $5.7
billion over 10 years. The majority of the savings from these
proposals would be attained through the across-the-board
reduction in program payments.
We believe the President has presented a budget that has
some reasonable suggestions for reducing the cost of farm
programs. However, we acknowledge that many of these policy
proposals, such as the reduction in the payment limit, are
quite sensitive. We recognize Congress may have other proposals
to achieve these savings, and we are willing to work with the
Congress on other cost savings recommendations.
The budget proposes that starting in 2007, the crop
insurance program also make a contribution to deficit
reduction. Net outlays for crop insurance have grown nearly 50
percent between 2001 and 2006, with the implementation of crop
insurance reforms in 2000. In addition, since 2000 we have seen
four ad hoc disaster programs covering 6 crop years; the total
cost of that was $10 billion. In this regard, the budget
includes proposals to enhance crop insurance coverage and
reduce program delivery costs so that crop insurance will
provide coverage that is sufficient to sustain most farmers in
times of loss. Our proposals together would save an estimated
$140 million annually in this area, beginning in 2007,
contributing about $1.3 billion to deficit reduction over the
10 years.
Based on the 2002 Farm Bill, this Administration has
implemented the largest conservation program in history. The
Farm Bill provided in excess of $17 billion in new conservation
funding over 10 years. The budget includes $3.8 billion in
mandatory funding to continue implementation of the
conservation programs authorized by the Farm Bill. Total
acreage covered by these programs would increase from 159
million acres to 184 million acres in 2006.
The budget also includes $814 million in discretionary
funding for ongoing conservation work that forms the foundation
of the Department's conservation partnership with farmers and
ranchers. This is a decrease of $177 million below the 2005
enacted level and reflects the elimination of Public Law 566
and 534 watershed programs, conservation operations earmarks,
and a reduction of $25 million in funding for the Resource
Conservation and Development Program. Within the total for
conservation program operations, priority will be placed on
other high-priority conservation activities, such as providing
more conservation technical assistance to livestock producers
to help them develop nutrient-management plans, and to meet the
regulatory challenges they face.
Participation levels in the Department's three major food
nutrition assistance programs--Food Stamps, WIC, and Child
Nutrition--have been growing in recent years, as you know, and
the budget needs to keep pace with the trend. WIC participation
has been growing more than 3 percent each year. Food Stamp
participation is actually up about 10 percent each year and
School Lunch participation has reached a new record level of
29.8 million children per day.
The budget contains sufficient resources to fully fund
expected participation for these programs. It also provides
contingency funding in the event that additional resources
would be needed.
The Department not only provides food assistance
domestically; it also assists 2.6 million women and children in
developing countries through preschool and school feeding
programs carried out under the McGovern-Dole International Food
for Education and Child Nutrition Program. The budget increases
funding for the McGovern-Dole program by more than 15 percent
over the 2005 enacted level.
Research to improve the quality and productivity of
America's food production and distribution system was the
central reason why USDA was founded in 1862. America has led
the world in innovation and efficiency through our research,
and that work must continue, especially if we want to maintain
our lead.
The 2006 budget places a high priority on critical research
issues facing American agriculture and strengthening the
quality of research by focusing on competitive programs. The
Administration strongly believes that research should be funded
through peer-reviewed competitive programs. Therefore, over the
next 2 years, research formula funds will be redirected on a
merit-based competitive process. As part of the change, the
2006 budget includes a $70 million increase for the National
Research Initiative and a new $75 million competitive research
grant program targeted to regional, State, and local needs.
Mr. Chairman, my full written statement includes additional
details on many areas of the USDA budget, including a total
program level of $973 million for food safety for meat and
poultry and egg products, partially funded by a proposed new
user fee; $6 billion for international activities such as trade
promotion; and $13.5 billion in rural development funding,
which includes $4.5 billion for homeownership opportunities.
In addition, USDA continues to make improvements to our
management to ensure that the Department is efficient, that it
is effective and guided by equality for all customers and
employees. As a former Governor, I am well aware of the need
for good management as well as accountability for taxpayer
funds, and I look forward to working with this committee and
the Congress to ensure the best possible stewardship of our
resources.
PREPARED STATEMENT
In conclusion, while the President is serious about
reducing the deficit so that the economy can continue to grow
over the longer term, it is still a robust budget and it
continues to fund key priorities. No Department or sector is
being singled out, and USDA is part of a team that will do its
part to produce savings that will strengthen the economy while
adopting reforms that improve our programs.
Thank you very much, Mr. Chairman. We would be happy to
answer any questions.
[The statement follows:]
Prepared Statement of Mike Johanns
Mr. Chairman and distinguished members of this Committee, it is
indeed a great honor for me to appear before you as Secretary of
Agriculture to discuss the fiscal year 2006 budget for the Department
of Agriculture (USDA).
I am joined today by Larry Wachs, our Acting Budget Officer and
Keith Collins, our Chief Economist.
This is my first appearance before this Committee. Let me say that
I am grateful to the President for nominating me for this position. I
look forward to serving as Secretary of Agriculture and working
together with this Committee to carry out our work to serve the
interests of agriculture, rural communities and consumers of food
worldwide. I am no stranger to agriculture or to public service. I grew
up on a dairy farm in Mitchell County, Iowa, and I have always had a
deep passion for agriculture. As Governor of Nebraska, I have been
actively involved in agricultural issues affecting my State.
Agriculture is a key economic driver in Nebraska since it is the
Nation's largest beef processing State and the fourth largest exporter
of agricultural products. As Governor, I led trade missions all across
the world to market our food products. I also worked aggressively on
drought issues and drought policy as well as pursuing value added
opportunities, such as ethanol production.
While I am new to the Federal budget process, I know first hand the
challenges related to presenting and enacting budgets at the State
level. As a Governor, I had the experience of having to make some
difficult decisions related to the budget since State law required the
budget to be balanced. I know the President and the Congress are facing
similar challenges. I am here to say that I support the President's
budget for the Department. It meets our most important priorities,
while exercising the kind of fiscal discipline that is absolutely
necessary to reduce the Federal deficit. Reducing the deficit is a
critical part of the President's economic plan. The long-term stability
of the economy depends on whether we have the will to act now. Farmers
and ranchers know the importance of a healthy economy, which raises
incomes and increases demand for their products. At the same time as we
reduce the deficit, we must work hard to leverage other tools, such as
our aggressive trade agenda, to maintain the strong farm economy.
It is now my responsibility to pick up where Secretary Veneman left
off and work with the Congress on the 2006 budget. I want to assure the
Committee that the Department will be fully engaged to provide whatever
assistance Congress may need as it carries out its responsibility
related to the 2006 budget.
Because of the overriding need to reduce the Federal deficit, USDA,
like every Federal agency, will share the governmentwide burden of
controlling Federal spending. There are proposals in the budget for
USDA that will produce real savings in both mandatory and discretionary
spending. With that said, the President's 2006 budget request for USDA
does meet our priorities by promoting economic opportunity and
ownership for farmers and rural residents, protecting America's
agriculture and food supply, and providing important assistance to the
needy at home and abroad. It also makes government more effective by
improving management and accountability and by eliminating, reforming,
or phasing out programs that are not cost-effective or do not show
measurable results.
The President's Budget, which was released on February 7, indicates
that USDA outlays are estimated to increase from about $72 billion in
2004 to nearly $95 billion in 2005 and then to remain roughly at that
level in 2006. The increase in 2005 was due to higher mandatory outlays
in the farm programs as well as in the nutrition assistance programs.
For the Department's discretionary budget, the overall budget authority
request is $19.4 billion. This compares to the $22 billion provided in
2005, which included $1 billion in one-time disaster funding for
wildfire management and hurricane assistance not continued in the 2006
budget. The appropriation request pending before this Committee, which
does not include the Forest Service, is $15.3 billion.
I would now like to focus on some specific program highlights.
BOVINE SPONGIFORM ENCEPHALOPATHY (BSE)
I have stated that my immediate top priority as Secretary is to get
American beef exports moving again to Japan. We also need to do all we
can do to prevent a further incident of BSE. We want to ensure that our
agricultural imports and exports are safe for consumers at home and
abroad.
For 2006, the budget proposes funding for BSE testing and
implementation of the National Animal Identification System (NAIS). The
Department has been engaged in a one-time, enhanced testing program
during 2004 and 2005. As of late March, we have tested about 295,000
animals so far, all of which have been negative. Once we have evaluated
the results of the enhanced testing program, a decision on the number
of animals needed to be tested in the future will be made. The
Department is also in the process of implementing the NAIS. As of late
March, 44 States have the ability to register livestock production
operations in the System. The goal is to have all States operational
for premises registration by the middle of 2005. In addition, the
budget provides an increase of $7.5 million in appropriations for
increasing our scientific understanding of the disease and developing
the technology needed by regulatory agencies to establish science-based
policies and control programs.
BSE is the disease that is now getting much of the attention. Of
course, there are other diseases and pests that can affect livestock
and crops that we need to guard against. We need to be constantly
vigilant to prevent the deliberate or unintentional introduction or
spread of plant and animal diseases and pests that can cause severe
economic or environmental damage. Our budget request for 2006 continues
the Department's efforts to find and control the spread of deleterious
animal and plant pests and diseases.
FOOD AND AGRICULTURE DEFENSE INITIATIVE
In order to protect American agriculture and the food supply from
intentional terrorist threats and unintentional introductions, the
budget proposes a governmentwide effort of nearly $600 million for the
President's Food and Agriculture Defense Initiative. For USDA's part,
the budget proposes $317 million for ongoing program activities and $59
million to complete construction of the National Center for Animal
Health in Ames, Iowa. Program funding for these ongoing programs
includes a $140 million increase, 79 percent above 2005, to strengthen
the networks for responding to food emergencies and plant and animal
diseases, conduct additional research and enhance monitoring and
surveillance efforts to quickly detect pest and disease threats.
FOOD SAFETY
The Nation's current food safety inspection system has demonstrated
that our food supply is the safest in the world and continues to show
improvements based on historical reductions in the incidence of
foodborne illness. The 2006 budget provides for continued protection of
the Nation's supply of meat, poultry and egg products. The budget
includes a program level of $973 million for the Food Safety and
Inspection Service. This is an increase of $36 million over 2005. The
additional funds are requested to maintain Federal support of State
inspection programs, and to provide for a more effective front-line
inspection workforce to improve our ability to detect and respond to
intentional and unintentional contamination in the food supply. The
budget requests an appropriation of $850 million and $123 million in
existing fees. Of the $850 million requested to be appropriated, the
budget assumes $139 million will be derived from new user fees.
FARM PROGRAM SPENDING
The U.S. farm economy has never been stronger. Record harvests and
a strong livestock sector have contributed to the growing strength of
the farm sector. Since 2003, producers have experienced record crops,
record cash receipts, and record net farm income. The large crops that
boosted farm income in 2003 and 2004 are now impacting domestic markets
with heavy supplies that are weakening prices and driving up farm
program costs. For 2005 and 2006, Commodity Credit Corporation (CCC)
outlays are now estimated to total $24 billion and $19 billion,
respectively, compared to only about $11 billion in 2004.
The prospect of higher budget outlays for the commodity programs
may complicate the job of reducing the Federal deficit. In this regard,
the President's budget proposes that the farm programs contribute to
the governmentwide deficit reduction effort. There are several
proposals cited in the budget to accomplish that objective. These
proposals are designed to work within the existing structure of the
2002 Farm Bill and achieve savings of between 3 and 5 percent from
baseline spending over 10 years. The proposals which are equitably
spread across the agriculture production sector include: reducing farm
program payments across the board by 5 percent, basing marketing loan
benefits on historical production, tightening payment limits, lowering
dairy program costs and reinstituting a small sugar marketing
assessment.
Last October, President Bush committed to working with Congress to
extend the Milk Income Loss Contract (MILC) program for 2 years. The
budget includes additional funding to meet this commitment and continue
this program that provides a safety net for small diary producers.
Together, these proposals would save about $587 million in 2006 and
$5.7 billion over 10 years. The majority of savings from these
proposals is obtained through the across the board reduction in program
payments. We are willing to work with the Congress in order to achieve
the savings estimated in the President's budget.
TRADE
Expanding markets for agricultural products is critical to the
long-term health and prosperity of our agricultural sector. The budget
provides $6 billion for the Department's international activities to
ensure that we can continue our important work of expanding access to
overseas markets and developing long-term trading relations with those
markets. Of particular importance, funding for the Foreign Agricultural
Service is increased so the agency is able to maintain its overseas
presence and continue to represent and advocate for U.S. agricultural
interests on a global basis.
CROP INSURANCE
The budget proposes that starting in 2007 the crop insurance
program also make a contribution to deficit reduction. Net outlays for
crop insurance will have grown nearly 50 percent between 2001 and 2006
with the implementation of crop insurance reforms in 2000. In addition,
since 2002 we have seen four ad hoc disaster programs covering 6 crop
years for a total cost of $10 billion. In this regard, the budget
includes proposals to enhance crop insurance coverage and reduce
program delivery costs so that crop insurance will provide coverage
that is sufficient to sustain most farmers in times of loss. Proposals
include a higher minimum coverage level, tying the receipt of direct
payments for program crops to the purchase of crop insurance and
changes in fees, premiums rates and delivery expenses. These proposals
together would save an estimated $140 million annually, beginning in
2007, contributing about $1.3 billion to deficit reduction over the
next 10 years.
CONSERVATION
Based on the 2002 Farm Bill, this Administration has implemented
the largest conservation program in history. The Farm Bill provided
more than $17 billion in new conservation funding over 10 years. The
budget includes $3.8 billion in mandatory funding to continue
implementation of the conservation programs as authorized in the Farm
Bill. Total acreage covered by these programs would increase from 159
million acres to 184 million acres in 2006. The Conservation Security
Program would receive an additional $72 million to extend the program
to approximately 200 additional watersheds in 2006. For the
Conservation Reserve Program, USDA's largest conservation program,
enrollment of 37.2 million acres is projected for 2006 up from the
current enrollment level of 34.7 million acres.
The budget also includes $814 million in discretionary funding for
ongoing conservation work which forms the foundation of the
Department's conservation partnership with farmers and ranchers. This
is a decrease of $177 million below the 2005 enacted level and reflects
the elimination of the Public Law 566 and Public Law 534 watershed
programs, conservation operations earmarks, and a reduction of $25
million in funding for the Resource Conservation and Development
Program. Within the total for conservation operations priority will be
placed on other high priority conservation activities, such as
providing more conservation technical assistance to livestock producers
to help them develop nutrient-management plans and to meet regulatory
challenges.
RURAL DEVELOPMENT
Rural America needs to share in the Nation's prosperity. It must
have adequate financing for housing, community infrastructure, and
rural businesses. The President's 2006 budget includes $13.5 billion in
loan, grant, and related assistance for this purpose, including $4.5
billion for providing homeownership opportunities. The 2006 budget also
includes a major initiative to deal with the changing environment for
the multi-family housing program. It provides $214 million for
protecting the rents of tenants who live in projects that are eligible
to prepay their loans and leave the program. The Administration will
also be proposing legislation later this year to provide new
authorities that would help meet the capital needs for necessary
repairs and rehabilitations of projects that remain in the program.
RESEARCH
Research to improve the quality and productivity of America's food
production and distribution system was the central reason that USDA was
created in 1862. America has led the world in innovation and efficiency
through our research, and that work continues, especially if we seek to
maintain the lead. The 2006 budget places a high priority on critical
research issues facing American agriculture and strengthening the
quality of the research by focusing on competitive programs. The
Administration strongly believes that research should be funded through
peer-reviewed competitive programs. Therefore, over the next 2 years,
research formula funds will be redirected to a merit-based competitive
process. As part of this change, the 2006 budget includes a $70 million
increase for the National Research Initiative, and a new $75 million
competitive research grant program targeted to regional, State, and
local needs. In addition, the budget supports research's key role in
previously mentioned high priority initiatives, including the
President's Food and Agriculture Defense Initiative and responding to
BSE.
FOOD ASSISTANCE
Participation levels in the Department's three major nutrition
assistance programs--Food Stamps, WIC and Child Nutrition--have been
growing in recent years and the budget needs to keep pace with that
trend. WIC participation has been growing at more than 3 percent each
year, Food Stamp participation is up about 10 percent each year and
School Lunch participation has reached a new record level of 29.8
million children per day. The budget contains sufficient resources to
fully fund expected participation for these programs and provides for
contingency funding in the event additional resources are needed.
For Food Stamps, legislation will be proposed to tie automatic
eligibility for Temporary Assistance for Needy Families (TANF)
recipients to those who receive actual cash assistance. This change
will reduce food stamp costs by $57 million in 2006 and by about $1.1
billion over 10 years. The 2006 budget will continue to exclude special
military pay when determining food stamp benefits for deployed members
of the armed services.
The WIC request provides full funding for all those estimated to be
eligible and seeking services. But, because food costs have risen
sharply for the WIC program in recent years, the Department will be
looking into ways to contain costs and continue to improve the
program's performance.
The Department not only provides food assistance domestically, it
also assists some 2.6 millions of women and children in developing
countries through preschool and school funding programs carried out
through the McGovern-Dole International Food for Education and Child
Nutrition Program. The budget increases funding for the McGovern-Dole
Program by more than 15 percent over the 2005 enacted level.
DEPARTMENT MANAGEMENT
As a former Governor, I know effective management is a critical
part of what I want to accomplish in the coming years. I am looking
forward to working with the Department's senior managers as we take up
the challenge of managing the Department of Agriculture. This
Department is a large and complex organization with a program level of
over $100 billion and a staff of over 100,000. If USDA were a private
corporation it would be ranked as one of America's largest
corporations. So there are many challenges in the management area and
our budget request takes this into account.
It is crucial that the Department be as efficient, effective and
discrimination-free as possible and that we deliver the best return on
taxpayer's investments. In recent years, the Department has made
significant progress in improving management. Some notable
accomplishments include:
--The Department's Strategic Plan is used throughout the Department
to communicate and drive our programmatic, budget and
management priorities. The Plan was used to guide the 2006
budget request.
--The Department has developed a comprehensive set of performance
goals, measures, and targets for USDA activities.
--The Department received its first-ever unqualified or ``clean''
opinion on the fiscal year 2002 financial statements and has
received a clean opinion each year since.
--USDA agencies are deploying new technologies that allow customers
to conduct business transactions over the Internet, saving both
customers and the Department time and money.
The 2006 budget builds upon the progress made so far by providing
the funding necessary to ensure there are staff and resources in place
to continue improving customer service and providing efficient program
delivery. As part of the 2006 budget, the Department would also
continue efforts to modernize its field office service centers and to
expand the use of Geographic Information Systems (GIS) to facilitate
customer service. Funds to continue renovations of our headquarters
facilities are also being requested in order to ensure that employees
and customers have a safe and modern working environment.
In summary, I want to emphasize that the President is serious about
reducing the deficit so that the economy can continue to grow over the
longer term. This budget moves us in the right direction while
continuing to meet key priorities. No Department or sector is being
singled out and USDA will do its part in producing savings that will
strengthen the economy and adopt reforms that will improve our
programs.
That concludes my statement. I look forward to working with members
and staff of the Committee and will be glad to answer questions you may
have on our budget proposals.
Senator Bennett. Thank you, Mr. Secretary. We appreciate
your comments, and again we appreciate your willingness to
serve in this highly challenging position that you have
accepted. I think you are finding it probably a little more
challenging than you may have thought the day before being
sworn in.
You said in your statement that you would be willing to
work with the Congress and consider other recommendations
besides those that were contained in the President's budget.
And that is good news for us to hear because, as you have heard
from those that did make opening comments, there may be some
different priorities or different challenges that we would want
to address. And so I just want to underscore your comment about
your flexibility, your willingness to look at changes within
this budget. Let's be clear about this. I am assuming you are
not willing to deal with the top line.
DEFICIT REDUCTION
Secretary Johanns. The top line is the goal. It is deficit
reduction. You know, it appears to me that no matter which side
of the aisle, which philosophical approach, deficit reduction
is just critical to the future of this economy. The President
has put out his suggestions, which I believe are reasonable
suggestions, for cost reductions.
We do acknowledge that the policy proposals, such as the
reduction in the farm program payments limit, are sensitive
issues. Mr. Chairman, I want to underscore to you that we will
work with Congress to try to achieve the savings that were set
out in the President's proposal.
Senator Bennett. Okay. Thank you. I appreciate that. I am
sure the other members of the subcommittee do.
CANADIAN BORDER CLOSURE
Let me raise an issue that probably has some disagreement
within the subcommittee, but for that reason I think it is
important for us to at least understand it. I would like to
discuss the situation with respect to the Canadian border.
There are some who are rejoicing that the Canadian border is
closed and hope that it stays closed forever and ever. And
there are others who are in serious difficulty. We have a
processing plant in Utah that now is operating only 3 days a
week, where prior to the closing of the Canadian border with
respect to live cattle was running a full 6-day full-time shift
and doing well.
We understand that many people are building facilities in
Canada on the assumption that the permanent effect of this will
be to destroy the market opportunities for processing plants in
the United States and that we could see a permanent shift into
Canada as the Canadians decide, well, we are not going to ship
cattle to America anymore, we will process them ourselves and
go overseas then from a Canadian base.
Can you discuss this whole situation? What does it look
like with respect to the Canadian border? I do understand that
boxed beef is being imported into the United States, but
discuss with us the question of the Canadian border and how
soon you expect that it might be opened or if you feel there is
a prospect that it could be delayed indefinitely.
Secretary Johanns. I would offer a number of observations
and, Mr. Chairman, I would start out and say I believe the
observations you have made are accurate. Canada is killing
probably about 80,000 animals a week. Every expectation is that
that number will continue to grow. This year, it probably will
surpass 100,000. They feel very, very strongly about their beef
industry, as we do. They are very proud of their industry. They
have done many of the same things that we have done in terms of
the firewalls relative to BSE. In fact, they banned the
ruminant-to-ruminant feeding on the same day we did. They are
working hard and aggressively, as we are, to implement that
ban.
The whole goal here is for the USDA to make its decisions
based upon good science, and the minimal risk rule allows for
the importation of beef products from animals under 30 months
and live animals headed to slaughter under 30 months from
minimal-risk countries including Canada. And every indication
is that that is safe. And I believe very, very strongly the
science supports that.
We were ready to proceed with the rule, as you know, in the
first week of March. A decision was made by a Federal court
judge in Montana to hold that up. That decision is now on
appeal to the Ninth Circuit Court of Appeals. I believe our
brief is due on Thursday of this week. So we are now working
our way through the legal process. Once that is resolved, given
the go-ahead, we are ready to proceed very, very quickly. But,
of course, we need to work through the legal process.
The other observation in your question that once the
industry restructures in Canada, it is not likely to change
again anytime soon. Canada's first preference would be to
resume normal trade relations with the United States, but they
also recognize that they have to diversify, which means they
are aggressively pursuing foreign markets.
It was interesting to me that Taiwan announced, as you
know, that they would resume trade with the United States in
beef recently. Egypt did also. I just noticed this morning that
Taiwan indicated that they are very close to resuming trade
with Canada. We see Canada out there in the international
marketplace. They are becoming a bigger and bigger competitor.
Then there is the other issue that you point out about the
impact on our processing plants in this country, and, again,
some will be able to hold on. They have the capital to do it.
But for some of the small processors, I worry very much that if
this market shift into Canada continues to go on, there is a
point at which they cannot hold on and then processing will
relocate, and people are out of work. All of the things that
you are experiencing in your State start to happen.
Again, I think what it comes back to is this: Base our
decisions on sound science, make sure we are paying attention
to the science, and that will lead to the right result.
CSREES BUDGET PROPOSALS
Senator Bennett. Thank you. Let's talk about the budget
proposals for CSREES and their impact on schools of agriculture
or forestry. Do you think that there is a possibility that some
of these schools will be shut down if these budget proposals
are upheld? And you have been a Governor. What about the State
legislatures and colleges? Do they have enough time to react to
the changes in funding that are being proposed?
Secretary Johanns. This is a program, as you know, where
universities have, over a period of time, built these
appropriations into their budget base. Part of the proposal
here is that when we head out to do research, we should do it
on a competitive-based approach, to try to do everything we can
to ensure that we are getting the maximum impact for the
Federal dollars that we put into this area. So the proposal is
for a competitive, peer-reviewed, juried approach to decide
where those research dollars should be allocated.
It is hard to argue with the approach if you recognize that
what we are really trying to do is take a limited resource, the
money that we can put into research, and try to obtain the best
possible research product we can get. This phases in, if I
remember correctly, over 2 years, so my hope is that
universities will adjust to this. Many are talking about the
reductions they are going to face, but the reality is that I
believe universities can compete in this process, compete for
these research dollars, and secure the funding through the
competitive juried process for science-based research.
USER FEES
Senator Bennett. You propose a number of user fees,
additional user fees. Do these come as a single package, or can
you estimate the time basis on which they will hit?
Secretary Johanns. I will ask our acting budget director to
talk about the package here, and then I will offer a thought,
if I could, Mr. Chairman.
Senator Bennett. Surely.
Mr. Wachs. Mr. Chairman, we have not yet submitted those
user fee proposals. We are working on them now, but no decision
has been made as to whether or not we will send them up as one
unique piece of proposed legislation or individual pieces.
Senator Bennett. I see. Okay. Well, get that to us as
quickly as you can because there is a history that spans
administrations and parties that says, well, if you have got a
problem, you propose some tax increases or some user fees or
something of that kind, which you know the Congress will never
enact, but at least it gives you the number.
Now, I am not accusing this administration of that
practice, but I have seen past administrations, Republicans as
well as Democrats, do that. So the more specificity you can
give us, the more credibility you will have with respect to
this issue.
Mr. Wachs. Yes, sir.
Senator Bennett. All right. Did you want to make a comment,
Mr. Secretary?
Secretary Johanns. User fees are something I have worked
with in a past life, and properly administered and implemented,
they do work and you can still have excellent programs, even
though a portion of it would be financed with user fees. For
example, for meat inspection, the proposal would allow one
approved 8 hour shift to be paid for with government funds, and
then anything beyond that would be paid for with the user fees.
Again, I have seen some very, very excellent programs.
Senator Bennett. Well, I am not opposed to user fees. I
think user fees make sense. But we would like some specifics
when we can have them. Thank you very much.
Senator Kohl.
Senator Kohl. Thank you, Mr. Chairman.
NONFAT DRY MILK
Mr. Secretary, last year, I was able to work with Secretary
Veneman to extend a very successful pilot program between USDA
and the Milwaukee Hunger Task Force. This program allows them
to turn nonfat dry milk into mozzarella cheese, which is then
distributed to local food pantries. It has been in effect for
over a year now, and we recently were able to extend the
program until September at a minimum. However, there has been
some question regarding the amount of nonfat dry milk
available. I know the USDA Web page shows the total amounts of
surplus nonfat dry milk, but it does not indicate, as you know,
the quality or age of those stocks.
So could you provide the committee with monthly reports on
the age and quality of those stocks and how they are to be
distributed, including domestic feeding programs, foreign aid,
livestock assistance, and other purposes?
Secretary Johanns. Yes, sir. This is a situation where I
just want to represent to you that I know there was a bump in
the road there, and, sir, I am sorry for that occurring. But
the answer to your questions is yes. We will work with you and
the members of the Committee to make sure that the information
regarding nonfat dry milk supplies is at your disposal. If the
information is not adequate, then we will work with you to
solve that problem and get that information at your fingertips.
So the answer to your question is very directly yes.
Senator Kohl. I appreciate that.
FARM INCOME
Mr. Secretary, in your statement you said, and I quote,
``The U.S. farm economy has never been stronger.'' However, I
have received an ERS document that headlines ``Farm households
receive most of their income off the farm.'' The article
confirms that farm household income has been at or above the
national average in recent years, but largely because most of
that income comes from off-farm jobs.
So what is the real statistic? Is real farm income going
up, or are more farmers and ranchers being forced to send out
their wives or husbands, their children, and perhaps even
themselves, to bring in the necessary income to keep their
farms afloat?
Secretary Johanns. You raise an excellent issue, and I have
got an economist here that I am sure is probably anxious to
offer a thought. But I will offer a thought based upon my
experience.
Your observation is accurate. There is just no question
that there are more spouses and sometimes both husband and
wife, out working in town.
In my experience, there are a number of reasons for that.
One of the reasons came home to me very vividly. We had opened
a call center in a community in western Nebraska, and a woman
came up to me and said, ``You know, Governor, we are so
appreciative for these jobs. And the reason why is if I work
here, I can get a health plan for my family.'' And she said,
``As you know, out on the ranch the only health plan really is
the one that we buy.''
So there are some things like that going on out in rural
America, but your observation is correct. We are seeing more
and more people working off the farm now.
In terms of the statistics, I will ask Dr. Collins to offer
a thought.
Mr. Collins. Senator Kohl, I would say that what you see in
the farm economy is really no different than what you see in
the national economy. We just had a year where the Gross
Domestic Project GDP rose 4.4 percent, but we had unemployment
of 5.5 percent. In fiscal year 2005, we had 24 million people
on food stamps.
That is not to say because those people have such financial
difficulties that we did not have a well-performing national
economy. We did. We have had a well-performing farm economy the
last 2 years. We set a record for net cash farm income in 2003,
another record in 2004, and we are predicting another record in
2005 for farm income.
A lot of that farm income, however, accrues to a small
portion of the farms in the United States. When we survey
farmers and we ask them what their principal occupation is,
over half tell us it is something other than farming. Thus, a
large proportion of the 2.2 million farms we have say they are
non-farmers and they earn the bulk of their income off the
farm. That can be looked at negatively as something they are
forced to do to make ends meet. Or it can be looked at
positively; that is, people can stay in farming as a small and
medium-size farmer because they have an off-farm job and they
can remain in farming. So you can look at that either way.
In the aggregate, farm income represents only about 10
percent of the total household income of all farm families; 90
percent is off the farm. And that is largely because of the
large number of lifestyle, retired farms and very small farms
that we have.
So it is a complicated picture, it is a mixed picture, and
you can find different stories in those statistics.
AGRICULTURAL BORDER INSPECTIONS
Senator Kohl. All right. Mr. Secretary, a few weeks ago,
GAO issued a report on the potential threat of agroterrorism.
GAO pointed out problems with USDA accreditation for
veterinarians, rapid diagnostic tools, stockpiles of ready-to-
use vaccines, and the 8-percent decline in agricultural border
inspections. I know you have seen this report.
The decline in border inspections since USDA transferred
much of this responsibility to the Department of Homeland
Security is especially troubling. Why do you think there has
been a decline in agriculture inspections at the border? And
what steps do you propose in order to improve agricultural
border security?
Secretary Johanns. There have been changes, as you point
out, and the key here, in terms of what I propose is that we
really do everything we can to work with the Department of
Homeland Security to make our efforts relative to the
protection of our food system and our food supply as absolutely
seamless as we possibly can, whether it is border inspection or
otherwise.
Many good things have happened over time. Again, having
been a Governor on 9/11 and seeing the progress that has been
made, many good things have happened especially with the
assistance that has been provided by the President and Congress
to the State and local levels. But there is always work to be
done. I think this report pointed that out to us, and in some
areas, quite honestly, it may call for us to just redouble our
efforts, working together with the Department of Homeland
Security.
Again, I would not want anything I am saying today to
downplay the positive impact that the support of Congress and
the President has had on State and local governments in terms
of our preparation for problems with terrorism, including
bioterrorism.
AVIAN INFLUENZA
Senator Kohl. Every day we read of potential threats that
could devastate our agricultural sector and endanger human
health. Avian flu in Asia is an example which, by some
accounts, could result in a really terrible pandemic. What is
USDA doing to help contain the avian flu? What other countries
are you working with on this problem? And what other agencies,
such as CDC, are you working with?
Secretary Johanns. Your question is very timely. I have
just asked for an extensive briefing on avian flu involving the
Department of Health and Human Services and USDA. There are
many predictions, some of them doomsday sort of predictions,
about the potential for avian flu. And I will tell you that at
the USDA, I am taking this very, very seriously. I want to do
everything we can to be prepared.
As you know, in our country we have a very robust response
to any problems in this area. We are going to do everything we
can to encourage our foreign trading partners to do likewise.
But let me assure you, this is absolutely on my radar screen.
It is a very important issue to me. And I am going to spend
some time and effort to make sure we are doing all we can to
deal with this issue. It is here and it is very real.
VETERINARIAN SHORTAGES
Senator Kohl. Mr. Secretary, what about veterinarians? As
you know, we have a shortage of veterinarians in rural areas,
and they provide good surveillance of animal disease and
potential agroterrorist threats. Do you have some thoughts on
how we can do a better job of providing adequate veterinarians
in our rural areas?
Secretary Johanns. There are a number of programs out there
at the State level relative to educating veterinarians. I will
give you an example of one I am very familiar with.
In the State of Nebraska, we did not have a veterinary
school. Some years ago we made an attempt to make it happen,
and it just did not come together, for a variety of reasons. So
we entered into an agreement with a veterinary school in Kansas
and basically what we did as a part of the State budget is buy
down the out-of-State tuition for the student. They liked the
program in Kansas, we liked the program in Nebraska, and we
have been able to educate veterinarians. So there are some
creative things going on out there to try to deal with this
veterinarian shortage issue.
Many States have programs that bring retired veterinarians
into service. Another thought in terms of dealing with the
whole issue is--let's say you have an outbreak where you really
need veterinarian services. States have State veterinarians
that we can work with. Many States have plans in place that
they can activate.
So the entire burden of providing veterinarian services is
not being completely shouldered at the national level. The
States are doing some very, very good, creative things, and I
think whatever we can do to help them in that effort is very,
very positive.
But your observation is, again, very real. There is a need
to maximize the veterinary resources we have out there and try
to improve that situation. But there are some programs in place
that can help do that.
MADCOW DISEASE (BSE)
Senator Kohl. Mr. Secretary, on mad cow disease, you stated
that your top priority is to get American beef moving again to
Japan, and the USDA budget for this year will fund
approximately 40,000 BSE inspections. This is a huge decrease,
as you know, from the level of inspections since BSE was
discovered in the United States.
So how does this level compare to the level of BSE
inspections USDA was performing prior to the discovery of BSE
in the United States?
Secretary Johanns. The request for BSE inspections is
double what they were in 2004. Proposed inspections increased
from 20,000 in 2004 to 40,000 in 2005 and the same number of
inspections is proposed for 2006. However, for the last year,
we have been doing an enhanced surveillance program, and as I
mentioned, we checked just before this hearing started, and we
have now tested about 314,000 animals in this enhanced
surveillance program. And, Senator, I am very happy to report
to you that everything is negative up to this point.
We are going to evaluate this program. We are doing
everything we can to make sure that we are conducting broad-
based testing in those areas of the country with increased risk
and we will evaluate that and determine whether to continue
this enhanced surveillance program.
A couple of very important points. Although I think there
is some misunderstanding about this, we have never argued that
this was a food safety approach. It really is a surveillance
approach. The whole idea of the USDA, when this was kicked off
and enhanced, was to get a better idea of what the national
herd condition was like relative to BSE.
At the time when it was kicked off, the USDA made
statements that we anticipated finding other BSE animals. But
it has not happened and we are happy about that. But it was,
again, never designed to be a food safety approach. It is an
enhanced surveillance approach.
My goal in the next couple of months is to make sure that
we have done the testing in the regions of the country that we
should be testing that we have touched the necessary bases,
that we make an evaluation of where we are with this program
and make a decision about where we go from there.
Senator, I will tell you that in that effort, I will
certainly consult with Congress and this Subcommittee and
others who have an interest in this area about their thoughts
and ideas.
Senator Kohl. If we need more inspections, how do you plan
to get them funded?
Secretary Johanns. Of course, we would have to consider use
of CCC funds or ask for an appropriation to make that happen.
BEEF EXPORTS TO JAPAN
Senator Kohl. Well, are you convinced that our present
level of testing is convincing our trading partners that we, in
fact, are serious? When are we going to get our beef back into
Japan? What do you anticipate?
Secretary Johanns. There is a whole combination of things
that are at work here. The surveillance, again, was our effort
to get an idea of what our national herd looked like. But the
removal of specific risk materials (SRMs), and allowing animals
under 30 months, all of those things fit in together in terms
of a risk analysis. And we believe very strongly that with
those approaches, you really bring the risk down to practically
nothing when it comes to BSE. And regardless of whether we are
talking to Japan or Egypt or any other country the case we are
making, is that based upon good science, when you consider all
of the things that we have done, our beef supply is safe. And
that is the case we are making to our trading partners.
When will Japan be reopened? From the very first day I
arrived, I have been pressing for a date. I do believe that the
steps are in the right direction. I am encouraged. I wish,
Senator, I could lay down a date in front of you and say that
is the date. But the Japanese have said, look, this has to go
through our science-based food safety process, and they are
working their way through that. Again, every step they seem to
take seems to be in the right direction, slowly, deliberately.
I would argue too slowly, but it does seem like we are headed
in the right direction. And we continue to pick countries off.
We are very encouraged by Egypt's announcement, and very
encouraged by Taiwan's announcement. We are still working with
South Korea.
So we are being very systematic about returning normal
trade in beef markets worldwide.
Senator Kohl. I thank you.
I thank you, Mr. Chairman.
Secretary Johanns. Thank you, sir.
Senator Bennett. We can come back for a second round.
Senator Burns.
Senator Burns. Thank you, Mr. Chairman. I want to thank the
Secretary, and I have a couple of questions here. You know, we
learned a lot about the Japanese situation--for the information
of the committee--that they have two quasi-government
organizations that have to sign off on this thing. One of them
is called Risk Assessment, the other is an Agency for Risk
Management, and they make recommendations. Then the Japanese
Government has got to operate. What does that sound like? It
sounds like the United States Government to me. And that sounds
like a bureaucracy maze that we have not been able to negotiate
yet. But I will tell you somebody that has learned to negotiate
it, and that is the Australians. So they are becoming very
efficient at that.
CROP DISASTER PAYMENTS
In last year's disaster package that you have been working
on--and I appreciate the good work you have done--our farmers
still have not gotten their checks, and here we are into the
planting season, and I would wonder if there is an explanation
for that and why that has not been accomplished. We have been
working on that thing for a year now. Do you have anybody that
wants to address that?
Secretary Johanns. Dr. Collins.
Mr. Collins. If you are referring to the crop disaster
program, the sign-up just recently began. The main reason that
takes a while to implement is because we have this cap on how
much a producer can receive. They are limited to their crop
insurance indemnities plus the crop disaster payment which
cannot exceed 95 percent of the income they would have had
otherwise.
Because of that cap, we cannot write checks until we know
how the insurance year has finished up, how it is settled out
and we get the final database from the Risk Management Agency.
That database was transmitted during the month of March, and so
we are in a position now to make payments and will be making
payments here imminently.
Senator Burns. I would suggestion posthaste.
Mr. Collins. Yes, sir.
Senator Burns. That just does not seem like a problem that
we cannot take care of, that we cannot address.
Mr. Collins. In past crop disaster bills, we did not have
that 95-percent cap.
FARM PROGRAM CUTS
Senator Burns. In your budget, Mr. Secretary, when we start
talking about cuts, I think our farm program cuts are doing
more than their share of this particular part. Foreign markets
are very important to us, and it was, as far as I am concerned,
good news when Taiwan and Egypt decided to open up. And I would
say that the only thing we have to do is just keep our head
down and don't let our shirttail hit our backside until we get
that done.
Over in the risk management area, it just seems to me that
we have got cuts there that maybe we ought to be taking a look
at in some form. I like the idea of mandatory insurance. I like
the idea that if risk management works, there would be no need
for an emergency disaster program. And that has not been the
case, that we have looked over there and said, well, we can get
some savings over there, when basically we ought to be putting
more emphasis on risk management as far as production
agriculture is concerned.
And that is where I am coming from. It is no wonder we have
got people working in town for the simple reason that the
commodities that they are selling today are at the same level
they were 50 years ago. Now, we have got to figure out some
way, gentlemen, to increase the income on the farm. User fees,
like you mentioned, Mr. Secretary, are usually paid by those
who can ill afford them. And yet they are important, the
services that are rendered, to both the consumer and the
producer. But right now the producers are picking up all of
that. And so there ought to be some on the other side, whether
it be in the processing, manufacturing, distributing, or
whatever. There should be some in that part of it, too.
So when we balance these things out, there is nothing wrong
on the farm except the price. Now, cattle producers have done
well in the last 2 years. There is no doubt about it. They have
really done well. But when you come to the grain commodities,
you know, the basic needs of what we produce in Montana and
what you used to--you were pretty close to in Nebraska--there
has been no increase. And our part of the consumer dollar
continues to shrink. And then you wonder why we have got to
work off the farm.
The other day--and cost input, fertilizer costs, we cannot
get the natural gas. We have got all these inputs that continue
to go up. The other day I bought a pick-up that is 8 years old.
And I gave as much for that pick-up, 8 years old, as I gave for
our first house that Phyllis and I bought. That is our problem,
is income. And yet in our programs that you treat as a ceiling,
we treat as a floor. And I wish we could get in the mind-set
that both of us are thinking on the same wavelength whenever we
start allocating cuts or increases.
But I think our main goal here should be we should look at
risk management. I would a lot rather support premiums on risk
management--and I think the farmer would too, because his
results, he understands what he is getting there--than trying
to pass emergency disaster legislation because that gets
tougher and tougher all the time. But had it not been for them,
then we would have lost a lot of people in our production
agriculture.
COUNTRY-OF-ORGIN LABELING
Country-of-origin labeling, we have done all the work. Why
aren't we just putting the final rule into the Federal
Register? That is a part of that decision that the judge made
in Montana with regards to the lawsuit from R-CALF. He cited
that the USDA has got the rules. How come they have not
finalized them and put them in the Federal Register?
Do you want to respond to that?
Secretary Johanns. Yes, I can offer a thought on country-
of-origin labeling. As you know from my confirmation hearing,
my support would be for a voluntary program, but the law makes
it a mandatory program. As a matter of fact, fish and shellfish
went into effect just within the last few days.
Senator Burns. We do not produce a lot of shellfish in
Montana.
Secretary Johanns. Maybe not in Montana, but the COOL
requirement is there in case you were to diversify into
shellfish or something.
The other thing I would say is that, as you know, the
deadline for country-of-origin labeling is now September of
2006 for all other covered commodities, and that was extended,
I believe, by the last appropriations process. So, the time
frame we are working toward is the beginning of fiscal year
2007.
When will the rules be published? To be very candid with
you, Senator, my guess would be that they will be published in
June of 2006.
CONSERVATION RESERVE PROGRAM
Senator Burns. But here is the problem. Some of us in this
industry are going to have to make some adjustments to be in
line with the rules. I think the earlier, the better, because
if adjustment has to be made, we should be doing that. And so I
would take a look at that because in order to get people in
compliance, why, we would have to--I have got other questions,
and I have got to go up to an energy meeting, Mr. Chairman. But
I just want to really focus on the income part of this thing. I
don't know how long you expect American agriculture to compete
with the result of the world. Are we going to put everything in
Conservation Reserve? I don't know why a farmer who wants to
farm has to compete with Government payments on CRP if he wants
to expand his operation on a cash lease basis. I think we
should look at that. There is a tremendous amount of savings
there, and especially CRP basically has been devastating to our
smaller communities. It has taken big chunks of land out of
production. And I don't want to grow to rely on foreign sources
for our foodstuffs in this country, our nutrition. I think that
is very shortsighted.
But we need some reform in those areas. Keep that little
packing house down at Spanish Fork going.
Senator Bennett. Hyrum.
Senator Burns. Was it Hyrum?
Senator Bennett. Hyrum.
Senator Burns. Which is the same area, isn't it?
Senator Bennett. I will introduce you to the geography of
the State of Utah.
Senator Burns. Well, we still have got one at Spanish Fork,
too, don't we?
Senator Bennett. Yes, I think so.
Senator Burns. And I realize--and I like the idea of we get
to add the value to the product. Everybody says we have got to
add value. I subscribe to your thinking that we have to do
that. But I think we have to look at RMA reform because I think
there we can put some predictability into our risk management.
And I would a lot rather do that than go through this business
of emergency disaster legislation.
So let's don't take any money out. Let's stay there, reform
it. And I would subscribe that we would subsidize it to a point
because that is a lot easier than going the other way. And it
also would help us on our deficit spending also.
I thank the chairman, and I have some more questions. I
thank the Secretary because his willingness and his knowledge
of agriculture is very, very good. And I certainly appreciate
that.
Secretary Johanns. It is always a pleasure, Senator. Thank
you.
Senator Bennett. Senator Dorgan.
TRADE DEFICIT
Senator Dorgan. Mr. Chairman, thank you very much.
Mr. Secretary, thank you for being here. When you were
nominated, I said that anyone who grew up on a dairy farm in
Iowa would do right well in this job, and I am glad you are
there. But I recognize you pull the wagon for the
administration and for OMB, and their policies must be your
policies. I could not, I am sure, get much out of you today
that would disagree with the policies that are coming from the
administration. And I understand all that.
But let me ask you a couple of questions and precede it by
saying about 2 hours ago it was announced that last month's
trade deficit was $61 billion--$61 billion, another record,
another chapter in a book of trade failures. Uncle Sam is being
played for Uncle Sucker all across the globe on trade policies,
and this year might be the first year in 50 years that the
agriculture trade surplus will have vanished. We are a country
that imports food, we import oil, and we export jobs. And it is
no wonder that things are going haywire.
But having said all that, I want to ask you about two trade
issues. One is the Canadian cattle issue and the other is
CAFTA.
CANADIAN CATTLE
On the Canadian cattle issue, you propose that we open the
market to live cattle despite the recent discovery of two
additional cases of BSE in Canada. And I would like to ask you
about a statement you made. You indicated that you feel the
Canadian feed issue is largely resolved, that the ban on animal
parts in animal feed has been effective.
As you know, there was a Freedom of Information Act request
in Canada reported by the Vancouver Sun that said this: ``In
the past year''--last year--``the Canadian Food Inspection
Agency found prohibited animal materials in 41 of 70 samples.''
In other words, 58 percent of the cattle feed tested. Now, that
comes from a Freedom of Information Act request from
information that was in the Canadian Food Inspection Agency,
inspections they had done last year, at least to my
understanding. How does that square with USDA's insistence that
things are going just swimmingly up in Canada with their
testing program?
Secretary Johanns. I am familiar with that article and the
assertions that they made. There was additional work done on
that. If I remember correctly, Senator, the situation there was
that they had done testing, I believe, of feed samples with a
microscope and detected protein--again, if I remember all this
correctly.
So then they started looking into that. What protein/what
are they finding? The Canadian Food Inspection Agency had a
very impossible time of verifying that the prohibited feed
material was from cattle. And, in fact, I think they found that
part of it was from mice, which, as you might expect, can
happen. I think they found one sample that was actually a human
hair. And we can get you that additional information. I am
drawing this all up from memory, and it has been some weeks
since I have looked at that article. But it caught my
attention, too. I looked at it very carefully.
The cattlemen, if you will remember, went up to Canada a
couple months ago with a team, and they wanted to take a look
at that article also. They actually filed a written report
which they distributed at their convention in San Antonio and
addressed that issue and pointed out some of the same things
that I am pointing out today.
Senator Dorgan. Which cattlemen are you describing at this
point?
Secretary Johanns. The National Cattlemen's Beef
Association.
Senator Dorgan. And are they pushing for reopening of the
border?
Secretary Johanns. It's probably not as simple to say that
because they have put forth a number of criteria that they
would like to see fulfilled for that border to be reopened. But
I am familiar with the Vancouver Sun article. There is just
more information to that article than the article itself.
Again, we would be happy to provide that.
Senator Dorgan. Mr. Chairman, what time limit are we on? I
was surprised to see the light go on here.
Senator Bennett. Since it is just you and me----
Senator Dorgan. Mr. Secretary, that is probably not good
news, is it?
Secretary Johanns. That is fine with me.
Senator Dorgan. Let me ask you, have you consulted with the
Canadian Food Inspection Agency about these samples?
Senator Bennett. I see Senator Brownback is coming back, so
keep going, but it is not----
Senator Dorgan. Is the chairman revoking that invitation?
Senator Bennett. It is not unlimited, but keep going, by
all means.
Senator Dorgan. All right. Well, let me just say this: Our
responsibility is to this country's farmers and ranchers and
beef industry. I know there are some that would like to create
a North American beef brand and so on and so forth. Our
responsibility is to our industry, and you know and I know that
the press was full of rumors last summer and fall when the
President was going to Canada that he was going to assure the
Canadians that after the election the border would be opened.
And, frankly, I don't know the details of all of that, but I
know that in spite of additional evidences of mad cow disease
in Canada, there is this movement to reopen the border. And I
frankly don't think it makes any sense. The Senate has already
expressed itself strongly on that issue, and I wanted to
express that to you.
CENTRAL AMERICAN FREE TRADE AGREEMENT
Let me ask you about CAFTA, the Central American Free Trade
Agreement. I described to you the $61 billion announcement this
morning. This is a colossal failure in policy for this country.
And it has happened under the watch of a number of parties and
Presidents here, but it is getting worse and worse. And my hope
is that the President would park the 747 and understand this is
a crisis that we all must work on.
Now, CAFTA was negotiated some long while ago. I do not
support CAFTA, with full disclosure, of course. I do not
support CAFTA, but I am anxious for it to come to the Hill. The
old phrase ``Bring it on'' should apply to this, in my
judgment. Let's have it. Let's have a debate on CAFTA on the
floor of the Senate, the sooner, the better.
So, Mr. Secretary, when can we expect CAFTA to be brought
to the floor of the Senate, in your judgment?
Secretary Johanns. I am not sure, Senator, that I have a
judgment as to when that debate is. I know we disagree on this
issue, in the spirit of full disclosure, although I am all over
the newspapers supporting CAFTA and I supported it before I
arrived here. I am working very hard on CAFTA and talking to
people and groups about it. But, quite honestly, I cannot offer
to you a date.
Senator Dorgan. Who is making that call? Who will
ultimately make the call when it is sent to Congress and when
they want to vote on it?
Secretary Johanns. The Administration, in working with the
leadership. Again, that would be my guess. My role is to do
everything I can because I believe very strongly in CAFTA. But
the timing issue is just not an issue that I have been engaged
in.
Senator Dorgan. I believe that CAFTA is a first step in
unraveling the sugar program, and I think we will have a
potentially significant impact on beet growers and so on. But
what I will do, if you don't mind, Mr. Chairman, is send some
questions in writing.
CROP PAYMENT LIMITATION
Then let me say one additional point. I support the
administration's payment limit recommendations, or at least the
suggestion there be payment limits. Senator Grassley and I have
long worked on that in the Congress. I think, however, the
recommendations on cuts in the market loan program and the
across-the-board reduction in farm program payments is a
horrible mistake and people should not confuse the two.
I did not come here and do not believe that we ought to be
supporting farm program payments of $30, $35 million over 5
years to big corporate agrofactories. If our farm program is
not to try to help keep families under a yard light out there
working on the farm, then we do not need a farm program. So I
do believe payment limits are important, and I support the
administration in their discussion of payment limits.
So, Mr. Chairman, I have more questions, but let me submit
them in writing to the Secretary and say that I hope as we go
through this process this year on appropriations that we can
overcome the recommended cuts in farm program benefits. We have
put a farm program out there. We vote on it, we debate it, and
I think that ought to represent the bridge across price valleys
and difficult problems that family farmers face. Farmers ought
to expect that the Government keeps its word on these issues.
Senator Bennett. Thank you.
Senator Brownback.
Senator Brownback. Thank you, Mr. Chairman.
Welcome, Mr. Secretary.
Secretary Johanns. Thank you, Senator.
Senator Brownback. I hope both of our football teams do
better this next year.
Secretary Johanns. Yes.
Senator Brownback. That will be helpful out in the Midwest
and to our part of the country.
BEEF EXPORTS TO JAPAN
I have got a couple things I want to discuss with you. One
is I am delighted to see your focus on Japan and opening up
that beef market. Of course, that is key to much of us in the
Midwest. You follow in the steps of another great Nebraskan,
Clayton Yeutter, who I worked with over a decade ago to first
open those markets. They were tough then because the Japanese
threw up every barrier that they could think of, and then a few
on top of it to stop us even--I remember one point in time some
Japanese officials saying, well, the Japanese digestive system
did not digest well U.S.-produced beef. It got to that absurd
level of argument that they put forward.
Do we need to do more up here? Do we need to pass laws
going at Japan until they will open this market up? Some people
are starting to propose that we do something like that to try
to get Japan to open their beef market back up.
Secretary Johanns. Well, Senator, I would answer this way:
Every opportunity I have had in my meetings with the Japanese
and I know every opportunity that Senators and House Members
have had, we have all made the point that patience is just
simply running very, very slim on Capitol Hill.
I met with the Ambassador of Japan within the first few
days of coming to the job and just said, look, if you watched
my confirmation hearing, it became an airing of frustration
over this issue, and I just worry that there is a point at
which the frustration boils over.
And then when the letter was signed by the 20 Senators--and
I am sorry, I don't remember if you signed that, but I pointed
that out to him and said, again, you have very, very thoughtful
people who are signing the letter in frustration.
So my belief is that the message has been delivered very
loud and clear. I really appreciate the President's leadership
here. He has talked to the Prime Minister, as you know. That
was reported. Secretary Rice has raised the issue. Others
across the Government have raised the issue. It does appear
that the steps are in the right direction. A step forward that
is very, very small. But it is in the right direction.
Senator Brownback. I hope we can move. Recently, when a
Congressman from Kansas proposed legislation regarding the
Japanese on this issue, it garnered a fair amount of support,
and I think things like that may start to move forward as we
try to find vehicles, the blunt instrument approach that
Congress typically uses to try to address something that should
not be continuing at this point in time.
Secretary Johanns. Right.
RAISING FARM INCOME
Senator Brownback. I do want to follow up on what Senator
Burns had mentioned on a couple of topics about we just need
more farm income. I was raised on a farm. My family still
farms. My brother farms with my dad, and you do see those
commodity prices, particularly on grains--he says they have not
improved in 50 years. They have actually gone down
substantially. If you look at any sort of time value of money
and inflation, they have gone substantially down. And people
can say, well, there is great efficiencies and size and scale
in your global marketplace and all those things. They have some
applicability and accuracy. Still, you travel throughout rural
America, and you see this in Nebraska, I see this: The
farmhouses are deteriorating; the equipment may be in pretty
good shape, but there has not been much net income. And much of
the net income on farms now is off-farm income. A spouse works
to provide the living expenses. You are hopeful that you can
hit that 1 good year in 5 that you can make some decent return.
VALUE-ADDED AGRICULTURE
I want to point to two areas, though, where it seems like
we have had some reasonable opportunities for growth and hope
of increasing farm income. One has been that new uses fee where
we move outside of the food and fiber field, doing very nicely
now in ethanol, a lot of expansions of plants throughout the
Midwest. I know you have seen it in Nebraska. I think we have
got a similar opportunity in soy diesel, good environmental
qualities, renewable sources of it. And we have put a push on
this at different times in different waves in U.S. agriculture.
I would just suggest to you that now would be another good
time to give another shoulder behind the wheel push to this
conceptualized area and not just in the ones we have been in,
the ethanol, the biodiesel, but also things like utensils,
eating utensils out of corn or soybeans, a whole array of them.
Once, about 12 years ago, I hosted a new uses expo in St.
Louis along with USDA and a whole bunch of other groups--
Department of Energy. I think we had 150 different products
there, from blue rocks made out of starch--I was hitting
Senator Grassley up about this the other day, and he said, yes,
they have got a shirt in a museum at Iowa State made out of
soybeans. He said it was fine as a shirt, but when it got wet,
it started smelling a little bit. That is why it is in the
museum.
Now, I am hopeful we can get through the odor issues with
that, but my point in saying that is as a new Secretary coming
in, coming in from the Midwest, you know these issues. People
want hope. They want a chance to think they have got a chance
to make some more income.
What about resurrecting that and hosting a big new uses
expo somewhere in the Midwest? I would offer Kansas City, but
where you really try to bring those entrepreneurs, those
innovators that are out there together, showcasing these new
sets of products, and put another lean-to into that push where
we really have had some modicum of success at other times. I
would love to see us put that in your budget or you get behind
it and say, yes, we need to do it to showcase--or maybe you do
a couple of them at different places around the country to
showcase those products.
I don't know if you have had a chance to think about those
areas, that is, an expo or even putting together a catalogue of
these products so that people can see, well, gosh, you can make
these plates out of wheat starch, you can do this disposable
utensil, you can make this table out of wheat straw, and here
is a nice-looking one. I hope you get a chance to look at that.
Secretary Johanns. I will take a look at it. Again, your
observations are correct. There is so much going on in value-
added agriculture, which is really what you are talking about.
It is taking that basic agricultural product and enhancing its
value to a broader marketplace. A perfect example of that,
again, happens to be in the State I came from. Cargill-Dow
joined in an effort in Blair, Nebraska, to literally create
polymers. I have a tie that came from that initiative, and the
potential exists to enter into the marketplace where plastics
are and provide a product produced from corn, biodiesel and
ethanol that you referenced. The success story in ethanol has
been truly remarkable, and I believe that there is going to be
that kind of growth in the biodiesel area.
There may be an opportunity for us as we think about how to
boost this effort to do something like you have suggested. I
wouldn't necessarily suggest that it is budget issues so much
as bringing the industries together.
Senator Brownback. That is what it is.
Secretary Johanns. Yes, I think they would be very
supportive.
Senator Brownback. And it is not just even industries. It
is those entrepreneurs. A lot of them are just an ``in a
garage'' guy that has come up with a different sort of idea,
and they create jobs and opportunities in local markets within
much of the rural areas, which we desperately need.
Secretary Johanns. It is a very exciting area because when
those jobs are created, they tend to be in the rural areas.
Ethanol plants are not built in the middle of Kansas City or
Omaha. They are built in rural areas near small towns, and the
impact they have is very large.
Senator Brownback. Biomass, electric generation I think is
another one that looks like to me where you could go on large-
scale areas, and then you also get a two-fer. You are dealing
with the carbon issue along with an agricultural job creation
and market issue.
I would be excited to work with you on something like that
because I think to me it really just lends an opportunity to
hope and optimism of we can do this, and you can be the chief
and will be the chief cheerleader for that by driving around
100 percent biodiesel-fueled truck that is running on soy. We
even had them early on, on animal fats. That had a real sweet
smell when the engine burned, going through like French fries
or you are going by a McDonald's. But those could be real
helpful and using those utensils, eating utensils at USDA that
are made out of corn or soybeans.
CARBON SEQUESTRATION
The second one I want to go into is the carbon area because
I do think we have got another opportunity for substantial
economic growth on carbon farming, carbon sequestration. We
have got a lot of research going on at Kansas State--I think
Nebraska has got some of this as well--to measure the carbon
fixing of a ton of carbon, over what period of time, so you
could measure and trade.
As I look down the road, I think of this as being one of
the great possibilities. The numbers I have seen, we have
removed about half of the carbon from the soil that was there
when the tall grass prairie was throughout much of the center
of the country. But that means there is the opportunity to
insert half of the carbon back in it. It will hold it. It will
clearly hold it. But we have got to build or put into place
trading systems, measurements. I think early on we need
measurements and the rudimentary trading systems to start
initiation. And there it looks like to me you are looking at a
massive marketplace, in the billions if not even greater than
that, for down the road when a number of countries are
wrestling with the CO<INF>2</INF> emissions issues.
I really hope you can lean in aggressively on that one
because I don't know of a bigger area that you could look at
for market potential. And if we even get a decent slice of it,
it is going to be a lot of income to rural America, and it has
got the added benefit of generally always being good
conservation practices, soil-enhancing practices, soil
retention practices that we need in the farm areas, anyway.
Secretary Johanns. I agree.
Senator Brownback. Are you working on carbon?
Secretary Johanns. Yes, we are. Maybe I can ask Keith to
give a more specific update. It is an area that we had worked
in, again before I came here, at the State level, but, Keith,
go ahead.
Mr. Collins. Senator, we know of your interest in this
issue and the legislation you have proposed. Our biggest
project right now is working with the Department of Energy
under what is called their 1605(b) Greenhouse Gas Registry
Program. As you may know, they just published their proposal
for accounting rules and guidelines for greenhouse gas
mitigation projects. The Department of Agriculture drafted the
agriculture and forestry sections of that.
The proposal is in a comment period now. We are holding a
public meeting on May 5 in the Washington, DC area, over in
Riverdale, to discuss just what you are talking about,
measuring the unit of trade. You don't get a trading system
going until you have a well-defined unit with standards that
people would accept, and that is what is in this proposal. It
establishes all the accounting rules and guidelines for
agricultural projects and forestry projects.
We think that when we finalize the 1605(b) registry
program, which will be kept by the Department of Energy, any
farmer or forester could voluntarily report their greenhouse
gas offsets to that system. We think that will create a
measurable unit which will create an opportunity for trading.
We are not calling it a transferable credit, but conceivably it
could function in that form. We are calling it a registered
reduction, and that will be on file with the Department of
Energy. And we think that can help kick start the kinds of
markets that you are talking about.
FOOD AID PROGRAMS
Senator Brownback. One final brief comment, Mr. Chairman,
if I could, and that is just on the food aid area, and that is
one I--we have been increasing, the chairman has been very
interested in what we can do on food aid, school lunch programs
here and overseas. I have done a lot of work overseas. That is
just a critical component, but particularly we are seeing lots
of needs in countries that just have poverty at a level that
people just do not have food at all, and this has been a long
historical effort, and I look forward to continue to working
with you on that because we had the capacity to do it. It is
always a difficulty getting the food aid there and getting it
in decent conditions, and the budgetary constraints, but I
really hope we can continue to do that. It is the right thing
to do, to help those that are in such deep need.
Thank you, Mr. Chairman.
Senator Bennett. Thank you.
Senator Harkin.
Senator Harkin. Thank you very much, Mr. Chairman. I
apologize to you and Mr. Secretary for being late to the
hearing.
REDUCING THE FEDERAL DEFICIT
I just have a couple of questions. I do not want to hold
people up too much longer, but, Mr. Secretary, reading over
your statement, you said because of the overriding need to
reduce the Federal deficit, USDA, like every Federal agency,
will share the Government-wide burden of controlling Federal
spending.
Well, that is all well and good, but, Mr. Secretary, I hope
that you will use your voice and your position in cabinet
meetings and in meetings with OMB, to point out that when we
passed the last farm bill, we were given a budget with the
concurrence of this administration. We stayed within that
budget for 10 years in passing that farm bill. And in the last
two, almost 3 years now, coming up 3 years, we have spent about
$15 billion less than what we could have, what we were allowed
to spend. We could have spent it. It was in the budget for us
to spend, but we saved that $15 billion for the taxpayers of
this country. We reduced the deficit by $15 billion. Those
people at OMB got to know that, and the people that sit around
that cabinet table up there with you and all those other
departments, they have to know that too.
And I am just asking you as a friend, as a neighbor, fellow
former Iowan, get in there and punch them out a little bit and
let them know how much money we have saved. We do not get
credit for it. This committee, Senator Bennett ought to get
some credit for it. We ought to get some credit for what we
have done to fashion a farm bill that saved $15 billion under
what we were allowed.
So to say that we are going to be involved in controlling
Federal spending, that is all well and good, but we have
already done a big part of it in agriculture, and we ought to
be proud of that, and we ought not to say, well, no one else is
doing it, but now we are going to take more cuts and more hits.
That is just preface to a couple of things that I want to talk
to you about, and I hope you will continue to point that out to
those people down there.
NATIONAL ANIMAL DISEASE CENTER
Mr. Secretary, three brief things, Animal Disease Lab,
Ames, Iowa. The National Animal Disease facilities is of
critical importance for animal health, human health as well.
The Congress, and this Administration and the previous
Administration made the decision to upgrade these facilities.
The work is under way. $404 million has already been
appropriated for the project. The President's budget proposal
calls for an additional $58.8 million, indicating that this
amount of funds will complete the project. The remaining amount
is dedicated to completing the so-called low-containment large
animal facilities.
There are strong indications that this figure of $58.8
million proposed in the budget is not adequate to complete
these animal holding facilities properly.
I understand that because of the shortage of funds the
Department has developed several options for asking for bids to
construct only a part of the major lab building in this fiscal
year. Mr. Secretary, I have had, I personally have had an
extremely hard time getting to the bottom of this issue of what
the correct figure is for the amount of funds needed to
complete the modernization of these facilities. The renovation
has to be done right, but my staff--and I have asked them to
get me this--they have been unable to get documents and
information that USDA has about what is really needed.
So, Mr. Secretary, I am asking would you furnish to this
subcommittee and to me--I am part of the subcommittee--without
a lot of delay because these decisions have to be made in our
appropriations process: (1) A copy of June 2003 program of
requirements that laid out the need requirements for the Ames
Animal Disease facilities; (2) a copy of the full report of the
International Review Team in January 2001 that laid out their
views of the adequacies of these facilities; and (3) exactly
how will the current plans for low-containment holding
facilities be short of the June 2003 program requirements?
And lastly, Mr. Secretary, will you inform this
subcommittee, prior to the conference on the bill: (1) if the
bids received for constructing the main laboratory building
show that costs will exceed cost estimates used to this point;
and (2) if the Department is delaying any part of the bidding
for constructing the main laboratory building because of cost
concerns and budget concerns?
That is a lot to throw at you. I will put it in writing.
Secretary Johanns. Okay.
Senator Harkin. That is a lot to throw at you, but I think
you understand what I am saying. I am having a hard time
finding out--on the one hand I am told that $58.8 million is
not adequate to complete it, on the other hand we are told that
it is, and I am just having a hard time figuring this thing out
and trying to get to the bottom of it. That is all.
Secretary Johanns. We will provide that information. We
will work with your staff.
[The information follows:]
National Animal Disease Center, Ames, Iowa
The President's budget proposes $58.8 million to complete the
National Animal Disease Center in Ames, Iowa. Funding at this level
will not compromise the original program requirements as outlined in
the June, 2003 Program of Requirements (POR). A POR is an internal
planning document that provides the costs of various options and
alternatives which the Agricultural Research Service (ARS) uses to
assist in defining research program needs and related technical
requirements. Developing a POR is an iterative process; an Architect-
Engineer (AE) under contract to ARS conducts numerous interviews with a
location's scientific and support staff. These inputs are gathered
without regard to budget constraints, and the document serves as just
one of several factors management considers in making final decisions
on project scope, budget, and other project-related policy decisions.
The June 2003 POR represents projections and estimates our
professionals and support staff developed through discussions with the
AE, who is under contract to ARS. It addresses only the Low Containment
Large Animal Facility (LCLAF), which is one of five components that
cover the overall plan to modernize the animal health facilities
located at Ames, Iowa. Rather than serving as the final design plan,
the POR functions as an interim step in developing the overall scope of
the project. The June 2003 POR was one of several inputs used by agency
management in making final decisions on the scope and sequencing of the
project components within the total project budget. A copy of the POR
was sent to the Subcommittee staff.
The management decision made was to meet the LCLAF program
requirements of the POR by a combination of new construction and
renovation of buildings and infrastructure. The LCLAF offered the best
opportunity to utilize existing facilities to insure the overall
modernization budget is maintained. The modernization effort will
construct new animal facilities to meet programmatic needs where the
existing facilities are not functionally adequate (i.e. group housing
of large animals) and will make use of the existing facilities that are
functionally adequate for the remaining programs. Of the planned
132,000 sq. ft., 42,000 sq. ft. will be built new. Existing LCLAF
facilities (buildings 3 and 4) will be retained providing an additional
88,500 sq. ft. of space. Together, the new and existing space will
accommodate the program requirements originally envisioned. New
infrastructure will be provided to ensure adequate and reliable utility
space.
The Department will keep the subcommittee informed if any bidding
delays are required or if bids received exceed available funds. The
Construction Manager (CM) at Risk is the project delivery system ARS is
using for the Ames Modernization Project. This approach was selected at
the outset because it accelerated the schedule by allowing construction
to start before the total design of a particular project component is
100 percent complete. To minimize the likelihood of excessive bids the
construction contractor is involved early in the design process and
provides verification of cost estimates during design. While the total
design may be at the 30 percent stage, a discrete portion of the
design, i.e. the site development or foundation, is 100 percent at the
time of the award of that package. In essence the construction of a
particular project component is being phased while design is underway.
ARS expects to open bids on the first of several construction
packages for the Laboratory/Office complex in the August-September,
2005 time frame. The CM will let bids to subcontractors at that time.
The package(s) will consist of site preparation, utilities, foundation,
etc. or some combination of activities based on market prices. ARS will
approve the final award. This process is similar to the design/
construction of the BSL3 Ag Containment facility now already underway.
A copy of the full report of the International Review Team is
provided for the record.
Canadian Science Centre for Human and Animal Health,
Winnipeg, Manitoba, January 22, 2001.
Secretary Ann Veneman,
Secretary, Department of Agriculture,
Washington, DC.
Dear Secretary Veneman: At the invitation of Dr. Floyd Horn,
Administrator of the Agricultural Research Service of your department,
we as an International Review Team, examined the Master Plan for the
consolidation and modernization of facilities for the National Animal
Disease Center (NADC), the National Veterinary Services Laboratory
(NVSL), and the Center for Veterinary Biologics (CVB) at Ames, Iowa.
During our visit to the site on January 9-10, 2001, we had
important meetings with key personnel of the NADC, NVSL, CVB and the
Iowa State University. As well, we were able to visit representative
U.S. Department of Agriculture laboratory and animal facilities there.
Enclosed, we provide you with our comments and observations for the
future needs and scope of this project which we trust will prove useful
to you in your deliberation.
We would like to thank Dr. Horn for his invitation and all those
who were involved in the visit. We would also like to note how
impressed we were by the enthusiasm and collegiality of the Ames animal
health community.
You will see from this report that we were very supportive of this
challenging and important project which clearly has national and
international implications for the future security of your livestock
industries.
Sincerely,
Dr. Norman G. Willis,
Executive Director.
______
ARS-APHIS Master Plan for Facility Consolidation and Modernization
International Review Team Report
Based on our review on January 9-10, 2001, we fully endorse the
principle of consolidating the Agricultural Research Service (ARS) and
Animal and Plant Health Inspection Service (APHIS) program elements and
the modernization of the laboratory facilities at Ames, Iowa. We
consider that the consolidation of the National Animal Disease Center,
the National Veterinary Services Laboratories and the Center for
Veterinary Biologics would bring many operational advantages and be
entirely appropriate. This would establish a credible national
reference laboratory status that we believe is essential for national
and international recognition and acceptance.
It is our opinion that this consolidation would further act as a
catalyst to focus collaboration with the scientific expertise of
academia and to tap into the huge national scientific resource. In
addition the plan would emphasize the essential linkage among research,
diagnosis and regulation required for the support of animal disease
control programs, agricultural industry productivity and agricultural
trade.
Globally, new diseases are emerging which require new approaches
and new technology. New and more demanding standards for international
trade are being developed in international organizations. To address
the changing and unpredictable animal disease and food safety needs of
the future, a highly effective physical facility and a critical core of
scientists are mandatory. Quality science needs quality facilities and
quality staff, who are only attracted to quality facilities.
With the globalization of trade heralded through the Sanitary and
Phytosanitary Agreement of the World Trade Organization and its
reference to a science base, agricultural program and animal disease
needs have become more global. The nature and scope of the relevant
science is now ``big science'' demanding state-of-the-art expensive
facilities in which to undertake new biotechnology and veterinary
biologics for disease detection, surveillance and control. Harmonized
international standards dictate requirements. Modern, fully equipped
facilities to accommodate and respond to these needs, are essential. To
be flexible to changing yet unknown future demands, facilities must be
designed to be adaptable.
Current facilities at Ames were built at a time when science,
standards and equipment requirements were more limited. They are now
inadequate because they do not meet international standards for safety
of staff and the environment, for animal welfare and for quality
assurance. The need to replace them is urgent and of such a nature that
we feel it should be considered a national emergency.
SCOPE
General
Consolidation of the three Centers is appropriate and will enhance
synergy acid collaboration among these Federal responsibilities and, in
the process, significantly improve their functions.
Focusing in this one site will further facilitate collaboration
with the scientific expertise existing in universities throughout the
Nation. This will serve to expand and coordinate the inclusion of
people in science for USDA's access, and to geographically focus the
scientific knowledge and inquiry.
It is appropriate and necessary to build modern laboratory
facilities capable of supporting federally mandated scientific work.
This includes developing new knowledge and technology, conducting
trade-related diagnostics and reference testing, and licensing
regulated biologics with the required laboratory support.
National Leadership
There is a need for this facility to serve as a national reference,
a premier laboratory that is recognized internationally as a Center of
excellence. This recognition will be incorporated into the evaluation
of veterinary services, a component in risk assessment which is used by
all trading countries to make trade decisions. This recognition will
unequivocally work to the U.S. advantage.
The veterinary biologics consolidation will also display a
leadership role in establishing biologics standards. Not only will this
promote the availability of safe and effective vaccines, but it will
also assure the industry that extraneous disease agents are not
inadvertently introduced thus threatening the national livestock herds
and flocks.
Location
We support the development of this project in Ames, Iowa based on
our observation that there already exists a strong and enthusiastic
cooperation and synergy among the three Centers and with the Iowa State
University. The Ames site would also provide the opportunity of mutual
sharing, and hence not duplicating very expensive equipment and
facilities in biotechnology Centers. This is an advantage for the USDA.
The nature of the scientific activities conducted in the Centers
can often be viewed with hostility by lay and business communities. It
is, therefore, of great value that the Ames community already accepts,
understands and values the functions of these Centers, a trust and
support which would have to be re-established in a different location.
The current human resource of ARS and APHIS personnel at Ames has
been built up over many years. It is our opinion and experience that
moving such facilities to a different location would result in a
substantial loss or dispersion of scientific staff which would be
extremely difficult to re-establish and, in the process, would set the
program back, perhaps for years. A strong infrastructure exists upon
which to further develop the physical facility. Development of such an
infrastructure would be costly at another site.
The best fulfillment of the benefits of this consolidation would be
achieved in the present Ames location.
NEED
Laboratories
When viewing the presently occupied laboratory facilities, the poor
standard and inadequacy of these facilities, particularly the off site
facilities, was quite unexpected. With our perception of the importance
of such programs as tuberculosis, brucellosis and prion diseases (such
as bovine spongiform encephatopathy/mad cow disease, scrapie, chronic
wasting disease), we found it ironic that the United States national
reference laboratories are currently housed in a converted animal
facility and other converted accommodation. It is our belief that this
represents a severe threat to the United States ability to control
animal disease. We question whether these facilities could be certified
to internationally accepted standards.
Animal Facilities
We consider that all animal facilities must meet established animal
care standards: In the present facilities, we do not believe these are
being met. For the future a failure to meet the standards presents a
risk of having to restrict further research studies.
We also observe that these facilities may place staff who work with
large animals, especially wildlife, at a significant personal safety
risk.
There is evidence that the poor State of the facilities is
seriously restricting progress in several key areas and that
inordinately long periods are required to produce research results. We
suggest that this will continue to have, a direct negative impact on
agricultural productivity, allowing animal disease to have a greater
than necessary impact.
Certification
With the globalization of trade, reference is made by all trading
countries to the international standards and guidelines for trade
incorporated in the OIE International Animal Health Code. Included in
the guidelines for risk assessment is the evaluation of an exporting
country's veterinary services and facilities. We consider that there
will soon be a requirement to achieve International Standards
Organization (ISO) laboratory certification as a standard. Completion
of the Master Plan would provide the Ames facility with the opportunity
to be the national reference laboratory with international recognition
and acceptance, and to meet these standards. We endorse this
opportunity. The result would be a direct positive influence on the
facilitation of agricultural trade.
Research
The Master Plan in our view, provides the capability that would
allow for investment in much needed longer team research. Such studies
are unlikely to be achieved in other-areas due to a lack of appropriate
facilities with the required biosecurity.
The focusing of scientific expertise at this one site through
collaboration provides the critical mass of scientists necessary to
stimulate the creativity required to address and solve future, as yet
unidentified problems.
CONSEQUENCES
We would like to take this opportunity, if you forgive our
directness, to stress risks and vulnerabilities which we believe are
facing you.
To our mind, status quo is not an acceptable option.
Laboratories presently doing essential program testing, would not
achieve ISO accreditation. This would threaten the acceptance of the
results produced which could prove critical to the livestock industry
and to the acceptance of the safety of food.
The current animal facilities are placing staff at unacceptable
personal risks and are causing significant delays in producing research
results urgently needed by the livestock industry.
POINTS FOR CONSIDERATION
We would like to bring to your attention that, in addition to the
need to provide the capital investment to build the proposed new
facilities, funding provisions should be considered to secure adequate
operating and preventive maintenance as well as the need to equip the
new facility. Such a comprehensive vision of this project would ensure
that full advantage is taken of the capabilities of the facility and
that it is available for the future.
Since future demands cannot be accurately predicted, a key feature
of facility design should be adaptability permitting flexible use in
the future.
CONCLUSION
As a result of our review, we fully endorse the scope of the
project and the urgent need to address the deficiencies and limitations
of the current facilities. We also consider the location of the project
in Ames, Iowa to be appropriate and advantageous. We feel that the
delivery of this project would address future agricultural industry and
food safety needs, and would yield positive international recognition,
contributing significantly to the success of USA trade.
We strongly believe that addressing these concerns is urgent. Ten
years is too long for correction and we suggest that this question be
addressed on an emergency basis.
Senator Harkin. I appreciate that.
Secretary Johanns. Senator, I would be happy to sit down
personally too once we assemble that and try to go through it
so we can both get a good understanding where we are at.
Senator Harkin. Okay. And I will get this to you in
writing, but I wanted it on the record.
CONSERVATION SECURITY PROGRAM SIGN-UP
Secondly, participation in the first CSP sign-up--somehow
you probably knew I was going to ask this question about CSP--
was much lower than the NRCS expected, but they still spent $40
million in 18 watersheds. This year, with expenditures capped
at $202 million for contracts in 220 watersheds, there will be
much less money per watershed for new contracts. The
President's budget proposes capping CSP at $274 million next
year. Again, all of these numbers are far less than the farm
bill provides for this program.
My questions are: how much of the $274 million for next
year, for 2006, would be available for new contracts, and how
much of it would go to making payments on contracts already
signed in 2004 and 2005?
Secretary Johanns. We can provide that, Senator.
Senator Harkin. I appreciate that. I knew you would not
know that, but if you could provide that, I would appreciate
that.
[The information follows:]
CSP Contracts
NRCS estimates show that for fiscal year 2006, approximately $110
million would be available for new contracts and $123.2 million would
be used for prior year contracts. The balance of $41.4 million would be
used for technical assistance by NRCS to deliver the program.
Senator Harkin. Secondly, how many new contracts will be
signed in 2005, this year, and how many fewer contracts will be
signed in 2006 with only $274 million? In other words, what do
you expect to sign this year, what would you expect to sign
next year under the budget that we have been handed.
Secretary Johanns. Okay.
Senator Harkin. This is my own statement, that it seems to
me that if this budget prevails then we will see a substantial
decline in the number of new enrollments for CSP, but that is
my supposition on that.
Secretary Johanns. We will get that information to you.
[The information follows:]
CSP Contracts
NRCS is estimating that more than 13,000 contracts will be signed
in fiscal year 2005, and approximately 9,400 contracts will be signed
in fiscal year 2006.
PACKER CONCENTRATION
Senator Harkin. I appreciate that. Last one, packers and
stockyards. The Packers and Stockyards Act was written to give
USDA the power to go after unfair and anticompetitive market
practices that were not being reached by previously enacted
laws such as Sherman and Clayton Act. It is a very powerful
statute. Concentration in the livestock and poultry industry
continues to increase at an alarming rate.
Independent producers repeatedly tell me that they are
being driven out of business because of unfair and
anticompetitive bidding and contracting practices of packers,
large packers and processors. They say they are just at the
mercy of a few huge firms. Some of these independent producers
have asked me why in the past 4 years, why in the past 4 years,
USDA has not filed even one administrative complaint against
any firm for anticompetitive activity. They ask why, despite
tremendous changes in the industry, USDA has not in the past 4
years proposed any new rules of modifications to rules to
protect fair competition under the Packers and Stockyards Act.
Whenever I or my staff have asked about this inactivity
either in hearings like this or by written correspondence, the
Department always says it is studying the matter and referring
it to its meat marketing study. USDA got $4.5 million in the
fiscal 2003 appropriations bill, but it took USDA over a year
and a half just to decide who to contract with to conduct the
study. That was $4.5 million for that study. It will be nearly
2 more years before the study is finished, and even then you
have no idea if its analysis and conclusions will be worth
anything.
I guess what I would ask is, are independent producers
justified in believing that the Department will continue to do
virtually nothing whatsoever to protect fairness in competition
in the livestock and poultry markets? This is what I am
hearing, and I ask that question in good faith, that
independent producers are thinking that nothing is ever going
to happen, and I am asking you if you have any--I know you have
only been on the job a little while, but if you have looked at
this and if you will at least work with this subcommittee and
others to make sure that that $4.5 million which we
appropriated is used expeditiously in getting this study done.
Secretary Johanns. Yes, I will work with the Committee.
Senator, I know you asked the question in good faith, and I
would tell you that in my time as Governor, this would be an
issue that people would raise as I am out there.
I have at least had an opportunity to look at the number of
investigations, and if you chart through the investigations, in
2003, there were 1,744; and in 2004, there were 1,923. It is
estimated that in 2005 there will be 1,975 investigations. So
it appears there is a significant amount of investigative work
going on.
What I would offer at this point--I know this is an
interest of yours and I would be happy to work with you. I
remember reading just within the last few weeks, that you had
asked for a look at this whole area of packer concentration. We
will cooperate in that effort in any way we can, and I will try
to do everything I can to provide you with the information to
answer the questions being raised by your constituency.
[The information follows:]
Livestock Study
In the Consolidated Appropriations Resolution, 2003, Congress
provided the Grain Inspection, Packers and Stockyards Administration
(GIPSA) $4.5 million, to remain available until expended, for a packer
concentration study. GIPSA is currently administering a study on
alternative procurement and transfer methods for livestock in the farm
to retail chain, including captive supplies.
GIPSA awarded a $4,319,373 contract to Research Triangle Institute
(RTI) on June 14, 2004, to conduct the study. RTI will complete two
reports. The first, scheduled for release midsummer 2005, will be based
on a limited survey of market participants that describes the types of
marketing arrangements used, their terms and availability, and the
reasons market participants give for their use. The second, scheduled
for release in mid-summer 2006, will be a comprehensive report that
provides an extensive economic analysis of the different marketing
arrangements. Additional data for the second report will come from two
types of sources: (1) a survey of industry participants, and (2) data
on transactions (purchases and sales) of livestock and meat.
Senator Harkin. I appreciate that very, very much. I thank
you very much, Mr. Secretary. I will get this other stuff to
you in writing on that Ames lab thing, and also on the CSP
thing. I will get that to you in writing, sir.
Secretary Johanns. Okay, great. Thank you, Senator.
ADDITIONAL COMMITTEE QUESTIONS
Senator Harkin. Thank you, Mr. Secretary.
Thank you, Mr. Chairman, for your indulgence. I appreciate
it very much.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Robert F. Bennett
CANADIAN BEEF INDUSTRY
Question. The Alberta provincial government and the Canadian
federal government have pledged over $100 million (CDN) to expand its
beef industry, taking advantage of the closed U.S. border.
Is the U.S. Government contemplating any actions to counter the
Canadians' efforts?
Answer. Canadian federal, provincial, and territorial governments
have funded $2.6 billion since 2003 for programs to support the
Canadian cattle and ruminant industry. Approximately 50 percent of
Canadian cattle and beef production is exported, and the United States
is the largest destination of Canadian product. By contrast,
approximately 8-10 percent of U.S. beef production is exported. Thus,
the United States is not as dependent on export markets as Canada is,
although we are working as hard as we can to reopen markets that are
currently closed.
Although this funding will be counted against Canada's WTO
commitments, Canada's overall expenditures remain well below the
CAN$4.3 billion annual ceiling for aggregate measures of support
allowed under the WTO agreements. The Canadian actions do not appear to
violate any trade commitments.
Question. How do you plan on restoring U.S. market share of beef
exports?
Answer. USDA, through marketing programs such as the Market Access
Program (MAP) and the Foreign Market Development (FMD) Program, works
closely with the U.S. Meat Export Federation (USMEF) to develop
strategies and action plans to develop, maintain, and restore U.S. beef
exports worldwide. These programs are not only aimed at restoring U.S.
market share, but are also used to create the atmosphere necessary to
make it easier for countries to get consumers to accept their decision
to reopen.
The Japanese and Korean governments have specifically asked that
USDA implement a risk communications plan to help sell any agreement
between the United States and their respective countries on Bovine
Spongiform Encephalopathy (BSE). In response, FAS and USMEF have
produced a joint pre- and post-opening risk communications plan that
focuses on consumer, media, and political beef trade concerns and
misperceptions about BSE. Both USDA and USMEF have begun to implement
and plan activities to communicate the proper messages such as
editorials, journalist trips to the U.S., BSE seminars, advertisements,
and dissemination of technical materials.
Most recently, Dr. Charles Lambert, Deputy Under Secretary for
Marketing and Regulatory Programs has led teams of technical experts to
meet with key Ministry officials in Korea and Japan to discuss the
cumulative efforts the United States has made to address BSE. The
teams, consisting of representatives from APHIS, FSIS, FAS, FDA, and
the industry have included key members who can answer the specific
concerns put forward by the Governments of Korea and Japan
respectively. However, the team's primary purpose has been to conduct
public diplomacy efforts, such as press briefings and seminars, to aid
in paving the way to market reopening.
With the recent opening of Taiwan's market to U.S. beef, USMEF and
the American Institute in Taiwan (AIT) will host a weekend of re-launch
events aimed at trade, media and consumers to celebrate ``U.S. beef is
back on Taiwan's table'' starting May 6, 2005. The activities will
include a press conference in the afternoon, followed by a reception
jointly hosted by USMEF and AIT. I will be addressing the reception via
a previously recorded video to acknowledge the science-based approach
of the Taiwanese government, and send that same message to other
markets in the region. Director Paal, AIT, will conduct the ceremonial
``cutting of the steak.''
Question. What funding is in the budget to resume and expand U.S.
beef exports?
Answer. For marketing year 2004/2005, FAS has allocated more than
$15 million in MAP and FMD funds to the U.S. Meat Export Federation to
conduct pre- and post-opening activities worldwide. A similar level of
activities could be supported through funding provided in the 2006
budget.
In addition, the 2006 budget proposes a $5.7 million increase and
27 additional staff years for the Trade Issues Resolution and
Management activities of APHIS. These funds will be used to station
staff at a number of overseas locations where they will be engaged in
addressing and resolving technical trade barriers, such as those
related to U.S. exports of beef.
CROP SUBSIDIES
Question. What would the impact to the price of food be if crop
subsidies were eliminated?
Answer. Since the farm and commodity support programs do contribute
to farm income and provide a financial safety net for producers, the
removal of these programs could have an adverse impact on farm
production, at least in the short term. The effect of that removal
would likely be an increase in the price of farm products and, thus,
some increase in food prices; however, the long-term effect on consumer
food prices would be modest. Since our farm sector is efficient,
productive, and already to a considerable degree market-oriented, one
would expect production to remain strong over the long term. Having
said that, I'd like to caution that an abrupt removal of the programs
would be much more disruptive to producers and consumers than a gradual
phase out. I will ask the Office of the Chief Economist provide
additional information in this regard.
[The information follows:]
The impact over time may be modest. Economic studies generally
suggest that the elimination of crop subsidies would lead to a modest
increase in the price of program crops, with the magnitude of increase
depending on market conditions when the subsidies are removed. Under
current farm programs, direct and countercyclical payments are based on
historical production and producers are permitted to plant all the
acreage eligible for direct and counter-cyclical payments to any crop,
except for some limitations on plantings of fruits, vegetables, and
wild rice. Since these payments are ``decoupled'' from current
production, the elimination of direct and countercyclical payments
would lead to essentially no reduction in plantings of major crops. In
contrast, marketing assistance loan benefits are tied to current
production and likely encourage producers to maintain production,
especially when prices for major crops fall and continue to remain
below marketing assistance loan rates.
Assuming conservation programs, such as the Conservation Reserve
Program, continue as specified in the 2002 Farm Bill, elimination of
crop subsidies would likely lead to lower plantings and higher prices
for major crops, with the acreage and price effects caused by
eliminating crop subsidies varying depending on baseline projections of
marketing assistance loan benefits. Higher prices for grains and
oilseeds following the elimination of crop subsidies would increase
feed expenses, causing livestock producers to reduce production
resulting in higher livestock prices. These higher farm prices for
major crops and livestock would likely lead to only a modest increase
in retail prices for food. Various economic studies suggest that the
elimination of crop subsidies could lead to less than a 5-percent
average increase in all farm prices. Since the farm value currently
accounts for less than 20 percent of consumer expenditures for
domestically grown food and less than 15 percent of total consumer
expenditures for food, a 5-percent increase in all farm prices could
raise the retail price of food by less than 1 percent.
Question. What would the impact be to rural economies and the U.S.
economy?
Answer. I believe the overall effect could be modest over time,
although certain rural economies could be more greatly affected. I will
ask the Office of the Chief Economist to provide additional
information.
[The information follows:]
Crop subsidies provide a stable source of income to producers of
program crops and benefit other agriculture-related businesses.
Increased farm income from crop subsidies results in additional goods
and services purchased in the local economy, which contributes to
economic expansion in the non-farm economy. Over time, government
payments are capitalized into higher farmland values, stabilizing the
property tax base for rural communities. Possible short run effects
resulting from the elimination of crop subsidies include: lower farm
income, lower planted acreage and production of program crops, higher
prices, lower expenditures by producers in the local economy and lower
land values and rents.
That being said, eliminating crop subsidies would have very modest
effects on the overall U.S. economy and on many rural economies. The
importance of the farm sector to the U.S. economy has been declining in
recent decades, reflecting improvements in agricultural productivity,
macroeconomic growth and the expansion of the non-farm economy. Farming
accounted for 0.7 percent of U.S. gross domestic product and 1.4
percent of total employment in 2001. That same year, farm program
payments amounted to only 1.3 percent of total personal income in all
U.S. rural counties.
However, some counties are much more dependent on farming and would
be more affected by the elimination of crop subsidies than others.
USDA's Economic Research Service (ERS) classifies counties as farm-
dependent when 15 percent or more of average annual labor and
proprietors' earnings is derived farming or 15 percent or more of
residents are employed in farm occupations. In 2000, ERS identified 440
counties, or 14 percent of all counties in the United States, as farm-
dependent. Many of these counties are located in the same areas where
crop subsidies are concentrated, such as the Western Corn Belt,
Northern and Southern Plains and Delta. In many of these counties, farm
program payments account for 3 percent or more of total personal
income. In these counties, the elimination of crop subsidies could
cause a more pronounced reduction of economic activity, employment and
the property tax base than in other areas.
Question. What would the impact be to U.S. food and fiber
production?
Answer. Once more, I believe we are talking about a modest impact
in the long run. However, an abrupt removal of the programs rather than
a longer term phase out would be more disruptive to many producers and
commodity sectors and this could reduce production levels in the short
term. I will ask the Office of the Chief Economist to provide
additional information.
[The information follows:]
Economic studies generally suggest that the elimination of crop
subsidies would not significantly reduce U.S. food production but could
significantly lower fiber production. The elimination of crop subsidies
is unlikely to significantly reduce overall food production, because a
large portion of current crop subsidies are ``decoupled'' from
production and large segments of agriculture do not receive crop
subsidies, such as livestock, fruit and vegetable producers. In
contrast, nearly all cotton producers receive crop subsidies and a
significant portion of these subsidies are marketing assistance loans
benefits which are more directly related to production levels.
Under the 2002 Act, participating producers are permitted to plant
all the acreage eligible for direct and counter-cyclical payments to
any crop, except for some limitations on plantings of fruits,
vegetables, and wild rice. As a result, producers' planting decisions
are expected to be largely unaffected by direct and counter-cyclical
payments, and producers select the mix of crops to plant based on
relative market returns and agronomic considerations. In contrast,
marketing loan benefits do depend on how much and which crops are
planted and, thereby, alter producers' planting decisions.
A study by USDA's Economic Research Service (ERS) analyzed the
effects of eliminating marketing assistance loans on production of
major crops over the period from 1998 through 2005. The ERS study
projected that elimination of marketing loan benefits would have
reduced plantings of major crops by 2 to 4 million acres (1-2 percent).
For cotton, acreage was projected to decline by 1.5 million acres in
2000 (10 percent) and by 2.5 to 3.0 million acres or 15-20 percent in
2001. The larger decline in cotton acreage in 2001 reflects that year's
sharply lower cotton prices and higher larger marketing loan benefits
than for the 2000 crop. This suggests that the effects of eliminating
crop subsidies on crop production depend on market conditions at the
time subsidies are removed, the magnitude of these subsidies, and the
speed with which subsidies were removed. Certainly, there would be some
noticeable effects, especially in certain sectors.
FARM SPENDING
Question. What actions has USDA specifically taken to implement the
President's proposals to reduce farm program spending?
Answer. The President's proposals to reduce farm program spending
will require that the Congress pass legislation to modify the farm
programs. Proposed legislation to implement the program changes is
being drafted and will be submitted to the Congress soon. USDA stands
ready to work with the Congress.
Question. What actions will USDA take to make certain that the
President's proposals are enacted?
Answer. USDA is prepared to work with Congress when these or
related proposals are taken up.
LOW PATHOGENIC AVIAN INFLUENZA (BIRD FLU)
Question. The funding level for the Low Pathogenic Avian Influenza
(LPAI) program was increased from $994,000 in fiscal year 2004 to $23
million for fiscal year 2005. The increase was provided to indemnify
producers for losses and to increase surveillance activities.
Can you provide an update on the status of the fiscal year 2005
funding and when we should expect this program to be fully implemented?
Answer. This program has two components: The commercial poultry
industry and the live bird marketing system (LBMS). The program in
commercial poultry will be administered through the National Poultry
Improvement Plan (NPIP) and will provide for: an H5/H7 LPAI monitored
status for poultry production facilities and States, thereby certifying
disease freedom for international and interstate movement of poultry
and poultry products; an active and passive LPAI surveillance program;
and an initial state response and containment plan, with
indemnification, for managing H5/H7 LPAI outbreaks, should they occur.
The program in the live bird marketing system provides uniform
standards (published October 2004) that are presently being implemented
and enforced at the state level for prevention and control of H5/H7
LPAI in markets, distributors and production facilities that
participate in this marketing system.
The breakout of the funding is as follows: $12,000,000 is for
indemnities; $3,871,547 is for surveillance activities; $932,285 is for
reagents and costs of administering tests; $4,326,693 is for salaries
and benefits and staff support; $600,000 for the Center for Veterinary
Biologics (CVB); $513,575 for Education and Outreach; and $555,900 for
Information and Technology.
The LPAI program will be fully operational when a regulation is
finalized for the commercial component of the program. The proposed H5/
H7 LPAI program for commercial table-egg layers, meat-type chickens,
and meat-type turkeys is currently going through the rule making
process.
As of April 12, 2005, no fiscal year 2005 funding for indemnities
has been used. Any unused funding in fiscal year 2005 will be available
in fiscal year 2006. In addition, there is about $6.5 million in
funding for indemnities from fiscal year 2004 CCC funding that is
currently available.
NATIONAL ANIMAL IDENTIFICATION
Question. The fiscal year 2006 budget includes a request of $33.3
million to continue the National Animal Identification program. This is
in addition to $18.7 million that was transferred from the Commodity
Credit Corporation (CCC) and another $33.1 million that was provided in
the fiscal year 2005 appropriations bill.
Can you provide the Subcommittee with a status report on this
program? Also, will there be a role for private industry?
Answer. In fiscal year 2005, the focus of the National Animal
Identification System will be on premises registration. As of May 2,
2005, 47 of 50 States have premises registration systems in place.
Currently, 60,000 premises have been registered, which represents 3
percent of all participating premises. APHIS also intends to begin the
process of registering and distributing animal identification numbers
in order to track animal movements. By the end of fiscal year 2005,
APHIS expects a small amount of data collection infrastructure to be
put in place with the implementation cost to be shared by the public
and private sectors. Private industry will be involved with the
distribution of animal identification numbers and producers will have
the ability to purchase Animal ID devices at their choice of private
sector providers.
Question. The $18.7 million that was transferred from the CCC
allowed for testing and fine tuning of technologies that could be used
to identify and track animals. Can you provide information on what type
of technology may be used for the Nation wide program?
Answer. While the funds provided will support the data repository,
the integration of animal identification technology standards
(electronic identification, retinal scan, DNA, etc.) will be determined
by industry to ensure the most practical options are implemented and
that new ones can easily be incorporated into the National Animal
Identification System (NAIS). NAIS allows producers to use technology
in coordination with production management systems, marketing
incentives, etc., allowing for the transition to a ``one number-one
animal'' system for disease control programs and other industry-
administered programs. While animals must be identified prior to being
moved from their current premises, producers can decide whether to
identify their stock at birth or during other management practices.
Question. What is the timeline for a fully implemented national
identification program?
Answer. We are working on a timeline and expect to release a
timeline soon.
special supplemental program for women, infants, and children (wic)
Question. The Administration's fiscal year 2006 budget request
includes an increase of $275 million for a total funding level of $5.5
billion. The requested increase for this program follows a fiscal year
2005 increase of $523 million. Therefore, the WIC program has received
an increase of approximately $798 million over the past 2 years.
Can you explain the fiscal year 2006 budget request for the WIC
program and help us understand why the cost of this program has
increased so rapidly?
Answer. The WIC Program experienced a larger than anticipated
increase in costs and participation during fiscal year 2004, for
several reasons:
--Participation grew substantially during fiscal year 2004, and is
currently at an all-time high. Our fiscal year 2004 budget
request projected an annual average participation of 7.8
million, but actual participation was over 7.9 million. The
fiscal year 2006 President's budget request projects
participation will increase to an average of 8.2 million in
fiscal year 2005 and 8.5 million in fiscal year 2006.
--There was an unanticipated spike in the retail price of dairy
products in fiscal year 2004; while dairy prices have now
moderated, they are still higher than they were prior to the
spike.
--Additionally, WIC has seen a decline in the amount of rebates some
States are able to receive from the Infant Formula Rebate
Program. Further, due to shifts in the infant formula market to
more expensive DHA/ARA enhanced formulas, formula began to cost
the program more than it did in the past.
WIC participation and food cost are challenging to project into the
future. Over time, the program has experienced periods, such as fiscal
year 2004, where these factors are particularly volatile. We will
continue to closely monitor program performance and will keep Congress
apprised of changes to our estimates which might be needed.
TRADE STATUS--JAPAN
Question. Mr. Secretary, we continue to monitor the current beef
embargo with Japan. As you may know, the Congress is considering a
number of actions that could be taken to address the current situation.
One option would be to seek retaliatory actions against Japan.
Can you update us on the current status of the negotiations? Also,
do you believe it is the appropriate time for Congress to take action
or do you expect Japan to allow the resumption of trade?
Answer. Negotiations are moving forward, albeit at a slower than
desired pace. However, for the first time since the October agreement
to resume trade, we are finally beginning to see signs of progress in
Japan's rulemaking.
The first decision Japan had to make as a pre-condition to
rulemaking on imports is the elimination of animals under 21 months of
age from its mandatory BSE testing requirement. Japan is finally ready
to make that change. In late March, Japan's Food Safety Commission
concluded the modification in the testing regulations presents an
acceptable level of risk. The decision to exempt animals under 21
months of age from testing is expected to be final sometime during May.
With the decision to exclude younger animals from mandatory testing
behind us, this now clears the way for rulemaking on imports.
Unfortunately, we do not have a timetable for a decision on imports,
but the next steps are now in place. In the coming weeks, the Ministry
of Agriculture, Forestry and Fisheries and the Ministry of Health,
Labor, and Welfare will deliver the Beef Export Verification (BEV)
program for Japan to the Food Safety Commission. The Commission will
evaluate the program, and we expect there will be consultations and
public meetings. Once they have finished that process, they will make a
decision. Again, the timetable for completion of this work is still
unclear, and we will continue to press Japan at every opportunity for a
decision to resume trade.
To help Japan prepare for decision-making on imports, Dr. Charles
Lambert, Deputy Under Secretary for Marketing and Regulatory Programs,
has led U.S. delegations of experts to Tokyo for technical discussions
and outreach activities with Japanese press and consumer groups. The
outreach activities have included press briefings and roundtable
discussions with the media, industry, and consumers to educate them on
the safety of U.S. beef.
BOLL WEEVIL ERADICATION PROGRAM
Question. With the submission of each year's budget request, the
Administration includes new priorities and drastically reduces a number
of ongoing programs. The boll weevil eradication program was funded at
$47 million for fiscal year 2005. The fiscal year 2006 budget request
for this program reduces the level to $15.8 million--which is a $31.3
million decrease.
If the requested level for the boll weevil program (a decrease of
$31.3 million) is provided, will the program be able to continue as
designed?
Answer. Together with funds from providers, and the FSA loan
program, the budget provides adequate funding to continue the
successful boll weevil eradication program.
USDA EMPLOYEE RETIREMENTS
Question. What are the Department's losses due to retirement and
what is it doing to recruit new people to carry out its very important
missions?
Answer. In fiscal year 2004, the Department lost 2,894 permanent
employees to retirement.
In December 2002, the Department established and implemented a
Strategic Human Capital Plan which initiated policies and practices
that ensure that USDA continue to have a workforce capable of meeting
its mission needs. USDA annually assesses its workforce requirements
and adjusts its recruitment and retention strategies in the Mission
Areas and agencies. This process ensures that we proactively replace
those who may choose retirement with people capable of filling those
gaps in our skills inventory in a timely manner.
ETHANOL PRODUCTION
Question. Dr. Collins, your written testimony mentions the rapid
increase in ethanol production.
Do you see any danger here in over production and producers'
inability to repay loans, many of which are backed by Federal programs?
Answer. Ethanol production has been rising rapidly. Current U.S.
ethanol production capacity is 3.75 billion gallons per year. There are
84 ethanol plants producing ethanol in 20 States. Daily ethanol
production reached 245,000 barrels or 10.29 million gallons in February
2005. There are 15 ethanol plants under construction and 2 ethanol
plants are expanding their production capacities. Total capacity under
construction and expansion is about 730 million gallons per year.
Ethanol production could increase to as much as 4 billion gallons this
year, up from 3.4 billion gallons last year, and late this year or
early next year, ethanol production capacity is expected to reach 4.48
billion gallons.
Ethanol is mostly used in oxygenated and reformulated gasoline
programs. About 20 percent of ethanol is used as an octane enhancer in
conventional gasoline. The market for ethanol as a replacement for
methyl tertiary butyl ether (MTBE) has largely been satisfied, and
ethanol must now compete as a fuel extender at a lower price.
The price of gasoline is rising due to the rising price of crude
oil, and the price of ethanol is declining due to greater ethanol
production. The price of ethanol net of the Federal excise tax
exemption is significantly lower than the price of gasoline and the
price of MTBE. However, refineries and blenders are reluctant to use
ethanol, due to a lack of infrastructure, such as storage and blending
facilities. This is especially true outside the Midwest. If the current
lower price of ethanol and higher price of gasoline continues into the
future, it is possible that refineries and blenders will start using
more ethanol as a substitute for gasoline and MTBE. In the absence of
any new demand for ethanol to replace MTBE, such as the Renewable Fuel
Standard, a greater supply of ethanol could lower the price of ethanol
in the future.
On a positive note for ethanol producers, the price of corn is less
than $2 per bushel and the price of distiller's dried grains (DDG) is
above $60 per ton. The net corn cost for a new dry mill is about 50
cents per gallon and processing cost is about 45 cents per gallon.
Therefore, the cost of producing of ethanol, excluding capital costs is
less than $1 per gallon. The current price of ethanol is about $1.30
per gallon.
______
Question Submitted by Senator Thad Cochran
SOYBEAN RUST
Question. I know that several agencies within USDA have worked
closely with the soybean industry on an ``Early Detection and
Surveillance Plan'' for soybean rust. This program will be carried out
in conjunction with land-grant universities, including Mississippi
State University. As you know, Mississippi is one of the nine States
where soybean rust was confirmed last fall. My soybean farmers are
acutely aware that losses due to soybean rust totaled $1 billion the
first year of the outbreak in Brazil, and $2 billion the following
year. USDA's Economic Research Service has estimated net economic
losses for the U.S. ranging from $640 million to $1.3 billion in the
first year of the pathogen's establishment in this country, and
estimated annual losses in the ensuing years of between $240 million
and $2 billion.
Given the importance of this early detection and surveillance plan,
can you please tell the status of its funding?
Answer. APHIS is using $1.19 million from its contingency fund to
implement the SBR monitoring and surveillance network and continues
supporting the comprehensive USDA SBR website. APHIS is providing
$800,000 of the contingency funds to State cooperators for sentinel
survey plots and $180,000 to USDA's Cooperative State Research,
Education, and Extension Service for 5 mobile monitoring teams. The
remaining funds will support the website, which provides real-time
updates on the results of surveillance efforts.
______
Questions Submitted by Senator Ted Stevens
RURAL COMMUNITY ADVANCEMENT PROGRAM
Question. The Rural Community Advancement Program (RCAP) was
established to provide planning assistance, grants, loan, loan
guarantees, and other assistance to meet the development needs of rural
communities. Though the fiscal year 2006 budget maintains the
flexibility to transfer funding among programs within RCAP, funding for
several programs, including Rural Community Development Grants,
Economic Impact Initiative Grants, Rural Business Enterprise Grants,
Rural Business Opportunity Grants, and High Cost Energy Grants is
eliminated. This action troubles me because of the importance of these
programs to my state, especially High Cost Energy Grants, which was
funded at $28 million in fiscal year 2005. Alaska's rural communities
experience some of the highest energy costs in the Nation, paying up to
9 times higher than the national average. Rural areas rely on expensive
diesel fuel which must either be barged or flown in.
Given the devastating consequences on rural communities,
particularly those in my state, why are these cuts being proposed?
Answer. The Administration's proposal, which is referred to as the
Strengthening America's Communities initiative, is expected to provide
more efficient and effective assistance to the most needy communities
and to provide some budgetary savings. Rural communities are expected
to receive a fair share of the resources that will be consolidated
under this initiative. In addition, RCAP would continue to be an
important source of funding for rural communities and would retain the
flexibility for transferring resources to meet local priorities.
Funding is not being requested for the high energy cost grants because
very few rural areas are eligible to receive these grants, and cuts in
this program would provide additional funding for RCAP programs that
serve more rural communities.
ALASKA DAIRY
Question. As you know, the closure of the United States-Canada
border due to the discovery of BSE infected cows in both Canada and
Washington State has negatively impacted producers. This situation is
particularly devastating to Alaska producers and dairy farmers who rely
on the importation of live animals such as cattle to replenish their
herds. This closure has eliminated transportation of these animals via
the Alaska-Canada Highway, which is the only economically viable option
for importing live animals into Alaska and our major transportation
corridor from the Lower 48. During this time, my staff and I have been
working with USDA to provide some measure of relief to our agriculture
producers. Last fall, Governor Frank Murkowski declared an economic
disaster for the State of Alaska caused by the closure and requested
Federal assistance to minimize the impacts of this closure.
Despite repeated requests to USDA from Governor Murkowski, the
Alaska State Legislature, Senator Murkowski, and myself, no assistance
has been offered or provided to assist agriculture workers in my State.
The fiscal year 2005 Omnibus included $1 million for dairies in Alaska.
USDA has still not released the funds--the stated reason is uncertainty
as to how to allocate it. During this period of inactivity by USDA, the
Alaska dairy industry continues to fail.
What steps are being taken by your office and USDA to ensure the
continued viability of the Alaska dairy industry?
Answer. USDA has not received a request for a disaster designation.
However, as you note, funds of $1 million were appropriated in Section
786 of title VII of Division A of the Consolidated Appropriations Act,
2005 (Public Law 108-447) to carry out Section 751 of Division A of
Public Law 108-7, enacted on December 8, 2004. This legislation
authorized the Secretary of Agriculture to make loans and grants to
expand Alaska's dairy industry and related milk processing and
packaging facilities. Further, I would note that an April 6, 2005,
amendment to the Emergency Supplemental Appropriations Act for Defense,
the Global War on Terror, and Tsunami Relief, 2005 (H.R. 1268), which
is currently being considered by Congress, would modify that authority
by giving the Secretary of Agriculture discretionary authority to apply
the 2005 funding to the accounts of Alaska dairy farmers owed to the
United States. If enacted, USDA will work expeditiously to implement
that legislation and provide appropriate assistance to Alaska's dairy
farmers.
In addition, on January 4, 2005, USDA published a final rule
amending existing regulations to provide for the importation of certain
ruminants, ruminant products and byproducts from regions that pose a
minimal risk of introducing BSE into the United States, and designates
Canada as the first minimal risk region. The effective date of the
final rule was to have been March 7, 2005. However, on March 2, 2005,
the U.S. District Court for the District of Montana temporarily delayed
the implementation of the minimal risk rule. As a result, opening up
the border to trade in cattle is very much a legal process outside of
the control of USDA. Nevertheless, we are very concerned about the
economic impact of the closed border with Canada on U.S. cattle
producers and processors, including Alaska's dairy producers. On June
9, I will host a roundtable discussion on BSE in North America that
will bring together experts from the USDA, producers, packers, academia
and others to discuss the safety of North American beef and the effects
of the border closings.
______
Questions Submitted by Senator Herb Kohl
EXECUTIVE BONUSES
Question. A recent OPM report on the performance level and bonuses
of executives in the Federal Government noted that less than 40 percent
of executives at USDA received the highest performance rating in fiscal
year 2003. However, the same report stated that over 80 percent of
these executives received bonuses, at an average of more than $12,000,
that same fiscal year.
What percentage of non-SES employees received bonuses in fiscal
year 2003, and what percentage of those employees received the highest
available performance rating?
Answer. In 2003, 46 percent of non-SES level employees received
cash awards. Fifty-nine percent of those employees who received cash
awards received the highest available performance rating for their
agency. Some of these employees received performance ratings under a
five-level appraisal system, some under a three-level system, and
others under a two-level system.
Question. What was the average monetary amount of that bonus?
Answer. The average cash award given to employees who received the
highest available performance rating was $703 in 2003.
Question. What is the total amount of funding USDA spent on
employee bonuses in fiscal year 2003 and 2004 for SES and non-SES
employees? How much does USDA plan to spend on bonuses in 2005?
Answer. The amounts spent in fiscal year 2003 and fiscal year 2004
are provided below. For fiscal year 2005, we estimate the amount for
SES awards to be 9 percent of salary costs, or approximately $4
million. The estimate for non-SES bonuses is not available as each
individual agency in the Department develops its own plan for bonuses.
[The information follows:]
------------------------------------------------------------------------
SES awards Non-SES award
------------------------------------------------------------------------
Fiscal year 2003........................ $1,927,845 $53,519,877
Fiscal year 2004........................ 3,025,520 57,236,689
------------------------------------------------------------------------
Question. Please provide a list of agencies that include funding in
their fiscal year 2006 budget request for SES and non-SES employees,
including the amount set aside for bonuses.
Answer. The President's Budget for USDA does not include requests
for bonuses. The amounts to be spent on SES and non-SES bonuses are
expected to be similar to those in prior years and are funded as part
of the agencies' salaries and expenses costs.
GAO HOMELAND SECURITY REPORT
Question. A few weeks ago, GAO issued a report on the potential
threat of agro-terrorism. GAO pointed out problems with:
--USDA accreditation for veterinarians;
--rapid diagnostic tools;
--stockpiles of ready-to-use vaccines;
--and the 8 percent decline in agricultural border inspections.
You have stated that you believe in order to reverse the decline in
agricultural border inspections it is very important to improve the
communication between USDA and DHS.
What specifically do you plan to do to improve your communication
and relationship with DHS to improve this situation and avoid similar
problems in the future?
Answer. APHIS Administrator Ron DeHaven and DHS' Customs and Border
Protection (CBP) Commissioner Bonner met in early April 2005 to discuss
communication issues between the two Agencies and agricultural
inspection operations at U.S. ports of entry. In addition to continuing
to implement the newly established joint quality assurance program to
evaluate operations at ports of entry, Dr. DeHaven and Commissioner
Bonner have agreed to hold quarterly meetings to address any issues
that cannot be resolved at the operational level. APHIS and CBP
operations officials are meeting twice monthly to carry out the quality
assurance program and address ongoing operational issues. The Agency's
goal for the program is to ensure the quality of inspections and
facilitate an appropriate level of communications between DHS and
APHIS. Thus far, APHIS and CBP have conducted a pilot joint inspection
blitz at the port of Detroit and joint reviews of operations at the
ports of Philadelphia and Miami. A review of operations at the maritime
port of Long Beach, California, is scheduled for June 2005.
APHIS and CBP officials are also continuing to address the large
number of vacancies at ports of entry. With the transfer of the port
inspection portion of the agriculture quarantine inspection function to
CBP in fiscal year 2003, APHIS transferred 363 fully-funded vacant AQI
inspector positions. This number has increased significantly through
attrition in the last 2 years. While progress has been made in filling
many positions, APHIS encourages CBP to continue an aggressive
recruitment and hiring program. APHIS assists CBP in recruiting by
distributing vacancy announcements to a large pool of qualified
candidates and expeditiously training those hired. Following the April
2005 meeting between Dr. DeHaven and Commissioner Bonner, APHIS is
enhancing its recruitment program for CBP vacancies through promoting
the jobs to qualified candidates. APHIS' Professional Development
Center has 14 classes scheduled for incoming agricultural specialists
(with space for 36 new inspectors in each class).
Progress has been made in other areas, such as access to CBP's data
systems. In March 2005, APHIS and CBP reached an agreement to allow
APHIS users to access CBP's Automated Targeting System (ATS), which
will allow us to review incoming cargo manifests electronically and
determine which to target for agricultural inspections. At this time,
14 APHIS users are approved to access ATS, with 6 more in the approval
process. APHIS is also placing two agricultural specialists in CBP's
National Targeting Center to develop criteria for determining which
incoming shipments to target for agricultural inspections.
ACCREDITED VETERINARIANS IN RURAL AREAS
Question. You have discussed the importance and variety of State
programs that are working to increase the number of accredited
veterinarians in rural areas where they could provide ample
surveillance of animal disease and potential agro-terrorist threats. I
agree that State programs are important, but I also believe they should
be strongly supplemented by the Federal Government, especially as they
are used to enhance national security.
What Federal programs are available and being utilized to increase
the number of accredited veterinarians in rural areas?
Answer. APHIS is authorized to offer additional compensation to
help recruit and retain veterinarians for difficult-to-fill positions.
The National Veterinary Medical Service Act enables APHIS to repay
veterinary medical school loans when a veterinarian serves in a
``shortage'' area. APHIS is also authorized to provide retention
bonuses to veterinarians, who are paid on the normal General Schedule.
Any retention bonuses must be approved through the APHIS Deputy
Administrator's Office on a case-by-case basis.
APHIS has not used its authority under the National Veterinary
Medical Services Act since the agency has not received appropriated
funding supporting this legislation. In fiscal year 2004 APHIS
Veterinary Services provided $36,755 in retention bonuses to two
veterinarians. In addition, APHIS has a roster of about 1,200 private
veterinarians in the National Animal Health Emergency Response Corps
who are available for public service in the event of an emergency.
FSIS routinely pays a range of recruitment incentives to attract
new veterinary hires in shortage or difficult to fill locations
nationwide. For example:
--Recruitment bonuses were used when filling positions in various
locations in 21 States. In fiscal year 2004, FSIS paid $632,803
to provide recruitment bonuses to 59 new veterinary hires.
--FSIS pays travel and transportation expenses to all veterinary new
hires. In fiscal year 2004, $290,000 was provided to pay these
expenses to 58 new hires.
--Direct-Hire Authority was granted by OPM for VMO hires GS-9 through
13, which doubled the number of applications.
--Training agreement authorizes accelerated promotion for GS-9 to GS-
11 VMO within 6 months of hiring to attract talented veterinary
applicants. The low starting salary for our entry level
positions, compared to jobs in the private sector, has been a
major factor in our inability to recruit new veterinary
graduates.
--Finally, use Superior Qualifications Appointment authority for
veterinarians new to Federal Service--allows for setting
starting salary above the normal level.
To date, we have not used Retention allowances to retain FSIS
veterinarians. FSIS has also not yet utilized the Repayment of Student
Loans Program to attract or retain veterinarians; however, the agency
is considering use of these authorities.
FOOD AND AGRICULTURE DEFENSE INITIATIVE
Question. The USDA budget proposes an increase of $78 million for
the Food and Agriculture Defense Initiative (FADI) bringing total FADI
spending to $376 million. The goals of this Initiative are laudable,
but I do have questions regarding what, specifically, this money is
buying.
Can you tell us what USDA has achieved and what work remains? How
are you measuring success in achieving these goals?
Answer. The events of September 11, 2001, heightened the Nation's
awareness and placed a renewed focus on ensuring the protection of the
Nation's critical infrastructures. The Department plays a significant
role in protecting America's agricultural industry and food supply from
intentional and unintentional harms. A terrorist attack on the food
supply could pose both severe public health and economic impacts, while
damaging the public's confidence in the Nation's food supply. As a
result of new potential threats to the food supply, USDA agencies have
made fundamental changes in how they implement their missions and have
focused efforts on food and agricultural production, USDA facilities,
and USDA staff and emergency preparedness.
Some activities the Department has begun include expanding the Food
Emergency Response Network (FERN) and the Regional Diagnostic Network
with links to the National Agricultural Pest Information System;
upgrading laboratory security and enhancing their capabilities to
quickly identify threats to the food supply; strengthening research on
diagnostic methods for quickly identifying various plant and animal
pathogens; enhancing the monitoring and surveillance of pests and
diseases in plants and animals; and enhancing the Department's
emergency preparedness and response capabilities by establishing a
Homeland Security Staff. The Homeland Security Staff provides oversight
of USDA nationwide policies and procedures related to homeland
security, and coordination with the Department of Homeland Security and
other Federal agencies, public and private organizations. I will have
this office provide additional information for the record.
[The information follows:]
The FADI closely correlates to the food and agriculture security
tasks set forth in Homeland Security Presidential Directive (HSPD)-9,
Defense of U.S. Agriculture and Food. HSPD-9 establishes 6 main
components to a defense strategy for agriculture and food security: (1)
Awareness and Warning, 2) Vulnerability Assessments, (3) Mitigation
Strategies, (4) Response Planning and Recovery, (5) Outreach and
Professional Development, and (6) Research and Development. Highlights
of current fiscal year activities for each component follow.
Awareness and Warning
Enhancing Federal, State, local, and industry awareness of the
threats to the agriculture and food sector is essential. First
responders in this sector are often industry owners and operators or
State or local regulatory officials. Additionally, early detection is
also key to minimizing the spread of a contaminant. Therefore, USDA has
focused upon educating individuals of the signs of an attack or
outbreak. USDA has also focused upon enhancing scientific capabilities
for early warning, such as establishing laboratory networks that can
rapidly share information and diagnostics. Key programs within
Awareness and Warning are highlighted below:
Awareness Activities.--To ensure awareness, USDA has hosted Food
and Agricultural Defense Field Training in a variety of settings.
USDA's Food Safety and Inspection Service (FSIS) has provided
biosecurity training to in-plant personnel. USDA's Animal and Plant
Health Inspection Service (APHIS) has provided biosecurity training via
CD-Rom to States. USDA's Cooperative State, Research, Education and
Extension Service (CSREES) has trained plant diagnosticians in every
State to recognize high consequence pathogens and is conducting plant
disease outbreak scenario drills in 24 States. USDA has also provided
information on its web page for owners and operators, so that they are
aware of signs of contamination. The USDA page on Soybean Rust is an
example of these activities. USDA also partnered with industry to
ensure their awareness of agriculture and food security during
transportation by providing a voluntary security guide with tips for
keeping products secure during transport. FSIS has also provided model
food security plans for industry to use in developing their own plans.
Food Emergency Response Network (FERN).--FSIS, along with the Food
and Drug Administration (FDA), co-chairs the Food Emergency Response
Network. Screening, in FSIS laboratories, under a surveillance program
coordinated by FERN, a national, integrated network of Federal & State
laboratories, with the surveillance and surge capability of testing
foods for threat agents in the event of a terrorist attack. Currently,
FERN includes 93 laboratories representing 43 States and Puerto Rico
(25 Federal, 60 State, 4 local and 4 other) and each laboratory has
satisfactorily completed the FERN Laboratory Qualification Checklist.
The FERN Laboratory Qualification Checklist provides the FERN National
Program Office with vital information to determine if a laboratory
meets the criteria for participation in FERN. Within the 93
laboratories, 67 conduct chemical agent testing, 69 conduct
microbiological testing, and 25 conduct radiological (some laboratories
conduct more than one type of test). The goal for FERN in fiscal year
2006 is to add 15 new State laboratories to partner with FSIS and FDA.
Funding to date has been used to build on the expertise of the
Federal, State and local laboratories that are now part of FERN. FERN
has laid the foundation for a coordinated laboratory network that will
ultimately be capable of meeting the testing demands resulting from an
attack on our food supply. FERN laboratories are currently conducting
method development for testing and performing proficiency testing. FERN
has established Regional Coordination Centers that serve as the primary
points of contact for laboratories across the country. Already
established are the Southeast Center located in Athens, Georgia, and
the Northeast Center temporarily headquartered in Rockville, Maryland.
Other Regional Coordination Centers will soon be established in
Alameda, California; Denver, Colorado; and St. Paul, Minnesota.
The additional funding requested for FERN, will enable the agency
to manage, maintain, and expand the capacity and capabilities of the
existing FERN labs. These funds will improve the FERN's ability to
handle the numerous samples that would be required to be tested in the
event of a terrorist attack on the food supply, because State and local
laboratories would be able to conduct a significant portion of the
necessary testing.
State and local laboratories continue to be identified and
recruited into the FERN. The goal is to include an adequate number of
Federal, State, and local food laboratories in the network to ensure
the necessary laboratory support, coordination, and collaboration in
the event of a terrorist attack on the food supply.
National Animal Health Laboratory Network (NAHLN).--The NAHLN is a
functional national network of existing animal diagnostic laboratories.
Its purpose is to rapidly and accurately detect and report pathogens of
national interest that have the potential for high consequence and/or
to be introduced intentionally. It provides geographically distributed
diagnostic support to APHIS by training diagnostic personnel to improve
service capabilities, expanding standardized rapid/sensitive testing
capabilities, improving the Nation's Bio-Safety Level (BSL)-3
capability, assuring quality standards and proficiency testing, and
improving communications to share data. The goal for NAHLN in fiscal
year 2006 is to train and proficiency test 10 additional laboratories;
assist in diagnostic fee-for-service guidance; and develop
international linkages.
The 12 founding laboratories, along with 32 other laboratories
funded by APHIS, provide surveillance testing for Bovine Spongiform
Encephalopathy (BSE), Exotic Newcastle Disease, Highly Pathogenic Avian
Influenza, and Chronic Wasting Disease in 37 States. The current number
of States with laboratories available to assist the National Veterinary
Services Laboratory (NVSL) in providing necessary Federal animal
diagnostic services has increased to 41.
Outputs that must occur to achieve preparedness oriented outcomes
include: laboratory biosafety upgrades, laboratory physical security
improvements, laboratory equipment upgrades, deployment of quality
management (QM) manuals and personnel, completed standard operating
procedures, and diagnostic personnel trained for high consequence
pathogens. These outputs are necessary to improve preparedness for and
ability to respond to high consequence animal diseases. Currently, 11
of the 12 laboratories are running Exotic Newcastle and Highly
Pathogenic Avian Influenza tests post proficiency. All laboratories
have passed proficiency tests for Classical Swine Fever. The Foot and
Mouth Disease program is progressing according to schedule.
The NAHLN has been an important part of the BSE testing program.
Eight of the twelve founding NAHLN laboratories have participated in
this high volume surveillance testing program, which tests volumes
similar to the Colorado example below, representing three to four fold
increases over 2001 levels. Beyond surveillance test performance, NAHLN
host institutions helped to operationalize the current high volume BSE
test, which makes wider surveillance possible with limited resources.
The NAHLN founding laboratories, through assay development and training
activities, have also increased the surveillance capacity of the
veterinary diagnostic system for Foot and Mouth Disease, Classical
Swine Fever, Exotic Newcastle Disease, and Highly Pathogenic Avian
Influenza.
As of January 31, 2005, Colorado State University Veterinary
Diagnostic Laboratories (CSUVDL) has performed 50,000 BSE tests,
processed over 15,000 chronic wasting disease samples, and 6,000
Scrapie samples since the NAHLN program's inception. Their weekly
testing volume has exceeded 3000 samples.
In 2004, Texas experienced 2 outbreaks of Avian Influenza (AI).
Because of the training and equipment afforded through this CSREES
grant, the Texas Veterinary Medical Diagnostic Laboratory (TMVDL) was
able to assume a major role in laboratory testing during and following
these 2 outbreaks. They were able to reduce the testing burden on the
National Veterinary Services Laboratory significantly by performing
almost all PCR and serological tests following the diagnosis of the
index case by NVSL. In total TVMDL ran 20,468 triage preliminary tests
and 2,679 real time PCR tests for AI during the 2 outbreaks. This
success story provides evidence of the increased foreign animal disease
response capacity that is needed in order to gather near-real time
information regarding potential threats to the Nation's animal
resources.
National Plant Diagnostic Network (NPDN).--The NPDN provides a
functional national network of existing diagnostic laboratories in all
States. Its purpose is to provide rapid and accurate detection and
reporting of plant pests and diseases that have the potential for high
consequence and/or to be introduced intentionally. The NPDN also
provides geographically distributed diagnostic support to APHIS by
decreasing the time between first observation of an anomaly by first
detectors and response, increasing the Nation's plant diagnostic
capabilities through improved equipment and training, providing
diagnostic surge capacity in case of a concentrated or deliberately
distributed agroterrorist incident, and training first detector
trainers that will increase the Nation's ability to detect incidents
before they become widely distributed.
The network is currently being utilized by APHIS to manage the
Phytophthora Ramorum (Sudden Oak Death) outbreak. NPDN is currently
running several multi-State plant disease outbreak simulations in
cooperation with APHIS/PPQ, State governments, the grower community.
The network is also currently working with the USDA Forest Service to
educate potential first detectors of sudden oak death disease.
NPDN provides equipment funding, training, and educational
resources to all land grant university diagnostic laboratories in an
effort to raise diagnostic capabilities nationwide. Last year, Plant
Diagnostic Laboratories in 41 States received funding to upgrade
equipment and facilities and Plant Diagnostic Laboratories in all
States and U.S. Territories received diagnostic training. In addition,
laboratories provided triage diagnostics for over 130,000 samples that
were potentially infected with P. ramorum, the pathogen that causes
sudden oak death, preventing its nationwide distribution through
marketing channels.
The NPDN also hosted outbreak scenario training exercises in 23
States. Outbreak scenarios will be completed for all States in the
continental United States by May 2005. Technical training on plant
biosecurity issues was provided through The National Pest Diagnostic
Network's First Detector Training and Certification Course. This
program trained over 10,000 individuals and trained over 1,500
individuals as additional trainers. With a few weeks after soybean rust
was first detected in Louisiana, private interest disease surveillance
activities were conducted by first detectors. Samples submitted to
diagnostic laboratories, as a result of these first detectors,
identified soybean rust in Mississippi, Florida, Georgia, Alabama,
Arkansas, Missouri, South Carolina, and Tennessee.
Integrated Consortium of Laboratory Networks.--Laboratory networks
from a variety of Federal Departments have agreed to work cooperatively
under a Memorandum of Understanding to communicate and cooperate by
sharing capabilities, policies, procedures, and approaches for handling
laboratory analysis during national emergencies. The consortium also
seeks to reduce redundancies among laboratories, identify holes in
laboratory capabilities, and to seek solutions to managing these
identified issues in the future. The MOU will likely be signed in early
May.
Integrated Surveillance Capability.--USDA's APHIS, FSIS, and CSREES
agencies are conducting a review and analysis of their information
systems that are relevant to the National Biosurveillance Integration
System (NBIS). In consultation with the Department of Homeland Security
(DHS), the agencies are considering the current information available
for submission to the NBIS, the costs of providing the information, and
a process for prioritizing information systems that should link to the
NBIS. The goal is to provide the highest priority information systems
to the NBIS to improve surveillance of threat agents in plants,
animals, and food.
Surveillance and Monitoring.--Surveillance and monitoring programs
are essential to an awareness and early warning capability. Within this
realm, USDA has a number of key initiatives underway. FSIS has
implemented the National Consumer Complaint Monitoring System (CCMS), a
surveillance and sentinel system that monitors, records, and tracks
food-related consumer complaints 24/7, and other reports of suspicious
activity. It serves as a real-time, early warning system of a potential
attack on the food supply. CCMS has evaluated approximately 3,500
consumer complaints since January 2001.
With regard to plant and animal health, USDA is completing the New
Pest Response Guidelines for all the select agents and is completing
integration of the Overseas Pest Information System (OPIS) database.
Wildlife provides an early indicator for outbreaks that may impact food
animals. Therefore, USDA is hiring 77 wildlife biologists nationwide.
Due to the importance of food animals, USDA is developing a monitoring
and database system for the National Animal Identification System
(NAIS) to identify gaps in the surveillance and monitoring of animal
health. Similarly, USDA is continuing its surveillance programs for
Foreign Animal Diseases (Foot and Mouth Disease), Swine feeding
surveillance, and Classical Swine Fever activities.
Vulnerability Assessments
USDA is using the CARVER + Shock vulnerability assessment method
across agencies so that we may compare findings across the farm-to-
table continuum. Our goal is to expand and continue these assessments
both internally and by leveraging upon DHS projects to partner with
industry to conduct assessments. To date, USDA has done a number of
threat and vulnerability assessments. Highlights follow:
USDA CARVER + Shock Assessments.--USDA agencies have conducted
threat and vulnerability assessments for food, animal, and crop
products and programs under our jurisdiction. USDA agencies will update
these assessments every 2 years. These agencies are also working with
Federal, State, and local partners to aid the private sector, as
industry conducts its own assessments.
Farm Service Contract Requirements.--Under USDA's Farm Service
Agency (FSA) oversight, language has been incorporated into all
Commodity Credit Corporation (CCC) Storage and U.S. Warehouse Act
Licensing Agreements requiring agreement holders to conduct a facility
vulnerability assessment and implement a security plan that includes
measures to protect commodities handled and stored in their facility.
FSA is also conducting training for agency staff that assess
compliance. FSA is preparing to conduct a vulnerability assessment for
commodity operations with specific emphasis on the vulnerability and
risk of bulk grain, oilseeds, rice, and processed agricultural
commodities to threats and attacks of deliberate contamination. This
assessment will address the complexities of CCC-owned and farmer-owned
marketing assistance loan collateral being commingled with bulk grain,
oilseeds, and rice of other public owners during the storage,
transportation, and distribution process. Additionally, USDA's Foreign
Agricultural Service (FAS) has begun to work with the U.S. Agency for
International Development and the State Department to develop and
coordinate an international food aid plan. The focus of this
cooperation is two fold: prevention by recognizing the most likely
threats and vulnerabilities within the international food aid system
(those that pose the biggest risk) and development of a Rapid Response
Plan.
Mitigation Strategies
Mitigation strategies depend upon vulnerability and threat
assessment findings and research and development capabilities. To date,
USDA has addressed concerns of vulnerabilities within imported meat,
poultry and egg products by developing standardized screening and
inspection procedures. USDA is also conducting research and development
concerning intervention steps to prevent contamination. Specifically,
USDA is developing intervention steps to prevent transport of agents of
concern from farm-to-table.
Response Planning and Recovery
In the event that preventive measures are unsuccessful, the
Department must be prepared to respond to and recover from an incident.
Therefore, USDA is focusing upon the national initiatives, the National
Response Plan and the National Incident Management System, to ensure
that the Department may respond appropriately to a catastrophic
incident. Additionally, USDA is considering sector specific response
and recovery initiatives. Highlights follow:
National Response Plan (NRP).--Implementing the NRP at USDA is
essential to ensuring that the food and agriculture continuum is
prepared for an event. Therefore, USDA staff offices are identifying
and preparing revisions to existing regulations, policies and guidance
to assure compliance with the NRP. FSIS is working with FDA and DHS, to
develop a food and agriculture annex for the NRP. They established a
cooperative agreement with the National Association of State
Departments of Agriculture (NASDA), to ``develop emergency
preparedness/response best practices and guidelines for Federal-State
response to incidents affecting the food supply.''
National Incident Management System (NIMS).--Similarly, USDA is
implementing NIMS. Agencies have completed the first phase of NIMS
implementation plans, which include preparedness, prevention, response,
and recovery aspects. USDA has compiled the plans into a department-
wide response to DHS. The next step is for USDA to work individually
with agencies to finalize their plans.
National Plant Disease Recovery System (NPDRS).--In the event of a
large-scale disease outbreak, the food and agriculture sector must have
plans in place for recovery. HSPD-9 specifically tasks USDA to develop
such a plan for the plant production system. To date, USDA has led an
interagency committee to develop a system to address the mechanisms and
process for a recovery system for plants/crops. The system should be
capable of responding to a high-consequence plant disease with pest
control measures and the use of resistant seed varieties within a
single growing season to sustain a reasonable level of production for
economically important crops.
To date, the committee has established a steering committee and
working groups to focus on specific diseases. The working groups are
examining the highest priority crops and most potentially harmful
diseases first. They are determining the likely outcome of an outbreak
and the existing mitigations and the need for research and development
to enhance recovery.
Decontamination and Disposal.--HSPD-9 also specifically tasks USDA
to work with the Environmental Protection Agency (EPA) to consider
decontamination and disposal roles and responsibilities. To date, EPA
has led a collaborative effort with USDA, DHHS, and DHS to develop a
plan that addresses how to handle decontamination and disposal issues
post-event for inclusion in the Food and Agriculture Response Plan
annex to the NRP.
Outreach and Professional Development
Since security is a relatively new concept for the food and
agriculture sector, educating stakeholders is important to successfully
implementing programs. The new need for security within this sector
also raises a need for educated professionals capable of addressing
security related issues--veterinarians trained in research for
biological weapons is an example of a new need. To address these
issues, USDA is building new partnerships and working to transition
traditional professional programs into the security realm.
Outreach via Food and Agriculture Sector Coordination.--Forging
strong relationships across Federal, State, local, and industry lines
is key to addressing security within the food and agriculture sector,
for most of it is privately held and or regulated at the State or local
level. Both HSPD-7 and 9 require some form of enhanced relationship
within the sector. Under the leadership of USDA, DHS, and FDA, Food and
Agriculture Sector Coordinating Councils have been formed--one for the
government, and one for industry. They meet in joint Council sessions
quarterly and their leadership hosts conference calls twice monthly.
The food and agriculture sector is the first to implement the NRP and
the National Infrastructure Protection Plan and will serve as a model
for others in organizing and implementing National programs.
Higher Education Programs.--USDA is providing capacity building
grants to universities that provide interdisciplinary degree programs
to prepare food defense professionals. A success story from this effort
is seen in the recently developed Soybean Rust webpage and related
educational materials that were developed by land grant universities in
partnership with CSREES.
Research and Development
Current technologies do not provide USDA with the best possible
tools for addressing our needs related to awareness, early warning,
response or recovery. Therefore, USDA has a research and development
program that focuses upon the highest priority needs. Key highlights
follow:
Food-related Research.--USDA is developing techniques to maximize
the probability of detecting threat agents in food. Specifically, USDA
is developing rapid tests for threat agents in food matrices. These
matrices are based upon vulnerability assessment findings. USDA is also
developing processing techniques to destroy (pasteurize) threat agents
in food.
Agricultural Research.--USDA is strengthening research on rapid
response systems to bioterror agents, improving vaccines, and
identifying genes affecting disease resistance. USDA is also supporting
NPDRS by conducting research on protection of plants against 3 high
priority threat agents (soybean rust, striped rust of wheat and downey
mildew of corn). Additionally, USDA is hosting research to enhance the
development of recombinant vaccine for Foot and Mouth Disease.
BioSafety Level (BSL)-3 Facility.--A priority for USDA is to
complete the consolidated state-of-the-art BSL-3 animal research and
diagnostic laboratory and quarantine facility at Ames, Iowa.
Leveraging DHS Programs an the University Centers for Excellence.--
USDA is working closely with both the pre and post-harvest DHS Centers
for Excellence staff to ensure that they are aware of on-going research
and development activities at USDA. The Department is also working with
the Centers to ensure that they are aware of our priorities and needs
as they develop their agendas.
Question. We are providing significant funding for FADI, and large
increases have been requested each year for the past several years.
When will FADI be fully implemented? Should the Committee expect
continued requests for increases in the years to come?
Answer. The FADI is an on-going initiative to ensure coordinated
efforts across the Federal agencies responsible for agriculture and
food security. Initially, The Department requested funding to establish
new programs because our focus and mandate was on preventing
unintentional contamination or addressing small-scale intentional
contamination such as an act by a disgruntled employee. Since 9/11, the
Department has begun to address intentional contamination. Our reason
for doing so is based upon intelligence demonstrating that our enemy
has both the knowledge and the access to agents that would be harmful
to the food and agriculture sector. Therefore, the Department will
continue to build upon our current security initiatives within the FADI
and as intelligence and world events dictate, we will modify and
enhance our efforts.
Question. How is USDA working with other agencies on FADI? Do you
think the other agencies are paying a proportionate share of their cost
for FADI, and how is that determined? Who makes that determination?
Answer. HSPD-9 sets clear expectations for how agencies will work
together to achieve a strategy to defend the Nation's food and
agriculture sector. The Department is working with our Federal, State,
local, and industry partners to meet this mandate. Although HSPD-9 sets
clear expectations for how the agencies will work together there is no
such directive for determining which agencies will pay for which
activities. This is determined by meetings held between the White House
Security Council, the Office of Management and Budget and the Federal
agencies involved in a particular activity.
USER FEES
Question. The budget request assumes more than $177 million in new
user fees in fiscal year 2006. Several of these, such as Food Safety
and Inspection Service (FSIS) user fees, have been proposed time after
time, and they are always rejected. If our Committee fully complies
with this request, and provides $710 million (a reduction of $106
million from last year), the responsibility to achieve the fees then
falls on you and the authorizing committees.
Has legislative language been submitted to the authorizing
committees? If not, when will USDA submit this language?
Answer. Legislative language for the user fee proposals is being
reviewed expeditiously and will be submitted to Congress as soon as the
reviews are completed.
Question. How will you avoid downsizing FSIS if you are not
successful with the authorizing committees? How will you absorb $177
million in lost resources? Do you support the Committee proceeding with
the President's appropriations proposal if the authorization committee
has taken no action by the date the Committee reports out the fiscal
year 2006 bill?
Answer. In 2006, the President's budget includes and requests the
full amount of budget authority, $850 million, needed to operate FSIS'
inspection services. We are requesting authority to charge user fees,
deposit the fees into special receipt accounts, and use the fees
subject to appropriations. We continue to support the fee proposals as
presented in the budget, which will shift the responsibility for
funding these programs to those who most directly benefit.
SOYBEAN RUST
Question. This past year, soybean rust was detected in the southern
United States and due to prevailing southerly winds, there is great
concern this disease will spread to the other major soybean producing
states. USDA actions to detect, halt, contain, and control soybean rust
will require coordinated efforts of the research and regulatory mission
areas, and perhaps others.
Do you believe soybean rust can be stopped from spreading to
additional States or do you believe there is little USDA can do in this
regard?
Answer. Soybean Rust (SBR) is a fungal disease that is spread
primarily by wind-borne spores. Because it is wind-borne and easily
travels long distances, there is no way to stop it from spreading. In
fact, the pathogen is thought to have traveled from Asia to Africa in
this way. Accordingly, USDA is focusing its efforts on assisting the
States and soybean producers in preparing for the arrival of the
disease in their areas.
USDA has tested fungicides and is seeking resistant varieties of
soybeans. Resistant varieties will take time to develop as there
appears to be limited genetic resistance.
Question. In what states, and regions of those states, has soybean
rust been detected to date, and what are your projections for spread of
this disease during the 2005 crop year?
Answer. SBR was detected for the first time in the continental
United States in November 2004 in Louisiana and subsequently in eight
other southern States: Alabama, Arkansas, Florida, Georgia,
Mississippi, Missouri, Tennessee, and South Carolina. The series of
hurricanes in fall 2004 was the likely cause of the spread of SBR into
the United States and may have spread it throughout the Gulf Coast
region.
In 2005, SBR has been detected in three counties in Florida on
kudzu plants. Surveillance efforts are ongoing, and it is difficult to
predict exactly where outbreaks will occur this year. However, USDA's
SBR aerobiology modeling system indicates that SBR spores have already
spread throughout the eastern half of the United States and likely into
Canada by wind. APHIS and State departments of agriculture are
implementing a monitoring and surveillance network utilizing sentinel
survey plots and mobile monitoring teams to track outbreaks as they
occur.
Question. Do you think it is more effective to concentrate USDA
activities on those areas of the country where soybean rust has been
detected or is most likely to appear rather than spread assistance over
a larger area where it is unlikely soybean rust will appear?
Answer. Because the disease travels long distances by wind, APHIS
officials believe that all major soybean-producing regions are at risk
for the disease and need to be prepared for its arrival. The monitoring
and surveillance network currently being implemented will allow APHIS
and State cooperators to track SBR outbreaks as they occur in new areas
and provide early warning to producers. SBR can be managed effectively
with fungicides, but the fungicides are most effective when applied
before the disease affects the plants.
Question. Please describe any activities, funding levels, and
funding sources the USDA plans to use in fiscal year 2005 and 2006
relating to soybean rust.
Answer. USDA will be spending $1.19 million on soybean rust
surveillance and monitoring efforts and more than $3.8 million is
research in fiscal year 2005. The President's budget requests $3.2
million for research in fiscal year 2006. Details follow below and have
been provided for the record.
APHIS is using $1.19 million from its contingency fund to implement
the SBR monitoring and surveillance network and continues supporting
the comprehensive USDA SBR website. APHIS is providing $800,000 of the
contingency funds to State cooperators for sentinel survey plots and
$180,000 to USDA's Cooperative State Research, Education, and Extension
Service for 5 mobile monitoring teams. The remaining funds will support
the website, which provides timely updates on the results of
surveillance efforts.
ARS has initiated research programs that involve five research
units in Illinois, Iowa, Maryland and Mississippi, plus cooperative
agreements with several Land Grant universities. This research is
designed to develop a better understanding of the way the disease
attacks the plant, strains of soybeans resistant to the disease, a
rapid detection test, and efficacy testing of various fungicide
strategies to combat the disease.
In fiscal year 2005, fungicide trials involving eight chemicals
have been conducted by ARS in South America and Africa where the
disease was known to occur prior to its entry into the United States.
ARS is working with EPA, states, and registrants to develop and
expedite Emergency Exemptions for fungicides in the chemical class of
``triazoles'' which have been found effective against soybean rust in
our studies in Africa and South America. These studies will continue in
fiscal year 2006.
In fiscal year 2005, ARS scientists working closely with the Joint
Genome Institute, Department of Energy in California, have partially
sequenced the genome of the more virulent species of the soybean rust
(Phakopsora pachyrhizi) and are preparing genetic maps for further
diagnostic development. Genome sequence data from the soybean rust
pathogen will be indispensable in identifying polymorphic DNA sequences
with high potential for strain identification, and will be essential to
long-term genetic strategies for the identification of genes that
regulate pathogenicity. These studies will continue in fiscal year
2006.
Fiscal year 2005 multi-year agreements are in place in Brazil,
Paraguay, China, South Africa, Thailand and Vietnam to evaluate soybean
varieties currently grown in the United States for tolerance to soybean
rust and to screen exotic soybean germplasm for resistance to soybean
rust under field conditions. Over 170 soybean lines are being tested at
these 6 international locations. These field sites will greatly
facilitate progress toward selection of superior breeding lines for
development of resistant varieties. In addition, ARS has proposed
research to exchange and evaluate Vietnamese and other soybean
germplasm for resistance to soybean rust in Vietnam and in other
locations.
ARS funding for fiscal year 2005 is $3,881,900; and fiscal year
2006 is $3,188,600.
______
Questions Submitted by Senator Robert C. Byrd
HUMANE ACTIVITY TRACKING
Question. Secretary Johanns, as you know, I am keenly interested in
ensuring that food animals are treated in a humane manner prior to
slaughter. I have included funding in the Food Safety and Inspection
Service for the past several years to increase the number of food
safety inspectors dedicated to making sure that humane animal handling
is treated with the importance it deserves. I plan to continue focusing
on this important subject, and I have several questions regarding how
USDA is carrying out its mission in this regard.
Last year, I included a $3 million increase for the Humane Animal
Tracking (HAT) System, a component of the Field Automation and
Information Management System (FAIM). It is my understanding that this
funding was used to connect the HAT system into the FAIM architecture
in 250 of the largest slaughter establishments. This allows one more
component of information to be at the fingertips of Food Safety and
Inspection Service personnel, which all taken together, is used to
ensure that food animals are treated in a humane manner, and that the
food they provide us remains safe.
Please discuss any potential benefits this increased funding for
the HAT System has to improve food safety and security, as well as
humane animal handling.
Answer. The increased funding has improved the enforcement of the
Humane Methods of Slaughter Act (HMSA). The HAT system is being used to
evaluate and verify important national and District trends to ensure
appropriate actions are being implemented, and ensuring that
enforcement of HMSA is consistent nationwide. The integration of HAT
into the FAIM architecture also allows humane handling and slaughter
verification data to be part of the same FSIS-wide communications
infrastructure as food safety and food security activities, and will
move us closer to the goal of real-time data sharing.
Question. What will be the maintenance costs to ensure the HAT
system remains connected to the FAIM architecture?
Answer. With the $3.0 million in funds made available to FSIS for
implementation of HAT, FSIS has established high-speed lines in 200 of
the more than 900 federally inspected establishments subject to HMSA to
date. The Agency will connect an additional 50 establishments with
high-speed lines in the immediate future. These establishments
slaughter approximately 95 percent of the animals slaughtered in the
United States. After funding for this activity expires, FSIS will use
available funds to maintain the high speed connections in these
establishments.
Question. What additional funding will be needed in order to
connect the HAT System to the FAIM architecture in the remaining
establishments?
Answer. The 2006 budget does not request additional funding for
FSIS to connect the HAT system to the FAIM architecture in the
remaining establishments. Any expansion of the system to additional
establishments will be done within available funds.
Question. Under the current budget proposal for FAIM, what are the
capabilities and shortfalls of this technology? In order to ensure that
HAT information is received by FSIS in real time, as well as other food
safety information, how would FAIM need to be changed or improved?
Answer. FSIS' FAIM project serves as the communications
infrastructure for the Agency's food safety, food security, and humane
handling and slaughter verification activities. Real-time
communications provide a continuous flow of data that gives FSIS the
capability to more rapidly detect and respond to abnormalities in food
safety systems. Dial-up technology is less reliable, less efficient,
and is not capable of handling the same volume of information as high-
speed technology. Because a large number of livestock slaughter
establishments are located in rural areas that may be isolated, there
are significant hurdles to overcome in order to establish high-speed
connections so that Agency personnel throughout the country can fully
utilize data and share food safety, food security and humane handling
and slaughter information in real-time. The existing FAIM
infrastructure is being improved to allow HAT data to be integrated
with inspection data stored in other Agency databases, including data
such as non-compliance records and food safety verification
information. The integration of HAT into the FAIM architecture also
allows humane handling and slaughter verification data to be part of
the same Agency-wide communications infrastructure as food safety and
food security activities, and will move us closer to the goal of real-
time data sharing.
Question. Do the DVMS or anyone else at FSIS prepare reports based
on the HAT data analysis, and can you provide those reports to the
committee?
Answer. A variety of FSIS employees use HAT data and make reports
on its contents. At this time, FSIS is in the process of developing a
standard format for collecting and reporting data. Once these reports
are developed and generated, I would be glad to provide a set to the
Committee.
Question. Of the total number of plants subject to HMSA, after the
$3 million provided last year is spent, how many will remain to be
hooked up to high speed connections? Of those not connected, what
percentage of slaughter occurs there, and what has been the rate of
HMSA compliance in those plants?
Answer. There are currently more than 900 federally inspected
slaughter establishments subject to HMSA. To date, FSIS has established
high-speed connections in approximately 200 livestock slaughter plants.
An additional 50 slaughter establishments will be connected with high-
speed lines in the immediate future. The establishments not connected
with high-speed connections slaughter approximately 5 percent of the
animals. The establishments with high-speed connections do not have a
different rate of compliance with HMSA than other establishments.
In the event of a food safety emergency, I believe it is imperative
that information is available to all who need it in real time, as
opposed to taking days, weeks, or event months to gather pertinent and
necessary information. However, I do not believe that this is currently
the case, and I am very concerned that improving the communication
system to provide real time information does not appear to be a
priority of USDA and FSIS.
Question. What percentage of FSIS inspected plants still have dial
up communications? What is the effect of having to use a dial up modem
instead of a real time communication system in the event of a food
safety, food security, or animal welfare emergency?
Answer. FSIS is currently implementing high-speed communications in
250 federally inspected establishments, which is approximately 11
percent of the 2,200 ``base'' establishments. A ``base'' establishment
is an establishment from which food safety inspectors, including patrol
inspectors, use as a base of operations for providing inspection
service to all establishments on a daily basis, and includes both
slaughter and processing establishments. Though dial-up is not as fast
and reliable as high speed, it still allows inspectors to be reached
and provided food safety information. High-speed technology would
provide greater assurances that inspectors can be reached and provided
with food safety information more rapidly than dial-up technology.
Question. In the event of an emergency, please describe how the
situation would differ depending upon whether the problem occurred in a
plant that still used slow, dial-up modems, as opposed to being able to
provide information to FAIM in real time.
Further, I included report language in the Senate report regarding
the potential of allowing additional FSIS personnel to work with the
current District Veterinary Medical Specialists (DVMS), in order to
ensure that DVMS are spending adequate time focusing on humane
slaughter activities. The language continued and discussed several
objective scoring techniques for FSIS personnel to document animal
slaughter improvements or failures. Specific suggestions were given,
and a report, which has been received, was due on March 1 of this year
regarding those suggestions. I appreciate that the report was submitted
on time; however, I do not believe that specific responses to each of
the suggestions given in the report language was provided. For example,
does USDA plan to allow the use of location or technological
opportunities to make unannounced observations at slaughter plants?
Answer. In a food safety emergency, the primary difference between
dial-up and high-speed technology would be the speed at which
information, including the detection of a problem, instructions to
inspectors, descriptions of product, test results, and other pertinent
information would be collected and disseminated. High-speed connections
would equip FSIS with a fully-integrated, real-time communications
infrastructure, giving FSIS the ability to instantly detect and respond
to abnormalities or weaknesses in the system to best ensure food
safety, food security and humane handling and slaughter activities,
particularly in the event of a food safety emergency.
To enforce provisions of the HMSA, FSIS personnel utilize
unobserved locations for verifying humane handling and slaughter
activities. Furthermore, District Veterinary Medical Specialists
(DVMSs) and other in-plant inspection personnel conduct unannounced--
including off-hour--visits to observe humane handling and slaughter
activities by plant personnel. FSIS does not believe that video cameras
are a substitute for the ongoing, intensive, and random verification of
establishment humane handling and slaughter. The use of video
surveillance from a remote location for HMSA enforcement would not be
viable alternative for assessing the consciousness of animals.
Question. Please respond to each of the suggestions provided in the
fiscal year 2005 Senate report.
Answer. I have asked FSIS to provide more detailed responses for
the record.
[The information follows:]
First Suggestion.--The Committee strongly feels that a portion of
that FTE increase should be used to allow additional FSIS personnel to
work cooperatively with the existing District Veterinary Medical
Specialists (DVMS), whose duties are specifically tied to HMSA
enforcement, in order to increase the number of facility visits by FSIS
personnel with special expertise in HMSA enforcement, and to allow each
DVMS better opportunities to visit facilities in other FSIS districts
to enhance communication and problem solving among all districts.
Agency Response.--FSIS' District Veterinary Medical Specialists
utilize the Agency's Public Health Veterinarians and in-plant
inspection program personnel extensively to ensure HMSA enforcement and
compliance. The DVMSs conduct in-plant verifications on humane handling
and slaughter, and are in regular contact with FSIS in-plant inspection
program personnel regarding humane enforcement issues. As part of their
routine, ongoing and continuous inspection and enforcement duties, all
FSIS inspection personnel are expected to take appropriate actions,
including suspending operations, if appropriate, of a livestock
slaughter establishment if they observe any violations of HMSA.
Further, all FSIS inspection personnel are trained and held accountable
for enforcing HMSA during the slaughter process.
DVMSs, during their audits, work with FSIS in-plant personnel to
identify observation locations from which FSIS officials can verify
humane handling and slaughter activities of plant employees without
knowledge of USDA's presence and observation. FSIS also continues to
refine humane handling verification and tracking procedures for
inspection program personnel. On February 18, 2005, the Agency issued
FSIS Notice 12-05, to provide inspection personnel with additional
information for humane handling and slaughter verification activities
related to animal stunning and procedures for checking for conscious
animals. The Notice also provides inspection personnel with
clarification regarding the information they are to record in the HAT
system, which are verified by DVMSs, and on noncompliance reports
issued for humane handling violations. For veterinarians covering
multiple plants as part of a patrol assignment, FSIS has assigned HAT
activities to be conducted whenever these veterinarians have cause to
visit these plants during their work day.
Second Suggestion.--The Committee expects FSIS to consider a number
of objective scoring techniques to measure more precisely the extent to
and the occasions in which regulatory actions may be appropriate, and
means by which FSIS personnel can actually document improvements or
failures in animal handling and slaughter operations. Further, the
Committee believes other scoring protocols will serve as useful tools
to the agency in directing limited resources. Such protocols may
include assigning overall facility ratings in regard to layout and
adoption by facility management of a systematic approach to monitor and
comply with HMSA requirements.
Agency Response.--FSIS has considered scoring methods, but feels
that scoring could jeopardize the Agency's zero-tolerance policy for
violations of the HMSA. The Agency continues to encourage industry to
implement good management practices for the humane handling of animals,
and requires industry to abide by all of the requirements of USDA's
regulations and HMSA. On September 9, 2004, FSIS published a Notice
encouraging establishments to use a systematic approach to ensure that
they meet the requirements of the law during handling and slaughter.
With a systematic approach, establishments focus on treating
livestock in such a manner as to minimize excitement, discomfort, and
accidental injury the entire time they hold livestock in connection
with handling and slaughter. Also, establishments have been encouraged
to design facilities and implement practices that will minimize
discomfort and injury in accordance with existing regulations. Plants
should periodically evaluate their system for effectiveness and improve
or adjust operations accordingly.
Third Suggestion.--The Committee encourages FSIS to enhance
capabilities to observe animal handling and slaughter operations
through the use of location or technological opportunities to make
unannounced observations that will allow the initiation, when
appropriate, of regulatory actions.
Agency Response.--The Agency supports use of unobserved locations
for verifying humane handling and slaughter activities. DVMSs and other
in-plant FSIS veterinary and inspection personnel conduct unannounced--
including off-hour--visits to observe humane handling and slaughter
activities by plant personnel. In addition, FSIS officials use
observation points in which plant employees conducting slaughter
activities are unaware of USDA's presence and observation. The DVMSs,
during their audits, work with FSIS in-plant personnel to identify
observation locations from which FSIS officials can verify humane
handling and slaughter activities of plant employees without knowledge
of USDA's presence and observation. Ongoing inspection, beyond routine
antemortem inspection, and enforcement responsibilities pursuant to
HMSA are routinely unannounced. Moreover, all FSIS livestock inspection
program personnel are trained in humane handling, and understand that
they are required and obligated to take immediate enforcement action
when a humane slaughter violation is observed.
FSIS does not believe that video cameras are a substitute for the
ongoing, intensive, and random verification of establishment humane
handling and slaughter obligations as documented in this 3 month
analysis. The use of video surveillance from a remote location for HMSA
enforcement would not be viable alternative for assessing the
consciousness of animals.
Question. Out of the total inspections that FSIS carries out in
regard to humane slaughter, what percentage of them occur unannounced
or without notice to the establishments?
Answer. The vast majority of humane handling and slaughter
verifications conducted by FSIS inspection program personnel occur
unannounced or without notice to the establishments. This is due to the
fact that humane handling and slaughter verification activities are
ongoing and continuous throughout the entire slaughter process, rather
than at specific times or announced points in the process.
Question. What has been the effect of the September 9th notice that
encouraged establishments to use a systematic approach in ensuring
humane slaughter? In what ways has it changed industry operations
regarding humane handling and slaughter of animals?
Answer. FSIS believes the Notice is having a positive effect in
encouraging establishments to use a systematic approach to humane
handling and slaughter activities. In addition, the Notice provides
FSIS inspection personnel and industry with a common framework for
discussion on how the Agency believes plants can be most successful in
meeting their obligations under the HMSA.
Question. Other than publishing the notice on September 9 regarding
humane slaughter, what else is FSIS doing to encourage industry to
change and improve their practices regarding humane handling of
animals?
Answer. FSIS conducts daily verification of humane handling through
the HAT system and holds routine discussions with plant management
during weekly meetings.
Question. Does FSIS monitor facility design and improvements to
measure how the industry is changing in plant designs regarding humane
handling? Are the plants' ``periodic evaluations'' made available to
FSIS, and what are the results?
Answer. FSIS monitors facility design and improvements as part of
the Agency's verification of facility regulatory requirements. The
DVMSs also have access to an establishment's periodic evaluations
during their audits. However, facility designs and establishment
periodic evaluations are considered proprietary information and cannot
be shared with the public.
Question. How many FTEs will be dedicated to humane handling in the
fiscal year 2006 budget?
Answer. The Consolidated fiscal year 2005 Appropriations Act
conference report requires that no fewer than 63 full time equivalent
(FTE) positions above the fiscal year 2002 level be employed during
fiscal year 2005 for purposes dedicated solely to inspection and
enforcement related to HMSA. During fiscal year 2006, FSIS will more
than meet this requirement for the number of FTEs.
HMSA ENFORCEMENT
Question. In a January, 2004 GAO report regarding humane slaughter,
GAO stated that they could not determine the amount of resources
necessary to ensure humane handling of animals in all establishments.
Since then, significant attention and funding has been provided to
ensure that humane handling of animals is a priority of FSIS, and FSIS
has announced several ways in which it is working to improve HMSA
enforcement.
Taking into account all of the efforts, changes and increased
funding for HMSA enforcement that have occurred since that GAO report,
are you now able to provide a resource level you believe would be fully
adequate to ensure HMSA enforcement throughout the country?
Answer. We believe we have adequate funding for HMSA enforcement.
Question. If you believe the current funding level is adequate, on
what do you base that determination?
Answer. We continually evaluate data on HMSA enforcement to assess
our performance. The DVMSs assess trends for non-compliance reports and
track any trends in humane handling slaughter violations that result in
suspension actions.
______
Questions Submitted by Senator Tom Harkin
CONSERVATION SECURITY PROGRAM
Question. Participation in the first CSP sign-up was much lower
than NRCS expected, but they still spent $40 million in 18 watersheds.
This year with expenditures capped at $202 million for contracts in 220
watersheds, there will be much less money per watershed for new
contracts. The President's Budget proposes capping CSP at $274 million
next year. All of these numbers are far less than the farm bill
provides for this program. As discussed at the hearing, you would
respond for the record to the following questions.
How much of the $274 million for 2006 would be available for new
contracts and how much of it would go to making payments on contracts
signed in 2004 and 2005?
Answer. NRCS estimates show that for fiscal year 2006,
approximately $110 million would be available for new contracts and
$123.2 million would be used for prior year contracts. The balance of
$41.4 million would be used for technical assistance by NRCS to deliver
the program.
Question. How many new contracts will be signed in 2005, this year,
and how many fewer contracts will be signed in 2006 with only $274
million?
Answer. NRCS is estimating that more than 13,000 contracts will be
signed in fiscal year 2005, and approximately 9,400 contracts will be
signed in fiscal year 2006.
Question. It seems clear that if the President's Budget prevails,
2006 will be a year of substantially diminished new enrollments and
expectations for CSP, correct?
Answer. The Administration's fiscal year 2006 Budget request
reflects a strong future commitment to the CSP with a request of $273.9
million, an increase of $71 million, or 36 percent, over the fiscal
year 2005 funding level.
AMES ANIMAL DISEASE FACILITY
Question. Modernizing USDA's National Animal Disease facilities is
of critical importance for animal health, animal agriculture and for
human health as well. This work is under way, with $404 million
appropriated for the project thus far. The President's budget proposal
calls for an additional $58.8 million, indicating this amount of funds
will complete the project. This remaining amount of funds is dedicated
to completing the so-called low containment large animal facilities.
There are strong indications that this figure of $58.8 million
proposed in the budget is not adequate to complete these animal holding
facilities properly. I understand that because of the shortage of
funds, the Department has developed several options for asking for bids
to construct only a part of the major lab building in this fiscal year.
I have had an extremely hard time getting to the bottom of this
issue of what the correct figure is for the amount of funds needed to
complete the modernization of these facilities properly. This
renovation has to be done right, but my staff has been unable to get
documents and information USDA has about what is really needed.
As discussed at the hearing, please furnish to the Subcommittee
and to me, without delay, (1) a copy of the June 2003 program of
requirements that laid out the requirements for the Ames animal disease
facilities and (2) a copy of the full report of the international
review team in January 2001 that laid out their views of the adequacy
of these facilities?
Answer. The President's budget proposes $58.8 million to complete
the National Animal Disease Center in Ames, Iowa. With the proposed
level of funding, the facility will meet the original program
requirements as outlined in the June, 2003 Program of Requirements
(POR). A POR is an internal planning document that provides the costs
of various options and alternatives which the Agricultural Research
Service (ARS) uses to assist in defining research program needs and
related technical requirements. The document serves as just one of
several factors management considers in making final decisions on
project scope, budget, and other project-related policy decisions. A
copy of the POR was sent to the Subcommittee staff. A copy of the full
report of the International Review Team has been provided for the
record.
Question. Exactly how will the current plans for the low bio-
containment holding facilities fall short of the June 2003 program of
requirements?
Answer. The original program requirements have not been
compromised. The low bio-containment holding facility will be completed
to meet all original programmatic requirements.
Question. Also, as discussed at the hearing, please inform the
Subcommittee promptly--that is prior to conference on this bill--(1) if
the bids received for constructing the main laboratory building show
that costs will exceed cost estimates used to this point and (2) if the
Department is delaying any part of the bidding for constructing the
main laboratory building because of cost concerns. What response to
these questions can you provide at this time?
Answer. We fully expect that the Ames modernization will be
completed within the total funding requested in the fiscal year 2006
budget. ARS expects to open bids on the first of several construction
packages for the Laboratory/Office complex in the August-September,
2005 time frame. The Department will keep the subcommittee informed on
the bidding process.
BIOBASED PRODUCTS PROCUREMENT
Question. I asked Chuck Conner at his confirmation hearing about
the regulations that are long delayed for the Federal biobased
purchasing preference program. He assured me that he would make it a
top priority, which has not heretofore been the case.
I would like to know what biobased products USDA is purchasing
right now to meet its statutory and leadership obligations? I know that
the Beltsville ARS facility, for example, has been a leader in its use
of biobased products--everything from biodiesel to cleaning products--
but what is USDA doing right now, nearly 3 years after the passage of
the farm bill, to actually buy products, and lead in this area as a
model agency for all the others?
Answer. The biobased product procurement program is a priority for
USDA. In addition to the well-known biobased purchasing efforts of the
Agricultural Research Service's Beltsville facility, USDA is currently
procuring biobased products in many areas. We have also completed many
leadership activities to support the program and currently plan many
more to increase the purchase and use of biobased products. Additional
details are provided for the record below.
[The information follows:]
Some of the biobased products that USDA is procuring include, but
are not limited to, the following:
--Soy-based inks in its printing plant;
--Biobased oils, lubricants and hydraulic fluids for its people
movers (elevators, escalators, etc.) in the USDA headquarters
building complex (solicitation is currently out for bid);
--Biobased signage to replace wooden signage made from traditionally
harvested forest materials in national forests;
--Materials for the South Building modernization, such as polylactide
fabrics, a corn product, for systems furniture, and laminated
wheat board desktop workstations;
--Carpet with soy-based backing;
--Biobased ice melt; and,
--Biobased cleaning solutions.
Additionally, USDA has completed the following leadership
activities to support the increased purchase and use of biobased
products:
--Issued Secretary's Memorandum 1042-003 and Departmental Regulation
5023-2, which establish the USDA Biobased Products Leadership
Council (BPLC) and basic USDA procurement policy on biobased
products. The Deputy Secretary of Agriculture chairs the BPLC;
--Issued a final rule in the Federal Register on January 11, 2005
establishing the framework for biobased product designation;
--Developed the Federal Acquisition Regulation (FAR) case for
biobased products. The Civilian Agency Acquisition Council
(CAAC) Law Team has assessed the case, and forwarded it to the
Civilian Agency Acquisition Council and the Defense Acquisition
Regulatory Council (DARC) for further review and initiation of
the rule making process.
During the remainder of calendar year 2005, highlights of planned
USDA activities include:
--Publishing in the Federal Register the first proposed rule to
designate items for preferred procurement, and pursuing the
publication of a final rule;
--Publishing two subsequent proposed rules to designate items for
preferred procurement for which we have developed the required
tests and analytical information (each with 10 items) and
clearing them through USDA and OMB;
--Publishing in the Federal Register the proposed rule for the
voluntary labeling program;
--Identifying existing biobased products available on General
Services Administration schedule contracts and make them
readily available for purchase by USDA purchase cardholders
using the USDA Advantage! virtual storefront;
--Developing a tabletop biobased products display to increase USDA
employee awareness of these products, their benefits, and the
need for USDA to take a leadership position in their purchase
and use;
--Developing and implementing an on-line biobased product awareness
training module thru USDA's AgLearn e-learning system; and,
--Pursuing the acquisition of undesignated products consistent with
existing procurement law and regulation to show leadership as
the product designation effort continues.
LIVESTOCK AND MEAT MARKETING STUDY
Question. On June 18, 2004, USDA announced that it had contracted
with the Research Triangle Institute (RTI) to conduct its livestock and
meat marketing study. This was roughly a year and a half after
receiving funds to conduct the study from the fiscal year 2003 omnibus
appropriations bill. It was my understanding that this study could not
be started until the Office of Management and Budget (OMB) cleared the
data collection packages to be used for the study. The comment period
for the two data collection packages did not end until December 3,
2004.
At this time, has USDA received clearance from the Office of
Management and Budget (OMB) for USDA and the Research Triangle
Institute to begin data collection for the livestock and meat marketing
study? If so, when was the start date?
Answer. No, USDA will submit the data collection plans to OMB for
clearance in the near future.
Question. Please provide me a time frame and project completion
date for the livestock and meat marketing study.
Answer.
[The information follows:]
timeline for major steps for livestock and meat market study
2003
Feb 20--$4.5 million appropriated for study
Feb-May--Interagency working group (GIPSA, OCE, AMS, ERS, NASS,
WAOB, DOJ, CFTC, FTC) defined scope of study necessary to meet
Congressional objectives and comply with Information Quality
Guidelines.
May 30--Published purpose and scope of study in Federal Register
with 30-day comment period. Received 23 comments.
July--GIPSA reviewed and summarized comments. GIPSA worked with
APHIS contracting office in Minneapolis to establish type of contract
to award and to determine the contracting officer. Drafted AD-700
required to initiate contracting procedures.
July-Aug--Interagency working group reviewed comments and confirmed
scope and objectives. GIPSA drafted Statement of Work (SOW).
Sep-Oct--Working Group reviewed and commented on SOW, GIPSA
finalized. GIPSA worked with APHIS contracting personnel in Minneapolis
to incorporate SOW into formal request for proposals (RFP) in
accordance with FAR.
Nov 17--Pre-solicitation notice published in Federal Business
Opportunities in accordance with FAR.
Nov-Dec--Transitioned from APHIS Minneapolis contracting officer to
Riverdale contracting officer to expedite contracting process. GIPSA
worked with OGC to establish initial protocols for confidentiality
provisions and non-disclosure agreements. GIPSA and APHIS contracting
officer finalized RFP.
Dec 3--APHIS published RFP in Federal Business Opportunities, GIPSA
placed copy on agency Web page in accordance with FAR.
Dec 16--Contracting officer and GIPSA held pre-proposal conference
with potential contractors in accordance with FAR.
Dec-Jan--GIPSA and contracting officer prepared responses to
questions raised at pre-proposal conference and released responses as
amendment to RFP. GIPSA and contracting officer prepared and published
additional amendments to RFP to enhance confidentiality provisions with
the Confidential Information Protection and Statistical Efficiency Act
(CIPSEA).
2004
Feb 9--Received proposals.
Feb 9--
Jun 14--Selection team from interagency working group reviewed
initial proposals; offerors in competitive range submitted revised
proposals; selection team evaluated revised proposals, negotiated with
highest-ranked offerors on cost and deliverables to arrive at final
proposal selection in accordance with FAR for competitive contracting
procedures.
Jun 14--Award of $4.3 million contract to RTI.
July-Aug--GIPSA established a peer review panel to review technical
performance of contractor. RTI prepared initial data collection plans.
Sep 9--Published in Federal Register summary of data collection
plans with 60-day public comment period in accordance with PRA
requirements.
Oct-Nov--RTI pre-tested data collection plans consistent with PRA
requirements. Peer review panel reviewed collection plan and offered
comments to meet Quality of Information guidelines.
Nov 8--Extended comment period on Federal Register notice of data
collection plans from Nov. 8 to Dec. 3 based on public requests.
Dec 3--Received 19 comments on data collection plans. Comments
addressed burden/scope, authority to collect data, MPR data use, and
security of data.
Dec-Mar--RTI revised data collection plans based on public and peer
group comments.
2005
March 21--Update Report sent to the House Appropriations Committee.
Nov-Mar--RTI conducted informal interviews of 27 entities to
address objectives 1 and 2.
Planned Activities
May--Send final transactions and survey data collection plans to
OCIO for submission to OMB, and publish notice in Federal Register.
May--OMB reviews data collection plans for the final report and
makes plans available to public in accordance with PRA requirements.
Jun--RTI issues interim report on objectives 1 and 2.
Jul--RTI begins collection of transaction data from 400 largest
entities.
Aug--RTI begins mail out survey of 6,800 entities.
2006
Jun--RTI issues final report.
Question. In addition, why has development of the framework of this
study taken so exhaustively long when funds were appropriated for it in
February 2003?
Answer. Statutory and regulatory requirements including the
Paperwork Reduction Act (PRA), the Information Quality Guidelines
issued by the Office of Management and Budget (OMB), and Federal
Acquisition Regulations (FAR) impose significant time-consuming
requirements on implementing a study of this scope. The steps are
outlined in the attached timeline, and are summarized below.
In order to insure that the study meets Congressional objectives
and complies with the OMB Information Quality Guidelines, Grain
Inspection, Packers and Stockyards Administration (GIPSA) formed an
interagency working group consisting of five USDA agencies with unique
areas of expertise in economics, marketing, research, and data
collection-processing and three other departments with expertise in
market regulatory issues: Office of Chief Economist (OCE); Agricultural
Marketing Service (AMS); Economic Research Service (ERS); National
Agricultural Statistics Service (NASS); the World Agricultural Outlook
Board (WAOB); Department of Justice (DOJ); Commodities Futures Trading
Commission (CFTC); and Federal Trade Commission (FTC).
Three months after the appropriation, GIPSA published a notice in
the Federal Register that reflected the working group's interpretation
of the scope of the study needed to effectively address the
Congressional request. The public was given 30 days to comment on the
scope of the study. GIPSA received comments from producers, packer
trade associations, and universities. The working group considered the
comments and refined the final scope into a request for proposals
(RFP).
GIPSA published the RFP on December 3, 2003. In consultation with
the APHIS contracting officer and to conform to FAR requirements, GIPSA
allowed approximately 2 months until February 9, 2004 for potential
submitters to review the initial RFP and subsequent amendments and
prepare proposals. GIPSA also published a pre-solicitation notice to
comply with Section 508 of the Rehabilitation Act, 29 U.S.C. 794d.
After GIPSA received the proposals, an evaluation committee composed of
members of the working group reviewed and ranked the proposals. GIPSA
gave the submitters of the highest-ranking proposals the opportunity to
revise their proposals in accordance with FAR-established procedures.
These proposals were then re-evaluated. The re-evaluation included
negotiations between the evaluation committee and submitters of the
highest-ranked proposals, during which the submitters responded to
questions from the evaluation committee about the proposals.
Once the contract was awarded, GIPSA and RTI implemented the
procedures required by the PRA for review and approval of the data
collection plan. First, RTI developed an initial data collection plan.
In accordance with PRA requirements, RTI published its plans in the
Federal Register, and the public was given 60 days to comment on the
plans. GIPSA extended the comment period after several potential
respondents requested additional time to file comments. GIPSA received
ten comments from packers and six comments from packers' trade
associations. To meet Information Quality Guidelines Requirements, RTI
pre-tested the plans with potential respondents during the comment
period, and GIPSA's independent peer reviewers reviewed and commented
on the plans. RTI then revised its initial plans after considering the
public comments, comments from the peer reviewers, and the results of
the pre-tests. The revised plans must be reviewed by OMB and published
in the Federal Register for an additional comment period by the public.
______
Questions Submitted by Senator Byron L. Dorgan
BUDGET
Question. In an interview with the Des Moines Register on Sunday,
you said this about the budget: ``Bad budget policy is not good for
agriculture no matter what the short-term gain is. It's not good for
interest rates. It's not good for stability in the international
marketplace. There's nothing good in it for agriculture.''
I agree with you completely; bad budget policy is bad for
agriculture. That's why I can't understand the President's fiscal year
2006 Budget request. The President's Budget would cut funding for food
stamps and rural development programs. It would cut discretionary
spending on conservation programs by $185 million, and cut funding for
the Resource, Conservation and Development Program by 50 percent.
The President's fiscal year 2006 Budget would impose a new, $40
million-a-year tax on sugar processors, which would cost nearly $6,500
each year to a farmer growing 500 acres of sugar beets, and it would
cut $5.7 billion in farm programs over the next 10 years. I asked the
Congressional Research Service to calculate the impact of the
President's Budget request on average North Dakota farms; they told me
an average North Dakota farm would have its farm payments cut by as
much as 29 percent.
Even though agriculture spending is less than 1 percent of the
Federal budget, the Administration is trying to squeeze out 16 percent
of its savings from agriculture programs.
Mr. Secretary, when I travel back home to North Dakota, I meet with
family farmers who ask me the same question over and over again:
``What is the President trying to do to us with this budget?
Doesn't he understand how difficult it is to stay on the farm, even
without these budget cuts? So I would ask you the same question.
Answer. We both agree that good budget policy is good for
agriculture and good for the Nation. And as I've noted before,
agriculture is only one of several areas where the President has
proposed reforms to reduce the budget deficit. I fully support the
President's proposals. Certainly spending reductions can be painful in
the short run, but the longer term benefits are worth some short term
sacrifice. The President's proposals for agriculture are intended to
spread the impact across the range of program participants in an
equitable manner.
The proposals do leave the farm safety net in place, albeit at
modestly reduced levels. While the reduction in loan deficiency
payments could be significant in some years, as you note, total
payments would be reduced by far less since the Administration proposes
direct and countercyclical payments be reduced by 5 percent. Since the
latter payments make up the bulk of the total payments which producers
receive in most situations, the total reduction is likely to be much
closer to 5 percent. And for the farm sector as a whole, I note that
aggregate farm income is at record levels and the financial health of
the sector is robust.
So I believe now is a good time to begin the task of reducing the
deficit. I recognize that the proposals do involve sensitive issues as
some suggest and I stand ready to work with the Congress to help
contribute to ``good budget policy'' with some sensible and modest
reforms which are consistent with ``good agricultural policy.''
CAFTA
Question. On Monday, you held a press conference with several
agricultural organizations in support of the Central American Free
Trade Agreement. But many in the agricultural community do not share
your enthusiasm for this agreement. I have heard from cattle ranchers
and wheat and corn and soybean producers in my State who think that the
promises of a new market for our farm exports will never materialize.
And I have heard from farm groups, like the National Farmers Union, the
American Corn Growers Association, R-CALF USA, the National Family Farm
Coalition, the American Sugar Beet Growers Association, the American
Sugar Cane Alliance, and dozens more who think this agreement will hurt
American agriculture. Additionally, the National Association of State
Departments of Agriculture has taken a position against CAFTA.
So my question is, are all of these groups simply wrong?
Answer. The Department firmly believes that CAFTA-DR is a good
agreement for American farmers and ranchers. This view is supported by
numerous agricultural organizations, such as the American Farm Bureau
Federation, National Association of Wheat Growers, National Cattlemen's
Beef Association, American Soybean Association, and National Corn
Growers' Association. All of these groups and scores more--56 leading
food and agricultural organizations in all--wrote a letter to all
Members of Congress on April 4, 2005, urging support for CAFTA-DR.
Question. Two weeks ago, you held a press conference on CAFTA at
which you said: ``There's one group that works hard on these trade
agreements to defeat them. And that's the sugar industry. . . . Every
which-way I look at this agreement I don't see that it has a negative
impact on the sugar program.''
As you know, the sugar program established in the 2002 Farm Bill
only stays in effect as long as we import less than 1.53 million tons
of sugar a year. If we ever import more than that, the sugar program is
suspended, any excess sugar held by our producers gets dumped on the
market, and the price of sugar plummets.
The only reason we're less than 1.53 million tons now is because
we've not been importing very much sugar from Mexico. But the Mexican
government is negotiating with us to increase their exports and, as
soon as those exports pick up again, we'll be right at the 1.53 million
ton limit. You've said before that CAFTA won't hurt our sugar
producers.
But how do you reconcile that claim with the fact that CAFTA's
sugar imports will put us over the limit and trigger the suspension of
the sugar program once we resume full imports from Mexico?
Answer. The Department is fully implementing the sugar program,
including the non-recourse loans which are its backbone. The price-
supporting non-recourse loans will remain available regardless of the
level of imports and regardless of whether or not domestic marketing
allotments are in place. Furthermore, the CAFTA-DR agreement includes a
mechanism for the United States to limit levels of sugar imports under
the Agreement if needed to assist in managing the sugar program.
Question. Our trade negotiators are currently working on Free Trade
Agreements with more than 20 other sugar-exporting countries. Most of
these countries already enjoy guaranteed, duty-free access to the U.S.
market under WTO rules. If CAFTA passes, each of those more than 20
sugar-exporting countries will expect to be treated just as generously
as we've treated the CAFTA Nations.
How can Congress begin work on a new farm bill in 2007 if we don't
know whether our sugar program is going to be negotiated away by our
trade negotiators looking for the next big Free Trade Agreement?
Answer. The Administration consults with Congress on a continuing
basis as we conduct all of our trade negotiations. In future trade
agreements, we will continue to be mindful of all of our domestic
agricultural programs, and continue to seek to reach agreements that
promote the interests of U.S. farmers and ranchers.
COUNTRY-OF-ORIGIN LABELING
Question. On Monday, April 4, County-of-Origin labeling for seafood
went into effect across the country. For the last week, anyone who has
bought fresh or frozen fish or shellfish has been able to tell its
country-of-origin. This is a wonderful thing. I have long thought that
it is crazy that we can tell where our shirts and our shoes were made,
but not where the food that we eat comes from. COOL for seafood has
been in effect for the last week, and I have not heard the industry
complaining that the cost of compliance is too high; I have not heard
of any consumers saying that the price of seafood has gone through the
roof in the past week. In fact, USDA's own estimate says that the price
for consumers will probably only increase by about two-tenths of a cent
per-pound. I know that USDA has long been opposed to country-of-origin
labeling.
Will the success of this program for seafood finally convince USDA
to embrace this program for meat and fruits and vegetables, too?
Answer. Congress passed the Country of Origin Labeling legislation
that will become mandatory for the meat and produce industry in 2006.
Although the Administration has been clear that it prefers a voluntary
program, if the current law requiring mandatory labeling is not
changed, USDA will faithfully implement the law for the remaining
commodities.
JAPAN TRADE
Question. Taiwan recently announced that it was resuming imports of
U.S. beef. This is good news. Before Taiwan closed its market to U.S.
beef it was one of our largest export markets.
What is the progress of your efforts to convince Japan and South
Korea to reopen their markets to U.S. beef?
Answer. We have been engaged with the Government of Japan at the
technical and political level since it banned U.S. beef in December
2003. For the first time since the October agreement to resume trade,
we are finally beginning to see signs of progress in Japan's
rulemaking.
The first decision Japan had to make as a pre-condition to
rulemaking on imports is eliminating animals under 21 months of age
from its mandatory BSE testing requirement. Japan is finally ready to
make that change. In late March, Japan's Food Safety Commission
concluded the modification in Japan's testing regulations presents an
acceptable level of risk. The decision to exempt animals under 21
months of age from testing is expected to be final sometime during May.
With the decision to exclude younger animals from mandatory testing
behind us, this now clears the way for rulemaking on imports.
Unfortunately, we do not have a timetable for a decision on imports but
the next steps are now in place. In the coming weeks, the Ministry of
Agriculture, Forestry, and Fisheries and the Ministry of Health, Labor,
and Welfare will deliver the Beef Export Verification (BEV) program for
Japan to the Food Safety Commission. The Commission will evaluate the
program, and we expect there will be consultations and public meetings.
Once they have finished that process, they will make a decision. Again,
we do not know when Japan will complete this work and so we will
continue to press Japan at every opportunity for a decision to resume
trade.
To help Japan prepare for a decision to lift its ban on imports,
Dr. Charles Lambert, Deputy Under Secretary for Marketing and
Regulatory Programs, has led U.S. delegations of experts to Tokyo for
technical discussions and outreach activities with Japanese press and
consumer groups. The outreach activities include press briefings and
roundtable discussions with the media, industry, and consumers to
educate them on the safety of U.S. beef.
The delegation has also visited Korea for extensive technical
discussions. The consultations have been led by experts from USDA and
FDA who have reviewed U.S. BSE measures and U.S. beef safety with
officials from the Korean Ministry of Agriculture.
BROADBAND FUNDING
Question. Last year Senator Burns and I met with Secretary Veneman
about the fact that Congress was providing the RUS with funding for
loans yet RUS was slow in getting the loans out the door. Secretary
Veneman did report some improvement, and I hope that you will remain
committed to this program and to achieving the meaningful deployment of
broadband services, particularly since broadband deployment has been a
goal expressed by this Administration.
Can you please walk me through your loan approval process? How long
does it take the average borrower to make it through all the steps
before getting final approval by USDA and provided with the actual
money to build out the broadband service?
Answer. I will ask USDA's Rural Development staff to provide a
detailed explanation.
[The information follows:]
Once the application is received, it goes through an initial review
process with one of the following decisions being reached: (1) the
application is considered complete and goes to the final review stage;
(2) the application is returned and cannot be processed; or (3)
additional information is requested before the application can be
considered complete. Once the application is considered complete, it
goes through an in-depth financial and engineering review. The loan is
then presented to the Assistant Administrator's Loan Committee for
approval. If approved, the loan will be reviewed by the Senior Loan
Committee. When the loan is approved the loan documents are sent to the
applicant for signature. Once the documents are signed, funds are then
made available for drawdown.
In fiscal year 2003, 42 applications were received and returned
with an average processing time of 7 months each; 31 applications were
considered complete with an average processing time of 6 months each;
and 26 applications were approved with an average processing time of 9
months each. Once the loans were been approved, the average processing
time of the loan was 6 months. Funds for 16 of these applications were
made available to the borrower in an average of 14 months. Of the 16
applications, 10 have not completed the approval process. Of these 10,
8 are pending a borrower action and 2 are pending an RUS action.
In fiscal year 2004, 25 applications were received and returned
with an average processing time of 4 months each; 14 applications were
considered complete with an average processing time of 3 months each;
and 11 applications were approved with an average processing time of 3
months each. Once the loans were approved, the average processing time
of the loan was 7 months. Funds for 2 of these approved applications
were made available to the borrower in an average of 11 months. Of the
11 approved applications, 9 have not completed the approval process. Of
these 9, 7 are pending a borrower action and 2 are pending an RUS
action.
So far during fiscal year 2005, three applications received have
been returned with an average processing time of 1 month; 5
applications have been considered complete with an average processing
time of 2 months; and one has been approved with an average processing
time of 5 months. This application is pending both an RUS and a
borrower action.
NATIONAL VETERINARY MEDICAL SERVICE ACT
Question. Many rural areas of this country face a severe shortage
of veterinarians. I understand that there are one-half as many
veterinarians available to respond in the event of an animal disease
outbreak as there were 20 years ago. The National Veterinary Medical
Act would help solve this shortage by providing loan repayments to
veterinarians who agree to practice in areas with a serious veterinary
shortage. At this time, USDA has not included for the National
Veterinary Medical Act in its budget. I understand that the program
could be administered on a trial basis with approximately 15-20
veterinarians for $1 million.
Would you be willing to implement the National Veterinary Medical
Act on a trial basis, in a limited number of states? Would you later
consider expanding such a trial or pilot program if analysis proves the
efficacy of the program in reducing veterinary shortage problem?
Answer. The President's budget does not include funding to
implement the National Veterinary Medical Act, which seeks to place
practicing veterinarians in rural areas.
RURAL DEVELOPMENT FUNDING FOR RURAL EMPOWERMENT ZONES AND OTHER GRANT
PROGRAMS
Question. For the fourth year in a row, the Administration proposes
no funding to follow through on the commitment that USDA made to rural
empowerment zones. This year, the approach is a bit different by
proposing to consolidate the program in the Administration's
Strengthening America's Communities Initiative at the Department of
Commerce but I believe the result for the rural empowerment zones will
be the same--no funding next year. I have one of these zones in my
state, the Griggs-Steele Empowerment Zone, focused on out migration-a
very serious problem in North Dakota.
If the Administration's proposal was accepted, what guarantee-if
any-would rural EZs have for funding in fiscal year 2006?
Answer. The President's Strengthening America's Communities
Initiative will include eligibility criteria that will ensure funds are
directed to those communities most in need of development assistance.
We feel confident that rural communities will fare well when these
criteria are used. We will continue to work with the Department of
Commerce on the technical details of program delivery, particularly as
it affects rural areas. Under the new Initiative, rural community
organizations would have access to a substantial portion of a total
program level exceeding $3.5 billion.
Question. You also propose consolidating several other rural
development programs besides rural empowerment zones including rural
business enterprise grants and rural business opportunity grants.
What assurances can you give this Subcommittee that rural
communities would be able to compete with urban ones for these grant
dollars if we accepted the Administration's proposal to consolidate
these programs into the Department of Commerce?
Answer. USDA is working with the Department of Commerce on the
development of this initiative, which will include criteria to ensure
that funds are directed to the most needy communities. Moreover, USDA's
Rural Development field staff will be available to help rural
communities qualify for assistance. We are confident that rural
communities will receive a fair share of the funding under the
initiative.
RESOURCE CONSERVATION AND DEVELOPMENT COUNCILS
Question. You have proposed reducing funding for the Resource
Conservation and Development Program within NRCS by about 50 percent. I
have heard from many RC&D Councils in North Dakota concerned about
their viability if such a large cut is enacted.
Can you please tell me what the effect of this proposed budget
would be on councils in my state?
Answer. Under the budget proposal, the Federal role of providing
seed money or serving as an incubator will cease after 20 years of
support in the interest of reducing the deficit and redirecting funds
to other higher priority conservation work. In North Dakota, six of the
eight RC&D areas have received Federal funding for more than 20 years
and will graduate from the program. They include: Dakota Prairies, Lake
Agassiz, Dakota West, Northern Plains, South Central Dakota, and Red
River. While these affected councils will no longer receive Federal
financial support, they will retain their Internal Revenue Service
(IRS) non-profit status and may continue to function as designed RC&D
areas, participating in other Federal, State, and local programs and
with non-Federal entities in rural communities across the country.
ARS RESEARCH IN NORTH DAKOTA
Question. I see that virtually all of the congressional earmarked
ARS research projects are eliminated again this year. This includes
almost $4 million in earmarks for the Fargo ARS and other ARS
facilities in Mandan and Grand Forks.
What would you propose happen to the researchers who are working on
projects such as sunflower research at the Fargo ARS proposed for
termination?
Answer. ARS has requested the termination of ongoing, unrequested
earmarks in the fiscal year 2006 budget to finance new and expanded
priority research initiatives that target national agricultural and
food needs. ARS impacted researchers will be reassigned to the new
initiatives where possible or offered positions funded from existing
vacancies located throughout the country.
Question. The Administration is requesting an increase of $6.8
million for nutrition survey research and $1.5 million for research to
address the Obesity Epidemic and to Promote Healthier Lifestyles.
Can you please tell me what portion of these funds will be spent at
the Grand Forks Human Nutrition Center, which is one of our Nation's
most outstanding human nutrition research facilities?
Answer. Of the $6.8 million increase requested for nutrition survey
research, $6.4 million will be allocated to Beltsville as it is the ARS
nutrition center that is responsible for conducting nutrition
monitoring. In addition, ARS plans to provide $400,000 to the Grand
Forks Human Nutrition Research Center to carry out research on obesity
in Native Americans. The remaining $1.5 million increase is requested
for research on obesity prevention and will be allocated to nutrition
centers in Little Rock, Arkansas; Davis, California; Boston,
Massachusetts; and Houston, Texas.
HATCH ACT FUNDING CUT
Question. The Administration also proposes a 50 percent cut in
formula funds under the Hatch Act for agricultural research at the 1862
colleges ($89.4 million) stating that ``this is the first phase of a
plan to shift funding from this program to competitively awarded
grants.'' I am concerned that there are many policy flaws in this plan
that haven't been considered by the Administration.
In 1887, Congress passed the Hatch Act which authorizes Federal
research funds for the State agricultural experiment stations, such as
NDSU, on a formula basis. The money is intended to solve problems for
farmers by developing new technology, plant varieties and ways to
combat crop pests and disease. Those funds pay salaries of scientists,
something not possible with competitive grants because the money cannot
be counted on year to year.
How does the Administration propose to deal with this problem if
the President's proposal is accepted by this Committee?
Answer. Recipients of formula funds have considerable flexibility
to use these funds to support research projects, infrastructure, and
personnel. The allocation of formula funds to support personnel varies
widely from institution to institution depending not only on the size
and needs of the institution but also on the institutional management
of financial resources from Federal and non-Federal sources. While the
amount of formula funds available to institutions in fiscal year 2006
will be reduced and eliminated in fiscal year 2007, it will ultimately
be up to each institution to determine how to allocate the resources
available to support personnel. However, the fiscal year 2006 budget
proposes full indirect cost recovery as part of competitive funding
which will allow institutions to support faculty, staff, and other
infrastructure needed to support agricultural science. In addition, the
State Agricultural Experiment Station Competitive Grants Program
proposed in the President's budget will provide a source of funding for
functions currently supported by formula funds.
NORTHERN GREAT PLAINS REGIONAL AUTHORITY
Question. Can you tell me how the Department is proceeding with the
establishment of the Northern Great Plains Regional Authority and which
agency within USDA will be charged with administering the Authority?
Answer. The $1.479 million in the fiscal year 2005 Appropriations
Act will be administered by USDA's Rural Development mission area
pending the establishment of the Authority. These funds are for
activity by the Northern Great Plains Regional Authority in fiscal year
2005 and fiscal year 2006 and cannot be used until the Authority is
established. Since the legislation authorizing this regional authority
calls for the Federal members to be appointed by the President and
confirmed by the Senate, the Presidential personnel staff is working to
identify candidates for nomination.
Question. Also, when can we expect the fiscal year 2005 funding to
be released? The legislation also calls for the appointment of a
Federal and a tribal co-chair.
Answer. Funds cannot be released until the Authority is
established, which cannot occur until the Federal and tribal co-chairs
have been appointed. The authorizing legislation for the Authority
calls for the Federal members to be in place before the Authority is
officially established. The Presidential personnel staff is working on
identifying candidates for nomination.
Question. Can you tell me what the process will be to make these
appointments and what the status of this process is?
Answer. Since the legislation authorizing this regional authority
calls for the Federal members to be appointed by the President and
Senate-confirmed, the Presidential personnel staff is working to
identify candidates for nomination.
APHIS BLACKBIRD CONTROL
Question. What are WS methods for managing the blackbird problem
for sunflowers? I understand one method, the Wildlife Conservation
Sunflower Plots, are showing promise as a method of reducing damage and
is supported by various ornithological groups. What resources would be
needed to conduct a large-scale (100 20 acre plots) evaluation of this
concept?
Answer. APHIS WS manages blackbird damage to sunflowers using
various methods such as aerial application of aquatic herbicide on
cattail-choked wetlands, which serve as roost sites for blackbirds.
Additionally, WS provides technical assistance through information
sharing and the loan or distribution of damage abatement equipment as
well as through monitoring annual bird populations and annual sunflower
damage assessments. WS is also involved in various research projects to
manage blackbirds, such as investigating blackbird migratory routes and
evaluating blackbird repellants as well as the ability to divert
blackbirds from commercial sunflower fields into 20-acre sunflower
``lure plots.''
Research projects provide an incentive for local farmers to
participate in the projects. Financial incentives are $3,000 for each
20 acre plot, and therefore, 100 20 acre plots would require $300,000.
Question. Through this Subcommittee, I have been successful in
adding funding to enhance blackbird control efforts in North Dakota. I
have been told that APHIS doesn't see this action as enhancing their
budget and funds have been directed away from blackbird control efforts
in North Dakota such as the test plots to enhance APHIS' base budget.
Can you tell me if these funds have all been applied for blackbird
control in North Dakota and what overhead APHIS charges for this work?
Answer. Each year since fiscal year 1989, APHIS appropriations
included $335,000 to North Dakota and $33,000 to South Dakota for
blackbird damage control activities. Since fiscal year 2002 an
additional $240,000 in annual funding has been provided to strengthen
our control efforts in North Dakota.
In fiscal year 2005 North Dakota received $257,000 of the $335,000
provided by congressional earmark in the fiscal year 1989 appropriation
and $186,000 of the $240,000 provided by congressional earmark in the
fiscal year 2002 appropriation for blackbird control efforts. The
balance of the earmarks is being used to fund program management and
operations, agency-wide support activity assessments, and department-
wide central charges. In addition, North Dakota received $77,612 for
cattail management efforts.
______
Questions Submitted by Senator Richard J. Durbin
BSE POLICIES
Question. In your February 3 testimony to the Agriculture
Committee, you testified that ``the single most important thing we can
do to protect human health regarding BSE is the removal of SRMs
(specified risk materials) from the food supply.''
I agree that the removal of these materials--SRMs--is essential to
our Nation's BSE prevention and control efforts. This is why I was
concerned when I learned last December that the head of the food
inspectors' union had raised some very important questions about USDA
policies for SRM removal. I sent then-Secretary Ann Veneman a letter
SRM removal but have not gotten answers to some of my specific
questions. USDA has also refused to meet with my staff about this
issue.
Who is determining the age of cattle?
Answer. Slaughter establishments are required to identify the age
of animals. FSIS' scientifically trained Public Health Veterinarians
and other similarly trained inspection personnel are responsible for
verifying the development, implementation, and maintenance of
establishment control procedures for determining the age of cattle. All
FSIS inspection program personnel are fully authorized and expected to
take immediate regulatory enforcement action in the event of
noncompliance.
Question. Specifically, SRM removal requirements depend on the age
of the animal: more types of tissues need to be removed from animals
over 30 months of age, for example, then from cows younger than 30
months. Yet, it is not clear to me who is making this determination of
cattle age, and what kind of training or qualification requirements
this person must meet. Are slaughterhouse employees (rather than
government inspectors) the ones who are determining the age of cattle
at slaughter?
Answer. The January 2004 BSE regulations and notices to FSIS
employees provide clear and specific direction to plants regarding
their responsibilities to have written plans and procedures in place to
identify age and ensure the removal of specified risk materials (SRMs).
Failure to comply with these requirements is a violation of the Federal
Meat Inspection Act. FSIS' scientifically trained Public Health
Veterinarians (PHVs) and other similarly trained inspection personnel
are responsible for verifying the development, implementation, and
maintenance of establishment control procedures for determining the age
of cattle and ensuring the removal of SRMs.
Question. What minimum training and qualifications does USDA
require for the people who are making this determination?
Answer. Establishments that slaughter cattle are responsible for
having written plans and procedures for identifying the age of cattle
at slaughter and ensuring the removal of specified risk materials
(SRMs). Failure to comply with these requirements is a violation of the
Federal Meat Inspection Act. FSIS' scientifically trained Public Health
Veterinarians (PHVs) and other similarly trained inspection personnel
are responsible for verifying the development, implementation, and
maintenance of establishment control procedures for determining the age
of cattle and ensuring the removal of SRMs.
PHVs are highly educated public health professionals. FSIS' entry-
level PHV training includes 3 weeks of in-classroom training, followed
by 3 weeks of on-the-job mentoring with a trained veterinarian, and 3
weeks of Food Safety Regulatory Essentials training. In addition, we
are beginning to train PHVs with 4-week Enforcement, Investigations and
Analysis Officer training.
PHVs also receive training that is specific to bovine spongiform
encephalopathy (BSE). During February and March 2004, all PHVs assigned
to beef slaughter plants were trained on Agency policies related to
BSE. During the summer and fall of 2004, PHVs were trained for their
role in the USDA BSE surveillance program. Finally, all entry-level PHV
training now includes BSE training.
Question. Have there been problems with non-compliance?
Answer. FSIS has conducted an intensive review of its non-
compliance data related to the SRM requirements, and has not identified
a systemic problem or problems with particular plants, beyond a low
level of non-compliance for which regulatory action was taken. These
regulatory actions, occurring at a low level, account for less than 1
percent of overall compliance actions taken by FSIS.
Question. I understand that FSIS keeps a database documenting
instances of non-compliance with policies such as SRM removal. I also
have heard that the Inspector General is investigating FSIS'
implementation and enforcement of the SRM removal policy.
How many instances of non-compliance have been reported since the
policy was implemented (January 2004)?
Answer. FSIS is in the process of reviewing records identified as
potential noncompliance records.
Question. Has FSIS located the non-compliance reports that show
problems with SRM removal? Have all of these non-compliance reports
been turned over to the Office of the Inspector General for its
investigation into the issue?
Answer. FSIS is in the process of reviewing records identified as
potential noncompliance records. The agency is cooperating fully with
the Office of Inspector General (OIG), and has provided them with the
information requested.
Question. Will you provide copies of these reports to my staff?
Answer. Copies of these records will be made available after the
agency completes its evaluation of records indicating potential non-
compliance.
Question. When will the Inspector General's report be completed?
Answer. According to OIG, the report is expected to be completed in
early fiscal year 2006.
Question. Is USDA's investigation of union president Stan Painter
retaliatory?
Answer. USDA's investigation into the validity of allegations that
Specified Risk Material (SRM) regulations are not being effectively
carried out or properly enforced was conducted solely to ensure the
safety of our Nation's food supply.
Question. Stan Painter, the president of the food inspectors union,
set forth a series of concerns about SRM removal in a letter to the
agency in early December. I understand that FSIS has responded to the
letter by launching a personal investigation of Mr. Painter. In
January, for example, FSIS flew Mr. Painter to Washington DC and
questioned him for 3 hours, to try to get him to divulge the sources of
his information. However, FSIS has a database of non-compliance
reports, which should document instances in which inspectors have
reported non-compliance with SRM removal.
Why has FSIS chosen to investigate Mr. Painter personally instead
of addressing the questions and concerns raised by his letter?
Answer. In a December 8, 2004, letter, the chairman of the National
Joint Council of Food Inspection Locals made unsubstantiated and non-
specific allegations that FSIS is not properly enforcing regulations
requiring the removal of Specified Risk Materials (SRMs) from beef
products. Because of the serious nature of the allegations contained in
Mr. Painter's Letter, FSIS immediately initiated an inquiry into those
allegations which included an informal interview of the union chairman.
During that interview, Mr. Painter refused to provide specific
information to support the letter's allegations. That inquiry
subsequently resulted in a formal investigation by FSIS to determine
the validity of the allegations. As part of that investigation, Mr.
Painter was formally interviewed on two occasions in January. The FSIS
investigation has been completed and the allegations concerning
improper enforcement of SRM regulations were not substantiated. In
addition, the OIG independently sent an investigator and an audit team
to examine the allegations concerning SRM regulatory compliance. Their
observations also concluded that the chairman's allegations were
unsubstantiated.
Question. Why did FSIS pressure Mr. Painter to name his sources,
instead of reviewing its database of non-compliance reports for the
information it needed?
Answer. FSIS took these allegations seriously and sought specifics
so the Agency could follow-up appropriately. To date, nothing
communicated to FSIS through interviews or data analysis, supports the
chairman's charge that BSE regulations are not being effectively
carried out or enforced by FSIS inspection personnel.
SINGLE FOOD SAFETY AGENCY
Question. Currently, Federal oversight for food safety is
fragmented with at least 12 different Federal agencies and 35 different
laws governing food safety. There are also dozens of House and Senate
subcommittees with food safety oversight. With overlapping
jurisdictions and scattered responsibilities, Federal agencies often
lack accountability on food safety-related issues and resources are not
properly allocated to ensure the public health is protected. The recent
rise of concerns about antibiotic resistance transferred from food
animals to humans and mad cow disease underscore the need for change.
Our Federal food safety statutes need to be modernized to more
effectively ensure that food safety hazards are minimized and research
and education programs are bolstered. I introduced a bill last week--S.
729--that would do just that.
President Bush and former Homeland Security Secretary Ridge have
both publicly discussed the concept of combining Federal food safety
responsibilities into a single agency, and outgoing HHS Secretary Tommy
Thompson noted in December that he had trouble sleeping at night,
worrying about attacks on our food supply.
Just last Thursday, the trade press reported that Gerald Masoudi,
FDA's chief counsel, said the lack of coordination among the agencies
with responsibility for beef safety as one of the greatest challenges
to protecting the public against mad cow disease. Masoudi said: ``The
responsibility of contaminated food products is spread out among three
Federal agencies that do not regulate the problem in a consistent
manner.''
With all these high-ranking officials raising concerns about the
safety of the food supply, has USDA changed its position and decided to
embrace the concept of a single food safety agency?
Answer. I believe that the Federal Government has a strong food
safety system in place and that USDA has a critical role to play in
protecting the U.S. food supply. I will work with my colleagues at the
Department of Homeland Security, the Department of Health and Human
Services, and other Federal and State agencies to maintain effective
working relationships.
Question. What do you see as the disadvantages of combining the
Federal food safety agencies into a single agency? Are there any
advantages?
Answer. The ultimate goal for Federal food safety programs must be
to improve food safety and public health. The food safety system could
be redesigned in an endless array of forms, but if food safety and
public health are not improved, it would be a failure.
Question. Do you believe the creation of the Department of Homeland
Security could serve as a model for the creation of a single food
safety agency?
Answer. There are many options that would need to be evaluated
before concluding that food safety functions of the Federal Government
need to be reorganized.
FOOD SAFETY USER FEES
Question. USDA's Food Safety and Inspection Service (FSIS) conducts
mandatory inspection of meat, poultry, and processed egg products to
insure their safety and proper labeling. The fiscal year 2006 FSIS
budget includes a request for $850 million in appropriations, some of
which would be reduced by $139 million in new user fees for salaries
and expenses. Acting Under Secretary for Food Safety, Dr. Merle
Pierson, told the House Appropriations Committee last month that the
agency would have to lay off 2,000 people if Congress does not enact
this user fee proposal.
Could you verify whether this is an accurate estimate of the number
of layoffs that would occur without the new user fees and elaborate on
which 2,000 jobs would be eliminated?
Answer. In 2006, the President's budget includes and requests the
full amount of budget authority, $850 million, needed to operate FSIS'
inspection services. We are requesting authority to charge user fees,
deposit the fees into special receipt accounts, and use the fees
subject to appropriations.
Question. Since Congress has been skeptical to such user fee
proposals in the past, what makes this proposal different? Will you be
sending up legislative language on this user fee proposal?
Answer. We continue to support the fee proposals as presented in
the budget, which will shift the responsibility for funding these
programs to those who most directly benefit. The legislative proposal
should be submitted to the Congress shortly.
FOOD SAFETY PERSONNEL
Question. The important food safety positions in the agency have
been vacant for some time now. Specifically, there has been no Under
Secretary for Food Safety since Elsa Murano left in December and there
has been an acting FSIS administrator in place since last March.
What is your timeframe for permanently filling these important food
safety positions?
Answer. We are working to fill these important positions as quickly
as possible.
NATIONAL SCHOOL LUNCH PROGRAM
Question. The Child Nutrition and WIC Reauthorization Act was
signed into law on June 30, 2004. It contained several provisions based
on legislation I proposed in 2003, known as the Safe School Food Act.
These provisions include doubling the number of school cafeteria
inspections and requiring USDA to provide training to school officials
on how to include food safety requirements in their food purchasing
contracts. And yet, investigations by Dateline NBC and others continue
to turn up problems with rodent infestations and unsafe food holding
temperatures in our Nation's school cafeterias that threaten to sicken
our children.
What is USDA doing to help school cafeterias improve school lunch
safety, particularly in the areas of this law?
Answer. School food safety has always been a priority for the
National School Lunch Program. The Child Nutrition and WIC
Reauthorization Act of 2004 provides schools additional tools to
improve the safety of school meals.
The Department will shortly issue interim regulations to implement
the statutory requirement of two school food safety inspections per
year. In addition, the Department has taken steps to link schools with
food safety regulators to put schools on the way to compliance. Earlier
this year, USDA contacted the associations representing State and local
food safety inspectors to inform them about the new requirement and
stress their important role in helping schools comply with the law. In
June, staff from the Food and Nutrition Service will attend the annual
conference of the National Environmental Health Association to discuss
the school food safety inspection requirement and to seek their
cooperation.
USDA is also working on the implementation of the provision that
requires School Food Authorities (SFAs) to establish a food safety
program based on Hazard Analysis and Critical Control Points (HACCP)
principles. The Department has drafted guidance with input from the
SFAs, State education agencies, State health agencies, the Food and
Drug Administration, and other Federal and State collaborators to help
SFAs develop food safety programs that meet the needs and capabilities
of different types of school foodservice operations. This document will
soon be under clearance and the Department plans to distribute it to
SFAs this spring.
Furthermore, USDA will continue to develop technical assistance
materials and training for school foodservice operators through Team
Nutrition and the National Food Service Management Institute (NFSMI) to
promote food safety in the National School Lunch Program. An example of
food safety material developed in collaboration with the NFSMI is
``Serving It Safe''. This technical assistance publication explains why
school food safety is important and gives practical guidance to
foodservice personnel to prepare and serve safe meals.
Question. In your February budget outline, you note School Lunch
participation is estimated to reach a record 29.8 million children each
day next year. Are there adequate resources in the budget for this?
Answer. The fiscal year 2006 funding request is a 5.8 percent
increase over the fiscal year 2005 funding level and will be sufficient
to provide reimbursement for meal service currently projected for
fiscal year 2006.
SAFE SCHOOL FOOD ACT
Question. The Safe School Food Act also calls for increased testing
for pathogens like E. coli, Salmonella, and Listeria in uncooked ground
meats, USDA to develop a database of information on food producers who
provide food to schools, and all USDA to institute mandatory recalls of
unsafe food being provided to schools.
Will you work with me to pursue these measures?
Answer. Although USDA has multiple measures in place to ensure that
safe food is provided to schools, I am always happy to work with
Congress on issues of importance to the Nation, such as food safety.
CHILDHOOD OBESITY
Question. Obesity rates have doubled for children in the last 25
years. In adolescents, the rates have tripled. We have to do something
to change the way children learn about nutrition and the way they make
food choices. In Illinois, several schools are working together to test
a few different strategies for improving the way students eat and we
expect to know more about what's working based on what these schools
are doing. But in the meantime, our kids are eating all the wrong kinds
of foods. I visited a school near Chicago last week and saw students
eating tabasco-spiced cheese puffs and soda for breakfast. School
administrators feel they have little choice but to provide what
students want.
How do you think we can improve the food choices students make when
they are at school?
Answer. Getting children to eat healthy food is always a challenge
for parents, caregivers and educators, especially during the school
year, when schedules are the busiest. Federal school meals programs
offer a critical tool to help parents and other caregivers encourage
healthy eating. USDA has been working closely with schools to help them
prepare meals that look good, taste good, and meet national nutrition
standards.
Yet the challenges of helping kids eat healthy reach beyond these
USDA-supported meals. Children's preferences are shaped by innumerable
influences in their environment as they learn and grow into adulthood.
Many students, enticed by high calorie low nutrient foods, do not
choose healthy meals. Improved school meals are undermined by competing
food sales outside of the Federal program that feature high-calorie low
nutrient foods and beverage items, and the intense advertising efforts
for those items.
Parents, schools, and many others in local communities have
important roles to play:
--Schools, parents and others in the community can use the new
MyPyramid as a tool to educate children in making wise food
choices. In April, 2005, USDA introduced MyPyramid, which
replaces the Food Guide Pyramid introduced in 1992. MyPyramid
is part of an overall food guidance system that emphasizes the
need for a more individualized approach to improving diet and
lifestyle. A child-friendly version of MyPyramid for teachers
and children is being developed. This version of MyPyramid is
intended to reach children 6 to 11 years old with targeted
messages about the importance of making smart eating and
physical activity choices. USDA hopes to have the children's
version available next school year.
--Parents and caregivers can influence behavior at school by offering
healthful meals and snacks at home, and by leading by example,
since children learn from what parents do at least as much as
what parents say. Parents should eat with their children and
model good eating and activity practices.
--School food service professionals can make healthful meals more
appealing to students using USDA resources such as our Fruits
and Vegetables Galore kit, which offers strategies to
incorporate more fruits and vegetables into school meals, and
promote them to students.
--Teachers can use USDA educational materials to build nutrition
education into their curricula.
--School administrators can encourage or require vending machine
operators, school canteens, and a la carte meal services to
improve their offerings. Our Making it Happen guide describes a
wide range of successful efforts to improve the nutritional
environments schools across the country.
--Parents, school administrators, teachers and local communities can
promote children's health through new local wellness policies.
Recent legislation will encourage the development of wellness
committees to develop goals and plans for nutrition education,
physical activity, and other activities. USDA is working with
schools to get these policies in place over the next 2 years.
--Schools and community leaders can take on the HealthierUS School
Challenge to make the school environment more supportive of
healthy eating and active lifestyle choices. Schools that
accept the challenge will be locally and nationally recognized
by USDA as being certified as a Silver or Gold Team Nutrition
School, based on school meal and other food and beverage sales
on the school campus, to showcase their success, and encourage
others to follow their lead.
The challenge of promoting children's healthy eating and physical
activity is one we must face together. The USDA offers leadership and
support for parents, schools and communities in this important effort.
INTERNATIONAL FOOD AID
Question. Your budget States we are going to provide an additional
$300 million for emergency food aid funding with AID. It also states we
are going to depend more on locally grown commodities in other
countries rather than in our own. American-grown food assistance has
long been a powerful weapon against world hunger.
If we have surplus commodities and the world has urgent needs, why
not continue to provide this U.S.-grown assistance?
Answer. American farmers will continue to benefit from our
international food aid programs. However, given the widely differing
emergency conditions faced in the countries where we provide food aid,
we need the flexibility to respond quickly and appropriately. In many
emergency situations, time is a critical factor and cash for local
purchases will save lives.
The Administration appreciates the benefits our food aid activities
provide to the agriculture industry, and the bulk of our programs will
continue to benefit these groups as it has done in the past. We believe
that the groups who have historically supported these programs will
continue to see the value of promoting food security abroad. From a
moral standpoint, the flexibility provided by this change will enable
the United States to save more lives and respond more quickly to
humanitarian crises which must continue to be the primary concern of
this program.
It is important to note that in situations where commodities are
not available for local purchase under appropriate market conditions in
developing countries, the funding could be used to purchase commodities
in the United States as is now done.
Our desire is not to entirely change the way that the United States
approaches meeting food aid needs, but to enhance the variety of tools
at our disposal so that we have multiple avenues to combat hunger in
emergencies.
______
Questions Submitted by Senator Tim Johnson
NORTHERN GREAT PLAINS REGIONAL AUTHORITY
Question. As a citizen of the Great Plains, you are well acquainted
with the many economic challenges facing rural communities in States
like South Dakota and Nebraska. In recognition of research
demonstrating the benefits of regional strategies for promoting
economic development, Congress established the Northern Great Plains
Regional Authority in the 2002 Farm Bill. As you know, the Authority
would help to coordinate policies affecting the region's economic
performance. Unfortunately, our home States have still not seen more
than a tiny fraction of the Authority's potential benefits.
Would you please clarify the Administration's position regarding
the merits of regional development organizations such as the Northern
Great Plains Regional Authority?
Answer. The President's 2006 budget shows that the Administration
remains committed to providing the resources to meet the development
needs of rural communities not only in South Dakota, Nebraska and the
other Great Plains States, but in all parts of the country.
Establishment of the Northern Great Plains Regional Authority that was
authorized by the 2002 Farm Bill would not necessarily impact either
the share of resources that the Great Plains States would receive or
how effectively these resources would be used. Nevertheless, the
Administration will continue to work toward establishing the Authority
with funding provided in fiscal years 2004 and 2005.
Question. Would you also please explain how, and in what timeframe,
the Administration intends to resolve the issues that have impeded the
Authority's operations to date?
Answer. Since the legislation authorizing this regional authority
calls for the Federal members to be appointed by the President and
confirmed by the Senate before the Authority can be established, the
Presidential personnel staff is working to identify candidates for
nomination. The timeframe for announcing the nominations is not known.
RURAL BUSINESS INVESTMENT PROGRAM
Question. As you know, inadequate access to financing, including
venture capital, is one of many factors that constrains economic growth
in our region. In order to address this issue, Congress established the
Rural Business Investment Program, which is modeled on a successful
program operated by the Small Business Administration. Though nearly 4
years have elapsed since the President signed the Farm Bill, which
created the Rural Business Investment Program, rural entrepreneurs
starved for capital are still waiting for the Administration to
implement the program.
Could you please explain why it has taken so long to implement the
program?
Answer. It is my understanding that the Rural Business Investment
Program was difficult to implement largely because it constituted an
entirely new type of assistance for USDA to provide--the guaranteeing
of debentures for investment companies to finance rural entrepreneurs.
However, I have been told that the program is now underway.
Question. Would you also please outline how, and in what timeframe,
the Administration intends to resolve the factors that have delayed the
program's implementation?
Answer. I will ask USDA's Rural Development staff to provide the
details of the key steps that were taken in implementing the program.
[The information follows:]
Publication of the Interim Final Rule and Notice of Funds
Availability.--The RBIP Interim Final Rule was published on June 8,
2004, in the Federal Register with a 30-day public comment period. On
that same date, a Notice of Funds Availability (NOFA) applicable to the
first competitive application round also was published in the Federal
Register.
Application Window Closed--September 17, 2004.--The Small Business
Administration (SBA) received five applications by the deadline from a
geographically diverse group of applicants. In fiscal year 2005, SBA's
Investment Division has completed their Initial Review Process and
notified applicants of the results. On or before June 1, 2005, USDA and
SBA expect to designate selected applicants as conditionally approved
Rural Business Investment Companies (RBIC's) and each will be given 1
year to raise their private equity match requirement. After proof of
the match and clearance of all requisite legal documentation, the
conditionally approved RBIC's may be licensed and become eligible for
program funds. We do not expect any investments to be made in rural
enterprises until fiscal year 2006.
SUN GRANT INITIATIVE
Question. I know that you are a proponent of the increased use of
biobased fuels.
Are you familiar with the ``Sun Grant Initiative,'' which provides
an innovative approach for providing university-based bioproduct
research and education programs at the State and local level?
Answer. Yes, I am aware of the Sun Grant Initiative.
Question. What is your opinion about possible collaborations
between the Department and the Sun Grant Initiative to extend the
Departments work in the area of bioproducts and the development of
renewable fuels?
Answer. Funding for the Sun Grant Initiative is not in the
President's Budget Proposal for fiscal year 2006. CSREES supports
research on biobased products and bioenergy through the National
Research Initiative and researchers could submit a proposal for
university-based bioproduct research and education to this
competitively awarded program to be considered for funding.
RESOURCE CONSERVATION AND DEVELOPMENT
Question. Resource Conservation and Development (RC&D) councils
foster economic activity, using resources available to our rural
communities. Constituents have voiced concern for the use of the
Program Assessment Rating Tool (PART) in the evaluation of RC&Ds,
questioning the applicability of the PART to RC&Ds given the
quantitative nature of the assessment.
Would you please clarify why PART is used for the evaluation of
RC&D councils?
Answer. The Performance Assessment Results Tool (PART) was
developed to enable the Administration to assess the effectiveness of
Federal programs and to help form management actions, budget requests,
and legislative proposals directed at achieving results. The PART
incorporates factors that affect and reflect program performance
including program purpose and design; performance measurement,
evaluations, and strategic planning; program management; and program
results.
Question. Are other rating tools available aside from PART that may
be more appropriate for the evaluation of RC&Ds?
Answer. USDA is in the final stages of completing a comprehensive
program evaluation, as required by Section 2504 of the Farm Security
and Rural Investment Act of 2002 for the RC&D program. The report
findings are expected to be released by June 30, 2005, and may
compliment the PART evaluation.
FEDERAL FORMULA FUNDS
Question. One especially troubling proposal is the Administration's
treatment of our Federal formula funds. South Dakota State University
(SDSU), a land-grant university in Brookings, South Dakota, relies
heavily on Hatch, McIntire-Stennis, and Animal Health Federal formula
funds. The President's proposed budget would cut 45 faculty and staff
at SDSU, with a 25 to 50 percent reduction in graduate students. These
cuts will result in the closure of at least one SDSU research farm, and
at least one SDSU public service laboratory. It is my understanding
that other land-grant institutions across America are also concerned by
the shift from Federal formula funds to competitive grants.
Would you please clarify how land-grant universities are expected
to adjust to this funding change?
Answer. Recipients of formula funds have considerable flexibility
to use these funds to support research projects, infrastructure, and
personnel. The allocation of formula funds to support personnel varies
widely from institution to institution depending not only on the size
and needs of the institution but also on the institutional management
of financial resources from Federal and non-Federal sources. While the
amount of formula funds available to institutions in fiscal year 2006
will be reduced and eliminated in fiscal year 2007, it will ultimately
be up to each institution to determine how to allocate the resources
available to support personnel. However, the fiscal year 2006 budget
proposes full indirect cost recovery as part of competitive funding
which will allow institutions to support faculty, staff, and other
infrastructure needed to support agricultural science. In addition, the
State Agricultural Experiment Station Competitive Grants Program
proposed in the President's budget will provide a source of funding for
functions currently supported by formula funds.
ANIMAL IDENTIFICATION
Question. I consistently hear from producers about the lack of
transparency with USDA's proposed animal identification system,
including cost, confidentiality, and incorporating practical methods of
identification into a national system.
Would you please indicate how producer costs will be minimized, how
producer confidentiality will be maintained, and how much flexibility
will be afforded producers with existing methods of identification
(i.e. branding)?
Answer. The National Animal Identification System (NAIS) will
contain the minimum amount of information necessary for animal health
officials to be able to track suspect animals and identify any other
animals that may have been exposed to a disease. Animal identification
and tracking systems maintained by the States or regional alliances
will be an integral part of the overall NAIS information
infrastructure. The State and regional systems will be able to collect
and maintain more information than is required for the NAIS, yet only
the required data need to be available for the national animal records
repository.
In order to secure full participation from livestock producers, the
USDA is pursuing legislation to establish a system for protecting
information obtained through the animal identification system
established by the Secretary of the USDA.
USDA understands that there is no ``one-size-fits-all''
identification technology. Rather than focus on a specific technology,
the focus will be on the design of the identification data system; what
information should be collected; and, when the data should be collected
and reported. Once the identification system is designed, the market
will determine which technologies will be the most appropriate to meet
the needs of the system. As specific technologies are determined, the
standards for those technologies will be established to ensure
compatibility across all sectors of the industry.
Producers will be able to use the NAIS in coordination with
production management systems, marketing incentives, etc., allowing for
the transition to a ``one number-one animal'' system for disease
control programs and other industry-administered programs. While
animals must be identified prior to being moved from their current
premises, producers can decide whether to identify their stock at birth
or during other management practices.
The integration of existing branding procedures into the NAIS,
while integrating animal identification technology standards
(electronic identification, retinal scan, DNA, etc.) will be determined
by industry to ensure the most practical options are implemented and
that new ones can easily be incorporated into the NAIS.
Because the NAIS is being developed as an industry-government
partnership, we expect that industry and the government will share the
cost of the necessary elements. At the present time, we do not envision
any significant Federal funding for individual animal tags or other
such devices. However, funding of select electronic readers could be
accommodated under agreements with some cooperators. A variety of
identification systems are currently used in the United States to
identify various livestock species. USDA continues to seek technology
solutions that have proven successful in the marketplace, and we
continue to rely on stakeholders to determine which animal
identification methods are the most practical and effective for each
species in order to minimize the costs to the producer.
SUBCOMMITTEE RECESS
Senator Bennett. Not at all.
Thank you, Mr. Secretary. It has been a very informative
morning, and we appreciate your responsiveness.
The next hearing will be tomorrow afternoon, where we will
hear from the Farm and Foreign Agricultural Services, the
Natural Resources and Environment activity, Rural Development,
and talk about Research, Education and Economics. Senator Craig
made a comment to me as he left about research and the
importance of that, and while I do not presume to speak for
him, I do think we need to recognize that agricultural research
in many ways is our seed corn, and we ought to take another
look at some of the cuts that have been proposed there.
With that, again, thank you for your participation, and the
hearing is recessed.
[Whereupon, at 11:18 a.m., Tuesday, April 12, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2006
----------
WEDNESDAY, APRIL 13, 2005
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 12:30 p.m., in room SD-192, Dirksen
Senate Office Building, Hon. Robert F. Bennett (chairman)
presiding.
Present: Senators Bennett and Kohl.
DEPARTMENT OF AGRICULTURE
STATEMENTS OF:
KEITH COLLINS, CHIEF ECONOMIST
MARK REY, UNDER SECRETARY FOR NATURAL RESOURCES AND ENVIRONMENT
GILBERT G. GONZALEZ, ACTING UNDER SECRETARY FOR RURAL
DEVELOPMENT
JOSEPH J. JEN, UNDER SECRETARY FOR RESEARCH, EDUCATION, AND
ECONOMICS
J.B. PENN, UNDER SECRETARY FOR FARM AND FOREIGN AGRICULTURAL
SERVICES
DENNIS KAPLAN, OFFICE OF BUDGET AND PROGRAM ANALYSIS
OPENING STATEMENT OF SENATOR ROBERT F. BENNETT
Senator Bennett. The subcommittee will come to order.
We want to thank you all for your accommodating us at this
somewhat unusual hour. We were scheduled to go at 2:00 p.m.,
and we have had to move that because of Senate activity. And I
understand that there is now a vote scheduled for 1:45 p.m.. So
we will try to move through this in expeditious fashion.
I am glad to see the curtain is open. That means you are
not important enough to be on television, but you brought your
own crowd with you. So it is well attended here today, and we
appreciate your being here.
This is our second hearing on the budget request. We heard
from the Secretary yesterday. And today's witnesses are Dr.
Keith Collins, the USDA's chief economist; Dr. J.B. Penn, who
is the Under Secretary for Farm and Foreign Agricultural
Services; Mark Rey, Under Secretary for Natural Resources and
Environment; Gilbert Gonzalez, Acting Under Secretary for Rural
Development; and Dr. Joseph Jen, Under Secretary for Research,
Education, and Economics, and accompanied by Mr. Dennis Kaplan
of the Office of Budget and Program Analysis. We appreciate
your service and appreciate your being here today.
The witnesses today represent production agriculture,
trade, conservation, rural development, and the research and
education, all of which support USDA programs, and we
appreciate your being here.
As I said, we are going to have a supplemental on the floor
today. So I would suggest that Dr. Collins perhaps make some
opening comments from his perspective as the chief economist.
And then if the rest of you are willing to hold yourself in
readiness, we go to questions.
And we will do our best to hear from all of you as we go
through the question situation. If that would be acceptable, we
will do that in the interest of time.
Senator Kohl.
Senator Kohl. I thank you very much, Senator Bennett.
And gentlemen, it is great to have you with us today. I
also will withhold an opening statement in the interest of
brevity and getting to your testimony and questions, and we
appreciate your coming here very much.
Thank you, Senator Bennett.
Senator Bennett. All right. Dr. Collins, you have the
floor.
STATEMENT OF KEITH COLLINS
Mr. Collins. Thank you very much, Chairman Bennett and Mr.
Kohl. For all of us here today, let me say thank you for
inviting the Department up here to discuss our 2006 budget
proposals.
I am going to start with a very brief overview of the
general economic situation in agriculture, and I think that
will help provide some context for the discussions that you
will have with our under secretaries this afternoon.
To begin with, I would say that strong domestic and foreign
economic growth are providing a foundation for U.S. farm and
rural economies to continue the improved performances that we
have seen over the past year and the year before. Markets for
livestock and livestock products, which account for about half
of the farm economy, continue to remain very strong despite the
closure of our beef in Asian markets.
During the first quarter of 2005, in fact, fed cattle
prices averaged $89 a hundredweight, which was the second-
highest quarterly price for cattle ever. With meat protein
demand still firm, with cattle slaughter down, and live animal
supplies expected to continue tight, I think average cattle
prices are likely to remain historically strong for some time
to come.
Likewise, hog, broiler, and milk returns all remain
favorable as supply expansion thus far has been restrained,
even in the face of growing demand.
Turning to major crops, stocks are up, and farm prices are
down following last year's record production levels. However,
farm cash receipts are being supported by the fact that farmers
have more volume to market this year based on last year's
record crops.
If you look at 2005, we believe U.S. crop production will
decline. USDA's prospective plantings report, which was
released a couple of weeks ago, suggests lower acreage for
wheat and for soybeans, about the same acreage for rice and
cotton, and a modest increase for corn. If we have trend yields
in 2005, production levels would decline for all major crops,
with declines ranging from 8 to 9 percent for soybeans to 20
percent for cotton.
But even with such reduced production, our crop supplies
would still be ample, and I believe little price appreciation
seems likely, except for cotton.
Globally, export competition will remain intense this year.
Wheat from the European Union and Black Sea region, corn from
Argentina and China, soybeans from Brazil and Argentina, as
well as oil and demand-driven increases in shipping costs will
pressure U.S. prices despite the competitive benefits from the
weaker dollar.
For fiscal year 2005, U.S. agricultural exports are
forecast at $59 billion, down from last year's record, but the
second highest since 1996. And that is despite the continuing
loss of beef export value.
With lower prices for program crops, Government payments
are forecast to be a record $24 billion in 2005, and that will
offset the decline in cash receipts for major crops. Under
Secretaries Penn and Rey can provide more information this
afternoon on how our farm and conservation programs are
assisting the farm economy.
Higher prices for fuel, fertilizer, and chemicals will
likely push up production expenses in 2005. But those will be
offset by lower expenses for farm origin inputs, such as feed.
That should keep overall production expenses about the same as
last year. And with gross income about the same as last year,
that means that net cash farm income should likewise be about
the same as last year's record high level.
The combination of the growing overall economy, strong
rural job growth, and record net cash income is expected to
boost average farm household income. And Under Secretary
Gonzalez today can relate how our rural development programs
are helping the performance of the rural economy.
With another sound income year in prospect, farm credit
conditions are expected to remain favorable. Farm input sales
should be good, and farm land values will likely rise again.
Thus, cash flow and balance sheet prospects indicate a pretty
solid footing for the farm economy in 2005.
While many farms will benefit from these income and balance
sheet trends, high cost/lower margin farms or those adversely
affected by weather may not see these benefits. And I think
that is why it is so important, as Dr. Jen can explain, to have
research programs that can help farms overcome barriers to
profitability.
PREPARED STATEMENTS
Finally, let me say consumers will continue to have
abundant, affordable food. Much smaller retail price increases
are expected in 2005 for meat and for vegetable oils and for
dairy products. That suggests retail food prices may rise
between 2.5 and 3 percent in 2005, compared with about 3.4
percent in 2004.
That completes my statement, Mr. Chairman. We would be
delighted to have your questions.
Senator Bennett. Thank you very much. And for the record,
all the statements submitted by all of the witnesses will be
included in the record.
[The statements follow:]
Prepared Statement of Keith Collins
Mr. Chairman and members of the Committee, I appreciate the
opportunity to appear at this hearing to discuss the current situation
and outlook for U.S. agriculture. The recovery in the agricultural
economy that began in 2003 is expected to continue in 2005. Net cash
farm income set back-to-back record highs in 2003 and 2004. This record
performance has led to general improvement in farm balance sheets. An
important factor supporting the strong financial performance of the
farm economy is the growth in U.S. agricultural exports. From fiscal
year 2000 to fiscal year 2004, the value of U.S. agricultural exports
rose by nearly $12 billion.
Livestock prices continue to remain strong even though Japan and
several other countries have failed to open their markets to U.S. beef
following the discovery of a cow with Bovine Spongiform Encephalopathy
(BSE) in December 2003. For most major crops, farm prices are down
following last year's record production, but record government payments
are forecast to about offset the decline in crop cash receipts. Higher
prices for energy-related inputs will likely push up production
expenses for fuel and fertilizer in 2005. However, lower production
expenses for farm-origin inputs should keep overall farm production
expenses about unchanged from last year. With gross income and total
production expenses close to last year's levels, net cash farm income
in 2005 is expected to be near last year's record. Cash flow and
balance prospects indicate that the farm economy will remain on a solid
footing in 2005.
Outlook for United States and World Economies and the Implications for
Agriculture
After several years of a weak and variable global economy that
constrained the demand for U.S. agricultural products, the United
States and world economies had back-to-back years of strong growth in
2003 and 2004. Both the United States and world economies are poised
for strong growth in the year ahead, which will bolster the demand for
U.S. agricultural products here and abroad.
In 2004, the U.S. economy grew 4.4 percent, up from 3 percent in
2003. Expansionary fiscal policy resulting from the budget deficit and
the Jobs and Growth Act of 2001; the low interest rates; rising
consumer income and spending; and increasing business fixed investment
all boosted growth. In 2005, rising interest rates and energy prices
are expected to slow the rate of economic growth in the United States
to a more sustainable 3.7 percent.
The improving domestic demand base may be seen in the demand for
food, which also drives demand for animal feed. Personal consumption
expenditures on food rose a very strong 4.8 percent in 2004, in real
terms. That compares with average growth of 3.8 percent in 2003 and
less than 2 percent during the economic slowdown in 2001 and 2002.
In addition to rising food demand, domestic industrial demand for
farm products is also increasing. As an example, ethanol production is
setting new record highs almost every month. In 2005, U.S. ethanol
production from corn will approach 4 billion gallons and is expected to
account for over 13 percent of corn use.
Foreign economies had a very nice recovery in 2004, growing 3.7
percent after a sustained period of substantially lower average growth.
The fitful performance of foreign economic growth had been a factor in
the slow growth in U.S. farm exports since the mid-1990s. For 2005,
lagging performance in Europe and Japan and slower growth in former
Soviet countries and a number of developing economies are expected to
reduce foreign economic growth to 3 percent. China, a $6 billion market
for U.S. farm products in fiscal year 2004, is pegged to grow at 8.7
percent.
By December 2004, the agricultural trade-weighted dollar had
depreciated almost 18 percent from its peak in February 2002. Over the
same period, the depreciation compared with competitor agricultural
exports was over 36 percent. While the dollar has already depreciated
considerably, it may depreciate further in 2005 due to the historically
large current account deficit. The depreciation in the dollar and
robust foreign economic growth helped push U.S. agricultural exports to
a record $62.3 billion in fiscal year 2004.
U.S. agricultural exports are forecast to decline to $59 billion in
fiscal year 2005. The primary factors leading to the decline in exports
include record global grain, soybean and cotton supplies, increased
foreign competition and lower prices. This export forecast reflects, in
part, the assumption that the markets that are now closed to U.S. beef
and poultry exports because of BSE and Avian Influenza will remain
closed in 2005. This is not a forecast of what foreign countries will
do. It simply reflects our standard forecasting procedure to assume the
current policies of foreign countries remain in place until they are
changed.
U.S. meat exports experienced explosive growth in the 1990s but
have faced slower growth over the past few years due to animal diseases
and policy-driven import limitations in some countries. The United
States finding of BSE has resulted in the loss of over 80 percent of
U.S. export markets for beef and related products in 2004. U.S. poultry
exports were flat, as outbreaks of Avian Influenza in several States
resulted in a number of countries placing restrictions on poultry
imports from the United States. But, U.S. pork exports rose by 27
percent last year, as trade restrictions on U.S. beef and poultry
created additional export opportunities for pork. In 2005, poultry
exports are forecast to increase by 5 percent and pork exports could be
up 16 percent.. Beef exports are forecast to increase by 37 percent in
2005, reflecting the resumption of trade with Mexico. Despite the
projected increase, U.S. beef exports are projected to be only one-
quarter of pre-BSE levels.
Outlook for Major Crops
For major crops, production is expected to outpace demand for the
first time in several years leading to a modest rebound in global
stocks and some decline in market prices for the 2004/2005 crops.
However, global grain stocks as a percent of total use remain low by
historical standards. In addition, foreign economic growth appears
sound. With relatively low world stocks, the potential for reduced crop
production in 2005 due to a return to trend yields and economic growth
continuing to support the demand for agricultural products, crop prices
could move higher over the coming months.
In 2004/2005, total supplies are generally exceeding total use of
major crops, leading to higher world and United States carryover. World
wheat stocks at the end of the 2004/2005 marketing year are expected to
increase 12 percent from a year earlier. World coarse grain stocks are
forecast to be up 27 percent, world oilseed stocks are forecast to
increase 40 percent, and world cotton stocks are forecast to increase
34 percent. These increases would result in global carryover stocks at
their highest level in 2 years for wheat and in 3 years for coarse
grains and for cotton. Reflecting the strong expansion in soybean
production in South America in recent years, the forecast global
oilseed stocks would be a record high at the end of 2004/2005.
For wheat, plantings in 2004 declined by 2.4 million acres to 59.7
million acres. This decline and lower yields reduced U.S. wheat
production from 2.35 billion bushels in 2003 to 2.16 billion in 2004.
U.S. wheat carryover is forecast to decrease by only 5 million bushels,
as total use is forecast to decline by 119 million. Larger foreign
wheat production in several traditional importing and major competitor
countries is forecast to lower U.S. wheat exports by 109 million
bushels in 2004/2005. For the current marketing year, the farm price of
wheat is forecast to average $3.35-$3.45 per bushel compared with last
season's $3.40.
For 2005/2006, wheat planted area is expected to be down about 2
percent, based on 4 percent lower winter wheat plantings last fall and
farmers' intentions to increase spring wheat planted area. With this
acreage, the lowest since 1972, and trend yields, 2005 wheat production
would be about 2.1 billion bushels, about 50 million bushels below
2004. Large global supplies are expected to keep exports under
pressure, thus 2005/2006 carryover stocks could rise and farm wheat
prices decline slightly from 2004/2005.
U.S. rice acreage was up 11 percent in 2004, as rice producers
responded to a strong recovery in prices and returns in 2003. Stocks at
the end of the current marketing year are forecast at 37 million cwt,
up from 24 million cwt from a year earlier and the highest as a percent
of total use since the 2001/2002 marketing year. Despite the sharp
increase in carryover, the farm price of rice is forecast to average
$7.30-$7.50 per cwt this marketing year, compared with $8.08 per cwt in
2003/2004, as stronger world prices are helping to bolster the United
States price.
In 2005, farmers indicated plans to seed 3.36 million acres, about
the same as in 2004. With trend yields, U.S. rice production would
decline to about 226 million cwt, but still the second largest crop
ever. A modest rise in exports and domestic consumption are expected in
2005/2006, implying that rice carryover stocks and farm prices are
likely to be very similar to the levels for 2004/2005.
In 2004, the corn crop was a record 11.8 billion bushels as
producers harvested a record 160.4 bushels per acre, exceeding the
previous record set last year by over 18 bushels per acre. The sharp
increase in total supply is forecast to lead to lower prices and
increasing carryover. Higher feed and industrial use is forecast to
increase total use by 328 million bushels, not enough to prevent a 1.3-
billion-bushel increase in carryover stocks. In 2004/2005, the use of
corn for ethanol production is forecast to increase 20 percent to a
record 1.4 billion bushels. This marketing year, the farm price of corn
is projected to average $2.00-$2.10 per bushel, compared with $2.42 per
bushel last season.
Farmers indicated plans to plant 81.4 million acres to corn in 2005
during the USDA planting intentions survey, up less than 1 percent from
2004. This level was lower than generally expected, as producers
planned to switch fewer acres away from soybeans than expected and
producers in the Dakotas preferred to increase area with other
oilseeds, such as sunflowers and canola. High fertilizer and fuel
prices may also be a factor in the limited increase in corn area. With
intended acreage and trend yields, 2005 corn production would be 10.8
billion bushels, 1 billion less than the 2004 crop. However, total use
is expected to about match this production, leaving carryover stocks
and farm prices for 2005/06 about the same as for this marketing year.
Soybean production reached a record 3.1 billion bushels in 2004,
contributing to higher domestic use, exports and carryover stocks.
Soybean crush is forecast to increase by 120 million bushels to 1.65
billion and soybean exports are forecast to increase by 195 million
bushels to 1.08 billion. Both crush and exports are forecast to be the
second highest on record. United State carryover stocks are forecast to
increase to 375 million bushels, which would be the highest carryover
as a percent of total use in 6 years. In February 2005, USDA forecast
Brazil's soybean production at 63 million metric tons for 2004/2005, up
from 53 million metric tons a year earlier. However, USDA is currently
projecting Brazil's soybean crop at 54 million metric tons.
The Brazilian crop potential has been reduced by drought, helping
to bolster U.S. soybean prices. The farm price of soybeans is projected
to decrease from last season's average of $7.34 per bushel to $5.25-
$5.55 per bushel this marketing year.
In 2005, farmers indicated in USDA's recent survey that they would
plant 73.9 million acres to soybeans. Although down 2 percent from
2004, this acreage level generally exceeded expectations. The declines
are largest in the south, where Asian rust was a factor and in the
northern plains, where shifting to other oilseeds is expected. USDA's
survey indicated that 11 percent of soybean producers had adjusted
their planting intentions due to the presence of Asian rust in the
United States. This low figure combined with the modest decline in
intended acreage nationally suggests Asian rust is not likely to be a
major factor in determining this year's United States planted acreage.
With this acreage and trend yields, 2005 soybean production would drop
back to 2.9 billion bushels, about equal to projected use, and leave
carryover stocks about unchanged. Prices in 2005/2006 are projected
below 2004/2005 when drought reduced carryin stocks.
In 2004, U.S. cotton production reached a record 23.1 million
bales, up from 18.3 million in 2003. Larger supplies coupled with lower
exports and domestic use have increased expected carryover and pushed
prices lower this season. U.S. exports of cotton are forecast to drop
from last year's record high 13.8 million bales to 13.2 million in
2004/2005, as production in China, our largest export market, is up
from a year ago. Carryover stocks at the end of this season are
projected to increase to 7.1 million bales, the highest in 3 years.
During the first 7 months of the current marketing year, cotton prices
have averaged 43 cents per pound, compared with last season's average
of 61.8 cents per pound.
For 2005, producers indicate plans to plant 13.8 million acres to
cotton, up slightly from 2004. In the Delta States, where Asian rust in
soybeans is of increased concern, intentions are up 12 percent, led by
Louisiana's 24 percent. With trend yields, this acreage would produce a
2005 crop of 18.1 million bales, down 5 million from last year.
Although domestic use is expected to continue its trend decline under
pressure from imported textiles and apparel, good export prospects and
lower production would reduce 2005/2006 carryover stocks substantially.
A persistent concern in U.S. agriculture is whether we are losing
our competitiveness in bulk commodities in world markets. The United
States share of global exports has been declining for decades for
wheat, coarse grains, rice and soybeans, and only turned up recently
for cotton in recent years as increased imports of textiles and apparel
shifted U.S. textile production overseas, creating higher foreign
demand for our cotton. Brazil, Argentina, China, India and the former
Soviet countries have increased agricultural exports by either
expanding arable land, increasing productivity or altering internal
policies. The share of global export markets of these countries rose
from 2 percent of world grain and soybean exports in 1994 to a peak of
30 percent in 2002. But their share of world trade in 2004/2005 is
expected to be 20 percent, the same as last year.
In the future, we continue to believe that China will be a steadily
increasing importer, that India will consume its own grain, and that
gains for the former Soviet countries, while expected to continue, will
not come as easily as recent gains; an inhospitable climate may also
make them an irregular competitor. Thus, while competition will be
strong, there is every reason to think that the United States will be a
strong competitor as well.
China remains an especially important factor in bulk commodity
trade. China's role as a United States competitor in grain markets
continued to decline in 2004/2005. China's net imports of wheat are
expected to reach 6.5 million metric tons, up from less than 1 million
in 2003/2004. Their net exports of coarse grains are also expected to
fall from 6.2 million tons in 2003/2004 to 3.2 million in 2004/2005. In
addition, China's growing oilseed crushing and textile export
industries have resulted in soaring soybean and cotton imports. China
is likely to continue to be a positive factor for U.S. agriculture in
2005/2006. USDA forecasts U.S. agricultural exports to China will fall
from last year's record of $6.1 billion to $4.6 billion in fiscal year
2005. The drop primarily reflects much lower United States prices for
cotton and soybeans. China is expected to remain the fifth largest U.S.
agricultural export market.
Horticultural markets have become an important contributor to farm
income for all size producers. For 2005, cash receipts from fruits,
vegetables and greenhouse and nursery crops are forecast to be $45.3
billion, down 2 percent from last year. With average weather, farm
receipts for fruits and nuts are expected to decline as production
rebounds, leading to generally lower prices. Exports for horticultural
crops for fiscal year 2005 are forecast to reach $14.5 billion, up
substantially from last year's $13.3 billion.
In recent years, strong demand for imported products has increased
the sector's trade deficit which is forecast at $11.1 billion in fiscal
year 2005. During the last 10 years, domestic production growth has
averaged only 0.5 percent, compared with import growth of 4.4 percent.
And with commercial and government interest in increasing the role of
fruits and vegetables in the American diet, the sector's trade deficit
likely will continue to grow to meet expanding demand.
Outlook for Livestock, Poultry and Dairy
Reduced supplies of red meat and nearly stable milk production
combined with increasing demand led to record-high fed cattle, broiler
and milk prices in 2004. Hog prices were also up sharply, pushing
livestock cash receipts to a record $122 billion, a 16-percent increase
from the previous year. While several traditional beef importers have
failed to open their markets to U.S. beef following the single BSE
incident in late December 2003, market fundamentals generally remain
quite strong. In addition, lower feed costs in 2005 are also helping to
bolster the returns of livestock and dairy producers.
Beef production dropped 6.4 percent in 2004. The drop in production
reflected tight domestic cattle inventories, following several years of
herd liquidation, and the continued closure of the border to Canadian
cattle imports. In addition to the drop in production, strong consumer
demand for meat protein, the improving restaurant and hotel business,
and improved diversity and quality of retail beef products have also
helped support beef prices. During 2004, the price of choice steers
averaged a record $84.75 per cwt.
Cattle herd liquidation ended in 2004 as the U.S. cattle inventory
on January 1, 2005, was 1 percent higher than a year earlier. This was
the first increase in herd size since January 1996. Herd rebuilding is
expected to be slow as the calf crop in 2004 was almost 1 percent
smaller than the previous year, leaving a small base from which to
retain heifers in 2005. USDA's April cattle market forecast assumes
that live cattle imports from Canada will resume during the second half
of 2005 and that fed cattle prices will average $83-87 per cwt. Prices
could be substantially stronger if Japan and other Asian countries open
their markets to U.S. beef.
In 2004, pork production increased 2.8 percent to a record 20.5
billion pounds. Despite the increase in pork supplies, the price of
slaughter hogs averaged $52.51 per cwt in 2004, up from $39.45 in 2003,
as tight supplies of beef boosted the demand for pork. In addition,
U.S. pork exports were record high in 2004 as demand has been strong in
markets that banned beef imports because of BSE or banned broiler
imports because of Avian Influenza. Other factors contributing to the
growth in pork exports are the weaker United States dollar and improved
global economic performance, especially in Mexico.
Despite high hog prices last year, hog producers have been cautious
about expanding, as indicated in farrowing intentions surveys. In 2005,
pork production is forecast up 1.2 percent. Hog slaughter will increase
as a result of the recent International Trade Commission finding that
removes duties placed on Canadian hogs and encourages imports of
Canadian feeder pigs and slaughter hogs. Hog prices are forecast to
average $48-$50 per cwt in 2005. While down from a year ago, hog prices
would still be about $10 per cwt higher than during 1998-2003.
Broiler production increased 4.0 percent to a record 34.1 billion
pounds in 2004. Higher prices for competing meat products and an
improving domestic economy pushed whole-bird broiler prices to a record
74.1 cents per pound in 2004, up from 62.0 cents in 2003. Broiler
exports fell 3 percent in 2004 as several countries restricted imports
of U.S. poultry following outbreaks of Avian Influenza in Delaware, New
Jersey, Pennsylvania, Texas and Maryland.
Broiler production is forecast to increase about 3 percent in 2005,
as producers respond to the increase in broiler prices. Continued
strong prices for competing meats and a rebound in U.S. broiler exports
are expected to maintain broiler prices at near last year's level.
Lower broiler part prices compared with mid-2004 should stimulate
sales, and several countries have either fully lifted the trade ban on
U.S. poultry following last year's outbreaks of Avian Influenza or
allowed the importation of U.S. poultry from selected States.
In 2004, milk production increased by just 0.2 percent, as cow
numbers fell by 0.8 percent and milk production per cow increased by
1.1 percent. Over the past 2 years, milk production has increased by
less than 0.5 percent, marking the slowest growth in milk production
over a 2-year period since the mid-1980s. Many factors have contributed
to this sluggish growth, including tight supplies of good quality hay,
the discovery of BSE in Canada and the subsequent suspension of imports
of dairy cows and heifers from that country, limitations on the
availability of bovine somatotropin (rBST), the National Milk Producers
Federation's CWT program which pays producers to reduce milk
production, and weak milk prices during 2002 and the first half of
2003. Tightening milk supplies caused the all-milk price to average a
record $16.03 per cwt in 2004, up from $12.55 per cwt in 2003.
During most of 2004, the Commodity Credit Corporation (CCC)
continued to purchase nonfat dry milk under the price support program
despite a record-high milk price. In 2004, CCC purchased 278 million
pounds of nonfat dry milk, down from the 635 million pounds purchased
in 2003. The CCC did not purchase any butter or cheese under the milk
price support program in 2004. Tightening domestic and international
milk supplies are keeping nonfat dry milk prices above support. Since
mid-November, the CCC has not purchased any nonfat dry milk.
Higher milk prices in 2004 reduced payments under the Milk Income
Loss Contract (MILC) program. In 2003, MILC payments were triggered
during January through August and the MILC payment rate averaged $1.09
per cwt over the entire year. The MILC payment rate averaged $0.22 per
cwt in 2004 with payments being triggered during January through April.
So far this year, no payments have been made under the MILC program.
Milk production is forecast to increase by 1.6 percent in 2005, as
production per cow recovers from 2 years of anemic growth. Monsanto has
announced that it is increasing the supply of rBST, and lower feed
costs should boost milk production per cow. The all-milk price is
projected to average $15.00 per cwt in 2005, which would be the fourth
highest on record.
Outlook for Farm Income
In 2004, farm cash receipts, net farm income and net cash farm
income all registered historic high. Farm cash receipts reached a
record $235 billion in 2004 as both livestock and crop receipts were
record highs. Livestock receipts rose by $16.7 billion in 2004,
reflecting strong prices for cattle, hogs, poultry and milk. Prices for
major crops generally exceeded year-earlier levels through the first 9
months of 2004, allowing producers to sell the remainder of the large
harvests from the fall of 2003 at unusually favorable prices. These
higher prices were largely responsible for a $7-billion increase in
crop receipts in 2004. Net cash farm income reached a record $77.8
billion in 2004, up from the previous record of $68.6 billion in 2003.
In 2005, both crop and livestock receipts are forecast to decline
from last year's record high. Despite the drop, farm cash receipts in
2005 are projected to be the second highest on record, surpassing $222
billion. Higher government payments are forecast to offset the drop in
farm cash receipts in 2005. The record crops harvested in 2004 have
lowered prices for major crops, triggering additional government
payments under the 2002 Farm Bill. In addition, producers affected by
adverse weather in either 2003 or 2004 will be eligible to receive
disaster payments in 2005. In 2005, government payments are forecast to
reach $24 billion, exceeding the record of $22 billion in 2000. With
higher government payments offsetting lower cash receipts, net cash
farm income is forecast to remain very near last year's record. While
most producers will face these generally favorable conditions, some,
such as high cost producers or those affected by adverse weather, will
not see these income benefits.
An indicator of the underlying fundamental strength of commodity
markets is farm income excluding government payments. In 2000, net cash
farm income excluding government payments hit a cyclical low of $34
billion. As markets have strengthened, payments based on prices have
declined, so that more of net cash income is now coming from market
sales. In 2004, net cash income excluding government payments increased
to $63.3 billion. In 2005, net cash farm income excluding government
payments is projected to fall to $54 billion. While below this past
year, net cash farm income excluding government payments remains well
above the cyclical low in 2000.
Farm production expenses are expected to be about unchanged in 2005
following a $13-billion increase last year. Higher prices for feed,
feeder livestock, labor, fuel, fertilizer and other inputs pushed up
production expenses in 2004. In 2005, lower feed and feeder cattle
prices are expected to about offset increases in energy-based input
costs, such as fuel and fertilizer.
The income earned by farm operator households in 2005 is expected
to continue the increases of recent years. Average farm household
income is forecast at $73,059, up nearly 3 percent from 2004. A 3.4
percent increase is expected in off-farm income, a modest rise from
2004, but more than enough to offset the also modest reduction in net
farm income from 2004.
With another sound income year in prospect, farmland values may
rise 4-5 percent in 2005. This increase would maintain the improvement
in the farm sector balance sheet that we saw in 2003 and 2004. After
ranging between 14.8 percent and 15.2 percent during 1992-2002, the
farm debt-to-asset ratio fell to 14.2 percent last year and expected to
remain steady in 2005. Recent increases in debt have been offset by
larger gains in farm asset values. As a result of farm real estate
values rising faster than farm mortgage debt, the degree of farmland
leverage declined slightly. This has provided farmland owners with an
added equity cushion to lessen the impact of any short-term declines in
income or asset values. While uncertainty remains over the
sustainability of the global economic recovery, the value of the
dollar, issues raised by the Federal budget deficit, trade
negotiations, emerging competitors, animal diseases, and oil prices,
U.S. agriculture appears poised for another sound financial year in
2005.
That completes my statement, and I will be happy to respond to any
questions.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
______
Prepared Statement of Mark Rey
Mr. Chairman and members of the Subcommittee, I am pleased to
appear before you today to present the fiscal year 2006 budget and
program proposals for the Natural Resources Conservation Service (NRCS)
of the Department of Agriculture (USDA). I am grateful to the Chairman
and members of this body for the ongoing support of private lands
conservation and the protection of soil, water, and other natural
resources.
Farmers, ranchers, and other private landowners across America play
a vital role in conserving our Nation's soil, water, air, and wildlife
resources while producing abundant food and fiber. This year, NRCS
celebrates its 70th Anniversary. I am proud to say that even though the
issues facing farmers and ranchers have grown more complex, NRCS has
risen to the challenge to help agriculture become even more vibrant and
productive while helping to protect our private land natural resource
base.
Fiscal Year 2006 President's Budget
The President's fiscal year 2006 Budget request for NRCS provides
resources for the ongoing mission of NRCS while ensuring that new
challenges faced by landowners can be addressed.
Because of the overriding need to reduce the deficit, NRCS, like
every Federal agency, will share in the responsibility of controlling
Federal spending. There are proposals in the budget that will produce
savings in both the mandatory and discretionary accounts. These savings
will enable the Administration to target funding based on need and
reward performance. It also allows the Administration to commit limited
resources to the highest priorities, such as accelerating technical
assistance to help agricultural producers meet regulatory challenges,
particularly in the area of helping to manage livestock and poultry
waste.
With that said, the President's fiscal year 2006 Budget request for
NRCS recognizes the vital role that natural resource conservation plays
in securing America's national security. Without productive soil, clean
water and air, and farmers and ranchers who can make a living off the
land, the United States would not be the strong Nation it is today.
The budget includes key increases within the Conservation Technical
Assistance (CTA) account--an additional $37.2 million to help producers
comply with Animal Feeding Operations/Confined Animal Feeding
Operations regulations, and $10 million to control invasive species.
This year, total NRCS funding for both discretionary and mandatory
programs is proposed at $2.7 billion.
Building Strong Accountability Measures
In the current budget environment, it is more important than ever
to continue working diligently in accountability and results
measurements for the funds provided by Congress. Mr. Chairman, I am
proud of the great strides NRCS has made in the past year on
performance and results, as well as making NRCS information more
accessible to farmers, ranchers, and the general public. NRCS has taken
bold steps to address all the challenges identified as a result of the
Program Assessment Rating Tool (PART) score for the base agency program
of CTA.
Meeting the President's Management Agenda is very critical to all
of us at USDA. Linking program requirements and program allocations to
performance and accountability measures helps both the Administration
and Congress make budget decisions. I am proud to report that this year
was the first year that NRCS could track direct charge through an
entire budget development cycle. Direct charge has improved the ability
of NRCS to directly track how NRCS employees spend every day and how
the technical assistance workload is distributed among programs. This
is a critical management tool, and will allow the Agency to prioritize
work and provide even greater accountability to the taxpayers and
members of Congress.
In addition, as a result of the accountability management
processes, NRCS has established national CTA program priorities for
fiscal year 2005. These priorities include development of Comprehensive
Nutrient Management Plans (CNMPs) to assist landowners needing to
comply with the Environmental Protection Agency's Concentrated Animal
Feeding Operation Rule; reduction of non-point source pollution, such
as nutrients, sediments, pesticides, or excess salinity in watersheds;
reduction of emissions that contribute to air quality impairment;
reduction in soil erosion and sedimentation from unacceptable levels on
agriculture lands; and promotion of habitat conservation for at-risk
species.
I am encouraged to report this direct link between performance and
priority setting and look forward to reporting further on the results
of this effort.
Cooperative Conservation
At the heart of delivery of voluntary conservation programs is
cooperative conservation. Cooperation in the delivery of programs at
the Federal, State and local levels with landowners, tribes, government
agencies and nongovernmental organizations is critical to providing
accountable, quality land care assistance. In August 2004, the
President issued an Executive Order on Facilitation of Cooperative
Conservation. Through this directive, the President has sent a clear
message that we can look forward to greater cooperation among Federal
agencies on natural resource issues. The order instructs Federal
departments and agencies to enter into conservation partnerships, and
to empower local participation in programs and projects that protect
and conserve natural resources and the environment. The Department of
Agriculture has embraced this concept, and is working with other
Federal agencies to highlight the successes of our joint efforts.
Looking Ahead
As the NRCS prepares to celebrate its 70th Anniversary this spring,
we have much to be proud of in private lands conservation. It is
rewarding to see the changes on the landscape that those early pioneers
in soil conservation envisioned--conservation terraces that stop sheet
and rill erosion, streamside vegetative buffers, acres of wetland
habitat, and healthy grazing and forest lands. Even with all those
changes, the next 3 years (fiscal year 2005 through fiscal year 2007)
promise to be record years for conservation implementation and
spending. This effort will continue to change the face of our Nation's
private lands landscape. Now more than ever, the field staff of NRCS
are focused on working with farmers, ranchers and other conservation
partners to get the job done.
Mr. Chairman, in summary, we all know that we are trying to plan
for the future under an atmosphere of increasingly austere budgets and
with a multitude of unknowns on the domestic and international fronts.
I believe that the Administration's fiscal year 2006 Budget request
reflects sound policy, and will provide stability to the vital mission
of conservation on private lands. The budget request reflects sound
business management practices and the best way to work for the future
and utilize valuable conservation dollars.
I thank members of the Subcommittee for the opportunity to appear,
and would be happy to respond to any questions that Members might have.
______
Prepared Statement of Bruce I. Knight, Chief, Natural Resources
Conservation Service
Thank you for the opportunity to appear before you today to discuss
our fiscal year 2006 Budget request for the Natural Resources
Conservation Service (NRCS).
As we look ahead to fiscal year 2006, and the contents of the
Administration's Budget request, I want to take a moment to reflect
upon all of the changes that have taken place within NRCS over the past
year. Since I last appeared before this Subcommittee, a great deal of
organizational change, streamlining, and improvements have taken shape.
To begin, we have a new Associate Chief of NRCS, Dana D. York. Dana
began her new position in August, and is a wonderful addition to our
management team. She has spent more than 28 years working for NRCS at
every level, including experience as a District Conservationist in the
field. She also has a breadth of experience on managing organizational
change, which is a timely skill, given the major organizational changes
that NRCS has embarked upon over the past 18 months.
AGENCY REORGANIZATION
Mr. Chairman, since our last hearing with this Subcommittee, we
also have three Regional Assistant Chiefs on board at NRCS National
Headquarters. Richard Coombe is heading up operations for the East
Region; Merlin Bartz for the Central Region, and Sara Braasch for the
West Region. The Regional Assistant Chiefs are providing leadership
excellence in management for their respective States. They are also
providing a critical link directly between the functions of National
Headquarters and our Agency field activities.
Overall, the NRCS reorganization is strengthening our support to
States, better aligning expertise with applied conservation, and making
NRCS a more efficient and effective organization. In September, we
launched our three new National Technology Support Centers in
Greensboro, North Carolina; Fort Worth, Texas; and Portland, Oregon.
The Centers are providing integrated technological support and
expertise for field conservationists. We have also reorganized National
Headquarters to ensure that comparable functions are appropriately
assigned to staff with similar expertise. For example, we now have a
single Easement Programs Division, and a single Financial Assistance
Programs Division to ensure that we have the right people working
together to meet common program objectives. In general, these changes
are helping to ensure that hard work from our staff is translating to
work on the ground.
I am proud of how NRCS staff, at all levels, has responded to the
major organizational changes made over the past year. More than 130
employees impacted by the reorganization have moved into their new
assignments. Although this process was not easy, and required many
careful steps and planning, it has gone remarkably well. We are now in
a position to realize the benefits of the new organizational structure.
Like most Federal agencies, NRCS faces a retirement bulge with 35
percent of our natural resource professionals eligible to retire in the
next 5 years. To ensure we have capable professionals in the future, we
piloted the Conservation Boot Camp. New employees spent six weeks
learning conservation planning and application skills. We plan three
additional pilots this year. The goal of the pilots is to enable the
agency to maintain its cadre of professional employees well into the
future.
PERFORMANCE UNDER PRESSURE
Given the shifts that have taken place over the past year, I think
the agency's accomplishments are all the more impressive. Last year,
NRCS and our partners:
--Provided technical assistance on over 27 million acres of working
farm and ranch land to reduce erosion, sedimentation and
nutrient runoff, enhance water quality, restore and create
wetlands, and improve and establish wildlife habitat;
--Developed 6,100 Comprehensive Nutrient Management Plans and applied
3,400;
--Served nearly 3.8 million customers around the country;
--Completed or updated soil survey mapping on 28 million acres;
--Executed over 47,000 Environmental Quality Incentives Program
agreements;
--Enrolled over 3,000 Wildlife Habitat Incentives Program agreements;
--Helped land managers create, restore, or enhance wetlands through
more than 1,000 contracts;
--Implemented the new Conservation Security program under a tight
deadline;
--Facilitated over one million hours of Earth Team volunteer service;
and
--Brought the number of proposed, interim final, and final rules
issued for implementation of the Farm Bill to 21.
As we move forward in fiscal year 2005, there are numerous
challenges and opportunities ahead, with NRCS playing a central role in
meeting the Administration's conservation objectives. We look to you to
build upon the fine accomplishments achieved this year to reach an even
brighter future.
INCREASING THIRD-PARTY TECHNICAL ASSISTANCE
With the historic increase in conservation funding made available
by the 2002 Farm Bill, NRCS will continue to look to non-Federal
partners and private technical service providers (TSPs) to supply the
technical assistance needed to plan and oversee the installation of
conservation practices. I am proud to report that as of the beginning
of March 2005, there are 2,201 TSPs registered with NRCS. Last year, we
set the goal to use $40 million in TSP assistance. NRCS surpassed this
goal for fiscal year 2004 and obligated $49.2 million for TSPs. In
fiscal year 2005, our goal is to reach $45 million for TSPs, or an
equivalent of 428 staff years.
TRANSPARENCY
Transparency of agency operations is an area that I have
highlighted in the past, and I want to be clear that it remains a key
focus of NRCS. NRCS has made tremendous gains in providing complete
access to program information, allocations, backlog, and contracting
data to the public. Our goal has been to ensure operational processes
are completely open to customers and stakeholders. On the NRCS website,
the Agency provides the following information:
--State rankings for funding in conservation programs;
--State Field Office Technical Guides;
--Program performance data; and
--Public input sessions to gather feedback on Farm Bill program
operation and priority setting.
NRCS has also taken strides to improve access to information in
foreign language formats, including many publications offered in
Spanish.
DISCRETIONARY FUNDING
The President's fiscal year 2006 Budget request for NRCS reflects
our ever-changing environment by providing resources for the ongoing
mission of NRCS and ensuring that new opportunities can be realized.
Conservation Operations
The President's fiscal year 2006 Budget request for Conservation
Operations (CO) proposes a funding level of $767.8 million, which
includes $625.6 million for Conservation Technical Assistance (CTA).
The CTA budget will enable NRCS to maintain funding for ongoing high-
priority work. In addition, the President's Budget request includes an
increase of $37.2 million for technical assistance to agriculture
producers facing significant regulatory challenges. This budget
initiative would be targeted toward animal feeding operations in need
of Comprehensive Nutrient Management Planning (CNMP) assistance. The
Budget request does not fund continuation of fiscal year 2005
congressional earmarks.
Mr. Chairman, for years we have stated that CTA is a program that
is at the heart of everything our Agency does. But as an Agency, we
have had a great deal of difficulty, up to this point, describing the
program's scope and effect and providing clear guidelines to our
frontline conservationists on its implementation.
I am pleased to report that NRCS was successful this year in
issuing a formal program policy for CTA. For the first time in 70
years, CTA has the same kind of official program guidance and specific
implementation framework as our other programs. We are also working to
revise the allocations process for CTA in order to ensure that we
reflect the values in the CTA program policy by placing our dollars
where the needs are. It is key that allocations reflect natural
resource conditions and the drive to meet our strategic planning
objectives and accountability. Our aim is to have the new allocation
formula in place upon enactment of the fiscal year 2006 Appropriations
Bill.
We have made great strides in developing an effective
accountability system with the support of Congress. This system has
allowed us to accurately track our accomplishments and costs. As
Undersecretary Rey outlined in his statement, this is the first budget
that truly integrates an entire cycle in terms of utilization of our
direct charge data. Based upon the current mechanisms in place for
funding discretionary and mandatory program technical assistance, it is
necessary to have sound data for workload in field offices. Our direct
charge accounting, along with the workload assessment tools that we
have in place, are providing the solid data to help us make program
management decisions and to assist in the budget development process.
For instance, with this data we can tell you that the cost of technical
assistance per active participant in the Farm Bill Programs has
decreased 13 percent from fiscal year 2002 to fiscal year 2005.
Watershed Surveys and Planning
The Watershed Surveys and Planning (WSP) account helps communities
and local sponsors assess natural resource issues and develop
coordinated watershed plans that will conserve and utilize their
natural resources, solve local natural resource and related economic
problems, avoid and mitigate hazards related to flooding, and provide
for advanced planning for local resource development. This includes
Floodplain Management Studies, Cooperative River Basin Studies, Flood
Insurance Studies, Watershed Inventory and Analysis, and other types of
studies, as well as Public Law 566 Watershed Plans.
Over 65 percent of these plans are used to guide local planning
efforts. The other 35 percent guide experts and sponsors in the
implementation of watershed projects to solve natural resource
problems.
The President's fiscal year 2006 Budget proposes to focus funding
on ongoing WSP efforts and includes $5.1 million to help approximately
40 communities complete their watershed planning efforts.
Watershed and Flood Prevention Operations
The Administration proposes to terminate funding for Watershed and
Flood Prevention Operations (WFPO) in fiscal year 2006 for several
reasons.
The Administration compared the benefits and costs of three Federal
flood damage reduction programs operated by NRCS, the Corps of
Engineers, and the Federal Emergency Management Agency.
The analysis found that the WFPO program provided the least net
flood damage reduction benefits.
This decrease in funding in WFPO account will enable the
Administration to divert limited resources to other priorities such as
accelerating technical assistance to help agricultural producers meet
regulatory challenges, particularly in the area of helping them to
manage livestock and poultry waste.
Mr. Chairman, I would note that the projects that were earmarked
for this program had funding requests that exceeded the amount
appropriated, which has removed the Department's ability to effectively
manage the program. The intense level of Congressional directives does
not permit the Agency to prioritize projects based upon merit and local
need. The fact that the program is entirely earmarked also makes it
impossible for the Department to attempt to coordinate program efforts
and implement work that will meet overall strategic natural resource
goals.
Watershed Rehabilitation
The President's Budget funding request for fiscal year 2006
includes funding for Watershed Rehabilitation activities involving
aging dams. These projects involve dams with a high risk for loss of
life and property. To date, 134 watershed rehabilitation projects have
been funded and 37 have been completed. Sixty-six dams have
rehabilitation plans authorized and implementation of the plans is
underway.
The Administration requests $15.1 million to address critical dams
with the greatest potential for damage.
Resource Conservation and Development
The purpose of the Resource Conservation and Development (RC&D)
program is to encourage and improve the capability of State, local
units of government, and local nonprofit organizations in rural areas
to plan, develop, and carry out programs for resource conservation.
NRCS also helps coordinate available Federal, State, and local programs
that blend natural resource use with local economic and social values.
Over half of the 375 RC&D areas have received Federal support for at
least 20 years. At this point, most of these communities should have
the experience and capacity to identify, plan for, and address their
local priorities. The President's fiscal year 2006 Budget, therefore,
proposes to phase out Federal support for local planning councils after
20 years of funding assistance after which the local councils should
have the capability to carry out much of the program's purpose
themselves. The overall proposed budget for RC&D in fiscal year 2006 is
$25.6 million.
FARM BILL AUTHORIZED PROGRAMS
Environmental Quality Incentives Program
The purpose of Environmental Quality Incentives Program (EQIP) is
to provide flexible technical and financial assistance to landowners
that face serious natural resources challenges that impact soil, water,
and related natural resources, including grazing lands, wetlands, and
wildlife habitat management. The budget proposes a level of $1 billion
for EQIP.
Over the past year, NRCS fully implemented a new agency developed
system, ProTracts, to speed up the processing of conservation contracts
with farmers and ranchers. ProTracts, which came about as part of the
West Texas Telecommunication Pilot, has allowed the Agency to
streamline the contracts process and, for the first time, see the
ongoing status of contracts, not just the payments. ProTracts allows
program managers to manage payments and obligations for a portfolio of
different contracts. We estimate savings of $5 to $10 million annually
in administrative costs that can be used to get financial assistance to
farmers to implement conservation programs. Because the contract
process is now electronic instead of paper, it speeds up the time
between contract application and approval. While reducing errors and
omissions, NRCS worked with the Office of the Chief Financial Officer
to link ProTracts to prior-year EQIP payments. The Agency is currently
migrating and reconciling EQIP contracts.
Wetlands Reserve Program
Wetlands Reserve Program (WRP) is a voluntary program in which
landowners are paid to retire cropland from agricultural production if
those lands are restored to wetlands and protected, in most cases, with
a long-term or permanent easement. Landowners receive fair market value
for the land and are provided with cost-share assistance to cover the
restoration expenses. The 2002 Farm Bill increased the program
enrollment cap to 2,275,000 acres. The fiscal year 2006 Budget request
estimates that about 200,000 additional acres will be enrolled in
fiscal year 2006, an appropriate level to keep NRCS on schedule to meet
the total acreage authorization provided in the Farm Bill.
I would note, Mr. Chairman, that on Earth Day last year, President
Bush announced a new policy: ``Instead of just limiting our losses (of
wetlands), we will expand the wetlands of America.'' ``No-net loss of
wetlands'' on the part of agriculture is a landmark achievement, and a
testament to the kinds of investments made in wetlands conservation on
private lands. I am proud that NRCS' wetland conservation efforts are
at the core of this initiative, and I look forward to working with the
Subcommittee toward achieving the goals.
Grassland Reserve Program
The 2002 Farm Bill authorized the Grassland Reserve Program (GRP)
to assist landowners in restoring and protecting grassland by enrolling
up to 2 million acres under easement or long term rental agreements.
The program participant would also enroll in a restoration agreement to
restore the functions and values of the grassland. The 2002 Farm Bill
authorized $254 million for implementation of this program during the
period fiscal year 2003-fiscal year 2007. Because we estimate that GRP
will reach the statutory funding cap by the end of fiscal year 2005,
the fiscal year 2006 Budget assumes that the program will have
exhausted its funding and not be able to enroll new contracts next
year.
Conservation Security Program
Conservation Security Program (CSP), as authorized by the 2002 Farm
Bill, is a voluntary program that provides financial and technical
assistance for the conservation, protection, and improvement of natural
resources on Tribal and private working lands. The program provides
payments for producers who practice good stewardship on their
agricultural lands, and incentives for those who want to do more.
Last year, we conducted a successful program signup in 18
watersheds across 22 States. Nearly 2,200 farmers and ranchers entered
contracts that covered 1.9 million acres of privately-owned land. We
are now offering the program in 220 new watersheds across the country
in addition to the 18 that were eligible in 2004. Each State has at
least one participating watershed. The President's fiscal year 2006
Budget requests $273.9 million in program funding to continue to expand
the program and enroll excellent conservation stewards.
Wildlife Habitat Incentives Program
Wildlife Habitat Incentives Program (WHIP) is a voluntary program
that provides cost-sharing for landowners to apply an array of wildlife
practices to develop habitats that will support upland wildlife,
wetland wildlife, threatened and endangered species, fisheries, and
other types of wildlife. The budget proposes a funding level for WHIP
of $60 million.
FARM AND RANCH LANDS PROTECTION PROGRAM
Through the Farm and Ranch Lands Protection Program (FRPP), the
Federal Government establishes partnerships with State, Local, or
Tribal government entities or nonprofit organizations to share the
costs of acquiring conservation easements or other interests to limit
conversion of agricultural lands to non-agricultural uses. FRPP
acquires perpetual conservation easements on a voluntary basis on lands
with prime, unique, or other productive soil that presents the most
social, economic, and environmental benefits. FRPP provides matching
funds of no more than 50 percent of the purchase price for the acquired
easements. The budget proposes a level of $83.5 million for FRPP in
fiscal year 2006.
Measuring Outcomes not Outputs
One of the most common questions that I have answered during my
tenure as Chief is about measuring the natural resource outcomes of
NRCS efforts. Rightfully so, policy-makers, such as Members of this
Subcommittee, as well as conservation and farm organizations, have
voiced a need for better information about the kinds of changes in
water and soil quality that are as a result of the investments we have
made.
Six months ago, we launched an exciting endeavor to better quantify
the on-the-ground effects of our conservation work. The Conservation
Effects Assessment Project (CEAP) is a 5-year effort to better quantify
the outcomes of our programs. Through CEAP, NRCS is partnering with the
Agricultural Research Service (ARS), the National Agricultural
Statistics Service (NASS), Farm Service Agency (FSA), and other
agencies to study the benefits of most conservation practices
implemented through the Environmental Quality Incentives Program,
Wetlands Reserve Program, Wildlife Habitat Incentives Program,
Conservation Reserve Program, and the Conservation Technical Assistance
program. This project will evaluate conservation practices and
management systems related to nutrient, manure, and pest management,
buffer systems, tillage, irrigation, and drainage practices, as well as
wildlife habitat establishment, and wetland protection and restoration.
CEAP will provide the farming community, general public,
legislators, and others with a scientifically based estimate of
environmental benefits achieved through conservation programs.
Conclusion
As we look ahead, it is clear that the challenges before us will
require the dedication of all available resources--the skills and
expertise of the NRCS staff, the contributions of volunteers, and
continued collaboration with partners and Technical Service Providers.
I am proud of the dedicated work ethic our people exhibit day in
and day out as they go about the work of getting conservation on the
ground. We have achieved a great deal of success. We need to focus our
efforts and work together, because available resources will ultimately
determine whether our people have the tools to get the job done. I look
forward to working with you as we move ahead in this endeavor.
This concludes my statement. I will be glad to answer any questions
that members of the Subcommittee might have.
______
Prepared Statement of Gilbert G. Gonzalez
Mr. Chairman, Members of the Committee, it is a pleasure to present
to you the fiscal year 2006 President's Budget request for USDA Rural
Development.
I am honored to serve as Acting Under Secretary of Agriculture for
Rural Development, and to have the opportunity to work with you to
carry out Rural Development's fundamental mission to increase economic
opportunity and improve the quality of life in rural America.
Everyday, we bring people and resources together. I believe that
given the opportunity, Americans will create strength through
investments in their own economic futures. And I believe it is our role
at Rural Development to stimulate these efforts in ways that will
maximize the benefits of local economies.
With the assistance of this subcommittee, the Bush Administration
has established a proud legacy of accomplishments in rural areas, and
will work to continue to enhance that legacy.
Overall, 800,000 jobs have been created or saved through combined
business, housing, utility, and community development investments by
USDA Rural Development over the last 4 years. Leveraging of these
investments with private sector investments are helping to spur
economic growth throughout rural America.
The Bush Administration has committed over $50 billion in rural
development investments in the last 4 years to support rural Americans'
pursuit of economic opportunities and an improved quality of life.
Rural Development delivers over 40 different programs enhancing
business development, housing, community facilities, water supply,
waste disposal, electric power, and telecommunications. Rural
Development also provides technical assistance to rural families, and
business and community leaders to ensure success of those projects. In
addition to loan-making responsibilities, Rural Development is
responsible for the servicing and collection of a loan portfolio that
exceeds $87 billion.
Rural Development is the only Federal organization that can
essentially build a town from the ground up through investments in
infrastructure, homeownership and job creation through business
development programs. We help rural Americans achieve their part of the
American Dream, particularly the 60 million rural residents who are not
involved in production agriculture.
Rural Development is a catalyst. We focus on our grassroots
delivery mechanism, building partnerships that will act to
strategically place Federal resources to serve as catalysts for
spurring private investment. Partners in this effort include: the
Department of Housing and Urban Development, the Department of Energy,
the Environmental Protection Agency, the Minority Business Development
Agency, the Small Business Administration, the Economic Development
Administration, and the National Credit Union Association. In addition,
we are working to increase the ability of faith-based organizations to
partner with Rural Development to also support local community and
economic development.
Successful economic development in rural areas is driven by local
strategies, where communities take ownership and focus on developing
leadership, technology, entrepreneurship, and higher education
opportunities.
RESPONSIBILITIES
Rural Development provides rural individuals, communities,
businesses, associations, and others with financial and technical
assistance needed to increase economic opportunity and improve the
quality of life in rural America. This financial and technical
assistance may be provided solely by Rural Development or in
collaboration with other public and private organizations promoting
development of rural areas.
VISION
To realize our vision of creating greater economic opportunities
and improved quality of life for rural citizens, we need to structure
the delivery of Rural Development programs in a way that can ensure
those who are most qualified become aware of our programs and receive
needed investment assistance. Rural Development has to do a better job
of outreach and education on what programs are available. To accomplish
this goal, we have embarked upon an aggressive outreach and marketing
effort that focuses on the programs appropriated, rather than on the
names of individual agencies. This is a key priority that we believe
will reduce confusion about who to contact for assistance and help
ensure more efficient utilization of program investment dollars by
those who are most qualified. We are also working to better communicate
with minority sectors, analyze program delivery, and improve the
overall knowledge of what USDA Rural Development can provide to rural
citizens and communities.
RURAL DEVELOPMENT BUDGET REQUEST
The President's commitment to rural America is strong, and this
request will support a total program level of loans and grants of $13.5
billion. Mr. Chairman, this Rural Development request is one component
of the President's overarching budget. The budget reflects the
difficult choices that had to be made among funding opportunities for a
variety of meritorious programs.
Over the last 4 years (fiscal year 2001-fiscal year 2004) with your
assistance, Rural Development has delivered over $50 billion in loans
and grants to rural Americans. Through this infusion of infrastructure
investment and local area income stimulus, many rural areas are
attracting an increase in private sector investment. These Federal
investments are being returned many times over in the form of increased
local tax base and new private ventures, with their associated
multiplier effects on household incomes and local quality of life.
I will now discuss the requests for specific Rural Development
programs.
RURAL HOUSING PROGRAMS
The budget request for USDA Rural Development's housing programs
totals just under $6.5 billion. This commitment will improve housing
conditions, continue to promote homeownership opportunities for
minority populations, and initiate our multi-family housing program
revitalization initiative. Initially, this will put in place a program
of tenant protection for our multi-family housing residents.
Rural Development's multi-family housing program includes about
17,000 properties and 470,000 units, with a loan portfolio value
approaching $12 billion. Many of the properties exceed 20 years in age
and face substantial rehabilitation needs. A substantial number of
owners wish to prepay their loans and remove properties from the
program. Rental assistance, a vital component of the program, has
steadily risen. Faced with this reality, this Administration
acknowledged the need to evaluate tenant protections, the portfolio,
and program, and identify alternatives to ensure the program's long-
term viability and continued supply of affordable rental housing in
rural areas.
Last year, Rural Development engaged private industry experts to:
--Review and define potential approaches to protect tenants;
--Review issues and develop solutions directly pertaining to the
market demand for such housing;
--Analyze and develop solutions for the increasing rehabilitation and
recapitalization requirements of the aging existing properties;
and
--Perform a comprehensive property assessment.
A statistically representative sample of the portfolio was selected
and reviewed. Based on that review and analysis by outside experts and
Rural Development staff, a comprehensive tenant protection and
revitalization initiative is being developed. This budget reflects the
first component of that initiative, which provides protection for the
very low-income tenants residing in the projects. We are requesting
$214 million to fund a rural housing voucher program, which will ensure
that very low-income and elderly tenants are protected in the event of
project prepayment.
A comprehensive legislative proposal is under development to
protect tenants and address the issues of rehabilitation needs and
prepayment. This proposal will embody the Administration's multi-year
initiative to ensure adequate rental housing options remain available
for very low-income rural residents and return the multi-family housing
program to sound footing.
Pending the outcome of the comprehensive multi-family property
assessment, Rural Development did not request funding for section 515
new construction. As a result of the study, we again are not requesting
new construction; we are seeking $27 million in the section 515 program
loan level for repair and rehabilitation only. New construction needs
will be met through the section 538 guaranteed program, which we are
requesting to double to a $200 million loan level.
We are also requesting rental assistance of $650 million to support
needed renewals, preservation, and a farm labor housing program level
comprised of $42 million in loans and $14 million in grants. Rental
assistance contracts should be maintained at the current 4 year term to
underscore our commitment to our private partners that future rental
assistance income streams will be supported.
The request for single-family direct and guaranteed homeownership
loans approaches $5 billion, which will assist about 40,400 rural
households who are unable to obtain credit elsewhere. In addition, $36
million is requested for housing repair loans and $30 million for
housing repair grants, which will be used to improve existing single
family houses mostly occupied by low-income elderly residents.
The community facilities request totals $527 million, including
$300 million for direct loans, $210 million for guaranteed loans, and
$17 million for grants. It is expected that a portion of the direct
loan program will continue to support homeland security and health and
safety issues in rural areas. Community facilities programs finance
rural health facilities, childcare facilities, fire and safety
facilities, jails, education facilities, and almost any other type of
essential community facility needed in rural America. Rural Utility
Programs
USDA Rural Development provides financing for electric,
telecommunications, and water and waste disposal services that are
essential for economic development in rural areas. The utilities
program request exceeds $5 billion, which is comprised of $2.5 billion
for electric loan programs, $669 million for rural telecommunication
loans, $25 million for distance learning and telemedicine grants, $359
million in loans for broadband transmission, over $1 billion for direct
and guaranteed water and waste disposal loans, $377 million for water
and waste disposal grants, and $3.5 million for solid waste management
grants.
The Rural Telephone Bank (RTB) was established in 1971 to provide a
supplemental source of credit to help establish rural telephone
companies. Efforts have been underway to privatize the bank. In fiscal
year 1996, the RTB began repurchasing Class ``A'' stock from the
Federal government, thereby beginning the process of transformation
from a federally funded organization to a fully privatized banking
institution. However, recent analysis has shown that there are private
lenders available to fulfill rural telecommunications lending needs. In
addition, funding for this program has exceeded demand.
In fact, there is about $300 million in unadvanced loan balances
for loans available for 5 years or more. This indicates that there is
little demand for a privatized RTB. The fiscal year 2006 budget
reflects the Administration's proposal to establish the process and
terms to implement dissolution of the RTB. Dissolution will result in
the government being repaid for all outstanding government stock and
the borrower receiving a cash payout for their outstanding stock.
Additional funds are requested for the regular telecommunications
program to maintain and enhance the level of Federal support available
to rural telecommunications. The fiscal year 2006 budget proposes $359
million in new discretionary program funding. This, coupled with $1.6
billion in carryover funds, will provide for almost a $2 billion
program level.
RURAL BUSINESS-COOPERATIVE PROGRAMS
Since fiscal year 2001, USDA Rural Development has provided about
$4 billion for rural business development in the form of loans, grants
and technical assistance. Funds assisted with the start up, expansion
or modernization of businesses and cooperatives in rural areas that
have helped create or save over 56,400 jobs.
The Rural Development business and cooperative program budget
request for fiscal year 2006 totals about $1.3 billion, the bulk of
which is comprised of $900 million for the business & industry (B&I)
loan guarantee program.
The rural business enterprise grant, rural business opportunity
grant, economic impact initiative, and the empowerment zone and
enterprise community programs have been included in the President's new
initiative to help strengthen American's transitioning communities,
while making better use of taxpayer dollars.
These grant programs will be consolidated and transformed into a
new, two-part program: (1) The Strengthening America's Communities
Grant Program, a unified economic and community development grant
program; and (2) The Economic Development Challenge Fund, an incentive
program for communities, modeled after the Millennium Challenge
Account.
We are requesting $34 million for the intermediary relending
program, $25 million for rural economic development loans, $5.5 million
for rural cooperative development grants, and $15.5 million of
discretionary funding for the value-added producer grant program.
The $10 million of discretionary budget authority for renewable
energy will support $286 million in guaranteed loans and $5 million in
grants. This program will assist in fulfilling the President's Energy
Policy that encourages a clean and diverse portfolio of domestic energy
supplies to meet future energy demands. In addition to helping
diversify our energy portfolio, the development of renewable energy
supplies will be environmentally friendly and assist in stimulating the
national rural economy through the jobs created and additional incomes
to farmers, ranchers, and rural small businesses. This is important for
rural communities and our country's ability to rely less on imported
energy. The President is committed to this program and the benefits it
holds for America.
During this Administration Rural Development has invested over $190
million in Bioenergy/Biomass ventures including $80 million in value-
added and business ventures and $114 million in renewable energy
utility upgrades and expansions. Under the Farm Bill section 9006,
$44.9 million in grant funds have been provided for 281 applicants for
wind power, anaerobic digestion, solar, ethanol plants, direct
combustion and fuel pellet suppliers, and other bioenergy related
systems.
ADMINISTRATIVE EXPENSES
Delivering these programs to the remote, isolated, and low-income
areas of rural America requires administrative expenses sufficient to
the task. From fiscal year 1996 through fiscal year 2004, Rural
Development's annual delivered program level increased by 111 percent.
Over that same period, Rural Development's Salaries and Expenses (S&E)
appropriation increased only 17 percent. In fiscal year 2001, Rural
Development was able to deliver $19 program dollars (loans and grants,
plus servicing the ever-growing portfolio) with one dollar of S&E. By
fiscal year 2004, Rural Development delivered $23 program dollars with
every S&E dollar. Over 4 years we were able to increase efficiencies,
to deliver 21 percent more program dollars with each S&E dollar. Rural
Development has the staff and the local distribution mechanism to meet
the ambitious program targets outlined earlier, but adequate
administrative support must be made available. To maintain our high
level of efficiency requires continued improvements which must be based
on continuous effort and investment of administrative resources.
With an outstanding loan portfolio exceeding $87 billion, fiduciary
responsibilities mandate that Rural Development maintain adequately
trained staff, employ state of the art automated financial systems, and
monitor borrowers' activities and loan security to ensure protection of
the public's financial interests. New, more sophisticated and
complicated programs provided through the fiscal year 2002 Farm Bill
(broadband, renewable energy, value-added, etc.), demand increasing
technical expertise of our aging workforce.
Limited S&E funding could jeopardize our ability to provide
adequate underwriting and loan servicing to safeguard the public's
interests.
For fiscal year 2006, the budget proposes a total of $682.8 million
for Rural Development S&E or an increase of $58.4 million over fiscal
year 2004. Of this increase, $13.3 million will fund salary costs and
related expenses; $20 million supports Information Technology (IT)
needs, including the web farm and data warehousing, continued expansion
and upgrading of systems supporting the evolving multi-family housing
program, e-Gov, IT security, and essential licensing and maintenance
agreements; $4 million for human capital investments, principally
training; and $7.6 million to continue relocation of facilities and
operations from downtown St. Louis, Missouri.
Mr. Chairman, Members of the Committee, this concludes my formal
statement. We would be glad to answer any questions you may have. Thank
you for the opportunity to appear before you to discuss the Rural
Development fiscal year 2006 budget request.
______
Prepared Statement of Russell T. Davis, Administrator, Rural Housing
Service
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to present the fiscal year 2006 President's budget for the
USDA Rural Development rural housing programs.
As an integral part of Rural Development, the rural housing program
assists rural communities in many fundamental ways. We provide a
variety of both single and multi-family housing options to residents of
rural communities. We also help to fund medical facilities, local
government buildings, childcare centers, and other essential community
facilities. Rural Development programs are delivered through a network
of 47 State offices and approximately 800 local offices.
The proposed budget for the rural housing program in fiscal year
2006 supports a program level of approximately $6.49 billion in loans,
loan guarantees, grants, and technical assistance. It also maintains
the Administration's strong commitment to economic growth, opportunity,
and homeownership for rural Americans. We believe that our efforts,
combined with the best of both the non-profit and private sectors, will
ensure that this budget makes a tremendous difference in rural
communities. The fiscal year 2006 budget also includes a major
initiative to revitalize the rural rental housing programs.
Let me share with you how we plan to continue improving the lives
of rural residents under the President's fiscal year 2006 budget
proposal for our rural housing programs.
MULTI-FAMILY HOUSING PROGRAMS
The Multi-Family Housing (MFH) budget preserves Rural Development's
commitment to maintaining the availability of affordable housing for
the many rural Americans who rent their homes. Our existing portfolio
provides decent, safe, sanitary, and affordable residences for about
470,000 tenant households.
The total program level request is $1.16 billion. This represents
an increase of 30 percent from last year's request. Six hundred and
fifty million dollars will be used for rental assistance (RA) for
contract renewals, farm labor housing, and preservation. These funds
will renew more than 46,000 4-year RA contracts. We estimate using $27
million for MFH direct loans to meet our preservation responsibilities
including prepayment prevention incentives.
Revitalization Initiative
In November 2004, we released a report titled the ``Multi-Family
Housing Comprehensive Property Assessment and Portfolio Analysis.''
This report analyzed the issues associated with the preservation of the
portfolio and provided recommendations for changes to the MFH program.
The fiscal year 2006 budget addresses the immediate need to provide
assistance for tenants of projects that prepay and leave the program.
Included is $214 million for the initial stage of the multi-family
housing Revitalization Initiative that establishes a tenant protection
program. Later this year, the Administration will propose legislation
to ensure that projects remain in the program and that they are
properly maintained. The authority to make rural housing vouchers is
contained in the Housing Act of 1949. Regulations will need to be
developed in order to use this authority.
The report recommended three primary strategies to revitalize our
aging portfolio, which continue to play a critical role in delivering
affordable rental housing to rural communities across the nation:
Allowing Prepayment While Protecting Tenants
While a significant segment of the portfolio has the legal right to
prepay, the report concluded that prepayment is economically viable for
only about 10 percent of owners. Recent court decisions require that
owners of projects that are eligible to prepay under the terms of their
loans, be allowed to do so. This would leave the tenants of these
projects at risk of significant rent increase and potential loss of
their housing. Therefore, we are proposing that all tenants of these
projects be adequately protected through the use of housing vouchers.
Creating an Equitable New Agreement With Project Owners Electing to
Stay With the Program
The report recommended that new agreements be reached with project
owners to keep their projects in the program and, thus, be used for
housing low income families. This new agreement would allow owners and
project managers to exercise their entrepreneurial planning and
management skills. Performance expectations and performance-based
incentives would be provided so that high-performing owners and project
managers are rewarded. Conversely, owners and property managers
performing poorly would be subject to sanctions.
Using Debt Relief as the Primary Tool to Stabilize Projects at Risk of
Physical Deterioration
The report also recommended that a majority of the existing MFH
portfolio is in need of additional financial assistance to achieve
long-term viability. The report recommended our using debt
restructuring as the primary tool. Additional financial assistance
would be provided in exchange for the owner's commitment to providing
long-term affordable housing.
The Administration continues to evaluate the costs and benefits of
various options to address items (2) and (3). We expect to complete
this evaluation and to propose legislation later this year. However,
the fiscal year 2006 budget includes $27 million for direct loans that
are to be used to meet immediate revitalization needs.
We anticipate our revitalization efforts will span the next several
years and have initiated a demonstration program to test the viability
of the revitalization concepts. In addition, we will be initiating a
demonstration program for making loans through the use of revolving
funds for preservation purposes, as provided for in the fiscal year
2005 Appropriations Act.
Section 538 Guaranteed Rural Rental Housing Program
The fiscal year 2006 budget request will fund $200 million in
section 538 guaranteed loans, funds that may be used for new
construction. The section 538 guaranteed program continues to
experience ever-increasing demand, brisk growth, and is rapidly
becoming recognized within the multi-family housing finance,
development, and construction industry, as a viable conduit to
facilitate the financing of housing projects. In fact, Rural
Development received an overwhelming response to the latest Notice of
Funding Availability with over 150 applications received.
In fiscal year 2004, we distributed more than $99 million in
guarantees to fund housing projects with over $243 million in total
development costs. The risk exposure to the government continues to be
very low, as loan guarantees to total development costs are well under
50 percent. We also have a delinquency rate of zero. A ``notice to
proceed'' was given to 44 applicants with an average loan guarantee
request of $2.2 million and an average total development cost of $5.5
million. Thirty-five out of the 44 applications given the approval to
proceed included the use of Low-Income Housing Tax Credits from the
various State governments where the projects will be located.
Since inception of the program, the section 538 guaranteed program
has closed 71 guarantees totaling over $171 million. The program also
has an additional 89 loans in process and not yet closed, totaling over
$352 million. The seventy one closed guarantees will provide over 4,200
rural rental units at an average rent per unit of approximately $500
per month.
The rural housing program recently published a final rule to
address program concerns from our secondary market partners and make
the program easier to use and understand. We look forward to
administering the fiscal year 2006 proposed budget of $200 million,
which will enable Rural Development to fund a significant number of
additional guaranteed loan requests.
The fiscal year 2006 budget also request funds $42 million in loans
and $14 million in grants for the Section 514/516 farm labor housing
program, $2 million in loans for MFH credit sales, and $10 million for
housing preservation grants.
SINGLE FAMILY HOUSING PROGRAMS
The Single Family Housing (SFH) programs provide several
opportunities for rural Americans with very low- to moderate-incomes to
purchase homes. Of the $4.7 billion in program level requested for the
SFH programs in fiscal year 2006, $3.7 billion will be available as
loan guarantees of private sector loans, including $207 million for
refinancing more affordable loans for rural families. Also, with $1
billion available for direct loans, our commitment to serving those
most in need in rural areas remains strong. This level of funding will
provide homeownership opportunities for 40,400 rural families.
Effective outreach and an excellent guarantee, coupled with
historically low interest rates have increased the demand for the
section 502 guaranteed program. Approximately 2,000 lenders participate
in the guaranteed SFH program. The competitive low-interest rate
environment has enabled the rural housing program to serve low-income
families that would typically receive a Section 502 direct loan with a
guaranteed loan instead. In fiscal year 2004, approximately 32 percent
of guaranteed loans were made to low-income families.
Section 523 Mutual and Self-Help Housing
The President's fiscal year 2006 budget requests $34 million for
the mutual and self-help housing technical assistance program.
The fiscal year 2004 ended with over $35 million awarded for
contracts and 2-year grants. There were 39 ``pre-development'' grants
awarded in fiscal year 2004, including many first-time sponsors,
several faith-based groups, and groups in States with no self-help
housing programs. Pre-development funds may be used for market
analysis, determining feasibility of potential sites and applicants,
and as seed money to develop a full-fledged application. Groups in the
pre-development phase typically need 6 to 12 months before they are
ready to apply for full funding.
The fiscal year 2006 proposed budget also includes $36 million in
program level for home repair loan funds and $30 million for grants to
assist elderly homeowners. It also includes $5 million in loan level
for each of two site loan programs, $10 million in loan level for sales
of acquired properties, and $1 million for supervisory and technical
assistance grants.
COMMUNITY PROGRAMS
The Community facilities budget request will provide essential
community facilities, such as educational facilities, fire, rescue, and
public safety facilities, health care facilities, and child care
centers in rural areas. The total requested program level of $527
million includes $300 million for direct loans, $210 million for loan
guarantees, and $17 million for grants.
In partnership with local governments, State governments, and
federally recognized Indian tribes, the fiscal year 2006 budget will
support more than 240 new or improved public safety facilities, 105 new
and improved health care facilities, and approximately 80 new and
improved educational facilities to serve rural Americans.
In fiscal year 2004, we invested over $130 million in 113
educational and cultural facilities serving a population totaling over
3.3 million rural residents, over $97 million in 338 public safety
facilities serving a population totaling over 1.7 million rural
residents, and over $304 million in 141 health care facilities serving
a population totaling over 3.2 million rural residents. Funding for
these types of facilities totaled $531 million. The remaining balance
was used for other essential community facilities such as: food banks,
community centers, early storm warning systems, child care centers, and
homeless shelters.
PROGRAM HIGHLIGHTS
I am pleased to provide you with an update on several highlights
from our major programs, as well as key initiatives being undertaken.
Rental Assistance
We have continued to improve the internal controls in the Rental
Assistance (RA) program and plan to implement a number of new
initiatives in this regard with the recent publication of a
comprehensive revision of our regulations. The new initiatives include
an increased emphasis on verification methods and procedures for
certifying income reported by tenants and improving management of
tenants with no reported income. We are currently in discussions with
the Department of Health and Human Services concerning USDA receiving
access to the National Directory of New Hires database. This will
enable us to match the data in the national directory against the
information provided by the tenant, and therefore reduce fraud and
abuse within the program. Additional training of borrowers and property
managers will also be the key to reducing errors when certifying
tenants for residency in MFH properties.
The automated RA forecasting tool is now in place and operational.
The forecasting tool was used to develop the fiscal year 2006 RA budget
and is able to forecast when RA contracts will either exhaust funds or
reach their 4-year term limit. The forecasting tool can also develop
the cost of new contracts based on an actual RA usage rate or a
selected inflation rate. The fiscal year 2006 RA budget, an inflation
rate of 2.4 percent was used, as recommended by the General Accounting
Office. We will continue to provide State offices with additional
guidance on the transfer of RA units and will centralize the
redistribution of unused RA.
Automation Initiatives
Last year, we reported that the rural housing program was
developing a data warehouse for MFH and SFH loans to improve our
reporting capabilities. I am pleased to report that we are currently
utilizing our data warehouses, making needed improvements, and training
staff on how to expand their reporting capabilities. Our Multi-Family
Information System (MFIS) database is now in Phase 5 of development,
following a very successful completion of Phase 4, which integrated
electronic debiting and crediting of borrowers accounts and eliminated
funds handling in area offices. We now have a website available to the
public to locate all MFH properties, with property and contact
information. Also implemented is the Management Agent Interactive
Network Connection (MAINC), which allows property managers to transmit
tenant and property data electronically to MFH via the Internet. This
data goes directly into the MFIS database and the data warehouse.
Last year, we also reported that an Automated Underwriting System
(AUS) was being developed that would allow lenders to input SFH
customer application data, pull credit, and determine immediately
whether the rural housing program would issue a commitment. The AUS
should be fully operational by next winter.
In December 2004 our Centralized Servicing Center (CSC) in St.
Louis, Missouri began the centralization of loss claims submitted by
lenders under our SFH guaranteed program. As of September 30, 2004, CSC
provided loss mitigation for approximately 110,000 guaranteed loans.
CSC is also supporting the rollout of the Lender Interactive Network
Connection (LINC), which is an Internet-based alternative for lenders
to submit loss claims electronically. Centralization will improve
efficiency, consistency, customer service to lenders, and provide
better management data to program officials.
USDA'S FIVE STAR COMMITMENT TO INCREASE MINORITY HOMEOWNERSHIP
The rural homeownership rate continues to outpace the national
rate. In 2004, it stood at 76.1 percent compared to the national rate
of 69.2 percent. But, while rural America has the highest percentage of
homeownership, we are committed to do more, particularly to assist more
minority families in living the American Dream. For USDA's part, we
developed a Five-Star Commitment to increase minority homeownership
opportunities.
Reducing Barriers to Minority Homeownership
Origination fees can now be incorporated into the loan amount.
Through reduction of such barriers the program guaranteed a total of
$3.18 billion in loans in fiscal year 2004, a record for the program.
Doubling the Number of Self-Help Participants by 2010
Over 54 percent of the families who participate in this program are
minorities. In fiscal year 2004, we helped over 1,100 families build
their own home.
Increasing Participation by Minority Lenders Through Outreach
Rural Development offices across the country have developed a
marketing outreach plan to increase participation in the guaranteed
loan program by lenders serving rural minorities.
Promoting Credit Counseling and Homeownership Education--Critical to
Successful Homeownership
Since the signing of an agreement with the Federal Deposit
Insurance Corporation to promote and utilize their ``Money Smart''
training program, nearly 700 Rural Development field staff received
training and will deliver the training to others. Over a third of our
State offices have already made the Money Smart Program available to
non-English speaking groups.
Monitoring Lending Activities to Ensure a 10 Percent Increase in
Minority Homeownership
USDA has jointly developed with the Departments of Housing and
Urban Development (HUD) and Veteran Affairs (VA) an internal tracking
system to measure the success of each of the 53 States and territories
we serve. Overall, the number of loans to minorities has increased by
more than 1,000 per year--an increase of more than 12 percent.
Improving Successful Homeownership
We are also pleased to report our achievement in helping our
customers remain successful homeowners. Rural Development has lowered
its direct loan housing program gross delinquency rate by 35.6 percent
and new loan delinquency rate by 61.8 percent over the past 5 years. As
of today, our gross delinquency rate is 12.85 percent and the new loan
delinquency rate is 1.92 percent. Our portfolio recently outperformed
the delinquency rate for sub-prime mortgage loans as tabulated by the
Mortgage Bankers Association's National Delinquency Survey.
To ensure that we were also providing a high level of customer
service, a satisfaction survey was recently completed. This was our
first independent homeowner survey and established a benchmark for
customer satisfaction. The survey was conducted by an outside
contractor and showed an average homeowner satisfaction rate of 8.6 on
a scale of 1 to 10. The study used the J.D. Power 2004 home mortgage
study to compare these results to the results of other organizations
providing financial services. The J.D. Power survey includes such well
known and respected major lending institutions as Bank of America,
Wells Fargo, and Chase. The average satisfaction level for the
organizations included in the survey is 7.2 with the highest rating
going to USAA (a private mortgage corporation) at 8.6. USDA Rural
Development is at the top of the list for customer satisfaction at 8.6
percent.
Rural Partners
In fiscal year 2006, we will continue to stretch the rural housing
program's resources and its ability to serve the housing needs of rural
America through increased cooperation with HUD and other partners. We
are committed to working with these partners to leverage resources for
rural communities. For example, we are working with HUD and expect to
adopt their ``TOTAL'' scorecard, modified for SFH guaranteed loans.
This cooperation between USDA and HUD will save time and money in
system development. Additionally, Rural Development information
technology staff and the CSC worked with HUD and VA to develop a one-
stop web portal, www.homesales.gov, to market government homes for
sale.
In our MFH program, HUD has been extremely helpful in sharing data
for development of our Comprehensive Property Assessment and in
providing knowledgeable, professional staff from their Office of
Affordable Housing Preservation to consult with before making
determinations on our rural portfolio. This eliminates duplicative work
and ensures better consistency.
CONCLUSION
Through our budget, and the continued commitment of President Bush,
rural Americans will have the tools and opportunities they can put to
work improving both their lives and their communities. We recognize
that we cannot do this alone and will continue to identify and work
with partners who have joined with the President to improve the lives
of rural residents.
I would like to thank each of you for your support of the rural
housing program's efforts. I look forward to working with you in moving
the fiscal year 2006 rural housing program budget forward, and welcome
your guidance as we continue our work together.
______
Prepared Statement of Peter Thomas, Administrator, Rural Business--
Coopertive Service
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to present the fiscal year 2006 President's Budget for USDA
Rural Development's business and cooperative programs.
This is my first opportunity to appear before you as administrator
of the rural business and cooperative programs USDA Rural Development.
I am honored to serve in this position, and to have the opportunity to
work with you to carry out Rural Development's fundamental mission to
increase economic opportunity and improve the quality of life in rural
America. Everyday, we bring people and resources together.
Mr. Chairman, the programs and services of Rural Development, in
partnership with other public and private sector businesses, continue
to improve the economic climate of rural areas through the creation or
preservation of sustainable business opportunities and jobs. Rural
Development programs help close the gap in opportunity for under-served
rural areas and populations, moving them toward improved economic
growth by providing capital, technology, technical assistance, and an
improved quality of life. The $1.279 billion program level requested in
this budget for the rural business and cooperative programs will assist
in creating or saving 56,400 jobs.
BUSINESS PROGRAMS
Business and Industry Guaranteed Loan Program
For the business and industry (B&I) program, the fiscal year 2006
budget includes $44 million in budget authority to support $900 million
in guaranteed loans. We estimate that the funding requested for fiscal
year 2006 will create or save about 24,560 jobs and provide financial
assistance to 489 businesses. Through the lender's reduced exposure on
guaranteed loans, they are able to meet the needs of more businesses at
rates and terms the businesses can afford. B&I guaranteed loans may
also be used by individual farmers to purchase cooperative stock in a
start-up or existing cooperative established for value-added
processing.
I would like to share a story to illustrate how our programs work
together to assist rural businesses. Unicep Packaging, Inc. is located
in City of Sandpoint, Idaho. The area has been affected by the decline
in the logging industry and has an increasing reliance on the tourism
industry for its economic base in addition to light manufacturing.
Dr. John Snedden started his business in 1990 in a Sandpoint
business incubator. In 1995, with the help of a USDA Rural Economic
Development Loan made through Northern Lights, Inc., the electric
cooperative in the Sandpoint area, the company constructed its initial
9,500 sq. ft. manufacturing plant, becoming the first company to
``graduate'' from the incubator. The business' original focus was
manufacturing professional tooth whitening products. Since then it has
shifted to unit-dose packaging and expanded its product lines and
manufacturing capacity to include custom packaging and contract
manufacturing for medical, dental, pharmaceutical, cosmetic,
nutraceutical, and industrial customers.
The B&I guaranteed loans of $2,150,000 to Unicep Packaging, Inc.
and $2,410,000 to Dr. John and Mary Jo Snedden financed a major
expansion completed in 2003, with the manufacturing facility now
encompassing 64,000 square feet. Dr. Snedden and his wife own the land
and building and lease the property to their business, Unicep
Packaging, Inc. Originally projected to create 62 additional jobs, the
expansion has resulted in the creation of 68 jobs. In addition, the
project has saved 58 jobs. On November 10, 2004, Unicep Packaging,
Inc., received the Business of the Year award from the Bonner County
Economic Development Corporation (BCEDC).
Intermediary Relending Program
The fiscal year 2006 budget includes $14.7 million in budget
authority to support $34 million in loans under the intermediary
relending program (IRP). The proposed level of funding will create or
save an estimated 26,172 jobs over the 30-year period of this year's
loans.
Participation by other private credit funding sources is encouraged
in the IRP program, since this program requires the intermediary to
provide, at a minimum, 25 percent in matching funds. To illustrate the
benefits IRP provides to rural America, I would like to share with you
a success story from rural Maine.
Wrabacon, Inc. was established in 1986 to design and build food and
drug packaging systems for customers throughout the United States. It
is located in a rural community with a population of less than 6,000
and a 5.8 percent state unemployment rate and a 7.1 percent town
unemployment rate. Wrabacon, Inc. employs about 13 highly skilled
engineers and technicians with an annual payroll in excess of $600,000.
The economic slow-down of 2001 had a deep effect on the company's sales
and cash flow. Recently, with the economic recovery, the company is
experiencing increased orders and sales.
Using IRP funds received from Rural Development, the Kennebec
Valley Council of Governments provided a $150,000 gap loan to bring
Wrabacon's accounts payable under control and to fund a part of the
company's operations. As a result of the loan, Wrabacon was able to
approach a commercial lender and received a $245,000 line of credit.
The combination of financing tools enabled Wrabacon to obtain needed
working capital, continue its growth, and maintain its level of
success. While retaining their existing employees, Wrabacon is now
anticipating the construction of a 30,000 square foot addition to their
existing facility for storage and expanded manufacturing. This is
expected to produce an additional 10 to 15 new jobs.
Rural Business Enterprise Grant Program and Rural Business Opportunity
Grant Program
No funding is requested for the rural business enterprise grant and
rural business opportunity grant programs. For grants like these that
are for community organizations to stimulate economic development, the
President's fiscal year 2006 Budget proposes to consolidate them into a
new economic and community development program to be administered by
the Department of Commerce. The new program would be designed to
achieve greater results and focus on communities most in need of
assistance.
Rural Economic Development Loan and Grant Programs
The fiscal year 2006 budget includes $25 million in rural economic
development Loans (REDL) and $10 million in rural economic development
grants (REDG). These programs represent a unique partnership, since
they directly involve an Rural Development electric and
telecommunications borrower in community and economic development
projects. We provide zero-interest loans and grants to intermediaries,
who invest the funds locally. The return on our equity from rural
America is strong.
The following is an example of how one REDLoan was utilized to
expand capacity and create jobs with higher than average wages in
Kentucky. P.J. Murphy Forest Products Corporation received a $250,000
loan through the South Kentucky Rural Electric Cooperative Corporation.
The family owned business, located in Bowling Green, produces bedding
for laboratory animals and wood flour which is used as filler in the
plastics industry. Demand for the company's products exceeded its
production capacity. The company built a new facility in Wayne County,
a designated Empowerment Zone, with an unemployment rate of 6.6 percent
at the time of the loan, as compared to the national unemployment rate
of 6 percent at the time of the loan. The $250,000 loan will be used to
purchase new equipment for the new facility. By locating the new
facility in the Empowerment Zone, the company will reduce its
transportation and shipping costs and create up to 15 new jobs in Wayne
County. These new jobs are expected to pay up to 1.8 percent above the
current average per capita income for the county, demonstrating the
Administration's commitment to increasing economic opportunities in
isolated rural areas.
Renewable Energy Grants Program
The fiscal year 2006 budget for the renewable energy systems and
energy efficiency improvements program proposes $10 million of budget
authority to support a $5 million grant program and a $286 million
guaranteed loan program. Fiscal year 2006 will be the first full year
of implementation of this combined loan and grant program. We
anticipate publishing a final rule to implement the program on a
permanent basis by August 2005. To date, we have relied on annual
notices of available funding, a procedure that is generally limited to
grant making.
These programs support the President's Energy Policy by helping to
develop renewable energy supplies that are environmentally friendly. In
addition, they contribute to local rural economies through the creation
of jobs and the provision of new income sources to rural small
businesses, farmers, and ranchers. We anticipate 292,000 households
will be served, and 3 million-kilowatt hours of energy generated while
reducing greenhouse gasses by 6.3 metric tons.
In fiscal year 2004, for example, a $10,000 grant was provided to a
farmer in Cassia County, Idaho. The farmer purchased and installed a
20kW wind turbine which began producing power in June of 2004. The
turbine produces power that is sold to Idaho Power. It also is expected
to supply the majority of the power consumed by the farmer's farm
machinery repair shop as well as his residence. The program directly
supports the President's goals of decreasing reliance on foreign oil,
increasing the use of renewable energy, and reducing toxic emissions
into the atmosphere.
COOPERATIVE PROGRAMS
The cooperative form of organizational governance continues to be a
cornerstone of business development in our rural communities. From the
large agricultural marketing cooperatives that bring additional value
to its members' products, to the small rural telephone cooperative that
brings broadband technology to its community's businesses and
residents, cooperative organizations provide our rural residents with
new and exciting job opportunities, enhanced educational and health
care opportunities, and the products and services that enable viable
rural communities to compete with their urban and suburban
counterparts.
The participatory, self-help foundation upon which cooperative
organizations are based is evidence of the very grass roots effort that
made our Nation great and continues to serve our rural communities
well. The mission of Rural Development's cooperative programs is ``to
promote the understanding and use of the cooperative form of business
as a viable organizational option for marketing and distributing
agricultural products.'' Cooperative program staffs successfully carry
out their mission by providing an array of educational and technical
assistance, research, and funding services to cooperatives, their
members, directors, and managers. Cooperative program staffs identify
and respond to the opportunities and challenges facing rural
cooperatives and agricultural producers, with a special emphasis on
helping its cooperative clientele adjust to the continually changing
economic forces in which they operate and compete in today's global
marketplace. The cooperative programs are relatively modest in size,
yet provide opportunities to encourage farmers and rural residents to
organize cooperatives as a way to expand their income base.
Value-Added Producer Grant Program
For fiscal year 2006, the budget requests $15.5 million for the
value-added producer grant program. The value-added producer grant
program encourages independent agricultural commodity producers to
further refine or enhance their products, thereby increasing their
value to end users and increasing the returns to producers. Grants may
be used for planning purposes such as conducting feasibility analyses
or developing business plans, or for working capital accounts to pay
salaries, utilities and other operating costs. Program revisions were
made in fiscal year 2005 that target grant funds to smaller, more
economically challenged independent producers. In so doing, not only is
Rural Development poised to infuse capital to meet rural America's most
critical needs, but it is able to assist more producers by funding
additional projects. With this budget request, Rural Development will
be able to fund approximately 60 projects.
The successful blending of modern technology with age-old tradition
is evident in Northern Iowa and Southern Minnesota where Amish dairy
farmers are producing and marketing blue cheese. With a $500,000 value-
added producers grant for marketing expenses, the Golden Ridge Cheese
Cooperative was able to turn a first place tie at the American Cheese
Society's 2004 contest into a profitable business opportunity. After
winning for its Schwarz und Weiss natural rind blue cheese at one of
world's most prestigious contests for specialty cheeses, ``Cheese is
now flying out of here.'' Forming a cooperative to produce cheese in a
modern plant was a difficult decision for the group because Old Order
Amish do not use modern machinery. However, the group went forward with
the modern cheese plant in order to preserve their way of life for
their families to enjoy. The plant now uses about 5,000 pounds of milk
a day that is purchased from the cooperative members and processed into
the Schwarz und Weiss cheese, as well as two other brands of blue
cheese. The plant employs about 20 full-time staff.
Since the passage of the Farm Bill in 2002, funding for the
Agricultural Marketing Resource Center (AgMRC) has been set at 5
percent of the funding made available to the other value-added
programs. Therefore, $775,000 of the $15.5 million budget request will
fund the AgMRC's activities. AgMRC is an electronically based
information center that creates, processes, analyzes, and presents
information on value-added agriculture. The center is housed at Iowa
State University and has partners at Kansas State University and the
University of California--Davis. The center provides producers,
processors, and other interested parties with critical information
necessary to build successful value-added businesses.
Rural Cooperative Development Grant Program
For fiscal year 2006, the budget requests $5.0 million for the
rural cooperative development grant program. The rural cooperative
development grant program provides funds to establish and operate
centers for developing new cooperatives and improving the operations of
existing cooperatives, with the primary goal of improving the economic
conditions of rural areas. This program complements our national and
State office technical assistance efforts by increasing outreach and
developing feasibility studies and business plans for new cooperatives
and assisting existing cooperatives in meeting the demands of today's
ever-changing global economy. With this budget request, Rural
Development will be able to fund additional 3 or 4 centers.
A rural cooperative development grant made in 2003 enabled a rural
Missouri cotton growers' cooperative to participate in today's emerging
global markets. With assistance from the Missouri Enterprise Business
Assistance Center in Rolla, Missouri, Delta Fibers, located in
Caruthersville, Missouri, was introduced to Porter Tech, a Mexican
import company. After visiting the Delta Fibers site, officials from
Porter Tech entered into an agreement with Delta Fibers and in the
summer of 2004, Missouri cotton began shipment into Mexico.
Cooperative Research Agreements
For fiscal year 2006, the budget requests $500,000 for cooperative
research agreements to encourage the study of those issues essential to
the development and sustainability of cooperatives. Because so much of
rural America's business endeavors are cooperatively formed, their
continued success is critical for the continued sustainability of the
Nation's rural communities. Through cooperative research agreements,
Rural Development can continue to develop and maintain the information
base vital for innovative, creative, and prudent decision making.
CONCLUSION
Mr. Chairman, and Members of the Subcommittee, this concludes my
testimony for the Rural Development fiscal year 2006 budget for rural
business and cooperative programs. I look forward to working with you
and other Committee members to administer our programs. I will be happy
to answer any questions the Committee might have.
______
Prepared Statement of Curtis M. Anderson, Acting Administrator, Rural
Utilities Service
Mr. Chairman, Members of the Subcommittee, thank you for the
opportunity to present the fiscal year 2006 President's Budget for
Rural Development utilities programs.
A strong rural America is important for a strong Nation. We
consider the rural utilities programs an important part of the USDA
Rural Development mission. Safe, affordable, modern utility
infrastructure is an investment in economic competitiveness and serves
as a fundamental building block of economic development. Changes in the
landscape of rural America, along with developments in technology, and
changes in market structure combined with an aging utility
infrastructure is occurring in the electric, telecommunications and
water sectors. Without the help of USDA Rural Development's rural
utility programs, rural citizens face monumental challenges in
participating in today's economy as well as maintaining and improving
their quality of life.
The $40 billion RUS loan portfolio includes investments in 7,500
small community rural water and waste disposal systems and
approximately 2,000 electric and telecommunications systems serving
rural America. This local/Federal partnership is an ongoing success
story. Eighty percent of the Nation's landmass continues to be rural,
encompassing 25 percent of the population. For an economy to prosper,
we need infrastructure investment to spur economic growth, create jobs
and improve the quality of life in rural America.
ELECTRIC PROGRAM
The electric program budget proposes $6 million in budget authority
to support a program level of $2.52 billion. The President's budget
requests $920,000 in budget authority for a hardship program level of
$100 million and over $5 million in budget authority for a $100 million
program level for municipal rate loans. The direct Treasury rate loan
program level is proposed to be $700 million provided for with a budget
authority of $70 thousand. The guarantee of Federal Financing Bank
(FFB) direct loans is proposed at a program level of $1.62 billion with
no budget authority required. The FFB loans are made at the cost of
money to the Federal Government plus one-eighth of a percent. As a
result, no budget authority is required for this part of the FFB
electric loan program. Over the past 4 years, we have eliminated most
of the backlog of loan applications and we strongly believe that the
President's budget request will meet the demand during the fiscal year
2006.
The electric program provides financing for rural electric
cooperative to expand and upgrade the transmission and distribution
systems needed to meet the demands of economic growth across our
Nation.
ADVANCED TELECOMMUNICATIONS IN RURAL AMERICA
The area of rural telecommunications is the most rapidly changing
aspect of rural utilities infrastructure. Job growth, economic
development, and continued quality of life in rural America require
access to today's high speed telecommunications.
At the forefront of our telecommunications program is the broadband
program created by the 2002 Farm Bill. The broadband loan program is
distinctive from all other lending programs within the agency's
portfolio. Nearly half of the applicants are ``start-up'' companies
with little, if any, history of doing business in this industry. In
addition, two distinctly different characteristics are at play--
competition (rather than a monopolistic environment) and multi-state
businesses (rather than a single cooperative or independent company
serving a single rural community). Very few of the applications are
designed to serve a single rural community or even a small grouping of
geographically close rural communities. Most are applications
requesting to serve 50, 75, or in excess of 100 rural communities in
multiple States. In these multiple community applications, the vast
majority of the communities already have broadband service available in
some of the proposed service area; in some instances, from more than
one provider. As you can imagine, these factors contribute to increased
review and processing efforts.
In fiscal year 2004, the agency made 33 loans totaling $602.9
million which will serve 535 communities. This means those communities
are connected to global business opportunities, improved quality
education and modern health care that was not available without those
high speed telecommunications connections. Since 2001,
telecommunications loan programs have provided funding to make
available internet access to 1.3 million rural residents.
In order to balance fiduciary responsibility with mission delivery,
USDA is focusing on ``quality loans.'' A failed business plan
translates not only into loss of taxpayer investment, but deprives
millions of citizens living in rural communities of the technology
needed to attract new businesses, create jobs, and deliver quality
education and health care services.
Building on USDA's experience and local presence in serving rural
communities, we bring a unique lending expertise that includes the
tools necessary to examine, and provide solutions for, the financial
and the technical challenges facing entities dedicated to serving rural
America. This model has resulted in a lending agency with unprecedented
success in our other programs and we are dedicated to bringing that
same level of success to this program.
From the beginning, the President has recognized the importance of
broadband technology to our rural communities. The President stated,
``. . . we must bring the promise of broadband technology to millions
of Americans . . . and broadband technology is going to be incredibly
important for us to stay on the cutting edge of innovation here in
America.'' The Bush Administration has been unwavering in its support
for this and other programs that will revitalize and strengthen our
rural communities.
Let me assure you that we are on track, we remain focused, and we
will complete our mission. We must continue to balance fiduciary
responsibility with mission delivery everyday. Our unique lending
expertise--the marriage of financial and technical analysis--helps to
maximize the success rate of borrowers' business models. We will strive
to do our part for rural America in fulfilling the President's promise
of bringing broadband service to millions of citizens.
TELECOMMUNICATIONS BUDGET
The fiscal year 2006 budget proposes a broadband loan program level
of $359 million driven by $10 million in budget authority. This
replaces the mandatory funding provided in the Farm Bill. In addition,
$1.6 billion in unused loan authority that the Farm Bill provided
remains available.
Included in the discretionary broadband loans is $30 million in
direct 4 percent loans requiring $2.4 million in budget authority; $299
million in direct Treasury rate loans requiring $6.4 million in budget
authority and $30 million in guaranteed loans requiring $1.1 million in
budget authority.
In the regular telecommunications program, the fiscal year 2006
Budget calls for a program level of $669 million. Included is $145
million in direct 5 percent loans, $424 million in direct Treasury rate
loans, and $100 million in Federal Financing Bank (FFB) direct loans
guaranteed by RUS. All of this is driven by $212,000 thousand in budget
authority.
The budget also reflects the Administration's commitment to resolve
the complicated issues involving the administration of the Rural
Telephone Bank by proposing dissolution. When the Rural Telephone Bank
was created in 1971, there was no lender other than what was available
through the USDA. However, there are now major lenders that provide a
commercial source of rural telecommunications financing. In addition,
funding for this program has exceeded demand. There are about $300
million in unadvanced loan balances for loans available for 5 years or
more. Dissolution will result in the government being repaid for all
outstanding stock and the borrowers receiving a cash payout for their
outstanding stock. Since the Administration is recommending
dissolution, the budget does not request any budget authority to
support RTB lending for fiscal year 2006. To ensure that rural
telecommunications providers have access to adequate levels of
financing, the budget requests that the standard RUS telecommunications
loan programs be increased by $175 million.
DISTANCE LEARNING AND TELEMEDICINE
Distance learning and telemedicine technologies are having a
profound impact on the lives of rural residents. Helping rural schools
and learning centers to take advantage of the information age and
enabling rural hospitals and health care centers to have access to
quality medical services only found in large hospitals, the distance
learning and telemedicine (DLT) program pulls together the best of
Federal assistance and local leadership.
The DLT grants are budgeted at $25 million, the same as Congress
appropriated for fiscal year 2005. The Budget proposes to zero out the
loan program, simply because the nature of the prospective applicants,
schools and hospitals, have placed the ability to repay loans out of
reach.
WATER AND ENVIRONMENTAL PROGRAMS
The water and environmental programs provide the most basic of
infrastructure needs for rural citizens: clean, safe, affordable
drinking water and ecologically sound waste disposal. No element is
more vital to human life and dignity as clean, safe water. Rural
communities are challenged to provide this vital service while facing
increasing regulatory requirements and persistent drought conditions
across a large area of the country.
The budget request seeks $449.6 million in budget authority for a
program level of $1.455 billion in loans and grants. The proposed loan
levels are $1 billion in direct loans and $75 million in loan
guarantees for water and waste disposal programs. The direct loan
program requires $69 million in budget authority. To augment the loan
programs, the budget request includes $377 million in grants. In
addition, the budget requests an additional $3.5 million in solid waste
management grants.
SUMMARY
Rural utility infrastructure programs are interwoven in the fabric
of USDA Rural Development programs. To provide safe, clean, water;
modern communications; and reliable electric power means businesses can
develop, homes can have light and heat, and markets can be opened to
the rest of the world.
______
Prepared Statement of Joseph J. Jen
Mr. Chairman, members of the Subcommittee, it is my pleasure to
appear before you to discuss the fiscal year 2006 budgets for the
Research, Education, and Economics (REE) mission area agencies of the
USDA. I have with me today Deputy Under Secretary Rodney Brown,
Administrator of the Agricultural Research Service (ARS) Edward
Knipling, Administrator of the Cooperative State Research, Education,
and Extension Service (CSREES) Colien Hefferan, Administrator of the
Economic Research Service (ERS) Susan Offutt, Administrator of the
National Agricultural Statistics Service (NASS) Ronald Bosecker, and
Office of Budget and Program Analysis' (OBPA) Deputy Director for
Budget, Legislative, and Regulatory Systems Dennis Kaplan. Each
Administrator has submitted written testimony for the record.
Before addressing the fiscal year 2006 budget, I want to express my
appreciation for the support received from Congress in our
appropriations for fiscal year 2005. We fully understand the pressure
the Congress, in addition to the Executive branch, is under to keep a
tight reign on the budget and control the Federal deficit. As much as
that was needed in developing the budget for fiscal year 2005, it is
even more true for the fiscal year 2006.
As you know, the President is committed to cutting the Federal
deficit in half over the next 5 years. Reducing the Federal deficit is
critical for continuing the current strength of the economy. As
Secretary Johanns said in his testimony before this subcommittee, ``no
department can opt out of helping in Federal deficit reduction. USDA
must play its role as much as any department.'' In the same way, REE is
not exempt from helping USDA achieve this government-wide goal.
The President's fiscal year 2006 budget proposes $2.320 billion for
the four REE agencies, $347.2 million less than the fiscal year 2005
appropriations, and close to the fiscal year 2005 President's proposed
budget of $2.403 billion. The importance of research in promoting a
competitive and secure food and agriculture sector, safe food, and a
healthy population, remains critical, even under constrained budgets.
Recently at the Agricultural Outlook Forum, Secretary Johanns said,
``Advances in science and technology have always been a part of our
success and they will continue to be.'' The phenomenal increases in
agricultural productivity over many decades in this country are the
product of science and technology. The same can be said for the
increasingly environmentally-friendly production practices used across
the Nation. Much of the improvement in our food safety system can be
attributed to research, and the recently released Dietary Guidelines
for Americans 2005 are firmly based on up-to-date research findings.
The bottom line is that science and technology are the foundation of
the American food and agricultural system.
REE agencies are at the center of the research system, supporting
the food and agricultural sector. They have a proud history over many
decades of finding solutions to the challenges confronting farmers,
ranchers, and others involved in agriculture, resulting in a high
return on the Federal investment to our Nation, which enjoys a
plentiful, affordable, and safe food supply. This remarkable history of
success continues today, yielding new knowledge, technologies,
statistics, and analysis for effectively addressing today's problems
and building the scientific and technological foundation for addressing
tomorrow's problems and opportunities.
However, high quality and relevant research cannot guarantee a
successful, competitive food and agricultural sector. Natural events,
market conditions, and resistance to the adoption of new technologies
can be barriers to the translation of new knowledge and technology into
business gains. At the same time, in the absence of such research, the
food and agricultural sector runs the risk of losing its competitive
edge in global markets.
A most notable example of addressing today's problems relates to
the recent arrival of soybean rust on our shores. For some time
scientists have been saying that this plant disease would inevitably
arrive in the United States, carried by winds from South America where
the disease has been residing for several years. REE agencies, their
partners in other USDA agencies, the research and scientific community,
State departments of agriculture, and soybean industry organizations,
have been preparing for this anticipated event that became a reality
last November in Louisiana. There are now 29 confirmed cases in nine
States.
Effective management and control of soybean rust relies on early
detection, correct identification, and proper and timely application of
fungicides. Starting in 1998, REE agencies have played a critical
leadership role with the ultimate goal of providing producers with
effective disease management options. For example, ARS scientists have
developed a real-time rapid detection test that has been adopted by the
Animal and Plant Health Inspection Service (APHIS). It will provide a
quick, easy and accurate means to detect soybean rust as part of a
national surveillance system. CSREES has been at the forefront of
training first detectors. In June of 2004, a regional soybean rust
teleconference attracted nearly 1,000 participants who grow or service
nine million acres of soybeans. CSREES, in collaboration with APHIS,
has also been instrumental in establishing a National Plant Diagnostic
Network of strategically located university-based laboratories that
support APHIS laboratories, facilitating rapid and accurate detection.
In September 2004, ERS published an article on the economic risks
of soybean rust in the United States in its publication, Amber Waves.
The article indicated that the economic effects of the pathogen's entry
into the United States could vary considerably, depending on growing
conditions, the severity and spread of the disease, and producers'
responses. This analysis presented policymakers and the soybean
industry with information to make more informed decisions in responding
to the detection of the soybean rust in 2004.
Similar to our work on soybean rust, the REE agencies and their
partners in the research community are also collaborating effectively
in genomics research. The future of agriculture is in genomics and
related fields such as proteomics and functional genomics. Sequencing
the genome of important agricultural plants and animals and learning
about the functions of different genes and genetic markers hold the
promise of a whole new generation of agricultural products that are
nutritionally enhanced, disease resistant, and less dependent on
fertilizers and herbicides. Genetic research is also central to the
development of rapid diagnostic tests, such as the ones used by APHIS
to identify avian influenza and exotic Newcastle disease.
Genomics is a prime example of research that takes years to
complete and years to realize many of the benefits, but that fact makes
it no less valuable. The ARS budget proposes an increase of $12.8
million for animal and plant genomics and related research and
preservation of animal and plant genetic resources. Under CSREES'
National Research Initiative (NRI), $11 million is proposed for
agricultural genomics research focused on the maize and swine genomes.
Another pioneering research direction, such as nanotechnology,
provides a new approach for addressing perennial challenges in
agriculture and capitalizing on new possibilities. Nanotechnology
refers to research and development at the atomic, molecular or
macromolecular levels, in the length scale of approximately 1 to 100
nanometer range. The technology takes advantage of novel properties and
functions of systems and structures because of their size. Already used
in both the medical and environmental arena, we are only beginning to
explore the promise this technology holds for agriculture. For example,
it could be used to develop healthy and tasty foods and products that
can be identified and tracked based on nanoscale bar codes. Eight
million dollars of the proposed increase in NRI funding will be
allocated to nanotechnology.
I would like to highlight three high priority programs in which the
REE agencies have a major role that would be enhanced with additional
funding in the President's proposed budget.
Food and Agriculture Defense Initiative.--The interagency Food and
Agriculture Defense Initiative, now in its second year, focuses on
strengthening the Federal Government's capacity to identify and
characterize bioterriorist attacks. The USDA component specifically
relates to protecting the food supply and agricultural production,
protecting USDA facilities, and ensuring USDA staff preparedness for a
potential event. The fiscal year 2006 budget provides increased program
funding of $35 million and $26 million for ARS and CSREES,
respectively, to expand their participation in this initiative. This
investment is just another step in President Bush's commitment to
protect homeland security.
The ARS increases will allow the agency to expand the National
Plant Disease Recovery System designed to ensure that disease resistant
seed varieties are continually developed and made available to
producers in the event of a natural or intentional catastrophic disease
or pest outbreak. The increased funds will also support the
strengthening of ongoing ARS research on rapid response systems to
selected agents, improved vaccines, and identification of genes
affecting disease resistance.
A $59 million request in the ARS buildings and facilities account
will complete the modernization of the National Centers for Animal
Health in Ames, Iowa. This consolidated ARS and APHIS facility will
house and support an integrated, multidisciplinary scientific
capability, combining animal disease research with the development of
diagnostic tools and vaccines. Including its biosecurity level two
(BSL-2), BSL-3, and BSL-3 Ag spaces, the Centers will be a state-of-
the-art facility, unique in the world.
The budget provides CSREES with $30 million, an increase of $21
million, to maintain and enhance the National Diagnostic Laboratory
Network of public agricultural institutions that serves as a backup to
APHIS' diagnostic laboratories for both animals and plants. The network
is playing an important role in the detection and control of soybean
rust and sudden oak death. The network laboratories are now in a
position to do confirmatory tests of soybean rust at the county and
farm level and are ready to detect and track the rust in the coming
growing season. The diagnostic laboratory network has also been
important in identifying sudden oak death on nursery stock before being
sold to the public. The initiative also includes $5 million for a
CSREES competitive program that would promote the training of food
system defense professionals who are critically needed in securing our
Nation's agricultural and food supply.
BSE Related Activities.--Bovine Spongiform Encephalopathy (BSE)
continues to be a challenge for the livestock sector. While no new BSE
has been detected in the United States since the first case in December
2003, two cases have been identified in Canada. Building on its current
BSE and related prion research program, the budget provides ARS with an
additional $7.5 million to further our scientific understanding of the
disease and develop technology needed by regulatory agencies to
establish science-based policies and control programs.
Nutrition Research and Education.--Concern continues regarding the
epidemic of obesity in our Nation. Particularly disquieting is the
incidence of obesity in children, estimated to be approximately 15
percent and essentially doubling between 1980 and 2000. At any age and
for any group, the causes of obesity are many and complex. They include
reduction in physical activity, greater reliance on convenience foods
and restaurants, and more basically, the consumption of more calories.
The reasons behind these behavior choices are complicated and not well
understood. Moreover, without a better understanding of the drivers of
these behaviors, it will be difficult to design effective types of
interventions, such as education programs, public information
announcements, or community campaigns, to help individuals and families
achieve and maintain healthy weights.
USDA, with its food assistance, nutrition education, and nutrition
research programs, plays an important role in promoting healthy
nutrition and weight, in general, and in addressing the obesity, in
particular. Contributing to the President's Healthier United States
initiative, the fiscal year 2006 budget proposes increases for ARS,
CSREES, and ERS that will strengthen the Department's capacity to
address this major national health problem and associated issues. The
increases will focus principally on gaining a better understanding of
the factors influencing food consumption patterns and the development
of effective interventions to promote healthy dietary choices and
prevent obesity.
An ARS increase of $6 million will improve the accuracy and ethnic
representation of ``What We Eat in America,'' a component of the
National Health and Nutrition Examination Survey (NHANES). This joint
USDA/Centers for Disease Control and Prevention survey is the principal
source of Nation-wide information on individuals' food consumption and
associate health status. An additional $2.3 million will be used for
nutrition research on obesity and nutrition survey research on the
energy and nutrient content of food consumed by minority populations.
The CSREES increase of $7.5 million in the NRI will focus on
understanding the environmental and social factors influencing
behaviors leading to childhood obesity.
A $0.6 million increase in the ERS budget will support a behavioral
economic research program to identify strategies for developing
effective nutrition messages that motivate consumers to adopt more
healthful diets.
The Expanded Food and Nutrition Education Program (EFNEP) in the
CSREES budget works directly with low-income individuals to help them
better manage food budgets, gain skills in safe food preparation, and
improve their diets. The program has a very impressive track record of
achieving positive, sustained behavioral changes related to food and
diet. The fiscal year 2006 proposed budget provides EFNEP an increase
of $4.5 million to $63 million, reaching a legislatively required
funding level needed for the 1890 Land-Grant Institutions to
participate in the program. The increase allows the program to reach
more people in more counties.
Before turning specifically to the REE agency budgets, I would like
to discuss a specific proposal found in the CSREES budget. The
Administration strongly believes that competitive research programs
provide the best mechanism for ensuring the allocation of funds to the
highest quality projects. Consistent with this policy position, this
year's CSREES budget proposes the redirection of funds from the Hatch
and McIntire-Stennis formula research programs to competitively awarded
grant programs over the next 2 years, and the reallocation of Animal
Health research formula funds in fiscal year 2006. A new State
Agricultural Experiment Station (SAES) Competitive Grants Program of
$75 million will support the same types of research at Agricultural
Experiment Stations that are currently supported by formula funds. The
budget also proposes eliminating the cap on indirect costs for CSREES
grants. Instead, the indirect cap for grants will be at a negotiated
level for each institution, a practice consistent with most other
Federal research grant programs.
Finally, all four REE agencies are currently initiating or
strengthening a formal process framed by the criteria of relevance,
quality and performance called for in the President's Management Agenda
initiative on research and development programs. These agency processes
are centered on reviews by external scientists that provide valuable
objective insights and recommendations for the programs, as well as
ratings that are used in the Program Assessment Rating Tool (PART)
employed by the Office of Management and Budget under the President's
Management Agenda. I am pleased to report that the three REE agency
programs that were reviewed under the PART in fiscal year 2004 received
scores of moderately effective, and we continue to improve agency
performance measures as part of a larger effort to enhance the
effectiveness of the REE programs.
REE AGENCY FISCAL YEAR 2006 BUDGETS
I would now like to turn briefly to the budgets of the four REE
agencies.
Agricultural Research Service.--As the principal intramural
biological and physical science research agency in USDA, ARS plays a
critical role for the Department and the larger agricultural community
in conducting research to develop new scientific knowledge and
technologies to solve high priority agricultural problems of broad
scope. It also is home to the National Agricultural Library (NAL), the
Nation's major information resource in the food, agricultural and
natural resource sciences. The fiscal year 2006 budget requests $1.1
billion for ARS. Within that total, $996 million is proposed for
research and information programs, approximately $100 million less than
was appropriated in fiscal year 2005. The $65 million proposed for
buildings and facilities is principally directed to complete the
modernization of the National Centers for Animal Health in Ames, Iowa.
The ARS budget proposes increases totaling $97 million for high
priority program areas of national and regional importance, such as
food safety, emerging and exotic diseases, BSE, human nutrition/
obesity, genomics and genetic resources, and climate change. To offset
these increases the budget proposes the elimination of approximately
$175 million in Congressional earmarks and $28 million in other project
terminations.
In addition to those previously described, the ARS budget proposes
increases for controlling emerging diseases and invasive species
affecting animals ($8.6 million) and plants ($17.7 million), a
significant portion of which is included in the Food and Agriculture
Defense Initiative. Targets for the fiscal year 2006 animal protection
research program include developing systems for rapid response to
selected agents and implementing a vaccine research program for control
and eradication of biological threat agents. Plant protection research
targets for fiscal year 2006 include developing and releasing to
producers new varieties of plant stock with insect and disease
resistance. An increase of $15.3 million in food safety research is
proposed to develop surveillance, sampling, and detection methods to
rapidly detect and identify foodborne pathogens as part of the Food and
Agriculture Defense Initiative.
High energy prices, instability in petroleum exporting countries,
environmental concerns, and the potential for new markets for
agricultural products have generated great interest in the development
of bioenergy. ARS continues to conduct research to generate scientific
knowledge and technologies to support production of affordable
bioenergy products. An increase of $2.5 million will be used to
accelerate this bioenergy research and technology program, as well as
other biobased products research. Fostering increased use of renewable
fuels and decreasing our dependence on foreign oil is a key component
of the President's energy plan.
Agricultural production is vulnerable to changes in climate, such
as rising temperatures, changing amounts of precipitation, increased
variability in weather, and increases in the frequency and intensity of
extreme weather events. These environmental changes also offer
opportunities for agriculture to help address the undesirable
accumulation of greenhouse gasses. An increase of $3.2 million in the
President's budget for the Climate Change Research Initiative will
support research providing information on balancing carbon storage,
emissions, and agricultural productivity in different agricultural
systems across the Nation. In particular, the research will generate
new knowledge on how to manage livestock, manures, fertilizers,
biological nitrogen fixation, and soils to minimize emissions and
increase sinks for greenhouse gasses. Other increases will support
research on agricultural air quality ($0.9 million) and water
protection and management ($0.9 million).
In the age of digital information, NAL is providing national
leadership through the development of the National Digital Library of
Agriculture. The requested increase of $1.9 million will allow NAL to
enhance development and delivery of content for the digital library, as
well as continue to integrate the AGRICOLA database into the digital
library.
Advances in information technology (IT), including the ability to
store and share information, are enabling agencies, such as ARS, to
gain great efficiencies and collaborative power in conducting research.
These advances, however, also make ARS' IT infrastructure more
vulnerable to cybersecurity attacks. The safety of sensitive research
information from unauthorized intruders is critical to the agency's
research program. As part of the USDA Homeland Security request, the
fiscal year 2006 budget proposes $3.6 million to strengthen ARS'
cybersecurity program by increasing the number of cybersecurity
officers and securing and implementing new cybersecurity tools.
Cooperative State Research, Education, and Extension Service.--The
President's fiscal year 2006 budget provides just over $1 billion for
CSREES. Compared to fiscal year 2005, the budget includes an increase
of $38 million in on-going programs and the elimination of $181 million
in unrequested increases. The Administration's request places a strong
emphasis on increases in the REE mission area for Food and Agriculture
Defense and peer-reviewed competitive grants. In providing critical
funding for the research, education, and extension programs of the Land
Grant system and other universities and organizations across the
country, CSREES continues to play a central role in the generation of
new knowledge and technology and the transfer of that knowledge and
technology to producers and consumers.
As described above, the budget proposes shifting the research
formula funds under the Hatch Act, Cooperative Forestry Research
Program (McIntire-Stennis), and Animal Health and Disease Research
programs to competitive programs over the next 2 years. The proposal
for fiscal year 2006 redirects half of the Hatch and McIntire-Stennis
funds and all of the Animal Health and Disease funds. State
Agricultural Experiment Stations will be eligible to apply for grants
under the new State Agricultural Experiment Station (SAES) Competitive
Grants Program funded at $75 million. Other formula funds will be
shifted to the NRI which would be funded at $250 million, an increase
of $70 million over the fiscal year 2005 appropriation level. The
details of the new SAES program will be developed by CSREES in
consultation with the land grant institutions and other stakeholders.
Administration of research previously funded under the competitive
406 integrated program has been moved to the NRI and SAES Competitive
Grants Program, where the same range of research will be supported.
Finally, the budget proposes eliminating the current indirect cost cap
for CSREES grants, currently set at 20 percent. Instead, the cap will
be negotiated for each institution, following the standard practice of
most other Federal competitive research programs. Lifting the cap
responds to frequently voiced concerns that researchers in some
institutions are discouraged from applying for NRI grants because the
20 percent cap does not cover true indirect costs to the grantee
institution.
The NRI, the agency's flagship competitive program, continues to be
a very valuable avenue for supporting cutting-edge research conducted
by the finest scientists across the country. The $70 million increase
in the NRI for fiscal year 2006 will support new research in genomics,
nanotechnology for functional foods and food safety, and emerging
issues in food and agricultural defense. The investment in food and
agricultural defense will help fill critical knowledge gaps in real
time or near real time rapid detection tests and monitoring
surveillance systems of animal and plant disease. Extensive efforts are
underway in several agencies to produce rapid, sensitive detection
tools. However, their value relies on their being used correctly to
help minimize the probability that animal disease outbreaks in the
United States may spread widely before containment procedures begin.
CSREES will support research that fills this critical knowledge gap on
the use of these tests in real time or near real time detection and
monitoring.
The budget calls for an increase of $1.5 million in the CSREES
Graduate Fellowship Grant Program. Despite recent gains in support for
minority-serving institutions and programs encouraging diversity in
higher education and the workforce, the Nation faces chronic challenges
in promoting human capital development that enables all citizens to
realize their educational potential. The food and agricultural system
would benefit from an expanded base of skilled scientists, technicians,
and other professionals as the baby-boomers begin to retire. The
proposed increase will allow CSREES to further expand the number of
fellowships offered at the Master of Science level, essential for
recruiting minority graduate students.
Economic Research Service.--ERS is provided $80.7 million in the
President's fiscal year 2006 budget. As the Department's principal
intramural economics and social science research agency, ERS conducts
research and analysis on the efficiency, efficacy, and equity aspects
of issues related to agriculture, food safety, human nutrition, the
environment, and rural development. Its programs and products are
shaped principally to serve key decision-makers who routinely make or
influence public policy and program decisions.
The budget provides an increase of $5.8 million to continue the
development of ERS's Consumer Data and Information System, a data and
analysis framework of the post-farm gate food system. It is designed to
identify, understand and track changes in food support and consumption
patterns for use in policy decisions in the food, health, and consumer
arenas. Fiscal year 2005 appropriations provided funds for implementing
one component of the system, the Flexible Consumer Behavior Survey
Module (FCBSM). The survey will be coordinated with the NHANES survey
managed by the National Center for Health Statistics of the Centers for
Disease Control and Prevention. in order to link data on individual's
knowledge and attitudes about dietary guidance and food safety with
data on food intake, dietary status, and health outcomes.
The increased funds will support a second component, a Rapid
Consumer Response Module that will provide real-time information on
consumer reactions to unforeseen events and disruptions, current market
events, and government policies. The funds will also be used to create
a Food Market Surveillance System of surveys and analyses to identify
food consumption patterns and how consumers respond to changes in the
food market place and in customers' lifestyles over time.
The data and analytical capacity made possible through the proposed
Consumer Data and Information System is crucial to understanding the
quickly evolving consumer-driven food and agricultural system. The
information from this system will help producers and processors to
continue competing effectively in domestic and global markets and will
help policymakers to identify and develop strategies addressing
nutrition and obesity issues at different levels of the food system.
National Agricultural Statistics Service.--NASS' budget requests
$145.2 million, an increase of $16.7 million over fiscal year 2005.
NASS' comprehensive, reliable, and timely data are critical to policy
decisions, maintaining stable agricultural markets, and ensuring a
level playing field for all users of agricultural statistics.
The budget provides $7 million for continuing a multiyear
initiative begun in fiscal year 2004 to restore and modernize NASS'
core estimates program to meet data users' needs with an improved level
of precision. A second increase of $1.8 million will incrementally
improve statistically defensible survey precision for small area
statistics that are used by the Risk Management Agency and the Farm
Service Agency in USDA, among others.
The Census of Agriculture, conducted by NASS, provides
comprehensive data on the agricultural economy on a 5-year cycle. In
the fiscal year 2006 budget, NASS is requesting an increase of $6.5
million to prepare for the 2007 Census, including finalizing, field
testing and evaluating the questionnaire.
SUMMARY
In summary, I want to reinforce the message that, while developed
within the context of the need to reduce the Federal deficit, the REE
budget reflects a continuing commitment to investment in high priority
agricultural research, statistics, education, and extension programs.
As such, it supports the Federal commitment to solving today's problems
and challenges faced by agricultural producers and to developing the
knowledge and tools of cutting-edge science to address future problems
and explore new scientific advances. This concludes my statement. Thank
you for your attention.
______
Prepared Statement of Dr. Edward B. Knipling, Administrator,
Agricultural Research Service
Mr. Chairman and members of the Subcommittee, I appreciate this
opportunity to present the Agricultural Research Service's (ARS) budget
recommendations for fiscal year 2006. The President's fiscal year 2006
budget request for ARS' research programs is $996.1 million, a net
decrease of $105.9 million from the fiscal year 2005 funding level. The
budget recommends $87.9 million in new and expanded research programs
which address the Nation's highest food and agriculture priorities.
Nearly half of the increase requested, $42.6 million, is in support of
the Federal Government's initiative to strengthen the Nation's homeland
security. ARS homeland security research focuses on the areas of food
safety, emerging and exotic diseases of animals and crops, and the
National Plant Disease Recovery System. There are also new and expanded
initiatives in critical research areas, such as Bovine Spongiform
Encephalopathy (BSE), invasive species of animals and plants, and
obesity. Other ARS program initiatives include research on genetics and
genomics, biobased products and bioenergy, air and water quality, and
climate change. The Agency is also requesting an increase of $9.3
million to finance pay costs required in fiscal year 2006.
The budget again proposes the termination of unrequested research
projects and resources appropriated in recent years. The appropriations
associated with the proposed project terminations total $203.1 million.
The savings to be achieved through the proposed terminations will be
redirected to finance the higher priority research initiatives proposed
in ARS' budget, as well as to help reduce overall Federal spending.
The ARS budget also includes $64.8 million under the Buildings and
Facilities account for the design, modernization, and construction of
ARS facilities. In particular, the budget requests $58.8 million for
the completion of the modernization of the National Centers for Animal
Health at Ames, Iowa.
PROPOSED PROGRAM INCREASES
Food Safety ($15.3 million).--Ensuring the safety of the Nation's
food supply is essential and vitally important to U.S. Homeland
Security. Bioterrorism against our food supply would affect the health
and safety of consumers and their confidence in the safety of the food
they consume. It would also have far-reaching impacts on the country's
economy, given that U.S. agriculture contributes over $1 trillion to
the gross domestic product. ARS research will focus on assessing the
vulnerabilities of the food supply, strengthening and expanding
laboratory preparedness, and developing technologies that rapidly
identify suspected food pathogens and toxins. ARS will work in these
areas of prevention, detection, and response with the Food Safety and
Inspection Service and other USDA agencies through programs such as the
Collaboration for Animal Health and Food Safety Epidemiology.
Emerging and Exotic Diseases of Animals and Plants ($19.5
million).--The United States is increasingly vulnerable to emerging
animal and plant diseases which could threaten the country's Homeland
Security. The threat of new diseases--whether they are a result of
bioterrorism or of naturally occurring epidemics--is an urgent and
growing challenge to livestock producers. Bovine Viral Diarrhea in
cattle, Porcine Reproductive Respiratory Syndrome in swine, and Marek's
disease virus in chickens are examples of these exotic diseases.
Harmful animal diseases introduced into the United States in recent
years from foreign countries include Avian Influenza and Exotic
Newcastle Disease. Brucellosis, Leptospiroris, and West Nile Virus are
still other examples of zoonotic diseases that pose a threat not only
to animals but to humans as well. Similarly, exotic and emerging plant
diseases--wheat and barley rusts, citrus canker, and corn viruses--
present a potential threat to the Nation. With the proposed increase,
ARS will develop vaccines, intervention strategies, and diagnostics for
the prevention, detection, identification, control, and eradication of
biological threat agents. ARS will also strengthen its collaborative
partnerships at the national and international levels to obtain access
to essential agents and data.
National Plant Disease Recovery System ($4.2 million).--The
emergence or spread of certain plant diseases, such as soybean rust,
citrus variegated chlorosis, or bacterial wilt, could seriously harm
America's agriculture. Recovery from a significant disease outbreak
requires a national system to manage host/pathogen interactions and
deploy resistant plant resources using cultural, biological, and
chemical control strategies. Homeland Security Presidential Directive
(HSPD-9) has charged ARS with the responsibility for leading this
effort with the Cooperative State Research, Education and Extension
Service (CSREES), the Animal and Plant Health Inspection Service
(APHIS), and others. ARS will use the proposed increase to minimize the
impacts of devastating crop diseases by documenting and monitoring
plant diseases, developing germplasm and plant varieties with improved
disease resistant characteristics, implementing integrated pest
management approaches, and transferring genetic resources (i.e.,
disease resistant plant varieties) to its customers.
Bovine Spongiform Encephalopathy ($7.5 million).--BSE is a
progressive, degenerative, fatal disease affecting the central nervous
system of adult cattle. It is believed that eating contaminated beef
products particularly from BSE-affected cattle causes a variant form of
Creutzfeldt-Jacob Disease in humans. The first case of BSE was
identified in the United States on December 23, 2003. We must discover
the cause of BSE and develop diagnostic tools to protect the U.S. food
animal industry and human health. The proposed increase will allow ARS
scientists to enhance the implementation of a national, coordinated
research program (with European scientists and others) in BSE
pathogenesis, diagnostics, and intervention.
Invasive Species ($6.8 million).--The security of the U.S.
livestock and poultry industries is threatened by the emergence of
animal parasites. Of particular concern is the worldwide emergence of
drug resistant nematodes and protozoa. Plants are also at risk. Sudden
Oak Death has had negative effects on California's plant nurseries.
Salt Cedar and Yellow Starthistle (invasive weeds) have caused
agricultural and environmental damage in several western States. Lobate
Lac Scale, Asian Longhorned Beetle, and Emerald Ash Borer (invasive
insects) have caused damage to a wide range of plant species. ARS will
use the proposed increase to target its research on controlling Sudden
Oak Death, Salt Cedar, Yellow Starthistle, Lobate Lac Scale, Asian
Longhorned Beetle, and Emerald Ash Borer. It will also develop control
technologies for invasive drug resistant nematodes and protozoa of
livestock and poultry. These new technologies will help facilitate
trade of U.S. commodities and reduce the risk of new harmful species
being inadvertently introduced into the United States.
Geonomics ($9.2 million).--Genomics holds the key to maintaining
America's agricultural competitiveness in global markets. Advances in
genomics research can improve the production and quality of food
products, prevent animal and plant diseases, and produce foods which
are richer in nutrients. ARS needs to continue its work on
characterizing, identifying, and manipulating the useful properties of
genes and genomes. In this regard, ARS will use the proposed increase
to identify genes that influence animal and plant growth and quality,
disease resistance, and other economically important traits. ARS will
continue to coordinate its genomics research with NIH's National Human
Genome Research Institute, CSREES, and the National Science Foundation.
Genetic Resources ($3.6 million).--The rate of extinction of lines
and strains of food animals and plants is rapidly accelerating. The
Nation needs a more comprehensive program to maintain threatened
germplasm to prevent the loss of genetic diversity. An adequate supply
of useful genes is essential in the event of bioterrorism or other
crises (e.g., Foot and Mouth Disease, Exotic Newcastle Disease, etc.).
With the proposed increase, ARS will enhance its ability to collect,
identify, characterize, and incorporate plant germplasm into
centralized gene banks. The additional funding will help sustain ARS'
National Plant Germplasm System repositories. The additional funding
will also enable further development of cryopreservation technologies
for the long-term storage of important animal germplasm (i.e., of
poultry, aquaculture, cattle and swine).
Human Nutrition/Obesity Research ($8.3 million).--Obesity is one of
this country's fastest growing public health problems. It contributes
to heart disease, cancer, diabetes, and other illnesses resulting in
hundreds of billions of dollars in health care costs each year.
Understanding food consumption trends and the factors that influence
dietary choices is critical for developing strategies for preventing
and mitigating obesity. ARS will use the proposed increase to conduct
nutrition surveys and research to prevent obesity in children, middle-
aged adults and others.
Biobased Products/Bioenergy Research ($2.5 million).--Soaring
energy prices, environmental concerns, and depressed agricultural
commodity prices highlight the need to develop alternative domestic
sources of energy. In addition, chemical and energy companies are
seeking renewable feedstocks for the production of chemicals and
materials that are currently made from petroleum feedstocks. The
Biomass Research and Development Act of 2000 promotes the use of
biobased industrial products, and the Food Security and Rural
Investment Act of 2002 encourages the development and use of bioenergy.
ARS will focus its research on: (1) improving the quality and quantity
of agricultural biomass feedstocks for the production of energy, (2)
developing technologies to produce biofuels from agricultural
commodities, and (3) developing technologies leading to new value-added
products from food animal byproducts. Increased development of
bioenergy and biobased products will expand market opportunities for
U.S. agriculture and reduce the Nation's dependence on petroleum
imports from unstable regions.
Air and Water Quality ($1.8 million).--Millions of Americans are
exposed to air pollution levels that exceed the Environmental
Protection Agency's air quality standards. Agricultural activities,
such as animal production operations, which produce ammonia,
particulate matter, and volatile organic compounds, can adversely
affect air quality. Another concern is the Nation's 11,000 small
watershed dams that no longer meet current safety standards and need to
be updated. ARS will use the proposed increase to develop new
technologies that reduce gaseous and particulate matter emissions from
animal feeding operations. It will also improve water quality and
environmental benefits through agricultural systems research, as well
as develop technologies which can be used to rehabilitate the Nation's
aging watershed dams.
Global Climate Change ($3.2 million).--Climate change encompasses
global and regional changes in the earth's atmospheric, hydrological,
and biological systems. Agriculture is vulnerable to these
environmental changes. The objective of ARS' global change research is
to develop the information and tools necessary for agriculture to
mitigate or adapt to climate change. ARS has research programs on
carbon cycle/storage, trace gases (i.e., methane and nitrous oxide),
agricultural ecosystem impacts, and weather/water cycle changes. ARS
will use the proposed increase to develop climate change mitigation
technologies and practices for the agricultural sector. Specifically,
ARS will: (1) conduct interdisciplinary research leading to
technologies and practices for sustaining or enhancing food and fiber
production and carbon sequestration by agricultural systems exposed to
multiple environmental and management conditions, (2) expand the
existing network of ARS sites conducting measurements of greenhouse gas
fluxes between the atmosphere and the land, and (3) identify ways to
decrease methane emissions associated with livestock.
National Digital Library for Agriculture and Improved Agricultural
Information Services ($1.9 million).--In 2001, both a ``Blue Ribbon
Panel'' and an advisory board concluded that NAL needed increased
resources to meet its potential, taking advantage of technological
innovations for timely information access and retrieval. The proposed
funding will support the development of additional information content
for emerging diseases effecting crops and continue the revitalization
of NAL, enabling it to better deliver relevant information products,
satisfy increasingly complex customer demands, and provide leadership
as the premier agricultural information resource of the United States.
Information Technology ($4.2 million).--ARS information technology
(IT) systems and networks are exposed to an unprecedented level of
risk. Of particular importance is safeguarding the agency's pathogenic,
genomic, and other sensitive research information from being acquired
or destroyed by unauthorized intruders through unprotected or
undetected cyber links. Agencywide centralized security measures are
needed to counter security threats. ARS must also ensure that its IT
infrastructure (i.e., computers, network hardware, etc.) is up-to-date
and reliable. ARS will use the proposed increase to replace, upgrade,
and secure its IT equipment and systems.
PROPOSED OPERATING INCREASES
In addition to the proposed research initiatives, ARS' fiscal year
2006 budget provides funding to cover costs associated with pay raises.
An increase of, $9.3 million, is critically needed to avoid erosion of
the agency's base resources. Absorption of these costs reduces the
number of scientists and support personnel essential for conducting
viable research programs.
PROPOSED PROGRAM DECREASES
ARS' budget proposes a decrease of $203.1 million that currently
finances unrequested or lower priority research projects added in
recent years. The fiscal year 2006 budget requires that we exercise
fiscal discipline to live within available resources. Within those
resource levels, the Administration has had to exercise its judgment
about what is needed to fund the highest priority programs. The
initiatives described earlier meet that test. Therefore, other
programs, such as those not previously requested by the Administration,
could not be funded within the Budget.
PROPOSED FUNDING FOR BUILDINGS AND FACILITIES
The fiscal year 2006 budget recommends $64.8 million for ARS'
Buildings and Facilities account. Most of the proposed funding, $58.8
million is for the National Centers for Animal Health in Ames, Iowa.
The National Centers for Animal Health are critical to supporting
American agriculture from both domestic and foreign diseases
intentionally or unintentionally introduced. The new facility combines
ARS' National Animal Disease Center with the Animal and Plant Health
Inspection Service's National Veterinary Services Laboratory and the
Center for Veterinary Biologics. The Centers will provide an
integrated, multidisciplinary scientific capability, combining animal
disease research with the development of diagnostic tools and vaccines.
This request will provide the remaining funds necessary to complete
this state-of-the-art complex.
ARS is also recommending $3 million for the planning and design of
new, up-to-date containment facilities at the Foreign Disease Weed
Science Research Laboratory at Ft. Detrick, Maryland. ARS scientists at
this facility conduct research on foreign plant pathogens that must be
kept under containment and pose a potential threat to American
agriculture.
In addition, ARS is recommending $3 million for continuation of
repairs to the National Agricultural Library. Constructed in 1968, many
of the building's systems and structures require replacement. In fiscal
year 2006 ARS plans to finance the replacement of windows and to
complete the repairs to the brick veneer.
Mr. Chairman, this concludes my presentation of ARS' budget
recommendations for fiscal year 2006. I will be happy to respond to any
questions the Committee my have.
______
Prepared Statement of Dr. Colien Hefferan, Administrator, Cooperative
State Research, Education, and Extension Service
Mr. Chairman and Members of the Committee, I appreciate the
opportunity to submit the proposed fiscal year 2006 budget for the
Cooperative State Research, Education, and Extension Service (CSREES),
one of the four agencies in the Research, Education, and Economics
(REE) mission area of the United States Department of Agriculture
(USDA).
The CSREES fiscal year 2006 budget proposal is just over $1
billion. CSREES, in concert with the Secretary of Agriculture and the
intent of Congress, works in partnership with the land-grant university
system, other colleges and universities, and public and private
research and education organizations to initiate and develop
agricultural research, extension, higher education, and related
international activities to advance knowledge for agriculture, the
environment, human health and well-being, and communities. In addition,
CSREES implements grants for organizations to better reach and assist
disadvantaged farmers in accessing programs of USDA. These partnerships
result in a breadth of expertise that is ready to deliver solutions to
problems facing U.S. agriculture today.
The fiscal year 2006 CSREES budget request aligns funding and
performance with the USDA strategic goals. CSREES manages its many
budget elements in support of research, education, extension, and
outreach programs as part of a cohesive whole supporting all five of
the Department's strategic goals. Distinct performance criteria,
including strategic objectives and key outcomes with identified annual
targets, are defined for each program or activity. As part of an
integrated budget and performance process, CSREES conducts periodic
portfolio reviews by external experts to monitor overall program
progress, suggest alternative approaches, and propose management
improvements.
The CSREES fiscal year 2006 budget proposal supports the
Administration's commitment to competitive programs, in which awards
are made based on an objective peer-review process, and to streamlining
program delivery. Over the past several years, CSREES has demonstrated
the capacity to reshape competitive programs to address not only
fundamental science through individual investigator research, but also
programmatic, multi-institutional efforts aimed at short to
intermediate term problem solving, while maintaining the highest
standard of peer-review. We believe this is the most effective way of
achieving quality results that respond to critical program needs.
Therefore, the fiscal year 2006 budget proposes to: (a) phase out
funding for the Hatch Act and McIntire-Stennis Cooperative Forestry
programs within 2 years; (b) eliminate the Animal Health and Disease,
Section 1433 Research Program; and (c) redirect funding for Section 406
activities, formerly supported under the Integrated Activities account,
to the Research and Education account. Activities for these programs
will be supported through the National Research Initiative (NRI) and
the new State Agricultural Experiment Station (SAES) Competitive Grants
Program. This shift of funding will allow greater flexibility and
responsiveness to critical agricultural issues.
CSREES continues to provide new opportunities for discoveries and
advances in knowledge through the NRI program. The fiscal year 2006
budget request of $250 million for the NRI is a significant step
towards reaching the authorized level of $500 million, and it is a
strong statement of the importance that the Administration places on
competitively awarded grants to advance knowledge for agriculture. The
NRI will continue to support current high priority programs with an
emphasis on critical issues. Through the NRI Coordinated Agricultural
Project (CAP), multi-million dollar awards support multi-year large-
scale projects to promote collaboration, open communication, and
coordinate activities among individuals, institutions, States, and
regions to address priority issues of national importance. A $5 million
CAP award supports research to improve rice crops by using new genomic-
based tools. The support included a multidisciplinary team of 14
institutions that will engage rice extension and industry personnel in
agricultural genomics research to explore the potential of the
technology. Extension personnel also will educate the public on the
merits of applying genome information to improve agricultural crops.
Another $5 million CAP award is being led by the University of Maryland
and includes researchers and extension specialists representing 17
States. It is expected that the research and education from this
project will help prevent and control avian influenza, a disease that
continues to threaten the commercial poultry industry with millions of
dollars in losses.
Expanded partnerships with other Federal agencies on research
topics of mutual interest will be possible with the increase in the NRI
funding. For example, research on the maize genome will be supported
through partnership with the National Science Foundation and the U.S.
Department of Energy. A comprehensive sequence resource will be
developed for the maize genome, providing the scientific community with
accurate and detailed information in a timely and cost-effective
manner. This information will include a complete sequence of all maize
genes and the full integration of the sequence with genetic and
physical maps leading to improved maize varieties. The NRI also will
support research on swine genomics. The Interagency Working Group on
Domestic Animal Genomics has identified the swine genome as a high
priority. The complete genomic sequence of swine is needed to provide
the basic information to pursue studies of gene function and marker-
assisted selection of animals for genetic improvement of swine in
production systems. We are requesting an increase of $11 million in the
NRI to support genomics research.
An increase of $4.6 million is proposed to address emerging issues
in food and agricultural defense under the NRI. The requested funding
will support research, education, and extension activities to increase
the safety and security of U.S. agriculture and food systems to
minimize threats to domestic plants and animals posed by infectious
diseases and invasive species.
In fiscal year 2006 an increase of $8 million is proposed under the
NRI for nanotechnology for functional foods and food safety. The
requested funds will support innovative research in nanoscale science
and engineering that will have specific applications to agriculture and
food systems. Nanotechnology studies will lead to nutrient dense,
healthful and flavorful foods with consumer appeal. Food function will
be enhanced by using nanotechnologies to facilitate the delivery of
health-providing bioactive nutrients to consumers.
Under the NRI, an increase of $7.5 million is proposed in fiscal
year 2006 for nutrition and obesity studies with emphasis on research
and evaluation methods to prevent childhood obesity. Research efforts
will be specifically aimed at understanding the environmental and
social factors influencing behaviors leading to childhood obesity and
how to change them to reduce and prevent obesity. In addition,
requested under the NRI is an increase of $39.3 million for ongoing
research and integrated research and education projects that focus on
water quality, food safety, and pest-related programs formerly funded
under the Integrated Activities account.
The fiscal year 2006 budget also proposes a change to the general
provisions of the fiscal year 2005 Consolidated Appropriations Act to
increase from a maximum of 20 percent to a maximum 30 percent the
amount provided for the NRI that may be used for competitive integrated
activities.
As part of a coordinated plan to shift formula funding to
competitively awarded grants and replace some of the multistate efforts
currently supported by formula funds, CSREES requests $75 million for
the new SAES Competitive Grants Program. As with the current multi-
State program, funding would be available to all State Agricultural
Experiment Stations. This program will support systemwide research
planning and coordination, as well as regional, State, and local
research in such areas as new products/new uses, social sciences, and
the environment, including ecosystem management. In fiscal year 2006,
it is proposed that research programs focused on methyl bromide and
organic transition could be supported through this program. However, we
will work closely with the SAES to ensure that this program also is
responsive to their needs.
In continuing and expanding our efforts for agricultural security
and in support of the President's Food and Agriculture Defense
Initiative, CSREES, through cooperative efforts with the Animal and
Plant Health Inspection Service, has established a unified Federal-
State network of public agricultural institutions to identify and
respond to high risk biological pathogens in the food and agricultural
system. The network is comprised of 13 State animal diagnostic
laboratories and 6 plant diagnostic laboratories, strategically located
around the country. These 19 key laboratories are developing a two-way,
secure communications network with other university and State
Department of Agriculture diagnostic laboratories throughout their
respective regions. The diagnostic laboratories are responsible for
identifying, containing, and minimizing the impact of exotic and
domestic pests and pathogens that are of concern to the security of our
food and agricultural production systems. For example, within a few
weeks after soybean rust was first detected in Louisiana, private
interest disease surveillance activities were conducted by first
detectors. Samples submitted to diagnostic laboratories, as a result of
these first detectors, identified soybean rust in Mississippi, Florida,
Georgia, Alabama, Arkansas, Missouri, South Carolina, and Tennessee.
The budget proposal requests an increase of $21.1 million for a total
of $30 million to maintain the national diagnostic laboratory network.
The proposed increase also will allow the optimization of the security
value of the diagnostic network which includes: a coordinated ground
surveillance and response component with appropriate educational and
training programs, a more extensive plant and animal disease and pest
diagnostic capability, upgraded and enhanced equipment, increased
information technology, expanded connectivity of State laboratories,
and targeted research to develop improved diagnostic and treatment
capabilities. The network will continue its link with the Extension
Disaster Education Network (EDEN) to disseminate information to
producers and professionals at the State and county level, and to
expand these activities to provide more current and timely educational
resources.
CSREES proposes $5 million for the Agrosecurity Education Program
that will support educational and professional development for
personnel in securing the Nation's agricultural and food supply. The
program will develop and promote curricula for undergraduate and
graduate level higher education programs that support the protection of
animals, plants, and public health. The program is designed to support
cross-disciplinary degree programs that combine training in food
sciences, agricultural sciences, medicine, veterinary medicine,
epidemiology, microbiology, chemistry, engineering, and mathematics
(statistical modeling) to prepare food system defense professionals.
Also within the fiscal year 2006 budget request is a proposed
increase of $4.5 million for the Expanded Food and Nutrition Education
Program (EFNEP). The EFNEP program reaches predominantly minority, low-
income youth and families with nutrition education that leads to
sustained behavior changes. EFNEP works with various partners in
providing its services, including collaborating with the National
Institute of Health on the 5-A-Day program promoting increased
consumption of fruits and vegetables, and with the Centers for Disease
Control and Prevention on their VERBtm program sharing curriculum
material directed at teaching young people about the importance of
nutrition and physical activity. Increased funding also will allow
EFNEP to move forward with efforts to add a physical activity focus to
help combat the rising problem of obesity in children and adults.
Funding at this level will allow participation by 1890 institutions who
are uniquely positioned to reach those in need of nutrition education.
CSREES continues to expand diversity and opportunity with
activities under 1890 base and educational programs, and 1994 and
Hispanic-Serving Institutions educational programs. In fiscal year
2006, the budget requests an increase of approximately $1.5 million for
both the research and extension 1890 base programs. Funding for our
1890 base programs provides a stable level of support for the
implementation of research and extension programming that is responsive
to emerging agricultural issues. Funding for the 1994 Institutions
strengthens the capacity of the Tribal Colleges to more firmly
establish themselves as partners in the food and agricultural science
and education system through expanding their linkages with 1862 and
1890 Institutions. Sustained funding for the Hispanic-Serving
Institutions promotes the ability of the institutions to carry out
educational training programs in the food and agricultural sciences.
This proven path of research, extension, and educational program
development rapidly delivers new technologies into the hands of all
citizens, helping them solve problems important to their lives.
CSREES also will continue to effectively reach underserved
communities through sustained support for the Outreach and Assistance
for Socially Disadvantaged Farmers and Ranchers Program (OASDFR).
CSREES will fund competitive multi-year projects to support outreach to
disadvantaged farmers and ranchers. Funds for the OASDFR program will
encourage and assist socially disadvantaged farmers and ranchers in
their efforts to become or remain owners and operators by providing
technical assistance, outreach, and education to promote fuller
participation in all USDA programs.
The higher education programs contribute to the development of
human capacity and respond to the need for a highly trained cadre of
quality scientists, engineers, managers, and technical specialists in
the food and fiber system. The fiscal year 2006 budget provides a $1.5
million increase in the Food and Agricultural Sciences National Needs
Graduate Fellowship program. This program prepares graduates to deal
with emerging challenges in such areas as agricultural biosecurity to
ensure the safety and security of our agriculture and food supply, new
issues in natural resources and forestry, and human health and
nutrition, including problems related to obesity such as diabetes and
cardiovascular health. Other higher education programs will provide
important and unique support to Tribal Colleges, the 1890 Land-Grant
Colleges and Universities, and the 1862 Land-Grant Universities as they
pilot important new approaches to expand their programs.
CSREES is committed to improving the management of resources
through the development and implementation of an electronic grants
application and reporting system and the Research, Education, and
Economics Information System (REEIS). The fiscal year 2006 budget
proposes increases of $0.2 million and $0.3 million, respectively for
these efforts. Currently, CSREES receives approximately 6,000 proposals
annually, resulting in about 2,000 grants and cooperative agreements.
These numbers are expected to grow with the proposed program increases
in the fiscal year 2006 budget. We are committed to streamlining the
process through participation in a common Federal electronic
application and report system. We are rapidly developing and enhancing
the capability to electronically receive, process, and award proposals,
including electronic distribution to reviewers nationwide, and support
for electronic financial and technical reporting on awards. We are
implementing and expanding the capability of REEIS as a platform to
link some 40 different databases and to serve as a single source of
information on issues related to accountability, strategic planning,
and performance assessment.
CSREES also is requesting funds to accelerate and innovate the e-
Extension network that will offer Americans unparalleled access to
scientifically-derived and unbiased information, education, and
guidance about the things that matter the most in their lives. The
fiscal year 2006 budget proposal includes $3 million for the New
Technologies for Ag Extension Program to support systems that will make
available research-based education offered by the e-Extension network.
Peer-reviewed competitive programs that meet national needs are a
much more effective use of taxpayer dollars than earmarks that are
provided to a specific recipient for needs that may not be national.
Based upon its broad scope, including the expanded integrated
authority, and proposed funding increase, alternative funding from the
NRI could be used to provide a peer-reviewed forum for seeking and
assessing much of the work funded through earmarks. For example in the
past 4 years, CSREES supported research in animal identification and/or
animal tracking under earmarked projects which fit within the scope of
the NRI. In addition, earmarked projects for human nutrition and food
safety are within the program areas of the NRI. In order to ensure the
highest quality research which addresses national needs within
available funding, the fiscal year 2006 budget has therefore proposed
to eliminate earmarked projects.
The fiscal year 2006 budget proposes changes in the general
provisions including, as previously mentioned, increasing the amount
provided for the NRI that may be used for competitive integrated
activities from up to 20 percent to up to 30 percent. Also proposed is
the elimination of the cap on indirect costs for competitively awarded
grants. In the past indirect cost rate caps have resulted in
recipients' inability to recover legitimate indirect costs, thus
penalizing recipients who choose to do business with CSREES. This
elimination allows full indirect cost recovery under competitive awards
and places CSREES competitive programs on an equal footing with other
Federal assistance programs.
CSREES, in collaboration with university and other partners
nationwide, continually meets the many challenges facing the food and
fiber system. The programs administered by the agency reflect the
commitment of the Administration to further strengthen the problem-
solving capacity of Federally-supported agricultural research,
extension, higher education, and outreach and assistance programs. In
addition, we continue to enhance our responsiveness and flexibility in
addressing critical agricultural issues.
Mr. Chairman, this concludes my statement. I will be glad to answer
any questions the Committee may have.
______
Prepared Statement of Susan E. Offutt, Administrator, Economic Research
Service
Mr. Chairman and members of the Committee, I am pleased to have the
opportunity to present the proposed fiscal year 2006 budget for the
Economic Research Service (ERS).
MISSION
The Economic Research Service informs and enhances public and
private decision making on economic and policy issues related to
agriculture, food, the environment, and rural development.
BUDGET
The agency's request for 2006 is $80.7 million. The agency is
requesting a $5.8 million increase to continue the development of an
integrated and comprehensive data and analysis framework of the food
system beyond the farm-gate that will provide a basis for
understanding, monitoring, tracking, and identifying changes in the
food supply and in consumption patterns.
CONSUMER DATA AND INFORMATION SYSTEM
In fiscal year 2006, ERS is requesting an increase of $5.8 million
to fully fund the Consumer Data and Information System which was
partially funded in fiscal year 2005. The new data would be used to
identify, understand and track changes in food supply and consumption
patterns, and to explore the relationship between consumers' knowledge
and attitudes and their consumption patterns.
Understanding consumer behavior is critical for addressing many of
the Nation's problems related to eating behavior. Obesity, in
particular, has become a major problem by increasing the risk for
chronic diseases, increasing medical costs, and reducing productivity.
Studies estimate that obesity is responsible for 365,000 deaths
annually, costs society $92.6 billion in increased medical
expenditures, and taxpayers finance half of these costs through
Medicare and Medicaid. Additionally, research is pointing to a decline
in life expectancy in the United States caused by the dramatic rise in
obesity, especially among young people and minorities. Many people
believe that formulating more effective programs and policies to end
obesity hinges on a clearer understanding of eating behaviors. This
initiative will support research that will provide the information and
knowledge to develop, implement, and target improved nutrition programs
and policies to reduce obesity.
Understanding consumer behavior is also critical for policy-making,
and program development and implementation in many other USDA program
areas. USDA officials require up-to-the-minute information on food
prices, product movements, and potential consumer reactions to events
to effectively make commodity support decisions, provide nutrition
education, and ensure the safety of our food. This initiative will
provide USDA with current food prices, sales volumes, food purchases, a
data base on consumer characteristics and purchasing behavior, and the
ability to quickly survey consumer reactions, knowledge, attitudes, and
awareness on a host of issues.
The Consumer Data and Information System has three major components
providing intelligence across and within the food and agricultural
complex. ERS has initiated work on the first component, a very limited
version of the Food Market Surveillance Report, which will be issued
quarterly to USDA officials. These quarterly reports will provide the
Department with the most up-to-date information on food prices,
purchases, and sales data publicly or privately available. This
information is critical to improve USDA decision-making and to provide
data for understanding consumer purchasing behaviors. Additional
funding is necessary for full implementation that will integrate food-
away-from-home consumption patterns and associated markets into the
system.
The second component, a new Rapid Consumer Response Module, will
provide real-time information on consumer reactions to unforeseen
events and disruptions, current market events, and government policies.
The questions in the module will be asked to members of several
proprietary consumer data panels currently maintained by private
vendors. The first proposed module is a special survey that will
provide a baseline for measuring consumer nutrition knowledge and
implementation of the new Dietary Guidelines. A follow-up survey of the
same respondents will provide information on consumer reaction to the
guidelines. An examination of the respondents purchase records would
reveal if dietary changes have actually occurred. Information will be
used to better implement dietary guidance strategies and will provide
policymakers with up-to-the-minute information and analyses. Another
planned survey will measure consumer knowledge of BSE and quantify the
relationships between knowledge levels and meat purchases.
Using fiscal year 2005 funding, ERS has initiated development of
the third component, a Flexible Consumer Behavior Survey (FCBS) that
will complement data from the National Health and Nutrition Examination
Survey (NHANES). The FCBS will provide information needed to assess
linkages among individuals' knowledge and attitudes about dietary
guidance, and food safety, their economic circumstances, their food-
choice decisions, and their nutrient intakes. Combining the NHANES with
this new survey allows analysis of how individual behavior,
information, and economic factors affect food choices, dietary status,
and health outcomes. A team of representatives from government and non-
governmental entities is developing and implementing the survey.
Additional funding will provide data and research to link food prices
with the NHANES and FCBS data.
Two additional components of the budget request are (1) additional
staff to ensure the successful design and implementation of the
Consumer Data and Information System and (2) a research grants program
to complement and augment the ERS research program. A targeted research
program will provide outside expertise to assist with the complex task
of integrating survey information as well as provide seed funds for
innovative nutrition and obesity studies using the data system. The
design and implementation of this information system is currently being
accomplished using existing staff through the reallocation of
resources.
ERS CONTRIBUTIONS TO MISSION AREA GOALS
ERS supports the five USDA strategic goals to: (1) enhance economic
opportunities for agricultural producers; (2) support increased
economic opportunities and improved quality of life in rural America;
(3) enhance protection and safety of the Nation's agriculture and food
supply; (4) improve the Nation's nutrition and health; and (5) protect
and enhance the Nation's natural resource base and environment.
Goal 1: Enhanced Economic Opportunities for Agricultural Producers
ERS helps the U.S. food and agriculture sector adapt to changing
market structures in rapidly globalizing, consumer-driven markets by
analyzing the linkages between domestic and global food and commodity
markets, as well as the implications of alternative domestic and
international policies on competitiveness. ERS economists analyze
factors that drive change in the structure and performance of domestic
and global food and agriculture markets; provide economic assessments
of structural change and competition in the agricultural sector;
analyze the price impacts of evolving structural changes in food
retailing; analyze how international trade agreements and foreign trade
restrictions affect U.S. agricultural production, exports, imports, and
income; and provide economic analyses that determine how fundamental
commodity market relationships are adjusting to changing trade,
domestic policy, and structural conditions. ERS will continue to work
closely with the World Agricultural Outlook Board (WAOB) and USDA
agencies to provide short- and long-term projections of United States
and world agricultural production, consumption, and trade.
In 2005, several initiatives are increasing the timeliness and
availability of data and information, while simultaneously saving staff
time. We are increasing the transparency of our commodity projections
processes, automating calculations where possible, and embedding them
within databases. Our goals are to: (1) make the work transparent,
inviting critique from both internal and external users; (2) transition
to fewer outlook analysts as retirements near, and (3) increase
timeliness in the release of data. We will have databases available for
all major crop and livestock commodities within the next 2 years.
ERS provides assessment of the effects of farm policy on the food
and agricultural sector. The agency led the development of analytical
studies that responded to requests to USDA for studies in the 2002 Farm
Act. For example, the 2004 USDA report, Economic Effects of U.S. Dairy
Policy and Alternative Approaches to Milk Pricing, provides a
comprehensive assessment of the effects of current U.S. dairy programs
that takes into account the ongoing structural change in consumer
demand, farm structure, and the processing industry.
China is one of the top 10 markets for U.S. agricultural exports
and is the world's largest producer and consumer of a range of
commodities. ERS research continues to examine key factors that will
shape the size and pattern of China's agricultural trade: water
scarcity, implementation of WTO commitments, changes in Chinese
consumers' demand for food, and factors influencing these changes,
including the declining role of subsistence farming, effects of
urbanization, and the rising demand for convenience. ERS' China
briefing room (www.ers.usda.gov/briefing/china) provides access to
reports that cover both specific market conditions and policy
developments.
ERS continues to expand research on how the dynamics of consumer
demand, notably the growing consumption of and trade in high value
products, are shaping global markets. The United States has one of the
most complex trade patterns for high value food products, including
strong growth in imports. This is attributable to its large productive
capacity, high-income consumers, and its heavy involvement in overseas
investment in food processing and brand licensing. Research to
understand the relative importance of these and other factors builds on
recently completed studies and takes advantage of newly available
global data sets on the food retail industry.
Organic farming continues to be one of the fastest growing segments
of U.S. agriculture and can potentially enhance environmental
protection, as well as economic opportunities for producers.
Appropriations received in fiscal year 2005 allow ERS to continue to
explore in greater depth the market for organic products and other
commodities, and foods that are differentiated in the marketplace by
virtue of how or where they are produced. In 2004, ERS co-sponsored a
workshop with the Farm Foundation and Giannini Foundation that brought
together industry leaders, academics and government agency staffers to
identify research needed to understand the potential oversight role of
government relative to various types of differentiated products, and
the implications of alternative public or private regulatory
approaches. In 2005, ERS is adding a targeted sample of organic dairy
producers to USDA's annual Agricultural Resources Management Survey
(ARMS). Survey data for both organic and conventional operations will
enable, for the first time, a side-by-side comparison of the economic,
structural, and production characteristics of these farms.
Food price determination is increasingly important for
understanding domestic and international markets and for seizing
opportunities to promote U.S. agriculture. ERS food markets research
focuses on enhancing knowledge and understanding of food prices, both
their objective measurement and how they are set by firms at different
stages of the food system. ERS has begun to use micro-level household
and store scanner data to measure the impact of changing store formats
on food prices in order to focus on the changing economic environment
and how these changes could affect customers' retail food purchasing
habits.
In 2005, ERS will publish a series of reports on the impacts of
concentration and consolidation along the food marketing chain. One
report focuses on the dramatic change in the competitive dynamics of
retail markets, measuring the price impact of Wal-Mart's success in
marketing food. Another report examines supermarkets' resulting
consolidations and measures the extent by which associated increases in
the efficiency of supermarket operations would reduce food prices.
Another report summarizes research on consolidation and structural
change in the following food industries: meat packing, meat processing,
poultry slaughter and processing, cheese, fluid milk, flour milling,
feeds, and oilseed (corn, cottonseed, and soybean) processing. Findings
to be published in 2005 suggest that even industries with growing
demand experienced consolidation, and that technological change was the
primary driver of consolidation from 1970-90. In addition, during the
period under investigation, firms tended to acquire highly productive
plants and then improve their performance. The evidence refutes the
claim that mergers and acquisitions lead to worker dislocations and
lost wages.
For producers, contracting can reduce income risks of price and
production variability, ensure market access, and provide higher
returns for differentiated farm products. For processors and other
buyers, vertical coordination through contracting is a way to ensure
the flow of products, obtain differentiated products, ensure
traceability for health concerns, and guarantee certain methods of
production. ERS continues to conduct research to improve understanding
by decision-makers of changes in the agricultural sector's structure
(for example, the implications for producers of the increasing
replacement of open markets by contractual arrangements and vertical
integration). ERS is currently examining the potential efficiency-
enhancing motives for the increasing use of contracts by food
manufacturers and processors. At the farm level, the new Family Farm
Report--Structural and Financial Characteristics of U.S. Farms, which
was published in March 2005--documents the ongoing changes in farms'
structure, financial performance, and business relationships in
response to consumer demands, competitive pressures, and changing
opportunities for farm families. This report is based on analysis of
2001 ARMS data. A shorter Family Farm report based on 2003 ARMS data
will be released later in 2005.
ERS will continue to work closely with the Foreign Agricultural
Service (FAS) and the Office of the U.S. Trade Representative to ensure
that ongoing negotiations on the Doha Development Agenda under the
auspices of the World Trade Organization (WTO) and regional trade
agreements are successful and advantageous for U.S. agriculture. The
demands of developing countries for sharp cuts in domestic agricultural
policies, along with exemptions that would limit the opening of their
markets, serve as stumbling blocks to reaching an agreement in current
WTO negotiations. While ERS analysis of the global benefits of trade
liberalization shows potential gains for all types of countries,
developing countries remain skeptical. Two common critiques are that
the analysis does not include potential market effects of decoupled
payments and does not include preferential market access by developing
countries to developed country markets. Current ERS research addresses
these questions with reports forthcoming in 2005 on the effects of farm
programs and an analysis of preferential trade programs.
Since 1980, legislation has encouraged patenting and license
agreements by Federal laboratories as a means of technology transfer.
The ERS report, Government Patenting and Technology Transfer, which
will be released in 2005, examines issues raised by government
patenting behavior through a case study of the Agricultural Research
Service. The report describes trends in patent use and considers its
effectiveness toward this policy goal. The report compares patenting
with alternative methods of technology transfer--such as scientific
publication--and analyzes factors that determine the most effective
means of promulgating the results of public research. Among the
findings are that increased patenting and licensing by USDA has
supplemented, not supplanted, the traditional instruments of technology
transfer such as scientific publications.
Data from ARMS underlie important estimates of farm income and
well-being, and constitute an essential component in much of ERS'
research. In 2004, the ARMS survey sample was expanded sufficiently to
allow ERS, with the National Agricultural Statistics Service (NASS), to
produce State level estimates for the largest fifteen States (as
measured by value of farm output). Also in 2004, ERS collaborated with
NASS to develop new survey instruments and data collection approaches
that merge mail surveys with in-person surveys, thereby reducing
respondent burden and improving the efficiency of data collection. In
addition, ERS has developed a path-breaking, web-based, secure ARMS
data retrieval and summarization prototype tool that is easy to use.
Implemented in 2004 in both public and restricted-access web versions,
this system retrieves ARMS data in formats customized to the customers'
needs, while assuring that sensitive data are not disclosed.
Goal 2: Support Increased Economic Opportunities and Improved Quality
of Life in Rural America
ERS research explores how investments in rural people, businesses,
and communities affect the capacity of rural economies to prosper in
the new and changing global marketplace. The agency analyzes how
demographic trends, employment opportunities, educational improvements,
Federal policies, and public investment in infrastructure and
technology affect economic opportunity and quality of life for rural
Americans. The rural development process is complex and sensitive to a
wide range of factors that, to a large extent, are unique to each rural
community. Nonetheless, ERS assesses general approaches to development
to determine when, where, and under what circumstances rural
development strategies will be most successful.
ERS assesses rural needs by examining the changing demographic,
employment, education, income and housing patterns of rural areas. Data
from the 2000 Census and other Federal information sources provide the
most up-to-date information on the current conditions and trends
affecting rural areas, and provide the factual base for rural
development program initiatives. In 2005, the agency is continuing its
series of publications that report current indicators of social and
economic conditions in rural areas for use in developing policies and
programs to assist rural people and their communities. Rural America at
a Glance: 2005, Rural Transportation at a Glance, Rural Children at a
Glance, and Rural Minorities at a Glance, all designed for a policy
audience, will summarize the most current information relevant
information on these topics.
In fiscal year 2005, ERS will disseminate research findings from an
ERS--Cornell University conference on ``Population Change and Rural
Society,'' held in January 2004. This conference showcased an
integrated set of demographic studies by leading social scientists that
analyzed critical demographic trends from the 2000 Census and drew
conclusions about their implications for economic and social life in
rural America. The conference focused on the policy implications of
changing demographic composition, economic restructuring, changing land
use patterns, and geographic patterns of chronic disadvantage and
emerging growth. The compendium of papers marks the first comprehensive
look at rural America based on data from the 2000 Census.
For over 30 years, ERS has captured aspects of the broad economic
and social diversity among rural areas in various county
classifications. These typologies have been widely used by policy
analysts and public officials to determine eligibility for and the
effectiveness of Federal programs to assist rural America. In August of
2004, ERS released a new county typology that maps out a geographic
portrait of the rich diversity of rural America in ways that are
meaningful for developing public policies and programs. In fiscal year
2005, ERS will publish a series of policy briefs that will address how
the economic, demographic, and policy themes identified in this
typology translate into effective rural development strategies for
enhancing rural economic opportunities and well being.
ERS is at the forefront of analysis assessing the critical role of
education in local, regional, and national economic development. The No
Child Left Behind Act of 2002 created a new era of increased school
accountability to ensure that our public schools adequately prepare
students for the increasingly high-skill ``new economy'' in which we
now live. However, rural schools and communities present a distinct set
of challenges to education reform. In 2005, findings from a conference
sponsored by ERS and the Southern Rural Development Center will be
published as special issues of two academic journals, the Review of
Regional Studies and the Journal of Research in Rural Education.
Research findings will focus on student achievement in rural schools,
and the linkages among schools, rural communities, and the labor
market.
Rural communities view increased educational investments as an
important part of economic development but are sensitive to the partial
loss of their investment in the form of youth outmigration to areas
with better opportunities. ERS is partnering with land-grant
universities in a research program designed to measure the relationship
between education and economic outcomes, both for the individual worker
and rural community, to help local communities better target their
economic development and school improvement efforts.
ERS also continues its long tradition of economic research on the
welfare of disadvantaged population groups in rural areas, including
low-income families, children, the elderly, and racial/ethnic groups,
as well as the Federal assistance programs that serve them. Through its
research on the measurement and dimensions of rural poverty, ERS helps
to better target and improve the effectiveness of Federal assistance
programs. In 2005, ERS will publish a study of the changing nature of
the rural low-skill labor force and its implication for the economic
well being of rural areas.
ERS conducts ongoing research on the impact and effectiveness of
Federal programs in rural areas. For example, ERS assists USDA's Rural
Development mission area in efforts to improve the delivery and
effectiveness of rural development programs through targeted economic
analysis. In 2005, ERS will continue to work with Rural Development
staff and cooperators at the University of Missouri to develop
measurable performance indicators for USDA rural business programs. In
addition, ERS is now focusing greater attention on the effects of
Federal farm policy on rural areas and farm households in preparation
for the upcoming debate over the 2007 Farm Bill. A 2005 conference,
jointly sponsored by ERS and the National Center for Food and
Agricultural Policy, will help provide policymakers with a better
understanding of the linkages between farm policy, farm households, and
rural communities. A new ERS briefing room on our website will be
continually updated during 2005 to provide an economic assessment of
the implications of farm policy reform and adjustment for agriculture
and rural America.
Goal 3: Enhance Protection and Safety of the Nation's Agriculture and
Food Supply
ERS research is designed to support food safety decision-making in
the public sector and to enhance the efficiency and effectiveness of
public food safety policies and programs. The program focuses on
valuing the societal benefits of reducing and preventing illnesses
caused by microbial pathogens; assessing the costs of alternative food
safety policies; assessing industry incentives to enhance food safety
through new technologies and supply chain linkages; evaluating
regulatory options and change; and exploring linkages between food
safety and international trade. ERS has worked closely with various
USDA agencies and the Centers for Disease Control and Prevention (CDC)
on various pathogen risk assessments and on analyzing the benefits and
costs of implementing the Hazard Analysis and Critical Control Points
(HACCP) rule. ERS and the Food Safety and Inspection Service (FSIS)
work together to identify research projects and activities that address
the needs of the Department.
As part of several national homeland security activities, ERS
continues to develop the capacity to assess the impact of accidental
and intentional disruptions to our food and agricultural system. ERS
staff are prepared to conduct the complex economic analysis needed to
assess the cost of securing our food supply, which includes protecting
production, processing, distribution, and consumption of food and
agricultural products. ERS is working with the Animal and Plant Health
Inspection Service (APHIS) and the Food and Drug Administration (FDA)
to improve tools for the analysis of disruption and disease mitigation
strategies that require both sound biological and economic analysis.
ERS has become well-known for its pioneering estimates of the
societal costs associated with foodborne illnesses due to E. coli and
other known pathogens. ERS and researchers from Harvard and the
University of Wyoming are collaborating to develop new methodologies
for more accurately eliciting and measuring the value of reductions in
health risk associated with foodborne pathogens. Results from both
studies are expected in 2005.
ERS is heading a project supporting the Department's reevaluation
of the appropriate roles for performance versus process standards in
enhancing food safety. Recent massive recalls of beef and poultry
products, the creation of international food safety standards, and a
recent court ruling rejecting failure to meet Salmonella standards as a
legal basis for closing a meat-processing plant have created concern
about the basic principles behind U.S. food safety regulation. This
project analyzes the costs and benefits of food safety performance
standards and develops guidelines for the application of such
standards. Preliminary results indicate that recent advances in testing
technology provide more accurate results, shorter time to result,
greater ease of use, and lower costs than in the past.
In the event that unsafe food enters the marketplace, public health
officials and food safety regulators ultimately rely on records
maintained by private industry and retailers to track the manufacture
and distribution of that food. Privately maintained traceability
bookkeeping records provide investigators with information on the
extent and distribution of a contaminated product--and on how to remove
such a product from distribution channels efficiently. The strength of
private traceability systems and the readiness of the food industry to
track and recall a contaminated product is important for safeguarding
the Nation's food supply. In 2005, ERS is working with agricultural
economists from the University of Arkansas to investigate how various
food companies in different industries handle product recalls, the
operation of designated recall teams, and the frequency and results of
mock recalls. The research will examine the type and scope of
information collected from auditing and certification activities,
characteristics of firms with recall practices, and the proportion of
firms in given sectors participating in auditing and certification
activities.
In response to increased risks to the Nation's agriculture and food
supply due to bio-terrorism, ERS embarked on an ambitious project known
as Geo-Spatial Economic Analysis (GSEA). The GSEA system merges an
extensive Geographic Information System with the analytical expertise
of ERS's economists and the Security Analysis System for U.S.
Agriculture (SAS-USA), which is a framework to tie systematically all
food supply processes from farm production, food manufacturing,
distribution of food products, to food consumption in every region of
the country. The GSEA system is designed to serve as a platform for
collaborative analysis across agencies in USDA and with appropriate
groups in FDA and the Department of Homeland Security (DHS). These
capabilities mean that emergencies can be managed efficiently and
expeditiously by assessing vulnerabilities and predicting outcomes. In
2005, the GSEA team expects to launch joint projects with the Army
Corps of Engineers and several national labs to improve our ability to
measure the economic consequences in the food and agricultural
industries caused by disruptions in other critical infrastructures. In
support of broad USDA initiatives such as the National Plant Disease
Recovery System, the GSEA system will serve as a tool to improve
economic assessments of crop and animal disease outbreaks using
alternative control strategies.
Goal 4: Improve the Nation's Nutrition and Health
ERS studies the relationships among the many factors that influence
food choices and eating habits and their health outcomes. The roles of
income, age, race and ethnicity, household structure, knowledge of diet
and health relationships, nutrition information and labeling, and
economic incentives and policies that affect food prices and
expenditures are of particular interest. Reducing obesity through
understanding its costs to individuals and society, how income, diet
and health knowledge affect obesity status, and considering private
versus public roles in reducing obesity is a priority for this
Administration.
ERS research has a major focus on the economic dimensions of
obesity, including understanding the societal costs of obesity,
explaining obesity trends among different demographic and income
groups, and assessing the benefits and costs of alternative options for
influencing Americans' food choices and dietary behaviors, including
roles for nutrition education and Federal food and nutrition assistance
programs. In 2005, ERS is investigating the factors that influence
consumers' food choices when eating away from home using the NHANES
data. This research will focus on discovering consumer preferences,
such as convenience and entertainment that compete with healthy eating.
Information about these factors help social marketers design effective
campaigns to influence consumers' away from home eating behavior.
Through the Food Assistance and Nutrition Research Program (FANRP),
ERS conducts studies and evaluations of the Nation's food and nutrition
assistance programs. FANRP research is designed to meet the critical
information needs of USDA, Congress, program managers, policy
officials, clients, the research community, and the public at large.
FANRP research is conducted through internal research at ERS and
through a portfolio of external research. Through partnerships with
other agencies and organizations, FANRP also enhances national surveys
by adding a food and nutrition assistance dimension. FANRP's long-term
research themes are dietary and nutritional outcomes, food program
targeting and delivery, and program dynamics and administration.
ERS continues to fund a national survey of food security and
hunger, conducted by the Census Bureau, as a supplement to the Current
Population Survey (CPS). The survey measures the number of U.S.
households that face difficulties in putting enough food on the table.
A new ERS effort, in cooperation with USDA's Food and Nutrition
Service, is designed to assess and strengthen food security measurement
by providing support for a National Academy of Sciences panel. The
panel is reviewing methods and procedures that underlie the current
measure and will consider various approaches to enhance these methods
for monitoring, evaluation, and related research purposes.
As part of our effort to improve the timeliness and quality of the
Department's food consumption data, in 2003 ERS launched an interagency
effort to develop a proposal for an external review of USDA's food
consumption data needs and gaps. Enhancements to the food consumption
data infrastructure are critical to understanding and addressing many
market and policy issues in the Department. The interagency effort led
to the funding of a review by the National Research Council's Committee
on National Statistics. A panel of experts was compiled, and the first
stage of the data review was a workshop held in the spring of 2004. A
final report will be issued by the Committee in 2005.
Goal 5: Protect and Enhance the Nation's Natural Resource Base and
Environment
In this area, ERS research and analytical efforts, in cooperation
with the Natural Resources Conservation Service (NRCS), support the
development of Federal farm, conservation, and environmental policies
and programs. These efforts require analyses of the profitability and
environmental impacts of alternative production management systems in
addition to the cost-effectiveness and farm income impacts of public
sector conservation policies and programs.
With passage of the Farm Security and Rural Investment (FSRI) Act
of 2002, USDA looked to ERS to provide comprehensive, detailed, and
understandable information to public and private users, including
information on programs in the Conservation Title. In addition, ERS
provided extensive support to other USDA agencies in developing rules
for implementation of Farm Bill conservation programs. ERS participated
in Farm Service Agency (FSA) and NRCS working groups on the
Conservation Reserve Program (CRP), the Environmental Quality
Incentives Program (EQIP), the Conservation Security Program (CSP), and
implementation of conservation technical assistance by third-party
technical service providers. In 2004, ERS contributed substantially to
the NRCS benefit-cost assessment for CSP. For instance, ERS helped to
prepare the NRCS report, Conservation Security Program: Benefit Cost
Analysis released in June 2004. ERS analysts played a central role in
both conceptualizing and developing a model of CSP participation that
is recognized by NRCS and others within USDA as an important
contribution to USDA's analytic capability with respect to conservation
programs. ERS assisted FSA with the implementation of the CRP program
by providing input data and suggesting ways to improve the Willingness-
to-Bid model used by FSA to set an environmental benefits index (EBI)
cutoff for enrollment in the twenty-ninth signup. ERS also participated
in forward-looking planning exercises concerning major CRP enrollment/
reenrollment decisions expected in 2007.
The FSRI sharply increased conservation funding and earmarked most
of it for working lands conservation rather than for farmland
retirement. The ERS report, ``Flexible Conservation Measures on Working
Land: What Challenges Lie Ahead?'' to be released in 2005, tackles the
issues and complexities that pertain to the design of working-land
payment programs (WLPPs). Program design and implementation will
largely determine the extent to which environmental goals are achieved,
and whether they are achieved cost-effectively, i.e., at a minimum cost
to society. A cost-effective program: (1) anticipates economic and
environmental outcomes associated with enrolling specific producers;
and (2) attracts and enrolls producers that are most likely to deliver
the desired outcomes. The report analyzes the critical role of program
design in gathering information (from producers in a bidding process)
and using that information to identify and enroll producers who,
collectively, are most likely to achieve program objectives cost-
effectively. Empirical analysis also shows how the environment,
commodity prices, and farm incomes could be affected by alternative
designs.
In 2004, ERS transmitted to Congress the report, The Conservation
Reserve Program's Economic and Social Impacts on Rural Counties, as
mandated by the FSRI, as well as the public version released in October
2004, The Conservation Reserve Program: Economic Implications for Rural
America. These reports address a number of concerns about the
unintended consequences of high levels of enrollment in the CRP. Our
research finds no statistically significant evidence that high
enrollments in the CRP have had a systematic, adverse effect on
population or community services in rural counties across the country.
In the course of the production of food and fiber, agriculture also
produces many by-products (externalities) such as open space,
recreational amenities, scenic views, groundwater recharge, and
wildlife habitat. Historically, the standard policy practice has been
to address each externality through a separate policy instrument.
However, when the transaction costs of administering policies (e.g.,
information gathering, contract formulation, enforcement) are positive,
using one instrument to address each externality or objective may not
be optimal. Using an empirical analysis focusing on the CRP, the ERS
report The Multiple Objectives of Agri-Environmental Policy, to be
released in 2005, explores the extent to which environmental attributes
may be jointly produced, e.g., efforts to reduce soil erosion may also
reduce nutrient runoff and increase soil carbon, with implications for
simultaneously targeting multiple environmental and cost objectives.
The report also provides an in-depth look at the costs, benefits, and
tradeoffs associated with the use of indices (such as the EBI used to
implement the CRP) for simultaneously targeting multiple environmental
and cost objectives.
Furthermore, applying environmental policies in an uncoordinated
fashion fails to account for interactions among environmental mediums
(i.e., air, land, water). This can result in conflicting policies, in
that addressing one environmental problem can make another worse. The
ERS report, Manure Management for Multimedia Environmental Improvement:
A Comparison of Single Media versus Multi-Media Policy Optimization, to
be released in 2005, provides a concrete example of the tradeoffs of
alternately and simultaneously meeting air and water quality
objectives, in terms of farmers' costs, production decisions, and
environmental indicators, by focusing on livestock and poultry
production. Among the results in the report is that, if enacted,
restrictions on ammonia emissions from concentrated animal feeding
operations could increase the cost of meeting Clean Water Act
regulations for spreading manure.
Many economists, ecologists, and wildlife biologists have argued
that less productive agricultural lands are environmentally sensitive.
If true, then this would have important implications for agricultural
policy. For instance, programs that stimulate production may cause
farmers to bring the relatively less productive lands that are
environmentally more sensitive into production. Using data from the
USDA's National Resources Inventory, the ERS report to be released in
late 2005, Land-Use Change and the Environment at the Extensive Margin
of Cropland, finds that there is a general relationship between lower
productivity and environmental sensitivity in terms of several agri-
environmental indicators examined, but this relationship does not hold
within all locations.
In fiscal year 2004, ERS continued the Program of Research on the
Economics of Invasive Species Management (PREISM) that was initiated in
fiscal year 2003. PREISM supports economic research and the development
of decision support tools that have direct implications for USDA
policies and programs for protection from, control/management of,
regulation concerning, or trade policy relating to invasive species.
Program priorities have been selected through extensive consultation
with APHIS, the Office of Budget and Program Analysis (OBPA) and other
agencies with responsibility for program management. In 2004, APHIS
used an ERS-supplied pest ranking decision tool to determine which
pests would be on its 2004 Federal-State Cooperative Agricultural Pest
Survey list, making transparent the basis for selecting the pests for
which State cooperators could receive targeted pest surveillance and
detections funds. The recent and rapid spread of the pathogen, soybean
rust (SBR), in South America prompted ERS, in April 2004, to publish a
study of the economic and policy impacts of its windborne entry into
the United States, Economic and Policy Implications of Wind-Borne Entry
of Asian Soybean Rust into the United States. This study quantifies the
potential economic impacts in the United States in both the first year
of SBR's entry and subsequent years when producers have adapted to this
new pest. On November 10, 2004, APHIS confirmed the presence of SBR on
soybean leaf samples taken from two plots associated with a Louisiana
State University research farm. The already published ERS analysis was
used by the USDA in refining rapid response strategies in anticipation
of SBR entry to North America.
In addition to ERS-led analysis of invasive species issues, PREISM
has allocated over $2.4 million in extramural research cooperative
agreements through a peer- reviewed competitive process. To share
review progress made by cooperators who received PREISM funding, and to
provide a forum for dialogue on economic issues associated with
agricultural invasive species, ERS organized a workshop in August 2004
with 90 attendees from academia and Federal agencies. Among the
projects funded in fiscal year 2004 were a GIS-based decision support
tool to help forest land managers prioritize their efforts to eradicate
or control invasive species, and a decision tool for establishing
efficient border protection controls against potentially damaging
species under conditions of extreme uncertainty and limited budgets.
Customers, Partners, and Stakeholders
The ultimate beneficiaries of ERS' programs are the American
people, whose well-being is improved by informed public and private
decision-making that leads to more effective resource allocation. ERS
shapes its program and products principally to serve key decision-
makers who routinely make or influence public policy and program
decisions. This clientele includes White House and USDA policy
officials and program administrators/managers; the U.S. Congress; other
Federal agencies, and State and local government officials; and
domestic and international environmental, consumer, and other public
organizations, including farm and industry groups interested in public
policy issues.
ERS depends heavily on working relationships with other
organizations and individuals to accomplish its mission. Key partners
include: NASS for primary data collection; universities for research
collaboration; the media as disseminators of ERS analyses; and other
government agencies and departments for data information and services.
Closing Remarks
I appreciate the support that this Committee has given ERS in the
past and look forward to continue working with you and your staff to
ensure that ERS makes the most effective and appropriate use of public
resources. Thank you.
______
Prepared Statement of R. Ronald Bosecker, Administrator, National
Agricultural Statistic Service
Mr. Chairman and members of the Committee, I appreciate the
opportunity to submit a statement for this Committee's consideration in
support of the fiscal year 2006 budget request for the National
Agricultural Statistics Service (NASS). This agency administers the
U.S. agricultural statistics program, created in USDA in 1863, and,
beginning in 1997, conducts the U.S. Census of Agriculture, first
collected in 1840. Both programs support the basic mission of NASS to
provide timely, accurate, and useful statistics in service to U.S.
agriculture.
major activities of the national agricultural statistics service (nass)
The continual progression of American farms and ranches to make
greater use of agricultural science and technology, coupled with the
growing complexity of global marketing, increases the need for modern
and reliable statistical information. The periodic surveys and censuses
conducted by NASS contribute significantly to economic decisions made
by policymakers, agricultural producers, lenders, transporters,
processors, wholesalers, retailers, and ultimately, consumers. Voids in
relevant, timely, and accurate data contribute to wasteful
inefficiencies throughout the entire production and marketing system.
The Farm Security and Rural Investment Act of 2002 created the need
for several new data series. For example, the 2002 Census of
Agriculture data were used to help prepare the first annual report to
Congress on USDA program participation of socially disadvantaged
farmers and ranchers. Census data on race, ethnicity, and gender were
used at the county level in preparing the report. These Census of
Agriculture data are the only source of comprehensive information
available on the agricultural sector. The 2002 Farm Bill also
reinforced the importance of existing data series to ensure the
continuation of farm security and rural investments. For example,
counter-cyclical payments are determined in part by market year average
prices determined by NASS. Each $0.01 change in the average corn price
may have resulted in a change of more than $110 million in counter-
cyclical payments during 2004. Similarly, large payment changes also
apply for the other program crops. These are only a few specific data
needs required by the Statute, but they clearly highlight the
importance of a strong, reliable agriculture statistics program.
NASS works cooperatively with each State Department of Agriculture
throughout the year to provide commodity, environmental, economic, and
demographic statistics for agriculture. This cooperative program, which
began in 1917, has served the agricultural industry well and is often
cited by others as an excellent model of successful State-Federal
cooperation. This joint State-Federal program helps meet State and
national data needs while minimizing overall costs by consolidating
both staff and resources, eliminating duplication of effort, and
reducing the reporting burden on the Nation's farm and ranch operators.
NASS' 46 field offices, which cover all 50 States and Puerto Rico,
provide statistical information that serves national, State, and local
data needs.
NASS statistics contribute to providing fair markets where buyers
and sellers have access to the same official statistics, at the same
pre-announced time. This prevents markets from being unduly influenced
by ``inside'' information, which might unfairly affect market prices
for the gain of an individual market participant. Empirical evidence
indicates that an increase in information improves the efficiency of
commodity markets, minimizing price fluctuations for U.S. producers.
Measures relating to the competitiveness of our Nation's agricultural
industry have become increasingly important as producers rely more on
world markets for their sales.
NASS statistical reports are critically important to assess the
current supply of and demand for agricultural commodities. They are
also extremely valuable to producers, agribusinesses, farm
organizations, commodity groups, economists, public officials, and
others who use the data for decision-making. For example, the U.S.
cattle and hog industries requested joint reports of United States and
Canadian livestock. The resulting publications provide composite
information on potential supplies and inventories of cattle and hogs.
This information can be used to make informed decisions, such as
marketing, expansion, or contraction, in today's global economy.
Without these data, the United States would be at a disadvantage in
global trade discussions and would find it very difficult to secure
global contracts and develop strong, reliable relations with our
trading partners.
NASS has been a leader among Federal agencies in providing
electronic access to information. All reports issued by NASS'
Agricultural Statistics Board are made available to the public at a
previously announced release time to ensure that everyone is given
equal access to the information. All of NASS' national statistical
reports and data products, including graphics, are available on the
Internet, as well as in printed form. Customers are able to
electronically subscribe to NASS reports and can download any of these
reports in a format easily accessible by standard software. A summary
of NASS and other USDA statistical data are produced annually in USDA's
Agricultural Statistics, available on the Internet through the NASS
Home Page, on CD-ROM disc, or in hard copy. All of NASS's 46 field
offices have Home Pages on the Internet, which provide access to
special statistical reports and information on current local commodity
conditions and production.
NASS released the results of the 2002 Census of Agriculture in the
Spring of 2004. The Census of Agriculture is taken every 5 years and
provides comprehensive data at the national, State, and county level on
the agricultural sector. The Census of Agriculture is the only source
for this information on a local level, which is extremely important to
the agricultural community. Detailed information at the county level
helps agricultural organizations, suppliers, handlers, processors, and
wholesalers and retailers better plan their operations. Important
demographic information supplied by the Census of Agriculture also
provides a very valuable database for developing public policy for
rural areas. The 2002 Census of Agriculture included for the first time
data on demographic information for up to three operators, enhanced
data on agricultural activity on American Indian Reservations, acreage
of organically produced crops, and information on production contracts
used in agriculture. Additionally, agriculture census results reflected
the status of all U.S. farms instead of only those represented on the
census mail list as was done previously. New statistical methodology
was employed to provide the most complete picture of U.S. agriculture
in many years. Census data were also released for agriculture census
programs in Puerto Rico, Guam, and the Commonwealth of the Northern
Mariana Islands. All of these results are available on the NASS
Website.
Statistical research is conducted to improve methods and techniques
used for collecting and processing agricultural data. This research is
directed toward achieving higher quality census and survey data with
less burden to respondents, producing more accurate and timely
statistics for data users, and increasing the efficiency of the entire
process. For example, NASS officially deployed its Electronic Data
Reporting (EDR) system in 2004, which provides respondents with the
ability to electronically complete the data collection process and thus
reduces reporting burden. Plans are to complete the system with the
electronic availability of the 2007 Census of Agriculture. The growing
diversity and specialization of the Nation's farm operations have
greatly complicated procedures for producing accurate agricultural
statistics. Developing new sampling and survey methodology, expanding
modes of data collection including electronic data reporting, and
exploiting computer intensive processing technology enables NASS to
keep pace with an increasingly complex agricultural industry.
The fiscal year 2005 budget included $2.7 million for agricultural
estimates restoration and modernization. These funds provided the
continued development of a foundation for quality improvements in
forecasts and estimates. The 2005 funds are being used to improve the
precision level from commodity surveys conducted by NASS. The majority
of the funding is being allocated to increasing sample sizes and the
data collection activities of local interviewers throughout the Nation.
The primary activity of NASS is to provide reliable data for
decision-making based on unbiased surveys each year, and the Census of
Agriculture every 5 years, to meet the current data needs of the
agricultural industry. Farmers, ranchers, and agribusinesses
voluntarily respond to a series of nationwide surveys about crops,
livestock, prices, chemical use and other agricultural activities each
year. Periodic surveys are conducted during the growing season to
measure the impact of weather, pests, and other factors on crop
production. Many crop surveys are supplemented by actual field
observations in which various plant counts and measurements are made.
Administrative data from other State and USDA agencies, as well as data
on imports and exports, are thoroughly analyzed and utilized as
appropriate. NASS prepares estimates for over 120 crops and 45
livestock items which are published annually in over 400 separate
reports.
Approximately 65 percent of NASS's staff are located in the 46
field offices; 21 of these offices are collocated with State
Departments of Agriculture or land-grant universities. NASS' State
Statistical Offices issue approximately 9,000 different reports each
year and maintain Internet pages to electronically provide their State
information to the public.
NASS has developed a broad environmental statistics program under
the Department's water quality and food safety programs. Until 1991,
there was a serious void in the availability of reliable pesticide
usage data. Therefore, beginning in 1991 NASS cooperated with other
USDA agencies, the Environmental Protection Agency (EPA), and the Food
and Drug Administration, to implement comprehensive chemical usage
surveys that collect data on certain crops in specified States. NASS
data allows EPA to use actual chemical data from scientific surveys,
rather than worst case scenarios, in the quantitative usage analysis
for a chemical product's risk assessment. Beginning in fiscal year
1997, NASS also instituted survey programs to acquire more information
on post-harvest application of pesticides and other chemicals applied
to commodities after leaving the farm. These programs have resulted in
significant new chemical use data, which are important additions to the
database. Surveys conducted in cooperation with the Economic Research
Service (ERS) also collect detailed economic and farming practice
information to analyze the productivity and the profitability of
different levels of chemical use. American farms and ranches manage
nearly half the land mass in the United States, underscoring the value
of complete and accurate statistics on chemical use and farming
practices to effectively address public concerns about the
environmental effects of agricultural production.
NASS conducts a number of special surveys, as well as provides
consulting services for many USDA agencies, other Federal or State
agencies, universities, and agricultural organizations on a cost-
reimbursable basis. Consulting services include assistance with survey
methodology, questionnaire and sample design, information resource
management, and statistical analysis. NASS has been very active in
assisting USDA agencies in programs that monitor nutrition, food
safety, environmental quality, and customer satisfaction. In
cooperation with State Departments of Agriculture, land-grant
universities, and industry groups, NASS conducted 138 special surveys
in fiscal year 2004 covering a wide range of issues such as farm
injury, nursery and horticulture, farm finance, fruits and nuts,
vegetables, and cropping practices. All results from these reimbursable
efforts are publicly available.
NASS provides technical assistance and training to improve
agricultural survey programs in other countries in cooperation with
other government agencies on a cost-reimbursable basis. NASS's
international programs focus on developing and emerging market
countries in Asia, Africa, Central and South America, and Eastern
Europe. Accurate information is essential for the orderly marketing of
farm products. NASS works directly with countries by assisting in the
application of modern statistical methodology, including sample survey
techniques. This past year, NASS provided assistance to Brazil, China,
El Salvador, Guatemala, Kazakhstan, Mexico, Nepal, Russia, and the
Ukraine. In addition, NASS conducted training programs in the United
States for 219 visitors representing 24 countries. These assistance and
training activities promote better quality data and improved United
States access to data from other countries.
NASS annually seeks input on improvements and priorities from the
public through the Secretary of Agriculture's Advisory Committee on
Agriculture Statistics, displays at major commodity meetings, data user
meetings with representatives from agribusinesses and commodity groups,
special briefings for agricultural leaders during the release of major
reports, and through numerous individual contacts. As a result of these
activities, the agency has made adjustments to its agricultural
statistics program, published reports, and expanded electronic access
capabilities to better meet the statistical needs of customers and
stakeholders.
FISCAL YEAR 2006 PLANS
The fiscal year 2006 budget request is for $145.2 million. This is
a net increase of $16.7 million from fiscal year 2005.
The fiscal year 2006 request includes increases to continue
restoration and modernization of NASS' core survey and estimation
program ($7.0 million); improvement in the statistical integrity and
standardization of the data collection and processing activities of the
Local County Agricultural Estimates program ($1.9 million); cyclical
activities associated with preparing and conducting the Census of
Agriculture ($6.5 million); and funding for increased pay costs ($1.3
million).
An increase of $7.0 million and 10 staff years are requested to
fund the continuation of the restoration and modernization of NASS'
core survey and estimation program. This increase will be directed at
continuing to restore and modernize the core survey and estimation
program for NASS to meet the needs of data users at necessary levels of
precision for State, regional, and national estimates. Decisions
affecting billions of dollars in the U.S. food and agricultural sectors
are facilitated in both public and private venues through access to
reliable statistical information. The USDA NASS statistical program
serves most agricultural commodity data needs in the United States, as
well as supplying important economic, environmental, and demographic
data that are used to impact lives of rural residents. Escalating
survey expenses, staff costs, and operating expenses, including higher
contract costs, forced detrimental adjustments to many of the Agency's
survey and estimates programs. These actions over time led to
reductions in the quality of the survey data on which NASS estimates
are based. Funding received in fiscal year 2004 and fiscal year 2005
was part of this multi-year initiative to restore survey accuracy to
previous levels. These changes were designed to increase precision at
the State and regional levels to promote the NASS goal for fiscal year
2005 of reaching precision target levels at least 75 percent of the
time for major survey indications. The additional funding requested in
fiscal year 2006 will allow continued improvements and provide the
necessary resources to reach precision target levels an estimated 83
percent of the time.
An increase of $1.9 million and 4 staff years are requested to
provide for data acquisition for the annual integrated Local County
Agricultural Estimates program. Local area statistics are one of the
most requested NASS data sets, and are widely used by private industry,
Federal, State and local governments and universities. This funding
supports the NASS goal to incrementally improve survey precision for
small area statistics. Current estimates are derived through a survey
process that does not support scientific probability design to produce
statistically defensible survey precision. Proper follow-up data
collection activities and redesign of survey systems will improve the
critical annual county-level data. The Risk Management Agency (RMA)
uses these statistics in indemnity calculations for Group Risk Plans
and the Group Risk Revenue Plans as part of the risk rating process.
This affects premium levels paid by producers. The FSA uses county
estimates to weight posted county prices to national loan deficiency
payments, and as an input to assist producers to update their base
acreage and yields as directed by the 2002 Farm Bill. In addition,
financial institutions, agriculture input suppliers, agricultural
marketing firms, and commodity transport firms utilize county level
data to make informed business decisions.
An increase of $6.9 million and 15 staff-years is requested for the
Census of Agriculture. The Census of Agriculture budget request is for
$29.1 million. This includes a cyclical program cost increase of $6.5
million and $389,000 for employee compensation. The available funding
includes monies to prepare for the 2007 Census of Agriculture and to
conclude analysis and publication of the Census of Aquaculture in
December 2006. The increase will be used to finalize questionnaire
content for the 2007 Census of Agriculture. Mail list development
activities will continue during fiscal year 2006 with the assistance of
locally employed enumerators. Contract employees will aid in updating
and streamlining census processing systems needed for conducting the
Census of Agriculture and its follow-on surveys. Finally, hardware and
software will be upgraded to allow for testing and implementation of
the processing systems.
This concludes my statement, Mr. Chairman. Thank you for the
opportunity to submit this for the record.
______
Prepared Statement of J.B. Penn
Mr. Chairman and Members of the Committee, I am pleased to appear
before you this afternoon to present the 2006 budget and program
proposals for the Farm and Foreign Agricultural Services (FFAS) mission
area of the Department of Agriculture (USDA). The FFAS mission area is
comprised of three agencies: the Farm Service Agency, Risk Management
Agency, and Foreign Agricultural Service.
Statements by the Administrators of the FFAS agencies, which
provide details on their budget and program proposals for 2006, have
already been submitted to the Committee. My statement will summarize
those proposals, after which I will be pleased to respond to any
questions you may have.
Mr. Chairman, the programs and services of the FFAS mission area
provide the foundation for the Department's efforts to ``enhance
economic opportunities for American agricultural producers'', one of
the five primary goals in the Department's strategic plan. The wide
range of services provided by our agencies--price and income support,
farm credit assistance, risk management tools, and trade expansion and
export promotion programs--are the bedrock for ensuring the economic
health and vitality of American agriculture.
FFAS also plays an important role in protecting and enhancing the
Nation's natural resource base and environment, another of the
Department's strategic goals, by providing critical support for
improved management of private lands.
The 2006 President's budget supports continuation of these diverse
activities and ensures our continued efforts on behalf of America's
agricultural producers. Although the budget does contain proposals for
savings in both discretionary and mandatory programs as part of
government-wide efforts to reduce the deficit, it fulfills our
priorities of promoting and enhancing the economic opportunities of our
farmers and ranchers and for protecting the environment.
FARM SERVICE AGENCY
The Farm Service Agency (FSA) is our lead agency for delivering
farm assistance. It is the agency that the majority of farmers and
ranchers interact with most frequently. Producers rely on FSA to access
farm programs such as direct and countercyclical payments, commodity
marketing assistance loans, loan deficiency payments, farm ownership
and operating loans, disaster assistance, and certain conservation
programs, such as the Conservation Reserve Program (CRP). Because FSA
is the prime delivery agency for most of the major farm assistance
programs, the budget places a priority on maintaining and enhancing
FSA's ability to provide efficient, responsive services to our
producers.
Farm Program Delivery
The 2002 Farm Bill required FSA to undertake the massive task of
implementing a complex set of new farm programs within a short time
period, and the agency met that challenge successfully and with
distinction. With the major workload associated with Farm Bill
implementation having been completed, FSA recently has faced other
program implementation challenges that have required the full
commitment of agency resources. Last October, the President signed a
disaster assistance bill that included more than a dozen programs and
$2.9 billion for farmers and ranchers who were affected by drought and
other weather-related problems in 2003 and 2004. Sign-up for crop
disaster assistance began March 14th, and payments began by March 30th.
FSA also has implemented an emergency relief program, supported with
$600 million of section 32 funds, for Florida's citrus, nursery, and
vegetable growers who were affected by three hurricanes last year.
Also enacted last October was legislation containing the so-called
tobacco buy-out provisions that has major consequences for the Federal
tobacco program. Under those provisions, transition payments will be
made to tobacco quota holders and producers, ending all elements of the
Federal tobacco price support program effective with the 2005 crop. FSA
is now actively engaged in the steps needed to implement the
legislation as quickly and efficiently as possible. Sign-up for the
transition payment program began on March 14th and will continue
through June 17th.
The 2006 budget is designed to ensure the agency's efforts can move
forward. It provides a total program level for FSA salaries and
expenses of nearly $1.4 billion, a net increase of $70 million above
2005. The requested level will support a ceiling of about 5,500 Federal
staff years and 10,300 non-Federal staff years. Staff levels have been
reallocated among FSA's program activities to reflect the decreased
workload associated with farm income program support and other areas,
while accommodating rising workload needs for conservation and other
programs. Permanent full time non-Federal county staff years are
estimated to remain unchanged from this year's level, while temporary
staff years are reduced with the completion of disaster assistance
activities.
FSA is taking other actions designed to improve their services on
behalf of America's producers. Among the most important of these are
information technology (IT) improvements, including the adoption of
web-based applications that allow farmers to sign up for programs, as
well as receive payments, on line. This reduces the paperwork burden
significantly and provides for more timely receipt of payments. By
2006, FSA expects all of its major programs will be web-based and
available on-line.
FSA also continues to implement Geospatial Information Systems
(GIS) and Global Positioning System technology that will provide
increasingly better services in the future and should result in
significant long-term savings. Funding for FSA IT modernization and
related GIS initiatives has been provided in the Common Computer
Environment account managed by the Department's Chief Information
Officer.
Finally, FSA is making considerable progress in reaching out to its
small farm and minority constituency base. In January, final guidelines
were implemented that provide reforms to ensure fair representation for
socially disadvantaged farmers and ranchers in county committee
elections. This has been complemented by expanded communication and
outreach activities to increase the number of minority and women
nominees in the election process.
Commodity Credit Corporation
Domestic farm commodity price and income support programs are
financed through CCC, a Government corporation for which FSA provides
operating personnel. CCC also provides funding for conservation
programs, including the CRP and certain programs administered by the
Natural Resources Conservation Service. In addition, CCC funds most of
the export programs administered by the Foreign Agricultural Service.
In 2004, as a result of strong prices and a healthy farm economy,
CCC net expenditures declined 39 percent below the previous year to
$10.6 billion. For 2005 and 2006, CCC outlays are expected to increase
significantly due to recent large crops that have contributed to
growing supplies and weakened prices. CCC outlays are now projected to
reach $24.1 billion in 2005 and then decline to $19.8 billion in 2006.
The President's budget includes a number of proposals to reduce the
level of farm spending consistent with the government-wide goal of
reducing the Federal deficit. These proposals are designed to work
within the existing structure of the 2002 Farm Bill and achieve savings
over the next 10 years. The proposals, which are spread across the
entire agricultural production sector, include reducing commodity
payments across the board by 5 percent; basing marketing loan benefits
on historical production; tightening payment limits; lowering dairy
program costs while extending the Milk Income Loss Contract program for
2 years; and reinstituting a 1.2 percent marketing assessment on sugar
processors.
These proposals are expected to save $587 million in 2006 and $5.7
billion over 10 years. The majority of the savings is achieved through
the across-the-board reduction in program payments.
The budget also proposes to limit the CCC bioenergy incentive
program to $60 million, similar to the limitation of $100 million that
applies to the 2005 program. An assessment of this program has found
that additional incentives for ethanol are less critical than other
Federal assistance, including tax credits and production mandates and
that greater emphasis should be placed on incentives for biodiesel
production rather than ethanol.
Conservation Programs
The 2002 Farm Bill provided for significant growth in the
Department's conservation programs. The CRP, which is funded by CCC and
administered by FSA, is the Department's largest conservation/
environmental program. The Farm Bill extended CRP enrollment authority
through 2007 and increased the enrollment cap by 2.8 million acres to a
total of 39.2 million acres.
As of the end of December, CRP enrollment totalled 34.7 million
acres. Another 1.2 million acres were accepted in the 29th general
signup in 2004 and will be enrolled once contracts are finalized. Once
that step is completed, the CRP will have reached more than 90 percent
of the total acreage authorized in the Farm Bill.
Our current baseline assumptions are that CRP acreage will increase
gradually to 39.2 million acres by 2008 and remain at that level
through 2015.
Farm Loan Programs
FSA plays a critical role for our Nation's agricultural producers
by providing a variety of direct loans and loan guarantees to farm
families who would otherwise be unable to obtain the credit they need
to continue their farming operations. By law, a substantial portion of
the direct loan funds are reserved each year for assistance to
beginning, limited resource, and socially disadvantaged farmers and
ranchers. For 2006, 70 percent of direct farm ownership loans are
reserved for beginning farmers and 20 percent are reserved for socially
disadvantaged borrowers, who may also be beginning farmers.
The 2006 budget includes funding for about $937 million in direct
loans and $2.9 billion in guarantees. We believe these proposed loan
levels will be sufficient to meet demand in 2006.
The 2006 budget also maintains funding of $2 million for the Indian
Land Acquisition program. For the Boll Weevil Eradication loan program,
the budget requests $60 million, a reduction of $40 million from 2005.
This reduction is due to the successful completion of eradication
efforts in several areas. The amount requested is expected to fund
fully those eradication programs operating in 2006. For emergency
disaster loans, the budget requests $25 million. About $175 million is
currently available for use in 2005, and a portion of that is likely to
carry over into 2006. The combined request and anticipated carryover
are expected to provide sufficient credit in 2006 to producers whose
farming operations have been damaged by natural disasters.
RISK MANAGEMENT AGENCY
The Federal crop insurance program represents one of the strongest
safety net programs available to our Nation's agricultural producers.
It provides risk management tools that are compatible with
international trade commitments, creates products and services that are
market driven, harnesses the strengths of both the public and private
sectors, and reflects the diversity of the agricultural sector.
In 2004, the crop insurance program provided about $46 billion in
protection on over 221 million acres, which is about 3 million acres
more than were insured in 2003. Our current projection is that
indemnity payments to producers on their 2004 crops will be about $2.9
billion which is about $1 billion less than in 2003. Our current
projection for 2006 shows a modest decrease in the value of protection.
This projection is based on the Department's latest estimates of
planted acreage and expected declines in market prices for the major
agricultural crops, and assumes that producer participation remains
essentially the same as it was in 2004.
The 2006 budget requests an appropriation of ``such sums as are
necessary'' as mandatory spending for all costs associated with the
program, except for Federal salaries and expenses. This level of
funding will provide the necessary resources to meet program expenses
at whatever level of coverage producers choose to purchase.
Despite the successes of the crop insurance program, more can be
done to improve its effectiveness. One of the overarching goals of the
crop insurance program has been the reduction or elimination of ad hoc
disaster assistance. However, in recent years Congress has passed four
disaster bills covering 6 crop years and costing the Government about
$10 billion. Therefore, the budget includes a proposal to link the
purchase of crop insurance to participation in farm programs, such as
the direct and counter-cyclical payment programs. This proposal would
require farm program participants to purchase crop insurance protection
for 50 percent, or higher, of their expected market value or lose their
farm program benefits. This level of coverage is nearly double the
amount of protection provided at the catastrophic level.
Additionally, participants in the Federal crop insurance program
would contribute to the President's deficit reduction program. The
budget includes several proposals that would reduce subsidies paid to
producers and approved insurance providers. In total, these changes are
expected to save about $140 million annually beginning in 2007.
In addition, the budget includes a general provision that would
provide $3.6 million in mandatory funds to continue data warehousing
and data mining activities authorized in the Agricultural Risk
Protection Act of 2000 (ARPA). ARPA provided $23 million in mandatory
funds for a variety of purposes, including data mining; however, that
funding expires in 2005. Data mining is an instrumental part of the
Department's efforts to combat fraud, waste, and abuse in the crop
insurance program. In its first year of operation, data mining is
estimated to have prevented the payment of about $94 million in
potentially fraudulent claims and assisted in the identification and
recovery of about $35 million in claims that should not have been paid.
Salaries and Expenses
For salaries and expenses of the Risk Management Agency (RMA), $88
million in discretionary spending is proposed, an increase of $17
million from the 2005 level of about $71 million. This net increase
includes additional funding for IT, increased staff years to improve
monitoring of the insurance companies, and pay costs.
RMA has an aging IT system; the last major overhaul occurred about
10 years ago. At that time, the crop insurance program offered seven
plans of insurance covering roughly 50 crops and providing about $14
billion in protection. In 2004, protection was offered through 20 plans
of insurance covering 362 crops, plus livestock and aquaculture, and
providing over $46 billion in protection.
Several major changes also have occurred over the years in the way
producers protect their operations from losses. In 1994, there were no
plans of insurance which offered protection against changes in market
prices. Today, over 50 percent of the covered acreage has revenue
protection and nearly 62 percent of the premium collected is for
revenue based protection. In addition, ARPA authorized the development
of insurance products to protect livestock. RMA has implemented several
new livestock price protection products. Because livestock production
occurs year-round, these products must be priced and sold in a
different manner than traditional crop insurance. The advent of new
types of insurance, not contemplated when the IT system was designed,
has placed tremendous strain on an aging system.
ARPA also instituted new data reconciliation, data mining, and
other anti-fraud, waste, and abuse activities that require the data to
be used in a variety of new ways. The current IT system was not
designed to handle these types of data operations. Consequently, the
data must be stored in multiple databases which increases data storage
costs and processing times and increases the risk of data errors.
The development of the new IT system will result in some additional
up-front costs to the Government because we will be required to finance
both the developmental costs as well as the increasingly expensive
maintenance costs of the legacy system. However, once the new system is
operational, the legacy system will be eliminated, and a substantial
reduction in maintenance costs is projected.
Finally, I would note that the budget for RMA includes a request
for 17 additional staff years. This increase will provide RMA with the
additional resources necessary to monitor the financial and operational
condition of the companies participating in the crop insurance program.
In 2002, American Growers', the Nation's largest crop insurance
company, failed. RMA, in concert with the Nebraska Department of
Insurance, did a tremendous job of ensuring that both the producers'
and the Government's interests were protected, indemnities paid, and
policies transferred to other insurance providers. The additional
staffing will help to ensure that a similar failure does not occur in
the future.
FOREIGN AGRICULTURAL SERVICE
I would now like to turn to the international programs and
activities of the FFAS mission area. As Secretary Johanns highlighted
in his recent testimony before the Committee, expanding trade is
critically important for the economic health and prosperity of American
agriculture. Expanding international market opportunities and promoting
trade are among the most important means the Department has to enhance
economic opportunities for our farmers and ranchers.
We have made solid progress during the past year in our market
expansion activities. Central to these efforts is the Framework
Agreement on agriculture that was reached last July by Members of the
World Trade Organization (WTO) as part of the current round of
multilateral trade negotiations. The agreement incorporates key U.S.
objectives for the negotiations and provides strong principles for
further liberalization of agricultural trade. Much work remains to be
done to translate those principles into actual reform commitments,
however, and we are working very diligently to achieve consensus among
WTO Members on as many areas as possible by this summer. This should
pave the way for a successful WTO Ministerial meeting next December in
Hong Kong.
Regional and bilateral trade agreements provide another important
avenue for opening new markets, and we continue to participate in the
ambitious agenda that has been established for the negotiation of such
agreements. During the past year, agreements were concluded with
Australia, Morocco, Bahrain, five Central American countries, and the
Dominican Republic. Negotiations are continuing with Panama, Thailand,
three Andean countries, the five members of the Southern African
Customs Union, the United Arab Emirates, Oman, and 34 countries that
will comprise the Free Trade Area of the Americas.
Our efforts to maintain and expand market access are not limited to
the negotiation of new agreements, however. Trade agreement monitoring
and compliance activities are vital if we are to protect U.S. trade
rights.
During the past year, among our highest priorities has been our
work to recover access to markets for U.S. beef that were closed due to
the December 2003 discovery of one case of bovine spongiform
encephalopathy (BSE) in the United States. To date, we have recovered
markets worth $1.2 billion, based on 2003 values. Most recently, Egypt
opened its market to U.S. beef and beef products from animals less than
30 months of age.
The current focus of our efforts is restoring access to the
Japanese market, and we are committed to reaching a resolution of this
matter as soon as possible. In October, the United States and Japan
reached agreements on the terms by which trade in U.S. beef would
resume. Since that time, U.S. experts have traveled to Japan to provide
additional technical explanations. We have worked across the
Administration to apply pressure to convince the Japanese that they
must open their market expeditiously. Last month, their Food Safety
Commission adopted a new domestic standard excluding cattle 20 months
of age and younger from mandatory testing. This is progress. We now
need an expedited import review process to get the market reopened.
Salaries and Expenses
The Foreign Agricultural Service (FAS) is the lead agency for the
Department's international activities and is at the forefront of our
efforts to expand and preserve overseas markets. Through its network of
78 overseas offices and its headquarters staff here in Washington, FAS
carries out a wide variety of activities that contribute to the goal of
expanding overseas market opportunities.
As the Committee may be aware, FAS is currently undergoing an
extensive review of its activities, organization, and operations. Many
factors have prompted this assessment, including the changing nature of
the global agricultural trade and trade-related issues; the need for
greater efficiency in the delivery of services to the public; and
budgetary constraints stemming in large part from significantly
increased overseas operating costs. Recent declines in the value of the
dollar relative to other currencies, coupled with local wage and price
increases at overseas posts, have created major challenges in managing
the agency's overseas presence.
FAS has already taken steps to respond to these challenges. Earlier
this year, the agency exercised buy-out and early-out authorities,
approved by the Office of Personnel Management, to reduce staff levels
at headquarters. In addition, its travel budget has been reduced by 50
percent, and promotional activities carried out by FAS overseas staff
and other international programs have been sharply curtailed.
Even with the actions that have been taken thus far and further
steps that are likely to result from the current organizational review,
FAS will continue to face fiscal hurdles as it strives to maintain the
services it provides to American agriculture. These factors were taken
into account during development of the 2006 budget, with particular
attention given to maintaining FAS' overseas presence so the agency can
continue to represent and advocate for U.S. agricultural interests on a
global basis.
The budget provides a program level of $152 million for FAS
activities in 2006, an increase of just over $11 million above 2005.
This includes funding to meet higher operating costs at the agency's
overseas posts, including increased payments to the Department of State
for administrative services that State provides at overseas posts.
Funding also is provided for FAS' contribution to the Capital
Security Cost Sharing program. Under that program, which is being
implemented this year, agencies with an overseas presence in U.S.
diplomatic facilities will contribute a proportionate share of the
costs of the construction of new, safe U.S. diplomatic facilities over
a 14-year period.
The budget also requests funding to support an FAS presence in the
new embassy in Baghdad, Iraq, as well as funding for increased agency
personnel costs.
Export Promotion and Market Development Programs
FAS administers the Department's export promotion and market
development programs which play an important role in our efforts to
assist American producers and exporters take advantage of new market
opportunities overseas.
The CCC export credit guarantee programs provide payment guarantees
for the commercial financing of U.S. agricultural exports. Those
guarantees facilitate exports to buyers in countries where credit is
necessary to maintain or increase U.S. sales, but where financing may
not be available with CCC guarantees. For 2006, the budget projects a
program level of $4.4 billion for CCC export credit guarantees.
For the Department's market development programs, including the
Market Access Program and Foreign Market Development Program, the
budget provides funding of $173 million. This is somewhat below the
2005 current estimate reflecting a proposal to limit the Market Access
Program to $125 million. That proposal is intended to achieve savings
in mandatory spending and contribute to government-wide deficit
reduction efforts.
The budget also includes $52 million for the Dairy Export Incentive
Program and $28 million for the Export Enhancement Program.
International Food Assistance
The United States continues to be the world's leader in global food
aid efforts, providing over one-half of world food assistance. In
support of our commitment to help alleviate hunger and malnutrition in
developing countries, the supplemental appropriations package submitted
by the President on February 14th includes a request for $150 million
to support additional Public Law 480 Title II food donations to meet
critical needs in Sudan and other emergency situations. It also
requests funding for recovery and reconstruction activities in tsunami-
affected countries and allows a portion of those funds to cover the
cost of Public Law 480 Title II commodities used to respond after the
tsunami.
For 2006, the budget continues our support for these efforts by
providing a program level of approximately $1.8 billion for U.S.
foreign food assistance activities, including $300 million that is
being requested in the Foreign Operations Appropriations Bill.
The Public Law 480 programs remain the primary vehicle for
providing U.S. foreign food assistance. The 2006 budget provides
funding that would support a Title I credit and grant program level of
$145 million. For Title II donations, funding is provided to support a
program level of $964 million. These estimated program levels include
unobligated funds carried over from previous years and projected
reimbursements from the Maritime Administration for costs associated
with meeting U.S. cargo preference requirements in prior years.
In the case of Title II, the level of appropriated funding
requested has been reduced by $300 million below the level requested in
recent annual budgets, and an equivalent level of funding is being
requested in the Agency for International Development's (AID)
International Disaster and Famine Assistance account to support
emergency food assistance activities that will be administered
separately by AID. This change is intended to expedite the response to
emergencies overseas by allowing food aid commodities to be purchased
more quickly and closer to their final destination, while increasing
the total amount of commodities that can be procured to meet those
emergencies.
For the McGovern-Dole International Food for Education and Child
Nutrition Program, the budget provides appropriated funding of $100
million, an increase of 15 percent above the 2005 enacted level. That
funding will be supplemented by anticipated reimbursements from the
Maritime Administration, and the total combined program level of $106
million is expected to support assistance for as many as 2.6 million
women and children.
The budget also includes an estimated program level of $137 million
for the CCC-funded Food for Progress program, which supports the
adoption of free enterprise reforms in the agricultural economies of
developing countries. The budget also assumes that donations of nonfat
dry milk will continue under the authority of section 416(b) of the
Agricultural Act of 1949. The total value of the commodity assistance
and associated costs is projected to be $151 million.
Trade Adjustment Assistance
The budget includes $90 million for the Trade Adjustment Assistance
(TAA) for Farmers Program, as authorized by the Trade Act of 2002. This
program provides assistance to producers of raw agricultural
commodities who have suffered lower prices due to import competition,
and to fishermen who compete with imported aquaculture producers. In
order to qualify for assistance, the price received by producers of a
specified commodity during the most recent marketing year must be less
than 80 percent of the national average price during the previous 5
marketing years. In addition, a determination must be made that
increases in imports of like or competitive products ``contributed
importantly'' to the decline in prices.
During 2004, the first full year of implementation, 12 petitions
for TAA assistance were approved. Commodities that were certified for
assistance included blueberries, Pacific salmon, shrimp, catfish, and
lychees. The total program costs for 2004 are estimated at $16 million.
The deadline for submission of petitions for 2005 TAA assistance
closed on January 31st. Thus far, TAA assistance has been certified for
Pacific salmon fishermen in 2 States, shrimpers in 7 States, Concord
juice grape producers in 3 states, black olive producers in California,
and potato producers in Idaho. Additional petitions are currently under
review, and decisions on their eligibility should be announced in the
near future.
That concludes my statement, Mr. Chairman. I would be pleased to
answer any questions that you and other Members of the Committee may
have. Thank you.
______
Prepared Statement of James R. Little, Administrator, Farm Service
Agency
Mr. Chairman and Members of the Subcommittee, I appreciate the
opportunity to present the fiscal year 2006 budget for the Farm Service
Agency (FSA). Since we met last year, I am pleased to report that FSA
has made substantial progress in a number of areas to enhance customer
service. We are putting in place an infrastructure that will help us
quickly respond to new legislation and provide better access to our
programs and data for our customers and business partners. We have made
great strides in reaching out to our small and disadvantaged
constituency base and engaging our stakeholders to help us develop a
new Strategic Plan that is aligned with the Secretary's plan, all
designed to support productive farms and ranches that are competitive
in global markets; promote a secure and affordable food and fiber
supply; and conserve natural resources and enhance the environment.
This budget is fiscally responsible and proposes several measures
to achieve savings in farm programs. It also includes a number of
projects and initiatives designed to achieve substantial and systemic
improvements that will position us for prompt implementation of the
next farm bill or any other enacted legislation. Your support for the
budget request will enable FSA to meet the challenges of a shifting
economic environment and the influence of natural and man-made
disasters. Before I begin addressing the details of the budget, I would
like to comment on some of our recent successes, some of the
initiatives we currently have underway, and some of the challenges we
face.
Disaster Assistance
The past year provided us with tremendous challenges from Mother
Nature, with record rainfall in parts of the country, a pervasive
drought in the West, and the worst hurricane season in decades. In all
cases FSA showed its colors and responded proactively to provide
support in record time. The disaster assistance bill signed by the
President on October 13, 2004, included more than a dozen programs and
$2.9 billion for farmers and ranchers who have been affected by drought
and other weather-related problems in 2003 and 2004, including damage
caused by the devastating 2004 hurricanes and tropical storms that
ravaged Florida, the Southeast and Eastern shore. Delivery of these
programs has been a massive undertaking, which included implementing
the Emergency Conservation Program in 12 days following passage of the
bill that provided new funding. In total, this important legislation
provided relief for losses of crops, livestock, dairy, cottonseed, and
trees, including orchards, timber and pecans. In addition, FSA
implemented an emergency relief program utilizing over $600 million
from Section 32 funds for Florida's citrus, nursery, and vegetable
growers who were especially impacted by back-to-back hurricanes
Charley, Frances and Jeanne.
FSA is working diligently to implement all of these disaster
programs as soon as possible. Signup for the Section 32 initiative
began last October, with more than $315 million already paid out.
Various other programs are being phased in; for example, the Tree
Assistance Program began February 7 and the major Crop Disaster Program
began March 14. I am pleased to note that these delivery times are
consistent with previous ad hoc disaster programs, which have generally
been implemented within 5\1/2\ months of enactment.
In addition, we continued the very successful Nonfat Dry Milk (NDM)
Livestock Feed Assistance Initiative, which provided drought relief to
foundation livestock producers in States hardest hit by drought.
Surplus Commodity Credit Corporation (CCC) stocks of NDM, which have
been denatured to prevent human consumption, are provided to
participating States at a greatly reduced cost. Under the 2004
initiative, 135.8 million pounds of NDM, including some of the unused
NDM from the 2003 initiative, was made available to eligible producers
in 96 counties in Arizona, Idaho, Montana, Nebraska, Nevada, New
Mexico, Oregon, Utah, and Wyoming.
Tobacco Transition Program
On October 22, 2004, President Bush signed into law the American
Jobs Creation Act of 2004, which includes the Fair and Equitable
Tobacco Reform provisions commonly referred to as the Tobacco Buyout.
Under this statute, payments will be made to tobacco quota holders and
producers, ending all aspects of the Federal tobacco support program,
including marketing quotas and non-recourse marketing loans, effective
with the 2005 crop. This is an historic event, Mr. Chairman, since the
tobacco price support program has been in place since the 1930's and
has defined a way of life for many of our Nation's small family
farmers.
Current tobacco program requirements for the 2004 marketing year
will remain in effect through the end of the 2004 marketing season,
which ends June 30, 2005, for flue-cured tobacco and September 30,
2005, for all other types of tobacco. The funds required to pay for the
transition, estimated to total $10.14 billion over a 10-year period,
will be obtained through assessments on manufacturers and importers of
all tobacco products sold in the United States. The payments to
producers will be made in 10 equal annual installments beginning in
2005 and ending September 30, 2014.
A sign-up period began on March 14. Tobacco quota holders will
receive payments of $7 per pound based on their basic quota at the 2002
marketing year level. Producers of quota tobacco will receive payments
of $3 per pound based on their shares of risk in the 2002, 2003, and
2004 crops of quota tobacco. FSA is working aggressively to implement
this historic piece of legislation as quickly and effectively as
possible. We are also working diligently to put in place a
comprehensive communication and educational strategy to ensure all
farmers, especially minority and disadvantaged farmers, are aware of
the program and informed about how to sign up and obtain their
benefits.
Technology Modernization
Over the past year, FSA has moved aggressively and collectively to
a more streamlined environment using state-of-the-art information
technology. FSA made significant progress in moving our systems to a
web-based environment, improving the way we do business, providing
better access to our data for our customers and business partners, and
improving customer service. In keeping with the President's Management
Initiatives on making programs more accessible using today's
technology, last April Secretary Veneman unveiled the USDA Customer
Statement, which enables producers to view all their program
information through one Web portal. According to the 2002 Census of
Agriculture, approximately 48 percent of all farmers have access to the
Internet, enabling them to check on their CCC payments, collections,
debt, and IRS reporting, via the Web. FSA Web-based applications also
allow farmers to sign up for the Direct and Counter-cyclical Payment
Program on line and receive their loan deficiency payments on line,
significantly reducing the paperwork burden and providing benefits more
timely. In addition, other partners are being provided electronic
access. For example, participating U.S. banks and exporters can now
electronically submit registrations, evidence of exports, and notices
of default under the General Sales Manager's Export Credit Guarantee
Program.
To take advantage of USDA's and FSA's electronic commerce (e-
commerce) programs, the FSA is encouraging all producers to sign up for
the capability. Over the next several months, we will be conducting an
extensive public relations campaign to promote e-commerce and its
benefits. Through a substantial modernization effort, FSA expects that
by 2006 all of its major programs will be Web-based and available on
line to our customers and partners.
In addition to e-commerce, FSA, along with other USDA agencies,
continues to implement Geospatial Information System (GIS) and Global
Positioning System (GPS) technology. GIS and GPS are helping FSA staff
more efficiently measure land features by allowing computer-generated
maps to interact with databases that store information about the land
and its characteristics and background. In collaboration with the Risk
Management Agency (RMA), FSA has digitized 80-90 percent of our most
critical component of GIS--the Common Land Unit, which is the smallest
land unit or field. This is the first major step toward creating a
common management information system that can be shared by FSA and RMA
and tremendously reduce redundancies.
Conservation
This past year, FSA set new standards for the Conservation Reserve
Program (CRP), which is the Federal Government's largest private lands
conservation program, assisting farm owners and operators in conserving
highly erodible and other environmentally sensitive land to improve
soil, water quality, air quality, and wildlife resources. I will talk
more about the Conservation Reserve Program in the ``Budget Requests''
section of this statement.
Program Outreach
Over the last year, FSA made great strides in reaching out to its
small farm and minority constituency base with support from Secretary
Veneman. Most importantly, on August 17, 2004, Secretary Veneman
published in the Federal Register Proposed Uniform Guidelines for
conducting FSA County Committee (COC) elections. The guidelines
mandated reforms intended to ensure fair representation of socially
disadvantaged farmers and ranchers on COCs. Detailed actions contained
in the guidelines include improved outreach and communications;
improved election procedures; nominations by the Secretary; and
additional reporting and accountability requirements, which were
implemented for the 2004 COC elections held December 6, 2004. FSA also
launched a massive communications campaign in partnership with many
minority and small farm organizations, with the specific goal to
increase the numbers of minority and women nominees on COC election
ballots. Analysis of the election data is under way, and FSA
anticipates some positive results. In keeping with congressional
intent, USDA will continue to review the results of the elections and
determine what next steps are needed to ensure adequate minority
representation on COCs.
Last year, FSA and the USDA Office of Civil Rights crossed a major
milestone when it implemented the Minority Farm Register and sponsored
several listening sessions to allow minority farmers to interact with
top Agency officials to discuss their problems and ways to improve
customer service. FSA has teamed with the Cooperative State Research,
Education, and Extension Service (CSREES) to train minority-serving
institutions to teach minority producers how to apply for farm loans
and operate their farms more efficiently. The partnership between FSA
and CSREES has been extremely proactive and should prove very
beneficial in helping improve FSA's program delivery.
Budget and Performance Management System
As part of FSA's vigilance towards our mission and meeting the
President's Management Agenda focusing on improved customer service,
FSA has developed the framework for a new performance-based, results-
focused Strategic Plan. Known as the Budget and Performance Management
System (BPMS), this framework aims to improve Agency and individual
performance, accountability, and decision-making; fully comply with
President's Management Agenda objectives; and ensure a customer focus
to all activities. To accomplish all this, FSA formed a BPMS Core Team
representing all major Agency functions. The Core Team looked at
everything FSA does to help farmers, ranchers, and agricultural
partners as well as how FSA manages its employees. Over 450 external
and internal stakeholders participated in the plan's development. The
Strategic Plan focuses on what FSA will do; BPMS focuses on how the
Agency will get it done. The BPMS involves a range of activities to
ensure taxpayer dollars are directed to efficient and effective
programs that get results. The cornerstone of BPMS is the new Strategic
Plan.
BPMS is the vehicle that will help FSA meet its performance goals.
Technology changes associated with BPMS will integrate all aspects of
budget and performance and associated costs for improved decision-
making and accountability to stakeholders and taxpayers. FSA has begun
to examine requirements for fully costing the performance measures it
uses to deliver results.
Organizational Efficiency
FSA is actively engaged in a comprehensive review of its operations
and organization at all levels, including headquarters, State offices,
and our 2,400 service centers. This review is necessary to better
understand how to meet the demands of a dynamic and ever changing
United States and world agricultural marketing system. FSA needs to
better utilize current technology, encourage e-government and web-based
programs, and expand GIS capabilities to improve customer service
across all business lines. Our review is examining ways to make access
to and delivery of our programs more efficient and at less cost, with
the help of technology and a streamlined infrastructure.
Fiduciary Accomplishments
Fiscal year 2004 marks the third consecutive year in which FSA and
CCC earned unqualified (clean) audit opinions for their activities,
which have program levels exceeding $25 billion.
BUDGET REQUESTS
Turning now to the specifics of the 2006 Budget, I would like to
highlight our proposals for the commodity and conservation programs
funded by the Commodity Credit Corporation (CCC); the farm loan
programs of the Agricultural Credit Insurance Fund; our other
appropriated programs; and administrative support.
COMMODITY CREDIT CORPORATION
Domestic farm commodity price and income support programs are
administered by FSA and financed through the CCC, a government
corporation for which FSA provides operating personnel. Commodity
support operations for corn, barley, oats, grain sorghum, wheat and
wheat products, soybeans, minor oilseed crops, upland cotton and extra
long staple cotton, rice, milk and milk products, honey, peanuts, pulse
crops, sugar, wool and mohair are facilitated primarily through loans,
payment programs, and purchase programs.
The 2002 Farm Bill authorizes CCC to transfer funds to various
agencies for authorized programs in fiscal years 2002 through 2007. It
is anticipated that in fiscal year 2005, $2.11 billion will be
transferred to other agencies.
The CCC is also the source of funding for the Conservation Reserve
Program administered by FSA, as well as many of the conservation
programs administered by the Natural Resources Conservation Service. In
addition, CCC funds many of the export programs administered by the
Foreign Agricultural Service.
Program Outlays
The fiscal year 2006 budget estimates largely reflect supply and
demand assumptions for the 2005 crop, based on November 2004 data. CCC
net expenditures for fiscal year 2006 are estimated at $19.8 billion,
down about $4.3 billion from $24.1 billion in fiscal year 2005. If the
President's proposals for farm program savings are enacted, CCC outlays
would decline by an additional $587 million in fiscal year 2006.
This net decrease in projected expenditures is attributable to
decreases for crop, tree and livestock disaster payments, loan
deficiency payments, and the Noninsured Assistance Program, partially
offset by an increase in counter-cyclical payments.
Reimbursement for Realized Losses
CCC is authorized to replenish its borrowing authority, as needed,
through annual appropriations up to the amount of realized losses
recorded in CCC's financial statements at the end of the preceding
fiscal year. For fiscal year 2004 losses, CCC was reimbursed $12.5
billion in fiscal year 2005.
Conservation Reserve Program
The Conservation Reserve Program (CRP), administered by FSA, is
currently USDA's largest conservation/environmental program. It is
designed to cost-effectively assist farm owners and operators in
conserving and improving soil, water, air, and wildlife resources by
converting highly erodible and other environmentally sensitive acreage,
normally devoted to the production of agricultural commodities, to a
long-term resource-conserving cover. CRP participants enroll acreage
for 10 to 15 years in exchange for annual rental payments as well as
cost-share assistance and technical assistance to install approved
conservation practices.
The 2002 Farm Bill increased authorized enrollment under this
program from 36.4 million acres to 39.2 million acres. Under the
general signup that ended September 24, 2004, FSA accepted offers to
bring nearly 1.2 million acres into the CRP. Also under the 2004
continuous and Farmable Wetlands Program (FWP) signup, a combined total
of 275,000 acres was enrolled. We issued incentive payments totaling
approximately $85 million under continuous signup, Conservation Reserve
Enhancement Program (CREP), and FWP under the incentives program that
began in May 2000 to boost participation. As of April 5, 2005, total
CRP enrollment is 34.8 million acres, nearly 90 percent of the 39.2
million acres authorized under the Farm Bill.
However, a challenge lies ahead. In 2007, 16 million acres
currently under CRP contracts are scheduled to expire, followed by
another 6 million acres in 2008, 4 million acres in 2009, and 2 million
acres in 2010. To ensure that the benefits of CRP continue, in August
2004 the President declared the Administration's commitment to full CRP
enrollment and announced that FSA will offer early reenrollments and
extensions of existing contracts. In addition, FSA encouraged public
comment on CRP through a Federal Register notice. Over 5,100 comments
were received, and FSA expects to complete its analysis and announce
reenrollment and contract extension provisions later this year.
President Bush also announced the Northern Bobwhite Quail
Initiative, aimed at creating 250,000 acres of habitat for the northern
bobwhite quail and other upland bird species, and a wetland restoration
initiative to restore up to 250,000 acres of wetlands and playa lakes
located outside the 100-year floodplain.
The CREP is also a major initiative under CRP that seeks to address
recognized environmental issues of States, Tribes, and the Nation. CREP
is a voluntary program implemented through Memoranda of Agreement with
partners, such as States, Federal agencies, and private groups. FSA
currently has 30 CREP agreements with 25 States with over 1.7 million
acres reserved for enrollment. The program is very popular with
environmental and wildlife groups, in addition to States and private
landowners. More than 600,000 acres are currently enrolled in CREP
nationwide. Most recently, in March 2005, FSA launched a second new
CREP project in Nebraska.
The fiscal year 2006 budget assumes general signups in fiscal years
2005 and 2006 to enroll approximately 1.0 million acres and 1.3 million
acres, respectively. In each of fiscal years 2005 and 2006, we
anticipate enrolling 450,000 acres under continuous signup and the
CREP. About 50,000 acres are estimated to be enrolled in the FWP in
fiscal year 2005 and 60,000 acres in fiscal year 2006.
Overall, CRP enrollment is assumed to gradually increase from 34.7
million acres at the end of fiscal year 2004 to 39.2 million acres by
fiscal year 2008, and to remain at 39.2 million acres through fiscal
year 2015, maintaining a reserve sufficient to provide for continuous
signup and CREP.
FARM LOAN PROGRAMS
The loan programs funded through the Agricultural Credit Insurance
Fund provide a variety of loans and loan guarantees to farm families
who would otherwise be unable to obtain the credit they need to
continue their farming operations.
The fiscal year 2006 Budget proposes a total program level of about
$3.8 billion. Of this total, approximately $0.9 billion is requested
for direct loans and nearly $2.9 billion for guaranteed loans offered
in cooperation with private lenders. These levels should be sufficient
to provide adequate funding for the neediest farmers and ranchers
throughout the year.
For direct farm ownership loans we are requesting a loan level of
$200 million. The proposed program level would enable FSA to extend
credit to about 1,700 small and beginning farmers to purchase or
maintain a family farm. In accordance with legislative authorities, FSA
has established annual county-by-county participation targets for
members of socially disadvantaged groups based on demographic data.
Also, 70 percent of direct farm ownership loans are reserved for
beginning farmers, and historically about 35 percent are made at a
reduced interest rate to limited resource borrowers, who may also be
beginning farmers. Recently, however, the reduced-rate provisions have
not been utilized since regular interest rates are lower than the
reduced rates provided by law. For direct farm operating loans we are
requesting a program level of $650 million to provide approximately
14,775 loans to family farmers.
For guaranteed farm ownership loans in fiscal year 2006, we are
requesting a loan level of $1.4 billion. This program level will
provide about 4,800 farmers the opportunity to acquire their own farm
or to preserve an existing one. One critical use of guaranteed farm
ownership loans is to allow real estate equity to be used to
restructure short-term debt into more favorable long-term rates. For
guaranteed farm operating loans we propose an fiscal year 2006 program
level of approximately $1.5 billion to assist over 8,500 producers in
financing their farming operations. This program enables private
lenders to extend credit to farm customers who otherwise would not
qualify for commercial loans and ultimately be forced to seek direct
loans from FSA.
We are particularly proud of all of our loan programs. As a matter
of fact, since fiscal year 2000, our direct and guaranteed loans to
minorities and women have increased every year. In fiscal year 2004,
there was an increase in the percentage of direct loans to each
minority group, and we set a record for guaranteed farm ownership
loans.
In addition, our budget proposes program levels of $2 million for
Indian tribe land acquisition loans and $60 million for boll weevil
eradication loans. For emergency disaster loans, our budget proposes a
program level of $25 million to provide sufficient credit to producers
whose farming operations have been damaged by natural disasters.
OTHER APPROPRIATED PROGRAMS
State Mediation Grants
State Mediation Grants assist States in developing programs to deal
with disputes involving a variety of agricultural issues including
distressed farm loans, wetland determinations, conservation compliance,
pesticides, and others. Operated primarily by State universities or
departments of agriculture, the program provides neutral mediators to
assist producers--primarily small farmers--in resolving disputes before
they culminate in litigation or bankruptcy. States with mediation
programs certified by FSA may request grants of up to 70 percent of the
cost of operating their programs. Legislative authority expires at the
end of fiscal year 2005; the Department plans to propose extending the
program through fiscal year 2010.
For fiscal year 2005, grants have been issued to 34 States. With
the requested $4.5 million for fiscal year 2006, we anticipate that
between 30 and 34 States will receive mediation grants.
Emergency Conservation Program
Since it is impossible to predict natural disasters, it is
difficult to forecast an appropriate funding level for the Emergency
Conservation Program. No funding was provided for the program in 2002
or 2003; however, it continued to operate throughout the 2 fiscal years
using unobligated funds carried forward, together with recoveries of
unused funds previously allocated to the States.
For fiscal year 2004, the Consolidated Appropriations Act provided
$11.9 million for use in southern California only. The Military
Construction and Emergency Hurricane Supplemental Appropriations Act of
2005, Public Law 108-324, provided $150 million for ECP--$100 million
in direct appropriation and $50 million transferred from CCC. These
funds are available until expended and will be used to provide
emergency cost-share assistance to producers who suffered losses due to
natural disasters such as droughts; Hurricanes Charley, Frances, Ivan,
and Jeanne; and tornadoes. As of April 5, $153.8 million has been
allocated to 45 States. The fiscal year 2006 budget proposes no funding
for this program.
Dairy Indemnity Program
The Dairy Indemnity Program (DIP) compensates dairy farmers and
manufacturers who, through no fault of their own, suffer income losses
on milk or milk products removed from commercial markets due to
residues of certain chemicals or other toxic substances. Payees are
required to reimburse the Government if they recover their losses
through other sources, such as litigation. As of April 5, we have paid
fiscal year 2005 DIP claims totaling $35,089 in four States.
The fiscal year 2006 appropriation request of $100,000, together
with unobligated carryover funds expected to be available at the end of
fiscal year 2005, would cover a higher than normal, but not
catastrophic, level of claims. Extended through 2007 by the 2002 Farm
Bill, DIP is a potentially important element in the financial safety
net for dairy producers in the event of a serious contamination
incident.
ADMINISTRATIVE SUPPORT
The costs of administering all FSA activities are funded by a
consolidated Salaries and Expenses account. The account comprises
direct appropriations, transfers from loan programs under credit reform
procedures, user fees, and advances and reimbursements from various
sources.
The fiscal year 2006 Budget requests $1.37 billion from
appropriated sources including credit reform transfers, for a net
increase of about $70 million over the fiscal year 2005 level. The
request reflects increases in pay-related costs to sustain essential
program delivery and increases in information technology investments to
continue and enhance the modernization of FSA program and
administrative systems. These increases are offset by decreases in both
Federal and non-Federal county office staff years and operating
expenses.
The fiscal year 2006 request reflects a ceiling of 5,474 Federal
staff years and 10,284 non-Federal staff years. Temporary non-Federal
county staff years will be reduced to 1,000 from the fiscal year 2005
level of 1,250 due to completion of disaster activities. Permanent non-
Federal county staff years are estimated to remain at the 2005 level.
Federal staff years have a net decrease of 24 staff years. FSA has
taken aggressive actions since fiscal year 2004 to reduce discretionary
spending in order to live within available funding. In fiscal year 2005
these measures were supplemented by a reduction in the hiring ceiling
which will culminate in a reduction of 39 staff years in fiscal year
2006. This reduction is offset by an increase of 15 staff years which
will be devoted to outreach activities aimed at increasing program
participation of underserved customers, with special emphasis on
socially disadvantaged and/or limited resource farmers, women, and
members of minority groups such as African Americans, Asian-Pacific
Americans, Hispanics, and Native Americans.
Before closing I would like to note that support of FSA's
modernization effort is also provided through the Department's Common
Computing Environment account. Funding made available to FSA under this
account will provide needed telecommunications improvements and permit
us to continue implementation of GIS, which is so crucial to rapid and
accurate program delivery.
Mr. Chairman, this concludes my statement. I will be happy to
answer your questions and those of the other Subcommittee Members.
______
Prepared Statement of A. Ellen Terpstra, Administrator, Foreign
Agricultural Service
Mr. Chairman, members of the Subcommittee, I appreciate the
opportunity to review the work of the Foreign Agricultural Service
(FAS) and to present the President's budget request for FAS programs
for fiscal year 2006.
To help position our agency to meet the challenges of the future,
we are going through an intensive self-assessment. Many factors have
driven our review. For example, the outbreaks of bovine spongiform
encephalopathy (BSE) and, to a lesser extent, avian influenza (AI) have
made us keenly aware of the changing nature of the trade issues that we
confront on a daily basis. Since the Uruguay Round Agreement on
Agriculture, trade disruptions have shifted from tariffs and quotas to
a host of more complex issues requiring scientific expertise along with
diplomacy. Issues surrounding biotechnology have underscored the need
for different skills in order to be effective in negotiating and
maintaining market access for our products.
The Administration's strategy of competition for trade
liberalization has also greatly affected our work. Last summer, the
Doha Development Agenda talks got back on track. We now have a
blueprint for completing a final agreement on agriculture that lays out
strong principles for liberalizing trade. Putting details to this
blueprint is not easy. There will be several critical negotiating
sessions in 2005, with a goal to achieve consensus on as many areas as
possible by July. We recognize that we have a lot of ground to cover in
the negotiations, but we are determined to take advantage of this once-
in-a-generation opportunity for fundamental trade reform.
In addition to multilateral negotiations in the World Trade
Organization, we are also negotiating several important regional and
bilateral agreements. Last year alone, agreements were concluded with
Australia, Morocco, Bahrain, five Central American countries and the
Dominican Republic. We continue negotiations with Panama, Thailand,
three Andean countries, the five members of the Southern African
Customs Union, the United Arab Emirates, Oman, and the 33 countries
that will be part of the Free Trade Area of the Americas.
We are also working to incorporate the principles of the
President's Management Agenda into our strategic and operational plans
with the goal of making FAS more results oriented. We are reviewing how
we manage our workforce, what we can do to make our programs more
accessible electronically, and how we can improve our financial
management and performance at all levels of the agency.
Finally, fiscal realities have dictated that we conduct a top-to-
bottom organizational review. The combination of rising expenses for
our overseas offices as a result of the declining value of the dollar,
increased Capital Security Cost Sharing assessments imposed by the
Department of State (DOS), and the need to absorb rising salary costs
has left us with a significant budget shortfall in fiscal year 2005.
To address this shortfall, we requested and received authority from
the Office of Personnel Management for early-outs and buy-outs to
reduce staff levels in headquarters. With this action, we have been
able to reduce headquarters civil service staff levels by 6 percent. We
have also imposed a 50-percent reduction in travel and sharply reduced
our promotional activities conducted by FAS overseas staff and other
international programs.
Thus, a combination of factors has created an opportunity to take a
serious and extensive look at the work of our agency and how we can
best meet the needs of our customers. We have consulted with Congress,
our stakeholders, other government agencies, and our employees to set a
new vision for the agency. We know that FAS needs to change to remain
relevant in a dynamic global environment.
As part of our ongoing assessment, we are charting a course for FAS
for the next 5 years. If we are successful, we envision that in 2010
FAS will be a leader in developing market priorities and strategies for
our most important markets, both from a competitive perspective and
from a market potential perspective.
Given our resource constraints we need to define what the agency
will look like. We know that the agency's most distinct asset continues
to be our overseas presence. Our overseas staff provides invaluable
service through their in-depth knowledge of the country, its
government, the market for our products, and the competition. As
government officials, we have the unique capability to gain access to
foreign officials on behalf of American agriculture.
But by 2010, FAS will be a smaller agency, sharply focused on
market access and market intelligence. Our offices overseas will be
smaller and may be in different locations. Even more than is the case
now, offices will cover more than one country, and we will make better
use of technology to improve our responsiveness and communications.
Market access will be even more technical and scientific in nature than
it is today, and market intelligence will be more targeted and forward
looking.
FAS will continue to be USDA's lead agency for agricultural trade
negotiations. We will focus on non-tariff trade barriers and continue
to monitor other countries' compliance with international agreements.
To build on our market intelligence and development strengths, we will
position our resources strategically to support U.S. trade interests.
Our trade capacity building activities will be targeted not only to
facilitating trade and economic development, but also to promoting
agricultural and food security worldwide.
In keeping with the President's Management Agenda, we are assessing
our activities, both overseas and at headquarters, to determine which
are inherently governmental and provide the maximum value to our
customers. Our country-by-country review has a goal of prioritizing
markets and activities and identifying where we can absorb reductions
with the least impact. We are looking at market potential, market
competition, the ease of doing business, the cost of each office, and
appropriate staff levels. It is essential that we continue to work in
areas where it is most difficult for our private sector to do business.
We expect to announce the results of this review shortly. We are
confident that the end result of our organizational review will be
better, more effective service to U.S. constituents, our agricultural
industry and producers.
Budget Request
Mr. Chairman, as I indicated earlier, FAS continues to experience
significant fiscal pressures resulting from the declining value of the
dollar abroad and rising staff costs.
However, the levels proposed in the President's budget will allow
FAS to maintain current service levels and move toward our 2010 vision
without degradation of service provided to our customers.
Our fiscal year 2006 budget proposes a funding level of $152.4
million for FAS and 982 staff years. This is an increase of $11.2
million above the fiscal year 2005 level and represents the funds
needed to ensure the agency's continued ability to conduct its
activities and provide services to U.S. agriculture.
The budget proposes an increase of $8.8 million for support of FAS
overseas offices. The FAS network of 78 overseas offices covering over
130 countries is vulnerable to the vagaries of macro-economic events
that are beyond the agency's control. The significantly weakened U.S.
dollar and higher International Cooperative Administrative Support
Services (ICASS) payments to DOS have caused base costs to increase
sharply. Since 2002, the dollar has fallen 9 percent against currencies
of our major markets.
Specifically, this increase includes:
--$5.4 million to maintain current services at the 78 FAS offices
around the world, including $2.4 million for wage increases for
locally employed staff; $900,000 for higher rents; and $900,000
for increases in all other in-country expenses including
security, repairs, travel, and supplies. Additionally, an
increase of $1.2 million will be required to meet higher ICASS
payments to DOS.
--$2.7 million for the fiscal year 2006 Capital Security Cost Sharing
Program assessment. In fiscal year 2005, DOS implemented a
program through which all agencies with an overseas presence in
U.S. diplomatic facilities will pay a proportionate share for
accelerated construction of new secure, safe, and functional
diplomatic facilities. These costs will be allocated annually
based on the number of authorized personnel positions. This
plan is designed to generate a total of $17.5 billion to fund
150 new facilities over a 14-year period. The FAS assessment is
estimated to increase annually in roughly $3 million increments
until fiscal year 2009, at which time the annual assessed level
will total an estimated $12 million. This level is assumed to
remain constant at that point for the following 9 years.
--$650,000 to support the FAS presence in the soon-to-be constructed
embassy in Baghdad, Iraq, after an absence of nearly 20 years.
FAS will have the lead on all USDA activities and projects in
support of Iraq and its agricultural development. This will
entail the entire range of market development, market access,
and market intelligence tools available to FAS and its industry
partners.
The budget also includes an increase of $2.4 million to cover
higher personnel compensation costs associated with the anticipated
fiscal year 2006 pay raise. Pay cost increases are non-discretionary
and must be funded. Absorption of these costs in fiscal year 2006 would
primarily come from reductions in agency personnel levels that would
significantly affect FAS's ability to contribute to USDA's strategic
goal of enhancing economic opportunities for agricultural producers.
Export Programs
Mr. Chairman, the fiscal year 2006 budget proposes $6.1 billion for
programs designed to promote U.S. agricultural exports, develop long-
term markets overseas, and foster economic growth in developing
countries.
Export Credit Guarantee Programs
The budget includes a projected overall program level of $4.4
billion for export credit guarantees in fiscal year 2006.
Under these programs, which are administered by FAS in conjunction
with FSA, the Commodity Credit Corporation (CCC) provides payment
guarantees for the commercial financing of U.S. agricultural exports.
As in previous years, the budget estimates reflect actual levels of
sales expected to be registered under the programs and include:
--$3.4 billion for the GSM-102 program;
--$5.0 million for the GSM-103 program;
--$1.0 billion for Supplier Credit guarantees; and
--$20.0 million for Facility Financing guarantees.
Market Development Programs
Funded by CCC, FAS administers a number of programs to promote the
development, maintenance, and expansion of commercial export markets
for U.S. agricultural commodities and products. For fiscal year 2006,
the CCC estimates include a total of $173.0 million for the market
development programs, $15 million below fiscal year 2005 levels and
includes:
--$125.0 million for the Market Access Program;
--$34.5 million for the Foreign Market Development (Cooperator)
Program;
--$10.0 million for the Emerging Markets Program;
--$2.5 million for the Quality Samples Program; and
--$2.0 million for the Technical Assistance for Specialty Crops
Program.
International Food Assistance
The fiscal year 2006 budget continues the worldwide leadership of
the United States in providing international food aid. In this regard,
the fiscal year 2006 President's budget includes $1.8 billion for U.S.
foreign food aid programs, including $300 million requested in the
Foreign Operations Appropriations Bill. Programs funded through the
Department of Agriculture include:
--$1.1 billion for Public Law 480 which is expected to support
approximately 2.2 million metric tons of commodity assistance.
For Title I, the budget supports a program level of $145.0
million, which includes $80 million in new appropriations. The
balance will be provided through unobligated carryover balances
and projected Maritime Administration reimbursements. The total
program level will support approximately 540,000 metric tons of
commodity assistance based on current price projections. For
Title II donations, the budget provides for a program level of
$964 million, which is expected to support 1.7 million metric
tons of commodity donations. This includes an appropriation
request of $885 million and $79 million in projected Maritime
Administration reimbursements. While the fiscal year 2006
appropriation request has been reduced by $300 million from
last year's request, an equivalent funding level has been
included in the U.S. Agency for International Development's
(USAID) disaster assistance account to support emergency food
assistance activities. This change will allow food aid
commodities to be purchased locally which will allow for a more
flexible and timelier response to emergencies. Further, the
resultant savings in ocean freight and distribution costs is
expected to increase the total amount of commodities that can
be procured.
--$137.0 million for CCC-funded Food for Progress. Funding at the
proposed level is expected to support 300,000 metric tons of
commodity assistance.
--$151.0 million for donations of CCC-owned nonfat dry milk under
Section 416(b) authority. Under this authority, surplus
commodities that are acquired by CCC in the normal course of
its domestic support operations are available for donation
through agreements with foreign governments, private voluntary
organizations and cooperatives, and the World Food program. For
fiscal year 2006, current CCC baseline estimates project a
limited supply of surplus nonfat dry milk that could be made
available for programming, and the budget assumes that 75,000
metric tons will be programmed.
--$106.0 million for the McGovern-Dole International Food for
Education and Child Nutrition Program. This represents an
increase of $15 million over the fiscal year 2005 current
estimate and includes $100 million in new appropriations and an
estimated $6 million in projected reimbursements from the
Maritime Administration. Funding at this program level will
assist an estimated 2.6 million women and children.
Export Subsidy Programs
FAS administers two export subsidy programs through which payments
are made to exporters of U.S. agricultural commodities to enable them
to be price competitive in overseas markets where competitor countries
are subsidizing sales. The budget includes:
--$28.0 million for the Export Enhancement Program (EEP). World
supply and demand conditions have limited EEP programming in
recent years, and as such, the fiscal year 2006 budget assumes
a continuation of EEP at the fiscal year 2005 level. The 2002
Farm Bill does include the maximum annual EEP program level of
$478.0 million allowable under Uruguay Round commitments, which
could be utilized should market conditions warrant.
--$52.0 million for the Dairy Export Incentive Program (DEIP), $46.0
million above the fiscal year 2005 estimate of $6.0 million.
This estimate reflects the level of subsidy currently required
to facilitate export sales consistent with projected United
States and world market conditions and can change during the
programming year as market conditions warrant.
Trade Adjustment Assistance for Farmers
Authorized by the Trade Act of 2002, the Trade Adjustment
Assistance for Farmers program authorizes USDA to make payments up to
$90.0 million annually to eligible producer groups when the current
year's price of an eligible agricultural commodity is less than 80
percent of the national average price for the 5 marketing years
preceding the most recent marketing year, and the Secretary determines
that imports have contributed importantly to the decline in price.
This concludes my statement, Mr. Chairman. I will be glad to answer
any questions.
______
Prepared Statement of Ross J. Davidson, Jr., Administrator, Risk
Management Agency
Mr. Chairman and members of the Subcommittee, I am pleased to
present the fiscal year 2006 budget for the Risk Management Agency
(RMA). The Federal Crop Insurance Program plays an important role in
assisting farmers to manage financial risks associated with yield and
revenue shortfalls due to bad weather or other natural disasters. RMA
continues to evaluate and provide new products and to promote the
adoption of crop insurance as a risk management tool so that the
Government can further reduce the need for ad-hoc disaster payments to
the agriculture community. In 2006, current projections are that the
program is expected to provide producers with more than $41 billion in
protection on approximately 220 million acres through about 1.2 million
policies.
The growth and effectiveness of the Crop Insurance Program is
dependent on a reliable delivery system, insurance products that meet
the needs of producers, investment in information technology to ensure
the delivery system is timely, accurate and dependable, and adequate
funding to support compliance and program integrity, product
evaluation, maintenance and administration, and new product
development.
To meet Crop Insurance Program requirements in fiscal year 2006,
RMA has requested a budget that will provide the necessary funding to
continue the growth of the program and ensure its effectiveness to meet
the agricultural community crop insurance requirements and assure
fiscal responsibility in the application of taxpayer's dollars. RMA's
total fiscal year 2006 budget request is $3.3 billion. The funding
level proposed for the Federal Crop Insurance Corporation (FCIC) Fund
is $3,162,979,000 and for the Administrative and Operating Expenses,
the request is $87,806,000.
FCIC Fund
The fiscal year 2006 budget proposes that ``such sums as may be
necessary'' be appropriated to the FCIC Fund. This ensures the program
is fully funded to meet the contractual obligation to pay claims, to
reimburse the private sector for expenses incurred in delivering
insurance to farmers and ranchers, to provide premium subsidies to make
crop insurance affordable, and to encourage the purchase of higher
levels of protection. Of the total amount requested for fiscal year
2006, 67 percent is slated for premium subsidies. The current estimate
of funding requirements is based on USDA's latest projections of
planted acreage and expected market prices. The budget request includes
$2.2 billion for Premium Subsidy, $781.4 million for Delivery Expenses,
$137.5 million for estimated excess losses based on an overall
projected loss ratio of 1.075, and $78.1 million for Agricultural Risk
Protection Act of 2000 (ARPA) activities which includes $3.6 million to
continue funding of Program Integrity initiatives under a General
Provision in the 2006 Budget. ARPA provided RMA with mandatory funding
to implement data mining and data warehousing to improve compliance and
integrity in the crop insurance program. We estimate, in the first year
of operation, data mining helped prevent nearly $94 million in improper
payments and helped recover approximately $35 million in improper
indemnities. The authority to use mandatory funds for data mining
expires in fiscal year 2005. Therefore, the 2006 Budget includes
language to provide $3.6 million to continue data mining and data
warehousing activities.
To strengthen crop insurance, promote program expansion, and limit
ad-hoc disaster payments, the 2006 Budget includes a proposal for
legislation to take effect in 2007 that requires those that receive
direct farm payments to purchase crop insurance. The proposal requires
farmers growing program crops who receive farm program benefits to
purchase insurance protection at a 50 percent, or higher additional
coverage level, of their expected market value, or lose their farm
program benefits. This change ensures a farmer's loss in a disaster
will not be greater than 50 percent. This proposal will further reduce
premium subsidies to crop insurance policyholders, as well as subsidies
in total to the participating insurance companies. These changes will
encourage greater personal responsibility of those who buy crop
insurance to pay for their risk management tools and will encourage the
companies to deliver crop insurance more efficiently. This Budget
proposal is estimated to realize $140 million in savings to the crop
insurance program beginning in 2007. The increased self-reliance
encouraged by this proposal and the linkage of the availability of crop
insurance to farm program payments are intended to enhance the
operating efficiency of the program and reduce the need for ad-hoc
disaster payments.
This proposal is expected to be submitted along with the other
mandatory proposals for farm programs that support the President's
Budget.
Administrative and Operating Expenses (A&O)
RMA's fiscal year 2006 request of $87.8 million for Administrative
and Operating Expenses represents an increase of about $16.3 million
from fiscal year 2005. This budget supports an increase for information
technology (IT) initiatives of $12.2 million.
RMA's corporate IT systems need updating and other enhancements to
take advantage of the latest technology and to ensure the IT component
of the delivery system is reliable, accurate, and accessible. Billions
of dollars in indemnity payments, premium subsidy, producer-paid
premiums, and administrative reimbursement payments pass through this
antiquated IT system each year. Therefore, I am duty-bound to continue
to request increases in IT funding because the current IT
infrastructure is long past its life cycle and is increasingly costly
to run, cumbersome to maintain; and makes it difficult to ensure the
security mandated by Federal law. The Agency's IT infrastructure
supports the crop insurance program's business operations at the
national and local levels, provides risk management products to
producers nationwide and is the basis for validating, receiving and
remitting reinsurance subsidy and other payments to private companies
reinsured by the FCIC. RMA is using system and database designs
originally developed in 1994. There have been few hardware and software
upgrades since then, but the program has grown and evolved dramatically
in the timeframe, and business process analysis and re-engineering of
the entire business delivery system are needed to support current and
future program growth. As stated in previous testimonies, without
adequate funding of the IT requirements, the Agency cannot safely
sustain additional IT changes required by new product development or
changes in existing products. Future program expansion will increase
the risk of system failure and possible inability to handle day-to-day
processing of applications and indemnity payments.
Also included in the 2006 Budget is $1.0 million to expand the
monitoring and evaluation of reinsured companies. RMA is, again,
requesting funds to establish a systematic process of monitoring,
evaluating, and auditing, on an annual basis, the performance of the
product delivery system. These funds will be used to support insurance
company expense audits, performance management audits and reinsurance
portfolio evaluations to ensure effective internal and management
controls are in place and operating for each reinsured company's
business operations.
The 2006 Budget requests $1.8 million to support an increase of 17
staff years. This will raise RMA's employment ceiling from 568 to 585.
A requested increase of 15 staff years is included to support the
increased workload for the Compliance function. The additional staff
years will provide the Compliance function the necessary support to
address outstanding OIG and GAO recommendations to improve oversight
and internal controls over insurance providers. In response to several
OIG audit reports, RMA needs to establish a systematic process of
auditing insurance providers to detect and correct vulnerabilities to
proactively prevent improper payment of indemnities. RMA's studies
suggest that additional resources in this area would provide a minimum
of $4 dollars in reduced fraud cost for every dollar spent. The
additional staffing will provide the necessary oversight to ensure
taxpayers' funds are expended as intended.
In addition, 2 staff years are requested for the Office of
Insurance Services to support good farming practice determinations and
to support the process of evaluating claims resulting from questionable
farming practices. ARPA requires RMA to establish a process to
reconsider determinations of good farming practices. The Regional
Offices of RMA's Insurance Services Division are in a unique position
by virtue of their background in production agriculture, agronomy and
related fields, and knowledge of local crops and growing conditions to
effectively carry out the important function of managing the process by
which good farming practices determinations are made. RMA data indicate
assessments are infrequently made for uninsured causes of loss against
a producer for failure to follow good farming practices. With approved
insurance providers operating in an environment of risk sharing, there
is a tremendous need for support and incentives for increased quality
of loss adjustment, particularly in the good farming practices area to
ensure that payments for losses are consistent with the requirements of
Federal Crop Insurance Act. Again, it is expected the additional
staffing in this area will be more than paid for by ensuring that loss
payments are made in accordance with the requirement that good farming
practices be used.
Lastly, an increase of $1.3 million is requested for pay costs.
These funds are necessary to maintain required staffing to carry out
RMA's mission and mandated requirements.
PROGRAM MANAGEMENT
Now, I would like to provide an update on some of our key
initiatives and products:
--FCIC Board Activities
--Standard Reinsurance Agreement
--Pilot Programs
--Product Development and Non-Insurance Risk Management Tools
--Education and Outreach Program
--Agricultural Management Assistance
--Comprehensive Information Management System
--Program Integrity
--Other Initiatives
Under the direction of the FCIC Board of Directors (Board), RMA
continues to promote an agenda to bring new and innovative insurance
products to the agricultural community, to validate the utility of
current insurance products, to ensure outreach to small and limited
resource farmers, to promote equity in risk sharing, and to guard
against waste, fraud and abuse within the program.
Through the private sector delivery system in crop year 2004, RMA
provided approximately $46.7 billion of protection to farmers, and
expects indemnity payments for crop year losses of approximately $3.1
billion. The participation rate for major program crops was
approximately 83 percent. RMA continues to improve and update the terms
and conditions of all crop insurance policies to better clarify and
define insurance protection and the duties and responsibilities of the
policyholder and insurance providers. The Board actions to accomplish
program expansion have been somewhat restricted by budget constraints
affecting available IT resources and additional staffing required to
meet new administrative and program requirements brought on by ARPA.
Given this constraint, within the funding appropriated for fiscal year
2004, the Board considered 44 action items during nine (9) meetings.
There were six (6) new program submissions and 19 program modifications
to existing insurance products. For example, the Board authorized the
expansion of the Adjusted Gross Revenue--Lite (AGR-Lite) plan of
insurance to all counties in Alaska, Idaho, Oregon, Washington State
and North Carolina beginning with the 2005 crop year. Also, the Board
approved the implementation of the Silage Sorghum Pilot and the Sugar
Beet Stage Removal Option Pilot.
Standard Reinsurance Agreement (SRA)
The new SRA has been put in place, effective for the 2005 crop
year. Key changes included a lowering of the A&O expense reimbursement,
which will be implemented over the 2005 and 2006 reinsurance years. In
addition, RMA has tightened the monitoring of SRA holders with respect
to financial solvency and is strengthening ties with state regulators
and the National Association of Insurance Commissioners (NAIC).
It should also be noted that, for reinsurance year 2005, RMA
approved three new SRA holders, bringing the current number of
reinsured companies to 16. Thus, 2005 has seen an increase in the
insurance writing capacity of the Federal crop insurance program.
Pilot Programs
For crop year 2005, RMA has 36 pilot programs being offered. A list
of those pilots programs is attached to my testimony (Exhibit 1). As
these programs gain experience, RMA conducts evaluations to determine
whether they may be converted to permanent programs and offered in
counties where the crop is routinely grown. During 2004, RMA completed
evaluations on seven (7) pilot programs including: cabbage, crambe,
cultivated wild rice, mint, mustard, Group Risk Plan (GRP), rangeland
and sweet potatoes. After consideration by the FCIC Board, cabbage,
cultivated wild rice, mint and mustard pilots were approved for
conversion to permanent programs. The Board directed RMA to revise the
GRP, rangeland and sweet potato programs, which has been done, and both
were approved as new pilot programs for the 2005 crop year. In
addition, RMA currently is contracting for an evaluation of the
Adjusted Gross Revenue pilot program.
Product Development and Non-Insurance Risk Management Tools
During fiscal year 2004, RMA awarded over $12 million in contracts
to further program goals of expanding the number of crop insurance
tools available to growers in the United States. Many of these
contracts are directed at specialty crops which supports one of RMA's
top priorities to develop effective risk management products for
pasture, rangeland, and forage. In January 2004, RMA released a
contract for research and development for pasture, rangeland, and
forge, with the aim of serving the vital needs of livestock producers.
RMA awarded four contracts to develop new approaches in various areas
of the country to address this potential market.
The contracts encourage use of new and innovative technology,
including a satellite based vegetative index; a satellite-based remote
sensing imagery that will describe the seasonal growth dynamics of
vegetation; and the use of a seasonal growth constrained rainfall index
based on a combination of a weighted warm-season/cool-season indexing
periods and the National Oceanic and Atmospheric Administration
rainfall data system. These programs are targeted for Board
consideration in 2005 and 2006, and potential availability for the 2006
and 2007 crop years.
Also, RMA has several active contracts underway which are focused
on providing new crop insurance programs for some of the most
significant non-insured specialty crops. Some of these include a new
program for Florida Fruit Trees; a Christmas tree program feasibility
study; development for fresh vegetables including asparagus, broccoli,
carrots, cauliflower, celery, garlic, artichoke, lettuce-head, lettuce-
leaf, lettuce-romaine, and spinach; Hawaii Tropical Fruits and Trees
development is currently under consideration by the FCIC Board;
feasibility of a revenue maple syrup program; a study by USDA's
Economic Research Service evaluating the unique risks of the organic
industry; research to determine the potential for development of a risk
management tool for producers of crops subject to quarantine
restrictions by a state or Federal agency; and research into the
feasibility of developing a crop insurance program for Small Value
Crops with an annual value of less than $50 million.
These are just a few of the product development initiatives
underway to expand and improve the risk management tools for American
agricultural producers.
Education and Outreach Program
For our educational efforts in 2004, a total of $4.5 million in
cooperative agreements were established with state departments of
agriculture, universities and non-profit organizations to benefit
states that have been historically underserved in the Crop Insurance
Program. Crop insurance education will be delivered to producers in
Connecticut, Delaware, Maine, Pennsylvania, Rhode Island, Maryland,
Massachusetts, Nevada, New Hampshire, New Jersey, New York, Utah,
Vermont, West Virginia, and Wyoming. These cooperative agreements will
expand available risk management information; promote risk management
education opportunities, inform agribusiness leaders; increase emphasis
on risk management; and deliver training on risk management to
producers with emphasis on reaching small farms.
Additional education efforts were dedicated to reaching producers
of specialty crops. A total of 41 partnership agreements were
established at a cost of $5.3 million in 2004. These agreements will
provide outreach to specialty crop producers to broaden their risk
management education.
Also, outreach efforts were directed to providing risk management
technical assistance to women, small and limited resource farmers, and
ranchers. A total of 60 projects were funded in 2004 at a cost of $5.2
million.
Agricultural Management Assistance
In 2004, RMA provided $4.2 million in financial assistance to
producers purchasing spring buy-up crop insurance policies in 15
targeted States. The primary goal of the program was to encourage
producers to purchase higher levels of coverage, and to provide an
incentive for new producers to insure. In 2004, RMA paid up to 15
percent of producers' out-of-pocket premium costs to encourage
increased participation.
Overall, in the targeted States RMA has seen an increase in
policies earning premium of about 7 percent. In addition, RMA estimates
that the average coverage level elected by most targeted States is 70
percent, in contrast to 65 percent, for those states without a
financial assistance program.
Comprehensive Information Management System
RMA is actively working on a project to implement Section 10706 of
the 2002 Farm Bill to assist with the development of a Comprehensive
Information Management System (CIMS) which will simplify and improve
the storage and access to data on programs administrated by RMA and the
Farm Service Agency (FSA). This project will provide a management
information system that allows RMA, FSA and other USDA entities and
insurance providers to process, share and report on approved common
information.
The CIMS will be designed to: improve access by agricultural
producers to RMA and FSA programs; improve and protect the integrity of
the information collected; meet the needs of the agencies that require
the data in the administration of their programs; improve the
timeliness of the collection of the information; contribute to the
elimination of duplication of information collection; lower the overall
cost to the Department of Agriculture for information collection; and
achieve such other goals as the Secretary considers appropriate for the
Agriculture community.
A contract has been issued for the system development;
identification of business processes and data elements of RMA and FSA
is in the final stage. The next phase involve the design and
implementation the information system for storing, maintaining,
accessing, and retrieving approved information by RMA, FSA, and USDA.
The design will leverage and comply with USDA's enterprise architecture
and common infrastructure.
Program Integrity
Risk Compliance managers have been concentrating on the mission-
critical tasks of evaluating and improving new processes to prevent and
deter waste, fraud, and abuse in the crop insurance program.
Significant effort is dedicated to building and adapting, reporting and
tracking feedback systems to complement and integrate the oversight
mandates established by ARPA. During 2004, Risk Compliance initiated
operation reviews of insurance providers to capture a program error
rate and to assess reinsured company activities under the Standard
Reinsurance Agreement. The Office of Management and Budget and the
USDA, Office of Chief Financial Officer are in agreement that a
quantifiable program error rate is a key measure in assessing program
compliance/integrity.
Additional efforts have been dedicated to integrating data mining
projects; exploring avenues to expedite the increase in sanction
requests; and continuing to improve the Compliance case management and
tracking system. These areas of responsibility have created a challenge
for Compliance to accomplish current activities along with new
requirements mandated by ARPA without the benefit of additional
resources. Therefore, the fiscal year 2006 Budget includes 15
additional staff years for Risk Compliance to strengthen the front-end
oversight of approved insurance providers and to address outstanding
Office of Inspector General recommendations to improve oversight and
internal controls over insurance providers. Also, included in this
budget is a request for $1 million to establish a systematic process of
auditing insurance providers to detect and correct program
vulnerabilities to preclude the payment of improper indemnities.
In addition, given the success of the data mining and data
warehousing activities to date, a provision is included in the 2006
Budget for $3.6 million to continue funding of data mining and
warehousing activities. Under current ARPA legislation, funding
provided to develop the data mining and warehousing systems expires in
2005. The 2006 Budget includes a General Provision to authorize funding
under the FCIC Fund to support annual maintenance costs and upgrades in
fiscal year 2006. As previously stated, approximately $94 million in
improper payments were determined and $35 million in improper
indemnities were received with the assistance of data mining and data
warehousing capabilities.
Other Initiatives
Some of the other initiatives RMA began or accomplished in 2004
are: completion of the Basic Provisions; development of the Written
Agreement Handbook; implementation of changes to Livestock Risk
Protection for feeder cattle, fed cattle, and swine; and development of
a handbook for Good Farming Practices.
CONCLUSION
RMA continues to make crop insurance protection useful to
producers, research way to address multi-year losses, expand risk
management education opportunities, provide outreach to limited
resource farmers, stimulate development of insurance products and
improve program integrity. Crop Insurance is a primary system of
support to producers when natural disasters strike. This was made very
evident when Florida experienced four hurricanes. In response to this
situation, FCIC-approved insurance providers mobilized immediately to
ensure timely payments of claims.
I urge you to approve this budget as submitted to allow RMA to
continue to improve a Crop Insurance Program that is actuarially sound,
meets producers' risk management needs at a cost which is fair to
taxpayers, affordable to farmers and sufficient for delivery of the
program through the private sector as established by Congress.
Mr. Chairman, this concludes my statement. I would be happy to
respond to any questions.
EXHIBIT 1.--FCIC: CROP YEAR 2005 PILOT CROPS
----------------------------------------------------------------------------------------------------------------
CROPS PLAN
--------------------------------------------------------------------------------------- Comment
Name Code Name Code
----------------------------------------------------------------------------------------------------------------
Alfalfa Seed 0107 APH 90 Also identified as:
Forage seed
All Other Citrus Trees 0211 TDO 40 Florida
Avocado 0019 ARC 46 California
Avocado 0019 APH 90 Florida
Avocado Trees 0212 TDO 40 Florida
Barley 0091 IP 42
Cabbage 0072 APH 90
Carambola Trees 0213 TDO 40 Florida
Cherry 0057 FD 51
Chili Pepper 0045 FD 51
Clams 0116 AQDOL 43
Corn 0041 IP 42
Corn 0041 IIP 45
Cotton 0021 IP 42
Cultivated Wild Rice 0055 APH 90
Fresh Market Beans 0105 DO 50
Grain Sorghum 0051 IP 42
Grapefruit Trees 0208 TDO 40 Florida
GRP Rangeland 0148 GRP 12 New crop code in 2005
Lemon Trees 0209 TDO 40 Florida
Lime Trees 0210 TDO 40 Florida
Mango Trees 0214 TDO 40 Florida
Mint 0074 APH 90
Multiple Crops .............. AGR 63 But not AGR-Lite
Mustard 0069 APH 90
Navel Oranges 0215 FD 51 California
Orange Trees 0207 TDO 40 Florida
Processing Cucumber 0106 FD 51
Raspberry and Blackberry 0108 FD 51 Several other berries
are `types' in this
policy
Silage Sorghum 0059 IAPH 96
Soybean 0081 IP 42
Soybean 0081 IIP 45
Strawberries 0110 FD 51
Sweet Potatoes 0185 APH 90 New crop code in 2005
Wheat 0011 IP 42
Winter Squash 0065 DO 50
----------------------------------------------------------------------------------------------------------------
Notes:
1. RMA will revise this list to reflect new or discontinued pilot programs.
2. Crop policies originally approved via the 508(h) mechanism are not considered pilots. Thus, CRC, RA, and
GRIP are not considered pilots.
AGRICULTURAL ECONOMY
Senator Bennett. Sounds pretty good, Dr. Collins. Does that
mean that the Federal Government can spend less money?
Dr. Collins. Unfortunately, it does not, Mr. Chairman. Part
of the reason it sounds pretty good is a very large increase in
Government payments is built into this assessment of the farm
economy.
Last calendar year, we spent about $14 billion in direct
payments to farmers. This calendar year, we expect about $24
billion. So Government spending is up. That is helping the
prosperity.
Senator Bennett. Ten billion dollars?
Dr. Collins. About $10 billion, yes, sir. Likewise, we see
that in our estimates of the Commodity Credit Corporation
budget, which you have. Last year, the CCC budget was about
$10.5 billion. This fiscal year, the CCC budget will be about
$24 billion. So that is up roughly $14 billion.
And that simply reflects the fact that our farm programs
generally are price sensitive. Counter cyclical payments,
marketing assistance loans depend on price levels. Price levels
are down from last year's fairly high levels, and much of the
increase is in marketing assistance loan spending.
I might add one final point to that----
Senator Bennett. I won't take the time to get into that.
Dr. Collins. The numbers I have just given you for the CCC
are in the President's budget. I might say that since the
President's budget was developed, price prospects do look
better for American agriculture. And I think we are running on
a track to spend less on marketing assistance loans and counter
cyclical payments than we had projected several months ago.
CAFTA
Senator Bennett. Okay. Dr. Penn, CAFTA has stirred up a lot
of passion. Do you want to make any comments about CAFTA and
its benefits to U.S. agriculture? How would you address
specifically the concerns raised by the sugar producers?
Dr. Penn. Thank you, Mr. Chairman, Senator Kohl. It is a
pleasure to be with you again this year.
I appreciate the opportunity to say a couple of words about
CAFTA because it is a trade agreement is very important in and
of itself, and it is also very important for the long-term
prosperity of U.S. agriculture. Should we fail to approve this
agreement, it will cast a long shadow over our opportunities to
expand market access through other trade agreements in the
future.
This is one of those rare trade agreements where virtually
every sector of agriculture stands to benefit. In essence, this
agreement is leveling the playing field. As has been pointed
out over and over, our markets are already open to the Central
American countries and the Dominican Republic. Ninety-nine
percent of all of their food and agricultural products already
enter our market duty free.
So this agreement says that we are going to greatly reduce
and eventually eliminate the tariffs on our products as they
move into those markets. And, the benefits are widespread--
across the grains, the oil seeds, the livestock sectors,
virtually every segment of agriculture stands to benefit.
Now, concern has been expressed by our friends in the sugar
industry, and they have made allegations that including sugar
in this agreement would threaten the operation of the domestic
sugar program. And, we just simply disagree with that. We think
that is not the case.
We are, in this agreement, allowing a very small amount of
additional sugar to enter the United States, 110,000 tons in
the first year. That is about 1 percent of the total United
States consumption of sugar. We consume something on the order
of 10 million tons. That would let in 110,000 tons. And, that
in no way jeopardizes the operation of the premium market that
we have for our own growers in the United States.
The world price of sugar today is well under 10 cents a
pound. The market in the United States is anywhere from 18 to
22 cents a pound. And admitting this additional sugar would not
cause any decrease in the price, nor would it otherwise
jeopardize the operation of the program.
So we think the concerns by the sugar industry are
overblown, that this is a good agreement for agriculture. It is
a good agreement for our country because it does provide
opportunities for economic growth and development in some
fledgling democracies right here in our hemisphere. We think
that that is very important for our national security.
So we believe it is a good agreement overall, and it is one
that I think you will see that most of the agriculture sectors
support very broadly. Some 60 groups are actively supporting
the passage of this agreement.
USDA PRESENCE IN IRAQ
Senator Bennett. Okay. It is a very small item in the
overall budget, but you have got $650,000 to establish a
presence in Iraq. It has been 20 years since the USDA was in
Iraq. What will the role be, just out of curiosity? I think
that is an item that will attract some attention.
Dr. Penn. As you know, the U.S. Government is establishing
a new embassy in Baghdad. And given the current situation
there, this will be the largest embassy that the United States
has in the world, given the nature of the security situation
and the economic situation.
Senator Bennett. We keep getting reminded of that when we
look at the number.
Dr. Penn. Iraq was once a very attractive market for U.S.
agriculture. In the late 1980s, before the earlier war in the
Gulf region, we were exporting something approaching a billion
dollars worth of food and agricultural products to Iraq. This
included grains, oil seeds, poultry products, vegetable oils,
dry beans.
We are slowly regaining some of that market. We have
exported something on the order of 350,000 tons of wheat since
hostilities ended the second time. And just this week, we
announced that we have had reported to us the sale of 65,000
tons of rice. So we are very slowly making inroads into that
market again, and we hope that those sales will continue.
The money that you note specifically is to establish a
presence for the Foreign Agricultural Service in this new
embassy in Baghdad. Under the new rules by the State
Department, all agencies that have a presence in the embassy
have to pay part of the capital cost----
Senator Bennett. I see.
Dr. Penn [continuing]. Part of the operating cost, and this
would support two or three Americans and the foreign nationals
that round out the complement.
CONSERVATION ASSISTANCE
Senator Bennett. I see.
Secretary Rey, first, I want to thank you on behalf of the
people of Utah for the work that you have done with respect to
the flood recovery in Washington County. We are facing another
round of that. The normal flow-off is about 66,000 acre feet,
and there are 240,000 acre feet in storage that could come down
in the next 2 weeks. So----
Mr. Rey. Almost makes you wish for fire season.
Senator Bennett. Yes. Well, unfortunately, we had a fire,
which denuded the watershed just before we had all of the rain.
So we are grateful. And we thank you also for your efforts on
the threatened and endangered species issues that we have to
deal with out in the West. And you have been responsive, and I
want the record to show that.
Now the President's budget requests a $37 million increase
to help farmers and ranchers address regulatory burdens,
primarily coming from EPA. And you and the NRCS has been in the
position of being the main agency that confronts this. Should
EPA bear some of these costs? Should we try to find a way to
shift budget a little on this one?
Mr. Rey. I think our joint recommendation--that is, both
NRCS's and EPA's--would be that the NRCS staff has the
technical capability and the better grassroots delivery system
to assist farmers and ranchers to do this work. And whoever
ends up bearing the cost of the work, the most effective way to
deliver the services or the most cost-effective way to deliver
the services is, I think, through NRCS's delivery system.
INVASIVE SPECIES
Senator Bennett. Okay. Tell me about invasive species.
Mr. Rey. The Administration's budget request includes a $10
million increase to use specifically for invasive species work.
The Western States are a focus of that work, although it is not
going to be exclusively in the West. And there are a couple of
key species, like star thistle and salt cedar, where the focus
that has been developed in coordination with all of the other
agencies in the Interagency Invasive Species Working Group have
agreed to.
Senator Bennett. Are we winning that fight?
Mr. Rey. I think on some species we are, and others we are
not. I think the investment that we are proposing to you for
2006 will help materially on the species that we have selected
for priority. But there are other concerns out there as well.
RESEARCH COORDINATION
Senator Bennett. Okay. Dr. Jen--ARS, one of the most
popular and attractive programs that USDA oversees. So you get
to be the one everybody likes. They have got 22 national
programs, some 1,200 research projects in this country and
overseas. The research is related not only to USDA programs,
although there are some that is exclusively there. But some to
activities in the other parts of the Federal Government, such
as food safety and nutrition and climate change and
environmental programs.
Tell us about what you are doing to make sure there is not
duplication between what you do and other university research
activities and research in the other Federal agencies.
Dr. Jen. Mr. Chairman and Senator Kohl, thank you for the
opportunity to be here.
In terms of trying not to have duplication of research
effort, we operate under the National Science and Technology
Council, which has a committee of science, committee of
technology, and interagency work groups that coordinate the
various type of Federal research among the department. So we
participate in most of those activities and discussions that
promote interagency cooperation.
More specifically, we cooperate with the National Science
Foundation, NIH, and NASA, for example, to address various
issues of common interest.
Within USDA, we have program areas in CSREES and ARS that
are planning together, so that the ARS research activity and
the university grants from CSREES are complimentary.
RURAL HOUSING PREPAYMENTS
Senator Bennett. Thank you.
Secretary Gonzalez, I think you will probably hear from
Senator Kohl about some of the rental assistance and activities
in the rural areas. He has a great interest in that. So I will
pass over it fairly quickly.
But I want to focus on one aspect. The recent report to the
administration on the condition of Section 515 housing
indicates that most of the units are not in danger of
prepayment, but they do need repair and renovation. And the
total, according to the report, is $2.6 billion.
Do you anticipate that any of the funds sought for vouchers
will be used for future renovations of these projects? If not,
why not?
Mr. Gonzalez. Thank you, Chairman Bennett, and thank you,
Senator Kohl.
There are two new developments in our multi-family program
from the time we met last year. First the courts have made a
determination that the owners have a right to prepay.
Fortunately, Rural Development took the initiative by
initiating the comprehensive property assessment, which we have
shared with the committee on both the House and the Senate
side.
Essentially what the study did was look inside the multi-
family portfolio and specifically look at a sample of the
17,000 properties that are out there, and determined that about
10 percent of those properties could potentially prepay.
In addition to that, we looked at market conditions and
property conditions. We did look at capitalization requirements
in the future. We looked at the propensity to prepay. But
specifically what we are focused in on right now in the 2006
budget is the $214 million, which is to establish a new tenant
protection voucher for the tenants.
If you take that 1,700 properties that could prepay, you
are talking about 50,000 families that essentially could be
displaced from the properties as a result of market increases
in rent. And so, the voucher program is designed specifically
to protect the tenant either in the existing property if the
owner prepays or at another property that is in our portfolio.
So the $214 million is designed specifically to meet what
we estimate are one third of the 50,000 units, in 2006, that we
expect to prepay. Those families potentially could be subject
to market rent increases and, as a result, could be out on the
street without housing.
Senator Bennett. So you are not anticipating the money
going for renovations?
Mr. Gonzalez. No, sir.
Senator Bennett. I see. Senator Kohl.
RENTAL ASSISTANCE PROGRAM
Senator Kohl. Thank you, Senator Bennett.
Mr. Gonzalez, I would like to talk a little bit more about
the subject raised by Senator Bennett. I believe the landscape
seems to be shifting here, and I am very troubled by what I
believe I see happening.
First, as you know, developers have gone to court and won
the right to prepay loans and convert low-income rental housing
to market prices, which will effectively force rural poor, the
people who are barely getting by as it is, out into a market
where their housing costs will go up. And now USDA comes
forward with a voucher program.
If we approve your voucher plan--and I don't think we
will--USDA will, in effect, be giving a green light to those
developers who want to hand tenants a voucher, tell them to
find another place to live, and kick them out of their present
housing. I understand that well enough. I don't intend to let
that happen.
In 2003, I requested a GAO report about your rental
assistance program, which found lots of problems, and we have
been working together to fix that. And now you are going to
turn into an uncharted area, where the rural housing service
has no experience. I have to tell you I don't think this
committee has enough confidence at this time to start off in a
new direction, especially one about which I am concerned as
much as I am about this program.
Furthermore, from what I have learned from you so far--and
I have tried to get information about this without a great deal
of success--it doesn't seem that you have much idea how this
voucher program is going to work. It is not authorized. There
is no detailed plan, and it looks like a $215 million carrot to
shove low-income people into the street and let their homes go
to more affluent families that can afford to pay market prices.
What is more, it appears that this proposal would let these
vouchers be used anywhere. A person in rural Wisconsin, for
example, could be given one of these vouchers, move to New York
City, which isn't exactly a rural area, and use this voucher,
funded through USDA's rural development programs. At least I
see nothing that proves otherwise.
I always thought that USDA was there to help poor families
in rural areas instead of working against them. So could you
explain a little bit more what this program is, why it is being
implemented, and what you are trying to do?
Mr. Gonzalez. Yes, Senator. I will share with you the two
new developments that I shared with Chairman Bennett. The
courts have determined the owners have a right to prepay. The
comprehensive property assessment did look inside the portfolio
of the 17,000 properties to examine market conditions, property
conditions, capitalization requirements for the future, and
also the propensity to prepay.
Earlier, GAO had come out with a report indicating that
closer to 25 percent of those properties could prepay. Our
number, based on a sample of 333 properties, is lower at 10
percent. So you are looking at 1,700 properties versus the
4,000 properties GAO estimated potentially could prepay. Our
number is rather conservative in terms of that. GAO has agreed
on our number.
Our primary concern is protecting those tenants from being
displaced by an increase in market rents. There is no program
that has been established like this within Rural Development to
protect tenants from and absorb that type of market rent
increase.
Regarding rental assistance we have brought a forecasting
tool online at the agency to greatly improve the accuracy of
our forecasting. Those numbers are a lot more reliable, a lot
more accurate. I would be glad to demonstrate the tool to staff
and to you, Senator, and to the committee.
We do have a tool that is online now that improves the
accuracy of the rental assistance forecasting.
Senator Kohl. But I don't see you disagreeing with the
assertion that these properties are going to be converted into
market price rental properties and that, as a result, those
tenants are going to be forced out. I mean, that is a statement
of fact, isn't it?
Mr. Gonzalez. Well, based on the study, 10 percent of those
properties are commercially viable and at least 50,000 families
could be subject to being displaced.
Senator Kohl. Well, how is that a good thing?
Mr. Gonzalez. It is not a good thing, but the voucher is
designed specifically, to protect those tenants from being
subject to that risk.
Senator Kohl. So they get a voucher, and they have to go
and find housing elsewhere?
Mr. Gonzalez. The voucher can be used in that property that
was prepaid, or it can be used in another property within our
portfolio.
Senator Kohl. What is the size of the voucher?
Mr. Gonzalez. I believe I would have to get you the details
on the size of the voucher. But I believe it is about $12,000
to $13,000.
Senator Kohl. Well, if you are not able to testify on the
size of the voucher and its adequacy, then how could we discuss
this program in light of these families that are going to be
displaced and their ability or inability to find satisfactory
housing?
Mr. Gonzalez. Our primary focus is the accuracy of the
study. We brought in an outside consulting group to look inside
this portfolio. They determined that at least 10 percent is
commercially viable and that could prepay, subjecting to 50,000
families to being put out in the street. That is a concern for
this agency, and it is a concern for this Administration to
protect those tenants.
HOUSING REVITALIZATION BUDGET REQUEST
Senator Kohl. Now I understand there is some kind of a
consulting fee, $10 million in consulting fees that you are
going to be spending. Please can explain to us what those fees
are for, to sell what I regard as a bad idea. How do you intend
to spend every penny of the $214 million that we are talking
about?
Mr. Gonzalez. Up to $10 million can be used to establish
the Office for Revitalization and provide administrative
support. That is up to $10 million. The balance of the $214
million will be spent on vouchers to protect the tenants.
Senator Kohl. And what is the $10 million going to be spent
on?
Mr. Gonzalez. To establish the Office of Revitalization for
this multi-family portfolio and for administrative support.
Senator Kohl. Well, as you can tell from my comments, we
are going to need to talk about this program in much greater
detail before the 2006 mark-up, and I will look forward to
working with you on ways in which we can at least satisfy my
office and Senator Bennett's that we are heading off into a
direction which is satisfactory. And I look forward to working
with you on it.
Mr. Gonzalez. Thank you, Senator.
MILK PRICES
Senator Kohl. Dr. Collins, when the Congressional Budget
Office prepared its January baseline, it assumed $13.90, as you
know, as the average all-milk price for 2005. On that basis,
CBO estimated that the MILC program would cost $606 million in
fiscal year 2005. The administration came up with an estimate
of about $500 million. More recent data leads me to believe
that those numbers are overstated. In your testimony, you
predict an all-milk price of $15 rather than the $13.90.
We only have 5 months left in our fiscal year, and it seems
very likely that the cost of milk will be much lower than
either the CBO or OMB predictions. So what was the all-milk
price assumption that resulted in the administration's January
price estimate of $500 million for milk, and what market
fundamentals have changed since that time?
Dr. Collins. That is a very good question, Mr. Kohl. Those
estimates were based on November supply and demand conditions.
I cannot remember the exact milk price that was back in the
November forecasts of the department. But I think you are
accurate in suggesting that the market has gotten a little
tighter since then, and milk price prospects look better.
You indicated a CBO price forecast in a $13 per
hundredweight range, and our forecast for 2005 is now up to $15
per hundredweight, which would make it the third- or fourth-
highest price in history. Unfortunately, when we score budget
proposals, we score them off the President's budget, just as
CBO scores budget proposals off its March baseline. We always
pick a point in time and stick with that throughout the entire
reconciliation process.
So even though I think that markets look a little better
than they did back in November of 2004, we will continue to
score the MILC program extension off the President's February
budget baseline.
VALUE-ADDED PROGRAMS
Senator Kohl. All right. For anybody and all on the panel,
in spite of the trend toward market dominance by a handful of
companies, a growing number of small, independent farmers are
turning to the historic role of farmers as business men and
women who are finding value-added niche markets, producing
specifically to those markets, and finding it is not so much
the size of the operation as it is the quality of the
operation.
Does your department recognize that these opportunities for
farmers exist? And if so, what are the farm credit, rural
development, and research and extension agencies doing to
support these niche developments and operations?
Dr. Penn. I can offer the perspective of our program area,
Senator Kohl, in the Farm Service Agency. As you know, we have
a very extensive farm loan operation, and there is a portion of
the loan funds that is set aside by statute for small and
disadvantaged farmers, for beginning farmers, and for minority
farmers.
This is a program that is especially well suited to
operations of the kind that you describe, those that have found
a niche in the marketplace and realize that they can fill that
niche without having to grow as large or operate like the
commercial mainstream field crop or livestock operations. So
those programs are almost ideally suited to the kinds of
operations that you are describing.
Mr. Gonzalez. Rural Development has for the last 3 years,
as a result of the Farm Bill, a value-added producer grant
program that essentially is creating new market opportunities
for farmers and ranchers in terms of taking those raw
commodities and adding value and, at the same time, increasing
the bottom line, creating jobs, and helping diversify rural
economies.
DIRECT MARKETING OF FARM PRODUCTS
Senator Kohl. All right. Gentlemen, I know that marketing
falls under jurisdiction of Agricultural Marketing Service that
will be represented here tomorrow. But for small farmers,
especially those seeking these niche markets, marketing can
make all the difference in the world in terms of success and
failure.
Do you think direct marketing of farm products is a viable
way to diversify rural investment? What are the keys to success
in this style of marketing?
Dr. Collins. All right, Senator Kohl, I would be happy to
take a shot at that.
VALUE-ADDED PROGRAMS
First of all, let me say on this whole question of value
added in niche markets, the Department did send up a report on
its value-added programs to the Congress. It was required in
last year's appropriations bill, and we sent it up, I believe,
in January of 2005. And it profiles across the Department all
the different value-added programs we have.
If my recollection is correct, we have roughly $350 million
a year in value-added programs, and we view value-added
marketing just as you described it, from the research programs
right through to the marketing programs of the Agricultural
Marketing Service or the programs in Mr. Gonzalez's area.
Also as part of value added, we include our bio-energy and
our bio-product work, which is substantial. It is not fully
included in that $350 million, but our bio-energy work and bio-
product work is running about $250 million, with Dr. Penn's
area accounting for a big portion of that with the CCC bio-
energy program.
DIRECT MARKETING OF FARM PRODUCTS
Specifically related to direct marketing--by ``direct
marketing,'' I think you mean farmers markets and things like
that--certainly we have seen an explosion in growth of farmers
markets over the past decade. And it has represented an
excellent opportunity for producers to go directly to the
consumer and get that additional value that might otherwise go
to a middleman or to a processor.
And what we are seeing with the producers is quite a range
of products that are being offered directly to the consumer. At
USDA, we have a farmers market once a week in one of our
parking lots, and we can see firsthand. We get farmers from
Virginia and Maryland and surrounding areas that come in and
directly market to USDA and other Federal employees where we
are.
I think the number of farmers markets is now in the range
of 3,000 across the United States, and we have seen a
tremendous growth in that. So it is an opportunity,
particularly for producers who can provide unique services to
consumers.
I know I have met with farmers who have come in to USDA
who, for example, have programs where they bring classrooms to
their farms. And that acquaints students and students' parents
with what they have on their farms, and then they market
directly to the community, and that becomes a marketing vehicle
for them.
So we are seeing a lot of ingenuity on the part of small
and medium-size farmers to extract a higher value. If you have
a small acreage, the only way you can get more income is to
increase the margin. One way to increase the margin is to
increase the price relative to the cost of production. The way
you increase the price is by you, as the farmer, adding value.
And that is what direct marketing can do.
SPECIALTY PRODUCTS
Senator Kohl. That is great. In Wisconsin, dairy farmers
are forming, as you know, cooperatives to develop specialty
cheese products. And this committee has provided funding to
help these cooperatives establish marketing policies.
Aside from programs like the value-added agricultural
product market development grants program of which I believe
the President proposes to cancel $120 million in this next
fiscal year, how can the department work with farm groups to
promote specialty products and create new markets for these
products? Tell me some of your own thoughts and experiences
here.
Dr. Collins. Well, one thing I would offer is the efforts
that the Department has made to promote the consumption of
fresh fruits and vegetables. We have done that in a variety of
ways. For example, through the school lunch program, we have
had pilot fresh fruit and vegetable programs to increase the
consumption of that.
You are going to hear from Under Secretary Bost tomorrow,
and I think he could give you a range of activities that he has
been involved in to try and promote the consumption of fresh
fruits and vegetables. Again, going back to USDA as a firsthand
experience, in our own cafeteria, we have replaced most of the
vending machines that used to sell highly processed products,
and we now have fruit and vegetable available in vending
machines and fruit juice vending machines and so on.
So I think that there is--through our food assistance
programs, we are making a substantial effort to try and promote
increased consumption of such specialty products.
FARM PRODUCT EXPORTS TO CHINA
Senator Kohl. Good. I thank you. Senator Bennett?
Senator Bennett. Dr. Collins, talk to us about China. That
is a topic on everybody's mind. Sometimes they get demonized.
You mentioned that in fiscal 2004, it was a $6 billion market
for U.S. farm products. Where do you see that going? And
specifically, what farm products do we export to China?
Dr. Collins. Well, specifically, we export a wide range of
products. The biggest ones probably are soybeans and cotton.
China has built a huge vegetable oil processing capacity over
the last decade. They are now the world's largest soybean
importer. This year, we estimate that they will import about
22.5 million tons of soybeans. We will----
Senator Bennett. Are they attempting to grow any
themselves?
Mr. Collins. They do grow soybeans. Their production has
been increasing, but at a slow rate and cannot nearly keep up
with their consumption, which is going to vegetable oil
consumption and going to improving the feed rations of their
livestock.
We expect that this year, we will set a record in soybean
exports to China, probably in the neighborhood of 12 million
tons, which is half of their total imports. And they account
for one third of the world's imports of soybeans.
In addition to that, another issue that you mentioned,
China being demonized, part of that has been related to the
huge overall trade deficit we have with China. It is our
largest single-country trade deficit. A part of that also
relates to the huge increase we are seeing in imported textiles
and apparel from China since January 1, when the Uruguay Round
Agreement on textiles was fully implemented.
But that gives us another opportunity. China is an enormous
consumer of cotton. This year, we think that they will import
about 8 million bales of cotton. Over the next several years,
we expect that that might grow to 10 to 12 million bales of
cotton. They are our largest market for cotton, which is a
high-value commodity, and so that represents a tremendous
opportunity for our producers as well.
Yes, we are losing our domestic cotton consumption. Our
textile mill capacity is slowly going overseas. But we are
replacing that with increased exports of cotton.
I remember years ago, I didn't think we would ever see 10
million bales of cotton exported, and this year, I think we are
going to do about 14 million bales. So it has been tremendous
for the cotton industry to be able to capture that growing
market in China.
China also this year is the world's largest importer of
wheat. This is a commodity that they didn't generally import.
In China, wheat has become a staple in the northern part of
China. Rice is really the staple food in the southern part of
China. And yet we have seen them become the world's largest
importer of wheat, and we are supplying some of that.
Rice, as I said, is considered a staple in the southern
half of China. That is a commodity they are probably most
sensitive about preserving self-sufficiency in, and they have
been right on the threshold of becoming a sizable importer of
rice. They have had difficulty expanding their rice acreage. I
don't foresee them becoming a big rice importer. It is possible
on the margin they could increase their imports some, but I
think you are going to see domestic efforts in China to
increase their rice production.
So we have a broad range of commodities. We are providing
some horticultural commodities to China as well. So there is
quite a range of things that we are providing.
Dr. Penn reminds me that number-one item, hides and skins
to China. So they are a market on the livestock side as well.
TEXTILE EXPORTS AND JOBS
Senator Bennett. Okay. My own observation in another life
here with the Joint Economic Committee, I think the textile
manufacturers that we are going to lose have already been lost.
And interestingly, what I think is happening is that China is
taking jobs away from the Dominican Republic and Mexico and
other places where they had taken these factories from us. And
now the Chinese are undercutting them.
Dr. Collins. This is exactly what we are hearing from
Caribbean area countries, for example. They fear the impact of
China on their exports to the United States. They have had
trade preferences with us in textiles. And now with the
elimination of all quotas, those preferences disappear. Country
of origin rules disappear, and they are very worried that China
is going to displace their textiles in the United States
market.
From a cotton point of view, China accounts for about 15
percent of our cotton textile and apparel imports. So it is not
a huge player right now, but it is going to grow fairly
sizably, I believe, over the next couple of years. I agree with
your point that much of what potentially could be lost has
already been lost. We lost the apparel industry a long time
ago, the high labor cost industry.
Senator Bennett. Yes.
Mr. Collins. And we do have a solid core of textile
companies that produce very high-quality, high-value,
technically advanced product. I can remember early in my career
visiting a textile plant, and you could see the parking lot was
full of cars. You go to a textile plant today, and there are
three cars in the parking lot. You know, it is highly
automated, and it has been able to improve its efficiency.
So we are going to have some market for U.S. textiles, but
there is no question that the Chinese market share in our
market will grow. And it will largely come at the expense of
other countries around the world. And this is an issue for
putting safeguards on Chinese textiles as well. Because when
you do that, we might reduce the imports of China, but they
might find their way into the United States through other
countries.
Senator Bennett. Yes. Well, you raise an interesting
question. If China is a major importer of cotton, as they begin
to take some of this work away from the Caribbean, are we going
to see drop-off in our cotton sales in the Caribbean?
Mr. Collins. That is the worry, that we will see some
decline in our exports of cotton.
Senator Bennett. What is the net number? Is China going to
import more than the Caribbean loses, or are we just going to
shift?
Dr. Collins. I think right now we are expecting our exports
will continue to grow, and that is because world consumption of
cotton textiles will continue to grow. The size of the pie is
going to get bigger.
CONSERVATION RESERVE PROGRAM
Senator Bennett. I see. Well, that is good.
Dr. Penn, let us talk about CRP, and there are tens of
millions of acres under the Conservation Reserve Program that
have contracts that are set to expire in the next few years.
What is FSA doing to make re-enrollment a smooth kind of
process? Do you see any kind of bureaucratic bottlenecks or
problems as those expirations come along?
Dr. Penn. Well, the situation is exactly as you note. I
can't remember the exact numbers, but there is a relatively
small amount of CRP acreage that expires in fiscal year 2006.
But then I believe in 2007 and 2008, over 22 million acres
begin to expire, and that is out of something on the order of
34 to 35 million that are enrolled now.
We have been thinking about this very seriously, noting
that this is both a challenge and an opportunity. We have such
a large amount of acreage coming out of the CRP and then
needing to re-enroll or extend acreage to continue the 39.4
million acre mandate that was included in the 2002 farm bill.
The question becomes do we want to change the profile, the
character, or the nature of the land that is to be re-enrolled
into this program?
We had a major conference last year in which a lot of these
questions were raised. What is the objective of the CRP now in
terms of its role in rural America, its role in protecting
wildlife, its role in environmental enhancement? So there are a
lot of objectives, and these continue to shift over time since
the beginning of this program in 1985.
There is to be another major conference later this year to
further explore these questions, to give all of the
stakeholders--the people who are concerned about soil erosion,
water quality, wildlife habitat, and agricultural production--
an opportunity to state what their views are with respect to
how to effectively manage this program. We have also put a
notice in the Federal Register in asking for comments on
options that we could consider as we begin to re-enroll this
large acreage.
The President has made a commitment to keep the CRP fully
enrolled as the statute allows, and the question then becomes:
exactly how you want to manage the program, what are the
objectives of the program, and where the land will come from.
So we are exploring all of these questions that you raise as we
get closer to the date when this large amount of acreage will
expire.
PLANNING RESEARCH PROGRAMS
Senator Bennett. All right. I applaud you for that.
Whatever we can do to make the re-enrollment as smooth and
seamless as possible. And that sounds like you are of the same
mind.
Now, Dr. Jen, you may be the one to ask this question to,
or others. The budget calls for a number of increases in areas
of research and then eliminates $175 million in projects
requested by Congress, many of which are research projects. In
some places, the budget proposes increases in cuts to the same
subject.
I will give you some examples. A $2 million increase in bio
energy research is offset in part by cuts in bio mass and
ethanol research. You have a $4.7 million increase in genomics
while cutting livestock and fish genome mapping and soybean and
cotton genetics. $15.3 million in food safety while cutting
projects that deal with salmonella, Listeria, and E. coli. $1.5
million increase for obesity and healthier lifestyle, but $6.9
million in cuts for research in those same areas regarding
child and elderly nutrition.
Share with us how you establish or how you set your
priorities and why you had the particular set of winners and
losers that you had. Was it just that if it came from the
department, you like it, and if it came from Congress, you
don't?
Dr. Jen. Absolutely not, Mr. Chairman.
Senator Bennett. Oh, okay. I wanted to get that on the
record.
Dr. Jen. Yes. We probably should get on the record that the
department supports a portfolio of all types of research
programs. Sometimes when you see the shifting from one area to
another, it is somewhat misleading. We set our research agenda
mainly on what is most important for the Nation.
Often, the title of the project, including other research
that you say is cut is moved into a different program or within
that program. So it is really not as clear cut as it appear.
For example, for genomics or obesity, the total budget request
for both these areas has increased in the President's 2006
budget.
Genomics research and obesity research are increased in the
national research initiative. So the budget did not show very
clear-cut increases in those areas. In terms of priority
setting, we have a tremendous number of stakeholder listening
sessions and interactions with industry, with university
community and with Congress, congressional staff, and all the
other stakeholders to set our priorities.
Senator Bennett. You will not be particularly surprised if
the committee adds some congressional earmarks, will you?
Dr. Jen. No, sir.
Senator Bennett. Okay. All right. I will leave that.
Senator Kohl, do you have any additional questions?
Senator Kohl. Thank you very much.
BUDGET DECREASES
Mr. Gonzalez, this year, as before, the President proposes
to cut direct loans and grants, which, as you know, target low-
income communities, and increase guaranteed loan programs,
which serve more moderate income communities. This proposal
effectively cuts vital services to our country's poor citizens
by reducing direct loans and grants for multi-family housing,
water and waste, broadband grants, and other rural development
programs.
USDA justifies this shift through its budget by emphasizing
lower interest rates and a resulting lower subsidy. On its
face, this sounds like a good idea to keep costs down. But
America's most needy rural communities are too poor and
neglected to participate in guaranteed programs. Furthermore,
the public policy underlying direct loans and grants is
precisely to support the Nation's most vulnerable rural
communities.
Now with interest rates rising, will it not be more
difficult for small rural communities to take on additional
debt in lieu of grant funding? Did your proposal anticipate the
possibility of higher interest rates? What effect does higher
interest rates have on the ability to serve low-income families
in the 502 guaranteed program?
Mr. Gonzalez. Yes, Senator. I believe our direct program is
down about $100 million. But our guaranteed program is up about
$400 million. This demonstrates our commitment, the
Administration's commitment to a home ownership society.
We are qualifying more people from our direct program and
also graduating people from our direct program into our
guaranteed program in the case of single-family housing.
In terms of our multi-family housing program, that number,
in terms of direct loans, is down. We obviously are focusing
right now on tenant protection. The other component on our
guaranteed side is our 538 multi-family housing program has
been doubled from $99 million to about $200 million. Combining
that with tax credits, we feel we can still serve the low-
income market.
Those are just examples of areas that even though there
have been some reductions on the direct side, we still are
adequately servicing residents in rural areas with our
guaranteed programs.
NUTRIENT MANAGEMENT LAB IN MARSHFIELD, WI
Senator Kohl. All right. A question for Secretaries Jen and
Rey. Along with volatile dairy prices, another major concern of
dairy farmers is the cost of compliance with State and Federal
environmental regulations. Two years ago, I helped bring
together the ARS, NRCS, and the University of Wisconsin College
of Agriculture and Life Sciences in a collaborative effort to
meet this very challenge.
As a result, this committee has provided funding to
establish a nutrient management laboratory at Marshfield,
Wisconsin. Part of the construction of this facility is
complete, and I hope we can provide funding for the last
construction phase this year.
We have also encouraged the ARS Dairy Forage Laboratory and
NRCS to work together as partners at the Marshfield facility to
develop management practices and implement them at the farm
level.
Mr. Jen or Mr. Rey, can you provide an update on this
partnership between these research and conservation agencies?
Mr. Rey. We have just developed a cooperative agreement for
fiscal year 2005, to develop the laboratory, and we can submit
a copy of that for the subcommittee's hearing record. On the
NRCS side, we will continue to provide resources to the effort
out of our base 2005 budget, and we will spend at least a half
a million dollars to support the continuation of the project
this year.
We will also provide staff support, with the aim of
integrating animal diet and feed management technologies into
overall conservation practices.
Dr. Jen. In terms of the Dairy Forage Research Laboratory,
we have completed feasibility studies for the renovation/
reconstruction of a new facility through the 2004 budget. We
forwarded the report to the Congress.
Senator Kohl. Gentlemen, I understand that a draft
memorandum of understanding between ARS, NRCS, and the
Wisconsin College of Agriculture and Life Sciences has been
forwarded to Washington. Has either agency taken further action
on approval of this memorandum of understanding? And will you
please notify me when such action is taken?
Mr. Rey. After we complete the work, we will notify you and
bring a copy up.
Senator Kohl. I would appreciate that very much. I thank
you very much.
Senator Bennett, I have no further questions.
WATERSHED AND FLOOD PREVENTION OPERATIONS
Senator Bennett. Okay. Secretary Rey, watershed and flood
prevention operations zeroed out in the President's budget. You
say in fiscal 2004, it provided nearly $1.5 billion in monetary
benefits, created, enhanced, or restored 7 million acres of
upland wildlife habitat, benefitted nearly 48 million people.
Okay. I realize this is a program that gets heavily
earmarked up here, and that does have an impact on NRCS's
ability to make decisions. But why do you want to zero it out?
Mr. Rey. I think calling this program heavily earmarked is
a bit of an understatement. It ranged in the last couple of
years between being 100 percent and more than 100 percent
earmarked. In the latter case, through an arithmetical error
that required us to distribute the earmarks on a discounted
fashion.
It is also a program that harkens back to the 1950s. A lot
of watershed structures have been constructed during that
period of time, and very little programmatic oversight has been
provided to the program in perhaps the last 15 years. Running
this program has become a considerable challenge to us. We
don't always have the right staff with the right backgrounds
and expertise in our State offices where the earmarked projects
are provided.
So we think this program has reached a point where stepping
back and taking a broader programmatic look at it is long
overdue. That is something we would like to work with the
Congress about. But, you know, to continue to administer it in
this fashion is perhaps not the best use of what is admittedly
tight budgets in a very difficult budget environment.
Senator Bennett. Will you be surprised if there are some
earmarks in this year's----
Mr. Rey. I would be surprised if there weren't.
Senator Bennett. Okay.
Mr. Rey. That having been said----
Senator Bennett. Yes.
Mr. Rey [continuing]. The point----
Senator Bennett. Can we work together a little more I think
is what you are saying.
Mr. Rey. Right.
Senator Bennett. So that the earmarks are tied more to a
budget plan or management plan that you might have in mind. Is
that what you----
Mr. Rey. Yes, and a programmatic look at where these two
programs should go in the future. I don't think that their past
performance, in terms of the construction of structural
watershed improvements, is necessarily where their future
should go.
Senator Bennett. All right. I think that kind of dialogue
is useful, and we will keep that in mind as we go forward.
Senator Kohl, you had one more question?
Senator Kohl. I thank you very much, Senator Bennett.
TRANSFER TO THE DEPARTMENT OF COMMERCE
Secretary Gonzalez, I see another part of the President's
budget where you want to get rid of four Rural Development
programs and send them over to the Department of Commerce. At
Commerce, they will be lumped with 14 other programs from all
over the Government, with one third less money than they now
have. The Administration justifies this by saying the programs
are duplicative, ineffective, and unaccountable.
Secretary Gonzalez, I understand you have been working with
these programs for a number of years. Do you think, for
example, that the Rural Business Enterprise Grant Program under
your management has been ineffective? Because, frankly, your
own press releases on the successes of these programs, this
particular program, leave quite a different impression.
Mr. Gonzalez. Thank you, Senator Kohl.
These programs obviously were ``PARTED'', were scored over
the last year by OMB, and most of these four programs under
Rural Development did not demonstrate results and, in some
cases, were duplicative. I support the President's
Strengthening America Communities Initiative in terms of
consolidating the 18 programs administered by the five
agencies. It makes a lot of sense, and it stands to benefit
rural areas when you look at the larger pot of money that is
being consolidated. Rural areas will have access to a
substantial portion of a program level of $3.75 billion.
We have been working with the Administration, the White
House and Department of Commerce to ensure that rural areas do
have greater access to a larger pool of money. And, we have
established--at least Commerce has established an advisory
committee, people working to flesh out the details to make sure
rural areas are well served. We had been working closely on
this initiative. I am confident and have been assured by the
Administration that rural areas will have a greater access to a
larger pool of funding--not just $75 million, but $3.75
billion.
Senator Kohl. Well, I will respond to that. I believe this
is, to some considerable extent, a shell game. As I see it, you
all think that while you are moving all these pieces around,
hopefully, no one is going to see that they are being gutted,
and their traditional constituencies are going to have to start
fighting each other. It will be Rural Development against CDBG
and on and on.
Even if we let you merge these programs, a cut is a cut, no
matter how deep, and someone is going to be a big loser. And as
you know, these programs are quite important to poor rural
communities. There seems to be a theme throughout the rural
development budget that these type of communities are going to
be singled out for continuing cuts. What is your response?
Mr. Gonzalez. Sir, I can just assure you that we are,
working with Commerce on this specific initiative, to ensure
that rural areas are well served and they stand to benefit from
this initiative. This is an opportunity for rural areas, as I
see it. Rural Development being the advocate that it is, there
is an opportunity here to provide the resources to rural areas.
I have offered up and proposed to the Department of
Commerce our delivery system. It is unmatched. When the
question becomes what can Rural Development do in terms of its
infrastructure and delivery system, we can help promote and
deliver this initiative. We can help educate communities on
this initiative and help communities, provide technical
assistance to make sure they do have access to this larger pool
of money.
Senator Kohl. Well, if these programs are to be moved to
Commerce, do you know for a fact that every single authorized
activity at USDA will still be an authorized activity at
Commerce? As you know, these are well-established programs at
USDA, and how will you be able to know that they will continue
to serve their traditional constituencies as they have in the
past if, in fact, they are gone from your jurisdiction?
Mr. Gonzalez. We are in the process of crafting legislation
with Commerce and the Administration on this initiative. And we
will be at the table with them to ensure that rural areas are
addressed.
ADDITIONAL COMMITTEE QUESTIONS
A template for urban isn't a template for rural
communities, and that is why we are at the table in terms of
making sure we address issues like business formation. If there
is an educational aspect to it, like No Child Left Behind
Initiative or broadband access, we are going to be there to
make sure that the right criteria are being used for rural
communities.
Senator Kohl. I hope so.
Thanks, Mr. Chairman.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted to Mark Rey
Questions Submitted by Senator Robert F. Bennett
watershed surveys and planning program
Question. The President's Budget has proposed $5,141,000 for the
Watershed Surveys and Planning program. What will that level of funding
allow NRCS to do?
Answer. This level of funding will allow NRCS to continue to fund
the highest-priority ongoing studies and plans in each of the States.
It will allow for completion of approximately 20 watershed studies and
plans.
Question. Will new projects be initiated?
Answer. Initiation of new plans and studies will, at most, occur on
a limited basis. If new plans or studies are initiated, they will be
selected based on a ranking and funding process that evaluates the
plans and studies according to their support of the NRCS Strategic
Plan.
Question. Will existing projects be completed at this level of
funding?
Answer. Again, this level of funding will allow NRCS to continue to
fund the highest-priority ongoing studies and plans in each of the
States. It will allow for completion of approximately 20 watershed
studies and plans. There are over 130 studies and plans that have
already been initiated.
Question. What level of funding would be required to complete all
initiated work?
Answer. Planning costs can vary widely, depending on the complexity
of the plan or study. It would require over $45 million to complete all
studies and plans which have already been initiated.
Question. How many fiscal year 2005 watershed funding requests did
NRCS receive for projects that were ready to be installed (local
sponsors had obtained land rights, permits, etc. and NRCS was prepared
with designs and ready for construction)?
Answer. In fiscal year 2005, NRCS received 278 funding requests
from project sponsors totaling $201 million on projects ready for
construction.
Question. Please provide the Committee with a list of all the
watershed projects that have been planned and authorized for
implementation, along with the dollar amount needed to provide the
Federal technical and financial share of the costs.
Answer. The attached provides the requested funding total of $1.9
billion to complete the currently authorized watershed projects.
[The information follows:]
----------------------------------------------------------------------------------------------------------------
Requested
State Program Watershed project name funding
----------------------------------------------------------------------------------------------------------------
Alabama................................ Public Law 566............ Pine Barren Creek......... $2,000,000
Alabama................................ Public Law 566............ Powell Creek.............. 500,000
Alabama................................ Public Law 566............ Big Nance Creek........... 2,000,000
Alabama................................ Public Law 566............ Choccolocco Creek......... 3,765,000
Alabama................................ Public Law 566............ Wilkerson Creek........... 312,000
Alabama................................ Public Law 566............ Kelly-Preston Mill Creek.. 20,000
Alabama................................ Public Law 566............ Harrison Mill-Panther 200,000
Creeks.
Alabama................................ Public Law 566............ Camp Branch............... 300,000
Alabama................................ Public Law 566............ Dry Creek................. 400,000
Alabama................................ Public Law 566............ Pates Creek............... 180,000
Alabama................................ Public Law 566............ Whitewater Creek.......... 100,000
Alabama................................ Public Law 566............ Short-Scarham Creeks...... 212,000
Alabama................................ Public Law 566............ Town Creek-Dekalb......... 185,000
Alabama................................ Public Law 566............ South Sauty Creek......... 100,000
Alabama................................ Public Law 566............ Northeast Yellow River.... 1,000,000
----------------
Total............................ .......................... .......................... 11,274,000
================
Alaska................................. Public Law 566............ Delta Clearwater.......... 5,951,600
================
Arizona................................ Public Law 566............ Buckhorn-Mesa............. 2,560,100
Arizona................................ Public Law 566............ Apache Junction-Gilbert... 1,792,000
Arizona................................ Public Law 566............ Williams-Chandler......... 1,280,000
Arizona................................ Public Law 566............ White Tank Mountains...... 1,681,700
Arizona................................ Public Law 566............ Eloy...................... 2,630,409
Arizona................................ Public Law 566............ New Magma................. 2,078,981
Arizona................................ Public Law 566............ Hohokam................... 4,341,423
Arizona................................ Public Law 566............ West Maricopa............. 755,044
Arizona................................ Public Law 566............ Maricopa-Stanfield........ 5,148,479
Arizona................................ Public Law 566............ San Carlos Watershed...... 5,819,964
----------------
Total............................ .......................... .......................... 28,088,100
================
Arkansas............................... Public Law 566............ Big Slough................ 17,036,000
Arkansas............................... Public Law 566............ North Fork Of Ozan Creek.. 1,211,000
Arkansas............................... Public Law 566............ Fourche Creek............. 841,000
Arkansas............................... Public Law 566............ South Fourche............. 3,627,000
Arkansas............................... Public Law 566............ Poinsett.................. 2,919,000
Arkansas............................... Public Law 566............ Upper Petit Jean.......... 12,017,000
Arkansas............................... Public Law 566............ Flat Rock Creek........... 1,779,000
Arkansas............................... Public Law 566............ Ozan Creeks............... 6,563,000
Arkansas............................... Public Law 566............ Little Red River.......... 279,000
Arkansas............................... Public Law 566............ Gould Portion Of Grady- 1,400,000
Gould.
Arkansas............................... Public Law 566............ Buffalo River Tributaries. 2,634,000
Arkansas............................... Public Law 566............ Departee Creek............ 2,060,000
----------------
Total............................ .......................... .......................... 52,366,000
================
California............................. Public Law 566............ Central Sonoma............ 3,700,000
California............................. Public Law 566............ Marsh-Kellogg Creek....... 3,750,000
California............................. Public Law 566............ Beardsley................. 50,000
California............................. Public Law 566............ Lower Llagas Creek........ 2,550,000
California............................. Public Law 566............ Upper Llagas Creek........ 150,000
California............................. Public Law 566............ Carpinteria Valley........ 1,000,000
California............................. Public Law 566............ Lower Silver Creek........ 16,300,000
California............................. Public Law 566............ Upper Stony Creek......... 125,000
California............................. Public Law 566............ Indian Creek.............. 50,000
California............................. Public Law 566............ Elkhorn Slough............ 960,000
California............................. Public Law 566............ Mccoy Wash................ 6,800,000
----------------
Total............................ .......................... .......................... 35,435,000
================
Colorado............................... Public Law 566............ Wolf Creek-Highlands...... 20,000
Colorado............................... Public Law 566............ Trinidad Lake North....... 240,000
Colorado............................... Public Law 566............ Limestone-Graveyard Creeks 340,000
Colorado............................... Public Law 566............ Highline Breaks........... 1,560,000
Colorado............................... Public Law 566............ Holbrook Lake Ditch....... 1,440,000
Colorado............................... Public Law 566............ Six Mile-St. Charles 2,640,000
Watershed.
----------------
Total............................ .......................... .......................... 6,240,000
================
Connecticut............................ Public Law 566............ South Branch Park River... 75,000
Connecticut............................ Public Law 566............ Norwalk River............. 11,567,800
Connecticut............................ Public Law 566............ Mill-Horse Brook.......... 6,760,000
Connecticut............................ Public Law 566............ Yantic River.............. 4,526,200
----------------
Total............................ .......................... .......................... 22,929,000
================
Delaware............................... Public Law 566............ Upper Nanticoke River..... 25,000
================
Florida................................ Public Law 566............ N. East Middle Suwannee 309,680
River.
Florida................................ Public Law 566............ S. West Middle Suwannee 309,680
River.
Florida................................ Public Law 566............ N. West Middle Suwannee 309,680
River.
Florida................................ Public Law 566............ S. East Middle Suwannee 309,680
River.
----------------
Total............................ .......................... .......................... 1,238,720
================
Georgia................................ Public Law 566............ Tobesofkee Creek.......... 1,985,424
Georgia................................ Public Law 566............ Lower Little Tallapoosa 350,562
River.
Georgia................................ Public Law 566............ Piscola Creek............. 822,794
Georgia................................ Public Law 566............ Five Points Area.......... 982,517
Georgia................................ Public Law 566............ South Chickamauga Creek... 1,068,475
----------------
Total............................ .......................... .......................... 5,209,772
================
Hawaii................................. Public Law 566............ Wailuku-Alenaio........... 2,000,000
Hawaii................................. Public Law 566............ Waimanalo................. 1,750,000
Hawaii................................. Public Law 566............ Waimea-Paauilo............ 9,232,000
Hawaii................................. Public Law 566............ Lahaina................... 7,500,000
Hawaii................................. Public Law 566............ Upcountry Maui............ 5,500,000
Hawaii................................. Public Law 566............ Lower Hamakua Ditch....... 4,500,000
----------------
Total............................ .......................... .......................... 30,482,000
================
Idaho.................................. Public Law 566............ Tammany Creek............. 3,673,495
Idaho.................................. Public Law 566............ Mission-Lapwai Creek...... 3,676,044
Idaho.................................. Public Law 566............ Bedrock Creek............. 432,550
Idaho.................................. Public Law 566............ Scott's Pond.............. 4,804,166
----------------
Total............................ .......................... .......................... 12,586,255
================
Illinois............................... Public Law 566............ Little Calumet River...... 52,400,000
Illinois............................... Public Law 566............ Lower Des Plaines 30,300,000
Tributaries.
Illinois............................... Public Law 566............ Lake Bloomington.......... 3,880,000
Illinois............................... Public Law 566............ Lake Carlinville.......... 825,000
----------------
Total............................ .......................... .......................... 87,405,000
================
Indiana................................ Public Law 566............ Muddy Fork Of Silver Creek 2,279,000
Indiana................................ Public Law 566............ Mariah Creek.............. 168,650
Indiana................................ Public Law 566............ Pigeon Creek.............. 160,590
Indiana................................ Public Law 566............ Honey Creek............... 5,400,000
----------------
Total............................ .......................... .......................... 8,008,240
================
Iowa................................... Public Law 566............ Little Paint Creek........ 700,000
Iowa................................... Public Law 566............ Bear Creek................ 3,300,500
Iowa................................... Public Law 566............ East Fork Of Big Creek.... 200,000
Iowa................................... Public Law 566............ West Fork Of Big Creek.... 2,300,000
Iowa................................... Public Law 566............ Upper Locust Creek........ 2,900,000
Iowa................................... Public Law 566............ East Fork Of The Grand 14,800,000
River.
Iowa................................... Public Law 566............ Mill-Picayune Creek....... 3,300,000
Iowa................................... Public Law 566............ Turkey Creek.............. 3,700,000
Iowa................................... Public Law 566............ Mosquito Of Harrison...... 2,800,000
Iowa................................... Public Law 566............ Waubonsie Creek........... 250,000
Iowa................................... Public Law 566............ Simon Run................. 640,000
Iowa................................... Public Law 566............ Troublesome Creek......... 4,000,000
Iowa................................... Public Law 566............ Twelve Mile Creek......... 1,050,000
Iowa................................... Public Law 566............ Little River.............. 500,000
Iowa................................... Public Law 566............ A&T Long Branch........... 500,000
Iowa................................... Public Law 566............ Long Branch............... 500,000
Iowa................................... Public Law 566............ Soap Creek................ 5,500,000
----------------
Public Law 566 Total............. .......................... .......................... 47,440,500
================
Iowa................................... Public Law 534............ Ltl. Sioux--Barber Hollow. 150,000
Iowa................................... Public Law 534............ Ltl. Sioux--Big Coon Creek 300,000
Iowa................................... Public Law 534............ Ltl. Sioux--West Wolf 150,000
Creek.
Iowa................................... Public Law 534............ Ltl. Sioux--Westside...... 450,000
Iowa................................... Public Law 534............ Ltl. Sioux--Bitter Creek.. 1,050,000
Iowa................................... Public Law 534............ Ltl. Sioux--Crawford Ck... 150,000
Iowa................................... Public Law 534............ Ltl. Sioux--Leech Hollow.. 300,000
Iowa................................... Public Law 534............ Ltl. Sioux--Little Whiskey 450,000
----------------
Public Law 534 Total............. .......................... .......................... 3,000,000
================
Iowa Total....................... .......................... .......................... 50,440,500
================
Kansas................................. Public Law 566............ North Black Vermillion.... 6,901,200
Kansas................................. Public Law 566............ Upper Black Vermillion.... 1,925,000
Kansas................................. Public Law 566............ Lower Elk River........... 843,000
Kansas................................. Public Law 566............ Lyons Creek............... 1,274,800
Kansas................................. Public Law 566............ West Sector Whitewater 540,000
River.
Kansas................................. Public Law 566............ East Sector Whitewater 990,000
River.
Kansas................................. Public Law 566............ North Sector Upper Walnut. 1,156,250
Kansas................................. Public Law 566............ Wet Walnut No. 2.......... 1,035,375
Kansas................................. Public Law 566............ Wet Walnut No. 3.......... 2,910,000
Kansas................................. Public Law 566............ Grasshopper-Coal Creek.... 3,097,900
Kansas................................. Public Law 566............ Diamond Creek............. 5,400,000
Kansas................................. Public Law 566............ Middle Creek (Morris)..... 881,250
Kansas................................. Public Law 566............ Elk Creek................. 9,652,500
Kansas................................. Public Law 566............ South Fork................ 978,000
Kansas................................. Public Law 566............ North-Middle Forks Wolf... 4,758,750
Kansas................................. Public Law 566............ South Fork Wolf........... 2,567,000
Kansas................................. Public Law 566............ Squaw Creek Lower Wolf.... 9,230,400
Kansas................................. Public Law 566............ Doyle Creek............... 2,430,000
Kansas................................. Public Law 566............ Upper Delaware And 12,460,000
Tributaries.
----------------
Total............................ .......................... .......................... 69,031,425
================
Kentucky............................... Public Law 566............ Obion Creek............... 4,000,000
Kentucky............................... Public Law 566............ Big Muddy Creek........... 750,000
Kentucky............................... Public Law 566............ Upper Tradewater River.... 10,000
Kentucky............................... Public Law 566............ West Fork Of Mayfield 1,200,000
Creek.
Kentucky............................... Public Law 566............ Red Lick Creek............ 900,000
Kentucky............................... Public Law 566............ Banklick Creek............ 4,000,000
Kentucky............................... Public Law 566............ North Fork Nolin River.... 900,000
Kentucky............................... Public Law 566............ Pigeon Roost Creek........ 1,120,000
Kentucky............................... Public Law 566............ Highland Creek............ 1,324,000
Kentucky............................... Public Law 566............ Brashear's Creek.......... 620,000
Kentucky............................... Public Law 566............ Boone Fork................ 5,720,000
----------------
Total............................ .......................... .......................... 20,544,000
================
Louisiana.............................. Public Law 566............ Cypress-Black Bayou....... 2,000,000
Louisiana.............................. Public Law 566............ Middle Tangipahoa......... 10,000
Louisiana.............................. Public Law 566............ Central Richland.......... 1,500,000
Louisiana.............................. Public Law 566............ Bayou Bourbeux............ 200,000
Louisiana.............................. Public Law 566............ Bayou Duralde-Lower 5,000,000
Nezpique.
----------------
Total............................ .......................... .......................... 8,710,000
================
Maine.................................. Public Law 566............ Kenduskeag Stream......... 1,000,000
Maine.................................. Public Law 566............ Meduxnekeag River......... 50,000
----------------
Total............................ .......................... .......................... 1,050,000
================
Maryland............................... Public Law 566............ Linganore Creek........... 100,000
Maryland............................... Public Law 566............ Dry Run................... 350,000
----------------
Total............................ .......................... .......................... 450,000
================
Massachusetts.......................... Public Law 566............ Baiting Brook............. 475,300
Massachusetts.......................... Public Law 566............ Clam River................ ...............
----------------
Total............................ .......................... .......................... 475,300
================
Michigan............................... Public Law 566............ Elk River................. 50,000
Michigan............................... Public Law 566............ South Branch Kawkawlin 60,000
River.
Michigan............................... Public Law 566............ Mud Creek................. 150,000
Michigan............................... Public Law 566............ Swan Creek................ 450,000
Michigan............................... Public Law 566............ Stony Creek............... 1,165,375
----------------
Total............................ .......................... .......................... 1,875,375
================
Minnesota.............................. Public Law 566............ Kanaranzi-Little Rock..... 780,000
Minnesota.............................. Public Law 566............ Whitewater River.......... 1,197,400
Minnesota.............................. Public Law 566............ Snake River............... 600,000
Minnesota.............................. Public Law 566............ Bear Creed................ 240,000
----------------
Total............................ .......................... .......................... 2,817,400
================
Mississippi............................ Public Law 566............ Chiwapa Creek............. 561,900
Mississippi............................ Public Law 566............ Town Creek................ 7,000,000
Mississippi............................ Public Law 566............ Tuscumbia River........... 1,622,500
Mississippi............................ Public Law 566............ Tallahaga Creek........... 2,100,000
Mississippi............................ Public Law 566............ South Delta............... 1,588,000
Mississippi............................ Public Law 566............ Long Beach................ 4,375,000
----------------
Public Law 566 Total............. .......................... .......................... 17,247,400
================
Mississippi............................ Public Law 534............ Ltl. Talla--Cane Creek.... 1,062,500
Mississippi............................ Public Law 534............ Ltl. Talla--Cypress & Puss 5,160,000
Cuss.
Mississippi............................ Public Law 534............ Ltl. Talla--Upper 1,250,000
Tallahatchie.
Mississippi............................ Public Law 534............ Ltl. Talla--Ayers Cree.... 2,600,000
Mississippi............................ Public Law 534............ Ltl. Talla--Duncan-Cane 2,125,000
Creeks.
Mississippi............................ Public Law 534............ Ltl. Talla--Greasy Creek.. 750,000
Mississippi............................ Public Law 534............ Ltl. Talla--Hell Creek.... 875,000
Mississippi............................ Public Law 534............ Ltl. Talla--Locks Creek... 250,000
Mississippi............................ Public Law 534............ Ltl. Talla--Lower Tippah 15,210,000
River.
Mississippi............................ Public Law 534............ Ltl. Talla--Ltl. Spring- 625,000
Ochewalla Creeks.
Mississippi............................ Public Law 534............ Ltl. Talla--Mill Creek.... 3,746,000
Mississippi............................ Public Law 534............ Ltl. Talla--Mud Creek..... 375,000
Mississippi............................ Public Law 534............ Ltl. Talla--North Tippah 2,431,000
Creek.
Mississippi............................ Public Law 534............ Ltl. Talla--Oaklimeter 11,263,000
Creek.
Mississippi............................ Public Law 534............ Ltl. Talla--Okonatie Creek 250,000
Mississippi............................ Public Law 534............ Ltl. Talla--Upper Tippah 6,625,000
River.
Mississippi............................ Public Law 534............ Yazoo--Abiaca Creek....... 10,553,750
Mississippi............................ Public Law 534............ Yazoo--Askalmore Creek.... 2,594,000
Mississippi............................ Public Law 534............ Yazoo--Batupan Bogue...... 1,250,000
Mississippi............................ Public Law 534............ Yazoo--Big Sand Creek..... 7,678,700
Mississippi............................ Public Law 534............ Yazoo--Black Creek........ 5,000,000
Mississippi............................ Public Law 534............ Yazoo--Black Creek (Delta) 7,500,000
Mississippi............................ Public Law 534............ Yazoo--Buntyn Creek....... 910,000
Mississippi............................ Public Law 534............ Yazoo--Burney Branch...... 5,260,000
Mississippi............................ Public Law 534............ Yazoo--Bynum Creek........ 1,208,000
Mississippi............................ Public Law 534............ Yazoo--Cane-Mussacuna Cks. 1,591,000
Mississippi............................ Public Law 534............ Yazoo--Coldwater River.... 10,740,000
Mississippi............................ Public Law 534............ Yazoo--Cypress Creek...... 3,012,500
Mississippi............................ Public Law 534............ Yazoo--Davis Splinter 1,935,000
Creek.
Mississippi............................ Public Law 534............ Yazoo--Eden Creek......... 63,000
Mississippi............................ Public Law 534............ Yazoo--Fighting Bayou..... 531,300
Mississippi............................ Public Law 534............ Yazoo--Hickahala Creek.... 1,188,000
Mississippi............................ Public Law 534............ Yazoo--Hoffa Creek........ 3,412,500
Mississippi............................ Public Law 534............ Yazoo--Hotophia Creek..... 500,000
Mississippi............................ Public Law 534............ Yazoo--Hurricane-Wolf 5,324,000
Creek.
Mississippi............................ Public Law 534............ Yazoo--Indian Creek-Bobo 1,250,000
Bayou.
Mississippi............................ Public Law 534............ Yazoo--Johnson And Fair 1,720,000
Cks.
Mississippi............................ Public Law 534............ Yazoo--Riverdale Creek.... 695,000
Mississippi............................ Public Law 534............ Yazoo--Senatobia Creek.... 510,000
Mississippi............................ Public Law 534............ Yazoo--Short Fork Creek... 3,940,000
Mississippi............................ Public Law 534............ Yazoo--Skuna River........ 5,818,800
Mississippi............................ Public Law 534............ Yazoo--Strayhorn Creek.... 6,375,000
Mississippi............................ Public Law 534............ Yazoo--Sledge Bayou....... 25,000
Mississippi............................ Public Law 534............ Yazoo--Tillatoba Creek.... 19,885,000
Mississippi............................ Public Law 534............ Yazoo--Toposhaw........... 3,125,000
Mississippi............................ Public Law 534............ Yazoo--Upper Skuna River.. 6,820,000
Mississippi............................ Public Law 534............ Yazoo--Yalobusha River.... 625,000
Mississippi............................ Public Law 534............ Yazoo--Northern Drainage 1,000,000
District.
Mississippi............................ Public Law 534............ Yazoo--North Tillatoha- 1,875,000
Hunter.
Mississippi............................ Public Law 534............ Yazoo--Long Creek......... 1,250,000
Mississippi............................ Public Law 534............ Yazoo--Otoucalofa Creek... 2,806,000
Mississippi............................ Public Law 534............ Yazoo--Pelucia Creek...... 4,535,000
Mississippi............................ Public Law 534............ Yazoo--Perry Creek........ 2,231,000
Mississippi............................ Public Law 534............ Yazoo--Persimmon Creek I.. 5,000,000
Mississippi............................ Public Law 534............ Yazoo--Pigeon Roost Creek. 12,578,700
Mississippi............................ Public Law 534............ Yazoo--Piney Creek........ 16,250,000
Mississippi............................ Public Law 534............ Yazoo--Potacocawa Creek... 1,837,500
Mississippi............................ Public Law 534............ Yazoo--Arkabutla Creek.... 3,512,300
----------------
Public Law 534 Total............. .......................... .......................... 228,513,550
================
Mississippi Total................ .......................... .......................... 245,760,950
================
Missouri............................... Public Law 566............ East Fork Of Big Creek.... 2,400,000
Missouri............................... Public Law 566............ Upper Little Black........ 750,000
Missouri............................... Public Law 566............ Lower Little Black........ 4,500,000
Missouri............................... Public Law 566............ Mozingo Creek............. 70,000
Missouri............................... Public Law 566............ Troublesome Creek......... 5,200,000
Missouri............................... Public Law 566............ Grassy Creek.............. 2,900,000
Missouri............................... Public Law 566............ Big Creek-Hurricane Creek. 16,100,000
Missouri............................... Public Law 566............ West Fork Of Big Creek.... 17,400,000
Missouri............................... Public Law 566............ East Locust Creek......... 5,000,000
Missouri............................... Public Law 566............ Upper Locust Creek........ 26,400,000
Missouri............................... Public Law 566............ Town Branch............... 2,090,000
Missouri............................... Public Law 566............ East Yellow Creek......... 10,000,000
Missouri............................... Public Law 566............ Moniteau Creek............ 3,120,000
Missouri............................... Public Law 566............ Marthasville Town Branch.. 750,000
Missouri............................... Public Law 566............ Hickory Creek............. 3,000,000
Missouri............................... Public Law 566............ East Fork Of The Grand 2,600,000
River.
----------------
Missouri Total................... .......................... .......................... 102,280,000
================
Montana................................ Public Law 566............ Lower Birch Creek......... 3,279,000
Montana................................ Public Law 566............ Mill Creek................ 175,000
Montana................................ Public Law 566............ Buffalo Rapids............ 8,806,000
----------------
Total............................ .......................... .......................... 12,260,000
================
Nebraska............................... Public Law 566............ Gering Valley............. 767,000
Nebraska............................... Public Law 566............ Papillion Creek........... 2,665,300
Nebraska............................... Public Law 566............ Aowa Creek................ 6,700
Nebraska............................... Public Law 566............ Tekamah-Mud Creek......... 6,700
Nebraska............................... Public Law 566............ Middle Fork Maple Creek... 6,700
Nebraska............................... Public Law 566............ Bone Creek................ 6,700
Nebraska............................... Public Law 566............ Stevens-Callahan (Camp 6,700
Creek).
Nebraska............................... Public Law 566............ Balls Branch.............. 6,700
Nebraska............................... Public Law 566............ Swan Creek................ 6,700
Nebraska............................... Public Law 566............ Wolf-Wildcat Creek........ 6,700
Nebraska............................... Public Law 566............ East-West-Dry Maple Creeks 10,000
Nebraska............................... Public Law 566............ Middle Big Nemaha......... 40,000
----------------
Total............................ .......................... .......................... 3,535,900
================
New Mexico............................. Public Law 566............ Prop Canyon & Tributaries. 740,000
New Mexico............................. Public Law 566............ T Or C Williamsburg 7,189,500
Arroyos.
New Mexico............................. Public Law 566............ Cottonwood-Walnut Creek... 19,125,000
New Mexico............................. Public Law 566............ Zuni Pueblo............... 16,487,500
New Mexico............................. Public Law 566............ Espanola-Rio Chama........ 33,920,000
----------------
Total............................ .......................... .......................... 77,462,000
================
New York............................... Public Law 566............ Mill Brook................ 2,050,000
New York............................... Public Law 566............ Nyc Ws (Ashokan).......... 96,100
New York............................... Public Law 566............ Nyc Ws (Upper 1,189,522
Cannonsville).
New York............................... Public Law 566............ Nyc Ws (Lower 1,204,339
Cannonsville).
New York............................... Public Law 566............ Nyc Ws (Pepacton)......... 642,748
New York............................... Public Law 566............ Nyc Ws (Neversink)........ 44,339
New York............................... Public Law 566............ Nyc Ws (Rondout).......... 66,452
New York............................... Public Law 566............ Nyc Ws (Schoharie)........ 362,009
----------------
Total............................ .......................... .......................... 5,655,509
================
North Carolina......................... Public Law 566............ Deep Creek (Yadkin)....... 6,000,000
North Carolina......................... Public Law 566............ Crabtree Creek............ 2,000,000
North Carolina......................... Public Law 566............ Swan Quarter.............. 5,280,000
North Carolina......................... Public Law 566............ Meadow Branch............. 787,830
North Carolina......................... Public Law 566............ Upper French Broad River.. 617,840
North Carolina......................... Public Law 566............ Newfound & Sandymush Creek 1,989,168
----------------
Total............................ .......................... .......................... 16,674,838
================
North Dakota........................... Public Law 566............ Square Butte Creek........ 7,400,000
North Dakota........................... Public Law 566............ Upper Turtle River........ 470,000
North Dakota........................... Public Law 566............ Taylor.................... 40,000
North Dakota........................... Public Law 566............ Belfield.................. 4,650,000
North Dakota........................... Public Law 566............ Colfax.................... 1,573,000
----------------
Total............................ .......................... .......................... 14,133,000
================
Ohio................................... Public Law 566............ Rush Creek................ 1,185,000
Ohio................................... Public Law 566............ Short Creek............... 6,275,000
Ohio................................... Public Law 566............ North Hocking River....... 1,872,000
Ohio................................... Public Law 566............ South Fork Licking River.. 6,820,000
Ohio................................... Public Law 566............ Wills Creek............... 657,000
Ohio................................... Public Law 566............ Four Mile Creek........... 3,915,000
Ohio................................... Public Law 566............ Upper Blanchard River..... 1,050,000
Ohio................................... Public Law 566............ Lower Stillwater River.... 120,000
Ohio................................... Public Law 566............ Upper Stillwater River.... 120,000
----------------
Total............................ .......................... .......................... 22,014,000
================
Oklahoma............................... Public Law 566............ Sandy Creek............... 1,330,000
Oklahoma............................... Public Law 566............ Leader-Middle Clear Boggy 6,650,000
Creek.
Oklahoma............................... Public Law 566............ Upper Black Bear Creek.... 2,660,000
Oklahoma............................... Public Law 566............ Upper Red Rock Creek...... 8,645,000
Oklahoma............................... Public Law 566............ Upper Blue River.......... 35,910,000
Oklahoma............................... Public Law 566............ Tri-County Turkey Creek... 1,330,000
Oklahoma............................... Public Law 566............ Stillwater Creek.......... 11,970,000
Oklahoma............................... Public Law 566............ Lower Clear Boggy Creek... 7,315,000
Oklahoma............................... Public Law 566............ Salt-Camp Creek........... 9,310,000
Oklahoma............................... Public Law 566............ Upper Bayou............... 8,645,000
Oklahoma............................... Public Law 566............ Lower Bayou............... 2,660,000
Oklahoma............................... Public Law 566............ Upper Elk Creek........... 8,645,000
Oklahoma............................... Public Law 566............ Cotton-Coon-Mission Creek. 4,655,000
Oklahoma............................... Public Law 566............ Jack Creek................ 1,330,000
Oklahoma............................... Public Law 566............ Lower Black Bear Creek.... 4,655,000
Oklahoma............................... Public Law 566............ Lower Red Rock Creek...... 12,635,000
Oklahoma............................... Public Law 566............ Okfuskee Tributaries...... 3,325,000
Oklahoma............................... Public Law 566............ Brushy-Peaceable Creek.... 18,620,000
Oklahoma............................... Public Law 566............ Lost-Duck Creeks.......... 2,660,000
Oklahoma............................... Public Law 566............ Cow Creek................. 7,980,000
Oklahoma............................... Public Law 566............ Upper Muddy Boggy Creek... 7,980,000
Oklahoma............................... Public Law 566............ Kickapoo Nations.......... 9,975,000
Oklahoma............................... Public Law 566............ Robinson Creek............ 3,990,000
Oklahoma............................... Public Law 566............ Hoyle Creek............... 665,000
Oklahoma............................... Public Law 566............ Turkey Creek.............. 6,650,000
Oklahoma............................... Public Law 566............ Cambell Creek............. 1,995,000
Oklahoma............................... Public Law 566............ Deer Creek................ 1,540,000
Oklahoma............................... Public Law 566............ Dry Creek................. 8,645,000
Oklahoma............................... Public Law 566............ Lugert-Altus.............. 2,520,000
Oklahoma............................... Public Law 566............ Little Beaver Creek....... 7,980,000
Oklahoma............................... Public Law 566............ Wild Horse Creek.......... 1,610,000
Oklahoma............................... Public Law 566............ Middle Deep Red Run Creek. 5,985,000
----------------
Public Law 566 Total............. .......................... .......................... 220,465,000
================
Oklahoma............................... Public Law 534............ Washita--Bitter Creek..... 1,330,000
Oklahoma............................... Public Law 534............ Washita--Bear Creek....... 665,000
Oklahoma............................... Public Law 534............ Washita--Tonkawa Ck- 4,788,000
Delaware Cks.
Oklahoma............................... Public Law 534............ Washita--Rush Creek....... 665,000
Oklahoma............................... Public Law 534............ Washita--Sugar Creek...... 665,000
Oklahoma............................... Public Law 534............ Washita--Spring Creek..... 2,394,000
Oklahoma............................... Public Law 534............ Washita--Wildhorse Ck (Up 665,000
& Lwr).
Oklahoma............................... Public Law 534............ Washita--Ionine Creek..... 3,325,000
Oklahoma............................... Public Law 534............ Washita--Little Washita... 665,000
Oklahoma............................... Public Law 534............ Washita--Maysville 1,995,000
Laterals.
----------------
Public Law 534 Total............. .......................... .......................... 17,157,000
================
Oklahoma Total................... .......................... .......................... 237,622,000
================
Oregon................................. Public Law 566............ Lower Tillamook Bay....... 6,388,796
Oregon................................. Public Law 566............ McKenzie Canyon Irrigation 2,325,000
Project.
----------------
Total............................ .......................... .......................... 8,713,796
================
Pennsylvania........................... Public Law 566............ Brandywine Creek.......... 1,541,000
Pennsylvania........................... Public Law 566............ Little Shenango River..... 1,172,500
Pennsylvania........................... Public Law 566............ Neshaminy Creek........... 9,160,000
Pennsylvania........................... Public Law 566............ Cross Creek............... 2,496,000
Pennsylvania........................... Public Law 566............ Yellow Creek.............. 60,000
Pennsylvania........................... Public Law 566............ Oven Run.................. 230,000
Pennsylvania........................... Public Law 566............ Monastery Run............. 475,000
Pennsylvania........................... Public Law 566............ Red-White Clay Creeks..... 2,122,000
Pennsylvania........................... Public Law 566............ Glenwhite Run............. 290,000
Pennsylvania........................... Public Law 566............ Tulpehocken Creek......... 2,840,000
Pennsylvania........................... Public Law 566............ Little Toby Creek......... 587,000
Pennsylvania........................... Public Law 566............ Mill Creek (Clarion/ 3,465,000
Jefferson).
Pennsylvania........................... Public Law 566............ Indian Creek.............. 2,960,000
Pennsylvania........................... Public Law 566............ Wheeling Creek............ 150,000
----------------
Total............................ .......................... .......................... 27,548,500
================
South Carolina......................... Public Law 566............ Thompson-Westfield Creek.. 2,000
South Carolina......................... Public Law 566............ North Fork Edisto......... 5,000
South Carolina......................... Public Law 566............ Pickens-Anderson.......... 4,000
South Carolina......................... Public Law 566............ South Edisto.............. 11,000
South Carolina......................... Public Law 566............ Holly Hill................ 1,000,000
----------------
Total............................ .......................... .......................... 1,022,000
================
South Dakota........................... Public Law 566............ Lower Little Mn River-Big 50,000
Stone Lake.
Tennessee.............................. Public Law 566............ Reelfoot-Indian Creek..... 4,021,317
Tennessee.............................. Public Law 566............ Cane Creek................ 8,371,486
Tennessee.............................. Public Law 566............ Hurricane Creek........... 2,008,193
Tennessee.............................. Public Law 566............ Mcnairy-Cypress Creek..... 4,282,632
Tennessee.............................. Public Law 566............ North Fork-Forked Deer 6,615,153
River.
Tennessee.............................. Public Law 566............ Sulphur Fork Creek........ 307,236
Tennessee.............................. Public Law 566............ Big Limestone Creek....... 543,478
Tennessee.............................. Public Law 566............ Lick Creek (1995)......... 684,501
Tennessee.............................. Public Law 566............ Bear Creek (Scott)........ 1,635,494
Tennessee.............................. Public Law 566............ Hickory Creek............. 2,669,595
Tennessee.............................. Public Law 566............ East Prong Little Pigeon 2,120,945
River.
----------------
Total............................ .......................... .......................... 33,260,030
================
Texas.................................. Public Law 566............ Caney Creek............... 5,400,000
Texas.................................. Public Law 566............ Salado Creek.............. 45,000
Texas.................................. Public Law 566............ Pine Creek................ 2,400,000
Texas.................................. Public Law 566............ Attoyac Bayou............. 1,681,000
Texas.................................. Public Law 566............ Donahoe Creek............. 3,600,000
Texas.................................. Public Law 566............ Choctaw Creek............. 24,000,000
Texas.................................. Public Law 566............ Aquilla-Hackberry Creek... 3,600,000
Texas.................................. Public Law 566............ Ecleto Creek.............. 9,600,000
Texas.................................. Public Law 566............ Leona River............... 3,600,000
Texas.................................. Public Law 566............ Paluxy River.............. 14,400,000
Texas.................................. Public Law 566............ Red Deer Creek............ 19,200,000
Texas.................................. Public Law 566............ Elm Creek (Cen-Tex)....... 33,600,000
Texas.................................. Public Law 566............ Elm Creek (1250).......... 9,600,000
Texas.................................. Public Law 566............ Los Olmos Creek........... 12,000,000
Texas.................................. Public Law 566............ Big Creek(Tri-County)..... 27,600,000
Texas.................................. Public Law 566............ Upper North Bosque River.. 90,000
Texas.................................. Public Law 566............ Bexar-Medina-Atascosa 475,000
Counties Water
Conservation.
----------------
Public Law 566 Total............. .......................... .......................... 170,891,000
================
Texas.................................. Public Law 534............ Trinity--Pilot Grove...... 32,400,000
Texas.................................. Public Law 534............ Trinity--Richland Creek... 36,000,000
Texas.................................. Public Law 534............ Trinity--Salt Creek & 6,000,000
Laterals.
Texas.................................. Public Law 534............ Trinity--Village & Walker 13,200,000
Creeks.
Texas.................................. Public Law 534............ Trinity--Cedar Creek...... 54,000,000
Texas.................................. Public Law 534............ Trinity--Chambers Creek... 42,355,000
Texas.................................. Public Law 534............ Trinity--Denton Creek..... 1,800,000
Texas.................................. Public Law 534............ Trinity--East Fork Above 9,600,000
Lavon.
Texas.................................. Public Law 534............ Trinity--Hickory Creek.... 7,200,000
Texas.................................. Public Law 534............ Trinity--Little Elm & 8,400,000
Laterals.
Texas.................................. Public Law 534............ Trinity--Lower E. Fork 1,200,000
Laterals.
Texas.................................. Public Law 534............ Trinity--Elm Fork......... 1,715,000
Texas.................................. Public Law 534............ Trinity--Big Sandy Creek.. 48,000,000
Texas.................................. Public Law 534............ Mdl Colorado--Upper Pecan 3,600,000
Bayou.
Texas.................................. Public Law 534............ Mdl Colorado--Southwest 1,800,000
Laterals.
Texas.................................. Public Law 534............ Mdl Colorado--Northwest 1,800,000
Laterals.
----------------
Public Law 534 Total............. .......................... .......................... 269,070,000
================
Texas Total...................... .......................... .......................... 439,961,000
================
Utah................................... Public Law 566............ Ferron.................... 384,500
Utah................................... Public Law 566............ Muddy Creek-Orderville.... 3,000
Utah................................... Public Law 566............ Tri-Valley................ 3,360
----------------
Total............................ .......................... .......................... 390,860
================
Vermont................................ Public Law 566............ Black River............... 563,000
Vermont................................ Public Law 566............ Lemon Fair River.......... 534,000
Vermont................................ Public Law 566............ Lower Winooski River...... 500,000
Vermont................................ Public Law 566............ Barton And Clyde Rivers... 1,820,000
Vermont................................ Public Law 566............ Lower Lake Champlain...... 1,100,000
Vermont................................ Public Law 566............ Lower Lamoille River...... 1,500,000
----------------
Total............................ .......................... .......................... 6,017,000
================
Virginia............................... Public Law 566............ Bush River................ 10,000
Virginia............................... Public Law 566............ Cedar Run................. 22,313,939
Virginia............................... Public Law 566............ Copper Creek.............. 75,000
Virginia............................... Public Law 566............ Cripple Creek............. 150,000
Virginia............................... Public Law 566............ Hays Creek................ 150,000
Virginia............................... Public Law 566............ Watkins Branch............ 4,083,622
Virginia............................... Public Law 566............ Three Creek............... 250,000
Virginia............................... Public Law 566............ Sandy Creek............... 100,000
Virginia............................... Public Law 566............ Lick Creek................ 7,479,384
Virginia............................... Public Law 566............ Ararat River.............. 17,757,182
Virginia............................... Public Law 566............ Chestnut Creek............ 800,000
Virginia............................... Public Law 566............ Little Reed Island Creek.. 800,000
Virginia............................... Public Law 566............ Buena Vista............... 7,975,146
----------------
Public Law 566 Total............. .......................... .......................... 61,944,273
================
Virginia............................... Public Law 534............ Potomac--South River...... 2,140,196
Virginia............................... Public Law 534............ Potomac--Linville Creek... 200,000
Virginia............................... Public Law 534............ Potomac--Lower North River 14,296,437
----------------
Public Law 534 Total............. .......................... .......................... 16,636,633
================
Virginia Total................... .......................... .......................... 78,580,906
================
Washington............................. Public Law 566............ East Side Green River..... 1,900,000
Washington............................. Public Law 566............ Omak Creek................ 1,000,000
----------------
Total............................ .......................... .......................... 2,900,000
================
West Virginia.......................... Public Law 566............ Elk Two Mile Creek........ 8,956,000
West Virginia.......................... Public Law 566............ Mill Creek................ 5,432,000
West Virginia.......................... Public Law 566............ Upper Deckers Creek....... 3,000,000
West Virginia.......................... Public Law 566............ Little Whitestick- 1,000,000
Cranberry Creeks.
West Virginia.......................... Public Law 566............ Upper Tygarts............. 3,000,000
----------------
Public Law 566 Total............. .......................... .......................... 21,388,000
================
West Virginia.......................... Public Law 534............ Potomac--Lost River....... 29,866,000
West Virginia.......................... Public Law 534............ Potomac--Lunice Creek..... 9,069,000
West Virginia.......................... Public Law 534............ Potomac--Patterson Creek.. 2,898,000
West Virginia.......................... Public Law 534............ Potomac--New Creek-Whites 2,821,000
Run.
West Virginia.......................... Public Law 534............ Potomac--No. & So. Mill 8,170,000
Creek.
West Virginia.......................... Public Law 534............ Potomac--South Fork River. 1,752,000
----------------
Public Law 534 Total............. .......................... .......................... 54,576,000
================
West Virginia Total.............. .......................... .......................... 75,964,000
================
Wyoming................................ Public Law 566............ Allison Draw.............. 2,084,000
Wyoming................................ Public Law 566............ Lingle Fort Laramie....... 5,436,955
----------------
Total............................ .......................... .......................... 7,520,955
================
Pacific Basin.......................... Public Law 566............ Kagman.................... 6,000,000
Pacific Basin.......................... Public Law 566............ Aui....................... 13,000
----------------
Pacific Basin Total.............. .......................... .......................... 6,013,000
================
National Total................... .......................... .......................... 1,887,972,931
----------------------------------------------------------------------------------------------------------------
Question. What is the number of watershed projects that are planned
and authorized for implementation but cannot proceed because the
Federal funding share is not available? How are you working at reducing
the list of projects awaiting the Federal share of funding? What is the
total dollar amount of unfunded Federal commitment in authorized,
unfinished watershed projects?
Answer. There are 442 authorized watershed projects that have
requested $1.9 billion. NRCS assists sponsors on an annual basis to
evaluate the status of project implementation and determine the amount
of funds needed to construct the conservation measures described in all
authorized watershed projects. In fiscal year 2005, 92 watershed
projects received fiscal year 2005 funds.
Question. How much did NRCS request during the fiscal year 2006
budget preparation?
Answer. NRCS' materials used in developing the fiscal year 2006
President's Budget are considered ``pre-decisional'' materials and,
therefore, remain a matter of internal record.
Question. How much did USDA request during the fiscal year 2006
budget preparation?
Answer. USDA's budget materials used in developing the fiscal year
2006 President's Budget are considered ``pre-decisional'' materials
and, therefore, remain a matter of internal record.
TECHNICAL AND FINANCIAL ASSISTANCE FUNDS
Question. If the Administration's budget is enacted, NRCS will have
not technical or financial assistance funds on October 1, 2005. What is
your plan to terminate/shut-down on all of the contractual obligations?
Answer. NRCS has about 2,000 contracts and agreements with sponsors
and landowners to install project measures.
NRCS would not have funds available in fiscal year 2006 to provide
technical services for construction inspection or contract management.
These contracts can be terminated for the convenience of the Government
under the contract terms. Terminating those contracts could result in
the need to restore the site to pre-construction conditions. The
termination costs plus the restoration effort may actually cost more
than the completion of the project. In addition, it might take several
months for the restoration effort to be completed for very large
projects in which case the restoration work may actually impact on the
next fiscal year with attendant needs for technical assistance funds
and perhaps additional financial assistance funds to properly close out
the projects. The true impact for many of the larger contracts will
need to be determined on a case by case basis.
Long Term Contracts.--The Government does not have the unilateral
right to terminate these land treatment agreements with individual
landowners in accordance with the terms of the agreement. If NRCS does
not have technical assistance funds to properly administer the
agreements, we may have to make payments under the agreements for
practices completed by the participants. If watershed funds are not
available for NRCS technical assistance, other funds would need to be
reprogrammed to administer the agreements and continue to make payments
for completed practices until the existing agreements are completed.
According to statute, the Secretary may terminate any agreements
with a landowner by mutual agreement if the Secretary determines that
such termination would be in the public interest. However, many
landowners may not mutually agree to terminate the agreements.
Question. What are the human safety risks, risks to the environment
and infrastructure if you halt construction on a half-constructed or
half rehabilitated dam or flood mitigation measure?
Answer. Human safety risks due to partial flood retention and more
probable dam failure, and environmental damage risks due to erosion and
sedimentation, will vary with the particular site situation and the
degree on completion. A partially completed dam is clearly a higher
risk to the public and the environment than a completed one.
Question. What is the Administration's plan to deal with projects
that are partially complete or dams that are half constructed on
September 30, 2005?
Answer. Dams that are partially completed when construction
activities are terminated can either be completed by others, modified
to protect the general public and the partially completed work, or
decommissioned and the area stabilized. Many embankment dams are
constructed over a period of several years; other dams have
construction interrupted by contractor default. NRCS has also
constructed many dams in planned phases with separate contracts for
each phase. Engineering solutions unique to each particular site will
be needed to mitigate long term risks to the Federal investment and the
general public. Unaddressed long term risks will likely be mitigated by
most State Dam Safety Agencies at the dam owner's expense.
Question. How many current contractual obligations do you have?
What is the monetary value associated with these obligations?
Answer. NRCS has about 2,000 contracts and agreements to install
conservation measures, including floodwater retarding structures and
Long Term Agreements with sponsors and landowners. These contracts and
agreements total about $167 million of obligated, yet undisbursed,
funds.
Question. What is the Administration's dollar estimate of claims,
attorney's fees, and litigation costs for addressing all of the
contractual obligations you propose to terminate?
Answer. The termination costs, including claims, attorney's fees,
and litigation costs, plus the cost to restore sites to original
condition have not been determined. These costs will need to be
determined on a case by case basis.
Question. What guidance are you providing to your sponsors (local
communities) who are anticipating Federal cost-share dollars and are
proceeding with land rights acquisition, engineering, design, and
Federal/State permits?
Answer. We have not provided any guidance to project sponsors.
Question. How much funding is needed to complete the on-going
watershed rehabilitation projects that have been initiated with prior
year appropriations?
Answer. The unfunded Federal commitment for projects authorized and
currently underway is $30 million.
Question. How many USDA assisted watershed dams have already
reached the end of their design life?
Answer. By the end of fiscal year 2005, 457 dams will have reached
the end of their design life.
Question. With the Administration's fiscal year 2006 budget
including a significant reduction in funding for watershed
rehabilitation, it seems like very few of the risks to loss of life and
property associated with these dams will be able to be addressed; is
that correct?
Answer. We project that of the currently authorized project work
that includes 68 dams, rehabilitation work could likely proceed on 7
dams.
Question. What are the anticipated rehabilitation needs for aging
watershed dams in the next 5 years?
Answer. In the next 5 years, 1,808 dams will reach the end of their
design life. By fiscal year 2009, $565 million (current dollars) is
required to rehabilitate these dams. The owners of these facilities
should also seek State and local government, as well as private,
sources of funding for their rehabilitation needs.
Question. At the rate of the administrations request for funding
for watershed rehabilitation, how long will it take to address: (1) the
on-going rehabilitation projects? (2) The existing known rehabilitation
needs?
Answer. With funding at $15 million per year, it would take
approximately 5 years to address ongoing projects. It would take
approximately 37 years to address the existing known rehabilitation
needs at this level of funding.
Question. How can the agency meet these critical public safety
needs with the Administration's budget proposal?
Answer. At the proposed funding level, watershed rehabilitation
needs and requests will be prioritized to address needs with the
greatest potential for loss of life.
Question. If funding was available, what is a realistic estimate of
the actual rehabilitation work that NRCS and local project sponsors can
accomplish in fiscal year 2006? How about the next 5 years?
Answer. The funding levels stipulated in statute are consistent
with the watershed rehabilitation needs to protect life and property.
Question. Is there an opportunity for communities to provide new
benefits, such as adding municipal water supply, recreation, and
wetland and wildlife enhancements when these dams are rehabilitated? Is
decommissioning (removal of dams) a viable alternative to consider for
rehabilitation of watershed dams?
Answer. Yes, local communities and project sponsors can add
additional purposes or beneficiaries to existing dams.
Question. How will appropriated funds be allocated to specific
watershed rehabilitation projects?
Answer. The statute directed USDA to assist sponsors with
rehabilitation of their aging dams and required establishment of a
priority ranking system. The priority ranking process has been
invaluable to provide a consistent method for evaluation of dams and
allocation of funds.
All viable applications received from project sponsors are ranked.
The priority ranking system includes the following major components:
Potential for failure of the dam; Consequences of failure of the dam--
based on existing conditions and design features of the dam; Input from
State Dam Safety Agency; Rapid implementation--to assure unsafe dams
are rehabilitated as quickly as possible. Highest priorities are
assigned to those dams with the greatest rehabilitation needs with the
potential for loss of life or significant environmental damage, should
the dam fail.
Question. Does NRCS have the technical capacity needed to assist
project sponsors with all of their requests for Federal assistance in
watershed rehabilitation?
Answer. While NRCS technical capacity in the area of planning,
design, and construction of water resource projects has decreased
significantly over the past several years the statute does not require
all technical assistance to come from NRCS. NRCS may elect to use
private technical sources to provide assistance in planning, design,
and construction oversight. Also, project sponsors may elect to
complete project planning and design using their own staff or the
hiring consultants to complete this work that would then be reviewed
and concurred on by NRCS.
Question. In fiscal year 2005, how many requests and how much money
was requested for rehabilitation assistance?
Answer. In fiscal year 2005, local communities requested 123
projects in 21 States totaling $43 million.
Question. How many projects were funded in fiscal year 2005? How
many projects were not funded?
Answer. The fiscal year 2005 appropriations provided for 87
projects in 21 States. 36 requests for watershed rehabilitation
projects were not funded.
Question. How much did each State receive for watershed
rehabilitation in fiscal year 2005?
[The information follows:]
FISCAL YEAR 2005 WATERSHED REHABILITATION
------------------------------------------------------------------------
State Total
------------------------------------------------------------------------
Alabama................................................. $170,000
Alaska.................................................. ..............
Arizona................................................. 3,797,000
Arkansas................................................ 431,000
California.............................................. 25,000
Colorado................................................ 195,000
Connecticut............................................. ..............
Delaware................................................ ..............
Florida................................................. ..............
Georgia................................................. 2,800,000
Hawaii.................................................. ..............
Idaho................................................... ..............
Illinois................................................ 40,000
Indiana................................................. 100,000
Iowa.................................................... 122,000
Kansas.................................................. 140,000
Kentucky................................................ 430,000
Louisiana............................................... 25,000
Maine................................................... 30,000
Maryland................................................ ..............
Massachusetts........................................... 115,000
Michigan................................................ 10,000
Minnesota............................................... 40,000
Mississippi............................................. 1,360,000
Missouri................................................ 300,000
Montana................................................. 225,000
Nebraska................................................ 1,122,000
Nevada.................................................. ..............
New Hampshire........................................... 110,000
New Jersey.............................................. 45,000
New Mexico.............................................. 662,000
New York................................................ 295,000
North Carolina.......................................... ..............
North Dakota............................................ 611,000
Ohio.................................................... 170,000
Oklahoma................................................ 5,470,000
Oregon.................................................. ..............
Pennsylvania............................................ 90,000
Rhode Island............................................ ..............
South Carolina.......................................... 102,000
South Dakota............................................ 20,000
Tennessee............................................... 14,000
Texas................................................... 5,035,000
Utah.................................................... 159,000
Vermont................................................. ..............
Virginia................................................ 610,000
Washington.............................................. ..............
West Virginia........................................... 190,000
Wisconsin............................................... 181,000
Wyoming................................................. 105,000
Pacific Basin........................................... ..............
Puerto Rico............................................. 30,000
---------------
State Totals...................................... 25,376,000
------------------------------------------------------------------------
______
Questions Submitted by Senator Herb Kohl
DUTIES OF AGENCY STAFF
Question. We are receiving reports that the Department is altering
the traditional agency assignments of certain field office staff. As we
understand it, where the CRP and EQIP programs are concerned, the Farm
Service Agency historically has assisted landowners with sign-up and
financial matters, while the NRCS has assisted with technical
assistance for these programs. Apparently, this is in line with long
standing expertise of these respective agencies. Information is now
coming forward that managers at the Department level are directing
agency staff to handle matters contrary to this historical pattern with
possible negative consequences. Please explain to the committee what is
taking place in this regard.
Answer. In a jointly signed memorandum dated July 19, 2004, Farm
Service Agency (FSA) Administrator James Little and Natural Resources
Conservation Service (NRCS) Chief Bruce Knight announced the migration
of Environmental Quality Incentives Program (EQIP) administrative
responsibilities from FSA to NRCS. There are many reasons for this
change, but the overall result will be a streamlining of services to
participants and more efficient use of Government resources.
Duplication of efforts, which were necessary when both agencies were
involved in EQIP, has been eliminated. Effective October 1, 2004, NRCS
is the point-of-contact for all administrative and technical services
provided through EQIP.
Although NRCS is recommending streamlining CRP to reduce the
administrative activities that are now required of NRCS, NRCS and FSA
have issued a ``workload agreement letter'' which basically states that
NRCS will provide CRP technical assistance for both the General CRP
Sign Up and the Continuous CRP.
In addition, TSPs have traditionally been hired either by the
landowner or by NRCS. TSPs have been available to conduct technical
assistance for CRP since fiscal year 2003.
NRCS at the State level can determine that they will contract out
the CRP technical assistance for conservation planning or conservation
application. NRCS may also decide that they will contract out different
phases of planning or application (conducting status reviews, practice
design or certification, etc.)
Question. What exact directives are being issued, and with what
degree of formality or permanence?
Answer. Jointly signed national directives from the Administrator
and Chief were issued to all FSA and NRCS employees on July 19, and
December 21, 2004. These directives supported an orderly transition to
new EQIP administrative procedures. A jointly signed letter was also
mailed to all active EQIP participants during August of 2004. The
permanent transfer of all contract files and related administrative
records occurred during October and financial reconciliation tasks were
finished during December. Since assuming administrative
responsibilities, NRCS has made over 32,000 EQIP payments totaling
about $175 million.
For fiscal year 2005, NRCS and FSA are operating under a ``Workload
Agreement'' which delineates the responsibility of CCC, FSA, and NRCS
with respect to CRP technical assistance, based on the 1986 Memorandum
of Understanding (MOU) establishing a cooperative working relationship
among the agencies involved in carrying out the CRP.
Question. What cost reimbursement arrangements are involved?
Answer. Since passage of the 2002 Farm Bill, NRCS has reimbursed
FSA annually for administrative services related to handling EQIP
applications and contracts. During fiscal year 2004, over $13 million
was transferred to FSA for this purpose. In 2005, NRCS has retained
these funds to enhance its administrative capability to support EQIP.
Much of this investment has been in software development, training, and
some additional administrative specialists to process payment
applications. No EQIP reimbursable agreements are planned with FSA this
year.
Utilizing the CRP agreement, NRCS will provide technical assistance
both directly or through NRCS approved Technical Service Providers and
assure all technical work done will meet NRCS technical requirements.
NRCS will also submit to FSA billings for direct charge from NRCS time
and accounting system information for full reimbursement of actual cost
of technical assistance provided by NRCS. These costs are based on NRCS
Cost of Programs Model.
Question. What complaints or inefficiencies are you aware of, and
what remedial steps will you take?
Answer. The transfer of more than 160,000 EQIP contracts has
neither been easy nor without some controversy. The migration and
reconciliation process took 5 months to complete. About 20 percent of
the participant payments were delayed beyond 30 days as NRCS
implemented new business processes for EQIP. We have given priority to
software support and training activities that enabled NRCS to eliminate
this problem. By the end of fiscal year 2005, NRCS expects to implement
additional streamlining activities to achieve more administrative and
technical efficiency.
In fiscal year 2007, 16.1 million acres of CRP land will expire and
will be available for planting to an agricultural commodity. This would
increase the soil erosion rate on cropland, and it would also place a
strain on the delivery of CRP technical assistance by NRCS at a time
when USDA's workforce is declining. FSA has requested comments on how
USDA should handle the expiration of the 16.1 million acres of CRP in
fiscal year 2007 and beyond.
NRCS is recommending streamlining CRP to reduce the administrative
activities that are now required of NRCS, e.g., land ownership changes,
obtaining landowner signatures on conservation plans, plan revision for
non-technical reasons, re-planning and certifying food plots every year
for the life of the contract, when the food plot seeding and/or
planting are the same year after year.
RESOURCE CONSERVATION AND DEVELOPMENT
Question. The President's budget includes substantial cuts in the
RC&D program and these cuts are arbitrarily based on the period of time
the associated districts have been authorized. Have you found that the
period of time a district has been authorized has any relation to the
effectiveness and success of the district?
Answer. We have found a variety of capacity situations in regards
to the length of time a RC&D Area has been designated. The President's
budget is not proposing to eliminate any RC&D councils. After more than
20 years of receiving technical assistance in the form of a full-time
coordinator and administrative support, the proposal reflects the
belief that these councils should have the capacity to supplant Federal
funds. The National Association of RC&D Councils recently provided
information showing that 24 percent of the councils have 2-5 employees
and 4 percent have 6 or more employees. Asking high-performing councils
to address these needs themselves should be feasible, and expecting
low-performing councils to improve their performance or risk being
terminated from assistance should also be reasonable.
Question. Should funding decisions be based on the most effective
use of Federal funds or arbitrary decisions?
Answer. We concur that funding decisions should be based on the
most effective use of Federal funds and believe that the President's
budget proposal reflects that decision.
Question. If effective districts will lose Federal funds under your
proposal, what assurances do you have that State, local or other funds
will replace them?
Answer. We are confident that high-performing councils will
demonstrate local leadership abilities to leverage funds from other
sources to supplant the incubator funds they have received from NRCS in
the past. This confidence is based on information they have provided in
the past regarding the high level of leveraged funds they are able to
achieve, an average of 5 to 1 dollar of RC&D appropriated funds for the
past 3 years, and the variety of funding sources they utilize in
carrying out their area plans each year.
______
Questions Submitted by Senator Tom Harkin
CONSERVATION SECURITY PROGRAM
Question. Participation in the first CSP sign-up was much lower
than NRCS expected, but the agency spent $40 million in 18 watersheds.
This year expenditures are capped at $202 million, some of which will
cover last year's contracts. With the sign-up in 220 watersheds this
year, there will be much less money per watershed for new contracts
this year.
The President's budget proposes capping CSP at $274 million next
year. If CSP is capped at $274 million, how much money will be
available for new contracts in fiscal year 2006?
Answer. With CSP capped at $274 million for 2006, NRCS expects to
have $110 million available for new contracts. The President's budget
provides for $273.9 million in available funding for CSP in 2006. Of
that amount, $123.2 is needed to fund prior year financial assistance
obligations. In addition, $41.4 million is used for technical
assistance by NRCS.
Question. I am concerned that the Conservation Security Program is
being eroded by restrictive rules and limited funds. If we follow the
President's budget recommendation, next year there will be less money
available for new contracts. If we continue decreasing the money
available for new contracts, then producers will not have the
opportunity to enroll in CSP once every 8 years, it will be more like
once in a lifetime.
We designed a program that was intended to be attractive to
producers and that would generate significant and lasting conservation
benefits from widespread participation.
I would like your commitment that USDA will help achieve the
original program objectives. Will you give me that assurance?
Answer. USDA is firmly committed to a CSP program that rewards
producers for their stewardship, promotes improved environmental
performance, and responsibly stays within the available funding
limitations.
NRCS is working hard to ensure development of the program in a
manner that is both farmer-friendly and responsive to the conservation
needs of the Nation. The watershed-based implementation is being used
to operate CSP and stay within the available budget. In 2004, CSP was
offered to producers in 18 selected watersheds and resulted in about
2,200 contracts with the $41 million of available funding. Currently,
sign-up for fiscal year 2005 CSP enrollment is well underway in 220
selected watersheds that reach all 50 States and the Caribbean. There
are 2,119 watersheds nationwide at the eight-digit hydrologic unit code
(HUC) level.
USDA is committed to the vision of CSP as a nationwide conservation
program. Other watersheds will be selected each year until landowners
in every watershed have had a chance to participate.
______
Questions Submitted to Gilbert G. Gonzalez
Questions Submitted by Senator Robert F. Bennett
RURAL RENTAL ASSISTANCE
Question. The budget requests $650 million for rural rental
assistance.
How will those funds be allocated?
Answer. [The information follows:]
FISCAL YEAR 2006 RENTAL ASSISTANCE
------------------------------------------------------------------------
------------------------------------------------------------------------
Renewals................................................ $639,126,000
Debt Forgiveness........................................ 5,900,000
Farm Labor Housing New Construction..................... 5,000,000
------------------------------------------------------------------------
Question. Will rental assistance be available for new construction
and substantial rehabilitation for farm labor housing projects?
Answer. Five million dollars will be available for Farm Labor
Housing new construction.
Question. Will that amount be adequate for all farm labor units
expecting to receive financing?
Answer. The amount is consistent with what has been provided in
recent years to support equivalent Farm Labor Housing New Construction
funding levels. Farm Labor Housing rental assistance costs
approximately $10,500 per unit; so this level will fund just under 500
units which should be sufficient to support the requested funding
levels for the program.
GUARANTEED MULTIFAMILY HOUSING
Question. The budget includes an increase for Section 538
guaranteed loans for rural rental housing.
What is the average income for families living in Section 538
developments and how does that compare to Section 515 developments?
Answer. The average income for families living in section 538
developments varies from project to project; however, section 538
projects have approximately 55 percent of the units rented to families
with very low income and approximately 40 percent are rented to low-
income families. The average income for families living in section 515
developments vary by project as well; however, approximately 95 percent
of section 515 units are rented to very low-income families and
approximately 4 percent are rented to low-income families.
Question. What is the average size of the communities in which
Section 538 developments are located?
Answer. The average size of the communities in which section 538
developments are located is approximately 8,790 people. The program can
assist communities up to 20,000 in population.
Question. What is the record of Section 538 developments in serving
low income households and more remote rural communities?
Answer. More than 90 percent of the units are rented to either very
low- or low-income families. One of the driving forces before renting
to very low- or low-income families is the tax credit requirements on
these projects. Eighty percent of section 538 properties are financed
with tax credit equities, which means that between 40 to 60 percent of
the units must serve families making less than 60 percent of median
income.
Section 538 is solely a guarantee program.
Question. What subsidy sources are available to make Section 538
units affordable for low income families?
Answer. The law governing the program requires that at least 20
percent of the loans made each year receive an interest credit subsidy,
which is a buy down from the lender's note rate to the Applicable
Federal Rate. So that this subsidy may reach the neediest of projects,
scoring and selection criteria are published each year in a Notice of
Funds Availability (NOFA), and the project must score a minimum number
of points, set in the NOFA, to receive interest credit. Because the law
sets a threshold for how many loans must receive interest credit, but
does set a limit on how many loans may receive it, the program's
subsidy rate has been calculated on the program's historic average of
interest credit subsidy granted. Each year, since program inception,
approximately 50 percent of the loans have received interest credit.
Rental Assistance is not available for section 538 projects;
however, other subsidies are permitted in these projects. HUD vouchers
are permitted, and State funded rental assistance is also permitted.
More than 80 percent of the section 538 projects have tax credit
equities, which adds an additional source of funding for the
construction. The tax credit agencies require large percentages of
units to be rented to families making less than 60 percent of area
median income.
Question. Does RHS have any information on the availability of such
sources and the likelihood that Section 538 projects will secure such
subsidies?
Answer. Currently, about 50 percent of section 538 properties
received an interest rate buy down, called interest credit. In order to
``stretch'' its interest credit and provide assistance to more
projects, while keeping the subsidy rate under control, the agency
currently limits the amount that any one property can receive to $1.5
million.
Additionally, 5-10 percent of the section 538 tenants have HUD
section 8 vouchers. As mentioned above, more than 80 percent of the
section 538 projects have applied for tax credits and received them.
These tax credits generate funds used in the construction of these
projects. As a condition of using tax credits, many of the units in
these projects are rented to very low-income families at affordable
rents without rent subsidies.
______
Questions Submitted by Senator Herb Kohl
RURAL DEVELOPMENT PROGRAMS
Question. The President's budget request eliminates four rural
economic development programs at USDA which are targeted to low-income
small rural communities and replaces these and 14 others into a smaller
substitute grant program the legislation for which has not even been
drafted. The Administration justifies this change by describing many of
these programs as duplicative, ineffective, and unaccountable with
results not demonstrated. Nevertheless, recent press releases cite the
successes and benefits the Bush administration has brought to rural
America through these very same programs the Administration seeks to
eliminate.
The entire proposal appears to have been developed and driven by
OMB with little or no input from the various affected Federal agencies.
What studies were conducted by either USDA or the Department of
Commerce to determine the impact this transfer will have on America's
rural communities? Isn't this just a shell game to reduce and/or
eliminate many of these programs and have their traditional
constituencies fighting over less funding? If this new smaller
substitute grant program was to be created in the Department of
Commerce, does the Department know for a fact what eligible activities
that are currently authorized under the four rural development programs
would be eligible under this new program? What transfer of staff from
USDA to the Department of Commerce is contemplated?
Answer. The President's proposed Strengthening America's
Communities Initiative is designed to streamline a number of Federal
programs that provide assistance to communities and will include
eligibility criteria that will ensure funds are directed to those
communities most in need of development assistance. While Rural
Development has not conducted any studies regarding this initiative, we
feel confident that rural communities will fare well when these
criteria are used, as the proposal includes broad purposes that will
allow rural communities to obtain funds for purposes currently being
met through the Rural Development programs included in the President's
proposal. USDA Rural Development has offered our expertise, assistance,
and experience in program delivery in rural areas through our 800 local
offices. We will continue to work with the Department of Commerce on
the technical details of the delivery of this program, particularly as
it affects rural areas. The Administration will craft the legislation
as a part of a collaborative effort with Congress and stakeholder
groups. A Secretarial Advisory Committee has been created at the
Department of Commerce to help address some of the most complex issues,
including eligibility of rural communities. The legislation that is
ultimately submitted will be the result of an open dialogue with
stakeholders and members of Congress. The impact of this initiative on
Rural Development staff will be minimal, and no staff will be
transferred to the Department of Commerce.
RD GENERAL REDUCTIONS IN DIRECT LOANS AND GRANTS
Question. It seems that Rural America, as presented in this case
and generally across the entire budget request for the Department of
Agriculture, is the loser once again. These are well established
programs at USDA, serving the poorest rural communities and I have no
intention of allowing this proposal to move forward until the
Department can provide detailed answers prior to the Committee's Mark-
up in the very near future. In fact, I request receipt of these answers
this month to adequately prepare to draft a workable bill and not leave
out our poor communities.
This year, as before, the President proposes to cut direct loans
and grants (which target low-income communities), and increase
guaranteed loan programs (that serve more moderate-income communities).
This proposal effectively cuts vital services to America's poorest
citizens by reducing direct loans and grants for multifamily housing,
water and waste, broadband grants, and other rural development
programs. USDA justifies this shift throughout its budget by
emphasizing a lower interest rate environment, and the lower subsidy
and program costs that would result. On its face, this sounds good to
keep costs down. But, America's most needy rural communities are too
poor and neglected to participate in guaranteed programs. Furthermore,
the public policy underlying direct loans and grants is precisely to
support the Nation's most vulnerable rural communities.
What impact studies did the Department undertake prior to proposing
this shift? If none, why not? If studied, what results? When can the
Committee receive the results? What steps is the Department prepared to
take to protect the needy communities and individuals who will not be
able to participate in or benefit from guaranteed programs, and will no
longer have direct loans and grants available?
Answer. The Administration remains steadfast in its commitment to
rural America, including the neediest communities, and Rural
Development's $12.8 billion program budget request reflects that
commitment. This program level will be achieved with $1.775 billion in
budget authority. Budget authority supporting grants plus direct loans
accounts for 94.5 percent of the program total. Budget authority for
guaranteed loans accounts for only 5.5 percent of the program request.
It is also noted that guaranteed loans do, in fact, benefit the very-
low income rural population directly by providing housing and jobs, and
indirectly by providing infrastructure and essential community
facilities. Furthermore, in this continuing low interest rate
environment, individuals and communities are better able to bear some
debt, which allows scarce resources to be stretched further and allows
more communities and very-low income residents to benefit.
RD TAX EXEMPT FINANCING FOR LOAN GUARANTEE PROGRAMS
Question. USDA provides loan guarantees for essential community
projects under the Rural Development Loan Guarantee program. Struggling
rural communities are critically dependent on these loan guarantees to
meet environmental standards for water and waste water in a cost
effective manner. When it comes to financing public investments for
these issues, rural communities are forced by existing regulation to
choose between USDA loan guarantees or tax exempt financing. Financing
costs would likely decrease if communities could combine tax exempt
financing with Federal guarantees.
Does USDA utilize the full program level available for loan
guarantees of this nature?
Answer. No, we are not able to utilize the full guaranteed water
and environment program funds available. In the last 3 fiscal years,
$75 million has been authorized in each year. However, only 6 loans for
$2.3 million were made in fiscal year 2002; 4 loans for $3.6 million in
fiscal year 2003; and 2 loans for $41.2 million in fiscal year 2004.
That is an average of four loans per year for $16 million. In the past
3 fiscal years, only 21 percent of the guaranteed authority was used.
The vast majority of applicants for loans for water and waste disposal
projects are from municipal or tax exempt entities. Even though this
money is available for loan guarantees, RD is not able to use it to
address the current backlog program in the water and waste disposal
program.
Question. Explain how a provision in the tax code allowing rural
communities to combine tax exempt financing with loan guarantees would
increase rural community utilization of these guarantees?
Answer. Changing the tax code to allow tax exempt financing with an
agency guarantee would allow public bodies to borrow funds from
commercial lenders at an interest rate comparable with the agency's
direct market rate loans. In fiscal year 2004, $291 million in loans
were made to 278 public body borrowers at the agency's market rate
interest rate. That represents over 30 percent of the agency's fiscal
year 2004 lending total. Over one third, 100 public body borrowers in
2004, did not receive grant funds and borrowed $134 million in market
rate loans. Most of these borrowers could obtain financing from private
lenders at a cost comparable to direct loans if they could receive both
a tax exemption and a guarantee on the financing.
RD BUSINESS PROGRAMS
Question. The Business and Industry Guaranteed program has received
a substantial increase in the Department's budget request for 2006.
Are you still pursuing other fees through Congress to reduce the
subsidy costs for this program, and if so, what is the Administration's
formal position?
Answer. The Administration is currently assessing its options
including consideration for assessing an annual fee for reducing the
subsidy costs of the program. It is the Administration's goal to find
ways of reducing the cost of the program in order to assure that
adequate funding is provided to accommodate the demand of this program
in fiscal year 2006 and beyond.
RHS NEW CONSTRUCTION
Question. The President's 2006 budget estimates indicate no rental
assistance for new construction for multi-family rental and farm labor
housing programs. In 2004, GAO reviewed this program, which is the
largest line item account in the Rural Development Mission area. Upon
GAO's finding of gross mismanagement of this program, the committee
changed the term of the contracts to capture over inflated contracts.
Is it true that you have now changed this position to allow rental
assistance for new construction in the farm labor housing program?
Answer. The fiscal year 2006 budget has $5 million in rental
assistance for Farm Labor Housing new construction.
[The information follows:]
FISCAL YEAR 2006 RENTAL ASSISTANCE
------------------------------------------------------------------------
------------------------------------------------------------------------
Renewals................................................ $639,126,000
Debt Forgiveness........................................ 5,900,000
Farm Labor Housing New Construction..................... 5,000,000
------------------------------------------------------------------------
Question. What led to this change?
Answer. Fiscal year 2006 budget had all 521 assistance listed on a
single line item as if for renewal only. The intention to provide $5
million in assistance for 514/516 was erroneously omitted in the
accompanying notes. It was the Administration's intent that support for
farm labor housing new construction be included and was part of the
$650 million requested.
Question. Does this indicate that you over-compensated for
renewals?
Answer. No, the chart did not reflect the intention of the
Administration, and the note in the budget should have said ``including
$5 million of funding for RA for Farm Labor Housing'' instead of ``does
not include''. The RA on the chart erroneously appeared as if it was
only for renewal use. It was overlooked in the review process, and
corrected later. We apologize for this error and appreciate the
opportunity to clarify.
Question. Why is the Administration allowing new construction for
the 514/516 program and not the 515 program when they are very similar
in program activities and structure?
Answer. The Department has studied the 515 program and now has
definitive knowledge of the need to focus on revitalization of existing
portfolio. The 514/516 program, though similar, has not benefited from
the same level of study yet. It would be premature to assume the same
approach is needed in both programs. Further review may indicate what
specific directional changes should be made in this program.
Question. Considering that the very low-income elderly compose
almost half of the population making use of the 515 program, is it not
of vital interest to meet those needs?
Answer. Currently approximately 57 percent of the units in the 515
programs are rented to elderly tenants. The Administration believes
that protection of these tenants through availability of new tools such
as vouchers, and emphasis on revitalizing the portfolio is the best way
to serve the rural elderly population with the limited resources
available.
RHS EQUAL ACCESS TO HOUSING
Question. ``Equal access to housing is especially important in
rural America. RHS is continuing to show the way in making decent
affordable housing available to low- and moderate-income rural people
regardless of color, disability, gender or belief.''
The above comments by former Rural Housing Service (RHS)
Administrator Art Garcia were made on April 26, 2002. I am not sure,
however, how faithful RHS remains to these ideas today.
In 2001, Rural Development issued a Request for Proposal (RFP)
(solicitation #RP-31ME-1-1001) to conduct fair housing paired testing.
The RFP stated that the testing was to be: ``. . . on a nationwide
basis in Rural Development's Rural Rental Housing Section 515 and
Section 538 complexes that were financed by USDA.''
Apparently, the testing was to determine whether discrimination
occurs in rental housing supported by RHS. Although the RFP was issued
nearly 4 years ago, we have heard no mention of the results.
Where are the testing results?
Answer. The study has been reviewed with RHS officials, and
training for Headquarters staff is scheduled by the Fair Housing
Alliance for May 24th and 25th regarding the findings. The recent
policy meeting held in Portland, Oregon, introduced the existence of
the study to the field and a session on accessibility and fair housing
was offered as a mandatory part of the training track for Multi-Family
Housing staff and architects. Additionally, discussions have been held
with Council for Affordable and Rural Housing and National Affordable
Housing Management Association groups about training of resident
managers to be more aware of their responsibilities, which was the
primary focus of the study. Both groups are currently offering such
training to industry managers.
Question. Why has there been no discussion of the findings?
Answer. The findings are being reviewed and policy formulated to
address the findings. The official training by the Fair Housing
Alliance is scheduled for May 24th and 25th.
Question. Did the tests find any violations? How many? In what
areas of the country were the tests conducted?
Answer. The tests found violations, but frequency of violations
were found at a rate of one third that normally found in similar HUD
reviews. The study conducted tests in a geographically dispersed
manner, not focusing on any one part of the United States.
Question. What corrective actions has the Department taken to
remedy any discriminatory practices?
Answer. While individual property by property results are not
provided in the study, the contractor has agreed to deliver to RHS a
list of any specific properties where violations were serious enough to
need immediate attention. These cases will be individually evaluated
and corrective action initiated by Rural Development State Offices.
rhs rental assistance
Question. In the President's budget request for Section 521 Rental
Assistance:
Does the total rental assistance number include transferred rental
assistance for projects that prepay?
Answer. The budget request does not include transferred rental
assistance for projects that prepay because we do not know at this time
which projects will prepay or what the balance of those rental
assistance contracts will be when the borrower actually prepays his
mortgage. The President's budget request of $650 million is for renewal
of contracts expected to exhaust funds in fiscal year 2006 renewals
($639 million), rental assistance for Farm Labor Housing new
construction ($5 million) and preservation (debt forgiveness) ($5.9
million).
Question. If so, what is the number?
Answer. The budget request does not include transferred rental
assistance.
Question. How many projects (and the associated rental assistance
for projects that prepay) do you anticipate will prepay in fiscal year
2006?
Answer. Unless litigation or legislation lifts restrictions
currently in place, we anticipate that approximately 100 properties
will prepay, based upon past trends. We cannot estimate the balance of
these rental assistance contracts.
RHS SINGLE FAMILY RURAL HOUSING
Question. What is the status of the Rural Home Loan Partnership in
the Section 502 direct loan program?
Answer. The agency continues to participate in the Rural Home Loan
Partnership (RHLP) for fiscal year 2005. The partnership provides
significant benefits for the agency and its partners as well as our
customers by bringing our mutual resources together to assist low- and
very low-income rural residents in becoming successful homeowners.
Question. Do you plan to continue this partnership effort?
Answer. Yes. Our customers benefit from the homeowner education and
affordable housing products that many of our RHLP partners provide. We
look forward to working with our partners to make this initiative even
more mutually beneficial.
Question. What is the cost to the government of this partnership
effort compared with what the cost would be if the Department provided
the entire loan through the 502 direct loan program?
Answer. Rural Development has not performed a specific cost-benefit
analysis. The RHLP is a unique partnership involving a local nonprofit,
local lender and Rural Development all working together to build a
better rural community. The nonprofit organization provides credit
counseling, homeownership education, and other affordable housing
products. The local lender is able to participate in helping lower
income families within their community to achieve homeownership. Rural
Development benefits by helping more families to become successful
homeowners.
RHS MULTI-FAMILY HOUSING
Question. In the Administration's new voucher program, what are the
annual cost, number and term for these vouchers?
Answer. While the legislative language currently being developed
through the Department will determine the final form of these vouchers,
we currently anticipate through the budgeting process that the rental
assistance assisted tenants will be provided a 5-year term and cost
approximately $13,000-$14,000 per voucher. Our calculations assumed
that Non RA assisted tenants would be covered for a shorter term, so
those vouchers would be less expensive. The 2006 Budget estimate is
based upon issuing 15,000-17,000 vouchers, which would cover about one-
third of the total expected in the prepayment estimation of the
Comprehensive Property Assessment (CPA). The CPA estimated the primary
need for vouchers would be in years 2006-2009.
Question. Who will administer this program, for example HUD Public
Housing Authorities?
Answer. We could use a delivery strategy similar to that used by
HUD, which includes public housing authorities as part of the process.
Question. If an entity outside of USDA administers this program,
what type of administrative agreement are you exploring and what is the
cost?
Answer. A delivery network similar to HUD could be operated under
an interagency agreement.
Question. Provide a detailed breakdown of the $214 million voucher
funding request. For example, will consulting costs be included and for
what amount?
Answer. Of the $214 million requested during fiscal year 2006 for a
Rural Development voucher program, $204 million would go for the cost
of vouchers and $10 million would go for administrative expenses,
including contracts for industry experts.
Question. Will these vouchers be project-based or tied to an
individual?
Answer. The vouchers are to be tenant based.
Question. Will they be portable and allowed to transfer outside of
the community? Can they be transferred to any community in the United
States? If so, how will you control the costs?
Answer. Details of the voucher program are still being developed.
They will include portability since it is understood that tenants
prefer to have choices.
Question. Can they be transferred to major urban communities? If
so, how will you avoid confusion or conflicts with the HUD voucher
program?
Answer. While they could be transferred to another geographical
area, the cost is determined by the market conditions in the area where
prepayment occurred. Therefore, moving to a very high cost of living
area from somewhere less expensive might not provide enough financial
assistance to fill the gap for the tenant between their income and the
urban rent.
Question. For several years the Administration has indicated that
they would move back to a low-income production program after a
comprehensive review was completed. When will this take place?
Answer. For fiscal year 2006, the production program will continue,
but will largely take the form of the section 538 program. The use of
tax credit equity, other subsidy, and interest credit have allowed this
program to serve low- and very low-income tenants. While not the same
as the section 515 program, it serves similar sized communities, and a
large number of low- and very low-income residents.
Question. How will the 538 program be an effective tool to
rehabilitate the 515 portfolio? Please explain the process for how this
will work? Would these transactions require the 9 percent tax credits
in order to succeed?
Answer. We are exploring how the section 538 program may be used to
rehabilitate existing section 515 projects. For example; the section
538 guarantee can be used for acquisition of the section 515 project if
coupled with extensive rehabilitation of $6,500 or more per unit. The
legislation and regulations permit the use of section 538 guarantees on
projects when they are acquired and repaired. The current regulations
require that the repairs be substantial, at least $6,500 per unit to
qualify for use with section 515 project acquisition. The economics of
each project would be different; however, the 9 percent tax credits
would not always be necessary for these projects to succeed. The longer
40-year amortization of the section 538 loan, plus the program's
interest credit buy down to the Applicable Federal Rate (AFR), should
help the project to succeed. Some regulation and handbook changes will
be needed to make the program more effective in partnership with
section 515 financing already in place on properties in need of
rehabilitation, and for stay-in owners. We intend to work on these
changes in 2006.
Question. How will you overcome potential barriers to the success
of your proposal, such as state ceilings on the 9 percent tax credits
and program competition?
Answer. In 2004 approximately 80 percent (35 out of 44) of the
projects awarded funds in section 538 had tax credits in the deals.
Similar leveraging occurred with section 515, but with mostly lower
valued 4 percent credits. While tax credits are added financial
benefits to project owners, these tax credits are not indicative of the
success or failure of a project. The projects have competed very well
for 9 percent credits.
The 538 program is currently prohibited from providing assistance
for projects with section 521 rental assistance and/or HUD section 8.
Question. Does this mean your proposal to use the 538 program to
rehabilitate the 515 program will be limited only to projects that have
no rental subsidy, and therefore, not reaching the very-low income
projects?
Answer. While the section 538 projects are not eligible for new
rental assistance, many projects do have HUD section 8 vouchers. As we
explore how a section 538 loan can be used with a section 515 project
rehabilitation, the section 515 project may have existing rental
assistance. Therefore it is possible that some rehabilitated section
515 projects with section 538 loans may have rental assistance. We will
need to explore possible regulation or handbook changes to be able to
successfully couple the two programs in a revitalization scenario, but
believe this is clearly the right direction.
Question. Will you use the 538 program to essentially refinance the
515 projects?
Answer. The section 538 program is a new construction program and a
mechanism to rehabilitate section 515 projects. In addition, to section
515 repair and rehabilitation authority in 2005 of $53 million, and
$8.8 million in section 533 (Housing Preservation Grants), applicants
who desire to purchase section 515 projects and repair them may apply
for section 538 funds. Because of rental assistance and other
considerations, refinancing is not always in the best interest of the
borrower or tenants. We do not expect to see wholesale use of section
538 for refinancing under current circumstances.
Question. If so, how will this affect the low and very low-income
residents and the project rent structure?
Answer. Full refinancing is not anticipated as a likely scenario.
Question. What can you realistically accomplish with the 538
program with the 9 percent tax credit for the rehabilitation of the 515
program in fiscal year 2006?
Answer. The Multifamily Revitalization Initiative anticipates that
revitalization will occur over an 8-10 year schedule, with the majority
of major renovations occurring after 2008. Rehabilitation funding with
the section 538 program will be developed as an option in the meantime.
Question. What percentage of 538 loans approved to date have
received a 9 percent tax credit?
Answer. Approximately 80 percent of the section 538 projects have
received 9 percent tax credits.
Question. Do you believe the 515 and 538 programs serve the same
income groups?
Answer. While the section 515 projects have a higher percentage of
very low-income tenants, they also use rental assistance. The section
538 projects have very low-income tenants also, just not to the same
percentage of tenants as the section 515 projects. A primary reason for
this is that the section 538 projects are prohibited from having rental
assistance; therefore, the section 538 projects in order to survive
must attract low-income tenants as well. Additionally, because many
section 538 projects have tax credits, those tax credits require that a
high percent of the units be rented to very low-income tenants, thus
requiring the owners to address the housing needs of the very low
income families.
Question. Please provide a side-by-side comparison of some
hypothetical 538 and 515 projects residing in the same communities
serving the same very-low-income residents. In doing so, provide the
rent structure, required reserve accounts, management and operational
expenses, and all Federal, State and other subsidies and/or grant money
including tax credits.
Answer. These are two properties that were developed at the same
time on a 4 acre tract in Arkansas. Driveways and property entrances
are shared. Both were constructed in 2003. The rent is higher in the
section 515 project prior to application of rental assistance, and this
is primarily a factor of 9 percent tax credits providing equity in the
section 538 product.
[The information follows:]
Section 538 property (Lowell); 40-unit complex garden; style units
24-1BR, 16-2BR.
Bank Loan 7.69 percent, 40 year; section 538 quarantee with Int.;
Credit Rate 5.19 percent; 9 percent LIHTC funds 40 year; and rate 5.19
percent.
Section 515 property (Robinson); 24-unit 2 story with elevator; 24-
1BR with community room & 2 project rooms.
RD loan 1 percent 50 year amort/30yr bal.; HOME Loan, 1 percent, 50
year amort/20 year bal.; Loan from applicant 1 percent 50 year amort
LIHTc (4 Percent).
Rent Structure $331-1BR, $437-2BR--$440/unit 1-BR (All with R/A)
$218/unit Average R/A.
------------------------------------------------------------------------
------------------------------------------------------------------------
Debt Service.................... $54,460 annually.. $35,857 annually
Reserve Require................. 8,000............. 16,346 annually
Operating Exp................... 9/unit/month...... 16/unit/month
Utilities....................... 19/unit/month..... 36/unit/month
Admin........................... 44/unit/month..... 59/unit/month
Taxes & Ins..................... 31/unit/month \1\. 11/unit/month \1\
---------------------------------------
Total Exp................. 103/unit/month.... 121/unit/month
---------------------------------------
Construction Costs.............. 2,752,028......... 1,908,000
Cost per unit................... 68,800............ 79,500
------------------------------------------------------------------------
\1\ Taxes based on land only.
RCBS RURAL COOPERATIVE DEVELOPMENT GRANTS
Question. The Rural Cooperative Development Grants program has
proven to be very effective in funding co-op development centers that
provide critical technical assistance to co-ops that are revitalizing
rural communities across the Nation.
Given the fact that this program has leveraged millions of dollars
for rural cooperative development, created hundreds of new jobs and new
businesses from health care to meat processing plans, has been an
effective use of Federal money, and is providing grants to far fewer
centers than are seeking funding, why does the Administration propose a
17 percent program cut from $6 million to $5 million? Is it not correct
that the Department is providing grants to far fewer centers than the
number of centers that seek funding? What steps can USDA take to ensure
the unique structural and economic advantages of member-owned and
controlled cooperatives will continue to be supported by USDA and its
programs? The Administration has reviewed the programs and services
provided by Cooperative Services at the Rural Business Cooperative
Services agency. What are the results of the review? Please provide any
documentation for these results.
Answer. The $5 million proposal is consistent with the
Administration's 2005 budget request. While we agree that the program
has been successful in developing new business enterprises and creating
jobs in rural America, the success of the program is intricately tied
to the success of the individual centers themselves. Since this is a
competitive grant program, a truly successful center leverages Rural
Development funding with funding from a variety of other sources and
must be able to sustain itself during years when it does not
successfully compete in this program. Several of the centers funded in
the past were not able to remain viable when funding for even a single
year was lost. Therefore, we believe that the $5 million appropriation
requested provides sufficient leveraging and encourages centers to seek
alternative funding sources that will only serve to enhance their
continued sustainability.
In 2003, the Rural Community Development Grants program received 44
applications requesting $12.7 million. Twenty-one applications were
funded for a total of $6.3 million. In 2004, 54 applications requested
$13.7 million. Twenty-four applications were funded for a total of $6.5
million.
Rural Development offers many loan and grant programs for which
cooperatives are eligible. Examples include the Business and Industry
Guaranteed Loan program, the rural Electric and Telecommunications
programs, the Broadband Loan program, the Community Connect Broadband
program, the Distance Learning and Telemedicine program, and the Value-
Added Producer Grant program. Cooperatives are also eligible to receive
technical assistance from recipients of Rural Development programs such
as the Rural Cooperative Development Program and the Rural Business
Enterprise Grant Program. Rural Development staff is also available in
the national office and in state offices to provide technical
assistance such as conducting feasibility studies, developing business
plans, and providing education to groups wishing to form cooperatives
as well as existing cooperatives. Finally, the Cooperative Services
program area of Rural Development conducts research into cooperative
issues and publishes its findings, which are available to the public
free of charge.
The Administration contracted for an outside program review of
Cooperative Services. The review was to identify improvements or
changes in the Cooperative Services programs to better assist today's
rural cooperatives, opportunities for leveraging the present CS
programs and capacity to support a broader range of cooperative
strategies and approaches to building economic vitality in rural areas,
and new ways of generating capital for cooperative organizations. Rural
Development just received the independent contractor's report and the
recommendations and conclusions are under initial review and analysis.
RUS GUARANTEED UNDEWRITING
Question. The Farm Security and Rural Investment Act of 2002
included a new program--Guarantees for Bonds and Notes Issued for Rural
Electrification or Telephone Purposes--to provide private sector
funding for the Department's Rural Economic Development Loan and Grant
(REDLG) program.
The REDLG program provides zero-interest loans and grants for
projects such as business expansion and start-up, community facilities,
schools and hospitals, emergency vehicles and essential community
infrastructure projects in some of the most rural communities in
America. According to USDA statistics, in Wisconsin alone, REDLG has
invested over $13 million in 60 projects while leveraging an additional
$63 million in private capital and creating nearly 2,000 jobs.
At the direction of this Committee, the Department issued a final
regulation for this REDLG enhancement in October of 2004--nearly 2 and
a half years after the program was signed into law by the President.
While this is a step in the right direction, it did not happen in time
for USDA to utilize the $1 billion program level that this Committee
provided in the fiscal year 2004 bill. This was the second year in a
row that USDA failed to utilize the program authority provided by
Congress.
Apparently, USDA still has not provided a single guarantee to date
under this new program. Due to this lack of implementation, no private
funding has flowed into REDLG activities. This represents a substantial
loss of investment in rural communities over the past 2 years.
Funds for rural development activities are becoming increasingly
scarce.
In view of current budget constraints, why has USDA not moved in a
more expeditious manner to implement a program that actually provides
private funding for Federal rural development efforts--at no cost to
the taxpayers?
Answer. There is approximately $100 million in the Rural Economic
Development Loan and Grant (REDLG) program account presently to fund
these economic and community projects. This section of the Farm Bill of
2002 is a very complex financial transaction and it has taken longer
than anticipated to implement. The main reason has been due to our
desire to protect the interest of the taxpayers while simultaneously
ensuring that the maximum amount of funds will be available for the
REDLG program. The Rural Utilities Service, the Federal Financing Bank
and a potential borrower have been negotiating the details of a
guarantee under this program. Last year only $4 million was used from
the REDLG account.
Question. It is very important to this Committee that this program
not only be implemented, but that implementation occurs in an
expeditious manner to ensure that the fiscal year 2005 program levels
are not lost in the same manner as occurred with the fiscal year 2004
and fiscal year 2003 appropriations.
Is it the intention of this Administration to follow the law as set
forth in the 2002 Farm Bill?
Answer. Yes, it is the intention of this Administration to follow
the law as set forth in the 2002 Farm Bill.
Question. Does USDA expect to utilize the funds that were
appropriated by the Committee in the fiscal year 2005 bill?
Answer. USDA expects to utilize the funds that were appropriated in
fiscal year 2005.
Question. When exactly can we expect this program to be fully
implemented?
Answer. The details have been agreed to and implementation is
expected to begin in June 2005.
RURAL UTILITIES SERVICE BROADBAND LOANS
Question. Rural Development and the Rural Utility Service suggest
that the broadband loan program is best utilized for ``residential
service.'' Congress, nevertheless, views this program not only as a
means to provide residential service, but as a tool for economic
development, stating in Senate Report 107-117, ``The availability of
this [broadband] service is crucial for both economic development and
to provide a service that a growing number of Americans are starting to
view as essential.''
Are you approving broadband loans outside residential services to
include economic development activity?
Answer. When a broadband loan is approved it covers the entire
proposed service territory including all residents and businesses in
that service territory. We strongly encourage that the broadband
service be made available to everyone in the area recognizing that any
economic development in the proposed service territory can actually
increase the feasibility of the project and create new customers for
the business plan. We see broadband as a tremendous economic growth
tool for rural America that can create new jobs in today's economy.
Broadband loans are limited by the following requirement: ``RUS
will not make a broadband loan under this part to provide broadband
service in an area receiving local exchange telephone service from an
RUS telecommunications borrower to any other entity other than the
incumbent telecommunications borrower. . . .''
Question. While I realize your concern about creating competition
between potential RUS loan recipients serving one area, can you see a
situation where you have a current broadband borrower that does not
want to expand and provide service for business purposes in their
current service area while another entity wants to provide this service
using a separate customer base, a separate business objective, and a
separate economic objective?
Answer. If a company is currently borrowing funds from RUS and has
no plans to provide broadband service in a specific area, then RUS will
consider making a loan to another entity to provide the broadband
service. Although RUS has not approved a loan of this nature to date,
we are constantly fielding questions about going into an existing
borrower's service territory. We request that a short explanation of
the proposal be prepared for our consideration before an application is
prepared. With the goal to get broadband everywhere, it is highly
likely that RUS will eventually approve loans for the same area to
different entities. Entity ``A'' may only be providing voice service
and the loan to Entity ``B'' could be to provide the broadband service.
______
Questions Submitted by Senator Tom Harkin
RENEWABLE ENERGY OF THE 2002 FARM BILL
Question. My first question about Section 9006, Renewable Energy
Projects and Energy Efficiency Improvements, concerns the timing of the
fiscal year 2005 program implementation. On March 28, 2005, the
Department announced the availability of $11.4 million in grants under
the Section 9006 program, with an application deadline of June 28. The
Department reserved the balance of the Section 9006 funding for a not-
yet-announced loan guarantee program. The Department committed to
releasing the loan guarantee rules later this spring. According to the
Department, any funds for loan guarantees not used by August 31, 2005,
will be made available for grants.
I am concerned that the Department, having reserved 50 percent of
the nearly $23 million in funding for an as-yet-announced loan
guarantee program, will not have sufficient time to make the unused
loan guarantee money available for grants this year. Last year's
grants-only program was well-oversubscribed, and I expect the program
to be even more popular this year.
Will you commit to me that the Department will make all of the
unused loan guarantee money available for additional grants this year,
and obligate those additional grants by September 30, 2005? Otherwise,
the Department risks leaving millions of dollars of unused money on the
table that could have gone for worthwhile projects in Iowa and around
the country.
Answer. The agency anticipates publishing a final rule for the
section 9006 program in late June or early July of 2005. The rule will
implement the guaranteed loan program authorized by the 2002 Farm Bill.
The agency plans to provide both grants and loan guarantees during
fiscal year 2005. In order for the public to be able to take advantage
of guaranteed loans in 2005, it was necessary to announce the
availability of the set aside funds in the March 28, 2005, grant
program Notice of Funds Availability (NOFA).
USDA will evaluate all grant applications received by the deadline
published in the NOFA. Grants will be awarded to all qualified
applicants, or until the initial phase of funding is exhausted,
whichever occurs first. Guaranteed loan applications received by the
deadline for that part of the section 9006 program will be evaluated
and guarantees will be provided for all qualified applicants, or until
funds are exhausted, whichever occurs first. As the NOFA indicates, any
guaranteed loan funds not obligated by August 31, 2005, will be pooled
and made available to fund any remaining qualified grant applications.
We fully expect to complete loan and grant awards to qualified
applicants by September 30, 2005.
My second question involves the scope of the final rules for the
Section 9006 program. Section 9006 requires the Department to offer
grants, loan guarantees, and direct loans to eligible applicants.
Unlike loan guarantees, direct loans are a dedicated source of capital
for clean energy projects, and they are less cumbersome for applicants
to obtain. Direct loans also are often more attractive for smaller but
equally deserving clean energy projects, since banks are unlikely to
issue loan guarantees for these small projects.
Question. Considering the clear statutory requirement for direct
loans, and their multiple benefits, will the Department include a
direct loan component in the final section 9006 program rules that you
have said will be issued later this summer? If not, why not?
Answer. The final rule must be within the scope of the proposed
rule that USDA published last year, which did not contain detailed
provisions for a direct loan program. Moreover, the Notice of Funding
Availability (NOFA) that USDA published earlier this year does not
provide for direct loans in fiscal year 2005. However, if USDA
determines that funds are available for direct loans in future years,
it can implement a direct loan program by including such provisions in
a future NOFA or by issuing regulations.
RURAL BUSINESS COOPERATIVE SERVICE
Question. It is my understanding that an advisory committee was
formed with outside experts to make recommendations on the mission of
the Rural Business Cooperative Service and specifically regarding
cooperative models and activities. I am concerned whether this advisory
committee operated in an open fashion in order to allow interested
groups and individuals to participate or even to have knowledge of any
proposed changes to existing cooperative models and activities.
Under what authority was the advisory committee constituted? Were
these meetings advertised in a public manner in accordance with the
Federal Advisory Committee Act? What were the findings, conclusions and
recommendations of the advisory committee? Are the advisory committee's
findings, conclusions and recommendations contained in a document? Is
that document public? Please promptly provide the document to the
committee. Who at the Department initiated and administered this
advisory committee process, and who were the actual members of this
advisory committee? What is the current status of the advisory
committee?
Answer. Rural Development contracted for an outside program review
of Cooperative Services. An advisory committee was not formed. The
review was to identify improvements or changes in the Cooperative
Services programs to better assist today's rural cooperatives,
opportunities for leveraging the present Cooperative Services programs
and capacity to support a broader range of cooperative strategies and
approaches to building economic vitality in rural areas, and new ways
of generating capital for cooperative organizations. Rural Development
just received the independent contractor's report and the
recommendations and conclusions are under initial review and analysis.
______
Questions Submitted to Joseph J. Jen
Questions Submitted by Senator Robert F. Bennett
BASIC SCIENTIFIC RESEARCH
Question. What do you believe the appropriate role of USDA is in
supporting basic scientific research at the land grant colleges and
universities?
Answer. USDA, through CSREES, is now and should support land-grant
university efforts in all aspects of research relevant to the
advancement of the food and agricultural sciences. New knowledge and
the technological advancements to which it contributes will always be
necessary to maintain an economically viable and environmentally sound
food and fiber industry for the United States.
Question. Do you believe that basic scientific research will be
able to receive funding through competitive awards?
Answer. The highly productive basic scientific enterprise that has
developed in the United States in the years following World War II has
been built on sound systems of competitive awards by agencies of the
United States government. The USDA/CSREES, through its competitively
awarded grants programs such as the National Research Initiative, has
been the major supporter of basic scientific research in fields
relevant to food and agriculture. The success of this program and its
promise for the future are the reasons for its strong support by
Congress, the Administration, and the scientific community.
FORMULA FUNDS
Question. The land grant colleges and universities are not
supportive of the proposed cuts to the formula funds.
--Other than preferring more competitively awarded research, what
does USDA believe is wrong with the current funding mechanisms?
Answer. The commitment to improving the overall quality of Federal
research led to the fiscal year 2006 budget redirection of funds from
formula research programs to competitive programs. Moving from formula-
based to competitive funding changes only the mechanism by which
science is supported, not the goals or objectives of the work. The
emphasis on competitive programs in the President's budget is
consistent with views held beyond the Administration. Within the last
few years Congress has directed USDA to support studies looking at its
research programs. The reports from these studies recommend increasing
the relative, as well as absolute, level of funding to support
competitive research. In addition, the State Agricultural Experiment
Station Competitive Grants Program proposed in the President's budget
will provide a source of funding for functions currently supported by
formula funds.
MISCONDUCT POLICY
Question. In a recent report, the USDA Inspector General says that
the Cooperative State Research, Education, and Extension Service does
not have a Federal Research Misconduct Policy, which is required of
Federal agencies, and that the Agricultural Research Service has such a
policy but it is not in compliance with Federal standards.
What are your plans to bring the agency in compliance?
Answer. The Office of the Undersecretary for Research, Education,
and Economics will serve as the centralized body for research
misconduct on behalf of the Department. By June 30, 2005 a Federal
Register notice will be published announcing the mission area's
research misconduct role and accepting the Office of Science and
Technology Policy (OSTP) definition of research misconduct as the USDA
definition. The Cooperative State Research, Education, and Extension
Service (CSREES) will take the lead on preparation and publication of
the Federal Register notice. Each USDA agency will be required to
develop policies and procedures compliant with the OSTP Federal
Research Misconduct Guidelines, or if more appropriate, to execute a
Memorandum of Understanding with another Departmental agency to act on
their behalf with respect to research misconduct. Agency policies are
to be completed no later than 9 months following publication of the
Federal Register notice noted above. CSREES will refine and document
its research misconduct policy. This will be reviewed by the Office of
General Counsel for OSTP compliance and subsequently published in the
Federal Register and on the agency's website.
The Agricultural Research Service is working with Department
officials to bring its Federal Research Misconduct Policy into
compliance.
STATE AGRICULTURAL EXPERIMENT STATION
Question. How will the proposed State Agricultural Experiment
Station competitive grants program work?
Answer. A CSREES working group of national program leaders has been
charged with the task of developing a preliminary design for the new
competitive grants program for the State Agricultural Experiment
Stations (SAES). Our initial planning for the SAES program emphasizes
broad national issues which are manifested in a wide range of regional
and local research problems, including regional pest management,
marketing and other farm management and local economic issues;
ecosystem management; and new uses and products. Grants may also
emphasize multi-institutional planning and coordination to take
advantage of system-wide capacity in areas such as plant and animal
disease and international markets, and sustaining capacity to assure
rapid response to problems in agrosecurity and food safety.
Question. How will the funding be allocated?
Answer. Funding for the SAES program will be competitively awarded.
Question. Who will review the grant submissions?
Answer. Proposals will be reviewed by ad-hoc reviewers (reviewers
who do not meet in a formal panel setting) and/or peer panel reviewers.
Question. Who will make the award decisions?
Answer. The ad-hoc reviewers and/or peer panel reviewers will
consist of experts in the food and agricultural sciences who will
recommend to CSREES projects for award based upon established
evaluation criteria.
______
Question Submitted by Senator Conrad Burns
HATCH ACT/MCINTIRE-STENNIS
Question. In Montana, our colleges and universities are engaged in
important and high-quality research that yields significant benefits
for Montana agriculture. Yet the President's budget proposes to slash
Hatch Act and McIntire-Stennis funding. I appreciate the desire to
shift funds into competitive grants, but our universities rely on this
funding to sustain long-term research programs.
--Competitive grants are important, but shouldn't they be part of a
balanced portfolio of Federal investment in agriculture and
forestry research?
Answer. Moving from formula-based to competitive funding changes
only the mechanism by which science is supported, not the goals or
objectives of the work. Competitive programs can be designed to build
and sustain research capacity; assure that research contributes to
teaching and extension programs; link strengths and unique expertise
across institutions; and address local and regional issues which
collectively secure the national agricultural system. In addition, with
full indirect cost recovery as part of competitive funding,
institutions can maintain and continuously improve the infrastructure
needed to support modern science, as well as support specialized
undergraduate, graduate, and postgraduate training in the agricultural
sciences. Also, the State Agricultural Experiment Station Competitive
Grants Program proposed in the President's budget will provide a source
of funding for functions currently supported by formula funds.
______
Questions Submitted by Senator Larry Craig
Question. The U.S. dry edible bean industry has been working with
NASS to establish parameters so that a national dry bean stocks report
can be implemented.
Please describe how such a survey and reporting would be
accomplished, including the details of the parameters of such
reporting.
Answer. The survey would be a census of all off-farm dry bean
storage facilities in eighteen States. Approximately 3,200 storage
facilities would be contacted during each survey period. The survey
would be conducted in June and December. Reporting would be by mail,
phone, and electronic data reporting. The initial survey would also
include personal interviews to help answer any questions the respondent
might have about the program.
Question. What do you estimate the initial cost to establish, and
the ongoing annual costs for, a national dry bean stocks report to be,
assuming the parameters you outline in the response to the above
question?
Answer. NASS' cost estimate for the first year is $650,000. The
projected cost for subsequent years is $550,000 per year.
Question. Will USDA make establishing a national dry bean stocks
report a priority and include its cost in the fiscal year 2007 budget
request to the Congress?
Answer. A proposal for instituting a national dry bean stocks
report will be seriously evaluated by USDA during the budget process
when establishing priorities among the many emerging needs requested of
the Department.
Question. If Congress provides sufficient funding to establish a
national dry beans stocks report in the fiscal year 2006 USDA
appropriation, when would NASS be able to start such reporting?
Answer. NASS would be able to start reporting in June 2006. The
following report would come out in January 2007.
______
Questions Submitted by Senator Herb Kohl
ECONOMIC RESEARCH SERVICE REPORTS
Question. Dr. Jen, I would like to compliment you and the employees
of the Economic Research Service for the good work they do. From their
Amber Waves magazine to other shorter reports that ERS publishes, this
Agency provides very helpful and timely information in its
publications.
How are ERS publications made available, and how does USDA work to
make sure the general public is aware of their existence?
Answer. ERS develops and disseminates a broad range of economic,
social scientific, and statistical information to the public. The
agency publishes economic information and research results on the web
and in a variety of agency-published research reports, market analyses
and outlook reports, articles published in ERS periodicals and articles
published in professional journals. Our research is available to the
public in print (which may require a small fee) and online (without
charge).
ERS distributes this information through an array of academic,
policy-, and public-oriented outlets. All ERS publications (including
Amber Waves) are distributed to (and by) the Government Printing Office
(GPO), the National Technical Information Center (NTIS), GPO Depository
Libraries, and the 1890 Land Grant Universities. Commodity Outlook
reports are also distributed to Cornell University's Mann Library
(USDA's economics and statistics system). Many publications are
provided to university Agricultural Economics departments, the Social
Science Research Network (SSRN), and other targeted distributions.
The ERS website (www.ers.usda.gov) provides instant access to ERS
publications, economic and statistical indicators, and datasets. In
fact, ERS' website includes an increasingly comprehensive body of
materials, covering the equivalent of 6,000 200-page books covering:
--Five research emphasis areas that reflect the agency's strategic
goals and research program
--Over 90 briefing rooms offering in-depth syntheses of ERS research
on important economic issues
--Twenty-two key topic areas populated with data, publications, and
other products
--Access to around 9,000 datasets and a range of data products
available in different formats, including online databases,
spreadsheets, and interactive web files and mapping
applications
--Over 1,400 publications, including commodity outlook newsletters
--An ``About ERS'' section pointing to subject specialists, job
listings, and other services
--A newsroom containing concise overviews of key issues, research
findings, and analysis
--Amber Waves magazine, including web-exclusive feature articles,
covering the economics of food, farming, natural resources, and
rural America
--A calendar of upcoming releases
--A subscription-based electronic notification service that supplies
e-mail alerts on newly released or updated products, covering
50 different topic areas and going to 22,000 subscribers.
In February of 2005, the website attracted over 320,000 visitors,
and over the past 4 years site usage has increased 324 percent.
When new research publications and products become available, we
send e-mail notices, postcard notices, report summaries, and sometimes
printed copies of new reports to customers who have expressed interest
in specific ERS topics by registering via the Internet from a
designated page on our website. About 22,000 ERS customers have signed
up for e-mail notifications and about 2,500 have signed up for printed
material. The overlap between the two lists is about 300.
Oral briefings, written staff analyses, and congressionally
mandated studies are delivered directly to executive branch
policymakers and program administrators. We keep the media and
Congressional staff informed of new ERS material via our monthly media
newsletter, DatelinERS, which is a monthly two-page newsletter
(available in both printed and electronic format) announcing recently
released ERS publications, data products, and other web resources. We
also keep our website homepage and newsroom up-to-date, featuring the
latest research and analysis available. We help educate the media about
what's available on our website each time they call us for information.
They, in turn, write stories that the general public reads.
We also exhibit at various conferences throughout the year,
educating the researchers, industry professionals, and the general
public about what we do. We bring publications and demonstrate the
website at these events.
ARS TERMINATIONS
Question. The President's budget proposes to eliminate more than
$200 million in ARS research activities that Congress has determined to
be of high priority. These proposed terminations include work that has
been ongoing for 4 or 5 years.
How does USDA expect Federal employee morale to remain high given
these proposals?
Answer. Research managers have to confront morale issue on a daily
basis and from a variety of sources. While proposals to not continue
funding for these projects have a negative impact on the employees
affected, ARS must retain the flexibility to proposed reallocations of
its resources to meet new challenges that affect the Nation.
Question. What effect is it having on recruitment?
Answer. We have advised all potential research candidates of the
proposed terminations.
CSREES CUTS IN FORMULA FUNDED RESEARCH PROGRAMS
Question. The President's budget proposes to cut in half or
eliminate formula-based funding to land grant universities across the
country for research related to general agriculture, forestry, and
animal health. These funds have helped to develop, and continue to
maintain, a strong cooperative relationship between USDA and the states
to share in research challenges and outcomes. Such drastic cuts are
very troubling and shake the foundation of that once-strong
partnership.
I strongly support competitive research, such as the National
Research Initiative, but it is important to note that the formula-based
funds help state universities, such as the University of Wisconsin,
respond rapidly to sudden problems.
A few years ago, the soybean aphid was discovered in Wisconsin, and
was beginning to spread to neighboring states. Within 6 weeks, the
University of Wisconsin, using formula-based Hatch Act funds, was able
to set up a multi-state working group that was able to research the
problem, determine methods of control, and get information to local
farmers on what they could do to protect against losses. If those
researchers had only competitive or special research grants for
problems like this, the ability to respond rapidly would be lost. And
that is just one example. Over the past few weeks, there have been
reports of an invasive pest that has appeared in the Mid South that
affects rice production. States in that region were able to respond
with formula funds in much the same way we were able to deal with the
soybean aphid. Soybean rust will be another example. To drastically cut
or eliminate these funds is an indication the President does not
realize the importance of these funds.
--How do you propose to work with state research institutions on
problems that arise suddenly if you have greatly reduced or
eliminated the source of Federal funds they could use for that
purpose?
Answer. The fiscal year 2006 budget proposes the new $75 million
State Agricultural Experiment Stations Competitive Grants Program
focused on regional, state and local research needs. Our initial
planning for this program emphasizes broad national issues which are
manifest in a wide range of regional and local research problems.
Grants also may emphasize multi-institutional planning and coordination
to take advantage of system-wide capacity in areas such as plant and
animal diseases and international markets, and sustaining capacity to
assure rapid response to problems in agrosecurity such as soybean rust.
This program will provide a source of funding for functions currently
supported by formula funds.
Question. If you shift Federal resources from formula-based funds
to competitive-based programs, how do you intend to help research
institutions that still need to build their capabilities in order to
fairly compete for Federal funding?
Answer. Moving from formula-based to competitive funding changes
only the mechanism by which science is supported, not the goals or
objectives of the work. Competitive programs can be designed to build
and sustain research capacity; assure that research contributes to
teaching and extension programs; link strengths and unique or limited
expertise across institutions; and address local and regional issues
which collectively secure the national agricultural system. In
addition, with full indirect cost recovery as part of competitive
funding, institutions can maintain and continuously improve the
infrastructure needed to support modern science, as well as support
specialized undergraduate, graduate, and postgraduate training in the
agricultural sciences.
Question. Won't there be definite winners and losers in your plan?
Answer. As in all plans that change the way in which funds are
distributed, there will be winners and losers. Smaller institutions
including those located in the territories will be impacted by the cut
in formulas. Institutions who are currently eligible to receive
McIntire-Stennis and Animal Health and Disease Research formula funds
but who are not land grant institutions, will not be eligible to
compete for funds under the new State Agricultural Experiment Stations
Competitive Grants program. It is assumed that institutions who in the
past have been successful in competing for competitive funds will
continue to do so in the future. While the amount of formula funds
available to institutions in fiscal year 2006 will be reduced or
eliminated, it will ultimately be up to each institution to determine
how to allocate funds available from Federal and non-Federal sources to
continue research projects or support personnel.
CLASSICAL PLANT AND ANIMAL BREEDING
Question. Dr. Jen, the Senate fiscal year 2005 report included
language under CSREES encouraging the Department, especially in the
establishment of priorities within the National Research Initiative, to
give consideration to research needs related to classical plant and
animal breeding.
What, if any, steps have the Department taken in response to this
language? Have any changes been made in the NRI priority process to
reflect these concerns?
Answer. For classical plant breeding, the NRI will be offering
funding opportunities for research, education, and training in a number
of plant programs for fiscal year 2006. In the current NRI plant
programs, support is provided for the development of techniques and
tools, such as marker-assisted selection and quantitative trait locus
analysis, which can be used in plant breeding. In the current NRI
animal programs, support is provided for research in areas such as
genetic or breed comparisons, identification of genetic markers,
including quantitative trait loci and economic trait loci, marker-
assisted selection, and chromosome identification, which can be used in
classical animal breeding.
The NRI sets program priorities based on input from stakeholder
groups which include commodity groups, producers, the scientific
community (including scientific societies) and other interested
parties. The National Program Leaders have continuing, ongoing
interactions and discussions with stakeholders through workshops and
conferences, written input and reports from stakeholders, as well as
input via telephone and e-mail. Stakeholder input is vital to setting
the priorities and directions of the NRI programs.
______
Questions Submitted by Senator Tom Harkin
PRESIDENT'S FISCAL YEAR 2006 BUDGET PROPOSAL
Question. The President's fiscal year 2006 budget proposes to move
the competitive, integrated grants programs (Water Quality, Food
Safety, several IPM-related programs, Methyl Bromide, and Organic
Transitions) currently managed under Section 406 of the 1998
Agriculture Research, Extension and Education Reform Act (AREERA) to
the National Research Initiative.
Does this proposal indicate a shift in research, education and
extension priorities? If so, why are the priorities changing and which
current Section 406 programs will see increases or decreases under the
new proposal. If not, what are the specific, detailed plans for
integrating the existing 406 programs within the NRI?
Answer. With the consolidation of programs, CSREES does not plan to
redirect priorities--all emphasis areas will remain in the portfolio of
programs. The primary purpose for moving integrated program activities
to the National Research Initiative Competitive Grants Program (NRI)
and to the new state Agricultural Experiment Stations Competitive
Grants Program (SAES) is to streamline the presentation of the budget,
thus reducing the appearance of redundant programs.
Question. Will each current 406 program be a separate NRI national
program? Will their funding allocation be increased, decreased or
remain the same compared to fiscal year 2005 Section 406 levels? Does
the agency expect that participation of Extension in the integrated
programs will increase, decrease, or remain unchanged if this proposal
were to be approved?
Answer. The fiscal year 2006 Budget proposes that Section 406
activities will be funded at $41.9 million, but the grants will be
administered through the NRI or the new SAES competitive grants
program. This will allow greater flexibility and responsiveness to
changing needs in these targeted areas. In addition, the fiscal year
2006 Budget also proposes an increase from 20 percent to 30 percent of
funds that may be used to support competitive integrated research,
education, and extension programs.
Question. With respect to the Organic Transitions program, would
the proposal retain a specific organic national program within the NRI;
and would the farm bill's Organic Farming REE program, currently
jointly administered with Organic Transitions, be administered
separately?
Answer. In fiscal year 2006, it is proposed that research programs
focused on activities such as organic transition could be supported not
only with NRI funds but also in the new SAES program. As we move
forward in planning for both the NRI and the new SAES competitive
grants program, we will insure coordination with the Organic
Agriculture Research and Education Initiative to maximize the
effectiveness of the funds available for award.
Question. Finally, please provide a detailed accounting of the
number and type of stakeholder groups who were involved in the
development of the proposal to transfer these programs from Section 406
to the NRI, including specific meeting dates and participants.
Answer. While we are prohibited from sharing budget details with
outside groups during the budget development process prior to release
of the President's budget proposal, we have and will continue to
consult widely with universities, stakeholders, and customers to insure
that CSREES research dollars are utilized in the most effective and
efficient way to address critical research issues. In the last 6 weeks,
the CSREES Administrator has met with over 1,000 direct clients and
customers across the country to discuss the fiscal year 2006 budget and
gain input from customers and stakeholders as we continue program
planning. In addition, an agency team is developing a proposal for the
proposed SAES program which will be available for public comment.
______
Questions Submitted to J.B. Penn
Questions Submitted by Senator Robert F. Bennett
FOREIGN AGRICULTURAL SERVICE (FAS) REVIEW
Question. I understand FAS is currently undertaking an
organizational review. What is the status of that review?
Answer. FAS has made progress in its organizational review and is
continuing to re-examine the agency's core mission, goals, and
resources. Input from the private sector has re-affirmed support for
FAS' network of overseas offices, specifically to resolve market access
issues and provide market intelligence for U.S. agricultural producers
and industry. Internal groups are currently reviewing crosscutting
strategies and tactics, particularly in the context of FAS' market
access mission. Ongoing discussions regarding both FAS' mission and
budget concerns have resulted in some shifts in overseas resources such
as downsizing in Europe along with limited expansion plans to cover
developing markets.
Question. When will final recommendations be released?
Answer. Internal working groups have developed some initial
recommendations and more comprehensive recommendations are being
researched and evaluated. We anticipate this review process will
culminate in final recommendations being presented to the FAS
Administrator in the fall of 2005.
LIVESTOCK RISK PROGRAM FOR LAMB
Question. What is the status of the sheep industry's proposed
Livestock Risk Program for lamb?
Answer. Unfortunately, details of the proposed Livestock Risk
Protection (LPR) program for Lamb submission and discussions of the
proposal with the submitters cannot be disclosed. Submissions under
section 508(h) (4)(A) of the Federal Crop Insurance Act (Act) must be
considered to be confidential commercial or financial information
during the period preceding any decision by the Board.
Applied Analytics Group (AAG) and the American Sheep Industry
Association (ASIA) submitted a proposal to include lamb in the LPR
program in accordance with Section 508(h) of the Act. On October 28,
2004, the Federal Crop Insurance Corporation (FCIC) Board of Directors
(Board) voted to send the proposed LRP Lamb Program for external review
by a panel of five persons experienced as actuaries and in underwriting
as required by the Act.
On January 13, 2005, the Board considered the input it received
from the external reviewers and the Risk Management Agency and
discussed the responses to such by AAG and ASIA. Based on these
discussions, the Board agreed to table the proposal for 45 days to
provide AAG and ASIA time to provide modifications to their LRP lamb
submission.
AAG and ASIA met again with the Board on April 28, 2005, to discuss
issues raised by the external reviewers and RMA and concerns of the
Board.
On April 28, 2005, the Board voted unanimously to give notice of
intent to disapprove the LRP lamb submission.
The Board is sympathetic to the needs of the sheep industry for a
viable risk management tool; but, must also assure any proposed program
complies with all applicable provisions of the Act, the interests of
producers are adequately protected, premiums rates are actuarially
appropriate, and that program integrity will be protected.
PUBLIC LAW 480
Question. The fiscal year 2006 budget proposes transferring $300
million from the Public Law 480 Title II account to USAID. What effect
will this have on USDA's role in administering food aid?
Answer. At this time it is not expected that USDA will have an in-
depth administrative role with regard to the $300 million; however,
interagency coordination across all food aid programs will continue.
USDA will continue to procure the food under Public Law 480 title II.
USDA's role in procuring commodities funded through the $300 million
allocated to USAID will depend on whether the commodities are purchased
in the United States or outside of the United States. If the
commodities are procured outside of the United States, USDA would not
be expected to have a role in the procurement of these commodities.
USAID will be responsible for the budget and the financial management
of those resources.
WEB-BASED APPLICATIONS
Question. FSA has put emphasis on web-based applications. What
percentage of producers are utilizing this technology?
Answer. According to the August 2003 Computer Usage and Ownership
Report of the National Agricultural Statistics Service, a total of 48
percent of U.S. farms have internet access. Of the 58 percent of farms
that have access to a computer, 54 percent own or lease one. Thirty
percent of farms use a computer for their farm business.
Question. Do you have benchmarks to track your success?
Answer. We are tracking internet usage daily for the web-based
applications we have deployed. FSA is currently receiving approximately
200,000 external web-site hits monthly. Over 45,000 customers have
obtained eAuthentication credentials--i.e., electronic signature--to
conduct business electronically with FSA.
The major web-based applications that have been deployed include:
--Web-based Forms.--Since the first forms became available in June
2002, FSA has been expanding this capability, specifically
targeting forms that our customers can electronically access,
sign, and submit on line. FSA has posted over 700 forms to our
eForms website, with over 100 in Spanish.
--Electronic Loan Deficiency Payments (eLDP's).--Pre-approved
producers can access a web-based application and interactively
file applications for LDP's. The web-based applications will
accept the LDP transactions, calculate and issue electronic
payments, and issue electronic notification of the payments to
the participating producers. The eLDP project was deployed
nationwide in September 2004. Over $30 million has been
distributed, and 12,000 applications have processed. Over 7,000
customers have established eLDP profiles.
--Electronic Direct and Counter Cyclical Payment Program (eDCP).--The
eDCP was deployed in October 2004 and enables producers to
enroll using web-based public access facilities in the new
system.
--Electronic Representative (eRep).--Deployed in September 2004, this
application allows various entities such as partnerships,
corporations, trusts, and estates, to conduct business with FSA
electronically.
--Customer Financial Inquiry Data Mart.--This application provides
FSA customers access to FSA/CCC payment, receipt, debt, and IRS
reporting information. Deployed March 2004 in conjunction with
the USDA Customer Statement.
--USDA Common Customer Statement.--Deployed March 2004. With linkages
to FSA's Customer Financial Inquiry Data Mart and Farm Loan
Customer Status Web Service, allows producers to obtain
information such as payments and receipts.
--Farm Business Plan Manager--Equity Manager.--This farm business
planning and financial/credit analysis tool is being used to
determine credit worthiness during the life of an FSA farm
loan. Initial deployment to FSA farm loan employees occurred in
2004. Access will be expanded to FSA guaranteed lenders in
2005.
Question. How are you encouraging producers to take advantage of
this technology?
Answer. We are encouraging producers in a number of ways. At
various farm trade shows we are displaying and demonstrating our new
applications as well as providing printed brochures and posters. In our
county offices the print material is also available, and FSA employees
are promoting these new tools and providing our customers instruction
on using them. FSA employees are also promoting these tools when
speaking in different forums across the country. In addition, almost
every press release, brochure, and poster that FSA produces contains a
promotional web-site link.
______
Questions Submitted by Senator Conrad Burns
BEEF TRADE
Question. Resuming beef trade with major foreign markets is a
priority for me, as it is for many Senators. I know USDA shares that
priority. However, news reports from some of these countries,
particularly Japan, indicate that consumer fears about U.S. beef safety
still exist.
In addition to your efforts to open the borders, what types of
things is USDA doing to promote U.S. beef internationally, and reassure
consumers in major markets that our beef is the safest in the world?
Answer. The Japanese and Korean governments have specifically asked
that USDA implement a risk communications plan to help sell any
agreement between the United States and their respective countries on
Bovine Spongiform Encephalopathy (BSE). In response, FAS and the U.S.
Meat Export Federation (USMEF) have produced a joint pre- and post-
opening risk communications plan that focuses on consumer, media, and
political beef trade concerns and misperceptions about BSE. Both USDA
and USMEF have begun to implement and plan activities to communicate
the proper messages such as editorials, journalist trips to the United
States, BSE seminars, advertisements, and dissemination of technical
materials.
In addition, Dr. Charles Lambert, Deputy Under Secretary for
Marketing and Regulatory programs, has led a U.S. delegation of experts
to Tokyo for outreach activities and technical discussions with
Japanese government officials. Outreach activities include press
briefings and roundtables with the press, industry, and consumers to
help convince Japanese that U.S. beef is safe.
SUGAR
Question. The 1.2 percent marketing assessment for sugar producers
appears, at first glance, to be not much more than a tax on sugar. If I
understand correctly, the revenues go directly into the General Fund,
rather than to an agriculture-related purpose. Can you provide a little
more background on the rationale for this assessment?
Answer. The sugar marketing assessment is proposed as part of a
package that spreads the deficit reduction burden across all farmers
that benefit from Federal agricultural programs. The deficit reduction
activities that will affect most agricultural program beneficiaries,
i.e. reduction in marketing loan gains, tightening payment limitations,
and the general 5 percent reduction in payments, will not affect sugar
program beneficiaries because the sugar program does not improve sugar
beet and sugarcane growers' income by direct payments from the Federal
Government. The sugar program increases farm income by increasing the
domestic sugar price by limiting supply through an import tariff-rate
quota and a domestic marketing quota. There is a nonrecourse sugar loan
available, but the sugar program is specifically required to manage
supply to avoid the cost of sugar loan collateral forfeitures. A sugar
marketing assessment, similar to the current proposal, was included in
the Omnibus Budget Reconciliation Acts of 1990 and 1993 to spread the
cost of deficit reduction among all Federal program beneficiaries.
CROP INSURANCE
Question. Last year, RMA successfully negotiated a new Standard
Reinsurance Agreement for crop insurance providers, which included some
reductions in administrative & overhead costs, as well as underwriting
gains. This year's budget includes further reductions in underwriting
gains, as well as some modifications to premium subsidies. Crop
insurance is a critical risk management tool for my producers in
Montana, and I want to ensure that the program remains strong. Can you
discuss the Administration's commitment to effective risk management
tools, and how this year's proposals strengthen crop insurance
delivery?
Answer. One of the highlighted goals of the Administration's budget
is strengthening crop insurance delivery to ensure that farmers have
adequate yield and price protection. The value of crop insurance
protection in 2006 will be about $41 billion, representing more than 80
percent of the Nation's acres planted to principal crops. Despite the
high level of participation, demand still exists for ad hoc disaster
assistance due in part to reliance on catastrophic coverage which
affords the producer only 27.5 percent protection in the event of a
total loss.
In continuing the Administration's efforts to more effectively
budget for and administer disaster assistance programs, the 2006 budget
includes a proposal to compel producers to purchase more adequate
coverage by tying the receipt of direct payments or any other Federal
payment for crops to the purchase of crop insurance.
Other changes include modifications to the fee for catastrophic
coverage that is intended to make the program more equitable in its
treatment of both large and small farms, restructuring premium rates to
better reflect historical losses, and reduction in delivery costs. The
combination of changes is expected to save the government approximately
$140 million per year, beginning in 2007.
______
Questions Submitted by Senator Herb Kohl
FSA AGENCY LOAN OFFICERS
Question. I understand a disproportionately large number of Farm
Service Agency loan officers will be eligible to retire in the next 2-5
years. Moreover, we are told it takes at least 2 years of on-the job-
training before a new loan officer can function at full competence.
Considering the critical impact these employees have on America's
farmers and ranchers, this raises some important questions. How many of
your senior loan officers, in the national office and in the field, are
eligible to retire?
Answer. FSA's records indicate that 287, or 17 percent, of the
agency's loan officers will be eligible to retire in fiscal year 2005.
Question. How many will be eligible to retire in each of the next 1
to 5 years?
Answer. So far, the agency has analyzed the data for the next 3
fiscal years. The information for those years is as follows:
------------------------------------------------------------------------
Number of Loan
Officers Percent of
Fiscal year Eligible to Total Loan
Retire Officers
------------------------------------------------------------------------
2006.................................... 345 21
2007.................................... 408 25
2008.................................... 492 30
------------------------------------------------------------------------
Each year's retirement eligibility includes those eligible from the
previous year, plus those becoming eligible to retire during that year.
Question. How many do you think will actually leave in fiscal year
2006?
Answer. Because each individual's situation is different, it is
difficult to predict the actual number of retirements in any given
year. However, given the high workload, the high rate of change in
program policies and information technology, and similar stress factors
associated with the farm loan manager position, we expect that a
substantial percentage of those employees eligible for retirement will
actually retire.
Question. What plans are you making in your 2006 budget request to
prepare your staff to replace those positions?
Answer. The President's fiscal year 2005 Budget included a request
for 100 trainee positions to establish a ``pipeline'' of new loan
officers in anticipation of coming retirements. However, because
appropriated funds were below the President's request, the agency made
the difficult decision to forgo filling those positions. Given the
continued need for fiscal restraint, the fiscal year 2006 President's
Budget did not include the 100 positions. As part of a comprehensive
review of agency operations, FSA is studying the best approach to
ensuring a sufficient, well-trained cadre of farm loan officers.
Question. If you agree that having adequate and fully competent
loan officers is necessary for the agency to fulfill its mission, why
are you not requesting funds to maintain an adequate force of loan
officers instead of asking for $3,300,000 for new outreach efforts?
Answer. Adequate and fully competent loan officers are indeed
necessary for the agency to fulfill its mission. Under an initiative
known as ``FSA Tomorrow,'' the agency is performing a top-to-bottom
review of its operations to determine whether its current structure
best serves present and future requirements. The need to ensure
adequate staffing of trained loan officers as well as employees in all
mission-critical occupations will be addressed as part of that review.
The stakeholder discussions that FSA held in developing its
strategic plan revealed that outreach to ensure equitable access to
programs by underserved populations is a critical issue. The agency
believes that its goal of outstanding customer service cannot be
realized if it fails to reach many of its potential customers.
Therefore, even in view of the many difficult choices required in
carrying out operations while constraining costs, FSA believes that an
enhanced outreach program is a high priority.
Question. Where and what population will you target in your
requested outreach efforts?
Answer. FSA's outreach efforts will address various populations
throughout the country that are underserved, particularly in access to
farm loan programs. As an example, one of FSA's outreach projects is a
cooperative agreement with the National Tribal Development Association
located in Montana. The National FSA American Indian Credit Outreach
Initiative, which has been ongoing for 3 years, is designed to reach
out to Native Americans on reservations to inform them about FSA farm
loan programs and to assist them in applying for loans. FSA has other
cooperative agreements to inform minority producers about FSA programs
and to encourage their participation. FSA is also reaching out, in
partnership with other Department of Agriculture agencies, to
community-based organizations to encourage minority participation in
FSA loan programs.
The additional $3,300,000 requested in the President's fiscal year
2006 Budget will be used to expand FSA's work with its partners and
customers to increase program participation of underserved customers,
with special emphasis on socially disadvantaged and/or limited resource
farmers, women, and members of minority groups such as Native
Americans, Hispanics, Asian-Pacific Americans, and African Americans.
Without this requested funding increase, the resources required to
perform this much-needed work must be taken from FSA's salaries and
expenses budget, thus placing downward pressure on FSA's hiring
ceilings.
Question. Have you ever tested your employees, for example, by
using third party entities, to see if your loan programs are being
administered in compliance with Federal statutes including the Equal
Credit Opportunity Act?
Answer. To date, third party testers have not been used. The agency
uses several different compliance review processes to ensure that all
regulatory requirements are met. FSA program and civil rights staffs
conduct routine reviews of office operations and loan processing and
servicing activities. If at any time problems become evident, special
targeted reviews are conducted as well. The agency maintains a special
focus on monitoring the processing of loans from minority and female
applicants; periodic reviews of denied applications must be performed
by managers, and corrective action taken immediately upon detection of
problems.
Question. Would not such tests be an appropriate way to identify
and address existing problems within your agency while conducting
additional outreach efforts? Wouldn't this be a cost-effective way to
deal with overall problems within the agency?
Answer. Additional compliance testing will not completely solve
several of FSA's problems with regard to underserved populations. In
order to apply for farm loans, producers, especially women and
minorities, must be made aware of the available loan programs. They
must also, in some cases, be encouraged and assisted by community-based
organizations and minority-serving educational institutions. Special
efforts must also be made to communicate with minority producers who
have special cultural and linguistic needs. While FSA agrees that
customer service during the loan application and approval process is
crucial, removing barriers to applying is also essential. FSA is
currently focusing its outreach effort on overcoming these known
barriers.
FAS FOREIGN OFFICE SECURITY
Question. The President's budget includes within the FAS salaries
and expenses account, nearly $3 million for capital security costs in
overseas locations and an additional $650,000 contribution for the
Baghdad Embassy. What assurances do you have that FAS location needs
will be met as are now indicated by the contribution rates you have
been assigned?
Answer. The State Department has developed a capital construction
program to provide adequate and secure space for all agencies overseas.
The costs of the program are based on a worldwide headcount and not
tied to specific facilities in specific locations. We will continue to
work with the State Department to ensure that FAS will be provided with
adequate space for the numbers of personnel for which it is being
charged.
Question. What input have you had with the State Department in
development of the rates of contributions USDA has been assigned for
this purpose?
Answer. After announcing the program, the State Department accepted
some feedback from other agencies regarding the provision of credit for
rent currently being paid and charging different rates for different
types of personnel. Other than making those two changes to the
calculation of agency contributions, the State Department has not
adopted any other suggestions. The overall level of the program was
determined by State, as was the rate of contribution for each employee.
______
Questions Submitted by Senator Tom Harkin
WTO DECISION ON USDA COMMODITY AND TRADE PROGRAMS
Question. In the course of crafting the 2002 farm bill, the House
and Senate Agriculture Committees, with extensive advice from USDA,
sought to keep the farm bill provisions consistent with our
international trade obligations. Despite those efforts, last month a
WTO appeals panel upheld the claims of the government of Brazil, which
asserted that the U.S. cotton support program and certain other
programs violate WTO rules. As a result, Congress faces a July 1, 2005
deadline for modifying the export credit guarantee and Cotton Step 2
programs in order to come into compliance with that WTO ruling. We will
also have to address changes in the price-related farm programs by some
later date. Congress needs the best advice of USDA regarding options
for changes to the export credit guarantee and cotton step 2 programs
that would be adequate to satisfy the requirements of the WTO appellate
panel's decision. When will we receive this advice and guidance?
Answer. USDA is consulting carefully and extensively with the U.S.
Trade Representative, industry, and others to craft a response to the
WTO Appellate Body's decision. We will fully comply with the WTO
decision. USDA will provide advice and guidance to Congress when we
have determined how best to comply, taking into account the security of
our cotton producers, the stability of our farm program, and the
commercial opportunities and obligations of all who rely on our export
credit programs, as well as our ambitions in the ongoing Doha WTO
negotiations.
FARM SERVICE AGENCY-STATE ALLOCATIONS
Question. Earlier this year I received a letter from a constituent
who was laid off from her temporary position with her county Farm
Service Agency office. She was informed that because the State agency
had not received its budget allocation for fiscal year 2005, there was
not enough money to keep her on staff. Was there a particular problem
with the State FSA budget allocations this year?
Answer. FSA's fiscal year 2005 President's budget assumed an
overall reduction in temporary staff years of 1,067 due to the
completion of final Farm Bill implementation activities. Although FSA
was operating under multiple continuing resolutions from October 1,
2004 through December 8, 2004, temporary ceiling levels and allotments
were made to all States. The total temporary employee ceiling level for
Iowa is 70 staff years. The total temporary employee usage through the
first half of the fiscal year was 36.72 staff years or 52 percent of
the total ceiling level. FSA provided Iowa with full funding through
the various continuing resolution periods, and subsequently for the
full year, in order to ensure the ability of the State to manage its
workforce in correlation with annual workload needs.
Question. What actions will FSA take to avoid future problems?
Answer. FSA complied fully with the requirements of the continuing
resolutions and issued timely allotments to all States. FSA will
continue to make every effort in the future to provide timely and
accurate funding to all States.
Question. Does the FSA have enough funds to adequately staff local
offices?
Answer. FSA completed a thorough review in order to ensure that
critical mission goals are accomplished within the available resources,
given that FSA's appropriation was $27.1 million below the requested
amount.
FARM SERVICE AGENCY--BENEFICIAL INTEREST
Question. For most producers, claiming loan deficiency was a
relatively routine procedure, but far too many producers encountered
beneficial interest problems that blocked them from receiving payment.
I encourage you to provide equitable relief where the loss of
beneficial interest was inadvertent or unintentional. I also understand
that FSA is working to combine forms to avoid some of the confusion
next year and should simplify the process for both producers and FSA
county office employees. What is the status of equitable relief for
these producers?
Answer. The beneficial interest requirement for loan deficiency
payments is the same as that which exists for commodity loans.
Beneficial interest is a statutory requirement. Misaction or
misinformation is determined on a case-by-case basis.
Question. What is the status of the form revision?
Answer. FSA is in the process of drafting a new form and
instructions. We hope to have it available in time for corn harvest.
CONSERVATION RESERVE PROGRAM--SWITCHGRASS
Question. As you mentioned in your comments--we have a challenge
ahead of us as existing CRP contracts expire. Working with the Chariton
Valley RC&D, we were able to combine CRP and energy production in an
innovative project in southern Iowa. I am concerned that the CRP acres
planted to switchgrass may not receive priority when the owners bid
those acres for re-enrollment in the CRP. Will the administration
support the concept of a CRP ``energy reserve'' so we can continue this
innovative project?
Answer. In August 2004, USDA asked for public comment on how to
address the 28 million acres under CRP contracts that will expire
between 2007 and 2010. USDA received about 5,200 comments, which we are
reviewing and evaluating.
As we develop our options on how to address extensions and
reenrollments, we will take into consideration the role that CRP can
play as a renewable fuel source. The pilot program in Iowa is a prime
example of the benefit that CRP can provide to meet some of our energy
needs in an environmentally sound manner.
SUBCOMMITTEE RECESS
Senator Bennett. Thank you. We have managed to beat the
clock by 5 minutes for which we are very grateful.
As I said, all of the prepared material that you brought
with you will be included in the record, and we will examine
it. We thank you for your service and your attention to all
these matters.
The next hearing will be tomorrow afternoon. We will
examine food, nutrition, and consumer services, marketing and
regulatory programs, and food safety.
Thank you again. The subcommittee is recessed.
[Whereupon, at 1:43 p.m., Wednesday, April 13, the
subcommittee was recessed, to reconvene at 2 p.m., Thursday,
April 14.]
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2006
----------
THURSDAY, APRIL 14, 2005
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 2:03 p.m., in room SD-192, Dirksen
Senate Office Building, Hon. Robert F. Bennett (chairman)
presiding.
Present: Senators Bennett, Burns, and Kohl.
DEPARTMENT OF AGRICULTURE
STATEMENTS OF:
ERIC M. BOST, UNDER SECRETARY FOR FOOD, NUTRITION, AND CONSUMER
SERVICES
WILLIAM T. HAWKS, UNDER SECRETARY FOR MARKETING AND REGULATORY
PROGRAMS
DR. MERLE D. PIERSON, ACTING UNDER SECRETARY FOR FOOD SAFETY
OPENING STATEMENT OF SENATOR ROBERT F. BENNETT
Senator Bennett. The subcommittee will come to order.
This is the third hearing that we have had on the USDA's
budget request for fiscal 2006. And our witnesses today are Mr.
Eric Bost, who is the Under Secretary for Food, Nutrition, and
Consumer Services; Mr. William Hawks, the Under Secretary for
Marketing and Regulatory Programs; and Dr. Merle Pierson,
Acting Under Secretary for Food Safety.
Gentlemen, we welcome you all. We see that Dennis Kaplan,
your keeper, is here again, as he has been in the past. Mr.
Kaplan, we appreciate your diligence and willingness to attend
these.
This is a very diverse group of activities for the
Department of Agriculture. Mr. Bost manages the food stamps and
WIC, a variety of other feeding and nutrition programs. And you
control roughly half the budget, maybe a little more than half.
So----
Mr. Bost. About 62 percent.
Senator Bennett. Sixty-two percent. All right. So everybody
has to be very nice to you.
Mr. Bost. I wish.
Senator Bennett. You wish. All right.
Dr. Pierson's principal agency is the Food Safety and
Inspection Service. So you are concerned with the Canadian
border and BSE and Avian flu and processing plants and all of
the rest of that. So you are in the news a lot.
And then Mr. Hawks manages the Animal and Plant Health
Inspection Service, the Agricultural Marketing Service, and the
Grain Inspection, Packers and Stockyards Administration. So
these agencies foster the marketing of U.S. agricultural
products. You are the sales arm, I suppose, of this group.
So we are in the same situation we were yesterday. We have
the supplemental on the floor. We do not have a vote scheduled
in the moment, but we are subject to being interrupted. So I
would hope that each witness would make a short summary so that
we can proceed to questions as quickly as possible. And of
course, we do have your complete written statements, and they
will, indeed, become part of the record.
Senator Kohl.
Senator Kohl. Thank you once again, Senator Bennett.
We are finishing off a busy week. We welcome Mr. Bost, Mr.
Hawks, and Dr. Pierson, and we thank you for coming today to
help us finish off this week of agriculture appropriations
hearings.
Together, you oversee budgets of more than $60 billion in
mandatory and discretionary spending, with the vast majority of
that money going to nutrition assistance programs. The missions
that you represent--feeding the hungry, making sure the food
supply in this country is safe, and protecting the health of
this country's most important plant and animal resources--are
each very important. And your agencies have received some of
the rare increases that are to be found in the President's
budget this year.
So I congratulate you on pulling that off. Looking at the
budget overall, it must have been a difficult task to do. This
does not mean, however, that we don't have concerns and
questions regarding your budgets. We do, and so we look forward
to your testimony and look forward to having a chance to ask a
few questions.
Thank you very much, Senator Bennett.
Senator Bennett. Let us go in the order in which you are
seated across the way, starting with you, Mr. Bost, and then go
across.
STATEMENT OF ERIC M. BOST
Mr. Bost. Thank you, Mr. Chairman, and good afternoon,
Senator Kohl.
For the record, I am Eric Bost, Under Secretary for Food,
Nutrition, and Consumer Services. You have my written
statement. So I will be very brief in terms of my opening
remarks.
The President's 2006 budget request for the nutrition
assistance programs is a record high $59 billion and ensures
that all eligible low-income children, seniors, and families
and individuals have access to nutrition assistance programs.
Since I have been Under Secretary, I have focused on three
major challenges: one, improving access so that all eligibles
are able to participate in our programs; two, building a
healthier United States by promoting better diets and a
healthier lifestyle; and three, improving the accuracy and
integrity in all of our programs.
The 2006 request supports anticipated participation and
costs for food stamps, WIC, and the Child Nutrition Programs
and provides contingency funds in the amount of $3 billion for
food stamps and $125 million in WIC.
In terms of integrity, one of the things that we are very
pleased with and very proud of, is that the error rate in the
Food Stamp Program is at 6.63 percent. This is the lowest that
it has ever been in the history of the Food Stamp Program and a
25 percent reduction over the course of the last 4 years.
The $5.5 billion request for the WIC Program would fully
support the anticipated participation of 8.5 million persons,
and continues our commitment to ensure that low-income pregnant
women, infants, and children have access to healthy food,
nutrition, education, and when necessary, referrals to other
health and social services.
PREPARED STATEMENTS
In closing, the President's direction and leadership has
been very clear. The Administration's record funding request
has priorities to ensure access, maintain and improve
integrity, and to help Americans live longer, healthier, and
better lives.
I would be happy to answer any questions that you may have.
[The statements follow:]
Prepared Statement of Eric M. Bost
Thank you, Mr. Chairman, and members of the subcommittee for this
opportunity to present the Administration's fiscal year 2006 budget
request for USDA's Food, Nutrition, and Consumer Services (FNCS).
I am here today to discuss with you the President's budget request
that demonstrates the Administration's unwavering commitment to our
Nation's 15 nutrition assistance programs--programs that ensure a
nutrition safety net for the Nation's children, elderly and low-income
households. I am proud of our accomplishments and proud to work for the
President who provides clear and continued support for these programs
that protect our children, elderly and low-income households from
hunger; improve their nutritional intake; and help to prevent the
health risks associated with poor nutrition and physical inactivity.
Three principles have continuously guided our administration of
these programs: (1) promoting access and awareness of the programs so
that all eligible persons can make informed decisions about whether to
participate with dignity and respect; (2) addressing the growing
epidemic of obesity, with its staggering implications for both National
health care costs and individual quality of life; and (3) enhancing the
integrity with which our programs are administered. For these programs
to be successful, our stewardship of public resources needs to inspire
the trust and confidence of the American people.
The President's budget for fiscal year 2006 requests a record level
of $59 billion dollars in new budget authority to administer these
vital programs. We will continue our efforts to improve the public's
awareness of our programs and to, wherever possible, simplify our
administrative processes. By doing so, we can better ensure all
eligible persons have open and informed access to the nutrition
assistance programs. Many potentially eligible individuals do not take
advantage of our programs' benefits and assistance. Clearly, we have
more work to do to reach those who are eligible for our programs.
Our 15 programs provide nutrition assistance, including both access
to healthy food and nutrition education and promotion to support and
encourage a healthy lifestyle. With this nutrition mission in mind, and
the Center for Nutrition Policy and Promotion's (CNPP) focus on
providing a comprehensive Food Guidance System that is the basis of
nutrition promotion for our programs as well as for the broader
population, we play a critical role in the integrated Federal response
to the growing public health threat posed by overweight and obesity.
Finally, we will strive to enhance the efficiency and accuracy with
which our programs are delivered. In fiscal year 2003, the most recent
year for which data is available, we have once again achieved a record
level of Food Stamp payment accuracy with a combined payment error rate
of only 6.63 percent. This is the fifth consecutive year of
improvement, lowering the error rate by over 4 percentage points and
making it the lowest rate in the history of the program. We will
maintain our efforts with State partners toward continued improvement
in the payment error rate. While I am confident that the coming year
will bring more good news about the administration of the Food Stamp
Program, we do have concerns that the Farm Bill's provisions governing
sanctions and incentives may diminish States' determination to maintain
this progress. We will also continue efforts to address the issue of
proper certification in the school meals programs in a manner that
improves the accuracy of this process without imposing barriers to the
participation of eligible children. We will also begin new analytical
work under this budget request to better assess the accuracy of
eligibility determinations in the Child and Adult Care Food Program.
Hard work of USDA staff, of the Congress, and of our State and
local program partners has accomplished many things, but important work
remains to be done. This budget request provides critical support for
this work. I would like to review the highlights of the request and the
improvements in performance and results it is designed to support.
PROGRAM ACCESS
At its most basic level, ensuring program access must begin with
making certain that sufficient resources are provided to these programs
so all who are eligible and in need can have ready access to benefits.
The President's fiscal year 2006 budget requests funds to support
record levels of participation in the Food Stamp Program and the WIC
Program. The Administration's strong commitment to adequately fund
these critical programs acknowledges the inherent difficulties in
anticipating future demand for program services, and provides for
contingency funding should program costs exceed our estimates.
For the Food Stamp Program, the budget continues the $3 billion
contingency reserve appropriated in fiscal year 2005 but also offers,
as an alternative, a proposal for indefinite budget authority for
program benefits. This authority would be an efficient way to ensure
benefits are funded as economic circumstances change. In WIC, the
contingency reserve appropriated in fiscal year 2005 would be
replenished to the $125 million level and would be available to the
program should participation or food costs exceed the levels
anticipated in the budget.
Adequate program funding, however, is not enough to ensure access
to program services for those who need them. The design of our programs
must not create barriers that prevent eligible people in need of
service from accessing our programs. We have recently implemented
legislative changes brought about by the Farm Bill that expanded
eligibility and simplified program rules to improve access to the Food
Stamp Program and have worked diligently to encourage our State
partners to take advantage of the new options. We remain committed to
the fundamental principles of improving program delivery and ensuring
access of eligible people who wish to participate in our programs as we
move forward with the implementation of program changes enacted as part
of the reauthorization of the Child Nutrition and WIC Programs last
year.
COMBATING THE EPIDEMIC OVERWEIGHT AND OBESITY
The statistics surrounding our National epidemic of overweight and
obesity are staggering. Nearly 365,000 deaths a year are related to
poor diet and physical inactivity; poor diet and inactivity are the
second leading cause of preventable death after smoking. Obesity is
costing Americans $123 billion in healthcare costs each year. About 60
million American adults are obese; and, if this trend continues, this
number will rise to 69 million by 2010; 64 percent of adults aged 20-74
are either overweight or obese.
Overweight, obesity and physical inactivity are major risk factors
for chronic diseases such as diabetes, cardiovascular disease and
cancer each of which undermines the quality of life, leads to premature
death, and contributes to the costs I just mentioned. Diabetes has
increased by 49 percent in the past 10 years, reflecting a strong
correlation with obesity; 18 million people have diabetes, and it is
increasingly diagnosed in children and adolescents; 1 in 3 persons born
in 2000 will develop diabetes if there is no change in current health
habits. Between 1971 and 2000, women's daily intake of calories rose by
22 percent, while men increased their daily intake by 7 percent. Recent
trends among children are alarming as well. In the past 20 years, the
percentage of children who are overweight has doubled and the
percentage of adolescents who are overweight has more than tripled. If
we do not stem this tide, this may be the first generation of children
that will not have a longer life expectancy than their parents.
The Federal nutrition assistance programs can play a critical role
in combating this epidemic by providing not just access to healthful
food, but also promoting better health through nutrition education and
promotion of physical activity. These FNS program services, along with
the work of the CNPP to improve the diets of all Americans, are a key
component of the President's HealthierUS initiative. I believe the
American public is served well by USDA's continual contributions to
addressing the critical nutrition-and health-related issues facing us
today. The CNPP continues to have an integral role in the development
and promotion of updated dietary guidance and nutrition education. The
Dietary Guidelines for Americans (Guidelines), published jointly every
5 years by the USDA and the U.S. Department of Human Services (HHS), is
the cornerstone of Federal nutrition policy, allowing the Federal
Government to speak with one voice. With the latest edition of the
Guidelines released January 12, 2005, we have provided the American
public with updated science-based advice that promotes health and helps
to reduce the risk of major chronic diseases--including addressing
obesity through diet and physical activity. For the first time the two
Departments created a consumer brochure and released it along with the
Guidelines to help consumers make smart choices from every food group,
find a balance between food and physical activity and get the most
nutrition out of their calories.
While the Guidelines will continue to serve the American public as
a representation of science-based Federal nutrition policy, USDA is
completing its work on a comprehensive Food Guidance System, replacing
the Food Guide Pyramid, that will serve Americans well by translating
the principles of the Guidelines and interpreting them into healthful
food choices. This new comprehensive Food Guidance System, due to be
released later this spring, will provide a framework that the American
public can use for selecting the types and amounts of foods they need
for a nutritionally adequate diet. With the release and targeted
promotion of both the Guidelines and the USDA's Food Guidance System, I
believe the American public will be motivated to make more healthful
food choices--and thus reduce the trends related to overweight and
obesity and other nutrition-related adverse outcomes. Both the
Guidelines and the new Food Guidance System will be widely and
consistently promoted across the nutrition assistance programs through
the Eat Smart. Play Hard.<SUP>TM</SUP> campaign, and within programs
through Team Nutrition, WIC nutrition education, and Food Stamp Program
nutrition education.
ENHANCING PROGRAM INTEGRITY AND DELIVERY
With this budget request, we are asking the Nation to entrust us
with over $59 billion of public resources. We are keenly aware of the
immense responsibility this represents. To maintain the high level of
public trust that we have earned as good stewards of the resources we
manage, we will continue our ongoing commitment to program integrity as
an essential part of our mission to help the vulnerable people these
programs are intended to serve.
This is not a new commitment. As I noted earlier, in fiscal year
2003, the most recent year for which data is available, the Food Stamp
Program achieved a record high payment accuracy rate of 93.4 percent.
We have also been working to develop strategies to improve the accuracy
of eligibility determinations in our school meals programs--an issue of
mutual concern to all those that care about these programs. The Federal
administrative resources provided for in this budget will allow us to
advance our close work with our State and local program partners on
both of these essential integrity initiatives--continuing both our
successes in the Food Stamp Program and our intensified efforts in
school meals.
In the remainder of my remarks, I'd like to touch on several key
issues:
FOOD STAMP PROGRAM
The President's budget anticipates serving a monthly average of
29.1 million persons in fiscal year 2006, an increase of 2.6 million
over our projections of the current fiscal year. Our $40.7 billion
request fully funds this level of service.
While the President's budget anticipates continuing improvement in
the Nation's economy, Food Stamp Program participation traditionally
continues to rise for some time after the aggregate employment begins
to improve. We have made a concerted effort over the last 3 years to
raise awareness of the benefits of program participation and encourage
those who are eligible, especially working families, senior citizens,
and legal immigrants, to apply. In the past 6 months we have provided
16 grant awards of approximately $2 million to community and faith-
based organizations to test innovative food stamp outreach strategies
to underserved, eligible individuals and families. While these efforts
have brought more people into the program, many eligibles remain who
could be participating but are not. We continue to aggressively promote
the message that Food Stamps Make America Stronger, in the sense that
the program puts healthy food on the tables of low-income families and
has a positive impact on local economies. Particular attention has been
focused on those legal immigrants who had their eligibility restored by
the Farm Bill, the elderly, and working families.
While we seek to encourage all who are eligible and in need to
participate in the program, we also need to ensure access to the
program is administered in an equitable manner across all States. The
budget contains a proposal to eliminate categorical Food Stamp
eligibility for Temporary Assistance for Needy Families (TANF)
participants who receive only TANF services including, for example, an
informational brochure and not cash benefits among persons with income
above the normal food stamp threshold. This proposal, with partial
implementation in fiscal year 2006, is expected to impact 161,000
persons and reduce benefits by $57 million. When fully implemented in
fiscal year 2007, this change is estimated to affect approximately
312,000 individuals and save $113 million annually. The President's
proposal restores equity among participants and ensures that Food Stamp
benefits go to individuals with the most need while retaining
categorical eligibility for the much larger number of recipients who
receive cash assistance through TANF, SSI and General Assistance.
The Budget also requests a continuation of a policy included in
last year's Appropriations to exclude special military pay received by
members of the armed forces serving in combat zones when determining
food stamp benefits for their families back home.
Over the next year, we will also be working with the Congress to
consider renaming the Food Stamp Program to better reflect its purpose
of providing nutrition assistance and promoting health among low-income
families. No additional funding is being requested to support the name
change.
Also included in the budget is a proposal to add the Food Stamp
Program to the list of programs for which States may access the
National Database of New Hires. Access to this National repository of
employment and unemployment insurance data will enhance States' ability
to quickly and accurately make eligibility and benefit level
determinations, improving program integrity. This proposal has modest
administrative costs associated with it, but is expected to produce a
net program savings of $2 million annually beginning in fiscal year
2007.
To ensure the adequacy of resources available to the program, and
as an alternative to the traditional contingency reserve, we have
proposed indefinite authority for program benefits and payments to
States and other non-Federal entities.
CHILD NUTRITION PROGRAMS
The President's budget requests $12.4 billion to support the
service of appealing, nutritious meals to children in public and
private schools and child care facilities through the Child Nutrition
Programs in fiscal year 2006. In the National School Lunch Program, we
anticipate serving almost 30 million children per day in fiscal year
2006, for a total of more than 5 billion meals served during the fiscal
year. Similarly, the School Breakfast Program will serve approximately
9.6 million children each school day for a total of more than 1.6
billion meals. The request for budget authority is an increase of $634
million from levels appropriated in fiscal year 2005. In fiscal year
2006, FNS will implement program changes and new activities resulting
from the 2004 reauthorization of these programs. These include efforts
to promote fruit and vegetable consumption, including the newly
authorized Fruit and Vegetable Program, and our continuing efforts to
promote healthy behaviors through support for implementation of local
wellness policies. To complement the agency's efforts, we have created
the HealthierUS Schools Challenge to encourage communities to improve
the foods offered at school and other aspects of a healthy school
nutrition environment and to recognize schools that have made those
improvements.
WIC
In fiscal year 2006, the President's budget request of $5.51
billion anticipates supporting critical services to a record monthly
average participation of 8.5 million women, infants and children
through the Special Supplemental Nutrition Program for Women, Infants
and Children (WIC). This is an increase of 300,000 participants per
month from anticipated fiscal year 2005 participation levels. The $125
million contingency reserve, appropriated in fiscal year 2003 and
reestablished in fiscal year 2005, remains available to the program
should participation or food costs exceed our projections. We currently
anticipate using a small portion of the reserve in fiscal year 2005;
the President's budget replenishes the reserve to the $125 million
level.
The budget also reflects the Administration's commitment to work
with its State partners to manage program costs to ensure future access
to this critical program for all who are eligible and seek its
services. We propose to cap the level of Nutrition Services and
Administration (NSA) funding at 25 percent of the total level grants to
States. We also are renewing our commitment to continue the long
successful partnership with our State partners to contain food package
cost growth through sharing of best practices and providing technical
assistance in the implementation of food cost containment strategies.
New funding of $3 million is requested in the budget to explore and
develop new food cost containment strategies.
COMMODITY SUPPLEMENTAL FOOD PROGRAM
The Commodity Supplemental Food Program (CSFP) serves elderly
persons and pregnant and post-partum women, infants and children. The
budget requests $106.8 million for this program, the same level
appropriated, after rescission, in fiscal year 2005. With level
funding, we anticipate a reduction in participation of approximately
44,000 persons.
We face difficult challenges and decisions with regard to
discretionary budget resources. The Department will pursue all means to
minimize the impact of straight-line funding for the program. However,
we have chosen to seek level funding for this program for several
reasons. First, CSFP is not available in all States. Second, it is only
available at a limited number of sites within those participating
States. Finally, a Program Assessment Rating Tool (PART) analysis
revealed a number of program weaknesses and concluded that the program
is unable to demonstrate results for its target population. We believe
our limited resources are best focused on those programs that are
universally available to serve these needy populations.
THE EMERGENCY FOOD ASSISTANCE PROGRAM (TEFAP)
TEFAP plays a critical supporting role for the Nation's food banks.
This support takes the form of both commodities for distribution and
administrative funding for States' commodity storage and distribution
costs. Much of this funding flows from the States to the faith-based
organizations, the cornerstone of the food bank community. The
President's budget requests the fully authorized level of $140 million
to support the purchase of commodities for TEFAP. Additional food
resources become available through the donation of surplus commodities
from USDA's market support activities. State administrative costs,
critical support to the food bank community, are funded at $50 million
in the President's request.
NUTRITION PROGRAMS ADMINISTRATION
We are requesting $140.8 million in our Nutrition Programs
Administration account, which reflects an increase of $2 million in our
Federal administrative funding. This account supports Federal
management and oversight of a portfolio of program resources totaling
$59 billion, over 60 percent of the USDA budget. This modest increase
will partially offset the personnel-related costs. As in past years, we
will be carefully managing our administrative resources seeking cost
savings to maintain our high performance at this funding level.
While we understand the difficult budgetary circumstances the
Federal Government now faces, FNCS must address the serious challenge
posed by the impending retirement of close to 30 percent of its
workforce over the next 5 years. I have begun that process by improving
the management of human capital planning processes, strengthening
services provided to employees, and implementing programs designed to
improve the efficiency, diversity, and competency of the work force.
With just nominal increases for basic program administration in most
years, FNCS has reduced its Federal staffing levels significantly over
time. We have compensated for these changes by working smarter--re-
examining our processes, building strong partnerships with the State
and local entities which administer our programs, and taking advantage
of technological innovations. We are extremely proud of what we have
accomplished and continue to seek new ways to meet the challenges
before us.
Mr. Chairman, I appreciate the opportunity to present to you this
record level budget and what it means for the millions of Americans
that count on us for nutrition assistance. I would be happy to answer
any questions you may have.
______
Prepared Statement of Roberto Salazar, Administrator, Food and
Nutrition Service
Thank you, Mr. Chairman, and members of the Subcommittee for
allowing me this opportunity to present testimony in support of the
fiscal year 2006 budget request for the Food and Nutrition Service
(FNS).
The Food and Nutrition Service is the agency charged with managing
fifteen nutrition assistance programs which create the Nation's
nutrition safety net and providing Federal leadership in America's
ongoing struggle against hunger and poor nutrition. Our stated mission
is to increase food security, reduce hunger and improve health outcomes
in partnership with cooperating organizations by providing children and
low-income people access to nutritious food and nutrition education in
a manner that inspires public confidence and supports American
agriculture. The budget request clearly demonstrates the President's
continuing commitment to this mission and our programs.
A request of $59 billion in new budget authority is contained
within the fiscal year 2006 budget to fulfill this mission through the
fifteen FNS nutrition assistance programs. These critical programs
touch the lives of more than 1 in 5 Americans over the course of a
year. Programs funded within this budget request include the National
School Lunch Program (NSLP), which will provide nutritious school
lunches to almost 30 million children each school day, the WIC Program,
which will assist with the nutrition and health care needs of 8.5
million at risk pregnant and postpartum women, infants and children
each month, and the Food Stamp Program (FSP), which will ensure access
to a nutritious diet each month for an estimated 29.1 million people.
The remaining programs include the School Breakfast Program (SBP), The
Emergency Food Assistance Program (TEFAP), the Summer Food Service
Program (SFSP), the Child and Adult Care Food Program (CACFP), the Food
Distribution Program on Indian Reservations (FDPIR), and the Commodity
Supplemental Food Program (CSFP) and the Farmers' Market Programs. FNS
seeks to serve the children and low-income households of this Nation
and address the diverse circumstances though which hunger and
nutrition-related problems present themselves and affect our
participants within the design and delivery methods of our programs.
The resources we are here to discuss represent an investment in the
health, self-sufficiency, and productivity of Americans who, at times,
find themselves in need of nutrition assistance. Under Secretary Bost,
in his testimony, has outlined the three critical challenges which the
Food, Nutrition and Consumer Services team has focused on under his
leadership: expanding access to the Federal nutrition assistance
programs; addressing the growing epidemic of overweight and obesity;
and, improving the integrity with which our programs are administered.
In addition to these fundamental priorities specific to our mission,
the President's Management Agenda provides an ambitious agenda for
management improvement across the Federal Government as a whole. I
would like to report on our efforts to address three specific items
under this agenda; reducing improper payments and enhancing the
efficiency of program delivery, building partnerships with faith and
community based organizations, and systematically planning for the
human capital challenges facing all of the Federal service.
THE CHALLENGE OF IMPROPER PAYMENTS
Good financial management is at the center of the President's
Management Agenda. As with any Federal program, the nutrition
assistance programs require sustained attention to program integrity.
We cannot sustain these programs over the long term without continued
public trust in our ability to manage them effectively. Program
integrity is as fundamental to our mission as program access or healthy
eating. Our efforts to minimize improper program payments focus on (1)
working closely with States to improve Food Stamp payment accuracy; (2)
implementing policy changes and new oversight efforts to improve school
meals certification; and (3) improving management of Child and Adult
Care Food Program providers, and vendors in WIC. We have identified
these 4 programs as programs susceptible to significant improper
payments and will continue to enhance the efficiency and accuracy with
which these programs are delivered. I am happy to report that in fiscal
year 2003, the most recent year for which data is available, we have
achieved a record level of Food Stamp payment accuracy with a combined
payment error rate of only 6.63 percent. This is the fifth consecutive
year of improvement, making it the lowest rate in the history of the
program. With this budget request, we will continue our efforts with
our State partners toward continued improvement in the payment error
rate. We will continue efforts to address the issue of proper
certification in the school meals programs in a way that improves the
accuracy of this process without limiting access of eligible children.
New analytical work will begin under this budget request to better
assess the accuracy of eligibility determinations in the Child and
Adult Care Food Program.
FAITH-BASED AND COMMUNITY ORGANIZATIONS OUTREACH
Faith-based organizations have long played an important role in
raising community awareness about program services, assisting
individuals who apply for benefits, and delivering benefits. President
Bush has made working with the faith-based community an Administration
priority, and we intend to continue our outreach efforts in fiscal year
2006. The partnership of faith-based organizations and FNS programs,
including TEFAP, WIC, NSLP, and the CSFP, is long-established. Most
faith-based schools participate in the NSLP and many child care
providers and sponsors are the product of faith-based organizations. In
addition, the majority of organizations such as food pantries and soup
kitchens that actually deliver TEFAP benefits are faith-based. Across
the country, faith-based organizations have found over the years that
they can participate in these programs without compromising their
mission or values. They are valued partners in an effort to combat
hunger in America. I am happy to report that in the past 6 months we
have provided 16 grant awards of approximately $2 million to community
and faith-based organizations to test innovative food stamp outreach
strategies to reach underserved, eligible individuals and families.
HUMAN CAPITAL MANAGEMENT
We currently estimate that up to 80 percent of our senior leaders
are eligible to retire within 5 years, as is nearly 30 percent of our
total workforce. FNS must address this serious challenge by improving
the management of the agency's human capital, strengthening services
provided to employees, and implementing programs designed to improve
the efficiency, diversity, and competency of the work force. With just
nominal increases for basic program administration in most years, the
Food and Nutrition Service has reduced its Federal staffing levels
significantly over time. We have compensated for these changes by
building strong partnerships with the State and local entities which
administer our programs and taking advantage of technological
innovations. We are extremely proud of what we have accomplished; full
funding of the nutrition programs administration request in this budget
is vital to our continued success.
Now, I would like to review some of the components of our request
under each program area.
FOOD STAMP PROGRAM
The President's budget requests $40.7 billion for the Food Stamp
account including the Food Stamp Program and its associated nutrition
assistance programs. These resources will serve an estimated 29.1
million people each month participating in the Food Stamp Program
alone. Included in this request is the continuation of the $3 billion
contingency reserve provided for the program in fiscal year 2005. While
we anticipate the improvement in the general economy will at some point
begin to impact the program, predicting the turning point of
participation continues to be challenging. To better meet this
challenge, we have proposed, as an alternative to the traditional
contingency reserve, indefinite funding authority for program benefits
and payments to States and other non-Federal entities. In addition, we
have made a concentrated effort to encourage working families, senior
citizens and legal immigrants to apply for benefits.
We need to ensure program access is administered in an equitable
manner across all States. The budget contains a proposal to eliminate
categorical Food Stamp eligibility for Temporary Assistance for Needy
Families (TANF) participants who receive only non-cash TANF services.
This proposal, with partial implementation in fiscal year 2006, is
expected to impact 161,000 persons and reduce benefits by $57 million
among persons with incomes above the normal food stamp thresholds.
Fully implemented in fiscal year 2007, this change is estimated to
affect approximately 312,000 individuals and save $113 million
annually. The President's proposal ensures that Food Stamp benefits go
to the individuals with the most need and retains categorical
eligibility for the large number of recipients who receive cash
assistance through TANF, SSI and General Assistance. Included in the
budget is a proposal to add the Food Stamp Program to the list of
programs for which States may access the National Database of New
Hires. Access to this National repository of employment and
unemployment insurance data will enhance States' ability to quickly and
accurately make eligibility and benefit level determinations, improving
program integrity. This proposal is expected to produce a net program
savings of $2 million annually beginning in fiscal year 2007.
The budget also requests a continuation of a policy included in
last year's Appropriations to exclude special military pay received by
members of the armed forces serving in combat zones when determining
food stamp benefits for their families back home. Over the next year,
we will also be working with members of this Committee to rename the
Food Stamp Program to better reflect its purpose of providing nutrition
assistance and promoting health among low-income families.
CHILD NUTRITION PROGRAMS
The budget requests $12.4 billion for the Child Nutrition Programs,
which provide millions of nutritious meals to children in schools and
in childcare settings every day. This level of funding will support an
increase in daily School Lunch Program participation from the current
29 million children to approximately 30 million children. Requested
increases in these programs reflect rising school enrollment, increases
in payment rates to cover inflation, and proportionately higher levels
of meal service among children in the free and reduced price
categories. We will also put into practice program changes and new
activities resulting from the 2004 reauthorization of these programs.
These include implementing the newly authorized Fruit and Vegetable
Program, and continuing our efforts to promote healthy behaviors by
supporting the implementation of local wellness policies. We created
the HealthierUS Schools Challenge to encourage communities to improve
the foods offered at school and other aspects of a healthy school
nutrition environment and to recognize schools that made improvements.
WIC
The President's budget includes $5.51 billion for the Special
Supplemental Nutrition Program for Women, Infants and Children, the WIC
Program. The request will provide food, nutrition education, and a link
to health care to a monthly average of 8.5 million needy women, infants
and children during fiscal year 2006. We will continue, with a budget
request of $15 million, an initiative begun in fiscal year 2004 and
authorized in the program's 2004 reauthorization, to enhance
breastfeeding initiation and duration. The $125 million contingency
fund provided in the fiscal year 2003 appropriation and reestablished
in fiscal year 2005, continues to be available to the program. We
currently anticipate using a small portion of the reserve in fiscal
year 2005 for projected program costs; the President's budget
replenishes the reserve to the $125 million level.
COMMODITY SUPPLEMENTAL FOOD PROGRAM (CSFP)
The Commodity Supplemental Food Program (CSFP) serves elderly
persons and at risk low-income pregnant and post-partum and
breastfeeding women, infants and children up to age six. The budget
requests $106.8 million for this program, the same level appropriated
in fiscal year 2005. Under this funding level, we anticipate a decrease
of 44,000. We face a difficult challenge with regard to discretionary
budget resources. CSFP operates in selected areas in just 32 States,
the District of Columbia, and two Indian Tribal Organizations. The
populations served by CSFP are eligible to receive similar benefits
through other Federal nutrition assistance programs that offer them
flexibility to meet their individual needs. We believe our limited
resources are best focused on programs available in all communities
nationwide.
THE EMERGENCY FOOD ASSISTANCE PROGRAM (TEFAP)
As provided for in the Farm Bill, the budget requests $140 million
for commodities in this important program. Our request for States'
storage and distribution costs, critical support for the Nation's food
banks, is $50 million. The Food and Nutrition Service is committed to
ensuring the continuing flow of resources to the food bank community
including directly purchased commodities, administrative funding, and
surplus commodities from the USDA market support activities. Much of
this funding is provided, at the local level, to faith-based
organizations. Surplus commodity donations significantly increase the
amount of commodities available to the food bank community from Federal
sources.
NUTRITION PROGRAMS ADMINISTRATION (NPA)
We are requesting $140.8 million in this account, an increase of $2
million over our fiscal year 2005 level. This increase will partially
offset personal-related costs of the FNS workforce in fiscal year 2006.
Our request for Federal administrative resources is needed to sustain
the program management and support activities of our employees
nationwide. I believe we need this modest increase in funding in order
to maintain accountability for our $59 billion portfolio and to assist
States to effectively manage the programs and provide access to all
eligible people.
Thank you for the opportunity to present this written testimony.
______
Prepared Statement of Eric J. Hentges, Executive Director, Center for
Nutrition Policy and Promotion, Food, Nutrition, and Consumer Services
Thank you, Mr. Chairman, and members of the Subcommittee, for
allowing me this opportunity to present testimony in support of the
Administration's budget for fiscal year 2006.
With the Nation facing significant public health issues related to
the quality of the American diet, I believe that the outcome-based
efforts of the Center for Nutrition Policy and Promotion are keys to
promoting more healthful eating habits and lifestyles across the
Nation. Working from its mission to improve the health of Americans by
developing and promoting dietary guidance that links scientific
research to the nutrition needs of consumers, the Center for Nutrition
Policy and Promotion has a critical role in how USDA meets its
strategic goal to improve the Nation's nutrition and health.
trends show need for revised nutrition guidance and educational tools
Recent studies of America's dietary habits and physical activity
reveal disturbing trends. First, a combination of poor diet and
sedentary lifestyle not only undermine the quality of life, life
expectancy, and productivity, they contribute to about 20 percent of
the 2 million annual deaths in the United States.
Second, specific diseases and conditions, such as cardiovascular
disease, hypertension, overweight and obesity, and osteoporosis, are
clearly linked to a poor diet. Recent statistics are staggering with 64
percent of adults (ages 20 to 74) being either overweight or obese.
Children have not escaped this unhealthy outcome. Over the past 20
years, the percentage of children who are overweight has more than
doubled from 7 to 15 percent, and the percentage of adolescents who are
overweight has more than tripled from 5 to 16 percent.
And third, the lack of physical activity has been associated with a
number of conditions, including diabetes, overweight and obesity,
cardiovascular disease, and certain cancers. Supporting evidence
indicates that about 30 percent of women and 25 percent of men get
little or no exercise.
DIETARY GUIDELINES FOR AMERICANS ESTABLISH FEDERAL NUTRITION POLICY
In conjunction with the Department of Health and Human Services
(HHS), USDA released the sixth edition of the Dietary Guidelines for
Americans on January 12, 2005. USDA's involvement is critical in
helping to stem and eventually reverse some of these disturbing trends.
The basis for Federal nutrition policy, the Guidelines, provide
advice for healthy Americans, ages 2 years and older, about food
choices that promote health and prevent disease. These Guidelines not
only form Federal nutrition policy, they also set standards for the
nutrition assistance programs, guide nutrition education programs, and
are the basis for USDA nutrition education and promotion activities.
Finding Your Way to a Healthier You, which is based on the Guidelines,
is but one of many strategies that will be needed to help consumers
make smart choices from every food group, find their balance between
food and physical activity, and get the most nutrition out of their
calories.
food guidance system serves as premier teaching tool
The updated Food Guidance System, currently recognized as the Food
Guide Pyramid, is used to help the American public consume a healthful
diet. The goals for revising the USDA's Food Guidance System are two-
fold: To provide the most up-to-date science and to use better
implementation strategies to help Americans develop healthier
lifestyles. This new system also supports two pillars of the
President's HealthierUS Initiative: to ``Eat a Nutritious Diet'' and to
``Be Physically Active Every Day.'' We expect the new system to be
released later this spring.
USDA takes considerable pride in its approach to updating the Food
Guidance System by maintaining an open and transparent process that
employed the public notice and comment period in the Federal Register.
Now, strategic promotion and implementation of the Food Guidance System
in both the public and private sectors will be essential in
transforming these scientific underpinnings into actionable, targeted
strategies that will motivate Americans to develop and maintain
healthful dietary and lifestyle habits.
EFFECTIVE PARTNERSHIPS STRENGTHEN DISSEMINATION OF SCIENCE-BASED
GUIDANCE AND EDUCATIONAL TOOLS
With your continued support and with robust partnerships among and
between USDA agencies and other Departments, and with information
multipliers from nutritionists, physicians, corporations, and others,
we are in a much stronger position to address the problems of obesity
and overweight. Over the past year, USDA and its partners, including
the scientists of the Dietary Guidelines Advisory Committee, have
updated the Nation's nutrition guidance. Now, with the collaborative
efforts focused on how best to reach the various populations served by
our diverse agencies and Departments, I am confident that we can begin
to stem the nutrition-- and health-related trends that are so adversely
affecting the American public.
I thank the Committee for the opportunity to present this written
testimony.
Senator Bennett. Thank you, sir.
Mr. Hawks.
STATEMENT OF WILLIAM T. HAWKS
Mr. Hawks. Thank you, Mr. Chairman, Senator Kohl. It is
certainly a pleasure to be with you to discuss the budget for
Marketing and Regulatory Programs, which include Animal and
Plant Health Inspection Service; Agricultural Marketing
Service; and Grain Inspection, Packers and Stockyards
Administration.
We have identified in Marketing and Regulatory Programs
some issues that need special attention over the next few
years: enhancing market access by reducing technical barriers
to trade and sanitary and phytosanitary (SPS) measures,
improving plant and animal health and agricultural quality by
continuing to work closely with the Department of Homeland
Security and with farmers and ranchers to control endemic pests
and disease, and harmonizing international standards by putting
sanity back in some of the sanitary and phytosanitary issues.
APHIS's primary mission is to safeguard animal and plant
health, and APHIS has negotiated sanitary and phytosanitary
regulations to maintain and open markets around the world and
to protect the health of plants and animals.
The trade issues resolution management efforts enable APHIS
to negotiate fair trade in international markets. In fiscal
year 2004, 112 SPS issues were resolved, allowing over $5
billion worth of trade to occur. In June 2004, we launched a
one-time enhanced bovine spongiform encephalopathy (BSE)
surveillance program. To date, we have tested almost 318,500
animals, none of which have been positive. In addition, we are
moving ahead with a National Animal Identification System and
are on schedule there.
GIPSA facilitates the marketing of livestock, meat,
poultry, cereals, oil seed, and related agriculture products.
It also promotes fair and competitive trade. GIPSA is
requesting an increased funding largely to significantly
upgrade its critical information management systems and
business functions.
PREPARED STATEMENTS
AMS, Agricultural Marketing Service activities assist the
U.S. agriculture industry in marketing their products and
finding ways to improve their profitability. AMS' budget
request seeks an increase of $10 million in the Marketing
Services account to invest in the Web-Based Supply Chain
Management System.
This concludes my statement, and I will be happy to respond
to questions.
[The statements follow:]
Prepared Statement of William T. Hawks
Mr. Chairman and members of the Committee, I am pleased to appear
before you to discuss the activities of the Marketing and Regulatory
Programs (MRP) of the U.S. Department of Agriculture and to present our
fiscal year 2006 budget proposals for the Animal and Plant Health
Inspection Service (APHIS), the Grain Inspection, Packers and
Stockyards Administration (GIPSA), and the Agricultural Marketing
Service (AMS).
In addition to my statement, Dr. Ron DeHaven, Administrator of
APHIS, Mr. David Shipman, Acting Administrator of GIPSA, and Dr. Ken
Clayton, Acting Administrator of AMS have statements for the record.
Under my leadership, MRP has addressed several broad goals and
objectives to increase marketing opportunities and to protect American
agriculture from damages caused by pests and diseases, both intentional
and unintentional. The key to private sector financial success is
relatively simple. First, offer the highest quality products. Second,
produce them at the lowest possible cost. And, third, earn a fair price
in the marketplace.
MRP helps American farmers and ranchers do all three. AMS and GIPSA
certify the quality of agricultural commodities and provide industry
with a competitive edge earned by the USDA seal of approval for grading
and inspection. APHIS protects the health of plants and animals,
thereby keeping costs low. Additionally, AMS administers the commodity
marketing order programs to help farmers earn fair prices; APHIS
negotiates sanitary and phytosanitary (SPS) regulations to maintain and
open markets around the world; and GIPSA works to ensure that livestock
producers have a level playing field upon which to compete. A healthy
and marketable product provides the foundation of competitive success.
MRP INITIATIVES
MRP has identified three areas for special attention over the next
4 years to make American agriculture more competitive. They include:
Enhanced Market Access.--Market access can be impaired through
technical barriers and SPS measures. MRP will work more closely with
international counterparts to educate them about our systems; to learn
more about the foreign country requirements; and to certify that U.S.
products meet their standards.
Improved Plant and Animal Health and Quality.--MRP will continue to
work closely with the Department of Homeland Security (DHS) to prevent
the entry of foreign plant and animal pests and diseases through the
Agricultural Quarantine Inspection Program (AQI). We will continue to
work with farmers and ranchers to control endemic pests and diseases at
minimal levels. Through MRP's commodity grading and inspection
programs, we will support our producers in the marketing of their high
quality crops and livestock.
Harmonization of International Standards.--MRP will provide
leadership in an effort to bring sanity to the sanitary and
phytosanitary measures. Since risk is inherent and fair trade relies
upon the same standards being applied to all parties, MRP will increase
its efforts with the World Organization for Animal Health and the
International Plant Protection Convention to develop standards and
processes for trade to exist, with restrictions and mitigations based
on sound science to reduce risk. Moving away from an ``all or nothing''
approach makes trade therefore less risky, as a localized or contained
outbreak has fewer effects on exports and thus on the economy. In a
similar vein, a level playing field in world markets depends on
technical standards that describe the quality and other characteristics
of agricultural products in a manner that does not discriminate against
U.S. producers and shippers. MRP will redouble its efforts in a variety
of international standard setting organizations to ensure that
technical standards do not become technical barriers.
FUNDING SOURCES
The MRP activities are funded by both the taxpayers and
beneficiaries of program services. The budget proposes that the MRP
agencies carry out programs costing $1.8 billion; with $436 million
funded by fees charged to the direct beneficiaries of MRP services and
$450 million from Customs receipts.
On the appropriation side, under current law, the Animal and Plant
Health Inspection Service is requesting $866 million for salaries and
expenses and $5 million for repair and maintenance of buildings and
facilities; the Grain Inspection, Packers and Stockyards Administration
is requesting $40 million; and the Agricultural Marketing Service is
requesting $88 million.
The budget proposes user fees that, if enacted, would generate
about $39 million in savings to the U.S. taxpayer. Legislation will be
proposed to provide USDA the authority to recover the cost of
administering the Packers and Stockyards Act, developing grain and
other commodity standards that are used to support fee-based grading
programs and for other purposes, and enabling additional license fees
for facilities regulated under the Animal Welfare Act. I will use the
remainder of my time to highlight the major activities and our budget
requests for the Marketing and Regulatory Programs.
ANIMAL AND PLANT HEALTH INSPECTION SERVICE
The fundamental mission of APHIS is to anticipate and respond to
issues involving animal and plant health, conflicts with wildlife,
environmental stewardship, and animal well-being. Together with their
customers and stakeholders, APHIS promotes the health of animal and
plant resources to enhance market access in the global marketplace and
to ensure abundant agricultural products and services for U.S.
customers. I would like to highlight some key aspects of the APHIS
programs:
Enhanced Market Access.--The Trade Issues Resolution and Management
efforts are key to ensuring fair trade of all agricultural products.
APHIS' staff negotiates SPS standards, resolves issues, and provides
clarity on regulating imports and certifying exports which improves the
infrastructure for a smoothly functioning market in international
trade. Ensuring that the rules of trade are based on science helps open
markets that have been closed by unsubstantiated SPS concerns.
In fiscal year 2004, reopening markets for United States products
posed the greatest challenges. In regard to beef markets that were
closed to U.S. exports because of BSE, APHIS has been successful with
reopening access to more than 20 countries. Altogether, APHIS resolved
112 SPS issues in fiscal year 2004, allowing over $5 billion worth of
trade to occur.
Recent developments in biotechnology underscore the need for
effective regulation to ensure protection of the environment and food
supply, reduce market uncertainties, and encourage development of a
technology that holds great promise. APHIS' Biotechnology Regulatory
Services unit coordinates our services and activities in this area and
focuses on both plant-based biotechnology and transgenic arthropods. We
also are examining issues related to transgenic animals.
Improved Plant and Animal Health and Quality.--While APHIS
continues to work closely with the Department of Homeland Security
(DHS) to exclude agricultural health threats, it retains responsibility
for promulgating regulations related to entry of passengers and
commodities into the U.S. APHIS' efforts have helped keep agricultural
health threats away from U.S. borders through increased offshore
threat-assessment and risk-reduction activities. APHIS has also
increased an already vigilant animal and plant health monitoring and
surveillance system to promptly detect outbreaks of foreign and endemic
plant and animal pests and diseases.
Between June, 2004, when we launched the one-time significantly
enhanced surveillance program for BSE, and March 22, 2005, we have
tested more than 284,000 animals. None have tested positive. Once we
have evaluated the results of the enhanced testing program, a decision
on the number of animals needed to be tested in the future will be
made.
In addition, we are moving ahead with the National Animal
Identification System (NAIS). By late March, 44 States had premises
registration abilities that are operational for the NAIS. The goal is
to have all States operational for premises registration by mid-year
2005.
Because efforts to exclude foreign pests and diseases are not 100
percent successful, APHIS also assists stakeholders in managing new and
endemic agricultural health threats, ranging from threats to
aquaculture to cotton and other crops, tree resources, livestock and
poultry. In addition, APHIS assists stakeholders on issues related to
conflicts with wildlife and animal welfare.
APHIS' 2006 BUDGET REQUEST
In a year of many pressing high-priority items for taxpayer
dollars, the budget request proposes about $866 million for salaries
and expenses. There are substantial increases to support the
Administration's Food and Agriculture Defense Initiative, address SPS
trade barriers, and deal with specific threats to the agriculture
sector. A brief description of key initiatives follows.
A total of about $169 million for Foreign Pest and Disease
Exclusion.--Efforts will focus on enhancing our ability to exclude
Mediterranean fruit fly, screwworm, and foreign animal diseases. In
addition, we also request funds to open new offices in Brazil,
Thailand, India, Italy, and West Africa to facilitate U.S. exports.
A total of about $239 million for Plant and Animal Health
Monitoring and Surveillance.--Due to the critical role of APHIS in
protecting the Nation from both deliberate and unintentional
introductions of an agricultural health threat, the budget requests an
increase of about $44 million, as part of the Food and Agriculture
Defense Initiative. This includes initiatives that enhance plant and
animal health threat monitoring and surveillance, including in those
that could be introduced in wildlife; ensure greater cooperative
surveillance efforts with States; enhance emergency coordination; boost
animal vaccine availability; enhance regulatory controls of biological
agents that pose a grave threat to human, animal, or plant health; and
other efforts. We will continue efforts to build the NAIS.
A total of $346 million for pest and disease management programs.--
Once pests and disease are detected, prompt eradication reduces long-
term damages. In cases where eradication is not feasible (e.g.,
European gypsy moth), attempts are made to slow the advance, and
damages, of the pest or disease. APHIS provides technical and financial
support to help control or eradicate a variety of agricultural threats.
The budget proposes a number of increases, including citrus canker,
emerald ash borer, the brown tree snake, and rabies, as well as
additional support for rural airports to protect against bird strikes.
Other programs were reduced. For example, successes in boll weevil
eradication efforts allow a reduction in that program.
A total of $18 million for the Animal Care programs.--Additional
funding will help APHIS maintain its animal welfare and horse
protection programs despite the rapid growth in the number of new
licensees and registrants. The budget includes a proposal to collect
$11 million in registration fees charged to research facilities,
carriers, and in-transit handlers of animals. Since these facilities
are the direct beneficiaries of APHIS' services, it is appropriate that
the costs be recovered.
A total of about $86 million for Scientific and Technical
Services.--Within USDA, APHIS has chief regulatory oversight of
genetically modified organisms. To help meet the needs of this rapidly
evolving sector, the budget includes a request to, in part, enhance the
regulatory oversight of field trials of crops derived with
biotechnology and initiate a regulatory role towards transgenic
animals, arthropods, and disease agents. Also, APHIS develops methods
and provides diagnostic support to prevent, detect, control, and
eradicate agricultural health threats, and to reduce wildlife damages
(e.g., coyote predation). It also works to prevent worthless or harmful
animal biologics from being marketed.
A total of $8 million for improving security and IT operations.--
This effort builds upon efforts started with Homeland Security
Supplemental funds. It also includes providing the State Department
funds to help cover higher security costs for APHIS personnel abroad. A
portion of the increase would also be used to upgrade key computer
resources for eGov, cyber security, and other efforts.
GRAIN INSPECTION, PACKERS AND STOCKYARDS ADMINISTRATION
GIPSA's mission is to enhance market access for livestock, meat,
poultry, cereals, oilseeds, and related agricultural products and to
promote fair and competitive trade for the benefit of consumers and
American agriculture. GIPSA fulfills this through both service and
regulatory functions in two programs: the Packers and Stockyards
Programs (P&SP) and the Federal Grain Inspection Service (FGIS).
Packers and Stockyards Programs.--The strategic goal for P&SP is to
promote a fair, open and competitive marketing environment for the
livestock, meat, and poultry industries. Currently, with 152 employees,
P&SP monitors the livestock, meatpacking, and poultry industries,
estimated by the Department of Commerce to have an annual wholesale
value of over $118 billion. Legal specialists and economic, financial,
marketing, and weighing experts work together to monitor emerging
technology, evolving industry and market structural changes, and other
issues affecting the livestock, meatpacking, and poultry industries
that the Agency regulates.
We conducted over 1,900 investigations in fiscal year 2004 to
enforce the Packers and Stockyards Act for livestock producers and
poultry growers and helped restore over $17 million to the livestock,
meatpacking, and poultry industries.
The Swine Contract Library began operation on December 3, 2003.
Producers can see contract terms, including, but not limited to, the
base price determination formula and the schedules of premiums or
discounts, and packers' expected annual contract purchases by region.
Thirty-two firms operating 51 plants accounting for approximately 95
percent of industry slaughter are subject to the Swine Contract
Library. GIPSA has received over 700 contracts to date.
The Livestock and Meat Marketing Study, for which Congress
appropriated $4.5 million in fiscal year 2003, faced a complex set of
issues that has delayed its completion date. GIPSA announced an award
to the Research Triangle Institute (RTI) in June, 2004. RTI assembled a
coalition of researchers from Colorado State University, Iowa State
University, Montana State University, North Carolina State University,
and the Wharton School of Business. RTI is continuing preparations for
data collection and the overall study and is scheduled to release study
reports in mid-year 2005 and mid-year 2006. The first report will
provide information about the types of livestock arrangements in the
cattle, hog, and sheep industries based on a survey conducted by RTI.
The second report will provide detailed economic analyses about the
arrangements. Despite the delay, the study will be completed within the
amount appropriated.
Federal Grain Inspection Service.--FGIS facilitates the marketing
of U.S. grain and related commodities under the authority of the U.S.
Grain Standards Act and the Agricultural Marketing Act of 1946. As an
impartial, third-party in the market, we advance the orderly and
efficient marketing and effective distribution of U.S. grain and other
assigned commodities from the Nation's farms to domestic and
international buyers. We are part of the infrastructure that undergirds
the agricultural sector.
GIPSA works with government and scientific organizations to
establish internationally recognized methods and performance criteria
and standards to reduce the uncertainty associated with testing for the
presence of biotechnology traits in grains and oil seeds. It also
provides technical assistance to exporters, importers and end users of
U.S. grains and oilseeds, as well as other USDA agencies, industry
organizations, and other governments. These efforts help facilitate the
sale of U.S. products in international markets.
Our efforts to improve and streamline our programs and services are
paying off for our customers, both in terms of their bottom lines and
in greater customer satisfaction. FGIS' service delivery costs average
$0.29 per metric ton, or approximately 0.14 percent of the $19 billion
value of U.S. grain exports. In fiscal year 2004, approximately 1.8
million inspections were performed by FGIS employees on more than 230
million tons of grains and oilseeds.
One indicator of the success of our outreach and educational
initiatives is the number of foreign complaints lodged with FGIS
regarding the quality or quantity of U.S. grain exports. In fiscal year
2004, FGIS received only four complaints regarding poor quality and no
complaints regarding inadequate weights from importers on grains
inspected under the U.S. Grain Standards Act. These involved 96,695
metric tons, or about 0.1 percent by weight, of the total amount of
grain exported during the year.
GIPSA'S 2005 BUDGET REQUEST
For 2005, the budget proposes a program level for salaries and
expenses of $40 million. Of this amount, $20 million is devoted to
grain inspection activities for standardization, compliance, and
methods development and $20 million is for Packers and Stockyards
Programs. The 2006 budget includes the following program increases:
About $2 million for IT initiatives.--GIPSA needs to significantly
upgrade its critical information management systems and modernize its
business functions as part of a comprehensive eGov initiative including
establishing an off-site, back-up Information Disaster Recovery
Program. This effort will provide the basic enterprise architecture
which will enable the Federal Grain Inspection Service to eliminate
duplicate data entry currently used for maintaining agricultural
product standards, recording certifications from grain inspectors, and
responding to customer's requests for inspections and test results. The
system will match, for the first time, all quality test assurance
results with those obtained by re-inspection and Board appeals. The
basic enterprise architecture will also enable the Packers and
Stockyards Program to rapidly receive electronic information from
livestock, meat packing and poultry operators, thereby reducing
industry's costs of data submission. This large multi-year initiative
would deliver improved performance and reduce costs years into the
future.
Nearly $1 million to develop new grain testing measures.--Domestic
and export marketing opportunities will be enhanced for ethanol co-
products, improved wheat quality, and low linolenic soybeans.
User fees.--User fees, if enacted, would be charged to recover the
costs of developing, reviewing, and maintaining official U.S. grain
standards used by the grain industry. This fee proposal would enable
GIPSA to recover $5 million in costs to develop, review, and maintain
the official U.S. grain standards. Also, the Packers and Stockyards
program would be funded by license fees of about $20 million that would
be required of packers, live poultry dealers, swine contractors,
stockyard owners, market agencies and dealers, as defined under the
Packers and Stockyards Act. Current law provides the agency with
registration requirements for the market agencies and dealers, but
there is no authority for licensing fees. Both of these proposals are
consistent with the Administration's efforts to shift funding for
programs, which benefit identifiable groups, to user fees.
AGRICULTURAL MARKETING SERVICE
The mission of the AMS is focused on facilitating the marketing of
agricultural products in the domestic and international marketplace,
ensuring fair trading practices, and promoting a competitive and
efficient marketplace to the benefit of producers, traders, and
consumers of U.S. food and fiber products. The Agency accomplishes this
mission through a wide variety of publicly and user funded activities
that help its customers improve the marketing of their food and fiber
products and ensure that food and fiber products remain available and
affordable to consumers. Consequently, most AMS programs enhance market
access to current trading information, including availabilities of
supply, location and size of demand, underutilized market facilities,
and availability of means of transportation. In addition, the
Standardization program contributes to the harmonization of
international quality standards.
Market News.--Market news reports improve market efficiency for all
parties by offering equal and ready access to current, unbiased market
information so that agricultural producers and traders can determine
the best place, price, and time to buy or sell. AMS Market News
provides this information by reporting current prices, volume, quality,
condition, and other market data on farm products in more than 1,300
production areas and specific domestic and international markets. The
reports are widely distributed through the internet and news media. The
Livestock Mandatory Price Reporting Program ensures access to
information on meat and livestock trades continue to be available for
producers in a consolidating industry. These data, including prices,
contracts for purchase, and other related information on fed cattle,
swine, lamb, beef, and lamb meat, are publicly disseminated in over 100
daily, weekly, or monthly reports.
Commodity Standards.--AMS works with the agricultural industry to
establish and improve commonly recognized quality descriptions for
agricultural commodities that support access to domestic and
international markets. The Standardization program supports exports of
U.S. agricultural products by helping to represent the interests of
U.S. producers in a variety of international standards development
meetings. AMS experts continue to participate in developing
international dairy, meat, poultry, fruit, and vegetable standards.
Recently, AMS' cotton specialists have been helping China adopt
instrument testing and calibration standards for cotton comparable to
those used in the United States to facilitate cotton trading between
the United States and China. Compatible standards and classing
procedures are in the interest of the United States, since China is the
world's largest importer of cotton and the United States is its biggest
foreign supplier.
National Organic Program.--The National Organic Standards program
supports market access for organic producers by setting national
standards for organic products sold in the United States, which
provides assurance for consumers that the organic products labeled
``organic'' uniformly meet those requirements. The U.S. organic food
industry has increased to a $15 billion annual sales level and is still
growing.
Pesticide Data and Microbiological Data Programs.--AMS also
provides consumer assurance and helps to maintain domestic and export
market demand for U.S. foods by collecting pesticide residue data and
microbiological baseline data. In 2004, the Pesticide Data program
performed over 100,000 analyses on more than 12,000 samples. The data
gathered and reported by AMS on pesticide residues and microbiological
pathogens supports science-based risk assessments performed by a number
of entities, including regulatory agencies.
Transportation Services.--The Transportation Services program
supports market access by facilitating the movement of U.S. agriculture
products from farm to market. This program helps maintain farm income,
expand exports, and sustain the flow of food to consumers by providing
``how to'' technical expertise, research, and data on domestic and
international transportation to growers, producers, and others in the
marketing chain, and for government policy decisions. The
Transportation Services program also produces periodic publications
that improve market access by providing information for agricultural
producers and shippers on trends, availability, and rates for various
modes of transportation, including grain and refrigerated transport,
agricultural containers, and ocean shipping.
Wholesale, Farmers, and Alternative Markets.--AMS program experts,
in cooperation with local and city agencies, improve market access to
market facilities by assisting local efforts to develop or improve
wholesale and farmers markets, and to discover other direct marketing
opportunities. This program also supports research projects to help
agricultural producers discover new or alternative marketing channels
and new technology.
Federal/State Marketing Improvement Program (FSMIP).--AMS helps to
resolve local and regional agricultural market access problems by
awarding Federal matching grants funds for projects proposed by State
agencies. In 2004, the FSMIP program allocated grant funds to 23 States
for 27 projects such as studies on linking producers with new buyers
groups and innovative uses for locally important agricultural products.
Commodity Purchases.--USDA nutrition programs provide growers and
producers with access to an alternative outlet for their commodities.
AMS food purchases stabilize markets and support nutrition programs,
such as the National School Lunch Program, the Emergency Food
Assistance Program, the Commodity Supplemental Food Program, and the
Food Distribution Program on Indian Reservations. AMS works in close
cooperation with both the Food and Nutrition Service (FNS) and the Farm
Services Agency (FSA) to administer USDA commodity purchases and to
maximize the efficiency of food purchase and distribution operations.
AMS, FNS, and FSA each provide a component of program administration
according to their organizational structure and expertise. This complex
system requires close coordination between the three agencies. To help
control the vast array of details inherent to the procurement process,
the Processed Commodities Inventory Management System (PCIMS) was
developed more than 10 years ago to track bids, orders, purchases,
payments, inventories, and deliveries of approximately $2.5 billion of
commodities used in all food assistance programs every year and another
$1 billion in price support commodity products maintained in inventory.
PCIMS is still being used by the three agencies with modifications
having been made over the years, when feasible, to add capabilities
such as financial tracking or to meet changes in program delivery.
AMS' 2006 BUDGET REQUEST
For 2006, the AMS budget proposes a program level of $742 million,
of which $204 million (27 percent) will be funded by existing user
fees, $450 million (61 percent) by Section 32 funds and $88 million (12
percent) by appropriations, which includes $3 million to be derived
from proposed new user fees. More specifically, the budget includes the
following:
An increase of $0.5 million to provide Market News on pork
products.--A legislative proposal to extend and amend the Livestock
Mandatory Price Reporting Program would include negotiated sales as
well as formula and contract transactions on pork cuts for domestic and
international trade. Currently, pork cut information is provided on a
voluntary basis by buyers and sellers of pork products and includes
only products traded on a negotiated basis. Consequently, these reports
only cover 5 percent of total pork cuts traded. Under mandatory
reporting, approximately 80 percent of pork products traded would be
reported.
An increase of $3.1 million to implement Country of Origin Labeling
(COOL).--Beginning in 2005, AMS will be responsible for enforcing
mandatory COOL for fish and shellfish. On September 30, 2006, mandatory
labeling requirements will be expanded to include all other covered
commodities. In order to ensure compliance with COOL, the budget
proposes a surveillance and enforcement program. In 2006, AMS will
initiate random audits of designated retailers to achieve a nationwide
compliance rate of 70 percent for covered commodities reviewed. From
2007 to 2010, AMS will increase its target compliance rate to 95
percent to ensure that the public receives credible and accurate
information.
An increase of $0.9 million for the Pesticide Data Program and the
Pesticide Recordkeeping Programs.--These funds are requested to
maintain State partnerships critical to the administration of these
programs.
An increase of $10 million to begin development of the Web-based
Supply Chain Management System (WBSCM).--The proposed system will
significantly improve customer service and administrative efficiency.
Discretionary appropriated funding is requested rather than mandatory
Section 32 funding because the discretionary funding more accurately
reflects the relative priority of the system versus other discretionary
information technology needs. Implementation of WBSCM will improve the
efficiency of Federal procurement of commodities by reducing ordering
and delivery times from 24 days to 5 days.
As Secretary Johanns testified before this committee last month,
the 2006 budget funds our most important priorities while exercising
fiscal discipline that is necessary to reduce the Federal deficit. The
AMS budget has a number of proposals that moves us in the right
direction while continuing to meet key priorities.
A decrease of $4.0 million for the termination of the AMS
Biotechnology Program.--The Biotechnology Program was initiated in 2002
to develop the agency's capacity to test bio-engineered fruits,
vegetables, nuts, and seeds. Due to difficulties in developing new
testing methodologies as well as lack of demand for these services, the
fee for service program has not yet been established. Should demand for
these services become apparent, AMS will work with the affected
industries to determine if alternative mechanisms can be utilized to
facilitate the marketing of agricultural commodities by differentiating
bioengineered from conventional commodities.
$3 million in new user fees.--Appropriated funding would be reduced
through the collection of user fees for the development of domestic
commodity grade standards that are associated with a grading program.
Users of grading services are direct beneficiaries of commodity
standards and, therefore, should be charged for the development of
commodity grades associated with the grading and inspection program. In
order to implement this proposal, legislation will be submitted to
Congress to authorize these fees.
A reduction of $2.5 million in 1-year funding for a grant to
Wisconsin.--This project dealt with the development of specialty
markets under the Federal-State Marketing Improvement Program.
CONCLUSION
This concludes my statement. I am looking forward to working with
the Committee on the 2006 budget for the Marketing and Regulatory
Programs. We believe the proposed funding amounts and sources of
funding are vital to enhancing market access, improving plant and
animal health and quality, and achieving harmonization of international
standards. It also reduces the deficit and protects American
agriculture from terrorists. We are happy to answer any questions.
______
Prepared Statement of Dr. W. Ron DeHaven, Administrator, Animal and
Plant Health Inspection Service
Mr. Chairman and members of the Subcommittee, it is a pleasure for
me to represent the Animal and Plant Health Inspection Service (APHIS)
before you today. APHIS is an action-oriented agency that works with
other Federal agencies, Congress, States, agricultural interests, and
the general public to carry out its mission to protect the health and
value of American agriculture and natural resources. This mission is
vital not only in protecting the livelihoods of agricultural producers
and the industries related to them, but also to United States homeland
security. In working to carry out our mission, we rely on a set of
interlocking protection strategies as depicted below:
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
APHIS' protection system is based on a strategic premise that
safeguarding the health of animals, plants, and ecosystems makes safe
agricultural trade possible and reduces losses to agricultural and
natural resources. All nine objectives in the protection system are key
components of this strategic premise. Failing to succeed in any one
objective endangers the entire system.
APHIS' efforts begin with offshore threat assessment and risk
reduction activities at the sources of exotic agricultural pests and
diseases. Through our pest and disease exclusion programs, we follow
animal and plant health throughout the world and use this information
to set effective agricultural import policy, and facilitate
international trade by clarifying and amending import requirements, as
necessary. Our off-shore risk reduction activities also include
conducting pest and disease eradication programs in foreign countries
and pre-clearance inspection of certain commodities in off-shore
locations; performing intense monitoring and surveillance for exotic
fruit flies and cattle fever ticks in high-risk, border areas of the
United States; and cooperating with the Department of Homeland
Security's Bureau of Customs and Border Protection to inspect arriving
international passengers, cargo, baggage, mail, and means of
conveyance.
To minimize agricultural production losses and export market
disruptions, APHIS quickly detects and responds to new invasive
agricultural pests and diseases, or other emerging agricultural health
situations, through our plant and animal health monitoring programs.
The Agency creates and updates endemic pest and disease information
systems, and monitors and conducts surveys in cooperation with States
and industry. APHIS also surveys for exotic plant pests and
investigates reports of suspicious animal pests and diseases to reduce
their spread, which eliminates significant losses and helps maintain
pest-free status for export certification of agricultural commodities.
APHIS also works closely with State, industry, and academic
partners to maintain national detection networks and emergency response
teams for plant and animal pest and disease outbreaks that may occur
here in the United States. We work with these same partners to manage
or eradicate economically significant endemic pests and diseases, and
manage wildlife damage to agricultural and natural resources.
Additionally, APHIS administers the Animal Welfare and Horse Protection
Acts, and maintains the scientific expertise necessary to develop new
methods to detect, diagnose, and control animal and plant pests and
diseases.
APHIS' mission of protecting the health and value of United States
agricultural and natural resources encompasses a wide variety of
activities, and the Agency strengthens key components of its protection
system by focusing on several key objectives and strategies. I would
like to present our recent accomplishments and budget initiatives for
fiscal year 2006 to you in light of our five strategic mission
priorities for the coming year.
Ensuring the Safe Research, Release, and Movement of Agricultural
Biotechnology
Among our highest priorities for the next several years is
continuing to build our recently established Biotechnology Regulatory
Services (BRS) program. The growth of agricultural biotechnology hinges
on the public's acceptance of this technology as safe, and APHIS'
regulatory role is key to ensuring global acceptance. Through the BRS
program, APHIS regulates the introduction (i.e., importation,
interstate movement, and field release) of genetically engineered
organisms such as plants, insects, microorganisms, and any other
organism to ensure that they do not constitute pest threats.
In fiscal year 2004, APHIS continued to strengthen the BRS program
by reshaping the organization, enhancing its Compliance Unit, and
increasing its workforce expertise (including the establishment of
staffs devoted to environmental and ecological analysis and genetically
altered animals). We are continuing our effort to significantly
increase the rate of inspection for all genetically engineered crop
field tests, with the target of inspecting each pharmaceutical and
industrial field test site 5 times during the growing season. APHIS has
also continued its efforts to increase the transparency of our
biotechnology-related activities to the public and stakeholders. For
example, we now announce the availability of environmental assessments
(EAs) for field tests of genetically engineered plants used to
manufacture pharmaceutical and industrial compounds in the Federal
Register for a 30-day comment period, allowing stakeholders and the
public to be a part of the decision-making process before APHIS
approves a permit. We have also launched a new, more user-friendly
website for our biotechnology-related programs that provides greater
accessibility to our permits and decisions, news and upcoming events,
and a link to our shared, comprehensive website developed with the Food
and Drug Administration and the Environmental Protection Agency. In
addition, we are continuing to make significant accomplishments in our
international activities related to regulatory coordination. Among
other things, we worked with Canada and Mexico to implement how trade
of biotechnology products will comply with the articles of the
Biosafety Protocol, thus helping to ensure uninterrupted trade between
our countries. In the past year, APHIS personnel also met with
approximately 20 teams of foreign officials (primarily from developing
countries) to provide regulatory overviews and conduct risk assessment
training.
Strengthening Emergency and Homeland Security Preparedness and
Responses
The program activities under this strategic priority minimize
agricultural production losses and export market disruptions by quickly
detecting and responding to new invasive agricultural pests and
diseases or other emerging agricultural health situations. The Agency
focuses on preventing the introduction and establishment of pests and
diseases by responding to outbreaks quickly and efficiently at the
national, State, and local levels. We work to ensure early detection
through formal plant pest surveys and animal disease surveillance
programs as well as through outreach programs to our stakeholders and
the general public.
The Animal Health Monitoring and Surveillance (AHMS) and Pest
Detection programs coordinate national detection efforts for animal and
plant pests and diseases. Both work closely with State and university
cooperators to ensure that any introduction of exotic or foreign pests
and diseases is quickly detected. These programs are also working
closely with USDA's Cooperative State Research, Education, and
Extension Service to coordinate the National Animal Health Laboratory
Network and the National Plant Diagnostic Network to increase testing
capacity in the United States for economically and environmentally
significant animal and plant diseases.
To prevent foreign animal disease incursions, APHIS thoroughly
investigates all suspicious situations. In fiscal year 2004, the AHMS
program conducted 870 suspected foreign animal disease investigations,
up from 480 in fiscal year 2003. The program is also continuing to
implement an enhanced surveillance program in response to the December
2003 detection of bovine spongiform encephalopathy (BSE) in Washington
State. APHIS is sampling as many cattle from high-risk categories (such
as those exhibiting signs of central nervous system disorders) as
possible in a 12-18 month period. As of March 22, more than 284,000
animals have been sampled under the enhanced surveillance plan, none of
which tested positive. The enhanced surveillance effort will provide
sufficient data and information to establish the probable prevalence
level of BSE in the United States.
To facilitate response efforts in the event of a future foreign
animal disease outbreak, APHIS and its State and industry cooperators
are establishing a National Animal Identification System (NAIS)
designed to identify, within 48 hours of discovery, any agricultural
premise exposed to a disease so that potential outbreaks can be
contained and eradicated as quickly as possible. The NAIS is a
networked computerized system that will allow us to identify livestock
and poultry and record their movements over their life-spans.
Currently, 44 States have premises registration capabilities that are
operational in the NAIS, and our goal is to have all States operational
by mid-2005. As of January 30, 2005, APHIS has awarded or committed
more than $13 million to 42 States and Native American Tribes to focus
primarily on animal premises identification, which is the foundation of
the NAIS.
Through the Pest Detection program, APHIS and its cooperators have
established State, regional, and national Cooperative Agricultural Pest
Survey (CAPS) committees to ensure that stakeholders at each level are
involved in the process of targeting plant pests for survey each year.
APHIS targets pests based on their risk of entry and potential to cause
significant economic or environmental damage. In fiscal year 2004, the
CAPS committees began institutionalizing a system to choose survey
projects based on both the pests' risk factors and States' priorities.
In 2004, the Agency and its cooperators conducted national surveys for
20 high-risk pests and 424 individual surveys across the country.
In fiscal year 2004, APHIS continued working with State
cooperators, the American Soybean Association, and university partners
to prepare for the arrival of soybean rust in the United States. As
part of our efforts to minimize the impact of the disease, we trained
more than 300 soybean producers, handlers, and consultants in soybean
rust detection and worked with pesticide companies to ensure that
options for fungicide mitigation would be available to soybean
producers. We also assembled a soybean rust detection assessment team
and put the assessment team into action early in fiscal year 2005 when
the Agency detected soybean rust for the first time in Louisiana. APHIS
and other USDA agencies are continuing to work with the soybean
industry to help producers adjust to the presence of soybean rust in
the United States through the development of monitoring and
surveillance programs (and a website to disseminate up-to-date
information about the disease's spread), predictive modeling techniques
to identify at-risk areas for disease spread, and decision criteria for
fungicide application.
Under the Animal and Plant Health Regulatory Enforcement program,
our Investigative and Enforcement Services unit continues to provide
support to all APHIS programs by conducting investigations of alleged
violations of Federal laws and regulations under APHIS' jurisdiction
through appropriate civil or criminal procedures. Regulatory
enforcement activities prevent the spread of communicable animal pests
and diseases in interstate trade. In fiscal year 2004, APHIS conducted
774 investigations involving animal health programs, resulting in 271
warnings, 71 civil penalty stipulations, six Administrative Law Judge
Decisions, and $158,625 collected in fines. APHIS also conducted 2,391
investigations involving plant quarantine violations resulting in 214
warnings, 807 civil penalty stipulations, 27 Administrative Law Judge
decisions, and approximately $1.4 million collected in fines.
The Agency maintains a cadre of trained professionals prepared to
respond immediately to potential animal and plant health emergencies.
APHIS' Emergency Management System (EMS) is a joint Federal-State-
industry effort to improve the ability of the United States to
successfully manage animal health emergencies, ranging from natural
disasters to introductions of foreign animal diseases. The EMS program
identifies national infrastructure needs for anticipating, preventing,
mitigating, responding to, and recovering from such emergencies. By
Presidential Homeland Security Directive, APHIS is restructuring its
emergency response systems according to the National Incident
Management System and developing an Incident Command System training
curriculum for our employees. In fiscal year 2004, APHIS held two
emergency response table-top exercises with Canada and Mexico designed
to provide training to the employees involved, and identify weaknesses
in our cooperative emergency response networks. The two recent
exercises covered a simulated foreign animal disease outbreak and
vaccine distribution from the vaccine bank.
APHIS has been challenged with numerous emergencies over the last
several years. We took quick and aggressive action to address plant and
animal health situations with Mediterranean fruit fly, citrus canker,
emerald ash borer, exotic Newcastle disease, low and high pathogenic
avian influenza, wildlife rabies, sudden oak death, white spot syndrome
disease, and BSE. Over $234 million of Commodity Credit Corporation
funds was approved for these emergencies in fiscal year 2004.
As reinforced by the Bioterrorism Preparedness and Response Act of
2002, APHIS also tracks plant and animal disease agents that could be
used in acts of bioterrorism. The Act requires that entities, such as
private, State, and Federal research laboratories, universities, and
vaccine companies, as well as individuals that possess, use or transfer
select agents and toxins identified as a severe threat to animal and
plant health or public health, register with the appropriate Federal
authority--either APHIS or the Centers for Disease Control and
Prevention (CDC). APHIS is cooperating with CDC to promulgate final
joint regulations on requirements that facilities must meet if they
wish to possess, transfer, or use select agents. Our fiscal year 2006
budget requests the establishment of a new line item, Select Agents, to
help consolidate and coordinate these activities throughout the Agency.
Reducing Domestic Threats Through Increased Offshore Threat Assessment
and Risk-reduction Activities
Responding to introductions of invasive pests and diseases once
they arrive on our shores is extremely costly for United States
taxpayers and agricultural producers alike. Accordingly, APHIS is
working to enhance its offshore threat assessment and risk reduction
programs with the goal of reducing the need for expensive emergency
response programs. Officials with our Agricultural Quarantine
Inspection, Trade Issues Resolution Management, Foreign Animal Disease/
Foot and Mouth Disease (FAD/FMD), and Import/Export programs track
plant and animal health issues around the world and use the information
to set import policies to ensure that agricultural diseases are not
introduced through imports. This information also helps determine what
pests and diseases might have pathways into the United States and
informs our monitoring and surveillance efforts here at home. APHIS is
establishing a formal international information gathering program under
the FAD/FMD and Pest Detection line items to build on these efforts.
The program has already placed three animal and plant health
specialists in South Africa, Brazil, and the Dominican Republic, and
the fiscal year 2006 budget would expand the program to collect
information from 16 additional countries.
APHIS also targets certain high-risk pests and diseases for
eradication in other countries. Several devastating agricultural pests
and diseases, including FMD, Mediterranean fruit fly (Medfly),
screwworm, classical swine fever, and tropical bont tick are present in
Central and South America or the Caribbean. Without the efforts of
APHIS and cooperating governments to eradicate these pests and diseases
at their sources, they would likely reach the United States through
means of natural spread. Through the FAD/FMD program, APHIS and
cooperating countries established a permanent barrier against FMD at
the Panama/Colombian border. Under an agreement with Panama and Mexico,
we collected 1,166 samples of suspected vesicular disease throughout
Central America; fortunately, all tested negative for FMD. Through the
international cooperative Medfly eradication program, or Moscamed, we
cooperate with Mexico, Guatemala, and Belize to eradicate and control
Medfly, thereby preventing the pest from moving north into the United
States. In fiscal year 2004, the program reduced the infested area in
the southern Mexican provinces of Chiapas and Tabasco by over 60
percent.
Because of climate and weather conditions, California, Texas,
Florida, and other border States are vulnerable to outbreaks of exotic
fruit flies and other agricultural pests such as cattle fever ticks.
APHIS conducts preventive release programs (PRPs) of sterile flies in
California and Florida to prevent Medfly from becoming established.
Since the California PRP began in 1996, APHIS has detected only four
Medflies in the State and reduced the number of Medfly infestations in
the Los Angeles area by 97 percent, saving over $145 million in
eradication costs. In response to a recent Medfly outbreak in Tijuana,
APHIS extended the PRP to an additional 251 square-mile area to prevent
the outbreak from spilling into California. APHIS also conducts
intensive trapping activities and emergency response programs to ensure
that other exotic fruit flies, such Oriental fruit fly, do not become
established. In addition, APHIS operates Mexican fruit fly (MFF)
suppression programs in Texas, and will enhance its efforts to ensure
that MFF does not become established in the United States.
To ensure our import regulations are enforced and adequately
protect United States agricultural and natural resources, we work
closely with the Department of Homeland Security's Bureau of Customs
and Border Protection to monitor and intercept prohibited items that
arrive at United States ports of entry. In fiscal year 2004,
agricultural inspectors checked the baggage of nearly 69 million
arriving passengers and cleared 48,335 ships and 2,580,470 cargo
shipments. In total, agricultural inspectors intercepted 49,180
reportable pests at land borders, maritime ports, airports, and post
offices.
Managing Issues Related to the Health of United States Animal and Plant
Resources and Conflicts With Wildlife
In addition to preventing the entry and establishment of new
agricultural pests and diseases, APHIS works to limit the damage caused
by those already present in the United States, eradicate certain
established or domestic pests and diseases, and manage wildlife damage
to agricultural and publicly owned resources. As with all our efforts,
we work closely with State, Tribal, industry, and academic partners in
these programs and leverage these partnerships for more efficient and
effective operations. APHIS also enforces the Animal Welfare and Horse
Protection Acts, which protect certain animals from mistreatment when
used in commerce or for exhibition purposes.
The Boll Weevil Eradication Program continues to make significant
progress toward eliminating this serious cotton pest from the United
States. As fiscal year 2005 began, more than 9 million acres of cotton
spread over nine States were weevil-free. While fiscal year 2004
activities were hampered by weather events, the program still expects
that 90 percent of cotton acreage will be weevil-free by the end of
this year. APHIS is also continuing Pink Bollworm eradication and
suppression activities. Pending growers' approval, APHIS, its State and
industry partners, and the Government of Mexico plan to implement a
comprehensive cooperative eradication program in three phases. When
compared with fiscal year 2001 trapping data, activities in phase one
have already shown a reduction in pink bollworm adults by over 94
percent in Texas, 97 percent in New Mexico, and 99 percent in
Chihuahua, Mexico.
APHIS also continues its effort to address the last stubborn
pockets of endemic animal diseases such as bovine tuberculosis,
brucellosis, and pseudorabies. Forty-six States are now accredited-free
of bovine tuberculosis, and forty-eight have achieved class free status
for brucellosis. At the start of fiscal year 2005, all fifty States and
three United States territories had reached Stage V (free) status for
pseudorabies. APHIS is working with State cooperators to focus on
preventing the transmission of these diseases between wildlife and
domestic livestock, and to identify remaining infected herds. In
addition, relatively new efforts are now well underway to assist
producers in controlling diseases such as low pathogenic avian
influenza.
APHIS' Wildlife Services (WS) Operations Program works to protect
agricultural crops from wildlife damage; protect livestock from
predation; prevent the transmission of wildlife-borne diseases to
safeguard the livestock industry; protect and preserve natural
resources, including threatened and endangered species; protect human
health and safety by preventing wildlife collisions with aircraft and
wildlife conflicts with humans; and protect wildlife damage to
property. The program provided wildlife hazard management assistance to
over 550 airports nationwide in fiscal year 2004, up from 42 in fiscal
year 1990. APHIS also continues to reduce the threat that wildlife
rabies poses to livestock and human health by maintaining a barrier
against the spread of the disease to uninfested areas. In fiscal year
2004, the WS Operations program reinforced oral rabies vaccination
zones along the Appalachian Ridge through the distribution of more than
6.3 million vaccine baits over 31,000 square miles, and in areas of
Texas with the distribution of 2.75 million baits over 29,000 square
miles.
APHIS and its cooperators are increasingly aware of the connection
between wildlife disease and both domestic animal and human health. For
example, bovine tuberculosis in deer continues to affect Michigan's
ability to eradicate the disease from its cattle population, and the
transmission of chronic wasting disease between wild deer and elk and
domestic deer and elk continues to be of concern. Accordingly, APHIS
continued to implement its Wildlife Disease Surveillance and Emergency
Response Program, and participated in disease surveillance and control
activities for 15 wildlife and domestic diseases in fiscal year 2004.
APHIS' Animal Welfare Program carries out activities designed to
ensure the humane care and treatment of animals used in research,
exhibition, the wholesale pet trade, or transported in commerce. The
program places primary emphasis on voluntary compliance through
education, but we also utilize inspection of records, investigation of
complaints, and reinspection of problem facilities to ensure that
protected animals receive an appropriate level of care. When education
efforts fail to achieve voluntary compliance, APHIS personnel
investigate alleged violations of Federal animal welfare and horse
protection laws and regulations, and oversee subsequent prosecution of
violators through appropriate civil or criminal procedures. In fiscal
year 2004, APHIS conducted 288 animal welfare investigations, resulting
in 205 formal cases submitted for civil administrative action. We also
issued 120 letters of warning and resolved 56 cases, resulting in
$92,972 in fines. Administrative law judges resolved another 41 cases,
resulting in $455,642 in fines.
APHIS continued to emphasize public education and outreach in
fiscal year 2004 through participation in canine care workshops around
the country with commercial breeders as the target audience; veterinary
workshops to educate veterinarians providing services to regulated
facilities; and, two exotic cat care workshops. Through regulatory
inspections and educational efforts, the Animal Welfare program
succeeded in raising the level of facility compliance from a baseline
of 58 percent in 2001 to 70 percent in 2004.
Resolving Trade Barrier Issues Related to Sanitary and Phytosanitary
(SPS) Issues
All of APHIS' efforts to protect the health of United States
agricultural resources and keep them free of major pests and diseases
support American farmers' ability to sell their products on the world
market. In turn, our efforts to facilitate safe trade with other
countries, including activities such as monitoring world agricultural
health and providing assistance to developing countries to build
regulatory capacity, help ensure that imported products will not
threaten our domestic production capability and health status.
Because of APHIS' expertise in animal and plant health issues and
regulatory role, the Agency serves as a key resource in resolving
sanitary and phytosanitary issues that become trade barriers. The
Agency works closely with trade policy organizations, including USDA's
Foreign Agricultural Service and the United States Trade
Representative. Officials with our Trade Issues Resolution Management
programs work to minimize trade disruptions caused by animal and plant
health issues. In fiscal year 2004, reopening markets for United States
poultry and beef posed the greatest challenges. Outbreaks of low
pathogenic avian influenza (LPAI) and exotic Newcastle disease
continued to affect poultry markets throughout the Americas, Asia, and
Europe. However, since August 2004, the United States regained LPAI-
free status under the World Health Organization for Animal Health (OIE)
definition. As a result, APHIS reopened poultry markets in all 25
European Union countries, Russia, Japan, and Chile, among others. The
total value of United States exports of poultry and poultry products
actually increased by 15 percent between January and August of 2004,
compared to the same period in fiscal year 2003. APHIS continues to
work with the limited number of trading partners that maintain bans on
United States poultry because of LPAI, including China.
In regard to beef markets that were closed to United States exports
because of BSE, APHIS has been successful with reopening markets for
United States beef in more than 20 countries. Canada and Mexico have
partially reopened their markets to certain United States beef
products, and we continue to work on reopening borders with Japan, a
major export market for United States beef, as well as other Asian
nations. APHIS has been successful in opening many export markets for
other ruminant products, such as pet food and bovine embryos and semen,
banned because of BSE.
Altogether, APHIS resolved 112 sanitary and phytosanitary issues in
fiscal year 2004, allowing over $5 billion worth of trade to occur. Our
export accomplishments included opening new markets for pork to
Australia and seed potatoes to China, and expanding existing market
access for wheat to Brazil, grains to Canada, and corn to Argentina. In
addition, we retained 23 markets for beef and beef products worth more
than $330 million world-wide.
FISCAL YEAR 2006 BUDGET REQUEST
The fiscal year 2006 Budget Request for Salaries and Expenses
totals just over $866 million, an increase of $57.9 million over the
fiscal year 2005 Consolidated Appropriations Act. About $6.5 million of
the increase is for pay raises. Of the total request, approximately
$436 million is identified in the President's Homeland Security
initiative, including $299 million in discretionary funding. Of the
$436 million, $174 million is identified in the President's Food and
Agriculture Defense Initiative, which serves to protect the agriculture
and food system in the United States from intentional, unintentional,
or naturally occurring threats.
The increase, approximately 7 percent above the fiscal year 2005
appropriation, is for initiatives designed to address the increasing
domestic and international threats to the health of United States
agriculture. On the domestic side, these include continuing
enhancements to our Biotechnology Regulatory Services program;
enhancements to both animal and plant health surveillance systems and
diagnostic capabilities; the ability to track animal and plant
pathogens and toxins identified as Select Agents; the build up our
animal disease vaccine bank; the ability to address wildlife disease
threats to livestock health; and an investment to substantially reduce
emergency fund transfers for a variety of plant pest and disease
programs. In the international arena, APHIS plans to use additional
funding to establish a formal international information collection
program that will help us set agricultural import policy and inform
others of our monitoring and surveillance efforts here in the United
States; enhance CSF eradication in the Caribbean; complete construction
of a new sterile screwworm production facility in Panama; and protect
and expand the $53 billion annual agricultural export market, among
other things.
The following paragraphs detail some of the accomplishments
expected under the fiscal year 2006 budget request:
Ensuring the Safe Research, Release, and Movement of Agricultural
Biotechnology
--An increase of $4,320,000 for the Biotechnology Regulatory Services
Program will allow us to continue to develop biotechnology
regulatory infrastructure, policies, and regulations while
conducting daily program operations, i.e., preparing risk
assessments, issuing permits, reviewing petitions for
deregulation, inspecting field test sites, building capacity in
developing countries, and international activities.
Strengthening Emergency and Homeland Security Preparedness and
Responses
--An increase of $16,893,000 for the Pest Detection Program to
continue outreach to volunteers; surveying for cactoblastis
(cactus moth) and soybean pests; increasing cooperative
agreements with State cooperators by an average of $110,000 per
agreement. We anticipate being able to detect 95 percent of
newly introduced economically significant pests before they
spread.
--An increase of $6,707,000 for the Animal Health Monitoring and
Surveillance Program to enhance the current disease monitoring
and surveillance system by increasing and integrating its
infrastructure in order to better protect the Nation's animals
from the threat of emerging and foreign animal diseases.
--An increase of $1,950,000 for the Wildlife Disease Monitoring and
Surveillance Program to build an animal disease surveillance
system that has domestic and international components for
establishing methods for surveillance data collection in
wildlife populations and investigating the prevalence of
specific diseases that may move from wildlife to livestock or
poultry populations. Wildlife disease specialists will be
trained to respond to disease outbreaks within 72 hours by
fiscal year 2006 with the ultimate goal of reducing response
time to 24 hours.
--An increase of $5,867,000 for the Veterinary Diagnostics Program to
continue its investment in the National Animal Health
Laboratory Network and begin a transition to new information
technology that will align the program's abilities, efficiency,
and effectiveness with the ever-growing demand for program
services. The investment will increase the program's ability to
respond to the threat of bio-terrorism and further APHIS'
commitment to the safety of the United States livestock
population.
--An increase of $9,671,000 for the Emergency Management System
Program to improve the response time for emergencies by 2 days
to enhance the animal health emergency preparedness.
--An increase of $25,651,000 for the Emerging Plant Pests Program to
enhance survey and tree removal to control emerald ash borer;
remove trees infected by and exposed to citrus canker; and,
enhance the Agency's emergency response infrastructure.
--An increase of $5,250,000 for the Select Agents Program to fully
carry out the activities mandated by the Agricultural
Bioterrorism Protection Act of 2002.
--An increase of $928,000 for Animal and Plant Health Regulatory
Enforcement to continue support to all APHIS programs by
conducting investigations of alleged violations of Federal laws
and regulations under APHIS' jurisdiction; overseeing/
coordinating subsequent prosecution of violators through
appropriate civil or criminal procedures; and providing Quick
Response Teams to assist in market surveillance, border
blitzes, and emergency program efforts such as those provided
during exotic Newcastle and BSE emergency outbreaks in fiscal
year 2003 and 2004.
Reducing Domestic Threats Through Increased Offshore Threat Assessment
and Risk-reduction Activities
--An increase of $6,424,000 for the Foreign Animal Diseases/Foot and
Mouth Disease Program (FAD/FMD) to place animal specialists
overseas to collect information on FAD, and expand classical
swine fever work into Central America, targeting Belize and
Nicaragua.
--An increase of $3,670,000 for the Screwworm Program to purchase
essential equipment for its new sterile screwworm production
facility in Panama, which will help establish a permanent
barrier against the pest at the Panama-Columbia border.
Managing Issues Related to the Health of United States Animal and Plant
Resources and Conflicts With Wildlife
--An increase of $770,000 for the Animal Welfare Program to respond
to rapid growth in the number of new licensees and registrants,
particularly in western States, by hiring eight new animal care
inspectors and stationing them at key locations where workloads
are most critical. Of the amount requested for Animal Welfare
activities, approximately $11 million will be derived from new
user fees.
--An increase of $1,666,000 for the Fruit Fly Exclusion and Detection
Program to be prepared to respond rapidly to domestic
outbreaks, prevent the northward spread of the Mediterranean
fruit fly into Central Mexico, and provide adequate numbers of
sterile flies for the preventive release program in the United
States.
--An increase of $3,000,000 for the Wildlife Services Operations
Airport Safety Program to enhance human safety by reducing
wildlife strikes to aircraft.
--An increase of $5,000,000 in funding for rabies under the Wildlife
Services Operations Program to maintain the oral rabies
vaccination barrier against spread of this disease to the west
of the Appalachian Mountains.
--An increase of $750,000 in the Wildlife Services Operations Program
for brown tree snake interdiction activities in Guam to prevent
the spread of this invasive animal to areas with fragile
ecosystems, such as Hawaii and the Northern Marianas.
--An increase of $5,000,000 in the Wildlife Services Operations
Program to provide funding for Homeland Security (Food and
Agriculture Defense) initiative of wildlife disease
surveillance as requested in the fiscal year 2005 Budget.
Resolving Trade Barrier Issues Related to Sanitary and Phytosanitary
(SPS) Issues
--An increase of $5,742,000 for the Trade Issues Resolution and
Management Program to expand and retain markets to provide new
market access and facilitate trade worth $2.4 billion in fiscal
year 2006 in part through opening new offices in Thailand,
India, Italy, West Africa, and Brazil.
DECREASES
To support our high priority programs, we propose several
offsetting decreases:
The high priority placed on deficit reduction limited the
availability for certain activities. We propose decreases of
$31,300,000 for the Boll Weevil program, which is possible because of
the program's success and will not affect its ability to meet the
target of complete eradication by 2008; $1,412,000 for the Brucellosis
program; $1,855,000 for the Chronic Wasting Disease program; $1,128,000
for the Grasshopper program; $15,435,000 for the Johne's Disease
program; $829,000 for the Noxious Weeds program; and, $11.48 million
for Wildlife Services Operations. Within the Emergency Plant Pests line
item, we propose reductions of $13,682,000 for Asian longhorned beetle
and $1,445,000 for sudden oak death. Within the appropriated
Agricultural Inspection Quarantine program, we propose to shift
$2,748,000 from the Hawaiian interline inspection program to our newly
expanded National Plant Germplasm and Biotechnology Laboratory, which
supports the Agency's emergency response capabilities, eradication
programs, pest exclusion activities, biotechnology permitting programs,
and the newly mandated Select Agents program. We are also proposing new
user fees for the Animal Welfare program, which would generate
$10,857,000 and replace the same amount of appropriated funding.
CONCLUSION
APHIS' mission of safeguarding United States agriculture is
becoming ever more critical. Although the processes by which we protect
America's healthy and diverse food supply are being increasingly
challenged by increased trade and tourism, APHIS is committed to taking
the lead in building and maintaining a world-class system of pest and
disease exclusion, surveillance, detection, diagnosis, and response.
Healthy plants and livestock increase our market potential
internationally, and thus contributes to a healthy United States
economy. Like the APHIS Strategic Plan, the APHIS Budget consists of
interdependent components that, when combined, can truly protect the
health and value of American agriculture and natural resources.
On behalf of APHIS, I appreciate all of your past support and look
forward to continued, positive working relationships in the future. We
are prepared to answer any questions you may have.
______
Prepared Statement of David R. Shipman, Acting Administrator, Grain
Inspection, Packers and Stockyards Administration
INTRODUCTION
Mr. Chairman and Members of the Committee, I am pleased to
highlight the accomplishments of the Grain Inspection, Packers and
Stockyards Administration (GIPSA), and to discuss the agency's fiscal
year 2006 budget proposal.
GIPSA's activities are an integral part of USDA-wide efforts to
support a competitive global marketplace for U.S. agricultural
products. Our mission is to facilitate the marketing of livestock,
poultry, meat, cereals, oilseeds, and related agricultural products,
and to promote fair and competitive trading practices for the overall
benefit of consumers and American agriculture.
We fulfill our service and regulatory roles through our Packers and
Stockyard Program, which promotes a fair, open, and competitive
marketing environment for the livestock, meat, and poultry industries
and our Federal Grain Inspection Service, which provides the U.S. grain
market with Federal quality standards and a uniform system for applying
these standards to promote equitable and efficient marketing.
ORGANIZATION
We carry out our mission with a dedicated staff of 722 employees
working in partnership with a variety of State and private entities.
Our Packers and Stockyards Program relies on three regional offices
specialized in one of the following: poultry, hogs, or cattle/lamb. Our
grain inspection services are delivered by the national inspection
system, a network of Federal, State, and private inspection personnel.
The system includes 10 GIPSA field offices, 2 Federal/State offices,
and 56 State and private agencies authorized by GIPSA to provide
official services.
PACKERS AND STOCKYARDS PROGRAM
Our Packers and Stockyards Program (P&SP) administers the Packers
and Stockyards Act (P&S Act) to ensure fair and competitive marketing
in livestock, meat and poultry for the benefit of consumers and
American agriculture. The P&S Act is intended to protect producers,
growers, market competitors, and consumers against unfair,
discriminatory, or deceptive practices that might be carried out by
those subject to the Act. To meet this objective, GIPSA seeks to
educate, regulate and investigate individuals and firms subject to the
P&S Act; to respond to anti-competitive behavior, unfair, deceptive, or
unjustly discriminatory trade practices; and to ensure livestock
producers and poultry growers are paid for their products. GIPSA takes
appropriate corrective action when there is evidence that firms or
individuals have violated the P&S Act.
The livestock, meatpacking, and poultry industries are important
segments of American agriculture and the Nation's economy. With only
152 employees, we regulate these industries, estimated by the
Department of Commerce in fiscal year 2002 to have an annual wholesale
value of $120 billion. At the close of fiscal year 2004, 5,678 market
agencies and dealers and 2,015 packer buyers were registered. In
addition, there were 1,443 facilities that provided stockyard services,
an estimated 6,000 slaughtering and processing packers, meat
distributors, brokers and dealers, and 202 live poultry dealers
operating subject to the P&S Act.
Our regulatory responsibilities are the heart of our mission to
administer the P&S Act. To this end, GIPSA closely monitors practices
that may violate the P&S Act. Last fiscal year, we conducted over 1,900
investigations, of which 146 were handled by Rapid Response Teams. As a
result of these investigations, the Packers and Stockyards Program
helped restore over $17 million to the livestock, meatpacking, and
poultry industries. The amount of monetary returns varies by year;
however, in the first 5 months of fiscal year 2005 we have helped
restore over $18 million to the livestock, meatpacking, and poultry
industries.
We continue to work with violating firms to achieve voluntary
compliance, and continue to initiate appropriate corrective action when
we uncover evidence that the P&S Act has been violated. During fiscal
year 2004, with assistance from the Office of the General Counsel, we
filed 15 administrative or justice complaints alleging violations of
the P&S Act. These formal disciplinary complaints resulted in five
decisions ordering the payment of $61,750 in civil penalties and
suspending 12 registrants from operating for periods of 45 days to 5
years.
We regularly assist the FBI, State and local law enforcement
agencies with their investigations. Some of our investigations involve
overlapping jurisdiction, and sometimes these agencies call on GIPSA
for its expertise. In addition, we communicate with our sister agencies
within USDA, the Department of Justice, the Commodity Futures Trading
Commission, and local and State governmental organizations to discuss
common issues and when appropriate, coordinate plans.
To ensure that producers and growers are aware of the protections
the P&S Act provides, we have a hotline (1-800-998-3447) by which
stakeholders and others may anonymously voice their concerns. In fiscal
year 2004, 65 percent of the hotline calls received resulted in
investigations. To encourage voluntary compliance, we regularly attend
industry meetings and conduct orientation sessions (28 in fiscal year
2004) for new auction market owners and feed mills to educate them
about their fiduciary and other responsibilities under the P&S Act.
Following the discovery of the bovine spongiform encephalopathy
(BSE) positive cow in December, 2003, we established three special task
forces to provide protection to livestock producers and members of the
cattle industry commensurate with the P&S Act. These task forces were
based in our Denver office which has lead responsibility for cattle,
and included technical experts from our Atlanta and Des Moines regional
offices and headquarters.
The BSE Task Forces monitored livestock markets and packers for
financial failures; reviewed changes in procurement practices; analyzed
changes in market prices; received complaints from the public; and
conducted 96 investigations. These investigations identified 11
violations of the P&S Act. Two of these firms have corrected the
violations; one investigation file has been forwarded for a possible
formal complaint; and the remaining firms have been given an
opportunity to comply with the P&S Act.
Following the disclosure of avian influenza in February 2004 by the
Animal and Plant Health Inspection Service (APHIS), we created a new
Avian Influenza/Poultry Policy Task Force out of the Atlanta Regional
Office. Like the BSE Task Force, the AI Task Force developed strategies
to identify and respond to potentially unlawful practices unique to
current market caused by the outbreak. In the current fiscal year, the
AI Task Force will continue monitoring the industry and responding to
the current AI situation.
Together with our stakeholders and other interested parties, this
year we developed and published two voluntary industry standards, in
addition to two standards established earlier, for technologies used to
assess quality and determine payment for livestock, meat or poultry.
These standards help both producers and packers. Producers are more
likely to get full value for the quality of livestock they produce and
packers are more likely to pay only for the product they want to
purchase. We will continue to work with stakeholders to develop
additional standards, as needed, to enhance transparency in the
marketplace.
In fiscal year 2004 we also reviewed the current bonding
requirements under the P&S Act and the returns to unpaid sellers from
the bonds of failed firms. The results of this work are under review to
determine whether regulatory changes are necessary to meet the
objectives of the P&S Act.
In fiscal year 2004, GIPSA implemented a web-based Swine Contract
Library in accordance with the requirements of the Livestock Mandatory
Reporting Act of 1999. Packers are required to file with GIPSA swine
purchase contracts and monthly reports about the number of swine they
expect to be delivered under contract in the next 12 months.
The Swine Contract Library (SCL) includes information from swine
packing plants with a slaughter capacity of 100,000 swine or more per
year. Thirty-two firms operating 51 plants accounting for approximately
95 percent of industry slaughter are subject to the SCL. GIPSA has
received over 707 contracts to date. Information, by region, including
price, premiums, discounts, grids, formulas, and other important
contract terms extracted from offered and available contracts used to
purchase hogs is now available to the public through the internet.
The Livestock and Meat Marketing Study, for which Congress
appropriated $4.5 million in fiscal year 2003, will have a delayed
completion. GIPSA awarded $4,319,373 to the Research Triangle Institute
(RTI) on June 14, 2004. RTI assembled a coalition of researchers from
Colorado State University, Iowa State University, Montana State
University, North Carolina State University, and the Wharton School of
Business. RTI is continuing preparations for data collection and the
overall study. RTI is scheduled to release study reports in mid-year
2005 and mid-year 2006. The first report will provide information about
the types of livestock arrangements in the cattle, hog, and sheep
industries based on a survey conducted by RTI. The second report will
provide detailed economic analyses about the arrangements. The study
will be completed within the amount appropriated.
FEDERAL GRAIN INSPECTION SERVICE
Our Federal Grain Inspection Service (FGIS) facilitates the
marketing of U.S. grain and related agricultural products through the
establishment of standards for quality assessments, regulation of grain
handling practices, and management of a network of Federal, State, and
private laboratories that provide impartial, user-fee funded official
inspection and weighing services under the authority of the U.S. Grain
Standards Act and the Agricultural Marketing Act of 1946.
FGIS establishes terms and methods for quality assessments that the
grain industry relies on to buy and sell over $51 billion of
commodities annually. These standards for quality assessments provide
the U.S. grain marketing system with the means to align post-harvested
crop quality with the diverse quality needs of today's food and feed
industry. GIPSA currently maintains more than 1,400 different quality
assessment terms and methods to characterize the quality of grain and
grain related products.
We are expanding our work with producers, technology providers, and
food and feed manufacturers to consensually identify the essential
quality attributes that require standard measurement to effectively
differentiate quality and add value to U.S. agriculture. For example,
FGIS, working with seed companies and producers, has identified the
need to measure the level of linolenic acid in soybeans, an attribute
that improves the stability and lessens or precludes the need to
hydrogenate soy oil. Hydrogenation produces trans fatty acids, which
have been linked to health problems. We now need to work with the
soybean industry and establish acceptable reference standards and rapid
assay methods to measure the level of linolenic acid in soybeans, an
initiative included in our fiscal year 2006 budget request. While
commercial production of low linolenic soybeans will begin in 2005,
some industry sources estimate that within several years, they will
account for 20 percent of soybean acreage at a value of $5 billion.
We are also working with the wheat industry in an effort to regain
the U.S. wheat market share which has declined from 33 percent of the
international market in 1995 to an estimated 26 percent in 2004. Our
goal is to develop rapid measurement methods to differentiate wheat
quality at the first point of sale and allow the U.S. wheat industry to
better meet the needs of foreign buyers. To date, working with the
wheat industry, we have identified several key quality attributes, such
as gluten strength, that require rapid measures, as well as the need to
validate international reference methods relating to the attributes.
Gaining consensus on the salient wheat attributes and reference methods
will allow GIPSA to pursue the development of rapid analytical methods
for use at the first point of sale, another initiative included in the
fiscal year 2006 budget.
As we develop measures of new attributes entering the market, we
are ensuring the current measurement methods are accurate and cost-
effective. For example, we are working to transform the measurement of
grain moisture. Maintaining current calibrations for moisture
measurement is time consuming and resource intensive. Advances in the
basic means to measure moisture, led by GIPSA, have the potential to
greatly reduce maintenance costs and improve the accuracy of moisture
measurements over a much wider range. These advances will benefit the
entire grain industry, from producer to food manufacturer.
Similar improvements are being implemented for wheat and barley
protein measurements this year. In collaboration with industry and
government officials throughout the world, GIPSA has advanced new
Artificial Neural Network (ANN) technology for protein measurement,
which reduces overall program costs and promotes greater harmonization
with U.S. trading partners.
We are introducing digital technology to improve the subjective
assessments made by inspectors and, in some instances, replace them
with objective measures. The percentage of broken rice is a critical
factor for producers and the rice industry. Using digital technology,
we have improved the consistency of measurements and simultaneously
reduced the analytical time by over 75 percent.
We are also working with stakeholders on grading standards to
further facilitate trade. As the production of peas for feed has
surged, as evident by a 108 percent increase in production from 2003 to
2004, a need for national feed pea standards has evolved. We are
working to meet this need. As the global competition in soybean markets
intensifies, we are collaborating with the soybean industry to
determine whether changes in analytical methods and grading standards
would improve the United States competitive position. One grading
factor under review is test weight per bushel, a factor used to market
soybeans in the United States for over a half century, but not used by
our major international competitors. We are also working closely with
the wheat industry to ensure the wheat standards facilitate the
expansion of the new and evolving market for Hard White Wheat. All of
these activities improve the American agriculture's ability to deliver
the specific quality of grain desired by food manufactures and
consumers, and strengthen its competitive position in the global
market.
In the biotechnology arena, we are improving the reliability and
accuracy of testing for the presence of modern biotechnology-derived
grains to help U.S. agriculture avoid market disruption as trading
partners around the world implement new import requirements. Our Test
Kit Evaluation Program validates the performance of commercially
available rapid tests for biotechnology-derived grains. Our Proficiency
Program improves the performance and reliability of Government and
private laboratories that test for biotechnology-derived grains in the
United States and worldwide. More than 100 organizations participated
in the program in fiscal year 2004, compared to 22 in 2002.
In response to the results of the proficiency program, we are
working to harmonize international reference materials and
biotechnology measurement methods used in commerce to measure the level
of biotechnology-derived events in raw agricultural products. The
current focus of many laboratories is to assay for the presence or
absence of a particular transgenic event, whereas the regulatory
requirements evolving for agricultural products usually require
reliable methods to measure the quantity of a biotechnology derived
event.
Our international outreach goes beyond work in the area of
biotechnology. We work cooperatively with other government agencies to
support market development and remove obstacles to U.S. grain reaching
world markets.
In recent years, we have focused on providing technical support to
the Mexican and Asian markets. Last year, GIPSA worked with Mexico's
private and public grain sectors to harmonize sampling and analytical
methods with the goal of minimizing trade disruptions due to
differences between GIPSA-certified quality and an importer's own
quality assessment. We helped establish five grain inspection
laboratories at major corn importing facilities in Mexico and trained
personnel from Mexican commercial firms and government agencies on U.S.
grain inspection policies and procedures. We also spearheaded the
establishment of a Government-to-Government Grain Industry Consultative
Group as a technical-level forum to address cross-border grain quality
issues.
Since fiscal year 2002, GIPSA has placed a temporary duty officer
in Asia to address immediate and long-term issues in the region, to
promote a better understanding and adoption of United States sampling
and inspection methods to minimize differences in inspection results
and to develop face-to-face relationships with customers, USDA
Cooperators and Government officials. In October 2005, we placed an
officer in Kuala Lumpur for 2 months, and this representative will
return to Kuala Lumpur for 2 more months beginning March 2005.
Following the completion of this assignment, GIPSA will place another
representative in the region for a 4-month assignment to continue our
work in the region.
We also provide technical consultative services for international
customers. During fiscal year 2004, GIPSA's consultative work included
conducting assessments of agricultural standards and transportation
management systems in South Africa, Botswana, Namibia, and Mozambique;
helping establish grain inspection laboratories in Kenya, Uganda, and
Tanzania; helping Egypt set up a biotech testing laboratory; helping
Iraq set wheat contract terms that resulted in their importation of
U.S. wheat, and giving a grain marketing seminar to Iraqi officials (in
Jordan); working with Canadian and Mexican officials to establish a
trilateral agreement on implementation of the Biosafety Protocol;
continuing work with Chinese officials on trade issues to ensure their
continued importation of U.S. soybeans; helping the USDA/Foreign
Agricultural Service and Animal and Plant Health Inspection Service
resolve various grain quality issues in other countries that would
otherwise have restricted U.S. grain exports; and briefing visiting
trade and governmental teams representing 55 countries around the
world.
In addition to facilitating the marketing of U.S. grain by
developing grain quality assessment methods and carrying out
international outreach efforts, GIPSA administers a national inspection
system comprising Federal, State, and private laboratories. These
laboratories provide valuable service to all sectors of the grain
industry on a user fee basis, 24 hours a day, 7 days a week. The world
recognizes the certificates issued by these laboratories as the gold
standard for grain quality certification. Buyers and sellers around the
world have confidence in and rely on the GIPSA certificate to trade
grain.
This confidence was earned. The dedicated Federal, State, and
private employees of the national grain inspection system work
tirelessly to ensure the integrity and reliability of the national
inspection system. They issue over 3 million certificates annually,
representing over 250 million tons of grain.
GIPSA continuously works to improve service delivery by this
network of laboratories and meet the needs of a changing market. In
fiscal year 2004, we revised the regulations on appeal inspections
under the U.S. Grain Standards Act to streamline the process and better
reflect market needs. These changes improved service delivery time and
reduced operational costs to both GIPSA and the grain industry. We also
revised sampling and inspection procedures to better meet the needs of
exporters shipping grain in small containers rather than large bulk
vessels. As a result of high freight rates for bulk ocean vessels and
an abundant supply of containers, the U.S. grain market experienced a
significant increase in the use of containers to ship export grain
overseas, especially to Asian markets. This shipping mode, once
reserved for specialty, high-value grain, was being used for basic
commodity grain and shifted the need for inspection services at
interior locations.
EGOVERNMENT SOLUTIONS
Our most ambitious undertaking to improve program operations and
service to the public is a sweeping, multi-year project to upgrade
information management systems and modernize our business functions.
Our current information management system consists of several
independent systems that have served specific purposes over the years
well, but are not integrated. This has limited our ability to meet the
growing demand for electronic, or web-based, delivery of our services.
It also impedes our efforts to improve the cost effectiveness and
efficiency of our internal business practices. The enterprise-wide
system currently under development will modernize nearly every aspect
of GIPSA operations and provide a great opportunity to improve current
business practices and service delivery.
New funding provided in fiscal year 2005 along with the redirection
of existing funds has enabled GIPSA to begin the modernization process.
Currently funded components of the new system will be deployed
incrementally between 2005 and 2007. We have requested additional
funding in fiscal year 2006 to support this important long term
initiative.
When completed, customers will have online access to the
information and applications they need to file complaints with GIPSA
via the Internet; receive status reports on a complaint; place claims
against bonds required under the P&S Act; register as a grain exporter
or livestock dealer; submit required annual reports; request grain
inspection services; receive reports on service status; see the status
of their user-fee account; and receive final certified results online
which will, in turn, allow customers to integrate official inspection
data into their own information and document management systems.
Private and State inspection agencies interested in being authorized to
provide official inspection services will also be able to apply for
GIPSA designation and re-designation on-line. Once officially
designated, these agencies will have direct access through the web to
GIPSA's extensive quality assurance program to ensure their inspection
results align with the official standards maintained by GIPSA.
This modernization effort will create synergy across GIPSA programs
and data sources, allowing GIPSA to improve internal program
efficiencies and effectiveness. This large multi-year initiative will
deliver improved performance and reduce costs years into the future.
PROTECTING THE HOMELAND
In addition, GIPSA has dedicated resources to homeland security
efforts. We continue to work closely with the USDA Office of Crisis
Planning and Management (OCPM) to refine the Department's and the
Agency's Continuity of Operations Plan (COOP) and to support and staff
the Department's Crisis Action Team (CAT). In fiscal year 2004, GIPSA's
COOP and CAT representatives participated in critical disaster-related
exercises and training sessions.
We provided technical assistance related to homeland security
issues to a number of industry and governmental groups, including the
USDA Homeland Security Working Group; worked with the National Food
Laboratory Steering Committee to coordinate and integrate resources to
support key components of the Food Emergency Response Network (FERN);
and, in conjunction with USDA and the Animal and Plant Health
Inspection Service, developed information for the USDA Sector Specific
Plan that will be included in the National Infrastructure Protection
Plan.
2006 BUDGET REQUEST
To fund important initiatives and address the Agency's
responsibilities, GIPSA's budget request for fiscal year 2006 is $40.4
million under current law for salaries and expenses and $42.5 million
for our Inspection and Weighing Services. These budgets include
additional requests of $442,000 for employee compensation; $2,025,000
to continue the modernization of our information management systems and
business functions; and $950,000 for new grain testing measures. In
addition our request includes a proposal to recover $25 million through
user fees to cover the costs of grain standardization activities and
Packers and Stockyards program activities.
An increase of $442,000 for employee compensation will enable GIPSA
to meet its objectives consistent with the priorities established by
the Secretary of Agriculture. This critically important increase is
needed to support and maintain current staffing levels to meet the
current and projected increased demand.
We are requesting an additional $2,025,000 for our IT modernization
initiative. This multi-year project will upgrade information management
systems and modernize our business functions. This request includes
$1,000,000 to continue the development of eGov solutions; $775,000 for
the formation of an Information Disaster Recovery Program, essential as
we deploy the eGov solutions and our employees and customers become
increasingly dependent on web-based applications for daily operations;
and $225,000 for recurring costs associated with the operations of eGov
solutions funded in fiscal year 2005 and deployed for operation.
We are also requesting an additional $950,000 to develop new grain
testing measures for ethanol co-products, wheat quality, and low
linolenic soybeans. It is our responsibility to provide the U.S. market
with the tools necessary to accurately and consistently measure a
commodity's quality attributes, both chemical and physical, that our
customers desire. New tests will facilitate the marketing of ethanol
co-products, wheat, and low linolenic soybeans.
Part of our appropriation request will be derived from proposed new
user fees. The budget proposes a collection of 4.3 million from grain
standardization user fees and $20.4 million from Packers and Stockyards
program licensing fees. Both fees are proposed to assess those who
benefit from the activities--the grain and livestock industries--rather
than the general public.
CONCLUSION
Mr. Chairman, Members of the Committee, thank you for the
opportunity to share some of the accomplishments made by our dedicated
staff and highlight our future plans to facilitate the marketing of
U.S. agricultural products and to promote fair and competitive trading
practices for the overall benefit of consumers and American
agriculture.
I would be pleased to address any issues or answer any questions
that you may have.
Thank you.
______
Prepared Statement of Kenneth C. Clayton, Acting Administrator,
Agricultural Marketing Service
Mr. Chairman and Members of the Committee, I am pleased to have
this opportunity to represent the Agricultural Marketing Service in
presenting our fiscal year 2006 budget proposal. To provide a starting
point for discussion of our budget proposals, I would like to begin by
reviewing our agency's mission and some of the programs through which
we carry out that mission.
MISSION
The goal of the Agricultural Marketing Service--AMS--is to
facilitate the marketing of agricultural products in the domestic and
international marketplace, ensure fair trading practices, and promote a
competitive and efficient marketplace to the benefit of producers,
traders, and consumers of U.S. food and fiber products. We accomplish
our mission through a wide variety of appropriated activities and
through our user-funded grading, certification, and Perishable
Agricultural Commodities Act programs.
MARKETING SERVICES
Our Marketing Services programs benefit agricultural producers,
traders, and consumers of dairy products, fruits, vegetables, specialty
crops, livestock and meat, poultry, and cotton. These programs
facilitate marketing by providing information, technical expertise, and
customer assurance.
Markets operate more efficiently when all parties have equal and
ready access to current, unbiased market information so that
agricultural producers and traders can determine the best place, price,
and time to buy or sell. In order to provide this information, AMS
Market News reports cover current prices, volume, quality, condition,
and other market data on farm products in more than 1,300 production
areas and specific domestic and international markets. Market News
reports are disseminated within hours of collection via the Internet.
The data is also made available through electronic means and the news
media. AMS reporters collect market news data for over 700 commodities
from buyers and sellers, mostly on a voluntary basis. However, Congress
established Livestock Mandatory Price Reporting in 2000 to ensure that
information on meat and livestock trades would continue to be available
for producers in a consolidating industry. These data, including
prices, contracts for purchase, and other related information, are
publicly disseminated in over 100 daily, weekly, or monthly reports on
fed cattle, swine, lamb, beef and lamb meat.
Another way to improve market efficiency is to develop commonly-
recognized agricultural product descriptions for use in commercial
sales and purchases. AMS' Standardization program works closely with
interested parties in agriculture and the food marketing system to
ensure that quality descriptions are aligned with current U.S.
marketing practices. The agriculture industry uses these descriptions
to convey commodity quality in purchase specifications and sales
contracts. AMS Market News reports trading based on these commodity
quality standards. AMS currently maintains about 600 U.S. agricultural
quality standards for domestic and international trading of cotton,
dairy products, fruits and vegetables, livestock, meat, poultry, eggs,
and rabbits.
The Standardization program supports exports of U.S. agricultural
products by representing the interests of U.S. producers in a variety
of international standards development organizations. AMS experts
continue to participate in developing international dairy, meat,
poultry, fruit, and vegetable standards. Recently, AMS' cotton
specialists have been working to facilitate cotton trading between the
United States and China by helping China adopt instrument testing and
calibration standards for cotton comparable to those used in the United
States. Compatible standards and classing procedures are in the
interest of the United States, since China is the world's largest
importer of cotton and the United States is its biggest foreign
supplier.
The National Organic Standards program provides assurance for
consumers that organic products uniformly meet established requirements
nationwide. The U.S. organic food industry has increased to a $15
billion annual sales level and is still growing. AMS program staff
works with the National Organic Standards Board to update and maintain
a National List of approved and prohibited substances for organic
production. AMS program personnel accredit State, private, and foreign
certifying agents who certify that organic production and handling
operations comply with national organic standards. By the end of 2004,
AMS had accredited a total of 97 certifying agents--56 domestic and 41
foreign.
AMS also provides consumer assurance by collecting pesticide
residue data and microbiological baseline data that helps to maintain
domestic and export market demand for U.S. foods. In fiscal year 2004,
the Pesticide Data program performed over 100,000 analyses on more than
12,000 samples. The data gathered and reported by AMS on pesticide
residues and microbiological pathogens supports science-based risk
assessments performed by regulating agencies.
Our Transportation Services program facilitates the movement of
U.S. agriculture products to market. This program helps support farm
income, expand exports, and maintain the flow of food to consumers by
providing ``how to'' technical expertise, research, and data on
domestic and international transportation to growers, producers, and
others in the marketing chain, and for government policy decisions. The
Transportation Services program also produces periodic publications
that provide information for agricultural producers and shippers on
various modes of transportation, including grain transportation,
refrigerated transport, ocean rates and transportation trends, and
agricultural containers.
Our Wholesale, Farmers, and Alternative Markets program experts, in
cooperation with local and city agencies, assist local efforts to
develop or improve wholesale and farmers market facilities, and to
discover other direct marketing opportunities. This program also
supports research projects on marketing channels and market technology
improvements, as well as numerous marketing conferences and workshops
across the country.
PAYMENTS TO STATES AND POSSESSIONS
AMS' Payments to States and Possessions program is more commonly
known as the Federal-State Marketing Improvement Program, or FSMIP.
This program helps to resolve local and regional agricultural marketing
problems by awarding Federal matching grant funds for projects proposed
by State agencies. These matching grants are made available to State
departments of agriculture and other State agencies for 25 to 35
projects each year, with the State agencies contributing at least half
of the project cost. In 2004 the FSMIP program allocated grant funds to
23 States for 27 projects such as studies on linking producers with new
buyer groups and innovative uses for locally important agricultural
products.
SECTION 32
AMS' Section 32 program purchases perishable non-price supported
agricultural commodities--meat, poultry, fruits, vegetables, and fish--
to encourage the exportation and domestic consumption of agricultural
commodities. The purchased foods are donated to the National School
Lunch Program and other domestic nutrition programs. In fiscal year
2004, AMS purchased 1.52 billion pounds of commodities that were
distributed by FNS through its nutrition assistance programs.
Section 32 of the Act of August 24, 1935 permanently authorized an
appropriation equal to 30 percent of customs receipts for this purpose.
These funds, plus unused balances up to $500 million from the previous
fiscal year, may be used by the Secretary to support markets by
purchasing commodities in temporary surplus, for domestic nutrition
assistance programs, for diversion payments and direct payments to
producers, for export support, and disaster relief. AMS retains only a
small percentage of the funds available under Section 32. In fiscal
year 2006, 81 percent of the $6.3 billion total will be transferred to
FNS to administer the Child Nutrition Programs and 1 percent to the
Department of Commerce for fishery products.
For 2006, AMS expects to obligate $850 million, of which $400
million will be spent on purchases for the Child Nutrition Programs.
Most of the rest is available to AMS' commodity purchases program for
emergency surplus removal. Section 32 funds also finance AMS'
administrative costs for commodity purchasing activities and Federal
administration of marketing agreements and orders, which help to
stabilize market prices for milk, fruit, vegetables, and specialty
crops.
My description of our programs is not complete without some
discussion of our agency's extensive partnerships.
PARTNERSHIPS
AMS depends on strong partnerships with cooperating State and
Federal agencies to operate many of our programs. State agency partners
collect data, provide inspection, monitoring, and laboratory services
for AMS, and otherwise maximize the value of both State and Federal
resources through sharing and coordination. For instance, AMS' Market
News program maintains cooperative agreements with 40 States to
coordinate their local market coverage with the regional and national
coverage needed for AMS market reporting. State employees who inspect
shipments of seed within a State provide information to AMS' Federal
Seed program on potential violations in interstate shipments. Our
transportation and direct marketing programs work with Federal, State,
city and local policy-makers to maintain an efficient national
transportation system and expand and improve market outlets for U.S.
agriculture.
Two AMS programs that could not function without their State
partners are the Pesticide Data and Pesticide Recordkeeping programs.
The Pesticide Data program depends on its State and Federal partners to
collect and test the product samples on which program results are
based. In fiscal year 2005, the program will direct about 80 percent of
its funding to its eleven State partners in reimbursement for services
provided. The information generated by the program can be utilized by
other USDA agencies, academia, agricultural industry, international
organizations, and global traders, as well as Federal agencies such as
EPA and FDA for policy and regulatory actions. Our Pesticide
Recordkeeping program depends on 36 States and territories that
participate with AMS in record inspection activities, and all 50 States
plus Puerto Rico are involved with educational programs for certified
applicators. Other USDA agencies provide pesticide recordkeeping
inspections under interagency agreements where State inspectors are not
available. In fiscal year 2005, the program expects to complete nearly
4,000 compliance inspections of certified private applicator records.
These programs cannot operate without adequate reimbursement to the
cooperating agencies--State and Federal--for their costs.
USDA food purchase programs have developed a partnership between
USDA agencies that maximizes the unique expertise that each agency
brings to the process. AMS works in close cooperation with both the
Food and Nutrition Service (FNS) and the Farm Services Administration
(FSA) to administer USDA's nutrition assistance and surplus commodity
programs. AMS purchases the non-price supported commodities--meat,
fish, poultry, egg, fruit and vegetable products--and FSA supplies the
price-supported commodities--flours, grains, peanut products, cheese
and other dairy products, oils and shortenings--that supply nutrition
assistance programs administered by FNS such as the National School
Lunch Program, the Emergency Food Assistance Program, and the Food
Distribution Program on Indian Reservations, according to their needs
and preferences.
To maximize the efficiency of food purchase and distribution
operations, AMS, FNS, and FSA each provide a component of program
administration according to their organizational structure and
expertise, but the system is complex and requires close coordination.
AMS and FSA purchase for FNS the entitlement commodities provided to
schools. Schools and other nutrition assistance programs can also
receive bonus commodities that are purchased to support agricultural
markets through AMS' surplus commodity program. AMS and FSA are
responsible for issuing and accepting bids, and for awarding and
administering contracts. FNS is responsible for taking commodity orders
from the States, monitoring purchases and entitlements throughout the
year, and for the overall administration of the commodity nutrition
assistance programs. Before a purchase is announced, AMS and FSA
specialists work with potential vendors, FNS, and food safety officials
to develop a specification for each product purchased that details
product formulation, manufacturing, packaging, sampling, testing, and
quality assurance. After market conditions, availability, and
anticipated prices are assessed, and recipient preferences determined,
AMS and FSA invite bids for particular United States produced and
domestic origin food products under a formally advertised competitive
bid program. Bids received from responsible vendors are analyzed and
contracts are awarded by AMS and FSA. FSA administers the payments to
vendors, ensures the proper storage of commodities when needed, and
assists in their distribution. Approximately $2.5 billion of
commodities are purchased for all of the domestic and foreign food
assistance programs every year and another $1 billion in price support
commodity products are maintained in inventory.
To better coordinate the operations between AMS, FNS, and FSA, and
control the vast array of details inherent to the procurement process,
the three agencies developed the Processed Commodities Inventory
Management System, or PCIMS, more than eleven years ago to track bids,
orders, purchases, payments, inventories, and deliveries. However,
PCIMS is an aging system that often cannot be adequately modified to
keep up with the agencies' business practice improvements, requiring
program employees to develop electronic entries external to PCIMS and
then update the system with the results. To resolve these problems and
improve program operations, AMS, FNS and FSA have been working together
to design a Web-Based Supply Chain Management System to replace PCIMS.
We are requesting a funding increase in fiscal year 2006 to begin
building the new system.
FISCAL YEAR 2006 BUDGET REQUEST
This leads us to our budget requests for fiscal year 2006. In
Marketing Services, we propose to amend the Livestock Mandatory Price
Reporting Act to continue the program and include pork cuts, implement
a new verification program for Country of Origin Labeling, start
building the Web-Based Commodity Supply Chain Management System, and
increase financial support for our State partners in the Pesticide Data
and Recordkeeping programs.
LIVESTOCK MANDATORY PRICE REPORTING
We are asking for an increase in program funding of $545,000 to
include pork cuts in the Livestock Mandatory Price Reporting, or LMPR,
program. The mandatory reporting system was established in response to
concerns of livestock producers over the diminishing availability of
data caused by market concentration. Mandatory reporting has been
successful--it reports 80 to 95 percent of transactions involving
purchases of livestock and sales of boxed beef and lamb, lamb
carcasses, and imported boxed lamb cuts. Under voluntary pork
reporting, AMS is able to gather only about 5 percent of transactions.
This proposal would increase reported data on pork cut trades to 80
percent. It will require packers to report on additional types of
trades and products by including formula and contract transactions, as
well as negotiated sales, of domestic and export sales of pork cuts.
Mandatory reported information will also include value-added and case-
ready products not usually reported on a voluntary basis.
The addition of pork cuts under mandatory reporting requires an
amendment to the Livestock Mandatory Reporting Act of 1999. USDA is
also proposing an amendment to extend the mandatory reporting program,
which currently expires September 30, 2005. USDA is reviewing the
program's effectiveness and considering potential enhancements proposed
by industry stakeholders, but supports continuation of LMPR.
COUNTRY OF ORIGIN LABELING
Our second increase request is for $3.1 million to initiate a new
Country of Origin Labeling, or COOL, program. We propose to establish a
cooperative Federal-State surveillance and enforcement program that
will verify that buyers are getting the required information concerning
the source of covered commodities. Mandatory COOL provisions are in
effect for fish and shellfish as of April 4 this year and on September
30, 2006, for the remaining commodities covered by the 2002 Farm Bill.
During fiscal year 2006, we will establish an audit-based compliance
system for fish and shellfish, and then will incorporate the remaining
covered commodities--ground and muscle cuts of beef, pork, and lamb;
fresh and frozen fruits and vegetables; and peanuts--after those
provisions go into effect. Until the mandatory rule becomes effective
and for 6 months following the effective date, we will focus our
resources on industry education and outreach to ensure effective and
appropriate implementation of the labeling requirements.
We plan to implement the audit-based surveillance activities
through agreements with cooperating State government agencies. AMS will
provide training and oversight, respond to formal complaints, conduct
surveillance audits, and conduct educational activities. We will audit
5 percent of covered retailers, over 1,800 each year, to achieve a
compliance rate beginning at 70 percent and rising to 95 percent by
2010. This program will ensure the public receives credible and
accurate information on the country of origin for covered commodities
while not overburdening the State agencies.
SUPPORT FOR COOPERATING STATES
We request $889,000 to strengthen our financial support to our
State partners for the Pesticide Data and Recordkeeping programs so
that these programs can continue to function effectively. This increase
will allow AMS to reimburse the States for rising costs, including
salaries, benefits, and travel expenses incurred by State personnel in
carrying out Federal program activities, and will help the States
retain specialized and experienced personnel.
WEB-BASED SUPPLY CHAIN MANAGEMENT SYSTEM
For fiscal year 2006, AMS is requesting an increase of $10 million
in our Marketing Services account to develop WBSCM, a next-generation
multi-agency food purchase and distribution tracking system which will
significantly improve administrative efficiency and customer service.
As I mentioned, this is a joint effort of AMS, FNS and FSA to establish
a Web-Based Supply Chain Management system that can replace, and
surpass, the functions of the current Processed Commodity Inventory
Management System.
WBSCM has undergone extensive reviews within USDA and has been
approved within the Department and by OMB as meeting e-government
requirements. Once functioning, the new system will create a singe
point of access for customers, allowing the agencies to share
information with them more quickly and conveniently. WBSCM will improve
program efficiency by greatly reducing the time required for processing
purchases; shortening delivery times; improving USDA's ability to
collaborate with other Departments; improving reporting capability;
reducing transportation, inventory, and warehousing costs; and enabling
future system updates as needed. WBSCM is also designed so that it
could eventually support agencies that manage similar commodity
distribution programs for export. Although implementation of the new
system will be a multi-year effort, increased efficiency, better
coordination, and improved services should begin as soon as WBSCM is
able to provide the services now being performed by PCIMS.
BIOTECHNOLOGY
The Biotechnology program is proposed for termination, reducing our
Marketing Services budget by $4 million. AMS had anticipated the need
to respond to industry requirements to differentiate between
bioengineered and conventional commodities. However, technological
issues and a lack of demand for fee-based quality assurance and
laboratory accreditation services have reduced the need for such a
program. Should demand for services become apparent, AMS will work with
the affected industries to determine if alternative mechanisms can be
utilized to facilitate the movement of agricultural commodities.
USER FEES
Our Marketing Services request also reflects $2.9 million in new
user fees based on a proposed legislative change that would convert
most of our domestic standards activities to user-fee funding. USDA has
proposed an amendment to the Agricultural Marketing Act of 1946 that
will authorize the agency to implement, collect, and retain user fees
for domestic standards that are associated with AMS grading and
certification services.
BUDGET REQUEST SUMMARY
Our budget request includes $84 million for Marketing Services. We
request $1.3 million in FSMIP grants funding--a decrease of $2.5
million that was provided in fiscal year 2005 to support Wisconsin
products. For administration of Section 32 activities, we request $11.5
million to support commodity purchasing and $16.1 million for the
Marketing Agreements and Orders program. Our Marketing Services and
Section 32 administrative funding requests include an increase for pay
costs.
Thank you for this opportunity to present our budget proposal.
Senator Bennett. Thank you.
Dr. Pierson.
STATEMENT OF DR. MERLE D. PIERSON
Dr. Pierson. Mr. Chairman, Senator Kohl, I am pleased to
appear before you today to discuss the status of the Food
Safety and Inspection Service programs and our fiscal year 2006
budget request.
PATHOGEN REDUCTION
Excellent progress has been made in improving the safety
and security of the U.S. meat, poultry, and egg products
supply. And as a result of implementing science-- and risk-
based policies, we have seen significant reductions in E. coli
O157:H7, Listeria monocytogenes, and Salmonella in FSIS
regulated products. Also there has been a dramatic decline in
recalls.
What has been the impact of our science-based policies on
public health? The Centers for Disease Control and Prevention
will be publishing tomorrow a report that analyzes food-borne
disease data for 2004. I am pleased to tell you that the CDC
report will state that for 2004, there were important declines
in food-borne illness.
For E. coli O157:H7, there was a 42 percent decrease from
the 1996-1998 baseline, a continuation of last year's downward
trend. For Campylobacter, the decrease from the baseline was 31
percent. Listeria monocytogenes, 40 percent, and Salmonella, 8
percent.
While we have made considerable progress, there is more to
be done. The USDA is committed to further protecting public
health through our continuing programs, such as those
described, as well as several science-based initiatives that we
are now working on.
FISCAL YEAR 2006 BUDGET REQUEST
For fiscal year 2006, FSIS is requesting an appropriation
of $849.7 million. The fiscal year 2006 budget requests an
increase of $19.5 million to support a food and agriculture
defense initiative in partnership with several other Government
agencies.
The budget request includes an increase of $13.9 million to
provide for a 2.3 percent pay raise for FSIS employees. In
addition, we are requesting $2.2 million in order to fill
supervisory and administrative duties as we make better use of
the scientific skills of our veterinary medical officers. And
$139 million is proposed to come from a new user fee.
PREPARED STATEMENTS
Mr. Chairman, thank you for providing me the opportunity to
speak about these issues and our progress and to submit written
testimony, which is much more extensive than I have just given
you. I certainly do promise you that we will do our best to
remain a world leader in public health.
[The statements follow:]
Prepared Statement of Dr. Merle Pierson
Mr. Chairman and Members of the Subcommittee, I am pleased to
appear before you today to discuss the status of the Food Safety and
Inspection Service (FSIS) programs and the fiscal year 2006 budget for
food safety within the U.S. Department of Agriculture (USDA). I am Dr.
Merle Pierson, Acting Under Secretary for Food Safety. With me today is
Dr. Barbara Masters, Acting Administrator of FSIS.
As we begin another new year at USDA, I am proud to emphasize
several areas where we have used science based policies to effectively
protect the health and well being of millions of consumers worldwide.
These successes would not have been possible without the resources you
have so generously given to us. I also will share with you our goals
for this year, and will conclude with a discussion of the fiscal year
2006 budget request.
The crux of our public health challenge centers on combating
biological, chemical, and physical hazards that range from the easily
understood to those that evolve and present new and complex challenges.
Thus, we must not only rely on existing knowledge and strategies for
food safety, but also continue to introduce and evaluate new
approaches. For me, as someone who has spent their entire career as a
food scientist, I am particularly proud of the work our office and FSIS
has done in developing science based policies to improve the safety and
security of the U.S. meat, poultry, and egg products supply.
Evaluating the Effectiveness of the 2004 Vision
While there are many approaches to measuring success, we looked at
indicators related to public health outcomes and pathogen reduction.
Such an evaluation is essential in determining the success of our
strategies and developing new ways to combat threats to public health.
In our high-speed, fast-food world, it can be difficult for some to
understand that successful science is not immediate gratification and
it is not easily measured. But over time, positive results, or I should
say, dramatic declines in foodborne illnesses or incidence of pathogens
in products, show that our risk based approach is working.
Breaking the Cycle of Multi-Million Pound Recalls
One indication of our progress is that we have seen a break in the
annual cycle of multi-million pound recalls. Through the use of risk
assessments, working with partners along the farm-to-table continuum,
and basing our policies on sound science, we have been able to break
this vicious cycle. I will illustrate this by discussing our E. coli
O157:H7, Listeria monocytogenes, and Salmonella policies.
After a comprehensive risk assessment on E. coli O157:H7 was
completed, we developed additional strategies to eliminate this
pathogen in beef establishments. We required all of the approximately
2,900 beef slaughter and processing establishments to reassess their
Hazard Analysis and Critical Control Point (HACCP) plans relative to
the potential presence and control of E. coli O157:H7 in raw beef. Then
our scientifically trained personnel conducted the first-ever
comprehensive reviews of the reassessed HACCP plans.
I believe this type of forward thinking initiated by USDA/FSIS will
continue to contribute to the dramatic improvements we have been
seeing. For instance, let's take a look at results from our
microbiological surveillance testing program for E. coli O157:H7 over
the past 4 years.
--In CY 2001, our testing program yielded 59 positive results out of
7,010 samples;
--In CY 2002, there were 55 positive results from 7,025 samples;
--In CY 2003, there were 20 positives out of 6,584 samples; and
--In CY 2004, there were only 14 positives out of 8,010 samples.
The effectiveness of using sound science is also evident when we
look at Listeria monocytogenes. Our 2003 interim final rule on control
of Listeria monocytogenes in ready-to-eat (RTE) meat and poultry
products, based on a thorough risk assessment, outlined three
strategies that an establishment could choose from to control the
pathogen depending on its product(s) and the environment in which it
operates: Alternative 1, provides for a combination of a post-lethality
treatment and a growth-suppressing agent or process; Alternative 2,
provides for either a post-lethality treatment or a growth-suppressing
agent or process; and Alternative 3, relies on sanitation as the
primary mitigation. In January 2005, FSIS revised its sampling
verification procedures so that more product samples are collected when
an establishment relies solely on sanitation practices for Listeria
monocytogenes control, while fewer samples are analyzed in situations
where an establishment has more aggressive process control measures and
interventions.
In 2003, we released data that showed a 25 percent drop in the
percentage of positive Lm regulatory samples from the year before, and
a 70 percent decline compared with years prior to the implementation of
HACCP.
Our science based initiatives, including those used to counter E.
coli O157:H7, have played a significant role in also reducing the
prevalence of Salmonella in raw meat regulatory samples. If we look at
the percentage of regulatory samples positive for Salmonella from our
scientific HACCP verification testing program, we see an overall
aggregate downward trend from 1998 through 2003. Salmonella presence in
raw meat and poultry regulatory samples has dropped substantially over
the past 6 years. Out of the number of regulatory samples collected and
analyzed by FSIS in 2003, 3.8 percent tested positive for Salmonella,
as compared with 4.29 percent in 2002, and 10.65 percent in 1998.
While the regulatory prevalence of Salmonella across all seven
product categories tested continued to decrease in 2003, we are
concerned that the percentage of positive Salmonella tests increased
slightly in three poultry categories. FSIS has been examining
Salmonella testing data from 1998 to the present in order to clearly
identify those plants displaying negative performance trends.
Enforcement Investigations and Analysis Officers can now conduct in-
depth HACCP and sanitation verification reviews at those facilities to
help ensure that this increase does not continue. FSIS compares
regulatory testing results to pre-HACCP baseline prevalence to provide
context to the yearly data. These 2003 numbers are still under the
standard for the aggregate data, but FSIS is working aggressively to
reverse the upward trend.
Let me also add that when there has been foodborne illness, FSIS
aggressively explores both epidemiological links to products from
individual establishments as well as conducts a food safety assessment
to determine whether or not insanitary conditions exist. If the
epidemiological link is found or insanitary conditions exist,
appropriate regulatory enforcement action is taken.
I have provided a brief overview of some of the measures I believe
have broken the annual cycle of multi-million pound recalls. I would
like to mention trends we are seeing in recall data.
In the late-1990s, the number of recalls had been increasing
steadily with at least one multi-million pound recall being conducted
every year; however, this trend has dramatically changed in the past 2
years.
--In 1997, there were 27 recalls;
--Followed by 44 recalls in 1998;
--58 recalls in 1999;
--76 recalls in 2000;
--87 recalls in 2001; and
--Reaching an all-time high of 113 recalls in 2002.
After we implemented the science based policies I mentioned
earlier, we saw a dramatic decline in recalls, culminating in a
reduction of nearly 18 percent in the number of pathogen-related
recalls, from 28 in 2003, to 23 in 2004. While this is certainly good
news, we still have areas of concern. One of the areas of concern is an
increasing trend in the percentage of recalls triggered by undeclared
allergens. This is a troubling development. We have alerted industry of
our concerns and are currently taking case-by-case action and are
looking at broader policies to address it industry-wide.
Perhaps even more dramatic is the fact that 2004 marked the second
year in a row that we did not have a multi-million pound recall of meat
or poultry in the United States. The decline in the number of recalls
is just one of several indicators that highlight the dramatic
improvements that can be achieved in our food safety system when
government, industry, consumers, and academia work together and use
science as a guide. Another measure of progress came from a Gallup poll
released this past August. It found that more than 85 percent of
Americans are confident in the Federal Government's ability to protect
our food supply.
Declining Foodborne Illnesses
This news is encouraging, but the most significant measure of
public health impact is the annual report published by the Center for
Disease Control and Prevention (CDC) last spring in which they reported
significant declines from 1996 to 2003 in illnesses caused by E. coli
O157:H7, Salmonella, Campylobacter, and Yersinia.
Specifically to the products USDA regulates, the CDC reported that
illnesses caused by Salmonella Typhimurium, typically associated with
meat and poultry, decreased by 38 percent from 1996 to 2003. Human
illnesses caused by E. coli O157:H7, often associated with ground beef,
declined 42 percent from 1996 to 2003. The decrease in E. coli O157:H7
infections occurred primarily during 2002-2003.
The CDC attributes the changes in the incidence of these infections
in part to the control measures implemented by government and industry
leaders, enhanced food-safety education efforts, and increased
attention by consumer groups and the media. We are hopeful that if we
continue on our current course, this reduction will not be just for 1
year, but will continue from now until we have achieved the greatest
reduction possible in the illnesses caused by these pathogens.
Bovine Spongiform Encephalopathy
Science based policies and recalls are two tangible methods that
external parties see USDA conducting to protect public health. However,
a significant amount of public health protection comes from the
extensive strategic planning efforts to improve our systems and
infrastructure that are not as easily recognized. I mention this in
reference to the first case of bovine spongiform encephalopathy (BSE)
detected in the United States in December 2003.
The December 23, 2003, detection of a BSE positive cow, originally
from Canada, at a slaughter operation in Washington State could be seen
by many as a precursor to the implementation of our BSE measures.
However, we had completed an extensive amount of groundwork on FSIS'
four BSE measures before USDA's major policy announcements on December
30, 2003. Our swift actions were unprecedented. The process for
publishing FSIS' interim final rule on BSE normally would have taken
several months; however, with the prior strategic planning this
normally daunting task was achieved in less than 2 weeks, and was done
at the time with an eye for protecting public health. Our BSE
regulations add a significant level of protection to an already robust
food safety system. FSIS' BSE related interim final rules will be
published as final rules following an analysis of the more than 22,000
comments received on the interim final rules and the BSE Advance Notice
of Proposed Rulemaking (ANPR) as well as completion of the Animal and
Plant Health Inspection Service (APHIS) enhanced BSE surveillance
program and the Harvard BSE risk reassessment.
Training for the Mission
Strong, science-based regulations and policies are merely words on
paper without personnel trained to carry them out. I would like to
thank the Congress, and this Subcommittee in particular, for the record
level of funding it has provided us in the area of training and
education. Each training accomplishment directly correlates to
improvements in the safety and security of the U.S. meat, poultry, and
egg supply. We are extremely proud of our efforts in this area and I
would like to share some of our successes with you today.
A large segment of our inspection program personnel is receiving
intensive training in sanitation procedures and Hazard Analysis and
Critical Control Point (HACCP) system principals, based on the type of
products produced at the establishments where the inspectors are
assigned. We expect to have this segment of our workforce fully trained
by the end of the current fiscal year. In 2003, FSIS inaugurated Food
Safety Regulatory Essentials (FSRE) training, which was designed to
better equip inspection personnel in verifying an establishment's HACCP
food safety system. All participants receive training in the
fundamentals of inspection, covering HACCP, the Rules of Practice,
Sanitation Performance Standards, and Sanitation Standard Operating
Procedures. This program also provides food safety training based on
the types of products being produced at the establishments where
inspectors are assigned. In fiscal year 2004, 1,700 individuals
received the Agency's FSRE training, more than doubling the amount of
students trained in fiscal year 2003.
FSIS has also initiated a comprehensive multi-year training and
education effort designed to ensure that every FSIS employee fully
understands their role in preventing or responding to an attack on the
food supply. To date, over 5,000 employees have received food security
training. The Law Enforcement Academic Research Network (LEARN), which
is carrying out the training, has stated that this effort is
unparalleled in the Federal sector since training is being provided to
such a broad base of our employees.
Furthermore, FSIS has successfully launched training for newly
hired Public Health Veterinarians (PHVs) and for newly hired food
inspectors. We are also going back to train ``new hires'' to ensure
that employees who did not initially receive this training are now
fully equipped with the latest scientific knowledge. In addition, we
now require entering Consumer Safety Inspectors to undergo and pass
FSRE training. We are also in the process of implementing policies to
require passage of mandatory training courses for entering Enforcement
Investigations and Analysis Officers (EIAOs) and for PHVs. Specifically
in 2005, we plan to provide training for 1,200 food inspectors, 400
PHVs, 200 EIAOs, 75 import inspectors, and 40 front line supervisors.
We also plan to provide FSRE training for 1,400 Agency personnel. I
also would like to note that we offer seats in our workforce training
courses to State inspection personnel.
These numbers are impressive, but what is even more meaningful are
the systematic changes at FSIS that this training effort has brought.
Our workforce is becoming the most scientifically trained in the world.
While we know these are merely the first steps, and that this knowledge
still needs to be extended to all our employees, we have embarked on a
path that will bring added protections to public health for generations
to come.
Food Security
Ensuring the security of FSIS inspected products is indeed an
awesome responsibility, and it is one which FSIS and its predecessor
agencies have been equipped to handle for almost a century. Over the
past several years, we have strengthened our focus on both intentional
and unintentional contamination by conducting risk and vulnerability
assessments. Specifically for food security, vulnerability assessments
have provided a solid foundation from which we have launched many
important initiatives to safeguard our food supply from any intentional
threats.
We have found these assessments are very powerful risk management
tools that can be used to develop strategies and policies that reduce
or eliminate the potential risk at vulnerable points along the farm-to-
table continuum. It is difficult to manage a threat when we are unsure
of its scope, so it was especially important to take a broad look when
developing the risk assessments.
The vulnerability assessments we conducted provided us the vital
data regarding risks in our system that otherwise would not have been
as apparent to us if we had not conducted them. If we had made food
security decisions without performing vulnerability assessments, it
would have been akin to aiming at a target in the dark without night-
vision goggles. We would have had no idea if we had hit our mark. And
when that mark is the security of the food on American tables, accuracy
is crucial.
What we gleaned from these vulnerability assessments helped us
develop more effective intervention strategies, especially when it
comes to surveillance and incident response plans. The assessments
allowed us to rank food products and potential contaminating agents in
order of highest concern. By using this risk based ranking, during
periods of heightened awareness, our laboratories can examine samples
for threat agents posing the greatest risk as identified in our
vulnerability assessments.
Communications
Public health benefits from our efforts in training and in food
security cannot be fully realized without a comprehensive and cohesive
communications infrastructure. For example, the highly trained import
inspector may only have a few critical moments to alert his colleagues
across the country in the event of a food security incident. Without
``real time'' information, inspectors in Montana may not know to stop a
suspect cargo. In an emergency, the American public cannot afford for
precious seconds to be lost while information slowly synchronizes over
outdated modems. We are maximizing the effectiveness of our resources
in this area and continue to work towards seamless integration, both
internally and with our other food safety partners.
To be a successful public health Agency, our employees need the
right information to do their jobs. This information needs to be
communicated quickly and accurately, ensuring public health will be
protected. Data that is delayed is less useful and in extreme
circumstances could have limited value because it is too late and could
threaten the safety of our meat, poultry, and egg product supply. It is
vitally important that the Agency continue to receive the necessary
funds to develop and upgrade its information technology systems, which
will improve efficiency and enhance communication among all FSIS
employees. For FSIS, the use of databases to track inspection program
tasks is essential for food safety verification. It is a vital
communication resource whereby inspectors can enter information about
their daily food safety, security, and humane handling verification
duties. Because of our public health mission, real-time information and
connectivity is vital, especially between key sites for our inspection
program personnel. This is particularly important because FSIS has a
geographically dispersed workforce. Managers in the field and at
headquarters must make crucial management decisions based on tracking
and analyzing information from their employees and the establishments
they regulate. A rapid exchange of information with the field is
critical for FSIS supervisors and managers to make better informed
decisions on food safety and security issues, thus better protecting
public health. We seek your continued support in this area.
Humane Handling and Slaughter Activities
FSIS continues to ensure compliance with the Humane Methods of
Slaughter Act (HMSA) in livestock slaughter establishments that operate
under Federal inspection. As part of their routine, ongoing and
continuous inspection and enforcement duties, all FSIS inspection
personnel are expected to take appropriate action, including suspending
operations, if appropriate, of a livestock slaughter establishment if
they observe any violations of HMSA. Further, all FSIS inspection
personnel are trained and held accountable for enforcing HMSA during
the slaughter process.
District Veterinary Medical Specialists (DVMSs) provide technical
expertise and oversight for HMSA-related activities, and ensure that
humane handling and slaughter activities and enforcement are handled
consistently by inspection program personnel. The Agency's DVMSs and
Deputy District Managers meet periodically as a group at the Technical
Service Center in Omaha, Nebraska, to correlate on humane enforcement
issues, and, in fact, one such meeting was just held in March 2005.
FSIS has continued to refine humane handling verification and
tracking procedures for inspection personnel. On February 18, 2005, the
Agency issued FSIS Notice 12-05, to provide inspection personnel with
additional information for humane handling and slaughter verification
activities related to animal stunning and procedures for checking for
conscious animals.
Future Initiatives
While we have made considerable progress, I stress that there is
more to be done to decrease the number of foodborne illnesses in the
United States even further. USDA is committed to further improving
public health through food safety and security through our continuing
programs such as those I have described as well as several science-
based initiatives I would like to mention.
Enhanced Data Integration
In order to better protect public health, our first initiative is
to anticipate and predict food safety risks through enhanced data
integration. One significant way to accomplish this is through the
analysis of FSIS regulatory sampling data, as well as other sources of
data, including baseline studies, in order to detect trends and
identify connections between persistence, prevalence, and other factors
such as practices employed by plants, seasonal variations, and
establishment size.
However, there is a missing link here. FSIS would need access to
industry data. Including data collected by the establishment would add
robustness to FSIS' information and improve the quality and validity of
decisions that are made. Ensuring the availability of data to FSIS from
industry, academia, States, consumers, and others will be necessary to
help us protect food safety risks. One way to accomplish this may be
through the establishment of a repository to provide data integrity and
confidentiality. We are examining this initiative and will have more
details available in the near future.
Associate Program Outcomes to Public Health Surveillance
Data
Our next initiative is to improve the association of program
outcomes to public health surveillance data. We are working closely
with the CDC and the Department of Health and Human Services' Food and
Drug Administration (HHS-FDA) to improve our ability to link foodborne
illness estimates with different food groups. Data on foodborne
illnesses due to specific pathogens needs to be connected with
prevalence data for different pathogens in specific foods.
The Foodborne Diseases Active Surveillance Network, or FoodNet,
allows FSIS and our Federal, State, and local food safety partners to
integrate this data by determining the burden of foodborne disease,
monitoring foodborne disease trends, and determining the extent of
foodborne diseases attributable to specific foods. By comparing and
contrasting the characteristics of pathogens recovered from food
samples with those recovered from foodborne illness patients, we are
able to improve our ability to link foodborne illness data with
specific foods.
As indicated from my overview earlier of our accomplishments, USDA
and its partners have made significant and dramatic improvements in
food safety since the implementation of HACCP as the driving component
of FSIS' enforcement of the Federal Meat Inspection Act and the Poultry
Products Inspection Act. The number of foodborne illnesses attributed
to FSIS-regulated products has declined markedly as have the rates of
contamination in regulatory samples. However, the implementation of our
new science-based initiatives is critical for us to strengthen our food
safety infrastructure even further. Enhancing data integration and
improving the association of program outcomes to public health
surveillance data will provide the additional, essential tools we need
to improve public health.
Fiscal Year 2006 Budget Request
I appreciate having the opportunity to discuss a number of FSIS'
accomplishments with you. Now, I would like to present an overview of
the fiscal year 2006 budget request for FSIS.
Implementation of these budget initiatives is imperative to helping
us attain FSIS' public health mission. In fiscal year 2006, FSIS is
requesting an appropriation of $849.7 million, a net increase of about
$32.5 million from the enacted level for fiscal year 2005, which
includes $139 million to be derived from proposed new user fees from
the industry.
Food and Agriculture Defense Initiative
The fiscal year 2006 budget also requests an increase of $19.5
million for FSIS to support a food and agriculture defense initiative
in partnership with other USDA agencies, the Department of Health and
Human Services and the Department of Homeland Security (DHS). Food
contamination and animal and plant diseases can have catastrophic
effects on human health and the economy. The three Federal departments
involved are working together to create a comprehensive food and
agriculture policy that will improve the government's ability to
respond to the dangers of disease, pests, and poisons, whether natural
or intentionally introduced. Our food and agriculture defense
initiative has five components:
--The Food Emergency Response Network (FERN);
--Data systems to support the FERN;
--Enhancing FSIS laboratory capabilities;
--Biosurveillance; and
--Follow-up bio-security training.
For FERN we are seeking an increase of $13 million; for FERN data
systems we are asking for an increase of $2.5 million; for enhancing
laboratory capabilities we are requesting $2.5 million; for
biosurveillance we are requesting an increase of $417,000; and for bio-
security training we are seeking an increase of $1 million.
The first component of the food and agriculture defense initiative
is FERN, a coordinated initiative between FSIS and the Department of
Health and Human Services' Food and Drug Administration (FDA) to
develop an integrated network of Federal, State, and local
laboratories. FERN is an integrated laboratory network capable of
providing ongoing surveillance and monitoring of the food supply, as
well as conducting the extensive testing necessary in the event of a
terrorist attack on the food supply. The FSIS fiscal year 2006 budget
request for FERN seeks an increase of $13 million from fiscal year 2005
which will enable the Agency to manage, maintain, and expand on the
existing group of FERN labs. These funds will improve the Agency's
ability to handle the greatly increased number of samples that would be
required to be tested in the event of a terrorist attack on the meat,
poultry or egg products supply. These State and local laboratories in
the FERN network would play an essential role in conducting this
expanded testing.
The second and third components of the food and agriculture defense
initiative provide further support to FERN. The electronic laboratory
exchange network (eLEXNET) is a national, web-based, electronic data
reporting system that allows analytical laboratories to rapidly report
and exchange standardized data. The fiscal year 2006 budget request
would provide funding needed to make eLEXNET available to additional
FERN and other food-testing laboratories nationwide. In turn, the
budget request would enhance FSIS' laboratory capabilities in order to
detect new bioterror-associated agents, and to ensure FSIS' capability
and capacity to perform the toxin and chemical testing that will be
standardized across all FERN laboratories.
Fourth, the food and agriculture defense initiative will allow FSIS
to participate in an interagency biosurveillance initiative that would
improve the Federal Government's ability to rapidly identify and
characterize a potential bioterrorist attack. Funding this initiative
will improve Federal surveillance capabilities and enable FSIS to
integrate with DHS to compile FSIS surveillance information rapidly
with threat information. This funding would also allow FSIS to focus
its resources on the vulnerable products and processes identified
during the Agency's vulnerability assessments of imported and domestic
products and establish a Foodborne Disease Surveillance Communication
system to coordinate with DHS systems.
Because the realm of biosecurity is ever changing, FSIS must
provide its workforce with the most up-to-date information possible to
ensure that meat, poultry, and egg products are protected from
intentional contamination. Therefore, the final component of the food
and agriculture defense initiative is follow-up biosecurity training of
the workforce. This additional training is essential as part of the
ongoing effort to protect the public by educating the workforce
regarding the latest Agency policies, threat agents, and
countermeasures to those agents.
Public Health Training
The maturation of HACCP has widened the scope of all front-line
inspection duties. While slaughter line inspectors have largely
retained their traditional tasks, other front-line personnel have
acquired more complex responsibilities related to public health,
including food safety assessments, food security, and documentation and
analysis to support detentions, recalls, or other enforcement actions.
Further integrating front-line inspection and science will allow
scientifically-trained FSIS personnel to most effectively utilize their
expertise. For instance, FSIS intends to fully employ the scientific
skills of its Public Health Veterinarians--systems analysis,
epidemiology, biostatistics, microbiology, pathology, and toxicology--
to safeguard public health. Accordingly, FSIS has been revising
veterinary work assignments so that PHVs spend 25 percent of their time
on public health assessment and assurance. As part of the fiscal year
2006 budget request, FSIS is requesting an increase of $2.2 million for
relief positions so that the Agency can take full advantage of the
training, experience, and responsibilities of these highly-trained
PHVs. The Agency and the public will benefit from more effective
utilization of the technical knowledge and skills of our veterinarians
through their expanded public health activities.
Supporting FSIS' Basic Mission
The FSIS budget request for fiscal year 2006 supports the Agency's
basic mission of ensuring that the Nation's commercial supply of meat,
poultry, and egg products is safe, wholesome, and correctly labeled and
packaged.
In order to fulfill the Agency's statutory obligations to provide
continuous inspection of meat, poultry, and egg products, the budget
requests an increase of $13.9 million for the FSIS inspection program
to provide for the 2.3 percent pay raise for FSIS employees in fiscal
year 2006 and to assure that the Agency is provided sufficient funds to
maintain programs without disruption to industry operations.
User Fee Proposal
In fiscal year 2006, FSIS estimates it will collect $122.9 million
in existing annual user fees to recover the costs of overtime, holiday,
and voluntary inspection. Of the $849.7 million requested in the fiscal
year 2006 budget, $139 million is proposed to be derived from a new
user fee that would recover the costs of providing inspection services
beyond an approved 8-hour primary shift. A legislative proposal
authorizing this new fee will soon be submitted to Congress. This will
result in significant savings for the American taxpayer.
Closing
We will continue to engage the scientific community, public health
experts, and all interested parties in an effort to identify science-
based solutions to public health issues to ensure positive public
health outcomes. It is our intention to pursue such a course of action
this year in as transparent and inclusive a manner as is possible. The
strategies I discussed today will help FSIS continue to pursue its
goals and achieve its mission of reducing foodborne illness, and
protecting public health through food safety and security.
Mr. Chairman, thank you again for providing me with the opportunity
to speak with the Subcommittee and submit testimony regarding the steps
that FSIS is taking to remain a world leader in public health. I look
forward to working with you to improve our food safety system, ensuring
that we continue to have the safest food supply in the world.
______
Prepared Statement of Dr. Barbara J. Masters, Acting Administrator,
Food Safety and Inspection Service
Mr. Chairman and members of the Subcommittee, I am pleased to be
here today as we discuss public health and the U.S. Department of
Agriculture's (USDA) fiscal year 2006 budget request for the Food
Safety and Inspection Service (FSIS).
FSIS has a long, proud history of protecting public health. The
Agency was established under its current name by the Secretary of
Agriculture on June 17, 1981, and its history dates back to 1906. FSIS'
mission is to ensure that meat, poultry, and egg products distributed
in interstate commerce for use as human food are safe, secure,
wholesome, and accurately labeled. FSIS is charged with administering
and enforcing the Federal Meat Inspection Act (FMIA), the Poultry
Products Inspection Act (PPIA), the Egg Products Inspection Act (EPIA),
and the regulations that implement these laws.
Ensuring the safety of meat, poultry, and egg products requires a
strong infrastructure. To accomplish this task, FSIS has a large
workforce of approximately 10,000 employees, most of whom are stationed
throughout the country and are present in plants everyday. In fiscal
year 2004, over 7,500 inspection personnel stationed in about 6,000
federally inspected meat, poultry, and egg products plants verified
that the processing of 43.6 billion pounds of red meat, 52.8 billion
pounds of poultry, and approximately 4 billion pounds of liquid egg
products complied with statutory requirements. In addition,
approximately 4.2 billion pounds of meat and poultry and approximately
12.1 million pounds of egg products were presented for import
inspection at U.S. ports and borders from 27 of 33 countries that we
have determined have inspection systems equivalent to our own. Ensuring
that these products are safe, secure, and wholesome is a serious
responsibility.
As you are well aware, these are compelling times in food safety,
and it is because of your support that we are making real progress in
improving the safety of the U.S. food supply. I would like to thank you
for providing FSIS the necessary resources to ensure the safety of the
food supply. In fiscal year 2005, FSIS received $7.2 million for
important training activities, including entry-level field employee
training, Food Safety Regulatory Essentials training (FSRE), and bio-
security training. These funds are helping to move the public health
agenda forward dramatically. Now, I would like to tell you about our
accomplishments during the past year, and about our priorities for
better ensuring the safety and security of meat, poultry, and egg
products in the future.
FOOD SAFETY ACCOMPLISHMENTS DURING 2004
The American public remains confident in the safety of the U.S.
meat, poultry, and egg supply, in part due to the many food safety
accomplishments FSIS made in 2004. In August of 2004, a Gallup poll
found that more than 85 percent of Americans are confident in the
Federal government's ability to protect our food supply.
During the past year, FSIS has continued to make progress in
breaking the cycle of foodborne illness through vigilant testing and
science-based policies. The 2004 annual Centers for Disease Control and
Prevention (CDC) report on the incidence of infections from foodborne
illness showed significant declines from 1996 to 2003 (inclusive) in
the incidences of Yersinia infections (down 49 percent), E. coli
O157:H7 (down 42 percent), Campylobacter (down 28 percent), and
Salmonella (down 17 percent).
The decrease in E. coli O157:H7 infections occurred primarily
during 2002-2003. We anticipate this downward trend to continue when
the next annual CDC report is released this spring. The CDC report
attributes the changes in the incidence of these infections in part to
the control measures implemented by government agencies and the food
industry, as well as enhanced food safety education efforts. The CDC
report noted that the decrease in human E. coli O157:H7 infections in
2003 followed an October 2002 FSIS notice to manufacturers of raw
ground beef products that they reassess their HACCP plans regarding
this pathogen. Our FSIS experience noted declines in the frequency of
E. coli O157:H7 contamination of ground beef for 2003 and 2004.
Progress continues in combating E. coli O157:H7. After a
comprehensive risk assessment on E. coli O157:H7 was completed, we
required all of the approximately 2,900 beef slaughter and processing
establishments to reassess their HACCP plans relative to the potential
presence and control of E. coli O157:H7 in raw beef. Then, our
scientifically trained inspection program personnel conducted the
first-ever comprehensive reviews of the reassessed HACCP plans.
The same rigorous scientific and risk-based approach that CDC
attributes to the reduction of E. coli O157:H7 illness was used in the
formulation of the Listeria monocytogenes rule that became effective
October 6, 2003. Since implementation of the interim final rule, 57
percent of establishments that were not already testing for the
pathogen have now begun testing, 27 percent have initiated the use of
an antimicrobial agent to inhibit the growth of this organism, and 17
percent started using post-lethality treatments.
Our 2003 interim final rule on control of Listeria monocytogenes in
ready-to-eat (RTE) meat and poultry products, based on a thorough risk
assessment, outlined three strategies that an establishment could
choose from to control the pathogen depending on its product(s) and the
environment in which it operates: Alternative 1, provides for a
combination of a post-lethality treatment and a growth-suppressing
agent or process; Alternative 2, provides for either a post-lethality
treatment or a growth-suppressing agent or process; and Alternative 3,
relies on sanitation as the primary mitigation. In January 2005, FSIS
revised its sampling verification procedures so that more product
samples are collected when an establishment relies solely on sanitation
practices for Listeria monocytogenes control, while fewer samples are
analyzed in situations where an establishment has more aggressive
process control measures and interventions.
Other indicators of success in combating these pathogens include a
decrease in the number of recalls initiated for E. coli 0157:H7,
Listeria monocytogenes, and Salmonella. After we implemented the
science based policies I mentioned earlier, we saw a dramatic decline,
culminating in a reduction of nearly 18 percent in the number of
pathogen-related recalls, from 28 in 2003, to 23 in 2004. While this is
certainly good news, we still have areas of concern. One of these is an
increasing trend in the percentage of recalls triggered by undeclared
allergens. This is a troubling development. We have alerted industry of
our concerns and are currently taking case-by-case action and are
looking at broader policies to address it industry-wide.
We are also further strengthening the partnerships we have with our
sister agency, the Animal and Plant Health Inspection Service (APHIS),
and are participating in its enhanced bovine spongiform encephalopathy
(BSE) surveillance program. Under the program, FSIS collects samples
from all antemortem condemned cattle, except for veal calves not
exhibiting central nervous system symptoms, and provides the samples to
APHIS for BSE testing. Condemned cattle have never been allowed to
enter the food supply. The goal of the APHIS surveillance program is to
test as many high risk cattle as possible during a 12 to 18 month
period to determine the prevalence of BSE in cattle in our country. In
calendar year 2004, 176,468 cattle were tested throughout the United
States, compared to 20,543 in 2003.
HUMANE HANDLING AND SLAUGHTER ACTIVITIES
FSIS also ensures compliance with the Humane Methods of Slaughter
Act (HMSA) in livestock slaughter establishments that operate under
Federal inspection. As part of their routine, ongoing and continuous
inspection and enforcement duties, all FSIS inspection personnel are
expected to take appropriate action, including suspending operations,
if appropriate, of a livestock slaughter establishment if they observe
any violations of HMSA. Further, all FSIS inspection personnel are
trained and held accountable for enforcing HMSA during the slaughter
process.
District Veterinary Medical Specialists (DVMSs) provide technical
expertise and oversight for HMSA-related activities, and ensure that
humane handling and slaughter activities and enforcement are handled
consistently by inspection program personnel. The Agency's DVMSs and
Deputy District Managers meet periodically as a group at the Technical
Service Center in Omaha, Nebraska, to correlate on humane enforcement
issues, and, in fact, one such meeting was just held in March 2005.
The Agency continues to encourage industry to implement good
management practices for the humane handling of animals, and requires
industry to abide by all of the requirements of USDA's regulations and
HMSA. On September 9, 2004, FSIS published a Notice encouraging
establishments to use a systematic approach to ensure that they meet
the requirements of the law during handling and slaughter. With a
systematic approach, establishments focus on treating livestock in such
a manner as to minimize excitement, discomfort, and accidental injury
the entire time they hold livestock in connection with slaughter. FSIS
believes that establishments using a systematic approach to humane
handling and slaughter can best ensure that they meet the requirements
of the HMSA, FMIA, and implementing regulations.
FSIS also continues to refine humane handling verification and
tracking procedures for inspection personnel. On February 18, 2005, the
Agency issued FSIS Notice 12-05, to provide inspection personnel with
additional information for humane handling and slaughter verification
activities related to animal stunning and procedures for checking for
conscious animals.
FSIS PRIORITIES FOR 2005--HOLDING OURSELVES ACCOUNTABLE
FSIS is holding itself accountable for improving public health.
Last year, we outlined a series of priorities to better understand,
predict, and prevent contamination of meat and poultry products to
improve health outcomes for American families. I am determined to build
upon these priorities and continue to improve the Agency's
infrastructure with greater attention to risk so that we can then
improve our performance under the public health model. The six
priorities, all equally important, that I am about to share with you
will drive our policies and actions during this calendar year.
Training, Education & Outreach
The first priority is training, education, and outreach. This has
been, and will continue to be, a high priority, and we at FSIS would
like to thank the Subcommittee for its invaluable support in this area.
FSIS can only achieve its public health, food safety, and food security
missions with adequate preparation of its workforce through scientific
and technical training that reflects the Agency's risk-based approach
to food safety and security. Results demonstrate that a highly trained
workforce will lead to definitive advancements in public health.
A large segment of our inspection program personnel is receiving
intensive training in sanitation procedures and Hazard Analysis and
Critical Control Point (HACCP) system principles, based on the type of
products produced at the establishments where the inspectors are
assigned. We expect to have this segment of our workforce fully trained
by the end of the current fiscal year. In 2003, FSIS inaugurated Food
Safety Regulatory Essentials (FSRE) training, which was designed to
better equip inspection personnel in verifying an establishment's HACCP
food safety system. All participants receive training in the
fundamentals of inspection, covering HACCP, the Rules of Practice,
Sanitation Performance Standards, and Sanitation Standard Operating
Procedures. This program also provides food safety training based on
the types of products being produced at the establishments where
inspectors are assigned. In fiscal year 2004, 1,700 individuals
received the Agency's FSRE training, more than doubling the amount of
students trained in fiscal year 2003.
FSIS has also initiated a comprehensive training and education
effort designed to ensure that every FSIS employee fully understands
their role in preventing or responding to an attack on the food supply.
To date, more than 5,000 employees have received bio-security training.
The Law Enforcement Academic Research Network (LEARN), which is
carrying out the training, has stated that the scope of this effort is
unparalleled in the Federal sector since training is being provided to
such a broad base of our employees.
Furthermore, FSIS has successfully launched training for newly
hired Public Health Veterinarians (PHVs) and for newly hired food
inspectors. We are also going back to train ``new hires'' to ensure
that any employees who did not initially receive this training are now
fully equipped with the latest scientific knowledge. In addition, we
now require entering Consumer Safety Inspectors to undergo and pass
FSRE training. We are also in the process of implementing policies to
require passage of mandatory training courses for entering Enforcement
Investigations and Analysis Officers (EIAOs) and for PHVs.
Specifically, in 2005 we plan to provide training for 1,200 food
inspectors, 400 PHVs, 200 EIAOs, 75 import inspectors, and 40 front
line supervisors. We also plan to provide FSRE training for 1,400
Agency personnel. I also would like to note that we offer seats in our
workforce training courses to State inspection personnel.
Additionally, FSIS has enhanced training by taking training
opportunities into the field. In August 2003, FSIS announced new
regional training centers in Atlanta, GA; Dallas, TX; Philadelphia, PA;
Des Moines, IA; and Boulder, CO, designed to provide comprehensive
workforce training programs to FSIS field employees. Since October
2004, more than 2,000 employees have been trained regionally. We
currently have five regional trainers and plan to hire and train an
additional ten by the end of the fiscal year, if not sooner.
We have also posted the training modules for the Food Inspector,
Public Health Veterinarian, and the FSRE training on the FSIS Web site.
This is significant because it makes the materials we are using to
train our workforce more accessible to everyone, including our food
safety partners and industry. When Agency policies change, these
training materials, including the information posted on the Web site,
are updated to reflect the latest scientific information.
FSIS has also extended its outreach to owners and operators of
establishments nationwide through teaching workshops that provide
detailed information about new directives. In 2004, five BSE and 11 E.
coli O157:H7 workshops were held across the country to target all
audiences concerned with food safety. We took the training materials
used at these meetings and distributed them to approximately 2,000
plants (both Federal and State) that slaughter cattle and process beef
products. In addition, several workshops were Web cast allowing
participants from across the country to interact with the instructors
and experts free of charge. Including Web cast participants, nearly a
thousand people took part in the BSE and E. coli workshops. We are very
proud of these FSIS outreach efforts and the resulting food safety
accomplishments.
Because everyone has a responsibility for food safety, educating
the public about its role is a crucial element in FSIS' food safety
mission. All food preparers, from consumers to food service employees,
must know and understand basic safe food-handling practices. These
efforts must be broad enough to ensure that no segment of the public is
uninformed about safe food handling practices, yet at the same time,
target various segments of the population to positively influence those
behaviors that pose the greatest potential risk. Communicating with the
public about food safety must be accomplished in a manner that is
easily understandable so that it is useful to every segment of the
population. Thus, FSIS has developed innovative and collaborative
methods for delivering the food safety message.
One such innovative way of spreading the food safety message is
USDA's Food Safety Mobile, which was introduced in March 2003. This
eye-catching ``food safety educator-on-wheels'' brings food safety
information to consumers and builds on our partnerships in communities
across the country. Through the Food Safety Mobile, FSIS is sharing its
food safety message with the public, especially culturally diverse and
underserved populations and those with the highest risk from foodborne
illnesses. Since its launch in March 2003, through September 2004, the
Food Safety Mobile traveled more than 40,000 miles and appeared in 178
events in approximately 129 cities in 47 States and Washington, D.C.
FSIS consumer education programs are modeled on the concept of
integrated marketing. Utilizing that concept, the Agency is developing
a mass media campaign plan aimed at improving the safe food handling
habits of consumers at home. The campaign plan will include elements
such as TV and radio ads, and a comprehensive multi-year plan for
implementation and evaluation of the campaign. As part of this program,
USDA and the State of Michigan launched a pilot mass media campaign
focused on food thermometer use called ``Is It DONE Yet? You Can't Tell
by Looking. Use a Food Thermometer to Be Sure.'' The FSIS and Michigan
State University project was designed to prevent foodborne illness by
promoting thermometer usage among consumers when preparing meat and
poultry. Results show a significant increase in the number of consumers
who reported using a food thermometer.
USDA's Meat and Poultry Hotline is an additional tool that FSIS
uses to share its food safety message. The Hotline handled over 104,000
calls and 111 media inquiries during fiscal year 2004. The Hotline
provides recorded information and live assistance on food safety issues
for both English and Spanish-speaking callers.
In April 2004, as a significant expansion of our food safety
education outreach efforts, FSIS launched its newly designed, consumer-
focused Web site that provides users with the latest information about
food safety. ``Ask Karen'', the virtual food safety representative of
the Agency, contains answers to over 1,300 food safety questions. More
than 39,000 questions have been asked and answered since mid-2004. Also
new to the redesigned Web site is a constituent subscription service
that provides subscribers with up to the minute food safety
information. As of March 2005, more than 9,700 subscribers signed up
for over 90,000 subscriptions. FSIS averages more than 280 new
subscribers per week.
Food Security
FSIS has accomplished much in the area of food security, making a
strong system even stronger. USDA has had an effective and robust
infrastructure in place for many decades that has protected the public
against intentional and unintentional threats to the food supply. This
science-based food safety and security verification system, with HACCP
as the foundation, is designed to prevent and control contamination of
the food supply during processing, regardless of whether the
contamination is naturally occurring or introduced intentionally.
Recently, we issued and updated a series of directives to employees
that outlined specific instructions on the procedures, monitoring, and
sampling to be taken in the event the Department of Homeland Security
(DHS) declares a Yellow, Orange, or Red Alert. We particularly wanted
to ensure that all FSIS divisions had specific instructions in place so
that the U.S. meat, poultry, and egg products supply could remain the
safest in the world should a threat to the Nation occur. In addition,
we issued a directive which defined what steps the Agency would take if
an emergency incident occurs. These instructions specifically outline
steps and procedures for FSIS personnel to take so that the agency's
daily operations are not interrupted by an incident. Depending on the
threat level, inspection personnel will conduct food security
verification procedures on a daily basis at minimum.
Within FSIS, we have established a full-time staff whose sole
responsibility is food security--the Office of Food Security and
Emergency Preparedness (OFSEP). That office is in the process of
updating seven vulnerability assessments for selected domestic and
imported food products. We have found that these risk-based assessments
are very powerful risk management tools that can be used to develop
strategies and policies that reduce or eliminate the potential risk at
vulnerable points along the farm-to-table continuum. The vulnerability
assessments we conducted provided us with vital data on some inherent
risks in our food safety system that otherwise would not have been as
apparent.
These assessments allowed us to rank food products and potential
contaminating agents in order of highest concern. Using this risk-based
ranking, during periods of heightened awareness our laboratories
examine samples for threat agents posing the greatest risk as
identified in our vulnerability assessments. For instance, if DHS
declares a specific threat to the food supply or a particular product
or process, then our lab personnel will activate the emergency response
plan and test up to 100 percent of all food safety samples for possible
food security risks.
Protection of the United States' food supply is critical for
maintaining the safety and health of the Nation's citizens and the
security of our economy. The Food Emergency Response Network (FERN) has
been created to provide an integrated means of protecting the food
supply at the local, State, and Nation levels. FERN is a coordinated
initiative between the U.S. Department of Agriculture's Food Safety and
Inspection Service (FSIS) and the Department of Health and Human
Services' Food and Drug Administration (FDA) to develop an integrated
laboratory network capable of providing ongoing surveillance and
monitoring of the food supply, as well as conducting the extensive
testing necessary in the event of a terrorist attack on the food
supply. Specifically, laboratories participating in FERN are
responsible for detecting and identifying biological, chemical, and
radiological agents in food. The involvement, participation, and
expertise of local, State, and Federal laboratories in FERN assures
that all food commodities under all jurisdictions are covered by the
network. The size of the network and its wide geographic representation
are also important because they will enable FSIS to rely on State and
local laboratories to participate in handling the numerous samples that
will be required to be tested in the event that a terrorist attack on
the food supply involves meat, poultry, or eggs.
FSIS Program Investigators are vigilant in ensuring food security,
through annual reviews, audits, and investigations and by conducting
other activities, including assessing product handling facilities,
providing guidance to meat, poultry, and egg products industry
officials regarding food security principals, and distributing Agency
food security publications.
We have also utilized a risk-based approach in education materials
prepared for our stakeholders. For instance, we have developed three
sets of guidelines for different segments of the farm-to-table
continuum: Food Security Guidelines for Food Processors; Safety and
Security Guidelines for the Transportation and Distribution of Meat,
Poultry and Egg Products; and Food Safety and Food Security: What
Consumers Need to Know. All of these publications are available on
FSIS' Web site at www.fsis.usda.gov.
We are looking at ways to further improve our Automated Import
Information System (AIIS), which uses statistics to choose imports for
reinspection and allows our inspectors at all ports-of-entry to share
data. From the vulnerability assessment, we have enhanced this network
to account for certain food security issues, and we are working with
other agencies, such as the Customs and Border Patrol, to integrate our
database systems to enhance the flow of vital information to further
strengthen our food safety system against intentional attacks.
FSIS and USDA work closely with the White House and DHS to
coordinate our food security efforts. Moreover, FSIS is an integral
part of the White House Interagency Food Working Group, which is
charged with developing an interagency strategy to protect the food
supply and minimize it as a target for terrorist activity.
In addition, we are working with HHS-FDA, USDA's Food and Nutrition
Service, and Agricultural Marketing Service to develop training in food
security awareness. We also recently entered into a cooperative
agreement with HHS-FDA, DHS, and the National Association of State
Departments of Agriculture to develop the best practices by which
Federal assistance can be provided to States and localities
expeditiously and effectively.
We are also interacting more closely with the intelligence and law
enforcement communities. We are building stronger relationships with
intelligence and enforcement agencies, such as the Federal Bureau of
Investigation, the Central Intelligence Agency, the Transportation
Security Agency, and the Coast Guard.
With respect to our trading partners, FSIS is seeking to enter into
bilateral agreements with several countries to share information that
would help secure the food supply. Agreements are being developed with
Canada, and similar discussions are beginning with Australia, Japan,
Mexico, and New Zealand.
Finally, it is vital that all food slaughter and processing
establishments, as well as all import and export establishments, assess
potential risks in their operations and take steps to ensure the
security of their operations. With that in mind, FSIS has developed the
``Industry Self-Assessment Checklist for Food Security'' and is
developing outreach efforts to distribute this document to regulated
industry. This voluntary checklist provides establishments with a
constructive tool to evaluate their security plans to prevent
intentional contamination of their products, thus helping to further
ensure food safety and security and protect public health.
Risk Analysis
FSIS is committed to emphasizing science in the development of food
safety policies. A scientific approach to food safety that incorporates
risk analysis is critical to FSIS' ability to combat the ever changing
threats to public health. Thus, another priority is risk analysis,
which includes risk assessment, risk management, and risk
communication. In addition to providing regulatory agencies with a
solid foundation for policy changes, science-based risk analysis is
necessary to help the Agency better predict and respond to food safety
threats by allowing us to focus Agency resources on hazards that pose
the greatest threat to public health. Analysis of FSIS regulatory
sampling data, as well as other sources of data, including baseline
studies, helps us detect trends and identify connections between
persistence, prevalence and other factors such as practices employed by
plants, seasonal variations, and establishment size. With that in mind,
the Agency will begin collecting samples in late Spring 2005, for a
baseline study for beef trimmings in raw ground beef production.
Planning for additional studies is underway.
In recent years, the Agency has conducted a number of risk
assessments, most notably those with regard to E. coli O157:H7 and
Listeria monocytogenes. As I stated earlier in my testimony, we have
seen marked reductions in both pathogens, thanks, in large part, to the
risk assessments that provided the scientific framework for our E. coli
and Listeria monocytogenes policies. In the coming year, FSIS plans to
conduct a similar risk assessment for Salmonella in raw ground beef and
raw poultry products. Just last month, the Agency held a public meeting
about two draft risk assessments--one for Salmonella in ready-to-eat
(RTE) and poultry products and one for Clostridium perfringens in both
RTE and heat-treated products that are not RTE.
To fully realize the benefits of risk analysis, however, FSIS must
develop methods for anticipating or predicting risk through enhanced
data integration. FSIS is engaged in developing innovative ways to
anticipate hazards, so that it can act to ensure that those hazards do
not manifest themselves as public health problems. The Agency is
currently examining its regulatory data to identify conditions that
consistently have foreshadowed the development of significant problems.
By identifying such conditions, inspection personnel can utilize data
to alert establishments so they can take corrective actions that may
prevent a hazard.
Management Controls and Efficiency
FSIS is looking for ways to best achieve our operational goals and
objectives. In order to better focus its resources, FSIS is
establishing a more fully documented management control program.
Management controls are operational checks and balances that safeguard
policies, procedures and structures to ensure that tasks are completed
in the most efficient and effective manner. With more fully documented
proper management controls, authority, responsibility, and
accountability are more clearly defined and delegated. In addition,
program performance is routinely analyzed, policies, and procedures are
regularly updated, management decisions are transparent and traceable,
documentation is accurately maintained, and supervision is appropriate
and continuous.
Communications
The Agency has also embarked on a comprehensive effort to ensure
that all levels of communications are as efficient, effective, and
rapid as possible. We recognize that as a public health regulatory
agency, we are only as effective as our communication systems. Nowhere
was this more evident than in the post-September 11th environment we
find ourselves in as a country and as an Agency.
It is vitally important that the Agency continue to receive the
necessary funds to maintain and upgrade its information technology (IT)
systems, which will improve efficiency and enhance communication
between and among all FSIS employees. For FSIS, the use of databases to
track inspection program personnel tasks is essential for food safety
verification. It is a vital communication resource whereby inspectors
can enter information about their daily food safety, security, and
humane handling verification duties. With the vast and dispersed number
of meat, poultry, and egg processing facilities scattered across the
country and throughout the world, our geographically dispersed
workforce needs the ability to send, receive, analyze, and react to
information gathered at any one of these potential hot-points, because
it is critical to the protection of public health. As an Agency we are
striving to ensure that our IT systems operate in a ``realtime data
exchange'' environment. In addition, managers at the district level and
at headquarters can make crucial management decisions based on tracking
progress and analyzing the performance of their employees, as well as
the establishments for which they are responsible. A more rapid
exchange of information with the field enables FSIS supervisors and
managers to make better informed decisions on food safety and security
issues, thus better protecting public health.
I have made it a very high priority to ensure that our numerous
data gathering and storage systems operate in a seamless and
cooperative fashion across the Agency and with our partners. We
appreciate the support this committee has provided in the past to allow
us to improve and update our communications systems.
To be a successful public health Agency, our employees need the
right information to do their jobs. Information needs to be
communicated quickly and accurately; ensuring public health will be
protected through safe and secure meat, poultry, and egg products. That
is why the Agency has put together an Internal Communications Board and
charged them with developing ways to enhance the flow of communication
laterally and vertically within FSIS. This board is engaged in many
projects to best meet the communication needs of our employees. One
major activity is the new FSIS Intranet. The Intranet will be one-stop-
shopping for all internal FSIS needs, providing access to notices,
directives, regulations, policies, career tools, and up-to-date news
and information about the Agency. The board has also been challenged
with working on our Agency's image and message. It is crucial that all
employees and stakeholders recognize and understand the critical public
health mission of FSIS.
We continue to strive to improve our communications both internally
with our workforce and externally with stakeholders and our public
health partners. As one partner in the U.S. food safety effort, FSIS
strives to maintain a strong working relationship with its sister
public health agencies. Cooperation, communication, and coordination
are absolutely essential if we are to be effective in addressing public
health issues. We made great strides in this area when we dealt with
the BSE-positive cow discovered in December 2003, and as we implemented
the new interim regulations this year. Moreover, we have been involved
in discussions on establishing data sharing systems with other
agencies, such as APHIS and CDC. Maintaining information technology
support will allow for a collaborative effort between State and Federal
agencies by fully integrating currently duplicative processes and data
collection, such as surveillance and monitoring activities for human
and animal diseases.
The Continued Evolution of Inspection and Enforcement
Another Agency priority is to continue the evolution of inspection
and enforcement. A risk based approach, encompassing all we do and
combined with the Agency's scientific commitment, will facilitate FSIS'
ability to combat ever changing threats to public health.
Today, we have a much better reaction to the hazard landscape. Our
ability to target resources for food safety and security verification
systems has greatly improved. FSIS has refined its risk-based approach
from a fairly static environment to one that is more fluid and can
better react to food safety challenges that exist, and those that may
arise, in order to further improve public health.
Specifically, our Agency works interdependently to assess data from
FoodNet, other Federal agencies, and State public health agencies, as
well as the FSIS Consumer Complaint Monitoring System (CCMS), to
investigate hazards by identifying sources, conducting food safety
assessments in regulated facilities, and conducting investigations in
associated transportation, distribution, and storage facilities. In
addition, food security monitoring procedures have been incorporated
into inspection verification methodology at all domestic and import
establishments. In-plant regulatory control actions as well as
effective administrative and criminal proceedings have been and
continue to be effective deterrents to violations of law.
As we approach the completion of the first decade under HACCP, FSIS
is determined to take a risk-based approach to food safety and security
verification in order to realize the next dynamic in food safety. With
recent developments in science and risk analysis, it is clear that
there are enhancements that can be made to HACCP that offer a more
complete approach to inspection and ensuring public health. This
enhanced risk-based system builds on the strong foundation provided by
the HACCP/Pathogen Reduction regulations and allows the FSIS workforce
to more effectively utilize their expertise in assuring the safety and
security of America's meat, poultry, and egg products.
To meet its goal of protecting public health, FSIS will continue to
review policies and regulations and work with interested parties to
modernize and further enhance its inspection and food safety and
security verification efforts, including the verification of humane
slaughter and handling. It is clear that progress has been made, but
through the continued evolution of inspection and enforcement, in our
risk based system, FSIS intends to make the world's safest food supply
even safer.
FISCAL YEAR 2006 BUDGET REQUEST
I appreciate having the opportunity to discuss a number of FSIS'
accomplishments with you. Now, I would like to present an overview of
the fiscal year 2006 budget request for FSIS.
Implementation of these budget initiatives is imperative to helping
us attain FSIS' public health mission. In fiscal year 2006, FSIS is
requesting an appropriation of $849.7 million, a net increase of about
$32.5 million from the enacted level for fiscal year 2005, which
includes $139 million to be derived from proposed new user fees from
the industry.
Food and Agriculture Defense Initiative
The fiscal year 2006 budget also requests an increase of $19.5
million for FSIS to support a food and agriculture defense initiative
in partnership with other USDA agencies, the Department of Health and
Human Services and the Department of Homeland Security. Food
contamination and animal and plant diseases can have catastrophic
effects on human health and the economy. The three Federal departments
involved are working together to create a comprehensive food and
agriculture policy that will improve the government's ability to
respond to the dangers of disease, pests, and poisons, whether natural
or intentionally introduced. Our food and agriculture defense
initiative has five components:
--The Food Emergency Response Network (FERN);
--Data systems to support FERN;
--Enhancing FSIS laboratory capabilities;
--Biosurveillance; and
--Follow-up bio-security training.
For FERN we are seeking an increase of $13 million; for FERN data
systems we are asking for an increase of $2.5 million; for enhancing
laboratory capabilities we are requesting $2.5 million; for
biosurveillance we are requesting an increase of $417,000; and for bio-
security training we are seeking an increase of $1 million.
The first component of the food and agriculture defense initiative
is FERN, a coordinated initiative between FSIS and the Department of
Health and Human Services' Food and Drug Administration (FDA) to
develop an integrated network of Federal, State, and local
laboratories. FERN is an integrated laboratory network capable of
providing ongoing surveillance and monitoring of the food supply, as
well as conducting the extensive testing necessary in the event of a
terrorist attack on the food supply. The FSIS fiscal year 2006 budget
request for FERN seeks an increase of $13 million from fiscal year 2005
which will enable the Agency to manage, maintain, and expand on the
existing group of FERN labs. These funds will improve the Agency's
ability to handle the greatly increased number of samples that would be
required to be tested in the event of a terrorist attack on the meat,
poultry or egg products supply. These State and local laboratories in
the FERN network would play an essential role in conducting this
expanded testing.
The second and third components of the food and agriculture defense
initiative provide further support to FERN. The electronic laboratory
exchange network (eLEXNET) is a national, web-based, electronic data
reporting system that allows analytical laboratories to rapidly report
and exchange standardized data. The fiscal year 2006 budget request
would provide funding needed to make eLEXNET available to additional
FERN and other food-testing laboratories nationwide. In turn, the
budget request would enhance FSIS' laboratory capabilities in order to
detect new bioterror-associated agents, and to ensure FSIS' capability
and capacity to perform the toxin and chemical testing that will be
standardized across all FERN laboratories.
Fourth, the food and agriculture defense initiative will allow FSIS
to participate in an interagency biosurveillance initiative that would
improve the Federal Government's ability to rapidly identify and
characterize a potential bioterrorist attack. Funding this initiative
will improve Federal surveillance capabilities and enable FSIS to
integrate with DHS to compile FSIS surveillance information rapidly
with threat information. This funding would also allow FSIS to focus
its resources on the vulnerable products and processes identified
during the Agency's vulnerability assessments of imported and domestic
products and establish a Foodborne Disease Surveillance Communication
system to coordinate with DHS systems.
Because the realm of biosecurity is ever changing, FSIS must
provide its workforce with the most up-to-date information possible to
ensure that meat, poultry, and egg products are protected from
intentional contamination. Therefore, the final component of the food
and agriculture defense initiative is follow-up biosecurity training of
the workforce. This additional training is essential as part of the
ongoing effort to protect the public by educating the workforce
regarding the latest Agency policies, threat agents, and
countermeasures to those agents.
Public Health Training
The maturation of HACCP has widened the scope of all front-line
inspection duties. While slaughter line inspectors have largely
retained their traditional tasks, other front-line personnel have
acquired more complex responsibilities related to public health,
including food safety assessments, food security, and documentation and
analysis to support detentions, recalls, or other enforcement actions.
Further integrating front-line inspection and science will allow
scientifically-trained FSIS personnel to most effectively utilize their
expertise. For instance, FSIS intends to fully employ the scientific
skills of its Public Health Veterinarians--systems analysis,
epidemiology, biostatistics, microbiology, pathology, and toxicology--
to safeguard public health. Accordingly, FSIS has been revising
veterinary work assignments so that PHVs spend 25 percent of their time
on public health assessment and assurance. As part of the fiscal year
2006 budget request, FSIS is requesting an increase of $2.2 million for
relief positions so that the Agency can take full advantage of the
training, experience, and responsibilities of these highly-trained
PHVs. The Agency and the public will benefit from more effective
utilization of the technical knowledge and skills of our veterinarians
through their expanded public health activities.
Supporting FSIS' Basic Mission
The FSIS budget request for fiscal year 2006 supports the Agency's
basic mission of ensuring that the Nation's commercial supply of meat,
poultry, and egg products is safe, wholesome, and correctly labeled and
packaged.
In order to fulfill the Agency's statutory obligations to provide
continuous inspection of meat, poultry, and egg products, the budget
requests an increase of $13.9 million for the FSIS inspection program
to provide for the 2.3 percent pay raise for FSIS employees in fiscal
year 2006 and to assure that the Agency is provided sufficient funds to
maintain programs without disruption to industry operations.
User Fee Proposal
In fiscal year 2006, FSIS estimates it will collect $122.9 million
in existing annual user fees to recover the costs of overtime, holiday,
and voluntary inspection. Of the $849.7 million requested in the fiscal
year 2006 budget, $139 million is proposed to be derived from a new
user fee that would recover the costs of providing inspection services
beyond an approved 8-hour primary shift. A legislative proposal
authorizing this new fee will soon be submitted to Congress. This will
result in significant savings for the American taxpayer.
CLOSING
We will continue to engage the scientific community, public health
experts, and all interested parties in an effort to identify science-
based solutions to public health issues to ensure positive public
health outcomes. It is our intention to pursue such a course of action
this year in as transparent and inclusive a manner as is possible. The
strategies I discussed today will help FSIS continue to pursue its
goals and achieve its mission of reducing foodborne illness, and
protecting public health through food safety and security.
Mr. Chairman, thank you again for providing me with the opportunity
to speak with the Subcommittee and submit testimony regarding the steps
that FSIS is taking to remain a world leader in public health. I look
forward to working with you to improve our food safety system, ensuring
that we continue to have the safest food supply in the world.
Senator Bennett. Thank you.
FOOD STAMP ERROR RATE
Mr. Bost, you talked about the failure rate, food stamp?
Mr. Bost. Yes, sir.
Senator Bennett. And you are delighted that it is at 6
percent, which you say is a significant decrease? Help me
understand----
Mr. Bost. Yes. It is a 25 percent decrease over the course
of the last 4 years, which is the lowest that it has ever been
in the history of the Food Stamp Program. We anticipate that
when we release the results, probably in June of this year, for
last year, it will be even lower.
Senator Bennett. Well, help me understand what it means.
Mr. Bost. Essentially, the error rate is a measure of an
inaccurate determination of benefits. For example, an error can
occur when a person goes into an office, in Sandy, Utah, and
applies for food stamps. It is an error if they get either too
much or too little. If it is just right, then it is perfect.
Senator Bennett. I see. So the error rate has to do with an
improper amount being given out?
Mr. Bost. That is correct. An improper payment. The
interesting thing is the fact that we are one of the few
Federal programs where improper payments are measured, and
reported every year.
Senator Bennett. Okay. Good. I just hadn't understood what
that meant before, and I----
Mr. Bost. Well, it is something that we are very proud of
in terms of working with our State partners. It demonstrates to
everyone how seriously we take this, and it ensures that there
is integrity in the program and that there is an accurate
determination of benefits for people that come in to apply.
FOOD STAMP PARTICIPATION
Senator Bennett. Can you explain the increase in
participants?
Mr. Bost. Well, I think there are probably three major
reasons. First and foremost, provisions we implemented as a
direct result of the farm bill, and the Food Stamp Program
being reauthorized. Second, Congress made it easier for
eligible persons to enroll in the program, and made it easier
for the States to implement it. Also, we have seen the results
of our outreach efforts, in terms of enrolling eligibles.
Last, but not least, the beauty of the Food Stamp Program
is that it responds to the changing tides of the economy. When
the economy is not doing so well, you see an increase in the
number of enrollees. When the economy is doing great, you see a
decrease. Those are the three main reasons that we have seen an
increase in terms of participation in the Food Stamp Program.
Senator Bennett. Well, the economy is doing better, but you
are still increasing?
Mr. Bost. Right. But there tends to be a lag----
Senator Bennett. I see.
Mr. Bost [continuing]. In terms of when the economy goes up
and participation declines. Interestingly enough, this month,
was the first month, and while I am not ready to say that it is
a trend yet, that participation didn't go up. It stayed the
same and started to decrease, which would indicate to us--and
like I said, I want to make this point that I am not ready to
say it is a trend yet--that participation is on the decline.
Senator Bennett. Okay. Well----
Mr. Bost. The economy may be catching up with it.
Senator Bennett. In the economy as a whole, the
unemployment rate is a lagging indicator?
Mr. Bost. That is correct.
WIC PARTICIPATION AND FUNDING
Senator Bennett. And this lags the unemployment rate. Okay.
Let us talk about WIC for a minute. We had a lot of angst about
WIC last year because we had to add about half a billion
dollars just to stay even as a result of the increase in milk
prices.
Mr. Bost. Yes, sir.
Senator Bennett. Now you are asking for another $275
million. What does that represent?
Mr. Bost. Well, right now, we are serving about 8.2 million
persons in the Women, Infants, and Children Program. We
anticipate that rate going up to about 8.5 million persons, and
these funds would fully support the expected participation
rate.
We believe that based on these numbers, we will be able to
meet the needs of those persons that are eligible to
participate in the program who seek services. We are also
asking for a contingency fund of $125 million just in case our
numbers are off.
I want to add two points I think are very important. The
issue of WIC and its associated costs are tied to two things.
It is not only participation, but as you said, the cost of the
WIC food package. When we saw a significant increase in dairy
prices last year, I saw a significant increase in my overall
WIC food costs.
WIC FOOD COSTS
Senator Bennett. Now do you have any forecast as to what is
going to happen to food costs this year? Are we going to have
another challenge as we get close to the final passage of the
bill in September, where we are going to have to find some
more, several hundred million dollars more?
Mr. Bost. No. The preliminary numbers we have at this point
would lead us to believe that we should not see a significant
increase in those costs. But it is unpredictable. We are
guessing in terms of looking into the future and trying to
anticipate it.
We have put some cost containment measures in place. We
have been working with the States to ensure we are as efficient
in the administration of this program as possible. That is one
reason that we looked at the WIC-only stores in California and
around the country. That increased our cost by an additional
$30 million.
We are looking at everything that we can possibly do to not
deter eligible persons from participating in the program. I am
working with the States to ensure that, one, we hold them
accountable and, two, this program is operated just as
efficiently and as effectively as possible.
Senator Bennett. You will remember we took a great interest
in WIC-only stores in the bill last year, and that interest
continues.
Mr. Bost. Well, it is something that we are very interested
in also, Mr. Chairman. I wrote not only to California, but to
every State in the country where there are WIC-only stores and
encourage them to look at some cost containment measures.
I want to make this point. We are not interested, we are
not motivated in putting the WIC-only stores out of business.
What I am interested in is controlling the costs.
Senator Bennett. Yes. Yes, so are we. And we encourage you
in that.
Mr. Bost. Thank you.
NATIONAL ANIMAL IDENTIFICATION SYSTEM
Senator Bennett. Secretary Hawks, national animal
identification. You have asked for $33 million to continue the
program, and that is in addition to some $18 million to $19
million that was transferred from the Commodity Credit
Corporation, and another $33 million that was appropriated last
year. Can you give us a status on where this is and where you
think it is going?
Mr. Hawks. Yes, sir. I would be quite happy to.
We did transfer $18.8 million from CCC last year. With
those funds, we started cooperative agreements with 43 States
and 16 tribes that we are working with. We held a series of
animal ID listening sessions around the country. I personally
attended every one of those. There were 16 of them, from one
end of this country to the other.
The consistent message that we were hearing from the
countryside, and I felt it was very important to get out to
where the real cowboys are, if you will----
Senator Bennett. Yes.
Mr. Hawks [continuing]. To get a good understanding of what
was going on out there, was confidentiality of information, and
the ability to be flexible as well as to have a system that
would perform appropriately.
Last October, the Administration submitted legislation, to
address the issue of confidentiality. We will be resubmitting
that. We had identified premise registration as the first order
of business. We have accomplished that now. We have 45 States
that are fully operational. We hope to have the rest of the
States fully operational in the near future. We will start,
hopefully by July, to issue actual animal identification
numbers, individual numbers.
Of the $33 million requested and appropriated in our 2005
budget, we will take approximately $19 million and move forward
with additional cooperative agreements. It is very important
that as we move forward with this, we move forward in a manner
that it does what we want to do. And I think there is a lot of
misunderstanding about animal identification. The fact is we
are looking at it from a disease control standpoint using the
authority provided in the Animal Health Protection Act.
And we only need a very small bit of information. We are
looking at various technologies. Radio frequency identification
is one of them. Retinal scans is one. DNA is one. So we are
trying to, with these cooperative agreements, test multiple
ways of doing this to make sure that we have a system that is
economical and functional, and that the confidentiality issues
are addressed.
Senator Bennett. Very good. I am looking for a completion
date. We start in July?
Mr. Hawks. We will be able to issue those individual
numbers in July. We actually are looking at a fully functional,
potentially mandatory system by 2009. But we feel it is very
important to move forward with this in a systematic manner.
The last thing that I want to do or I think you want me to
do is to be out there with a system that is not functional. We
are doing this very cooperatively. We are preparing to publish
in the very near future a current thinking paper, a strategic
plan with timelines and dates, and get input back on that. So
we feel like it has got to be a cooperative arrangement that we
go forward with and that we not have something that won't be
functional when we get through with it.
OVERSEAS PROGRAMS
Senator Bennett. Okay. Tell me about your APHIS offices
overseas. I understand you are talking about new offices in
Brazil, Thailand, India, Italy, and West Africa?
Mr. Hawks. Yes, sir.
Senator Bennett. What do we expect to get out of that?
Mr. Hawks. One of the things that I said in my opening
statement is the fact that I want to see us put some sanity
back in sanitary and phytosanitary trade issues. It seems that
over the last few years, sanitary and phytosanitary issues have
become the trade distorting practices of choice around the
world. We only have to look at the situation with Japan right
now and our beef, and not being able to open that market.
But it is important to have, from a technical perspective,
those people that can address these issues. As I said, we did
112 of those SPS issues last year that allowed for $5 billion
of trade to occur. So it is important to have those types of
offices, the personnel there that can address these from a
technical perspective, to maintain those markets, to open those
markets and address those issues.
That is the reason we have been increasing resources. And
we have to constantly look at the areas and re-evaluate where
those resources need to be because it is very important that we
are prudent with our dollars, with your tax dollars.
Senator Bennett. Sure. Sure.
FOOD EMERGENCY RESPONSE NETWORK
Dr. Pierson, let us talk about FERN. You have requested a
$13 million increase for the Food Emergency Response Network,
and you say this will allow USDA to establish 100 laboratories
that will be able to exchange data, inform the public, and so
on.
Why do we need 100 laboratories? How many do you have now?
And I assume these are all existing labs with whom you will
contract, rather than standing up brand-new ones. But let us
understand where you are now, and 100 sounds like pretty
ambitious. That is two a week. That is quite an administrative
task to undertake.
Dr. Pierson. Correct. As you correctly described, FERN
would be the Food Emergency Response Network. As you know, FERN
is a laboratory system that was put together in cooperation
with the Food and Drug Administration and other partners to
provide a system whereby we could have an immediate response if
there is, in fact, a food-related emergency event, such as an
intentional widespread contamination of foods.
We feel it is much better to be prepared and to have a
system in place that can respond immediately to provide that
immediate result that is needed through analysis, rather than
approaching it in a piecemeal way or more of a reactive way.
What we are doing is to build upon existing resources. We
are not asking to build new facilities or new laboratories.
Throughout the United States, we have many very, very capable
State laboratories and local laboratories. And our goal, yes,
is to bring into the fold up to 100 laboratories.
What we are working towards is to provide standard
methodologies, and standard protocols that can be shared by
these laboratories, so that we have a commonality of
understanding as to how to approach and analyze the samples. It
is very, very important that we have uniformity so we don't get
some differences in response.
Senator Bennett. Yes, I understand that. But you are
talking two per State. Is that how it is going to be allocated,
or is it going to be one per State and then the rest bunched
some place?
Dr. Pierson. We are looking towards adding about 15
laboratories initially, and our ultimate goal is 100. This is a
building process that we are going through, and we are
establishing this infrastructure and then building upon that
over a period of time.
Senator Bennett. Will you have at least one per State?
Dr. Pierson. That is eventually what we are looking for, at
least one per State. Then, of course, there would eventually be
more.
I know I personally presented this proposal 2 years ago
before the Association of Food and Drug officials, the
consortium of State laboratories, and at that time, we were
working with them to conceptually buy into this concept. We
have a very good response, and so we are then looking to
incrementally bring those labs online.
Senator Bennett. Okay. Thank you very much.
Senator Kohl.
Senator Kohl. Thank you, Senator Bennett.
MILWAUKEE HUNGER TASK FORCE
Mr. Bost, the Hunger Task Force based in Milwaukee was
established in 1974 to work toward making sure that Milwaukee's
young people received breakfast at school. Since then, their
mission has been expanded, and now they advocate public
policies that we hope will eventually stamp out hunger.
Until this larger mission is accomplished, however, they
serve nearly 45,000 people a month at their pantries, and
nearly half are children. And they provide more than 60,000
meals each month at their homeless shelters and meal programs.
I think you are familiar with this.
Organizations such as this one, local groups that work on
the ground and actually carry out both public and private
feeding programs, I believe have much to offer in the way of
shaping good public policy, providing suggestions on how to
improve what we are currently doing.
I know that USDA has worked with the Hunger Task Force in
the past and is currently working with them on their mozzarella
cheese effort that I spoke of on Tuesday. I also know that they
have many other ideas that I believe that we should hear and
take into consideration.
Mr. Bost, perhaps the best way to appreciate a group like
this and the way they carry out what appears to be at times a
very difficult task is to visit them in person and watch them
in action. I know you have met with representatives of the task
force on hunger for Milwaukee here in Washington.
Mr. Bost. Yes, I have.
Senator Kohl. And I wonder if I might prevail upon you at
some point to get out there and see what they are doing on the
ground and listen to them and have an opportunity to appreciate
and to perhaps learn a little on how important their work is.
Mr. Bost. Well, interestingly enough, Senator Kohl, I was
scheduled to visit Milwaukee and had an opportunity to do that,
except that I had a hearing.
Senator Kohl. Today?
Mr. Bost. No, it wasn't today. It was in the House. And so,
yes, it was already scheduled. We are looking for an
opportunity to have it rescheduled.
Senator Kohl. I didn't know that. I think that is terrific.
Mr. Bost. Yes. It was already scheduled. We had an
opportunity to meet with the executive director not too long
ago, and so there has been some correspondence. We are working
on scheduling a trip for me to visit with them.
Senator Kohl. I do thank you so much. That is a surprise,
and I think it is great.
Mr. Bost. Well, I don't know why you would be surprised. I
told her that I was coming.
Senator Kohl. Yes.
Mr. Bost. It was a question of being able to get it
scheduled.
Senator Kohl. I thank you.
Mr. Bost. You are quite welcome.
PRIVACY PROTECTION OF CERTAIN SELLERS OF FARM PRODUCTS
Senator Kohl. Secretary Hawks, last year, I inserted a
provision--General Provision 776--to modernize the law
governing agricultural lien central filing systems, to do it in
a way that protects farmers from identity theft that could
occur if their Social Security numbers were widely distributed.
What has been done to implement this change, and can we
expect at some point to have it completed?
Mr. Hawks. Yes, sure. You actually threw me off with that
question, Senator Kohl. I was not prepared to respond to that
question. And so, I will have to get back with you on that.
I know that in GIPSA, there's central filing. And so, I
will have to say I am not prepared to give you an absolute as
to where we are on that process.
[The information follows:]
Clear Title
Section 1324 of the Food Security Act of 1985 (Act) authorized the
Secretary of Agriculture to approve and certify central filing systems
operated at the State level for farm products and to approve amendments
to such certified central filing systems that have been proposed by a
Secretary of State, provided that the proposed central filing systems,
or amendments thereof, conform with the Act, as amended. Section 776 of
the Consolidated Appropriations Act of 2005 allows a Secretary of State
to propose the use of a unique identifier to be used in lieu of a
social security number and allows the Secretary of Agriculture to
approve proposed unique identifiers.
The Grain Inspection, Packers and Stockyards Administration (GIPSA)
is responsible for the administration of the Act. GIPSA posted on its
web page a copy of the amended Act. GIPSA is in the process of updating
the regulations and will be completed within one year. Section 776 does
not provide GIPSA with the authority to create a selection system or
method by which unique identifiers are produced. GIPSA will review any
system proposed by a Secretary of State's office. Upon thorough review,
GIPSA will determine whether to approve the selection system or method
proposed.
Senator Kohl. All right. I thank you, and we will----
Mr. Hawks. Honesty is one of the things you will find from
me. And I have already visited you in Wisconsin, too.
Senator Kohl. Yes, I remember. At least on one occasion, we
met at the airport on your way through.
Mr. Hawks. We sure did.
TWENTY-FIVE PERCENT CAP OF WIC NSA FUNDS
Senator Kohl. Secretary Bost, the budget request includes
language to limit the funding for nutrition services and
administrative expenses of the WIC program to no more than 25
percent of the total amount provided. This will reduce funding
available for nutrition services and administration, but more
importantly, it changes the structure providing these very
important dollars.
On the surface, this may sound like only a reduction in
administrative expenses. But there is more to it, as you know,
than this what appears to be a more superficial explanation.
This funding isn't just lights and office expenses, as you
know. It includes nutrition education, obesity prevention,
breast feeding support and promotion, prenatal and pediatric
health care referrals, spouse and child abuse referral, and
other vital services.
Further, this request, by changing the way administrative
funding is provided, will actually create a disincentive for
food costs containment. In the past, administrative dollars
were tied to the number of people you served. So you would keep
food costs low, serve more people, and receive more
administrative money.
In this proposal, however, your administrative money is not
tied to the number of people you serve. It is tied to the total
amount you spend on food. So if you keep food costs low, you
are not rewarded. You actually lose administrative dollars. And
over time, this could actually drive WIC costs up.
I think we agree that the WIC program provides more than
only food. This request is more than just a cutback on lights
and office. It will reduce essential services provided through
the WIC program, and so I think it deserves some serious
reconsideration.
Do you have some thoughts that you would like to express?
Mr. Bost. Yes, Senator Kohl. A couple of things. If you
recall in my opening comments, we are always interested in
ensuring that all of the programs that I am responsible for,
are managed just as efficiently as possible. We believe that
this proposal will cause, hopefully, in cooperation with us,
some State agencies to seek ways to be much more efficient. We
do not believe that it will compromise those core services that
they are directly responsible for. That is the first point.
The second point is that I had an opportunity to meet with
the WIC groups when they were in town not too long ago. The
commitment that I made to them is that we would be willing to
sit down with them and entertain ideas in terms of the best way
to get to the 25 percent cap that would not compromise their
ability to provide the level of services that we are interested
in providing.
And last, but not least--and I am going to read this
because I want to make sure that it is right--the percentage of
total funds available for States for grants in 2005 is about 26
percent. We are looking at bringing that down to 25 percent,
which is only 1.5 percent. In addition to that, the funding
available in fiscal year 2006 is about $1.3 billion, and for
2005, it was a little bit less. So, it is another way that we
believe we can work with our State partners, to say to them,
``What can we do to make this program as efficient as we
possibly can, given the fact that we just don't have endless
dollars available to run it?''
No decision has been made at this point in terms of what
the allocation formula would be. That was a commitment that I
made to the group, that we would be willing to sit down and
work with them to get to the point of putting the cap of 25
percent in place.
Senator Kohl. Good. Thank you.
SHARING DISTRIBUTION LISTS
Secretary Pierson, it is my understanding that USDA is
considering a rule that will publicly disclose any retail
outlets that may have received tainted meat. To me, it seems
that this is an idea that should be acted upon.
Is this proposed rule still being reviewed by OMB, and do
you have any information regarding if and when we can expect
this rule to be promulgated?
Dr. Pierson. Thank you, Senator Kohl.
Yes, FSIS did, in fact, prepare a proposed rule relative to
the sharing of distribution lists. That rule has gone through
departmental clearance at all levels. It had been forwarded to
OMB, and it is at a pre-decisional stage so I cannot publicly
discuss the details of what is there.
OMB has had a number of questions that they sent back to
us. We are looking at those questions. I don't have an exact
timeline on OMB's decision, but we are now considering the
issues between us and OMB.
Senator Kohl. You don't know when this might, in fact, wind
up being effectuated or what?
Dr. Pierson. I do not know.
Senator Kohl. Can you----
Dr. Pierson. At this time, I don't know.
Senator Kohl [continuing]. Keep me abreast as to what is
happening, when it is going to get published? As I said, I
believe it is a good idea. I think most people believe this is
a good idea.
Dr. Pierson. Sure. Certainly, we will keep you posted on
the progress.
FOOD STAMP CATAGORICAL ELIGIBILITY
Senator Kohl. Secretary Bost, last October, Economic
Research Service reported 11.2 percent of U.S. households were
``food insecure,'' which means hungry, at least sometime during
2003, the last year for which data is available. One of your
stated goals is to decrease the percent of food insecure
families down to 7.7 percent by 2006.
This budget contains, however, provisions to restrict
expanded categorical eligibility for the Food Stamp Program,
and as you say in your statement, it is going to kick more than
300,000 people off the food stamp roles. I have heard the
administration's argument on this. Essentially, you say that
all people have to do is ask about receiving TANF and just pick
up a flyer, and they are automatically eligible for food
stamps.
However, let us be honest. These are not wealthy families
that are coming in to seek Federal assistance. These are
working families, families struggling to make ends meet, while
housing, gas, child care, health care, and utility prices
continue to rise.
In Wisconsin, one of the hardest-hit States in your
proposal, this is 19,000 people who depend on food stamps each
month and who will be denied this basic benefit. In Wisconsin,
this proposal will take away the automatic eligibility for
children in these families to receive free lunches at school.
So how do you respond to these concerns, and what advice do
you have for these families who can no longer depend on the
Government and are increasingly unable to depend on emergency
food?
Mr. Bost. Senator Kohl, I think there are several things
that I would say. First and foremost, we have instituted and
implemented one of the most comprehensive outreach programs
over the course of the last 10 or 15 years in terms of reaching
out and attempting to enroll eligible families in all of our
nutrition programs. That is the first thing that I would say.
The second thing that I would say to you is that for those
persons that are affected by this proposal, if they still
believe that they are eligible to participate in the Food Stamp
Program, they can still go and apply. What we are interested in
accomplishing here is to ensure that we target those families
that are in the greatest of need in terms of meeting their
nutritional well-being.
Last, but not least, we have seen, as the Chairman noted,
that the food stamp roles in this country have significantly
increased over the course of the last several years. Right now,
we are serving over 25, almost 25.5 million people in the Food
Stamp Program. I am continuing to do outreach in terms of
ensuring that eligible people are enrolled. We have radio ads.
We have a major campaign. We spent money in terms of access and
participation grants.
So, for people that believe that they are still eligible,
we want them to come and to apply. This provision is there to
specifically target those that are in the greatest need in
terms of meeting their nutritional needs and providing food for
children and their families. If they believe that they are
still eligible to apply, they should go apply.
Senator Kohl. Thank you, Mr. Chairman.
Senator Bennett. Senator Burns.
Senator Burns. Welcome, gentlemen. Nice to have you here,
and I have only got a couple of questions. That will probably
lead to another one, but you know how it is.
We have pretty well gone over the BSE thing. I think Mr.
Hawks probably got sick and tired of me in December a couple of
years ago. I looked over my phone log, and you were on there a
lot.
Mr. Hawks. I never get tired of you.
Senator Burns. But first of all, I thank you for the hard
work that you did. I think we had a real problem on the first
announcement of the cow in Washington State, and we did succeed
in maintaining the consumer confidence in our beef that was
here. And we took a little dip in the market, but it didn't
last very long, and I think it was handled the best way I know
how in as far as a bureaucracy is concerned.
You know, I always worry about it. Every time I see a
camel, I look at it and said, ``He had to be put together by a
committee.'' Because nobody could come up with a conglomeration
of that and make it work.
ANIMAL AND DAMAGE CONTROL IN MONTANA
But nonetheless, I have got a couple of questions. In our
country out there, Mr. Hawks, could you tell me, provide me
with some details of the current status of the Animal and Plant
Health Inspection Service and what we can expect? We have some
concerns with that. We have some new problems and challenges on
the horizon. Well, not on the horizon. They are here.
And could you give me some kind of an idea of where you
think that agency is going and some details on it?
Mr. Hawks. Yes, sure. I would be quite happy to do that. I
have actually visited your State quite a bit and actually
have----
Senator Burns. A lot of predators around, wasn't there?
Mr. Hawks. There are a lot of predators around.
Senator Burns. Two-legged ones.
Mr. Hawks. And yes, sure, they are out there. No doubt
about it.
But that is a program that is obviously very important to
an area like yours. Obviously, you have got a lot of different
predators. I know that the wolves are an issue for your sheep
producers, your cattle producers out there. We have
consistently worked with the States and with your producers.
And as I have said, I have personally been out there.
So I think that program is online from where it needs to
be. But a commitment that I will make to you right here is that
we will work with you. You know, my favorite statement is
``working together works.'' So I am prepared to work with you
if there are specific issues that we need to address there.
Senator Burns. That cooperation is okay until it comes to
the coyote and the wolf. You know, I can remember it was said,
well, they will stay in the park, too, you know? But they found
out that the wolves couldn't read the park signs. They fell
down or.
NATIONAL ANIMAL IDENTIFICATION SYSTEM
I know that the Chairman here has asked you a little bit
about the national ID, and you have got some pilot projects
that are out there now. And I understand there are some people
in the private sector that are also working on this situation.
Are we making any progress on a national ID?
Now I will tell you that a national ID is not met with a
lot of enthusiasm from some of us, me being one of those
people. But nonetheless, I also know what reality is. And can
you give me an update? And when do you think that you are going
to make a decision on what this Department of Agriculture wants
to do, or how do you read Congress on what Congress wants to
do?
Mr. Hawks. Senator, as you well know, I have been
personally engaged in the animal ID. We held the listening
session right there in Billings. I heard from quite a few of
your producers out there what their interests were.
You asked a question about the private sector. Obviously,
there is a role for the private sector as well as the public
sector here. We have got to work cooperatively.
We will be publishing very soon in the Federal Register
what we are calling a current thinking or a strategic plan to
try to get input to make sure that this system that we put
together is functional. The thing that we don't want is we
don't want to have a lot of duplicative systems out there. We
want something that will work.
And you have got some unique situations out West with the
brand States. So part of the goal of these cooperative
agreements is to work to test things out there to make sure
that it will work.
You know, we have a diverse country. And when you go from
Florida to the State of Washington, the agriculture is
different. The livestock industry is a lot different. So we
feel like we are making good progress. We have got 45 States
now that are registering premises. We are going to be ready to
do individual animal numbers, hopefully, by mid July.
So I think at one of my listening sessions, a gentleman
summed it up pretty good. He said, ``I think you are at a
yellow light.'' He said, ``When you approach a yellow light,
you have got a decision to make. You can either mash on the gas
and speed up, or you can throw on the brakes. Either way, you
may cause an accident.''
So I think we are at that yellow light. And we hear a lot
from a lot of circles that are saying ``mash on the gas.'' A
lot of other circles are saying ``throw on the brakes.'' I
think it is prudent that we do neither one rapidly, but that we
make sure that we negotiate this intersection safely.
Senator Burns. And I agree with that. I would say if this
is one place where we are trying to write a national law that
``one size fits all'', that will be very difficult. And that is
why I recommended early on that states, all you have to do is
understand their system and certify it, and then you kind of
step out of the way and let the States do it because usually
they have the best handle, especially in animal health. They
have got the best handle on where they are and the condition.
Of course, we have got a brand law in Montana, and that
helps us a little bit. But the hot brand is not the total
answer, as you well know. But nonetheless, I still think the
records, the owners, and their method of identification should
be kept within the State borders.
I think each State has got to do that in some way or other,
through some sort of a reimbursement or whatever. Because I
just don't think you can run a law like this that one size fits
all. I just don't think you can do it.
It is just like trying to write a farm bill that applies to
Iowa and applies to the Golden Triangle in Montana. By gosh, it
don't work. It just don't work because it don't rain at the
same time. It don't freeze at the same time. There are just a
lot of variables that makes it almost impossible to manage from
Washington, D.C., from this place that I call 17 square miles
of logic-free environment.
And so, we deal with these issues that have real people
involved, real faces. And I would say as you go down that line
on identification that you look very, very hard and let the
States handle it because we have a livestock department that is
very efficient, understands it.
Also we have a brand law in the same department, so we kind
of know where these things go and where they come from. And I
appreciate your patience on that.
Mr. Hawks. Now, Senator, you are right. As I have already
alluded, there is a lot of diversity in this country. And we
are working very closely with the State animal health
officials. And you are right. You have a very good----
Senator Burns. Those records have got to be kept in those
States. They cannot come back here.
Mr. Hawks. Well, we want to work with you to make sure that
we have a system that is functional. I hear what you are
saying, but I am committed to having a good, functional system
to----
Senator Burns. I won't fund it. I won't fund it. Let us
keep it in the States. That is where the records ought to be
kept, okay? Strong letter to follow.
Thank you very much.
Mr. Hawks. Thank you.
Senator Bennett. Senator Kohl, do you have any additional
questions?
Senator Kohl. Just one.
Senator Bennett. Yes.
FSIS IMPORT INSPECTIONS
Senator Kohl. Secretary Pierson, this committee has
included report language for the past several years regarding
FSIS import inspections. Specifically, the language instructs
USDA to be especially vigilant in countries where a significant
number of plants fail inspection.
However, I understand that USDA has not been continuously
vigilant, specifically in regard to Mexican plants. Of the nine
audits USDA has conducted since the spring of 1999, in Mexico,
more than one-fourth of the plants audited failed six of those
times, and no comprehensive audit has ever been conducted. This
appears to be a very high number of failing plants and no
increased scrutiny.
Does the USDA have any plans to increase audits in Mexico,
considering their high failure rate? Or is it USDA's opinion
that the current level is adequate to ensure that the plants
exporting to this country actually meet the same standards on a
continuous basis as plants in the United States?
Dr. Pierson. Thank you. I do very much appreciate your
remarks, and might I take you right up to today?
We are actually getting a lot of criticism for being overly
tough, which is an interesting statement. And I think what has
happened is that we have implemented a rigorous system to
ensure equivalency that countries exporting meat, poultry, and
egg products to the United States, in fact, meet our
equivalency requirements.
We schedule, at least annually, audits of countries that
export to the United States. We can, in fact, and do audit more
frequently when countries are, let us say presenting problems
and issues.
ENFORCEMENT AUDIT OF MEXICO'S INSPECTION SYSTEM
Specifically, Mexico, at one time, did have very serious
difficulties. We worked very closely with Mexico, and we let
them know very seriously that they needed to pay very close
attention to their inspection system. It has to be an
independent inspection system, one where the plants don't pay
the inspectors, for example. That is a no-no for us. They have
to be paid by their government, and they have to be government
employees.
We then make sure that we audit that system--the inspection
infrastructure. The other part is we then audit plants, and I
can say that fairly recently, within the past year, we have
done a comprehensive audit of Mexico; and as a matter of fact,
they have made vast improvements. I believe, Dr. Masters, we
did not have any delistments of plants in that inspection, did
we?
Dr. Masters. It was an enforcement audit, and we can get
the exact details of that audit.
Dr. Pierson. Sure. We can present that to you. The outcome
of that audit was, I would say, very positive. Mexico did work
very hard to come up to speed to our equivalency requirements,
and we were pleased with the work that they had done.
So I can assure you that our audits are very thorough, and
they are very rigorous. We expect countries to meet the same
requirements that we have for our domestic suppliers or
producers.
[The information follows:]
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ADDITIONAL COMMITTEE QUESTIONS
Senator Kohl. I thank you.
I thank you, Mr. Chairman.
The Subcommittee will submit some additional questions from
Members for your response.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Robert F. Bennett
LOW PATHOGENIC AVIAN INFLUENZA
Question. The funding level for the Low Pathogenic Avian Influenza
program was increased from $994,000 in fiscal year 2004 to $23 million
for fiscal year 2005. The increase was provided to indemnify producers
for losses and to increase surveillance activities. Can you provide an
update on the status of the fiscal year 2005 funding and when we should
expect this program to be fully implemented?
Answer. This program has two components: the commercial poultry
industry and the live bird marketing system (LBMS). The LPAI program
will be fully operational when a regulation is passed for the
commercial component of the program.
The breakout of the funding is as follows:
--$12,000,000 for Indemnities.--These funds will cover the indemnity
and euthanasia, disposal, cleaning and disinfection costs of
flocks that test positive for LPAI and need to be depopulated.
Because this is a new program, we are in the process of
developing a regulation that is specific to indemnities
associated with LPAI outbreaks in both the LBMS and the
commercial poultry industry. Fortunately, we have had no LPAI
outbreaks this fiscal year and have not yet needed to use these
funds.
--$3,871,547 for Surveillance Activities.--Funds have been devoted to
cooperative agreements with States that have significant LBMS
activities, as well as State laboratories participating in the
NPIP LPAI program. States are using these funds to provide
personnel to inspect and collect samples within the LBMS, to
conduct trace backs and trace forwards, and to support the
additional laboratory activities associated with the NPIP
program for the commercial poultry industry. Currently, 10
States have established cooperative agreements and 11
additional States have shown interest in joining the program by
the end of this fiscal year.
--$932,285 for Reagents and Costs of Administering Tests.--These
funds have been provided to the National Veterinary Services
Laboratory (NVSL) for the processing of samples submitted. NVSL
has developed the agreement to contract out the production and
distribution of test reagents. These test reagents have been
distributed to State and industry laboratories approved to
participate in the NPIP.
--$4,326,693 for Salaries, Benefits and Staff Support.--These funds
provided for the hiring of Federal personnel to assist with the
implementation of the national program, and to support the
States in managing and preventing LPAI infections. To date, we
have hired 17 people and are in the process of hiring an
additional 29 employees (i.e., veterinary medical officers,
epidemiologists, animal health technicians, laboratory
technicians, etc.).
--$600,000 for the Center for Veterinary Biologics (CVB).--These
funds have been used for the expansion of an Avian Influenza
vaccine bank through a contract with a biologics company. While
vaccines are not routinely used to prevent infections, vaccines
still have a potential role in controlling the spread of an
outbreak or in a situation where depopulation of infected
flocks is not possible or feasible. APHIS anticipates that the
Statement of Work (SOW) for this contract will be completed by
the end of May 2005. The SOW will be submitted with a
requisition, and the solicitation for bids will be prepared and
published. APHIS anticipates signing this contract by September
2005.
--$513,575 for Education and Outreach Initiatives.--These funds are
being used to train all newly hired veterinary medical officers
and animal health technicians, and all LBMS participants in the
recognition of avian influenza and the enhancement of
biosecurity practices in live bird markets, auctions,
wholesalers, distributors, dealers and producer facilities.
--$555,900 for Information and Technology Support.--These funds are
supporting the cost of certifying, accrediting, refining and
securing an information technology system. The funds will also
be used to purchase or enhance communications technology to
support basic surveillance functions such as data collection,
evaluation, and interpretation. This system is currently under
development and is expected to be ready to implement by the end
of the calendar year.
WEB-BASED SUPPLY CHAIN MANAGEMENT
Question. The fiscal year 2006 budget request $10 million to
develop a Web-based Supply Chain Management System (WBSCM). This system
would replace the current system and allow for more efficiency in the
purchasing and tracking of commodities for nutrition programs.
Can you briefly describe the need for this new web-based program?
Answer. The Web-based Supply Chain Management System (WBSCM) would
replace the Department's Processed Commodity Inventory Management
System (PCIMS). WBSCM is designed to improve management of USDA's
domestic and international food assistance programs for a seamless,
transparent, and efficient flow of food products throughout the supply
chain process. PCIMS does not efficiently and effectively support e-
government approaches to dealing with program clientele. It is based on
1980's technology and its architecture is extremely inflexible and
costly to maintain. In contrast, WBSCM's design uses proven commercial-
off-the-shelf software that incorporates commercial best business
practices in an open, flexible architecture to meet functional,
operational and compliance requirements.
The anticipated benefits of WBSCM include reduced costs for
commodities, transportation, inventory and warehousing, which will
benefit both customers and vendors. WBSCM offers improved reporting
capabilities and more timely delivery of commodities, a shortened
processing cycle, and improved collaboration and integration between
associated programs within the Department.
USDA AND DEPARTMENT OF HOMELAND SECURITY EMPLOYEES
Question. The Department of Agriculture has transferred a number of
employees to the Department of Homeland Security. Please update us on
the current relationship between USDA and the Department of Homeland
Security? More importantly, do you have any concerns with the current
arrangement that this Subcommittee should be aware of?
Answer. USDA and the Department of Homeland Security (DHS) continue
to work cooperatively to ensure quality agriculture research and
inspections remain a high priority. Scientists from the USDA's
Agricultural Research Agency (ARS) are co-located with DHS scientists
at the Plum Island Animal Disease Center, which houses the ARS research
program and APHIS foreign animal disease testing. The relationship
between these programs and the DHS testing and evaluation program has
been defined in a plan which lays out respective agency roles in
protecting American livestock from acts of bioterrism. This formal
definition of roles facilitates cooperation between the departments.
Additionally, APHIS and DHS' Customs and Border Protection (CBP) have
established a joint quality assurance program to ensure that the
quality of agricultural inspections is maintained and to facilitate an
appropriate level of communications between CBP and APHIS. Additional
details of these two endeavors follow.
Agricultural Quarantine Inspections.--APHIS and CBP operations
officials are meeting twice monthly to carry out quality assurance
program activities and address ongoing operational issues at ports of
entry. As part of the program, APHIS and CBP have conducted a pilot
joint inspection blitz at the port of Detroit and joint reviews of
operations at the ports of Philadelphia and Miami. Reviews of
operations at the maritime ports of Long Beach, California; Port
Elizabeth, New Jersey; and Seattle, Washington are planned for summer
2005.
APHIS Administrator DeHaven and CBP Commissioner Bonner met in
early April 2005 to discuss agricultural inspection operations at U.S.
ports of entry. In addition to continuing to implement the joint
quality assurance program to evaluate operations at ports of entry, Dr.
DeHaven and Commissioner Bonner have established a series of meetings
at various administrative and operational levels to ensure that any
problems with the inspection program are addressed by the appropriate
officials. Operational managers are already meeting several times a
month in conjunction with the quality assurance program, and Dr.
DeHaven and Commissioner Bonner agreed to hold quarterly meetings to
address any issues that cannot be resolved at the operational level.
APHIS' Deputy Administrator for the Plant Protection and Quarantine
Program and CBP's Assistant Commissioner will also meet on a monthly
basis.
APHIS and CBP officials are also continuing to address the large
number of vacancies at ports of entry. With the transfer of the port
inspection portion of the agriculture quarantine inspection function to
CBP in fiscal year 2003, APHIS transferred 363 fully-funded vacant
inspector positions from Agricultural Quarantine Inspection. This
number has increased significantly through attrition in the last 2
years. While progress has been made in filling many positions, APHIS
encourages CBP to continue an aggressive recruitment and hiring
program. APHIS assists CBP in recruiting by distributing vacancy
announcements to a large pool of qualified candidates and expeditiously
training those hired. Following the April 2005 meeting between Dr.
DeHaven and Assistant CBP Commissioner Ahern, APHIS is enhancing its
recruitment program for CBP vacancies through promoting the jobs to
qualified candidates at job fairs and on college campuses. APHIS'
Professional Development Center has 14 classes scheduled for incoming
agricultural specialists (with space for 36 new inspectors in each
class).
Progress has been made in other areas, such as APHIS access to
CBP's data systems. In March 2005, APHIS and CBP reached an agreement
to allow APHIS users to access CBP's Automated Targeting System (ATS),
which will allow APHIS to review incoming cargo manifests
electronically and determine which should be targeted for agricultural
inspections. At this time, 14 APHIS users are approved to access ATS,
with 6 more in the approval process. APHIS is also placing two
agricultural specialists in CBP's National Targeting Center to develop
criteria for determining which incoming shipments to target for
agricultural inspections.
APHIS and CBP officials are working cooperatively to address
operational inspection issues through the quality assurance program,
which includes quarterly data reviews and port of entry evaluations.
APHIS and CBP officials will continue cooperating through these
channels to manage the agricultural inspection program. However, APHIS
officials remain concerned about the large number of vacancies for
agricultural inspectors at CBP.
Plum Island Animal Disease Center.--The relationship between DHS
and USDA is defined administratively by an annually renewed interagency
agreement. The agreement provides for a local council at Plum Island to
manage day-to-day resource issues. The agreement also provides for a
Board of Directors of Agency Heads to manage the overall programmatic
relationship at the Plum Island Animal Disease Center.
The current arrangements are working. As programs change and ARS
maintains a primary focus on protecting livestock from exotic diseases
and DHS focuses on terrorism countermeasures, there may be a divergence
in issues for each agency that could place stress on resources
available for research and testing and evaluation. The Board of
Governors' approach to dealing with programmatic issues will serve as a
forum to resolve those issues.
______
Questions Submitted by Senator Conrad Burns
COUNTRY OF ORIGIN LABELING
Question. Country of Origin Labeling is a hot issue in Montana. In
order for producers to be ready to comply with the law when it takes
effect on Sept. 30, 2006, they will need to know what's expected of
them. USDA has already published the proposed rule, and taken all the
public comment on beef labeling. Why not publish the rule now, and give
producers advance notice of what they will need to do to comply, to
minimize the burden?
Answer. The Agency believes it is prudent to monitor the fish and
shellfish industry's compliance with the interim final rule for
mandatory country of origin labeling of fish and shellfish for an
appropriate period of time prior to finalizing the regulation for the
other covered commodities to determine whether there are any provisions
that should be modified prior to implementation for the remaining
affected industries. AMS published the interim final rule for mandatory
country of origin labeling of fish and shellfish in the October 5,
2004, Federal Register, and the regulations became effective April 4,
2005. This rule provides for an active enforcement program to begin in
October 2005, during which time the agency will focus its resources on
education and outreach.
NATIONAL ANIMAL IDENTIFICATION SYSTEM
Question. Can you give us an update on the Department's actions on
Animal ID? In particular, can you address how USDA plans to address
data confidentiality and cost to the producer?
Answer. The National Animal Identification System (NAIS) will
contain only information necessary for animal health officials to be
able to track suspect animals and identify any other animals that may
have been exposed to a disease. To ensure that officials have
immediate, reliable, and uninterrupted access to this information in
the event of a disease concern, certain basic data must be readily
available to the Federal Government.
Animal identification and tracking systems maintained by the States
or regional alliances will be an integral part of the overall NAIS
information infrastructure. The State and regional systems will be able
to collect and maintain more information than is required for NAIS, yet
only the required data need to be available for the national animal
records repository.
In order to secure full participation from livestock producers, the
USDA is pursuing legislation to establish a system for withholding or
disclosing information obtained through the animal identification
system established by the Secretary of the USDA.
APHIS understands that there is no ``one-size-fits-all''
identification technology. Many methods are currently on the market,
such as branding, radio frequency identification devices, and retinal
scans. It is likely that some technologies will work better for certain
animal species than others. Rather than focus on a specific technology,
APHIS will focus on the design of the identification data system; what
information should be collected; and, when the data should be collected
and reported. Once the identification system is designed, the market
will determine which technologies will be the most appropriate to meet
the needs of the system. As specific technologies are determined, the
standards for those technologies will be established to ensure
compatibility across all sectors of the industry. For example, the
cattle industry is recommending radio frequency identification eartags,
using the international standards for radio frequency identification of
animals.
The NAIS must allow producers to use NAIS in coordination with
production management systems, marketing incentives, etc., allowing for
the transition to a ``one number--one animal'' system for disease
control programs and other industry-administered programs. While
animals must be identified prior to being moved from their current
premises, producers can decide whether to identify their stock at birth
or during other management practices.
The integration of existing branding procedures into NAIS, while
integrating animal identification technology standards (electronic
identification, retinal scan, DNA, etc.) will be determined by industry
to ensure the most practical and cost effective options are implemented
and that new ones can easily be incorporated into NAIS.
Question. USDA has funded a number of pilot projects to explore
methods for implementing a national animal ID. What is the status of
these projects? Is the Department providing these projects with clear
guidance and expectations?
Answer. Pilot projects for the NAIS are currently being conducted
via cooperative agreements with States and tribes. Cooperative
agreement funds are used to obtain resources to support data collection
or the integration of data from existing systems. In July 2004, the
first-round of awarding cooperative agreement funds through a
competitive application process resulted in 29 project agreements. In
October 2004, $1.5 million that had been previously reserved for other
expenses became available for establishing 13 additional cooperative
agreements.
Most of the projects became ``active'' late in 2004 following the
preparation and approval of each cooperators work plan. The application
provided the States with specific objectives and the expected outcomes
of each project. Cooperators are responsible for providing quarterly
reports describing achievements in relationship to the original
approved plan using specific performance measures required by the
Department. Such measures include the number and percent of premises
registered, the number of stakeholders reached through outreach, and
the cost of attaining each of these measures. In States that have pilot
projects, specific reports on the progress of the project are also
required.
Question. How do you plan to connect the results of all these pilot
projects together into a national framework? Are there any industry
models for bringing all these pieces together?
Answer. The results of the pilot projects will be summarized to
provide more direction on how the industry can most effectively collect
animal identification and movement data. While there have been various
projects in the past that provide valuable information, there remains a
need to evaluate the practicality of data collection reflective of the
vast diversification of the U.S. livestock industry. As more animals
enter the voluntary system, the ability to collect and transmit the
information from various production points and through service
providers will continue to advance.
Each of the pilot projects were selected for funding based on the
merits of the project proposal. The criteria were broad based,
soliciting projects that would demonstrate the adaptability of new
technology, the coordination and integration of existing databases that
may contain premises information, and the solutions to problems faced
in certain regions of the country, such as brand inspection states. At
the conclusion of the pilot projects, APHIS will evaluate the results
using staff resources. We will determine what questions have been
answered, what questions remain unanswered, and what new questions
arose as a result of the projects.
BLUETONGUE RESTRICTIONS
Question. As the Department works to harmonize trade regulations
and scientific protocols with Canada, is the issue of bluetongue being
addressed? How close are we to eliminating bluetongue restrictions that
serve as a barrier to trade?
Answer. The Canadian Food Inspection Agency (CFIA) and the USDA's
Animal and Plant Health Inspection Service (APHIS) have expressed a
commitment to work together toward harmonizing disease management
policies. Both Agencies have initiated discussions regarding health
status recognition for anaplasmosis, bluetongue, brucellosis, and
tuberculosis that may be applied against additional categories of
cattle and other livestock.
Most of our trading partners have imposed some restrictions on the
importation of U.S. cattle, goats, and sheep due to the presence of
bluetongue viruses in the United States. USDA does not expect total
elimination of these restrictions. Yet, the Department continues to
work towards minimizing restrictions based on scientific evaluation of
the disease presence in the United States. APHIS is continuously
negotiating with country officials to eliminate or reduce restrictions
not fully justified by the available science. For example, APHIS
provided disease surveillance data to compel Canada to modify its
restrictions in March 2004. The CFIA removed bluetongue testing and
treatment requirements for U.S. feeder cattle imported from 39 States
considered to have a low incidence of bluetongue. Feeder cattle from
the remaining 11 States, which are considered to have a high incidence
of bluetongue, are also not required to be tested provided they reside
for at least 60 days prior to import in a low incidence state. These
States include Alabama, Arizona, Arkansas, California, Florida,
Georgia, Louisiana, Mississippi, Nevada, South Carolina, and Texas.
Testing is still an option and should the feeder cattle be found free
of bluetongue, the 60-day period will be waived. Historically, these
high incidence states have not exported significant numbers of feeder
cattle to Canada.
______
Questions Submitted by Senator Herb Kohl
AMS NATIONAL ORGANIC PROGRAM
Question. Mr. Hawks, for the past 2 years, language has been
included in the Senate report strongly encouraging USDA to hire an
Executive Director for the National Organic Standards Board, and to
create an on-going Peer Review Panel to oversee and give advice to the
Secretary regarding the process for accrediting organic certifiers. Can
you please give me an update on USDA's response to these directives?
Answer. AMS has drafted a position announcement for an Executive
Director after gathering input from the National Organic Standards
Board (NOSB) regarding expertise and other qualifications required for
the position. We expect the announcement to be posted by early June.
The National Organic Program (NOP) is also working with the NOSB to
formalize an ongoing Peer Review procedure and is awaiting input from
the NOSB on the frequency, timing, and technical expert assistance
needed to address peer review. The results of an AMS-initiated peer-
review audit of the NOP accreditation process by the American National
Standards Institute (ANSI) were posted on the NOP website in January
2005.
Question. If they have not already been implemented, can you please
provide me with a date by which this will be completed?
Answer. An executive director is expected to be hired later this
summer. A peer review process is awaiting further input pending the
upcoming NOSB meeting in August 2005.
Question. Last April, USDA published and then rescinded four
documents regarding organic standards and enforcement. It is my
understanding that this caused significant confusion within the organic
community, and that last October at a National Organic Standards Board
meeting, USDA committed to publishing clarifications on the National
Organic Program website in order to resolve this confusion. However,
these clarifications have not yet been published. Can you provide me
with a timeline for publishing these clarifications?
Answer. The clarifications were posted on the NOP website on April
22, 2005.
GIPSA IDENTITY THEFT
Question. Mr. Hawks, last year I inserted a provision (General
Provision 776) to modernize the law governing agricultural lien central
filing systems and to do so in a way that protects farmers from
identity theft that could occur if their social security numbers are
widely distributed. Please provide me with information regarding what
has been done to implement this change, and when we can expect it to be
complete.
Answer. Section 1324 of the Food Security Act of 1985 (Act)
authorized the Secretary of Agriculture to approve and certify central
filing systems operated at the State level for farm products and to
approve amendments to such certified central filing systems that have
been proposed by a Secretary of State, provided that the proposed
central filing systems, or amendments thereof, conform with the Act, as
amended. Section 776 of the Consolidated Appropriations Act of 2005
allows a Secretary of State to propose the use of a unique identifier
to be used in lieu of a social security number and allows the Secretary
of Agriculture to approve proposed unique identifiers.
The Grain Inspection, Packers and Stockyards Administration (GIPSA)
is responsible for the administration of the Act. GIPSA posted on its
web page a copy of the amended Act. GIPSA is in the process of updating
the regulations and will be completed within 1 year. Section 776 does
not provide GIPSA with the authority to create a selection system or
method by which unique identifiers are produced. GIPSA will review any
system proposed by a Secretary of State's office. Upon thorough review,
GIPSA will determine whether to approve the selection system or method
proposed.
AGRICULTURE BORDER INSPECTIONS
Question. When Secretary Johanns appeared here this week, I asked
him about a recent GAO report on Agro-Terrorism and, in particular, the
problem that agriculture border inspections have decreased since that
responsibility was transferred to the Department of Homeland Security.
The Secretary mentioned a lot of the things the States are doing to
protect the farm sector, but we need to know more about why the number
of Federal agriculture inspections has declined over the past 2 years.
The GAO report says that during that period, agricultural inspections
at ports of entry, the first line of defense, have declined while
imports have increased. According to DHS's own data, there were 40.9
million agriculture import inspections in 2002 and that number dropped
to 37.5 million in 2004. According to GAO, neither USDA or DHS can
explain why this has happened.
I realize that you could easily say this is DHS's problem, but
protection of U.S. agriculture is your problem and if DHS is not doing
its job, somebody had better raise some red flags. I would hope that
somebody would be USDA. What kind of specific procedures do you use to
coordinate with DHS on animal and plant health issues?
Answer. APHIS is responsible for setting agricultural import policy
and communicating any policy changes to DHS' Customs and Border
Protection (CBP) officials. Agency officials notify CBP of any changes
through designated points of contact. CBP has agreed to send time-
sensitive pest alerts, issued when APHIS officials determine that a
particular product poses a serious pest risk, to all field locations
within 24 hours of receiving them. APHIS also has a series of
comprehensive manuals that detail inspection procedures to be used at
various types of locations and for specific types of cargo. APHIS
officials update the manuals on a regular basis and notify their
counterparts at CBP when changes have been made. All manuals are
available to CBP and the public on APHIS' Web site.
APHIS and CBP officials are also continuing to address the large
number of vacancies at ports of entry. With the transfer of the port
inspection portion of the agriculture quarantine inspection function to
CBP in fiscal year 2003, APHIS transferred 363 fully-funded vacant
inspector positions from Agricultural Quarantine Inspection. This
number has increased significantly through attrition in the last 2
years. While progress has been made in filling many positions, APHIS
encourages CBP to continue an aggressive recruitment and hiring
program. APHIS assists CBP in recruiting by distributing vacancy
announcements to a large pool of qualified candidates and expeditiously
training those hired. Following the April 2005 meeting between Dr.
DeHaven and Assistant CBP Commissioner Ahern, APHIS is enhancing its
recruitment program for CBP vacancies through promoting the jobs to
qualified candidates at job fairs and on college campuses. APHIS'
Professional Development Center has 14 classes scheduled for incoming
agricultural specialists (with space for 36 new inspectors in each
class).
To ensure that the quality of inspections is maintained and to
facilitate an appropriate level of communication between the two
agencies, APHIS and CBP recently established a joint quality assurance
program. Officials from both Agencies are conducting a series of port
evaluations as part of the program. Additionally, APHIS conducts
quarterly reviews of data collected by CBP through the inspection
process for consistency and completeness. When APHIS officials notice
anomalies in the data, they request that CBP investigate the issues and
make any necessary corrections.
Question. GAO says that DHS inspectors don't always get timely
information about the arrival of high-risk cargo, but were you aware of
such cargo when you were responsible for inspections?
Answer. Prior to the transfer of the inspection program to DHS,
APHIS officials accessed the U.S. Customs Service's automated targeting
system (ATS) and automated manifest system to review incoming cargo
shipments and determine which to target for specific levels of
inspection. APHIS' port operations manuals also detail what types of
incoming cargo should undergo specialized inspections.
In March 2005, APHIS and CBP reached an agreement to allow APHIS
users to access CBP's ATS, which will allow us to resume reviewing
incoming cargo manifests electronically. At this time, 14 APHIS users
are approved to access ATS, with 6 more in the approval process. APHIS
is also placing two agricultural specialists in CBP's National
Targeting Center to develop criteria for determining which incoming
shipments to target for agricultural inspections.
Question. Do you have information you need to be sharing with DHS?
Answer. APHIS believes that all pertinent information regarding
agricultural imports is being shared. APHIS officials communicate
regularly with their counterparts at CBP and notify them of all policy
changes. APHIS and CBP are working together through the joint quality
assurance program to ensure that the two agencies are sharing all
necessary information and effectively managing the agricultural
quarantine inspection program.
Question. I know there are some who suspect the reduced number of
agriculture inspections is because DHS is assigning inspectors to other
non-agriculture cargos. I hope that is not the case. But either way, I
think that someone needs to hold DHS accountable to make sure that
safeguards for the Agriculture sector are, at least, as strong as they
were 2 years ago. Do you have, or do you think you should have, some
way to ensure that plant and animal pests and diseases are being
properly stopped at the border? After all, if they get past the border,
spread, and get established, your job will be a lot harder and a lot
more expensive. Don't you agree?
Answer. APHIS officials believe that, if followed properly, the
inspection protocols and procedures detailed in our port operations
manuals should stop high-risk cargo at the borders for inspection.
However, new pests and diseases could still be introduced through
smuggling and means of natural spread.
APHIS places a high priority on preventing the entry of
agricultural pests and diseases through its pest and disease exclusion
programs. These include regulatory activities and border inspections as
well as off-shore risk reduction programs such as the international
cooperative efforts to eradicate Mediterranean fruit fly from Central
America and foot-and-mouth disease from Central and South America.
APHIS also maintains emergency response capabilities to deal with pests
and diseases that inevitably slip through our borders with the enormous
volume of international travel and trade.
Question. The Office of Inspector General is issuing a report dated
April 14, 2005, on the subject of the transition and coordination of
border inspection activities between USDA and DHS. In summary, the
report includes the following observations:
--Border inspection responsibilities were transferred from APHIS to
DHS in March of 2003.
--2,500 front line inspectors were transferred from APHIS to DHS.
--APHIS could not assure that the DHS process for agriculture
inspection operations contains adequate controls to safeguard
U.S. Agriculture against entry of foreign pests and disease.
--There was a reported 32 percent drop in the number of pest
inspections following the transfer to DHS.
--DHS has denied APHIS access to port locations even when access was
requested, even to perform duties for which APHIS still has
regulatory responsibility.
--APHIS does not have a process to periodically review the extent and
results of attention given to critical inspection areas.
--APHIS and FSIS do not require DHS to notify FSIS of all incoming
shipments, which could allow the shipments to bypass FSIS re-
inspection.
--APHIS has been unable to effectively evaluate or provide advice to
DHS on agriculture inspection activities.
--DHS has not provided adequate data on staffing levels and
deployment of agriculture inspectors to APHIS for evaluation.
--APHIS officials continue to express concern about how DHS is using
inspection user fees.
--APHIS needs to establish a more effective way to coordinate with
DHS.
Would you please respond to the findings of this report?
Answer. APHIS is currently preparing its response to the findings
of the report, which we must provide to OIG by June 6, 2005. In
response to the observations that OIG pointed out, much progress has
been made on many of the issues. As APHIS and CBP officials continue to
work cooperatively through the quality assurance program, we will
resolve many of the issues identified in the OIG's report, such as
APHIS officials' ability to evaluate operations at ports of entry. For
example, APHIS and CBP developed protocols recently that provide access
to ports of entry for APHIS' port veterinarians.
Additionally, APHIS Administrator DeHaven and CBP Commissioner
Bonner met in early April 2005 to discuss joint management of
agricultural inspection operations at U.S. ports of entry. In addition
to continuing to implement the quality assurance program to evaluate
operations at ports of entry, Dr. DeHaven and Commissioner Bonner have
established a series of meetings at various administrative and
operational levels to ensure that any problems with the inspection
program are addressed by the appropriate officials. Operational
managers are already meeting several times a month in conjunction with
the quality assurance program, and Dr. DeHaven and Commissioner Bonner
agreed to hold quarterly meetings to address any issues that cannot be
resolved at the operational level. APHIS' Deputy Administrator for the
Plant Protection and Quarantine Program and CBP's Assistant
Commissioner will also meet on a monthly basis.
HIGH PATHOGENIC AVIAN INFLUENZA
Question. Would you please provide information regarding actions
taken by the Department to work with other countries on the containment
of high pathogen avian influenza and steps being taken to avoid its
introduction into the United States?
Answer. APHIS participates in several international organizations
that address animal health issues such as avian influenza. For example,
issues pertaining to surveillance, and control and eradication of the
high pathogen avian influenza (HPAI) strain H5N1 in Asia, are being
directly addressed by the World Health Organization (WHO), the Asia
Pacific Economic Cooperation (APEC), the United Nation's Food and
Agriculture Organization (FAO) and the World Organization for Animal
Health (OIE). APHIS has been an active participant in the OIE, has
attended Expert Meetings at FAO, and has assisted in planning and
leading FAO interventions (Rome and Bangkok, February 2004; Bangkok,
July 2004; Rome, October 2004; Ho Chi Minh City, Vietnam, February
2005).
APHIS also takes steps to prevent the introduction of animal
diseases by sharing knowledge and expertise with counterparts in
foreign countries. For example, in September 2004, APHIS provided
personal protective equipment supplies to the Philippines and
coordinated a 3-day training course on AI and exotic Newcastle disease
(END) to 40 Bureau of Animal Health employees in Quezon City, in the
Philippines.
USDA Deputy Undersecretary Lambert has proposed a conference among
Asia-Pacific Economic Cooperation members designed to improve
coordination between States and international organizations over AI-
related issues, and to discuss the affects of AI on trade and other
sectors. The USDA Foreign Agricultural Service, in coordination with
OIE and FAO, is currently organizing this 2-day meeting scheduled for
July 28-29, 2005 in San Francisco, California.
As a primary safeguard against the introduction of HPAI (H5N1) into
the United States, APHIS maintains scientifically-based trade
restrictions on the importation of poultry and poultry products from
affected countries. In many of these countries, APHIS had prior poultry
and poultry product import restrictions in place because they were also
known to have END. The import restrictions targeted against the
introduction of END also effectively mitigate the risk of HPAI. These
restrictions include:
--Prohibiting the importation of live birds and hatching eggs from
H5N1 affected countries;
--Requiring imports of poultry products from East-and Southeast-Asia
be processed or cooked in accordance with a USDA permit prior
to importation;
--Requiring all imported birds be quarantined at a USDA bird
quarantine facility and tested for the avian influenza virus
before entering the country; which now includes returning U.S.
origin pet birds;
--Developing a risk assessment that specifically considers the threat
to the United States of HPAI introduction from Southeast Asia.
This assessment is helping APHIS to identify and closely
monitor pathways that are vulnerable to potential HPAI (H5N1)
introduction. APHIS has also alerted the U.S. Department of
Homeland Security to be especially vigilant in performing
agricultural inspections for prohibited products at U.S. ports
of entry handling passengers and cargo from Asia. In addition,
APHIS is also increasing its monitoring of domestic commercial
markets for illegally smuggled poultry and poultry products;
--APHIS is working closely with international organizations like OIE,
FAO, and WHO to assist HPAI affected countries and other
neighboring Asian-Pacific countries with disease prevention,
management, and eradication activities. By helping these
countries prepare for, manage, or eradicate HPAI (H5N1)
outbreaks, APHIS can reduce the risk of the disease spreading
from overseas to the United States.
USDA agricultural attaches are closely monitoring the HPAI
situation in Asia and routinely report new developments.
APHIS reviewed and provided input to the U.S. Department of Health
and Human Services' Centers for Disease Control and Prevention (CDC) on
its Pandemic Influenza Response and Preparedness Plan. APHIS provided
guidance concerning its role in animal health and wildlife disease
management. APHIS also collaborated with the CDC to draft
recommendations to help prevent the transmission of HPAI (H5N1) to
animal disease outbreak response workers.
APHIS is conducting a multi-level outreach and education campaign
called ``Biosecurity is For the Birds'' to provide disease and
biosecurity information to backyard poultry producers. The campaign
also encourages producers to report sick birds, thereby increasing
APHIS' poultry foreign animal disease surveillance opportunities.
USDA, Agriculture Research Service (ARS) supports APHIS and poultry
industry action programs with epidemiology, molecular virology, and
pathogenesis research on avian influenza. ARS has been/is:
--Evaluating new AI viruses as they occur around the world and will
continue to assist infected countries and agencies.
--Currently classifying AI viruses received recently from the United
States, Hong Kong, Italy, El Salvador, Chile, Netherlands,
Indonesia, Vietnam, and South Korea for disease-causing
potential.
--Conducting research studies including: molecular characterization
related to the lethality of the viruses; the search for genetic
markers for this lethality, and investigating the epidemiology
and spread of the viruses. Also, pathogenic potential of the
viruses is being assessed in disease--free chickens held in
biocontainment facilities.
--Developing and evaluating techniques to predict which mild forms of
virus will change to more deadly forms of the AI virus.
In January 2005, APHIS initiated a $5 million, 3 year Coordinated
Agricultural Project for the ``Prevention and Control of Avian
Influenza in the United States.'' Seventeen States are working together
to develop critical diagnostic tests and vaccines for detection and
control. They are also working in live bird markets in California,
Minnesota, and New York to study transmission risk factors and provide
educational and outreach programs. For the first time, we will be
conducting influenza surveillance in waterfowl of the four major
flyways over the United States. The group is also studying how
influenza emerges in domestic chickens and turkeys. Stakeholder and
Scientific Advisory Boards include industry, other Federal and State
agencies, and renowned avian influenza experts. This activity is also
tightly coordinated with the Department of Homeland Security ``National
Center for Foreign Animal and Zoonotic Disease Defense'' that includes
work on four diseases, one of which is AI.
LOW PATHOGENIC AVIAN INFLUENZA
Question. The Congress provided nearly $23 million in fiscal year
2005 for pest and disease management activities relating to low
pathogenic avian influenza. This represented a very substantial
increase above the fiscal year 2004 level. The President proposes a
slight increase for fiscal year 2006.
Please provide information on how these funds are being used in
fiscal year 2005 and how those purposes will differ with the use of
fiscal year 2006 funds.
Answer. This program has two components: the commercial poultry
industry and the live bird marketing system (LBMS). The low pathogenic
avian influenza program (LPAI) will be fully operational when a
regulation is passed for the commercial component of the program. The
use of funds in fiscal year 2006 will not significantly differ from the
use of funds in fiscal year 2005 because States who signed their
cooperative agreements in the last quarter of fiscal year 2004 will
continue to participate in fiscal year 2005 and fiscal year 2006. Other
States have been provided information to indicate their interest and,
to date, 11 other States have shown an interest in joining the program.
The breakout of the funding is as follows:
--$12,000,000 for Indemnities.--These funds will cover the indemnity
and euthanasia, disposal, cleaning and disinfection cost of
flocks that test positive and need to be depopulated due to
LPAI. Because this is a new program, we are in the process of
developing a regulation that is specific to indemnities
associated with LPAI outbreaks in both the LBMS and the
commercial poultry industry. Fortunately, we have had no LPAI
outbreaks this fiscal year and have not yet expended any of the
indemnity funds.
--$3,871,547 for Surveillance Activities.--Funds have been devoted to
cooperative agreements with States in both the Eastern and
Western regions that have significant LBMS activities, as well
as State laboratories participating in the National Poultry
Improvement Plan (NPIP) program. States are using these funds
to provide personnel to inspect and collect samples within the
live bird marketing system, do trace backs and trace forwards,
and to support the additional laboratory activities associated
with the NPIP program for the commercial poultry industry. For
the LBMS program 10 States currently have cooperative
agreements. There are 11 additional States that have shown
interest in joining the program by the end of this fiscal year.
The amount shown also includes travel costs and transportation
of needed items.
--$932,285 for Reagents and Costs of Administering Tests.--All of
these funds have been provided to the National Veterinary
Services Laboratory (NVSL) for the processing of samples. NVSL
has developed and contracted out the production of these test
reagents that have been distributed at no charge to State and
industry laboratories approved to participate in the NPIP.
--$4,326,693 for Salaries, Benefits and Staff Support.--These funds
provided for increased Federal personnel in both the Eastern
and Western Area and Regional offices and activities for
implementation and compliance with program requirements to
support the States in managing and preventing LPAI infections.
Seventeen Federal personnel have been hired and the funds are
being used for salaries, benefits, and staff support. We are in
the process of hiring an additional 29 Federal personnel (i.e.,
veterinary medical officers, epidemiologists, animal health
technicians, laboratory technicians, etc.) to further support
implementation of the program.
--$600,000 for the Center for Veterinary Biologics (CVB).--Funds have
been used for the expansion of an AI vaccine bank through a
contract with a biologics company. While vaccines are not used
routinely to prevent H5 and H7 infections, vaccines still have
a potential role for assisting in the control of a large
outbreak or in a situation where depopulation of infected
flocks infested with avian influenza (AI) is not possible or
feasible. APHIS anticipates completion of the Statement of Work
(SOW) for this contract will be completed by the end of May
2005. The SOW will be submitted to with a requisition and the
solicitation for bids will be prepared and published. A
contract will be signed this fiscal year.
--$513,575 for Education and Outreach Initiatives.--Funds are being
used for training all newly hired Federal personnel as well as
all LBMS participants in the recognition of AI, and for the
enhancement of biosecurity practices in live bird markets,
auctions, wholesalers, distributors, dealers and producer
facilities. APHIS continues to provide training courses, and to
produce and distribute educational materials for the LBMS
personnel and participants.
--$555,900 for Information and Technology Support.--These funds are
supporting the cost of certifying, accrediting, refining and
securing an information technology system to collect AI data
and acquiring the communications technology needed for carrying
out the LPAI program. The system is currently under development
and is expected to be ready to implement by the end of the
calendar year.
In addition to appropriated funding, on May 12, 2004, $13,700,000
was transferred from the Commodity Credit Corporation (CCC) for use by
the LPAI program. APHIS distributed $2.7 million to pay for Federal and
State (Texas) personnel and supplies necessary to conduct the
depopulation, surveillance and laboratory activities associated with
this outbreak. Indemnity was also paid to the producer to cover bird
losses and disposal, and, cleaning and disinfection. Of the remaining
$11 million allocated to begin the LPAI program, $6 million was held in
reserve to cover future indemnities and emergency costs is the case of
future outbreaks. There was another outbreak in Texas in June 2004 and
payment amounts are currently being finalized. APHIS distributed $2.2
million in the form of cooperative agreements with States, particularly
in the northeast, to support surveillance activities in the live bird
marketing system. The Agency provided $1 million to NVSL to support the
production and distribution of AI reagents to State and industry labs
approved within the NPIP program. APHIS also provided: $600,000 to hire
and support additional Federal field personnel, primarily in the
Eastern Region; $500,000 to support the development of an AI vaccine
antigen bank through a competitive contract with a biologics producer;
and $300,000 to support laboratory activities in Delaware and Maryland
where an outbreak of LPAI occurred in February 2004.
CHRONIC WASTING DISEASE
Question. Chronic wasting disease has been present in the United
States for a number of years and has been present in the State of
Wisconsin. Now, it has been reported that this disease has been located
in New York State. Obviously, the disease is continuing to spread.
Please provide information on how funds for chronic wasting disease
have been used in fiscal year 2005 and how the Department plans to use
funds proposed for fiscal year 2006.
Answer. Aside from congressionally directed funds, the total
appropriated Chronic Wasting Disease (CWD) line item is divided equally
between the farmed/captive cervid and the free-ranging deer and elk
programs. Activities conducted as part of the farmed cervid program
include laboratory testing; and the appraisal, indemnity, depopulation
and disposal of voluntarily depopulated animals. Activities conducted
as part of the wildlife program include establishing cooperative
agreements with State wildlife agencies and Tribes, evaluating new
testing technologies, and supporting methods development at APHIS'
National Wildlife Research Center.
The fiscal year 2006 President's budget proposes a 10 percent
reduction in the CWD line item funding. This will result in various
reductions, particularly in the areas of indemnities and cooperative
agreements. With the recent detection of CWD in wild deer in New York,
APHIS will continue to work with the International Association of Fish
and Wildlife Agencies to revise the formula used for determining the
amount provided for cooperative agreements with State wildlife
agencies.
Question. Please provide information on the problem of the
continuing spread of this disease. Do you think current efforts by USDA
and the States is effective in the control of this disease or is a
different approach warranted?
Answer. It is not entirely clear whether the disease is spreading,
or whether our enhanced surveillance efforts are detecting disease that
has been present in the cervid population for some time. Furthermore,
much is still unknown about the modes of transmission for CWD, and the
control measures currently in place may need to be adjusted as our
knowledge improves. There is evidence of direct horizontal transmission
from animal to animal and some degree of transmission through means of
environmental contamination.
APHIS is proposing a rule that will limit interstate movement of
participating farmed cervids and identify contaminated properties where
CWD is found, thus reducing the potential for disease spread. This rule
should allow the industry to move well-monitored and low risk animals
while detecting, and hopefully eliminating, CWD-positive herds through
increased surveillance testing, indemnity and depopulation. If it
becomes clear that transmission is occurring through the movement of
cervid carcasses, products, or other materials, regulations could be
promulgated to address that concern.
Control of CWD in wild deer and elk is a much greater problem. Due
to the complexity of authorities and jurisdictional responsibilities
for wildlife management that are divided between States, Tribes and
other Federal agencies, APHIS has worked diligently to develop a
variety of management approaches that are currently being utilized in
the monitoring and surveillance of CWD in wild populations. Because of
this cooperative effort, the information gathered through wildlife
surveillance continues to increase our understanding of this disease.
SUDDEN OAK DEATH
Question. The President's budget includes a significant decrease in
APHIS funding for sudden oak death. However, there have been concerns
that this disease might be spreading to other States and regions of the
country. Please provide an update on surveillance and other activities
to detect, monitor, and control sudden oak death, including a
description of areas where it has been located and the rate at which
the disease has spread.
Answer. APHIS is working with the U.S. Forest Service (USFS) and
State cooperators to prevent the introduction of the pathogen
Phytophthora ramorum (PR), which causes SOD, and prevent SOD
development in new areas. To accomplish these goals, we are destroying
plants with PR in nurseries, enforcing quarantines to contain PR,
executing a 50-State national survey of high-risk nurseries, and
tracking the origin and destination of infected plant material. These
activities help determine the extent of PR migration, while minimizing
its impact on commerce and the environment. Through these activities,
we are protecting the Nation's landscape, the complex ecosystems that
native oaks support, and the economic livelihood of several
industries--such as forest products--from potentially huge losses.
In January 2005, we implemented an Emergency Federal Order that
requires all nurseries in California, Oregon, and Washington to have
their nurseries found free of PR before they are shipped interstate.
These actions are critical because some nurseries in these States have
been responsible for widespread movement of PR, and because PR's host
range is not yet fully defined. The Order has helped prevent further PR
spread through nursery shipments, while still allowing the interstate
movement of healthy plants. If PR is detected in the environment
outside the West Coast, APHIS would implement an Incident Command
System and initiate a rapid eradication or management response.
When APHIS initiated SOD regulations in fiscal year 2002, PR was
established in 10 California counties and one county in Oregon.
Currently, PR is established in 14 California counties and one county
in Oregon. It has not become established in any other State, or in any
forested area outside the 15 counties. However, it has been detected in
nursery stock in 21 States: Alabama, Arkansas, Arizona, California,
Colorado, Connecticut, Florida, Georgia, Louisiana, Maryland, North
Carolina, New Jersey, New Mexico, Oklahoma, Oregon, Pennsylvania, South
Carolina, Tennessee, Texas, Virginia, and Washington.
JOHNE'S DISEASE
Question. The President's budget includes a very substantial
decrease in funding for Johne's disease. Please provide information on
activities of the Department, including those in conjunction with the
States, during fiscal year 2005 for control of this disease.
Answer. The Johne's program is voluntary in nature and managed
using a Federal, State and industry cooperative approach. It has been
developed in cooperation with the National Johne's Working Group and
the Johne's Committee of the U.S. Animal Health Association, State
Veterinarians, and industry representatives. Each State has a Johne's
Disease Group (comprised of producer, university, laboratory,
regulatory and veterinary practitioner representatives) to assist the
State with program development. In October 2004, APHIS, in conjunction
with States, affected industries, and producers, developed a national
Johne's disease strategic plan to help reduce the prevalence of the
disease in the United States. The strategic plan includes the Voluntary
Bovine Johne's Disease Control Program, which provides testing
guidelines for States to use to identify cattle herds at low risk for
Johne's disease infection and best management practices associated with
controlling Johne's disease on infected farms. APHIS has established a
National Demonstration Herd Project with the primary objective to
validate the long term use of these best management practices on the
control of Johne's disease. Secondary objectives include the creation
of additional training materials for producers and veterinarians and
evaluate testing and monitoring strategies to control Johne's disease.
Currently, APHIS is completing the second year with 60 dairy herds and
16 beef herds enrolled in the project. The project will provide more
economic data for the costs of managing the disease and the costs
versus benefits of control measures in the future. This demonstration
herd project is a 5 year project, and interpretation of project results
will start to become available in 2006.
APHIS is continuing to look for greater sensitivity and specificity
of diagnostic tests and testing strategies (such as validating pooled
fecal culturing or environmental sampling as a way to screen herds to
determine infection status). More sensitive tests could lead to earlier
identification of infected animals, allowing for quicker disease
containment actions.
Question. Please provide information regarding the rate and extent
of spread of this disease and the economic consequences it poses to the
United States dairy industry.
Answer. APHIS estimates that Johne's disease is present in
approximately 22 percent of all dairy herds and 8 percent of all beef
herds in the United States. Economic losses, associated with the
disease resulting in reduced milk production and premature culling, are
estimated to cost the U.S. dairy industry between $200 and $250 million
per year.
NATIONAL ANIMAL IDENTIFICATION SYSTEM
Question. The fiscal year 2005 Agriculture Appropriations bill
included a number of provisions related to animal livestock
identification programs, including the Wisconsin Livestock
Identification Consortium. Please provide an update on how these
programs have been coordinating their activities and explain to what
extent these programs are contributing to a National Animal
Identification program.
Answer. The Wisconsin Livestock Identification Consortium (WLIC),
through a cooperative agreement administered by APHIS, has developed a
premises registration system that served as the prototype for a
national Standardized Premises Registration System (SPRS) that APHIS
now offers to any State wishing to use the system. Through the
cooperation of many, the WLIC is working with Federal, State, and
industry leaders to generate the public support necessary so that
premises registration will become mandatory. The WLIC has also been
able to build consensus on a variety of other issues including what
pilot projects to support in the State, and how to implement the next
phases of NAIS. From this experience, USDA has proposed in the draft
program standard for NAIS that each State forms a similar animal
identification coordinating committee composed of State, Federal, and
industry stakeholders as part of the Stage I requirements.
Another project, also funded as a cooperative agreement
administered by APHIS, is the Farm Animal Identification and Records
(F.A.I.R.) project. This project continues to demonstrate the value of
automatic data collection at key locations in the United States. The
Radio Frequency Identification (RFID) automatic readers in livestock
markets and slaughter establishments in the original pilot States of
New York, Pennsylvania, Wisconsin and California have demonstrated the
ability of capturing animal identification associated with key
movements and/or events. The project was also used to help manage the
movement of cattle in Michigan to support the Bovine Tuberculosis
eradication program in that State. Over 125,000 animal movements have
been recorded using this system. Several other States are looking at
the F.A.I.R. system to track animal movement. As this data collection
infrastructure is utilized, it will provide a highly beneficial
contribution to the implementation of the animal tracking phase of
NAIS.
Question. Please provide information regarding the types of
technologies the Department is considering for use in implementing a
National Animal Identification program.
Answer. APHIS understands that there is no ``one-size-fits-all''
identification technology. Many methods are currently on the market,
such as branding, radio frequency identification devices and retinal
scans. It is likely that some technologies will work better for certain
animal species than others. The integration of animal identification
technology standards (electronic identification, retinal scan, DNA,
etc.) will be determined by industry to ensure the most practical
options are implemented and that new ones can easily be incorporated
into the National Animal Identification System. As specific
technologies are determined, the standards for those technologies will
be established to ensure compatibility across all sectors of the
industry. For example, the cattle industry is recommending radio
frequency identification eartags, using the international standards for
Radio Frequency Identification of animals. When the industry widely
adopts a technology, USDA will take the necessary steps to recognize
the methods through regulatory changes.
WILDLIFE SERVICES
Question. Please provide an update on activities relating to wolf
predation measures in the Upper Midwest.
Answer. Wolves continue to colonize much of the northern and
central forest regions of Wisconsin. The gray wolf population continues
to increase each year by an average of 12 percent. The number of wolf
complaints that APHIS investigates each year has increased
proportionally to the increase in the gray wolf population. Since 2000,
the number of wolf complaints has increased by 231 percent. During
2004, APHIS investigated 126 wolf damage complaints. Wolf depredation
on livestock has steadily increased from 2001 to 2004. The increase in
wolf complaints and damage is likely to continue until the gray wolf
population levels off. APHIS responds to all wolf damage complaints in
Wisconsin and utilizes a variety of techniques to resolve damage issues
which include the use of non-lethal techniques such as electronic
guards and visual deterrents.
In Minnesota, depredation by wolves on livestock and poultry is a
problem for some producers. While only a small percentage of the farms
in the wolf range are affected annually, some of these farms will
suffer substantial monetary loss in a given year. From 1976 through
2004, the number of farms suffering verified wolf depredations ranged
from 9 to 99 per year out of about 8,000. APHIS captured an average of
135 wolves through Wildlife Services depredation control programs
during the past 5 years. Minnesota's wolf population currently has
stabilized at about 3,000 wolves. Sarcoptic mange, also known as
scabies, had a noticeable impact on Minnesota wolves during 2000-2004.
It is expected that wolves will continue to colonize more agricultural
areas of the State and will cause increasing conflicts with livestock.
Consequently, it will become necessary for APHIS personnel to resolve
wolf damage problems at a growing number of farms scattered across an
expanding wolf range. As depredation control actions increase, the
number of wolves taken each year is also likely to increase.
Question. Please provide information relating to beaver management
in State of Wisconsin.
Answer. Beavers continue to cause major damage to valued resources
in Wisconsin. Since the population explosion in the mid 1980s, beavers
have caused millions of dollars worth of damage to many resources
including trout stream habitats, roads, timber, wild rice, and other
sensitive habitats. In 1988, APHIS implemented a beaver damage
management program in northern Wisconsin to assist cooperators in
resolving beaver conflicts/damage. Currently, APHIS cooperates with the
Wisconsin Department of Agriculture, Trout Unlimited, and the U.S.
Forest Service in northern Wisconsin to protect over 1,200 miles of
high quality trout streams. However, this represents only 10 percent of
the trout stream miles in the State. APHIS also cooperates with nine
county highway and forestry departments and over 50 local townships to
protect roads and timber resources from beaver damage. APHIS resolves
over 400 of these resource conflicts annually. The APHIS beaver damage
management program is a cost-share program with cooperative funding
coming from State and county governments and private entities. This
cooperative program saves cooperators a potential loss of over $1
million annually.
Question. Please provide information relating to crane operations
in the State of Wisconsin.
Answer. The sandhill crane has experienced dramatic population
increases over the last 20 years to the point that they are often
implicated in agricultural crop damage situations throughout Wisconsin.
In 2004, one potato grower alone reported over $37,000 in damages to
his crop from feeding sandhill cranes. APHIS conducts site visits to
assess damage and recommends abatement options to alleviate the
problem. APHIS provides harassment devices, such as propane cannons and
pyrotechnics, to make the birds uncomfortable in crop fields. Many crop
owners get frustrated and often request a Federal depredation permit to
lethally remove sandhill cranes that become accustomed to the
harassment techniques. In 2004, APHIS received 55 reports of
agricultural damage from crop owners who wanted to attempt to lethally
remove cranes in Wisconsin. In the past, many crop owners were able to
successfully deter sandhill cranes by using a corn seed treatment that
was removed from the market in 2004 with no replacement pesticide. This
will increase the pressure on APHIS to provide services.
In addition, sandhill cranes can pose safety hazards at airports
throughout the State. Several airports in Wisconsin have contacted
APHIS to request recommendations and permits to remove or reduce the
hazards caused by sandhill cranes using airport property. Sandhill
cranes weigh on average 8-10 pounds, creating an extremely hazardous
situation when encountered by aircraft while in flight. In 2004, APHIS
was contacted by five airports who requested Federal depredation
permits to lethally remove sandhill cranes that posed a risk to human
health and safety and aircraft. In 2005, eight airports have requested
these services.
______
Questions Submitted by Senator Mary L. Landrieu
WILDLIFE SERVICES
Question. What Wildlife Service methods development efforts are
underway to reduce blackbird damage to the rice industry?
Answer. In fiscal year 2005, APHIS' Wildlife Services Methods
Development efforts to reduce blackbird damage to the rice industry
include investigating non-lethal solutions. These include development
of chemical bird repellents and baits to deter blackbirds from seeded
and ripening rice, and improving methodology for reducing depredating
blackbird populations on rice farms in Louisiana, Arkansas, Texas and
Missouri.
Question. What resources are allocated to this effort, and what
additional resources would be required to accelerate methods
development to reduce blackbird depredations on rice?
Answer. In fiscal year 2005, APHIS allocated $313,998 ($289,998 for
personnel and $24,000 operating expenses) to work on this problem,
including two research biologists and two technicians. APHIS projects
that an additional $400,000 is required to accelerate laboratory and
field research efforts to develop and register a repellent for
protecting seeded and ripening rice; to develop an improved lethal bait
for reducing depredating blackbird populations; and to evaluate
alternative management strategies on rice farms to reduce blackbird
damage to rice in Louisiana, Arkansas, Texas and Missouri.
______
Questions Submitted by Senator Tom Harkin
SOYBEAN RUST
Question. Over the last few months, since the finding of soybean
rust in Louisiana, a lot of work has been undertaken to establish an
extensive surveillance and monitoring program to track the progress of
soybean rust. Officials from USDA hosted a workshop in Indianapolis in
early February to lay out their plans to establish a network of
sentinel plots in cooperation with State governments and private
groups. Soybeans were planted more than a month ago in the southern-
most growing regions in the United States, and soon will be planted
across our Nation. It is critical to have an early warning system in
place to alert producers to treat their fields. I wrote to you on
January 27, 2005 to urge you to allocate funds from the Commodity
Credit Corporation to launch this early warning system against soybean
rust, and I understand that this recommendation was endorsed by career
USDA staff. What action has the Department taken to create this system?
Answer. USDA's coordinated framework for the soybean rust (SBR)
response includes five components: (1) monitoring and surveillance; (2)
predictive modeling; (3) web-based dissemination of information; (4)
decision criteria for fungicide application; and (5) outreach. The
activities under these components build on our efforts to prepare for
the arrival of the disease, which include cooperating with the soybean
industry on a range of educational and awareness efforts and sponsoring
the development of a predictive modeling system for SBR. The predictive
modeling system is already functioning, and APHIS and cooperating
officials are entering survey data into the system as it becomes
available. Survey data is available on USDA's comprehensive SBR
website, which also provides detection and identification tips,
information on fungicide use, and local extension agents' contact
information, among other things.
APHIS is releasing $1.19 million from the Agency's contingency fund
to support the monitoring and surveillance network with State
cooperators and continued maintenance of USDA's comprehensive SBR
website. APHIS is providing $800,000 of these funds to State
cooperators through the Cooperative Agricultural Pest Survey (CAPS)
network to establish sentinel plots for surveillance. APHIS officials
have completed many of the CAPS agreements and are working diligently
to complete the remaining agreements. State cooperators have already
established sentinel plots in many areas, especially in southern
States, and the results of surveys are already displayed on USDA's SBR
website. APHIS is using $180,000 of the contingency funds to establish
five mobile monitoring teams to provide timely support for the
detection network. The remaining funds will support continued
development and maintenance of USDA's SBR website and modeling system.
ORGANIC COST-SHARE FUNDING
Question. Section 10606 of the 2002 farm bill created a national
organic cost-share program to offset the cost of certification under
the National Organic Program for organic producers and handlers. Five
million dollars was provided for this program, to be available until
expended. At this time, it appears there is roughly $1.5 million left
for cost-share funding. It is unclear how long these funds will remain
available for producers and handlers before running out.
How long does USDA/AMS perceive the remaining roughly $1.5 million
in cost-share funding will last before running out?
Answer. AMS has obligated essentially all of the initial $5,000,000
provided for cost-share funding. Of the total, $30,000 has been
retained to cover unexpected spikes in utilization by the States.
Question. Will sufficient funds last throughout fiscal year 2006?
How much in additional funding would AMS need to keep this program
active until the next farm bill?
Answer. Based on current utilization patterns, we anticipate that
the initial funding will be fully exhausted by the States by the third
quarter of fiscal year 2006. It should be noted, however, that the use
of funds by the States, in terms of amounts and timing, can be highly
variable. We estimate that the States would require $1,200,000 in
additional funding to keep the program active between the third quarter
of fiscal year 2006 and passage of the next farm bill.
NATIONAL ANIMAL IDENTIFICATION SYSTEM
Question. As USDA moves forward with implementation of a national
animal identification system, it still remains unclear exactly where
data will be kept as it is submitted by producers from across the
United States. Does USDA plan to maintain and control a central
database for all species of animals? Or, does USDA plan to maintain and
control regional databases as a repository for all or certain selected
species?
Answer. The primary information system components of the National
Animal Identification System (NAIS) would include the National Premises
System and National Animal Identification and Tracking System. The two
main NAIS information repositories would be maintained and centrally
managed by APHIS. The overall system would allow for the identification
of each premises and the recording and reporting of animal
identification and animal movement data. Additionally, the system would
associate or link the animal identification data to each premises where
the animal or group was located and the specific dates on which the
animal(s) was at the premises. Only information essential to the
enhancement of animal disease surveillance and monitoring would be
stored in a Federally-managed database under the NAIS.
Premises registration systems for all species are currently
maintained and operated by the States or regional alliances or third
parties, and essential data is forwarded to the National Premises
Information Repository. USDA is in the process of building a National
Animal Identification and Tracking System and a National Animal Records
Repository. Once participating State/regional and third-party systems
have been evaluated for data compliance, APHIS would support the
establishment of interfaces between these systems and the national
repositories. The State/regional systems or third-party systems would
be able to collect and maintain more information than is required for
NAIS, but only the federally required data would need to be sent to the
national repositories. NAIS data would be kept confidential to the
extent allowed by law, and routine access would be restricted to State
and Federal animal health officials when information is required to
perform their responsibilities for maintaining the health of the U.S.
herd.
Question. Exactly who will house the data?
Answer. The premises information and animal records repository will
be maintained by APHIS at the Centers for Epidemiology and Animal
Health facility in Fort Collins, Colorado. In the future, the system
will be housed at the National Technology Information Center in Kansas
City, Missouri. This move will give NAIS a more robust hardware
infrastructure will full system security and 24/7 surveillance for
system operation.
Question. If private firms maintain the data how will USDA have
control of and have access to that information?
Answer. To ensure that animal heath officials would have immediate,
reliable, and uninterrupted access to essential National Animal
Identification System information in the event of a disease concern,
certain basic data would be maintained at the Federal level.
Accordingly, the two main NAIS information repositories, the National
Premises Information Repository and the National Animal Records
Repository, would be maintained and managed by APHIS. If data that is
required by animal health officials to perform their duties is held
privately, the same degree of access must be assured.
CONCLUSIONS OF HEARINGS
Senator Bennett. Thank you very much, Senator Kohl.
I have no further questions. Gentlemen, thank you for your
service to the country and to the department.
The hearing is recessed.
[Whereupon, at 2:56 p.m., Thursday, April 14, the hearings
were concluded, and the subcommittee was recessed, to reconvene
subject to the call of the Chair.]
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2006
----------
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
MATERIAL SUBMITTED BY AGENCIES NOT APPEARING FOR FORMAL HEARINGS
[Clerk's Note.--The following agencies of the Subcommittee
on Agriculture, Rural Development, and Related Agencies did not
appear before the subcommittee this year. Chairman Bennett
requested these agencies to submit testimony in support of
their fiscal year 2006 budget request. Those statements
submitted by the chairman follow:]
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
Prepared Statement of Lester M. Crawford, DVM, Ph.D., Acting
Commissioner
INTRODUCTION
Mr. Chairman, members of the Committee, I am honored to testify on
FDA's fiscal year 2006 President's budget request. I'd like to begin by
conveying my appreciation to the Subcommittee members for providing the
Food and Drug Administration (FDA) with several key increases in the
fiscal year 2005 appropriation. We received increases for food defense,
medical device review, Bovine Spongiform Encephalopathy, medical
countermeasures, and the FDA consolidation project at White Oak. These
increases will allow FDA to continue to meet the expanding range of
challenging public health issues that we face. I can assure you that
FDA will continue to spend these resources wisely. I believe that the
American people would be impressed if they really knew how much return
on investment they get from FDA.
I am fully aware of the difficult funding decisions you face in the
current session, and I believe that every dollar invested in FDA's
programs can have a major positive impact--from the consumer to the
farmer to the drug and medical device manufacturer and beyond. FDA
plays a lead role in protecting and advancing the public health of the
United States.
Our mission is to ensure that U.S. consumers continue to enjoy the
safest food, and the most effective medical supplies in the world, and
that we continue to foster medical product innovation. We have a good
track record of accomplishment. Near the beginning of fiscal year 2004,
we unveiled a comprehensive strategic action plan to ``protect and
advance America's health'' in the 21st century. Our plan outlined a
series of specific steps to combat the increasingly complex public
health challenges we face as a Nation--and to capitalize on the myriad
health innovations occurring each day--in order to help U.S. consumers
live longer, healthier, and happier lives.
FDA'S 2006 PRESIDENT'S BUDGET REQUEST
Our fiscal year 2006 Budget request maximizes the performance of
our on-board assets--the greatest of which is our scientific staff--and
focuses additional requests on the areas of highest risk and highest
yield. Overall, our fiscal year 2006 request is for $1.50 billion in
budget authority, a $50 million increase above fiscal year 2005. Total
funding, including user fees, is $1.881 billion, $81 million above
fiscal year 2005. Key budget authority increases include: $30.074
million for Food Defense, $5.996 million for Medical Device Review,
$5.0 million for the Office of Drug Safety ($6.5 million including user
fees), $4.1 for rental costs, and $7.0 million for Buildings and
Facilities. The proposed budget allows FDA to continue to work towards
meeting statutory regulatory responsibilities while initiating new
efforts to address challenges that fall within our mission. Now I'd
like to tell you more about these proposed increase requests.
FOOD DEFENSE
In the post 9/11 environment, FDA has made fundamental changes in
how we implement our mission of protecting the food supply. We are
doing this so that all U.S. consumers can have confidence that their
food is not only safe, but also secure. We are requesting a $30 million
increase for food defense, to build upon gains achieved with food
defense funds appropriated in fiscal year 2005. Funds requested
directly support Homeland Security Presidential Directive-9, which
established the national policy to protect the Nation's food and
agriculture system from terrorist attacks. FDA and the USDA, in
conjunction with the White House Homeland Security Council, have
continued to coordinate efforts to protect the agricultural and food
sectors.
FDA is responsible for ensuring the safety of approximately 80
percent of the Nation's food supply. The possibility of food products
being used as a vehicle for attack is a major concern. The direct
effects on public health, adverse impacts on public confidence in the
U.S. food supply, and economic impacts on the food industry are all
potentially devastating. Over the past year we have implemented major
enhancements to our food safety and security program.
Shortly after 9/11, FDA focused its Food Security resources on
traditional tools to bolster the security of the Nation's food supply.
Since then, FDA has conducted classified assessments of strengths and
vulnerabilities in the U.S. food system, and has structured its Food
Defense plans accordingly. This risk-based strategy deals with the
risks of contamination of both imports and domestically produced and
processed foods. FDA has also instituted new systems that give advance
notice of upcoming food imports, improving FDA's ability to target
inspections.
Implementing FDA's strategy is an Administration priority for which
an increase of $30 million is requested. Within the $30 million
increase, $20 million will support a national network known as the Food
Emergency Response Network (FERN). FERN will increase our analytic
surge capacity in the event of terrorist attack by developing adequate
laboratory testing capacity for biological, chemical and radiological
threats and targeted food defense research efforts. This will enable us
to test thousands of food samples within a matter of days in the event
of an act of terror, or other emergency, and quickly determine what
food is safe, and what food is not. This network will be complemented
by a strong research program to develop effective protection strategies
to shield the food supply from terrorist threats. FDA seeks to detect
contaminants more quickly, and, where possible, modify food processing
in ways that would neutralize pathogens before they caused harm. An
additional $5.6 million is requested for targeted food defense research
on prevention technologies, methods development, determination of
infectious dose for certain agents when ingested with food, and agent
characteristics within specified foods. A $3.0 million increase is
requested to improve coordination and continue integrating our food
defense capabilities with the Department of Homeland Security's, as
part of the government-wide Bio-Surveillance Initiative. Finally, $1.5
million is requested to upgrade our crisis management capabilities so
that we are prepared to minimize the impacts of potential problems with
the food supply.
MEDICAL DEVICE REVIEW
To provide more timely and cost-effective review of new medical
devices, we have worked to implement the 2002 Medical Device User Fee
and Modernization Act (MDUFMA), which allows us to collect user fees
from companies that submit medical device applications. In fiscal year
2006, we are requesting an increase of $5.996 million to continue to
meet the fiscal year 2006 performance and funding expectations in
MDUFMA. In fiscal year 2006, we expect to complement the FDA-wide
device review program with $40.3 million in medical device user fees,
which is an increase of $6.362 million over fiscal year 2005.
These additional funds will be used to hire more staff and to
develop better systems to support more effective and timely review. The
law requires us to pursue a complex and comprehensive set of review
goals. Each year brings additional goals, and the goals become more
aggressive. We must report on performance relative to the specified
goals at the end of each year.
We have also committed to two ambitious long-term goals for
reducing average total approval time for medical device premarket
applications, and have already achieved one of these goals, even though
it was targeted for fiscal years 2005-2007. It is for a 30-day
reduction in average approval time for premarket applications given
expedited approval, which is similar to priority approval for drugs and
biologics. We have already achieved that goal--a 33 day reduction in
average approval time compared with the baseline of fiscal years 1999-
2001.
OFFICE OF DRUG SAFETY
FDA approves medical products after a sponsor demonstrates that
they are safe and effective. However, the full magnitude of potential
risks does not always emerge during the clinical trials that are
conducted to evaluate safety and effectiveness. Monitoring the safety
of marketed products requires close collaboration between our clinical
reviewers and safety staff to evaluate and respond to adverse events
identified in ongoing clinical trials or reported to us by physicians
and their patients.
Ensuring drug product safety is a mission-critical function of
FDA's Center for Drug Evaluation and Research (CDER), and is an
important component of both the premarket and postmarket review
process. FDA is requesting a $6.5 million increase to strengthen the
drug safety functions within CDER's Office of Drug Safety (ODS), of
which $5.0 million is in budget authority and $1.5 million increase is
in PDUFA user fees. One of ODS' primary roles is to provide expertise
in the review of postmarketing safety data and to maintain and
coordinate CDER's postmarketing surveillance and risk assessment
program. ODS plays a significant role in the CDER drug safety mission,
however, their role is only a small subset of the total effort expended
and resources spent by CDER on drug safety.
This increase will allow us to hire additional staff to manage and
lead safety reviews, provide further expertise in critical areas such
as risk management, risk communication, epidemiology, and to increase
access to a wide range of clinical, pharmaceutical and administrative
databases. It will also help increase transparency by sharing drug
safety information sooner and more broadly and strengthening FDA's
post-market surveillance capacity, using a network of information
sources to analyze postmarket drug safety information. The requested
increase will also support patient safety initiatives and extend
partnerships with the Centers for Medicare and Medicaid Services, the
Agency for Health Research Quality and other HHS agencies.
WHITE OAK MOVE
FDA is continuing the White Oak Consolidation project, which upon
completion will house over 7,700 staff in 2.3 million square feet of
space. By the end of fiscal year 2005, the campus will have almost
700,000 square feet completed with 1,850 staff on site. The new
buildings will eventually replace all 40 of the existing fragmented
facilities in 16 locations which support the Office of the
Commissioner, and all of our Centers and the Field headquarters, except
the Center for Food Safety and Applied Nutrition and the National
Center for Toxicological Research. This project will allow FDA to
standardize and modernize document handling, provide shared use
facilities such as libraries and conference areas, further reduce
redundancies in administrative tasks and allow conversion to a single
computer network. In fiscal year 2005, over 1,700 review staff are
moving to White Oak, so a significant portion of costs are being
financed by PDUFA fees. Fiscal year 2006 costs need to be financed
through budget authority; as a result, FDA requests an increase of
$4.128 million in additional budget authority, to provide the needed
infrastructure and to move the staff to the CDRH Engineering/Physics
Laboratory and a portion of FDA's shared use data center facilities.
RENT COSTS
In prior years, FDA's rent costs were budgeted separately from the
programs that used the space. To facilitate management improvement,
FDA's fiscal year 2006 budget proposes to move funding for rent to the
program lines. This will place accountability for rental and other
associated costs within the operating programs, and eliminate the need
to transfer funds between budget lines when program space needs change.
The FDA program lines include increases of $6.0 million to cover
projected increases in rent charges; of this, $4.1 million is requested
in budget authority and $1.9 million in user fees.
BUILDINGS AND FACILITIES
In fiscal year 2005, FDA did not request funding to repair and
maintain our building and facilities in order to fund other priority
initiatives, but we are now challenged to continue to sustain these
buildings, some of which are over 50 years old, in poor condition, and
have severely deferred maintenance. The requested $7 million increase
for buildings and facilities will help cover the cost of greatly needed
repairs and improvements to existing owned or leased facilities that
FDA occupies in 49 States and in the District of Columbia and Puerto
Rico.
MANAGEMENT EFFICIENCIES
FDA is continually working to create a stronger, more unified
Agency. The increasing complexity of our regulatory mission requires
that we look for new ways to create efficiency, standardize processes,
enhance infrastructure and improve planning. FDA has made significant
improvements to its business practices that support the agency's
mission-critical activities through the implementation of the
President's Management Agenda. In fiscal year 2006, proposed management
savings will result in a $1.554 million reduction in administrative
costs. In the area of Information Technology (IT), we are developing a
roadmap to better align key technologies to our policy goals and
objectives, which will better integrate enterprise architecture,
capital planning and investment management, and project management into
a more comprehensive investment review and governance process. We are
consolidating IT functions across the Agency, which allows us to
realize our goals and objectives while reducing spending. In fiscal
year 2006, we are expecting an IT savings of over $5.1 million.
FDA has redesigned the way we deliver various administrative and
information technology services using the shared services model. This
model aligns our administrative resources into a customer focused
organization, providing more efficient services in a cost effective
manner without jeopardizing our mission. This model also allows us to
provide services in a way that maintains close ties to customers
through negotiated service level agreements that specify the level of
service to be delivered and the costs that will be charged to the
customer. FDA has also competed and won all six of the commercial
activities studied for competitive sourcing in fiscal year 2003 and
2004, generating millions of dollars in efficiencies. FDA is pleased to
announce it just won the seventh competition for clerical support
services functions, which when implemented will result in a major
change in the way we conduct our clerical support service functions.
In the area of financial management, we received our seventh
consecutive ``unqualified'' or clean audit opinion in January 2005 on
our financial statements from the Department's Office of Inspector
General. This achievement reflects our ability to produce credible
financial statements in a timely manner despite the fact that our
existing systems are not fully compliant with today's financial
standards. We are pleased to announce that in fiscal year 2005 we will
implement the new Unified Financial Management System, which will
replace our old accounting system. This system used across the
Department, will satisfy financial requirements, and provide timely
financial information to executives and managers for better decision
making. We have also integrated performance information into the
traditional budget presentation, providing better linkages between the
resource request and its performance goals.
USER FEE INCREASES
We are also requesting an increase of $31.320 million for user fees
that support prescription drug review, medical device review, animal
drug review, mammography inspections, export certification, and color
certification fees. All of these requested fee increases are authorized
under current law.
PROTECTING THE HOMELAND--COUNTERTERRORISM
Since September 11, 2001, public awareness of terrorist threats has
changed and has underscored the importance of FDA's consumer protection
mission. Because our regulatory authority and responsibility cut across
critical elements of counterterrorism efforts, we must assess and
respond to a broad range of terrorist related health and safety
threats. One example of this coordinated effort is the establishment of
the Food Emergency Response Network (FERN), which will enable us to
test thousands of food samples within a matter of days in the event of
an act of terror or other emergency.
Additionally, I would like to highlight our progress in ensuring
the safety of food imports as we continue to direct resources to where
they are needed most. Import food field exams, along with laboratory
analyses, were FDA's major tools to physically monitor imports prior to
the Bioterrorism Act. One of the new approaches under the Act is the
implementation of the risk based Prior Notice system as a basis for
triaging and prioritizing the examination of imported food shipments
that may pose the greatest risk to U.S. consumers. Our fiscal year 2006
food defense request contains priorities (FERN, research,
biosurveillance and crisis management) that Congress funded in fiscal
year 2005. This will allow us to take advantage of new authorities
provided in the Bioterrorism Act to further our use of risk-based
monitoring of food imports.
FDA is also focusing its efforts on medical countermeasures to
strengthen our preparedness and response capabilities and to help the
Agency remain vigilant against potential threats to the public's health
and security. FDA regulated products, such as human and animal drugs,
vaccines, blood, and other products, will play a crucial role in
countering the effects of a terrorist attack. We are working with
industry to develop medical countermeasures using state-of-the-art
science, and collaborating with other agencies and organizations to
identify existing products that may be useful as medical
countermeasures.
One example is Prussian Blue, which has been approved as
Radiogardase for the treatment of contamination with radioactive cesium
or non-radioactive thallium, released from a ``dirty bomb.'' The
product has been used since the 1960s as an investigational drug to
enhance excretion of cesium and thallium from the body. To encourage
manufacturers to submit marketing applications for the approval of this
important medical countermeasure, FDA carefully reviewed the available
data and literature, determined that the product would be found safe
and effective, and published this finding, along with draft labeling.
In fiscal year 2004, FDA approved two other drugs, pentetate calcium
trisodium injection and pentetate zinc trisodium injection, for
treating certain kinds of radiation contamination. And this February,
FDA announced the approval of Vaccinia Immune Gobulin Intravenous, the
first intravenous human plasma derived product available to treat
certain rare complications of the smallpox vaccination. Approval of
these countermeasure products was facilitated by FDA guidance documents
as part of an ongoing effort to provide the public with the best
available protection against nuclear accidents and terrorist threats.
We frequently collaborate with the Centers for Disease Control and
Prevention, the Department of Homeland Security, the Department of
Defense, and other government agencies to support the availability of
essential products in case of a terrorist event. FDA helps to assure
the safety and efficacy of the countermeasures held in the Strategic
National Stockpile (SNS) that will be used in response to national
emergencies. The SNS is a stockpile of critical medical products that
includes antibiotics (to treat threats such as anthrax); antitoxins;
vaccines (including enough smallpox vaccine for every person in the
United States); medical supplies; medications; surgical items; and,
other drugs (including treatments for radiation poisoning and chemical
agent exposure). The Agency has also conducted vulnerability and needs
assessments by reviewing information on available medical
countermeasures as well as promising products under development.
PATIENT AND CONSUMER SAFETY AND PROTECTION
We continually strive to improve our mechanisms for assuring that
patients and consumers are protected from product risks by improving
our post-marketing monitoring, analysis, communication and regulatory
activities. By partnering with healthcare providers, healthcare
institutions and other government agencies, FDA will be able to quickly
identify and understand the risks associated with FDA regulated
products and effectively communicate concerns and prevention
strategies. We also collaborate with foreign government counterparts to
share vital information, coordinate enforcement actions, and to
leverage our resources, so we can expand FDA's protective functions
even more broadly.
FDA grants approval to medical products only after a sponsor
demonstrates they are both safe and effective. Unfortunately all
approved products pose some level of risk. Unless a new product's
demonstrated benefit outweighs its known risk for an intended
population, FDA will not approve the product. However, the full scope
of risks does not always emerge during the mandatory clinical trials
conducted before approval. Occasionally, serious adverse effects are
identified after approval either in post-marketing clinical trials
being conducted for unapproved indications, or through spontaneous
reporting of adverse events. Such reactions can range from a minor,
unpleasant reaction to a product, to an event that is life-threatening
or deadly. An adverse reaction may also result from errors in
prescribing, dispensing or use. The issue of how to detect and limit
adverse reactions is challenging. How to weigh the impact of an adverse
reaction against the benefit of a product to a patient and the public
health is multifaceted and complex, involving scientific as well as
public policy issues. FDA often relies on input from over thirty
advisory committees to provide advice and guidance during and after the
review process.
The number of serious adverse drug events reported to the FDA grew
more than four-fold between 1992 and 2003. About 45 percent of these
adverse events are caused by medication errors that occur in dispensing
or administration. These troubling statistics demonstrates why Congress
has supported FDA in creating a post-market safety program designed to
assess these postmarket adverse events. This complements the pre-market
safety reviews required for approval of medical products in the United
States.
There is evidence that spontaneous reporting systems alone do not
allow for adequate characterization of the true safety profile of a
regulated product. We have been working with Federal, State and private
organizations to identify useful sources of data using adverse event
monitoring systems such as MedSun, which is a post-market reporting
system that serves as an advance warning system and provides two-way
communications to report adverse events associated medical devices. A
primary focus involves identifying particular risks in specific
populations such as children, elderly, and patients from particular
demographic groups who may be associated with different risks.
The most recent patient safety issue has involved the drug Vioxx
(rofecoxib) which illustrates the vital importance of both the ongoing
assessment of the safety of an approved product once it is in
widespread use and the effective communication of newly discovered
risks to patients and medical providers. FDA has taken a number of
steps to improve our drug safety system and thereby better protect the
public health. FDA is sponsoring an Institute of Medicine (IOM) study
that will make an assessment of FDA's drug safety system and its
effectiveness in safeguarding U.S. consumers. This study will focus on
the postmarketing phase of FDA's oversight, and assess what additional
steps can be taken to improve it. While this IOM process proceeds, FDA
will institute a number of steps designed to foster greater
independence and transparency in postmarketing safety deliberations.
On February 15, 2005, Health and Human Services Secretary Leavitt
and I unveiled a new emboldened vision for FDA that will promote a
culture of openness and enhanced oversight within the Agency. As part
of this vision, FDA will create a new, independent, Drug Safety
Oversight Board to oversee the management of drug safety issues, and
will provide emerging information to health providers and patients
about the risks and benefits of medicines. This Board will oversee the
management of important drug safety issues within CDER. The Board will
be comprised of medical experts from FDA and other HHS agencies and
government departments (e.g., Department of Veterans Affairs), and will
consult with other medical experts and representatives of patient and
consumer groups.
FDA will also increase the transparency of our decision-making
process by establishing new and expanding existing communication
channels to provide targeted drug safety information to the public.
These channels will help ensure that established and emerging drug
safety data are quickly available in an easily accessible form. The
increased openness will enable patients and their healthcare
professionals to make better-informed decisions about individual
treatment options. The Agency is also proposing a new ``Drug Watch''
Web page for emerging data and risk information and increased use of
consumer-friendly information written especially for healthcare
professionals and patients.
As FDA develops these communications formats, we will solicit
public input on how FDA should manage potential concerns associated
with disseminating emerging information prior to regulatory action. The
Agency will issue draft guidance on procedures and criteria for
identifying drugs and information for the Drug Watch page. In addition,
we will actively seek feedback from healthcare professionals and
patients on how best to make this information available to them.
As one effort to help prevent medical administration errors, FDA
has issued a rule requiring bar codes on the labels of thousands of
human drugs and biological products. This measure will help protect
patients from preventable medication errors, reduce the cost of
healthcare and harness information technology to promote higher quality
care. Monitoring the safety of marketed products requires close
collaboration between our clinical reviewers and safety staff to
evaluate and respond to adverse events identified in ongoing clinical
trials or reported to us by physicians and their patients.
Children are a particularly vulnerable population. Until recently,
they have not usually benefited from the knowledge that is gained by
studying the products that are being used to treat them. Utilizing the
tools Congress gave FDA in the Modernization Act, the Best
Pharmaceuticals for Children Act (BPCA) and in the Pediatric Research
Equity Act (PREA), we have made enormous progress in obtaining
information about the safety and efficacy on over 100 products that are
prescribed to children. Of these, 87 have new labeling information for
children. From these studies, it was determined that almost one in four
of the products did not work, had a pediatric safety issue or required
a change in dose. Almost all of the information that was developed
concerning the safety of Selective Serotonin Reuptake Inhibitors
(SSRIs) and their use in pediatrics came from studies FDA requested
using these new tools.
BPCA contains important, new disclosure requirements. Under BPCA, a
summary of FDA's medical and clinical pharmacology reviews of pediatric
studies is publicly available regardless of the action taken on the
application. Since 2002, FDA has posted the summaries of 41 product
reviews on FDA's website at: http://www.fda.gov/cder/pediatric/
Summaryreview.htm. This information provides a rich source of valuable
safety information to allow pediatricians to make more informed
decisions about whether and how to use these drugs in their patients.
After a year of hard work by our dedicated staff, I am pleased to
report that we have made significant progress in achieving our goals
for protecting and advancing America's health and safety. We have
empowered consumers to improve their own health through better
information about the foods they eat and the medicines they consume.
The Agency introduced a national education campaign to give consumers
advice on how to safely use over-the-counter pain relief products like
non-steroidal anti-inflammatory drugs (including aspirin and ibuprofen)
and acetaminophen. In addition, FDA, FDA is asking the manufacturers of
all OTC non-steroidal anti-inflammatory drugs (NSAIDs) to revise their
labels to include more specific information about potential
cardiovascular and gastrointestinal risks as well as information to
assist consumers in the safe use of such drugs. This effort on OTC
NSAIDs is consistent with FDA's efforts to address similar concerns
about prescription NSAIDs.
I am also proud to report that one of FDA's top priorities is the
implementation of the the Food Allergen Labeling and Consumer
Protection Act. Beginning in 2006, the Agency plans to ensure that
manufacturers provide improved food labeling information that will help
the millions of consumers who suffer from food allergies. The act
specifically requires food labels to identify in plain English if the
product contains any of the eight major food allergens--milk, eggs,
fish, crustacean shellfish, peanuts, tree nuts, wheat and soybeans. The
new labeling will be especially helpful in teaching children who suffer
from food allergies to recognize the presence of substances they need
to avoid.
The final rule prohibiting the sale of dietary supplements that
contain ephedra, went into effect in April 2004, paving the way for
greater consumer protection and removal of risky products from the
market. FDA has developed a four-pronged approach for ensuring the
safety of dietary supplements, including supplements promoted for
weight loss. This approach includes guidance on assuring the safety of
new dietary ingredients, development of good manufacturing practices
guidelines for dietary supplements, guidance on the scientific evidence
needed to substantiate label claims on dietary supplements, and
diligent enforcement.
We are also working collaboratively with Federal and other partners
to develop the scientific evidentiary base FDA will use to make safety
and enforcement decisions on dietary supplements that contain ephedra.
Partners in this effort include, FDA's Center for Food Safety and
Applied Nutrition, National Center for Toxicological Research, the
National Institutes of Health's Office of Dietary Supplements and
National Center for Complementary and Alternative Medicine, and the
National Toxicology Program in the Department of Health and Human
Services. We are also partnering with the University of Mississippi's
National Center for Natural Products Research, as well as others, on
dietary supplement issues.
I am also pleased to report that a training program was also
developed for health educators to help teach food safety to pregnant
women and women who might become pregnant. In January of this year the
HHS, in conjunction with USDA released the ``Dietary Guidelines for
Americans 2005'', an update of the Federal Government's science-based
advice to promote health and reduce risk of chronic diseases through
nutrition and physical activity. FDA was instrumental in developing the
Dietary Guidelines. However, FDA will continue to confront complex
challenges in fiscal year 2006.
As you can see, FDA is further protecting the public health by
constantly exploring new ideas, modernizing our rules, streamlining our
procedures and carrying out ground-breaking reforms, which began with
the FDA Modernization Act. We are experiencing one of our greatest
periods of innovation. The strategies we are putting to work are
designed to deliver optimum health gains for each tax dollar while
easing regulatory burden on industry and removing obstacles in the path
of product innovation across all industries in the FDA's purview.
The FDA strives to be a respected steward of the public's trust and
ensures that benefits outweigh the risks of regulated products. We will
keep the promise of the FDA mission by putting in place more rigorous
oversight and by collecting and sharing important and emerging
information about product safety and effectiveness. The 21st Century
has brought unprecedented new challenges to patient and consumer safety
and FDA is aggressively moving ahead on a number of important
protections, old and new.
USING RISK BASED MANAGEMENT PRACTICES
Our mission has become much more complicated as public health
protection continues to entail a wide range of unprecedented challenges
and threats. The number of medical products that we regulate now
exceeds 150,000, and the products are becoming increasingly more
complex. Access to this rapidly growing range of products offers
opportunities for improving health, improving lives, and enhancing
lifestyles, but it also creates new kinds of vulnerabilities and risks
to the public health.
FDA has identified efficient risk management as the primary way to
make the most effective use of resources to address the growing number
of FDA regulated products on the market and the increased complexity of
many of these products. The Agency has initiated a critical,
comprehensive review of its practices related to planning and
prioritizing its inspections, conducting inspections as effectively and
efficiently as possible, and, achieving compliance with the Federal
Food, Drug and Cosmetics Act.
FDA accomplishes these goals through rigorous analysis to
consistently identify the most important risks and the use of a quality
system approach to designing and conducting our core business
processes. Another integral component in the risk-based management
strategy is the use of risk-based Current Good Manufacturing Practices
(cGMP), to provide a greater focus on product quality. This was
initiated under FDA's Good Manufacturing Practices for the 21st Century
initiative. The objectives of risk-based GMPs will encourage industry
to adopt new technological advances early in the process; to facilitate
application of modern quality management techniques, including
implementation of quality systems approaches, to all aspects of
pharmaceutical production and quality assurance; and, to implement
risk-based approaches that focus industry and Agency attention on
critical areas. This new approach will also ensure that regulatory
review and inspection policies are based on state-of-the-art
pharmaceutical science and will also enhance the consistency and
coordination of FDA's drug quality regulatory programs, in part, by
integrating enhanced quality systems approaches into our business
processes and regulatory policies concerning review and inspection
activities.
These strategies have resulted in an inspection and enforcement
program that provides the foundation for a strong, robust Agency
centered on the protection of public health. An example of an
innovation stemming from the FDA's recent GMP initiative is the
Pharmaceutical Inspectorate, which created a cadre of highly-trained
field investigators that focuses on conducting inspections of highly
complex or high-risk drug products and processes. Given the environment
of fiscal restraint, the Agency must make informed decisions on how the
workload can be best accomplished, while still safely monitoring
regulated products. This is being accomplished by covering the highest
risks in regulated products.
An example of efficient and effective use of risk management in our
operations is the Prior-Notice Import Security Reviews conducted at the
Prior Notice Center. These reviews are just one example of the expanded
targeting and follow through on potentially high risk import entries
that FDA is developing to complement the import field exam. Nearly 20
percent of all imports into the United States are food and food
products consumed daily by the public, making imported foods potential
vehicles to carry out terrorist attacks in the United States by
contamination of our food supply. The Prior-Notice system requires food
importers to provide the FDA with advance notice of human and animal
food shipments imported or offered for import into the United States.
By requiring advance notice for imported foods, we gain critical
new tools that could help identify shipments containing potentially
dangerous foods and prevent them from entering the country. For example
FDA would know in advance, when and where specific food shipments will
enter the United States, what those shipments will contain, from where
and from whom they are imported, and the facility where the food was
manufactured. This advance information, along with other information
from the intelligence community, allows FDA to more effectively target
inspections and ensure the safety of imported foods.
FDA receives on average, 27,000 notifications about incoming food
shipments each day, and works closely with the Customs and Border
Protection (CBP) at the prior-notice Center which is co-located with
CBP's National Targeting Center to ensure that the Prior-Notice
regulations promote a coordinated strategy for border protection. Using
the electronic data required under those regulations, the science-based
knowledge of the Agency, and a sophisticated automated targeting
system, FDA works side-by-side with CBP while making decisions about
food shipments that could pose a potential threat to the United States.
Those identified as potential threats will be subject to thorough
inspections upon arrival at our ports. This integrated risk-management
process increases our security and facilitates the movement of
legitimate commerce.
FDA is also helping vaccine manufacturers overcome challenges such
as the problems Chiron is experiencing. Under the Good Manufacturing
Practices for the 21st Century Initiative, we are working with industry
to encourage use of advanced technologies as well as quality systems
and risk-based approaches that build quality into the manufacturing
process. We are also increasing our surveillance of influenza vaccine
manufacturers and have expanded our ability to communicate with our
foreign regulatory counterparts on critical public health issues.
CLOSING
We at the Food and Drug Administration are working hard to address
key challenges in fulfilling our public health mission. Our goal is to
maximize the benefits and minimize the risks from the products we
regulate. We work to provide high quality and consistent oversight in
an environment of changing public health risks, new technologies and
global market dynamics. We recognize that our responsibilities are
growing in scope and complexity, and we are responding by focusing on
our core public health mission, by making high-yield investments and by
seeking effective collaborations and partnerships.
Our vision for the future of FDA is one of transformation,
requiring the broad use of new technology and new ways of thinking,
developed in collaboration with a broad network of partners--public and
private, United States and international. By capitalizing on 21st
century information technology and regulatory process innovation, we
will leverage public investment in FDA to yield an even greater level
of public health protection, and lower barriers on the critical path to
medical innovation. This will allow us to further implement a quality
systems approach in all of our operations, improving regulatory
business processes, increasing productivity, and promoting better
health outcomes. We are committed to fostering increased predictability
and transparency in every aspect of what we do.
We would like to thank you for your continued support of the agency
and its public health mission. This year is expected to be another
exciting one for the Agency and we look forward to working with you
throughout the 109th Congress.
______
DEPARTMENT OF AGRICULTURE
Office of the Inspector General
Prepared Statement of Phyllis K. Fong, Inspector General
Good morning, Mr. Chairman and Members of the Subcommittee. Thank
you for inviting me to testify before you today to discuss the
activities of the Office of Inspector General (OIG) and to provide you
information from our work pertaining to the programs and operations of
the U.S. Department of Agriculture (USDA).
I would like to introduce the members of my senior management team
who are here with me today: Joyce Fleischman, Deputy Inspector General;
Robert Young, Assistant Inspector General for Audit; Mark Woods,
Assistant Inspector General for Investigations; and Walt Kowal,
Director of our Business Management and Procurement Division.
I am pleased with the opportunity to provide the Subcommittee with
some of the highlights of our audit and investigative activities over
the past year, inform you about the results we achieved, and give you a
preview of projects of interest that are pending or are planned for
fiscal year 2005.
To ensure that our audit and investigative resources are directed
at the most important challenges facing USDA, we have begun planning,
organizing, and budgeting our work according to three major objectives
that define our priorities.
My testimony today will be focused on our work directed towards the
major challenges facing the Department in the areas of safety, security
and public health, program integrity, and management of public
resources.
SAFETY, SECURITY, AND PUBLIC HEALTH
The highest priority for our audit and investigative work is to
support USDA in the enhancement of effective safety and security
measures to protect USDA and our Nation's agricultural resources.
Food Safety: Improving USDA Oversight and Inspection Systems
Ensuring a safe domestic food supply and providing an effective and
reliable system of import safeguards for foreign-produced food products
is a vital responsibility of the Department. Public and congressional
concerns continue regarding the ramifications of Bovine Spongiform
Encepholopathy (BSE) in Canada's cattle herd and its impact on the U.S.
cattle market. We are continuing our work on the Department's
surveillance efforts to detect and estimate the prevalence of BSE in
the U.S. cattle herd. We are focusing our efforts on whether USDA has
established effective management control processes over inspection-
related activities, including animal disease surveillance programs. OIG
will devote significant audit and investigative resources to BSE and
other food safety issues in fiscal year 2005 to assist the Department
as it addresses the challenging questions that have arisen.
Investigating the USDA Response When BSE-Suspect Cattle Are Identified
Last year, I advised the Subcommittee that OIG was investigating
allegations surrounding the health status of the BSE-positive cow found
in Washington State in December 2003. Allegations were raised in the
media pertaining to the potential falsification of USDA inspection
records that described the cow's condition before its BSE status was
confirmed. OIG investigated whether any USDA personnel or private
parties provided false information or engaged in any intentional
misconduct. We also examined whether USDA personnel and employees of
the beef processing facility followed proper procedures during the
inspection of the BSE-positive cow and during their collection,
handling, and delivery of tissue samples from the infected cow.
In July 2004 testimony before a joint hearing of the House
Agriculture and Government Reform Committees on BSE issues, I reported
that we found no instances where USDA personnel knowingly conveyed
false information or engaged in intentional misconduct. APHIS and the
Canadian Food Inspection Agency (CFIA) concluded that they accurately
identified the BSE-positive cow. We examined their work and agreed with
their conclusion. OIG discovered no evidence that USDA personnel
falsified any records pertaining to the condition of the BSE cow at the
time of inspection. Our investigation also found that the former
employee of the facility, who alleged that the BSE-positive cow was
ambulatory and healthy when it arrived at the facility, described a
different animal from the one that arrived in the same trailer and
later tested BSE-positive.
A second OIG investigation into the handling of a BSE-suspect cow
by Department officials resulted from the premature condemnation of a
cow in San Angelo, Texas. On May 4, 2004, the FSIS Acting Regional
Director in Dallas, Texas, reported that a cow identified as having
Central Nervous System (CNS) symptoms by an FSIS veterinarian at a beef
processing facility in San Angelo, Texas, was not tested for BSE after
it had been slaughtered. The initial decision by the FSIS Veterinary
Medical Officer (VMO) on-site at the facility to test the cow for BSE
was overturned by a senior APHIS official, and the cow's carcass was
subsequently sent to a rendering plant.
OIG investigated whether an APHIS official in Austin, Texas,
provided a false statement to USDA/FSIS investigators during their
inquiry into his decision not to test the animal at the facility. The
OIG investigation found no evidence that any of the USDA officials
responsible for the decision not to take brain tissue samples from the
cow for BSE testing, or any other USDA personnel, provided false
information or engaged in intentional misconduct. The cow did not enter
the food supply; its carcass was disposed of at a local landfill in
accordance with applicable environmental standards.
After the incident, FSIS and APHIS Veterinary Services announced a
new joint policy regarding BSE sampling of condemned cattle at
slaughter plants. The policy establishes protocols for the agencies'
responsibilities to obtain samples from condemned cattle exhibiting
signs of CNS disorders, regardless of age.
The USDA BSE Surveillance Plan and BSE Enforcement Issues
The Department's testing of cattle for BSE had centered on high-
risk cattle--those that exhibit a CNS disorder or died from unclear
causes. After the discovery of a BSE-infected animal in Washington
State in December 2003, APHIS expanded its surveillance program
beginning June 1, 2004.
As I testified last year, we initiated an audit to assess whether
the surveillance program in place in December 2003 had been adequately
implemented and whether the expanded program would accomplish its
stated goal to determine if ``. . . BSE is actually present in the
population and, if so, at what level.'' We concluded that several
limitations inherent in the expanded sampling plan needed to be
clarified to convey what the results of the testing actually imply.
Among the major issues we identified were: sampling was not truly
random because participation in the program is voluntary; APHIS could
not obtain a statistically appropriate geographical representation of
the U.S. cattle population, so the chances of detecting BSE, if it
exists, would be reduced; and the projected maximum BSE prevalence rate
may be unreliable.
Our review also determined that cattle condemned at slaughter
plants for CNS disorders were not always tested for BSE. The Department
needed to increase testing of rabies-negative brain samples from
animals that exhibit clinical signs not inconsistent with BSE. At the
time of our review, a process for obtaining samples from cattle that
``died on the farm'' had not been developed. USDA also needed to
standardize the age requirement for BSE testing.
Based on our audit findings, we recommended that APHIS fully
disclose the assumptions behind its sampling plan, clarify the
limitations, and ensure that all high-risk animals are sampled and
tested in accordance with USDA policy and the 2004 Surveillance Plan.
We also recommended that APHIS expedite development of a new system to
track and report accomplishments and implement performance measures and
a continuous risk assessment. APHIS agreed with all of our
recommendations and advised OIG it is moving to correct the weaknesses
we identified.
Currently, OIG has four audits in progress pertaining to BSE. In
our BSE Surveillance Program--Phase II audit, OIG is monitoring the
Department's implementation of its BSE-Expanded Surveillance Program,
involving both APHIS and FSIS. This audit will evaluate the
effectiveness of APHIS' expanded BSE Surveillance program; whether BSE
laboratories are meeting their objectives and are in compliance with
program policies and procedures for conducting tests on submitted BSE
samples and reporting test results to APHIS and stakeholders; and if
APHIS and FSIS took prompt and proper corrective actions in response to
recommendations in the BSE Surveillance Program--Phase I audit report
previously cited.
In our Phase III review, we will evaluate whether the USDA
enforcement of the ban on specified risk materials (SRMs) in meat
products and controls to prevent central nervous system (CNS) tissue in
advanced meat recovery (AMR) product have been effectively implemented.
The review will also cover FSIS ante mortem condemnation procedures and
procedures for obtaining brain tissue samples from condemned cattle for
BSE testing. Our target date for completing these two efforts is early
summer, 2005. This week, we released our audit of the Department's
(APHIS, FSIS) Oversight of the Importation of Beef Products from
Canada. In May 2003, USDA halted imports of live cattle, ruminants, and
ruminant products from Canada after a Canadian cow tested positive for
BSE. In August 2003, the Department announced that it would allow the
importation of low-risk beef and other ruminant products from Canada.
In response to congressional concerns, we evaluated APHIS' oversight of
Canadian beef imports and whether proper controls were established to
ensure that only low-risk product entered the United States. Among our
key objectives were determining whether APHIS met existing regulatory
and policy requirements regarding permits that allowed the importation
of some Canadian beef products and whether APHIS properly considered
and implemented risk-mitigation measures for animal and public health.
We found that while APHIS allowed the import of beef products they
considered low risk in an attempt to further trade, they did not
publicly communicate or explain their actions to all interested
parties. APHIS changed its policies relating to required risk
mitigation measures to allow the import of low-risk product produced at
facilities that also handled higher risk product, thereby increasing
the potential risk for cross-contamination. OIG made a number of
recommendations that would strengthen the USDA process for
communicating such changes in policy and improve controls over Canadian
beef product imports. The Department has generally agreed with our
recommendations and has identified a number of positive actions to
address these concerns. Finally, we are completing an audit to evaluate
the adequacy of a recall of ineligible product from Canada and will be
reporting our results to you.
Food Contamination and Recall Activities
In my testimony before the Subcommittee for the last 2 years, I
discussed OIG work regarding FSIS recall operations that involved the
adulteration of ground beef products by Escherichia coli (E. coli) in a
Colorado plant. Our audit of the Colorado facility determined that the
facility and FSIS had not fulfilled their responsibilities under the
Hazard Analysis and Critical Control Point (HACCP) system. OIG made
extensive recommendations to improve their inspection processes and
recall procedures in this audit. As a result, FSIS directed plants to
reassess their HACCP plans for raw ground beef products and issued a
directive requiring inspectors to obtain processing plants' pathogen
test results at least on a weekly basis. FSIS issued a second directive
that clarified when trace-back' samples should be taken and that
suppliers shall be notified of test results.
At the time of my testimony last year, two audits on Listeria
adulteration recalls were still underway. In two audit reports issued
in June 2004, we determined that similar to the Colorado recall
incident, weaknesses in FSIS' management control and oversight of the
recall process were again evident. In response to our recommendations,
FSIS issued a new directive on recall procedures, which implemented a
process for selecting customers for effectiveness checks, and enhanced
instructions to agency personnel for performing effectiveness checks on
products distributed to the National School Lunch Program. We are still
working with FSIS to address the development of a supportable
methodology for determining the success, or failure, of a recall.
Regarding our investigative work on incidents of food adulteration,
we investigated the owner of a California food service management
storage and distribution business for supplying 47 California school
districts with poultry products containing rodent hair, feces, and
signs of being gnawed by rodents. The owner and plant manager were
convicted, placed on probation, and fined over $10,000.
Controls Over Germplasm Storage Material and Genetically Engineered
Organism Field Testing
USDA plays a major role in regulating and monitoring genetically
engineered organisms (GEOs), ranging from the storing of germplasm used
to produce seeds for such crops, to approving field tests of
genetically engineered crops, to monitoring the movement and import of
GEO crops. In March 2004, we issued a report on the adequacy of USDA
controls over the identification, accountability, and security of plant
germplasm at USDA facilities. We found that guidance and policies were
lacking and that inventory accountability and physical security needed
improvement. The agencies responsible for storing germplasm and
controlling its movement (ARS and APHIS) agreed to take action on our
recommendations.
Because of the sensitivity and potential impact biotechnology has
on U.S. trade, we are continuing our work in this area. We have an
audit that is nearing completion that will report our evaluation of
USDA controls over field tests and movements of GEOs. We are examining
APHIS' procedures for approving, controlling, and monitoring field
tests of genetically engineered crops to prevent the inadvertent
release of GEOs in the environment. Uncontrolled and inadvertent
release of GEOs, particularly high-risk GEOs such as those containing
pharmaceutical and industrial compounds, cannot only seriously impact
the safety of the food supply, but adversely impact trade. Further, the
genetic diversity of plant life can be compromised. We expect to issue
a final report on our work by late spring.
Homeland Security and Program Implementation
We place a high priority on work that will assist USDA officials in
strengthening the Department's defenses against threats to our Nation's
food supply, production agriculture, and Federal facilities.
We reviewed the Department's progress in addressing the specific
security, inventory, and access deficiencies identified in a previous
OIG report on USDA research laboratories and examined its
implementation of new policies to improve controls on inventories and
biosecurity. To do so, OIG made unannounced visits to 16 laboratories
previously identified as having deficiencies. We found that while
agency officials had made great progress to implement biosecurity
measures, particularly for BSL-3 laboratories, further improvement is
needed with respect to accountable records, internal reviews, and
cybersecurity.
Our work has shown that subjects of OIG investigations are also of
interest to other members of the Federal Bureau of Investigation (FBI)
Joint Terrorism Task Forces. This has led to several recent cases. OIG
participated in the FBI's JTTF in Columbus, Ohio, and we assisted in
the investigation of an individual for providing material support to
the al Qaeda terrorist network. The individual pled guilty in the
Eastern District of Virginia to one count of conspiracy to provide
material support and resources to al Qaeda and one count of Providing
Material Support and Resources to al Qaeda. He was sentenced to 20
years in prison.
OIG created a nationwide task force in order to coordinate with
Federal, State, and local law enforcement agencies in identifying and
prosecuting violators who steal infant formula from large chain stores.
Stolen infant formula is a nationwide problem due to the resale value
of the merchandise on the black market and the potential for overseas
transfers of the illegal proceeds. OIG is particularly concerned with
the health and wholesomeness of the stolen infant formula because
previous investigation indicates it is often relabeled and resold in
smaller grocery stores--often through the Women, Infants, and Children
(WIC) program. We have found that expired, stolen infant formula is
often relabeled with new expiration dates, and some of the relabeled
formula does not contain the nutrients/ingredients listed on the label.
Currently, we have 14 open investigations involving stolen infant
formula. We are working with JTTFs in order to assist other Federal and
local law enforcement agencies and to insure that this issue remains an
investigative priority.
Evaluation of the Implementation of the Listed Agent or Toxin
Regulations
Select agents or toxins are those biological agents listed by APHIS
as having the potential to pose a severe threat to animal and plant
health or to animal and plant products. APHIS is required by the Public
Health Security and Bioterrorism Preparedness and Response Act to
ensure that anyone possessing, using, or transferring these agents is
registered with the Government.
We are examining whether adequate controls are in place at APHIS
headquarters to ensure that entities known to use or store listed
agents or toxins are registered, that laboratory reported security
measures are assessed, and that movement of select agents between
scientists and laboratories can be documented and tracked. We are also
participating in an Interagency Working Group reviewing the export
licensing process for biological and chemical commodities. The
Interagency Working Group is interested in the responsibilities and
actions of APHIS concerning the possession, use, and transfer of
biological agents and toxins and their relationship to export
licensing.
Homeland Security-Related Audit Work Planned in Fiscal Year 2005
We have several security-related audits that we expect to begin
work on in fiscal year 2005. OIG will conduct an audit on the
Department's implementation of the Bioterrorism Act of 2002. This Act
requires, in part, that warehouses and elevators that are used to store
Government-owned commodities register with the Food and Drug
Administration (FDA) and establish and maintain records that can be
used to identify producers. We will assess whether USDA has properly
verified or required FDA registration and compliance prior to entering
into storage agreements with warehouse and elevator firms. We will also
follow up on our prior audit of Forest Service (FS) security over
explosives/munitions magazines located within the National Forest
System (NFS). We will assess FS' action to implement our prior
recommendations and determine if explosives/munitions magazines are
adequately secured.
Protecting the Safety of USDA Employees
A fundamental duty of OIG is to expeditiously investigate any
incidents of violence or threats of violence against USDA employees.
USDA employees must be protected against harassment or intimidation as
they discharge their duties, whether they are engaged in protecting
public safety as food inspectors, or serving as law enforcement
personnel in our national forests. Last fall, OIG helped secure a
conviction for a crime that took the lives of two dedicated FSIS
employees. In October 2004, after a 6-month jury trial in Alameda
County, California, the owner of a sausage factory was convicted of
homicide with special circumstances (first degree murder) for the
murder of two FSIS Compliance Officers and one California Department of
Food and Agriculture Investigator while they were on official business
at his facility in June 2000. In January, the jury recommended that the
owner be sentenced to death for this crime. An OIG Special Agent played
a primary role in investigating the murders and assisting the
prosecution's case. Sentencing by the judge is imminent.
Last week, OIG submitted our statutorily mandated investigative
report to Congress pertaining to the deaths of two FS employees who
died fighting the Cramer Fire in the Salmon-Challis National Forest
(Idaho). OIG found that certain FS personnel at the fire, primarily the
Incident Commander, failed to comply with established FS firefighting
policies and tactics. Our investigation found that the contract
firefighting teams, who were brought in to assist FS firefighters,
performed poorly. Therefore, we initiated a review of FS' use of
private contract crews to determine the effectiveness of FS' procedures
and oversight pertaining to the contract crews' readiness, training
certifications, and communication proficiencies, among other issues.
Reducing USDA Program Vulnerabilities and Enhancing Program Integrity
OIG's second priority is to help USDA reduce vulnerabilities and
ensure or restore integrity in the various benefit and entitlement
programs of USDA, including a variety of programs that provide payments
directly and indirectly to individuals or entities.
Targeting Risk and Improper Payments Within USDA
The Improper Payments Information Act of 2002 (IPIA) requires the
head of each agency to annually review all programs and activities the
agency administers to identify those that may be susceptible to
significant improper payments. Once these programs are identified, the
agencies must estimate the annual amount of improper payments, and, if
the estimate is over $10 million and greater than 2.5 percent of
program payments, report the estimate to Congress along with the
actions the agency is taking to reduce those improper payments. The
Department's farm programs and food and nutrition programs, which
amounted to $34 billion and $46 billion, respectively, last year, are
subject to this statute's requirements. Three primary agencies (the
Risk Management Agency (RMA), the Farm Service Agency (FSA), and the
Natural Resources Conservation Service (NRCS)) administer USDA's crop
insurance, crop disaster, and conservation programs, respectively,
while the feeding programs are administered by the Food and Nutrition
Service (FNS). We audited implementation of the IPIA in these agencies.
We found that FNS had available information from numerous sources to
establish baseline information the agency could have used to establish
error rates for feeding programs in response to OMB's data request for
improper payment information. However, the agency did not believe the
information was statistically valid and, therefore, could not be used
to report on improper payments.
Our review of IPIA implementation in FSA and NRCS disclosed little
progress being made. The agencies did not take necessary action to
comply with the Act and implement OMB's guidance. The agencies stated
the guidance provided by OMB and the Department's Office of Chief
Financial Office (OCFO) was unclear; and, therefore, they were unsure
of what actions to take. Our audit of OCFO's implementation measures
disclosed that OCFO's direction and guidance to the agencies needs to
be strengthened in order to provide reasonable assurance that program
areas vulnerable to improper payments are fully identified. We will
continue to monitor the Department's implementation of the IPIA.
We have initiated a multifaceted and comprehensive review of USDA's
farm programs to identify improper payments and address fraud and
abuse. This initiative is now focusing on crop insurance, disaster
payments, and payment limitations but will be expanded to other USDA
farm programs. Our audit and investigative staffs, which have extensive
experience with these programs, are now reviewing previously conducted
audits and investigations and are compiling data on program
vulnerabilities and their causes. Efforts will then shift to the
development of innovative solutions and the means to identify abuse.
OIG is working with RMA this year to access and learn how to better use
data mining tools that will help us proactively target crop insurance
fraud by farmers, agents, and adjustors involving suspicious patterns
of claims. Our computer forensics unit will play a major role in the
latter phase, as it will use its recently enhanced capability to
develop processes that will analyze, manipulate, and cross-match
computer data in the various agencies' databases and detect those most
likely to be involved in abuse. We were very successful in our initial
development of computerized targeting of fraud in the Food Stamp
Program and hope to achieve similar success with USDA's farm programs.
We also plan to work with RMA to enhance our ability to use satellite
imagery to strengthen the hard evidence used in crop insurance fraud
cases.
Food and Nutrition Programs
OIG has continued to work with FNS to improve program integrity and
to identify improvements in program administration. In fiscal year
2004, we evaluated internal controls related to National School Lunch
Program (NSLP) meal accountability, procurement, and accounting systems
in six States. We identified control weaknesses in meal accountability
procedures, including lack of proper edit checks, to ensure the
accuracy of the daily meal counts and claims for reimbursement and
procurement procedures. For instance, in the 2000 school year, the
Philadelphia school district claimed reimbursement for 241,852 meals
served in excess of students in attendance, 147,954 meals in the
incorrect reimbursement category, and 109,778 more free and reduced-
price meals than could be supported by approved applications and direct
certifications. This resulted in excess reimbursements of over
$800,000. In Chicago, nearly 27 percent of the 598 schools in the
district submitted undetected inflated meal claims, over-claiming
642,102 breakfasts and lunches in the period of October 2003-May 2004.
Due to the school district's limited oversight, we questioned over $1.2
million in program funds and recommended collection of over $650,000.
In fiscal year 2004, FNS received about $5 million to enhance
program integrity in Child Nutrition Programs by expanding assessment
of certification accuracy in the school meals programs. FNS is using
this funding to conduct a study aimed at providing a reliable, national
estimate of over and under payments in the NSLP and the School
Breakfast Program (SBP). The study will analyze data for school year
2005-2006, and we will monitor the study results to assure it meets its
intended purpose. Depending on the significance of the error rates that
will be identified by the study, FNS should be better able to determine
whether changes are needed in eligibility requirements for NSLP and SBP
to reduce ineligible participation.
OIG also conducted investigations involving over $1 million in
false claims involving inflated meal claims for reimbursement from the
NSLP and the Child and Adult Care Feeding Program. Through court
actions, we have recovered $570,000 in California, Louisiana, and
Wisconsin and have $1 million in claims pending in a New York case
along with three persons sentenced from 6 to 30 months in prison.
Food Stamp Program Investigations
Illegal trafficking in Food Stamp Program (FSP) benefits, whether
issued through electronic benefits transfers (EBT) systems or food
coupons, continues to be a major area of concern. Over the last year,
we spent approximately 20 percent of our investigative time on
investigations of FSP fraud. The use of EBT systems to deliver FSP
benefits, in addition to saving administrative program costs by
eliminating costs of printing, issuing, and reconciling millions of
paper food stamps every month, has also provided a wealth of electronic
data of enormous benefit in detecting and investigating suspicious
patterns of activity and in compiling evidence that is used to
successfully prosecute corrupt retailers.
Using the Computer Forensic Unit's (CFU) capabilities, we can
analyze the EBT database and track recipient and store redemption
patterns to prove fraud and determine the total amount of money
involved. The investigation of an authorized store in Chicago
illustrates how we are able to use the data. The subjects of the
investigation had moved the authorized point of sale device to
different locations in Chicago so they could exchange cash for EBT
benefits away from the authorized store. We were able to analyze the
EBT data to track recipient and store redemption patterns to prove the
fraud, as well as determine the total amount of fraud involved in the
case. For example, recipients redeemed benefits in two stores that were
miles apart and physically impossible to travel to in the time
indicated in the redemption data. Our work resulted in four individuals
being sentenced to serve from 15 to 57 months in prison and ordered to
pay $29.1 million in restitution.
RMA: Reducing IT Security and Operations Vulnerabilities
RMA administers the Federal Crop Insurance Corporation (FCIC) and
oversees all programs authorized under the Federal Crop Insurance Act.
RMA's fiscal year 2004 crop year potential liability exceeded $46
billion. FCIC's 2004 crop year premium subsidy and producer-paid
premiums are $2.5 billion and $1.6 billion, respectively. As of August
30, 2004, insurance indemnities paid on the 2003 crop year were $3.2
billion.
We audited RMA's IT security and operations, which disclosed
serious internal control weaknesses in the overall management and
organizational structure for these activities. RMA's IT environment is
highly vulnerable due, in part, to the overall control of IT operations
by production managers who also control the financial commitments and
outlays. This vulnerability resulted in material noncompliance with OMB
and Presidential Decision Directives. Our electronic vulnerability
scans of RMA's network revealed over 300 high- and medium-risk
vulnerabilities, insufficient system policy settings, and serious and
recurring access control weaknesses, compounded by inadequate firewalls
and intrusion detection devices. Overall, RMA managers did not adhere
to the Department's system development lifecycle methodology for
software application development, installation, and/or maintenance.
We recommended that RMA provide sufficient resources to its new
Chief Information Officer to effectively oversee IT security and
preclude undue influence by production managers. We additionally
recommended that RMA include the noted material control weaknesses in
its Federal Managers' Financial Integrity Act (FMFIA) report; take
immediate action to eliminate the vulnerabilities noted; and establish
appropriate policies, procedures, and controls for the agency's IT
operations. We also recommended that RMA obtain background
investigations for all IT contractor employees before access to
systems, hardware, and facilities is authorized. RMA officials have
indicated that they plan to take aggressive action by prioritizing the
recommendations and acting first on those that will mitigate the FMFIA
material internal control weakness. We will follow up to see that
corrective actions will be taken.
RMA: Investigations into Crop Insurance Payment Fraud
We have a number of investigations ongoing into crop insurance
fraud, as well as disaster payment fraud. Most of these investigations
involve substantial dollar amounts. For example, in two of our cases,
OIG investigated 9 persons who schemed to gain over $20 million in
fraudulent RMA and FSA payments. The investigations have resulted in
forfeiture of $13 million in cash and property to the Government in
order to recoup some of these losses. One of the persons has been
sentenced up to 60 months in prison, and the others pled guilty and are
waiting to be sentenced.
FSA: Investigations into Payment Limitation Fraud
In addition to fraud cases involving crop insurance and disaster
payments, we have a number of open investigations pursuing fraud
involving payment limitations. Our investigations have found variations
of a common scheme, such as: fraudulently including the names of
individuals on farm operating plans who do not meet FSA's requirement
that one be ``actively engaged in farming operations''; establishing
farming partnerships where alleged partners do not actually share in
the farming operation; failing to disclose that partners in one farming
partnership have an interest in another farming operation; and
falsifying documents to hide the fact that the financial accounts are
actually commingled with those of another farming entity.
As an example, OIG investigated a case of fraud committed by one of
Mississippi's largest farmers and his brother. This resulted in both of
them pleading guilty in June 2004 to conspiracy to defraud FSA of $11.2
million in subsidy program payments, submitting false statements to
FSA, wire fraud, mail fraud, money laundering, and witness tampering.
The plea agreement included the criminal forfeiture of approximately
400 acres and one of the farmer's houses that had been built with the
proceeds from this scheme. The farmer's accountant actively
participated in the conspiracy and also pled guilty. From 1999 through
2001, the conspirators created 13 partnerships and 64 different
corporations to fraudulently obtain payments from FSA and RMA. They
recruited and paid individuals for the use of their names and Social
Security numbers to secure enough stockholders for each entity and
misrepresented those names to FSA to obtain the subsidy payments. The
conspirators also attempted to persuade those individuals to testify
falsely before a Federal grand jury and to OIG agents. The farmer was
sentenced to 5 years imprisonment and ordered to repay $11.2 million to
the Government in restitution. The brother was fined $5,000 and
sentenced to 2 years probation. The accountant was sentenced to 7
months imprisonment and fined $20,000.
Natural Resources Conservation Service (NRCS)
We are also evaluating the potential for improper payments in NRCS
conservation programs, as well as determining the impact of any
improper payments on other farm program payments. Under various
conservation programs administered by NRCS, the Government pays
landowners to take marginal agricultural land out of production and put
it into environmentally friendly conservation uses. At the same time,
FSA agricultural programs provide payments to eligible producers
predicated on the number of crop-specific ``base acres'' on the farm
used for agricultural activities, as determined by FSA. In general,
producers are prohibited from receiving both an NRCS conservation
easement payment and FSA agricultural program payments on the same base
acres. Landowners are also paid for conservation easements based on
agency appraisals. If appraised values are not properly established,
significant overpayments can be made for conservation easements. We are
finalizing our work and expect to release a report by late spring,
2005.
Forest Service
Each year, wildfires destroy 2 to 7 million acres of resources in
the United States, and the Forest Service (FS) faces significant
challenges in utilizing its personnel and resources to suppress and
control wildland fires and to protect the health of our public forests.
OIG will conduct extensive audit work in fiscal year 2005 related to FS
firefighting programs, activities, and management actions. We recently
completed a review of FS' firefighting safety program. Our review found
that while FS had excellent written firefighting safety policies and
procedures, improvements were needed in the agency's overall fire
safety program. OIG determined that FS had not fully implemented
recommendations from past internal and external safety reviews and that
the agency did not have documentation to support the qualifications of
all its firefighters. OIG will monitor FS management actions to follow
up on this audit and related issues that arose in our aforementioned
Cramer Fire investigation.
The accumulation of hazardous fuels has been one of the major
contributors to the increase in large destructive wildfires. OIG will
examine FS' Hazardous Fuels Reduction efforts to assess the agency's
controls over the funds, activities, and effectiveness of reducing the
accumulation of hazardous fuels. Our review of FS' National Fire Plan
Large Fire Suppression Costs will assess FS' efforts to control,
account for, and report its large fire suppression costs. FS' costs to
fight fires now exceed an average of $1 billion per year. As part of
our audit, we will assess the agency's implementation of
recommendations from prior reviews, including FS' action plan, to
determine whether FS has taken the necessary actions to reduce its fire
suppression costs.
OIG will also assess FS' use of Emergency Equipment Rental
Agreements (EERAs) to rent equipment on a short-term basis to assist in
fighting wildland fires and the agency's use of collaborative ventures
and partnerships with non-Federal entities. FS' use of such
partnerships has increased significantly, and our review will focus on
whether they are well managed, meeting program objectives, and avoiding
potential conflicts of interest. OIG will also review FS' management
procedures pertaining to the control and potential elimination of
invasive species, which cost more than $138 billion per year in damage,
losses, and control efforts. Nonnative insects and diseases have
infested over 3.5 million acres in the national forests, and
approximately half the species on the endangered species list are at
risk because of competition and loss of habitat traceable to invasive
species.
USDA'S MANAGEMENT OF PUBLIC RESOURCES
OIG conducts audits and investigations that focus on improved
financial management and accountability, information technology
security and management, protection of public assets, employee
corruption, Forest Service resources, and rural development programs,
among others.
Financial Management and Accountability
Both the Congress and the President's Management Agenda have placed
emphasis on improving financial management in all Federal departments.
Improvements made by the Department to its financial systems have
allowed USDA to maintain an unqualified opinion on its consolidated
financial statements for the third consecutive year. While this is a
major achievement, the Department still needs to improve its financial
management processes to correct internal control weaknesses. Strong
financial management is required to ensure the availability of accurate
and timely financial data needed to properly manage USDA programs.
Information Technology (IT), Security, and Management
In 2004, we assessed the adequacy of IT security in the Rural
Development (RD) mission area; Risk Management Agency; APHIS; the
Economic Research Service; the Grain Inspection, Packers and Stockyards
Administration (GIPSA); the Office of Budget and Program Analysis; and
the Office of the Chief Economist. Advances in technology have
increased the Department's vulnerability to unlawful destruction and
penetration by hackers and other individuals. USDA agencies manage
multibillion dollar programs that are integral to homeland security,
food safety, and critical infrastructure that must be protected. We
found weaknesses in IT security programs due to inadequate
implementation at each agency we reviewed. IT security improvements are
still needed at USDA's second largest data center, the Office of the
Chief Information Officer/National Information Technology Center's
(OCIO/NITC). We recommended improvements in access controls, security
plans, risk assessments, disaster recovery plans, and identification
and correction of potential system vulnerabilities. OCIO stated that
corrective action either has been taken or is underway to address each
issue.
FISCAL YEAR 2006 BUDGET REQUEST
We are very proud of the accomplishments of OIG and pleased to
report that, in fiscal year 2004, we continued to more than pay our own
way. In the investigations arena, OIG issued 425 investigative reports
that resulted in 370 indictments and 350 convictions. These actions
resulted in $292.9 million in fines, restitutions, other recoveries,
and penalties during the year. In the audit arena, we issued 97 audit
reports, and management made decisions based on 77 of the reports. Our
audits resulted in questioned and unsupported costs of $15.2 million.
Of this, management agreed to recover $9.2 million. In addition,
management agreed to put another $748.2 million to better use. Equally
as important, implementation of our recommendations by USDA managers
will result in more efficient and effective operations of USDA
programs.
During the past year, we have continued to review and evaluate OIG
activities and made changes as needed to provide the most effective
support to the Department's programs and operations. One of our most
critical efforts continues to be in our IT arena. With the essential
funding provided by this Committee, we were able to continue rebuilding
our crucial IT infrastructure. Specifically, the agency was able to
continue improvements and updates to the network operating system and
associated software. In addition, new servers were acquired for
headquarters and each regional office. These servers include remote
management capabilities, which should allow quicker resolution and more
efficient use of resources. We have also successfully mirrored our
program databases at two locations. This balances workload during
normal operations and provides a real-time backup if a major outage or
emergency would occur at one of the sites.
We are continuing to see results through improvement in our audit
processes and our investigative forensic efforts. The new IT equipment
and specialized software has continued to help OIG complete its audits
faster and target its analyses to the highest USDA risk areas. The
reduced staff-time allows OIG to review additional high-risk or
vulnerable programs and operations. As I mentioned earlier, we also
plan to continue to increase our use of our IT capabilities to further
our effort in the improper payments area.
For example, we use automated data mining and analysis software to
extract, sort, analyze, and summarize large volumes of financial and
program data to support our opinions on USDA agency and consolidated
financial audits. In contrast, in a manual environment, analysis of
such large volumes of data would not be feasible for OIG due to
resource constraints and mandatory audit deadlines.
On the Investigations side, the IT funding has allowed our Computer
Forensics Unit (CFU) to process cases utilizing the most up-to-date
forensic hardware and software tools. The CFU has also designed and
developed its own specialized software, for example, to analyze
millions of food stamp EBT transactions in order to identify fraud in
this program. An example of the CFU's capabilities was demonstrated
during the investigation of a recent $3 million rural development
business and industrial loan fraud investigation. During the execution
of a search warrant, a laptop was seized, and the subjects stated that
the laptop had been ``reformatted'' and that nothing would be found on
the laptop. Through CFU analysis, a copy of Quick Books was found on
the restored computer; once recovered, we were able to prove how the
fraud was committed. Hardware and software used in the CFU allow
servers and workstations to be restored in a forensics laboratory
setting, meeting required professional and judicial standards in a
manner that maintains the integrity of the data so that they can be
used in a court of law.
These forensic tools must be regularly upgraded and replaced in
order to keep pace with the ever-changing IT hardware and software
standards and investigative needs.
Again, I want to especially thank the Committee for its support in
this area.
The President's fiscal year 2006 request of $81 million for OIG
provides for an increase of $1.6 million for mandatory pay costs and
$1.7 million for program changes. The program change increases are $1.1
million to fund the Nationwide Emergency Response Program, $300,000 for
continued improvements to the CFU, and $300,000 for secure IT
communications at the ``secret'' level. The increase for the Emergency
Response Program will allow OIG to staff, train, and equip specially
trained, quick-response teams to investigate biohazard threats against
American agriculture and, as mandated by Public Law 107-203, the duty-
related deaths of FS firefighters. The increase for the CFU will be
primarily for a storage network to efficiently store voluminous amounts
of electronic evidence that can potentially translate to higher case
convictions. The increase for secure communications will allow OIG to
target IT investments to enable our special agents and auditors to
access Homeland Security information at the ``secret'' level.
I believe adequate funding for our OIG activities makes good sense.
OIG audits and investigations save money for the taxpayers, help ensure
the safety and wholesomeness of the Nation's food supply, promote USDA
Homeland Security efforts, and ensure the integrity of USDA programs.
As such, I support the President's budget request for OIG.
This concludes my statement, Mr. Chairman. I appreciate the
opportunity to appear before you today and would be pleased to respond
to any questions you and the Committee may have at this time.
______
ADDITIONAL SUBMITTED QUESTIONS
Questions Submitted by Senator Robert F. Bennett
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
MEDICAL DEVICES
Question. I appreciate the Administration's request for nearly $6
million for the Devices and Radiological Health program for fiscal year
2006, which comes on top of the nearly $26 million the committee
enacted in fiscal year 2005. These significant investments have been
difficult in the current environment but are critical to ensure timely
patient access to increasingly complex medical technologies, and are
consistent with the appropriations targets contained in the Medical
Device User Fee and Modernization Act (MDUFMA).
Can you tell the committee the steps you are taking with these
funds to improve the device review function in terms of hiring FTE's,
making improvements in your IT infrastructure, and meeting performance
goals?
Answer. Medical device user fees, combined with appropriations,
have made it possible for FDA to make substantial improvements to the
process for the review of device applications.
FDA has used the greatest portion of the resources made available
by MDUFMA to hire additional staff to enhance the review process and to
enable FDA to meet the MDUFMA performance goals. The following table
shows the increase in staffing made possible by MDUFMA resources.
[The information follows:]
ADDITIONAL STAFF-YEARS ADDED TO DEVICE REVIEW
[Compared with fiscal year 2002]
----------------------------------------------------------------------------------------------------------------
Fiscal year
FDA Component Fiscal year Fiscal year 2005 (Current
2003 2004 Estimate)
----------------------------------------------------------------------------------------------------------------
CDRH............................................................ 12 63 152
CBER............................................................ 14 25 36
ORA............................................................. 5 6 10
-----------------------------------------------
Total..................................................... 31 91 198
----------------------------------------------------------------------------------------------------------------
The increased staffing shown for fiscal year 2005 is the current
planning estimate, assuming that Congress acts quickly to ensure that
MDUFMA continues in effect with no changes other than modification of
the appropriations trigger requirement to forgive the shortfall in
appropriations for fiscal year 2003 and 2004.
MDUFMA funds have also enabled FDA to strengthen the device review
process by initiating a Medical Device Fellowship Program to make more
use of expertise in academia and the private sector, and by expanding
training and professional development for staff dedicated to device
review.
FDA has also undertaken several significant, ongoing projects to
modernize its information technology infrastructure. These efforts are
critical to meeting the performance goals under MDUFMA and they require
continued funding to be completed or to remain viable. These projects
include:
--Establishing premarket database and tracking systems for ODE/OIVD,
including specialized reports and tracking for each review
division. These systems will help FDA better manage review
times and processes.
--Developing of assignment tracking systems for the Office of
Compliance, including integration with ODE/OIVD systems.
--Developing of a streamlined pre-approval inspection program, with
clear timeframes and monitoring systems.
--Establishing Turbo 510(k) to provide for rapid review and clearance
of in vitro diagnostic products.
--Establishing the eConsult Pilot to make reviews more efficient.
--Scheduling, systematic upgrading of reviewer PCs (on a 3-year
cycle) to ensure data security, compatibility with industry
submissions, and more efficient operating systems and program.
--Upgrading hardware and software for the CDRH document imaging,
storage, and retrieval system.
--Issuing new guidances to implement MDUFMA and establishing a
guidance tracking system to prioritize guidance development and
revision.
Modernized infrastructure will help FDA meet the demands placed on
it while ensuring continued high quality reviews.
FDA has made excellent, substained progress towards meeting
MDUFMA's performance goals. We are confident that our performance for
fiscal year 2005 will reflect the time and effort we are investing in
improving our device review processes and in making the other
improvements called for by MDUFMA. The goals for fiscal year 2006 and
fiscal year 2007 are even more challenging, and will require a
sustained commitment by FDA if they are to be met. Our actions and
performance to date provide a sound foundation on which we will
continue to build.
Our performance during fiscal year 2003 and fiscal year 2004 and
the first quarter of fiscal year 2005 shows we are on track to meet the
goals for fiscal year 2005 and later years; we have attached FDA's
performance reports for fiscal year 2003 and fiscal year 2004. Although
it is too early to provide precise forecasts for fiscal year 2005, we
are pleased with our progress to date and we would be glad to provide
you an update later in the year.
During fiscal year 2005, FDA is focusing on building our capacity
to conduct the high-quality reviews expected by Congress, the
Administration, and our stakeholders, including:
--Providing new and updated guidance to industry,
--Making our review processes more efficient, more predictable, and
more interactive,
--Developing innovative review processes such as modular and
expedited reviews,
--Recruiting scientific, engineering, and medical experts, and making
greater use of experts outside FDA, to improve the scope and
timeliness of our review processes, and
--Modernizing our data systems and IT infrastructure to ensure the
sound management and accountability of our review programs.
This Committee enacted a nearly $26 million increase for the device
program in fiscal year 2005 and the President has proposed a nearly $6
million increase for fiscal year 2006, putting appropriations on the
trajectory contained in MDUFMA. However, these appropriations increases
will not keep the program viable beyond this fiscal year without a
change to the MDUFMA law that would forgive the appropriated shortfall
amount for those years when the Administration did not request enough
funding to meet the appropriations target.
Question. Does FDA still intend to request that the Authorizing
Committees make this change to the MDUFMA law? If so, when will the
change need to be enacted in order to keep the program from
terminating? What is FDA required to do with the MDUFMA fees and staff
if this legislative fix is not enacted?
Answer. On October 29, 2003, OMB Administrator Joshua Bolten, sent
a letter to the Speaker of the House, agreeing to a ``clean fix'' of
the appropriations trigger problem. The Administration's proposal would
forgive the fiscal year 2003 and 2004 appropriations shortfalls,
thereby ensuring that MDUFMA would not sunset at the end of fiscal year
2005, and pledging Administration support for full appropriations
funding in the remaining years of MDUFMA. At that time, industry
supported a clean trigger fix, and the Administration did request and
Congress appropriated full funding for the program for fiscal year
2005. FDA continues to work with stakeholders to ensure the success of
MDUFMA.
If Congress does not enact corrective legislation, FDA will lose
its authority to collect medical device user fees beginning October 1,
2005 and the performance goals negotiated for the medical device
program will end. FDA would have to reduce staffing levels, abandon
critical infrastructure modernization, reduce interaction with
applicants, abandon planned guidance development, terminate the Medical
Device Fellowship Program and largely eliminate our use of contract
expertise in academia and the private sector, and take a variety of
other steps to limit expenditures to the amounts made available in our
fiscal year 2006 and fiscal year 2007 appropriations. FDA would expect
review times to deteriorate, resulting in significant delays in the
introduction of new medical devices.
Question. What effect, if any, would a continuing resolution have
on MDUFMA?
Answer. FDA's most critical need for this program is for Congress
to enact corrective legislation before the end of the fiscal year to
modify the ``appropriations trigger'' requirement to forgive the
shortfall in appropriations for fiscal year 2003 and 2004. If Congress
does not enact corrective legislation, FDA will lose its authority to
collect medical device user fees beginning October 1, 2005 and the
performance goals negotiated for the medical device program will end.
The problems associated with a continuing resolution are small compared
with the prospect of an early, abrupt end to the MDUDMA user fee
program.
If the MDUFMA fee program dies, FDA would have to reduce staffing
levels, abandon critical infrastructure modernization, reduce
interaction with applicants, abandon planned guidance development,
terminate the Medical Device Fellowship Program and largely eliminate
our use of contract expertise in academia and the private sector, and
take a variety of other steps to limit expenditures to the amounts made
available in our fiscal year 2006 and fiscal year 2007 appropriations.
FDA would expect review times to deteriorate, resulting in significant
delays in the introduction of new medical devices.
Any continuing resolution would create its own challenges. Assuming
the MDUFMA appropriations trigger issue is resolved, FDA's primary
concern is the length of any continuing resolution. A year-long CR that
is at levels below the MDUFMA-specified appropriation would cause the
program to terminate. FDA will be unable to collect fees during a
continuing resolution. This is not a small problem, it is an effect of
the continuing resolution.
The Agency appears to be making progress on meeting the MDUFMA
performance goals. However, I have heard from some device company
constituents that they are concerned about the increases in the
application fees they are paying. For example, application fees for
breakthrough products (Premarket Applications) have grown by over 50
percent in the first 3 years. Unless such increases are limited in the
remaining 2 years, PMA fees will grow from the MDUFMA-envisioned
$250,000 in the final year of the program to over $350,000. Some have
suggested limiting fee increases in the last 2 years of MDUFMA to the
rate of inflation--similar to the rate of growth for appropriations
expected for the next 2 years.
Question. Would you support limiting fee increases in the remaining
2 years of the program to preserve the larger goals of MDUFMA? If not,
can you tell the committee why the agency could not accept such a
limitation and what impact such a proposal would have specifically in
terms of FDA's ability to meet performance goals, recruit and retain
staff necessary to meet the performance goals and fulfill non-goal
related activities?
Answer. FDA is committed to working with our stakeholders and
Congress to save the MDUFMA user fee program and its performance goals.
FDA staff are now working with Congressional staff and stakeholders to
save the MDUFMA user fee program and the many benefits it offers. FDA
sincerely hopes this process will lead to quick action on a solution
that is acceptable to FDA and the Administration, our stakeholders, and
Congress.
It is my understanding that part of the growing frustration on the
part of the medical technology companies with regard to MDUFMA is the
feeling that the Center for Devices and Radiological Health still does
not have baseline information on what it costs to review each type of
application, and has dedicated more user fee revenue to reserve funds
than hiring actual reviewers.
Question. Can you tell the committee what it costs to review the
different application types? If not, will this information be available
in time for reauthorization? How many new FTE reviewers has CDRH hired
with this massive infusion of appropriations and fees?
Answer. FDA has contracted for a study to develop information on
the standard costs of various types of medical device applications, but
the contractor has not yet provided his report of findings to FDA. The
study results, showing costs per completed application in fiscal year
2003 and fiscal year 2004, will be available in time for
reauthorization.
[This information follows:]
ADDITIONAL STAFF-YEARS ADDED TO DEVICE REVIEW
[Compared with fiscal year 2002]
----------------------------------------------------------------------------------------------------------------
Fiscal year
FDA Component Fiscal year Fiscal year 2005 (Current
2003 2004 Estimate)
----------------------------------------------------------------------------------------------------------------
CDRH............................................................ 12 63 152
CBER............................................................ 14 25 36
ORA............................................................. 5 6 10
-----------------------------------------------
Total..................................................... 31 91 198
----------------------------------------------------------------------------------------------------------------
FOOD SAFETY
Question. According to statements made by former HHS Secretary
Thompson, the food supply is extremely vulnerable to attack. However, I
note in the budget request that FDA plans to do fewer food import
physical exams in fiscal year 2005 and fiscal year 2006 than it did in
fiscal year 2004. This is particularly troubling because the Committee
provided an increase of $35.5 million for food safety activities in
fiscal year 2005 and FDA has requested an increase of slightly more
than $30 million in fiscal year 2006.
Has FDA changed its food safety strategy so that import physical
exams are no longer a priority? If so, what other activities are you
undertaking to protect the food supply?
Answer. Food import physical exams have always been just one part
of FDA's import strategy. A field examination is a visual and physical
examination of a product to determine whether it complies with FDA
requirements for admissibility. During food import physical exams, FDA
personnel check attributes such as damage during storage or transit,
inadequate refrigeration, rodent or insect activity, presence of lead
in dinnerware, appearance of decomposition, and compliance with
labeling requirements. However, a food import physical exam cannot be
used to test for microbiological or chemical contamination and must be
supplemented with other activities.
FDA cannot rely solely on the physical examination of a product
through a food import physical exam to reduce the potential risks posed
by imported foods. Currently, a significant effort is underway to
broaden and develop appropriate knowledge based risks. ORA continues to
think that the best approach to improving the safety and security of
food import lines is to devote resources to expanding and refining
targeting and by following through on potentially high risk import
entries rather than by simply increasing the percentage of food import
lines that receive a physical field exam.
To manage the ever-increasing volume of imported food shipments,
FDA is using risk management criteria to achieve the greatest food
protection possible. While we cannot physically inspect every shipment,
it is important to note that every shipment containing FDA-regulated
products entered through the Bureau of Customs and Border Protection's
(CBP) automated system is electronically reviewed by FDA's system.
FDA's Operational and Administrative System for Import Support (OASIS)
determines if the shipment meets identified criteria for physical
examination or sampling and analysis or warrants other review by FDA
personnel. This electronic screening allows FDA to concentrate its
enforcement resources on high-risk shipments while allowing low-risk
shipments to proceed into commerce.
The Public Health Security and Bioterrorism Preparedness and
Response Act of 2002 provided a significant new tool that enhances
FDA's ability to electronically review all FDA-regulated imported food
shipments. That law requires that FDA receive prior notice submissions
before food is imported or offered for import into the United States.
Advance notice of imported food shipments, called ``Prior Notice,''
provides FDA with detailed information regarding the product, shipment
and supply chain before imported food arrives in the United States.
This not only allows the electronic system to review and screen the
shipments for potential serious threats to health, intentional, alleged
or otherwise, before the food enters the United States but also allows
FDA staff to review prior notice submissions for those products flagged
by the systems as presenting the most significant risk. Screening and
review of the augmented data allows FDA, with the support of the
Customs and Border Protection also known as the CBP, to target import
inspections more effectively and help protect the Nation's food supply
against terrorist acts and other public health emergencies. FDA worked
very closely with CBP to develop the screening system. FDA receives
approximately 27,000 prior notice submissions about incoming food
shipments every day. FDA believes this new system, which complements
food import physical exams, provides for risk based targeting and
follow through on potentially high-risk import entries.
Question. What is FDA doing with the funding provided in fiscal
year 2005 and what does the Agency plan to do with the fiscal year 2006
request amount?
Answer. We appreciate the committee's support for the
Administration's food defense initiative. The fiscal year 2006 budget
continues to fund the programs initiated with fiscal year 2005
appropriations. Below is a short summary of what the agency is doing
with the $35.2 million provided by the congress last year, and what we
plan to do with the $30 million increase requested for fiscal year
2006.
[The information follows:]
FDA FOOD DEFENSE INCREASES FISCAL YEAR 2005 AND FISCAL YEAR 2006
Fiscal year 2005 Appropriations: + $35,216,000 and + 99 FTE
Food Emergency Response Network (FERN) + $14,880,000
FDA, along with USDA's FSIS, is building a national laboratory
network that will enable us to test thousands of food samples within a
matter of days in the event of a food terrorism crisis or other
emergency event. The fiscal year 2005 appropriations increase will add
6 FDA-funded State laboratories to the 10 FDA Federal laboratories
already a member of FERN. It will also continue efforts to expand the
electronic Laboratory Exchange Network (eLEXNET). The Request for
Applications (RFA) for cooperative agreements to fund 6 State
laboratories was published in the Federal Register in May 2005.
Research + $9,920,000
The enacted increase will help ensure that we have the capability
to anticipate, prevent, detect, inactivate and recover from a broad
range of agents that could pose serious threats to the food supply. The
increase will also enable us to understand the behavior of threat
agents in foods and the lethal/toxic dose needed to cause illness or
death. FDA's intramural and extramural food defense research projects
focus, in particular, on developing and validating field-deployable
methods, as mandated by section 302 of the Public Health Response and
Bioterrorism Preparedness Act of 2002.
Inspections + $6,944,000
The enacted increase helps ensure that domestic and imported foods
are safe for consumption. FDA is planning to conduct 60,000 import
field exams and 38,000 Prior-Notice Security Reviews using targeted
information gleaned from prior-notice submissions and intelligence made
available to the Prior-Notice Center.
Bio-Surveillance + $1,984,000
FDA will contribute to the Administration's Bio-Surveillance
Initiative by developing nationally recognized standards for data
messaging and communication in the health area and by researching the
appropriate connectivity method with the National Biosurveillance
Integration System at the Department of Homeland Security.
Crisis/Incident Management + $1,488,000
The enacted increase will support the Emergency Operations Network
Incident Management System Project. This project will provide a
comprehensive system for managing emergencies and related incidents
handled throughout the FDA, including its centers and field offices.
The development of such a system is in accordance with Homeland
Security Presidential Directive (HSPD-5), ``Management of Domestic
Incidents'', and the establishment of a National Incident Management
System.
Requested Fiscal Year 2006 Budget Authority Increase + $30,074,000 and
+ 17 FTE
Food Emergency Response Network + $20,000,000
The requested increase will add 19 FDA-funded State laboratories to
the 6 funded in fiscal year 2005 and to the 10 FDA Federal laboratories
already members of FERN.
Research + $5,574,000
The requested increase will continue to ensure that we have the
capability or ``science tools'' to anticipate, prevent, detect,
characterize, confirm, inactivate, and recover from a broad range of
agents that could pose serious threats to the food supply in accordance
with section 302 of the Bioterrorism Act.
Bio-Surveillance + $3,000,000
FDA will continue to contribute to the Administration's Bio-
Surveillance Initiative by integrating existing surveillance systems
with the Department of Homeland Security.
Crisis/Incident Management + $1,500,000
The enacted increase will continue to support the Emergency
Operations Network Incident Management System Project.
Import Examinations and Inspections
(No increase is requested, but FDA will focus base resources on
more effective Prior-Notice Security Reviews)
The enacted increase helps ensure that domestic and imported foods
are safe for consumption. Funds allow for 60,000 import field exams and
38,000 Prior-Notice Security Reviews (new Goal) using intelligence made
available to the Prior-Notice Center.
In the Food and Drug Administration's fiscal year 2006 request, the
agency has requested an increase of $20 million for the Food Emergency
Response Network. When FERN is completed, this collaborative effort
with USDA, will include a mix of chemical, radiological, and
microbiological labs that total 100 across the United States. The
Committee has already provided significant funding increases for FERN
and completing this project promises to be a sizable investment that is
not currently known by the Committee.
Question. What does this investment buy and what is the anticipated
outcome of increasing lab capacity through FERN? Also, please provide,
for the record, a table that displays the complete investment for the
FERN project to date and in future fiscal years. In addition, include
the number of labs that have been and will be added in each year.
Answer. We would be happy to provide this information on the FERN
project.
[The information follows:]
The first two tables below describe our planned expenditures for
the total food defense increases in fiscal year 2005 and fiscal year
2006. The third table displays FERN lab output data from fiscal year
2005 to the outyears. The number of USDA and FDA funded FERN
laboratories needed to respond to a terrorist event involving food was
based on discussions with the White House Interagency Food Working
Group. These discussions included the development of a plausible
scenario in which 100,000 units of a specific food was contaminated
with a threat agent. Based on this scenario, we estimated that 100
laboratories would be required to provide the needed surge capacity to
respond to the attack Please note that FDA will fund 50 chemical/
radiological labs and FSIS plans to fund 50 microbiological
laboratories, for a total of 100 FERN laboratories. For specific
funding information for FSIS, please see the USDA/FSIS Budget
Submission transmitted to this Subcommittee.
FERN PERFORMANCE--FISCAL YEAR 2006
----------------------------------------------------------------------------------------------------------------
Request What the funds provide Related program goals
----------------------------------------------------------------------------------------------------------------
$35,216,000 Budget Authority........... 6 new State Labs added to Food Increase national laboratory
Emergency Response Network (FERN). capacity to test food samples in
Laboratory equipment, supplies, the event of a terrorist attack.
training and security to enhance Expand Federal/State/local
State capability to assist in involvement in FDA's eLEXNET
FDA's Food Defense activities. system by having 95 laboratories
A secure food laboratory IT network participate in the system by the
(eLEXNET) for the real time end of fiscal year 2005.
sharing of information on a Provide more targeted, risk-based
national basis. inspectional coverage of imported
60,000 import field exams, 38,000 foods to reduce the risk of
Prior-Notice Security Reviews. contaminated products entering
Increased research on prevention domestic commerce.
technologies, agent Develop effective protection
characteristics, new methods, and strategies to ``shield'' the food
dose response relationships. supply from terrorist threats.
Improved coordination and Improve early attack warning and
integration of existing food bio-surveillance capabilities at
surveillance capabilities with the the national level to prepare
Department of Homeland Security's against a potential terrorist
integration and analysis function, attack.
as part of the government-wide Bio-
Surveillance Initiative.
Improved Crisis Management
capabilities.
----------------------------------------------------------------------------------------------------------------
FERN PERFORMANCE--FISCAL YEAR 2006
----------------------------------------------------------------------------------------------------------------
Request What the increase buys Related program goals
----------------------------------------------------------------------------------------------------------------
Increase $30,074,000 Budget Authority.. 19 new State Labs added to Food Increase national laboratory
Emergency Response Network (FERN). capacity to test food samples in
Laboratory equipment, supplies, the event of a terrorist attack.
training and security to enhance Develop effective protection
State capability to assist in strategies to ``shield'' the food
FDA's Food Defense activities. supply from terrorist threats.
Increased research on prevention Improve early attack warning and
technologies, agent bio-surveillance capabilities at
characteristics, new methods, and the national level to prepare
dose response relationships. against a potential terrorist
Improved coordination and attack.
integration of existing food
surveillance capabilities with the
Department of Homeland Security's
integration and analysis function,
as part of the government-wide Bio-
Surveillance Initiative.
Improved Crisis Management
capabilities.
Base Resources......................... 60,000 import field exams and Provide more effective, risk-based
38,000 Prior-Notice Security inspectional coverage of imported
Reviews. foods to reduce the risk of
contaminated products entering
domestic commerce.
----------------------------------------------------------------------------------------------------------------
FDA TOTAL LABORATORY CAPABILITY DISTRIBUTION
[Dollars in millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year Project
Fiscal year Fiscal year 2006 Fiscal year outyear Two Year Total State
2005 output 2005 enacted cumulative 2006 request cumulative outyear labs
\1\ output output estimate \2\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Microbiological Screening & Confirmatory .............. .............. .............. .............. .............. .............. ..............
\3\....................................
Chemical................................ 6 $9.9 20 $22.4 36 $46.6 36
Radiological............................ 5 5.9 14 16.3 14
Food Lab Response and Methods Validation/ .............. 5.0 .............. 6.6 .............. 13.9 ..............
Proficiency Testing/Training...........
---------------------------------------------------------------------------------------------------------------
TOTAL............................. 6 14.9 25 34.9 50 76.8 50
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Fiscal year 2005 Request includes enacted rescissions.
\2\ Outyear estimates reflect projected costs to complete FDA's 50 FERN labs, based on a 2 year estimate. Amounts requested in future budgets are
contingent upon availability of funds. Once the 50 FERN labs are complete, FDA estimates that the FERN cost will be limited to annual recurring needs.
\3\ USDA funded.
Question. How did you determine that 100 would be the appropriate
number of FERN labs?
Answer. The Administration based the number of USDA and FDA funded
FERN Laboratories needed to respond to a terrorist event involving food
on discussions with the Interagency Food Working Group or the IFWG.
These discussions included the development of a plausible scenario in
which 100,000 units of a specific food was contaminated with a threat
agent. Based on this scenario, we estimated that 100 laboratories would
be required to provide the needed surge capacity to respond to the
attack.
However, it should be noted that this number of 100 reflects
laboratory capabilities for chemical, microbiological and radiological
analyses rather than actual laboratory locations, because some State
laboratories will have the capability to analyze samples for multiple
agents at one location. Although the FERN strives to include
laboratories with the ability to analyze foods for several types of
agents, it is also realized that some laboratory locations may only
have capabilities for one type of threat agent, but not the others.
Hence, that is why the number of physical locations included within the
FERN network could range from 50 with 50 laboratory locations
performing multiple analyses to 100 laboratory locations performing one
type of analysis each. Laboratories will need to be capable of being
operational around the clock, 7 days a week, have trained personnel,
use validated methods, and have satisfactorily completed proficiency
test samples.
Question. Once labs are added to the network, I assume maintenance
of equipment and lab supplies in the facilities will begin. What is the
annual cost of maintaining FERN labs? Will the cost be born by the FDA
or State partners?
Answer. Once FDA establishes a FERN lab, we also fund the
maintenance costs, which we estimate at $350,000 per year for each
laboratory. FDA continues to provide support to the States for the
Annual Surveillance Sampling Program and to maintain capability for
threat agents.
DRUG SAFETY
Question. In recent months, FDA has received a significant amount
of news coverage related to the withdrawal of some widely prescribed
pain relievers over safety concerns. I note that the FDA has included
an increase of $5.0 million for drug safety in the fiscal year 2006
budget. What does FDA plan to do to reduce the likelihood that events
like this will happen in the future?
Answer. On November 5, 2004, Acting FDA Commissioner Lester
Crawford announced a 5-step plan for enhancing our efforts in drug
safety and on February 15, 2005, HHS Secretary Mike Leavitt and Acting
FDA Commissioner Lester Crawford unveiled a new vision for FDA that
will promote a culture of openness and enhanced oversight within the
Agency. We would be happy to provide references to these documents and
an outline of the information they contain.
[The information follows:]
FDA Acts to Strengthen the Safety Program for Marketed Drugs (11/
05/2004) http://www.fda.gov/bbs/topics/news/2004/NEW01131.html).
The elements of this plan are:
--Sponsor an Institute of Medicine (IOM) Study of the Drug Safety
System: An IOM committee, under an FDA contract, will study the
effectiveness of the United States drug safety system with
emphasis on the post-market phase, and assess what additional
steps could be taken to learn more about the side effects of
drugs as they are actually used. The committee will examine
FDA's role within the health care delivery system and recommend
measures to enhance the confidence of Americans in the safety
and effectiveness of their drugs.
--Implement a Program for Adjudicating Differences of Professional
Opinion: CDER will formalize a program to provide an improved
process to ensure that the opinions of scientific reviewers are
incorporated into its decision-making process. In most cases,
free and open discussion of scientific issues among review
teams, and with supervisors, managers and external advisors,
leads to an agreed course of action. Sometimes, however, a
consensus decision cannot be reached, and an employee may feel
that his or her opinion was not adequately considered. Such
disagreements can have a potentially significant public health
impact, so CDER's program provides for a review of the involved
differing professional opinions by FDA and outside experts. An
ad hoc panel, whose members were not directly involved in
disputed decisions, will have 30 days to review all relevant
materials and recommend to the Center Director an appropriate
course of action.
--Appoint Director, Office of Drug Safety: CDER will conduct a
national search to fill the currently vacant position of
Director of the Office of Drug Safety, which is responsible for
overseeing the post-marketing safety program for all drugs. The
Center is seeking a candidate who is a nationally recognized
drug safety expert with knowledge of the basic science of drug
development and surveillance, and has a strong commitment to
the protection of public health.
--Conduct Drug Safety/Risk Management Consultations: In the coming
year, CDER will conduct workshops and Advisory Committee
meetings to discuss complex drug safety and risk management
issues. These may include emerging concerns for products that
are investigational or already marketed. Examples of input that
might be sought include whether a particular safety concern
alters the risk to benefit balance of a drug; whether FDA
should request a sponsor to conduct a particular type of study
to further address an issue; what types of studies would best
answer the question; whether a finding is unique to one product
or seems to be a drug class effect; whether a labeling change
is warranted and, if so, what type, and how to otherwise
facilitate careful and informed use of a drug. These
consultations will include experts from FDA, other Federal
agencies, academia, the pharmaceutical industry and the
healthcare community.
Publish Risk Management Guidance: By the end of this year, FDA
intends to publish final versions of three guidances that have been
developed by our agency to help pharmaceutical firms manage risks
involving drugs and biological products. These documents are
``Premarketing Guidance,'' covering risk assessment of pharmaceuticals
prior to their marketing; ``RiskMAP Guidance,'' which deals with the
development and use of risk-minimization action plans; and
``Pharmacovigilance Guidance,'' which discusses post-marketing risk
assessment, good pharmacovigilance practices and pharmacoepidemiologic
assessment.
(Note: these were published on 3/24/05 and can be found at the
following websites:
Premarketing Risk Assessment: http://www.fda.gov/cder/guidance/
6357fnl.htm
Development and Use of Risk Minimization Action Plans: http://
www.fda.gov/cder/guidance/6358fnl.htm
Good Pharmacovigilance Practices and Pharmacoepidemiologic
Assessment: http://www.fda.gov/cder/guidance/6359OCC.htm
On February 15, 2005, HHS Secretary Mike Leavitt and Acting FDA
Commissioner Lester Crawford unveiled a new vision for FDA that will
promote a culture of openness and enhanced oversight within the Agency.
Reforms Will Improve Oversight and Openness at FDA 02/15/2005:
http://www.hhs.gov/news/press/2005pres/20050215.html
In keeping with this vision, the FDA will create a new independent
Drug Safety Oversight Board to oversee the management of drug safety
issues. In addition, the FDA is proposing a Drug Watch web page through
which the Drug Safety Oversight Board would share drug safety
information sooner and more broadly, including information on potential
safety problems even before the Agency has reached conclusions that
would prompt a regulatory action. The new communications include:
--The Proposed Drug Watch Page.--At the direction of the new Drug
Safety Oversight Board, this page would include emerging
information about possible serious side effects or other safety
risks.
--Healthcare Professional Information Sheets.--We have increased out
efforts to develop and make these sheets available to better
communicate emerging risk information to the medical community.
We will continue to develop these information sheets, or will
update existing ones, as we become aware of possible serious
new side effects for a drug. The sheets will contain FDA Alert
describing emerging information.
--Patient Information Sheets.--We have also increased our efforts to
develop and make available on CDER's Website user friendly
information for patients and consumers on drugs about which we
have identified emerging issues. We will continue to develop
these sheets, or update existing ones, as we become aware of
possible serious new side effects for a drug. The sheets will
contain FDA Alert describing emerging information.
COUNTERFEIT DRUGS
Question. In last year's hearing record, FDA inserted its report on
counterfeit drugs. In this report FDA identifies eight critical
elements that need to be addressed in order to safeguard the drug
supply. Please update the Committee on the progress you have made on
these items.
Answer. FDA has been actively working with stakeholders such as
manufacturers, wholesalers, retailers, health professionals, State and
Federal regulatory agencies, technology experts, and standard-setting
bodies to put into place the measures outlined in the FDA Counterfeit
Drug Task Force Report. We have made considerable progress in some
areas, while in other areas there is still work to be done. FDA
currently is finishing drafting a report that provides an update on the
progress on the recommended measures. We expect that this update will
provide you with the type of comprehensive update that you ask in your
question.
[The information follows:]
COMBATING COUNTERFEIT DRUGS: A REPORT OF THE FOOD AND DRUG
ADMINISTRATION ANNUAL UPDATE--MAY 18, 2005
On February 18, 2004, FDA issued a Report entitled ``Combating
Counterfeit Drugs: A Report of the Food and Drug Administration.'' The
comprehensive Report highlights several measures that can be taken to
better protect Americans from counterfeit drugs. These measures address
six critical areas:
--Securing the actual drug product and its packaging
--Securing the movement of the product as it travels through the U.S.
drug distribution chain
--Enhancing regulatory oversight and enforcement
--Increasing penalties for counterfeiters
--Heightening vigilance and awareness of counterfeit drugs
--Increasing international collaboration
Over the past year, we have worked with manufacturers, wholesalers,
pharmacies, consumer groups, technology specialists, standard-setting
bodies, State and Federal agencies, international governmental
entities, and others to advance the measures outlined in the Report.
Significant progress is being made in many of these areas. Although we
continue to believe that the U.S. drug supply is among the safest in
the world, more work needs to be done to further implement these
measures and further secure our Nation's drug supply.
In 2004, FDA's Office of Criminal Investigations (OCI) initiated 58
counterfeit drug cases, a significant increase from the 30 cases
initiated in 2003. We believe that this is in part due to an increased
awareness and vigilance at all levels of the drug distribution chain as
a result of the Combating Counterfeit Drugs Report released last year.
In addition, this increase in investigations is due to increased
referrals from and coordination with other State and Federal law-
enforcement agencies and communication with drug manufacturers.
Fortunately, most of the counterfeit drugs at issue did not reach
consumers because we focused our limited resources and developed
proactive investigations that enabled us to identify components of
counterfeit products and interdict finished counterfeit drug products
before they entered domestic distribution.
Although the number of counterfeit drug cases has increased and the
threat to the public health is real, most of the suspect counterfeits
that we discovered in 2004 were found in smaller quantities, compared
to those found in 2003. Most of these drugs were destined for the black
market or internet distribution, rather than for widespread
distribution in the Nation's drug supply chain.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
TECHNOLOGY: SECURING THE PRODUCT, PACKAGING, AND MOVEMENT THROUGH THE
SUPPLY CHAIN
In the Report, we stated that it is critical to implement new
technologies to better protect our drug supply. We concluded that a
combination of rapidly improving track and trace technologies and
product authentication technologies could be used to provide a greater
level of security for drug products. These technologies are intended to
secure the product, packaging, and movement of the product as it
travels through the drug supply chain.
Track and Trace Technology
In the Report, we stated that adoption and wide-spread use of
reliable track and trace technology is feasible by 2007. This would
help secure the integrity of the supply chain by providing an accurate
drug ``pedigree,'' a record documenting that the drug was manufactured
and distributed under secure conditions. We particularly advocated for
the implementation of electronic track and trace mechanisms and noted
that radio-frequency identification (RFID) is the most promising
technology to meet this need. RFID technology uses a tiny radio
frequency chip containing essential data in the form of an electronic
product code (EPC). Implementation of RFID will allow supply chain
stakeholders to track the chain of custody (or pedigree) of every
package of medication. By tying each discrete product unit to a unique
electronic serial number, a product can be tracked electronically
through every step of the supply chain.
Over the last year stakeholders have made tremendous progress in
the development and implementation of EPC/RFID. This is a huge endeavor
that requires close collaboration among all constituents of the
pharmaceutical distribution system. We have observed and supported this
collaboration, and we continue to support it today.
A critical piece of this undertaking is the development of
standards for the type of technology to be used and the systems for
storing and sharing pedigree information. This activity will ensure
that the electronic track and trace technologies adopted are
comprehensible and data communication systems are interoperable. We
have been present at and actively participated in many industry,
standard-setting, and government meetings and workshops where
implementation issues have been discussed. We appreciate the
opportunities we have been given to participate in the discussions and
provide input when needed.
We received a number of questions over the past year regarding RFID
and regulatory issues from members of the supply chain. In response to
these common questions, on November 15, 2004, we issued a Compliance
Policy Guide (CPG) for implementing RFID feasibility studies and pilot
programs as an important and essential step in moving this technology
forward. The CPG presents FDA's current thinking regarding several
labeling, current Good Manufacturing Practices (GMP), and other
regulatory issues that may arise by affixing an RFID tag to a drug
product for a feasibility study or pilot program. Several members of
the supply chain simultaneously announced their intention to move
forward with pilot programs (joint programs across the supply chain or
within an individual company) that will involve the tagging of products
susceptible to counterfeiting. In fact, three major pharmaceutical
companies said that they will incorporate an RFID tag into at least one
of their products by the end of 2005. We have been in close
communication with participants in these and other pilot studies and
provided input when appropriate.
Also in November, we announced the creation of an internal, cross-
agency ``RFID Workgroup.'' This group is charged to monitor adoption of
RFID in the pharmaceutical supply chain, pro-actively identify
regulatory issues raised by the use of this new technology, and develop
straightforward processes for handling those issues. We believe that
the workgroup will improve communication with members of the supply
chain on RFID related issues and will facilitate both the performance
of pilot studies and the collection of data needed to formulate policy.
It is important to gain a better understanding of the effects of
RFID on drug products, particularly biological products because they
may be more susceptible to change in their environment. In the past
year, we developed a protocol for the Product Quality Research
Institute (PQRI) (a collaboration of FDA, academia, and industry) to
evaluate the effects of radio-frequency on specific biological protein-
based products. This study is in its very early stages. Also, a
laboratory within FDA's Center for Devices and Radiological Health is
conducting analyses of the heating and the radio-frequency field
strengths induced in certain liquid pharmaceuticals by some RFID
systems. We are encouraged by the response of individual companies
informing us that they are conducting studies. In addition, the Health
Research Initiative of the Auto-ID Laboratories is conducting
additional studies on the effects of radio-frequency on various drug
products and storage conditions. We look forward to the results of such
studies.
Next Steps.--FDA will continue to play an active role in public and
private sector efforts toward developing an ``electronic safety net''
for our drug supply, including the adoption and widespread use of
reliable track and trace technology by 2007. We will continue to
facilitate and monitor standard-setting activities, including efforts
by epcGlobal (an entity that has taken a lead role in developing
standards) to establish standards for numbering systems, chip
frequency, electronic pedigree, and data-sharing and security. In
addition, we will continue to encourage and foster research on the use
and potential impact of RFID on drug and biological products. Finally,
we will regularly review the extent and pace at which RFID is being
adopted.
Authentication Technology
In the Report, we noted that authentication technologies for
pharmaceuticals (such as color-shifting inks, holograms, taggants, or
chemical markers imbedded in a drug or its label) have been
sufficiently perfected that they can now serve as a critical component
of a layered approach to control counterfeit drugs. FDA's Report
acknowledged the importance of using one or more authentication
technologies for drug products, in particular those most likely to be
counterfeited. Over the past year, we have worked with individual drug
manufacturers who sought to incorporate such technologies into their
product, labeling, or packaging. When asked, we have provided advice
and suggestions regarding application and use of authentication
technologies and worked with sponsors on the regulatory issues
associated with making changes to approved product labeling.
In the Report, we said that in order to facilitate the use of
authentication technologies on or in approved products, we would
consider publishing a draft guidance on notification procedures for
making changes to products, their packaging, or their labeling. We
decided not to issue guidance in the past year because we would like to
gain additional experience working with companies in their application
and use of authentication technologies so the guidance can have
appropriate general applicability.
Next Steps.--We will continue to work with companies and
organizations to facilitate use of authentication technologies in
products, labeling, and packaging.
REGULATORY OVERSIGHT AND ENFORCEMENT
Electronic Pedigree
In the Report, we said that adoption of electronic track and trace
technology would help stakeholders meet and surpass the goals of the
Prescription Drug Marketing Act (PDMA). We said that we intend to focus
our efforts on facilitating industry adoption of this technology. To
allow stakeholders to move toward an electronic pedigree we said that
we would further delay the effective date for certain provisions in a
final rule that FDA promulgated in December 1999 to implement the
Prescription Drug Marketing Act of 1987 (PDMA), as modified by the
Prescription Drug Amendments of 1992 (PDA). On February 23, 2004, we
published a notice in the Federal Register delaying the effective date
until December 2006.
As stated above, we are pleased with the progress stakeholders,
standard-setting bodies, and software and hardware companies have made
thus far toward implementing an electronic pedigree for drug products.
We recognize that there have been, and continue to be, challenges along
the way. However, we are optimistic that this progress will continue in
an expeditious manner toward meeting our 2007 goal. If it appears that
this goal will not be met, we plan to consider the options regarding
implementation of the PDMA provisions that are the subject of the stay.
Next Steps.--We are closely monitoring the progress of widespread
use of electronic pedigrees as we assess whether to lift, maintain, or
pursue other options regarding the stay of implementation of the
provisions in the PDMA final rule. We will continue to work with
stakeholders to facilitate implementation.
State Efforts
In the Report, we recognized the important role that the States
have in regulating the drug supply chain, and we stated that adoption
and enforcement of strong, proven anti-counterfeiting laws and
regulations by the States would help in our collective effort to detect
and deter counterfeit drugs. FDA strongly supported the efforts taken
by the National Association of Boards of Pharmacy (NABP) in revising
the Model Rules for Licensure of Wholesale Distributors for States to
adopt. These Model Rules make it difficult for illegitimate wholesalers
to become licensed and then to transact business. Four States have laws
in place that are similar to the Model Rules (Florida, Nevada,
California, and Indiana), and other States are considering adoption
(e.g., New Jersey, Iowa). FDA has provided advice and input on a few
State legislative proposals and we recommend that more States move in
this direction in the coming year.
NABP last year also announced the creation the Verified-Accredited
Wholesale Distributors (VAWD) program as a complement to the Model
Rules. Applicants for VAWD accreditation undergo a criteria compliance
review, licensure verification, an inspection, background checks, and
screening through NABP's clearinghouse. It is intended to provide
assurance that the wholesale distribution facility operates
legitimately, is validly licensed in good standing, and is employing
security and best practices for safely distributing prescription drugs
from manufacturers to pharmacies and other institutions. Recently,
Indiana was the first State to pass a law that requires VAWD
accreditation for all drug wholesale distributors who do business in
Indiana.
In the Report, we said that there would be great value in the
creation of a national list of drugs most likely to be counterfeited
based on factors that are likely to contribute to counterfeiting risk.
The Model Rules called for such a national list as a starting point for
application of pedigree requirements in the short term so that there
would not be 50 different State lists. In December 2004, NABP convened
a National Drug Advisory Coalition, which included industry and State
and national government representation. FDA has served in an ex-officio
role on this Coalition. The Coalition developed criteria for inclusion
or removal from such a list and created a national list that includes
31 drugs. FDA applauds NABP on this accomplishment.
We recognize that States have implemented and are considering
provisions requiring a pedigree (in some cases electronic) for drug
products. We are pleased that these efforts complement Federal
requirements and believe that rapid and uniform implementation of a
pedigree that starts at the point of manufacture and accompanies the
drug product until it is dispensed would be beneficial. As stated in
the Report, adoption and enforcement of the Model Rules by all States
would have the greatest impact on protecting the Nation's drug supply.
In the Report, we also said that increased penalties would help
deter counterfeiting and more adequately punish those convicted. As we
continue the efforts on the Federal level, it is equally important that
States adopt stronger penalties (like those outlined in the Model
Rules) so the penalties associated with counterfeiting drugs are
commensurate to the significant threat they pose to the public health.
Next steps.--FDA will continue to support efforts by the States to
adopt and enforce stricter laws and to pursue increased Federal
penalties for drug counterfeiting.
Secure Business Practices
In the Report, we described the important role that all
participants in the drug supply chain have in adopting secure business
practices. Around the time the Report was issued several trade
associations for wholesale distributors issued guidelines for their
members regarding best practices for drug distribution system
integrity. In fact, in the past year, the Healthcare Distribution
Management Association (HDMA) released new membership rules that
require active members to adopt best practices that include extensive
regulatory, financial, security, and due diligence processes and
procedures.
It is also important to note that many of the secure business
practices outlined in these trade associations' best practices
guidelines are included in the Model Rules for Licensure of Wholesale
Distributors for adoption by the States.
Next Steps.--We will continue to work with stakeholders who would
like to develop secure business practices.
Heightened Vigilance and Awareness
Health Professional Reporting Via MedWatch
In the Report, we indicated that we would encourage and educate
health professionals to use the MedWatch form as a mechanism to report
suspect counterfeit drugs to FDA. To make the reporting of suspect
counterfeits easier, we changed the instructions for the MedWatch
reporting form, both paper and electronic versions, so reporters will
know how and when to report suspect counterfeits. We have also amended
the MedWatch website description of product problems and added
``suspect counterfeit'' to the list of product problems to report to
FDA using the MedWatch form. FDA staff has promoted the use of MedWatch
for reporting suspect counterfeits in numerous speeches to health
professional organizations over the past year. A small number of such
reports are starting to come in using the MedWatch form.
Next steps.--FDA will continue to educate health professionals to
use the MedWatch form to report suspect counterfeit drugs.
Counterfeit Alert Network
In the Report, we stated we would create a Counterfeit Alert
Network (CAN) and partner with health professional and consumer groups
to provide timely and effective notification to their members or
constituents of a verified counterfeit event. By signing the CAN co-
sponsorship agreement, organizations become CAN partners and agree to
deliver time-sensitive messages and information on specific counterfeit
incidents and educational messages about counterfeits in general, as
well as information about how and when to report suspect counterfeit
drug products. In the past year, we have formed the CAN and currently
13 organizations have signed the CAN co-sponsorship agreement.
Also, in the Report, we stated we would develop internal guidelines
for the informational contents of outgoing FDA messages that would be
useful to communicate a counterfeiting incident to CAN partners. In the
past year, we have developed these guidelines, in the form of a
template, in collaboration with CAN partners. This template will allow
for the efficient preparation and delivery of uniform counterfeit alert
messages for partners to further disseminate.
Next Steps.--FDA will encourage stakeholders to become members of
the CAN and continue to work with CAN partners to be ready to
disseminate effective and appropriate counterfeit alerts when needed.
Streamline FDA's Internal Rapid Response to Reports
In the Report, we said that we would streamline our internal
processes to respond quickly to reports of suspect counterfeits by
improving coordination and communication among all initial responders
in the agency. In the past year we amended our internal standard
operating procedures and developed a protocol for more efficient
internal communication and coordination when a suspect counterfeit drug
is reported to the agency, regardless of where the report is received
(e.g., MedWatch, an FDA field office, call to the FDA hotline).
Next Steps.--No additional action is required.
Educating Consumers and Health Professionals
In the Report, we noted that educating consumers about the risks of
counterfeits is a critical piece of the effort to stop counterfeits
from entering the stream of commerce. In the past year we have taken
many steps towards educating consumers. First, we developed two public
service announcements (PSAs) geared to consumers. These PSAs ran in 4.5
million magazines. In addition, 4.6 million medication leaflets
distributed by retail pharmacies with patient's prescriptions also
carried these PSAs along with additional consumer information about
counterfeit drugs. Also, FDA drafted an article about counterfeit drugs
that was printed in several local papers nationwide, with an estimated
readership of about 9.5 million consumers.
We also set up a webpage on the FDA website for consumers to obtain
information about counterfeit drugs, FDA initiatives, and educational
information. This website can be found at www.fda.gov/counterfeit. In
addition, the National Consumers League (NCL) developed a highly
informative website containing useful consumer information about
counterfeit drugs.
In the past year, FDA partnered with the National Health Council
(NHC) to jointly create and disseminate educational messages on
counterfeit drugs. NHC is a private, non-profit organization of over
100 national health-related organizations. Under this partnership,
messages to raise awareness of the dangers of counterfeit drugs and how
to avoid them will be developed and tested to measure their
effectiveness. In addition, products will be created to deliver these
messages to the target audience.
In addition, FDA is developing educational messages to inform
pharmacists about how to recognize counterfeits, counsel patients on
how to minimize the risk of exposure to counterfeits, and on how to
notify FDA if a counterfeit drug is suspected. These efforts are in the
early stages.
In the Report, we said that we would re-launch our safe online
buying practice campaign. In March 2005, we launched a new campaign
with tips for consumers on how to buy drugs safely on the Internet and
minimize their risks of getting a counterfeit or otherwise substandard
drug.
Next steps.--We will increase dissemination of the PSAs and
counterfeit drug messages. We will continue to update and post relevant
information on the counterfeit drug webpage. We will also continue to
work with the NHC to finalize educational messages and develop a
dissemination strategy for those messages. In the coming months, we
will also work with pharmacy organizations to finalize educational
messages for pharmacists and develop a strategy to disseminate these
messages.
International Collaboration
In the Report, we recognized that counterfeit drugs are a worldwide
concern, and we stated that we would collaborate with foreign
stakeholders to develop strategies to deter and detect counterfeits
globally. In February 2004, the World Health Organization (WHO) hosted
a meeting to discuss an approach for developing global strategies for
combating counterfeit drugs. FDA participated in this meeting and
supports WHO's efforts in this area. It was decided at the WHO meeting
that a concept paper would be drafted with a proposed strategy to
address this problem. In March 2005, we attended the 4 th Pan American
Conference on Drug Regulatory Harmonization held by the Pan-American
Health Organization (PAHO) where a report was presented and
recommendations were discussed regarding combating counterfeit drugs in
the Americas. FDA's counterfeit drug initiative is consistent with the
recommendations of the PAHO report.
FDA's Office of Criminal Investigations (OCI) continues to work
with foreign law-enforcement agencies directly and through Interpol on
individual international counterfeit cases.
OCI also has provided training on counterfeit drugs to foreign law-
enforcement, customs and judicial officers from various parts of the
world through the U.S. Patent and Trademark Office (PTO) Intellectual
Property Enforcement Academy. In addition, in the past year, several
individual countries have sought FDA's insights, advice, and/or
training on combating counterfeit drugs. Although the approaches that
we outlined in the Report were specific to the U.S. drug distribution
system, many of the principles outlined in the Report are applicable
generally.
Next Steps.--To the extent that resources permit, FDA will continue
to work with international organizations, foreign law enforcement
agencies, and individual governments to provide training and advice
concerning drug counterfeiting and to collaborate on coordinated
strategies to combat the problem of counterfeit drugs globally.
Conclusion
Significant progress has been made towards implementing the
measures outlined in FDA's Combating Counterfeit Drugs Report issued in
February 2004. Although the use of electronic track and trace
technology is still in the implementation stage, adoption and
widespread use is closer to becoming a reality as stakeholders work
diligently to find solutions to the challenges faced along the way. The
use of authentication technologies is gaining acceptance as
manufacturers realize that steps should be taken to protect their
products from sophisticated counterfeiters. States are starting to
adopt stricter laws and harsher penalties to ensure that only
legitimate wholesalers do business in their State and they are taking
measures to do their part in protecting supply chain integrity. Trading
partners in the drug supply chain are also taking steps to ensure
secure business practices are adopted and utilized as drug products are
bought and sold. Educational efforts have been undertaken to help
health professionals and consumers develop a greater awareness and
knowledge about counterfeit drugs and how to minimize the risks of
exposure. In addition, efforts are underway to tackle counterfeit drugs
on a global level.
Despite the progress made, there remains a viable and concrete
threat of counterfeit drugs entering the U.S. drug distribution system.
We must all continue to work together to expeditiously pursue the
measures outlined in the Report to further protect the safety and
security of the U.S. drug supply.
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appendix: significant counterfeit cases closed in the past year
Below are a number of significant counterfeit drug cases that were
closed in the past year:
Counterfeit Lipitor
During the first quarter of 2005, three men pled guilty to Federal
criminal charges in a multi-million dollar Lipitor smuggling and
counterfeiting conspiracy. The pleas are a result of an ongoing OCI
investigation involving the manufacturing, smuggling, and interstate
distribution of counterfeit pharmaceuticals that was initiated by OCI
in April 2003. To date, eight people have been indicted; four have
pleaded guilty, and another was convicted by a trial jury.
In another counterfeit Lipitor case, an OCI undercover operation
resulted in the arrest and conviction of a Belize citizen for violating
Title 21, U.S.C. 331 (a)--Introduction into Interstate Commerce of a
Misbranded Drug. In September 2004 the defendant was sentenced to 10
months incarceration and 1 year probation.
Genapharm.com (Counterfeit Human Growth Hormone)
On March 9, 2004, an Austin, Texas man pled guilty to four counts
of conspiracy to introduce misbranded and unapproved new drugs into
interstate commerce, counterfeiting human growth hormone, and
possessing controlled drugs with intent to distribute. Two other
persons involved in these offenses were previously convicted and
sentenced.
Counterfeit Viagra
On June 23, 2004, an individual pled guilty to charges of
conspiracy, trafficking in counterfeit goods, and a felony violation of
the Federal Food, Drug and Cosmetic Act. In pleading guilty, the
defendant admitted that he conspired with a manufacturer in Beijing to
import thousands of counterfeit Viagra tablets into the United States,
which he would then resell. The defendant was sentenced on March 25,
2005 to 18 months in prison, followed by 3 years probation and was
fined $6,000.
Counterfeit Serostim
On June 16, 2004, an indictment was unsealed in San Diego that
charged an individual with conspiring to unlawfully distribute human
growth hormone and trafficking in counterfeit goods. According to the
indictment, this individual obtained counterfeit Serostim and sold it
to bodybuilders who did not possess lawful prescriptions for the drug.
Another individual involved in this investigation pled guilty to
similar charges on February 19, 2003. Serostim is a prescription drug
containing the active ingredient ``somatropin,'' a form of human growth
hormone. Serostim is approved by the FDA for use in the United States
to treat AIDS wasting disease.
Counterfeit Labeled Pharmaceuticals
An Alabama drug wholesaler was convicted for violating Title 21,
U.S.C. 331 (i) (3)--Selling and Holding for Sale a Counterfeit Drug.
In October 2004 the company was sentenced to 5 years probation and
fined $24,000.
Counterfeit Viagra
In January 2005, a Southern California man pled guilty to importing
counterfeit Viagra from China and manufacturing 700,000 counterfeit
Viagra tablets at a lab in the United States. An accomplice was
convicted of similar charges in September 2004. The total value of the
counterfeit Viagra in this case is more than $5.65 million.
World Express Rx
In January 2005, a San Diego man was sentenced to serve a 51-month
prison term and forfeit substantial cash proceeds for his role in
operating a large Internet pharmacy scheme. The drugs distributed
included a variety of products counterfeited in Mexico, smuggled into
the United States and sent throughout the country. Some of the
ingredients for the drugs were shipped from India and China. In other
instances, unapproved and counterfeit drugs made in India and Pakistan
entered the United States via the Bahamas. At least 14 other
individuals are also being prosecuted in California or Florida as part
of this international conspiracy.
NATIONAL ANTIMICROBIAL RESISTANCE MONITORING SYSTEM
Question. Can we get a current accounting of funds available to FDA
to fund the NARMS program and the distribution of these funds to the
various agencies?
Answer. At this time, FDA has not determined the exact amount of
NARMS funding for CDC and USDA for fiscal year 2006 but plans to make
decisions in the Fall of 2005. In fiscal year 2005, the NARMS program
took a reduction due to competing Agency priorities, however, FDA
funded USDA and CDC at the same level they were funded in fiscal year
2004 with FDA absorbing any reduction in program funding. FDA believes
that all three arms are integral to the success of the NARMS program
and to achieve the benefits envisioned at its inception and agreed upon
by all three agencies. We would be happy to provide a chart showing the
allocation of NARMS funding in fiscal year 2004 and fiscal year 2005.
[The information follows:]
NARMS FUNDING FISCAL YEAR 2004-2005
[In millions of dollars]
------------------------------------------------------------------------
Fiscal year Fiscal year
2004 2005
------------------------------------------------------------------------
USDA.................................... 1.606 1.606
CDC..................................... 2.037 2.037
FDA \1\................................. 3.991 3.686
-------------------------------
Total............................. 7.634 7.329
------------------------------------------------------------------------
\1\ Included in this figure are laboratory supplies FDA purchases for
USDA, CDC and FDA.
Question. Permanent funding needs to be established to allow ARS to
hire permanent staff positions. Also, current funding is inadequate to
allow for the collection of samples in a scientifically-based,
randomized and statistically-sound manner. Can funding be line-itemed
to insure on-going designated funding stream?
Answer. All three components of NARMS are critical to monitor the
development of bacterial resistance from the use of antibiotics in
animals and subsequent public health impacts. NARMS is foremost a
public health surveillance system. Emergence of bacterial antibiotic
resistance among livestock is certainly critical to establish links
between use in food producing animals and public health consequences.
However, it is of equal importance to the other arms and should not be
singled out as the most responsive measure of the NARMS program.
FDA is planning an independent external review of all three
components of the NARMS program, the human, retail meat, and slaughter
components and is holding a public meeting, June 23-24, 2005, to
address sampling issues and how the NARMS funds have been spent , as
well as other issues.
Question. Can an independent panel be formed to direct the
activities and funding for the NARMS program?
Answer. FDA is planning an independent external review of all three
components of the NARMS program, the human, retail meat, and slaughter
components and is holding a public meeting, June 23-24, 2005, to
address sampling issues and how the NARMS funds have been spent , as
well as other issues.
Question. There was report language in last year's appropriations
bill requiring adequate funding for the 3 arms of NARMS. Are the three
portions of the NARMS program adequately funded as directed in this
report language?
Answer. FDA strongly supports NARMS and all its components, and
believes that it is important to maintain NARMS funding, to the extent
possible, even when there are competing public health priorities. FDA
has funded NARMS since NARMS was conceived in 1996 and is committed to
the continued funding of this program as much as possible without
compromising our other core programs.
In fiscal year 2005, the NARMS program took a reduction, however,
FDA funded USDA and CDC at the same level they were funded in fiscal
year 2004 with FDA absorbing any reduction in program funding. FDA
believes that all three arms are integral to the success of the NARMS
program and to achieve the benefits envisioned at its inception and
agreed upon by all three agencies.
______
Questions Submitted by Senator Herb Kohl
FDA PAY COSTS
Question. In fiscal year 2005, the FDA's top priority was to
provide funding to cover necessary increased salaries and expenses for
their staff. The FDA's budget, in fact, is 60 percent salaries and
expenses. In the fiscal year 2006 budget request, however, no funding
is requested at all to cover the required pay increases, effectively
resulting in a $36 million shortfall.
Why isn't funding requested for increased salaries and expenses in
the fiscal year 2006 budget, since it was the top priority for the
previous fiscal year?
Answer. In fiscal year 2006 FDA needs approximately $36 million to
cover the cost of a pay increase. The agency will cover the costs of
the pay raise within the total request.
Question. How does FDA propose to absorb the funding for employee
pay increases, approximately $36 million? What specific programs, and
in what amounts, will that funding come from?
Answer. This will be accomplished in fiscal year 2006 through
instituting hiring freezes and attrition of over 250 FTE. In select
areas where we are still hiring, we will carefully targeting the areas
for backfills, such as import field exams. FDA will use risk-based
management principles throughout the program areas to ensure we are
properly targeting programs to protect public safety.
CITIZEN PETITIONS
Question. It has been brought to my attention that FDA recognizes
the need to expedite the decision making process for citizen petitions
and that the current system may be contributing to agency delay in
approval of abbreviated new drug applications (ANDAs). Further, I
understand that FDA is currently exploring reforms to this process as a
way to accelerate consumer access to more affordable medicines.
Please provide a chart listing the citizen petitions filed with FDA
in fiscal year 2003 and fiscal year 2004 that target ANDAs, including
the name of filer, date the petition was filed and completion date for
each petition.
Answer. There were 42 citizen petitions filed with FDA in fiscal
year 2003 and fiscal year 2004 that relate specifically to ANDAs. We
would be happy to provide this information. The petitions are in
alphabetical order by the topic of the petition so that related
petitions are grouped together and where no completed date is provided,
the petition is still pending with the Agency. The information
describes only petitions that relate to ANDAs specifically and does not
include certain types of petitions that are necessary to approving some
ANDAs, but do not on their face relate to ANDAs, for example, relisting
petitions. When a drug is no longer being marketed, an ANDA applicant
seeking to reference that drug product must file a relisting petition
requesting that the FDA determine that the drug product was not
withdrawn for reasons of safety or effectiveness. Also, in some
instances there were additional citizen petitions relating to a
particular drug product that may have been filed outside of the
requested timeframe. For example, only one petition relating to
fentanyl transdermal products is shown, but a total of four petitions
were filed, some in fiscal year 2005.
[The information follows:]
BLOCKING PETITIONS--SUBMITTED IN FISCAL YEAR 2003 AND FISCAL YEAR 2004
180-day; gabapentin, can exclusivity be waived?
PETITIONER: Pfizer.
DOCKET #: 04P-0227.
SUBMITTED: 5/11/2004.
COMPLETED: 7/2/2004.
That FDA acknowledge that 180-day exclusivity is not a right or
asset subject to transfer or waiver in favor of one or more specified
subsequent ANDA applicants; specifically that FDA not approve Teva
during the running of Purepac's exclusivity.
180-day; para IV recertification for CMC changes
PETITIONER: Biovail.
DOCKET #: 03P-0121.
SUBMITTED: 3/26/2003.
That FDA require paragraph IV re-certification in the case of ANDAs
when there is an amendment to the CMC portion of the ANDA.
30-month; DuoNeb (Ipatropium/Albuterol)
PETITIONER: Dey, L.P.
DOCKET #: 04P-0324.
SUBMITTED 7/16/2004.
That FDA determine that Ivax' ANDA 76-724 is subject to 30-month
stay of approval. Related to Docket No. 04P-0520.
Agrylin (anagrelide HCl)--CP
PETITIONER: Shire.
DOCKET #: 04P-0365/CP1.
SUBMITTED: 8/16/2004.
COMPLETED: 4/18/2005.
That FDA refrain from approving ANDAs that reference Agrylin.
Agrylin (anagrelide HCl)--PSA
PETITIONER: Shire.
DOCKET #: 04P-0365/PSA1.
SUBMITTED: 9/3/2004.
COMPLETED: 4/18/2005.
Petition for Stay of Action (PSA) to CP1.
Alphagan; refuse ANDAs for 0.2 percent
PETITIONER: Allergan.
DOCKET #: 02P-0469.
SUBMITTED: 10/28/2002.
COMPLETED: 5/21/2003.
That FDA refuse to approve ANDA's for brimonidine tartrate 0.2
percent. A newer (and allegedly safer) 0.15 percent product has
recently been approved. See relisting CPs, Docket Nos. 02P-0391and 02P-
0404.
Amino acid solutions
PETITIONER: Braun Medical.
DOCKET #: 02P-0450.
SUBMITTED: 10/16/2002.
COMPLETED: 6/19/2003.
Withhold approval of any ANDA for amino acid drug products packaged
in DEHP-plasticized PVC and intended for use in infant populations.
Amlodipine/Benazepril
PETITIONER: Frommer Lawrence.
DOCKET #: 04P-0339.
SUBMITTED: 7/29/2004.
That FDA refuse to accept for filing ANDAs for this combination
drug that do not include fed and fasted BE studies.
Desmopressin BE
PETITIONER: Ferring Pharm Inc.
DOCKET #: 04P-0068.
SUBMITTED: 2/13/2004.
That FDA establish specific BE requirements for oral products
containg desmopressin (DDAVP).
Doryx and Suitability Petition
PETITIONER: Warner Chilcott.
DOCKET #: 04P-0417.
SUBMITTED: 9/13/2004.
That FDA require ANDAs for Doxycycline Hyclate Capsule products
containing powder or similar fill and using Doryx as the RLD first
obtain FDA's acceptance of a suitability petition for a change in
dosage form.
Fentanyl--Palo Alto
PETITIONER; Palo Alto Health.
DOCKET #: 04P-0340.
UBMITTED: 7/29/2004.
COMPLETED: 1/28/2005.
That FDA require ANDA applicants for transdermal fentanyl
(Duragesic) to perform BA/BE studies on both intact and stripped skin.
Ferrlecit (CP1)
PETITIONER: Watson Pharma/CRG.
DOCKET #: 04P-0070/CP1.
SUBMITTED: 2/13/2004.
That FDA not approve any ANDA for Ferrlecit (sodium ferric
gluconate complex in Sucrose) until all conditions in the petition are
met.
Ferrlecit (CP2)
PETITIONER: Watson Pharma.
DOCKET #: 04P-0070/CP2.
SUBMITTED: 8/18/2004
That FDA refuse to receive an ANDA for Ferrlecit until FDA
establishes guidelines to deternine sameness of a generic sodium ferric
gluconate complex product.
Flonase (Fluticasone Nasal Suspensions)
PETITIONER: GSK.
DOCKET #: 04P-0239.
SUBMITTED: 5/19/2004.
That FDA refrain from approving ANDAs for nasal suspension
formulations and issue a BE guidance.
Flonase (Fluticasone Propionate Nasal Spray)
PETITIONER: Bell Boyd & Lloyd.
DOCKET #: 04P-0206.
SUBMITTED: 5/3/2004.
That FDA make a determination that no ANDA seeking FDA premarket
approval of a generic formulation of Fluticasone Propionate Nasal
Spray, 50 mcg, shall be received for substantive review, or granted
final approval, unless such an ANDA contains successful results of BA
and BE studies conducted under the methodologies set forth in FDA's.
Levothyroxine--allow Unithroid only as RLD
PETITIONER: Jones Pharma.
DOCKET #: 03P-0097.
SUBMITTED: 3/13/2003.
COMPLETED: 10/1/2003.
Levothyroxine--ANDA guidance
PETITIONER: Jerome Stevens.
DOCKET #: 04P-0061.
SUBMITTED: 2/10/2004.
COMPLETED: 6/23/2004.
That FDA establish guidance and clarify requirements for levo
ANDAs.
Levothyroxine--BE methodology
PETITIONER: Abbott.
DOCKET #: 03P-0387/CP1.
SUBMITTED: 8/25/2003.
COMPLETED: 6/23/2004.
That FDA make certain requirements for BE studies of levothyroxine.
Levothyroxine--BE methodology (PRC)
PETITIONER: Abbott.
DOCKET #: 03P-0387/PRC1.
SUBMITTED: 7/23/2004.
That FDA reconsider its denial of earlier petition requesting that
FDA require certain BE studies of levothyroxine.
Levothyroxine--CP and PSA re BE standards
PETITIONER: Jones Pharma.
DOCKET #: 03P-0126/CP1.
SUBMITTED: 3/28/2003.
COMPLETED: 6/23/2004.
That FDA refrain from approving or accepting for filing any levo
ANDA that shows BE via 2001 Guidance or as announced at Mar 12-13 2003
meeting of Pharm Sci AC; that FDA convene a joint mtg of Pharm Sci AC
and E&M Drugs AC to establish BE standards.
Levothyroxine--name Levoxyl as 3RLD--PSA
PETITIONER: Abbott:
DOCKET #: 03P-0113/PSA.
SUBMITTED: 5/13/2003.
COMPLETED: 11/7/2003.
That FDA stay the effective date of the decision to grant Mylan's
request that Levoxyl be named a RLD.
Levothyroxine--name Synthroid as 2RLD--PSA
PETITIONER: Abbott.
DOCKET #: 03P-0107/PSA.
SUBMITTED: 5/13/2003.
COMPLETED: 11/7/2003.
That FDA stay the effective date of the decision to grant Mylan's
request that Synthroid be named a RLD.
Levothyroxine--PRC on CP/PSA re BE standards
PETITIONER: Abbott.
DOCKET #: 03P-0126/PRC1.
SUBMITTED: 7/23/2004.
Levothyroxine--w/d Synthroid & Levoxyl as RLDs
PETITIONER: Abbott.
DOCKET #: 03P-0210.
SUBMITTED: 5/13/2003.
COMPLETED: 11/7/2003.
That FDA withdraw the decision in Docket Nos. 03P-0107 and 03P-0113
to name Synthroid and Levoxyl as RLDs.
Loratadine and b2
PETITIONER: GenPharm.
DOCKET #: 03P-0160.
SUBMITTED: 4/16/2003.
COMPLETED: 6/24/2004.
That FDA require 505(j) applications for generic OTC loratadine
(Claritin), and not permit b2 applications.
Lovenox--not approve ANDAs
PETITIONER: Aventis.
DOCKET #: 03P-0064.
SUBMITTED: 2/19/2003.
That FDA not approve any ANDA using Lovenox (enoxaparin sodium
injection, a low molecular weight heparin) as the RLD unless (a) the
manufacturing process is determined to be equivalent, or equivalent s&e
is supported by clinical trials, and (b) the generic product contains a
1,6 anhydro ring structure at the reducing ends of between 15 percent
and 25 percent.
Metaxalone
PETITIONER: King.
DOCKET #: 04P-0140/CP1.
SUBMITTED: 3/19/2004.
That FDA (a) rescind the 3/1/2004 ``Dear Applicant'' letter, (b)
require ANDA applicants using SKELAXIN as the RLD to certify re the 128
patent, and (c) prohibit a carve out of PK information.
Metaxalone--PSA1
PETITIONER: King.
DOCKET #: 04P-0140/PSA1.
SUBMITTED: 3/19/2004.
PSA to CP1.
Metaxalone--PSA2
PETITIONER: Mutual.
DOCKET #: 04P-0140/PSA2.
SUBMITTED: 4/5/2004.
That FDA stay approval of any sNDA for Skelaxin, specifically s-046
regarding dosing with food.
Methylphenidate--Concerta
PETITIONER: McNeil.
DOCKET #: 04P-0139.
SUBMITTED: 3/19/2004.
That FDA apply additional BE metrics other than the average BE
parameters to ensure that the approval of generic versions of Concerta
(methylphenidate HCl) extended-release tablets are both bioequivalent
and clinically equivalent to Concerta.
Methylphenidate--Metadate CD--BE
PETITIONER: Celltech.
DOCKET #: 04P-0225.
SUBMITTED: 5/7/2004.
That FDA require an additional BE test for generic versions of
Celltech's Metadate CD (ER methylphenidate).
Mupiricin Calcium (topical)
PETITIONER: Glaxo.
DOCKET #: 04P-0290.
SUBMITTED: 7/8/2004.
That FDA refrain from approving any ANDAs for topical mupirocin
calcium products containing the amorphous form of the active
ingredient.
Mupirocin ointment; BE requirement for
PETITIONER:--GlaxoSmithKline.
DOCKET #: 03P-0140.
SUBMITTED: 4/8/2003.
COMPLETED: 11/7/2003.
That FDA not approve ANDAs for topical mupirocin ointment products
absent additional data to support the full labeling of the RLD
(Bactroban).
Oxandrolone BE
PETITIONER: Savient Pharm Inc.
DOCKET #: 04P-0074.
SUBMITTED: 2/18/2004.
That FDA establish specific BE requirements for oral products
containg oxandrolone.
Oxycontin, ANDAs and RMPs
PETITIONER: Purdue Pharma.
DOCKET #: 04P-0006/PSA.
SUBMITTED: 1/7/2004.
COMPLETED: 3/23/2004.
That FDA stay approval of modified-release ANDAs that reference
Oxycontin until FDA has evaluated supplements from Purdue that
incorporate an RMP into labeling.
Periostat--2003 CP
PETITIONER: CollaGenex.
DOCKET #: 03P-0315/CP1.
SUBMITTED: 7/14/2003.
That FDA refuse to approve any ANDA for Periostat.
Periostat--2003 CP re West-ward
PETITIONER: CollaGenex.
DOCKET #: 03P-0372.
SUBMITTED: 8/15/2003.
That FDA refuse to approve West-ward's ANDA for Periostat.
Periostat--2003 PSA
PETITIONER: CollaGenex.
DOCKET #: 03P-0315/PSA1.
SUBMITTED: 7/18/2003.
PSA to CP1. That FDA refuse to approve any ANDA for Periostat.
Restasis
PETITIONER: Allergan.
DOCKET #: 03P-0275/PSA.
SUBMITTED: 8/6/2003.
COMPLETED: 12/18/2003.
Stay approval of all Section 505(j) ANDAs and Section 505(b)(2)
NDAs for generic versions of Restasis because it is not an antibiotic
and therefore is entitled to 3-year exclusivity.
Ribavirin
PETITIONER: ICN Pharm.
DOCKET #: 03P-0321.
SUBMITTED: 7/16/2003.
COMPLETED: 4/6/2004.
That FDA not approve generic Rebetol under 505(j) with labeling
that omits information on the use of ribavirin with PEG-Intron because
such a product would be misbranded; any guidance with respect to
labeling and cross-labeling of generic ribavirin products must be done
according to GGP regs and therefore requests that FDA defer action on.
. .
Sirolimus with Rapamune
PETITIONER: Wyeth.
DOCKET #: 03P-518.
SUBMITTED: 11/5/2003.
COMPLETED: 9/20/2004.
Refrain from approving any ANDA for Sirolimus with Rapamune as the
RLD before the expiration of the statutory exclusivity that applies to
Rapamune.
Therapeutic proteins and b2
PETITIONER: BIO.
DOCKET #: 03P-0176.
SUBMITTED: 4/24/2003.
That FDA not approve anything less than a full NDA for a
therapeutic protein product regulated under the FDCA. This petition
generally relates to the can-there-be-generic-biologics question.
Question. Which offices at FDA are involved in reviewing citizen
petitions that target ANDAs? What role, if any, does the HHS Office of
General Counsel play?
Answer. A number of offices within the Center for Drug Evaluation
and Research are involved in reviewing citizen petitions that relate to
ANDAs. The Office of Regulatory Policy or ORP is responsible for
drafting responses to these types of citizen petitions. ORP consults
the Office of Generic Drugs on all of these petitions and consults with
the appropriate medical review division within Office of New Drugs
regarding issues relating to the approval of the innovator product that
is the basis for the ANDA. If a citizen petition raises safety issues,
the Office of Drug Safety is also involved in reviewing the petition.
In addition, other offices may be consulted, as needed, for example the
Office of Compliance, Controlled Substances Staff. ORP consults with
the Office of Chief Counsel FDA, the Food and Drug division of the HHS
Office of General Counsel, regarding petitions that raise legal issues,
and the Office of Chief Counsel reviews all citizen petition responses
for litigation risk and legal sufficiency. The Office of Commissioner,
Office of Policy, may be consulted and the Associate Commissioner of
Policy and Planning has signed some of the citizen petition responses
in the past.
FDA's Office of Chief Counsel, which is the Food and Drug Division
of HHS OGC, assists in resolving legal issues raised in incoming
citizen petitions, assists in drafting citizen petition responses, and
reviews citizen petition responses and administrative records
supporting those responses for legal sufficiency. The Food and Drug
Division of HHS OGC consults the Immediate Office at HHS OGC when a
citizen petition raises issues that are particularly sensitive, novel,
or complex.
Question. Currently, how many citizen petitions targeting ANDAs
have been under review by the FDA Office of General Counsel for more
than 180 days? How many FTEs are dedicated to reviewing citizen
petitions in the FDA Office of General Counsel?
Answer. Currently there is one citizen petition that raises ANDA-
related issues that has been under review by the Food and Drug Division
of HHS OGC for more than 180 days. The Food and Drug Division of HHS
OGC devotes approximately .7 FTE per year to responding to ANDA-related
citizen petitions.
Question. What specifically is FDA doing to reform the FDA citizen
petition review process, and what potential solutions are under
consideration?
Answer. We are examining our citizen petition process very
thoroughly. During the past 8 months, the Office of Regulatory Policy,
or ORP, has undertaken an extensive review of how we handle citizen
petitions assigned to CDER. The purpose of this review is to identify
areas where we can work more efficiently and effectively, despite the
significant increase in the number of citizen petitions received. For
example, CDER has seen approximately a 50 percent increase in the
number of citizen petitions received in CY04 over CY03, and we
anticipate an additional increase in the number of citizen petitions
submitted in CY05, based on the current rate of receipt for CY05. As
part of this review process, ORP worked with the Office of Generic
Drugs or OGD, the Office of New Drugs, and the Office of Chief Counsel
to determine causes of delay. We have already begun implementing
changes to our internal processes and will track whether these changes
improve the overall response time for citizen petitions. As part of
this process, ORP will increase its interactions with other offices
early in the process to provide better direction on what information is
needed for a citizen petition response. We believe that increased
communication will help to avoid misunderstandings, wasted efforts, or
unnecessary delays. ORP and OGD are also increasing communications
relating to priorities and anticipated timetables, so that we can
coordinate citizen petition responses with upcoming ANDA approvals. In
addition, we have added recommended goal dates for each stage of the
citizen petition review process.
We also note that outside of ORP's process improvement efforts, OGD
has made organizational changes designed to improve the citizen
petition review process. OGD has established a specific group of
scientists who will be responsible for addressing citizen petition
review issues. This organizational change will increase the
consistency, quality, and speed of OGD input on citizen petition
responses.
Question. Do you believe FDA needs additional FTEs and/or funding
to make the citizen petition review process more efficient? If so,
please provide an estimate of the increased funding amount needed in
fiscal year 2006.
Answer. During the past 8 months, the Office of Regulatory Policy,
or ORP, has undertaken an extensive review of how we handle citizen
petitions assigned to CDER. The purpose of this review is to identify
areas where we can work more efficiently and effectively, despite the
significant increase in the number of citizen petitions received.
We have already begun implementing changes to our internal
processes and will track whether these changes improve the overall
response time for citizen petitions. As part of this process, ORP will
increase its interactions with other offices early in the process to
provide better direction on what information is needed for a citizen
petition response. We believe that increased communication will help to
avoid misunderstandings, wasted efforts, or unnecessary delays. ORP and
OGD are also increasing communications relating to priorities and
anticipated timetables, so that we can coordinate citizen petition
responses with upcoming ANDA approvals. In addition, we have added
recommended goal dates for each stage of the citizen petition review
process.
We also note that outside of ORP's process improvement efforts, OGD
has made organizational changes designed to improve the citizen
petition review process. OGD has established a specific group of
scientists who will be responsible for addressing citizen petition
review issues. This organizational change will increase the
consistency, quality, and speed of OGD input on citizen petition
responses.
MDUFMA SHORTFALL
Question. As you know, the MDUFMA user fee program is set to expire
this year, unless additional authorizing language is passed by the
Congress. We have provided significant increases for CDER since this
program was initiated, and further increases are requested this year.
Has authorizing language been submitted by the FDA to forgive
previous MDUFMA funding shortfalls, enabling the MDUFMA program to
continue past the current fiscal year?
Answer. The Administration informally transmitted its legislative
proposal to alter the appropriations triggers for fiscal year 2003 and
2004 to Congress in May 2004. FDA staff are now working with
Congressional staff and stakeholders to save the MDUFMA user fee
program and the many benefits its offers to industry, FDA, the health
care community, and patients. FDA sincerely hopes this process will
lead to a proposal that is acceptable to FDA and the Administration,
our stakeholders, and Congress.
Question. If not, what is the status of that language, and
specifically when do you expect it to be sent to Congress?
Answer. The Administration informally transmitted its legislative
proposal to alter the appropriations triggers for fiscal year 2003 and
2004 to Congress in May 2004. Since that time, some of the stakeholders
have asked for further changes in the MDUFMA law. FDA staff are now
working with Congressional staff and stakeholders to develop the
legislative language required to save the MDUFMA user fee program and
the many benefits it offers to industry, FDA, the health care
community, and patients. FDA sincerely hopes this process will lead to
a proposal that is acceptable to FDA and the Administration, our
stakeholders, and Congress.
Question. What will happen if the language is not submitted or
passed by the Congress before October 1, 2005? Does FDA have a plan to
make up for the potentially lost user fee income?
Answer. If Congress does not enact corrective legislation, FDA will
lose its authority to collect medical device user fees beginning
October 1, 2005 and the performance goals negotiated for the medical
device program will end.
FDA would have to reduce staffing levels, abandon critical
infrastructure modernization, reduce interaction with applicants,
abandon planned guidance development, terminate the Medical Device
Fellowship Program and largely eliminate our use of contract expertise
in academia and the private sector, and take a variety of other steps
to limit expenditures to the amounts made available in our fiscal year
2006 and fiscal year 2007 appropriations. FDA would expect review times
to deteriorate, resulting in significant delays in the introduction of
new medical devices.
TISSUE SAFETY
Question. What is the status of the FDA rule that was proposed in
1997 that would provide guidelines for current good manufacturing
practices for establishments that produce human cells, tissues, and
related products?
Answer. In 2004, FDA published the last two of three final rules to
implement a new risk-based approach for the regulation of human cells,
tissues, and cellular and tissue-based products, HCT/Ps. Together,
these three rules are expected to prevent the spread of communicable
diseases, assure that safety and effectiveness are demonstrated for
cellular and tissue-based products that are also drugs, biological
products, or devices, and enhance public confidence in these products
so that they can fulfill their potential for saving and improving
lives.
FDA published the third and last final rule on November 24, 2004.
The Good Tissue Practice Rule requires manufacturers to recover,
process, store, label, package, and distribute human cells, tissues,
and cellular and tissue-based products in a way that prevents the
introduction, transmission, or spread of communicable disease. Good
tissue practice includes the methods, facilities and controls used to
manufacture HCT/Ps. The rule also contains provisions for FDA
inspection of establishments and enforcement of the regulations.
FDA published the second of the three final rules on May 25, 2004.
The Donor Eligibility rule requires donor screening and testing to
prevent the unwitting use of contaminated tissues with the potential to
transmit infectious disease. The new rule extends the protections
provided by FDA's previously issued tissue rules by requiring testing
and/or screening for additional communicable diseases that can be
transmitted through transplanted tissues and cells. The new regulation
adds requirements to screen for human transmissible spongiform
encephalopathies, including Creutzfeldt-Jakob disease, and to screen
and test for syphilis. Screening and testing for still other relevant
communicable disease agents, such as human T-lymphotropic virus, will
be required for viable cells and tissue rich in leukocytes such as
semen and hematopoietic stem cells. For reproductive tissues, the
regulation also addresses potential risks associated with Chlamydia
trachomatis and Neisseria gonorrhoeae.
The Donor Eligibility rule also provides a framework for
identifying and addressing new or emerging diseases that may pose risks
to recipients of transplanted HCT/Ps and for which appropriate
screening measures or testing are available. Thus, this regulation
gives FDA the flexibility to rapidly address new disease threats as
they appear, providing substantial additional protections for patients
receiving tissue transplants. The Donor Eligibility final rule and the
Good Tissue Practice final rule will become effective on May 25, 2005.
FDA previously published the Establishment Registration and Listing
final rule requiring human cell, tissue, and cellular and tissue-based
product establishments to register and list their products with the
Agency. On January 21, 2004, this rule became effective for certain
establishments, for example, reproductive tissue and cord blood
establishments, which had previously been exempt from its provisions.
The rule is now fully effective. This complete database of HCT/P
establishments and their products will provide important information to
FDA, and will assist the agency to improve communications with industry
and the public.
nutritional products, labeling and dietary supplements
Question. This month, FDA published two Advance Notices of Proposed
Rulemaking regarding the appearance and usefulness of food labels.
Specifically, these ANPRMs discussed how calories and serving sizes are
shown on food labels.
How much funding is included in the fiscal year 2006 budget request
for the Office of Nutritional Products, Labeling and Dietary
Supplements?
Answer. The estimated fiscal year 2006 budget for the Office of
Nutritional Products, Labeling and Dietary Supplements is $10 million.
Question. Would these proposed rules come under the FDA Office of
Nutrition Products, Labeling and Dietary Supplements?
Answer. Yes, the two Advance Notices of Proposed Rulemaking
regarding the appearance and usefulness of food labels will come under
the FDA Office of Nutrition Products, Labeling and Dietary Supplements.
Question. Please provide a summary of the activities under the
jurisdiction of this office, including funding allocated for each
activity, for the past 5 years.
Answer. We would be happy to provide the budget and FTE for the
Office of Nutritional Products, Labeling and Dietary Supplements also
known as ONPLDS for fiscal year 2001-2006, and an estimate breakdown of
budgetary resources and FTE among major activity areas appears below.
Compliance, international activities, outreach and education, and
research activities are included within the major activity areas listed
below.
[The information follows:]
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
DRUG LABELING
Question. As you know, once FDA approves a drug, they are no longer
able to direct the drug manufacturer to ensure that labels on the
approved drug appear a certain way. Vioxx, the drug recently pulled
from the market because of serious safety questions, negotiated with
the FDA for 14 months before finally changing their drug label to
reflect an increased risk of heart attacks, and FDA couldn't force them
to change the label earlier. There are serious concerns about the
potential number of people who died as a result of taking this drug
during this time of negotiation. An FDA official has recently said that
FDA needs additional authority to be able to force drug manufacturers
to present labels in a specific way, without negotiation.
Dr. Crawford, do you believe FDA needs additional authority to
force manufacturers to present drug labels in a manner deemed
appropriate by the FDA, without negotiation with the drug companies?
Answer. I do not believe additional authority is needed. FDA has
significant authority to determine that a drug is misbranded if its
labeling is false or misleading. We can seek judicial relief to mandate
changes to the label or take action to remove the product from the
market. However, both of these actions take time. The process would
normally begin with a warning letter to the company expressing FDA's
position, and the company would have a chance to respond. If the
company does not make the changes voluntarily, FDA would then have to
pursue judicial relief, which is a time-consuming process.
When FDA considers removing a product from the market over a
sponsor's objections, FDA would first evaluate whether the risks of
marketing the product with false or misleading labeling outweighed the
benefits to the population of patients that rely on the product. In
many cases, the risks may not outweigh the benefits. And again, if the
sponsor does not agree to stop marketing, the procedures for removing a
drug from the market are very time consuming. They require publication
of a notice and opportunity for hearing in the Federal Register, and a
possible administrative hearing if the sponsor demonstrates that there
is a genuine issue of material fact to be decided in a hearing.
Question. If you don't believe additional authority is needed, what
steps can FDA take to make sure that situations and questions such as
those surrounding Vioxx and the need for stronger labels on certain
drugs don't present themselves again? Essentially, how do you keep this
from happening time and again?
Answer. FDA is taking a number of steps to help ensure that
patients and health care professionals have access to current
information about drug safety. As we explained in our response to a
previous question, we are proposing a Drug Watch Web Page to respond to
the needs of patients and health care providers. This web page will
contain emerging information for both previously and newly approved
drugs about possible serious side effects or other safety risks. This
information may alter the benefit/risk analysis of a drug for some
patients, and affect patient selection or monitoring decisions. FDA is
also improving communication through more widespread development of
Healthcare Professional and Patient Information Sheets.
Healthcare Professional Information Sheets are one-page information
sheets for healthcare professionals for all new molecular entities as
well as some other drugs (e.g., drugs on FDA's Drug Watch and all drugs
with Medication Guides (FDA-approved patient labeling). The information
sheets will contain the most important new information for safe and
effective product use, such as known and potential safety issues based
on reports of adverse events, new information that may affect
prescribing of the drug, and the approved indications and benefits of
the drug. Patient Information Sheets are one-page information sheets
for patients containing new safety information as well as basic
information about how to use the drug in a consumer friendly format.
Finally, it is important to recognize that, as Dr. Janet Woodcock
emphasized before the Senate Health, Education, Labor and Pensions
Committee last March, another significant issue is that once a label
change is made, old labels in paper form are still in distribution and
it takes time to get newer labels in circulation. Dr. Woodcock
testified that the new strategy of posting drug safety information
sooner using the Drug Watch mechanism will help alleviate this concern
because it will enable the FDA to get information directly to the
people who need it in a more timely manner. We are confident that the
new drug safety actions we are implementing will help ensure that
consumers and healthcare practitioners have access to the most recent
safety information about drug products.
Question. How do you respond to the findings of this study?
Answer. There is a common misconception that FDA issued new
regulations in 1997. In fact, that is not the case. As a result of the
changing social, health, and marketing environments, FDA issued
guidance clarifying existing regulations governing how sponsors could
comply with the requirements for presenting risk information.
Existing regulations require that drug advertisements not be false
or misleading. FDA closely monitor all prescription drug promotion
including direct-to-consumer (DTC) promotion. For most drugs, there is
no requirement that manufacturers submit promotional pieces to FDA for
review prior to use. As a result, FDA often reviews promotional pieces
at the same time as they are used in the public domain to promote the
drug. When FDA finds that promotion is misleading, FDA works to ensure
that the promotion ceases, typically by issuing enforcement letters,
known as untitled letters and Warning Letters.
Overall, the results of the study that you cite corroborate one of
the primary findings of FDA's research on DTC promotion--that DTC
advertising has positive and negative outcomes. Specifically, higher
prescribing rates were seen among those patients who showed symptoms of
the relatively more ambiguous adjustment disorder and requested
prescription medication than those who did not. However, when patients
presented with the symptoms of major depression, their requests
resulted in more of the acceptable steps in the care for major
depression, the clearer of the two disorders to diagnose.
FDA's own work has examined this issue in research on the impact of
DTC advertising on the doctor-patient relationship. In our study
sample, FDA research showed that 32 percent of patients asked about a
prescription drug. Of this proportion of responses, 49 percent reported
that they received the drug they had asked about (51 percent did not
get the drug they asked for). Forty-one percent said they received
advice to change diet or behavior, and 34 percent said they received a
prescription for another drug. FDA's final report of its three surveys
entitled Patient and Physician Attitudes and Behaviors Associated with
DTC Promotion of Prescription Drugs can be found online at http://
www.fda.gov/cder/ddmac/researchka.htm.
FDA's physician data showed that when patients asked for a specific
brand, 64 percent of primary care physicians and 46 percent of
specialists prescribed the requested drug (i.e., 36 percent and 54
percent did not provide requested drug). The most common reasons
reported for not prescribing a requested drug were that a different
drug was more appropriate or the drug was not right for the patient. Of
those physicians who recalled a patient asking about a prescription
drug, 88 percent reported the patient had the condition the drug
treats.
Question. Do you believe that doctors are commonly prescribing
medication that may not be necessary due to increased public requests?
Do you believe this is a public health issue?
Answer. The issue of inappropriate prescribing predates Direct to
Consumer or DTC, TV advertising. Of note, it is arguably most
problematic for antibiotics, a class of drugs that is very rarely
advertised DTC.
Patients do ask about prescription medications, but DTC advertising
is not the primary driver of those requests. FDA survey research shows
that among patients who had been to their doctor in the last 3 months,
approximately 4 percent reported that they made an appointment because
they wanted a prescription for a product they had seen advertised.
Physicians use their clinical judgment when deciding to prescribe
or not prescribe. The simple act of a patient requesting treatment
should not automatically trigger the presumption that the request is
inappropriate. The question is when we should give deference to
clinical expertise and let science be the final arbiter of
``appropriateness.''
Question. How much money is allocated in the FDA budget to be spent
on monitoring of drug advertisements?
Answer. An estimated $1,948,000 is planned in the FDA 2005 budget
and an estimated $2,140,000 is planned in the FDA 2006 budget for
monitoring of drug advertisements.
Question. What role is FDA playing in trying to ensure that drug
advertisements include appropriate information regarding potential
benefits, warnings and side effects?
Answer. The Division of Drug Marketing, Advertising, and
Communications, or DDMAC is responsible for regulating prescription
drug promotion. DDMAC's mission is to protect the public health by
insuring that prescription drug information is truthful, balanced, and
accurately communicated. DDMAC accomplishes its mission through a
comprehensive surveillance, enforcement, and education program, and by
fostering optimal communication of labeling and promotional information
to both health care professionals and consumers.
Based in part on discussion at FDA's September 22-23, 2003 public
meeting, FDA developed guidance to encourage advertising that provides
understandable risk and benefit information appropriate to support
conversations between consumers and their health care providers. On
February 4, 2004, the agency issued three draft guidance documents,
addressing: Options for presenting risk information in consumer-
directed print advertisements for prescription drugs, to encourage use
of consumer-friendly language and formats; criteria FDA uses to
distinguish between disease awareness communications and promotional
materials, in an effort to encourage manufacturers to disseminate
disease educational messages to the public; and, a manner in which
restricted device firms can comply with the rules for disclosure of
risk information in consumer-directed broadcast advertising for their
products, to help encourage compliance in this emerging area of medical
product promotion.
Question. Do you believe the FDA needs to play a greater role in
drug advertisement monitoring? Is more money required for these
activities?
Answer. The pharmaceutical industry spends more than $20 billion a
year on promoting prescription drugs to healthcare professionals and
consumers. Expenditures on DTC promotion has increased from $791
million in 1996 to over $4 billion in 2004.
FDA's monitoring program includes reviewing promotional pieces that
are submitted at the time of initial use and monitoring companies'
websites, TV and print DTC advertisements, medical journal
advertisements, and promotion in the exhibit halls at medical
conferences. Any violations noted in promotion are prioritized using a
risk-based approach so that the most serious violations are addressed
first. FDA issues untitled and warning letters to address violations.
These letters almost always result in the cessation of the misleading
promotion. In the case of more serious violations that are addressed
with Warning Letters, the company agrees to disseminate remedial
information to correct the misleading messages presented in the
violative promotion. In addition, FDA uses its resources to encourage
voluntary compliance by companies to the regulations. These efforts
include providing advisory comments to companies when requested, and
for accelerated approval drugs, issuing guidance and conducting
outreach programs.
Question. What percentage of drug advertisements are seen and
approved, even unofficially, by FDA before they are put on television?
Do you believe this percentage should be higher? How often does FDA
send out warning letters regarding drug advertisements, and how
effective is this method of monitoring?
Answer. There were 143 proposed Direct to Consumer, or DTC
broadcast ads submitted to the Division of Drug Marketing, Advertising
and Communication for comment and 485 DTC broadcast ads disseminated in
2004. However these numbers cannot be simply used to calculate a
percentage of ads that are seen before they are disseminated because of
the following factors. Companies sometimes choose not to proceed with
specific ads after they receive comments from FDA. In addition, some of
the disseminated ads are different versions of the proposed ads. It is
not unusual for a company to generate several ads during the same
promotional campaign.
FDA issued 2 Warning Letters and 8 untitled letters in 2004 for DTC
promotion. These letters are effective in stopping the misleading
promotion. In addition, the Warning Letters resulted in the company
disseminating remedial ads to correct the misleading promotional
messages contained in the cited ads.
COUNTERTERRORISM/FOOD AND AGRICULTURE DEFENSE INITIATIVE
Question. Since fiscal year 2002, funding for FDA's
counterterrorism activities, including regular increases and emergency
supplemental funding, has increased from approximately $7 million to
$244 million, an increase of $237 million in less than 4 years,
including a requested increase of more than $30 million in fiscal year
2006. While I don't doubt the necessity of increased funding and
activities related to counterterrorism, I do believe that it is
imperative that we maintain tight control and knowledge over how these
funds are being spent, and specifically how they are benefiting and
keeping the public safe.
Is all of the $244 million funding requested for counterterrorism
this year part of the President's Food and Agriculture Defense
Initiative? If not, how much is considered a part of this initiative?
Answer. The fiscal year 2006 counterterrorism (CT) request includes
$65 million for continued implementation of Homeland Security
Presidential Directive 9, also known as HSPD-9, relating to ``Defense
of United States Agriculture and Food.'' This includes a $30 million
increase above the initial fiscal year 2005 HSPD-9 implementation of
$35 million. The balance of the $244 million was provided to FDA prior
to the issuance of HSPD-9 in February 2004 and funds a number of
initiatives and efforts supported by Congress. These includes FTE hired
for field operations under the fiscal year 2002 Supplemental;
counterterrorism research, including the food defense research mandated
by section 302 of the Bioterrorism Act; vulnerability assessments to
identify high priority products and likely threat agents;
countermeasures to protect the public from harm caused by a terrorism;
and physical security for FDA facilities, including Agency
laboratories.
Question. How is FDA working with other agencies on FADI? What is
the FDA's proportion of the funding? Is it your belief that other
agencies are paying a proportionate share of their cost for FADI, and
how is that determined? Who makes that determination?
Answer. FDA is working with the USDA/FSIS, Department of Homeland
Security,
White House Homeland Security Council, and the intelligence
community to implement the initiative. We believe the fiscal year 2006
President's budget appropriately reflects funding levels government-
wide to implement the initiative. Section 26 of HSPD-9 appears below
and describes the budget process for implementing the initiative.
Budget
(26) For all future budgets, the Secretaries of Agriculture, Health
and Human Services, and Homeland Security shall submit to the Director
of the Office of Management and Budget, concurrent with their budget
submissions, an integrated budget plan for defense of the United States
food system.
Question. Please provide the total amount of funding transferred to
other agencies, and specifically how this funding will be used.
Answer. The agency anticipates that a portion of the $3 million
requested in fiscal year 2006 for food defense may be made available to
Department of Homeland Security as part of the biosurveillance
initiative. The funds will be used to integrate FDA's food defense
biosurveillance systems with the Department of Homeland Security. Funds
also will be used to support staff sent to the National biosurveillance
analysis center to provide technical expertise to DHS led information
integration and analysis efforts.
Question. When will FADI and the other FDA counterterrorism
initiatives be fully implemented? Should the Committee expect continued
requests for increases in the years to come?
Answer. The U.S. Government's counterterrorism initiatives,
including FDA's efforts, are anticipated to continue in the near term
and will be re-evaluated, as appropriate, based on future intelligence
and threat assessments conducted by the intelligence and homeland
security officials in collaboration with FDA and other Federal
agencies. Therefore, it would be difficult to predict a meaningful
timetable for full implementation of counterterrorism initiatives by
FDA or any other agency. If the $30 million request for food defense is
fully funded, we anticipate that most out-year requirements can be
funded with recurring base funds. Below is specific information on our
request for enabling the agency to protect the food supply.
[The information follows:]
COUNTERTERRORISM FUNDING
FERN--$20.0 million
FERN, which is managed by FDA's Office of Regulatory Affairs, or
ORA, is a multiyear effort to establish a comprehensive network of
Federal and State laboratories across the United States that will
enable FDA to test thousands of food samples within a matter of days in
the event of an act of terrorism or other emergency.
The requested increase, in conjunction with base funding, will
provide an additional 19 FDA-funded State laboratories, adding to the
six that were funded in 2005 and to the 10 FDA laboratories that are
already up and running. Currently, 99 labs in 44 States and Puerto Rico
have satisfactorily completed the FERN Laboratory Qualification
Checklist, which provides vital information to determine if a lab meets
the criteria for participation in FERN and is eligible for Federal
funding.
These funds will also permit FERN's National Program Office to
manage the laboratory response in the event of a food related emergency
and coordinate the FERN support programs which provide validated food
testing methods, proficiency testing for laboratories, electronic
communications, and training programs for laboratory personnel.
FERN, developed in accordance with HSPD-9, integrates the Nation's
laboratory infrastructure to detect and identify biological, chemical
or radiological threat agents in food at the local, State, and Federal
levels. Its primary objectives include prevention (Federal and State
surveillance sampling programs); preparedness (strengthen laboratory
capacity and capabilities); response (surge capacity to handle
terrorist attacks or a national emergency involving the food supply);
and, recovery (support recalls, seizures, and disposal of contaminated
food to restore confidence in the food supply). FERN resources are
leveraged by collaborating and coordinating with other lab networks
including the Laboratory Response Network (LRN) and the National Animal
Health Laboratory Network.
Below is FDA's plan to fully implement FERN. For specific funding
information for FSIS, please see the USDA/FSIS Budget Submission
transmitted to this Subcommittee.
FDA TOTAL LABORATORY CAPABILITY DISTRIBUTION
[Dollars in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year Projected
Fiscal year Fiscal year 2006 Fiscal year outyear Two year Total State
2005 output 2005 enacted cumulative 2006 request cumulative outyear labs
\1\ output output estimate \2\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Microbiological Screening & Confirmatory .............. .............. .............. .............. .............. .............. ..............
\3\....................................
Chemical................................ 6 $9.9 20 $22.4 36 $46.6 36
Radiological............................ .............. .............. 5 5.9 14 16.3 14
Food Lab Response and Methods Validation/ .............. 5.0 .............. 6.6 .............. 13.9 ..............
Proficiency Testing/Training...........
---------------------------------------------------------------------------------------------------------------
TOTAL............................. 6 14.9 25 34.9 50 76.8 50
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Fiscal year 2005 Request includes enacted rescissions.
\2\ Outyear estimates reflect projected costs to complete FDA's 50 FERN labs, based on a 2 year estimate. Amounts requested in future budgets are
contingent upon availability of funds. Once the 50 FERN labs are complete, FDA estimates that the FERN cost will be limited to annual recurring needs.
\3\USDA funded.
Food Defense Research--$5.574 million
This applied and targeted research initiative addresses the
significant need for research funding to ensure our ability to detect
or inactivate a broad range of agents that could pose serious threats
to the food supply. These funds will:
--Expand and accelerate the food defense research plan by identifying
additional agent/commodity combinations which will effect the
relevant food defense research thrusts of methods development,
agent characteristics, prevention technologies, and dose-
response relationships;
--Provide the required base support from FDA for the microbial
forensics program that the Interagency Agreement with the DHS/
National Biodefense Analysis and Countermeasures Center
specifies; and,
--Help to maintain the foods defense research enterprise
infrastructure (equipment maintenance and repair, BSL-3 labs,
select agent inspections, animal care inspections, and LRN/FERN
methods validation labs).
In the food defense area, mission-critical knowledge gaps are
addressed through an integrated portfolio of intramural, extramural,
and consortia-based programs, which address the need to anticipate,
prevent, detect, respond, and recover from a terrorist attack on the
food supply. This requires research activities in:
--Knowledge of the behavior and susceptibility of the population to
microbiological, chemical, radiological, and biologically-
derived toxic agents in priority vulnerable foods during the
stages of production, distribution, marketing, and preparation;
--Identification and/or development of new techniques for
``shielding'' priority vulnerable foods through the development
of new prevention and/or security technologies;
--Development of enhanced sampling and detection methods for priority
agents in vulnerable foods including field deployable and in-
line sensor-based screening, analytical, and investigational
(forensic) technologies;
--Development of effective methods for ensuring that critical food
production and manufacturing infrastructure can be rapidly and
effectively decontaminated if a terrorism event were to occur;
--Assessments of vulnerabilities of foods and identifying areas where
enhancements in preventive measures could increase the security
of the food supply, and,
--Knowledge of consumer behaviors and the critical role consumers
play in preventing illness associated with an attack on the
food supply, to ensure timely and relevant information about
threats and/or an attack is understood by consumers.
Crisis Management: Emergency Operations Network Project and Incident
Management System--$1.5 million
The request also supports the Emergency Operations Network/Incident
Management System Project to provide a comprehensive system for
managing emergencies and related incidents in FDA's centers and field
offices. The development of this system conforms to HSPD-5,
``Management of Domestic Incidents'', and the establishment of a
National Incident Management System. The Emergency Operations Network
Incident Management System (EON IMS), managed by the FDA Office of
Crisis Management, is the central hub for exchanging and relaying all
emergency-related information into, within, and outside of FDA. One of
its overarching objectives is to integrate multiple data streams from
other electronic systems--such as the FERN, eLEXNET, Epidemic
Information Exchange, and from FDA laboratories/investigators and
external agencies--into a coherent fashion during critical decision
points. This improved information management will create a safety net
that significantly reduces the probability that terrorists will achieve
their aims and minimize the impact of these threats if they occur. The
EON IMS is important in all emergencies and exercises requiring
efficient receipt and dissemination of large volumes of information to
our stakeholders, including the public and other Federal and State
agencies. This system will provide a web-based connection for all FDA
offices and our partners, through which accurate real-time information
about various incidents can be shared and discussed.
The EON IMS, which is critical for the agency to manage, plan for,
and respond to emergency situations, has three components: incident
tracking and contact management, a collaboration and knowledge
management tool for meetings and document management, and a Geographic
Information System for mapping and impact assessment.
By developing and incorporating agency-wide guidance in the EON
IMS, FDA will ensure that its emergency response is uniform,
consistent, and coordinated. Participants coordinating an emergency
will be able to provide input and access real-time data regarding a
specific emergency, Agency operating plans and procedures, contact
databases, and analysis tools which will enhance the agency's
capability of responding in the most efficient way possible.
Biosurveillance/NBIS--$3.0 million
The Department of Homeland Security is leading the development of
the National Biosurveillance Integration System (NBIS), which is
intended to integrate systems that monitor health, environment, and
intelligence information in order to provide early detection of
threats, guided responses to events, and information sharing among
agencies. eLEXNET and FERN data capture system, have been identified as
a food sector data system that would address an unmet need in the DHS-
led information integration effort that is a candidate system to
participate in NBIS. FDA's ORA will contribute to the Administration's
Bio-Surveillance Initiative by developing nationally recognized
standards for data messaging and communication in the health area and
by establishing the appropriate connectivity with the NBIS. FDA also
will provide its technical expertise by providing staff to the national
biosurveillance analysis center at DHS.
Question. Can you tell us what FDA has achieved and what work
remains to be done? How does FDA measure success in achieving these
goals?
Answer. As stated in the previous answer to a question, full
implementation of the Administration's counterterrorism initiatives,
including FDA's efforts, is an on-going activity that depends on
current as well as future intelligence and threat assessments.
Therefore it we cannot accurately predict a timetable for full
implementation. In the area of food defense, however, the Presidents
budget places high priority on fully developing the Food Emergency
Response Network so that there is adequate lab testing surge capacity
in the event of a terrorist attack on the food supply, food defense
research so that we have the ability to identify threats and the
science tools to address them, crisis management, and biosurveillance.
The goal of FERN is to establish 100 State laboratories, 50 of which
are chemical and radiological laboratories funded by FDA and the
remaining 50 are microbiological laboratories funded by USDA/FSIS. The
fiscal year 2006 budget fully funds 25 of the planned 50 FDA FERN State
labs. We would be happy to provide specific examples of FDA's on-going
CT activities and accomplishments.
[The information follows:]
FDA'S CT ACTIVITIES AND ACCOMPLISHMENTS
Foods
Working with industry to reduce threats and contain outbreaks of
foodborne illness.--FDA has issued new industry guidance on security
measures, and has encouraged specific additional industry security
measures in response to the increased threat level. The guidance will
help food producers, warehouses, importers, stores, restaurants, and
other food establishments minimize the risk that their food will be
subject to terrorism.
Increasing risk-based surveillance of domestic and imported food.--
FDA has increased risk-based inspections of domestic food facilities
and sampling and lab analysis of foods produced here and abroad.
Expanding the Food Emergency Response Network.--With the U.S.
Department of Agriculture, FDA is designing a network of labs that will
help prevent and respond to chemical, biological or radiation
contamination of our Nation's food supply.
Implementing the 2002 Bioterrorism Act.--Under the Public Health
Security and Bioterrorism Preparedness and Response Act of 2002, FDA
has developed and published regulations requiring the estimated over
400,000 domestic and foreign food facilities to register with FDA. This
will allow FDA to contact food facilities in the case of a bioterrorism
or food-borne illness incident. Also, the new regulations require
importers to tell FDA in advance about food shipments, improve FDA's
ability to detain food, and require food companies to keep records that
will help FDA address a bioterrorism or food-borne illness incident. To
implement the prior notice regulation and screen intelligence data on
food imports, the agency also established the Prior Notice Center,
which is co-located with the Customs and Border Protection's National
Targeting Center.
Increasing ability to quickly identify outbreaks of foodborne
illness.--FDA is working with the U.S. Centers for Disease Control and
Prevention to ensure that outbreaks or unusual patterns of illness are
investigated quickly.
Increasing participation in the first Internet-based food safety
system.--FDA's goal is to have 105 laboratories in fiscal year 2006.
Currently there are 95 laboratories around the country participating in
eLEXNET (Electronic Laboratory Exchange Network). This shared
electronic data system consolidates and shares microbial food
contamination findings among Federal, State and local laboratories.
Medical Products
Helping to speed development of new emergency treatments and
diagnostic tests.--FDA is adapting its review processes and working
vigilantly to speed the development of products to diagnose, treat or
prevent outbreaks from exposure to anthrax, smallpox, plague, and other
biological, chemical and radiological agents that could be used by
terrorists. FDA is even assuming many of the responsibilities normally
carried out by drug sponsors. Specific efforts to date have focused on:
--Products to reduce the effects of radioactive elements;
--New antitoxins to prevent or treat botulism and anthrax;
--Novel vaccines to prevent smallpox;
--Antimicrobials to treat pneumonic plague;
--Approval of Levaquin (levofloxacin) for inhalational anthrax post-
exposure prophylaxis in adults;
--Approval of new labeling for Cipro (ciprofloxacin), based on the
information obtained from the CDC's program evaluation
conducted after the anthrax events of October 2001;
--A number of generic ciprofloxacin drug products have been approved,
which will ensure an adequate supply of product should a
biologic event occur.
Speeding Availability of Critical Medical Products
FDA has made it possible for critically important treatments and
diagnostic tests to be made rapidly available for use during
emergencies. Flexible, creative ways are being found to share
information about these new products (for example, videos for patients
who might receive smallpox vaccine).
Providing Researchers With Early Guidance and Assistance
FDA is providing guidance early on to researchers so that
discoveries made in the laboratory can be more quickly turned into
counterterrorism products available to first responders, health
professionals and the military. FDA published the Draft Guidance for
Industry: Vaccinia Virus-Developing Drugs to Mitigate Complications
from Smallpox Vaccination.
Relying on Animal Efficacy Studies
Under a new regulation, FDA can now approve medical treatments
against chemical, biological, radiological, or nuclear agents based on
evidence of effectiveness from animal studies when human studies are
not ethical or feasible. Human data supporting the safety of such
products is still required.
Ensuring an Adequate Stockpile of Emergency Medical Pproducts
FDA is working with the CDC's Strategic National Stockpile, as well
as with industry, the National Institutes of Health, the Defense
Department, and foreign governments to ensure the safety and
effectiveness of stockpiled vaccines and other medical products so that
the products are available for use during terrorist attacks. FDA and
CDC formed a Post-event Surveillance Working Group and developed a plan
for the collection of post-event safety and outcome information on
medical countermeasures deployed from the SNS and distributed due to a
mass casualty situation caused by a terrorist event.
Offering Research Grants and Other Funding
FDA continues to facilitate the ongoing human trials in plague in
Africa and monkey studies in pneumonic plague, funded in previous years
through interagency agreements with the CDC and NIAID, respectively.
Concomitantly with the human plague studies, an investigational rapid
plague diagnostic test kit is being evaluated. Previously funded trials
are ongoing to study the impact of long-term use of antibiotics that
could be used for post-exposure prevention in healthy adults and in
special populations (such as pregnant women).
Working With the Military
FDA has worked with the Joint Chiefs of Staff to help obtain
critical medical products for combat readiness. It has helped U.S.
Special Forces obtain medical countermeasures for airborne hospitals
used in evacuating battlefield casualties. It has provided intensive
consultation and review to help make available needed investigational
and licensed medical products such as antisera and vaccines. FDA
approved pyridostigmine bromide for combat use by U.S. military
personnel to protect them from the lethal effects of the nerve gas
Soman. The agency also cleared a high-tech battlefield wound dressing
that can stop massive bleeding within minutes and a decontamination
lotion for use by the military to remove or neutralize chemical warfare
agents and other toxins from the skin, preventing serious burns and
death.
Protecting Children
FDA has been providing guidance to parents and health professionals
when they use antibiotics and other drugs to treat children and
pregnant and nursing women stricken by bioterrorist attacks. The advice
covers such areas as:
--Proper dosage,
--Adverse effects, and
--How to pulverize the tablets and mix them with foods or drinks to
give to children in an emergency.
FDA has now approved pediatric dosage forms of the AstroPen
atropine autoinjector to treat children, from infants to adolescents,
exposed to certain nerve agents or organophosphate insecticides.
Two forms of potassium iodide, appropriate for pediatric use, have
been approved as a thyroid blocking agent for use in radiation
emergencies. ThyroShield is an oral solution, and ThyroSafe Tablets are
half the strength of previously approved tablets. ThyroSafe is also
scored in quarters for dosing very young children.
Detecting Bioterrorism Agents
FDA is helping develop methods to detect biological agents that
terrorists might use in an attack.
Blood Donations
Keeping the blood supply safe.--FDA has provided guidance to blood
donation centers and healthcare facilities on prudent measures to
reduce any possible risk of transmitting anthrax through blood donated
by people who may be infected with the disease.
Radiation Protection
Helping companies develop drugs to prevent and treat radiation
exposure.--Radiogardase (insoluble Prussian blue) capsules were
approved to treat people internally contaminated with radioactive
Cesium-137 or Thallium. Pentetate calcium trisodium injection (Calcium
DTPA) and pentetate zinc trisodium injection (Zinc DTPA) were approved
for the treatment of internal contamination with plutonium, americium,
or curium. FDA also posted a draft guidance on ``Internal Radioactive
Contamination--Development of Decorporation Agents.'' This guidance to
industry is to encourage the development of drugs that help eliminate
radioactive materials from the body.
Reviewing radiation devices used against terrorism.--FDA is
monitoring the safety and effectiveness of radiation-emitting devices
used to detect potential security threats in airports and other
locations, devices used to destroy biological agents released in a
terrorist attack, and used to treat victims of radiation exposure.
Veterinary Products
Increasing security measures for animal feed.--FDA is working with
other government agencies, the animal feed industry and other producer
groups to minimize the risk of terrorist attacks on feed for animals
that are raised for human food.
Facilitating the supply of critical animal drugs.--FDA is ensuring
the availability of veterinary drug products to meet emergency needs.
Cosmetics
Working with the cosmetic industry to reduce threats.--In November
2003, FDA issued final guidance to industry on security steps they can
take to help ensure that their products are secure against terrorism.
Field Operations
Improving inspections.--Thanks to increased bioterrorism funding
from Congress, FDA has hired over 650 new inspectors and other field
personnel to keep watch on imports and other avenues our enemies might
try to use to contaminate our food or tamper with other FDA-regulated
products. FDA has also increased inspections of facilities that
manufacture medical products that could be used in response to a
terrorism threat.
Upgrading laboratories.--FDA has upgraded its laboratories to
handle the increased number of sample analyses. Lab scientists are
developing rapid methods for detecting bacterial and viral food
contaminants.
Scrutinizing imports.--FDA has expanded its coverage to an
additional 45 ports of entry where there are significant shipments of
FDA-regulated products. The agency is also strengthening its import
information systems to improve targeting of suspect products. The links
between import and domestic information are being tightened so imported
products can be better traced in this country.
Toxicological Research
Enhancing research facilities and technologies.--FDA is developing
a Level 3 lab at its National Center for Toxicological Research to
safely allow analysis and research on select agents. The lab will be
used to test food samples that may be contaminated by biological,
chemical or radiological means. The center is continuing research to
identify and characterize biological warfare agents using technologies
involving DNA and proteins.
Developing methods to detect explosives.The center is developing
sensor technologies to detect nitrogen-based explosives in airline
cargo by refining its patented methodology currently used to detect and
identify deteriorating food.
NARMS
Question. How much money is in the FDA fiscal year 2006 budget
request for NARMS? How much of that money will be transferred to CDC,
to USDA, and how much will be used to collect and test retail meat
samples?
Answer. At this time, FDA has not determined the exact amount of
NARMS funding for CDC and USDA for fiscal year 2006 but plans to make
decisions in the Fall of 2005. FDA believes that all three arms are
integral to the success of the NARMS program and to achieve the
benefits envisioned at its inception and agreed upon by all three
agencies.
Question. What is the status of the report requested in the fiscal
year 2005 Senate Report regarding the distribution of NARMS funding
between USDA, FDA and CDC? By what date can we expect to receive this
report, which is currently overdue?
Answer. The requested NARMS report is currently in the clearance
process.
FDA OFFICE OF DRUG SAFETY
Question. As you are aware, the FDA Office of Drug Safety has been
under significantly increased scrutiny in recent months due to the
removal of several drugs such as Vioxx and Bextra from the market and
high levels of media coverage. Part of FDA's response to this has been
to conduct a 3 day panel on Cox-2 Inhibitors, the creation of a new
Drug Safety Oversight Board, and increased efforts to ensure that
adverse events are properly monitored and the public is aware of risks
associated with different drugs, such as the creation of a new Drug
Watch web page. The fiscal year 2006 budget request includes an
increase of $5 million for the Office of Drug Safety, bringing total
funding to $22.9 million. Although this is nearly a 25 percent increase
in funding, in a budget that totals nearly $1.5 billion, $22.9 million
seems like a small amount for a subject under such scrutiny and facing
so many difficulties. Further, many of the new efforts recently
announced by the FDA appear as though they will be under the
jurisdiction of the Office of Drug Safety.
Please provide a chart showing specifically how much all of the new
activities announced on February 15 regarding drug safety will cost,
and from where that funding will come.
Answer. We believe that additional funding beyond what is in our
fiscal year 2006 budget request would significantly improve our
oversight of drug safety. Additional funding would enable the Agency to
increase its access to large population-based databases and to develop
software tools to manage and analyze the data. The following
information provides background on the current postmarketing
surveillance system and explains why we believe that system should be
expanded.
On February 15, 2005, HHS Secretary Leavitt and Acting FDA
Commissioner Crawford unveiled a new, emboldened vision for FDA that
will promote a culture of transparency, openness, and enhanced
oversight within the Agency. As part of this vision, FDA plans to
create a new Drug Safety Oversight Board or DSB to provide independent
oversight and advice on the management of important drug safety issues
and to manage the dissemination of certain safety information through
FDA's web site to health care professionals and patients.
Under this proposal, FDA plans to enhance the independence of
internal deliberations and decisions regarding risk/benefit analyses
and consumer safety. The DSB will oversee the management of important
drug safety issues within CDER. The DSB will include individuals from
FDA, as well as medical experts from other HHS agencies and government
departments, such as the National Institutes of Health and Department
of Veterans Affairs. Individuals on the Board who have conducted the
primary review of data or served as deciding officials for any
regulatory action under consideration will be recused from voting on
issues concerning those particular drugs. CDER's Deputy Director will
serve as the Chair of the DSB. The DSB also may consult with other
medical experts and representatives of patient and consumer groups.
CDER is updating its Manual of Policies and Procedures or MAPP, to
reflect the organizational structure, roles, and responsibilities of
the DSB in CDER. Among other responsibilities described in the MAPP,
the DSB and its staff will; Identify, track, and oversee the management
of important drug safety issues; Adjudicate organizational disputes
concerning the management of drug safety issues; Establish policies
regarding management of drug safety issues in CDER; Select drugs to be
placed on Drug Watch (described below) and update their status
(including deciding to remove drugs from Drug Watch) as appropriate;
Oversee the development of patient and professional information sheets
in CDER; Track important emerging safety issues and ensure that they
are resolved in a timely manner; and Ensure that CDER decisions about a
drug's safety benefit from the input and perspective of experts within
and outside FDA who have not conducted the primary review or served as
a deciding official in the ongoing pre-market evaluation or post-market
surveillance activities with respect to that drug.
FDA also plans to increase the transparency of the Agency's
decision-making process by establishing new and expanding existing
communication channels to provide drug safety information to the
public. These communications will help ensure that established and
emerging drug safety data are quickly available in an easily accessible
form. The increased openness will enable patients and their health care
professionals to make better-informed decisions about individual
treatment options.
One communication mechanism the Agency is proposing is a new Drug
Watch webpage that would include emerging information about possible
serious side effects or other safety risks for previously and newly
approved drugs. Per our proposal, this resource would contain important
information that might affect patient selection or monitoring
decisions. The web resource might also contain information about
measures that patients and practitioners could take to prevent or
mitigate harm. Once implemented, this information resource will
significantly enhance public knowledge and understanding of safety
issues by discussing emerging or potential safety problems, sometimes
even before FDA has reached a conclusion that would prompt a regulatory
action.
We are also intensifying our current efforts to provide the public
with the most important information for the safe and effective use of
drugs in patient-friendly language. We are doing this through two
tools: Patient Information Sheets and Healthcare Professional
Information Sheets.
Patient Information Sheets.--Are intended to convey critical facets
of a product's approved labeling in lay terms. These sheets will also
include a section for ``emerging safety information'' in those
instances when we determine that there is information on the Drug Watch
that a patient should consider. This ``emerging safety information''
will match the information on the Drug Watch. Information from the Drug
Watch that is not in the final labeling of the product will be clearly
identifiable and accompanied by a disclaimer, such as: ``This
information reflects FDA's preliminary analysis of data concerning this
drug. FDA is considering, but has not reached a final conclusion about,
this information. FDA intends to update this sheet when additional
information or analyses become available.'' Our ultimate objective is
to develop Patient Information Sheets for all approved drugs, most of
which will not have an emerging safety section.
Healthcare Professional Information Sheets.--Are intended to
highlight the most up-to-date information practitioners may want to
consider in prescribing drugs for their patients. We ultimately intend
to develop these sheets for all new molecular entities as well as some
other drugs. This is not a new approach. When available, the highlights
section of a product's approved labeling will be used to develop the
Healthcare Professional Information sheets.
We would be happy to provide a chart that provides estimates for
costs associated with the activities announced by Secretary Leavitt in
February.
The activities described below were announced in February 2005 and
we have an estimate of the total FTE resources that we plan to use to
conduct these additional drug safety activities in fiscal year 2005 and
fiscal year 2006. However, because we have just launched these new
activities--the Drug Safety Oversight Board, the Drug Watch Web Page,
and Patient and health care professional information sheets--we do not
have an historical basis to definitively estimate the share of
resources that each of these activities will command from the total
resources allocated to perform the activities announced in February,
2005. For example, we cannot reliably predict whether the work
associated with the Drug Watch Web Page will be more or less demanding
compared to the work to support the Drug Safety Oversight Board or to
prepare the information sheets. However, we have committed a total of 8
FTEs in fiscal year 2005 and 4 additional FTEs in fiscal year 2006 (for
a cumulative commitment of 12 FTEs) to these three areas.
[The information follows:]
DRUG SAFETY ACTIVITIES
----------------------------------------------------------------------------------------------------------------
Budgeted from current fiscal Projected additional funding
year 2005 base resources with fiscal year 2006 increase
New Drug Safety Activities ---------------------------------------------------------------
Dollars in Dollars in
millions Amount FTE millions Amount FTE
----------------------------------------------------------------------------------------------------------------
Drug Safety Oversight Board (DSB)............... .............. .............. .............. ..............
Drug Watch Web page............................. .............. .............. .............. ..............
Patient and Healthcare Professional Information .............. .............. .............. ..............
Sheets and related drug safety communications
efforts........................................
---------------------------------------------------------------
TOTAL..................................... $1.08 8 $0.552 4
----------------------------------------------------------------------------------------------------------------
Question. Do you believe additional funding beyond what is in the
budget request will be necessary to significantly improve FDA's
oversight of drug safety?
Answer. We believe that the funding requested in the fiscal year
2006 Budget for drug safety oversight, combined with other FDA
initiatives, will significantly improve our oversight of drug safety.
Today, FDA's post-marketing risk monitoring and assessment rely
primarily on two methods of adverse event reporting to the Agency
through direct, voluntary reporting by health professionals and
consumers and required reporting by pharmaceutical manufacturers.
Required reporting by manufacturers is based primarily on reports they
receive voluntarily from user facilities, healthcare professionals, and
consumers. In 2003, FDA received more than 370,000 such reports. The
Agency's medical, statistical, and epidemiological experts use these
reports to continually evaluate a product's safety profile. Our post-
marketing monitoring programs focus primarily on identifying events
that were not observed or recognized before approval and identifying
adverse events that might be happening because a product is not being
used as anticipated.
The system has inherent limitations--mainly that it relies on
healthcare providers being able to recognize and then voluntarily
report an adverse event. We usually do not know if we are missing
important problems or whether underreporting is obscuring a problem.
During the past 7 years, we have made vast improvements in the way we
manage and analyze this large amount of data. We now use a variety of
electronic and statistical tools that have increased our ability to get
information to our safety evaluators in a timely way, but these
improvements do not address the inherent limitations in the system.
The United States lacks a systematic approach to monitoring and
assessing the safety of medicines that are in general use. This fact is
particularly concerning for newly marketed products. In the case of a
new drug, the only safety data we have comes from the product's use in
clinical trials, where small numbers of carefully screened and closely
monitored patients use a drug for a relatively short time period. The
clinical trial world is very different from the real world where a drug
is suddenly available to millions of people who may have multiple
conditions, may be taking multiple drugs, and may be working with
multiple healthcare providers. If the United States had a systematic
approach to monitoring and assessing drug safety, it would contain
systems to help identify and quantify risks, programs to investigate
and analyze the risks, and methods to intervene and inform as needed to
prevent further harm.
To ensure that the FDA is fulfilling its responsibility to monitor
the safety of drugs, we can no longer rely on information gleaned
solely from voluntary reporting. Instead, the FDA needs a drug safety
system dedicated to the timely collection, triage and analysis of post-
marketing data. Such a Drug Safety Net would have four major
components. The first component is access to large clinical and drug
use data sets to help detect adverse events and medication errors and
to conduct population-based safety studies. In fiscal year 2006, using
the increased resources requested in the President's budget for drug
safety activities, we estimate that we will allocate $2.24 million in
budget authority and $0.4 million in user fees to this first activity.
The second component is a network of partnerships to increase the power
to detect problems. In fiscal year 2006, we estimate that we will
allocate $0.8 million in budget authority and $0.2 million in user fees
to this second component. The third component is strong analytic tools
to rapidly identify drug safety signals. In fiscal year 2006, we
estimate that we will allocate $1.4 million in budget authority and 0.5
million in user fees for this third component. The fourth component is
communicating timely and practical information to help healthcare
providers and consumers make good choices regarding medicines. In
fiscal year 2006, the estimated allocation for this fourth component is
$0.5 million in budget authority and $0.2 million in user fees.
To appropriately assess post-marketing safety of drugs, FDA needs
access to a wide range of clinical, pharmacy, and administrative
databases. Given the highly fragmented healthcare system in the United
States, there is no single healthcare database that the Agency can rely
on to monitor drug adverse events. It is essential that the FDA have
access to a wide range of databases to adequately assess drug safety.
Such databases include: Existing Federal databases, such as those
maintained by the Center for Medicare and Medicaid Services (CMS), the
Department of Veterans Affairs (VA), the Department of Defense (DOD),
the Indian Health Service (IHS); clinical and hospital networks, and
insurers, for example, health maintenance organizations, preferred
provider organizations, Blue Cross/Blue Shield; and pharmacy benefit
management organizations such as Advance PCS, Premier.
In addition, access to a greater variety and breadth of data will
give the FDA the opportunity to perform broad epidemiologic studies
that can examine the risks of adverse events and the risk factors
associated with these events for individual medicines or drug classes.
Tools to manage and analyze the large databases described above are
essential if the value of the information contained therein is to be
realized. The FDA is currently pilot testing tools such as desktop data
mining techniques. A much greater effort is needed on the part of the
FDA, in consultation with experts in government, academia, the private
sector, and the pharmaceutical industry, to help us realize the
potential of these data mining and analysis tools.
MERCURY
Question. The fiscal year 2005 Senate Report included language
encouraging FDA to ``implement an outreach and education effort with
physicians and other appropriate outlets in order to increase awareness
among potentially affected consumers, and to measure the effectiveness
of the efforts on target group behavior and impact on their overall
consumption of seafood.'' The EPA is currently working to determine and
outline what safe levels of mercury are.
What has FDA done in response to the Senate report language? How is
FDA working with EPA on the mercury issue?
Answer. FDA and EPA are jointly sponsoring a public education
campaign to reach women who may become pregnant, pregnant women,
nursing mothers, and parents of young children about the methylmercury
advisory. An extensive outreach effort to over 9,000 print and
electronic media outlets, including outlets that specialize in reaching
women, has been conducted.
Information about the advisory has been sent to over 50
organizations of health care providers to women and children, such as
the American Academy of Pediatrics, the American Academy of Family
Physicians, the American College of Obstetricians and Gynecologists,
and the American College of Nurse Midwives; directors of the Women,
Infant, and Children, or WIC, program; and all local health
departments. The advisory has also been distributed through exhibits at
medical professional association meetings that took place in 2004 and
will be distributed at similar meetings scheduled during 2005.
Brochures about the methylmercury advisory have been sent to
practicing pediatricians, obstetricians and gynecologists, nurse
midwives, and nurse practitioners and physician assistants specializing
in pediatrics or obstetrics throughout the country for distribution
through their offices. These health professionals can order additional
copies of the brochure, as needed, from FDA and EPA for their patients.
In November and December of 2004, EPA and FDA were filling additional
requests for these brochures at a rate of approximately 35,000
brochures per week.
An educational program for pregnant women on food safety for use by
health educators will be launched in spring 2005 that will highlight
information from the methylmercury advisory. This program will include
an educational video and a curriculum and will be sent to 35,000 health
educators working with pregnant women. A special web page for pregnant
women will be part of the program.
Special funding has been set aside for community outreach efforts
in several different geographic locations to insure that the message
reaches women in special populations at greater potential exposure.
Examples include Native Americans and certain Hispanic and Asian groups
who have high fish consumption practices. Some of these projects are
already underway; others will begin later this year.
A Federal-State Working Group on the Coordination of Methylmercury
advisories has been established to examine ways to join the Federal
advisory with the State advisories as much as possible.
This outreach campaign will be evaluated through the FDA-USDA
consumer survey on food safety knowledge, attitudes, and behaviors that
will be completed in 2005.
______
Questions Submitted by Senator Tom Harkin
IMPORTED GELATIN
Question. Imports into the United States of gelatin and gelatin
products, such as unfilled capsules, have increased significantly since
2000. U.S. producers of gelatin products have raised serious questions
about the safety of the raw materials and manufacturing practices used
in facilities producing gelatin for shipment to the United States. It
is my understanding that Food and Drug Administration inspectors have
not to date inspected any gelatin-producing facilities in developing
countries.
In particular, imports of these products from India have increased
nearly 1300 percent over the period since 2000. In fact, many countries
bar beef exports from India because of widespread cattle and livestock
diseases, such as rinderpest and foot and mouth disease. Those diseases
should not be a problem if the gelatin is produced with modern
manufacturing practices, but without FDA inspection it could not be
known what practices and facilities are used in gelatin production in
India. Further, although the Indian cattle population is deemed to be
BSE-free by the OIE, that alone would not assure the wholesomeness and
safety of cattle products and byproducts from India--including gelatin
produced from cattle bones.
What criteria does FDA use to determine which overseas food
processing facilities it should inspect as a condition of shipping to
the United States and which it should allow to ship products to the
United States without any inspection?
Answer. In general, FDA focuses foreign inspections on the same
high-risk food products highlighted for domestic coverage, and FDA does
not inspect overseas food processing facilities as a condition of
shipping products to the United States. The number of foreign
inspections conducted each year for CFSAN regulated products is
minuscule compared to the number of firms exporting to the United
States. For these reasons, it is very important that FDA carefully
select the foreign firms it inspects. The results of triaging the
Center's ``databases'' of inspectional information are used to better
identify the risks associated with particular imported products and
allow the Center to prioritize and efficiently use resources to inspect
at the port of entry or for onsite inspections in the identified
foreign countries. The Center must assure the broadest use of the
information obtained by carefully selecting the products, firms and
countries to be as representative as possible.
Countries are selected if they are significant sources of product
for U.S. markets or if FDA identifies or suspects there is a food
safety or security concern that must be further evaluated. Product
selections focus on products produced commercially and shipped in large
quantities into the United States or shipped in smaller quantities but
intended for consumption by vulnerable populations. These inspections
are considered ``mission critical.''
Question. By what date can this Committee be assured that FDA will
have inspected the plants in India from which gelatin shipments to the
United States are made?
Answer. FDA does not have the authority to require inspection of
foreign facilities and the agency must be invited by the country of
interest to inspect facilities in that country. This process can become
quite protracted, and requires coordination with the authorities of the
exporting country. The first step in scheduling inspections of foreign
food manufacturers is to contact the regulatory agency in India that
has authority over the firms to be inspected.
CFSAN has tentatively identified 12 gelatin manufacturing
facilities in India that it would like to inspect. FDA also hopes to
inspect some of the bone suppliers to these gelatin manufacturing
facilities as they are identified. The Indian agency with regulatory
authority over gelatin manufacturers usually provides a representative
to accompany the FDA investigator during the inspections.
FDA has initiated contact with the regulatory agency in India and
expects to conduct inspections during this fiscal year.
NATIONAL ANTIMICROBIAL RESISTANCE MONITORING SERVICE
Question. The National Antimicrobial Resistance Monitoring Service
(NARMS) is a tool used by three Federal agencies--the Food and Drug
Administration (FDA), the Department of Agriculture (USDA), and the
Centers for Disease Control and Prevention (CDC)--to monitor changes in
antimicrobial resistance in bacterial pathogens.
In December of 2004, I submitted a request to you for more
information about the operation of NARMS and the distribution of NARMS
funds, but I have not received any new information about this important
program.
Answer. On March 7th, 2005, FDA sent a response to you addressing
your request for information about the operation of NARMS and the
distribution of NARMS funds. We would be happy to provide a copy of
this letter, for your convenience.
Question. Have FDA, USDA and CDC planned a meeting to discuss the
distribution of NARMS fiscal year 2005 funds?
Answer. Quarterly meetings on NARMS are conducted and the budget is
one of the items discussed. In addition, FDA is planning an independent
external review of all three components of the NARMS program including
human, retail meat, and slaughter, in conjunction with a public
meeting, June 23-24, 2005, to address sampling issues and how the NARMS
funds have been spent as well as other issues. If there are any
particular Senate staff members whom you would like us to invite to
this meeting, please let us know.
Question. When will the annual report on NARMS activities for 2002
and 2003 be prepared and released to the public?
Answer. FDA published the first annual NARMS retail meat report on
September 30, 2004. This can be found on line at the NARMS website. See
http://www.fda.gov/cvm/narms_pg.html. This report provides data on the
prevalence of antimicrobial resistant foodborne pathogens and commensal
bacteria among retail meat and poultry samples. The 2003 retail meat
report is currently in preparation. CDC is responsible for the annual
report on the human arm of NARMS and USDA for the animal arm of NARMS.
CDC and USDA annual reports can also be viewed from the NARMS website.
Question. What was the level of funding for NARMS in fiscal year
2004, and what are the current expenditures (fiscal 2005) for this
program?
Answer. FDA's total funding of NARMS in fiscal year 2004 was $7.6
millions and $7.3 million in fiscal year 2005. This level reflects both
the fiscal year 2005 across the board rescission and FDA efforts,
announced in the fiscal year 2005 Congressional Justification, to find
efficiencies across FDA programs.
Question. How are NARMS funds being distributed among FDA, USDA and
CDC, and what specific activities are being conducted through this
program?
Answer: At this time, FDA has not determined the exact amount of
the National Antimicrobial Resistance Monitoring System, or NARMS,
funding for FDA, CDC and USDA for fiscal year 2006 but plans to make
decisions in the Fall of 2005. FDA believes that all three arms are
integral to the success of the NARMS program and to achieve the
benefits envisioned at its inception and agreed upon by all three
agencies. The Agency has continued the retail meat arm of NARMS at FDA.
Ten participating FoodNet sites collect samples from local grocery
stores and submit the isolates to the FDA laboratory for antimicrobial
susceptibility testing. This allows FDA to have a more representative
picture of the contribution of the food supply to antimicrobial
resistance and helps sponsor with their antimicrobial drug submissions
to FDA under GFI#152. In addition, FDA has improved NARMS methods
including the development of a standardized Campylobacter broth
microdilution method approved by the National Committee for Clinical
Laboratory Standards, and completed the first annual NARMS retail meat
report on September 30, 2004 which can be found on line at http://
www.fda.gov/cvm/narms_pg.html. This report provides data on the
prevalence of antimicrobial resistant foodborne pathogens and commensal
bacteria among retail meat and poultry samples. Also, FDA has enhanced
the robustness of the NARMS retail meat arm by training personnel in
participating State public health labs in isolation and testing
methodologies as well as instituted randomized sampling strategies;
screened animal feeds and animal feed components for the presences of
resistant pathogens including Salmonella, E. coli and Enterococcus;
presented numerous abstracts, posters, and scientific talks on NARMS at
national and international scientific meetings. CDC and USDA also have
accomplished numerous activities under NARMS. Please contact CDC and
USDA directly for information on their specific activities under NARMS.
______
Questions Submitted by Senator Byron L. Dorgan
MANUFACTURING SUPPLEMENTS AND ANNUAL REPORTS
Question. How many applications did the FDA receive and review from
drug manufacturers under section 506A of the Federal Food, Drug, and
Cosmetic Act in fiscal year 2004? How many of those applications were
approved?
Answer. I would be happy to provide that for the record.
[The information follows:]
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Question. How many drug manufacturing facilities has the FDA
inspected overseas from fiscal year 2000 through fiscal year 2004? In
how many countries are those facilities located? Please provide a list
of those countries.
Answer. For fiscal year 2000-fiscal year 2004 FDA conducted 1,159
inspections at 858 facilities located in 41 foreign countries. These
inspections took place in: Italy, Germany, United Kingdom, Canada,
India, France, Japan, China, Switzerland, Ireland, Spain, Sweden,
Netherlands, Denmark, Belgium, Mexico, Australia, Israel, Austria,
Czech Republic, Hungary, Taiwan, Singapore, Slovenia, Finland, South
Africa, South Korea, Portugal, Norway, Turkey, Croatia, Argentina,
Romania, Jordan, Poland, Slovakia, Russia, Thailand, Macau, Latvia, and
Malta.
______
Questions Submitted by Senator Richard J. Durbin
SINGLE FOOD SAFETY AGENCY
Question. Currently, Federal oversight for food safety is
fragmented with at least 12 different Federal agencies and 35 different
laws governing food safety. There are also dozens of House and Senate
subcommittees with food safety oversight. With overlapping
jurisdictions and scattered responsibilities, Federal agencies often
lack accountability on food safety-related issues and resources are not
properly allocated to ensure the public health is protected. The recent
rise of concerns about antibiotic resistance transferred from food
animals to humans and mad cow disease underscore the need for change.
Our Federal food safety statutes need to be modernized to more
effectively ensure that food safety hazards are minimized and research
and education programs are bolstered. I introduced a bill last week--S.
729--that would do just that.
President Bush and former Homeland Security Secretary Ridge have
both publicly discussed the concept of combining Federal food safety
responsibilities into a single agency, and outgoing HHS Secretary Tommy
Thompson noted in December that he had trouble sleeping at night,
worrying about attacks on our food supply.
Just last Thursday, the trade press reported that Gerald Masoudi,
FDA's chief counsel, said the lack of coordination among the agencies
with responsibility for beef safety as one of the greatest challenges
to protecting the public against mad cow disease. Masoudi said: ``The
responsibility of contaminated food products is spread out among three
Federal agencies that do not regulate the problem in a consistent
manner.''
With all these high-ranking officials raising concerns about the
safety of the food supply, has FDA decided to embrace the concept of a
single food safety agency? What do you see as the disadvantages of
combining the Federal food safety agencies into a single agency? Are
there any advantages?
Answer. Over the years, there has been much discussion about
consolidating all food safety, inspection, and labeling functions into
one agency with the intention of increasing the effectiveness of the
food safety system. In 2002, the White House examined into food safety
issues, including the single food agency issue, and concluded that the
goals of the Administration are better advanced through enhanced
interagency coordination rather than through the development of
legislation to create a single food agency.
From FDA's viewpoint, the important question is whether the various
Federal agencies with food safety authorities are working together
effectively. The answer to that question is yes. The existing system is
working. The American food supply continues to be among the safest in
the world. Food safety agencies are working more closely together than
ever before.
With regard to the Federal Government's efforts to protect the
public from mad cow disease, or Bovine Spongiform Encephalopathy known
as BSE, the Federal agencies with responsibility for food and animal
feed have a harmonized national food safety policy for BSE. For
example, the Interim Final Rule published by FDA that bans the use of
specified risk materials and other prohibited cattle materials in all
FDA-regulated foods and cosmetics parallels USDA's Interim Final Rule
for meat and meat products. Both FDA and USDA closely coordinated the
Federal Government's actions in response to the finding of a BSE-
positive cow in the State of Washington in December 2003. This
coordinated response was successful in quickly containing adulterated
food and feed products and in limiting food safety concerns in the
general public.
FDA appreciates your continued leadership in food safety issues.
Ensuring the safety of the food supply is a top priority for FDA and
for the Administration. A great deal has been done in the past few
years to improve food safety and security. FDA has worked with food
safety agencies at the Federal, State and local levels to significantly
strengthen the Nation's food safety system across the entire
distribution chain, from farm to table, to better protect our food
supply against deliberate and accidental threats. This cooperation has
resulted in greater awareness of such vulnerabilities, the creation of
more effective prevention programs, new surveillance systems, and
faster foodborne illness outbreak response capabilities. An effective
food defense system is built on a strong food safety system.
The fiscal year 2006 budget requests an increase of $30 million for
food defense activities. Of this amount, $20 million will support a
national laboratory network known as the Food Emergency Response
Network, or FERN. FDA and USDA have worked in close collaboration to
establish this network. A critical component of controlling threats
from deliberate food-borne contamination is the ability to rapidly test
large numbers of samples of potentially contaminated foods for a broad
array of biological, chemical, and radiological agents. FERN will
increase the Nation's laboratory surge capacity through a nationwide
network of Federal and State laboratories capable of testing the safety
of thousands of food samples, thereby enhancing the Nation's ability to
swiftly respond to a terrorist attack. The additional $10 million will
be used for targeted food defense research, for continued coordination
and sharing of data with the Department of Homeland Security as part of
the government-wide Bio-Surveillance Initiative, and for upgrades in
FDA's crisis management capabilities.
Significant new tools to enhance the safety of the food supply were
provided by the Public Health Security and Bioterrorism Preparedness
and Response Act also know as the Bioterrorism Act, which the President
signed in 2002. This landmark legislation represents the most
fundamental enhancement to FDA's food safety authorities in many years,
and FDA has been working hard to implement it. In response to the
provisions included in the Bioterrorism Act, FDA has: Published a final
rule to implement recordkeeping requirement on 12/9/2004; Published a
final rule to implement the administrative detention provision on 6/4/
2004; Signed a Memorandum of Understanding with Customs and Border
Protection or CBP, on 12/3/2003 to allow FDA to commission CBP officers
in ports and other locations to conduct investigations and examinations
of imported foods; and Published Interim Final Rules to implement the
requirement for domestic and foreign facilities to register with FDA
and the requirement for prior notice of imported food on 10/10/2003.
In addition to implementing the Bioterrorism Act, FDA has many
other ongoing counterterrorism activities. For example, since September
11, 2001, FDA has increased its emergency response capability by
realigning resources to counterterrorism and by reassessing and
strengthening its emergency response plans. FDA has also conducted
numerous emergency response and preparedness exercises to further
strengthen our response to a terrorist event involving our Nation's
food supply. These exercises have included Federal, State, and industry
partners.
FDA has completed vulnerability assessments focused on specific
foods, suspect agents, and processing steps where an agent could be
intentionally introduced. These vulnerability assessments have assisted
the agency in focusing on those commodities considered to be most at
risk for intentional contamination. Government and industry have worked
together on specific and targeted mitigation steps to address the
vulnerabilities identified in our assessments. These assessments have
also assisted the agency in focusing intramural and extramural research
on four major areas: new methods for detection of agents, prevention
technologies, agent characteristics, and dose response.
FDA has also issued food security guidance documents to different
segments of the food industry on the preventive measures they can take
to minimize the risk that food or cosmetics under their control will be
subject to tampering or other malicious, criminal, or terrorist
actions.
Other Counterterrorism Activities over past 3 years include:
Increasing laboratory surge capacity by expanding participation in the
Food Emergency Response Network, constructing BSL-3 laboratories in the
Field and supporting the construction and deployment of two mobile
laboratories; Enhancing an early-warning system to identify hazardous
foods by expanding the number of Federal, State, and local laboratories
providing data through our Electronic Laboratory Exchange Network;
Conducting numerous research projects to improve our ability to detect
contamination, focusing on rapid test methods for use in the Field;
Carrying out food defense activities under Homeland Security
Presidential Directives; the Interagency Security Plan; the Secretary's
Bioterrorism Strategic Plan; and FDA's Strategic Action Plan; Enhancing
FDA's ability to plan, manage, and respond to food emergencies through
the Emergency Operations Network or EON, an electronic incident
management system; and Enhancing law enforcement and intelligence
gathering/analysis by, for example, participating in select Joint
Terrorism Task Forces and establishing a dedicated Counterterrorism
Section in FDA's Office of Criminal Investigations.
Question. Do you believe the creation of the Department of Homeland
Security could serve as a model for the creation of a single food
safety agency?
Answer. As we explained in our response to the previous question,
the Administration has looked at the issue of consolidation and has
determined that the goals of the Administration are better advanced
through enhanced interagency coordination rather than through
consolidation.
Question. Can you explain the rationale for cutting back the
inspections budget for all FDA products at a time when we are facing
greater risks to the food supply?
Answer. FDA's Field Program budget has increased every year since
fiscal year 2002. However, as Agency resources for particular programs
and activities fluctuate due to funding changes, budget priority
changes or demands of higher priority work, we have responded by
working to ensure that we use available resources strategically.
To manage the ever-increasing volume of imported food shipments, we
are using risk management strategies to achieve the greatest food
protection with our available resources. While we cannot physically
inspect every shipment, it is important to note that every shipment
containing FDA-regulated products entered through the Bureau of Customs
and Border Protection's (CBP) automated system is electronically
reviewed by FDA's system. FDA's system, OASIS, determines if the
shipment meets identified criteria for physical examination or sampling
and analysis or warrants other review by FDA personnel. This electronic
screening allows FDA to concentrate its inspection resources on high-
risk shipments while allowing low-risk shipments to proceed into
commerce.
The Prior Notice provision of the Public Health Security and
Bioterrorism Preparedness and Response Act of 2002 provided a
significant new tool to the agency. It requires that FDA receive prior
notice before food is imported or offered for import into the United
States. Advance notice of imported food shipments, called ``Prior
Notice,'' allows FDA, with the support of the CBP, to target import
inspections more effectively and help protect the Nation's food supply
against terrorist acts and other public health emergencies. With the
new prior notice requirement, specific information mandated by the
Bioterrorism Act must be submitted to FDA before the imported food
arrives in the United States. This not only allows the electronic
system to review and screen the shipments for potential serious threats
to health (intentional or otherwise) before food arrives in the United
States, but it also allows for FDA staff review of prior notices for
those products flagged by the system as presenting the most significant
risk. FDA worked very closely with CBP in developing this screening
system. FDA receives approximately 27,000 prior notice submissions
about incoming food shipments every day. The Prior Notice electronic
system uses intelligence data, known risk factors, and information
about the shipper and consignee to identify prior notice submissions
that warrant additional scrutiny for security purposes.
SEAFOOD SAFETY
Question. The New York Times reported on Sunday, April 10, that six
out of eight major stores selling salmon as wild were in fact selling
farm-raised salmon labeled as wild salmon. As you know, in the last 2
years, scientific bodies have warned that farm-raised salmon contains
higher levels of polychlorinated biphenyls, or PCBs, then wild salmon.
The EPA says PCBs can cause cancer and other effects on the immune
system, the reproductive system and the endocrine system. So consumers
are paying premium prices for what they may consider ``safer'' salmon,
and they are not getting what they pay for.
What is FDA doing to investigate this potential case of misbranding
that may affect the public health? Does the agency have plans to
implement a more rigorous sampling system to ensure that consumers are
in fact buying what is on the label?
Answer. Reported polychlorinated biphenyls or PCBs residue levels
found in farmed salmon are far below the FDA's tolerance level of 2
parts per million for total PCBs in fish tissue and do not justify any
restrictions in fish consumption. FDA advises that consumers should not
alter their consumption of salmon. This fish is an excellent source of
protein and omega 3-fatty acids. From a public health perspective,
there is no need to make a distinction between farmed vs. wild salmon.
Both are low in chemical contamination and should be consumed as a part
of healthy, nutritional diet.
FDA has limited ability to increase enforcement action of labeling
violations. In the broader interest of the consumer, food safety issues
continue to take precedence. Moreover, most of the alleged misbranding
occurred in retail establishments. In these cases, FDA usually defers
to the States in matters related to retail food safety. The
Agricultural Marketing Service, or AMS, recently announced mandatory
labeling of fish and shellfish in retail food stores to indicate
country of origin and method of production (i.e., wild-caught or farm-
raised). AMS is responsible for implementing this country of origin
labeling program, which went into effect on April 4, 2005.
Question. With most food plants going un-inspected for 5 years or
more at a time, what resources do you need to assure the food industry
that the cop is on the beat?
Answer. Inspection frequencies vary depending on the products
produced and the nature of the establishment, although our statistics
indicate that it is not true that most food plants go un-inspected for
5 years or more. Inspection priorities may be based on a firm's
compliance history or coverage of new firms that have not been
previously inspected. Food firms producing high-risk products are
inspected annually with provisions that allow for less frequent
inspections of high-risk firms that have a good inspection history.
After accounting for resources needed to cover their high-risk
responsibility, FDA districts apply their remaining resources,
including available State contract inspections, to non-high risk food
firms in their jurisdictions. On average, non-high risk establishments
are inspected once every 3.7 years. These include FDA, State contract,
and State partnership inspections. In fiscal year 2006, the requested
funds will provide for a total of 21,325 domestic inspections. Of
these, FDA investigators will perform 10,025 inspections and States
will perform 11,300 inspections. These 11,300 State inspections include
an estimated 2,000 State partnership inspections which are voluntarily
provided. In addition, FDA follows up on consumer and trade complaints,
voluntary recalls conducted by the industry.
DIETARY SUPPLEMENT
Question. The agency has promised to finalize the regulations for
the last several years and both consumer groups and the dietary
supplement industry agree that these requirements would go a long way
toward implementing the Dietary Supplement Health and Education Act of
1994.
What is the status of the final rule on dietary supplement good
manufacturing practices?
Answer. The proposed rule was published on March 13, 2003, and
included responses to numerous comments received after publication of
the ANPRM in 1997. The comment period for the proposed rule was
extended until August 2003. We held public stakeholder meetings on
April 29, 2003 in College Park, MD, and on May 6, 2003 in Oakland, CA.
We also held a public meeting, via satellite downlink, on May 9, 2003,
with viewing sites at our district and regional offices throughout the
country. After the comment period closed, we began the process of
analyzing the comments submitted to the proposed rule. The issues
raised by the comments are complex, and in some cases, novel. We have
expended significant internal resources on reviewing and preparing
responses to the comments received.
The publication of a final rule on the current good manufacturing
practice requirements for dietary supplements is a very high priority
at FDA's Center for Food Safety and Applied Nutrition. I can assure you
that this final rule is one of FDA's highest priorities and will be
published as soon as possible.
I have been working with Senator Hatch to develop a requirement
that dietary supplement companies report serious injuries, known as
adverse events, to FDA. FDA's support would GREATLY speed our progress.
Question. Would you support our efforts to require mandatory
adverse event reporting?
Answer. At this time, the Administration has not established a
position on legislative proposals requiring manufacturers of dietary
supplements to report serious adverse events related to use of their
products to the FDA.
Following the removal of ephedra from the market in 2003, FDA said
it would conduct a full safety review of the twelve dangerous
supplements identified by Consumer Reports by October 2004. This has
not happened, to my knowledge, even though four of these supplements
that are known to be carcinogenic or to cause liver failure--
aristolochic acid, androstenedione, chaparral, and kava--appeared with
warnings on FDA's website.
Question. What is the status of FDA's review of the dozen dietary
supplements that have been identified as dangerous by Consumer Reports?
Answer. Under section 402(f)(1)(A) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 342(f)(1)(A)), a food is considered adulterated
if, among other things, it is a dietary supplement or contains a
dietary ingredient that presents a significant or unreasonable risk of
illness or injury under the conditions of use recommended or suggested
in labeling, or if no conditions of use are suggested or recommended in
the labeling, under ordinary conditions of use. FDA bears the burden of
establishing that the product presents a significant or unreasonable
risk. We continually monitor the marketplace and the scientific
literature to identify dietary supplements and dietary ingredients that
may present safety concerns. Regulatory actions are based upon the
totality of the scientific evidence available, including the
pharmacology of the substance, scientific literature, adverse event
reports, and evidence-based reviews.
We continue to consider emerging information on the safety of all
dietary supplements, including those listed in the Consumer Reports
Magazine article, as it becomes available. Based on information
available to FDA at this time, we have no basis to conclude that any of
the dietary supplements containing the substances identified in the
Consumer Reports Magazine article violate the act.
MAD COW
Question. I requested, with Senators Harkin, Cochran and Chambliss,
a GAO report which found that FDA's oversight of the feed ban contains
``program weaknesses that continue to undermine the Nation's firewalls
against BSE.'' While FDA has banned the use in cattle feed of certain
cattle parts suspected to cause BSE transmission, there are loopholes
in the ban and loopholes in its enforcement. The report suggested that
FDA more frequently inspect animal feed facilities, sample cattle feed
for the presence of banned materials, and work more closely with USDA.
You introduced legislation last year, S. 2007, that we are in the
process of revising to concur with these recommendations.
How will FDA address the recommendations in the new GAO report
highlighting weaknesses in FDA's enforcement of the feed ban, such as
implementing more frequent inspections and testing for banned
materials?
Answer. As noted in the FDA response to the GAO report, while a few
areas to further strengthen the feed ban program were identified, for
which FDA has or will implement the recommendations suggested, FDA does
not believe that material weaknesses were identified.
It is important to understand that FDA's risk-based approach to
implementation of the ruminant feed ban regulation. This regulation
potentially impacts a wide variety of firms involved in the animal feed
industry. For example, every firm that manufactures, transports,
distributes or sells animal feed or feed ingredients for any animal
species is subject to inspection under the FDA ruminant feed ban
compliance program, regardless of whether prohibited material is
utilized. Even swine and poultry farms that mix their own feed and
grocery stores that sell pet food are potentially subject to inspection
under this rule. All operations that involve feeding ruminants, such as
dairy and beef cattle are also subject to the rule. In consideration of
the limited resources for inspecting this large population of firms,
FDA is obligated to set priorities for inspecting a meaningful
subpopulation of these regulated firms.
FDA informs FDA and State investigators of its inspection
priorities via its publication of the BSE/Ruminant Feed Inspection
Compliance Program guidance document. FDA's highest inspection priority
is firms that manufacture or process animal feeds or feed ingredients
that contain prohibited material. It is most important that these
products are not used for ruminant feed so this industry segment, which
includes renderers, protein blenders, and feed mills, is inspected on
an annual basis.
Firms outside of this segment generally, have a lower inspection
priority since they pose a lower risk of producing contaminated feed.
Other segments, such as cattle feeders, are of interest to the FDA, but
according to estimates, there are over one million ruminant feeders in
the United States. The agency continues to develop and utilize
educational tools to complement inspections and to promote voluntary
compliance in these large industry segments. FDA will additionally
implement inspectional initiatives to increase its presence in some of
these less inspected segments, such as transporters and animal feed
salvagers, based upon our assessment of compliance and risk in these
industry sectors.
FDA has been collecting and testing animal feed samples since
August 18, 2003, when FDA issued a sampling assignment to the FDA field
staff for the collection of 600 domestic samples. In fiscal year 2005,
we will collect 900 samples for testing. The characteristics of the
ruminant feed ban sampling assignment are unique and more complex when
compared to other FDA sampling programs. Other programs are more simply
based on a methodology that can definitively detect the presence of the
objectionable contaminant or pathogen. Further, the nature of the
contaminants in some of the other programs allows for the establishment
of tolerance levels. The mere detection of a pathogen or some of these
other contaminants, in excess of an established tolerance, is
sufficient to consider the sample violative in these other programs. In
contrast to these other programs, analytical findings alone under the
ruminant feed ban program do not establish that the sample violates the
ruminant feed ban rule. As the ruminant feed ban sampling assignment
notes, positive analytical findings necessitate follow-up evaluations
to determine whether the findings were indeed the result of a violation
of the ruminant feed ban regulation.
Since no test currently exists for the detection of the infectious
prion agent that causes BSE in feed, analysis of feed is not, by
itself, a means of verifying the safety of cattle feed. Additionally,
feed microscopy and/or PCR analytical results alone are not adequate to
make compliance decisions about whether or not the presence of
materials does or does not comply with the provisions established in
the ruminant feed ban rule. The feed microscopy method has limitations
and the rule has exemptions. Feed microscopy generally can only detect
the presence of mammalian tissue, through the identification of either
bone or hair. In certain other situations, feed microscopy can only
detect the presence of animal tissue when blood is detected. The
present ruminant feed ban allows for certain exemptions regarding the
application of the mammalian protein prohibition. Exempted materials
include pure porcine meat and bone meal, blood from any animal species,
including ruminants; gelatin, and milk protein. Further, there is no
prohibition on the use of non-mammalian proteins such as poultry meal.
The detection of certain non-specific materials, such as bone or
muscle, may be the result of exempt ingredients, such as ruminant blood
meal, pure porcine meat and bone meal, or poultry meal. PCR has similar
limitations since the test cannot differentiate between prohibited
material ingredients and certain ruminant-containing exempt
ingredients, such as ruminant blood, ruminant milk products, and plate
waste. Since feed microscopy and PCR cannot differentiate prohibited
material from other acceptable materials, the analytical results cannot
be used to verify the presence of prohibited material, nor can they be
used for confirming the adequacy of clean-out measures. When research
identifies new or better means of identifying the agent that causes BSE
in feed or the presence of prohibited material in feed, FDA will
further assess how best to use sampling and testing to ensure the
safety of animal feed.
We have attached FDA's full response to the nine GAO
recommendations for executive action for your information.
Question. When does FDA intend to ban cattle feed materials that
carry a risk of BSE transmission, such as poultry litter and plate
waste?
Answer. In July 2004, FDA published jointly with the USDA an
advance notice of proposed rulemaking, ANPRM, requesting comments and
scientific information on possible measures that would strengthen the
animal feed regulations.
See http://www.fda.gov/OHRMS/DOCKETS/98fr/04-15882.htm. As part of
the ANPRM, FDA also announced that the Agency had tentatively decided
to issue a proposed rule to implement the International Review Team's
main recommendation to prohibit the use of specified risk materials in
all animal feed. Such a prohibition of specified risk materials may
preclude the need for prohibiting additional ingredients, such as
poultry litter. The present prohibition of specified risk materials in
foods for human consumption implemented with the rules published by
USDA and FDA in January and July 2004, respectively, may obviate the
need for prohibiting plate waste and other human food product waste.
FDA analyzed the comments and information received in response to the
ANPRM and is currently preparing a proposed regulation that would
prohibit the use of certain cattle material that carry the risk of BSE
transmission in all animal feed. In developing the proposed regulation,
the agency is examining the economic and environmental effects that
would be involved with this proposed measure. The proposed regulation
is presently undergoing internal Agency review as part of the clearance
process.
DRUG SAFETY
Question. Serious pain medication and antidepressant side effects
are the latest in a series of problems that have come to light publicly
several years after the drugs were approved by FDA. It has been
suggested that FDA appears to be holding back on the release of
negative information about new drugs. Companies are not required to
publish all the drug safety studies they conduct, but they must provide
these studies to FDA.
While the painkillers Vioxx and Bextra have been removed from the
market pending the inclusion of an improved warning label, what are
FDA's plans for letting the public know in a more timely manner the
results of drug studies that do not necessarily favor the drugs?
Answer. FDA has authority to determine that a drug is misbranded if
its labeling is false or misleading and can seek judicial relief to
mandate changes to the label or take action to remove the product from
the market. Both of these actions take time. The process would normally
begin with a warning letter to the company expressing FDA's position,
and the company would have a chance to respond. Unless the company
voluntarily made the changes, FDA would then have to pursue judicial
relief, a time-consuming process. For FDA to remove the product from
the market over a sponsor's objections, FDA would consider whether the
risks of marketing the product with false or misleading labeling
outweighed the benefits for the population of patients that use the
product. The risks may not outweigh the benefits for many drugs, and
again, the procedures for removing a drug from the market if the
sponsor does not agree to stop marketing are very time consuming. They
require publication of a notice and opportunity for hearing in the
Federal Register, and a possible administrative hearing if the sponsor
demonstrates that there is a genuine issue of material fact to be
decided in a hearing.
We understand the concern regarding the time involved in
negotiating labeling changes with the company. However, as Dr. Janet
Woodcock emphasized in testimony before the Senate HELP Committee last
March, another significant issue is that once a label change is made,
old labels in paper form are still in distribution and it takes time to
get newer labels in circulation. Dr. Woodcock testified that the new
strategy of posting drug safety information sooner using the Drug Watch
mechanism will help alleviate this concern because it will enable the
FDA to get information directly to the people who need it in a timely
manner. We are confident that the new drug safety actions we are
implementing will help to ensure that consumers and healthcare
practitioners will have access to the most recent safety concerns with
drug products. As we explained in our response to a previous question,
we are proposing a Drug Watch Web Page that would include emerging
information for both previously and newly approved drugs about possible
serious side effects or other safety risks that have the potential to
alter the benefit/risk analysis of a drug, affect patient selection or
monitoring decisions, or that could be avoided through measures taken
to prevent or mitigate harm. FDA is also improving communication
through more widespread development of:
Healthcare Professional Information Sheets one-page information
sheets for healthcare professionals for all drugs on FDA's Drug Watch
and all drugs with Medication Guides (FDA-approved patient labeling)
containing the most important new information for safe and effective
product use, such as known and potential safety issues based on reports
of adverse events, new information that may affect prescribing of the
drug, and the approved indications and benefits of the drug.
Patient Information Sheets one-page information sheets for patients
containing new safety information as well as basic information about
how to use the drug in a consumer friendly format.
David Graham, the FDA drug safety analyst responsible for first
raising red flags about Vioxx, suggests he was intimidated by the
agency before giving Congressional testimony last November. His
suggestions that Vioxx and five other new drugs were being approved
despite serious safety concerns were recently validated in an HHS
Inspector General Office report that indicated nearly one-fifth of FDA
scientists surveyed said they had been pressured to approve a drug
despite safety concerns.
Question. What is FDA's official policy toward whistleblowers?
Answer. On January 18, 2005, I personally issued an ``all hands''
e-mail to Agency staff to address this matter. It specifically stated:
``Let me also remind all employees that, consistent with the law,
any act of retaliation against FDA employees resulting from their
actions within the law to criticize the agency (either internally or
externally, including to Congress) is not acceptable. The Agency has
consistently operated using the highest ethical standards, and I expect
all Agency employees to continue to uphold the highest standards of
conduct and fully comply with all relevant Federal requirements and
government policies.''
DIETARY SUPPLEMENTS
Question. Utah District Court ruled on April 13th that FDA's ban on
ephedra and ephedra products was illegal.
What action does the agency intend to take to appeal this decision
and what legislative authority would be helpful to clarify that FDA has
the authority to take deadly dietary supplements such as ephedra off
the market?
Answer. FDA is reviewing the decision that applies to the
Neutraceutical Solarary product line of 10mg or less. Any final
decision on whether or not to appeal must be made by the Solicitor
General.
NONDEPARTMENTAL WITNESSES
[The following testimonies were received by the
Subcommittee on Agriculture, Rural Development, and Related
Agencies for inclusion in the record. The submitted materials
relate to the fiscal year 2006 budget request for programs
within the subcommittee's jurisdiction.]
Prepared Statement of the Ad Hoc Coalition
Mr. Chairman, Members of the Subcommittee, this statement is
respectfully submitted on behalf of the ad hoc coalition \1\ composed
of the organizations listed below. The coalition supports sustained
funding for the concessional sales and Food for Progress (FFP) programs
under Title I of Public Law 480 at a baseline level that will ensure
the continued viability of the programs.
---------------------------------------------------------------------------
\1\ The ad hoc coalition is composed of American Maritime Congress,
American Soybean Association, International Organization of Masters,
Mates & Pilots, Liberty Maritime Corporation, Marine Engineers'
Beneficial Association, Maritime Institute for Research and Industrial
Development, National Association of Wheat Growers, National Corn
Growers Association, National Council of Farmer Cooperatives, Sealift,
Inc., TECO Ocean Shipping, Inc., Transportation Institute, USA Dry Pea
& Lentil Council, USA Rice Federation, U.S. Wheat Associates, Inc., and
Wheat Export Trade Education Committee.
---------------------------------------------------------------------------
In recent years, funding appropriated to the Title I account has
declined sharply. The direct appropriation to the Title I account in
fiscal year 2003 was $118 million. In fiscal year 2004, it declined to
$106 million. In fiscal year 2005, it declined again to $94.2 million.
In the administration's fiscal year 2006 budget, the requested funding
is $65,040,000. According to the fiscal year 2006 USDA Budget Summary,
this request, together with carryover funding, will support a fiscal
year 2006 program level for concessional sales and FFP donations of
$145 million in commodity and (separately funded) freight costs. Total
Title I commodity assistance in fiscal year 2006 is estimated to be
540,000 metric tons.
Mr. Chairman, our coalition has noted that funding for the Title I
account in recent years increasingly has been used to support FFP
grants. FFP is an essential component of our overall food aid system,
and deserves strong support. The coalition nonetheless believes that
the Foreign Agricultural Service (FAS) should make a determined effort
to increase participation in the traditional Title I concessional sales
program. As discussed more fully below, Title I has important policy
objectives that are unique and deserving of sustained funding.
GUIDING PRINCIPLES OF FOOD AID POLICY
Mr. Chairman, the coalition recognizes that American food
assistance policy is well-established and founded on certain guiding
principles, including the following:
--Meeting America's humanitarian obligation to sustain food
assistance programs, U.S. participation in which should
constitute more than 50 percent of all food aid worldwide.
--Employing food assistance programs as stepping stones for economic
growth and development.
--Employing food assistance programs to promote respect worldwide for
American values and our economic system, thereby enhancing
goodwill toward America among disadvantaged populations that
may be breeding grounds for terrorism.
THE SHARP DECLINE IN OVERALL FOOD AID PROGRAM LEVELS
Mr. Chairman, the programs needed to implement these principles
have enjoyed broad, bipartisan support for many decades. The strength
of our commitment has made the United States the world's leading food
aid supplier. In the process, American agriculture is bolstered as food
aid recipients strengthen and stabilize their economies, ultimately
proving to be valuable long term customers for U.S. products.
In recent years, however, food aid shipments have declined sharply.
In fiscal year 2000, the United States programmed more than 6.7 million
tons of food aid to 95 countries, consisting of 35 different
commodities with a value of $1.4 billion. In fiscal year 2001, our food
aid program declined to 6.36 million tons of assistance to 45
countries, valued at $1.28 billion. Unfortunately, this downward trend
has continued. For fiscal year 2006, the President's budget would
support only 3.49 million metric tons of food assistance under all
program authorities.
THE ADMINISTRATION'S BUDGET FOR FISCAL YEAR 2006
The administration proposes Title I funding that would support a
direct loan level of only $43 million. Projected carryover funding and
reimbursements from the Maritime Administration would supplement
available funding, allowing the administration to project an overall
Title I program level (including FFP donations) of $145 million. The
fiscal year 2006 request, however, is limited to $65 million in new
funding to the Title I account. The effect of this drastic reduction in
the annual appropriation would be to empty the account of all reserves,
leaving the Title I program (and Food for Progress donations) with a
greatly diminished baseline and bleak prospects for future fiscal
years. Our coalition regrets the continued erosion of the Title I
program, and believes that funding should be restored to levels which
will ensure the program's viability as a flexible and significant
policy initiative.
The baseline for the Food for Peace Title II program has been
reduced from $1.185 billion in fiscal year 2005 to $885 million. This
initiative was designated as a ``major reform'' by the administration
on February 11, 2005. Under the president's budget, Title II food aid
would be reduced by $300 million and USAID's International Disaster and
Famine Assistance (IDFA) program would be increased by an equivalent
amount. The effect of this initiative would be to reduce Title II
shipments to about 1.75 million metric tons, far below the statutory
level established in the authorizing law of 2.5 million metric tons.
Mr. Chairman, our coalition strongly opposes the administration's
proposal to convert essential American food assistance to a program
under which USAID would use appropriated funds to procure food supplies
in markets that are closer to their final destination. Under Public Law
480, the United States has delivered high-quality, nutritious food to
billions of people throughout the world for more than half a century.
The administration seeks to reverse the longstanding policy that U.S.
food assistance should consist of U.S. commodities, produced by
American farmers and processed by American enterprises. If USAID
requires increased funding for emergency requirements, such funding
should not come at the expense of the Title II program, upon which
American producers, processors, and shipping companies rely.
Furthermore, transfer of Title II funding to the State Department's
IDFA program will undermine our negotiating position in the WTO, where
the United States has spent the last two years defending our current
food assistance programs as a necessity if the world is committed to
reducing hunger.
Under authority provided by Section 416(b) of the Agricultural Act
of 1949, the administration states that surplus nonfat dry milk will be
made available for donation in fiscal year 2006, with a commodity value
estimated at $151 million. This represents another year of diminished
reliance on the 416(b) program, which is CCC-funded.
In its fiscal year 2006 Budget Summary, the Department of
Agriculture estimates that CCC-funded FFP shipments will be 300,000
metric tons of grain equivalent. Unfortunately, this falls short of the
400,000 ton level established for CCC-funded FFP shipments in the 2002
Farm Bill.
Finally, the administration has requested $100 million for the
McGovern-Dole International Food for Education and Child Nutrition
Program (IFEP), an increase of 15 percent over the fiscal year 2005
level.
The administration's recommendations, taken together, would lead to
further reductions in food aid. Of even more significance, the
administration's recommendation to reduce Title II funding in favor of
USAID cash assistance undermines the foundation upon which U.S. food
aid policy has been built in the post-World War II era. The coalition
strongly urges this subcommittee to sustain Title II funding at $1.185
billion, thus ensuring that U.S. food assistance will continue to
consist of U.S. commodities produced and processed by Americans.
RESTORATION OF OVERALL FOOD ASSISTANCE PROGRAM LEVELS
Mr. Chairman, the coalition recommends that food aid be restored
over time to sustainable levels in the range of 4.0 million to 6.0
million metric tons of grain equivalent in each fiscal year. In fiscal
year 2006, this would require an incremental increase in Title I
baseline funding, restoration of the Title II baseline to $1.185
billion and greater use of existing authorities of the Commodity Credit
Corporation. The Title I program must be restored if the United States
is to take full advantage of the unique potential of this historic
initiative. The special features of Title I remain significant elements
of U.S. food aid policy, as discussed below.
ADVANTAGES OF THE TITLE I PROGRAM
Mr. Chairman, the Title I program offers countries long-term loans
and concessional payment terms for the purchase of U.S. agricultural
commodities. As such, Title I has advantages over other food aid
programs.
--Resource Efficient.--Because Title I is a concessional sales
program, appropriations required to support Title I, under the
terms of the Federal Credit Reform Act of 1990, cover only the
subsidy cost, and not the full commodity value. In the
President's budget for fiscal year 2006, the subsidy cost of
the Title I program is established for the fiscal year at 55.40
percent. Thus, under the Title I program, Congress ensures the
shipment of $1.00 worth of U.S. agricultural products at an
appropriated cost of about 55 cents. Moreover, Title I recovers
more dollars for the U.S. Treasury in loan repayments than it
expends in annual outlays.
--Bridge to Economic Independence.--The Title I program is designed
to operate in markets which are neither poor enough to warrant
donations nor rich enough to purchase commodities on commercial
terms. Of the top 50 consumer Nations of American agricultural
products, 43 were once recipients of U.S. foreign aid in some
form. The Title I program historically has been an essential
component of our humanitarian food assistance program, and
should be retained.
Unfortunately, Mr. Chairman, Title I concessional sales have been
reduced to their lowest levels in half a century. According to the
administration's budget, Title I loans in fiscal year 2006 will
generate only $43 million in commodity sales. Of course, the potential
demand for donated food will always exceed the supply. The coalition
recognizes that recipient countries would prefer grants over
concessional sales--even sales at extremely favorable terms. In order
to ensure that the most desperate countries have sufficient donated
food aid, the coalition recommends that FAS aggressively market the
Title I concessional sales program to other countries that can afford
the terms. Among the countries receiving Title I-funded FFP grants in
recent years, there are surely some who reasonably could afford to make
the transition from grant assistance to concessional sales, using the
direct loan authority of Title I.
CONCLUSIONS AND RECOMMENDATIONS
Mr. Chairman, the coalition is committed to maintaining U.S. food
assistance programs at responsible levels in order to meet humanitarian
needs and enhance the potential for economic growth in recipient
countries. Our recommendation is to increase over time annual food
assistance at combined program levels of between 4.0 million and 6.0
million metric tons of grain equivalent. This can be accomplished, as
in the past, with a blend of programs supported by direct
appropriations and CCC program authorities.
The coalition recommends the following:
--Title I program levels should be increased in fiscal year 2006, and
responsibly increased again in succeeding years, so that the
unique advantages of the program, highlighted above, are not
lost. The Senate Appropriations Committee should accompany such
increased funding with strongly-worded report language
directing FAS to market the Title I program aggressively to
those countries that reasonably can afford the terms.
--The Title II program should be restored to its fiscal year 2005
baseline level of $1.185 billion. This will ensure that funding
is not diverted to programs relying primarily upon foreign
commodities for food assistance. This action will also help
ensure that the United States fulfills its moral obligation to
provide not less than one-half of the world's donated food aid.
--In committee report language, the Senate Appropriations Committee
should direct the FAS to make greater use of existing CCC
authorities to expand food aid to regions in critical need.
Mr. Chairman, the Title I program has been a bulwark of American
food aid policy since the days of the Marshall Plan. It deserves the
strong support of your subcommittee, the Congress and the entire
Nation.
The Title I program delivers more food assistance per dollar of
investment than any other program. The Title I program, moreover, is
fully consistent with the administration's position that aid to
developing countries be tied to their adoption of reforms and policies
that make development both lasting and effective. With strong
Congressional support, the Food for Peace Title I program will continue
to promote American humanitarian values. The funding of Title I,
accordingly, should be increased to ensure that this historic program
is restored to its proper place in U.S. food assistance policy.
______
Prepared Statement of the American Farm Bureau Federation
The Farm Security and Rural Investment Act of 2002 (FSRIA) was
enacted 3 years ago following 2 years of exhaustive debate in the House
and Senate. The new farm law represents a delicate balance by
effectively addressing the stability of our agricultural production
base, protecting our important natural resources and enhancing
nutrition and food assistance programs in our Nation.
The mandatory programs administered by the Department of
Agriculture such as commodity, conservation, crop insurance, export
promotion programs, nutrition and forestry are of enormous importance
to farmers, ranchers, rural businesses, low-income Americans and our
Nation's children. Therefore, we respectfully ask the Appropriations
Committee avoid making any changes to mandatory programs within the
USDA budget.
Contract-based working lands conservation programs such as the
Environmental Quality Incentives Program (EQIP), Conservation Security
Program (CSP), Wildlife Habitat Incentives Program and Forest Land
Enhancement Program (FLEP) enjoy wide support within the agricultural
and landowner community, as shown by current levels of
oversubscription. Farm Bureau is concerned that many of these programs
have not been funded at optimum levels, especially the Conservation
Security Program. This has led to a level of confusion among farmers
and ranchers of when and how the program will be implemented within
their particular watershed, and whether or not the financial incentives
will be adequate to encourage participation. As we move forward in this
budget process, Farm Bureau encourages Congress to find an appropriate
balance of funding for targeted land idling programs, such as the
General and Continuous Conservation Reserve Programs, with our current
working lands conservation programs.
Farm Bureau supports the farm bill's energy title that includes
provisions for Federal procurement of bio-based products, bio-refinery
development grants, a biodiesel fuel education program, renewable
energy development program, renewable energy systems, a bioenergy
program, biomass research and development and value-added agricultural
product development and marketing. These programs play a critical role
in assisting in rural economic development as well as in increasing our
Nation's energy independence and should be fully funded at authorized
levels.
Farm Bureau has identified three areas as priorities for
discretionary funding in fiscal year 2006. They are: BSE and animal
identification, programs to increase agricultural exports and crop
protection.
BOVINE SPONGIFORM ENCEPHALOPATHY AND ANIMAL IDENTIFICATION
The threat of bioterrorism and the discovery of Bovine Spongiform
Encephalopathy (BSE) in the United States has prompted increased action
by USDA and others to step up animal disease surveillance and funding
for critical programs such as animal identification. Farm Bureau places
great priority on efforts to safeguard our food supply and requests
increased resources be appropriated to APHIS and ARS for these
activities.
Animal Identification.--We have serious concerns about the adequacy
of the administration's proposal for $33 million to continue
implementation of the National Animal Identification System (NAIS).
Industry estimates of the U.S. Animal Identification Plan (USAIP)
forecast an ongoing cost of about $100 million per year to effectively
implement such a system. USDA has expended just $51 million in the
first year of development of the NAIS. When added to this year's budget
request, the total Federal fund commitment amounts to approximately $84
million. This is significantly short of the Department's own cost
estimate of $550 million for the first 5 years of NAIS operation.
If the government were to fund $33 million each year (the same as
their fiscal year 2005 and fiscal year 2006 requests), two-thirds of
the cost of the NAIS would be funded by producers and affected
industries. Farmers and ranchers cannot afford to bear the brunt of the
cost of this program, especially when most of the benefit will accrue
to the general public. This program undoubtedly benefits consumers as
much or more than it does producers and the industry and a larger
portion of the cost must be borne by the government. We appreciate the
inclusion of NAIS funding in the fiscal year 2005 agriculture funding
bill, and strongly encourage the Committee to significantly increase
that amount in this year's version of the agriculture appropriations
bill. Implementation of this critical program will not only add to our
ability to trace a diseased animal back to the source but will also
reassure the public and our trading partners of a safe food supply.
BSE.--Farm Bureau supports the $66 million in BSE-related funding
proposed by USDA in their fiscal year 2006 budget request. After the
discovery Dec. 23, 2003, of a single cow with BSE in the United States,
a one-time, enhanced BSE surveillance program was implemented,
beginning in June 2004. The enhanced surveillance program will exceed
its testing goals in fiscal year 2005, providing an accurate risk
profile of the probable prevalence of BSE. However, we must continue
our monitoring and surveillance program to protect the health of the
U.S. herd. We support the administration's requested $7.7 million
increase for the Animal Health Monitoring and Surveillance (AHMS)
program, including both program costs and employee compensation. The
AHMS budget request includes $17.1 million for the Animal and Plant
Health Inspection Service (APHIS) to continue BSE testing of at least
40,000 samples (including sampling at rendering plants and on farms)
and to continue to use the 12 State diagnostic laboratories that
support the work of the national BSE reference lab, APHIS' National
Veterinary Services Laboratories.
We support an increase of $7.5 million for an enhanced BSE research
program. The additional research funding would allow Agriculture
Research Service (ARS) scientists to increase our understanding of the
disease and develop the technology needed by regulatory agencies to
establish science-based policies and control programs. This scientific
emphasis will not only help us in our current trade negotiations to
reopen export markets lost since December 2003, but also to focus on a
new understanding of the disease risks in the long run.
In addition, Farm Bureau supports funding for the Agriculture
Research Service (ARS) to complete the National Centers for Animal
Health (NCAH) in Ames, Iowa. The NCAH will offer facilities and
physical resources capable of supporting internationally-recognized
animal health research, including efforts to increase the global body
of scientific knowledge about BSE. We appreciate the inclusion of $59
million in the fiscal year 2006 budget request to complete construction
of the National Centers for Animal Health. However, we believe that the
budget request does not reflect extra-inflationary costs that have
occurred since the original construction plan was completed. Therefore,
we request at least $85 million be appropriated to complete the world-
class NCAH originally envisioned.
CROP PROTECTION AND AGRICUTLURE INPUTS
USDA must continue to work with EPA, agricultural producers, food
processors and registrants to provide farm data required to ensure that
agricultural interests are properly considered and fully represented in
all pesticide registration, tolerance reassessment re-registration, and
registration review processes. In order to participate effectively in
the process of ensuring that crop protection tools are safe and remain
available to agriculture, USDA must have all the resources necessary to
provide economic benefit, scientific analysis and usage information to
EPA. To this end, funding should be maintained or increased, and in
some cases restored, to the following offices and programs:
Office of Pest Management Policy (OPMP).--OPMP has the primary
responsibility for coordination of USDA's Food Quality Protection Act
(FQPA) and crop protection obligations and interaction with EPA. Proper
funding is vital for the review of tolerance reassessments,
particularly dietary and worker exposure information; to identify
critical uses, benefits and alternatives information; and to work with
grower organizations to develop strategic pest management plans. The
funding to OPMP should be designated under the Secretary of
Agriculture's office, rather than as an add-on to the Agricultural
Research Service budget.
Agriculture Research Service (ARS).--Integrated Pest Management
(IPM) research, minor use tolerance research (IR-4) must have funding
maintained, and research on alternatives to methyl bromide must have
funding restored and receive future funding to satisfactorily address
the unique concerns of these programs. Research is also needed to
identify new biological pest control measures and to control pesticide
migration.
Cooperative State Research, Education and Extension Service
(CSREES).--Funding must be maintained, in some cases restored, and full
future funding provided for Integrated Pest Management research grants,
IPM application work, pest management alternatives program, expert IPM
decision support system, minor crop pest management project (IR-4),
crops at risk from FQPA implementation, FQPA risk avoidance and
mitigation program for major food crop systems, methyl bromide
transition program, regional crop information and policy centers and
the pesticide applicator training program.
Economic Research Service (ERS).--USDA and EPA rely on ERS programs
to provide unique data information and they should be properly funded
including IPM research, pesticide use analysis program and the National
Agriculture Pesticide Impact Assessment Program.
Food Quality and Crop Protection Regulation.--Additional funding
for proper regulation of pesticides is needed in the following
programs: National Agriculture Statistics Service pesticide use
surveys; Food Safety Inspection Service increased residue sampling and
analysis; Agricultural Marketing Service; and the Pesticide Data
Program.
PROGRAMS TO INCREASE AGRICULTURAL EXPORTS
Creating new and expanding existing overseas markets for U.S.
agricultural and food products is essential for a healthy agricultural
economy. Continued funding of export development and expansion programs
is essential for improving U.S. farm and food income. Farm Bureau
recommends maximum funding of all authorized export development and
expansion programs in a manner consistent with our commitments in the
World Trade Organization agreement. USDA services and programs that
facilitate U.S. exports by certifying plant and animal health to
foreign customers, that protect U.S. agricultural production from
foreign pests and diseases, and fight against unsound non-tariff trade
barriers by foreign governments are also critical and should receive
priority funding.
Plant and Animal Health Monitoring, Pest Detection and Control.--
Plant and animal health monitoring, surveillance and inspection are
crucial programs. We support funding increases for improved plant pest
detection and eradication, management of animal health emergencies and
to increase the availability of animal vaccines. Expansion of Plant
Protection and Quarantine personnel and facilities is necessary to
protect U.S. agriculture from new and often-times virulent, costly pest
problems.
APHIS Trade Issues Resolution and Management.--Full funding is
needed for APHIS trade issues resolution and management. As Federal
negotiators and U.S. industry try to open foreign markets to U.S.
exports, they consistently find that other countries are raising pest
and disease concerns (i.e., sanitary and phytosanitary measures), real
or contrived, to resist or prohibit the entry of American products into
their markets. Only APHIS can respond effectively to this resistance.
It requires however, placing more APHIS officers at U.S. ports and
overseas where they can monitor pest and disease conditions, negotiate
trading protocols with other countries and intervene when foreign
officials wrongfully prevent the entry of American imports. It is
essential that APHIS be positioned to swiftly and forcefully respond to
such issues when and where they arise.
Export Development and Expansion Programs.--We recommend full
funding of all export development and expansion programs consistent
with our WTO commitments. Farm Bureau supports General Sales Manager
credit guarantee programs. These important export credit guarantee
programs help to make commercial financing available for imports of
U.S. food and agricultural products via a deferred payment plan. The
Market Access Program, the Foreign Market Development Program, the
Emerging Markets Program and the Technical Assistance for Specialty
Crops program are all very important and effective export development
and expansion programs that increase demand for the U.S. agriculture
and food products abroad. These programs also benefit U.S. agriculture
by recruiting far more private sector funds into development and
expansion activities for U.S. agriculture and food products than the
U.S. government contributes.
Direct assistance of U.S. agricultural exports is also authorized
by the Export Enhancement Program, a program to counter unfair trading
practices of foreign countries. Farm Bureau supports the funding and
use of this program in all countries, and for all commodities, where
the United States faces unfair competition. The Dairy Export Incentive
Programs allows U.S. dairy producers to compete with foreign nations
that subsidize their commodity exports. The International Food for
Education Program will be an effective platform for delivering severely
needed food aid and educational assistance.
Public Law 480.--We recommend fully funding Public Law 480. Public
Law 480 programs serve as the primary means by which the United States
provides foreign food assistance through the purchase of U.S.
commodities. The Public Law 480 program provides humanitarian and
public relations benefits, positively impacts market prices and helps
develop long-term commercial export markets. We oppose any efforts to
reduce funding of Public Law 480, especially efforts to transfer
funding to other food aid and development programs outside the
jurisdiction of USDA.
APHIS Biotech Regulatory Service (BRS).--Agricultural biotechnology
is an extremely promising technology and all reasonable efforts must be
made to allow continued availability and marketability of biotech tools
for farmers. BRS plays an important role in overseeing the permit
process for products of biotechnology. Funding for BRS personnel and
activities are essential for ensuring public confidence and
international acceptance of biotechnology products. AFBF supports
increased spending of $4.5 million in this area because it will enable
the USDA to increase inspections of genetically-modified crop field
test sites and enhance its capacity to regulate transgenic animals,
arthropods, and disease agents.
Foreign Agricultural Service (FAS).--The USDA's Foreign
Agricultural Service will require sufficient funding to expand services
to cover all existing and potential market posts.
______
Prepared Statement of the American Forest and Paper Association
The American Forest and Paper Association \1\ (AF&PA) supports
sustainable forest management on all forest lands and encourages
funding for research programs that advance sustainable forestry. In
particular, there is a need to focus resources on research that
addresses forest productivity, wood utilization, inventory, and
conversion of wood to produce bioenergy/bioproducts. The following
recommendations concern fiscal year 2006 appropriations for the U.S.
Department of Agriculture.
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\1\ AF&PA is the national trade association of the forest, paper
and wood products industry. AF&PA represents more than 200 companies
and related associations that engage in or represent the manufacture of
pulp, paper, paperboard and wood products. The forest products industry
accounts for approximately 7 percent of total U.S. manufacturing
output, employs 1.3 million people, and ranks among the top ten
manufacturing employers in 42 States.
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Cooperative State Research, Education, and Extension Service Programs
There is a critical need for practical research and outreach
designed to produce and measure healthier, faster-growing forests. The
USDA Cooperative State Research, Education, and Extension Service
(CSREES) and the universities that partner with the agency play a key
role on-the-ground in meeting this need.
--Cooperative Forestry Research (McIntire-Stennis) Program.--AF&PA
recommends funding of $22.2 million, keeping it at the fiscal
year 2005 enacted level. This program is the foundation of
forest resources research and scientist education efforts at
universities. It provides cutting-edge research on
productivity, technologies for monitoring and extending the
resource base, and environmental quality. The program is a
Federal-state-university partnership and one that has been
highly effective in leveraging the Federal investment and
producing results; in fact, program funding is matched more
than three times by universities with State and non-federal
funds. The Administration's fiscal year 2006 budget request
would cut program funding by 50 percent compared to fiscal year
2005. Proceeding with the Administration's request would
devastate our national forestry research capacity; thus, we
strongly urge restoring funding to the fiscal year 2005 enacted
level.
--National Research Initiative (NRI) Competitive Grants Program.--
AF&PA supports the President's request of $250 million,
provided at least 10 percent of the total is directed towards
forestry research. These NRI grants are a significant source of
funding for basic and applied research on forest resources,
including their management and utilization. Last year, less
than 6 percent of the $180 million funding was allocated to
forestry research proposals. Given the considerable potential
of the program to contribute to the nation's sustainable
forestry research needs, that percentage should be increased to
a minimum of 10 percent, with specific focus on grants that
support forest productivity, wood utilization, and biorefining
technologies.
--Renewable Resources Extension Program (RREA).--AF&PA supports the
President's request of $4.1 million funding, a slight increase
over the fiscal year 2005 funding level. This program provides
the foundation for extension and outreach efforts delivered to
private landowners through universities. Cutting-edge forestry
research is of limited benefit unless it can be effectively
delivered to the nation's forest landowners.
Agenda 2020
Agenda 2020 began in 1994 as a partnership between the forest
products industry and the Department of Energy's Forest Products
Industry of the Future program to accelerate the research, development,
and deployment of new technologies in the industry. This collaborative
research is focused on forest productivity, and developing processes
and technologies that can cut energy use, minimize environmental
impacts, and improve overall productivity in the industry to make it
more globally competitive. The partnership has expanded to include
USDA.
--Biomass Research and Development Initiative.--AF&PA recommends $15
million, with increased focus on production and management of
forests and the efficient conversion of forest biomass into
energy. USDA funding for this initiative supports key
components of Agenda 2020 research, development, and
demonstration for the integrated forest products biorefinery
(IFPB): cultivation and production of high-quality feedstocks
engineered for both bioenergy/bioproducts and traditional
forest products; and conversion technologies to produce
bioenergy/bioproducts at several points during the traditional
harvest and manufacturing process. This IFPB research helps
ensure sustained, healthy forest productivity as the industry
evolves into a producer of high-valued, renewable, carbon-
positive bioenergy and bioproducts.
Conclusion
AF&PA appreciates the chance to provide the Subcommittee with
testimony regarding fiscal year 2006 appropriations for the U.S.
Department of Agriculture. The funding levels proposed for the programs
listed above will help promote sustainable forest management on our
nation's public and private lands.
______
Prepared Statement of the American Honey Producers Association, Inc.
I am Steve Park of Palo Cedro, California, and I serve as President
of the American Honey Producers Association. The American Honey
Producers Association (``AHPA'') is a national organization of
commercial beekeepers actively engaged in honey production throughout
the country. I am here today to request your assistance in continuing
to support full funding for honeybee research.
First, we wish to thank the Subcommittee for the strong support it
has provided in the past for agricultural research activities on behalf
of the beekeeping industry. For example, in the fiscal year 2003 cycle,
the Subcommittee fully restored proposed cuts in honeybee research that
would have resulted in the elimination of three Agricultural Research
Service (``ARS'') laboratories that are indispensable to the survival
of our industry. Such support has enabled the ARS to meet the critical
needs of the industry. To continue this valuable research, the AHPA
requests that for the fiscal year 2006 cycle Congress not only restore
proposed rescissions of add-on funding from previous years for the two
ARS Honey Bee Research Laboratories at Baton Rouge, Louisiana and
Weslaco, Texas, but also approve specific funding increases proposed in
the Administration's budget both for honey bee genome research at the
ARS laboratory in Baton Rouge (under the category of invasive species
affecting plants), and for invasive honey bee pest control research at
the ARS laboratory in Beltsville, Maryland. We also urge the Congress
to maintain honeybee research funding at current levels for the ARS
laboratory in Tucson, Arizona.
The President's Budget Proposal
The American Honey Producers Association applauds the President's
fiscal year 2006 budget proposal for recommending funding increases for
the Honey Bee Research Laboratories located at Baton Rouge, Louisiana,
and Beltsville, Maryland, and also for proposing a continuation of
funding at current levels for the Honey Bee Research Laboratory in
Tucson, Arizona. However, we are concerned that the President's budget
also calls for significant funding decreases for the two Honey Bee
Research Laboratories at Baton Rouge and at Weslaco. These cuts are
proposed rescissions of funding increases included by Congress in
previous appropriation cycles. Specifically, the Administration is
suggesting $394,000 in cuts for the Baton Rouge facility and $246,000
in cuts for the Weslaco facility. These cuts to the ARS Honey Bee
Research Laboratories would have a severe effect on the honey industry
as well as on all pollination-dependent agriculture and many native
plants. This seems particularly inappropriate considering the
substantial benefits that flow from this program, which helps assure
the vitality of the American honeybee industry and U.S. agriculture.
These four ARS laboratories provide the first line of defense
against exotic parasite mites, Africanized bees, brood diseases and
other new pests and pathogens that pose very serious and growing
threats to the viability and productivity of honey bees and the plants
they pollinate. If the rescissions proposed this year by the President
were to be enacted, scientists at the Baton Rouge and Weslaco
laboratories will be overburdened and forced to discontinue essential
research, thereby jeopardizing the U.S. honey bee industry and the
production of agricultural crops that require pollination by honey
bees.
The Importance of Honey Bees to U.S. Agriculture
Honeybees fill a unique position in contemporary U.S. agriculture.
They pollinate more than 90 food, fiber, and seed crops, valued at more
than $20 billion a year in the United States, according to the
Department of Agriculture. Honeybees are necessary for the production
of such diverse crops as almonds, apples, oranges, melons, vegetables,
alfalfa, soybeans, sunflower, and cotton, among others. In fact,
honeybees pollinate about one-third of the human diet. In addition,
honeybees are responsible for the production of an average of 200
million pounds of honey annually in the United States, the sales of
which helps sustain this Nation's beekeepers.
Since 1984, the survival of the honey bee has been threatened by
continuing infestations of mites and pests for which appropriate
controls are being developed by scientists at the four ARS
laboratories. For example, the pinhead sized Varroa mite is
systematically destroying bee colonies and is considered by many to be
the most serious malady of honeybees. In fact, one of the most
publicized effects of the devastating mite infestation is the recent
shortage of honeybees to pollinate California's almond crop--the
biggest crop requiring honey bees for pollination and California's
largest agricultural export. California grows 100 percent of the
Nation's almond crop and supplies 80 percent of the world's almonds.
More than one million honeybee hives are needed to pollinate the half a
million acres of almond groves that line California's Central Valley.
That means nearly half of the managed colonies in the United States are
involved in pollinating almonds in California during February and early
March. Having enough bees to pollinate the almond crop can mean the
difference between a good crop and disaster. Unfortunately, we estimate
that as many as 30 percent of California's almond groves were not
pollinated this year due to a lack of honeybees. As one news report
noted in January of this year, growing almonds without honeybees ``is
like sky diving without a parachute.'' Thus, the damaging effects of
mites and other pests reach far beyond the American honey industry.
Tracheal mites are another contributing factor to the loss of
honeybees. Tracheal mites infest the breathing tube of adult honeybees
and also feed on the bees' blood. The mites essentially clog the bees'
breathing tubes, blocking the flow of oxygen and eventually killing the
infested bees. The industry is also plagued by a honeybee bacterial
disease that has become resistant to antibiotics designed to control it
and a honeybee fungal disease that has no known medication to control
it. These pests and diseases, especially Varroa mites and the bacterium
causing American foulbrood, are now resistant to chemical controls in
many regions of the country. Such resistance is increasingly becoming a
problem, as most of the major chemical controls are ineffective in
treating such pests and diseases. Further, we have seen that these
pests are building resistance to newly developed chemicals more quickly
than in the past, thereby limiting the longevity of chemical controls.
Unfortunately, there is no simple solution to these problems, and
the honeybee industry is too small to support the cost of the needed
research, particularly given the depressed state of the industry in
recent years. Further, there are no funds, facilities, or personnel
elsewhere available in the private sector for this purpose.
Accordingly, the beekeeping industry is dependent on research from
public sources for the scientific answers to these threats. Since the
honeybee industry is completely comprised of small family-owned
businesses, it relies heavily on the ARS for needed research and
development. The key to the survival of the honey industry lies with,
the honeybee research programs conducted by ARS.
The sequencing of the honeybee genome at Baylor University has
opened the door to creating highly effective solutions to these
problems via marker-assisted breeding. Marker assisted breeding would
permit the rapid screening of potential breeders for specific DNA
sequences that underlie specific desirable honeybee traits. The
sequenced honeybee genome is the necessary key that will allow
scientists to discover the important DNA sequences. Because of the
sequenced honeybee genome, it is now possible to apply molecular
biological studies to the development of marker-assisted breeding of
honeybees. Marker-facilitated selection offers the first real
opportunity to transform the beekeeping industry from one that has been
dependent upon a growing number of expensive pesticides and antibiotics
into an industry that is free of chemical inputs and that is
economically viable in today's competitive global marketplace.
Furthermore, research on honeybees, one of five animals chosen by
the National Institutes of Health for genome sequencing, may provide
important insight into other areas of science. The honeybee is the
first agricultural species to be sequenced, and such work may provide
breakthrough advances in many areas of science. In fact, honeybees are
being studied by the U.S. Department of Defense as sentinel species
that could detect and locate agents of harm, such as chemical or
biological threats. According to one researcher, it appears that
honeybees' olfactory capabilities are at least on par with that of a
dog, if not more sensitive. Thus, the scientific advances achieved by
ARS will provide an array of benefits across many disciplines.
The Work of the ARS Honey Bee Research Laboratories
The ARS Honey Bee Research Laboratories work together to provide
research solutions to problems facing businesses dependent on the
health and vitality of honeybees. The findings of these laboratories
are used by honey producers to protect their producing colonies and by
farmers and agribusinesses to ensure the efficient pollination of
crops. Each of the four ARS Honey Bee Research Laboratories (which are
different in function from the ARS Wild Bee Research Laboratory at
Logan, Utah) focuses on different problems facing the U.S. honey
industry and undertakes research that is vital to sustaining honey
production and assuring essential pollination services in this country.
Furthermore, each honey bee research laboratory has unique strengths
and each is situated and equipped to support independent research
programs which would be difficult, and in many cases impossible, to
conduct elsewhere.
Research at the ARS Weslaco Laboratory
Because the AHPA recommends that the appropriation for the Weslaco
laboratory be approved at not less than current levels, we respectfully
request Congress to reject the President's proposal to eliminate
$246,000 in funding added by Congress in fiscal year 2001 for the ARS
Honey Bee Laboratory at Weslaco, Texas. Retaining the current level of
funding for the Weslaco laboratory will enable it to continue its work
in finding a chemical solution to parasitic mites that are causing a
crisis for the U.S. beekeeping and pollination industries. Varroa mites
are causing the loss of hundreds of thousands of domestic honeybee
colonies annually as well as devastating wild bee colonies. As noted in
a February 2005 USA Today article, the Varroa mite has destroyed as
much as 60 percent of the hives in some areas.
For example, in Florida, the number of commercial bee colonies has
fallen from approximately 360,000 hives in 1990 to just 220,000 today--
primarily as a result of the Varroa mite. These tiny parasites--also
known as the ``vampire mite''--attach themselves to the backs of adult
bees and literally suck out their insides. When these mites were first
discovered in the United States in the 1980s, beekeepers were able to
fight them with strips of the chemical fluvalinate. However, the Varroa
mites have evolved into a parasite seemingly immune to current
pesticides. The ARS laboratory at Weslaco has been developing
alternative chemicals to control the Varroa mite. Presently, there are
no other chemicals available for controlling the Varroa mite, and the
laboratory is working frantically to develop other means of control.
The laboratory also is working with a potent fungus, which may kill the
mites without impeding colony development or population size.
Furthermore, the laboratory is researching methods that may control
the small hive beetle. Since its discovery in Florida in 1998, this
pest has caused severe bee colony losses in California, Florida,
Georgia, South Carolina, North Carolina, Pennsylvania, Ohio, and
Minnesota. Estimates put these losses in just one season at over 30,000
colonies. The beetles are now spreading all across the United States.
Although it seems that the chemical coumaphos may help control this
insect as well as the Varroa mite, it has not yet received a Section 3
registration for general use. The ARS honey bee research scientists at
the Weslaco laboratory have been working overtime to find chemicals,
techniques, pheromones, or other methods of controlling the beetle.
Time is of the essence and a control must be found immediately, because
all the bee colonies in the Western Hemisphere are at risk.
This facility also focuses its research efforts on developing
technologies to manage honeybees in the presence of Africanized
honeybees, parasitic mites, and other pests. In order to ensure that
further pests are not introduced into the United States, scientists at
the Weslaco facility provide technical assistance to agriculture
departments in foreign countries on the control of parasitic mites. The
laboratory has worked with officials in Guatemala, Costa Rica, Mexico,
and South Africa to protect the U.S. honeybee population from further
devastation by infestation of foreign parasites, diseases, and other
pests. This inter-governmental cooperation is necessary to ensure the
continued viability of the U.S. honeybee industry.
Research at the ARS Baton Rouge Laboratory
While we are pleased that the President has requested an increased
funding in the amount of $500,000 for honey bee genome research at the
ARS Baton Rouge Laboratory, we are dismayed by and opposed to the
Administration's simultaneous request for $394,000 in cuts for this
facility, eliminating previous Congressional increases in funding. In
light of the importance of genome research, we hope that Congress will
support the President's recommended increase for the ARS laboratory at
Baton Rouge, Louisiana, while opposing the rescission proposed by the
Administration. An increase in funding will allow the vital genome
research conducted in Baton Rouge to achieve more quickly the
breakthrough successes that are closer than ever to realization. The
Baton Rouge facility is the only laboratory in the United States and,
we believe, in the world, developing long-term, genetic-based solutions
to the Varroa mite. Existing stocks of U.S. honeybees are being tested
to find stocks that exhibit resistance to the parasitic mites.
Research scientists with the laboratory have also been to the far
corners of the world looking for mite resistant bees. For example, in
eastern Russia, they found bees that have co-existed for decades with
the mites and survived. Using these bees, the laboratory develops
stocks of honeybees resistant to the parasites. Before these new stocks
are distributed to American beekeepers, the laboratory ensures that the
resistance holds up under a wide range of environmental and beekeeping
conditions, testing attributes such as vigor, pollination, and honey
production. We believe recent scientific breakthroughs with this
genomic research will allow scientists in the near future to breed
honey bees that are resistance to the Varroa mite and other parasites.
The Baton Rouge facility also operates the only honeybee quarantine
and mating station approved by the Animal and Plant Inspection Service.
These stations are necessary to ensure that new lines of bees brought
into the United States for research and development are free of
diseases unknown in the United States. In addition, Baton Rouge
research scientists are focused on the applications of new technologies
of genomics. This work has the potential to enhance the proven value of
honeybee breeding for producing solutions to the multiple biological
problems that diminish the profitability of beekeeping.
Research at the ARS Tucson Laboratory
The American Honey Producers Association supports the
Administration's request that funding for the ARS Honey Bee Research
Laboratory in Tucson be kept at the current level for fiscal year 2006.
This research center is the only ARS honey bee laboratory serving the
needs of beekeepers and farmers in the western United States. The
facility works to improve crop pollination and honeybee colony
productivity through quantitative ecological studies of honeybee
behavior, physiology, pest and diseases, and feral honeybee bionomics.
Currently, the Tucson laboratory is working to finalize the development
of a pheromone that kills the Varroa mite.
Because more than one million colonies are transported from across
the country for pollination into crops grown in the western United
States (primarily California), the Tucson research center addresses
problems that arise from transporting and introducing colonies for
pollination of crops such as almonds, plums, apricots, apples,
cherries, citrus, alfalfa, vegetable seed, melons, and berries. This
research center has been instrumental in disseminating information on
technical issues associated with the transport of bee colonies across
State lines. Additionally, in order to ensure that transported colony
populations remain stable during transport and also during periods
before the crop to be pollinated comes into bloom, scientists at the
laboratory have developed an artificial diet that stimulates brood
production in colonies. A large bee population is necessary to ensure
that efficient pollination occurs, creating superior quality crops.
Research at the ARS Beltsville Laboratory
Again, we support the President's proposal to increase funding at
the ARS Honey Bee Research Laboratory in Beltsville by $100,000 to
boost current research efforts aimed at eliminating invasive honeybee
pests. This facility, the oldest of the Federal bee research centers,
conducts research on the biology and control of honey bee parasites,
diseases, and pests to ensure an adequate supply of bees for
pollination and honey production. Using biological, molecular,
chemical, and non-chemical approaches, scientists in Beltsville are
developing new, cost-effective strategies for controlling parasitic
mites, bacterial diseases, and emergent pests that threaten honey bees
and the production of honey.
The laboratory also develops preservation techniques for honeybee
germplasm in order to maintain genetic diversity and superior honeybee
stock. Scientists at the facility also provide authoritative
identification of Africanized honeybees and diagnosis of bee diseases
and pests for Federal and State regulatory agencies and beekeepers on a
worldwide basis. In operating this bee disease diagnosis service, the
Beltsville facility receives over 2,000 samples annually from across
the United States.
Conclusion
In conclusion, we wish to thank you again for your support of
honeybee research in the past and for your Subcommittee's understanding
of the importance of these laboratories. The American Honey Producers
Association would appreciate your continued support by (1) increasing
the level of funding for the ARS Honey Bee Research Laboratory in Baton
Rouge, Louisiana, by $500,000, as proposed by the Administration in its
fiscal year 2006 budget; (2) increasing the level of funding for the
ARS Honey Bee Research Laboratory in Beltsville, Maryland, by $100,000,
as proposed by the Administration in its fiscal year 2005 budget; (3)
restoring the proposed rescissions from previous years of $394,000 for
the Baton Rouge facility and $246,000 for the Weslaco, Texas, facility;
and (4) maintaining the current level of funding for the ARS Honey Bee
Research Laboratory in Tucson, Arizona. Only through research can we
have a viable U.S. beekeeping industry and continue to provide stable
and affordable supplies of bee-pollinated crops, which make up fully
one-third of the U.S. diet.
Furthermore, we urge you to reject any effort to cut the operating
budgets of these vitally important research laboratories by
consolidating their functions. Any proposed cuts and their resulting
budget and staff reductions would significantly diminish the quality of
research conducted by these laboratories, harming bee keepers as well
as farmers who harvest pollination-dependent agriculture. Congress
cannot allow these cuts to occur and must continue to provide
sufficient funding for the ARS Honey Bee Research Laboratories to
perform their vital role.
I would be pleased to respond to any questions that you or your
colleagues may have.
______
Prepared Statement of the American Indian Higher Education Consortium
Mr. Chairman and Members of the Subcommittee, on behalf of the
American Indian Higher Education Consortium (AIHEC) and the 33 Tribal
Colleges and Universities that comprise the list of 1994 Land Grant
Institutions, thank you for this opportunity to share our funding
requests for fiscal year 2006.
This statement is presented in three parts: (a) a summary of our
fiscal year 2006 funding recommendation, (b) a brief background on
Tribal Colleges and Universities, and (c) an outline of the 1994 Tribal
College Land Grant Institutions' plan for using our land grant programs
to fulfill the agricultural potential of American Indian communities,
and to ensure that American Indians have the skills and support needed
to maximize the economic development potential of their resources.
SUMMARY OF REQUESTS
We respectfully request the following funding levels for fiscal
year 2006 for our land grant programs established within the USDA
Cooperative State Research, Education, and Extension Service (CSREES)
and Rural Development mission areas. In CSREES, we specifically
request: $12 million payment into the Native American endowment fund;
$3.3 million for the higher education equity grants; $5 million for the
1994 institutions' competitive extension grants program; $3 million for
the 1994 Institutions' competitive research grants program; and in the
Rural Development--Rural Community Advancement Program (RCAP), that $5
million for each of the next 5 fiscal years be targeted for the tribal
college community facilities grants. RCAP grants help to address the
critical facilities and infrastructure needs at the colleges that
impede our ability to participate fully as land grant partners. Since
fiscal year 2001, the RCAP tribal college competitive program has
received an annual appropriation of $4-$4.5 million.
BACKGROUND ON TRIBAL COLLEGES AND UNIVERSITIES
The first Morrill Act was enacted in 1862 specifically to bring
education to the people and to serve their fundamental needs. Today,
over 140 years after enactment of the first land grant legislation, the
1994 Land Grant Institutions, as much as any other higher education
institutions, exemplify the original intent of the land grant
legislation, as they are truly community-based institutions.
The Tribal College Movement was launched in 1968 with the
establishment of Navajo Community College, now Dine College, serving
the Navajo Nation. Rapid growth of tribal colleges soon followed,
primarily in the Northern Plains region. In 1972, the first six
tribally controlled colleges established the American Indian Higher
Education Consortium to provide a support network for member
institutions. Today, AIHEC represents 34 Tribal Colleges and
Universities--33 of which now comprise the list of 1994 Land Grant
Institutions located in 12 states--created specifically to serve the
higher education needs of American Indian students. Annually, they
serve approximately 30,000 full--and part-time students from over 250
Federally recognized tribes.
All of the 1994 Land Grant Institutions are accredited by
independent, regional accreditation agencies and like all institutions,
must undergo stringent performance reviews to retain their
accreditation status. Tribal colleges serve as community centers by
providing libraries, tribal archives, career centers, economic
development and business centers, public meeting places, and child care
centers. Despite their many obligations, functions, and notable
achievements, tribal colleges remain the most poorly funded
institutions of higher education in this country. Most of the 1994 Land
Grant Institutions are located on Federal trust territory. Therefore,
states have no obligation and in most cases, provide no funding to
tribal colleges. In fact, most states do not even fund our institutions
for the non-Indian state residents attending our colleges, leaving the
tribal colleges to absorb the per student operational costs for non-
Indian students enrolled in our institutions, accounting for
approximately 20 percent of our student population. Under these
inequitable financing conditions and unlike our state land grant
partners, our institutions do not benefit from economies of scale--
where the cost per student to operate an institution is diminished by
the increased size of the student body.
As a result of 200 years of Federal Indian policy--including
policies of termination, assimilation and relocation--many reservation
residents live in abject poverty comparable to that found in Third
World nations. Through the efforts of Tribal Colleges and Universities,
American Indian communities are receiving services they need to
reestablish themselves as responsible, productive, and self-reliant
citizens. It would be regrettable not to expand the very modest
investment in, and capitalize on, the human resources that will help
open new avenues to economic development, specifically through
enhancing the 1994 Institutions' land grant programs, and securing
adequate access to information technology.
1994 LAND GRANT PROGRAMS--AMBITIOUS EFFORTS TO REACH ECONOMIC
DEVELOPMENT POTENTIAL
Tragically, due to lack of expertise and training, millions of
acres on our reservations lie fallow, under-used, or have been
developed through methods that render the resources non-renewable. The
Equity in Educational Land Grant Status Act of 1994 is starting to
rectify this situation and is our hope for future advancement.
Our current land grant programs are small, yet very important to
us. It is essential that American Indians explore and adopt new and
evolving technologies for managing our lands. We have the potential of
becoming significant contributors to the agricultural base of the
nation and the world.
Native American Endowment Fund.--Endowment installments that are
paid into the 1994 Institutions' account remain with the U.S. Treasury,
only the annual interest, less the USDA's administrative fee, is
distributed to the colleges. The latest gross annual interest yield
(fiscal year 2004) is $2,180,705, after the USDA's administrative fee
of $87,228 is deducted; $2,093,477 remains to be distributed among the
33 tribal college Land Grant Institutions by statutory formula. While
we have not yet been provided the breakdown of fiscal year 2004 funds
as distributed per institution, in the prior year the USDA's
administrative fee was larger than the interest yield payments
distributed to 74 percent of the 1994 Land Grant Institutions. After
the distribution amounts are determined for this year's disbursement,
we fully expect similar results. We ask the Subcommittee to review the
Department's administrative fee and consider reducing it for this
program, so that more of these already limited funds can be distributed
to 1994 Land Grant Institution community based programs.
Just as other land grant institutions historically received large
grants of land or endowments in lieu of land, this endowment assists
1994 Land Grant Institutions in establishing and strengthening our
academic programs in such areas as curricula development, faculty
preparation, instruction delivery, and to help address critical
facilities and infrastructure issues. Many of the colleges have used
the endowment funds in conjunction with the Education Equity Grant
funds to develop and implement their academic programs. As earlier
stated, tribal colleges often serve as primary community centers and
although conditions at some have improved substantially, many of the
colleges still operate under deplorable conditions. Most of the tribal
colleges cite improved facilities as one of their top priorities.
Several of the colleges have indicated the need for immediate and
substantial renovations to replace construction materials that have
long exceeded their effective life span, and to upgrade existing
buildings due to accessibility and safety concerns.
An increased endowment payment would enhance the size of the corpus
and thereby increase the annual interest yield available to the 1994
land grant institutions. This additional funding would be very helpful
in our efforts to continue to support faculty and staff positions and
program needs within Agriculture and Natural Resources departments, as
well as to continue to help address the critical and very expensive
facilities needs at our institutions. Currently, the amount that each
college receives from this endowment is not enough to adequately
address curricula development and instruction delivery, as well as make
even a dent in the necessary facilities projects at the colleges. In
order for the 1994 Institutions to become full partners in this
Nation's great land grant system, we need and frankly, under treaty
rights, warrant the facilities and infrastructure necessary to fully
engage in education and research programs vital to the future health
and well being of our reservation communities. We respectfully request
the subcommittee agree to fund the fiscal year 2006 endowment payment
at $12 million, as included in the President's Budget recommendation.
1994 Institutions' Educational Equity Grant Program.--Closely
linked with the endowment fund, this program is designed to assist 1994
land grant institutions with academic programs. Through the modest
appropriations made available since fiscal year 2001, the tribal
colleges have been able to begin to support courses and plan activities
specifically targeting the unique needs of our respective communities.
The 1994 Institutions have developed and implemented courses and
programs in natural resource management; environmental sciences;
horticulture; forestry; bison production and management; and especially
food science and nutrition to address epidemic rates of diabetes and
cardiovascular disease on reservations. If more funds were available
through the Educational Equity Grant Program, tribal colleges could
channel more of their endowment yield to supplement other facilities
funds to address their critical infrastructure issues. Authorized at
$100,000 per eligible 1994 Institutions, in fiscal year 2005,
approximately $2,160,000 or two-thirds of the authorized level was
available for distribution to the 1994 institutions, after across-the-
board cuts and Department fees were applied to the initial appropriated
level of $2,250,000. We respectfully request full funding of $3.3
million to allow the tribal colleges to build upon the courses and
activities that the initial funding launched.
Extension Programs.--The 1994 Institutions' extension programs
strengthen communities through outreach programs designed to bolster
economic development; community resources; family and youth
development; natural resources development; agriculture; as well as
health and nutrition awareness.
In fiscal year 2005, $3,273,000 was appropriated for the 1994
Institutions' competitive extension grants, a slight increase over
fiscal year 2004. Without adequate funding, 1994 Institutions' ability
to maintain existing programs and to respond to emerging issues such as
food safety and homeland security, especially on border reservations,
is severely limited. Increases in funding are needed to support these
vital programs designed to address the inadequate extension services
provided to Indian reservations, by their respective state programs. It
is important to note that the 1994 extension program is designed to
complement the Indian Reservation Extension Agent program and does not
duplicate extension activities. 1994 Land Grant programs are funded at
very modest levels. The tribal college land grants have applied their
ingenuity for making the most of every dollar they have at their
disposal by leveraging funds to maximize their programs whenever
possible. For example, over the last 5 years the College of Menominee
Nation (CMN) in Keshena, Wisconsin, has leveraged funding from several
programs to expand its extension program focusing its efforts on
strengthening the economic capacity of the local community. Partnering
with U.S. Department of Health and Human Services, CMN is designing a
curriculum that involves tribal elders, relevant service providers,
local schools, the Commission on Aging, and health clinics designed to
encourage minority youth to enter Allied Health fields. With a grant
from the Wisconsin Department of Transportation, the college's
extension and outreach offers the Transportation Alliance for New
Solutions (TrANS) program. This is a 120 hour program designed to train
women and minorities in roads construction. In addition, the Federal
Highway Administration and the Wisconsin Department of Transportation
have provided grant funds to CMN extension and outreach to conduct a
Summer Transportation Institute focusing on middle school students.
Students spend 4 weeks exploring various careers within the
transportation industry. To continue and expand successful programs
such as those being conducted at CMN, we request the Subcommittee
support this competitive program by appropriating $5 million to sustain
the growth and further success of these essential community based
programs.
1994 Research Program.--As the 1994 Land Grant Institutions have
begun to enter into partnerships with 1862/1890 land grant institutions
through collaborative research projects, impressive efforts to address
economic development through land use have come to light. Our research
program illustrates an ideal combination of Federal resources and
tribal college-state institutional expertise, with the overall impact
being far greater than the sum of its parts. We recognize the budget
constraints under which Congress is functioning. However, $1,087,000,
the fiscal year 2005 appropriated level, is grossly inadequate for a
competitive pool of 33 institutions. This research program is vital to
ensuring that tribal colleges may finally become full partners in the
Nation's land grant system. Many of our institutions are currently
conducting agriculturebased applied research, yet finding the resources
to conduct this research to meet their communities' needs is a constant
challenge. This research authority opens the door to new funding
opportunities to maintain and expand the research projects begun at the
1994 Institutions, but only if adequate funds are appropriated. Project
areas being studied include soil and water quality, amphibian
propagation, pesticide and wildlife research, range cattle species
enhancement, and native plant preservation for medicinal and economic
purposes. We strongly urge the Subcommittee to fund this program at $3
million to enable our institutions to develop and strengthen their
research potential.
Rural Community Advancement Program (RCAP).--In fiscal year 2005,
$4.5 million of the RCAP funds appropriated for loans and grants to
benefit Federally recognized Native American tribes was targeted for
community facility grants for improvements at Tribal Colleges and
Universities. This amounts to a $500,000 increase over the level that
had been allocated to the program each year since fiscal year 2001.
This program requires a minimum 25 percent non-Federal match. This has
become a barrier for some of the colleges to even consider applying for
these funds. Tribal colleges are chartered by their respective tribes
which enjoy a government-to-government relationship with the Federal
Government. Due to this relationship, tribal colleges have very limited
access to non-Federal monies. Non-Federal matching requirements present
a significant barrier to our colleges in their ability to compete for
much needed funds. In the 2002 Farm Security and Rural Investment Act,
(Public Law 107-171) language was adopted with regard to the Rural
Cooperative Development Grants that limits non-Federal matching to no
more than 5 percent in the case of a 1994 institution. As stated
earlier, the facilities at many of the 1994 Land Grant Institutions are
in serious need of repair and in many cases replacement. We urge the
Subcommittee to designate $5 million for each of the next 5 fiscal
years to afford the 1994 institutions the means to aggressively address
critical facilities needs, thereby allowing them to better serve their
students and respective communities. Additionally, we request that
Congress include language directing the agency to limit the non-Federal
matching requirement to no more than 5 percent, the same level as
applied to the Rural Cooperative Development Grants program, to help
the 1994 land grant institutions to effectively address critical
facilities and construction issues at their institutions.
CONCLUSION
The 1994 Land Grant Institutions have proven to be efficient and
effective vehicles for bringing educational opportunities to American
Indians and hope for self-sufficiency to some of this Nation's poorest
regions. The modest Federal investment in the 1994 Land Grant
Institutions has already paid great dividends in terms of increased
employment, education, and economic development. Continuation of this
investment makes sound moral and fiscal sense. American Indian
reservation communities are second to none in their potential for
benefiting from effective land grant programs and as earlier stated no
institutions better exemplify the original intent of the land grant
concept than the 1994 Land Grant Institutions.
We appreciate your support of the Tribal Colleges and Universities
and we ask you to renew your commitment to help move our communities
toward self-sufficiency. We look forward to continuing our partnership
with you, the U.S. Department of Agriculture, and the other members of
the Nation's land grant system--a partnership that will bring equitable
educational, agricultural, and economic opportunities to Indian
Country.
Thank you for this opportunity to present our funding proposals to
this Subcommittee. We respectfully request your continued support and
full consideration of our fiscal year 2006 appropriations requests.
______
Prepared Statement of the American Nursery & Landscape Association and
the Society of American Florists
The American Nursery & Landscape Association (ANLA) and the Society
of American Florists (SAF) welcome this opportunity to present the
nursery and floriculture industry's views regarding the U.S. Department
of Agriculture's (USDA) budget for the fiscal year 2006.
ANLA is the national trade organization representing the U.S.
nursery and landscape industry. ANLA represents 2,500 production
nurseries, landscape firms, retail garden centers and horticultural
distribution centers, and the 16,000 additional family farm and small
business members of the State and regional nursery and landscape
associations. ANLA's grower members are estimated to produce about 75
percent of the nursery and greenhouse crops moving in domestic commerce
in the United States that are destined for landscape use. Members also
produce various plants used in the commercial production of tree and
small fruits.
SAF is the national trade association representing the entire
floriculture industry, a $19 billion component, at retail, of the U.S.
economy. Membership includes some 10,000 small businesses, including
growers, wholesalers, retailers, importers and related organizations,
located in communities nationwide and abroad. The industry produces and
sells cut flowers and foliage, foliage plants, potted flowering plants,
and bedding plants, which compete in the international marketplace.
ECONOMIC IMPORTANCE OF THE INDUSTRY
Our industries represent the fastest-growing part of American
agriculture. The 2002 Census of Agriculture shows a 40 percent increase
from 1997 to 2002. According to a 2004 study by the Economic Research
Service of USDA, floriculture and nursery crops posted total sales in
excess of $15.3 billion, a value exceeded only by corn, soybeans, ad
vegetable crops. Nursery and floriculture crops represent about 15
percent of total U.S. crop receipts and are produced in every State in
the United States.
AGRICULTURAL RESEARCH SERVICE (ARS)
FLORICULTURE & NURSERY RESEARCH INITIATIVE
ANLA and SAF developed and jointly submitted a detailed $21 million
proposal to Congress in 1998, establishing a coordinated Research
Initiative for the environmental horticulture industry. We are pleased
that Congress chose to recognize the growing importance and size of the
industry in U.S. agriculture and has continued to increase the funding
level of the Initiative to $6 million in fiscal year 2005. We
respectfully request a $1 million increase in this amount, for a total
of $7 million in fiscal year 2006. This research is currently funding
projects of importance to the floral and nursery industry, but its
projects are also of importance to agriculture and society in general.
The additional funding would enhance the basic research efforts to
address emerging imported insect and disease issues in the floral and
nursery industry. It would also allow for the strengthening of ongoing
research efforts--for instance, it would allow expansion of
Phytophthora ramorum (also known as ``Sudden Oak Death'') research.
The Initiative represents a strong and cost-effective cooperation
between industry, ARS scientists, and existing ``university centers of
excellence'' with experience with the industry's needs. In tight fiscal
times, the Initiative has a proven track record of results and return
on investment. With continued support, crucial research--ranging from
pest and disease management to mechanization to reduced chemical use to
reduced runoff and environmental management--will not be diminished or
on-going projects invalidated before their results can be brought to
bear.
The continued funding allows us to move forward modestly on our
crucial goals, which are:
--Protect the environment, including human health and safety through
research leading to reduced use of chemicals and a reduction in
runoff and other wastes.
--Enhance environmental remediation and cleanup, efforts on wetlands,
post-industrial sites, air quality and other environmental
areas through research on the ability of plants to reverse and
mitigate environmental pollution.
--Improve the ability to prevent the spread of plant pests and
diseases, in international trade.
--Contribute to the U.S. agricultural economy, and increase United
States competitiveness in international markets by conducting
research leading to improved nursery/greenhouse and
floriculture products and production strategies, and by
improving technology transfer of research results to benefit
other U.S. agricultural sectors.
--Strengthen rural and suburban economies across the United States by
providing improved crop production systems and technologies to
growers to increase production efficiency.
--Maintain biodiversity through germplasm preservation enabling
useful botanic traits to be transmitted to future generations.
--Enhance Americans' quality of life by increasing the availability
and diversity of plants and flowers for the consumers' purchase
and enjoyment.
The floriculture and nursery industry supports its own research,
which is typically applied research rather than the basic, long-term
research funded by ARS. The industry's private foundations fund an
average of $3 million annually on research.
However, the Federal Government also has a recognized role in
funding research. The basic, long-term USDA-ARS funding, with projects
at major ARS stations and land-grant universities across the country,
has brought valuable new tools and help to a segment of agriculture
otherwise underserved in the USDA budget. The research funded by the
Initiative is of crucial importance to the floral and nursery
industry--but it will also benefit other segments of agriculture, and
will provide benefits to society at large.
The wave of the future will be found in increased industry-
academic-government partnerships and cooperation. The money
appropriated by Congress in fiscal year 2005 and previous years is
already funding long-term basic research of critical importance to the
industry, on projects chosen to compliment industry's privately funded
efforts and to address long-term industry needs to:
--Help prevent and deal with the increasing import of foreign pests
and diseases, which have a devastating impact on American
agriculture and the environment--like Ralstonia solanacearum
and Phytophthora ramorum are being studied and important
projects underway will be lost, should funding not be
continued.
--Reduce chemical usage
--Find ways to improve the post-harvest life of both flowers and
plants
--Develop disease-resistant and pest-resistant flowers and plants to
reduce the need for pesticide application in the environment
--Find ways to control root diseases
--Improve spray technology and pest control in greenhouses
--Manage nursery and greenhouse irrigation, fertilization and runoff
--Develop better tests leading to virus-free stock
The Agricultural Research Service, private industry, and
universities have developed a strong program of coordination and
cooperation to accomplish the goals of the Initiative. We ask Congress
to continue and increase funding for this very important effort, which
represents a new level of cooperation among industry, the Federal
Government, and university researchers, to meet the needs of the floral
and nursery industry. We were disappointed that the President's budget
request for fiscal year 2006 failed to include the funding appropriated
to the Initiative by Congress in fiscal year 2005 and previous years.
Were the President's budget to be enacted by Congress, the current $6
million would be cut back and valuable research efforts already in
progress would be lost.
We believe that these Congressional appropriations reflect the
voices of constituents to whom this research is of very high
importance, and we request that funding be restored. Further, we
respectfully request a $1 million increase in the Floriculture and
Nursery Research Initiative, through the Agricultural Research Service
budget, for a total of $7 million in fiscal year 2006.
We very much appreciate this opportunity to present a statement for
the record, and will be pleased to answer any questions from the
Subcommittee.
______
Prepared Statement of the American Public Power Association
The American Public Power Association (APPA) is the national
service organization representing the interests of over 2,000 municipal
and other State and locally owned utilities throughout the United
States (all but Hawaii). Collectively, public power utilities deliver
electricity to one of every seven electric consumers (approximately 43
million people), serving some of the Nation's largest cities. However,
the vast majority of APPA's members serve communities with populations
of 10,000 people or less.
We appreciate the opportunity to submit this statement outlining
our fiscal year 2006 funding priorities within the jurisdiction of the
Agriculture, Rural Development, and Related Agencies Subcommittee.
Department of Agriculture: Rural Utility Service Rural Broadband Loan
Program
APPA urges the Subcommittee to fully fund the Rural Utility
Service's (RUS) Rural Broadband Loan Program at $10 million, as
authorized in the 2002 Farm Bill, and to take all appropriate steps to
assist the RUS in facilitating the processing of loan funds provided in
fiscal year 2002 through fiscal year 2005.
APPA believes it is important to provide incentives for the
deployment of broadband to rural communities, many of which lack
broadband service. Increasingly, access to advanced communications
services is considered vital to a community's economic and educational
development. In addition, the availability of broadband service enables
rural communities to provide advanced health care through telemedicine
and to promote regional competitiveness and other benefits that
contribute to a high quality of life. Approximately one-fourth of
APPA's members are currently providing broadband service in their
communities. Several APPA members are planning to apply for RUS
broadband loans to help them finance their broadband projects.
______
Prepared Statement of the American Sheep Industry Association
The American Sheep Industry Association (ASI) is a federation of
state member associations representing over 67,000 sheep producers in
the United States. The sheep industry views numerous agencies and
programs of the U.S. Department of Agriculture as important to lamb and
wool production. Sheep industry priorities include building on the
first growth in the U.S. Sheep Industry since 1990 through
strengthening our infrastructure primarily through the programs of
USDA, APHIS, Veterinary Services, Wildlife Services, and National Sheep
Industry Improvement Center to fully funding critical predator control
activities, national animal health efforts, and expanding research
capabilities.
We appreciate this opportunity to comment on the USDA fiscal year
2006 budget.
RURAL DEVELOPMENT
The National Sheep Industry Improvement Center is critical to the
industry and we fully support appropriations for the balance of the
authorized spending of $21 million. The Sheep Center is currently
involved with an Intermediary Low Interest Direct Loan Program, which
became operational in 2000 and has committed $14 million for lamb, wool
and goat projects. Loans are being used to fund a variety of large and
small projects in every region of the country with emphasis on
targeting different marketing challenges through value added and niche
marketing initiatives. The second focus area is a direct grant program
that was started in 2002.
We strongly support the appropriations level of fiscal year 2005
and urge the Subcommittee to continue funding at that level for fiscal
year 2006.
We understand that loan proposals currently under consideration
will fully use the available funds. The demand for the Center's funds
is increasing and additional appropriations will be required to meet
the new project requests.
ANIMAL AND PLANT HEALTH INSPECTION SERVICE (APHIS)
Scrapie
The American Sheep Industry Association is very appreciative for
the increased appropriations approved in fiscal year 2005 of $17.5
million. USDA/APHIS, along with industry and State regulatory efforts,
is now in the position to eradicate scrapie from the United States with
a multi-year attack on this animal health issue. As the collective and
aggressive efforts of Federal and State eradication efforts are
expanding into slaughter-surveillance and other methods and systems,
the costs are, as expected, escalating. We urge the Subcommittee to
support the President's request of $19 million for scrapie eradication
in the 2005 budget.
Scrapie is one of the families of transmissible spongiform
encephalopathies (TSEs), all of which are the subject of great
importance and interest around the globe. USDA/APHIS, along with the
support and assistance of the livestock and allied industries, began an
aggressive program to eradicate scrapie in sheep and goats 3 years ago.
The plan USDA/APHIS is implementing will eradicate scrapie by 2010 and
with subsequent monitoring and surveillance would allow the United
States to be declared scrapie-free by 2017. Becoming scrapie-free will
have significant positive economic impact to the livestock, meat and
feed industries and, of course, rid our flocks and herds of this fatal
animal disease.
Essential to the eradication effort being accomplished in a timely
manner is adequate appropriated funds. The program cannot function
properly without additional personnel, diagnostic support and
surveillance activities that depend upon appropriated funds. We
strongly urge you to support the level of funding that is specified for
scrapie in the President's budget request. Funding of $19 million will
provide for an achievable scrapie eradication program and the eventual
scrapie-free status for the United States. As with the other successful
animal disease eradication programs conducted by USDA/APHIS in the
past, strong programs at the State level are key. We therefore urge the
Subcommittee to send a clear message to USDA to budget significant
funding toward cooperative agreements with the State animal health
regulatory partners.
Wildlife Services
With well over one-quarter million sheep and lambs lost to
predators each year, the Wildlife Services (WS) program of USDA-APHIS
is vital to the economic survival of the sheep industry. The value of
sheep and lambs lost to predators and predator control expenses are
second only to feed costs for sheep production. Costs associated with
depredation currently exceed our industry's veterinary, labor and
transportation costs.
Wildlife Service's cooperative nature has made it the most cost
effective and efficient program within the Federal Government in the
areas of wildlife management and public health and safety. Wildlife
Services has more than 2,000 cooperative agreements with agriculture,
forestry groups, private industry, State game and fish departments,
departments of health, schools, county and local governments to
mitigate the damage and danger that the public's wildlife can inflict
on private property and public health and safety.
ASI strongly supports the fiscal year 2005 appropriations for
Wildlife Services operations and methods development programs,
particularly as related to livestock protection. We request the
Committee to restore the funding levels that are decreased in the
Administration's fiscal year 2006 budget and approve an increase to the
livestock protection program of Wildlife Services operations of $9
million. We encourage and support continued recognition in the
appropriations process for fiscal year 2006 of the importance of aerial
hunting as one of Wildlife Service's most efficient and cost-effective
core programs. It is used not only to protect livestock, wildlife and
endangered species, but is a crucial component of the Wildlife Services
rabies control program.
Similar to the increasing needs in the aerial hunting program, we
encourage continued emphasis in the programs to assist with management
of wolf depredation in the States of Montana, Idaho, Wyoming,
Minnesota, Wisconsin, Michigan, New Mexico and Arizona. Additionally,
program expenses are expected in the States surrounding the Montana,
Idaho and Wyoming wolf populations. It is strongly supported that
appropriations be provided for $586,000 for additional wolf costs
anticipated in Washington, Oregon, Nevada, Utah, Colorado and North
Dakota.
Federal funding available for livestock predation management by the
Western Region program has remained relatively constant for
approximately 16 years. WS program cooperators have been forced to fund
more and more of the costs of the program. WS Western Region base
funding has increased only 5.6 percent in the past 10 years while
cooperative funding has increased 110 percent (see chart). This
increase has primarily come from individual livestock producers,
associations, counties, and States.
Additionally, new Federal mandates and program investments such as
narrow-banding of radios, computer record keeping and compliance with
the Endangered Species Act are requiring a larger portion of the
already stretched budget and negatively impacting the amount of
livestock predation management work that WS can conduct.
Economics of Predation Management
The WS Western Region predation management program is one of the
few government sponsored programs that is cost-shared, and this
provides a significant benefit to both the producers and the
government. Predation management, as conducted by the WS program, is
cost effective and returns more money to the U.S. treasury than it
costs. An analysis of 1998 data shows that for every dollar spent for
predation management, $3 worth of livestock were saved. In that same
year the total investment in just the predation management program was
$20 million ($9 million Federal and $11 million cooperative funds);
therefore, the full impact of this investment was a $250 million net
increase in economic activity. Using today's values for livestock,
every Federal dollar spent on predation management results in $10.84 in
livestock saved, conservatively, $97.5 million in livestock saved
($52.5 million in calves, $34 million in sheep and lambs, $11 million
in goats). When cooperative funding is included with Federal funds, the
benefit cost ratio is $4.87:1.
----------------------------------------------------------------------------------------------------------------
Total value of
Type of Livestock Number Number saved livestock
protected from predators saved
----------------------------------------------------------------------------------------------------------------
Calves.......................................................... 2,500,000 70,000 $52,500,000
Adult Sheep..................................................... 2,000,000 82,000 8,200,000
Lambs........................................................... 1,850,000 214,600 25,752,000
Goats........................................................... 292,000 110,960 11,096,000
----------------------------------------------------------------------------------------------------------------
The value of livestock saved is much greater in rural economies
than any other type of economic development. Livestock dollars, that
would have been lost without adequate predation management, generate an
additional three fold increase in non-agricultural economic activity in
rural America. The total economic activity (both agriculture and non-
agricultural sectors) generated by predation management is $390.2
million.
Emerging Issues
Additional issues are emerging in the West that will challenge the
Federal WS program.
--Wolves.--Recently a Federal judge struck down the threatened
species status for wolves in the Western Distinct Population
area eliminating the ability of private land ranchers to deal
with wolves, thus requiring additional government intervention.
--Wildlife.--The declines in predation management that have already
occurred, and that will continue to occur without additional
Federal funding, have resulted in negative impacts on many
native wildlife populations. Several western States currently
need to fund predation management to prevent the listing of
sage grouse as an endangered species or to recover mule deer
herds.
Without additional Federal funding to support existing western
livestock protection programs, predation management expertise will be
lost and livestock grazing in some areas will be jeopardized. Rural
economies need this support, and the return for the investment exceeds
the requested assistance.
ASI urges the Subcommittee to provide USDA, APHIS, WS, Western
Region an additional $9 million of Federal funds for livestock
protection. At a nominal 16 percent tax rate on the economic activity
generated by the investment would result in over $62 million to the
Treasury.
------------------------------------------------------------------------
------------------------------------------------------------------------
Total Livestock Protected............................... 6,642,000
Total Value of Livestock Saved (Using $10.84:1 Ratio)... $97,548,000
Value incl. Multiplier.................................. $390,192,000
16 percent Nominal Tax rate............................. $62,430,720
------------------------------------------------------------------------
Chart 1. Ten Year Comparison--WR Federal Base and Cooperative Funds
(Including Livestock Protection)
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
FARM AND FOREIGN AGRICULTURAL SERVICES
Foreign Agricultural Service (FAS)
The sheep industry participates in FAS programs such as the Market
Access Program (MAP), Quality Samples Program (QSP) and the Foreign
Market Development Program (FMD). ASI strongly supports appropriations
at the full authorized level for these critical Foreign Agricultural
Service programs. ASI is the cooperator for American wool and sheep
pelts and has achieved solid success in increasing exports of domestic
product. Exports of American wool have increased dramatically with
approximately 60 percent of U.S. production now competing overseas.
Risk Management Agency (RMA)
Through ASI, the U.S. sheep industry is working with RMA on the
development of ``Livestock Risk Protection'' for lamb (LRP-Lamb), a
price-risk insurance product to help sheep producers manage the primary
factor in their operation's financial exposure. The sheep industry is
very anxious to begin a pilot project with LRP-Lamb with the goal of
providing a market-based, user-friendly risk management tool that
effectively and efficiently protects against price downswings,
providing producers and their lenders with a critically needed
financial management tool.
We note that the Administration's budget request supports the
expanded use of crop insurance and recommends an increase in the crop
insurance budget. While we appreciate the Administration request
focusing on the traditional crops and crop insurance, the livestock
sector and the sheep industry in particular will be well-served to have
the opportunity to participate in crop insurance programs. ASI urges
the Subcommittee to support the President's request and recommend
additional funding especially in the ``Delivery and other
Administrative Expenses'' to help cover the research and developmental
costs to design creative new programs for the livestock sector as well
as in the ``Administrative and Operating Expenses'' category to enable
RMA to deliver these products, including appropriate maintenance
expenses.
ASI understands and supports USDA's goal to provide innovative
price protection products for livestock producers. The 2000 Crop
Insurance Reform Act authorized funding for fiscal year 2006 at $20
million and if necessary, we recommend the Subcommittee to approve an
increase in the dollars allocated for each year by a nominal amount to
provide pilot program monies for LRP-Lamb while continuing to
adequately fund pilot programming for cattle and swine.
NATURAL RESOURCES CONSERVATION SERVICE (NRCS)
ASI urges increased appropriations for the range programs of the
Soil Conservation Service to benefit the private range and pasture
lands of the United States with conservation assistance. We support the
budget item and recommend an increased level for the Grazing Lands
Conservation Initiative, which ASI has worked with, along with other
livestock and range management organizations, to address this important
effort for rangelands in the United States.
RESEARCH, EDUCATION AND ECONOMICS
Our industry is striving to be profitable and sustainable as a user
of and contributor to our natural resource base. Research, both basic
and applied, and modern educational programming is essential if we are
to succeed. We have been disappointed in the decline in resources USDA
has been targeting toward sheep research and outreach programs. In
order for the sheep industry to continue to be more globally
competitive, we must invest in the discovery and adoption of new
technologies for producing, processing and marketing lamb and wool. We
urge the Subcommittee to send a strong message to USDA supporting sheep
research and education funding increases.
Agricultural Research Service
We continue to vigorously support the administration's funding of
research concerning emerging and exotic diseases. Emerging and exotic
diseases continue to have significant impact on our industry due to
animal health and trade issues. The animal disease portion should be
substantial and is urgently needed to protect the U.S. livestock
industry. We note the President's request for fiscal year 2006 includes
$7.5 million for BSE research. We agree that BSE is an extremely
important disease issue globally and believe that research is needed.
With this in mind, we remind the Subcommittee that scrapie is a TSE
that is endemic in the United States and we recommend that these monies
for BSE research be utilized in such a manner that the resultant
research assists with scrapie eradication needs. As the Subcommittee is
aware unlike scrapie which transmits from sheep to sheep within flocks,
BSE doesn't transmit from cow to cow in the absence of recycled
protein. This difference between BSE and scrapie transmission explains
the need for continuing to concentrate research efforts on scrapie
detection and control methods. We also respectively remind the
Subcommittee that scientists in the Animal Disease Research Unit
(ADRU), ARS, Pullman Washington, have made significant progress in the
early diagnosis of TSEs, in understanding genetic resistance to TSEs
and in understanding mechanisms of TSE transmission, which are
important in eradication of all TSEs. The programs of these scientists
at ADRU should be enhanced and expanded to include, for instance, the
development of further improvements in rapid and accurate TSE detection
methods and to provide an understanding of the role of environmental
sources of the TSE agent in the transmission of TSEs within the United
States and world and to further understand the basis of genetic
resistance and susceptibility to these devastating diseases.
Since 2001, Congress has had the foresight to appropriate $764,195
each year to this unit for ``Microbial Genomics.'' Microbial genomics
is the cornerstone project for their genomic research infrastructure
and has resulted in very important genome projects for infectious
diseases of livestock such as scrapie and Ovine Progressive Pneumonia
virus (OPPv). Scrapie remains endemic within the United States; however
ongoing research efforts continue to provide tools necessary for
control and eventual eradication. OPPv causes life-long infection which
continues to have significant economic impact for U.S. Sheep producers.
Very promising on-going genomic research efforts are directed at early
determination of which sheep are susceptible to disease and responsible
for economic losses. Early detection of susceptibility and resistance
will lead to practical intervention strategies. We respectively request
the Subcommittee to recommend the restoration of $764,195 to ADRU for
the fiscal year 2006 budget.
We also urge the Subcommittee to recommend the restoration of
$489,183 for Malignant Catarrhal Fever (MCF) at the ARS/ADRU in Pullman
for the fiscal year 2006 budget. MCF is a viral disease of ruminants
that is of great concern to our livestock industries. The exotic
variant of MCF is considered a high priority select agent. This funding
is provided for collaborative research with the U.S. Sheep Experiment
Station, Dubois ID, for vaccine development directed at preventing
transmission and economic losses caused by MCF.
Research into Johne's disease has received additional funding
through ARS over the past several years, focusing on cattle. Johne's
disease is also endemic in the U.S. sheep population and is not well
understood as a sheep disease. The same food safety concerns exist in
both sheep and cattle; other countries are also very concerned about
Johne's in sheep. We urge the Subcommittee to send a strong message to
ARS that Johne's disease in sheep should receive more attention at the
National Animal Disease Research Center (NADC) with an emphasis on
diagnostics.
We note that the President's fiscal year 2006 includes an increase
of $2.5 million in the ``Product Quality/Value Added'' category for
``Bioenergy and Biobased Products'' research. Within this category, the
budget request recommends a portion of these funds be used for the
development of ``technologies leading to new value added products from
food animal byproducts''. We agree that this is an important area of
research and urge the Subcommittee to recommend that a significant
proportion of funds for this category, as supported by ARS, be directed
toward research on wool at the molecular level focusing on flame
retardation, and enhancement of fiber properties through enzyme
treatments targeting military needs and other niche consumer
applications.
Cooperative State Research, Education, and Extension Service (CSREES)
The Minor Use Animal Drug Program is funded through a ``Special
Research Grant'' that has had great benefit to the U.S. sheep industry.
The research under this category is administered as a national program
``NRSP-7'' cooperatively with FDA/CVM to provide research information
for the approval process on therapeutic drugs that are needed. Without
this program, American sheep producers would not have effective
products to keep their sheep healthy. We appreciate the
Administration's request of $588,000 for this program, and we urge the
Subcommittee to recommend that it be funded at least at this level to
help meet the needs of our rapidly changing industry and increasing
costs for research necessary to meet the requirements for approving
additional therapeutics for sheep.
On-going funding for the Food Animal Residue Avoidance Databank
(FARAD) program is critically important for the livestock industry in
general and especially for ``minor species'' industries such as sheep
where extra-label use of therapeutic products is more the norm rather
than the exception. We appreciate the Administration's request of
$1,000,000 for this program in the USDA budget, and urge the
Subcommittee to recommend that it be funded at least at this level to
help meet the needs of the animal industries. FARAD provides
veterinarians the ability to accurately prescribe products with
appropriate withdrawal times protecting both animal and human health.
On-going research in wool is critically important to the sheep and
wool industry. ASI urges the Subcommittee's support to restore and
continue the CSREES special grants program for wool research at least
to the fiscal year 2005 level of $300,000 for fiscal year 2006.
Research for the Montana Sheep Institute is important to the sheep
and wool industry. Sheep grazing is being used as an important tool for
natural resource management to improve the competitiveness of lamb and
wool in the marketplace. ASI encourages the Subcommittee's support to
continue funding at the fiscal yeaer 2005 level of $574,000 for 2006.
The research and education programs conducted through the Joe Skeen
Institute for Rangeland Restoration provide valuable information for
sheep producers in the western United States. ASI urges the
Subcommittee to continue the funding for this program to $1,000,000 for
fiscal year 2006.
Grants to Train Farm Workers in Technologies and to Train Farm Workers
in Specialized Skills Necessary for Higher Value Crops
The shortage of skilled sheep shearers has increasingly become a
problem for U.S. sheep producers and strong interest has been expressed
in utilizing this grant program through USDA as authorized in section
6025 of the 2002 Farm Security and Rural Investment Act. Grant funds
are authorized; however appropriations would be necessary for the
program to allow the U.S. sheep industry the opportunity to apply for
funds to train U.S. workers as sheep shearers.
______
Prepared Statement of the American Society for Microbiology
The American Society for Microbiology (ASM) appreciates the
opportunity to submit testimony on the fiscal year 2006 appropriation
for the United States Department of Agriculture (USDA). The ASM is the
largest single life science organization in the world, with more than
43,000 members who work in academic, industrial, medical, and
governmental institutions. The ASM's mission is to enhance the science
of microbiology, to gain a better understanding of life processes, and
to promote the application of this knowledge for improved plant, animal
and human health, and for economic and environmental well-being.
The USDA sponsors research and education programs which contribute
to solving agricultural problems of high national priority and ensuring
food availability, quality and safety, as well as a competitive
agricultural economy. U.S. agriculture faces new challenges, including
threats from emerging infectious diseases in plants and animals,
climate change, and public concern about food safety and security. It
is critical to increase the visibility and investment in agriculture
research to respond to these challenges. ASM urges Congress to provide
increased funding for research programs within the USDA in fiscal year
2006.
Microbiological research in agriculture is vital to understanding
and finding solutions to foodborne diseases, endemic diseases of long
standing, new and emerging plant and animal diseases, development of
new agriculture products and processes and addressing existing and
emerging environmental challenges. Unfortunately, Federal investment in
agricultural research has not kept pace with the need for additional
agricultural research to solve emerging problems. According to National
Science Foundation (NSF) data, agriculture research makes up only 4
percent of Federal funds devoted to basic research. According to the
USDA Economic Research Service (ERS) report, Agricultural Research and
Development: Public and Private Investments Under Alternative Markets
and Institutions, the rate of return on public investment in basic
agricultural research is estimated to be between 60 and 90 percent.
USDA National Research Initiative Competitive Grants Program
The National Research Initiative Competitive Grants Program (NRI)
was established in 1991 in response to recommendations outlined in
Investing in Research: A Proposal to Strengthen the Agricultural, Food
and Environmental System, a 1989 report by the National Research
Council's (NRC) Board on Agriculture. This publication called for
increased funding of high priority research that is supported by USDA
through a competitive peer-review process directed at:
--Increasing the competitiveness of U.S. agriculture.
--Improving human health and well-being through an abundant, safe,
and high-quality food supply.
--Sustaining the quality and productivity of the natural resources
and the environment upon which agriculture depends.
Continued interest in and support of the NRI is reflected in two
subsequent NRC reports, Investing in the National Research Initiative:
An Update of the Competitive Grants Program of the U.S. Department of
Agriculture, published in 1994, and National Research Initiative: A
Vital Competitive Grants Program in Food, Fiber, and Natural Resources
Research, published in 2000.
Today, the NRI, housed within USDA's Cooperative State Research,
Education, and Extension Service (CSREES), supports research on key
problems of national and regional importance in biological,
environmental, physical, and social sciences relevant to agriculture,
food, and the environment on a peer-reviewed, competitive basis.
Additionally, NRI enables USDA to develop new partnerships with other
Federal agencies that advance agricultural science. An example of such
collaboration is USDA's partnership with the NSF on the Microbe
Project.
In fiscal year 2004, NRI was able to fund only 11 percent of the
grant proposals it received, while agencies such as the National
Institutes of Health (NIH) and the NSF fund between 20-30 percent. ASM
urges Congress to fund NRI at the President's requested level of $250
million in fiscal year 2006. NRI's requested increase comes from the
proposal to shift CSREES Integrated Activities, such as food safety and
water quality, making up $40 million of the proposed $70 million
increase, and to reallocate funds from the CSREES formula grants to the
NRI in the administration's effort to eliminate the formula grant
programs by fiscal year 2007. If new funds cannot be found, ASM
supports the proposed 50 percent reduction of formula grant funds, part
of which will be redirected to the NRI, and the remaining 50 percent be
phased out over a 3-year period rather than a 1-year period of time,
giving the institutions currently receiving formula grants time to
adjust. ASM supports the Administration's effort to increase
competitively awarded funding mechanisms and believes that competitive
grants ensure the best science.
Additional funding for the NRI is needed to expand research in
microbial genomics and to provide more funding for merit reviewed basic
research with long-term potential for new discoveries and products. ASM
supports the President's requested level of $250 million for NRI.
USDA Food and Agriculture Defense Initiative
The Food and Agriculture Defense Initiative is an interagency
initiative to improve the Federal Government's capability to rapidly
identify and characterize a bioterrorist attack, by improving the
national surveillance capabilities in human health, food, agriculture,
and environmental monitoring. ASM supports the President's request for
this initiative within the USDA budget of $376 million for fiscal year
2006, an increase of $78 million over fiscal year 2005. Of this total,
$59 million is for the completion of the USDA's National Centers for
Animal Health in Ames, Iowa. This funding will go towards:
Enhancing food defense by:
--Expanding the Food Emergency Response Network (FERN) with
participating laboratories including implementation of the
Electronic Laboratory Exchange Network (eLEXNET) and an
electronic methods repository;
--Upgrading laboratory capabilities to quickly identify chemical and
radiological threats to the food supply; and
--Strengthening research on diagnostic methods for quickly
identifying various pathogens and contaminated foods and
innovative biosecure foods.
Enhancing agriculture defense by:
--Strengthening research on rapid response systems for bioterror
agents, improved vaccines, and identifying genes affecting
disease resistance;
--Expanding the National Plant Disease Recovery System to ensure
disease resistant seed varieties are continually developed and
made available to producers in the event of a natural or
intentional catastrophic disease or pest outbreak;
--Substantially expanding the Regional Diagnostic Network with links
to the National Agricultural Pest Information System;
--Establishing a Higher Education Agrosecurity Program for capacity
building grants to universities for interdisciplinary degree
programs to prepare food defense professionals;
--Substantially enhancing the monitoring and surveillance of pests
and diseases in plants and animals, including targeted National
wildlife surveillance;
--Establishing connectivity with the Department of Homeland Security
(DHS) integration and analysis to improve biosurveillance of
pests and diseases in plants;
--Increasing activities to safeguard plants from intentional threats
to spread pests and diseases;
--Strengthening the system to track biological disease agents;
--Improving USDA's ability to respond to a disease outbreak,
including increasing supplies of vaccines for the National
Veterinary Stockpile;
--Providing funds for completing the consolidated state-of-the-art
BSL-3 animal research and diagnostic laboratory at Ames, Iowa;
and
--Improving biocontainment safeguards at the Foreign Disease Weed
Science Laboratory in Frederick, MD.
ASM believes there should be greater emphasis on research in the
Food and Agriculture Defense Initiative. ASM recommends an increase in
funding, both extramurally and intramurally, for research on pathogenic
microorganisms as part of the Food and Agriculture Defense Initiative.
Food Safety
Each year foodborne pathogens cause 76 million human illnesses,
325,000 hospitalizations, 5,200 deaths, and an unknown number of
chronic conditions, according to the CDC (ERS: Economics of Foodborne
Disease: Feature, 2005). The USDA's Economic Research Service (ERS)
estimates that the medical costs, productivity losses, and costs of
premature deaths for diseases caused by just five foodborne pathogens
exceeds $6.9 billion per year in the United States. The USDA plays a
vital role in the government's effort to reduce the incidence of
foodborne illness. Continued and sustained research is important to
safeguarding the Nation's food supply and focusing on methods and
technologies to prevent microbial foodborne disease and emerging
pathogens. The most significant outcome of food safety research is to
provide greater public health protection which, in part, can be
measured by reductions in the incidence of foodborne illnesses. The
Centers for Disease Control and Prevention reports that the 2003
incidence of illness caused by four major foodborne pathogens exceed
the levels outlined in the National Health Objectives for 2010 (CDC:
MMWR, April 30, 2004). Although increases are requested for the Food
and Agriculture Defense Initiative and the Food Safety and Inspection
Service, we note that a reduction in funding for food safety within ARS
has been proposed, and level funding is requested within CSREES.
Without a sustained significant increase in the level of food safety
research funding, meeting the National Health Objectives for 2010 in
all likelihood will not become reality. ASM recommends a substantial
increase in food safety research, which is essential to ensure the
protection of the Nation's health.
Genomics Initiative
The NRI and the ARS fund USDA collaborative efforts in the field of
genomics. There are opportunities to leverage USDA investments with
those of the NIH, the Department of Energy, and the NSF in projects to
map and sequence the genomes of agriculturally important species of
plants, animals, and microbes. Determining the function of the
sequenced genomes (functional genomics) and analyses of the data
(bioinformatics) now need investment for new management techniques and
tools. USDA plays an important role in coordinating and participating
in interagency workgroups on domestic animal, microbial, and plant
genomics. Access to genomic information and the new tools to utilize it
have implications for virtually all aspects of agriculture. An increase
of $11 million has been requested for the NRI in fiscal year 2006 to
support investments in the sequencing and annotation of the maize and
swine genomes. A $9.2 million increase in animal and plant genomics
research within the ARS has been requested. ASM supports the requested
increases for the genomics initiative and USDA.
Emerging Infectious Diseases in Plants and Animals
The food production and distribution system in the United States is
vulnerable to the introduction of pathogens and toxins through natural
processes, global commerce, and intentional means. The ASM supports
increases in the USDA research budget for emerging diseases and
invasive species. Nearly 200 zoonotic diseases can be naturally
transmitted from animals to man and opportunistic plant pathogens and
soil inhabiting microorganisms can be causal agents of infection and
disease in humans. For emerging diseases to be effectively detected and
controlled the biology, ecology, and mechanisms for pathogenicity of
the causal pathogens must be understood and weaknesses exploited to
limit their impact. This research will help address the risk to humans
from emerging diseases and opportunistic pathogens, and will ensure the
safety of plant and animal products. Additionally, expanded research is
needed to accelerate the development of information and technologies
for the protection of United States agricultural commodities,, wildlife
and human health against emerging diseases.
Antimicrobial Resistance Research
The USDA plays a key role in addressing the national and global
increase in antimicrobial resistance and the complex issues surrounding
this public health threat. The ARS Strategic Plan for 2003-2007 States
the need to ``determine how antimicrobial resistance is acquired,
transmitted, maintained, in food-producing animals, and develop
technologies or altered management strategies to control its
occurrence.'' In 1996, the Department of Health and Human Services
(HHS) and the USDA established the National Antimicrobial Resistance
Monitoring System (NARMS) to monitor trends in antimicrobial resistance
in foodborne pathogens; the USDA has expanded monitoring to include the
Collaboration on Animal Health Food Safety Epidemiology (CAHFSE)
program. USDA support for these projects should continue. USDA research
also has a vital role to play in controlling the emergence of
resistance in pathogens associated with food through NRI funded grants.
USDA research also has a vital role to play in controlling the
emergence of resistance in pathogens associated with food through NRI
funded grants. ASM urges Congress to increase support for antimicrobial
resistance surveillance, research, prevention, and control programs.
Conclusion
The USDA's mission and goals of leadership on food, agriculture,
and natural resources, based on sound public policy, the best available
science, and efficient management should be supported. With a
significant investment in research, USDA will be better able to meet
its goals. ASM urges Congress to provide sufficient funding for
research at USDA by increasing funding for agricultural research
programs, including providing $250 million for NRI in fiscal year 2006.
The ASM appreciates the opportunity to provide written testimony
and would be pleased to assist the Subcommittee as the Department of
Agriculture bill is considered throughout the appropriations process.
SCHEDULE OF FEDERAL AWARDS--2005
--------------------------------------------------------------------------------------------------------------------------------------------------------
Grants Receipts or Grants
Federal Grantor/Pass-through Grantor/ Cost Center Federal CFDA Program or Receivable 1/1/ Revenue Disbursements/ Recivable 12/
Program Title Number Award Number 2005 Recognized Expenditures 31/2005
--------------------------------------------------------------------------------------------------------------------------------------------------------
MAJOR PROGRAMS: Resident Postdoctoral 783 93.28 1,157,764.00 83,055.50 .............. .............. 83,055.50
Research...............................
---------------------------------------------------------------------------------------------------------------
Total Major Programs.............. .............. .............. 1,157,764.00 83,055.50 .............. .............. 83,055.50
===============================================================================================================
OTHER FEDERAL ASSISTANCE:
HHS:
NIGMS-MARC...................... 789 93.88 431,300.00 155,195.00 .............. .............. 155,195.00
DNA Repair and Mutagenesis...... 457 93.39 25,000.00 25,000.00 .............. .............. 25,000.00
Candida and Candidiasis......... 434 93.12 10,000.00 10,000.00 .............. .............. 10,000.00
ASM Conf New phage Biology...... 430 93.86 10,000.00 10,000.00 .............. .............. 10,000.00
ASM Conf Cell Cell.............. 470 93.86 18,000.00 17,000.00 .............. .............. 17,000.00
ASM Conf Signal Transduction.... 429 93.86 20,000.00 20,000.00 .............. .............. 20,000.00
ASM Conf Viral Immune Evasion... 428 93.86 20,000.00 .............. .............. .............. ..............
National Science Foundation:
Plant Biotechnology............. 678 47.07 15,000.00 .............. .............. .............. ..............
Pathogens....................... 697 47.07 110,000.00 .............. .............. .............. ..............
Cell-Cell Communications........ 470 47.07 5,000.00 5,000.00 .............. .............. 5,000.00
Colloquium Genome Annotation.... 672 47.07 63,408.00 2,421.00 .............. .............. 2,421.00
U.S. Department of Energy:
DNA Repair and Mutagenesis...... 457 81.05 20,000.00 20,000.00 .............. .............. 20,000.00
Prokaryotic Development......... 472 81.05 10,000.00 .............. .............. .............. ..............
Geobiology...................... 675 81.05 15,000.00 .............. .............. .............. ..............
Microbial Ecology and Genomics.. 676 81.05 25,000.00 .............. .............. .............. ..............
Multicellular Cooperation....... 671 81.05 15,000.00 .............. .............. .............. ..............
Integrating Metabolism.......... 477 81.05 10,000.00 10,000.00 .............. .............. 10,000.00
Beyond Microbial Genomics....... 691 81.05 94,520.00 .............. .............. .............. ..............
USDA: Conf Salmonella Pathogenesis.. 421 10.21 10,000.00 .............. .............. .............. ..............
EPA:
Microbial Eolocy................ 676 66.50 20,000.00 .............. .............. .............. ..............
Infectious Disease GI Tract..... 670 66.61 50,000.00 .............. .............. .............. ..............
---------------------------------------------------------------------------------------------------------------
Total Other Awards............ .............. .............. 997,228.00 274,616.00 .............. .............. 274,616.00
---------------------------------------------------------------------------------------------------------------
Total Federal Awards.......... .............. .............. 2,154,992.00 357,671.50 .............. .............. 357,671.50
--------------------------------------------------------------------------------------------------------------------------------------------------------
______
Prepared Statement of the American Society for Microbiology
The American Society for Microbiology (ASM), the largest single
life science society with over 43,000 members, is pleased to submit a
statement on the fiscal year 2006 appropriation for the Food and Drug
Administration (FDA). The proposed fiscal year 2006 budget request of
$1.9 billion for the FDA represents a 4.5 percent increase over the
fiscal year 2005 appropriation. Much of the $81 million dollar increase
is allocated to defending the Nation's food supply and further
improving FDA evaluation of medical devices and health care products.
The ASM recommends a 6 percent increase for FDA's budget in fiscal
year 2006. FDA is the principal guardian of consumer and medical
product safety in the United States. FDA regulations encompass human
and veterinary drugs, biological products, cosmetics, medical devices,
products that emit radiation, and a wide range of food products.
Increased funding will strengthen FDA's responsibilities to ensure safe
and effective medical products, food safety, accurate consumer product
information and safe and effective drug and device evaluations.
NATIONAL SECURITY AND THE FDA
FDA researchers and field officers are collaborating with other
Federal, State, and local agencies to implement the Bioterrorism Act of
2002. The fiscal year 2006 budget proposes $244 million for FDA
activities to prevent or mitigate bioterrorism, including $180 million
for food defense. Protecting the Nation's food supply from intentional
contamination is an ongoing responsibility of the FDA, which now
coordinates these efforts with the U.S. Department of Agriculture
(USDA) and the Department of Homeland Security (DHS) under the Homeland
Security Presidential Directive (HSPD-9) of 2004. Last September, the
FDA, DHS, and USDA signed an agreement with the National Association of
State Departments of Agriculture to improve cooperation among all
levels of government when responding to food and agricultural
emergencies, with technical expertise provided by the Federal entities.
Two-thirds of the proposed funding increase would enhance the
multi-agency Food Emergency Response Network (FERN), a relatively new
nationwide consortium of Federal and State laboratories capable of
testing thousands of food samples for biological, chemical, or
radiological agents. The network, which continues to add laboratories,
incorporates detection and reporting systems that are more
comprehensive and better coordinated than previous surveillance and
monitoring systems. A variety of FDA programs address the network's
objectives of prevention, preparedness, response, and recovery in the
event of terrorism. Last year FDA personnel, for instance, conducted
training seminars on optimal detection methods for the pathogens
Bacillus anthracis and Salmonella. If approved, the fiscal year 2006
budget request will help elevate FERN's surge capacity, as well as add
nineteen additional FDA funded State laboratories to the six funded in
fiscal year 2005, joining the ten laboratories already in place.
Data collected from FERN activities are quickly available across
the country through the Electronic Laboratory Exchange Network
(eLEXNET), one of several surveillance information systems supported by
the FDA. Together, the FERN and eLEXNET networks are FDA's contribution
to the National Biosurveillance Integration System, developed by the
DHS to coordinate health, environment, and intelligence information
systems against terrorist threats. Part of the requested fiscal year
2006 increase for food security would underwrite another FDA component
as well, the Emergency Operations Network Incident/Management System
(EON IMS) managed by the agency's Office of Crisis Management. Its
mission is to integrate multiple electronic data systems (e.g., FERN,
eLEXNET, Epidemic Information Exchange) into formats conducive to rapid
decision making during crisis situations. Among its components is a
Geographic Information System (GIS) for mapping and impact assessments.
Last year, the system was pilot tested successfully during several
outbreaks of foodborne salmonellosis in 15 States.
Basic and applied research projects linked to food defense also
would benefit from the proposed fiscal year 2006 increase, in
particular those useful in prevention or detection of pathogenic
bioagents in food supplies. Subsequent discoveries undoubtedly will
benefit the understanding of infectious diseases in general. Among the
areas included in the FDA research agenda are population susceptibility
factors, new food security technologies to protect particularly
vulnerable foods, tamperproof packaging, rapid test methodologies to
strengthen a currently overloaded field testing system, and innovative
sensor technologies to detect bioagents in consumer products.
Within the FDA mission to protect public health, the agency
reinforces the Nation's drug preparedness against bioterrorism, by
evaluating and approving vaccines and therapeutics included in the
Strategic National Stockpile. Among the counterterrorism therapeutics
evaluated by the FDA are improved smallpox vaccines and treatments for
anthrax infections. As with its other national security efforts, the
FDA cooperates with other Federal agencies in development, production,
and approval of critical vaccines and therapeutics to be used against
possible biological weapons. The agency also informs the public with
science based updates on candidate countermeasures, explaining the
benefits and possible side effects of their use.
After September 11, 2001, the FDA assessed the Nation's food
production, transport, and import systems for vulnerability to
intentional release of microbial, chemical, or radiological agents. The
FDA subsequently hired 655 new employees for its Office of Regulatory
Affairs (ORA). Most were given food safety assignments, many at border
or port entry locations or otherwise dealing with imports. The ORA's
thirteen laboratories analyze more than 41,000 product samples
annually, often from inspected import shipments. The number of FDA
regulated products imported to the United States each year has exploded
from about 1.5 million in 1992 to nearly 10 million today. Under the
Bioterrorism Act of 2002, new regulations effective December 2004
require the registration of food facilities, both foreign and domestic,
that manufacture, process, or hold food for human or animal consumption
in the United States. The agency expects more than 400,000 facilities
to register. The new regulations also require prior notification of
imported food shipments, an estimated 25,000 notifications daily, to
help alert FDA inspectors to suspicious or otherwise questionable
shipments.
FOOD SAFETY AND PUBLIC HEALTH
The FDA's Center for Food Safety and Applied Nutrition (CFSAN)
oversees our entire food supply, excluding meat, poultry, and some egg
products regulated by USDA programs. According to the FDA, about $417
billion worth from U.S. agriculture and an additional $49 billion
imported from worldwide sources, pass through 60,000 businesses that
manufacture, process, and store and transport food products. Given the
size and complexity, there are multiple possibilities for negligent or
accidental contamination. The Centers for Disease Control and
Prevention (CDC) estimates that foodborne microbial diseases cause
approximately 76 million illnesses, 325,000 hospitalizations, and 5,000
deaths in the United States each year. In 2000, the USDA's Economic
Research Service (ERS) estimated the annual cost from just five
bacterial foodborne pathogens as $6.9 billion, including medical costs,
lost productivity, and premature death. About one-third of total costs
are the result of illnesses in children under the age of ten. Working
to update costs, the ERS now calculates that 1.4 million cases due to
Salmonella alone cost $3 billion annually.
In the 1990s, the FDA boosted food safety efforts through numerous
initiatives and new regulations, after several outbreaks of foodborne
illnesses related to Escherichia coli O157:H7, Listeria and Salmonella
raised public concerns about food safety. Federal statistics indicated
a 20 percent decline in the incidence of several foodborne diseases
from 1997 to 1999. Today CFSAN personnel both instigate and implement
improved regulations, among them the requirement that more production
plants adopt Hazard Analysis and Critical Control Points (HACCP)
procedures that prevent problems at the most contamination prone steps
in a production process. The center also participates in nationwide
surveillance networks, such as FoodNet and PulseNet, that detect
disease outbreaks. Prevention goals guide many of the CFSAN programs;
e.g., a 50 percent reduction in all salmonellosis cases by 2010.
While the FDA steadily makes advances in preserving food safety,
new challenges routinely face agency personnel. The volume and
diversity of imported foods continue to expand rapidly, creating new
food types and sources to be regulated and evaluated. The dramatic
growth of the dietary supplements industry (already $17 billion in
2000) creates additional demand on FDA resources. The U.S. population
continues to age, adding more individuals most susceptible to foodborne
illnesses. Scientists are identifying new foodborne pathogens and other
contaminants, as well as new routes of transmission through the food
chain. Bioengineering of agricultural products and irradiation of
processed foods will continue to push FDA oversight duties into unique
directions. Most recently the FDA is confronting the economic,
political, and public health ramifications of a group of diseases known
as transmissible spongiform encephalopathies, thought to be associated
with contaminated meat products.
The most controversial and well known of these is bovine spongiform
encephalopathy (BSE), more commonly called ``mad cow disease.'' Fifteen
years ago, after cases of BSE in Great Britain were linked to eating
contaminated beef, the FDA established its first anti-BSE regulations
through controls on live cattle imports. In 1997, the agency banned the
use of mammalian animal products in ruminant animal feed, to prevent
the spread of BSE. Thus far, there has been one proven case of a BSE-
infected, Canadian raised cow in this country, in late December 2003.
Thirty FDA employees along with State inspectors rapidly mobilized to
trace products from the cow to twenty-two facilities, retrieving meat
materials from a range of businesses in the meat processor pipeline.
During 2004, the agency further strengthened its safeguards against BSE
with additional animal feed restrictions, recordkeeping requirements
for meat growers and processors, and scientific studies of rapid
diagnostic kits that detect animal protein in ruminant feed. The agency
also increased its inspections of feed mills and renderers, expecting
to conduct 2,800 visits itself and process information from an
additional 3,800 State based inspections. Thus far, no additional case
of BSE contamination has been detected in this country.
CONSUMER PRODUCT SAFETY, MEDICAL DEVICES AND PUBLIC HEALTH
Recently publicized problems with some FDA approved prescription
drugs refocused attention on the extent to which FDA regulatory
activities affect our daily lives. In addition to the Nation's food
supply, the agency evaluates the safety and efficacy of human and
veterinary drugs, biological products such as blood and human vaccines,
medical devices, and products that emit radiation, as well as
cosmetics. The agency rigorously tests drugs and devices in its
laboratories, ensures that products are truthfully and clearly labeled
for users, and conducts post-market surveillance on approved products.
In 2003, for example, the agency handled more than 370,000 reports of
adverse effects related to use of pharmaceuticals, a third of which
were serious in nature. In fiscal year 2004, the FDA approved 534 new
and generic drugs and biological products. The fiscal year 2006 budget
proposes significant increases for the FDA's Human Drugs and Biologics
program and for the Office of Drug Safety. A $19 million increase is
proposed for the human drugs program and a $7 million increase is
requested for the biologics program. Increased resources will in part
be used to access a wide range of databases containing information
related to drug safety. The fiscal year 2006 budget also proposes an
increase of $12 million for the safety and efficacy of medical devices.
The increase will help improve the device application review process as
well as post-market surveillance efforts. Collaboration between the FDA
and the National Institutes of Health will develop standards for
electronic reporting of adverse events in clinical trials, to eliminate
inferior products much earlier in their development.
ASM appreciates the opportunity to comment on the fiscal year 2006
budget request which supports science based FDA activities that will
ensure both homeland security and public health.
______
Prepared Statement of the California Industry and Government Central
California Ozone Study Coalition
Mr. Chairman and Members of the Subcommittee: On behalf of the
California Industry and Government Central California Ozone Study
(CCOS) Coalition, we are pleased to submit this statement for the
record in support of our fiscal year 2006 funding request of $500,000
from the Department of Agriculture for CCOS. These funds are necessary
for the State of California to address the very significant challenges
it faces to comply with new national ambient air quality standards for
ozone and fine particulate matter. The study design incorporates recent
technical recommendations from the National Academy of Sciences (NAS)
on how to most effectively comply with Federal Clean Air Act
requirements.
First, we want to thank you for your past financial support of the
Central California Ozone Study (CCOS) and California Regional
PM<INF>10</INF>/PM<INF>2.5</INF> Air Quality Study (CRPAQS). Your
support of these studies has been instrumental in improving the
scientific understanding of the nature and cause of ozone and
particulate matter air pollution in Central California and the nation.
Information gained from these two studies is forming the basis for the
8-hour ozone, PM<INF>2.5</INF>, and regional haze State Implementation
Plans (SIPs) that are due in 2007 (ozone) and 2008 (particulate matter/
haze). As with California's previous SIPs, the 2007-2008 SIPs will need
to be updated and refined due to the scientific complexity of our air
pollution problem. This request would fund the extension of CCOS to
address important questions that won't be answered with results from
previously funded research projects.
To date, our understanding of air pollution and the technical basis
for SIPs has largely been founded on pollutant-specific studies, like
CCOS. These studies are conducted over a single season or single year
and have relied on modeling and analysis of selected days with high
concentrations. Future SIPs will be more complex than was anticipated
when CCOS was originally designed and involve new technical challenges.
The National Academy of Sciences (NAS) is now recommending a weight-of-
evidence approach that will involve utilizing more broad-based,
integrated methods, such as data analysis in combination with seasonal
and annual photochemical modeling, to assess compliance with Federal
Clean Air Act requirements. This will involve the analysis of a larger
number of days and possibly an entire season. In addition, because
ozone and particulate matter are formed from some of the same emissions
precursors, there is a need to address both pollutants in combination,
which CCOS will do.
Consistent with the new NAS recommendations, the extended CCOS
study will involve the conduct of corroborative analyses with the
extensive data provided by past studies, advance the state-of-science
in air quality modeling, and improve our understanding of multi-
pollutant, multi-year air pollution. In addition, it will facilitate
continuous data collection, using an expanded monitoring network, over
a three-year period. Access to data over a multi-year timeframe will
enable us to perform seasonal and annual modeling of all pollutants. It
will also allow us to consider year-to-year variations in air quality.
The study will incorporate further refinements to emission inventories,
develop observation-based analyses with sound theoretical bases, and
include the following five general components:
------------------------------------------------------------------------
------------------------------------------------------------------------
Conducting weight-of-evidence data analyses............. 2006-2008
Developing an enhanced monitoring network............... 2006-2007
Making emission inventory improvements.................. 2006-2010
Collecting enhanced monitoring data..................... 2007-2009
Performing seasonal and annual modeling................. 2008-2011
------------------------------------------------------------------------
As with CCOS and CRPAQS, Policy and Technical Committees consisting
of representatives from Federal, State and local governments, as well
as private industry, would direct the new study elements. Under CCOS
and CRPAQS, these committees set landmark examples of collaborative
environmental management. The proven methods and established teamwork
provide a solid foundation for this study.
For Fiscal Year 2006, our Coalition is Seeking Funding of $500,000
From the Department of Agriculture/CSREES in Support of CCOS.--Domestic
agriculture is facing increasing international competition. Costs of
production and processing are becoming increasingly more critical. With
the current SJV PM<INF>10</INF> SIP and the upcoming ozone and
PM<INF>2.5</INF> SIPs, the agricultural industry within the study area
is facing many new requirements to manage and reduce their air quality
impacts. The identification of scientifically validated, cost-effective
options for reducing the environmental impacts of on-field and
livestock related air emissions will contribute significantly to the
long-term health and economic stability of local agriculture. Funding
will support livestock and crop-related research that will help
maintain a vital agricultural industry within the State. Research will
be focused to measure baseline emissions, and to study the most
economical and effective approaches for reducing the impacts of
agriculture on air quality. These studies also have nationwide
benefits.
The funding request is for: (1) Development and evaluation of
methods and equipment to reduce on-field particulate matter emissions,
(2) Evaluation of baseline livestock emissions (VOCs, PM<INF>10</INF>,
ammonia) and effective methods to reduce these emissions, (3)
Development of livestock facility emissions models that are based on
individual processes emissions, as recommended by the National Academy
of Sciences, and (4) Study of agricultural VOC emissions from pesticide
application. This work will help answer questions that will be relevant
to farmers and regulators throughout the Nation.
Thank you very much for your consideration of our request.
______
Prepared Statement of the City of Avondale, Arizona
Chairman Bennett, Ranking Member Kohl, thank you for allowing me to
testify in support of $3 million in funding for the expansion of the
City of Avondale's waste water treatment facility through the Rural
Development Agency's Water and Waste Disposal Grants program in the
fiscal year 2006 Agriculture, Rural Development and Related Agencies
Appropriations bill.
Mr. Chairman, let me state it bluntly--we are in a desperate
situation. The City of Avondale has experienced exponential growth as
the sixth fastest growing city in the second fastest growing state in
the Nation. In 1990, the population was approximately 16,800. Today,
the City has nearly tripled in size to more than 50,000 residents. It
is estimated that the population will almost double to 80,000 by 2010.
In 1995, it was estimated that the City's population growth would not
reach 80,000 until 2020. This rapid and sudden expansion, in
conjunction with the city's economic malaise, has placed our finances
at a premium to meet our needs to provide water and wastewater capacity
that serves the expected population growth. As you may know, Avondale
has a majority of minority races (overwhelmingly Hispanic), and a
population that is moderate to low-income. Fourteen percent of
Avondale's residents live at or below the poverty line.
The City of Avondale has exhausted all state and local funding
options prior to seeking Federal assistance. In fact, in 2000, the city
passed a one-half of one cent sales tax to fund street, water and sewer
projects. The City used this funding source for the first expansion of
the Wastewater Treatment Plant, which was completed in January 2003.
The previous 2 years economic downturn, resulting in declining sales
tax revenue, has left the city with limited local funds for the next
expansion of the Treatment Plant, and the City does not have voter
authorization to issue bonds required by the State Revolving Fund.
As you know, the EPA mandates that current treatment facilities
must be expanded once they reach 80 percent capacity. Even with the
recently completed expansion of the facility, it is estimated that the
Avondale facility will reach over 80 percent by 2008. Knowing that time
and money is needed to design such a large project, the City has begun
the necessary preliminary permitting, environmental and pre-design
processes in anticipation of the master plan and construction, which
will be aided by the $850,000 of Federal funds received in fiscal year
2004 and 2005. With Federal funding, the city will increase the current
6.4 MGD capacity of the plant to 10 to 12 MGD, while also increasing
the capacity of the plant to reuse treated water for irrigation or
recharge purposes, and allow the plant to treat effluent to supplement
the city's potable water supply.
Furthermore, under the Clean Water Act's outdated formula Arizona
ranks last in per-capita and per-need funding under the State Revolving
Fund that is designed to help communities finance infrastructure
projects. This funding inequity has created problems for communities
like Avondale that have limited means but that must still meet Federal
water quality standards. The only fair way to rectify this inequity
would be for the Federal Government to provide the necessary funds to
complete the mandated expansion of the facility.
It is important to note that the City of Avondale's improved and
expanded wastewater treatment facility will do more than provide
wastewater services to the residents. It will also provide treated
effluent that will dramatically reduce its need for potable water
supplies. The expansion will also enable the City to better meet its
state-mandated 100-year water supply by recharging the remaining
effluent into the ground for future use, allowing nature to further
purify the water in order for it to be used for future potable
purposes.
Not only will this expansion allow the City to remain in compliance
with strict local, state and Federal regulatory requirements, it will
also add treatment processes that will allow the City to reuse the
treated wastewater for irrigation purposes, thereby recharging this
valuable resource. Recharging treated wastewater will allow the City to
reduce its dependence on imported water sources such as the Colorado
River, which benefits all municipalities relying on the river.
Finally, it is important to note that $850,000 included in the last
2 fiscal years was a critical first step because the waste water plant
is reaching full capacity. However, it is critically important to keep
this project on an optimal funding schedule to ensure the project is
completed before the treatment plant reaches maximum capacity. With
that in mind, we can utilize $3 million in fiscal year 2006 through the
Rural Development Agency's Water and Waste Disposal Grants program
toward completion of this $20 million project of which the City will
provide 53 percent of the funding.
This Project Serves a Broad Public Purpose in Three Ways.--(1) it
will allow the City to continue to provide the necessary sewer service
for our residents; (2) will benefit the rest of Arizona by helping to
cut down on the amount of scarce water the City uses, because the plant
also treats the water to allow it to be re-used for irrigation
purposes; and, (3) will allow the city to treat the effluent to bring
it up to Class A standards and to recharge it into the ground to be
withdrawn later as potable water.
Therefore, I ask that you support the City's request for $3 million
for the expansion of our waste water treatment plant through the Rural
Development Agency's Water and Waste Disposal Grants program in the
fiscal year 2006 Agriculture, Rural Development and Related Agencies
Appropriations bill.
______
Prepared Statement of the Coalition on Funding Agricultural Research
Missions
Dear Mr. Chairman, Ranking Member Kohl and Members of the
Subcommittee: The Coalition on Funding Agricultural Research Missions
(CoFARM) appreciates the opportunity to submit testimony on the fiscal
year 2006 appropriation for the United States Department of
Agriculture. CoFARM is a coalition of 23 professional scientific
organizations with 130,000 members dedicated to advancing and
sustaining a balanced investment in our Nation's research portfolio.
CoFARM understands the challenges the Senate Agriculture Appropriations
Subcommittee faces with this year's (fiscal year 2006) tight
agriculture budget. We also recognize that the Agriculture
Appropriations bill has many valuable and necessary components, and we
applaud the efforts of the Subcommittee to fund mission-critical
research through the USDA-Cooperative State, Research, Education and
Extension Service. We are particularly grateful to the Subcommittee for
funding the NRI at $180 million in fiscal year 2005. Below we have
highlighted recommendations for the fiscal year 2006 appropriations
cycle.
National Research Initiative.--CoFARM strongly endorses the
President's proposed fiscal year 2006 budget of $250 million for the
National Research Initiative Competitive Grants Program (NRI).
According to the USDA's Economic Research Service (Agricultural
Economic Report Number 735), publicly funded agricultural research has
earned an annual rate of return of 35 percent. This rate of return
suggests that additional allocation of funds to support research in the
food and agricultural sciences would be beneficial to the U.S. economy.
NRI Integrated Research.--CoFARM requests that any new monies
appropriated for the NRI, as requested by the administration, allow the
Secretary the discretion to apply up to 30 percent towards carrying out
the NRI integrated research, extension and education competitive grants
program.
Indirect Costs.--CoFARM applauds the administration's proposal to
eliminate the indirect cost cap on the NRI, set at 20 percent for
fiscal year 2005, which will broaden its appeal by putting the NRI on
equal footing with other Federal competitive grants programs such as
those of NSF and NIH.
Formula Funding.--CoFARM believes that cuts to and proposed
elimination of CSREES' formula-funded research programs can be
detrimental to the entire USDA research portfolio. Because of their
timing and potential regional and intra-state impacts, much of the
infrastructure needed to conduct competitively funded research would be
compromised if formula funds were to be cut. To cut Hatch, McIntire-
Stennis, and Animal Health & Disease in a single fiscal year would
irreparably harm those projects. This would mean a huge and potentially
damaging loss of research data nationwide.
Food and Agriculture Defense Initiative.--CoFARM supports the
request of the administration that $30 million be provided for the
Homeland Security Program to facilitate protecting America's
agricultural production systems. Recent security threats facing America
require new and expanded agricultural research to protect our Nation's
natural resources, food processing and distribution network, and rural
communities that will secure America's food and fiber system.
A balance of funding mechanisms, including competitive and formula
funding, is essential if the capacity of the United States to conduct
agricultural research, both basic and applied, is to be maintained and
the country is to continue to improve crop and livestock quality, and
the processes that deliver safe and nutritious food products from farm
to table while protecting and enhancing the Nation's environment and
natural resources. In order to address these challenges and maintain
our position in an increasingly competitive world, we must continue to
support research programs funded through CSREES.
Past investments in agricultural research have yielded many
breakthroughs in American agricultural productivity, including these
few Hatch and NRI funded research success stories:
--Pennsylvania researchers are developing rapid diagnostic tests to
curb avian influenza, a disease that could cripple the state's
$700 million poultry industry.
--University of Maryland researchers have created an advanced machine
vision technology to detect bone fragments and foreign objects
in meat.
--Researchers in Florida have tested a common fern's ability to soak
up arsenic, a cancer-causing heavy metal, from contaminated
soils. The market for plant-based remediation of wastes is
estimated to be $370 million in 2005.
--NRI funded research supported research by a University of
California scientist who has genetically engineered a breed of
corn with half the usual amount of carbohydrates and double the
protein, which should lead to the development of new crops that
will help alleviate protein deficiencies in children in
developing countries.
--Entomologists and Nematologists developed a vaccine for the
protection of cattle from the horn fly, a major insect pest in
many parts of the world costing the North American cattle
industry alone more than $1 billion annually.
--As a result of NRI funding, a group of economists found that the
competitive environment of supermarket retailers encourages
patterns of adoption of food products using technologies that
are new to the market.
--Through NRI funded research, scientists developed a new assay that
allows for rapid identification of Clostridium perfringens,
which is associated with common food-borne illness, in hospital
outbreaks and has resulted in improved diagnostic procedures.
--Florida family and youth researchers have shed light on crime and
violence trends in schools and evaluated prevention programs.
The result has been a decline in disruptive behavior in
classrooms by 40 percent over 2 years. The work is a national
model for improving school safety.
Congress must enhance funding for agricultural research to assure
Americans of a safe and nutritious food supply and to provide for the
next generation of research scientists.
As you lead the Congress in deliberation on funding levels for
agricultural research, please consider CoFARM as a supportive resource.
We hope you will call on our membership and scientific expertise.
______
Prepared Statement of the Coalition to Promote U.S. Agricultural
Exports
As members of the Coalition to Promote U.S. Agricultural Exports,
we commend the Chairman and members of the Subcommittee for their
interest and support of U.S. agriculture and express our appreciation
for this opportunity to share our views.
The Coalition to Promote U.S. Agricultural Exports is an ad hoc
coalition of over 80 organizations, representing farmers and ranchers,
fishermen and forest product producers, cooperatives, small businesses,
regional trade organizations, and the State Departments of Agriculture
(see attached). We believe the United States must continue to have in
place policies and programs that help maintain the ability of American
agriculture to compete effectively in a global marketplace still
characterized by highly subsidized foreign competition.
During consideration of the 2002 Farm Bill, Congress sought to
bolster U.S. trade expansion efforts by approving an increase in
funding for the Market Access Program (MAP) and the Foreign Market
Development (FMD) Program, which will begin to reverse the decline in
funding for these important export programs that occurred over the
previous decade. For fiscal year 2006, the Farm Bill authorizes funding
for MAP at $200 million, and FMD is authorized at $34.5 million. The
Coalition strongly urges that both programs be funded at the full
authorized levels in order to carry out important market development
activities.
Farm income and agriculture's economic well-being depend heavily on
exports, which account for one-third or more of domestic production,
provide jobs for millions of Americans, and make a positive
contribution to our Nation's overall trade balance. In fiscal year
2005, U.S. agriculture exports are projected to reach $59 billion,
which would make the current year the 3rd highest export sales year
ever following fiscal year 2004 at $62.3 billion and fiscal year 1996
at $59.8 billion. However, exports could be significantly higher if it
were not for a combination of factors, including continued high levels
of subsidized foreign competition and related steep artificial trade
barriers. Agricultural imports are also forecast to be a record $58
billion, continuing a 35-year upward trend that has increased at a
faster pace recently. If these projections hold, then agriculture's
trade surplus is only expected to be about $1 billion, a huge decline
from the roughly $27 billion surplus of fiscal year 1996. In fiscal
year 1999, the United States recorded its first agricultural trade
deficit with the EU of $1 billion. In fiscal year 2005, USDA forecasts
that the trade deficit with the EU will grow to $6 billion, the largest
agriculture deficit the United States runs with any market.
According to recent information from USDA, the European Union (EU)
spent more than $3.25 billion on agricultural export subsidies in 2003,
compared to approximately $30 million by the United States. In other
words, the United States is being outspent by more than 100 to 1 by the
EU alone with regard to the use of export subsidies.
In recent years, the EU, the Cairns group, and other foreign
competitors also devoted approximately $1.2 billion on various market
development activities to promote their exports of agricultural,
forestry, and fishery products. A significant portion of this is
carried out in the United States. Because market promotion is permitted
under World Trade Organization (WTO) rules, with no limit on public or
producer funding, it is increasingly seen as a centerpiece of a winning
strategy in the future trade battleground. Many competitor countries
have announced ambitious trade goals and are shaping export programs to
target promising growth markets and bring new companies into the export
arena. European countries are expanding their promotional activities in
Asia, Latin America, and Eastern Europe. Canada, Australia, New
Zealand, and Brazil have also budgeted significant investments in
export promotion expenditures worldwide in recent years. As the EU and
our other foreign competitors have made clear, they intend to continue
to be aggressive in their export efforts.
Both MAP and FMD are administered on a cost-share basis with
farmers and other participants required to contribute up to 50 percent
of their own resources. These programs are among the few tools
specifically allowed in unlimited amounts under WTO rules to help
American agriculture and American workers remain competitive in a
global marketplace still characterized by highly subsidized foreign
competition. The over 70 U.S. agricultural groups that share in the
costs of the MAP and FMD programs fully recognize the export benefits
of market development activities. Since 1992, MAP participants have
increased their contributions from 30 percent (30 cents for every
dollar contributed by USDA) to 166 percent ($1.66 in industry funds for
every USDA dollar). For FMD, the contribution rate has risen from 76
percent to the current level of 139 percent. By any measure, such
programs have been tremendously successful and extremely cost-effective
in helping maintain and expand U.S. agricultural exports, protect
American jobs, and strengthen farm income.
Competing in the agricultural export market carries new challenges
and opportunities for U.S. agriculture. Not only is the competition
becoming more intense with increased funding being brought to bear, but
we also face a world where new trade agreements are being developed
almost daily. The United States is also negotiating trade agreements
with the goal of opening new market opportunities for U.S. agriculture.
In addition, the opening of the Iraq market and the markets of other
previously sanctioned countries will offer further opportunities and
challenges.
For all these reasons, we want to emphasize again the need to
strengthen the ability of U.S. agriculture to compete effectively in
the global marketplace. American agriculture is among the most
competitive industries in the world, but it cannot and should not be
expected to compete alone in export markets against the treasuries of
foreign governments. As a Nation, we can work to export our products,
or we can export our jobs. USDA's export programs, such as MAP and FMD,
are a key part of an overall trade strategy that is pro-growth, pro-
trade and pro-job.
Again, as members of the Coalition to Promote U.S. Agricultural
Exports, we appreciate very much this opportunity to share our views
and we ask that this statement be included in the official hearing
record.
COALITION TO PROMOTE U.S. AGRICULTURAL EXPORTS
Alaska Seafood Marketing Institute
American Feed Industry Association
American Forest and Paper Association
American Hardwood Export Council
American Meat Institute
American Peanut Council
American Quarter Horse Association
American Seed Trade Association
American Sheep Industry Association
American Soybean Association
Blue Diamond Growers
Calcot, Ltd.
California Agricultural Export Council
California Asparagus Commission
California Association of Winegrape Growers
California Canning Peach Association
California Cling Peach Board
California Dried Plum Board
California Fig Institute
California Kiwifruit Commission
California Pistachio Commission
California Plum Marketing Board
California Strawberry Commission
California Table Grape Commission
California Tomato Commission
California Walnut Commission
Cherry Marketing Institute
CoBank
Diamond of California
Florida Citrus Commission
Florida Citrus Mutual
Florida Citrus Packers Association
Florida Citrus Processors Association
Florida Department of Citrus
Food Export USA--Northeast
Georgia Poultry Federation
Ginseng Board of Wisconsin
Hop Growers of America
Indian River Citrus League
Kansas Livestock Association
Kentucky Distillers Association
Land O'Lakes, Inc.
Mid-America International Agri-Trade Council
Mohair Council of America
National Association of State Departments of Agriculture
National Association of Wheat Growers
National Barley Growers Association
National Cattlemen's Beef Association
National Chicken Council
National Confectioners Association
National Corn Growers Association
National Cotton Council
National Council of Farmer Cooperatives
National Grain Sorghum Producers
National Grange
National Grape Cooperative Association, Inc.
National Milk Producers Federation
National Oilseed Processors Association
National Pork Producers Council
National Potato Council
National Renderers Association
National Sunflower Association
National Turkey Federation
NORPAC Foods, Inc.
North American Millers' Association
Northwest Horticultural Council
Ocean Spray Cranberries, Inc.
Pet Food Institute
Produce Marketing Association
Softwood Export Council
Southern Forest Products Association
Southern U.S. Trade Association
Sunkist Growers
Sun Maid Growers of California
Sunsweet Growers, Inc.
Texas Cattle Feeders Association
The Catfish Institute
The Popcorn Institute
Tree Top, Inc.
United Egg Association
United Egg Producers
United Fresh Fruit and Vegetable Association
USA Dry Pea and Lentil Council
USA Poultry & Egg Export Council
USA Rice Federation
U.S. Apple Association
U.S. Dairy Export Council
U.S. Dry Bean Council
U.S. Hides, Skins & Leather Association
U.S. Livestock Genetics Export, Inc.
U.S. Meat Export Federation
U.S. Rice Producers Association
U.S. Wheat Associates
Valley Fig Growers
Vinifera Wine Growers Association
Virginia Wineries Association
Welch's
Western Growers Association
Western Pistachio Association
Western U.S. Agricultural Trade Association
Wheat Export Trade Education Committee
WineAmerica (The National Association of American Wineries)
Winegrape Growers of America
Wine Institute
______
Prepared Statement of the Colorado River Basin Salinity Control Forum
COLORADO RIVER BASIN SALINITY CONTROL PROGRAM, TITLE II
Forum's Recommendation Concerning: Funding for Environmental
Quality Incentives Program.
Support funding of this nationwide program at the President's
requested amount of $1 billion for fiscal year 2006.
Request there be designated to the Colorado River Basin Salinity
Control Program 2.5 percent of the EQIP funding.
The Congress concluded that the Colorado River Basin Salinity
Control Program (Program) should be implemented in the most cost-
effective way. Realizing that agricultural on-farm strategies were some
of the most cost-effective strategies, the Congress authorized a
program for the United States Department of Agriculture (USDA) through
amendment of the Colorado River Basin Salinity Control Act in 1984.
With the enactment of the Federal Agriculture Improvement and Reform
Act of 1996 (FAIRA), the Congress directed that the Program should
continue to be implemented as one of the components of the
Environmental Quality Incentives Program (EQIP). Since the enactment of
the Farm Security and Rural Investment Act (FSRIA) in 2002, there have
been, for the first time in a number of years, opportunities to
adequately fund the Program within the EQIP.
The Program, as set forth in the Colorado River Basin Salinity
Control Act, is to benefit Lower Basin water users hundreds of miles
downstream from salt sources in the Upper Basin as the salinity of
Colorado River water increases as the water flows downstream. There are
very significant economic damages caused by high salt levels in this
water source. Agriculturalists in the Upper Basin where the salt must
be controlled, however, don't first look to downstream water quality
standards but look for local benefits. These local benefits are in the
form of enhanced beneficial use and improved crop yields. They submit
cost-effective proposals to the State Conservationists in Utah, Wyoming
and Colorado and offer to cost share in the acquisition of new
irrigation equipment. The Colorado River Basin Salinity Control Act
provides that the seven Colorado River Basin States will also cost
share with the Federal funds for this effort. This has brought together
a remarkable partnership.
After longstanding urgings from the States and directives from the
Congress, the USDA has concluded that this program is different than
small watershed enhancement efforts common to the EQIP. In this case,
the watershed to be considered stretches more than 1,200 miles from the
river's headwater in the Rocky Mountains to the river's terminus in the
Gulf of California in Mexico and receives water from numerous
tributaries. The USDA has determined that this effort should receive a
special funding designation and has appointed a coordinator for this
multi-State effort.
In fiscal years 2003, 2004 and 2005, the Natural Resources
Conservation Service (NRCS) directed $13.6 million, $19.8 million and
$19.5 million respectively to be used for the Program. The Forum
appreciates the efforts of the NRCS leadership and the support of this
subcommittee. The plan for water quality control of the Colorado River
was prepared by the Colorado River Basin Salinity Control Forum
(Forum), adopted by the States, and approved by the United States
Environmental Protection Agency (EPA). In the water quality plan it is
required that the USDA (Federal) portion of the effort be funded at a
level of at least $17.5 million annually. Over the last three fiscal
years, for the first time, funding reached this level on an average
annual basis. State and local cost-sharing is triggered by the Federal
appropriation. In fiscal year 2005, it is anticipated that the States
will cost share with about $8.3 million and local agriculture producers
will add another $7.5 million. Hence, it is anticipated that in fiscal
year 2005 the State and local contributions will be 45 percent of the
total program.
Over the past few years, the NRCS has designated that about 2.5
percent of the EQIP funds be allocated to the Colorado River salinity
control program. The Forum believes this is the appropriate future
level of funding as long as the funding does not drop below $17.5
million. Funding above this level assists in offsetting pre-fiscal year
2003 funding below this level. The Basin States have cost sharing
dollars available to participate in funding on-farm salinity control
efforts. The agricultural producers in the Upper Basin are waiting for
their applications to be considered so that they might improve their
irrigation equipment and also cost share in the Program.
OVERVIEW
The Program was authorized by the Congress in 1974. The Title I
portion of the Colorado River Basin Salinity Control Act responded to
commitments that the United States made, through a Minute of the
International Boundary and Water Commission, to Mexico specific to the
quality of water being delivered to Mexico below Imperial Dam. Title II
of the Act established a program to respond to salinity control needs
of Colorado River water users in the United States and to comply with
the mandates of the then newly-enacted Clean Water Act. This testimony
is in support of funding for the Title II program.
After a decade of investigative and implementation efforts, the
Basin States concluded that the Salinity Control Act needed to be
amended. The Congress agreed and revised the Act in 1984. That
revision, while keeping the Department of the Interior as lead
coordinator for Colorado River Basin salinity control efforts, also
gave new salinity control responsibilities to the USDA. The Congress
has charged the Administration with implementing the most cost-
effective program practicable (measured in dollars per ton of salt
controlled). It has been determined that the agricultural efforts are
some of the most cost-effective opportunities.
Since Congressional mandates of nearly three decades ago, much has
been learned about the impact of salts in the Colorado River system.
The Bureau of Reclamation (Reclamation) has conducted studies on the
economic impact of these salts. Reclamation recognizes that the damages
to United States' water users alone are hundreds of millions of dollars
per year.
The Forum is composed of gubernatorial appointees from Arizona,
California, Colorado, Nevada, New Mexico, Utah and Wyoming. The Forum
has become the seven-State coordinating body for interfacing with
Federal agencies and the Congress in support of the implementation of
the Salinity Control Program. In close cooperation with the EPA and
pursuant to requirements of the Clean Water Act, every three years the
Forum prepares a formal report evaluating the salinity of the Colorado
River, its anticipated future salinity, and the program elements
necessary to keep the salinity concentrations (measured in Total
Dissolved Solids--TDS) at or below the levels measured in the river
system in 1972 at Imperial Dam, and below Parker and Hoover Dams.
In setting water quality standards for the Colorado River system,
the salinity concentrations at these three locations in 1972 have been
identified as the numeric criteria. The plan necessary for controlling
salinity and reducing downstream damages has been captioned the ``Plan
of Implementation.'' The 2002 Review of water quality standards
includes an updated Plan of Implementation. In order to eliminate the
shortfall in salinity control resulting from inadequate Federal funding
for a number of years from the USDA, the Forum has determined that
implementation of the Program needs to be accelerated as the President
has requested. The level of appropriation requested in this testimony
is in keeping with the agreed upon plan. If adequate funds are not
appropriated, significant damages from the higher salt concentrations
in the water will be more widespread in the United States and Mexico.
Concentrations of salts in the river cause $330 million in damage
in the United States and result in poorer quality water being delivered
by the United States to Mexico. Damages occur from:
--a reduction in the yield of salt sensitive crops and increased
water use for leaching in the agricultural sector,
--a reduction in the useful life of galvanized water pipe systems,
water heaters, faucets, garbage disposals, clothes washers, and
dishwashers, and increased use of bottled water and water
softeners in the household sector,
--an increase in the use of water for cooling, and the cost of water
softening, and a decrease in equipment service life in the
commercial sector,
--an increase in the use of water and the cost of water treatment,
and an increase in sewer fees in the industrial sector,
--a decrease in the life of treatment facilities and pipelines in the
utility sector,
--difficulty in meeting wastewater discharge requirements to comply
with National Pollutant Discharge Elimination System permit
terms and conditions, and an increase in desalination and brine
disposal costs due to accumulation of salts in groundwater
basins, and
--increased use of imported water for leaching and cost of
desalination and brine disposal for recycled water.
For every 30 mg/L increase in salinity concentrations, there is $75
million in additional damages in the United States. The Forum,
therefore, believes implementation of the USDA program needs to be
funded at 2.5 percent of the total EQIP funding.
Although the Program thus far has been able to implement salinity
control measures that comply with the approved plan, recent drought
years have caused salinity levels to rise in the river. Predictions are
that this will be the trend for the next several years. This places an
added urgency for acceleration of the implementation of the Program.
STATE COST-SHARING AND TECHNICAL ASSISTANCE
The authorized cost sharing by the Basin States, as provided by
FAIRA, was at first difficult to implement as attorneys for the USDA
concluded that the Basin States were authorized to cost share in the
effort, but the Congress had not given the USDA authority to receive
the Basin States' funds. After almost a year of exploring every
possible solution as to how the cost sharing was to occur, the States,
in agreement with Reclamation, State officials in Utah, Colorado and
Wyoming and with NRCS State Conservationists in Utah, Colorado and
Wyoming, agreed upon a program parallel to the salinity control
activities provided by the EQIP wherein the States' cost sharing funds
are being contributed and used. We are now several years into that
program and, at this moment in time, this solution to how cost sharing
can be implemented appears to be satisfactory.
With respect to the States' cost sharing funds, the Basin States
felt that it was most essential that a portion of the Program be
associated with technical assistance and education activities in the
field. Without this necessary support, there is no advanced planning,
proposals are not well prepared, assertions in the proposals cannot be
verified, implementation of contracts cannot be observed, and valuable
partnering and education efforts cannot occur. Recognizing these
values, the ``parallel'' State cost sharing program expends 40 percent
of the funds available on these needed support activities made possible
by contracts with the NRCS. Initially, it was acknowledged that the
Federal portion of the Program funded through EQIP was starved with
respect to needed technical assistance and education support. The Forum
is encouraged with a recent Administration acknowledgment that
technical assistance must be better funded.
______
Prepared Statement of the New Mexico Interstate Stream Commission
SUMMARY
This Statement is submitted in support of appropriations for the
Department of Agriculture's Colorado River Basin salinity control
program. Prior to the enactment of the Farm Security and Rural
Investment Act (FSRIA) in 2002, the salinity control program had not
been funded at the level necessary to control salinity with respect to
water quality standards since the enactment of the Federal Agriculture
Improvement and Reform Act (FAIRA) of 1996. Inadequate funding of the
salinity control program also negatively impacts the quality of water
delivered to Mexico pursuant to Minute 242 of the International
Boundary and Water Commission. Adequate funding for the Environmental
Quality Incentives Program (EQIP), from which the Department of
Agriculture funds the salinity program, is needed to implement salinity
control measures. FSRIA authorized a funding level of at least $1.2
billion for EQIP in fiscal year 2006, and the President's budget for
fiscal year 2006 requests an appropriation of $985 million for EQIP. I
urge the Subcommittee to support funding from Commodity Credit
Corporation (CCC) of at least $985 million to be appropriated for EQIP.
I request that the Subcommittee designate 2\1/2\ percent of the EQIP
appropriation, but no less than $17.5 million, for the Colorado River
Basin salinity control program. I request that adequate funds be
appropriated for technical assistance and education activities directed
to salinity control program participants.
STATEMENT
The seven Colorado River Basin States, in response to the salinity
issues addressed by Clean Water Act of 1972, formed the Colorado River
Basin Salinity Control Forum (Forum). Comprised of gubernatorial
appointees from the seven Basin States, the Forum was created to
provide for interstate cooperation in response to the Clean Water Act,
and to provide the States with information to comply with Sections 303
(a) and (b) of the Act. The Forum has become the primary means for the
seven Basin States to coordinate with Federal agencies and Congress to
support the implementation of the salinity control program.
The Colorado River Basin salinity control program was authorized by
Congress in the Colorado River Basin Salinity Control Act of 1974.
Congress amended the Act in 1984 to give new responsibilities to the
Department of Agriculture. While retaining the Department of the
Interior as the lead coordinator for the salinity control program, the
amended Act recognized the importance of the Department of Agriculture
operating under its authorities to meet the objectives of the salinity
control program. Many of the most cost-effective projects undertaken by
the salinity control program to date have occurred since implementation
of the Department of Agriculture's authorization for the program.
Bureau of Reclamation studies show that damages from the Colorado
River to United States water users are about $330,000,000 per year.
Damages are estimated at $75,000,000 per year for every additional
increase of 30 milligrams per liter in salinity of the Colorado River.
It is essential to the cost-effectiveness of the salinity control
program that Department of Agriculture salinity control projects be
funded for timely implementation to protect the quality of Colorado
River Basin water delivered to the Lower Basin States and Mexico.
Congress concluded, with the enactment FAIRA in 1996, that the
salinity control program could be most effectively implemented as a
component of the Environmental Quality Incentives Program (EQIP).
However, until 2004, the salinity control program since the enactment
of FAIRA was not funded at an adequate level to protect the Basin
State-adopted and Environmental Protection Agency approved water
quality standards for salinity in the Colorado River. Appropriations
for EQIP prior to 2004 were insufficient to adequately control salinity
impacts from water delivered to the downstream States, and hampered the
required quality of water delivered to Mexico pursuant to Minute No.
242 of the International Boundary and Water Commission, United States
and Mexico.
EQIP subsumed the salinity control program without giving adequate
recognition to the responsibilities of the Department of Agriculture to
implement salinity control measures per Section 202(c) of the Colorado
River Basin Salinity Control Act. The EQIP evaluation and project
ranking criteria target small watershed improvements that do not
recognize that water users hundreds of miles downstream are significant
beneficiaries of the salinity control program. Proposals for EQIP
funding are ranked in the States of Utah, Wyoming and Colorado under
the direction of the respective State Conservationists without
consideration of those downstream, particularly out-of-State, benefits.
Following recommendations of the Basin States to address the
funding problem, the Department of Agriculture's Natural Resources
Conservation Service (NRCS) designated the Colorado River Basin an
``area of special interest'' including earmarked funds for the salinity
control program. The NRCS concluded that the salinity control program
is different from the small watershed approach of EQIP. The watershed
for the salinity control program stretches almost 1,200 miles, from the
headwaters of the river through the salt-laden soils of the Upper Basin
to the river's termination at the Gulf of California in Mexico. NRCS is
to be commended for its efforts to comply with the Department of
Agriculture's responsibilities under the Colorado River Basin Salinity
Control Act of 1974. Irrigated agriculture in the Upper Basin realizes
significant local benefits of improved irrigation practices, and
agricultural producers have succeeded in submitting cost-effective
proposals to NRCS.
The Basin States, including New Mexico, were very dismayed that
funding for EQIP since the 1996 enactment of FAIRA was inadequate until
2004. Years of inadequate Federal funding for the Department of
Agriculture prior to 2004 resulted in the Forum finding that the
salinity control program needs acceleration to maintain the water
quality criteria of the Colorado River water quality standards for
salinity. Since the enactment of the Farm Security and Rural Investment
Act in 2002, an opportunity to adequately fund the salinity control
program now exists. The President's budget request of $985 million
accomplishes the needed acceleration of the NRCS salinity control
program if the USDA continues its practice of designating 2\1/2\
percent of the EQIP funds appropriated. The requested funding of 2\1/2\
percent of the EQIP funding or no less than $17.5 million will continue
to be needed each year for at least the next few fiscal years.
State and local cost-sharing is triggered by and indexed to the
Federal appropriation. Federal funding for the NRCS salinity control
program of about $19.5 million for fiscal year 2005 has generated about
$15.8 million in cost-sharing from the Colorado River Basin States and
agricultural producers, or roughly an 80 percent match of the Federal
funds appropriated for the fiscal year.
The Department of Agriculture salinity control projects have proven
to be the most cost-effective component of the salinity control
program. The Department of Agriculture has indicated that a more
adequately funded EQIP program would result in more funds being
allocated to the salinity program. The Basin States have cost-sharing
dollars available to participate in on-farm salinity control efforts.
The agricultural producers in the Upper Basin are willing to cost-share
their portion and waiting for adequate funding for their applications
to be considered.
I urge the Congress to appropriate at least $985 million from the
CCC in fiscal year 2006 for EQIP. Also, I request that Congress
designate 2\1/2\ percent of the EQIP appropriation, but no less than
$17.5 million, for the Colorado River Basin salinity control program.
Finally, I request that adequate funds be appropriated to NRCS
technical assistance and education activities directed to the salinity
control program participants, rather than requiring the NRCS to borrow
funds from CCC for these direly needed and under-funded support
functions. Recent history has shown that inadequate funding for NRCS
technical assistance and education activities has been a severe
impediment to successful implementation of the salinity control
program. The Basin States parallel funding program, implemented as a
means of cost sharing with NRCS, expends 40 percent of the States'
funds available to meet the needs of NRCS for technical assistance and
education activities because of the inadequacy imposed by Federal
limitations on funding for these needed activities. I urge the Congress
to appropriate adequate funds for these support activities essential to
the successful implementation of the salinity control program.
______
Prepared Statement of the Council on Food, Agricultural and Resource
Economics (C-FARE) and the Consortium of Social Science Associations
(COSSA)
Dear Mr. Chairman, Ranking Member Kohl and Members of the
Subcommittee: The Council on Food, Agricultural, and Resource Economics
(C-FARE) and the Consortium of Social Science Associations (COSSA)
appreciate the opportunity to submit testimony on the fiscal year 2006
appropriation for the United States Department of Agriculture. C-FARE
is a non-profit, non-partisan organization dedicated to strengthening
the presence of the agricultural, natural resources, and applied
economics profession to matters of science policy and Federal budget
determination, and we represent approximately 3,500 economists
nationwide. COSSA is an advocacy organization for the social and
behavioral sciences supported by more than 100 professional
associations, scientific societies, universities and research
institutions.
Our organizations understand the challenges the Senate Agriculture
Appropriations Subcommittee faces given the tight fiscal year 2006
agriculture budget. We also recognize that the Agriculture
Appropriations bill has many valuable and necessary components, and we
applaud the efforts of the Subcommittee to fund mission-critical
research. Below are listed recommendations for the fiscal year 2006
appropriations cycle.
USDA COOPERATIVE STATE RESEARCH, EDUCATION, AND EXTENSION SERVICE
(CSREES)
National Research Initiative
--C-FARE and COSSA endorses funding for the National Research
Initiative Competitive Grants Program (NRI). The NRI encourages
high quality research that is conducted through a peer reviewed
format. In particular, the research issues addressed by Markets
and Trade and Rural Development are diverse and multi-faceted.
Social Science research also enhances ideas and technologies
from other fields of science and research which adds value to
their role in the NRI.
--C-FARE and COSSA requests that any new monies appropriated for the
NRI, as requested by the administration, allow the Secretary
the discretion to apply up to 30 percent towards carrying out
the NRI integrated research, extension and education
competitive grants program.
--Our organizations applaud the administration's proposal to
eliminate the indirect cost cap on the NRI, set at 20 percent
for fiscal year 2005, which will broaden its appeal by putting
the NRI on equal footing with other Federal competitive grants
programs.
--Social Science research is highly valued by USDA and much of what
our scientists offer can help meet the strategic goals of
CSREES. For example, social science research meets CSREES
strategic goal number 1, ``Enhance Economic Opportunities for
Agricultural Producers'' by providing science-based
information, knowledge, and education to help farmers and
ranchers understand risk management, and the long-term impacts
of trade barriers. Research by our members also meets CSREES
goal number 2, ``Support Increased Economic Opportunities and
Improved Quality of Life in Rural America,'' by providing
information to help inform decisions affecting the quality of
life in rural America. Therefore, we request that the Committee
encourage CSREES to fund the social science research components
of the NRI at a level sufficient to allowing scientists address
these unmet research needs.
Formula Funding.--Cuts to and proposed elimination of CSREES'
formula-funded research programs can be detrimental to the entire USDA
research portfolio. Formula Funds support the continuing costs of
research activities while providing for long-term commitments to
research that is often essential. Because of their timing and potential
regional and intra-state impacts, much of the infrastructure needed to
conduct competitively award research would be compromised if formula
funds were cut. This would mean a huge and potentially damaging loss of
research data nationwide. A balance of funding mechanisms, including
competitively awarded and formula funding, is essential if the capacity
of the United States to conduct agricultural research, both basic and
applied, is to be maintained and the country is to continue to excel in
areas such as agricultural production and expanding the quality of
rural life.
REGIONAL RURAL DEVELOPMENT CENTERS
C-FARE and COSSA endorse the continued funding as requested by the
President for the RRDCs (Regional Rural Development Centers). They are
an important avenue for supporting research and extension work.
Utilizing social and economic research, the RRDCs help the engagement
of rural people and organizations in the civic life of their
communities, promote sound rural economic and workforce development
strategies that improve job quality and the competitiveness of workers
in rural areas, and they assist rural communities in developing
strategies for addressing the challenges associated with the expansion
of urban and suburban localities into rural areas.
USDA ECONOMIC RESEARCH SERVICE (ERS)
C-FARE and COSSA applaud the House and Senate for their support in
the fiscal year 2005 Appropriations Bill of the Flexible Consumer
Behavior Survey. The funding from last year helped lay the foundation
for this much needed data program. C-FARE and COSSA support the
President's proposed funding level of $5.8 million to continue the
development of the data and analysis framework of the post-farm gate
food system. If fully funded it will help identify, understand, and
track changes in food supply and consumption patterns. Such information
is essential for use in making policy decisions in the food, health and
consumer arenas. These funds will help implement the system by creating
and developing a rapid consumer response module which will allow USDA
to link consumer reactions to food purchases, sales, consumption and
price information. It will also help develop a behavioral economic
research program, the implementation of system surveys, and a web-based
data dissemination program. These surveys and information will provide
knowledge for producers to better target products to consumer behavior,
while providing policymakers with a better basis for formulating
effective nutritional policy.
USDA NATIONAL AGRICULTURAL STATISTICS SERVICE (NASS)
C-FARE and COSSA recommend supporting the President's priority
activities for NASS. These include:
--Agricultural Estimates ($7.0 million).--This increase will build on
2004 and 2005 efforts to restore and modernize NASS's core
survey and estimation program, which covers most agricultural
commodities produced in the United States and encompasses
economic, environmental and rural data With these funds a
restored sample size, and other positive attributes will be
utilized by agencies and constituents alike.
--Locality Based Agricultural County Estimation Program ($1.9
million).--This funding supports the NASS goal to improve
statistically defensible survey precision for small area
statistics.
--Census of Agriculture ($6.5 million).--The Census of Agriculture
provides comprehensive data on the agricultural economy with
national, State, and county level details. This increase
supports the normal increase in activity levels due to the
cyclical nature of the 5-year Census program. Funding will be
used to prepare for the 2007 Census of Agriculture and to
conclude analysis and publication of the Census of Aquaculture
in December 2006.
USDA AGRICULTURE MARKETING SERVICE (AMS)
C-FARE and COSSA encourage Congress to continue supporting USDA's
AMS at a level that will allow them to continue offering the high value
programs they provide. As economists and social scientists we
appreciate that the AMS programs promote a competitive and efficient
marketplace. AMS services such as standardization, grading, market
news, commodity procurement, and other market-facilitating activities
benefit both consumers and producers. For the research community
specifically, AMS market news services provide in-depth data regarding
a wide range of commodities and modes of transportation; such basic
information is invaluable for analysis. AMS also supports research on
marketing and transportation issues through cooperative agreements and
through the Federal-State Marketing Improvement Program.
USDA GRAIN INSPECTION, PACKERS, AND STOCKYARDS ADMINISTRATION (GIPSA)
C-FARE and COSSA also value the vital work of GIPSA to help USDA
enhance economic opportunities for agricultural producers by promoting
fair and competitive trade practices and financial integrity in the
grain, livestock, meat and poultry industries. GIPSA reports provide
information that aid in the development of industry standards and
policy decision-making. Several of these reports are used in the
research conducted by social scientists. In particular, the Packers and
Stockyards Statistical Report provides researchers with data on
industry concentration, plant size, and other industry economic
information. The data helps social science researchers study important
social and economic issues, including concentration in the meat packing
industry. We encourage Congress to continue providing appropriate
support for GIPSA and their important programs.
USDA NATURAL RESOURCES CONSERVATION SERVICE (NRCS)
Our organizations also support sustained investment in our Nation's
natural resources and environment. We applaud USDA NRCS for promoting
conservation and sustainable use of natural resources on the Nation's
private lands. NRCS helps provide science-based knowledge to improve
the management of forests, rangelands, soil, air and water resources.
Social science researchers use this vital information to develop policy
recommendations that impact the future of our agricultural sector, as
well as life in rural America.
CONCLUSION
Recent security threats facing America require new and expanded
agricultural research to protect our Nation's forests, water supplies,
food processing and distribution network, and rural communities and
insure the future security, safety and sustainability of America's food
and fiber system. In order to address these challenges and maintain our
position in an increasingly competitive world, we must continue to
support research programs such as the NRI and those supported through
formula funding.
Thank you for the opportunity to present our recommendations. As
you know, past investments in agricultural research have yielded many
breakthroughs in American agricultural productivity. If you have any
questions or concerns regarding our priorities please do not hesitate
to contact us.
______
Prepared Statement of Defenders of Wildlife
On behalf of our members and supporters, Defenders of Wildlife
appreciates the opportunity to comment upon the fiscal year 2006 budget
for the U.S. Department of Agriculture. Defenders of Wildlife is a
national nonprofit conservation organization committed to preserving
the integrity and diversity of natural ecosystems, preventing the
decline of native species, and restoration of threatened habitats and
wildlife populations.
Defenders of Wildlife has significant concerns about the
administration's fiscal year 2006 budget and we strongly oppose a
number of changes the Bush Administration's proposed fiscal year 2006
budget would make to Farm Bill conservation programs. The Bush
Administration's proposal attempts to rewrite the Farm Bill to the
great detriment of USDA voluntary conservation programs. We make
recommendations in the following priority areas.
2002 Farm Bill Conservation Title Programs
Resource conservation programs within the Farm Security and Rural
Investment Act of 2002 (Public Law 107-171) (Farm Bill) provide an
integrated approach, through incentives and technical assistance, to
both production and stewardship of farm and ranch lands and the
environment. Further, these programs have been particularly valuable in
providing resources for addressing threatened and endangered species
conservation issues. The 2002 Farm Bill tried to achieve a balance
between farm commodity provisions and critical conservation, nutrition,
research and rural development programs that reach far more Americans
than the traditional commodity programs. But, in every year since the
passage of the Farm Bill, these conservation programs continue to be
funded well under authorized levels. This comes at the expense of
meaningful benefits to both sustainable farmers and ranchers and the
environment.
The conservation title specifically has bourn the brunt of the
cuts. Since the farm bill passed, the combination of congressional and
administrative actions has re-opened the farm bill to reduce promised
conservation title funding for programs administered by the National
Resource Conservation Service (NRCS) by $3.7 billion. This includes
nearly $800 million from the fiscal year 2003 through fiscal year 2005
funding cycles, plus an additional $2.9 billion from the Conservation
Security Program (CSP) alone in the out years.
For fiscal year 2006, President Bush is again proposing a cut to
conservation programs that will result in a 28 percent decrease in
funding originally promised by the 2002 Farm Bill. The 2002 Farm Bill
promised mandatory conservation funding in fiscal year 2006 of $2.435
billion. Yet, the total amount in the President's fiscal year 2006
budget request for all programs is $1.739 billion, $700 million less
than was promised and is needed. The fiscal year 2005 appropriations
bill already drastically scaled back the mandatory farm bill spending
for oversubscribed programs by nearly $500 million. The President's
fiscal year 2006 budget request programs would scale them back again.
This despite the fact that the USDA's voluntary conservation programs
continue to be in demand and oversubscribed, Nationally, there are over
150,000 qualified farmers and ranchers interested in implementing
conservation practices to improve soil, water and air quality and add
wildlife habitat through the conservation programs, who are waiting for
funding; the value of the backlog of these qualified applicants exceeds
$2 billion.
Defenders of Wildlife urges Congress to restore balance to the Farm
Bill and to not shortchange progressive voluntary conservation
programs. National Farm Bill legislation has a profound impact on
native species and wildlife habitat conservation choices of individual
private landowners who practice crop, livestock, and forestry
activities. Almost 60 percent of at risk species (as defined by The
Nature Conservancy) are on private or State lands. Nearly 40 percent of
plant and animal species listed as threatened or endangered are found
only on private or State lands. Seventy percent of the land in the
United States is held in private ownership in the form of range,
forestry, or agricultural use. As of 1995, nearly 84 percent of the
plants and animals listed as endangered or threatened were listed in
part due to agricultural activities. Specifically, we urge Congress to
restore balance by protecting funding allocations for the following
programs:
The Conservation Security Program
The Bush Administration's proposed fiscal year 2006 budget
continues to cripple the landmark Conservation Security Program (CSP).
CSP supports farmers who implement and maintain effective stewardship
practices on their working farm lands. The President's fiscal year 2006
budget reduces the CSP substantially below the level authorized in the
Farm Bill with a 58 percent decrease. Moreover, because a significant
portion of fiscal year 2006 funding will go to fund the continuation of
contracts signed in 2004 and 2005, the proposed funding level will
severely curtail the number of watersheds where the program can be
offered in 2006 to well below the intent of the 2002 Farm Bill. Current
funding levels have permitted enrollment of only about 10 percent of
the Nation's watersheds in the first 2 years of program implementation.
The President's budget suggests a rollout rate that will result in 10
to 12 year cycle for reaching all of the Nation's farmers. That means
many contracts will expire long before farmers get their next chance to
re-enroll, which risks the loss of the environmental benefits of the
program and turns away many good stewards of the land.
The Conservation Security Program offers long term benefits for
continued management of lands to promote environmental health. CSP is
structured to reward farmers who have already invested in environmental
stewardship, and to encourage them to go even farther to implement
stewardship practices on their working lands through the enhancement
payment structure. CSP is an essential part of the USDA portfolio of
conservation programs to protect our water, soil, and wildlife
resources. In order to achieve its promise of continuous income support
to all of the country's best stewards, the program must be available to
all producers nationwide, and must be implemented on a schedule that
permits farmers to re-enroll when their contracts are up. Defenders
urges Congress to consider the benefits that these programs can provide
to sustainable farmers in all types of agriculture and in all regions
of the country, and authorize at appropriated levels. At this point,
perpetual cuts seems to have the effect of rewriting the Farm Bill and
changing CSP from the first-ever working lands conservation entitlement
program envisioned by Congress, to a program with limited enrollment,
preferential bidding, and waiting lists.
This program can provide great benefits if funded as intended by
the 2002 Farm Bill.
The Wildlife Habitat Incentives Program
In the President's fiscal year 2006 budget the Wildlife Habitat
Incentives Program (WHIP) gets slashed by 29 percent, a $25 million cut
below the authorized level mandated in the 2002 Farm Bill and was
already cut by 45 percent below farm bill authorized levels in 2005.
WHIP provides cost sharing and technical assistance for the development
of wildlife habitat on private lands. Though small in size, the program
provides significant benefits for wildlife and wildlife habitat and
provides proactive solutions to dealing with endangered habitat and
species issues before they become critical. More than 8,400 projects
affecting some 1.4 million acres have been approved under WHIP (source:
National Wildlife Federation fact sheet). There is demand for more as
backlog statistics from NRCS show us. Nationwide, over 3,000 qualified
applicants, likely small farmers and ranchers, are being turned away.
The value of the backlogged applications that could be going to these
stewards totals $10 million.
Agriculture Secretary Johanns recently lauded the performance
benefits WHIP saying that, ``More than $27 million funded over 3,000
private landowners create, restore and enhance wildlife habitat for
upland wildlife; wetland wildlife; threatened, endangered or at-risk
species and fisheries as well as other types of wildlife. Of the more
than 430,000 acres enrolled in the program last year, 21,000 acres will
help threatened and endangered species.'' Defenders urges Congress to
restore full funding to this program and protect the allocation of this
program to continue to provide meaningful benefits to sustainable
farmers and ranchers and to wildlife.
The Wetland Reserve Program
President Bush has stated as a priority his commitment to a goal of
``no net loss'' of wetlands, yet one of the most progressive and
meaningful programs that works towards that goal, the Wetlands Reserve
Program (WRP) is slated in the President's budget to be cut by 20
percent. On April 22, 2004 the President announced his commitment to
provide funding for an overall increase of wetlands each year and
stated he would seek to ``create, improve, and protect at least three
million wetland acres over the next 5 years in order to increase
overall wetland acres and quality.'' (source: White House Press
Release, April 22, 2004) To meet this goal the President called on
Congress to fund conservation programs--specifically the Wetlands
Reserve Program, yet his fiscal year 2006 budget cuts that program by
$80 million dollars.
WRP provides farmers with cost-share assistance and easements to
take wetlands converted for agricultural purposes out of production and
to restore them to beneficial wetlands. According to statistics by U.S.
Fish and Wildlife service, one-third of all bird species, 190 species
of amphibians and 5,000 species of plants depend on wetlands habitat.
Along with WHIP, WRP has contributed the most to the creation and
improvement of habitat for at-risk and declining species. Yet, WRP saw
a 38 percent reduction in its acreage allotment in 2005 and, again
faces a 20 percent reduction in 2006. This despite a demand that has
led to a backlog of over 3,100 applicants nationwide, that would have
provided restoration to almost 536,000 acres across the country. This
is a substantial amount when one considers that, according to the USDA,
overall annual wetlands losses are estimated at some 60,000 acres.
Defenders urges Congress to take up the President's promise to conserve
wetlands, and restore funding to this program which is integral to the
success of that goal.
The Grasslands Reserve Program
The Grasslands Reserve Program (GRP) is a voluntary program
offering landowners the opportunity to protect, restore and enhance
grasslands on their property. The program received $254 million over
the life of the Farm Bill, and that money has been widely used for
projects that benefit wildlife, particularly grassland birds like the
sage grouse, and is important to addressing endangered species issues.
However, GRP is predicted to use up its entire Farm Bill allocation by
the end of 2005, so there is no money in the budget for GRP in 2006.
Defenders urges Congress to consider the benefits of this program for
addressing threatened and endangered species issues and note that if
this amount is capped, it will be more critical then ever to fund other
similar conservation programs such as WHIP to help continue the work
started under the GRP.
Other Important Conservation Programs in the Farm Bill
Several other critical programs, that are part of the forward
thinking conservation initiatives in the Farm Bill, will also be
significantly cut, which in turn will undermine progressive efforts by
farmers and ranchers to steward land, conserve soil and water, and
provide habitat for wildlife. The Environmental Quality Incentives
Program (EQIP), which provides technical assistance, cost-share/
incentive funding to assist crop and livestock producers with
environmental and conservation improvements on their farms and ranches,
is cut by 17 percent. And the Farm and Ranch Land Protection Program
(FRPP), which keeps working farms and ranches in production and puts
cash in the pockets of farmers and ranchers, will suffer a 17 percent
cut. Defenders again urges Congress to protect the restore funding and
protect the allocation for these programs, as well as the Conservation
Reserve program. Farm Bill conservation programs should be appropriated
at authorized levels as intended by the 2002 Farm Bill.
Farm Bill Energy Title Programs
Inclusion of an Energy Title in the 2002 Farm Bill was a huge
bipartisan victory for renewable energy and for rural America. However,
the program was allocated $23 million per year in mandatory funding for
fiscal years 2003-2007. The President's fiscal year 2006 budget request
provides only $10 million in discretionary funding. This title provides
programs to spur the growth of renewable energy within the agriculture
sector, an immense potential energy source. Sec. 9006 is the only
provision specific to renewable energy project development within the
Farm Bill. It provides grants, and eventually loans and loan
guarantees, to farmers, ranchers, and rural small businesses for the
development of renewable energy projects and energy efficiency
improvements. The program is designed to help farmers develop much
needed new income streams from renewable energy generation, including
wind, biomass, geothermal, hydrogen and solar energy, as well as
helping to meet the Nation's critical energy needs in an
environmentally sustainable way, and generate economic development in
every region of the country. Defenders urges Congress to restore full
funding to the Renewable energy program as mandated by the Farm Bill.
Wildlife Services
The Wildlife Services (WS) program housed under the Animal and
Plant Health and Inspection Service (APHIS) is tentatively funded,
under the President's fiscal year 2006 budget, at a program level of
approximately $76 million. Defenders of Wildlife is pleased to see more
engagement in the invasive species issue by APHIS in general and
Wildlife Services in particular, as we have been advocating for just
such a policy change for many years.
Invasive Species
Defenders of Wildlife recognizes that exotic invasive species are
an enormous threat to native ecosystems and biological diversity and
urges full funding of efforts to control invasive species. They are
also a source of huge economic losses; the Asian longhorned beetle, for
instance, potentially threatens maple syrup and tourism industries, as
well as street trees, and could cause damage in the hundreds of
billions of dollars. Therefore, we urge full funding of efforts to
exclude, control, and halt the spread of invasive species.
Specifically, we urge the Subcommittee to fund control efforts for the
Asian longhorned beetle and the emerald ash borer at $40 million each
in fiscal year 2006; to fund APHIS's work to halt Sudden Oak Death at
$40 million; to fully fund the cactus moth sterile release program at
$1.5 million; to fully fund the Noxious Weed Control and Eradication
Act at the $15 million authorized level; and to fully fund the
Department of Agriculture's portion of the Interdepartmental National
Invasive Species Crosscut Budget.
Livestock Protection
However, it also appears that the agency continues to spend a
disproportionate amount of its annual allocation for livestock
protection activities, which translates generally into the killing of
predators. The allocation to livestock protection is particularly
troubling because a close analysis reveals that in fiscal year 2001,
Wildlife Services killed 88,868 coyotes, 386 mountain lions, and 2,467
bobcats. While the agency no longer keeps detailed records on the
reported value of resources damaged by livestock, in fiscal year 1997
(the last year for which WS collected such information) WS spent $9.8
million in response to a reported $7.7 million in livestock-related
damages and spent just $9.5 million to address the more than $63
million in damages reported in the 6 other program categories.
Considering that in fiscal year 2001, 49 percent of its budget on
agriculture-related activities ($15 million), and divided the remaining
51 percent between human health and safety ($10.4 million), property
($2.99 million) and natural resource protection ($2.26 million)
expenditures, the trend suggests that Wildlife Services could expend up
to $38 million for agriculture protection this year. Continuing to
increase the amount of money used to kill predators to protect
livestock is an inefficient use of taxpayer resources, given that
national sheep inventories are declining by roughly 200,000 head per
year, and cattle inventories are declining by nearly 600,000 per year.
These declines are greatest in the twelve western States where Wildlife
Services allocates nearly 63 percent of its agriculture protection
dollars.
Defenders is concerned with the consistent lack of attention paid
to the directives by Wildlife Services which deal with modernizing the
field activities of its staff. Defenders recommends that Congress ask
for a report on Wildlife Services' implementation of the directives
dealing with the increased use of non-lethal methods.
Defenders of Wildlife requests also that the Committee's report
language follow the model of previous years and revise the directive as
follows, ``The Committee expects that Wildlife Services will make use
of the non-lethal methods developed by the National Wildlife Research
Center and will make non-lethal controls as the method of choice and
resort to lethal means only as a last resort.''
Defenders of Wildlife appreciates this opportunity to provide
testimony on the fiscal year 2006 USDA budget. Thank you for your
consideration of these comments.
______
Prepared Statement of Easter Seals
Easter Seals appreciates the opportunity to report on the notable
accomplishments of the USDA Cooperative State Research, Education, and
Extension Service (CSREES) AgrAbility Program and request that funding
for the AgrAbility Program be increased to $5 million in fiscal year
2006.
The AgrAbility Program is an essential, unduplicated, hands-on
resource for farmers, ranchers, and farmworkers with disabilities and
their families. AgrAbility is the only USDA program dedicated
exclusively to helping agricultural producers with disabilities. It
demonstrates the value of public-private partnership by securing
donations of funds, talent, and materials to magnify the impact of a
modest Federal investment. The fiscal year 2005 appropriation of $4.6
million is funding 24 State projects.
What is AgrAbility?
AgrAbility is a program authorized through a provision in the 1990
Farm Bill that provides information and technical assistance to
farmers, ranchers, and farmworkers with disabilities. Congress began
funding the project in 1991 and has continued to do so each year since.
The U.S. Department of Agriculture Cooperative State Research,
Education, and Extension Service (CSREES)--a network that links
research, science, and technology to meet the needs of people where
they live and work--administers the AgrAbility Program. CSREES awards
program funds though a competitive grant process to land-grant
universities that have partnered with at least one nonprofit disability
service provider to provide education and assistance to agricultural
workers with disabilities and their families.
A network comprised of a National AgrAbility Project and numerous
State AgrAbility Projects provides program services in over half of the
States in the United States. The National AgrAbility Project partners,
University of Wisconsin-Extension, Cooperative Extension Service and
Easter Seals, collaborate to support State AgrAbility Project
activities. The State projects provide the direct on-site services to
farmers, ranchers, and farmworkers with disabilities and other chronic
health conditions. AgrAbility Project services are available to people
of all races, creeds, genders, abilities, and national origins. The
project staff works with operators regardless of the size of their
operations or extent of their resources.
Why is AgrAbility Needed?
Agricultural production is hazardous. Over 700 farmers and ranchers
die in work-related incidents yearly and another 120,000 workers
sustain disabling injuries from work-related incidents (National Safety
Council, 2002). In addition, the USDA National Agricultural Statistics
Service estimates that more than 200,000 farmers, ranchers, and other
agricultural workers experience lost-work-time injuries and
occupational illnesses every year, approximately 5 percent of which
have serious and permanent results. Off-farm incidents; health
conditions, such as heart disease, arthritis, or cancer; and aging
disable tens of thousands more. Nationwide, approximately 288,000
agricultural workers between the ages of 15 and 79 have a disability
that affects their ability to perform one or more essential tasks
(Bureau of Labor Statistics, 1999).
Additionally, like their urban counterparts, approximately 20
percent of children and other family members in agricultural families
have disabilities, such as cerebral palsy, mental retardation, and
epilepsy. Physical and attitudinal barriers often prevent these
children and adults from participating fully in farm and ranch
operations, and from engaging in social and recreational activities
enjoyed by other rural residents.
For most of the over 3 million Americans earning their livings in
agriculture, the work is not just their livelihood--it is their way of
life--a productive and satisfying way of life of which they are very
proud. This is also true for the majority of people with disabilities
or chronic health conditions who work or live in agricultural settings.
These people want to find ways to accommodate their disabilities and
continue to farm. All too often, however, they are frustrated in their
attempts. Rural isolation, limited personal resources, limitations in
rural health delivery systems, and inadequate access to agriculture-
oriented assistance, are among the obstacles they face.
How Does AgrAbility Help?
The AgrAbility Project offers education and assistance to help
identify ways to accommodate disabilities and chronic health
conditions, eliminate barriers, and create a favorable climate among
rural service providers for people with disabilities. AgrAbility helps
to prevent people from being forced out of agriculture because of their
disabilities and provides them with ideas for safe, affordable
solutions that allow them to maintain their businesses and rural
lifestyles.
Who Does AgrAbility Serve?
Farmers, ranchers, and farmworkers involved in all types of
production agriculture who have any type of disability (physical,
cognitive, or sensory) or chronic health condition may receive
services. Family members who have a disability or chronic health
condition may also receive assistance.
Who are the AgrAbility Clients?
Juan Padron, AGE, a dairy farmer, sustained a spinal cord injury
that left him paralyzed from the chest down in 2001 while helping a
neighbor unload large square hay bales. AgrAbility staff recommended
purchasing a heavy-duty wheelchair that could navigate farm terrain and
adding hand controls to the tractor. In addition, his son, who
originally contacted AgrAbility on his father's behalf, has developed a
unique chute for restraining cows making it possible for his father to
continue to artificially insemination them.
Daun Koke, AGE, is a wife and mother of five and has cerebral
palsy. She and her husband have a 100-head beef operation and over 600
acres of row crops. She heard about AgrAbility on television and
contacted the project immediately. AgrAbility staff has helped her
obtain funding for adding a lift, wide mirrors, and hand controls to
the tractor and automatic livestock gates. These changes have increased
Daun's ability to work alongside her husband on their operation.
Tyler McElwee, 16, has always been actively involved in his
family's beef and crop operation. After sustaining a spinal cord injury
(on the farm) 4 years ago, he and his family learned about AgrAbility
from a school advisor. AgrAbility provided information on adding lifts
and hand controls to the farm equipment. He now is able to help out by
cleaning pens, feeding cattle, and working in the fields. He also shows
beef cattle and is actively involved in FFA. His plans to one day own
his own beef operation.
Randy Jiminez, AGE, who has post-polio syndrome, has what he calls
a ranchette with ducks and geese, and teaches gun safety courses. With
the assistance of AgrAbility staff and the Department of Vocational
Rehabilitation (DVR), his house was to accommodate his wheelchair and a
golf cart was obtained and modified to increase his outdoor mobility. A
business loan was also secured through DVR for setting-up the gun
safety program.
Brenda Besse, AGE, has a purebred Brown Swiss dairy farm and a
2,000-acre grain operation. She lost her right leg above the knee in an
entanglement with a combine head. AgrAbility staff helped her get a
utility vehicle for hauling feed, wood shavings, hay, straw, and calf
bottles around the farm. She now helps other AgrAbility clients learn
about the various resources available to them. When Brenda is not
farming, you can find her on the golf course where she is ranked the #1
female amputee golfer in the United States.
Bobby Clay, AGE, has a pastured poultry and vegetable farm and also
operates a poultry processing enterprise. Following a spinal cord
injury, he contacted his local extension agent who, with AgrAbility
staff, assisted him in modifying his operation including the addition
of 2,000 feet of water lines, chicken tractors, 20 water hydrants, and
a front end-loader. With these modifications, Bobby can still maintain
his agricultural enterprise and locally market his own poultry.
Larry LeMasters, AGE, and his wife have a 200-head dairy operation,
several flocks of chickens, and a ``herd of six kids.'' In 2000, he
began having problems getting around the farm and doing his chores due
to pain. Larry was diagnosed with fibromyalgia, a form of muscular and
soft tissue rheumatism that has limited his mobility, strength, and the
amount of bending and lifting he can do. They decided to contact
AgrAbility after reading an article about it and reviewing the project
website. AgrAbility staff recommended changes to the milking system to
alleviate the need for constant bending and reaching.
What Services Do AgrAbility Clients Receive?
AgrAbility clients benefit from partnerships between the extension
services at land-grant universities and nonprofit disability service
organizations. Together members of each AgrAbility Project staff
provide clients with direct on-site assistance that includes the
following activities.
--Assessing agricultural tasks and providing guidance on how to
restructure them to accommodate the clients' disabilities.
--Reviewing agricultural worksites and equipment and making
suggestions for modifications.
--Identifying ways to prevent secondary injuries and disabilities.
--Coordinating needed community resources and services by
--putting them in touch with community volunteers who have the
ingenuity and contacts to augment AgrAbility project
support;
--linking them to a network of engineers, health and rehabilitation
service providers, agricultural experts, product
manufacturers and suppliers, educators, skilled tradesmen,
and other rural resources; and
--helping them access existing services within public agencies,
including State vocational rehabilitation agencies and
assistive technology centers, to maximize benefits
available to them.
--Referring individuals and family members to and facilitating
participation in peer support groups.
How Does Collaboration Benefit Clients?
The AgrAbility projects build collaborations with State offices of
vocational rehabilitation, State assistive technology projects, and
farm and community business organizations, such as agricultural
cooperatives, Farm Bureau, or Lion's Club. AgrAbility clients benefit
from the added expertise and resources such collaborations bring to the
projects. Many AgrAbility projects have developed contractual
arrangements with their State's vocational rehabilitation office that
provide a win-win for the client, the project, and the State.
What Services Does the National AgrAbility Project Provide?
The National AgrAbility Project staff provides training and
technical assistance, and information on available resources to the
State AgrAbility project staffs through a variety of means, including
--annual National AgrAbility Project Training Workshops,
--toll-free telephone consultations,
--an online library of technical resources, and
--collaboration on and presentations at statewide educational
activities.
In addition, the National AgrAbility Project staff
--provides direct technical consultation on developing assistive
technology solutions to clients, rehabilitation engineers, and
fabricators;
--presents information about AgrAbility at national agricultural and
health-related events; and
--develops and disseminates new educational materials relevant to
farming and ranching with disabilities.
These and other activities all help to meet the goal of promoting
awareness that with technical assistance, information, and education
farmers, ranchers, and farmworkers with disabilities can successfully
continue to do the work they know and love.
How are Federal Resources Maximized and New Resources Secured?
National and State project staffs seek to form partnerships and
alliances with corporations and organizations that will help expand the
reach and services of the program. Additional efforts are made to
secure financial and in-kind contributions to augment the base funds
provided through the USDA-CSREES grants. These efforts help maximize
the Federal support and invest community and corporate leaders in the
mission and work of the AgrAbility Project--Promoting success in
agriculture for farmers, ranchers, and farmworkers with disabilities.
Such efforts also provide these leaders with a tangible way to give
back to the rural communities in which they live and/or conduct
business. By supporting the AgrAbility Project, they are helping their
customers who face the challenges of accommodating their disabilities
while continuing to work in agricultural production.
Funding Request
The need for AgrAbility services has never been greater, and its
accomplishments to date are remarkable by any standard. Easter Seals is
proud to contribute to the ongoing success of the USDA-CSREES
AgrAbility Program. Please support the allocation of at least $4.6
million for AgrAbility in fiscal year 2005 to ensure that this valuable
public-private partnership continues to serve rural Americans with
disabilities and their families. Thank you for this opportunity to
share the successes and needs of the USDA AgrAbility Program
______
Prepared Statement of the Farmer-Rancher/Oklahoma Farmers Union,
Ringling, Oklahoma
INVASIVE SPECIES AFFECTING ANIMALS AND PLANTS IMPORTED RED FIRE ANT
ARS-RESEARCH
Mr. Chairman and members of the Subcommittee, I appreciate the
opportunity to submit testimony with respect to the increasing invasive
species funding of the red imported fire ant. I am an agriculture
producer in southern Oklahoma, employed with the Oklahoma Farmers Union
and a 20-year advocate for research initiatives to combat this growing
problem impacting both agriculture and the daily lives of citizens in
affected States and counties. Oklahoma Farmers Union is a general farm
organization representing over 100,000 families in the State of
Oklahoma.
My work on this issue goes back to the 1980's as a House
Agriculture Appropriations Subcommittee associate staff member, later
as an agriculture producer/research cooperator and now as an
association representative and participant in numerous committees and
fire ant conferences and meetings.
The Red Imported Fire Ant Problem
The imported fire ants now inhabit more than 320 million acres in
the southern United States (13 states) and Puerto Rico. The average
densities of fire ant populations in the United States are more than 5
times higher than in their native South America, where natural enemies
keep the fire ant population under control. Imported fire ants destroy
many other ground-inhabiting arthropods and other small animals,
reducing the biological diversity in many areas. Fire ants cause a
multitude of problems for humans, domestic animals, and agriculture.
Between 30 percent and 60 percent of the people in the infested areas
are stung each year. More than 200,000 persons per year may require a
physician's aid for fire ant stings. Anaphylaxis occurs in 1 percent or
more of those people as a result of stings.
The fire ant impact on the American economy is approximately $5
billion per year. Agriculture producers are economically hurt by the
loss of animals due to stings, short-circuiting of electrical equipment
as a result of ant buildup in switch boxes, damage to farm equipment
from ant mounds in pastures and fields and personal discomfort and risk
to life from frequent exposure and contact with the ants in the normal
course of working on the farm or ranch. Total annual fire ant losses to
U.S. agriculture are estimated at $750 million.
This past year in the State of Oklahoma we saw the spread of fire
ants during research surveys in counties where citizens had reported
possible fire ant mounds. Because of the intensity of the fire ant
problem within our State, a special State legislature directed fire ant
task force is being formed. While 9 Oklahoma counties are currently
quarantined from selling products to non-quarantined areas, we
anticipate that number to rise given an additional 31 counties now have
fire ant populations for a total of 40 impacted counties. Over one-
third of our State is now impacted while in 1984 that number was zero!
The Research Solution
The lead research agency on the national level for this issue is
the USDA-Agricultural Research Service with most work centered at the
Center for Medical, Agricultural and Veterinary Entomology in
Gainesville, Florida. I have the highest respect and admiration for the
scientists, the administration and the methods of basic and applied
research utilized by this agency and this research location.
I and others have advocated for many years the need to increase
funding for the site where key research for red imported fire ants is
conducted and from where field activities across the United States is
directed. While the Administration budget included a request for
funding this activity last year, no additional funds were appropriated
for the program. We are delighted to see that the President's fiscal
year 2006 budget request includes $600,000 for fire ant research for
the Gainesville location for molecular research work, including
pathogen discovery as part of an Administration request of $10 million
for Invasive Species Affecting Animals and Plants.
The proposed increase will allow ARS to target its research with
respect to the fire ant by studying its genomics and developing more
effective pesticides and biological control agents. Additionally, this
will allow ARS to continue to develop biologically-based integrated
pest management components. The latter has shown a marked impact on
fire ant research locations but more work must be continued in this
area to identify more cold-hardy species that can be utilized in more
northern environments where the advancing fire ant line continues to
spread.
To date, the researchers in the USDA-ARS Imported Fire Ant Research
Unit in Gainesville, FL, have continued to search for new biological
control agents that could be used as self-sustaining bio-control agents
against the imported fire ants. Biological control agents are the only
long-term and self-sustaining solution for the fire ant problem in the
United States.
Self-sustaining biological control agents cause direct mortality
and/or stress, reducing the ecological dominance of fire ants and can
be useful in natural habitats where pesticide use is not tolerated. The
successful establishment of biological control agents of fire ants
would be a major benefit throughout the southern United States.
Biological control has the potential to offer long-term suppression of
fire ants over large areas in the United States and save millions of
dollars annually by reducing the use of pesticides.
Biological control agents could also help slow the spread of these
pests into other susceptible States, such as Kentucky, Maryland,
Virginia, Delaware, New Mexico, Arizona, Nevada, other parts of
California, and up the Pacific Coast.
For long-term success, investment in genomics research to develop
more effective pesticides and pathogens is crucial if biological
controls are to be fully effective. Contributing to the overall effort
is the continued development of novel uses for pheromones in fire and
control and technology transfer of repellent and attractant technology
to commercial interests.
New Developments in Fire Ant Biological Control
I'm excited about new developments in fire ant biological control.
The protozoan Vairimorpha invictae, a specific pathogen of fire ants in
South America, is being tested in quarantine in Gainesville, FL. This
disease should be released in the field in the future.
A new isolate of the fire ant pathogen Thelohania solenopsae is
being tested in quarantine in Gainesville, FL. This isolate may be
better adapted to black and hybrid fire ants, than the present isolate
found in the United States. It may also have a more detrimental effect
on the ants than the United States isolate. Scientists hope to have
this new isolate released in the field in the coming years.
Viruses have been identified from fire ant populations in Florida.
Molecular biology studies may reveal opportunities for the use of these
viruses as biological agents against fire ants. Besides the viruses,
during the past 3 years, three other new diseases of fire ants have
been identified from ants in Florida. These discoveries serve as
indications that new diseases can be identified in the South American
range of the fire ants, and developed for use in the biological control
of U.S. fire ants.
Three different species of the fire ant decapitating flies have
been released so far in the United States. Two species are established
in Florida and South Carolina. One species is established in other
southeastern States. New decapitating fly species are being tested in
quarantine in Gainesville, FL, and should be ready for field release in
the coming months. Other species collected in South America, will be
quarantine tested and evaluated for use.
Area-wide suppression of fire ants research programs are being
conducted at locations In Florida, Texas, Mississippi, Oklahoma, and
South Carolina. These research efforts combine both biological and
chemical methods to achieve an integrated pest management approach.
Conclusion and Request for Funding
Much progress has been made but to continue this aggressive,
results-oriented research at the same or perhaps excelled pace, it is
imperative that additional funding be directed--preferably in permanent
base funding to the Gainesville, FL location. On behalf of the
producers and consumers who make up the membership of the Oklahoma
Farmers Union, we support the Administration's $10 million research
initiative contained in the ARS budget for further targeted research
for Invasive Species Affecting Animals and Plants and specifically the
$600,000 directed to Gainesville site.
Thank you for this opportunity. I would appreciate the
Subcommittee's consideration of this most important issue.
______
Prepared Statement of Florida State University
Mr. Chairman, I would like to thank you and the Members of the
Subcommittee for this opportunity to present testimony before this
Committee. I would like to take a moment to briefly acquaint you with
Florida State University.
Located in Tallahassee, Florida's capitol, FSU is a comprehensive
Research I university with a rapidly growing research base. The
University serves as a center for advanced graduate and professional
studies, exemplary research, and top quality undergraduate programs.
Faculty members at FSU maintain a strong commitment to quality in
teaching, to performance of research and creative activities and have a
strong commitment to public service. Among the current or former
faculty are numerous recipients of national and international honors
including Nobel laureates, Pulitzer Prize winners, and several members
of the National Academy of Sciences. Our scientists and engineers do
excellent research, have strong interdisciplinary interests, and often
work closely with industrial partners in the commercialization of the
results of their research. Florida State University had over $182
million this past year in research awards.
Florida State University attracts students from every county in
Florida, every state in the nation, and more than 100 foreign
countries. The University is committed to high admission standards that
ensure quality in its student body, which currently includes National
Merit and National Achievement Scholars, as well as students with
superior creative talent. We consistently rank in the top 25 among U.S.
colleges and universities in attracting National Merit Scholars to our
campus.
At Florida State University, we are very proud of our successes as
well as our emerging reputation as one of the nation's top public
research universities.
Mr. Chairman, let me tell you about a project we are pursuing this
year through the U.S. Department of Agriculture.
In fiscal year 2001, Congress passed the Federal Crop Insurance
Act, which included funding of partnerships for Risk Management
Development and Implementation. This legislation authorized the USDA,
working with NOAA, to enter into partnerships for the purpose of
increasing the availability of tools for crop loss mitigation. The
partnerships give priority for producers of agricultural commodities
for specialty crops and under-served agricultural commodities. Congress
authorized the program through fiscal year 2008.
The Federal Government can utilize new cost-effective ways to
reduce risk by using modern ideas such as decision support tools and
using El Nino and La Nina to predict climate variability. This allows
for fair pricing of premiums for crop insurance. The Southeast Climate
Consortium (SECC), which consists of Florida State University, the
University of Florida, the University of Miami, the University of
Georgia, Auburn University, and University of Alabama at Huntsville,
has been at the forefront of climate prediction work. The SECC has
worked throughout the Southeastern United States, with support from
NOAA and USDA, to develop new methods to predict the consequences of
climate variability for agricultural crops, forests, and water
resources. More recently, in actual real-life tests, these methods have
been applied to the problems that farmers raising specialty crops face
relative to rainfall, temperature and assessing the risk of wild fires.
By the use of these methods, these challenges have been successful.
In the SECC, Florida State University provides the climate
forecasts and risk reduction methodology, the University of Florida
translates this climate information into risks associated environmental
impacts and work with Extension Services to provide information to the
agricultural community, and the University of Miami provides the
economic modeling of the agricultural system. Utilization of these
tools and their application to agricultural problems in this project
has the strong support of extension managers.
The new tasks for fiscal year 2006 will be to develop drought
forecasting methods to help farmers and producers plan for reducing
risks of economic losses, develop best management practices (BMPs) that
incorporate climate forecasts to give farmers options for compliance
with water quality standards, and investigate the possible applications
of using climate forecasts to guide disaster preparedness, such as for
hurricanes.
FSU, on behalf of the Southeastern Climate Consortium, is
requesting $4,000,000 for this important activity in fiscal year 2006.
Mr. Chairman, this is just one of the many exciting activities
going on at Florida State University that will make important
contributions to solving some key concerns our nation faces today. Your
support would be appreciated, and, again, thank you for an opportunity
to present these views for your consideration.
______
Prepared Statement of Friends of Agricultural Research--Beltsville,
Inc.
Mr. Chairman, and Members of the Subcommittee, thank you for this
opportunity to present our statement regarding funding for the
Department of Agriculture's Agricultural Research Service (ARS), and
especially for the Agency's flagship research facility, the Henry A.
Wallace Beltsville Agricultural Research Center (BARC), in Maryland.
Our organization--Friends of Agricultural Research--Beltsville--
promotes the Center's current and long-term agricultural research,
outreach, and educational missions.
Our testimony addresses three main themes:
We begin with our highest recommendation for any item in the
President's fiscal year 2006 budget--Systematics Research at the
Beltsville Agricultural Research Center.
The Department of Agriculture recently named systematics research
at BARC the Department's Number One priority for addressing problems
with invasive species. The President's fiscal year 2006 budget
recommends $1 million for systematics research at BARC within $1.8
million for Invasive Species (Home Land Security). We strongly support
approval.
If the proposed $1 million is approved, BARC capabilities in plant
pathogenic fungi, whiteflies, thrips, weevils, and animal parasites
will improve substantially. All of these organisms pose serious threats
to U.S. agricultural production, yet all are tiny and hard to identify.
About 80 percent of the Department's systematics programs are based at
BARC. Systematics scientists make up about 10 percent of the BARC
scientific staff.
Systematics has suffered from attrition and inflation for the past
20 years. Staff sizes are probably only about half of what they were 20
years ago. Systematics identification depends on priceless BARC
collections--some entries being more than a century old. These
collections are critical to accurate identifications. Systematics is
essential for identifying exotic or new species, for barring invasive
species from entering the United States. Amazingly, only about 10
percent of all insects and fungi have been named and described as to
how they relate to other organisms.
Dr. John Marburger, Presidential Science Advisor and Director of
the Office of Science and Technology Policy, has said that systematics
is part of the Nation's critical scientific infrastructure. Because
systematics is critical to foreign trade as well as domestic
production, the Department has the largest systematics program in the
Federal Government. Authoritative sysematics not only protects the
United States against invasive species, it also assures our trading
partners that United States exports are free of invasive species. At
least once, systematics enabled the United States to successfully
refute an accusation of biowarfare, an accusation that the United
States had deliberately introduced an invasive insect into another
country
Long-term needs for ARS systematics research may exceed $30
million, not including modernization of facilities. The $1 million in
the President's fiscal year 2006 budget would be an important step
toward meeting the needs for this fundamentally important research.
Next, we turn to the urgent need to continue support for specific
research areas that the Congress has mandated at BARC in previous
fiscal years. These mandates address research that has enormous
national impact. The mandates have been strongly endorsed and supported
by this Subcommittee and others. We list them below with brief
descriptions and our recommendations for continued funding.
Dairy Genetics.--For over 75 years, the Animal Improvement Programs
Laboratory has created statistical genetic predictions to aid the dairy
industry in identifying the best bulls for dairy breeding. Genetic
improvement in dairy cattle has steadily increased milk yield per cow
and feed efficiency (milk produced per pound of feed) over many years.
The result is lower milk prices for consumers and less animal waste to
contaminate the environment because fewer cows are needed to produce
the Nation's milk supply. We confirm that this mission critical
research should continue.
Barley Health Food Benefits.--Barley contains soluble fiber
compounds called beta-glucans that are beneficial for health. Beta-
glucans can lower cholesterol and improve control of insulin and blood
sugar. These funds support human-volunteer studies designed to help us
better understand how barley could be used in a healthful diet to
reduce the incidence of chronic disease. We recommend continued
support.
Biomineral Soil Amendments for Control of Nematodes.--Plant
nematodes are microscopic worms that feed on the roots of plants.
Nematodes can cause substantial losses in crop yields. This research
focuses on using such industrial byproducts as environmentally benign
soil additives for controlling nematodes. We recommend funding for
these promising approaches.
Foundry Sand Byproducts Utilization.--Waste sands from the metal-
casting industry currently are dumped in landfills. This project is
working with industry on guidelines for beneficial uses of these sands.
We recommend continuation.
Poultry Disease (Avian Coccidiosis).--Coccidiosis, a parasitic
poultry disease, costs the industry $2-3 billion per year. This
research focuses on understanding the genetics of both the parasite and
the host chicken to identify targets that will allow better disease
control. We recommend this funding.
Biomedical Materials in Plants.--Plants can be used as factories to
manufacture vaccines and other pharmaceuticals for both animals and
humans. This research focuses on development of tobacco as a crop with
this beneficial use. This research should continue.
National Germplasm Resources Program.--Sources of germplasm for all
agricultural crops are maintained either as seed or live plant material
at several locations across the country. Much of this germplasm is the
result of plant exploration around the world. This group maintains the
computer database that indexes all crop germplasm in our repositories
with critical information as to where it was obtained, the specific
scientific identification, and information on useful traits for plant
breeding. We strongly support continued funding for this mission-
critical program.
Bovine Genetics.--This research focuses on bovine functional
genomics, especially for dairy cattle. Scientists are identifying
specific genes for quality traits such as easier calving, higher milk
production, and resistance to mastitis. We recommend this funding.
Minor-use Pesticides (IR-4).--``Minor-use'' pesticides are those
that are used on crops such as fruits and vegetables that are not one
of the ``big four'' crops like corn, wheat, and soybeans, and cotton.
Because markets are much smaller than for major crops, chemical
manufacturers have little incentive to obtain all the safety data
needed to obtain EPA registration for pesticides used on minor crops.
Nevertheless, producers of minor crops find certain agrochemicals to be
essential. This project produces the data needed for EPA registration
of minor-use pesticides. We recommend continued funding.
National Nutrition Monitoring System.--Scientists at BARC have the
unique responsibility of carrying out the national surveys of food
consumption by individuals. This is now done in collaboration with
HHS's health surveys. BARC scientists also maintain the National
Nutrient Database, which includes information on 126 nutrients in
thousands of foods. This work supports the school lunch program, WIC,
Food Stamps, senior nutrition programs, food labeling, dietetic
practices, and even the EPA. We urge continuation of this funding.
Coffee and Cocoa.--Producers of chocolate candy are the single
largest users of fluid milk, sugar, peanuts, and almonds in the United
States. United States specialty coffee shop chains also are one of the
major markets for fluid milk. Events that limit the availability of
cocoa or coffee can have significant impacts on major U.S. commodity
markets. Candy producers need a stable supply of cocoa, but
smallholders in developing countries produce most cocoa. Several
devastating diseases and insects threaten cocoa. This research is aimed
at developing environmentally friendly ways to control pests and
diseases. Coffee is threatened by insects very similar to those that
infest cacao; thus, work on the two crops benefits from being co-
located We recommend continuation of this funding.
Johne's Disease.--Johne's disease is a contagious bacterial disease
of the intestinal tract of ruminants. It occurs most often in dairy
cattle, causing weight loss and diarrhea. Nearly one-fourth of dairy
herds are infected. Producers lose $54 million annually from reduced
milk production. The disease is spread in manure. This research focuses
on disease control. We recommend continuation of this funding
Food Safety--Listeria, E.Coli, and Salmonella.--Food-borne illness
annually costs $3 billion in health-care costs, and annually costs the
economy up to $40 billion in lost productivity. This research focuses
on diagnostics for food-borne pathogens, and on ways to control
pathogens in fruits and vegetables. We recommend continuation of this
funding
Weed Management Research.--All farmers must contend with weeds. For
organic farmers, weeds are the single biggest challenge to crop
production. This research, in collaboration with the Rodale Institute
and Pennsylvania State University, focuses on developing systems for
controlling weeds in organic production systems. Organic crop
production was valued at $400 million per year in the 2002 Census of
Agriculture. These research funds will improve non-chemical weed
control.
Last, we turn to our recommendation for construction funds to
complete Phase III of the Beltsville Human Nutrition Research Center
and construction of a combined facility for swine and other research.
The most urgent facilities need at BARC is funds to modernize
building 307--the final phase of the three-phase process to modernize
the Beltsville Human Nutrition Research Center. Phases I and II funded
two new human nutrition research buildings. Both buildings have been
completed, are fully functional, and are contributing to the research
mission of the Beltsville Human Nutrition Research Center. Congress
provided design money for modernizing building 307, or Phase III,
several years ago. We recommend full funding to complete Phase III
construction. An estimated $27 million is needed.
Also, we recommend $10 million for the construction of a combined
research facility for swine, certain related human nutrition research,
immunology (human and animal), and parasitological research.
Mr. Chairman, that concludes our statement. We again thank you for
the opportunity to present our testimony and for your generous support.
______
Prepared Statement of the Great Lakes Indian Fish and Wildlife
Commission
Summary of fiscal year 2006 Testimony:
--Re-affirm Support for Local Decision Making.--The success of the
U.S. Department of Agriculture's Environmental Quality
Incentives Program (EQIP) and Wildlife Habitat Incentives
Program (WHIP) is due in large part to a program structure that
stresses local decision making.
--Restore $275,000 for the Wisconsin Tribal Conservation Advisory
Council.--GLIFWC requests Congress restore $275,000 in funding
for the Wisconsin Tribal Conservation Advisory Council (WTCAC)
eliminated by the Administration in fiscal year 2006.
--Maintain EQIP and WHIP Program Funding.--GLIFWC supports the
Administration's budget request for $1 billion for the
Environmental Quality Incentives Program (EQIP) and $60 million
for Wildlife Habitat Incentives Program (WHIP).
Disclosure of USDA Grants Contracted.--GLIFWC is an intertribal
organization which, under the direction of its member tribes,
implements Federal court orders governing tribal harvests of off-
reservation natural resources and the formation of conservation
partnerships to protect and enhance natural resources within the 1836,
1837, and 1842 ceded territories (See map). Under the USDA's
Environmental Quality Incentives Program, GLIFWC contracted $10,000 in
fiscal year 1998 and an additional $40,000 in fiscal year 1999. In
addition, GLIFWC also contracted EQIP Education Grants funded by USDA
and the University of Wisconsin Extension Service for $29,940 in fiscal
year 1998 and $20,000 in fiscal year 2001. Under the WHIP program,
GLIFWC contracted $2,400 in fiscal year 2003.
Mr. Chairman, Members of the Committee, my name is James H.
Schlender. I am the Executive Administrator of the Great Lakes Indian
Fish and Wildlife Commission (GLIFWC). Our eleven member tribal
governments thank you for considering our testimony regarding programs
funded by USDA's Natural Resource Conservation Service. GLIFWC's
testimony stresses three major objectives: (1) Re-affirm support for
local decision making in EQIP and WHIP programs; (2) restore funding
for the Wisconsin Tribal Conservation Advisory Council (WTCAC) at
$275,000 annually; and (3) provide funding for the Environmental
Quality Incentives Program (EQIP) at $1 billion and Habitat Incentives
Program at $60 million and support intertribal and tribal efforts to
participate in conservation partnerships.
Background.--GLIFWC is comprised of eleven (11) sovereign tribal
governments located throughout Minnesota, Wisconsin, and Michigan. The
Commission's purpose is to protect and enhance treaty-guaranteed rights
to hunt, fish, and gather on inland territories ceded under the
Chippewa treaties of 1836, 1837, and 1842; to protect and enhance
treaty guaranteed fishing on the Great Lakes; and to provide
cooperative management and protection of these resources. The
Commission participates in a wide range of cooperative management
activities with local, State, Federal, and foreign governments. Some of
these activities arise from court orders, while others are developed in
general government-to-government dealings between tribes and other
governments.
Re-affirm Support for Local Decision Making.--GLIFWC's success in
contracting and implementing USDA's EQIP and WHIP programs is due in
large part to a program structure that stresses local decision making.
This local decision making process includes: (1) identification of
local conservation problems; (2) establishment of local priorities,
ranking systems, and cost share rates; and (3) selection of options
that best solve problems based upon local environmental conditions.
GLIFWC requests Congress reaffirm its support for community based
decision making structures within USDA's EQIP and WHIP programs and
closely scrutinize any proposals to impose top down ranking systems
that may attempt to mandate a one size fits all philosophy.
Local Decision Making Within the EQIP Program Results in Successful
Efforts to Control Purple Loosestrife in the Bad River and Chequamegon
Bay Watersheds and Built Conservation Partnerships.--Purple loosestrife
(Lythrum salicaria L.) is an exotic perennial plant first recorded in
Wisconsin in 1940. As purple loosestrife spread throughout wetland
ecosystems, it reduced carrying capacities for muskrats, water birds,
and mink and degraded the quality of migratory waterfowl production
sites.
GLIFWC completed a 5 year EQIP project to control purple
loosestrife in the Bad River and Chequamegon Bay watersheds at a cost
of $50,000. GLIFWC incorporated a watershed strategy utilizing funding
from the BIA's Noxious Weed Program to control loosestrife on public
lands and NRCS EQIP funding to control loosestrife on private lands
with land owner consent. GLIFWC also incorporated an integrated pest
control strategy utilizing both chemical controls and biological
controls--beetles that feed exclusively on purple loosestrife. The
beetles were grown and released on a number of sites as a long term
control measure. Field assessments indicate that the beetles have
established themselves at the release sites. The use of GPS and GIS
technology enabled GLIFWC to document the effectiveness of this
invasive species control strategy.
GLIFWC has also completed two EQIP education grants in support of
its purple loosestrife and leafy spurge control efforts. Under these
grants, the GLIFWC: (1) prepared and published educational materials to
prevent the spread of purple loosestrife, leafy spurge, and other
invasive plants; (2) established an Internet GIS web site (see http://
www.glifwc-maps.org/) to assist landowners, State and Federal agencies,
non-profit conservation organizations, and tribes in developing and
implementing invasive plant control strategies within watersheds; and
(3) promoted cooperative control projects through technical assistance
and educational materials/presentations.
These EQIP education grants provided an informational foundation
for the Northwood's Weed Initiative (NWI). The Northwood's Weed
Initiative (NWI), a partnership including: NRCS, GLIFWC, The Nature
Conservancy, USFWS, USFS, WDNR, UWEX and private citizens, is working
to slow the spread of leafy spurge and other invasive plants that have
been identified in the area. This invasive plant poses a threat to
tribal gathering rights as it will disrupt plant communities, out-
competing native plants used by tribal members. The first efforts to
control and contain leafy spurge were begun on private lands within the
ceded territory. An educational poster on leafy spurge is in the
development phase and will be distributed State-wide.
Wisconsin Tribal Conservation Advisory Council.--The Wisconsin
Tribal Conservation Advisory Council (WTCAC) was established for the
purposes of: (1) identifying tribal conservation issues, (2) advising
the USDA Natural Resources Conservation Service on more effective ways
to deliver USDA programs, and (3) assisting the Indian Nations of
Wisconsin in accessing USDA resources. This Tribal Conservation
Advisory Council was organized in March 2001 and is the first such
council formed in the country as authorized under the 1995 Farm Bill.
GLIFWC requests Congress restore funding for WTCAC at $275,000 in
fiscal year 2006 thereby ensuring tribal communities in Wisconsin have
the technical resources needed to address their conservation needs.
WTCAC and EQIP Funding set-asides Increase Program Participation by
Indian Nations in Wisconsin.--One of the responsibilities of the WTCAC,
at the request of the NRCS State Conservationist, is to review and
recommend funding for conservation proposals from the 11 federally
recognized tribes in Wisconsin. The WTCAC was allocated $88,000 in WHIP
funding and $1,100,000 in EQIP funding over fiscal year 2003 and fiscal
year 2004. These resources enabled tribes to conserve and protect
natural resources through a number of innovative projects including:
--Supporting Aquaculture Development.--Tribes have taken a leadership
role in integrating aquaculture projects into USDA's EQIP
program including: (1) Red Cliff's construction of a wetland
filtration system as part of Red Cliff's Coaster Brook Trout
Restoration Project at $75,000--which was critical in
supporting the selection of Red Cliff for the State's new $3
million aquaculture training facility; (2) St Croix's
installing an aquaculture effluent treatment system at its St.
Croix Waters Aquaculture facility at $43,162 and establishment
of nutrient management of fish waste at $3,780; and (3) St.
Croix's contracting of $19,918 to improve water volume and
quality for the rearing of food fish and walleye and perch
fingerlings for restocking efforts on local lakes. NRCS is now
working with Lac Courte Oreilles (LCO) on plans to expand the
fish rearing ponds currently operated by the tribal hatchery.
--Decommissioning Abandoned Wells.--Tribes have used EQIP funding to
decommission abandoned wells that are a potential source of
groundwater contamination including: (1) $5,500 contracted at
Bad River; (2) $10,026 contracted at Lac du Flambeau; and (3)
$45,800 at the Sokaogan Chippewa community.
--Controlling Shoreline Erosion on Wisconsin Lakes.--EQIP funding has
been used to provide shoreline stabilization to prevent
sedimentation, adverse effects on water quality, and aquatic
habitat damage including projects on: (1) the Chippewa Flowage
and Skull Island and Middle Three Sisters Islands by LCO at
$225,000; (2) Flambeau and Pokegama Lakes by Lac du Flambeau at
$40,000; and (3) Big Sand Lake in Burnett County by St. Croix.
--Wetland and Wild Rice Restoration Project.--The Sokaogon Chippewa
Community contracted $47,780 (EQIP) to restore the natural flow
that was altered in Swamp Creek, remove nuisance plant species,
reseed wild rice, remove debris from stream banks and beds, and
control erosion on a tribal access road. St. Croix contracted
$18,750 (EQIP) to install a grade stabilization structure to
control soil erosion upstream of the confluence of the Yellow
River and the St. Croix River impaired wild rice beds
downstream on the St. Croix River. LCO used $7,050 (WHIP) to
re-establish wild rice and install 100 wood duck houses and 12
loon nesting platforms. These efforts build upon the tribe's
earlier success in establishing wild rice beds on Billy Boy
Flowage.
--Stream Corridor Restoration Projects.--Tribes used WHIP funding for
habitat projects to support efforts to establish spawning
migrations of coaster brook trout from Lake Superior through
stream habitat work in Graveyard Creek (i.e. by Bad River at
$15,732) and in Red Cliff Red Cliff Creek (i.e. by Red Cliff at
$10,000).
--Forest Restoration and Protection Project.--The Bad River
contracted $74,988 to plant white pine, red pine, balsam fir,
and white spruce on tribal lands that, left untreated, would
regenerate to aspen and increase erosion problems. Lac du
Flambeau contracted $54,160 in EQIP funding for Forest site
preparation on 200 Acres, Forest stand improvement on 250
acres, a prescribed burn on 223 acres, and three water control
structures.
Michigan Tribes Begin to Access NRCS EQIP and WHIP Funding.--The
success of Wisconsin tribes experienced in contracting EQIP and WHIP
funding from NRCS is now starting in Michigan. In 2004, the Lac View
Desert Band contracted EQIP funding to construct two walleye rearing
ponds at $100,000. The tribe also received an additional $11,000 in
WHIP funding to drill wells for the ponds.
The Keweenaw Bay Indian Community contracted $50,000 in WHIP
funding to construct a walleye rearing pond. Keweenaw Bay also
contracted $20,000 to establish buffer zones to protect coastal
wetlands from sedimentation from stamp sands in Keweenaw Bay.
Unfortunately, the Bay Mills Indian Community has yet to receive
funding through USDA's EQIP or WHIP programs and is looking to rectify
this problem in the future.
Once projects move into the implementation phase at Keweenaw Bay
and Lac View Desert, GLIFWC will also begin assessing and documenting
program delivery to its member tribes in Minnesota.
Tribal Contributions to NRCS.--It is import for Congress to
acknowledge that while NRCS has provided tribes with fiscal resources,
tribes have also provided assistance to NRCS in meeting their
conservation mission. GLIFWC, and its professional biologists, have
taken a leadership role in assisting NRCS in preparing: (1) Wisconsin
Biology Technical Note 4 Wild Rice Seeding Guidelines; (2) Wisconsin
Biology Technical Note 5 Invasive Plant Species Control; and (3)
Wisconsin Practice Standard 595 Pest Management -Aquatic Invasive
species.
GLIFWC takes the following lessons from these circumstances:
--Funding for tribal projects in Wisconsin is directly attributable
to active outreach toward and integration of tribes into the
budgeting process of NRCS State offices.
--A tribal advisory council consisting of the tribal representatives
and funded by NRCS can effectively link tribes with the NRCS
and result in more funding directed toward tribal projects.
--Set asides for tribal projects from NRCS State office funding
allocations is critical to ensure that tribes are able to
access their fair share of those allocations.
--The lessons learned in Wisconsin are useful in supporting efforts
to bring NRCS programs to Michigan tribes given those tribes
are provided an adequate commitment of staff time and fiscal
resources.
A partnership integrating WTCAC, the State NRCS offices, and
financial resources from USDA's EQIP and WHIP programs enables Tribal
Nations to directly address conservation needs that are prioritized
within their respective communities. We ask Congress to support
increased funding for these programs and re-affirm support for local
decision making processes.
______
Prepared Statement of The Humane Society of the United States
As the largest animal protection organization in the country, we
appreciate the opportunity to provide testimony to the Agriculture,
Rural Development, and Related Agencies Subcommittee on fiscal year
2006 funding items of great importance to The Humane Society of the
United States (HSUS) and its more than 8.9 million supporters
nationwide.
ENFORCEMENT OF ANIMAL WELFARE LAWS
We are writing to thank you for your outstanding support during the
past few years for improved enforcement by the U.S. Department of
Agriculture of key animal welfare laws, and to urge you to sustain this
effort in fiscal year 2006. Your leadership is making a great
difference in helping to protect the welfare of millions of animals
across the country, including those at commercial breeding facilities,
laboratories, zoos, circuses, airlines, and slaughterhouses. As you
know, better enforcement will also benefit people by helping to
prevent: (1) orchestrated dogfights and cockfights that often involve
illegal gambling, drug trafficking, and human violence, and can
contribute to the spread of costly illnesses such as Exotic Newcastle
Disease and bird flu; (2) injuries to slaughterhouse workers from
animals that are still conscious; (3) the sale of unhealthy pets by
commercial breeders, commonly referred to as ``puppy mills''; (4)
laboratory conditions that may impair the scientific integrity of
animal based research; (5) risks of disease transmission from, and
dangerous encounters with, wild animals in or during public exhibition;
and (6) injuries and deaths of pets on commercial airline flights due
to mishandling and exposure to adverse environmental conditions. For
fiscal year 2006, we want to ensure that the important work made
possible by the fiscal year 2005 budget is continued and that resources
will be used in the most effective ways possible to carry out these key
laws. Specific areas of concern are as follows:
APHIS/Animal Welfare Act (AWA) Enforcement
We commend the Committee for responding in recent years to the
urgent need for increased funding for the Animal Care division to
improve its inspections of approximately 10,000 sites, including
commercial breeding facilities, laboratories, zoos, circuses, and
airlines, to ensure compliance with AWA standards. Thanks to the
Committee's strong support, Animal Care now has 106 inspectors,
compared to 66 at the end of the 1990s. We are pleased that the
President's budget recommends an increase of $770,000 (plus allowance
for pay costs) and 8 staff years to further improve AWA enforcement in
fiscal year 2006. This responds to Animal Care's significantly
increased workload as a result of rapid growth in the number of new
licensees and registrants, particularly in the Western Region
(including the Midwest), which has had an average increase of 109
facilities per month so far in fiscal year 2005. Since fiscal year
2001, the number of licensed/registered facilities in the Western
Region has nearly doubled. The Eastern Region is also experiencing
growth of an average 57 new facilities per month. We commend Animal
Care for reaching out to those that had previously failed to become
licensed or registered as the law requires, and bringing them under the
agency's oversight for AWA compliance. To ensure that the program's
effectiveness is not compromised, we urge you to provide $17,478,056,
as recommended by the President, for Animal Welfare.
APHIS/INVESTIGATIVE AND ENFORCEMENT SERVICES (IES)
The President's budget recommends an increase of $928,000 and 8
staff years for IES in fiscal year 2006, and 3 of the 8 new field
investigator positions are to focus primarily on enforcement of Federal
animal welfare laws. This reflects the fact that the volume of animal
welfare cases is rising significantly as new facilities become licensed
and registered. IES has already initiated more cases in the first half
of fiscal year 2005 than it had pursued in each of the previous two
years. In fiscal year 2004, IES conducted 288 formal investigations of
alleged AWA violations, with 97 cases resolved through either civil
penalty stipulations or Administrative Law Judge decisions and a total
of $548,614 assessed in fines. To ensure the vital support for Animal
Care's front-line work, we urge you to provide the $10,398,944
requested by the President for IES.
Office of Inspector General/Animal Fighting Enforcement
We very much appreciate the inclusion of $800,000 in fiscal year
2005 for USDA's Office of Inspector General to focus on animal fighting
cases. Congress enacted provisions in 2002 (as part of the Farm Bill)
that were overwhelmingly supported in both chambers to close loopholes
in the AWA regarding cockfighting and dogfighting. Since 1976, when
Congress first prohibited most interstate and foreign commerce of
animals for fighting, USDA has pursued only a handful of dogfighting
and cockfighting cases, despite rampant activity across the country.
USDA continues to receive frequent tips from informants and requests to
assist with State and local prosecutions, and is beginning to take
seriously its responsibility to enforce the portion of the AWA dealing
with animal fighting ventures. Dogfighting and cockfighting are
barbaric practices in which animals are drugged to heighten their
aggression and forced to keep fighting even after they've suffered
grievous injuries. Animal fighting is almost always associated with
illegal gambling, and also often involves illegal drug trafficking and
violence toward people. Dogs bred and trained to fight endanger public
safety, and some dogfighters steal pets to use as bait for training
their dogs. Cockfighting has been linked with the outbreak of Exotic
Newcastle Disease in 2002-2003 that cost taxpayers more than $200
million for containment and compensation, and with the death of at
least four children in Asia in 2004 who were exposed through
cockfighting activity to avian influenza. Given the potential for
further costly disease transmission, as well as the animal cruelty
involved, we believe it would be a sound investment for the Federal
Government to increase its efforts to combat illegal cockfighting and
dogfighting activity, working closely with State and local law
enforcement personnel to complement their efforts. We therefore
respectfully request that $1.2 million be designated for the OIG to
focus on animal fighting cases in fiscal year 2006.
Food Safety and Inspection Service/Humane Methods of Slaughter Act
(HMSA) Enforcement
We are grateful that Congress provided $5 million in fiscal year
2005 to sustain no fewer than 63 full time equivalent (FTE) positions
dedicated solely to inspections and enforcement related to the Humane
Methods of Slaughter Act, plus $3 million to incorporate a new tracking
system to ensure compliance with this law. The HMSA is designed to
ensure that livestock are treated humanely and rendered unconscious
before they are killed. The effort to target funds for this purpose was
undertaken following reports of lax enforcement of the HMSA and animals
being skinned, dismembered, and scalded while still alive and
conscious. We urge that $5 million be provided again in fiscal year
2006 exclusively for HMSA enforcement, and that language again be
included to ensure effective implementation. Specifically, we hope such
language will encourage USDA to: (1) use a portion of these funds to
designate additional FSIS personnel to work with the existing District
Veterinary Medical Specialists solely on HMSA enforcement; (2) employ
objective scoring techniques (such as ratings on physical plant layout)
to determine when regulatory actions are needed and to document
improvements or failures in animal handling and slaughter operations;
and (3) use location and technologies to enhance enforcement through
unannounced observations.
APHIS/Horse Protection Act Enforcement
Congress enacted the Horse Protection Act in 1970 to end the
obvious cruelty of physically soring the feet and legs of show horses.
In an effort to exaggerate the high-stepping gate of Tennessee Walking
Horses, unscrupulous trainers use a variety of methods to inflict pain
on sensitive areas of the feet and legs for the effect of the leg-jerk
reaction that is popular among many in the show-horse industry. This
cruel practice continues unabated by the well-intentioned but seriously
understaffed APHIS inspection program. We appreciate the Committee's
help providing modest increases to bring this program close to its
authorized annual funding ceiling of $500,000. We hope you will provide
the $497,024 requested by the President for fiscal year 2006. We also
urge the Committee to oppose any effort to restrict USDA from enforcing
this law to the maximum extent possible.
DOWNED ANIMALS AND BSE
We are pleased that the Bush Administration proposed an interim
final rule in January 2004 to ban the use of downed cattle for human
food, in the wake of the discovery of a cow in Washington State that
was infected with Bovine Spongiform Encephalopathy (BSE). We hope the
Committee will codify this ban--and extend it to other livestock
besides cattle--with language barring the Food Safety and Inspection
Service from spending funds to certify meat from downed livestock for
human consumption. While the science to date has only indicated BSE
transmission from infected cows to people, downer pigs and other downer
livestock are at a significantly higher risk of transmitting other
serious and sometimes fatal illnesses through their meat, such as
E. coli and Salmonella, and these animals, too, suffer when they
are moved en route to slaughter.
As the Committee is aware, some segments of industry and members of
Congress have recommended weakening the USDA downed cattle ban. They
claim that animals unable to walk because of injury pose no health
risk. But injury and illness are often interrelated--an animal may
stumble and break a leg because of disease that causes weakness and
disorientation. And USDA inspectors would have a difficult--if not
impossible--task trying to sort out the reason an animal became non-
ambulatory. Major consumer groups including Consumers Union and
Consumer Federation of America, support groups for victims of food-
borne illness, such as Safe Tables Our Priority (S.T.O.P.),
Creutzfeldt-Jakob Disease Foundation, and CJD Voice, food safety
organizations, companies such as McDonald's and Wendy's, and many
others have all pointed out how reckless such a system would be. Of the
BSE cases identified in Canada and the United States to date, 3 out of
the 5 were identified as downed due to injuries, including the
Washington State case (``calving injuries'') and the most recent case
in Canada (``slipped on ice/broken leg'').
From an animal welfare perspective, a comprehensive ban is needed
because a downer cow with a broken leg would suffer just as much as a
sick one if it's dragged through a slaughterplant--maybe even more. A
ban on use of all downers for human food also provides an incentive for
producers to treat animals humanely and prevent livestock from going
down. Even before the administrative ban, USDA estimated that only 0.4
percent to 0.8 percent of all cows processed annually were non-
ambulatory. The downer ban encourages producers and transporters to
engage in responsible husbandry and handling practices, so that this
percentage may be reduced to levels approaching zero. As Temple
Grandin--advisor to the American Meat Institute and others in the meat
industry--long ago explained in Meat & Poultry Magazine, ``Ninety
percent of all downers are preventable.'' Cases that involve broken
bones and other injuries are perhaps the most preventable with improved
husbandry.
Most Americans had no idea that animals too sick or injured to walk
were being dragged with chains or hauled by bulldozer en route to the
food supply. When that fact came to light in December 2003, USDA's
prompt decision to ban all downer cattle from human food calmed
consumers. Unraveling the ban would undermine consumer confidence. More
than 99 percent of the 22,000+ public comments USDA received on its
downer ban called on the agency to maintain and strengthen its downer
ban, with most asking that other species be included. For a report on
the comments received by the agency, please go to: http://
files.hsus.org/web-files/PDF/2004_06_16_rept_USDA_comments.pdf.
USDA testimony before various congressional committees has made
clear that the agency need not rely on slaughterplant testing for BSE
surveillance purposes. The USDA can conduct a viable surveillance
program at rendering plants and farms to track the potential
progression of BSE in this country.
In addition to the downer issue, we urge the Committee to provide
adequate funding to ensure meaningful enforcement by the Food and Drug
Administration of its ``feed ban,'' designed to prevent BSE-
contaminated animal products from being fed to other animals. We are
concerned that inspectors visit facilities infrequently and rely on
self-reporting by those facilities and paperwork checking rather than
first-hand evaluation of feed content and dedicated production lines.
We are also concerned that FDA relies a great deal on State agencies to
conduct this oversight, when most states face severe budget constraints
that may compromise their ability to handle this job. Preventing the
spread of BSE is vital to the Nation as a whole, for public health, the
agricultural industry, and animal welfare. Vigorous enforcement of the
feed ban is an essential component of this effort. We hope adequate
Federal funds will be provided in fiscal year 2006 to meet this
challenge.
Again, we appreciate the opportunity to share our views and
priorities for the Agriculture, Rural Development, and Related Agencies
Appropriation Act of fiscal year 2006. We appreciate the Committee's
past support, and hope you will be able to accommodate these modest
requests to address some very pressing problems affecting millions of
animals in the United States. Thank you for your consideration.
______
Prepared Statement of the InterTribal Bison Cooperative
INTRODUCTION AND BACKGROUND
My name is Ervin Carlson, a member of the Blackfeet Tribe of
Montana and President of the InterTribal Bison Cooperative. Please
accept my sincere appreciation for this opportunity to submit testimony
to the honorable members of the Department of Agriculture
Appropriations Sub-Committee. The InterTribal Bison Cooperative (ITBC)
is a Native American non-profit organization, headquartered in Rapid
City, South Dakota, comprised of 54 federally recognized Indian Tribes
located across 18 States across the United States.
Buffalo thrived in abundance on the plains of the United States for
many centuries before they were hunted to near extinction in the 1800s.
During this period of history, buffalo were critical to survival of the
American Indian. Buffalo provided food, shelter, clothing and essential
tools for Indian people and insured continuance of their subsistence
way of life. Naturally, Indian people developed a strong spiritual and
cultural respect for buffalo that has not diminished with the passage
of time.
Numerous tribes that were committed to preserving the sacred
relationship between Indian people and buffalo established the ITBC as
an effort to restore buffalo to Indian lands. ITBC focused upon raising
buffalo on Indian Reservation lands that did not sustain other economic
or agricultural projects. Significant portions of Indian Reservations
consist of poor quality lands for farming or raising livestock.
However, these wholly unproductive Reservation lands were and still are
suitable for buffalo. ITBC began actively restoring buffalo to Indian
lands after receiving funding in 1992 as an initiative of the first
Bush Administration.
Upon the successful restoration of buffalo to Indian lands,
opportunities arose for Tribes to utilize buffalo for tribal economic
development efforts. ITBC is now focused on efforts to assure that
tribal buffalo projects are economically sustainable. Federal
appropriations have allowed ITBC to successfully restore buffalo to
tribal lands, thereby preserving the sacred relationship between Indian
people and buffalo. The respect that Indian tribes have maintained for
buffalo has fostered a serious commitment by ITBC member Tribes for
successful buffalo herd development. The successful promotion of
buffalo as a healthy food source will allow Tribes to utilize a
culturally relevant resource as a means to achieve self-sufficiency.
AMENDED LANGUAGE REQUEST TO FOOD STAMP ACT
The InterTribal Bison Cooperative respectfully requests an
amendment to the Department of Agriculture's Food Stamp Act to amend
the earmark language for purchase of buffalo from ``Native American
producers or producer owned cooperatives'' to ``exclusively from Native
American producers'' in the current fiscal year 2005 amount of
$4,000,000. Specifically, ITBC requests the following amended language
to the Food Stamp Act:
For necessary expenses to carry out the Food Stamp Act (7 U.S.C.
2011 et seq.), $26,289,692,000, of which $2,000,000,000 shall be placed
in reserve for use only in such amounts and at such times as may become
necessary to carry out program operations: Provided, That of the funds
made available under this heading and not already appropriated to the
Food Distribution Program on Indian Reservations (FDPIR) established
under section 4(b) of the Food Stamp Act of 1977 (7 U.S.C. 2013 (b)),
$4,000,000 shall be used to purchase bison and/or bison meat for the
FDPIR and other food programs on the reservations, exclusively from
Native American bison producers. Provided further, That all bison
purchased shall be labeled according to origin and the quality of cuts
in each package: Provided further, That the Secretary of Agriculture
shall make every effort to enter into a service contract, with an
American Indian Tribe, Tribal company, or an Inter Tribal organization,
for the processing of the buffalo meat to be acquired from Native
American producers: Provided further, That funds provided herein shall
be expended in accordance with section 16 of the Food Stamp Act:
Provided further, That this appropriation shall be subject to any work
registration or workfare requirements as may be required by law:
Provided further, That funds made available for Employment and Training
under this heading shall remain available until expended, as authorized
by section 16(h)(1) of the Food Stamp Act.
PREVENTATIVE HEALTH CARE INITIATIVE
The Native American Indian population currently suffers from the
highest rates of Type 2 diabetes. The Indian population further suffers
from high rates of cardio vascular disease and various other diet
related diseases. Studies indicate that Type 2 diabetes commonly
emerges when a population undergoes radical diet changes. Native
Americans have been forced to abandon traditional diets rich in wild
game, buffalo and plants and now have diets similar in composition to
average American diets. More studies are needed on the traditional
diets of Native Americans versus their modern day diets in relation to
diabetes rates. However, based upon the current data available, it is
safe to assume that disease rates of Native Americans are directly
impacted by a genetic inability to effectively metabolize modern foods.
More specifically, it is well accepted that the changing diet of
Indians is a major factor in the diabetes epidemic in Indian Country.
Approximately 65-70 percent of Indians living on Indian
Reservations receive foods provided by the USDA Food Distribution
Program on Indian Reservations (FDPIR) or from the USDA Food Stamp
Program. The FDPIR food package is composed of approximately 58 percent
carbohydrates, 14 percent proteins and 28 percent fats. Indians
utilizing Food Stamps generally select a grain-based diet and poorer
quality protein sources such as high fat meats based upon economic
reasons and the unavailability of higher quality protein sources.
Buffalo meat is low in fat and cholesterol and is compatible to the
genetics of Indian people. ITBC has implemented a health care
initiative to provide easy access to buffalo meat on Indian
reservations and to educate more Indian familes on the health benefits
of range fed buffalo meat in their daily diets. ITBC believes that
incorporating buffalo meat into the FDPIR program will provide a
significant positive impact on the diets of Indian people living on
Indian Reservations. Further, ITBC is exploring methods to make small
quantities of buffalo meat available for purchase in Reservation
grocery stores. A healthy diet for Indian people that results in a
lower incidence of diabetes will reduce Indian Reservation health care
costs and result in a savings for taxpayers.
ITBC GOALS AND INITIATIVES
In addition to developing a preventative health care initiative,
ITBC intends to continue with its buffalo restoration efforts and its
Tribal buffalo marketing initiative.
In 1991, seven Indian Tribes had small buffalo herds, with a
combined total of 1,500 animals. The herds were not utilized for
economic development but were often maintained as wildlife only. During
ITBC's relatively short 10-year tenure, it has been highly successful
at developing existing buffalo herds and restoring buffalo to Indian
lands that had no buffalo prior to 1991. Today, through the efforts of
ITBC, over 35 Indian Tribes are engaged in raising over 15,000 buffalo.
All buffalo operations are owned and managed by Tribes and many
programs are close to achieving self-sufficiency. ITBC's technical
assistance is critical to ensure that the current Tribal buffalo
projects are sustainable within their Tribal communities. Further,
ITBC's assistance is critical to those Tribes seeking to start a
buffalo restoration effort.
Through the efforts of ITBC, a new industry has developed on Indian
reservations utilizing a culturally relevant resource. Hundreds of new
jobs directly and indirectly revolving around the buffalo industry have
been created. Tribal economies have benefited from the thousands of
dollars generated and circulated on Indian Reservations.
ITBC has also been strategizing to overcome marketing obstacles for
Tribally raised buffalo. ITBC is presently assisting the Assiniboine
and Gros Ventre Tribes of the Fort Belknap Reservation, who recently
purchased a U.S.D.A. approved meat-processing plant, with a
coordination scheme to accommodate the processing of range-fed Tribally
raised buffalo.
CONCLUSION
ITBC has proven highly successful since its establishment to
restore buffalo to Indian Reservation lands to revive and protect the
sacred relationship between buffalo and Indian Tribes. Further, ITBC
has successfully promoted the utilization of a culturally significant
resource for viable economic development.
ITBC has assisted Tribes with the creation of new jobs, on-the-job
training and job growth in the buffalo industry resulting in the
generation of new money for Tribal economies. ITBC is actively
developing strategies for sustainable Tribal buffalo operations.
Finally, and most critically for Tribal populations, ITBC is developing
a preventive health care initiative to utilize buffalo meat as a
healthy addition to Tribal family diets.
ITBC strongly urges you to support its request for the amended
language as specifically provided above to the Food Stamp Act to allow
$4,000,000 for the purchase of Native American produced buffalo and
buffalo meat, to improve the diet of Tribal members.
______
Prepared Statement of the Metropolitan Water District of Southern
California
Dear Chairman Bennett: The Metropolitan Water District of Southern
California is writing in support of the following Federal program under
the Department of Agriculture's (USDA) budget that we believe is
deserving of your Subcommittee's support during the fiscal year 2006
budget process:
Farm Security and Rural Investment Programs, Environmental Quality
Incentives Program Activity.
$25 million earmark for the Colorado River Basin Salinity Control
Forum.
The Metropolitan Water District of Southern California is a public
agency that was created in 1928 to meet the supplemental water demands
of people living in what is now portions of a six-county region of
southern California. Today, the region served by Metropolitan includes
approximately 18 million people living on the coastal plain between
Ventura and the international boundary with Mexico. It is an area
larger than the State of Connecticut and, if it were a separate Nation,
would rank in the top ten economies of the world.
Included in our region are more than 300 cities and unincorporated
areas in the counties of Los Angeles, Orange, San Diego, Riverside, San
Bernardino, and Ventura. We provide over half of the water used in our
5,200-square-mile service area. Metropolitan's water supplies come from
the Colorado River via our Colorado River Aqueduct and from northern
California via the State Water Project's California Aqueduct.
MWD continues to support USDA implementation of conservation
programs. MWD firmly believes that interagency coordination, along with
incentive-based cooperative conservation programs that facilitate the
development of partnerships, are critical to addressing natural
resources concerns, such as water quality degradation, wetlands loss
and wildlife habitat destruction. It is vital that the Congress
provides USDA with the funding necessary to successfully carry out its
commitment to natural resources conservation.
ENVIRONMENTAL QUALITY INCENTIVES PROGRAM (EQIP)
An important program for MWD has been the Colorado River Basin
Salinity Control Program, which is funded by USDA at the Federal level
through the Environmental Quality Incentives Program Activity of the
Farm Security and Rural Investment Programs. MWD recommends that EQIP
be funded at $1 billion in fiscal year 2006, as proposed in the
President' Budget, with the Colorado River Basin Salinity Control
Program funded at $25 million, 2.5 percent of the EQIP Activity, as
requested by the seven Colorado River Basin States through the Colorado
River Basin Salinity Control Forum.
EQIP provides assistance to farmers and ranchers who face threats
to soil, water, air and related natural resources on their land. EQIP
provides assistance in a manner that will promote agricultural
production and environmental quality as compatible goals. The Natural
Resources Conservation Service (NRCS) offers the program throughout the
Nation.
In Public Law 104-127, Congress amended the Colorado River Basin
Salinity Control Act to direct the Secretary of Agriculture to carry
out salinity control measures in the Colorado River Basin as part of
EQIP. Beginning with the first full year of EQIP funding in 1997
through 2001, USDA's participation in the Colorado River Basin Salinity
Control Program (Salinity Control Program) had significantly diminished
as compared to the 1996 level of funding for salinity control. After
requests had been made by the Colorado River Basin Salinity Control
Forum (Forum), the interstate organization responsible for coordinating
the seven Basin States' salinity control efforts, and others, as well
as directives from the Congress, USDA concluded that the Salinity
Control Program warranted a multi-state river basin approach. The Forum
is composed of Gubernatorial appointees from Arizona, California,
Colorado, Nevada, New Mexico, Utah, and Wyoming. Clearly, Colorado
River Basin salinity control has benefits that are not merely local or
intrastate in nature, but continue downstream. EQIP is also important
because it provides funding for agricultural source water protection
measures that protect and improve the quality of Metropolitan's
imported supplies from Northern California.
The Colorado River is a large component of Southern California's
regional water supply and its relatively high salinity causes
significant economic impacts on water customers in MWD's service area,
as well as throughout the Lower Colorado River Basin (Lower Basin). MWD
and the Bureau of Reclamation (Reclamation) completed a Salinity
Management Study for Southern California in June 1999. The study
concluded that the high salinity from the Colorado River continues to
cause significant impacts to residential, industrial and agricultural
water users. Furthermore, high salinity adversely affects the region's
progressive water recycling programs, diminishes the effectiveness of
water conservation efforts, and is contributing to an adverse salt
buildup through infiltration into Southern California's irreplaceable
groundwater basins.
In April 1999, MWD's Board of Directors authorized implementation
of a comprehensive Action Plan to carry out MWD's policy for management
of salinity. The Action Plan focuses on reducing salinity
concentrations in Southern California's water supplies through
collaborative actions with pertinent agencies, recognizing that an
effective solution requires a regional commitment. MWD, the Association
of Groundwater Agencies, the Southern California Association of
Publicly Owned Treatment Works, and the WateReuse Association of
California have formed a Salinity Management Coalition.
During 2003, the Coalition was expanded to include major water and
wastewater agencies throughout Southern California. Presently, the
eleven members of the coalition are working to implement a Strategic
Action Plan that focuses primarily on local contributions to southern
California's high-salinity problem. In addition, Southern California
leaders are working with urban areas in Arizona, Nevada, New Mexico,
and Texas to find solutions to mutual problems with salinity in
imported supplies, such as from the Colorado River, and other sources.
In December 2004, these agencies participated in the National Salinity
Summit to examine and coordinate salinity management activities.
Concentrations of salts in the Colorado River cause hundreds of
millions of dollars in damage in the United States according to the
U.S. Department of the Interior. Implementation of salinity control
measures:
--increases the yield of salt sensitive crops and decreases water use
for leaching in the agricultural sector,
--increases the useful life of galvanized water pipe systems, water
heaters, faucets, garbage disposals, clothes washers, and
dishwashers, and decreases the use of bottled water and water
softeners in the household sector,
--decreases the use of water for cooling, and the cost of water
softening, and increases equipment service life in the
commercial sector,
--decreases the use of water and the cost of water treatment, and
decreases sewer fees in the industrial sector,
--increases the life of treatment facilities and pipelines in the
utility sector,
--eases the meeting of wastewater discharge requirements to comply
with National Pollutant Discharge Elimination System permit
terms and conditions, and decreases desalination and brine
disposal costs due to less accumulation of salts in groundwater
basins, and
--decreases use of imported water for leaching and the cost of
desalination and brine disposal for recycled water.
Absent the Salinity Control Program, impacts would progressively
increase with continued agricultural and urban development upstream of
California's points of Colorado River diversion. Droughts will cause
spikes in salinity levels in the future that will be highly disruptive
to Southern California water management and commerce. The Salinity
Control Program has proven to be a very cost-effective approach to help
mitigate the impacts of higher salinity. Adequate Federal funding of
the Salinity Control Program is essential.
The Forum issued its 2002 Review, Water Quality Standards for
Salinity, Colorado River System (2002 Review) in October 2002. The 2002
Review found that 1 million tons of salinity needs to be controlled
annually to maintain 2001 salinity levels through 2020. From 1994
through 2003, funding for USDA's salinity control program did not equal
the Forum-identified funding need for the portion of the program the
Federal Government is responsible to implement. While NRCS has
designated Colorado River Basin salinity control as an area of special
interest, appointed a multi-state coordinator, and allocated about
$19.8 million in fiscal year 2004 and $19.5 million in 2005, it is
essential that implementation of salinity control efforts through EQIP
continue to be accelerated to reduce economic impacts. The Basin States
and farmers continue to stand ready to pay their share of the
implementation costs of EQIP.
The Forum has determined that allocation of 2.5 percent of the EQIP
funds, that is $25 million, is needed in fiscal year 2006 for on-farm
measures to control Colorado River Basin salinity. Funding at this
level will permit the state adopted and U.S. Environmental Protection
Agency approved water quality standards to be met. With 2.5 percent of
the EQIP cost share financial assistance, monitoring, and technical
assistance funding requested by the President allocated to the Salinity
Control Program, an additional $21 million in States and local cost
sharing could be committed.
MWD urges the Subcommittee to support funding of $1 billion for
EQIP, the amount requested in the President's Budget, and advise USDA
that $25 million, or 2.5 percent of the EQIP funds, be designated for
the Salinity Control Program. Thank you for your consideration of our
testimony. USDA's conservation programs are critical for achieving
Colorado River Basin salinity control objectives, as well as broader
source water quality protection objectives in the Colorado River Basin
and California.
We look forward to working with you and your Subcommittee. Please
contact Brad Hiltscher, MWD's Executive Legislative Representative in
Washington, D.C. at (202) 296-3551, if we can answer any questions or
provide additional information.
______
Prepared Statement of the National Association of State Energy
Officials (NASEO)
Mr. Chairman and members of the Subcommittee, I am Sara Ward of
Ohio and Chair of the National Association of State Energy Officials
(NASEO). NASEO is submitting this testimony in strong support of
funding at a $23 million level in fiscal year 2006 for Section 9006 of
the Farm Bill, dealing with energy efficiency and renewable energy for
farms and rural small businesses. NASEO also supports a $14 million
funding level for the critical biomass R&D program contained in Section
9010 of the Farm Bill.
The state energy offices implement energy programs in the states in
all sectors of the economy and develop energy policies for the States.
The energy offices work closely with agricultural extension offices
throughout the United States to support a vibrant rural economy, while
increasing productivity and the use of energy efficiency and renewable
energy. NASEO has long-supported expanded use of ethanol, as part of a
balanced national energy policy.
The ``Renewable Energy System and Energy Efficiency Improvements
Program'' (Section 9006 of the Farm Security and Rural Investment Act
of 2002 ) (Public Law 107-171) received $23 million in fiscal year
2005. Despite the budget request of $10 million, we strongly support
level funding of $23 million in fiscal year 2006. This program has
already proven to be effective in promoting the use of renewable energy
and energy efficiency in the agriculture sector. The State energy
offices are working to promote this program. A number of States have
matching efforts to expand the reach of this critical activity. The
first 2 years of the program distributed $44 million in Federal grants
across 29 States, for $300 million in energy projects. These projects
have included wind power, energy efficiency, anaerobic digesters,
biofuels processing and many other projects.
The State energy offices stand ready to respond to any questions or
concerns from the Subcommittee regarding these two important programs.
______
Prepared Statement of the National Association of State Foresters
INTRODUCTION
The National Association of State Foresters (NASF) is pleased to
provide testimony on the U.S. Department of Agriculture (USDA) budget
request for fiscal year 2006. Representing the directors of State
forestry agencies from the States, eight U.S. territories, and the
District of Columbia, our testimony centers around those Deputy Areas
most relevant to the long-term forestry operations of our constituents:
Research, Education, and Economics, as well as Natural Resources and
Environment. We believe the USDA budget for fiscal year 2006, which
offers opportunities for advancing the sustainable management of
private forestland nationwide, can be strengthened through our
recommendations.
USDA COOPERATIVE STATE RESEARCH, EDUCATION, AND EXTENSION SERVICE
(CSREES) PROGRAMS
Cooperative Forestry Research (McIntire--Stennis) Program
The Cooperative Forestry Research (McIntire-Stennis) Program (CFRP)
is a crucial part of the foundation that underlies academic and
scientific understanding of the Nation's forest resources. McIntire-
Stennis CFRP was originally enacted in order to provide universities
with formula funds for the explicit purpose of research in the field of
forestry, which was not provided for in similar research funding
programs. For more than forty years, CFRP has equipped both private and
land-grant universities with the ability to produce invaluable research
concerning forest productivity, environmental quality, and technologies
for monitoring and extending the natural resource base. The program
also provides rigorous scientific education and training for university
students--the future managers of the Nation's forest resources.
Universities, supported by base funds from the Federal Government,
have consistently supplied science-based forestry research not
affiliated with any particular resource use or interest group. Without
sufficient base funds from the Federal Government, society will lose
the benefits wrought by this productive partnership.
The Administration's proposed fiscal year 2006 budget reduces
funding for the McIntire-Stennis CFRP to half the amount enacted in
fiscal year 2005 and aims to eliminate the program formula funds in
fiscal year 2007. The Administration plans to redirect the funds toward
both the National Research Initiative competitive grants program (NRI),
and the new State Agriculture Experiment Station competitive grants
program (SAES), which would provide competitive grants exclusively to
land-grant universities. Although the amount of funding would
theoretically be maintained, the proposed change in the funding
mechanism would drastically alter the way that the funds would
ultimately be used. Neither NRI nor SAES support specific forestry
research efforts. The combination of the proposed elimination of
McIntire-Stennis formula funds and the shift in the program funding
mechanism would significantly reduce universities' ability to conduct
necessary and credible forest resource research.
NASF recommends full restoration of program funding for the
Cooperative Forestry Research (McIntire-Stennis) Program to $22
million. The proposed increase in CFRP will help the program continue
to serve as the cornerstone of forest research in universities,
providing knowledge central to sound management from environmental,
economic, and social perspectives.
The National Research Initiative Competitive Grants Program (NRI)
The National Research Initiative Competitive Grants Program (NRI)
advances fundamental scientific agriculture and forestry research. Two
of the notable NRI forestry funding opportunities available in 2005 are
Bio-based Products research grants and Bioenergy Production research
grants. While grants such as these have great potential to contribute
to forest resource research efforts, only 6 percent of NRI funds were
allocated to forestry research proposals in fiscal year 2005.
NASF supports continued funding for NRI, and encourages the
President to increasing the proportion of spending dedicated to forest
research to a minimum of 10 percent. However, NASF strongly disapproves
of the proposed shift of McIntire-Stennis funds to NRI, thereby ending
the forestry focus of the McIntire-Stennis program.
The Renewable Resources Extension Act (RREA)
The Renewable Resources Extension Act (RREA) facilitates the
transfer of needed forestry information and technology to non-
industrial private forest landowners, as well as loggers and small
businesses involved with forest resource management.
Extension's education programs aid private landowners in
understanding their management options and responsibilities, and
encourage them to take advantage of other technical and financial
assistance programs.
NASF recommends funding RREA at $4.1 million for fiscal year 2006,
in order to sustain the program's ability to address critical extension
and stewardship needs.
FARM BILL CONSERVATION PROGRAMS
NASF believes that the conservation programs enacted in the 2002
Farm Bill are integral for protecting water quality, erodible soils,
wildlife habitat, and wetlands associated with forestry and
agricultural operations. Trees and forestry practices are often the
best solution to many of the conservation challenges arising from these
operations.
NASF recommends funding for the Environmental Quality Incentives
Program (EQIP) at the fiscal year 2005 level of $1.2 billion, full
funding for the Conservation Reserve Program (CRP), $85 million for the
Wildlife Habitat Improvement Program (WHIP), targeting of 321,000 acres
under the Wetlands Reserve Program (WRP), and $150 million for the
Emergency Watershed Program (EWP). NASF supports the President's fiscal
year 2006 funding proposal of $274 million for the Conservation
Security Program (CSP). NASF recommends that the Subcommittee strongly
encourage the Secretary of Agriculture and the NRCS to expand the
emphasis on forestry practices in EQIP and the other Farm Bill
Conservation Programs.
These programs are important for landowners with both forest and
agricultural land, as well as farmers who wish to plant trees for
conservation purposes on their agricultural lands. Nearly two-thirds of
the land in the United States is forested, the majority of which is
privately owned. Investing Federal funds in conservation practices on
private forest lands produces benefits for all, not simply landowners.
These benefits include abundant clean water for drinking and
recreation, improved wildlife habitat, open space, viable rural
economies, and many other tangible and intangible public benefits.
CONCLUSION
The National Association of State Foresters seeks the
Subcommittee's support for a USDA fiscal year 2006 budget that will
make sure the public's conservation needs--provided by private
landowners--are met. Thank you for the opportunity to provide our
testimony.
______
Prepared Statement of the National Association of University Fisheries
and Wildlife Programs
The National Association of University Fisheries and Wildlife
Programs (NAUFWP) appreciates the opportunity to submit testimony
concerning the fiscal year 2006 budget for the U.S. Department of
Agriculture. NAUFWP represents approximately 55 university programs and
their 440 faculty members, scientists, and extension specialists and
over 9,200 undergraduates and graduate students working to enhance the
science and management of fisheries and wildlife resources. NAUFWP is
interested in strengthening fisheries and wildlife education, research,
extension, and international programs to benefit wildlife and their
habitats on agricultural and other private land.
The following table summarizes NAUFWP's recommendations for the
Cooperative State Research, Education and Extension Service, and the
Natural Resources Conservation Service:
[In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal Year
-----------------------------------------------
USDA Agency/Program 2006
2005 Enacted President's 2006 NAUFWP
Budget Recommended
----------------------------------------------------------------------------------------------------------------
Coop. St. Research, Education, and Extension Serv:
Hatch Act................................................... 178,707 89,354 178,707
McIntire-Stennis Cooperative Forestry....................... 22,205 11,103 22,205
Renewable Resources Extension Act........................... 4,060 4,093 4,093
Natural Resources Inventory................................. 179,552 250,000 250,000
Natural Resources Conservation Service:
Forest Land Enhancement Program............................. .............. .............. 80,000
Conservation Program Monitoring and Evaluation.............. .............. .............. 1,000
----------------------------------------------------------------------------------------------------------------
COOPERATIVE STATE RESEARCH, EDUCATION AND EXTENSION SERVICE
Hatch Act.--The President's fiscal year 2006 request for the Hatch
Act proposes a 50 percent cut in these formula funds, moving toward
elimination of the program in fiscal year 2007. The Hatch Act supports
agricultural research in the States at college and university
agriculture experiment stations. Experiment stations conduct research
that relates directly to maintaining an effective agricultural industry
and promoting a sound and prosperous agricultural and rural life. These
stations are essential for their work on food and fiber systems,
environmental impacts of these systems, and resource issues relating to
the future of agriculture in each State and the Nation. Eliminating the
base funding for critical agricultural research at land grant
universities would be detrimental to rural economies and our natural
resources. NAUFWP strongly encourages Congress to continue Hatch Act
formula funding into the future, starting with restoring the program to
$178.707 million in fiscal year 2006.
McIntire-Stennis.--The proposed budget for McIntire-Stennis
Cooperative Forestry in fiscal year 2006 reflects a 50 percent cut, and
reports elimination of the program in fiscal year 2007. These funds are
essential to the future of resource management on non-industrial
private forestlands, where forest products are produced while natural
resources, including fish and wildlife, are conserved. As societal
pressures for forest products grow, private forestlands will
increasingly be needed to supplement wood products and supplies. In the
absence of long-term, on-going research on forest health, productivity
and environmental quality provided through McIntire-Stennis, the Nation
could easily become unable to meet future forest product needs.
Replacing formula funds with competitive grants will erode essential
base funding for land grant universities, and leave long-term, stable
forest research to chance. NAUFWP strongly encourages you to continue
the McIntire-Stennis Cooperative Forestry program into the future by
restoring the program to $22.505 million in fiscal year 2006.
Renewable Resources Extension Act.--We strongly recommend that the
Renewable Resources Extension Act be funded at the President's
requested level, $4.093 million, in fiscal year 2006. RREA funds are
apportioned to State Extension Services at land grant universities for
educational programs aimed at private forests and rangelands. The
programs help landowners improve management, marketing, and utilization
of their renewable natural resources. RREA funds are leveraged up to
15-fold (average of 7:1) by State, local, and private funds to develop
and disseminate information. Given that 58 percent of the Nation's
forestland is privately owned, it is imperative that we provide these
landowners with the knowledge to sustainably manage their forests for
timber, watershed protection, recreation, biodiversity, and carbon
sequestration. Extension programs supported by RREA also offer
information about technical assistance, tax incentives, and cost-
sharing opportunities.
Recently, CSREES and the Land Grant universities developed a 5-year
strategic plan to guide RREA implementation from 2005-2009. The
resulting goals and actions, if appropriately funded, will allow State
Extension Services to help private forest landowners develop more
profitable resource-based enterprises while improving environmental
quality, controlling invasive species, decreasing land conversion and
fragmentation, and increasing economic and quality of life benefits to
landowners and communities.
RREA is a ``win-win'' program with measurable results. For example,
the University of Florida used RREA funds to develop a Wildland Fire
Education program, leveraging $200,000 and reaching 2,000 workshop
participants. Cornell University used RREA funds to work with the New
York Department of Environmental Conservation's Division of Lands and
Forests to implement the State's Stewardship Plan for the 2002 Farm
Bill. As a result of Cornell's RREA-supported involvement,
approximately $323,000 has been leveraged to provide educational
assistance to over 57,000 forest owners who control more than 3 million
acres of forestland in the State. Texas A&M used RREA funds to initiate
creation of an electronic version of the Texas Friendly quality
customer service training, to help Texas landowners expand
opportunities for nature tourism income sources.
National Research Initiative.--National Research Initiative
Competitive Grants (NRI) are open to academic institutions, federal
agencies, and private organizations to fund research on improving
agricultural practices, particularly production systems that are
sustainable both environmentally and economically, and to develop
methods for protecting natural resources and wildlife. Innovative grant
programs such as NRI help broaden approaches to land management, such
as integrating timber and wildlife management on private lands. We
support the President's $250 million request for National Research
Initiative Competitive Grants in fiscal year 2006, provided the
increase does not come at the expense of important formula fund
programs such as Hatch Act and McIntire-Stennis.
NATURAL RESOURCES CONSERVATION SERVICE
Forest Land Enhancement Program (FLEP).--The Forest Land
Enhancement Program was created through the 2002 Farm Bill to provide
financial, technical, educational, and related assistance to promote
sustainable management of non-industrial private forestlands. The
program is authorized at $100 million for 2002-2007, to be distributed
through State forestry agencies. We request restoration of the full
funding balance, $80 million, for this program in fiscal year 2006.
Conservation Program Monitoring and Evaluation.--Monitoring Farm
Bill conservation programs and evaluating their progress toward
achieving Congressionally established objectives for soil, water, and
wildlife will enable NRCS to ensure successful program implementation
and effective use of appropriated funds. Thus far, limited monitoring
efforts have been focused on soil and water achievements, and NRCS and
the Agricultural Research Service have done all the evaluations. It is
important for assessments to address wildlife and habitat impacts, and
for external parties to be included to ensure credibility and
objectivity. We recommend Congress direct $1 million toward a pilot
watershed-based monitoring and evaluation project that can serve as a
model for conservation program assessment nationwide.
Thank you for considering the views of university fisheries and
wildlife scientists. We look forward to working with you and your staff
to ensure adequate funding for wildlife conservation.
______
Prepared Statement of the National Coalition for Food and Agricultural
Research
Dear Mr. Chairman, Ranking Member Kohl and Members of the
Subcommittee: On behalf of the National Coalition for Food and
Agricultural Research (National C-FAR), we are pleased to submit
comments in strong support of enhanced public investment in food and
agricultural research, extension and education as a critical component
of Federal appropriations for fiscal year 2006 and beyond.
SUMMARY POSITION--FISCAL YEAR 2006
With the noteworthy exceptions indicated below, National C-FAR
urges the Subcommittee and Committee to fund the Administration's
request for food and agricultural research, extension and education for
fiscal year 2006, including much-needed increases in the National
Research Initiative. National C-FAR urges that funding for research,
extension and education be augmented to the maximum extent practicable,
as an important next step toward building the funding levels needed to
meet identified food and agricultural research, extension and education
needs. In particular--
--National C-FAR urges the Subcommittee and Committee to maintain
funding for the Hatch, McIntyre-Stennis and Animal Health and
Disease formula fund programs at or above fiscal year 2005
enacted levels. National C-FAR is concerned that the
Administration's proposal to (1) cut Hatch and McIntyre-Stennis
funds by 50 percent in fiscal year 2006 and 100 percent in
fiscal year 2007; and (2) eliminate funding for Animal Health
and Disease in fiscal year 2006 would destabilize the important
research and extension activities currently funded by those
programs, as well as the ability to maintain critical
scientific expertise at the affected institutions.
--National C-FAR appreciates the Administration's proposed increases
for selected programs in the Agricultural Research Service. We
also are concerned about the apparent arbitrary reduction in a
number of programs without a careful review of their merits,
including adequate stakeholder input.
As a coalition representing stakeholders in both the research,
extension and education community and the customers' who need and
depend upon their outcomes, National C-FAR urges expanded public
participation in the Administration's research priority setting and
funding decision process and stands ready to work with the
Administration and other interested stakeholders in such a process.
INTEREST OF NATIONAL C-FAR
National C-FAR serves as a forum and a unified voice in support of
sustaining and increasing public investment at the national level in
food and agricultural research, extension and education. National C-FAR
is a nonprofit, nonpartisan, consensus-based and customer-led coalition
established in 2001 that brings food, agriculture, nutrition,
conservation and natural resource organizations together with the food
and agriculture research and extension community. More information
about National C-FAR is available at http://www.ncfar.org.\1\
---------------------------------------------------------------------------
\1\ National C-FAR seeks to increase awareness about the value of,
and support for, food and agricultural research, extension and
education. For example, National C-FAR is hosting an educational series
of ``Break & a Briefing'' seminars on the hill, featuring leading-edge
researchers on timely topics to help demonstrate the value of public
investment in food and agricultural research, extension and education.
National C-FAR also circulates a series of one-page Success Profiles
highlighting some of the many benefits already provided by public
investment in food and agricultural research, extension and education.
Each provides a contact for more information. Profiles released to date
are titled ``Anthrax,'' ``Mastitis,'' ``Penicillin,'' ``Witchweed,''
``Making Wine,'' ``Fighting Allergens,'' and ``Harnessing
Phytochemicals.'' The Profiles can be accessed at http://www.ncfar.org/
research.asp.
---------------------------------------------------------------------------
DEMONSTRATED VALUE OF PUBLIC INVESTMENTS IN FOOD AND AGRICULTURAL
RESEARCH, EXTENSION AND EDUCATION
Public and private investments in U.S. agricultural research and
practical application of results have paid huge dividends to the United
States and the world, especially in the latter part of the 20th
century. However, these dividends are the result of past investments in
agricultural research.
If similar research dividends are to be realized in the future,
then the nation must commit to a continuing investment that reflects
the long-term benefits of food and agricultural research.
Food and agricultural research, extension and education to date
have helped provide the United States with an agricultural system that
consistently produces high quality, affordable food and natural fiber,
while at the same time:
--Creating jobs and income.--The food and agricultural sector and
related industries provide over 20 million jobs, about 17
percent of U.S. jobs, and account for nearly $1 trillion or 13
percent of GDP.
--Helping reduce the trade deficit.--Agricultural exports average
more than $50 billion annually compared to $38 billion of
imports, contributing some $12 billion to reducing the $350
billion trade deficit in the nonagricultural sector.
--Providing many valuable aesthetic and environmental amenities to
the public.--The proximity to open space enhances the value of
nearby residential property. Farmland is a natural wastewater
treatment system. Unpaved land allows the recharge of the
ground water that urban residents need. Farms are stopovers for
migratory birds. Farmers are stewards for 65 percent of non-
federal lands and provide habitat for 75 percent of wildlife.
--Sustaining important strategic resources.--This Nation's abundant
food supply bolsters national security and eases world tension
and turmoil. Science-based improvements in agriculture have
saved over a billion people from starvation and countless
millions more from the ravages of disease and malnutrition.
Publicly financed research, extension and education are necessary
complements to private sector research, focusing in areas where the
private sector does not have an incentive to invest, when (1) the pay-
off is over a long term, (2) the potential market is more speculative,
(3) the effort is during the pre-technology stage; and (4) where the
benefits are widely diffused. Public research, extension and education
help provide oversight and measure long-term progress. Public research,
extension and education also act as a means to detect and resolve
problems in an early stage, thus saving American taxpayer dollars in
remedial and corrective actions.
By any standard, the contributions of publicly supported
agricultural research, extension and education to advances in food
production and productivity and the resulting public benefits are well
documented. For example, an analysis by the International Food Policy
Research Institute of 292 studies of the impacts of agricultural
research and extension published since 1953 (Julian M. Austin, et al, A
Meta-Analysis of Rates of Return to Agricultural Research, 2000) showed
an average annual rate of return on public investments in agricultural
research and extension of 81 percent!
NATIONAL C-FAR URGES ENHANCED FEDERAL FUNDING FOR FOOD AND AGRICULTURAL
RESEARCH, EXTENSION AND EDUCATION
National C-FAR appreciates the longstanding support this
Subcommittee and the full Committee have demonstrated through funding
food and agricultural research, extension and education programs over
the years that have helped the U.S. food and agricultural sector be a
world leader and provide unprecedented value to U.S. citizens, and
indeed the world community.
National C-FAR is deeply concerned that shortfalls in funding in
recent years for food and agricultural research, extension and
education jeopardize the food and agricultural community's continued
ability to maintain its leadership role and more importantly respond to
the multiple, demanding challenges that lie ahead. Federal funding for
food and agricultural research, extension and education has been flat
for over 20 years, while support for other Federal research has
increased substantially. Public funding of agricultural research in the
rest of the world during the same time period has reportedly increased
at a nearly 30 percent faster pace.
Reduced public investment in food and agricultural research,
extension and education may well be a result of a view that the U.S.
food and agricultural system is an unprecedented success story.
However, societal demands and expectations placed upon the food and
agricultural system are ever-changing and growing. Simply stated,
Federal funding has not kept pace with identified priority needs.
National C-FAR is deeply concerned that continuing shortfalls in
funding for food and agricultural research, extension and education
will jeopardize the food and agricultural community's ability to
maintain its leadership role. National C-FAR believes it is imperative
to lay the groundwork now to respond to the many challenges and
promising opportunities ahead through Federal policies and programs
needed to promote the long-term health and vitality of food and
agriculture for the benefit of both consumers and producers. Stronger
public investment in food and agricultural research, extension and
education is essential in producing research outcomes needed to help
bring about beneficial and timely solutions to multiple challenges.
Multiple examples, such as those listed below, serve to illustrate
current and future needs that arguably merit enhanced public investment
in research, extension and education so that the food and agricultural
system can respond to these challenges on a sustainable basis:
--Strengthened bio-security is a pressing national priority. There is
a compelling need for improved bio-security and bio-safety
tools and policies to protect against bio-terrorism and dreaded
problems such as foot-and-mouth and ``mad cow'' diseases and
other exotic plant and animal pests, and protection of range
lands from invasive species.
--Food-linked health costs are high. Some $100 billion of annual U.S.
health costs are linked to poor diets, obesity, food borne
pathogens and allergens. Opportunities exist to create
healthier diets through fortification and enrichment.
--Research, extension and education are key to providing to solutions
to environmental issues related to global warming, limited
water resources, enhanced wildlife habitat, and competing
demands for land and other agricultural resources.
--There was considerable debate during the last farm bill
reauthorization about how expanded food and agricultural
research, extension and education could enhance farm income and
rural revitalization by improving competitiveness and value-
added opportunities.
--Energy costs are escalating, dependence on petroleum imports is
growing and concerns about greenhouse gases are rising.
Research, extension and education can enhance agriculture's
ability to provide renewable sources of energy and cleaner
burning fuels, sequester carbon, and provide other
environmental benefits to help address these challenges, and
indeed generate value-added income for producers and stimulate
rural economic development.
--Population and income growth are expanding the world demand for
food and natural fiber and improved diets. World food demand is
projected to double in 25 years. Most of this growth will occur
in the developing nations where yields are low, land is scarce,
and diets are inadequate. Without a vigorous response, demand
will only be met at a great global ecological cost.
--Regardless of one's views about biotechnology and genetic
resources, an effective publicly funded research role is needed
for oversight and to ensure public benefits.
Translational education (extension) is a vital link connecting the
research community to those who need and use research outcomes. The
extension and education system helps translate basic and applied
research outcomes into practical applications and more timely
implementation by the end user community, thus helping to realize
positive economic, environmental, health, food security and a host of
other benefits in the food and agricultural system, and for the
consuming public. The USDA's National Research Initiative has made
significant progress in recognizing this role, through funding of
projects that undertake an integrated research and extension approach.
National C-FAR strongly supports funding for extension and education.
Finally, there is a continuing need to build the human capacity of
expertise to do quality food and agricultural research, extension and
education, and to implement research outcomes in the field and
laboratory. The food and agricultural sciences face a daunting task of
supplying the Nation with the next generation of scientists and
educators. If these basic human resource needs are not met, then the
Nation will face a shortage of trained and qualified individuals.
Public investment in food and agricultural research, extension and
education today and in the future must simultaneously satisfy needs for
food quality and quantity, resource preservation, producer
profitability and social acceptability. National C-FAR supports the
public funding needed to help assure that these needs are met.
A Sense of the Congress resolution endorsed by National C-FAR to
double funding in food and agricultural research, extension and
education within 5 years was incorporated into the 2002 Farm Bill that
was enacted into law. However, the major commitment to expanded
research has not yet materialized. At the 3-year mark, the larger
reality is the threat of funding cuts.
NATIONAL C-FAR FISCAL YEAR 2006 FUNDING RECOMMENDATION
With the noteworthy exceptions indicated below, National C-FAR
urges the Subcommittee and Committee to fund the Administration's
request for food and agricultural research, extension and education for
fiscal year 2006, including much-needed increases in the National
Research Initiative. National C-FAR urges that funding for research,
extension and education be augmented to the maximum extent practicable,
as an important next step toward building the funding levels needed to
meet identified food and agricultural research, extension and education
needs. In particular--
--National C-FAR urges the Subcommittee and Committee to maintain
funding for the Hatch, McIntyre-Stennis and Animal Health and
Disease formula fund programs at or above fiscal year 2005
enacted levels. National C-FAR is concerned that the
Administration's proposal to (1) cut Hatch and McIntyre-Stennis
funds by 50 percent in fiscal year 2006 and 100 percent in
fiscal year 2007; and (2) eliminate funding for Animal Health
and Disease in fiscal year 2006 would destabilize the important
research and extension activities currently funded by those
programs, as well as the ability to maintain critical
scientific expertise at the affected institutions.
--National C-FAR appreciates the Administration's proposed increases
for selected programs in the Agricultural Research Service
(ARS). We also are concerned about the apparent arbitrary
reduction in a number of programs without a careful review of
their merits, including adequate stakeholder input.
As a coalition representing stakeholders in both the research,
extension and education community and the customers' who need and
depend upon their outcomes, National C-FAR urges expanded public
participation in the Administration's research, extension and education
priority setting and funding decision process and stands ready to work
with the Administration and other interested stakeholders in such a
process.
CONCLUSION
In conclusion, National C-FAR respectfully submits that--
--The food and agricultural sector merits Federal attention and
support;
--Food and agricultural research, extension and education have paid
huge dividends in the past, not only to farmers, but to the
entire Nation and the world;
--There is an appropriate and recognized role for Federal support of
research, extension and education;
--Recent funding levels for food and agricultural research, extension
and education have been inadequate to meet pressing needs;
--Federal investments in food and agricultural research, extension
and education should be enhanced in fiscal year 2006 and
beyond;
--Funding in fiscal year 2006 for USDA, CSREES formula fund programs
(Hatch, McIntyre-Stennis and Animal Health and Disease) should
be continued, at or above fiscal year 2005 enacted levels; and
--The Administration should provide for expanded public
participation, including during review of programs being
considered for possible reforms or cuts.
National C-FAR appreciates the opportunity to share its views and
stands ready to work with the Chair and members of the Subcommittee and
Committee in support of these important funding objectives.
______
Prepared Statement of the National Commodity Supplemental Food Program
Association
Mr. Chairman and subcommittee members, I am Vicki Metheny,
President of the National Commodity Supplemental Food Program (CSFP)
Association. Our Association of State and local CSFP operators works
diligently with the Department of Agriculture Food, Nutrition and
Consumer Service to provide a quality nutritionally balanced commodity
food package to low income persons aged sixty and older, low income
mothers, infants, and children. The program first authorized in 1969,
serves approximately 536,000 individuals every month in 32 States, 2
Tribal Organizations and the District of Columbia.
--The fiscal year 2006 President's Budget has proposed only $106.9
million for the CSFP and projects total resources of $112.8
million, with which the Department expects to support only
491,056 caseload slots, an 8 percent cut. 45,140 low-income
seniors will no longer receive much needed nutritious commodity
foods.
--The $110.8 million in total resources made available in fiscal year
2005 will only maintain the fiscal year 2004 caseload of
536,196.
--Within the last 7 years, CSFP has added 15 new States to the
Program serving 113,792 new program participants, the vast
majority being low-income seniors.
--The program is not yet in all 50 States due to budget constraints,
not due to a lack of interest or need for the services. In
fiscal year 2003 when additional resources were made available
to the program, 84,160 additional participants were served,
mostly seniors.
The CSFP's 36 years of service stands as testimony to the power of
partnerships between community and faith-based organizations, private
industry and government agencies. The CSFP offers a unique combination
of advantages unparalleled by any other food assistance program:
--The CSFP specifically targets our nation's most nutritionally
vulnerable populations: the young children and the low-income
seniors.
--The CSFP provides a monthly selection of food packages specifically
tailored to the nutritional needs of the population we serve.
Each eligible participant in the program is guaranteed [by law]
a certain level of nutritional assistance every month in
addition to life-changing nutrition education.
--The CSFP purchases foods at wholesale prices, which directly
supports the farming community. The average food package cost
for fiscal year 2005 is $13.95 with an approximate retail cost
of $50.00.
--The CSFP involves the entire community in the problems of hunger
and poverty. Thousands of volunteers as well as private
companies donate money, equipment, and most importantly time to
deliver food to homebound seniors. These volunteers not only
bring food but companionship and other assistance to seniors
who might have no other source of support. Forty-five percent
of State and local operating resources are provided at the
grassroots level along with an additional $7.7 million in items
donated to participants.
The Agriculture Appropriations Sub-Committee has consistently been
supportive of CSFP, acknowledging it as a cost-effective way of
providing nutritious supplemental food packages to low income eligible
seniors, mothers and children.
This year, your support is needed urgently to provide adequate
resources in order to retain the existing services for the 536,196
mothers, children and seniors currently receiving benefits. If the
philosophy behind the President's budget is to do no harm to nutrition
programs then $123.2 million must be provided to maintain fiscal year
2005 level services.
The sub-committee itself has provided funding increases over the
years to allow States with approved plans to join the growing list of
CSFP participants. Five States currently have approved State plans.
$3.5 million would be needed to fund this vital program expansion into
Arkansas, Delaware, New Jersey, Oklahoma and Utah.
While it is true that budget times are difficult just now for the
government, as they are for many individuals, States already operating
CSFP have indicated that there is additional need for the program and
have asked for 110,000 slots for expansion of the program. The total
cost of this expansion would be $21.3 million, however, any expansion
would be worthwhile and very much appreciated.
FISCAL YEAR 2006 PROGRAM SERVICE NEEDS
[Dollars in millions]
------------------------------------------------------------------------
Description Funding Need Service Level
------------------------------------------------------------------------
Maintain current service level.......... $123.2 536,196
Maintain service level and expansion of 126.7 556,696
service into five new States (20,500
people)................................
Maintain service level and expansion of 142.5 648,164
service in current States (111,968
people)................................
Maintain current service level, 148.0 674,664
expansion of service and five new
States.................................
------------------------------------------------------------------------
CURRENT SERVICE LEVEL
------------------------------------------------------------------------
Participant description Number
------------------------------------------------------------------------
Senior Citizens 60 and over who are at or below 130 472,000
percent of poverty.....................................
Women, Infants, Children (exclusive of WIC recipients).. 64,000
---------------
TOTAL............................................. 536,000
------------------------------------------------------------------------
Current Service Area:
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
FISCAL YEAR 2006 PROPOSED FUNDING IS NOT ADEQUATE
------------------------------------------------------------------------
Proposed Senior Service
Description Funding Decrease
------------------------------------------------------------------------
$106.9 million appropriation + $6.02 $112.8 million (45,140)
million USDA commodity drawdown........
------------------------------------------------------------------------
The Commodity Supplemental Food Program (CSFP) provides Federal
commodity food, nutrition education, and related services to senior
citizens 60 and over (who are at or below 130 percent of Federal
Poverty Income Guidelines). CSFP also serves pregnant and post-partum
women, children under 6 (at or below 185 percent of Federal Poverty
Income Guidelines), each month who are at nutritional risk due to low
income. Eighty-eight percent of our monthly participants are seniors.
The remaining 12 percent of those served by CSFP are moms and kids, of
whom 9 out of 10 are no longer eligible for the WIC program. CSFP is
currently distributed in 32 States, two (2) Indian Tribal
Organizations, and the District of Columbia with the help of three (3)
million volunteer hours, hundreds of non-profits and faith based
organizations.
CSFP ADMINISTRATIVE EXPENSE/VALUE SURVEY FOR FISCAL YEAR 2004
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Volunteer
Programs USDA Grants Total Costs Not USDA In-Kind Cost Value Total Value Percent USDA Extra Goods
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NH.............................................................. $423,110 $467,684 $44,574 $1,702 $151,812 $621,198 68 $2,750
NY.............................................................. 1,846,888 3,816,178 1,969,290 9,000 51,570 3,876,748 48 20,425
VT, FB.......................................................... 291,667 291,667 0 0 30,942 322,609 90 268,200
DC.............................................................. 447,667 2,030,320 1,582,653 507,873 12,256 2,550,449 18 0
PA.............................................................. 795,923 1,084,276 288,353 236,891 828,304 2,149,471 37 128,281
KY.............................................................. 943,750 963,000 19,250 .............. 55,008 1,018,008 93 0
MS.............................................................. 399,922 426,672 26,750 36,000 422,049 884,721 45 0
NC.............................................................. 82,803 122,803 40,000 0 3,438 126,241 66 20,000
SC.............................................................. 210,562 251,350 40,788 119,386 251,489 622,225 34 21,061
TN.............................................................. 840,733 840,733 0 0 0 840,733 100 0
IL.............................................................. 946,303 946,303 0 0 336,099 1,282,402 74 0
IN.............................................................. 263,202 298,202 35,000 17,520 358,095 673,817 39 0
MI.............................................................. 4,465,551 4,751,458 285,907 264,202 3,258,607 8,274,267 54 13,012,108
MN.............................................................. 811,741 150,848 339,107 7,508 691,494 1,849,850 44 240,000
RL, MN.......................................................... 7,422 14,844 7,422 0 0 14,844 50 0
OH.............................................................. 713,646 808,976 95,330 57,906 237,910 1,104,792 65 158,754
WI.............................................................. 261,820 306,025 44,205 0 240,110 546,135 48 528,550
LA.............................................................. 4,539,024 4,539,024 0 953,286 1,429,323 6,921,633 66 940
NM.............................................................. 1,113,015 1,428,969 315,954 368,815 237,144 2,034,928 55 646,964
TX.............................................................. 671,165 757,819 86,654 15,000 139,652 912,471 74 75,000
CO.............................................................. 1,158,839 1,289,224 130,385 87,860 597,192 1,974,276 59 577,049
IA.............................................................. 231,552 518,095 286,543 0 67,247 585,342 40 108,510
KS.............................................................. 325,397 394,416 69,019 329,960 255,881 980,257 33 81,424
MS.............................................................. 526,404 579,089 52,685 71,278 223,659 874,026 60 0
MT.............................................................. 357,744 406,496 48,752 116,529 199,301 722,326 50 295,666
NE.............................................................. 757,561 1,051,670 294,109 39,643 261,662 1,352,975 56 69,597
ND.............................................................. 157,368 192,942 35,574 1,135 226,220 420,297 37 23,940
SD.............................................................. 157,921 197,366 39,445 12,980 41,376 251,722 63 15,743
OS, SD.......................................................... 36,848 36,848 0 0 0 36,848 100 0
AK.............................................................. 157,921 176,196 18,275 0 36,271 212,467 74 0
AZ.............................................................. 992,153 1,632,789 640,636 442,950 1,030,066 3,105,805 32 655,000
CA.............................................................. 3,016,611 3,186,426 169,815 404,734 358,180 3,949,340 76 741,872
NV.............................................................. 473,764 490,051 16,287 33,000 30,474 553,525 86 0
OR.............................................................. 53,312 53,312 0 0 0 53,312 100 0
WA.............................................................. 134,194 145,743 11,549 300 62,366 208,409 64 0
-------------------------------------------------------------------------------------------------------------------------------
TOTAL..................................................... 28,613,503 34,647,814 7,034,311 4,135,458 12,125,197 51,908,469 55 7,691,834
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Prepared Statement of the National Council of Farmer Cooperatives
Thank you, Mr. Chairman, and members of the Subcommittee for your
leadership and support for U.S. agriculture. The National Council of
Farmer Cooperatives (NCFC) appreciates this opportunity to submit its
views regarding the fiscal year 2006 agriculture appropriations bill,
and respectfully requests this statement be made part of the official
hearing record.
NCFC is the national trade association representing America's
farmer cooperatives. There are nearly 3,000 farmer cooperatives across
the United States whose members include a majority of our Nation's more
than 2 million farmers. They exist for the mutual benefit of their
farmer members and provide them with increased opportunity to improve
their income from the marketplace and compete more effectively in the
global marketplace.
These farmer owned businesses handle, process and market virtually
every type of agricultural commodity grown and produced, along with
many related products; manufacture, distribute and sell a variety of
farm inputs; and provide credit and related financial services,
including export financing. Earnings derived from these activities are
returned by farmer cooperatives to their farmer members on a patronage
basis thereby enhancing their overall income.
America's farmer cooperatives also provide jobs for nearly 300,000
Americans with a combined payroll over $8 billion, further contributing
to our Nation's economic wellbeing. Many of these jobs are in rural
areas where employment opportunities are sometimes limited.
We appreciate very much the challenges facing Congress in the
current budget environment. At the same time, we want to emphasize the
continued importance and high priority of policies and programs,
together with needed funding, under the 2002 Farm Bill to help promote
an economically healthy and competitive U.S. agricultural sector, meet
the food and fiber needs of consumers at home and abroad, strengthen
farm income, improve our balance of trade, promote rural development,
and maintain and create needed jobs.
To help achieve these important objectives, it is also vital to
maintain and strengthen the ability of farmers to join together in
cooperative self-help efforts. There is a long history of congressional
support for public policy to enhance the ability of farmers to join
together in farmer cooperatives to improve their overall income from
the marketplace, manage their risk, capitalize on new market
opportunities, and to compete more effectively in a global economy.
Accordingly, in addition to supporting basic farm and commodity
programs under the 2002 Farm Bill, we recommend the following:
--USDA's Rural Business--Cooperative Service (RB-CS).--The rural
development mission area includes responsibility for carrying
out a variety of programs to help achieve these objectives,
including research, education and technical assistance for
farmers and their cooperatives. Since the elimination of a
separate agency with responsibility for such programs, funding
for such purposes has generally been provided through the
salary and expense budget relating to rural development.
For fiscal year 2006, the administration's budget proposal
provides $683 million in both budget authority and program
level for salaries and expenses for the rural development
mission area, compared to $639 million for fiscal year 2005.
Since there is no separate line item relating to programs in
support of cooperative self-help efforts by farmers and their
cooperatives, we recommend that specific language be included,
as Congress previously has, to ensure that programs to
encourage such cooperative self-help efforts be given a high
priority.
--Value-Added Producer Grants.--USDA's Value-Added Producer Grants
program is aimed at encouraging and enhancing farmer
participation in value-added businesses, including through
farmer cooperatives, to help them capture a larger share of the
value of their production and improve their overall income from
the marketplace. It also helps promote economic development and
create needed jobs in rural areas.
In fiscal year 2005, the program was funded at $15.5 million. For
fiscal year 2006, the administration has recommended
approximately $16 million. Given the importance and success of
the program in promoting cooperative self-help efforts by
farmers, we would like to see the program fully funded at $40
million as provided under the 2002 Farm Bill and hope the
Subcommittee will be able to move toward that goal. It is also
important to note that the program is administered on a
matching basis, thereby doubling the impact of such grants and
helping encourage needed investment in rural America. As a
cost-share program, it has served as an excellent example of an
effective public-private partnership that has been extremely
successful by any measure.
--Commodity Purchase Programs.--USDA annually purchases a variety of
commodities for use in domestic and international feeding
programs, including the school lunch program. NCFC strongly
supports such programs to: (1) meet the food and nutrition
needs of eligible consumers and (2) help strengthen farm income
by encouraging orderly marketing and providing farmers with an
important market outlet, especially during periods of surplus
production.
In addition to providing needed funding for such programs, it is
important to ensure that farmers who choose to cooperatively
market their production and related products, as well as their
cooperatives, are not limited or excluded, but remain fully
eligible under such programs. This is consistent with USDA's
historic mission in support of such cooperative efforts and
essential to ensure the continued availability of high quality
products on a competitive basis.
--B&I Loan Guarantee Program and Farmer Cooperatives.--One of the
major challenges facing farmer cooperatives in helping farmers
capture more of the value of what they produce beyond the farm
gate is access to equity capital. In approving the 2002 Farm
Bill, Congress made a number of changes to USDA's Business and
Industry (B&I) guaranteed loan program to better meet the needs
of farmer cooperatives and their farmer members. These included
changes to allow farmers to qualify for guaranteed loans for
the purchase of stock in both new and existing cooperatives to
provide the equity capital needed to encourage more involvement
and participation in value-added activities. For fiscal year
2006, the administration's budget proposal provides an overall
program level of $899 million, which represents an increase
over fiscal year 2005. Accordingly, we recommend that funding
be not less than this level.
--Rural Business Investment Program.--The Rural Business Investment
Program was authorized under the 2002 Farm Bill to help foster
rural economic development by encouraging and facilitating
equity investments in rural business enterprises, including
farmer cooperatives. We are concerned over proposals that would
eliminate funding for this important program. Again, providing
improved access to equity capital is essential if farmers are
going to be able to capitalize on value-added business
opportunities through cooperative self-help efforts. For these
reasons, we urge that the program be fully funded as authorized
and implemented as Congress intended.
We would also like to take this opportunity to express our strong
support for USDA's export programs. Such programs are vital to helping
maintain and expand U.S. agricultural exports, counter subsidized
foreign competition, meet humanitarian needs, protect American jobs,
and strengthen farm income. As a member of the Coalition to Promote
U.S. Agricultural Exports, we urge that funding be provided at $200
million, together with $34.5 million for the Foreign Market Development
program, as provided under the 2002 Farm Bill. In addition, we urge
full funding for the Export Credit Guarantee Programs, the Export
Enhancement Program, Dairy Export Incentive Program, Technical
Assistance for Specialty Crops, Food for Progress, as well as Public
Law 480 and other food assistance programs, including McGovern-Dole.
We also would like to urge support for needed funding and resources
for USDA's Foreign Agricultural Service to continue to effectively
carry-out such programs and to provide the technical assistance and
support needed to help maintain and expand U.S. agricultural exports.
Another important area of emphasis when it comes to enhancing the
global competitiveness of farmer cooperatives and American agriculture
is research. NCFC supports the National Coalition for Food and
Agriculture Research goal of doubling Federal funding over the next 5
years.
Finally, we also want to express our strong support for important
conservation and related programs administered by USDA's Natural
Resources Conservation Service (NRCS). Many of these programs were
significantly expanded under the 2002 Farm Bill and provide financial
and technical assistance to help farmers and others who are eligible to
develop and carry out conservation and related activities to achieve
important environmental goals.
NRCS is also the lead technical agency within USDA offering ``on-
farm'' technical and financial assistance. We strongly support such
programs, including technical assistance activities that may be carried
out in partnership with the private sector involving farmer
cooperatives. Farmer cooperatives have invested heavily in developing
the technical skills of their employees to help their farmer members
address environmental concerns. It is estimated that 90 percent of all
members of the Certified Crop Advisor (CCA) program, for example, are
employed by the private sector and majority of those are employed by
farmer cooperatives.
Conclusion
Thank you again, Mr. Chairman and members of the Subcommittee, for
the opportunity to share our views. We appreciate this statement being
included in the official hearing record.
______
Prepared Statement of the National Fish and Wildlife Foundation
Mr. Chairman and Members of the Subcommittee: I appreciate the
opportunity to submit testimony for the record regarding the fiscal
year 2006 funding request for the National Fish and Wildlife Foundation
(Foundation). The Foundation respectfully requests that this
Subcommittee fund the Foundation at $4 million through the U.S. Natural
Resources Conservation Service (NRCS) appropriation. This request would
allow the Foundation to expand its highly successful grant program to
better assist the NRCS in maximizing the benefits of the Conservation
Title of the 2002 Farm Bill.
Federal dollars appropriated by this Subcommittee allow us to
leverage State, local, and private dollars for on-the-ground
conservation. The Foundation's relationship with NRCS began in 1996
when we signed a cooperative agreement to protect and restore
previously converted agricultural wetlands through the Wetland Reserve
Program (WRP). Through that partnership the Foundation received $5
million in NRCS funds, matched it with $5.4 million in non-Federal
funds and awarded a total of 31 WRP grants. More than 10,000 acres were
restored and enrolled in the WRP through this effort. Since that time,
the Foundation has received $15 million in NRCS Federal funds ($3
million per fiscal year since fiscal year 2000) which it has dedicated
to a matching grant program focused on private land conservation. The
Foundation has been able to support 330 projects in 49 States by
matching the $15 million with $47 million in non-Federal funds for a
total of more than $62 million in on-the-ground conservation. These
projects have led to the direct restoration of more than 200,000 acres
of farmland and rangeland and to 775 miles of restored streams and
rivers.
Our general conservation grant program allowed us then and
continues to allow the Foundation to be highly successful in assisting
the NRCS in accomplishing its mission to help people conserve, maintain
and improve our natural resources and environment. Whether it involves
farm, range or grassland conservation, species management, or
conservation education, the Foundation strategically invests the
Federal funds entrusted to us in sound projects. In fiscal year 2004,
the Foundation received $3 million in Federal funds, which it leveraged
with over $9 million in non-Federal funds for a total of more than $12
million in on-the-ground conservation. This marks the fourth year in a
row that the Foundation has been able to average a 3:1 non-Federal to
Federal funding ratio. With the funds provided by the Committee in
fiscal year 2005, we expect to successfully continue our leveraging of
Federal funds to increase on-the-ground conservation benefits.
The Foundation's achievements are based on a competitive grant
process where Federal funds are matched by the grantee with non-Federal
funds and in-kind services. Those grantees include Resource
Conservation and Development Areas, conservation districts,
universities, and non-profit organizations who work in partnership with
farmers and ranchers to support conservation efforts on private land.
The Foundation also works to further maximize Federal funds by
providing private funds through the generosity of one of our growing
number of corporate and foundation partners. These funds are in
addition to the non-Federal funds that are provided by the Foundation's
grantees. In the Foundation's partnership with NRCS, Federal funds have
been supplemented with funding from the Shell Oil Company, the FMC
Corporation, the Anheuser-Busch Companies, Inc., the Summer T. McKnight
Foundation, the Charles Stewart Mott Foundation, the William Penn
Foundation, and the David and Lucile Packard Foundation. In total,
these organizations provided approximately $700,000 to enhance our NRCS
partnership grants.
Working Landscapes.--Through our partnership, we work with NRCS to
identify and fund projects that have strong support in affected
agricultural and rural communities. We place our highest priority on
projects integrating conservation practices on ongoing agricultural,
ranching, and forestry operations. We fund partners and provide
expertise by engaging watershed experts, ranchers, foresters, farmers,
local governments, and non-profits to undertake on-the-ground private
land activities with willing landowners.
The Foundation has provided critical support to organizations that
are assisting farmers and ranchers in implementing private land
conservation activities. Through these efforts the Foundation has
helped to restore and protect thousands of acres of buffer, wetland,
and grassland habitats. One way Foundation grants promote the
integration of conservation practices on farmland and rangeland is by
demonstrating the economic benefits that can be obtained through these
practices. Our Encouraging Wildlife on Direct-Market Farms project will
attempt to demonstrate that preserving and restoring native plant and
animal communities can be economically beneficial to direct-market
farming operations. The University of Northern Iowa (UNI) will utilize
$31,158 in Foundation NRCS funds that it will match with $91,308 in
non-Federal funds to document the conservation activities on 200
direct-market farms. UNI will then work with five farms to coordinate
wildlife habitat restoration plans based on the most successful
documented conservation activities found on surrounding farms. Three
well-publicized field days will be conducted on participating farms and
a variety of media will be used to inform consumers of the links
between these farms and wildlife habitat improvements. It is
anticipated that this demonstration project will encourage other area
farmers to incorporate wildlife management into their operations.
The Foundation has also invested heavily in efforts to improve the
ecological health of working agricultural lands. Grantees supported by
the Foundation have worked with farmers and ranchers to reduce
agricultural runoff, remove invasive species, and restore native
ecosystems. One of our stellar projects is the Conservation Agriculture
Model Farms (ND)-IV project which is a cooperative effort between
government, non-profit organizations, and private landowners to
demonstrate the economic efficiency and profitability of designing
whole farm plans. These plans identify the best soils to farm and
design appropriate alternatives on the rest. The project is funded with
$50,000 in Federal funds and is being match with $100,000 in non-
Federal funds. The project will lower the costs of farming by making
farming more efficient and by reducing the use of herbicides and
fertilizers, while providing conservation benefits such as improved
wildlife habitat, improved water storage, and reduced soil loss due to
erosion. The template farm plans developed through this project will be
able to be used by other farmers throughout the region.
Conserving Fish, Wildlife and Plants.--With our NRCS dollars, the
Foundation funds projects that directly benefit diverse fish and
wildlife species including, salmon in the west, migratory birds in the
midwest and grassland birds in the south. Habitat for native fish has
been restored on private lands throughout the United States through
vegetative planting, streambank stabilization, livestock fencing and
nutrient reduction efforts. In addition to improving water quality,
efforts have been undertaken by our grantees to reduce water loss
caused by invasive species or from outdated irrigation systems. By
reducing the water taken from rivers, there is less chance that drought
will negatively impact aquatic life.
A project that highlights one of these efforts is our Wildlife
Habitat Enhancement (TX) project. The West Nueces-Las Moras Soil and
Water Conservation District, funded with $31,200 in Foundation NRCS
funds that is being matched with $62,400 in non-Federal funds, will
conduct prescribed burns on over 3,000 acres of private lands to reduce
densities of ashe juniper. Ashe juniper is an invasive plant species
that uses a disproportionate amount of water resources. The removal of
ashe juniper in the Edwards Aquifer will result in increases in water
quality and quantity and improved wildlife habitat. In addition to the
prescribed burns, the grantee will conduct field days and distribute
brochures to local landowners on prescribed burning and grazing
techniques that can be conducted to decrease ashe juniper infestations.
We also measure our success in part by preventing the listing of
species under the Endangered Species Act and by stabilizing and
hopefully moving others off the list. Some species that have received
support through our NRCS grant program include salmonids, golden-
cheeked warblers, southwestern willow flycatchers, whooping cranes,
sage grouse, lesser prairie chickens, aplomado falcons, black-tailed
prairie dogs, Louisiana black bears, bog turtles, and Karner blue
butterflies. We invest in common sense and innovative cooperative
approaches to endangered species, building bridges between the
government and the private sector.
Expanding Conservation Education Opportunities.--Our grants also
use our NRCS dollars to expand conservation education opportunities. Of
our fiscal year 2004 NRCS partnership grants, approximately one fourth
contained an environmental education or outreach component. Some of the
conservation education projects supported through our NRCS grant
program seek to educate farmers and ranchers on conservation practices
while demonstrating how best management practices and wildlife
incentives provide both environmental and economic benefits. Other
projects have provided training to secondary school teachers on the
ecological, economic and cultural benefits of rangeland and farmland
conservation. The Sustainable Vineyard Ecosystem Management grant
highlights some of the Foundation's environmental education work. In
this project the grantee, California Sustainable Winegrowing Alliance,
was awarded $60,000 in Federal funds that is being matched with
$150,000 in non-Federal funds to encourage sustainable on-the-ground
conservation practices that will benefit diverse species and habitats
in California's winegrowing region. This sizable educational effort
will target more than 4,000 winegrape growers who farm over 500,000
acres through local workshops and outreach events.
Continued Need.--The Foundation is uniquely positioned to continue
assisting NRCS in meeting its need to implement beneficial conservation
practices on our Nation's farms and ranches by leveraging NRCS's scarce
Federal resources to maximize the on-the-ground conservation benefits.
The Foundation's matching grant program has the flexibility to address
many agricultural conservation needs. These include, but are not
limited to, increasing instream flow for rivers while continuing to
support agricultural irrigation, promoting the recovery of specific
threatened or endangered animals on private land, implementing critical
conservation practices on private land that does not qualify for
funding under a Farm Bill program, and by forging broad community-based
partnerships. The need for these projects is evident by the number of
grant applications the Foundation receives. On average we receive two
times the number of applications we are able to fund. In addition, we
regularly fund projects at a reduced level that still permits the
project to be successfully completed while allowing the Foundation to
fund additional worthwhile agricultural conservation projects.
Accountability and Grantsmanship.--All potential grants are subject
to a peer review process involving local NRCS staff, State agency
staff, academics, commodity and environmental interests, corporations,
and others. The review process examines the project's conservation
need, technical merit, the support of the local community, the variety
of partners, and the amount of proposed non-Federal matching funds. We
also provide a 30 day notification to the Members of Congress for the
congressional district and State in which a grant will be funded prior
to making the grant. In addition, the Foundation requires strict
financial reporting by grantees and is subject to an annual audit.
Basic Facts About the Foundation.--The Foundation promotes
conservation solutions by awarding matching grants using its federally
appropriated funds to match private sector funds. We have a statutory
requirement to match Federal funds with at least an equal amount of
non-Federal funds, which we consistently exceed. No Federal
appropriations meet our administrative expenses.
The Foundation is governed by a 25-member Board of Directors
appointed by the Secretary of The Interior. At the direction of
Congress, the Board operates on a nonpartisan basis. Directors do not
receive any financial compensation for service on the Board; in fact,
all of our directors make financial contributions to the Foundation. It
is a diverse Board, representing the corporate, philanthropic, and
conservation communities; all with a tenacious commitment to fish and
wildlife conservation.
The National Fish and Wildlife Foundation continues to be one of,
if not the, most cost-effective conservation program funded in part by
the Federal Government. By implementing real-world solutions with the
private sector while avoiding regulatory or advocacy activity, our
approach is more consistent with this Congress' philosophy than ever
before. We serve as a model for bringing private sector leadership to
Federal agencies and for developing cooperative solutions to
environmental issues. We are confident that the money you appropriate
to the Foundation will continue to make a difference.
______
Prepared Statement of the National Organic Coalition
Chairman Bennett, Senator Kohl, and Members of the Subcommittee: My
name is Steven Etka. I am submitting this testimony on behalf of the
National Organic Coalition (NOC) to detail our recommendations and
requests for fiscal year 2006 funding for several USDA marketing,
research, and conservation programs of importance to organic
agriculture.
The National Organic Coalition (NOC) is a national alliance of
public interest organizations working to provide a voice for farmers,
ranchers, environmentalists, consumers and others involved in organic
agriculture. The goal of the Coalition is to assure that organic
integrity is maintained, that consumer confidence is preserved and that
policies are fair, equitable and encourage diversity of participation
and access. The current members of NOC are the Center for Food Safety,
Rural Advancement Foundation International--USA, National Cooperative
Grocers Association, and the Northeast Organic Farming Association --
Interstate Council.
We urge the Subcommittee's strong consideration of the following
funding requests for various USDA programs of importance to organic
farmers, marketers and consumers:
USDA/Agricultural Marketing Service (AMS)
Organic Standards--Request: $2.5 million.
Responding to a strong growth in consumer demand for organically
produced foods, Congress enacted the Organic Foods Production Act of
1990 (OFPA) to authorize the creation of national organic standards so
that consumers across the Nation could be confident that one common set
of rules applies to all foods that carry the label ``certified
organic.''
When the organic agriculture community agreed in the late 1980s to
pursue legislation to create a Federal organic standards program, it
was done in recognition of the benefits to producers and consumers of
establishing one common standard in the Nation for organically produced
agricultural products. Yet for many in the organic community, it was
done with some apprehension, as well. Many saw the great risks
associated with turning the keys to a grassroots effort over to the
Federal Government.
To capture both the promise and the apprehension associated with a
federalized organic standards program, the Organic Foods Production Act
(OFPA) of 1990 was enacted with an emphasis on maintaining a strong
public/private partnership in the implementation and administration of
Federal organic programs. There is concern, however, that some the
provisions of OFPA that were included to assure strong participation by
organic farmers and consumers in the national standard-setting and
oversight process have not been fully implemented, in part due to lack
of adequate funding.
In fiscal year 2005, Congress specified funding of $1.98 million
for the AMS category of ``Organic Standards,'' of which the National
Organic Program (NOP) is a subset. This level represented funding of
approximately $1.5 million for the National Organic Program,
essentially level with the previous year. In the President's fiscal
year 2006 budget submittal, a request was made for $2.026 million for
AMS ``Organic Standards,'' representing a slight increase of $46,000
over fiscal year 2005. However, we are requesting $2.5 million for AMS/
organic standards, to provide USDA with the extra resources needed to
establish certifier training programs and to respond more fully to the
program deficiencies outlined in the outside audit conducted in 2004.
The issue of how AMS spends the money appropriated for organic
standards is of great importance and concern to the members of NOC.
Congress included report language in fiscal year 2004 that urged AMS to
use some of the funding increase received in fiscal year 2004 for the
National Organic Program (NOP) to comply more fully with the statutory
requirements of the Organic Foods Production Act (OFPA). Specifically,
the Senate report language in fiscal year 2004 called on NOP to hire an
Executive Director for the National Organic Standards Board (NOSB), to
create an ongoing Peer Review Panel, and to improve scientific
technical support for the NOSB. These points were reiterated in the
fiscal year 2005 Senate Report. The members of NOC very much appreciate
the Congressional efforts to provide NOP with the necessary funds and
direction to bring about greater compliance with OFPA. This is an
important step toward ensuring the public/private partnership
intentions of that Act.
However, the Department has not completed action on any of these
Congressional recommendations. Therefore, NOC is urging that the
Committee reiterate the importance of OFPA compliance on these matters,
using the following suggested report language:
``In fiscal year 2004 and 2005 the committee urged AMS to use a
portion of their appropriation to comply with unfulfilled statutory
requirements of the Organic Foods Production Act (OFPA). While initial
efforts are underway, the statutory requirements have not yet been
fully complied with and the Committee urges the Department to fully
comply with them in the 2006 fiscal year. Specifically, NOP and NOSB
should work together to complete the hiring of a NOSB director. The
Committee urges the Department to correct problems noted in the outside
audit of the NOP conducted in 2004. This one-time audit should not be
construed to meet the requirements under OFPA for the creation of an
on-going Peer Review Panel to oversee the accreditation process for
organic certifiers. Additionally, the committee urges AMS to promptly
make available their list of certified organic entities.''
USDA
Organic Data Initiatives
Authorized by Section 7407 of the 2002 Farm Bill, the Organic
Production and Marketing Data Initiative states that the ``Secretary
shall ensure that segregated data on the production and marketing of
organic agricultural products is included in the ongoing baseline of
data collection regarding agricultural production and marketing.'' As
the organic industry matures and grows at a rate between 15 and 20
percent annually, the lack of national data for the production,
pricing, and marketing of organic products has been an impediment to
further development of the industry and to the effective functioning of
many organic programs within USDA. Reliable, current data is needed by
all participants in the organic sector, and are also needed to support
USDA organic programs through various USDA agencies.
Because of the multi-agency nature of data collection within USDA,
the effort to improve organic data collection and analysis within USDA
must also be undertaken by several different agencies within the
Department:
Economic Research Service (ERS)
Collection and Analysis of Organic Economic Data--Request:
$500,000.
In fiscal year 2005, Congress appropriated $495,850 to USDA's
Economic Research Service to continue the collection of valuable
acreage and production data, as required by Section 7407 of the 2002
farm bill. This funding level was down slightly from the $500,000
appropriated in fiscal year 2004.
Because increased ability to conduct economic analysis for the
organic farming sector is greatly needed, we request $500,000 million
be appropriated to the USDA Economic Research Service to implement the
``Organic Production and Market Data Initiative'' included in Section
7407 of the 2002 farm bill.
Agricultural Marketing Service (AMS)
Organic Price Collection--Request: $750,000.
Accurate, public reporting of agricultural price ranges and trends
helps to level the playing field for producers. Wholesale and retail
price information on a regional basis is critical to farmers and
ranchers, but organic producers have fewer sources of price information
available to them than conventional producers. Additionally, the lack
of appropriate actuarial data has made it difficult for organic farmers
to apply for and receive equitable Federal crop insurance. AMS Market
News is involved in tracking product prices for conventional
agricultural products, and with funding, could broaden their efforts to
include organic price data as well. We request $750,000 to be
appropriated to the USDA Agricultural Marketing Service for collection
of organic price information.
National Agriculture Statistics Service (NASS)
Census Follow-up/Organic Grower Survey--Request: $500,000.
The mission of USDA's National Agricultural Statistics Service
(NASS) is to provide timely, accurate, and useful statistics in service
to U.S. agriculture. The Agency is currently in the process of
developing the 2007 agricultural census. Although NASS is making an
effort to expand the quantity of organic questions in the census, they
will need to conduct a follow-up survey in order to collect more in-
depth information on acreage, yield/production, inventory, production
practices, sales and expenses, marketing channels, and demographics.
Therefore, we are requesting $500,000 for USDA NASS.
USDA/CSREES
Organic Transitions Program--Request: $4 million.
The Organic Transition Program, funded through the CSREES budget,
is a research grant program that helps farmers surmount some of the
challenges of organic production and marketing. As the organic industry
grows, the demand for research on topics related to organic agriculture
is experiencing significant growth as well. Extension agents and other
information providers report an increase in number of farmers seeking
reliable information on making the transition to organic production.
The benefits of this research are far-reaching, with broad applications
to all sectors of U.S. agriculture, even beyond the organic sector. Yet
funding for organic research is minuscule in relation to the relative
economic importance of organic agriculture and marketing in this
Nation.
The CSREES Organic Transition Program was funded at $2.1 million in
fiscal year 2003, $1.9 million in fiscal year 2004, and $1.88 million
in fiscal year 2005. Given the rapid increase in demand for organic
foods and other products, and the growing importance of organic
agriculture, the research needs of the organic community are expanding
commensurately. Therefore, we are requesting that the program be funded
at $4 million in fiscal year 2006.
USDA/CSREES
National Research Initiative--Request: Report Language on Plant and
Animal Breeding.
In recent decades, public resources for classical plant and animal
breeding have dwindled, while expenditures by private firms on seed and
breed development for a limited set of major crops and breeds have
increased greatly. Unfortunately, this shift has significantly
curtailed the public access to plant and animal germplasm, and limited
the diversity of seed variety and animal breed development. This
problem has been particularly acute for organic and sustainable
farmers, who seek access to germplasm well suited to their unique
cropping systems and their local environment.
In the Senate Report that accompanied the fiscal year 2005
Appropriations bill, language was included that encouraged ``the
Department, especially in the establishment of priorities within the
National Research Initiative, to give consideration to research needs
related to classical plant and animal breeding.'' Despite this
language, the need to foster classical plant and animal breeding has
yet to be reflected in the NRI priority-setting process. Further, the
relationship between public plant and animal breeding and meeting the
needs of organic and sustainable farmers is still not clearly
understood within CSREES. Therefore, we are requesting the inclusion of
the following report language to continue to urge CSREES to make
classical plant and animal breeding a greater priority in future NRI
grant proposal request processes, and to underscore the importance of
this effort for organic and sustainable agricultural systems:
Through the fiscal year 2005 process, CSREES was urged to give
consideration to research needs related to classical plant and animal
breeding, especially in the establishment of priorities within the
National Research Initiative. The Committee is concerned that classical
plant and animal breeding is still not reflected in the NRI priority
setting process, and that the importance of classical breeding to
organic and sustainable agricultural systems is still not well
understood within the Agency. The Committee would like to reiterate its
concern about dwindling public funding for classical plant and animal
breeding, and urges the Agency to use the NRI as a tool to revitalize
public resources in this important area.
USDA/Rural Business Cooperative Service
Appropriate Technology Transfer for Rural Areas (ATTRA)--Request:
$3.4 million.
ATTRA is a national sustainable agriculture information service,
which provides practical information and technical assistance to
farmers, ranchers, Extension agents, educators and others interested in
sustainable agriculture. ATTRA interacts with the public, not only
through its call-in service and website, but also provides numerous
publications written to help address some of the most frequently asked
questions of farmers and educators. Much of the real-world assistance
provided by ATTRA is extremely helpful to the organic community. As a
result, the growth in demand for ATTRA services has increased
significantly, both through the website-based information services and
through the growing requests for workshops. Currently, given the lack
of resources, ATTRA is only able to service 1 out of 5 requests for
workshops. Therefore, we are requesting that ATTRA be funded at $3.4
million for fiscal year 2006, representing a $920,000 increase over
fiscal year 2005.
USDA/ARS
1.8 percent Set-Aside for Organic Research (No Net Increases)--
Request: Report language.
Development of organic production effectively serves USDA strategic
objectives for environmental quality, human health and nutrition, and
agricultural trade. ``Fair share'' funding of organic agricultural
research, based on relative market size (between 1.5 percent and 2.5
percent of total U.S. retail food sales), translates to at least a 5-
fold increase in the proportion of USDA-ARS resources explicitly
allocated to organic. In 2004, USDA-ARS spent about $3.5 million on
organic-specific projects, or about 0.35 percent of the $1 billion
fiscal year 2004 ARS expenditures. Under a 1.8 percent ``fair share''
framework, the ARS would have generated about $18 million for organic
research in its budget.
The 2005 appropriations omnibus bill contained language encouraging
ARS, when appropriate, to direct research resources in a manner that
reflects the growing interest in organic production and the need to
provide enhanced research for this growing organic sector. For fiscal
year 2006 we are requesting more explicit report language encouraging
the USDA ARS to set aside 1.8 percent of their budget to be used
exclusively on organic research at appropriate ARS locations, under
direction of the National Program Staff.
USDA/NRCS
Conservation Security Program--Request: No Funding Limitation.
USDA/Rural Business Cooperative Service
Value-Added Producer Grants--Request: No Funding Limitation.
The Conservation Security Program (authorized by Section 2001 of
the 2002 farm bill) and the Value-Added Producer Grant (authorized by
Section 6401 of the 2002 farm bill) are new programs with great
potential to benefit organic producers in their efforts to conserve
natural resources and to explore new, value-added enterprises as part
of their operations.
Unfortunately, while these programs were authorized to operate with
mandatory funding, their usefulness has been limited by funding
restrictions imposed through the annual appropriations process. We are
urging that the Conservation Security Program and the Value-Added
Producer Grant Program be permitted to operate with unrestricted
mandatory funding, as authorized.
Thank you for this opportunity to testify and for your
consideration on these critical funding requests.
______
Prepared Statement of the National Potato Council
My name is Jim Wysocki. I am a potato farmer from Wisconsin and
current Vice President, Legislative/Government Affairs for the National
Potato Council (NPC). On behalf of the NPC, we thank you for your
attention to the needs of our potato growers.
The NPC is the only trade association representing commercial
growers in 50 States. Our growers produce both seed potatoes and
potatoes for consumption in a variety of forms. Annual production is
estimated at 437,888,000 cwt. with a farm value of $3.2 billion. Total
value is substantially increased through processing. The potato crop
clearly has a positive impact on the U.S. economy.
The potato is the most popular of all vegetables grown and consumed
in the United States and one of the most popular in the world. Annual
per capita consumption was 136.5 pounds in 2003, up from 104 pounds in
1962 and is increasing due to the advent of new products and heightened
public awareness of the potato's excellent nutritional value. Potatoes
are considered a nutritious consumer commodity and an integral,
delicious component of the American diet.
The NPC's fiscal year 2006 appropriations priorities are as
follows:
POTATO RESEARCH
Cooperative State Research Education and Extension Service (CSREES)
The NPC urges the Congress not to support the President's fiscal
year 2006 budget request to eliminate the CSREES Special Grant Programs
and the formula funds under the Hatch Act. Both of these programs
support important university research work that helps our growers
remain competitive in today's domestic and world marketplace.
The NPC supports an appropriation of $1.8 million for the Special
Potato Grant program for fiscal year 2006. The Congress appropriated
$1.417 million in fiscal year 2004, a decrease from the fiscal year
2003 level of $1.584 million and $1.509 million in fiscal year 2005.
This has been a highly successful program and the number of funding
requests from various potato-producing regions is increasing.
The NPC also urges that the Congress include Committee report
language as follows:
``Potato Research.--The Committee expects the Department to ensure
that funds provided to CSREES for potato research are utilized for
varietal development testing. Further, these funds are to be awarded
after review by the Potato Industry Working Group.''
AGRICULTURAL RESEARCH SERVICE (ARS)
The NPC urges that the Congress not support the Administration's
fiscal year 2006 budget request to rescind all fiscal year 2005
Congressional increases for research projects.
The Congress provided funds for a number of important ARS projects
and due to previous direction by the Congress the ARS continues to work
with the NPC on how overall research funds can best be utilized for
grower priorities.
FOREIGN MARKET DEVELOPMENT
Market Access Program (MAP)
The NPC also urges that the Congress maintain the spending level
for the Market Access Program (MAP) at its authorized level of $200
million for fiscal year 2006 and not support the Administration's
budget request to cap this valuable export program at the $125 million
level.
Foreign Agriculture Service (FAS)
The NPC supports the Presidents fiscal year 2006 budget request of
$152.4 million for the USDA Foreign Agriculture Service (FAS). This
level is the minimum necessary for the agency given the multitude of
trade negotiations and discussions currently underway.
FOOD AID PROGRAMS
McGovern Dole
The NPC supports the Administration's fiscal year 2006 budget
request of $100 million for the McGovern-Dole International Food Aid
Program. PVO's have been including potato products in their
applications for this program.
Public Law 480
The President's fiscal year 2006 Budget requests $1.2 billion for
USAID programs, including $964 million for USAID Public Law 480 Title
II programs. The President's budget also transfers $300 million from
USAID Title II activities funded under the Agriculture Budget to the
Foreign Operations Budget. The NPC urges that the $300 million be
reinstated in the regular USAID Public Law 480 Title II budget to avoid
a significant loss of applications for dehydrated potatoes in Title II
programs and procurement of U.S. food commodities for food aid.
PEST AND DISEASE MANAGEMENT
Animal and Plant Health Inspection Service (APHIS)
Golden Nematode Quarantine.--The NPC supports an appropriation of
$1,266,000 for this quarantine which is what is believed to be
necessary for USDA and the State of New York to assure official control
of this pest. Failure to do so could adversely impact potato exports.
Given the transfer of Agriculture Quarantine Inspection (AQI)
personnel at U.S. ports to the Department of Homeland Security, it is
important that certain USDA-APHIS programs be adequately funded to
ensure progress on export petitions and protection of the U.S. potato
growers from invasive and harmful pests and diseases.
Pest Detection.--The NPC supports $45 million in fiscal year 2006,
which is the Administration's budget request. Now that the Agriculture
Quarantine Inspection (AQI) program is within the new Homeland Security
Agency, this increase is essential for the Plant Protection and
Quarantine Service's (PPQ) efforts against potato pests and diseases
such as Ralstonia.
Emerging Plant Pests.--$101 million was appropriated in fiscal year
2005. The President requests $127 million in fiscal year 2006 which the
NPC supports.
The NPC supports having the Congress once again include language to
prohibit the issuance of a final rule that shifts the costs of pest and
disease eradication and control to the States and cooperators.
Trade Issues Resolution Management.--$12,578,000 was appropriated
in fiscal year 2005 and the President requests $18 million in fiscal
year 2006. The NPC supports this increase ONLY if it is specifically
earmarked for plant protection and quarantine activities. These
activities are of increased importance yet none of these funds are used
directly for plant protection activities. As new trade agreements are
negotiated, the agency must have the necessary staff and technology to
work on plant related import/export issues. The NPC also relies heavily
on APHIS-PPQ resources to resolve phytosanitary trade barriers in a
timely manner.
AGRICULTURAL STATISTICS
National Agricultural Statistics Service (NASS)
The NPC supports sufficient funds and guiding language to assure
that the potato objective yield and grade and size surveys are
continued.
RURAL DEVELOPMENT GRANTS
Since potato growers do not receive direct payments, the 2002 Farm
Bill provided for, among other things, grants to allow our growers to
expand their business opportunities. One program that has been used by
our growers is the value-added grant program. The NPC would urge that
the Farm Bill funding level for this program be maintained. In
addition, maintaining adequate farm labor is also important to our
growers. The NPC urges that farm labor housing grants be maintained and
not reduced as proposed by the Administration's budget request.
______
Prepared Statement of the National Research Center for Coal and Energy
\1\
Chairman Bennett and Members of the Subcommittee: Thank you for the
opportunity to offer testimony to the Subcommittee on Agriculture,
Rural Development, and Related Agencies. Our testimony concerns three
programs under USDA which support small communities. We request funding
to continue the National Drinking Water Clearinghouse program ($1.5
million) and the Special Services for Underserved Communities program
($1 million) as part of the overall Rural Community Advancement
Program. We request new funding to initiate a Rural Brownfields
Redevelopment Center ($1 million). These programs are described below.
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\1\ The National Research Center for Coal and Energy is located at
West Virginia University. This statement has been prepared by Richard
Bajura, Director, Pamela Schade, and Paul Ziemkiewicz. For additional
information, contact our web site at http://www.nrcce.wvu.edu.
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DRINKING WATER AND WASTEWATER TREATMENT PROGRAMS
Need for Federal Programs
Clean, safe drinking water and wastewater treatment are critical to
public and environmental health. For most of us, it's easy to take
water for granted. But not that long ago, most people didn't have
indoor plumbing. According to U.S. Census Bureau data, only half of
American homes in 1940 had complete plumbing facilities--defined as hot
and cold piped water, a bathtub or shower, and a flush toilet. By 2002,
the Environmental Protection Agency (EPA) found that the number of
homes having complete plumbing facilities increased to 91 percent. Much
of this improvement can be attributed to Federal infrastructure
investment.
The U.S. Department of Agriculture's Rural Utilities Service (RUS)
has provided more than $20 billion for water and wastewater projects
since 1947. In spite of these improvements, however, 670,000 households
(with nearly 2 million people) lack access to water, sanitation, or
both. Safe, affordable water infrastructure is an investment in the
economic viability and public health of rural America.
Water and Wastewater Challenges
Over 50,000 water treatment systems serve the U.S. population, with
43,000 of these systems being classified as ``small'' systems (serving
fewer than 3,300 people) and ``very small'' systems (serving fewer than
500 customers). Because smaller systems have lower revenues and fewer
resources, they are more likely to fail in meeting regulatory
requirements. Very small systems are 50 percent more likely to incur
violations than all other system sizes. When the Safe Drinking Water
Act was passed in 1974, eighteen (18) contaminants were regulated. By
2004, that number had grown to 86. Another eight will be added by 2008.
While significant progress has been made, a number of challenges
confront communities as they try to safeguard public health. In many
communities, water distribution systems and wastewater collection
systems are 40 to 50 years old, with many dating back more than a
century. In the 2002 report titled Clean Water and Drinking Water
Infrastructure Gap Analysis, EPA estimated that we need to invest $265
billion for infrastructure for drinking water systems through 2022.
Wastewater infrastructure systems will need an estimated $388 billion
during the same time period. The report suggests that, without new
investment, progress made over the last 30 years is threatened. As a
partial solution to addressing the challenges of inadequate funding,
the Technical Assistance and Training (TAT) grants under the Rural
Community Advancement Program make it possible for small communities to
maximize their investments in water infrastructure through deployment
of appropriate technology.
NATIONAL DRINKING WATER CLEARINGHOUSE (NDWC)
For nearly 15 years, the National Drinking Water Clearinghouse at
West Virginia University has helped small and rural communities with
their water infrastructure management and utility security issues. The
NDWC is currently funded at approximately $1.2 million through the
USDA's Rural Utilities Service (RUS) under the Rural Community
Advancement Program (RCAP).
The NDWC provides a range of assistance activities for small
communities. Telephone callers can obtain toll-free technical
assistance from our staff of certified operators, engineers, and
scientists. Our quarterly publication ``On Tap,'' a magazine about
drinking water treatment, financing, and management options helps
communities and small water systems operate, manage and maintain their
facilities, while keeping them financially viable. A comprehensive Web
site and databases with thousands of entries provide around-the-clock
access to contemporary information on small water systems. Training
sessions customized for small and rural areas, teleconferences, and
more than 400 free and low-cost educational products give people the
instruction and tools they need to address their most pressing drinking
water issues.
These services are well received by small community officials and
service providers and should be continued. We request funding of $1.5
million to continue the NDWC programs through the Technical Assistance
and Training Grants.
SPECIAL SERVICES TO UNDERSERVED COMMUNITIES
In addition to the National Drinking Water Clearinghouse's
knowledge base and technical support, the NDWC is expanding its
assistance to underserved communities through technical field support.
The NDWC's funding currently does not provide for direct services to
underserved communities, so West Virginia University is piloting an
effort to honor requests for site specific technical support. This
support gives small and very small communities assistance through site
assessments and feasibility studies that they might not otherwise be
able to access for planning needed infrastructure improvements, their
financing, and management. We request funding for technical services to
underserved communities at the $1 million level.
For fiscal year 2005, we anticipate receiving approximately $1.4
million in total for the NDWC and the Special Services to Underserved
Communities programs from appropriations provided by the Subcommittee.
RURAL BROWNFIELDS REDEVELOPMENT CENTER
``Brownfields'' is a catch-all term for the approximately 450,000
former industrial and commercial sites across the United States that
are contaminated, unused and often abandoned. The cleaning up, or
``remediation'' of these sites is essential to protect public health,
strengthen local economies and encourage local growth. Communities with
brownfields often face economic and social concerns, such as
unemployment, substandard housing, outdated or faulty public
infrastructure, and crime. Although Federal and state programs may be
in place to address local issues, too often the programs operate in
isolation.
Additionally, Federal resources have been difficult to access by
small and rural communities. Through the enactment of recent
legislation, more funding with more flexibility in application is
available for redeveloping brownfields in rural areas. Rural
communities are now at the forefront for assessment and clean-up funds,
particularly with the availability of direct grants. There is also
widespread recognition that rural communities require different
approaches and a variety of models to make brownfield redevelopment
possible, and these communities require more technical assistance and
other informational materials. The Appalachian Regional Commission
(ARC) cites the following obstacles to brownfield redevelopment for
rural Appalachian communities:
--Unused open space is often more readily available and cheaper to
develop than reclaiming a brownfield site.
--Recruiting an experienced brownfield redevelopment manager is
difficult.
--Liability concerns are compounded by insufficient information to
establish responsibility for contamination.
--Cleaning up a brownfield site can be expensive.
--There is no formal venue for exchanging information and providing
guidance about brownfield redevelopment among rural
communities.
West Virginia University (WVU) proposes to initiate a Rural
Brownfields Redevelopment Center. This center will merge our water
research expertise with our technical assistance skills to enable us to
provide support for brownfields redevelopment initiatives in small
communities nationwide.
Our work under the proposed Center will focus on developing data
bases, information, and redevelopment models that can be deployed
nationally to assist small communities in addressing needs for
reclaiming brownfield sites and turning these sites into economic
engines for developing regional economies. Topics to be addressed
include:
--information collection and dissemination,
--map site libraries which include GIS data,
--technical assistance by phone and in person, and field assistance
(at the sites),
--demonstration programs,
--assistance to state agency personnel and communities,
--assistance with planning and identifying funding options,
--specialization in rural brownfields redevelopment,
--state-based brownfields conferences,
--manuals, models, and personal consultation and courses to assist
other communities based on lessons we learn.
WVU is well positioned to lead a national brownfields redevelopment
effort. Our National Drinking Water Clearinghouse, National Small Flows
Clearinghouse, and WV Water Research Institute and its Geotechnology
Center have technical assistance, education and outreach, and research
capabilities relevant to brownfields issues. All three programs have
installed and managed successful demonstrations on the ground.
Nationally, there is no current brownfields assistance program that has
married the practice of brownfields redevelopment with expertise in
water issues.
We request funding in fiscal year 2006 at a level of $1 million to
initiate this program. Stakeholders will include regional universities,
state offices, development agencies, and industry.
Thank you for the opportunity to offer testimony on the USDA
programs.
______
Prepared Statement of the National Rural Housing Coalition
Mr. Chairman and members of the House Subcommittee on Agriculture,
my name is Robert Rapoza, the executive secretary of the National Rural
Housing Coalition.
The National Rural Housing Coalition (the Coalition) has been a
national voice for rural low-income housing and community development
programs since 1969. Through direct advocacy and policy research, the
Coalition has worked with Congress and the Department of Agriculture to
design new programs and improve existing programs serving the rural
poor. The Coalition also promotes a non-profit delivery system for
these programs, encouraging support for rural community assistance
programs, farm labor housing grants, self-help housing grants, and
rural capacity building. The Coalition is comprised of approximately
300 members nationwide. We have testified before the Subcommittee
before and appreciate this opportunity to share the views of our
members on Federal rural housing and community development policy.
A disproportionate amount of the Nation's substandard housing is in
rural areas. Rural households are poorer than urban households, pay
more of their income for housing than their urban counterparts, and are
less likely to receive government-assisted mortgages. They also have
limited access to mortgage credit and the secondary mortgage market,
making them prime targets for predatory lending. Rural America needs
programs targeted directly at the issues facing its population. The
Rural Housing Service (RHS) of Rural Development (RD) meets many of
these needs, serving low and very-low income families with safe
affordable housing.
According to the 2000 Census, there are 106 million housing units
in the United States. Of that, 23 million, or 22 percent, are located
in non-metro areas. 1.6 million of these units are either moderately or
severely substandard. At the same time, many non-metro households are
unable to afford adequate housing due to high poverty rates. According
to a 1999 Economic Research Service report, the poverty rate in Rural
America was 15.9 percent--over 8 million people--compared to 13.2
percent in urban areas. A full 5.5 million people, or one-quarter of
the non-metro population, are overburdened by housing costs.
Renters in rural areas are, in fact, the worst housed individuals
and families in the country. Thirty-five percent of all rural renters
are cost-burdened, paying more than 30 percent of their income for
housing. Almost one million rural renters suffer from multiple housing
problems, 60 percent of whom pay more than 70 percent of their income
for housing.
Prospective homeowners suffer the same problems of high rates of
poverty and poor quality of housing as rural renters. Additionally,
they suffer from the non-availability of credit, specifically a limited
access to mortgage credit. The consolidation of the banking industry
that accelerated throughout the 1990s has had a significant impact on
rural communities. Mergers among banks have replaced local community
lenders with large centralized institutions located in urban areas.
Aside from shifting the locus of loan making, this trend has eroded the
competitive environment that, in the past, encouraged rural lenders to
offer terms and conditions that were attractive to borrowers.
RURAL HOUSING SERVICE
Section 515 Rural Rental Housing Program
Although we often talk about the surge in homeownership and all of
its benefits, not all of us, especially in rural areas, have the means
to be homeowners. Thus, USDA's RHS Section 515 rural rental housing
program is invaluable to low-income residents in rural communities. The
portfolio contains 450,000 rented apartments in Section 515
developments, the value of which is evident when compared to the
900,000 rural renters in substandard housing. The average 515 tenant
income is little more than $9,000, which is equal to only 30 percent of
the Nation's rural median household income. Sixty percent of the
tenants are elderly or disabled and one-quarter are minority.
The Federal Government's present investment in rural rental housing
is at its lowest level in more than 25 years. Over the last 15 years,
Congress and Administrations of both parties have unwisely cut the
rural rental housing budget, and lending has declined from over $500
million a year in 1994 to just $114 million in fiscal year 2003 and
2004. In fact, for the last 3 years the Administration's budget
included no funding whatsoever for rural rental housing production. As
a result, there is scant production of new rural rental housing. The
Administration clams that low income rural renters can get housing
assistance through the section 538 guarantee program. We think that is
highly unlikely.
As Congress considers future policy for rural housing, it has two
opportunities to protect our Nation's rural renters and homeowners. The
first is to maintain the existing stock of Section 515 units. The
second is to increase the production of affordable rental housing units
in rural communities. The current portfolio of Section 515 units
represents an important resource to low-income families in Rural
America, and as a result of declining Federal resources for the
development of new housing developments, it is essential to preserve
the existing stock.
The existing Section 515 portfolio is aging. Of the 17,000
developments across the country close to 10,000 are more than 20 years
old. To maintain this stock, it will take a commitment of Federal funds
for restoration. An injection of new debt or equity is required to
finance repairs and upgrades, and keep rural housing safe and
available.
The Housing Act of 1987 regulated roughly two-thirds of rural
rental housing principally financed under Section 515. This legislation
placed a low-income use restriction on Section 515 and also established
financial incentives to owners to maintain their properties for low-
income housing. In theory, at the end of the initial 20-year use
restriction, an owner could seek an incentive to extend long-term low-
income use, or sell the project to a nonprofit organization or public
body that would operate the housing for low-income use.
However, the lack of adequate funding for incentives has raised a
great concern among owners. Many wish to prepay, but cuts to Section
515 have eliminated RHS's means to compel them to keep their properties
affordable when they do. Moreover, the law restricts their ability to
seek incentives or sell to a nonprofit organization or public body.
In 2004, the administration initiated an important study of the
Section 515 portfolio. It determined that only 10 percent of the units
were in hot' markets in which they could be used for market rate
tenants or owners. The balance of the units were in markets in which
their highest and best use is low income housing. Most need repair and
renovation and the price tag over a 20 year period is over $2 billion.
So the Administration is to be congratulated in documenting the
need for additional assistance for rural rental housing developments.
They are also to be congratulated for gaining additional funds in the
budget request: $214 million for housing vouchers for tenants living in
development in hot markets where prepayment is a real possibility.
But while it is important to protect vulnerable tenants, this
policy ignores the long-term implications of an escalating decline in
the affordable housing stock. We believe the administration's approach
is too narrow. By focusing solely on protecting tenants in hot markets,
the Administration may provide an incentive that encourages prepayment.
The policy also ignores the other 90 percent of units that need repair
and renovation.
We urge the Subcommittee to approve the request for additional
assistance for rural rental housing. However, we also urge that, in
additional to providing some funding for vouchers, this assistance be
distributed across Section 515 for use as equity loans, financing for
transfer to non-profits and repair and renovation of existing projects.
Section 502 Single Family Direct Loan Program
Section 502 is the only Federal program providing home ownership
opportunities to low income-families. The average income of households
assisted under Section 502 is $18,500. About 3 percent of households
have annual incomes of less than $10,000. Some 46 percent of Section
502 families have incomes at 46 percent of area median. Since its
inception, Section 502 has provided loans to almost two million
families. The current average budget authority cost to the Federal
Government is extremely low, less than $10,000 per unit.
Despite low cost to the government and failing delinquency rates,
the number of home ownership loans for low income people is falling. In
fiscal year 2004, RHS provided 14,641 loans and in fiscal year 2005,
10,800 loans, even though RHS had on hand more than 35,000 loan
requests of over $2.3 billion at the end of fiscal year 2004. Even in
the face of unprecedented demand the projected total falls in fiscal
year 2006 to 9,000.
The decline in direct loans for low-income families has been
inversely proportional to the major trend in rural housing: the
increase in homeownership loan guarantees. In fiscal year 2005, the
total available for guaranteed loans was $3.309 billion. The fiscal
year 2006 request is $3.374 billion. Unfortunately for low-income
people, the average income for families receiving guaranteed loans is
roughly double that of those families receiving direct loans.
Under Mutual and Self-Help Housing, with the assistance of local
housing agencies, groups of families eligible for Section 502 loans
perform approximately 65 percent of the construction labor on each
other's homes under qualified supervision. This program, which has
received growing support because of its proven model, has existed since
1961. The average number of homes built each year over the past 3 years
has been approximately 1,500. Sixty-eight percent of the participants
in self-help housing are minority households.
The budget requests $34 million.
Non-Profit Organizations
Due to dramatic housing program reductions and the continuing
strength of the Nation's real estate market, the private sector
delivery system is not as prominent as it used to be and in many rural
communities no longer exists. In some rural areas, non-profits have
filled the void by pursuing a multiple funding strategy. Skilled local
organizations meld Federal, State, local and private resources together
to provide affordable housing financing packages to low-income
families. But there is yet no comprehensive source of federal support
to promote a non-profit delivery system.
The Rural Community Development Initiative program enhances the
capacity of rural organizations to develop and manage low-income
housing, community facilities, and economic development projects. These
funds are designated to provide technical support, enhance staffing
capacity, and provide pre-development assistance--including site
acquisition and development. RCDI provides rural community development
organizations with some of the resources necessary to plan, develop,
and manage community development projects. Using dollar-for-dollar
matching funds and technical assistance from 19 intermediary
organizations, some $12 million in capacity building funds were
distributed in previous years to 240 communities. Yet this valuable
program has been eliminated in this year's budget request. For fiscal
year 2006, we recommend $6.5 million for the Rural Community
Development Initiative, the current rate.
Farm Labor Housing
Two additional rental housing programs specifically address the
needs of farm laborers. Migrant and seasonal farmworkers, who help keep
our local and state economies growing, are some of the Nation's most
poorly housed populations. The last documented national study indicated
a shortage of almost 800,000 units of affordable housing for
farmworkers.
Farmworkers and their families are some of the poorest and least
assisted people in the Nation. 61 percent of farmworkers earn incomes
below the poverty-level and consequently some 60 percent of farmworker
households live below the poverty threshold, almost six times the
national rate. Despite this level of poverty, less than 20 percent of
farmworker households receive public assistance; most commonly food
stamps, rarely public or subsidized housing.
There are only two Federal housing programs which specifically
target farmworkers and their housing needs: USDA's Section 514 loans
and 516 grants. Non-profit housing organizations and public bodies use
the loan and grant funds, along with the Rural Housing Service's rural
rental assistance, to plan and develop housing and related facilities
for migrant and seasonal low-income farmworkers. Section 514 authorizes
the Rural Housing Service to make loans with terms of up to 33 years
and interest rates as low as one percent. Section 516 authorizes RHS to
provide grant funding when the applicant will provide at least 10
percent of the total development cost from his own resources or through
a 514 loan.
We appreciate the past support of this Subcommittee and urge an
appropriation of $100 million for section 514 and 516.
RURAL UTILITY SERVICE
Hundreds of rural communities nationwide do not have access to
clean drinking water and safe waste disposal systems. According to the
2000 Census, approximately 1.9 million people lack indoor plumbing and
basic sanitation services, including potable water and sewer. According
to 1999 EPA Safe Drinking Water Needs Survey, $48 billion will be
required over the next 20 years to ensure that communities under 10,000
have safe drinking water supplies. According to EPA's 2000 Clean Water
Needs Survey $16 billion will be required over the next 20 years to
provide the 19,000 wastewater treatment facilities needed for
communities of fewer than 10,000 people. In all, small communities will
need some $64 billion in order to meet their water and wastewater
needs.
The budget request cuts $99 million from rural water-sewer loans
and grants. We urge the Subcommittee to restore these funds.
The issue of affordability is critical to waste disposal systems,
which are generally more expensive than water systems. Waste systems
naturally succeed water systems. With central water comes indoor
plumbing, washing machines, dishwashers, and other amenities, all of
which eventually require an efficient wastewater disposal system. Low-
income communities often pay as much as they can afford for water
service alone and are unable to manage the combined user fees for water
and waste. Furthermore, according to EPA data, ratepayers of small
rural systems are charged up to four times as much per household as
ratepayers of larger systems. In some extreme situations, some
households are being forced out of homeownership because they cannot
afford rising user costs. Small water and wastewater systems lack the
economies of scale needed to reduce costs on their own.
In order for communities to cut back on project costs and have
affordable utility rates, they typically underestimate operation and
maintenance costs in the budgets for new systems. Therefore, there is
often limited or no investment in the kinds of upgrades and expansions
of infrastructure needed for community development to stabilize local
small businesses, develop affordable housing, and invest in other
industrial development.
USDA's Rural Utilities Service (RUS) is the primary Federal force
in rural water and waste development, providing loans and grants to
low-income communities in rural areas. The agency assists low-income
rural communities that would not otherwise be able to afford such
services. Nearly all the communities RUS served last year had median
household income below their state's non-metro median household income.
In providing these important services, RUS also protects public
health and promotes community stabilization and development. Aging
municipal sewage systems alone are responsible for 40,000 overflows of
raw sewage each year. The overflows cause health hazards including
gastrointestinal problems and nausea and inflict long-term damage on
the environment. Additionally, businesses and industries are often
unable or reluctant to locate in areas without functioning water and
sewer systems. But with the assistance of RUS, communities are able to
have the services they need to improve their health and their
economies.
Through Federal and State initiatives, RUS is working to confront
the challenges faced by rural communities. With increasingly restricted
time and money, state offices are using other resources such as
leveraged funds and technical assistance from the Rural Community
Assistance Program (RCAP), leveraged funds through HUD's Community
Development Block Grant program, and the EPA's State Revolving Loan
Funds, as well as through some private lenders.
Other Federal Agencies
Mr. Chairman, for many rural communities the USDA's Rural
Development programs are the only source of housing and community
development assistance. Other Federal agencies do not have a good
record of supporting Rural America.
Rural households have limited access to mortgage credit and the
secondary mortgage market and are less likely to receive government-
assisted mortgages than their urban counterparts--according to the 1995
American Housing Survey, only 14.6 percent of non-metro residents
versus 24 percent of metro residents receive Federal assistance.
Moreover, poor rural renters do not fair as well as poor urban
renters in accessing existing programs. Only 17 percent of very low-
income rural renters receive housing subsidies, and, overall, only 12
percent of HUD Section 8 assistance goes to rural areas; only seven
percent of Federal Housing Administration (FHA) assistance goes to non-
metro areas; on a per-capita basis, rural counties fared worse with
FHA, receiving only $25 per capita versus $264 per capita in metro
areas.
Programs such as HOME, CDBG and FHA may have the intention of
serving rural areas, but fail to do so to the appropriate extent. For
these reasons we oppose the Strengthening America's Community
Initiative and urge the Subcommittee and the Congress to continue to
provide appropriations for Federal rural development programs.
Mr. Chairman and members of the Committee, we look to you for
continued support of the efforts of Rural Development. These programs
are vital to the survival of our small communities nationwide. They
address the most basic needs of affordable housing and clean water that
still exist all over the country.
We appreciate your past support and your present attention to this
matter.
______
Prepared Statement of the National Rural Telecom Association
SUMMARY OF TESTIMONY REQUESTS
Project involved.--Telecommunications lending programs administered
by the Rural Utilities Service of the U.S. Department of Agriculture.
Actions proposed:
--Supporting loan levels for fiscal year 2006 in the amounts
requested in the President's budget for 5 percent direct ($175
million) and cost of money ($425 million) and the associated
subsidy, as required, to fund those programs at the requested
levels. Supporting guaranteed loans in the same amount ($125
million), as contained in the fiscal year 2005 Agriculture
Appropriations Act. Supporting the budget recommendation to
transfer $175 million in lending authority from the Rural
Telephone Bank (RTB) to the cost-of-money program in connection
with the administration's stated intention to dissolve the bank
in fiscal year 2006.
--Supporting the budget request for $358.9 million in direct loans
for broadband facilities and internet service access provided
through discretionary funding.
--Supporting, subject to the successful implementation in fiscal year
2006 of the administration initiative to dissolve the Rural
Telephone Bank pursuant to Sec. 411 of the RTB enabling act,
elimination of the restriction on retirement of Rural Telephone
Bank Class A stock, the prohibition against the transfer of
Rural Telephone Bank excess funds to the general fund as well
as the requirement that Treasury pay interest on all Bank funds
deposited with it. Opposing the proposal contained in the
budget to transfer funds from the unobligated balances of the
liquidating account of the Rural Telephone Bank for the bank's
administrative expenses.
--Supporting continued funding, as requested in the President's
budget, in the amount of $25 million in grant authority
designated for distance learning and medical link purposes.
Mr. Chairman, Members of the Committee: My name is John F. O'Neal.
I am General Counsel of the National Rural Telecom Association. NRTA is
comprised of commercial telephone companies that borrow their capital
needs from the Rural Utilities Service of the U.S. Department of
Agriculture (RUS) to furnish and improve telephone service in rural
areas. Approximately 1,000, or 71 percent of the Nation's local
telephone systems borrow from RUS. About three-fourths of these are
commercial telephone companies. RUS borrowers serve almost 6 million
subscribers in 46 states and employ over 22,000 people. In accepting
loan funds, borrowers assume an obligation under the act to serve the
widest practical number of rural users within their service area.
PROGRAM BACKGROUND
Rural telephone systems have an ongoing need for long-term, fixed
rate capital at affordable interest rates. Since 1949, that capital has
been provided through telecommunications lending programs administered
by the Rural Utilities Service and its predecessor, the Rural
Electrification Agency (REA).
RUS loans are made exclusively for capital improvements and loan
funds are segregated from borrower operating revenues. Loans are not
made to fund operating revenues or profits of the borrower system.
There is a proscription in the Act against loans duplicating existing
facilities that provide adequate service and state authority to
regulate telephone service is expressly preserved under the Rural
Electrification Act.
Rural telephone systems operate at a severe geographical handicap
when compared with other telephone companies. While almost 6 million
rural telephone subscribers receive telephone service from RUS borrower
systems, they account for only 4 percent of total U.S. subscribers. On
the other hand, borrower service territories total 37 percent of the
land area--nearly 12 million squares miles. RUS borrowers average about
six subscribers per mile of telephone line and have an average of more
than 1,000 route miles of lines in their systems.
Because of low-density and the inherent high cost of serving these
areas, Congress made long-term, fixed rate loans available at
reasonable rates of interest to assure that rural telephone
subscribers, the ultimate beneficiaries of these programs, have
comparable telephone service with their urban counterparts at
affordable subscriber rates. This principle is especially valid today
as this administration endeavors to deploy broadband technology and as
customers and regulators constantly demand improved and enhanced
services. At the same time, the underlying statutory authority
governing the current program has undergone significant change. In
1993, telecommunications lending was refocused toward facilities
modernization. Much of the subsidy cost has been eliminated from the
program. In fact, most telecommunications lending programs now generate
revenue for the government. The subsidy that remains has been targeted
to the highest cost, lowest density systems in accordance with this
administration's stated objectives.
We are proud to state once again for the record that there has
never been a loan default by a rural telephone system borrower! All of
their loans have been repaid in accordance with their terms, $12.4
billion in principal and interest at the end of the last fiscal year.
NEED FOR RUS TELECOMMUNICATIONS LENDING CONTINUES
The need for rural telecommunications lending is great today,
possibly even greater than in the past. Technological advances make it
imperative that rural telephone companies upgrade their systems to keep
pace with improvements and provide the latest available technology to
their subscribers. And 3 years ago, Congress established a national
policy initiative mandating access to broadband for rural areas. But
rapid technological changes and the inherently higher costs to serve
rural areas have not abated, and targeted support remains essential.
Competition among telephone systems and other technological
platforms have increased pressures to shift more costs onto rural
ratepayers. These led to increases in both interstate subscriber line
charges and universal service surcharges on end users to recover the
costs of interstate providers' assessments to fund the Federal
mechanisms. Pressures to recover more of the higher costs of rural
service from rural customers to compete in urban markets will further
burden rural consumers. There is a growing funding crisis for the
statutory safeguards adopted in 1996 to ensure that rates, services and
network development in rural America will be reasonably comparable to
urban telecommunications opportunities.
ONGOING CONGRESSIONAL MANDATES FOR RURAL TELECOMMUNICATIONS
Considerable loan demand is being generated because of the mandates
for enhanced rural telecommunications standards contained in the
authorizing legislation. We are, therefore, recommending the following
loan levels for fiscal year 2006 and the appropriation of the
associated subsidy costs, as required, to support these levels:
------------------------------------------------------------------------
------------------------------------------------------------------------
5 percent Direct Loans.................................. $145,000,000
Cost-of-Money Loans..................................... 425,000,000
Guaranteed Loans........................................ 125,000,000
Broadband Loans......................................... 358,875,000
---------------
Total............................................. 1,053,875,000
------------------------------------------------------------------------
These are the same levels established in the fiscal year 2005
appropriations Act for the 5 percent direct and guaranteed loan
programs and the same amounts for 5 percent direct and cost-of-money
loans, as requested in the President's budget for fiscal year 2006. The
authorized levels of loans in each of these programs were substantially
obligated in fiscal year 2004 and current estimates are that authorized
program levels will be met in fiscal year 2005. We believe that the
needs of this program balanced with the minimal cost to the taxpayer
make the case for its continuation at the stated levels.
RURAL TELEPHONE BANK DISSOLUTION INITIATIVE
The Rural Telephone Bank was established by Congress in 1971 to
provide supplemental financing for rural telephone systems with the
objective that the bank ultimately would be owned and operated by its
private shareholders. However, changed circumstances in the rural
telephone industry and difficulties associated with accelerating
privatization of the Rural Telephone Bank have made this transition to
private ownership and control problematic raising difficult questions
about the viability of a privatized bank and its future support among
rural telephone systems.
In recognition of these factors, the administration has determined
to liquidate and dissolve the bank in fiscal year 2006 pursuant to Sec.
411 of the RTB enabling act. We support this action as well as the
budget recommendation to transfer the current lending authority of the
RTB ($175 million) to the cost-of-money loan program so that rural
telephone systems will continue to have adequate loan resources
available for rural telecommunications infrastructure development at
the levels intended by the Congress.
THE BROADBAND LOAN PROGRAM
The administration is recommending again this year that the
mandatory funding of loans for the deployment of broadband technology
in rural areas provided in the recent farm act in the amount of $20
million (new section 601(j)(1)(A) of the Rural Electrification Act of
1936) be rescinded in fiscal year 2006 and in its place the budget
requests $11.7 million in new discretionary authority for these
purposes. NRTA supports the administration's budget request of the
subsidy cost for this program that will provide approximately $358.9
million in loan levels for fiscal year 2006. We applaud the
administration's continuing commitment to this program to facilitate
the deployment of broadband technology throughout our Nation's rural
areas.
SPECIFIC ADDITIONAL REQUESTS
--Subject to the successful implementation in fiscal year 2006 of the
administration's initiative to liquidate and dissolve the Rural
Telephone Bank pursuant to Sec. 411 of the RTB enabling act,
NRTA supports elimination of the restriction on the retirement
of class A government stock in the RTB, the prohibition against
transfer of RTB funds to the general fund and the requirement
for the payment of interest by Treasury
The Administration has recommended in the budget that the general
provision of the fiscal year 2005 act (Sec. 413) containing the 5
percent annual statutory restriction on the retirement of class A
government stock in the Rural Telephone Bank be eliminated in its
entirety. In principle, the association supports that proposal.
However, we urge the Committee to continue this provision in its
entirety in the fiscal year 2006 act while providing an exception that
would make the provision inapplicable in the event of liquidation or
dissolution of the bank. This would assure that the protections
provided the private stockholders by this provision would be maintained
in the event that, for some unanticipated reason, the administration
does not go forward with its stated intention to liquidate the bank or,
if its implementation is delayed beyond fiscal year 2006. Previous
appropriations acts (fiscal year 1997 through fiscal year 2005) have
recognized the ownership rights of the private class B and C
stockholders by prohibiting a transfer to the Treasury of the bank's
excess, unobligated fund balances which otherwise would have been
required by the Federal credit reform act. The balance of the current
statutory provision, also contained in previous years' appropriations
acts, that requires Treasury to pay interest on bank funds deposited
with it should also be continued in fiscal year 2006, except in the
event of dissolution of the bank.
--Reject Budget Proposal to Transfer Funds from RTB Liquidating
Account for Administrative Costs
The President's budget again proposes that the bank assume
responsibility for its administrative costs by a transfer of funds from
the unobligated balances of the bank's liquidating account rather than
through an appropriation. As NRTA has pointed out in its testimony in
previous years, this recommendation is contrary to the specific
language of Sec. 403(b) of the RTB enabling act. It would not result in
budgetary savings and has been specifically rejected by this Committee
in previous years. No new justification is contained in this year's
budget and once again we request its rejection.
--Grants for Medical Link and Distance Learning Purposes
We support the continuation in fiscal year 2006 of the $25 million
in grant authority provided in the President's budget for medical link
and distance learning purposes. The purpose of these grants is to
accelerate deployment of medical link and distance learning
technologies in rural areas through the use of telecommunications,
computer networks, and related advanced technologies by students,
teachers, medical professionals, and rural residents.
CONCLUSION
Thank you for the opportunity to present the association's views
concerning this vital program. The telecommunications lending programs
of RUS continue to work effectively and accomplish the objectives
established by Congress at a minimal cost to the taxpayer.
______
Prepared Statement of the National Turfgrass Evaluation Program
Mr. Chairman and Members of the Subcommittee: On behalf of the
National Turfgrass Evaluation Program (NTEP), I appreciate the
opportunity to present to you the turfgrass industry's need and
justification for continuation of the $490,000 appropriated in the
fiscal year 2005 budget for turfgrass research within the Agricultural
Research Service (ARS) at Beltsville, MD. Secondly, we are asking for
twelve individual research positions of $450,000 each. This amount is
being requested by House members in individual districts where the
positions are located. We appreciate the support of research funding at
Logan, UT ($125,000) and Beaver, WV ($150,000) provided by the
committee in fiscal year 2005 and request that funding be increased to
$450,000 for each position in fiscal year 2006.
Justification of $490,000 Appropriation Request for the Existing ARS
Scientist Position and Related Support Activities
NTEP and the turfgrass industry are requesting the Subcommittee's
support for $490,000 to continue funding for the full-time scientist
staff position within the USDA, ARS at Beltsville, MD, focusing on
turfgrass research, that was appropriated in the fiscal year 2005
budget, and in the three previous budget cycles.
Turfgrass provides multiple benefits to society including child
safety on athletic fields, environmental protection of groundwater,
reduction of silt and other contaminants in runoff, and green space in
home lawns, parks and golf courses. Therefore, by cooperating with
NTEP, USDA has a unique opportunity to take positive action in support
of the turfgrass industry. While the vast majority of the USDA's funds
have been and will continue to be directed toward traditional ``food
and fiber'' segments of U.S. agriculture, it is important to note that
turfgrasses (e.g., sod production) are defined as agriculture in the
Farm Bill and by many other departments and agencies. It should also be
noted that the turfgrass industry is the fastest growing segment of
U.S. agriculture, while it receives essentially no Federal support.
There are no subsidy programs for turfgrass, nor are any desired.
For the past 70 years, the USDA's support for the turfgrass
industry has been modest at best. The turfgrass industry's rapid
growth, importance to our urban environments, and impact on our daily
lives warrant more commitment and support from USDA.
A new turfgrass research scientist position within USDA/ARS was
created by Congress in the fiscal year 2001 budget. Additional funding
was added in fiscal year 2002 with the total at $490,000. A research
scientist was hired, and is now working at the ARS, Beltsville, MD
center. A research plan was developed and approved by ARS. This
scientist has used the funding for a full-time technician, equipment
and supplies to initiate the research plan and for collaborative
research with universities. We have an excellent scientist in place and
he is making good progress in establishing a solid program. At this
point, losing the funding for the position would be devastating to the
turf industry, as significant research has begun.
Justification of Funding for 12 ARS Scientist Positions at ARS
Installations Around the United States $450,000 Each; Total:
$5,400,000 Appropriation Request for the First Installment on
the National Turfgrass Research Initiative
The turfgrass industry also requests that the Subcommittee
appropriate an additional $5,400,000 for the National Turfgrass
Research Initiative. This Initiative has been developed by USDA/ARS in
partnership with the turfgrass industry. We are asking for twelve
priority research positions at nine locations across the United States.
These twelve positions address the most pressing research needs, namely
water use/efficiency and environmental issues. $450,000 is being
requested for each location.
The USDA needs to initiate and maintain ongoing research on
turfgrass development and improvement for the following reasons:
--The value of the turfgrass industry in the United States is $40
billion annually. There are an estimated 50,000,000 acres of
turfgrass in the U.S. Turfgrass is the number one or two
agricultural crop in value and acreage in many states (e.g.,
MD, PA, FL, NJ, NC).
--As our society becomes more urbanized, the acreage of turfgrass
will increase significantly. In addition, state and local
municipalities are requiring the reduction of water, pesticides
and fertilizers on turfgrass. However, demand on recreational
facilities will increase while these facilities will still be
required to provide safe turfgrass surfaces.
--Currently, the industry spends about $10 million annually on
turfgrass research. However, private and university research
programs do not have the time nor resources to identify
completely new sources of beneficial genes for stress
tolerance. ARS turfgrass scientists will enhance the ongoing
research currently underway in the public and private sectors.
--Water management is a key component of healthy turf and has direct
impact on nutrient and pesticide losses into the environment.
Increasing demands and competition for potable water make it
necessary to use water more efficiently. Also, drought
situations in many regions have limited the water available
and, therefore, have severely impacted the turf industry as
well as homeowners and young athletes. Therefore, new and
improved technologies are needed to monitor turf stresses and
to schedule irrigation to achieve the desired quality.
Technologies are also needed to more efficiently and uniformly
irrigate turfgrasses. Drought tolerant grasses need to be
developed. In addition, to increase water available for
irrigation, waste water (treated and untreated) must be
utilized. Some of these waste waters contain contaminants such
as pathogens, heavy metals, and organic compounds. The movement
and accumulation of these contaminants in the environment must
be determined.
--USDA conducted significant turfgrass research from 1920-1988.
However, since 1988, no full-time scientist has been employed
by USDA, Agricultural Research Service (ARS) to conduct
turfgrass research specifically, until the recently
appropriated funds become available.
The turfgrass industry has met on several occasions with USDA/ARS
officials to discuss the new turfgrass scientist positions, necessary
facilities, and future research opportunities. In January 2002, ARS
held a customer workshop to gain valuable input from turfgrass
researchers, golf course superintendents, sod producers, lawn care
operators, athletic field managers and others on the research needs of
the turfgrass industry. As a result of the workshop, ARS and the
turfgrass industry have developed the National Turfgrass Research
Initiative. The highlights of this strategy are as follows:
A NATIONAL STRATEGY FOR ARS TURFGRASS RESEARCH
Research Objectives.--Conduct long-term basic and applied research
to provide knowledge, decision-support tools and plant materials to aid
in designing, implementing, monitoring and managing economically and
environmentally sustainable turfgrass systems including providing sound
scientifically based information for use in the regulatory process.
Research Focus.--To make a significant contribution in developing
and evaluating sustainable turfgrass systems, ARS proposes developing
research programs in six major areas:
Component I. Water Management Strategies and Practices
Rationale.--New and improved technologies are needed to monitor
turf stresses and to schedule irrigation to achieve desired turf
quality but with greater efficiency or using other water sources.
Component II. Germplasm: Collection, Enhancement and Preservation
Rationale.--Grasses that better resist diseases, insects, drought,
traffic, etc. are desperately needed. Also, a better understanding of
the basic biology of turfgrass species is essential.
Component III. Improvement of Pest Management Practices
Rationale.--New tools and management practices are needed to
adequately control weeds, diseases, insects and vertebrate pests while
reducing input costs and pesticide use.
Component IV. The Environment: Understanding and Improvement of
Turfgrass' Role
Rationale.--The need is great to quantify the contribution of turf
systems to water quality and quantify of vital importance in addressing
the potential role of turf systems in environmental issues.
Component V. Enhancement of Soil and Soil Management Practices
Rationale.--Research is needed to characterize limitations to turf
growth and development in lessthan optimum soils and to develop cost-
effective management practices to overcome these limitations.
Component VI. Integrated Turf Management
Rationale.--To develop needed tools for turf managers to select the
best management practices for economic sustainability as well as
environmental protection.
ARS, as the lead agency at USDA for this initiative, has graciously
devoted a significant amount of time to the effort. Like the industry,
ARS is in this research endeavor for the long-term. To ARS' credit, the
agency has committed staff, planning and technical resources to this
effort. However, despite ARS' effort to include a budget request in the
overall USDA budget request, USDA--at higher levels--has not seen fit
to include this research as a priority. Thus, the industry is left with
no alternative but to come directly to Congress for assistance through
the appropriations process.
The role and leadership of the Federal Government and USDA in this
research are justifiable and grounded in solid public policy rationale.
ARS is poised and prepared to work with the turfgrass industry in this
major research initiative. However, ARS needs additional resources to
undertake this mission.
The turfgrass industry is very excited about this new proposal and
wholeheartedly supports the efforts of ARS. Since the customers at the
workshop identified turfgrass genetics/germplasm and water quality/use
as their top priority areas for ARS research, for fiscal year 2006, the
turfgrass industry requests that the following positions be established
within USDA/ARS:
------------------------------------------------------------------------
------------------------------------------------------------------------
Position 1: Component I: Water: Agricultural Engineer-- $450,000
Irrigation Southwest--Phoenix, AZ.........................
Position 2: Component II: Germplasm: Molecular Biologist 450,000
Southwest--Lubbock, TX....................................
Position 3: Component IV: Environment: Agricultural 450,000
Engineer--Fate & Transport Southwest--Phoenix, AZ.........
Position 4: Component I: Water: Stress Physiologist-- 450,000
Salinity Southwest--Riverside, CA.........................
Position 5: Component II: Germplasm: Geneticist--Stress 450,000
Transition Zone--Beltsville, MD...........................
Position 6: Component I: Water: Agricultural Engineer-- 450,000
Irrigation Transition Zone--Florence, SC..................
Position 7: Component IV: Environment: Agricultural 450,000
Engineer--Fate & Transport Northeast--University Park, PA.
Position 8: Component III: Pest Management: Weed Scientist 450,000
Northeast--University Park, PA............................
Position 9: Component IV: Environment: Agricultural 450,000
Engineer--Fate & Transport North Central--Ames, IA........
Position 10: Component III: Pest Management: Pathologist 450,000
Transition Zone--Beltsville, MD...........................
Position 11: Component II: Germplasm: Geneticist-- 450,000
Biodiversity Upper West--Logan, UT........................
Position 12: Component III: Pest Management: Entomologist 450,000
North Central--Wooster, OH................................
------------
TOTAL................................................ 5,400,000
------------------------------------------------------------------------
For this research we propose an ARS-University partnership, with
funding allocated to ARS for in-house research as well as in
cooperation with university partners. For each of the individual
scientist positions, we are requesting $300,000 for each ARS scientist
position with an additional $150,000 attached to each position to be
distributed to university partners, for a total of $450,000 per
position. We are also asking that the funding be directed to ARS and
then distributed by ARS to those university partners selected by ARS
and industry representatives.
In fiscal year 2005, in addition to restoring most of the $490,000
appropriated in fiscal year 2004, the Subcommittee generously provided
additional funding for turfgrass research at Beaver, WV ($150,000) and
Logan, UT ($125,000). We appreciate the support of the Subcommittee for
this new funding in fiscal year 2005 and ask for your continued support
of that funding in fiscal year 2006 at $450,000 per location.
In addition, you will be receiving Member requests for funding of
each of the twelve positions described above. Therefore, we appreciate
your strong consideration of each individual member request for the
turfgrass research position in his or her respective congressional
district.
In conclusion, on behalf of the National Turfgrass Evaluation
Program and the turfgrass industry across America, I respectfully
request that the Subcommittee continue the funding appropriated in
fiscal year 2005 for Beltsville, MD, ($490,000), Beaver, WV ($150,000)
and Logan, UT ($125,000) within the Agricultural Research Service. I
also request that the Subcommittee appropriate an additional $5,400,000
for twelve new turfgrass scientist positions around the country, with
$450,000 provided for each location.
Thank you very much for your assistance and support.
______
Prepared Statement of The Nature Conservancy
Mr. Chairman and members of the Subcommittee, I appreciate this
opportunity to present The Nature Conservancy's recommendations for
fiscal year 2006 appropriations. The Conservancy urges the Subcommittee
to provide funding for Animal and Plant Health Inspection Service
(APHIS) eradication efforts for four destructive invasive species--the
Asian Longhorned Beetle, the Cactus Moth, the Emerald Ash Borer, and
Sudden Oak Death. In addition we urge the Subcommittee to fully fund
the Noxious Weed Control Act of 2004, and to place no limitation on the
amount of acres to be enrolled in fiscal year 2006 in the Wetlands
Reserve Program (WRP) administered by the Natural Resources
Conservation Service.
The Nature Conservancy is an international, non-profit organization
dedicated to the conservation of biological diversity. Our mission is
to preserve the plants, animals and natural communities that represent
the diversity of life on Earth by protecting the lands and waters they
need to survive. The Conservancy has more than 1,000,000 individual
members and 1,900 corporate associates. We have programs in all 50
States and in 27 foreign countries. We have protected more than 15
million acres in the United States and Canada and more than 117 million
acres with local partner organizations globally. The Conservancy owns
and manages 1,400 preserves throughout the United States--the largest
private system of nature sanctuaries in the world. Sound science and
strong partnerships with public and private landowners to achieve
tangible and lasting results characterize our conservation programs.
Asian Longhorned Beetle (ALB).--The Asian Longhorned Beetle kills a
wide variety of hardwood trees, particularly sugar maple. ALB threatens
to devastate forests reaching from New England to the Great Lakes.
Currently the beetle is found primarily in New York City and New
Jersey. APHIS, State, and local officials are succeeding in a 9-year
program to eradicate ALB. The President has proposed funding of $15.521
million in fiscal year 2006 as compared to $28.933 million in fiscal
year 2005. We urge the Subcommittee to fund ALB at $40 million in
fiscal year 2006, so that the ongoing efforts to eradicate this pest
are not jeopardized. Failure to eradicate the ALB exposes both urban
and rural areas of northern States to substantial risk. If not stopped,
ALB could kill 30 percent of the Nation's urban trees at a compensatory
value of $669 billion.
Maple trees are especially threatened. If unchecked, the New
England maple syrup industry is threatened as well as autumn foliage
tourism which generates $1 billion in revenue in New England every
year.
Cactus Moth.--The cactus moth kills prickly pear cacti. First found
in Florida, the moth is rapidly moving along the Gulf Coast (currently
it has traveled as far as Alabama) killing prickly pear cacti. APHIS
has bred a sterile cactus moth that may help control the spread of this
pest. Control of the cactus moth before it disperses around the Gulf
Coast would protect the vast diversity of prickly pear cacti in the
southwestern United States and Mexico. There are 31 likely host prickly
pear species (opuntia) for the moth across the United States (9 found
nowhere else in the world), including the federally endangered Opuntia
treleasei, and 56 in Mexico (38 found nowhere else in the world).
Additionally, control would protect agricultural interests.
Horticultural production of prickly pears occurs in Arizona,
California, Nevada, New Mexico, and Texas. Annual revenues for Arizona
alone are estimated at $14 million. In drought years, ranchers in Texas
have burned the spines off opuntias and fed them to cattle. This
practice is even more important in Mexico, where opuntias are critical
for the cattle industry. In Mexico, the agricultural impacts would be
devastating: the area of cultivated and harvested wild cactus is
estimated to be 3 million hectares. Opuntia products are the seventh
most important agricultural product and the third most important
subsistence food source. Further, opuntias are cultivated for
agricultural purposes in at least 28 other countries. Thus, the cactus
moth presents both a critical ecological and agricultural threat. We
urge you to fund eradication efforts at $1.5 million in fiscal year
2006 for a full sterile release program.
Emerald Ash Borer (EAB).--The Emerald Ash Borer, an Asian native,
was detected in 2002. Control programs began in 2003. The affected area
covers 13,000 square miles in Michigan's Lower Peninsula and adjacent
areas in Indiana, Ohio, and Ontario. At present, spread of the emerald
ash borer to the Upper Peninsula, Illinois, and Wisconsin is partially
prevented by lakes Michigan, Erie, and Huron. However, if eradication
efforts are not sufficiently aggressive, EAB will spread further south
into Ohio and Indiana, and be carried by people across bridges and
through tunnels to other vulnerable areas in the East and Midwest.
Seven billion ash trees are at risk across the Nation, at an estimated
cost of $282 billion. We urge the Subcommittee to provide APHIS with
$40 million to contain the Emerald Ash Borer in fiscal year 2006. The
President's budget recognizes the urgent need to fight this pest and
has requested $32.586 million for fiscal year 2006. In fiscal year
2005, APHIS is spending $3.961 million in appropriated funds plus $11
million in emergency funds drawn from the Commodity Credit Corporation
(CCC). As you know, OMB does not usually allow emergency draws over
several years from CCC so additional funding is needed in 2006 to
eradicate this very dangerous pest.
Sudden Oak Death (SOD).--Since 2000, APHIS has worked with
California, Oregon, and other States to prevent the spread of SOD. This
disease infects at least 38 native tree, shrub and herb species. The
disease kills a variety of western and eastern oak trees. SOD has
already killed tens of thousands of tanoaks, live oaks and black oaks
in California. If SOD spreads into Oregon and Washington, it could
severely disrupt production and movement of Douglas-fir seedlings used
in replanting. If SOD spreads to the East, it is likely to kill large
numbers of red oaks. Collectively the red and white oaks comprise 38
percent of the Nation's total hardwood saw-timber volume.
Containing Sudden Oak Death has become more challenging as the
number of host plants has grown from 1 dozen to 3 dozen. The situation
became a crisis in March 2004 when officials discovered that infected
nursery plants had been shipped nationwide; more than 200 nurseries
received these plants. APHIS has adopted highly restrictive regulations
to prevent a recurrence of the 2004 crisis; the agency is receiving
funding from CCC to fully implement these regulations in fiscal year
2005. In fiscal year 2006, at least $12 million will be needed to
ensure the efficacy of these regulations and curb the spread of this
disease, approximately $10.5 million more than the President has
requested. We recognize that funding is tight. However, relatively
small investments now will go a long way toward eliminating these
invasive species and prevent larger funding demands in the future.
Noxious Weed Control and Eradication Act.--We respectfully request
$15 million, the authorized amount, for implementation of the Noxious
Weed Control and Eradication. As control and management of invasive
species are important for agriculture, natural areas, forestry, and
rangeland, this effort has strong bipartisan support. This issue is
vital to the health of the Nation's economy and ecosystems.
Interdepartmental National Invasive Species Crosscut Budget.--The
Conservancy strongly supports the Interdepartmental National Invasive
Species Crosscut Budget prepared by the National Invasive Species
Council. This effort represents the most cost-effective way for Federal
Government agencies to work together and prioritize their invasive
species activities, and it will help them to measure success and
achieve their goals of prevention, early detection, rapid response,
control and management and restoration. When considering the
Interdepartmental Crosscut Budget, the Conservancy recommends that you
fund four requested increases for the Agricultural Research Service.
These increases, on taxonomic knowledge of invasive species, biological
control of tamarisk, nursery research for sudden oak death, and
research to control yellow star thistle and leafy spurge across the
Western States, would each benefit extensive agricultural and natural
areas across the United States.
Wetlands Reserve Program (WRP).--On Earth Day last year, President
Bush committed to increasing the number of wetland acres in the United
States. For fiscal year 2006, the President's budget proposes no cap
via the appropriations bill on the number of acres that can be enrolled
in WRP. We urge the subcommittee to not restrict the enrollment of
wetland acres under WRP. Without a cap, we expect the Administration to
enroll 250,000 acres consistent with 2002 farm bill authority. In 2005
the appropriations bill limited WRP signup to 154,500 acres. WRP is the
Nation's premier wetland protection program and without full funding
the Administration will be hard pressed to meet its goal of adding
wetlands to our national resources. Wetlands are critical for
biodiversity in addition to the flood control and pollution filtering
services they provide throughout the United States.
Thank you for the opportunity to present The Nature Conservancy's
comments on the U.S. Department of Agriculture's budget.
______
Prepared Statement of the Northwest Indian Fisheries Commission
Mr. Chairman and Members of the Committee, I am Billy Frank, Jr.,
Chairman of the Northwest Indian Fisheries Commission (NWIFC), and on
behalf of the twenty-Western Washington member Tribes, I submit this
request for appropriations to support the research, sanitation and
marketing of Tribal shellfish products. We request the following:
--$500,000 to support seafood marketing costs which will assist the
Tribes in fulfilling the commercial demands for their shellfish
products both domestically and abroad;
--$1,000,000 to support water and pollution sampling, sampling and
research for paralytic shellfish poisoning and coordination of
research projects with State agencies; and,
--$1,000,000 to support data gathering at the reservation level for
the conduct of shellfish population surveys and estimates.
TREATY SHELLFISH RIGHTS
As with salmon, the Tribes' guarantees to harvest shellfish lie
within a series of treaties signed with representatives of the Federal
Government in the mid-1850s. In exchange for the peaceful settlement of
what is today most of Western Washington, the Tribes reserved the right
to continue to harvest finfish and shellfish at their usual and
accustomed grounds and stations. The Tribes were specifically excluded
from harvesting shellfish from areas ``staked or cultivated'' by non-
Indian citizens. Soon after they were signed, the treaties were
forgotten or ignored.
The declining salmon resource in the Pacific Northwest negates the
legacy Indian people in Western Washington have lived by for thousands
of years. We were taught to care for the land and take from it only
what we needed and to use all that we took.
We depended on the gifts of nature for food, trade, culture and
survival. We knew when the tide was out, it was time to set the table
because we live in the land of plenty; a paradise complete. Yet,
because of the loss of salmon habitat, which is attributable to
overwhelming growth in the human population, a major pacific coastal
salmon recovery effort ensues. Our shellfish resource is our major
remaining fishery.
At least ninety types of shellfish have been traditionally
harvested by the Tribes in Western Washington and across the continent
Indian people have called us the fishing Tribes because of our rich
history of harvesting and caring for finfish and shellfish. Our
shellfish was abundant and constituted a principal resource of export,
as well as provided food to the Indians and the settlers, which greatly
reduced the living expenses.
Shellfish remain important for subsistence, economic, and
ceremonial purposes. With the rapid decline of many salmon stocks, due
to habitat loss from western Washington's unrelenting populous growth,
shellfish harvesting has become a major factor in Tribal economies.
The Tribes have used shellfish in trade with the non-Indian
population since the first white settlers came into the region a
century and a half ago. Newspaper accounts from the earliest days of
the Washington Territory tell of Indians selling or trading fresh
shellfish with settlers. Shellfish harvested by members of western
Washington's Indian Tribes is highly sought after throughout the United
States and the Far East. Tribal representatives have gone on trade
missions to China and other Pacific Rim nations where Pacific Northwest
shellfish--particularly geoduck--is in great demand. Trade with the Far
East is growing in importance as the Tribes struggle to achieve
financial security through a natural resources-based economy.
Treaty language pertaining to Tribal shellfish harvesting included
this section:
``The right of taking fish at usual and accustomed grounds and
stations is further secured to said Indians, in common with all
citizens of the United States; and of erecting temporary houses for the
purposes of curing; together with the privilege of hunting and
gathering roots and berries on open and unclaimed lands. Provided,
however, that they not take shell-fish from any beds staked or
cultivated by citizens.'' Treaty with the S'Klallam Tribes, January 26,
1855.
In exchange for the peaceful settlement of what is today most of
western Washington, the Tribes reserved the right to continue to
harvest finfish and shellfish at all of their usual and accustomed
grounds and stations. The Tribes were specifically excluded from
harvesting shellfish from areas ``staked or cultivated'' by non-Indian
citizens.
Tribal efforts to have the Federal Government's treaty promises
kept began in the first years of the 20th Century when the United
States Supreme Court ruled in U.S. v. Winans, reaffirming that where a
treaty reserves the right to fish at all usual and accustomed places, a
State may not preclude Tribal access to those places.
Sixty years later, the Tribes were again preparing for battle in
court. After many years of harassment, beatings and arrests for
exercising their treaty-reserved rights, western Washington Tribes took
the State of Washington to Federal court to have their rights legally
re-affirmed. In 1974, U.S. District Court Judge George Boldt ruled that
the Tribes had reserved the right to half of the harvestable salmon and
steelhead in western Washington.
The ``Boldt Decision,'' which was upheld by the U.S. Supreme Court,
also re-established the Tribes as co-managers of the salmon and
steelhead resources in western Washington. As a result of this ruling,
the Tribes became responsible for establishing fishing seasons, setting
harvest limits, and enforcing Tribal fishing regulations. Professional
biological staffs, enforcement officers, and managerial staff were
assembled to ensure orderly, biologically-sound fisheries.
Beginning in the late 1970s, Tribal and State staff worked together
to develop comprehensive fisheries that ensured harvest opportunities
for Indians and non-Indians alike, and also preserved the resource for
generations to come.
It was within this new atmosphere of cooperative management that
the Tribes sought to restore their treaty-reserved rights to manage and
harvest shellfish from all usual and accustomed areas. Talks with their
State counterparts began in the mid-1980s, but were unsuccessful. The
Tribes filed suit in Federal court in May 1989 to have their shellfish
harvest rights restored.
The filing of the lawsuit brought about years of additional
negotiations between the Tribes and the State. Despite many serious
attempts at reaching a negotiated settlement, the issue went to trial
in May 1994.
In 1994, District Court Judge Edward Rafeedie upheld the right of
the treaty Tribes to harvest 50 percent of all shellfish species in
their usual and accustomed fishing areas. Judge Rafeedie also ordered a
shellfish Management Implementation Plan that governs Tribal/State co-
management activities. After a number of appeals, the U.S. 9th Circuit
Court of Appeals let stand Rafeedie's ruling in 1998. Finally, in June
1999, the U.S. Supreme Court denied review of the District court
ruling, effectively confirming the treaty shellfish harvest right.
assist the tribes in marketing efforts to fulfill the demands for their
SHELLFISH PRODUCTS, $500,000
Shellfish harvested by members of Western Washington Indian Tribes
are of extreme quality and are highly sought after throughout the
United States, Europe and the Far East. Unfortunately, because Tribes
are not centrally organized and it is the individual Tribal fisher who
harvests the resource, such markets have never fully materialized.
We request $500,000, which will assist the Tribes in promoting our
shellfish products, both in domestic and international markets. Tribes
anticipate the need to provide necessary health training to harvesters,
possibly develop cooperative seafood ventures, develop marketing
materials and engage in actual marketing operations. Specific earmarked
funding from the Committee can jump start Tribal efforts in these
areas. We also anticipate participating in intertribal consortiums that
generally promote Tribal products, and urge the Committee to support
necessary funding for those efforts. Funding from the Committee will
allow the Tribes to realize the fair value for their product, help
employ more Tribal members, and allow the Tribes to fulfill their
treaty rights.
WATER AND POLLUTION SAMPLING, SAMPLING AND RESEARCH FOR PARALYTIC
SHELLFISH POISONING AND COORDINATION OF RESEARCH PROJECTS WITH STATE
AND FEDERAL AGENCIES, $1,000,000
Shellfish growing areas are routinely surveyed for current or
potential pollution impacts and are classified based on the results of
frequent survey information. No shellfish harvest is conducted on
beaches that have not been certified by the Tribes and the Washington
Department of Health. Growing areas are regularly monitored for water
quality status and naturally-occurring biotoxins to protect the public
health.
However, both Tribal and non-Indian fisheries have been threatened
due to the lack of understanding about the nature of biotoxins,
especially in subtidal geoduck clams. Research targeted to better
understand the nature of biotoxins could prevent unnecessary illness
and death that may result from consuming toxic shellfish, and could
prevent unnecessary closure of Tribal and non-Indian fisheries.
DATA GATHERING AT THE RESERVATION LEVEL FOR THE CONDUCT OF SHELLFISH
POPULATION SURVEYS AND ESTIMATES, $1,000,000
Very little current data and technical information exists for many
of the shellfish fisheries now being jointly managed by State and
Tribal managers. This is particularly true for many free-swimming and
deep-water species. This lack of information can not only impact
fisheries and the resource as a whole, but makes it difficult to assess
50/50 treaty sharing arrangements. Additionally, intertidal assessment
methodologies differ between State and Tribal programs, and can lead to
conflicts in management planning.
Existing data systems must be enhanced for catch reporting,
population assessment and to assist enhancement efforts. Research on
methodology for population assessment and techniques also is critical
to effective management.
Onsite beach surveys are required to identify harvestable
populations of shellfish. Regular monitoring of beaches is also
necessary to ensure that the beaches remain safe for harvest.
Additional and more accurate population survey and health certification
data is needed to maintain these fisheries and open new harvest areas.
This information will help protect current and future resources and
provide additional harvest opportunities.
CONCLUSION
We ask that you give serious consideration to our needs. We are
available to discuss these requests with committee members or staff at
your convenience. Thank you.
______
Prepared Statement of the Oregon Water Resources Congress
I am Anita Winkler, Executive Director, Oregon Water Resources
Congress (OWRC). Our organization was established in 1912 as a trade
association to support member needs to protect water rights and
encourage conservation and water management statewide. OWRC represents
non-potable agriculture water suppliers in Oregon, primarily irrigation
districts. as well as member ports, other special districts and local
governments. The association represents the entities that operate water
management systems, including water supply reservoirs, canals, pipeline
and hydropower production.
This testimony is submitted to the United States Senate
Appropriations Committee, Agriculture, Rural Development and Related
Agencies Subcommittee in support of the fiscal year 2006 appropriation
request of our member irrigation district, the Three Sisters Irrigation
District for their McKenzie Canyon Project.
The McKenzie Canyon Project (MCP) focuses on water conservation to
improve instream flows in Squaw Creek for fish and water quality and to
provide farmers with a more economical and reliable supply of water.
The project would be constructed under the Department of Agriculture's
Watershed Protection and Flood Prevention Act (Public Law 83-566
program). The Natural Resource Conservation Service (NRCS) has
completed the engineering for the project under the Bridging-The-
Headgates Program Memorandum of Understanding. NCRS has completed a
watershed plan and environmental assessment for the McKenzie Canyon
Project. The project has been approved by NRCS Chief Bruce Knight.
The total project cost is $1,130,148, and OWRC and the Three
Sisters Irrigation District are requesting $386,776 for fiscal year
2006.
This project will significantly decrease system water losses.
Currently the water is delivered to 31 farms through a series of open
canals and on-farm ditches that experience seepage losses on the order
of 40 percent to 50 percent. Phase one of this project will replace
approximately 10,265 feet of an open canal irrigation water conveyance
system with buried High-Density Polyethylene pipeline. This will return
1.2 cfs instream to Squaw Creek permanently through the Oregon Water
Resources Department conserved water program. Squaw Creek is important
for providing habitat for Endangered Species Act (ESA) listed bull
trout, as well as, redband and other resident trout. Fishery agencies
and the tribes are also counting on improving conditions in Squaw Creek
to support spawning and rearing for Chinook and steelhead once
anadromous fish are reintroduced above Pelton and Round Butte Dams on
the Deschutes River. Efforts to reintroduce anadromous fish are
expected to start in 2007 as part of the Federal Energy Regulatory
Commission (FERC) re-licensing requirements.
Thank you for the opportunity to provide this statement for the
hearing record.
______
Prepared Statement of the Organization for the Promotion and
Advancement of Small Telecommunications Companies
Summary of Request
The Organization for the Promotion and Advancement of Small
Telecommunications Companies (OPASTCO) seeks the Subcommittee's support
for fiscal year 2006 loan levels for the telecommunications loans
program administered by the Rural Utilities Service (RUS) in the
following amounts:
[In millions of dollars]
------------------------------------------------------------------------
------------------------------------------------------------------------
5 percent hardship loans................................ 145
Treasury rate loans..................................... 425
Guaranteed loans........................................ 125
------------------------------------------------------------------------
Note: The $425 million recommended for Treasury rate loans assumes that
the President's budget proposal to dissolve the RTB is carried out.
Dissolution of the RTB would necessitate additional funds for RUS
telecommunications loans in order to maintain the level of funds
available to rural telecommunications borrowers.
In addition, OPASTCO requests the following action by the
Subcommittee: (1) eliminate the 5 percent limitation on the retirement
of Class A stock of the Rural Telephone Bank (RTB); (2) maintain the
prohibition on the transfer of unobligated RTB funds to the general
fund of the Treasury and the requirement that interest be paid on these
funds; and (3) fund the distance learning, telemedicine, and broadband
program at sufficient levels.
General
OPASTCO is a national trade association of approximately 550 small
telecommunications carriers serving primarily rural areas of the United
States. Its members, which include both commercial companies and
cooperatives, together serve over 3.5 million customers in 47 States.
Perhaps at no time since the inception of the RUS (formerly the
REA) has the telecommunications loans program been so vital to the
future of rural America. The telecommunications industry is at a
crossroads, both in terms of technology and public policy. Rapid
advances in telecommunications technology in recent years have begun to
deliver on the promise of a new ``information age.'' Both Federal and
State policymakers have made deployment of advanced telecommunications
services a top priority. In addition, the President has established as
a goal that all Americans have affordable access to broadband
technology by 2007. However, without continued support of RUS's
telecommunications loans program, rural telephone companies will be
hard pressed to continue building the infrastructure necessary to bring
their communities into this new age and achieve policymakers'
objectives.
Contrary to the belief of some critics, RUS's job is not finished.
Actually, in a sense, it has just begun. We have entered a time when
advanced services and technology--such as fiber-to-the-home, high-speed
packet and digital switching equipment, and digital subscriber line
technology--are expected by customers in all areas of the country, both
urban and rural. Moreover, the ability of consumers to use increasingly
popular Voice over Internet Protocol (VoIP) services requires that they
first have a broadband connection from a facilities-based carrier.
Unfortunately, the inherently higher costs of upgrading the rural
wireline network, both for voice and data communications, has not
abated.
Rural telecommunications continues to be more capital intensive and
involves fewer paying customers than its urban counterpart. In the
FCC's September 2004 report on the deployment of advanced
telecommunications capability, the Commission correctly noted that
``[r]ural areas are typically characterized by sparse and disperse
populations, great distances between the customer and the service
provider, and difficult terrain. These factors present a unique set of
difficulties for providers attempting to deploy broadband services.''
Thus, in order for rural telephone companies to continue modernizing
their networks and providing consumers with advanced services at
reasonable rates, they must have access to reliable low-cost financing.
The relative isolation of rural areas increases the value of
telecommunications services for these citizens. Telecommunications
enables applications such as high-speed Internet connectivity, distance
learning, and telemedicine that can alleviate or eliminate some rural
disadvantages. A modern telecommunications infrastructure can also make
rural areas attractive for some businesses and result in revitalization
of the rural economy. For example, businesses such as telemarketing and
tourism can thrive in rural areas, and telecommuting can become a
realistic employment option.
While it has been said many times before, it bears repeating that
RUS's telecommunications loans program is not a grant program. The
funds loaned by RUS are used to leverage substantial private capital,
creating public/private partnerships. For a very small cost, the
government is encouraging tremendous amounts of private investment in
rural telecommunications infrastructure. Most importantly, the program
is tremendously successful. Borrowers actually build the infrastructure
and the government is reimbursed with interest.
The 5 Percent Limitation on the Retirement of Class A Stock of the RTB
Should be Eliminated
OPASTCO supports the elimination of the provision adopted in prior
Agriculture Appropriations Acts that limits the retirement of Class A
stock of the RTB to no more than 5 percent. Elimination of this
restriction is necessary for the Administration to move forward with
its proposal to dissolve the RTB. OPASTCO is receptive to this
proposal, assuming it can be accomplished in a manner that equitably
compensates the private Class B and C stockholders for their holdings
in the bank. In addition, even if the dissolution of the RTB does not
occur, elimination of the 5 percent limitation on the retirement of
Class A stock would provide the bank's board of directors with the
necessary flexibility to accelerate the bank's privatization.
The Prohibition on the Transfer of Any Unobligated Balance of the RTB
Liquidating Account to the Treasury and Requiring the Payment
of Interest on These Funds Should be Continued
OPASTCO urges the Subcommittee to reinstate language prohibiting
the transfer of any unobligated balance of the RTB liquidating account
to the Treasury or the Federal Financing Bank which is in excess of
current requirements and requiring the payment of interest on these
funds. As a condition of borrowing, the statutory language establishing
the RTB requires telephone companies to purchase Class B stock in the
bank. Borrowers may convert Class B stock into Class C stock on an
annual basis up to the principal amount repaid. Thus, all current and
former borrowers maintain an ownership interest in the RTB. As with
stockholders of any concern, these owners have rights which may not be
abrogated. The Subcommittee's inclusion of the aforementioned language
into the fiscal year 2006 appropriations bill will ensure that RTB
borrowers are not stripped of the value of this required investment.
The Distance Learning, Telemedicine, and Broadband Program Should
Continue to be Funded at Adequate Levels
In addition to RUS's telecommunications loans program, OPASTCO
supports adequate funding of the distance learning, telemedicine, and
broadband program. Through distance learning, rural students gain
access to advanced classes which will help them prepare for college and
jobs of the future. Telemedicine provides rural residents with access
to quality health care services without traveling great distances to
urban hospitals. In addition, the broadband program will allow more
rural communities to gain high-speed access to the Internet and receive
other advanced services. In light of the Telecommunications Act's
purpose of encouraging deployment of advanced technologies and services
to all Americans--including schools and health care providers--
sufficient targeted funding for these purposes is essential in fiscal
year 2006.
Conclusion
The development of the nationwide telecommunications network into
an information superhighway, as envisioned by policymakers, will help
rural America survive and prosper in any market--whether local,
regional, national, or global. However, without the availability of
low-cost RUS funds, building the information superhighway in
communities that are isolated and thinly populated will be untenable.
By supporting the RUS telecommunications programs at the requested
levels, the Subcommittee will be making a significant contribution to
the future of rural America.
______
Prepared Statement of Pickle Packers International, Inc.
The pickled vegetable industry strongly supports and encourages
your committee in its work of maintaining and guiding the Agricultural
Research Service. To accomplish the goal of improved health and quality
of life for the American people, the health action agencies of this
country continue to encourage increased consumption of fruits and
vegetables in our diets. Accumulating evidence from the epidemiology
and biochemistry of heart disease, cancer and diabetes supports this
policy. Vitamins (particularly A, C, and folic acid) and a variety of
antioxidant phytochemicals in plant foods are thought to be the basis
for correlation's between high fruit and vegetable consumption and
reduced incidence of these debilitating and deadly diseases. The
problem is that many Americans choose not to consume the variety and
quantities of fruits and vegetables that are needed for better health.
As an association representing processors that produce over 85
percent of the tonnage of pickled vegetables in North America, it is
our goal to produce new products that increase the competitiveness of
U.S. agriculture as well as meet the demands of an increasingly diverse
U.S. population. The profit margins of growers continue to be narrowed
by foreign competition. Likewise, the people of this country represent
an ever-broadening array of expectations, tastes and preferences
derived from many cultural backgrounds. Everyone, however, faces the
common dilemma that food costs should remain stable and preparation
time continues to be squeezed by the other demands of life. This
industry can grow by meeting these expectations and demands with
reasonably priced products of good texture and flavor that are high in
nutritional value, low in negative environmental impacts, and produced
with assured safety from pathogenic microorganisms and from those who
would use food as a vehicle for terror. With strong research to back us
up, we believe our industry can make a greater contribution toward
reducing product costs and improving human diets and health.
Many small to medium sized growers and processing operations are
involved in the pickled vegetable industry. We grow and process a group
of vegetable crops, including cucumbers, peppers, carrots, onions,
garlic, cauliflower, cabbage (Sauerkraut) and Brussels sprouts, which
are referred to as minor' crops. None of these crops is in any
``commodity program'' and as such, do not rely upon taxpayer subsidies.
However, current farm value for just cucumbers, onions and garlic is
$2.3 billion with an estimated processed value of $5.8 billion. These
crops represent important sources of income to farmers, and the
processing operations are important employers in rural communities
around the United States. Growers, processing plant employees and
employees of suppliers to this industry reside in all 50 States. To
realize its potential in the rapidly changing American economy, this
industry will rely upon a growing stream of appropriately directed
basic and applied research from four important research programs within
the Agricultural Research Service.
VEGETABLE CROPS RESEARCH LABORATORY, MADISON, WISCONSIN
First, we thank the Committee for $200,000 in additional funding it
provided the fiscal year 2002 budget to carry out field and processing
research vital to the membership of PPI. However, to continue this
important work it is necessary for Congress to restore this funding in
fiscal year 2006, since the funds were not included in the budget sent
to the Congress. The USDA/ARS Vegetable Crops Research Unit at the
University of Wisconsin is the only USDA research unit dedicated to the
genetic improvement of cucumbers, carrots, onions and garlic. Three
scientists in this unit account for approximately half of the total
U.S. public breeding and genetics research on these crops. Their past
efforts have yielded cucumber, carrot and onion cultivars and breeding
stocks that are widely used by the U.S. vegetable industry (i.e.,
growers, processors, and seed companies). These varieties account for
over half of the farm yield produced by these crops today. All U.S.
seed companies rely upon this program for developing new varieties,
because ARS programs seek to introduce economically important traits
(e.g., virus and nematode resistance) not available in commercial
varieties using long-term high risk research efforts. The U.S.
vegetable seed industry develops new varieties of cucumbers, carrots,
onions, and garlic and over twenty other vegetables used by thousands
of vegetable growers. The U.S. vegetable seed, grower, and processing
industry, relies upon the USDA/ARS Vegetable Crops Research Unit for
unique genetic stocks to improve varieties in the same way the U.S.
health care and pharmaceutical industries depend on fundamental
research from the National Institutes of Health. Their innovations meet
long-term needs and bring innovations in these crops for the United
States and export markets, for which the United States has successfully
competed. Past accomplishments by this USDA group have been
cornerstones for the U.S. vegetable industry that have resulted in
increased profitability, and improved product nutrition and quality.
Both consumers and the vegetable production and processing industry
would like to see fewer pesticides applied to food and into the
environment in a cost-effective manner. Scientists in this unit have
developed a genetic resistance for many major vegetable diseases.
Perhaps the most important limiting factor in the production of
cucumbers has been its susceptibility to disease. New research progress
initiated in the 1990s and continuing today in Madison has resulted in
cucumbers with improved pickling quality and suitability for machine
harvesting. Viral and fungal diseases threaten much of the U.S.
cucumber production. New sources of genetic resistance to these
diseases have recently been mapped on cucumber chromosomes to provide a
ready tool for our seed industry to significantly accelerate the
development of resistant cultivars for U.S. growers. Likewise, new
cultivar resistances to environmental stress like cold, heat and salt
stress discovered by these scientists will help cucumber growers
produce a profitable crop where these stressful conditions occur. The
development of DNA markers that are associated with traits for
tolerance of biological stress will help public and private breeders
more efficiently develop stress-resistant varieties because selection
for improved varieties can be done in the laboratory as well as in the
field saving time and the costly expenses associated with field
testing. Nematodes in the soil deform carrot roots to reduce yield from
10 percent to over 70 percent in major production areas. A new genetic
resistance to nematode attack was recently discovered and found to
almost completely protect the carrot crop from one major nematode. This
genetic resistance assures sustainable crop production for growers and
reduces pesticide residues in our food and environment. Value of this
genetic resistance developed by the vegetable crops unit is estimated
at $655 million per year in increased crop production, not to mention
environmental benefits due to reduction in pesticide use. This group
improved both consumer quality and processing quality of vegetables
with a resulting increase in production efficiency and consumer appeal.
This product was founded on carrot germplasm developed in Madison,
Wisconsin. Carrots provide approximately 30 percent of the U.S. dietary
vitamin A. With new carrots that have been developed, nutritional value
of this crop has tripled, including the development of nutrient-rich
cucumbers with increased levels of provitamin A. Using new
biotechnological methods, a system for rapidly and simply identifying
seed production ability in onions has been developed that reduces the
breeding process up to 6 years! A genetic map of onion flavor and
nutrition will be used to develop onions that are more appealing and
healthy for consumers. Garlic is a crop familiar to all consumers, but
it has not been possible to breed new garlic varieties until a new
technique for garlic seed production was recently developed and is now
being bred like other crops.
There are still serious vegetable production problems, which need
attention. For example, losses of cucumbers, onions, and carrots in the
field due to attack by pathogens and pests remains high, nutritional
quality needs to be significantly improved and U.S. production value
and export markets could certainly be enhanced. Genetic improvement of
all the attributes of these valuable crops are at hand through the
unique USDA lines and populations (i.e., germplasm) that are available
and the new biotechnological methodologies that are being developed by
the group. The achievement of these goals will involve the utilization
of a wide range of biological diversity available in the germplasm
collections for these crops. Classical plant breeding methods combined
with bio-technological tools such as DNA marker-assisted selection and
genome maps of cucumber, carrot and onion will be the methods to
implement these genetic improvements. With this, new high-value
vegetable products based upon genetic improvements developed by our
USDA laboratories can offer vegetable processors and growers expanded
economic opportunities for United States and export markets.
U.S. FOOD FERMENTATION LABORATORY, RALEIGH, NORTH CAROLINA
The USDA/ARS Food Fermentation Laboratory in Raleigh, NC is the
major public laboratory that this industry looks to as a source for new
scientific information on the safety of our products and development of
new processing technologies related to fermented and acidified
vegetables. Over the years this laboratory has been a source for
innovations in this industry, which have helped us remain competitive
in the current global trade environment. We expect the research done in
this laboratory to lead to new processing and product ideas that will
increase the economic value of this industry and provide consumers with
high quality, more healthful vegetable products. In addition to the
newer challenges related to protecting our products from acid tolerant
pathogens (E. coli O157:H7, Listeria, and Salmonella) this industry
needs better technology for waste minimization related to the salt and
organic waste generated in our processing plants.
We thank Congress for the additional funding it provided to this
laboratory in the fiscal year 2004 ($270,000) and fiscal year 2005
($100,000) budgets to hire a microbial physiologist and to enhance the
capabilities of this research program that is so important to our
industry. After 6 years of stable funding, these budget increases have
made it possible for the laboratory to return to four scientists and to
proceed with a very active research program. It is very important that
Congress restore the full $370,000 funding in the fiscal year 2006
budget, since the funds were not included in the budget sent to the
Congress.
For the future safety and security of the food supply of the United
States, PPI supports the Food Safety and Security Initiative the
President has proposed in his fiscal year 2006 budget. It takes
continuous vigilance and good science to deal with the natural threats
to human health posed by pathogenic bacteria. However, the possibility
that the acid tolerant pathogens might be used to intentionally disrupt
the food supply, adds a different and more dangerous element to the
already difficult job of assuring safety throughout the complex food
chain. We believe the special expertise of the ARS Food Fermentation
Laboratory scientists in working with these pathogens in acid and
acidified foods can make an important contribution to this initiative.
SUGAR BEET AND BEAN RESEARCH UNIT, EAST LANSING, MICHIGAN
The USDA/ARS cucumber post harvest engineering research at East
Lansing, Michigan is the only federally funded program that is devoted
to developing new and/or improved engineering methods and technology
for assessing, retaining, and assuring post harvest quality,
marketability, and wholesomeness of pickling cucumbers and other
vegetable products. The cucumber post harvest engineering research is
one component of the post harvest engineering research program within
the Sugar Beet and Bean Research Unit in East Lansing, Michigan. The
post harvest engineering research program currently has a full-time
research agricultural engineer whose primary research is to develop
methods and technology for assessing and assuring post harvest quality
of tree fruits. Because of severe under-funding, the location's
cucumber post harvest engineering research has not been carried out at
the full scope it would have been expected. A postdoctoral research
associate has been hired to carry out research on developing
nondestructive technology for assessing and grading pickling cucumbers
and other vegetables. The ARS East Lansing location has been
internationally recognized for developing innovative, practical
engineering methods and techniques to improve harvest and post harvest
handling systems for vegetables and tree fruits. The location recently
developed a new laser-based multi-spectral imaging technology for
grading and sorting fruit for texture and soluble solids content. The
technology has the potential for inspecting a variety of vegetable
crops including cucumbers. The location also developed an advanced
hyper-spectral imaging system for automated detection of defects and
quality attributes of fruit, which could also be used for pickling
cucumber inspection.
Today, consumers have increasing choices of foods and they are
demanding for better, consistent safe products. Defective and inferior
cucumbers/vegetables will lead to poor quality, inconsistent pickled
products and can cause significant economic losses to growers and
processors. An effective quality control and assurance system
throughout the handling steps between harvest and retail is required
for the pickling industry to provide consistent, superior products to
the marketplace. Methods currently available for measuring and grading
quality of cucumbers and other vegetables are either ineffective or
time consuming. New and/or improved technologies are needed to assess,
inspect and grade fresh cucumbers rapidly and accurately for various
internal and external quality characteristics so that raw products can
be directed to, or removed from, appropriate processing or marketing
avenues. This will minimize post harvest losses of food that has
already been produced and ensure high quality, consistent final product
and end-user satisfaction. Research at East Lansing, MI is currently
applying technology in imaging, machine vision and spectroscopy and
advanced data/image processing methods (neural networks, genetic
algorithms, and fuzzy logic) to develop rapid inspection techniques for
detecting and segregating defective cucumbers resulting from mechanical
and temperature injury, physiological disorders, and diseases. Advanced
imaging and spectroscopy techniques are being used for rapid,
nondestructive evaluation of internal quality attributes of fresh
cucumbers, which will directly impact the processing and keeping
quality of pickled products. The research will lead to new inspection
and grading technology that will help the pickling industry in
delivering high-quality safe products to the marketplace. To enhance
research on the development of engineering methods and technology for
assuring post harvest quality and marketability of pickled and
vegetable products, a full-time research scientist (engineering) will
be needed for the ARS East Lansing research program.
U.S. VEGETABLE LABORATORY, CHARLESTON, SOUTH CAROLINA
The research program at the USDA/ARS, U.S. Vegetable Laboratory in
Charleston, SC addresses established national problems in vegetable
crop production and protection with emphasis on the southeastern United
States. This research program is internationally recognized for its
accomplishments, which have resulted in development of over 150 new
vegetable varieties and lines along with the development of many new
and improved disease and pest management practices. This laboratory's
program currently addresses 14 vegetable crops including those in the
cabbage, cucumber, and pepper families, which are of major importance
to the pickling industry. The mission of the laboratory is to (a)
develop disease and pest resistant vegetable crops and (b) develop new,
reliable, environmentally sound disease and pest management programs
that do not rely on conventional pesticides.
Continued expansion of the Charleston program is crucial. Vegetable
growers must depend heavily on synthetic pesticides to control diseases
and pests. Cancellation and/or restrictions on the use of many
effective pesticide compounds are having a considerable influence on
the future of vegetable crop production. Without the use of certain
pesticides, growers will experience crop failures unless other
effective, non``)pesticide control methods are found quickly. The
research on improved, more efficient and environmentally compatible
vegetable production practices and genetically resistant varieties at
the U.S. Vegetable Laboratory continues to be absolutely essential.
This gives U.S. growers the competitive edge they must have to sustain
and keep this important industry and allow it to expand in the face of
increasing foreign competition.
FUNDING NEEDS FOR THE FUTURE
It remains critical that funding continue to maintain the forward
momentum in pickled vegetable research the United States now enjoys and
to increase funding levels as warranted by planned expansion of
research projects to maintain U.S. competitiveness. We also understand
that discretionary funds are now used to meet the rising fixed costs
associated with each location. Additional funding is needed at the
Wisconsin and South Carolina programs for genetic improvement of crops
essential to the pickled vegetable industry, and at North Carolina and
Michigan for development of environmentally-sensitive technologies for
improved safety and value to the consumer of our products. The
fermented and acidified vegetable industry is receptive to capital
investment in order to remain competitive, but only if that investment
is economically justified. The research needed to justify such capital
investment involves both short term (6-24 months) and long term (2-10
years or longer) commitments. The diverse array of companies making up
our industry assumes responsibility for short-term research, but the
expense and risk are too great for individual companies to commit to
the long-term research needed to insure future competitiveness. The
pickled vegetable industry currently supports research efforts at
Wisconsin and North Carolina and anticipates funding work at South
Carolina and Michigan as scientists are put in place. Donations of
supplies and processing equipment from processors and affiliated
industries have continued for many years.
U.S. Vegetable Laboratory, Charleston, South Carolina
The newly constructed laboratory-office building at the U.S.
Vegetable Laboratory was occupied in April 2003. Design of the
accompanying greenhouse and head house using the funds appropriated for
this purpose in fiscal year 2003 was completed in July 2004. In fiscal
year 2004, construction of the head house component of this project was
funded. In fiscal year 2005, $2.976 million was appropriated for
construction of greenhouses, but $8.251 million is still needed for the
planned $11.227 million greenhouse complex. This new facility replaces
and consolidates outmoded laboratory areas that were housed in 1930s-
era buildings and trailers. Completion of the total research complex
will provide for the effective continuation and expansion of the
excellent vegetable crops research program that has been conducted by
the Agricultural Research Service at Charleston for over 60 years. It
is most critical to the mission of the U.S. Vegetable Laboratory that
the fiscal year 2002, fiscal year 2003, and fiscal year 2004
appropriated funds for expansion of the Charleston research staff is
maintained in fiscal year 2006. In addition, new funds are still needed
to hire additional scientists to expand the research program. An
Entomologist is needed to facilitate development of host resistance and
new management approaches to a wider range of established insect pests
of vegetable crops; a Molecular Biologist is needed to develop and
utilize molecular techniques for pathogen and pest population studies
necessary to development of new management approaches and resistant
genetic stocks. Both of these new scientific positions will greatly
contribute to the accomplishment of research that will provide for the
effective protection of vegetable crops from disease and pests without
the use of conventional pesticides. Each of these positions requires a
funding level of $350,000 for their establishment.
------------------------------------------------------------------------
Gross Funds
Appropriations to Restore Fiscal year Impacted
------------------------------------------------------------------------
Minor Use Pesticides (IR-4)........... 2002 $5,000
U.S. Vegetable Laboratory............. 2003 490,000
U.S. Vegetable Laboratory............. 2004 266,000
-----------------
Total Funds to Restore.......... .............. 761,000
------------------------------------------------------------------------
------------------------------------------------------------------------
New Scientific Staff Needed Current Status New Funds Needed
------------------------------------------------------------------------
Entomologist..................... Needed............. $350,000
Molecular Biologist.............. Needed............. 350,000
-----------------
Total New Funds............ ................... 700,000
------------------------------------------------------------------------
Food Fermentation Laboratory, Raleigh, North Carolina
The current funding for the laboratory is $1,274,000. This includes
the new funds provided in fiscal year 2004 ($270,000) and in fiscal
year 2005 ($100,000) that are not in the fiscal year 2006 budget
proposal that was sent to the Congress. We request that the additional
funding provided by the Congress in fiscal year 2004 and fiscal year
2005 be restored in the fiscal year 2006 budget, so that the funds
available to the Food Fermentation Laboratory remain constant.
------------------------------------------------------------------------
Scientific Staff Current Status Funds Needed
------------------------------------------------------------------------
Microbiologist.................... Active.............. $300,000
Chemist........................... Active.............. 300,000
Food Technologist/Biochemist...... Active.............. 300,000
Microbial Physiologist............ Hiring process 300,000
active.
Post-doctoral microbiologist...... Active.............. 74,000
---------------
Total Funding Required...... .................... 1,274,000
Current funding (fiscal year .................... 1,274,000
2005).
---------------
Additional Funding Needed......... .................... 0
------------------------------------------------------------------------
Vegetable Crops Research Laboratory Unit, Madison, Wisconsin
Current base funding for three scientists is $832,400, of which
$200,000 was added in fiscal year 2002. An additional $267,600 is
needed to fully fund the scientists and support staff, including
graduate students and post-doctorates.
------------------------------------------------------------------------
Scientific Staff in Place Current Status Funds Needed
------------------------------------------------------------------------
Geneticist........................ Active.............. $300,000
Horticulturist.................... Active.............. 300,000
Geneticist........................ Active.............. 300,000
---------------
Total Funding Required...... .................... 900,000
Current Funding............. .................... 832,400
---------------
Shortage.................... .................... 67,600
Proposed Reduction.......... .................... 200,000
---------------
Additional Funding Needed......... .................... 267,600
------------------------------------------------------------------------
A temporary addition of $200,000 was provided to enhance the
research effort of this program in fiscal year 2002, and we greatly
appreciate that additional support, but that addition is being proposed
for reduction in fiscal year 2006. Thus, the restoration of the funds
proposed for reduction, is urgently requested. We request a $267,600
permanent addition this year to sustain the long-term research of this
group.
Sugar Beet and Bean Research Unit, East Lansing, Michigan
The location urgently needs to hire a full-time research engineer
to develop a comprehensive research program on nondestructive
inspection, sorting and grading of pickling cucumbers and other
vegetable crops to assure the processing and keeping quality of pickled
products. The current base funding for the cucumber engineering
research is $200,000. An increase of $100,000 in the current base
funding level would be needed to fund the research engineer position.
------------------------------------------------------------------------
Scientific Staff in Place Current Status Funds Needed
------------------------------------------------------------------------
Postdoctoral Research Associate... Active.............. $200,000
Research Engineer................. Needed.............. 100,000
---------------
Total Funding Required...... .................... 300,000
Current Funding............. .................... 200,000
---------------
Additional Funding Needed......... .................... 100,000
------------------------------------------------------------------------
Thank you for your consideration of these needs and your expression
of support for the USDA/ARS.
______
Prepared Statement of the Public Citizen's Energy and Environment
Program
Chairman Bennett, Ranking Member Kohl and Members of the
Subcommittee: My name is Wenonah Hauter. I am Director of Public
Citizen's Energy and Environment Program. As you know, Public Citizen
is a non-profit consumer organization, representing 150,000 members. We
welcome this opportunity to present our views on the fiscal year 2006
Agriculture, Rural Development, Food and Drug Administration and
Related Agencies Appropriations Bill.
USDA--FOOD SAFETY AND INSPECTION SERVICE (FSIS)
We are adamantly opposed to the Administration's proposal to
collect $139 million in user fees in order to recover the cost of
providing inspection services beyond an approved eight-hour primary
shift, as it could compromise the effectiveness of FSIS inspectors.
This proposal has been rejected in the past by Congress and we request
that you do so again this year. Furthermore, FSIS has already taken
action to de-list foreign establishments that had been previously
approved to export their meat and poultry products to the United States
on the basis that inspection services were paid for by the companies
involved instead of by the foreign government. Given this history,
implementation of the Administration's proposal would be hypocritical.
While not fully under its jurisdiction, we believe that the
subcommittee needs to look into the mixed signals top USDA officials
have been sending in regards to FSIS' authority. On March 19, 2003,
former USDA Secretary Ann Veneman delivered a speech before an
industry-sponsored conference in which she stated:
``. . . we are working under a Meat Inspection Act that pre-dates
the Model T. In an effort to modernize food safety authorities, we want
to work with Congress and our partners to consider various ideas, some
of which have been discussed in the past. These include: ``Mandatory
notification to USDA when a federally inspected establishment has
reason to believe that meat or poultry has been adulterated or
misbranded; Authority to impose civil penalties after notice in writing
and continued lack of compliance. This authority would involve due
process before an administrative law judge, and liabilities would be
limited to penalties based on continued noncompliance; And cease-and-
desist orders and potential suspensions at earlier phases and on an
expedited basis arising from HACCP violations.'' \1\
---------------------------------------------------------------------------
\1\ http://www.usda.gov/news/releases/2003/03/0092.htm.
---------------------------------------------------------------------------
Industry opposition was quick and ferocious, and nothing has
occurred since her speech. In light of adverse court rulings which FSIS
has suffered in recent years regarding its attempts to exert authority
over meat processors that have violated food safety regulations, we
believe that the Congress needs to take action to plug the current
legal loopholes.
We are also concerned that FSIS does not have adequate in-plant
inspection staffing to ensure that our meat and poultry products are
safe. In recent years, the requests for additional staffing by the
Administration have been modest. FSIS has been engaged over the past
year in a process to realign staffing based on new standards that take
into account food safety risk. While the agency claims that the new
staffing model is based on ``science,'' we are concerned that the data
upon which the agency is basing its decisions may not be sufficient or
reliable. The agency is relying on data that it has collected through
its Field Automation and Information Management (FAIM) system. We have
learned from inspection personnel that the FAIM system has been fraught
with problems. For example, inspection personnel have had difficulty
logging on to the system and the system often crashes before
inspectors' reports have been completely transmitted. Consequently,
there may be a ``garbage-in-garbage-out'' scenario whereby the agency
will find itself having re-deployed its inspection staff based on
faulty and/or incomplete data. There have been a number of product
recalls in recent months that seem to be directly attributable to lack
of inspection resources.\2\ We request that the subcommittee fully
investigate this issue before the agency completes its staffing
reassignments.
---------------------------------------------------------------------------
\2\ http://www.fsis.usda.gov/Fsis_Recalls/RNR_013_2005/index.asp.
http://www.fsis.usda.gov/Fsis_Recalls/RNR_007_2005/index.asp.
http://www.fsis.usda.gov/Fsis_Recalls/RNR_003_2005/index.asp.
http://www.fsis.usda.gov/Fsis_Recalls/RNR_001_2005/index.asp.
http://www.fsis.usda.gov/Fsis_Recalls/RNR_042_2004/index.asp.
http://www.fsis.usda.gov/Fsis_Recalls/RNR_047_2004/index.asp.
---------------------------------------------------------------------------
In a related area, the USDA Office of Inspector General (OIG) found
serious security weaknesses in the FSIS information technology systems.
Specifically, the OIG stated:
``Our vulnerability scans of selected FSIS systems disclosed
weaknesses that may be exploited both internally and externally from
the Internet. FSIS had not adequately protected physical access to its
headquarters computer facility by limiting it to users who need access
to perform their duties, and it had not completed all security plans
required by OMB Circular A-130. FSIS database administrators were
allowed to make changes to FSIS data without following up with
appropriate personnel to verify the validity of the changes.\3\
---------------------------------------------------------------------------
\3\ http://www.usda.gov/oig/webdocs/OIG-Report010604.pdf, p. 6.
---------------------------------------------------------------------------
On the issue of equivalence and import re-inspections, we believe
that FSIS needs to do a better job of safeguarding consumers against
unsafe food that may be imported. In July 2003, Public Citizen released
a report entitled, ``The WTO Comes to Dinner: USDA Implementation of
Trade Rules Bypasses Food Safety Requirements'' in which we documented
shortcomings in the FSIS food safety program for imported meat and
poultry products. For example, we have not been able to determine how
FSIS permanently bans a country from exporting food to the United
States if FSIS finds habitual violations of food safety regulations. We
have also become alarmed that since the fall of 2002, when FSIS
instituted a new sampling regime, the amount of imported meat and
poultry products re-inspected at our ports of entry has dropped
precipitously. During a period in which we must be more vigilant about
the security of our food supply, FSIS seems to have adopted a policy
that is counterintuitive. In 2004, there were three recalls of imported
products that should not have entered into U.S. commerce.\4\ We ask
that the subcommittee review FSIS' food safety program for imported
products.
---------------------------------------------------------------------------
\4\ http://www.fsis.usda.gov/News_&_Events/Recall_028_2004_Release/
index.asp;
http://www.fsis.usda.gov/News_&_Events/Recall_038_2004_Release/
index.asp;
http://www.fsis.usda.gov/News_&_Events/Recall_046_2004_release/
index.asp.
---------------------------------------------------------------------------
While we applaud FSIS' steps in protecting consumers from beef that
may be contaminated with bovine spongiform encephalopathy (BSE), the
initiatives announced on December 30, 2003 still do not go far enough.
First, we are concerned that meat product that is obtained through the
use of advanced meat recovery (AMR) systems is still permissible for
cattle that are slaughtered under the age of 30 months. AMR systems
recover meat close to the spinal column. The spinal column is an area
of concern since that is where infected tissue is often found. There
have been cases of BSE-infected cattle reported abroad that were
younger than 30 months. Consequently, we believe that the 30-month
cutoff is too high, and that AMR should be banned entirely. Second,
there needs to be a rigorous training program on BSE for FSIS
inspectors and veterinarians to ensure that FSIS personnel fully
comprehend the symptoms of BSE and the new regulations FSIS has put in
place. There have been allegations made by FSIS inspection personnel
that the regulation on the removal of specified risk materials from
beef entering the food supply has not been fully enforced,\5\ and we
urge the subcommittee to investigate this matter fully, including
requesting copies of non-compliance reports that document these
shortcomings. Third, there has been much controversy over the
``downer'' ban that FSIS announced. We believe that the definition of
``non-ambulatory, disabled'' animal is adequate to prevent any
confusion at the slaughter facilities, but we are concerned about how
USDA will continue to thoroughly conduct BSE surveillance since such
animals will no longer be presented for slaughter. Fourth, the recall
of meat from the slaughtered BSE-contaminated cow in Washington State
illustrated, once again, the weaknesses of the FSIS recall process,
which restricts state and local departments of health from publicizing
recall information. Fifth, we are concerned that USDA may have
prematurely lifted its ban on Canadian beef imports in August 2003. It
is obvious that there was confusion over what was eligible to be
imported into the United States which led to a systematic breakdown
between the fall 2003 and spring 2004 that was vividly described in a
recent Office of Inspector General Report.\6\ In light of the fact all
recent cases of BSE-contaminated cows on the North American continent
were of Canadian origin, it is too soon to allow the import of beef
from Canada.
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\5\ http://www.citizen.org/documents/PiersonLetter12-20-04.pdf.
\6\ http://www.usda.gov/oig/webdocs/33601-01-HY.pdf, pp. 15-20.
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USDA--REGULATORY AND MARKETING AFFAIRS
At the outset, we request that the subcommittee revisit the issue
of country-of-origin labeling and provide funding for the full
implementation of this provision of the 2002 Farm Bill as quickly as
possible. USDA is responsible for implementing country-of-origin-
labeling for seafood, which includes notice of whether the seafood is
farm-raised or wild caught. Unfortunately, the final rules that the
USDA developed fall short of the original mandate by exempting half of
imported seafood due to the definition of ``processed'' put forth by
the agency. The USDA's final rules define ``processed'' so broadly that
any seafood altered from its natural state is exempt from COOL. We urge
the subcommittee to allocate sufficient resources to USDA to strengthen
and adequately enforce the labeling rule for seafood.
Some industry and non-governmental organizations are also
developing organic standards for aquatic species. Without any
accountability, these standards will simply confuse consumers and
weaken the term ``organic.'' The USDA must develop national organic
standards for aquatic species. A National Organic Standards Board
committee is currently being formed and will require resources to
thoroughly and effectively develop organic standards for aquatic
species.
We believe that recent announcements by the Animal and Plant Health
Inspection Service (APHIS) regarding its surveillance program for BSE
are less than adequate. First, we do not believe that re-opening our
border to live Canadian cattle is prudent at this time. Prior to the
finding of the BSE-positive cow in Washington State, APHIS had
published a proposed rule permitting the import of live cattle from
countries that had a minimal risk of BSE. Published in October 2003,
the rule was an attempt to reshape previous U.S. policy which shut our
borders to any country that had a reported case of BSE. We believe this
proposed rule was APHIS' attempt to make an exception to existing
policy because the border closure which resulted from the May 2003
discovery of a BSE-infected cow in Alberta impacted the U.S.
agribusiness interests which have operations on both sides of the
border.
Since May 2003, three more cows in North America have been
diagnosed with BSE--all of Canadian origin.\7\ There have been
investigative reports by Canadian journalists that indicate that Canada
has had a difficult time enforcing its bovine feed rules.\8\ In
addition, our own Food and Drug Administration has documented
contamination in cattle feed produced in Canada and exported to the
United States, issuing at least nineteen import alerts since October
2003.\9\ As we have already cited above, the recent USDA Office of
Inspector General Report on the importation of Canadian beef clearly
showed that APHIS was not equipped to handle this permitting process.
Furthermore, we are concerned that there was undue outside influence
brought to bear on the agency to expand the importation of Canadian
beef products in clear violation of departmental policy.\10\
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\7\ http://www.citizen.org/cmep/foodsafety/madcow/
articles.cfm?ID=12776.
\8\ Skelton, Chad. ``Secret tests reveal cattle feed contaminated
by animal parts; Mad cow fears spark review of vegetable-only'
livestock feeds,'' Vancouver Sun, December 16, 2004.
\9\ Statement of Senator Kent Conrad, Congressional Record, March
3, 2005, pp. S 1964.
\10\ Hisey, Peter. ``DeLauro: Inspector General said White House
pressured USDA on Canadian beef,'' The MeatingPlace.com, February 24,
2005.
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While the enhanced BSE surveillance program announced by APHIS on
March 15, 2004 was a step in the right direction, it still leaves many
questions unanswered. The size of the sample is still not finite. We
have been critical of APHIS in the past for its sampling
techniques,\11\ and it seems that the agency is leaving itself
vulnerable to criticism with its new program. In fact, Dr. George Gray,
Executive Director of the Harvard Center for Risk Analysis recently
stated that APHIS was basing its new surveillance regime on faulty
assumptions and cautioned APHIS to adjust its sampling to reflect the
possibility of BSE being found in so-called low risk animal
populations.\12\ We are also concerned that APHIS has not decided what
its surveillance regime will be after the ``enhanced'' program is
completed later this year.
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\11\ http://www.citizen.org/documents/madcowreport.pdf.
\12\ Sugarman, Carol. ``USDA's Ambitious BSE Testing Program Gets
Guarded Support,'' Food Chemical News, March 22, 2004.
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On the issue of food irradiation, we believe that APHIS is opening
up our borders to increased fruit and vegetables imports from abroad,
leaving our domestic farmers vulnerable to unfair competition, and
possibly exposing American consumers to harmful health effects from
consuming irradiated food. In October 2002, APHIS approved the use of
irradiation as an approved phytosanitary measure for imported fruits
and vegetables. We opposed this rule.\13\ When APHIS issued its final
rule in October 2002, we were perplexed by the convoluted structure of
the rule.\14\ APHIS is still reviewing applications from foreign
governments that wish to use irradiation as a phytosanitary measure.
There has been interest expressed in a number of countries to use this
technology on their products for export. On April 1, 2005, APHIS
published a proposed rule that will permit the importation of
irradiated apples from Australia and New Zealand that will compete with
our domestic apple industry.\15\
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\13\ http://www.citizen.org/documents/aphiscomments.PDF.
\14\ http://www.citizen.org/pressroom/release.cfm?ID=1254.
\15\ http://frwebgate.access.gpo.gov/cgi-bin/
getdoc.cgi?dbname=2005_register&docid=fr31mr05-16.pdf.
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In 2004, APHIS approved the use of irradiation to treat Hawaiian
sweet potatoes to be shipped to the mainland of the United States. This
approval came even after mainland sweet potato growers opposed the
approval of the rule.\16\ What is even more troubling is that APHIS
seemed to have approved this rule to assist a financially ailing food
irradiation company. In fact, in approving this new rule, APHIS stated:
``The irradiation facility in Hawaii will benefit from having more
crops available to treat. The treatment available at this facility has
enabled many producers in Hawaii to move their products to the
mainland, thus providing them with access to markets that were not
previously available. For several years, the State of Hawaii has
encouraged farmers to diversify agricultural production, given the
significant decline in the production of sugarcane as a major crop. The
approval of irradiation as a treatment for sweet potatoes moved
interstate from Hawaii will help to provide steady throughput for this
facility. The facility currently treats seasonal crops whose volume is
more variable than that of sweet potatoes and is thus sometimes
underutilized. A steady source of revenues from treatment, such as
revenues from treating sweet potatoes to be moved interstate, would
help assure this facility's continued operation and availability for
all the producers in Hawaii who can use it.'' \17\
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\16\ Skrzycki, Cindy. ``Approval of Irradiated Sweet Potatoes Has
Critics Steamed,'' Washington Post, March 9, 2004.
\17\69 FR 7547.
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The facility in question is owned by Hawaii Pride, a company that
was created using a USDA Rural Development Administration loan.\18\ The
firm was having difficulty making payments on the loan because of its
precarious financial condition.\19\ In essence, APHIS is running an
irradiation ``industrial policy'' by helping bail out Hawaii Pride from
total financial ruin with the approval of this rule. We filed a Freedom
of Information Act request with the agency on March 12, 2004 requesting
all documents related to this decision and we have yet to receive a
response. The subcommittee should review APHIS' activities regarding
this rule.
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\18\ http://www.hiedb.org/
showtext.asp?ArticleID=26&Category=Articles.
\19\ Titan Corporation. Form 10-K filed with the Securities and
Exchange Commission, March 10, 2004, p.21.
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usda--cooperative state research, education, and extension service
It has come to our attention that the Cooperative State Research,
Education, and Extension Service (CSREES) provided funds to Texas A&M
University to establish a National Center for Electronic Beam Research
at its campus. The initial grant of $185,000 was approved on July 28,
2003, and certain Texas congressional delegation members were credited
for securing the funds.\20\ The timing of the grant approval raised
suspicions since Texas A&M and the SureBeam Corporation, a leading food
irradiation processor and electron-beam irradiation equipment
manufacturer, entered into a strategic partnership only 3 years
earlier.\21\ SureBeam donated to the University $10 million worth of
electron-beam irradiation equipment in exchange for the use of a
building on the campus where the company could use the equipment for
commercial purposes and University could use it for research purposes.
In the summer of 2003, SureBeam's dubious accounting practices began to
surface in the press, and among the areas of concern was the manner in
which SureBeam was reporting ``revenues'' from its relationship with
Texas A&M.\22\ On January 19, 2004, SureBeam filed for Chapter 7
bankruptcy and is in the process of liquidating its assets.\23\ On
August 12, 2004, CSREES awarded the Texas A&M Electron Beam Facility
another $328,357 grant.\24\ In September 2004, the supermarket chain
Wegman's revealed that it was offering irradiated frozen hamburger
patties in its stores that were treated at the Texas A&M facility.\25\
We believe that the subcommittee needs to investigate this matter
further to determine whether there were any improprieties in the award
of these grants.
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\20\ http://www.meatandpoultryonline.com/content/news/
article.asp?docid=(d63bd189-14d2-450d-b399-bd02eac5cbc6).
\21\ http://www.ift.org/publications/docshop/ft_shop/10-00/
10_00_pdfs/10-00-p&t-proc.pdf.
\22\ Norris, Floyd. ``SureBeam Revenue Policy Questioned,'' New
York Times, August 27, 2003.
\23\ Freeman, Mike. ``SureBeam's Bankruptcy Filing Offers Few
Details,'' San Diego Union-Tribune, January 21, 2004.
\24\ http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_01OB/.cmd/
ad/.ar/sa.retrievecontent/.c/
6_2_1UH/.ce/7_2_5JM/.p/5_2_4TQ/.d/5/_th/J_2_9D/_s.7_0_A/7_0_1OB?PC_7_2_
5JM_contentid=2004%2F08%2F0330.xml&PC_7_2_5JM_navtype=RT&PC_7_2_5JM_
parentnavid=LATEST_RELEASES&PC_7_2_5JM_navid=NEWS_RELEASE#7_2_5JM.
\25\ http://www.wegmans.com/meb/columns/091804.asp.
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FOOD AND DRUG ADMINISTRATION
We applaud the Food and Drug Administration (FDA) for revisiting
its feeding restrictions for ruminant animals in light of the discovery
of a BSE-infected cow in Washington State. Unfortunately, while the FDA
made its announcement on January 26, 2004 that it intended to
promulgate interim final rules creating new BSE firewalls, none of
those rules have yet been published in the Federal Register. That means
that cattle in this country are still being fed under the old feeding
rules that the FDA has found to be deficient. The FDA needs to take
immediate action to place those new restrictions in effect. While we
believe the new rules proposed are a step in the right direction, we
believe that further restrictions are needed that include the
prohibition of any mammalian and poultry protein to be fed to cattle,
as recommended by the International Advisory Panel appointed by USDA
Secretary Ann Veneman.\26\
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\26\ http://www.aphis.usda.gov/lpa/issues/bse/US_BSE_Report.pdf.
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We are also concerned that the FDA is not able to increase its
surveillance over imported foods that fall under its jurisdiction. In
fact, the FDA is being overwhelmed with imports--leaving U.S. consumers
vulnerable to unsafe imported food making its way into commerce. The
subcommittee needs to review the staffing levels for FDA, especially as
they relate to import inspection.
Shrimp is currently the number one seafood choice for American
consumers and 80 percent of it is imported, at least half of which is
farm-raised. Chemicals banned in the United States., such as
chloramphenicol and nitrofurons, are used to raise shrimp that are
exported to the United States. Yet the FDA only inspects one to two
percent of all imported seafood. The FDA must be appropriated funds to
inspect a significant amount of imported seafood.
In his testimony in 2003, then-FDA Commissioner Mark McClellan
reported that an FDA working group has been considering a re-definition
of the term ``pasteurization'' to include such new technologies as
irradiation. Such a re-definition could be used by food processors on
product labeling. The group that has been charged with this
responsibility is a subcommittee of the National Advisory Committee on
the Microbiological Criteria for Food. As we have testified in the past
on this issue, consumers have repeatedly rejected such a re-definition
in focus group studies conducted by the USDA and FDA.\27\ We believe
that such an exercise is a waste of resources since re-defining
pasteurization would lead to consumer deception and confusion.
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\27\ http://www.citizen.org/documents/agappropsmarch03.pdf.
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______
Prepared Statement of the Red River Valley Association
Mr. Chairman and members of the Committee, I am Wayne Dowd, and I
am pleased to represent the Red River Valley Association as its
President. Our organization was founded in 1925 with the express
purpose of uniting the citizens of Arkansas, Louisiana, Oklahoma and
Texas to develop the land and water resources of the Red River Basin.
The Resolutions contained herein were adopted by the Association
during its 80th Annual Meeting in Bossier City, Louisiana on February
24, 2005, and represent the combined concerns of the citizens of the
Red River Basin Area as they pertain to the goals of the Association.
As an organization that knows the value of our precious water
resources we support the most beneficial water and land conservation
programs administered through the Natural Resources Conservation
Service (NRCS). We understand that attention and resources must be
given to our national security and the war in Iraq; however, we cannot
sacrifice what has been accomplished on our Nation's lands. NRCS
programs are a model of how conservation programs should be
administered and our testimony will address the needs of the Nation as
well as our region.
The President's fiscal year 2006 budget for NRCS indicates a
decrease of $70 million from what Congress appropriated in fiscal year
2005. In reality, NRCS is taking a major decrease in program funding
and staff years. This is reflected in the fact that NRCS manpower for
fiscal year 2006 would have to decrease by over 2,000 staff years, if
the President's budget is implemented. This is unacceptable.
This means that NRCS assistance to landowners will not be
adequately funded, to the detriment of the Nation and our natural
resources. We would like to address several of the programs
administered by NRCS. Failure to adequately fund these initiatives
would reduce assistance to those who want it and the resources that
need protection..
Conservation Operations.--This has been in steady decline, in real
dollars, over the past several years. The President's budget included
$767.8 million, which is a decrease of $69.6 million from fiscal year
2005. Maintaining a ``level'' funding level is actually a cut, due to
mandated increases in pay and benefits, in addition to continuing
increases in the ``cost of doing business''.
We request a total of $930 million be appropriated for Conservation
Operations for NRCS to meet the demands it faces today.
Conservation Technical Assistance is the foundation of technical
support and a sound, scientific delivery system for voluntary
conservation to the private users and owners of lands in the United
States. It is imperative that we provide assistance to all ``working
lands'' not just those fortunate few who are able to enroll in a
Federal program. Working lands are not just crops and pasture
(commodity staples) but includes forests, wildlife habitat and coastal
marshes. The problem is that NRCS personnel funded from ``mandatory
programs'' can only provide technical assistance to those enrolled in
these programs, leaving the majority of the agricultural community
without technical assistance. We recommend that adequate funding be
placed in ``Conservation Technical Assistance'', and allow NRCS to
provide assistance to all who are in need of assistance.
It is our understanding that the Technical Service Providers (TSP)
program has not lived up to its expectations. It has been difficult to
fund this initiative at or below what it would cost to use NRCS
manpower. Therefore, it is an increase in funding to delivery these
services. We believe that TSPs should be used only after NRCS staffing
is brought up to levels commensurate with the increase in workload
caused by the Farm Bill, not to replace NRCS staffing.
Watershed and Flood Prevention Operations (Public Law 566 & 534).--
We are greatly disappointed that the President's Budget provided no
funding for watershed operations. There is no doubt that this is a
Federal responsibility, in conjunction with a local sponsor. This
program addresses all watershed needs to include: flood protection,
water quality, water supply and the ecosystem. There is no Corps of
Engineer, Bureau of Reclamation or FEMA program to address small
watershed needs, before disaster strikes. We recommend that Congress
hold oversight hearings to understand the importance and hear how
popular this program is to our communities.
We are very appreciative for the funding level of $75.6 million
enacted in fiscal year 2005. It is reassuring to know that both the
House and Senate realize the importance of this program to the
agricultural community.
There are many new projects, which are awaiting funds for
construction under this program. We strongly recommend that a funding
level of $200 million be appropriated for Watershed Operations
Programs, Public Law 534 ($20 million) and Public Law 566 ($180
million).
The Red River has proven, through studies and existing irrigation,
to be a great water source for supplemental irrigation. The two
projects mentioned below, will use existing, natural bayous to deliver
water for landowners to draw from. The majority of expense will be for
the pump system to take water from the Red River to the bayous. These
projects will provide the ability to move from ground water dependency
to surface water, an effort encouraged throughout the Nation. Both will
enhance the environmental quality and economic vitality of the small
communities adjacent to the projects.
Walnut Bayou Irrigation Project, AR.--Plans and specifications have
been completed and it is ready to proceed into the construction phase.
An irrigation district has been formed and they are prepared to take on
the responsibility to generate the income for the O&M required to
support this project. We request that $4,000,000 be appropriated for
these projects in fiscal year 2006.
Red Bayou Irrigation Project, LA.--The plans and specifications
have been completed, making this project ready for construction in
fiscal year 2006. An irrigation district has been formed and is
prepared to collect funds to support the O&M for this proposed system.
We request that $2,500,000 be specifically appropriated to begin
construction in fiscal year 2006.
Watershed Rehabilitation.--More than 10,400 individual watershed
structures have been installed nationally, with approximately one-third
in the Red River Valley. They have contributed greatly to conservation,
environmental protection and enhancement, economic development and the
social well being of our communities. More than half of these
structures are over 30 years old and several hundred are approaching
their 50-year life expectancy. Today you hear a lot about the watershed
approach to resource management. These programs offer a complete
watershed management approach and should continue for the following
reasons:
--They protect more people and communities from flooding now than
when they were first constructed.
--Their objectives and functions sustain our Nation's natural
resources for future operations.
--They are required to have local partners and be cost shared.
--The communities and NRCS share initiatives and decisions.
--They follow NEPA guidelines and enhance the environment
--They often address the need of low income and minority communities.
--The benefit to cost ratio for this program has been evaluated to be
2.2:1.
What other Federal program can claim such success?
There is no questioning the value of this program. The cost of
losing this infrastructure exceeds the cost to reinvest in our existing
watersheds. Without repairing and upgrading the safety of existing
structures, we miss the opportunity to keep our communities alive and
prosperous. It would be irresponsible to dismantle a program that has
demonstrated such great return and is supported by our citizens. We
cannot wait for a catastrophe to occur where life is lost to decide to
take on this important work.
A 1999 survey, conducted in 22 States, showed that 2,200 structures
are in need of immediate rehabilitation at an estimated cost of $543
million. The President's budget neglects the safety and well being of
our community needs by placing only $15.1 million for this program.
This is drastically lower than the levels authorized in the 2002 Farm
Bill. We request that $65 million be appropriated to provide financial
and technical assistance to those watershed projects where sponsors are
prepared to commence rehabilitation measures, as directed in the 2002
Farm Bill.
Watershed Survey and Planning.--In fiscal year 2005 $7.1 million
was appropriated to support this extremely important community program.
NRCS has become a facilitator for the different community interest
groups, State and Federal agencies. In our States such studies are
helping identify resource needs and solutions where populations are
encroaching into rural areas. The Administration decided to fund this
program with only $5.1 million. We disagree with this low level and ask
Congress to fund this program at the appropriate level. As our
municipalities expand, the water resource issue tends to be neglected
until a serious problem occurs.
Proper planning and cooperative efforts can prevent problems and
insure that water resource issues are addressed.
We request this program be funded at a level of $35 million.
We request that the following two studies be specifically
identified and funded in the fiscal year 2006 appropriation bill.
Maniece Bayou Irrigation Project, AR.--This is a project in its
initial stage of planning. An irrigation district is being formed to be
the local sponsor. This project transfers water from the Red River into
Maniece Bayou where landowners would draw water for supplemental
irrigation. We request that $200,000 be appropriated to initiate the
plans and specifications.
Lower Cane River Irrigation Project, LA.--The transfer of water
from the Red River to the Lower Cane River will provide opportunities
for irrigation and economic development. Funds are needed to initiate a
Cooperative River Basin Study. We request that $250,000 be appropriated
for this study.
Emergency Watershed Protection Program.--This program has
traditionally been funded through Emergency Supplemental Appropriations
and administered by NRCS through its Watershed and Flood Prevention
Operations. It has traditionally been a zero budget line item, and has
relied on supplemental appropriations. Since the Administration has
decided to ``zero out'' Watershed and Flood Prevention Operations do
they intend to eliminate this program, since both are included in the
same authorization?
As our populations expand and shift, land use changes and
intensifies. Impacts of severe weather events are becoming more of an
impact on our communities, rivers and related eco-systems. These major
weather events will have an adverse impact requiring urgent NRCS
assistance. It is important that NRCS is prepared for a rapid response,
not waiting for legislative action to provide funds for emergency work.
With some funds available, they would be able respond immediately to an
emergency when it occurs and not have to wait for an emergency
supplemental to be passed.
We request that $20 million be appropriated as ``seed'' funding to
allow NRCS to react to an emergency while the full need is determined
and added through a supplemental appropriation.
Resource Conservation and Development (RC&D).--This has always been
a well-received program by the Administration. Their budget proposal of
$25.6 million is not adequate to accomplish the needs of the Nation.
This program leverages its resources at 4 to 1, with communities, local
sponsors and non-government organizations. The benefits are realized at
over 14 to 1, average per project. What other Federal program can claim
such a return on investment?
We request that $51 million be appropriated for this program.
Mandatory Accounts (CCC) Technical Assistance (TA).--Request for
assistance through the CCC programs has been overwhelming. Requests far
exceed the available funds and place an additional workload on NRCS's
delivery system. Adequate funding for TA must be provided at the full
cost for program delivery. This includes program administration,
conservation planning and contracting with each applicant. Congress, in
the 2002 Farm Bill, wisely increased conservation programs each year.
This increased investment, with the multi-year CCC programs, will
increase the NRCS workload. It is imperative that NRCS receive the TA
funding levels required to administer these programs. If they do not
receive full funding these programs will not realize their full
capability.
Over 70 percent of our land is privately owned. This is important
in order to understand the need for NRCS programs and technical
assistance. Their presence is vital to ensuring sound technical
standards are met in conservation. These programs not only address
agricultural production, but sound natural resource management. Without
these programs and NRCS properly staffed to implement them, many
private landowners will not be served adequately to apply conservation
measures needed to sustain our natural resources for future
generations.
We are all aware of the issue with TMDL levels in our waterways. If
our Nation is to seriously address this we must look at the impacts
from our farmlands. Assistance for land treatment plans and plan
implementation is exactly what the NRCS Watershed programs are intended
to address. Watershed programs should be receiving an increase in
funds, not zeroed out!
With these new clean water initiatives why do we ignore the agency
that has a proven record for implementing watershed conservation
programs? Congress must decide; will NRCS continue to provide the
leadership within our communities to build upon the partnerships
already established? It is up to Congress to insure NRCS is properly
funded and staffed to provide the needed assistance to our taxpayers
for conservation programs.
These NRCS studies and watershed projects are an example of true
cooperative ``conservation'' initiatives. There is an interface with
communities and local sponsors at each step of the process and local
sponsors do cost share at the levels expected of them.
All these programs apply to the citizens in the Red River Valley
and their future is our concern. The RRVA is dedicated to work toward
the programs that will benefit our citizens and provide for high
quality of life standards. We therefore request that you appropriate
the requested funding within these individual programs, to insure our
Nation's conservation needs are met.
I thank you for the opportunity to present this testimony on behalf
of the members of the Red River Valley Association and we pledge our
support to assist you in the appropriation process. Please direct your
comments and questions to our Executive Director, Richard Brontoli,
P.O. Box 709, Shreveport, LA 71162, (318) 221-5233, E-mail:
redriverva@hotmail.com.
______
Prepared Statement of the Society for Women's Health Research
On the behalf of the Society for Women's Health Research and the
Women's Health Research Coalition, we are pleased to submit testimony
in support of increased funding for biomedical research, and more
specifically women's health research.
The Society is the only national non-profit women's health
organization whose mission is to improve the health of women through
research, education, and advocacy. Founded in 1990, the Society brought
to national attention the need for the appropriate inclusion of women
in major medical research studies and the need for more information
about conditions affecting women disproportionately, predominately, or
differently than men.
The Coalition was created by the Society in 1999 as a way to
strengthen our grassroots advocacy with scientists and researchers and
clinicians from across the country who are concerned and committed to
improving women's health research. The Coalition now has more than 620
members from across the country, including leaders within the
scientific community and medical researchers from many of the country's
leading universities and medical centers, directors from various
Centers of Excellence on Women's Health as well as leading voluntary
health associations, and pharmaceutical and biotechnology companies.
The Society and the Coalition are committed to advancing the health
status of women through the discovery of new and useful scientific
knowledge. We believe that sustained funding for the women's health
research programs that are conducted across the federal research
agencies is necessary if we are to accommodate the health needs of the
population and advance the Nation's research capability. Therefore, we
urge your support for the Food and Drug Administration (FDA) Office of
Women's Health and request funding of $5 million in order that it may
meet its program goals.
FOOD AND DRUG ADMINISTRATION OFFICE OF WOMEN'S HEALTH
As you know, the FDA has jurisdiction over drugs, medical devices,
vaccines, blood and tissue products, foods and cosmetics. Within the
FDA, we would like to highlight women's health and sex and gender-based
research, areas in which the Society long has been a proponent.
The Office of Women's Health at the FDA was administratively
established in 1994 and has been critical to women's health, both
within and outside the agency. The office aims to provide scientific
and policy expertise on gender sensitive regulatory and oversight
issues; to correct gender disparities in the areas for which the FDA is
responsible--drugs, devices, and biologics and to monitor women's
health priorities, providing leadership and an integrated approach
across the agency. Finally, it forms partnerships, within the
government and with outside groups and organizations. Currently, the
Office of Women's Health at the FDA is doing admirable work, but its
inadequate budget prevents this Office from fully accomplishing its
mission.
In 2001, the Society submitted testimony on behalf of the Office of
Women's Health and in support of a centralized database at the FDA to
coordinate clinical trial oversight, monitor the inclusion of women in
clinical trials, oversee the parameters of informed consent, and
identify training needs. Due to Society efforts and this Committee's
commitment, in 2002 Congress provided the Office of Women's Health at
the FDA with funds to develop an agency-wide database focused on women
health activities to include demographic data on clinical trials. The
FDA has been developing this database now known as the ``Demographic
Information and Data Repository'' to review clinical studies, enhance
product labeling, identify knowledge gaps, and coordinate data
collection.
While progress has been made, the database is far from up and
running. Currently, the FDA receives large volumes of information in
applications from drug manufacturers for review and evaluation. The FDA
reviewers must comb through the submitted drug trial reports and
digital data in as many as twelve formats to evaluate a new drug's
safety and effectiveness. With no database, reviewers must handpick
gender, age, and ethnicity information from stacks of reports and craft
their own data comparisons. This is time consuming, makes the review
process less efficient, and delays access to important information.
Scientific and medical advances are occurring rapidly and the public
needs and deserves access to the most recent and accurate information
regarding their health. Therefore, in order to fully capitalize on the
potential of the data warehouse and the resulting wealth of
information, we urge Congress to commit $1 million for the Demographic
Information and Data Repository.
Scientists have long known of the anatomical differences between
men and women, but only within the past decade have they begun to
uncover significant biological and physiological differences. Sex
differences have been found everywhere from the composition of bone
matter and the experience of pain to the metabolism of certain drugs
and the rate of neurotransmitter synthesis in the brain. Sex-based
biology, the study of biological and physiological differences between
men and women, has revolutionized the way that the scientific community
views the sexes. The evidence is overwhelming, and as researchers
continue to find more and complex biological differences, they are
gaining a greater understanding of the biological and physiological
composition of both sexes.
Much of what is known about sex differences is the result of
observational studies, or is descriptive evidence from studies that
were not designed to obtain a careful comparison between females and
males. The Society has long recognized that the inclusion of women in
study populations by itself was insufficient to address the inequities
in our knowledge of human biology and medicine, and that only by the
careful study of sex differences at all levels, from genes to behavior,
would science achieve the goal of optimal health care for both men and
women. This has given rise to sex-based biology.
Many sex differences are already present at birth, whereas others
develop later in life. These differences play an important role in
disease susceptibility, prevalence, time of onset and severity and are
evident in cancer, obesity, coronary heart disease, autoimmune, mental
health disorders, and other illnesses. Physiological and hormonal
fluctuations may also play a role in the rate of drug metabolism and
effectiveness of response in females and males. This research needs to
be supported and encouraged.
Building upon sex differences research, the Society encourages the
establishment of drug-labeling requirements to ensure that drug labels
include language about differences experienced by women and men.
Further, we advocate for research on the comparative effectiveness of
drugs with specific emphasis on data analysis by sex.
Our country's drug development process has succeeded in developing
new and better medicines for the health of both women and men. However,
there is no requirement that the research data about a new drug's
safety and effectiveness be analyzed for sex differences or that
information about the ways drugs may differ in various populations
(e.g., women requiring a lower dosage because of different rates of
absorption or chemical breakdown) be included in prescription drug
labels and other patient educational and instructional materials.
Additionally, proper drug labeling is not always the complete
solution. If the drug is not a new type of product or if the sex-
specific information is detected only in post-marketing studies, the
drug label will not be the primary source of information for the
prescribing physician, and it may be difficult to get new information
incorporated into physicians' prescribing habits.
The Society is encouraged by the FDA's commitment to improve the
health of women and its recognition of the need for more specific drug
labeling by sex. We believe the opportunity is before us to communicate
the sex differences data discovered from clinical trials to the medical
community and consumers (patients) through drug labeling and packaging
inserts. As part of advancing the need to analyze and report sex
differences, the Society encourages the FDA to continue adequately
addressing the need for accurate drug labeling to identify important
sex and gender differences as well as to ensure appropriate data
analysis of post market surveillance reporting for these differences.
As part of their outreach and education efforts, the Office of
Women's Health at the FDA has been committed to ensuring that women in
every community in the United States have the vital information they
need to make healthy choices for themselves and their families. For
example, the office launched a nationwide menopausal hormone therapy
information campaign in collaboration with other agencies and women's
health organizations. The campaign distributed materials for women to
use as tools to gain a better understanding of the health risks and
benefits of hormone therapy.
To ensure adequate analysis and recording of sex and gender
disparities in drugs, devices and biologics and appropriate regulatory
policy, and accurate drug labeling, we believe that the Office of
Women's Health at the FDA should be funded at a total of $5 million so
that it can create, implement, and coordinate gender sensitive programs
vital to women and men throughout the Nation.
In conclusion, Mr. Chairman, we thank you and this Committee for
its strong record of support for women's health. We look forward to
continuing to work with you to build a healthier future for all
Americans.
______
Prepared Statement of the Society of American Foresters
The Society of American Foresters (SAF) represents over 15,000
forestry professionals dedicated to the conservation of our forest
resources. SAF members use their education and experience to better use
and manage public and private forest resources for this generation and
the next. Only with the proper resources can these professionals both
within and outside the Federal agencies help to make this happen. SAF
offers the following suggestions that we believe will ensure forest
resource professionals can continue to conserve and improve the
Nation's forest resources and ensure the many forest goods and services
are provided to benefit society.
SAF is deeply concerned with the proposed cuts to several forestry
programs within the U.S. Department of Agriculture budget, as noted
below. We strongly urge reconsideration of these cuts in light of the
impacts they will have on the Nation's forests and their conservation.
Cooperative Forestry Research Program (McIntire-Stennis Act)
The funding provided through the Cooperative Forestry Research
Program has provided the backbone of forestry research in the United
States at the various forestry universities and colleges across the
country since 1962. At the same time, this program helps to train
tomorrow's forestry professionals. Offering opportunities for graduate
students to gain real research experience while also getting an
advanced education, ensures that this country retains the capacity to
manage its forests today and in the future. For these reasons, SAF
strongly disagrees with the proposed 50 percent cut to the Cooperative
Forestry Research Program and urges Congress to ensure this program is,
at a minimum, funded at $22 million, the level provided in fiscal year
2005.
Forestry research is critically important to conserving forests
while at the same time enabling society to benefit from the diverse
array of goods, services and values that forests can provide through
sustainable management.
SAF believes that forestry research should be funded through both
public and private investments. The Cooperative Forestry Research
Program helps to make this happen. With each dollar provided through
this program, forestry schools leverage an additional $9 from other
Federal, State, and private sources. In fact, this program provides
only 10 percent of the funding for public forestry research, extension
and education at public colleges and universities, but without this 10
percent the other 90 percent could not be leveraged. SAF recognizes
that formula funds are sometimes regarded as ``entitlements'' and are
perceived as lacking in accountability. However, we believe that this
program provides important and different research opportunities
relative to the larger competitive grant programs. Perceptions of
improved accomplishment reporting can be readily dealt with. Cutting
this program's funding in half simply halves the program's
effectiveness without addressing the perceived problems. We look
forward opening a dialogue with Congress and the Administration about
this program and potential improvements and urge that this conversation
take place before changes are made to this critical program.
National Research Initiative
SAF supports the proposed $70 million increase in the National
Research Initiative's Competitive Grants Program (NRICGP) but
recommends allocating at least 10 percent of this funding to renewable
natural resource research. Forestland constitutes over 30 percent of
this country's land base and currently, less than 6 percent of funding
provided through the NRICGP funds forestry research. As noted above,
these forests provide high-demand goods and services such as clean
water and air, wildlife habitat, hunting, fishing, and other outdoor
recreation opportunities that are an increasing part of rural
economies, and forest products that the Nation cannot survive without.
Through the NRICGP, funding is provided for research on various issues
in the biological and environmental sciences arena. While the research
currently conducted through this program is important, we believe that
this program should place more emphasis on forestry research to ensure
our professionals have the information and new ideas to succeed at a
time when more and more demands are being placed on the Nation's
forests.
We strongly believe this combination of formula-based funding
through the Cooperative Forestry Research Program and competitive-based
research funding through NRI to be appropriate if we are to maintain
the long-term stability and focus required in forestry research, and
foster new and innovative thinking characteristic of competitive
grants.
Renewable Resources Extension Act
SAF recommends funding the Renewable Resources Extension Act
through the Cooperative State Research and Extension Service at the
authorized level of $30 million. We recommend a modest increase in this
program because we believe this program has potential to greatly
improve the Nation's forests and their management.
Current budget deficits demand that every dollar invested be
leveraged as much as possible. Research funding is no exception.
Outreach and extension, which assists in the translation of research
findings to solve real world problems, greatly increase the value of
research investments. Through the RREA program, much needed outreach
and extension is provided through universities around the country.
These efforts utilize research findings, making investments in research
increasingly important.
This outreach and extension provided through the RREA program helps
the every growing number of family forest owners who own over 40
percent of the forestlands in this country, deal with the pressing
problems they face. Development pressures, wildfire and forest health
problems, declining U.S. forest products markets, and increasing
demands on family forests for environmental services such as clean
water and wildlife habitat, are just a few of the challenges family
forest owners must deal with. Family forest owners need information and
assistance to be able to address these problems, the RREA program helps
make this possible.
Natural Resources Conservation Service
SAF is extremely concerned with the proposed cuts to the Natural
Resources Conservation Service (NRCS) conservation operations account
and recommends funding this account at $837 million, as provided in
fiscal year 2005. The Administration's proposal would cut funding for
this account by almost 10 percent of current funding levels,
drastically affecting the Agency's capacity to provide much needed
technical assistance to family forest owners and farmers with
incidental forest land.
Through NRCS' conservation operations account, family forestland
owners receive much needed assistance for a variety of conservation
practices, influencing the stewardship of these valuable resources. In
addition, the conservation operations account helps ensure conservation
programs can be implemented as mandated. Several programs administered
by NRCS are key to assisting family forest owners, including the
Environmental Quality Incentives Program, the Wildlife Habitat
Incentives Program, the Conservation Reserve Program, and the Wetlands
Reserve Program. We strongly support full funding for these programs
and will continue to work with NRCS to address family forest owner
needs through these programs.
Thank you for your consideration. We are happy to provide
additional details on any of the programs mentioned above upon request.
______
Prepared Statement of the U.S. Apple Association
The U.S. Apple Association (U.S. Apple) appreciates the opportunity
to provide this testimony on behalf of our Nation's apple industry.
Our testimony will focus on the following areas: the Market Access
Program (MAP); funding for the Specialty Crop Competitiveness Act,
Cooperative State Research, Extension and Education Service (CSREES)
and Agricultural Research Service (ARS) funding, nutrition education
and expansion of the fruit and vegetable snack program.
U.S. Apple is the national trade association representing all
segments of the apple industry. Members include 36 State and regional
apple associations representing the 7,500 apple growers throughout the
country as well as more than 500 individual firms involved in the apple
business. Our mission is to provide the means for all segments of the
U.S. apple industry to join in appropriate collective efforts to
profitably produce and market apples and apple products.
Market Access Program (MAP)
U.S. Apple encourages Congress to appropriate $200 million in MAP
funds, the level authorized in the farm bill for fiscal 2006.
The apple industry receives $3.1 million annually in export
development funds from the U.S. Department of Agriculture's (USDA)
Market Access Program (MAP). These funds are matched by grower dollars
to promote apples in more than 20 countries throughout the world. One-
quarter of U.S. fresh apple production is exported, with an annual
value of approximately $370 million.
Strong MAP funding is critical to the U.S. apple industry's efforts
to maintain and expand exports, and to increase grower profitability.
Congress recognized the importance of MAP by authorizing increased
funding in the 2002 farm bill. Over the past 2 years, congressional
appropriations have kept pace with the farm bill's authorized level.
Food Quality Protection Act (FQPA) Implementation
U.S. Apple urges full funding for the following U.S. Department of
Agriculture (USDA) administered programs to mitigate the negative
impact of FQPA implementation on apple growers.
--$16 million for the Pesticide Data Program, administered by the
Agricultural Marketing Service (AMS);
--$8.0 million for the National Agricultural Statistics Service
(NASS) pesticide-usage surveys;
--$2.0 million for the Office of Pest Management Policy administered
by the Agricultural Research Service (ARS);
--$3.7 million for minor-use registration of crop protection tools
(IR-4) administered by ARS;
--$7.2 million for area-wide IPM research administered by ARS;
--$13.5 million for the Integrated Pest Management Research Grant
Program administered by the Cooperative State Research,
Extension and Education Service (CSREES);
--$10.8 million for minor-use registration of crop protection tools
(IR-4) administered by CSREES; and
--$12.5 million for the Pest Management Alternatives Program,
Regional Pest Management Centers, Crops at Risk and Risk
Avoidance and Mitigation Program also administered by CSREES.
National Tree Fruit Technology Roadmap
U.S. Apple urges the Committee to support the apple industry's
efforts to improve its competitiveness by providing increased Federal
funding for the development and application of new technologies as
outlined below.
Codling Moth Research
The U.S. apple industry needs better pest management techniques,
improved understanding of secondary pests and the biology of pest
predators, improved mating disruption techniques, rapid and efficient
pest detection and instrumentation methods. Geographic differences in
codling moth control capabilities requires a regional approach to
research funding. U.S. Apple requests the following additional
appropriations for this problem:
$400,000 Agricultural Research Service--Yakima, Washington
$400,000 Agricultural Research Service--Kearneysville, West
Virginia
Soil Replant Disease and Rootstock Breeding Research
Soil replant disease is a poorly understood phenomenon that reduces
tree vigor and stunts tree growth in new orchards, which are planted on
the site of a previously existing orchard. A combination of organisms
such as bacteria, fungi, nematodes and viruses are suspected to play a
role in attacking the roots of new apple trees, limiting their growth
potential. This problem has surfaced as a high priority problem because
of the scarcity of new orchard sites, the need to replant existing
orchards, the high per acre cost of planting new orchards and shortage
of good options to control replant disease. Soil replant disease is a
problem for all tree fruits, including apples, pears, peaches and
cherries. Genetics and genomics research on resistance issues would be
applicable to all of these tree fruit crops.
Research is needed to better understand site-specific drivers
causing the disease and how the disease causes damage. Research is
necessary to develop biorational and sustainable controls. Research is
needed to explore possible avenues for genetic resistance of
rootstocks. U.S. Apple requests the following additional appropriations
for this problem:
$400,000 Agricultural Research Service--Geneva, New York
$400,000 Agricultural Research Service--Wenatchee, Washington
Fruit Quality Research
The future of the U.S. apple industry will depend on the ability of
apple growers to consistently grow and market apples with superior
quality. Improved fruit quality will not only ensure greater
international competitiveness, but it will increase consumer demand for
apples.
Research is needed on the physical, chemical and genetic
composition of apples so apple growers can produce apples with superior
consumer traits, such as texture, aroma, and nutrition, and apples with
superior production traits including uniform ripening and better
storage characteristics and systems to deliver better fruit quality to
consumers through improved defect and quality sorting. This research
would also be useful for other tree fruits such as peaches. U.S. Apple
requests the following additional appropriations for this problem:
$750,000 Agricultural Research Service--Albany, California
$750,000 Agricultural Research Service--Wenatchee, Washington
Automation, Sensors and Precision Agriculture Research
Improving labor productivity is a critically important goal for the
apple industry as it strives to remain competitive with low-wage
international competitors. Labor accounts for approximately 50 percent
of the cost of producing U.S. apples. Tree fruit industries must
identify and incorporate new technologies that will minimize low skill
tasks, enhance worker productivity and safety, reduce production and
handling costs, decrease seasonality of labor, and maximize fruit
quality delivered to consumers. This research would also be applicable
to a host of tree fruits including cherries, peaches, almonds and
apples and pears.
$4,000,000 Agricultural Research Service--Kearneysville, West
Virginia
Genetics and Breeding
Research on genetics, genomics, and plant breeding are high
priority area for tree fruit growers who produce a variety of crops,
such as apples, cherries, peaches and almonds. Genetics and genomics
have to be applied through an active plant-breeding program to be
successful.
The U.S. apple industry supports the appropriations of $350,000 in
Federal research funds for cherry genetics, genomics and plant
breeding, which will also benefit tree fruit crops such as apples,
peaches and almonds using functional genomics approaches to extend the
research benefits. The effort would be national in scope and lead by
Dr. Amy Iezzoni at Michigan State University (MSU). This research,
which will provide the much needed scientific knowledge needed to
develop better varieties in the future that would reduce labor costs,
provide new disease and insect resistant varieties, and enhance overall
fruit quality. The U.S. apple industry believes strongly in aggressive
research programs in this area. This research keeps U.S. growers on the
cutting edge of new varieties and rootstocks. U.S. Apple requests the
following additional funding to address this need:
$350,000 Cooperative State Research Education And Extension
Service--Michigan State University
Temperate Fruit Fly Research Position--Yakima, Wash.
U.S. Apple requests continued funding of $300,000 to conduct
critical research at the USDA ARS laboratory in Yakima, Wash. on
temperate fruit flies, a major pest of apples.
The Yakima, Wash., USDA ARS facility is conducting research
critical to the crop protection needs of the apple industry. FQPA
implementation has reduced the number of pesticides currently available
to growers for the control of pests, such as cherry fruit fly and apple
maggot. Left unchecked, these temperate fruit flies can be devastating.
Thus, research is needed to develop alternative crop protection methods
as growers struggle to cope with the loss of existing tools. While
Congress appropriated $300,000 last fiscal year for this critical
research, the administration's proposed budget for fiscal 2006 rescinds
this funding.
Post Harvest Quality Research Position--East Lansing, Mich.
U.S. Apple urges Congress to maintain baseline funding of $309,600
in the USDA ARS fiscal year 2006 budget for the postharvest quality
research position in East Lansing, Mich.
The East Lansing, Mich., USDA ARS facility is conducting research
critical to the future survival of the U.S. apple industry. Using a
series of new sensing technologies, researchers at this facility are
developing techniques that would allow apple packers to measure the
sugar content and firmness of each apple before it is offered to
consumers. Research indicates consumer purchases will increase when
products consistently meet their expectations, suggesting consumers
will eat more apples once this technology is fully developed and
employed by our industry. While Congress appropriated $309,600 last
fiscal year for this critical research, the administration's proposed
budget for fiscal 2006 rescinds this funding.
Specialty Crops Competitiveness Act
U.S. Apple urges Congress to fund the Specialty Crop
Competitiveness Act at the authorized level of $54.5 million for fiscal
year 2006.
The Specialty Crop Competitiveness Act (SCCA) was introduced in the
108th Congress by Reps. Cal Dooley (D-CA) and Doug Ose (R-CA) and in
the Senate by Sens. Craig (R-ID) and Stabenow (D-MI). The bill was
designed to strengthen demand, reduce production costs, and enhance
production and marketing efficiencies.
A scaled-back version of the SCCA passed Congress last fall and was
signed into law by President Bush in December. The law authorizes a
total of $54.5 million per year but does not mandate funding. The
majority of the funds authorized funds would go toward block grants,
with each State department of agriculture being guaranteed a minimum of
$100,000.
Fresh Fruit and Vegetable Snack Program
U.S. Apple urges Congress to include $42 million in the USDA budget
to expand the fruit and vegetable snack program to 25 schools in each
of the 42 remaining States.
The 2002 farm bill established the Fruit and Vegetable Pilot
Program to promote consumption of fruits and vegetables among school
children by providing free produce to schools in 25 schools in each of
four States (Iowa, Indiana, Michigan, Ohio and one Indian Tribal
Organization in New Mexico). The Child Nutrition and WIC
Reauthorization Act of 2004 made the pilot permanent and expanded it to
25 schools in Mississippi, three additional States (North Carolina,
Pennsylvania and Washington were chosen by USDA) and two additional
Indian Reservations.
Reports from the original pilot showed that students were
increasing their consumption of fruits and vegetables, choosing more
fruits and vegetables for lunch, and asking their parents for fruits
and vegetables at home. The fruit and vegetable snack program works to
educate children about the healthy eating habits that will last a
lifetime. The fruit and vegetable snack program should be expanded to
25 schools in every State.
Nutrition Education to Promote Health and Fight Obesity
U.S. Apple strongly encourages Congress to fully fund the nutrition
education programs authorized under the Child Nutrition and WIC
Reauthorization Act of 2004.
Childhood obesity is a national epidemic. Numerous studies have
shown that children in the United States are not getting anywhere near
the recommended servings of fruits and vegetables per day. According to
the Centers for Disease Control (CDC) obesity treatment cost over $90
million per year. USDA estimates that we could save over $70 billion
per year with better diets.
Nutrition education will be key in changing these behavior
patterns. The Child Nutrition and WIC Reauthorization Act of 2004
authorized funding up to 1 cent per school lunch served ($58 million)
for nutrition education programs, materials and staffing. The
President's budget did not include this funding.
The U.S. Apple Association thanks the committee for this
opportunity to present testimony in support of the U.S. apple
industry's Federal agricultural funding requests.
______
Prepared Statement of the U.S. Marine Shrimp Farming Consortium
Mr. Chairman, we greatly appreciate the opportunity to provide
testimony to you and the Subcommittee, to thank you for your past
support, and to discuss the achievements and opportunities of the U.S.
Marine Shrimp Farming Consortium (USMSFC), funded under the Federal
initiative, Shrimp Aquaculture.
We bring to your attention the success of the U.S. Marine Shrimp
Farming Consortium and its value to the Nation. The Consortium consists
of institutions from seven States: the University of Southern
Mississippi/Gulf Coast Marine Laboratory, Mississippi; the Oceanic
Institute, Hawaii; Tufts University, Massachusetts; Texas Agricultural
Experiment Station, Texas A&M University, Texas; Waddell Mariculture
Center, South Carolina; the University of Arizona, Arizona; and
Nicholls State University, Louisiana. These institutions, which oversee
the USMSFC, have made major advances in technology development and
services to support the U.S. shrimp farming industry. The USDA in its
2004 program review recognized the program's excellent scientific
performance, output, and multi-state collaborative efforts. The
Consortium is at the crossroads of contributing to major growth of the
U.S. shrimp farming industry, consolidating its competitive advantages,
and satisfying consumer's demands for safe and wholesome seafood
products. Shrimp is the number one consumed seafood product in the
United States, yet contributes to a $3.6 billion trade deficit, second
only to the import of oil for the deficit contributed by natural
resource products.
Accomplishments
The Consortium, in cooperation with private industry, industry
associations, and government agencies has generated new technologies
for producing safe and premium quality marine shrimp at competitive
prices. To date, the program has: (1) established the world's first and
currently most advanced breeding and genetic selection program for
marine shrimp; (2) completed pioneering research and development of
advanced diagnostic tools for disease screening and control; (3)
described the etiology of shrimp diseases associated with viral
pathogens; (4) fostered shrimp production at near-shore, inland/rural
farm and even desert sites; (5) served a lead role in the Joint
Subcommittee on Aquaculture's efforts to assess the threat of globally
transported shrimp pathogens; (6) served on the Office of International
Epizootics, recommending country-of-origin labeling of imported shrimp
products to combat the spread of exotic disease pathogens, subsequently
adopted by the USDA in its 2002 Farm Bill; (7) supplied the U.S.
industry with selectively bred and disease-resistant shrimp stocks; (8)
developed advanced technology for biosecure shrimp production systems
to protect both cultured and native wild stocks from disease; and (9)
developed new feed formulations to minimize waste generation and
enhance the use of domestic grains and oilseed products. These
substantial accomplishments advance the continued growth of the
domestic industry, place an important emphasis on environmental
sustainability, address concerns for the safety and quality of our
seafood supply, and increase market competitiveness.
Judging from the state of the industry today, USMSFC efforts
continue to have measurable positive effect. Coastal farming continues
to lead in the production of cultured shrimp in the United States, and
inland farming has added new dimensions and growth to the industry.
Improvements in farm management practices coupled with the widespread
use of disease-resistant stocks have resulted in bumper crops for the
industry over the last several years. Domestic farmed shrimp production
has tripled over the last 6 years, yielding an average growth rate of
20 percent per year. The year 2004 recorded over 12 million pounds of
shrimp produced in addition to nearly $5 million recorded in sales of
broodstock animals for improved market characteristics.
With reliable production in place, we have also seen a commensurate
geographic expansion of the industry within the United States from
three to seven States in the last 10 years. A broader industry base,
while increasing production through the addition of new farms, also
provides additional protection to the industry by geographically
isolating different regional sectors in the event of disease outbreaks
or natural disaster. Significant amounts of shrimp are now being
produced in Texas, South Carolina, Florida, Hawaii, Arizona, Alabama,
and Arkansas. Several other States are now beginning to explore
production with the newer technologies being developed.
Industry Vulnerability
While exceptional progress has been made, this emerging industry is
continually confronted with new challenges. The industry depends on the
USMSFC for leadership and innovative technology development. As a
result of development of high-health and improved stocks, disease
diagnosis, new feeds, and new production technologies and farming
approaches, the domestic industry has maintained relative stability,
while other countries have had major losses in their production due to
diseases and environmental problems. Disease losses due to exotic
viruses in Asia and Latin America during the past 5 years have
approached $6 billion USD.
Diseases present in imported commodity shrimp products threaten not
only the emerging domestic shrimp farming industry, but also the
Nation's native shrimp stocks. During 2004, limited disease outbreaks
did occur in Texas and Hawaii that were caused by a breakdown in
biosecurity protocols against imported shrimp products. A quick
response of the USMSFP, working in concert with the USDA's Animal and
Plant Health Inspection Services and other agencies in the State of
Texas, helped identify and isolate these outbreaks, limit the spread,
and minimize the loss in production nationwide.
While significant progress has been made in risk assessment and
risk management with visible success, the industry and the USMSFC must
remain constantly vigilant and proactive to further improve global
competitiveness. In addition to providing significant input on the
development of national and international regulatory standards for
shrimp farmers, important service work for governmental agencies and
NGOs keeps us continuously apprised of new developments pertaining to
emerging regulations so that USMSFC research plans can be kept
proactively responsive to dynamic shifts in industry needs.
The overwhelming threat facing the U.S. marine shrimp farming
industry today is the significant decline in market prices for domestic
shrimp due to a surge of foreign imports over the last 3 years. The
decline has also seriously threatened the domestic shrimp harvest
industry. Average U.S. farm gate prices have fallen 40 percent percent
since then, constraining profitability and plans for industry
expansion. Anti-dumping tariffs imposed in February 2005 have not nor
are forecasted to stem the tide of rising imports, or improve domestic
shrimp prices as intended. Affected buyers and distributors have
largely absorbed those costs or producers have switched to product
forms not covered by the tariffs. Moreover, other countries not named
on the order have filled any voids with increased imports into the
United States.
Concerns also have been heightened over food safety issues
associated with unregulated use of antibiotics and fecal-borne
contaminants due to questionable production practices in certain
countries. Further, due to disease outbreaks worldwide, several foreign
countries have switched production to the dominant species in the
United States, eroding a previous competitive advantage. While it is
important that a level playing field be created through reexamination
of trade and food safety issues, more technologically advanced and
innovative approaches are now critically needed to leverage U.S.
industry gains, create competitive advantage, and improve
profitability. Innovative ways need to be sought to offset low prices
and to distinguish and add value to the domestic product to provide a
competitive edge in the marketplace and to ensure the safety of the
domestic seafood supply.
Industry Independence
In fact, despite recent price and profitability trends, investor
confidence is rising as a result of the work of the Consortium. New
farms are emerging utilizing new and improved technologies, while
others are working in cooperation with the Consortium on more advanced
approaches that are nearing fruition. In addition to supporting today's
industry, our advanced, high-density biosecure shrimp production
systems are now developed to the point for further expansion of shrimp
farming into near-shore, inland/rural and desert sites away from the
environmentally sensitive coastal zone. We now have in place the
economic models that will appropriately direct research to ensure
economic viability, taking in consideration all associated biological,
regional, and economic risk factors. Importantly, these new production
technologies produce the highest quality and safest shrimp, utilize
U.S. grain and oilseed products for feed production, and do not pose
any threat to the environment. These important traits of an evolving
domestic industry can be exploited to gain competitive edge, offset
declining prices, and ensure the quality and safety of shrimp for the
consumer. Clearly, the U.S. shrimp farming industry has emerged solid
from near collapse in the early 1990s, and appears well poised for a
new phase of growth, provided the technologies and innovations are in
place to support a larger, more diverse, and more competitive domestic
industry for the new millennium.
To support existing efforts and technology transfer and plans for
new dimensions to the research to address recent profitability issues,
an increase in the current funding level from $3.941 million to $6
million is requested. The increase will be used to: strengthen the
Consortium's biotechnology and molecular capabilities and activities to
support rapid and more advanced disease monitoring and genetic
selection efforts; accelerate the development of new genetic lines for
market advantage; advance high-density production prototypes to
commercial-scale testing; determine the mechanisms of disease immunity
in shrimp for protection of both farmed and wild shrimp stocks; and
address niche market technologies for competitive advantage. In
addition to these needed technological innovations, increased funding
will support new efforts to promote institutional innovations that will
enable expansion and vertical integration of the domestic industry,
including examination of regulatory impediments to shrimp aquaculture;
the effect of farm insurance; development of cooperatives; and the
socioeconomics of existing and advanced, high-density production
systems.
Mr. Chairman, the U.S. shrimp farming industry and our Consortium
deeply appreciate the support of the Committee and respectfully ask for
a favorable consideration of this request.
______
Prepared Statement of the United States Telecom Association
SUMMARY OF REQUEST
Project Involved
Telecommunications Loan and Grant Programs Administered by the
Rural Utilities Service of the U.S. Department of Agriculture.
Actions Proposed
--Supporting Rural Utilities Service (RUS) loan levels and the
associated funding subsidy, as required, for the 5 percent
direct loan program and cost of money programs in fiscal year
2006 in amounts requested in the President's budget. Supporting
a continuation of the $125 million loan level as contained in
the fiscal year 2005 Agriculture Appropriations Act for the
guarantee program. Also supporting $358,875,000 in funding for
broadband telecommunications loans, as recommended in the
President's budget. Supporting the Administration's proposal to
transfer the $175 million in loan authority currently allocated
to the Rural Telephone Bank to the cost of money program.
--Also, except in the event of liquidation or dissolution of the
Rural Telephone Bank per Sec. 411 of the Rural Electrification
Act of 1936, as amended, supporting an extension of the
prohibition on retiring more than 5 percent of the Class A
stock of the Rural Telephone Bank, supporting the prohibition
on maintaining any account or subaccount within the accounting
records of the Rural Telephone Bank which has not specifically
been authorized by statute, supporting the prohibition against
the transfer of Rural Telephone Bank funds to the general fund
as well as the requirement that Treasury pay interest on all
Bank funds deposited with it.
--Opposing the proposal contained in the budget to transfer funds
from the unobligated balances of the liquidating account of the
Rural Telephone Bank for the Bank's administrative expenses.
--Opposing the rural recertification proposal through denial of funds
for a rule change.
--Supporting $25 million for telemedicine and distance learning
grants in rural areas.
I am Walter B. McCormick, Jr., President and CEO of the United
States Telecom Association (USTA), the premier trade association
representing service providers and suppliers for the telecom industry.
USTA's 1,200 member companies offer a wide range of services, including
local exchange, long distance, wireless, Internet, VOIP, IP video and
cable television service. Our membership ranges from the smallest rural
co-op to some of the largest corporations in American. I submit this
testimony in the interests of the members of USTA and the customers
they serve.
USTA members firmly believe that the targeted assistance offered by
a strong RUS telecommunications loan program remains essential to a
healthy and growing rural telecommunications industry that contributes
to the provision of universal telecom service. We appreciate the strong
support this Committee has provided for the RUS telecom program since
its inception in 1949 and look forward to a vigorous program for the
future.
A CHANGING INDUSTRY
Nearly a decade has passed since the President signed the
Telecommunications Act of 1996, a landmark piece of legislation in its
time, and calls are multiplying for the Act to be updated to address
today's reality of intermodal competition. The current system of
government-managed competition in the telecom industry is a tremendous
obstacle to investment, economic growth and jobs creation which are
important to all Americans, but particularly for those living in
telecom-dependent rural America. The financial markets recognize that
the current system of inequitable government-managed competition cannot
stand. That recognition is reflected in the availability and pricing of
capital to telecommunications entities. Dramatic changes in technology,
such as Voice over Internet Protocol (VOIP), and the wide use of
wireless service to the point of market parity, have caused great
uncertainty for carriers serving the most challenging areas of our
Nation. During these changing times, access to a reliable source of
capital such as the RUS loan programs is key to the system upgrades
which will enable rural areas to experience the economic growth and job
creation that a freely competitive market with ready access to fairly
priced capital can provide.
The need for modernization of the telecommunications technology
employed by RUS borrower rural telecom companies has never been
greater. In addition to upgrading to next generation networks to allow
new services to be extended to rural subscribers, it is critically
important that rural areas be included in the nationwide drive for
greater bandwidth capacity. In order to provide higher speed data
services, such as Digital Subscriber Line (DSL) or even fiber optic
connections to the Internet, outside plant must be modernized and
switching must be migrated to new platforms. With current technology,
DSL services cannot be provided to customers located on lines more than
a few miles from the switching office. Rural areas have a significant
percentage of relatively long loops and are therefore particularly
difficult to serve with higher speed connections. Rural telecom
companies are doing their best to restructure their networks to shorten
loops so that DSL may be provided, but this is an expensive proposition
and may not be totally justified by market conditions. However, these
services are important for rural economic development, distance
learning and telemedicine. RUS-provided financial incentives for
additional investment encourage rural telecommunications companies to
build facilities which allow advanced services to be provided. The
externalities measured in terms of economic development and human
development more than justify this investment in the future by the
Federal Government.
Greater bandwidth and packet switching capabilities are crucial
infrastructure elements which will allow rural businesses, schools and
health care facilities to take advantage of the other programs
available to them as end users. The money spent on having the most
modern and sophisticated equipment available at the premises of
businesses, schools or clinics is wasted if the local
telecommunications company cannot afford to build facilities that
quickly transport and switch the large amounts of voice, video and data
that these entities generate. RUS funding enhances the synergies among
the FCC and RUS programs targeted at improving rural education and
health care through telecommunications.
The RUS program helps to offset regulatory uncertainties related to
universal service support, interstate access revenues and
interconnection rules with a reliable source of fairly priced, fixed-
rate long term capital. It is a voluntary program designed to provide
incentives for local telecom companies to build the facilities
essential to economic growth.
RUS endures because it is a brilliantly conceived public-private
partnership in which the borrowers are the conduits for the Federal
Government benefits that flow to rural telephone customers, the true
beneficiaries of the RUS program. The government's contribution is
leveraged by the equity, technical expertise and dedication of local
telecommunications companies. The small amount of government capital
involved is more than paid back through a historically perfect
repayment record by telecommunications borrowers, as well as the
additional tax revenues generated by the jobs and economic development
resulting from the provision and upgrading of telecommunications
infrastructure. RUS is the ideal government program--it generates more
revenues than it costs, it provides incentives where the market does
not for private companies to invest in infrastructure promoting needed
rural economic development, it allows citizens to have access to
services which can mean the difference between life and death, and it
has never lost a nickel of taxpayer money because of a telecom carrier
default.
RECOMMENDATIONS
For fiscal year 2006, this Committee should set the loan levels and
necessary associated subsidy amounts for the 5 percent direct loan
program and cost of money loan programs consistent with the levels
recommended in the President's budget. The guaranteed
telecommunications loan program should be maintained at the fiscal year
2005 level. These levels would preserve our members' ability to serve
the Nation's telecommunications needs, maintain universal service and
bring advanced telecom services to rural America.
Congress has recognized the tremendous potential of broadband
technology to enhance human and economic development in rural areas by
providing mandatory funding of loans for the deployment of such
technology in rural areas. USTA urges the provision of funding for this
program in the amount of $358,875,000 as proposed in the President's
budget. The capital intensive nature of the telecommunications
industry, particularly with respect to implementation of broadband,
requires a stable and predictable source of funds. The President should
be lauded for his recognition of the importance of broadband deployment
to our Nation's economy and particularly for his recognition, through
support of the RUS program, of the tremendous impact broadband
telecommunications can have on economic growth and development in rural
America.
Elimination of the 7 Percent Cap on the Interest Rate for the ``Cost of
Money'' Program
For a number of years, through the appropriations process, Congress
has eliminated the 7 percent ``cap'' placed on the insured cost-of-
money loan program. The elimination of the cap should continue. If long
term Treasury interest rates exceeded the 7 percent ceiling contained
in the authorizing act, the subsidy would not be adequate to support
the program at the authorized level. This would be extremely disruptive
and hinder the program from accomplishing its statutory goals.
Accordingly, USTA supports continuation of the elimination of the 7
percent cap on cost-of-money insured loans in fiscal year 2006.
Recommended Loan Levels
USTA recommends that the telephone program loan levels for fiscal
year 2006 be set as follows:
[Millions of dollars]
------------------------------------------------------------------------
------------------------------------------------------------------------
Insured 5 percent Direct Loans (5 percent).............. 145
Insured Cost-of-Money Loans............................. 425
Loan Guarantees......................................... 125
Broadband Telecommunications Loans...................... 358,875
---------------
Total............................................. 1,053,875
------------------------------------------------------------------------
Loans and Grants for Telemedicine and Distance Learning
USTA supports the continuation of $25 million in grants for
distance learning and telemedicine, as provided in the President's
budget. As we move into the Information Age with the tremendous
potential of the Internet to increase productivity and economic
development and promote education and medicine, such funds can help
continue the historic mission of RUS to support the extension of vital
new services to rural America.
Recertification of Rural Status Would Be Disruptive and Chill Rural
Telecom Investment
The Administration's budget notes that USDA will propose rule
changes to require recertification of rural status for each electric
and telecommunications borrower on the first loan request received in
or after 2006 and on the first loan request received after each
subsequent Census.
Telecom construction and investment is a long term continuous
process, not a project by project proposition. The uncertainty created
by the possibility of decertifying a borrower as rural after it has
established a relationship with RUS and begun borrowing funds for
expansion and upgrading according to a long term plan would be
disruptive and discourage borrowers from participating in the RUS
program, thereby denying its benefits to subscribers. The ``once rural
always rural'' practice of RUS has been extraordinarily successful at
providing needed long term capital, at a careful and measured pace, to
telecom carriers intent on expanding and upgrading service to promote
rural economic development. Congress should deny funding in fiscal year
2006 for such a rule change.
Liquidation and/or Dissolution of the Rural Telephone Bank Under the
Proper Conditions Will Benefit the Government and RUS Telecom
Borrowers
The Rural Telephone Bank (RTB) was created by Congress under
extraordinary circumstances in 1971 when the President seemed intent on
shutting down the rural telephone lending program. USTA applauds the
commitment of the current Administration to supporting telecom
infrastructure development in rural America through the RUS telecom
programs, and particularly the Administration's goal of universal
broadband availability within the next two years. Given that support,
the ongoing administratively cumbersome privatization scheme of the
Rural Telephone Bank is no longer necessary as long as the
Administration continues to support, and Congress adopts, an equivalent
level of capital available in the RUS cost of money program.
When the RTB was formed, Congress provided a variety of options for
its future. USTA supports the Administration's recommended choice of
liquidation and/or dissolution of the RTB per the statutory
requirements included in Section 411 of the Rural Electrification Act
of 1936, as amended, with the equivalent increase in loan level in the
cost of money program, as the optimal direction for the future of the
RTB. Return of the paid in capital of the RTB stockholders, both
government and private, at par value per Section 411 is a proper and
fair deal for both the government and the stockholders.
CONCLUSION
Our members take pleasure and pride in reminding the Committee that
the RUS telecommunications program continues its perfect record of no
defaults by telecommunications carriers in over a half century of
existence. RUS telecommunications carrier borrowers take seriously
their obligations to their government, their Nation and their
subscribers. They will continue to invest in our rural communities, use
government loan funds carefully and judiciously, and do their best to
assure the continued affordability of telecommunications services in
rural America. Our members have confidence that the Committee will
continue to recognize the importance of assuring a strong and effective
RUS Telecommunications Program through authorization of sufficient loan
levels.
______
Prepared Statement of the University of Southern Mississippi and the
Mississippi Polymer Institute
Mr. Chairman, distinguished Members of the Subcommittee, I thank
you for this opportunity to provide testimony describing ongoing
research and commercializing efforts of The University of Southern
Mississippi (USM) and the Mississippi Polymer Institute. I am very
grateful to the Subcommittee for its leadership and the continued
support of the Institute and its work. This testimony will include an
update on the progress of the Institute since my testimony of
approximately 1 year ago. Research efforts over the last year have
focused on agricultural-based polymeric emulsions, and the production
of a commercial quality, formaldehyde-free, soybean-based adhesive for
use in particleboard manufacture. The emulsion polymer research has
resulted in higher levels of agricultural-derived monomer incorporation
and better control over the polymerization process that provides high
performance environmentally friendly coatings. We are excited about
this development as we believe the agricultural-derived monomers used
in the polymer formation clearly and convincingly produces superior
latex polymer with numerous potential advantages and applications.
Furthermore, we have successfully produced lab-scale fiberboards that
exceed all medium density particleboard commercial specifications.
Thus, we have designed, synthesized, and utilized a soybean-derived
adhesive with no added formaldehyde. This is, to our knowledge, the
first such glue prepared from agricultural products with absolutely no
added formaldehyde. This continued success demands the expansion of
formaldehyde-free soybean-based adhesive for use in the very large
oriented strand and medium density fiberboard markets if the technology
is to be adequately exploited. Such technical achievements guarantee
more potential revenue for U.S. farmers. Coupled with the reduction in
air pollution and the absence of formaldehyde, the new adhesive is a
winning product. With these and other previously reported achievements,
we have clearly shown that many products manufactured heretofore from
petroleum can be replaced with agricultural products if adequate
funding, facilities, and commitment are available. This is exciting
work and we are most appreciative of your support. This document
provides an overview of our research to date and validates the
necessity for continued funding.
In the research and development of vegetable oil macromonomers
(VOMMs), we have chemically modified various vegetable oils such as
castor, soy, linseed, safflower, sunflower, and tung oil to design and
synthesize over 100 novel monomers, derivatives, and methods for
functionalization. This year's main focus has been the tailoring of
monomer structures that encourage higher polymerization efficiencies.
The molecular changes affected have broadened the options for polymer
building blocks while increasing real performance potential. The
technology success is dependent upon the use of agricultural materials
as the primary building blocks for emulsion-derived polymers, and
offers opportunities for using ag-derived materials as a basic
feedstock in the polymer industry. In developing a variety of VOMMs,
our synthetic techniques have been optimized to achieve greater than 90
percent conversion of usable oil in VOMMs, producing in some cases only
glycerol as a byproduct. The revised and now accepted synthetic
procedure affords a useful, polymerizable VOMM without extraordinary
methods or processes. During this year, our synthetic efforts have
produced emulsion polymers containing greater than 40 percent of VOMM
by weight (based upon polymer solids), and provide chemically and
physically stable polymers suitable for a variety of end uses,
particularly in coating formulations. A significant advancement this
year is attributed to our new level of control and understanding
between monomer design and partitioning during the emulsion
polymerization process. These new VOMMs are readily copolymerizable
with common commercial monomers, and exhibit higher degrees of useful
crosslinking after application and cure. The fundamental scientific
principles regarding the transfer of hydrophobic monomers across the
aqueous phase have been confirmed, yet additional data must be
collected as more of these novel monomers building blocks are being
designed, synthesized, and studied.
VOMMs that function both as a monomer and as the stabilizing
surfactant have been synthesized and evaluated. These unique monomers
are termed surfmers. Three soybean oil-derived surfmers were
successfully synthesized and polymerized to produce new polymer
structures. The first was a nonionic surfmer possessing poly(ethylene
oxide) moieties of three different chain lengths, and concurrently
three levels of hydrophilicity. The idealized structures were named
EMMSO 35, EMMSO 55, and EMMSO 75. Stable styrene emulsion copolymers
containing as high as 44 weight percent of EMMSO 35 were synthesized.
Moreover, a latex with 30 weight percent copolymerized EMMSO 35 was
formulated into architectural coatings that exhibited good film
formation and performance stability. The second one was an anionic
surfmer, based upon a neutralized version of an earlier VOMM, soybean
acrylate monomer (SAM). All-acrylic latexes containing 5-40 weight
percent of 100 percent neutralized SAM have been successfully
synthesized. Latexes containing 30 percent by weight of 100 percent
neutralized SAM provided good gloss and adhesion, and was formulated as
an environmentally friendly binder for nail polish.
Our sustained efforts to patent the technology developed in these
collective projects have resulted in a total of 21 patents and patent
applications, both United States and foreign. More applications will be
submitted during the coming year.
Commercial nail polishes contain very high amounts of solvents
which constitute volatile organic compounds (VOCs) and negatively
impact the environment. Novel VOMM-based latexes have been designed for
use in nail polishes that are environmentally-friendly and possess high
gloss. We are continuing to optimize our VOMM-based latexes to provide
faster dry time while maintaining a zero-VOC formulation.
Paper coatings derived from VOMM-based emulsions have been
formulated for paper coating applications. Testing equipment has been
purchased and installed, and testing is underway to enhance our
understanding of polymer performance on paper substrates. VOMM latexes
formulated into paper coatings have exhibited performance properties
similar to those of styrene-acrylic commercial controls. VOMM coating
properties continue to be evaluated and optimized using various co-
monomer compositions.
A soybean-derived product, SAM, was successfully incorporated into
a permanent press textile treatment to replace the previous VOMM,
castor oil acrylate monomer (CAM). The novel product increases military
uniform durability over 30 percent, and increases the acceptable level
of wrinkle resistance from 20 washes to 170 wash cycles, thereby
reducing laundry costs, at a significant savings for service personnel
and the Department of Defense. This polymer was utilized for the
treatment of Marine camo uniforms during Iraqi freedom campaign.
Warmkraft, the company who purchased our textile latex cited cost
issues and over engineering (meaning the product was too good) and
therefore chose an alternate formulation after more than 2 years of
treating Marine uniforms. However, they recently contacted us and noted
experiencing consistency problems with their current product, and thus
may purchase the latex from us again. Textile latex research is
expanding to understand the fundamental mechanisms for its adhesion,
longevity, and the efficacy of antimicrobial agents to provide added
combat force protection.
In yet another of our novel ag-based technologies, we have
developed a formaldehyde-free adhesive for use in particleboard
composites. The primary component in the developmental adhesive is soy
protein isolate (SPI), and lab produced particleboards have met or
exceeded industry performance requirements as defined by ANSI standards
for M1, M2, M3, and M-S grade boards. Processing and board production
are compatible with current equipment and methodologies. Efforts are
underway to reduce the water content of the current adhesive to
decrease dry time and increase line speeds. The new adhesive was scaled
up to semi-commercial quantities for process and formulation robustness
testing in preparation for full-scale evaluations with a commercial
partner. Alternative less expensive proteins have also been evaluated
in our current shelf-stable formulation, and have demonstrated similar
immediate performance characteristics (long-term testing is in
progress). Last year, formulations only met a single industry
performance standard, and required higher curing temperatures and
times. We have successfully exceeded M1, M2, M3 and M-S particleboard
standards while providing higher moisture resistance and improved
structural integrity even after 24 hours of water immersion when
evaluated against particleboards formulated with formaldehyde-based
adhesives.
In 1983, the Mississippi Legislature authorized the Polymer
Institute at USM to work closely with emerging and other existing
polymer-related industries to assist with research, problem solving,
commercializing efforts, and workforce development. This effort
complements existing strong ties with industry and government involving
exchange of information and improved employment opportunities for USM
graduates. Most importantly, through basic and applied research coupled
with developmental and commercializing efforts of the Institute, the
School of Polymers and High Performance Materials continues to address
national needs of high priority.
Our research remains focused on the study and development of a
technology platform that facilitates further commercialization of
alternative agricultural crops for use in the polymer industry. The
polymer industry maintains its position as the single largest consumer
of petroleum chemical intermediates in the world. The finite supply of
petroleum resources has resulted in extreme price pressures as
worldwide demand continues to increase. Unfortunately, this feedstock
normally generates non-biodegradable raw materials that are not carbon
neutral, and therefore do not represent a sustainable alternative for
economic development in the polymer industry. The theme of our work is
to develop high performance and environmentally friendly technology
utilizing agricultural intermediates. In this way, we as a Nation can
improve our environment, reduce our dependence on imported petroleum,
and keep America's farmlands in production. As farm products meet the
industrial needs of the American society, rural America is the
benefactor. Heretofore, these successful efforts to utilize alternative
agricultural products as an industrial feedstock continue to receive
more and more attention but drastically less than these high tech
innovations and opportunities warrant. Your decisions are crucial to
the accomplishment of these goals as funding from this Subcommittee has
enabled us to implement and maintain an active group of university-
based polymer scientists whose energies are devoted to commercializing
alternative crops. We are most grateful to you for this support, and
ask for your continued commitment.
The faculty, the University, and the State of Mississippi are
strongly supportive of the Mississippi Polymer Institute and its close
ties with industry. Most faculty maintain at least one industrial
contract as an important part of extramural research efforts.
Polymers, which include fibers, plastics, composites, coatings,
adhesives, inks, and elastomers, play a key role in the materials
industry. They are used in a wide range of industries including
textiles, aerospace, automotive, packaging, construction, medical
prosthesis, and health care. In the aerospace and automotive
applications, reduced weight and high strength make them increasingly
important as fuel savers. Their non-metallic character and almost
unlimited design potential support their use for many national defense
purposes. Moreover, select polymers are possible substitutes for so-
called strategic materials, some of which come from potentially
unreliable sources.
As a polymer scientist, I am intrigued by the vast opportunities
offered by American agriculture. As a professor, however, I continue to
be disappointed that few of our science and business students receive
training in the polymer-agricultural discipline despite its enormous
potential. The School of Polymers and High Performance Materials and
the Mississippi Polymer Institute at USM are attempting to make a
difference by showing others what can be accomplished if appropriate
time, energy, and resources are devoted to the understanding of ag-
based products. I became involved in the polymer field more than 40
years ago, and have watched its evolution where almost each new product
offered the opportunity for many more. Although polymer science as a
discipline has experienced expansion and a degree of public acceptance,
alternative agricultural materials in the polymer industry continue to
be an underutilized national treasure. Today, society displays less
acceptance of petroleum-derived materials than ever before, and
consequently, the timing is ideal for agricultural materials to make
significant inroads as environmentally-friendly, biodegradable, and
renewable raw materials. Agricultural materials have always been
available for our use, yet society for many reasons, continues to
ignore their potential.
U.S. agriculture has made the transition from the fields to the
kitchen tables, but America's industrial community continues to be
frightfully slow in adopting ag-based industrial materials. The prior
sentence was included in my previous testimonies but continues to ring
true. We are making progress and must continue to aggressively pursue
this opportunity by:
--Intensify United States efforts to commercialize alternative crops
and dramatically reduce atmospheric VOC emissions and odor.
--Reduce United States reliance on imported petroleum.
--Maintain a healthy and prosperous farm economy.
--Foster new cooperative opportunities between American farmers and
American industry.
--Create advanced polymer technology-based manufacturing jobs that
cannot be easily exported to other countries.
--Maintain our innovative and developmental competitive edge over
other less environmentally-friendly countries and less
competitive economies.
Mr. Chairman, your leadership and support are deeply appreciated by
the entire USM community. While I can greatly appreciate the financial
restraints facing your Subcommittee, I feel confident that further
support of the Mississippi Polymer Institute will continue to pay
dividends by way of increasing commercialization opportunities for
agricultural materials in the American industry. Advances in polymer
research are crucial to food, transportation, housing, and defense
industries. Our work has clearly established the value of ag products
as industrial raw materials, and we must move it from the laboratories
to the industrial manufacturing sector. Only then can the United States
enjoy the cleaner and safer environment that these technologies offer,
as well as new jobs, and expanded opportunities for the U.S. farmer. Of
course, while working to achieve commercialization, we are committed to
continue technology advancement, as will basic research on those topic
areas where knowledge is required.
Since our testimony last year, we have continued to research,
develop, and trial larger scales for commercializing agricultural-based
products. Indeed, the technology on a lab scale has matured, and
marketing and sales must move parallel with continued research and
commercial development of novel products. Thus, we are in need of
additional resources to advance these infant technologies to the market
place, and to continue our development of other exciting technologies.
We therefore respectfully request $1.7 million in Federal funding to
more fully exploit the potential of commercializing the technologies
described herein. We have shown that we can be successful, yet we need
additional resources in order to ultimately utilize the potential of
this technology. Our efforts will be recognized as instrumental in
developing a ``process'' for the commercialization of new ag-based
products. The development of this process, and to show it is
successful, is extremely important to all entrepreneurs who believe in
and support ag-based products. Thank you, Mr. Chairman and Members of
the Subcommittee, for your support and consideration.
______
Prepared Statement of the Upper Mississippi River Basin Association
The Upper Mississippi River Basin Association (UMRBA) is the
organization created in 1981 by the Governors of Illinois, Iowa,
Minnesota, Missouri, and Wisconsin to serve as a forum for coordinating
the five States' river-related programs and policies and for
collaborating with Federal agencies on regional water resource issues.
As such, the UMRBA has an interest in the budget for the U.S.
Department of Agriculture's conservation programs and technical
assistance.
Of particular importance to the UMRBA is funding for the
Conservation Reserve Program (CRP), Wetlands Reserve Program (WRP),
Environmental Quality Incentives Program (EQIP), and Conservation
Security Program (CSP). Taken together, these four Commodity Credit
Corporation-funded programs provide an invaluable means for the USDA to
work with landowners, local conservation districts, and the States to
maintain agricultural productivity while protecting the Nation's soil
and water resources. Moreover, they do this in a voluntary, non-
regulatory fashion. CRP, WRP, EQIP, and CSP will be key non-regulatory
elements in the States' efforts to address agricultural sources of
water quality impairment through the Total Maximum Daily Load program.
Successful application of conservation programs to this region's water
quality problems will also help address the growing national concern
with hypoxia in the Gulf of Mexico, which has been linked to nutrient
loads from agriculture and other sources. As stewards of some of the
Nation's most productive agricultural lands and important water
resources, the five States of the Upper Mississippi River Basin believe
these programs are vital.
Conservation Reserve Program
The UMRBA supports President Bush's fiscal year 2006 budget request
of $2.02 billion for the Conservation Reserve Program, a modest
increase over fiscal year 2005. This increase is testament to the
strong landowner interest and high environmental benefits resulting
from enrollment of fragile cropland acres in CRP. Through CRP, farmers
and ranchers can voluntarily establish long term conservation
practices, such as filter strips and riparian buffers, on highly
erodible and environmentally sensitive cropland.
In Illinois, Iowa, Minnesota, Missouri, and Wisconsin, total CRP
enrollment is currently 6.9 million acres, or approximately 20 percent
of the national CRP acreage. Yet the five States' CRP enrollment
represents 42 percent of the total number of CRP contracts and 40
percent of the total number of farms enrolled nationwide in the CRP. In
the most recent general sign-up (#29), producers with eligible lands
competed nationally for acceptance into CRP, based on an environmental
benefits index. In the five States of the Upper Mississippi River Basin
(UMRB), 80 percent of the offers made were accepted for enrollment,
adding over 200,000 acres to the CRP.
All five States also have active Conservation Reserve Enhancement
Programs tailored to meet their priority conservation needs. Current
CREP enrollment in the UMRB States is approximately 240,000 acres, or
38 percent of the national total. These rates of participation clearly
demonstrate the importance of the CRP and CREP in the Nation's
agricultural heartland and reflect the compatibility of these programs
with agricultural productivity.
Wetlands Reserve Program
The President's fiscal year 2006 budget proposes $321 million for
the Wetlands Reserve Program, nearly a 17 percent increase over fiscal
year 2005 funding. UMRBA applauds this increase and urges Congress to
provide sufficient funding to meet WRP's annual enrollment goal of
250,000 acres.
Since the WRP was established in 1996, its easements have proven to
be important tools for restoring and protecting wetlands in
agricultural areas. This is clearly evident from the overwhelming
landowner response and the resulting improvements to water quality and
habitat. Through fiscal year 2003, WRP enrollment in Illinois, Iowa,
Minnesota, Missouri, and Wisconsin totaled more than 271,000 acres, or
18 percent of the national total. In fiscal year 2004, landowners in
the five States enrolled an additional 38,000 acres in the WRP.
However, there were eligible, but unfunded, applications to enroll
another 136,000 acres from the five States in fiscal year 2004. This
represents 25 percent of the total national backlog of applications for
that year.
Environmental Quality Incentives Program
In contrast to conservation programs that protect land and water
resources by curtailing production on sensitive lands, the
Environmental Quality Incentives Program supports conservation on
working lands. Promoting agricultural production and environmental
quality as compatible goals is particularly important in the Midwest
agricultural heartland.
The 2002 Farm Bill provides $1.2 billion of budget authority for
the EQIP in fiscal year 2006. However, the President is proposing to
fund EQIP at only $1.0 billion in fiscal year 2006. The UMRBA urges
Congress to fund EQIP at its full authorized level. Like many other
conservation programs, EQIP funding has not kept pace with demand. Even
at full funding, there will likely be significant numbers of unfunded
EQIP applications. In fiscal year 2004, the EQIP allocation to the
States of Illinois, Iowa, Minnesota, Missouri, and Wisconsin totaled
$111 million. Yet that amount still left a backlog of $180 million in
unmet requests for EQIP assistance, 12 percent of the Nation's total
unfunded EQIP applications. In fiscal year 2005, the EQIP allocation to
the five basin States has increased to $121 million, still well below
the need, as reflected in unfunded applications for the past 3 years.
Conservation Security Program
The President's budget request of $274 million for the CSP reflects
a 36 percent increase over fiscal year 2005 and is nearly 7 times what
was spent in fiscal year 2004, when the program began. Yet it is
unlikely that this will be sufficient to meet the demand for this
popular voluntary program, which provides financial and technical
assistance to agricultural producers who implement conservation
measures on working lands.
In fiscal year 2004, CSP contracts were limited to farmers and
ranchers in 18 priority watersheds across the country. Five of those
watersheds were in the five States of the Upper Mississippi River
Basin. In those five watersheds, NRCS approved contracts totaling $15.5
million, which was 44 percent of the total CSP contract payments that
year.
It is too early to judge what effect the fiscal year 2005 CSP
funding cap of $202 million will have. The fiscal year 2005 sign-up
opened March 28, 2005 and is scheduled to close May 27, 2005. In
contrast to fiscal year 2004, when only 18 watersheds were eligible, in
fiscal year 2005, 220 watersheds are eligible. Thus, while CSP funding
increased 5-fold in fiscal year 2005, the number of eligible watersheds
has increased more than 12-fold and the number of eligible farms has
increased 8-fold. Of the 220 eligible watersheds nationwide, 22 are in
the five States of Illinois, Iowa, Minnesota, Missouri, and Wisconsin.
Those 22 watersheds include over 19 percent of the total number of
farms that will be eligible for CSP in fiscal year 2005. It remains to
be seen what the ultimate level of landowner interest will be in the
CSP, as the number of eligible watersheds grows. But the UMRBA is
encouraged that CSP is continuing to expand and funding levels are
increasing.
Conservation Technical Assistance
Through the Conservation Technical Assistance program, NRCS
provides the technical capability that helps people plan and apply
conservation on the land. NRCS works through and in partnership with
conservation districts to assist individuals and groups in assessing
conservation needs and planning, designing, and installing conservation
practices. In addition, the CTA program assists in preparing landowners
to participate in USDA conservation financial assistance and easement
programs, provides emergency disaster technical assistance, and enables
NRCS to coordinate with other programs such as U.S. EPA's nonpoint
source management program and U.S. Fish and Wildlife Service's Partners
for Wildlife.
Given that CTA is the foundation for much of the Nation's private
lands conservation assistance, it is disappointing that the President's
fiscal year 2006 budget proposes a $61 million, or 8 percent, decrease
in the CTA account. The UMRBA urges that, at a minimum, funding for CTA
be maintained at the fiscal year 2005 level.
Watershed Programs
The UMRBA is deeply concerned that the President is proposing deep
cuts to NRCS's watershed programs, including total elimination of the
Watershed and Flood Prevention Operations program, which funds Public
Law 566 and Public Law 534 projects. Funding for Watershed Operations
has declined substantially over the past 20 years, from an historical
high of $199 million in fiscal year 1994 to only $75 million in fiscal
year 2005. And yet this program provides significant local, regional,
and national benefits, by addressing watershed protection, flood
prevention, erosion and sediment control, water supply, water quality,
water conservation, agricultural drought problems, rural development,
municipal and industrial water needs, upstream flood damages, fish and
wildlife habitat enhancement, and wetland creation and restoration. In
fiscal year 2004 there were $191 million in Public Law 566 and Public
Law 534 projects ready for construction, and a total project backlog
estimated at $1.56 billion. Nearly $230 million of that backlog was in
the States of Illinois, Iowa, Minnesota, Missouri, and Wisconsin.
Despite the fact that Public Law 566 and Public Law 534 projects in the
five States were allocated over 22 percent of the total national
funding in fiscal year 2004, that amount ($17.9 million) was far less
than the $230 million backlog. Rather than eliminating this important
program, UMRBA urges that it be funded at least equal to the fiscal
year 2005 level of $75 million.
In addition to continuing to invest in watershed and flood
prevention projects, the rehabilitation of aging flood control dams
must also be addressed. Of the 11,000 Public Law 534 and Public Law 566
dams nationwide, more than 3,000 will reach the end of their design
life by 2013. Recognizing this fact, Congress authorized the Watershed
Rehabilitation Program in 2000 and authorized significant new funding
for the program in the 2002 Farm Bill. In particular, $60 million is
authorized for the Watershed Rehabilitation Program in fiscal year
2006. Yet the President's fiscal year 2006 budget request is only $15
million, a 44 percent decrease over the fiscal year 2005 funding level.
In fiscal year 2005, $27.3 million was appropriated for the Watershed
Rehabilitation Program, only 60 percent of the $46 million of project
requests that year. Rehabilitation of aging dams, which could become a
threat to public health and safety, is extremely important and UMRBA
thus urges Congress to fund the Watershed Rehabilitation Program at
least equal to its fiscal year 2005 level.
Also of concern is the Watershed Surveys and Planning account which
is slated to be cut in the President's fiscal year 2006 budget. The
fiscal year 2006 request of $5.1 million for Watershed Surveys and
Planning compares with pending projects totaling $18.8 million in
fiscal year 2004. UMRBA thus urges Congress to provide funding at least
equal to the fiscal year 2005 level for this important watershed
program.
______
Prepared Statement of the Western Coalition of Arid States (WESTCAS)
The Western Coalition of Arid States (WESTCAS) is submitting this
testimony to the United States Senate Appropriations Committee,
Agriculture, Rural Development and Related Agencies Subcommittee
regarding the U.S. Department of Agriculture's fiscal year 2006 Federal
budget. The USDA's budget is of particular concern for our members
because of the tie-in to water use in irrigation that consumes a large
percentage of available water resources in many of our member States.
WESTCAS is an organization created in 1992 with coalition
membership of approximately 125 water and wastewater districts, cities
and towns, and professional associates focused on water quality issues
in many western States.
Most of the water and wastewater related funding in the USDA's
budget is found in the Natural Resources Conservation Service (NRCS)
budget. Some programs received slight increases for fiscal year 2006,
in particular the Ground and Surface Water Conservation program, and we
support these increases. However, most programs' budgets have been cut
and WESTCAS advocates restoring these cuts to at least fiscal year 2005
enacted levels. These programs include:
--Environmental Quality Incentives Program (EQIP), which provides
funding for ``innovative approaches to leveraging Federal
investment in environmental enhancement and protection in
conjunction with agricultural production'';
--Watershed and Flood Prevention Program which had funding eliminated
entirely for three of its programs;
--Watershed Surveys and Planning's budget, which has been decreased
each of the last 2 years;
--Conservation Technical Assistance program;
--Watershed Rehabilitation Program which provides funding for dam
safety; and
--technical assistance budget for Resource Conservation and
Development, which was reduced by 50 percent.
WESTCAS feels that other water-related program cuts also need close
review since it appears that the President's USDA budget took the
biggest cut of all Federal budgets this year. For example, the
Agriculture Research Service funding for the Environmental Stewardship
program was reduced from $219 million to $178 million. And the
Cooperative State Research, Education and Extension Service's Water
Quality research and education budget line item was completely
eliminated.
WESTCAS believes that budget cuts regarding these types of
programs, which affect a scarce natural resource so vital to continued
growth and prosperity in the West, are not warranted, and we urge the
Committee to restore these programs' funding levels.
The Colorado River Basin Salinity Control Program, as set forth in
the Colorado River Basin Salinity Control Act, is another program under
EQIP that is supported by WESTCAS. The Colorado River Basin Salinity
Control Act provides that the seven Colorado River Basin States will
cost share on Federal funds received for salinity control efforts for
the river. Over the past few years, the NRCS has designated that about
2.5 percent of the EQIP funds be allocated to the Colorado River
Salinity Control Program. WESTCAS supports continued designation of 2.5
percent of EQIP dollars to be dedicated to the Salinity Control Program
for the Colorado River.
We thank you for the opportunity to provide this statement for the
hearing record.
______
Prepared Statement of The Wildlife Society
The Wildlife Society appreciates the opportunity to submit
testimony concerning the fiscal year 2006 budgets for the Natural
Resources Conservation Service (NRCS), Farm Service Agency (FSA),
Animal Plant Health Inspection Service (APHIS), and Cooperative State
Research, Education and Extension Services (CSREES). The Wildlife
Society is the association of almost 9,000 professional wildlife
biologists and managers dedicated to sound wildlife stewardship through
science and education. The Wildlife Society is committed to
strengthening all Federal programs that benefit wildlife and their
habitats on agricultural and other private land.
Natural Resources Conservation Service
Wildlife Habitat Incentives Program (WHIP).--WHIP is a voluntary
program that provides technical and financial support to farmers and
ranchers to create high quality wildlife habitat. The Wildlife Society
recommends funding WHIP at $85 million in 2006, the full amount
authorized by the 2002 Farm Bill.
Wetland Reserve Program (WRP).--WRP is a valuable program designed
to assist farmers and ranchers protect and restore wetland habitat. The
Wildlife Society appreciates the continued targeting of 200,000 acres
annually for enrollment in WRP. However, we recognize that if the
authorized level of 250,000 acres is not enrolled every year, then
enrollment must increase in future years to reach the authorized level
of 2,275,000 acres. Full WRP enrollment is needed if the Administration
intends to achieve the President's goal of no-net-loss of wetlands. The
Wildlife Society supports an enrollment target of 250,000 acres in
fiscal year 2006.
Animal and Plant Heath Inspection Service
Wildlife Services.--Wildlife Services (WS), a unit of APHIS, is
responsible for controlling wildlife damage to agriculture,
aquaculture, forest, range, and other natural resources, for
controlling wildlife-borne diseases, and for controlling wildlife at
airports. Its activities are based on the principles of wildlife
management and integrated damage management, and are carried out
cooperatively with State fish and wildlife agencies.
The Wildlife Society is concerned about the proposed $3.4 million
decrease in funding for Methods Development for 2006. Many current
wildlife control tools such as traps, snares, and wildlife toxicants
are becoming less acceptable to the public and are being prohibited in
many States as the result of public referenda. The only credible way to
identify and perfect new methods is through research. However, WS
funding is only adequate to cover maintenance and operating costs and
no funding is being provided for the development of new innovative
wildlife damage management methods. We strongly recommend that Congress
restore the reductions of $3.413 million in this program category, and
add an additional $1.5 million to provide for uncontrollable costs and
to accelerate research in cormorant management and feral hog control.
Further, we recommend Congress fully fund the trap standards and
testing program at $0.5 million and to direct the Agency to allocate
the $500,000 to fulfill international commitments to trap evaluation in
full cooperation with State fish and wildlife agencies and the IAFWA.
Veterinary Services.--The Wildlife Society commends APHIS-
Veterinary Services' cooperation and sincerely appreciates funding for
State wildlife management agencies for CWD surveillance and management
in free-ranging deer and elk. Additionally, we strongly supports APHIS
efforts to eliminate CWD from captive cervids in order to eliminate the
risk of spread of the disease from these animals to free-ranging deer
and elk. The surveillance and monitoring efforts conducted by all 50
States during 2004 and 2005 would not have been possible without this
cooperative funding. Additionally, knowledge of the presence and
prevalence of CWD, as well as knowledge on the range of the disease,
has been enhanced by this program. Without continued funding, States
will be unable to maintain the level of CWD surveillance and monitoring
necessary to track the disease. The National CWD Plan calls for
additional efforts on management activities to prevent the spread of
CWD in the United States. The Wildlife Society recommends increased CWD
funding to a total of $30 million in fiscal year 2006, with $20 million
designated for cooperative grants to the States for surveillance and
management of CWD in free-ranging deer and elk.
Cooperative State Research, Education, and Extension Service
Renewable Resources Extension Act.--RREA provides an expanded,
comprehensive extension program for forest and rangeland renewable
resources. The RREA funds, which are apportioned to State Extension
Services, effectively leverage cooperative partnerships at an average
of four to one, with a focus on private landowners. The need for RREA
educational programs is greater today than ever because of continuing
fragmentation of ownership, urbanization, the diversity of landowners
needing assistance and increasing societal concerns about land use and
the impact on natural resources including soil, water, air, wildlife
and other environmental factors. The Wildlife Society recommends that
the Renewable Resources Extension Act be funded at $30 million as
authorized in the 2002 Farm Bill.
McIntire-Stennis.--The proposed budget for fiscal year 2006
reflects a significant decrease in the McIntire-Stennis Cooperative
Forestry formula funding program and reported elimination in the fiscal
year 2007 budget process. These funds are essential to the future of
resource management on non-industrial private forestlands as forest
products are produced while conserving natural resources, including
fish and wildlife. As societal pressures for forest products grows,
private land forests will increasingly be needed to supplement supplies
but trees suitable for harvest take decades to produce versus the
single year in which crops such as corn and soybeans can be produced.
In the absence of long-term and on-going research such as provided
through McIntire-Stennis, the Nation could easily become ill-suited to
meet future forest product needs. Replacement of McIntire-Stennis
funding with competitive grants will leave long-term and stable forest
research to chance. The Wildlife Society strongly believes that the
reasons for continuing the McIntire-Stennis Cooperative Forestry
program into the future are compelling and urges Congress to increase
the fiscal year 2006 budget amount to $25 million, an amount more
consistent with historic funding levels.
National Research Initiative.--National Research Initiative
Competitive Grants (NRI) are open to academic institutions, Federal
agencies, and private organizations to fund research on improving
agricultural practices, particularly production systems that are
sustainable both environmentally and economically, and to develop
methods for protecting natural resources and wildlife. Innovative grant
programs such as NRI help broaden approaches to land management, such
as integrating timber and wildlife management on private lands. The
Wildlife Society supports funding of $240 million for National Research
Initiative Competitive Grants.
Thank you for considering the views of wildlife professionals. We
look forward to working with you and your staff to ensure adequate
funding for wildlife conservation.
LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS
----------
Page
Ad Hoc Coalition, Prepared Statement of.......................... 409
American:
Farm Bureau Federation, Prepared Statement of................ 412
Forest and Paper Association, Prepared Statement of.......... 415
Honey Producers Association, Inc., Prepared Statement of..... 416
Indian Higher Education Consortium, Prepared Statement of.... 420
Nursery & Landscape Association and the Society of American
Florists, Prepared Statement of............................ 423
Public Power Association, Prepared Statement of.............. 425
Sheep Industry Association, Prepared Statement of............ 426
Society for Microbiology, Prepared Statements of...........431, 436
Anderson, Curtis M., Acting Administrator, Rural Utilities
Service, Department of Agriculture, Prepared Statement of...... 113
Bennett, Senator Robert F., U.S. Senator from Utah:
Opening Statements of....................................1, 81, 217
Questions Submitted by.............41, 178, 194, 205, 210, 321, 357
Bond, Senator Christopher S., U.S. Senator from Missouri,
Statement of................................................... 4
Bosecker, R. Ronald, Administrator, National Agricultural
Statistic Service, Department of Agriculture, Prepared
Statement of................................................... 137
Bost, Eric M., Under Secretary for Food, Nutrition, and Consumer
Services, Department of Agriculture............................ 217
Prepared Statement of........................................ 219
Statement of................................................. 218
Burns, Senator Conrad, U.S. Senator from Montana:
Prepared Statement of........................................ 4
Questions Submitted by................................206, 212, 323
Statement of................................................. 3
Byrd, Senator Robert C., U.S. Senator from West Virginia,
Questions Submitted by......................................... 58
California Industry and Government Central California Ozone Study
Coalition, Prepared Statement of............................... 438
City of Avondale, Arizona, Prepared Statement of................. 439
Clayton, Kenneth C., Acting Administrator, Agricultural Marketing
Service, Department of Agriculture, Prepared Statement of...... 249
Coalition:
On Funding Agricultural Research Missions, Prepared Statement
of......................................................... 441
To Promote U.S. Agricultural Exports, Prepared Statement of.. 442
Cochran, Senator Thad, U.S. Senator from Mississippi:
Prepared Statement of........................................ 5
Question Submitted by........................................ 47
Collins, Keith, Chief Economist, Office of the Secretary,
Department of Agriculture...................................... 1, 81
Prepared Statement of........................................ 84
Statement of................................................. 82
Colorado River Basin Salinity Control Forum, Prepared Statement
of............................................................. 444
Consortium of Social Science Associations (COSSA), Prepared
Statement of................................................... 448
Council on Food, Agricultural and Resource Economics (C-FARE),
Prepared Statement of.......................................... 448
Craig, Senator Larry, U.S. Senator from Idaho:
Prepared Statement of........................................ 6
Questions Submitted by....................................... 206
Crawford, Lester M., DVM, Ph.D., Acting Commissioner, Food and
Drug Administration, Department of Health and Human Services,
Prepared Statement of.......................................... 339
Davidson, Ross J., Jr., Administrator, Risk Management Agency,
Department of Agriculture, Prepared Statement of............... 156
Davis, Russell T., Administrator, Rural Housing Service,
Department of Agriculture, Prepared Statement of............... 105
Defenders of Wildlife, Prepared Statement of..................... 451
DeHaven, Dr. W. Ron, Administrator, Animal and Plant Health
Inspection Service, Department of Agriculture, Prepared
Statement of................................................... 235
Dorgan, Senator Byron L., U.S. Senator from North Carolina,
Questions Submitted by........................................66, 400
Durbin, Senator Richard J., U.S. Senator from Illinois, Questions
Submitted by..................................................72, 400
Easter Seals, Prepared Statement of.............................. 454
Farmer-Rancher/Oklahoma Farmers Union, Ringling, Oklahoma,
Prepared Statement of.......................................... 457
Florida State University, Prepared Statement of.................. 459
Fong, Phyllis K., Inspector General, Office of the Inspector
General, Department of Agriculture, Prepared Statement of...... 347
Friends of Agricultural Research--Beltsville, Inc., Prepared
Statement of................................................... 460
Gonzalez, Gilbert G., Acting Under Secretary for Rural
Development, Department of Agriculture......................... 81
Questions Submitted to....................................... 194
Great Lakes Indian Fish and Wildlife Commission, Prepared
Statement of................................................... 462
Harkin, Senator Tom, U.S. Senator from Iowa, Questions Submitted
by...................................62, 193, 203, 209, 215, 335, 398
Hawks, William T., Under Secretary for Marketing and Regulatory
Programs, Department of Agriculture............................ 217
Prepared Statement of........................................ 229
Hefferan, Dr. Colien, Administrator, Cooperative State Research,
Education, and Extension Service, Department of Agriculture,
Prepared Statement of.......................................... 124
Hentges, Eric J., Executive Director, Center for Nutrition Policy
and Promotion, Food, Nutrition, and Consumer Services,
Department of Agriculture, Prepared Statement of............... 227
Humane Society of the United States, Prepared Statement of....... 465
InterTribal Bison Cooperative, Prepared Statement of............. 468
Jen, Joseph J., Under Secretary for Research, Education, and
Economics, Department of Agriculture........................... 81
Prepared Statement of........................................ 115
Questions Submitted to....................................... 205
Johanns, Hon. Mike, Secretary, Office of the Secretary,
Department of Agriculture...................................... 1
Prepared Statement of........................................ 11
Statement of................................................. 7
Johnson, Senator Tim, U.S. Senator from South Dakota:
Prepared Statement of........................................ 6
Questions Submitted by....................................... 77
Kaplan, Dennis, Office of Budget and Program Analysis, Department
of Agriculture................................................. 81
Knight, Bruce I., Chief, Natural Resources Conservation Service,
Department of Agriculture, Prepared Statement of............... 97
Knipling, Dr. Edward B., Administrator, Agricultural Research
Service, Department of Agriculture, Prepared Statement of...... 121
Kohl, Senator Herb, U.S. Senator from Wisconsin:
Questions Submitted by.............49, 191, 195, 207, 213, 325, 375
Statement of................................................. 2
Landrieu, Senator Mary L., U.S. Senator from Louisiana, Questions
Submitted by................................................... 334
Little, James R., Administrator, Farm Service Agency, Department
of Agriculture, Prepared Statement of.......................... 146
Masters, Dr. Barbara J., Acting Administrator, Food Safety and
Inspection Service, Department of Agriculture, Prepared
Statement of................................................... 262
Metropolitan Water District of Southern California, Prepared
Statement of................................................... 470
National Association of:
State Energy Officials (NASEO), Prepared Statement of........ 472
State Foresters, Prepared Statement of....................... 473
University Fisheries and Wildlife Programs, Prepared
Statement of............................................... 474
National:
Coalition for Food and Agricultural Research, Prepared
Statement of............................................... 476
Commodity Supplemental Food Program Association, Prepared
Statement of............................................... 480
Council of Farmer Cooperatives, Prepared Statement of........ 484
Fish and Wildlife Foundation, Prepared Statement of.......... 486
Organic Coalition, Prepared Statement of..................... 488
Potato Council, Prepared Statement of........................ 492
Research Center for Coal and Energy, Prepared Statement of... 494
Rural:
Housing Coalition, Prepared Statement of................. 496
Telecom Association, Prepared Statement of............... 500
Turfgrass Evaluation Program, Prepared Statement of.......... 503
New Mexico Interstate Stream Commission, Prepared Statement of... 447
Northwest Indian Fisheries Commission, Prepared Statement of..... 507
Offutt, Susan E., Administrator, Economic Research Service,
Department of Agriculture, Prepared Statement of............... 128
Oregon Water Resources Congress, Prepared Statement of........... 510
Organization for the Promotion and Advancement of Small
Telecommunications Companies, Prepared Statement of............ 510
Penn, J.B., Under Secretary for Farm and Foreign Agricultural
Services, Department of Agriculture............................ 81
Prepared Statement of........................................ 140
Questions Submitted to....................................... 210
Pickle Packers International, Inc., Prepared Statement of........ 512
Pierson, Dr. Merle D., Acting Under Secretary for Food Safety,
Department of Agriculture...................................... 217
Prepared Statement of........................................ 255
Statement of................................................. 254
Public Citizen's Energy and Environment Program, Prepared
Statement of................................................... 518
Red River Valley Association, Prepared Statement of.............. 522
Rey, Mark, Under Secretary for Natural Resources and Environment,
Department of Agriculture...................................... 81
Prepared Statement of........................................ 95
Questions Submitted to....................................... 178
Salazar, Roberto, Administrator, Food and Nutrition Service,
Department of Agriculture, Prepared Statement of............... 224
Shipman, David R., Acting Administrator, Grain Inspection,
Packers and Stockyards Administration, Department of
Agriculture, Prepared Statement of............................. 244
Society:
For Women's Health Research, Prepared Statement of........... 525
Of American Foresters, Prepared Statement of................. 527
Stevens, Senator Ted, U.S. Senator from Alaska, Questions
Submitted by................................................... 47
Terpstra, A. Ellen, Administrator, Foreign Agricultural Service,
Department of Agriculture, Prepared Statement of............... 152
The Nature Conservancy, Prepared Statement of.................... 506
The Wildlife Society, Prepared Statement of...................... 544
Thomas, Peter, Administrator, Rural Business--Coopertive Service,
Department of Agriculture, Prepared Statement of............... 110
U.S.:
Apple Association, Prepared Statement of..................... 529
Shrimp Farming Consortium, Prepared Statement of............. 532
United States Telecom Association, Prepared Statement of......... 534
University of Southern Mississippi and the Mississippi Polymer
Institute, Prepared Statement of............................... 537
Upper Mississippi River Basin Association, Prepared Statement of. 541
Wachs, Lawrence, Acting Budget Officer, Office of the Secretary,
Department of Agriculture...................................... 1
Western Coalition of Arid States (WESTCAS), Prepared Statement of 543
SUBJECT INDEX
----------
DEPARTMENT OF AGRICULTURE
Page
Additional Committee Questions.................................178, 321
Administrative:
Expenses..................................................... 104
Support...................................................... 152
Advanced Telecommunications in Rural America..................... 114
Agency Reorganization............................................ 97
Agricultural:
Economy...................................................... 161
Marketing Service............................................ 233
Agriculture Border Inspections................................... 326
AMS:
National Organic Program..................................... 325
2006 Budget Request.......................................... 234
Animal And:
Damage Control in Montana.................................... 280
Plant Health Inspection Service.............................. 230
APHIS' 2006 Budget Request....................................... 230
ARS Terminations................................................. 208
Basic Scientific Research........................................ 205
Beef Trade....................................................... 212
Biotechnology.................................................... 253
Bluetongue Restrictions.......................................... 325
Budget........................................................... 128
Decreases.................................................... 174
Request Summary.............................................. 254
Requests..................................................... 149
Business Programs................................................ 110
CAFTA............................................................ 162
Child Nutrition Programs.......................................222, 226
Chronic Wasting Disease.......................................... 331
Classical Plant and Animal Breeding.............................. 209
Clear Title...................................................... 277
Combating the Epidemic Overweight and Obesity.................... 220
Commodity Credit Corporation..................................... 149
Commodity:
Programs..................................................... 107
Supplemental Food Program..................................223, 226
Conservation:
Assistance................................................... 163
Reserve Program.............................................. 173
Switchgrass.............................................. 216
Security Program............................................. 193
Consumer Data and Information System............................. 128
Cooperative Programs............................................. 112
Country of Origin Labeling.....................................253, 323
Crop Insurance................................................... 213
CSREES Cuts in Formula Funded Research Programs.................. 208
Decreases........................................................ 243
Dietary Guidelines for Americans Establish Federal Nutrition
Policy......................................................... 227
Direct Marketing of Farm Products..............................169, 170
Discretionary Funding............................................ 98
Distance Learning and Telemedicine............................... 115
Duties of Agency Staff........................................... 191
Economic Research Service Reports................................ 207
Effective Partnerships Strengthen Dissemination of Science-based
Guidance and Educational Tools................................. 228
EGovernment Solutions............................................ 248
Electric Program................................................. 113
Enforcement Audit of Mexico's Inspection System.................. 283
Enhancing Program Integrity and Delivery......................... 221
ERS Contributions to Mission Area Goals.......................... 129
Faith-based and Community Organizations Outreach................. 225
Farm:
And Ranch Lands Protection Program........................... 101
Bill Authorized Programs..................................... 100
Loan Programs................................................ 150
Product Exports to China..................................... 171
Farm Service Agency.............................................. 141
Agency Loan Officers......................................... 213
Beneficial Interest.......................................... 216
State Allocations............................................ 215
Federal Grain Inspection Service................................. 246
Fiscal Year 2006:
Budget Request...................................241, 252, 254, 269
Plans........................................................ 139
Food:
Emergency Response Network................................... 274
Guidance System Serves as Premier Teaching Tool.............. 227
Safety Accomplishments During 2004........................... 262
Stamp:
Catagorical Eligibility.................................. 279
Error Rate............................................... 271
Participation............................................ 271
Program................................................221, 225
Foreign Agricultural Service..................................... 144
Foreign Office Security...................................... 215
Review....................................................... 210
Formula Funds.................................................... 205
FSIS:
Import Inspections........................................... 282
Priorities for 2005--Holding Ourselves Accountable........... 264
Funding Sources.................................................. 229
Grain Inspection, Packers and Stockyards Administration.......... 231
Identity Theft............................................... 326
2005 Budget Request.......................................... 232
Guaranteed Multifamily Housing................................... 194
Hatch Act/McIntire-Stennis....................................... 206
High Pathogenic Avian Influenza.................................. 328
Housing Revitalization Budget Request............................ 167
Human Capital Management......................................... 225
Humane Handling and Slaughter Activities......................... 263
Increasing Third-Party Technical Assistance...................... 98
Invasive Species................................................. 164
Johne's Disease.................................................. 332
Livestock:
Mandatory Price Reporting.................................... 252
Risk Program for Lamb........................................ 211
Low Pathogenic Avian Influenza.................................321, 329
Major Activities of the National Agricultural Statistics Service
(NASS)......................................................... 137
Marketing Services............................................... 250
Milk Prices...................................................... 168
Milwaukee Hunger Task Force...................................... 275
Misconduct Policy................................................ 205
Mission........................................................128, 249
MRP Initiatives.................................................. 229
Multi-Family Housing Programs.................................... 105
National Animal Identification System...........273, 281, 323, 333, 336
Nutrient Management Lab in Marshfield, WI........................ 175
Nutrition Programs Administration..............................223, 226
Organic Cost-Share Funding....................................... 335
Organization..................................................... 244
Other Appropriated Programs...................................... 151
Overseas Programs................................................ 274
Packers and Stockyards Program................................... 244
Partnerships..................................................... 251
Pathogen Reduction............................................... 254
Payments to States and Possessions............................... 251
Performance Under Pressure....................................... 97
Planning Research Programs....................................... 174
President's Fiscal Year 2006 Budget Proposal..................... 209
Privacy Protection of Certain Sellers of Farm Products........... 276
Program:
Access....................................................... 220
Highlights................................................... 108
Management................................................... 158
Proposed:
Funding for Buildings and Facilities......................... 124
Operating Increases.......................................... 124
Program:
Decreases................................................ 124
Increases................................................ 121
Protecting the Homeland.......................................... 248
Public Law 480................................................... 211
RCBS Rural Cooperative Development Grants........................ 201
RD:
Business Programs............................................ 197
General Reductions in Direct Loans and Grants................ 196
Tax Exempt Financing for Loan Guarantee Programs............. 196
REE Agency Fiscal Year 2006 Budgets.............................. 118
Renewable Energy of the 2002 Farm Bill........................... 203
Rental Assistance Program........................................ 166
Research Coordination............................................ 164
Resource Conservation:
And Development.............................................. 193
Service...................................................... 97
Responsibilities................................................. 102
RHS:
Equal Access to Housing...................................... 198
Multi-Family Housing......................................... 199
New Construction............................................. 197
Rental Assistance............................................ 198
Single Family Rural Housing.................................. 199
Risk Management Agency........................................... 143
Rural Business Cooperative:
Programs..................................................... 104
Service...................................................... 204
Rural:
Development:
Budget Request........................................... 102
Programs................................................. 195
Housing:
Prepayments.............................................. 165
Programs................................................. 103
Rental Assistance............................................ 194
Utilities Service Broadband Loans............................ 203
RUS Guaranteed Undewriting....................................... 202
Section 32....................................................... 251
Sharing Distribution Lists....................................... 278
Single Family Housing Programs................................... 107
Soybean Rust..................................................... 335
Specialty Products............................................... 170
State Agricultural Experiment Station............................ 206
Sudden Oak Death................................................. 331
Sugar............................................................ 212
Support for Cooperating States................................... 253
Technical and Financial Assistance Funds......................... 188
Telecommunications Budget........................................ 114
Textile Exports and Jobs......................................... 172
The Challenge of Improper Payments............................... 224
The Emergency Food Assistance Program (TEFAP)..................223, 226
Transfer to the Department of Commerce........................... 177
Transparency..................................................... 98
Trends Show Need for Revised Nutrition Guidance and Educational
Tools.......................................................... 227
Twenty-Five Percent Cap of WIC NSA Funds......................... 277
2006 Budget Request.............................................. 249
USDA:
And Department of Homeland Security Employees................ 322
Five Star Commitment to Increase Minority Homeownership...... 108
Presence In Iraq............................................. 163
User Fees........................................................ 254
Value-added Programs...........................................168, 169
Vision........................................................... 102
Water and Environmental Programs................................. 115
Watershed:
And Flood Prevention Operations.............................. 176
Surveys and Planning Program................................. 178
Web-based:
Applications................................................. 211
Supply Chain Management...................................... 322
System................................................... 253
WIC............................................................222, 226
Food Costs................................................... 272
Participation and Funding.................................... 272
Wildlife Services..............................................333, 334
WTO Decision on USDA Commodity and Trade Programs................ 215
Office of the Secretary
Accredited Veterinarians in Rural Areas.......................... 50
Additional Committee Questions................................... 41
Agricultural Border Inspections.................................. 20
Alaska Dairy..................................................... 48
Ames Animal Disease Facility..................................... 62
Animal Identification............................................ 79
APHIS Blackbird Control.......................................... 71
ARS-APHIS Master Plan for Facility Consolidation and
Modernization International Review Team Report................. 36
ARS Research in North Dakota..................................... 70
Avian Influenza.................................................. 21
Beef Exports to Japan............................................23, 29
Biobased Products Procurement.................................... 63
Boll Weevil Eradication Program.................................. 46
Bovine Spongiform Encephalopathy (BSE)........................... 12
Policies..................................................... 72
Broadband Funding................................................ 68
Budget........................................................... 66
Canadian:
Beef Industry................................................ 41
Border Closure............................................... 16
Cattle....................................................... 27
Carbon Sequestration............................................. 32
Central American Free Trade Agreement............................28, 67
Childhood Obesity................................................ 76
Consequences..................................................... 38
Conservation..................................................... 14
Reserve Program.............................................. 26
Security Program............................................. 62
Sign-up.................................................. 39
Country-of-Orgin Labeling........................................25, 68
Crop:
Disaster Payments............................................ 24
Insurance.................................................... 13
Payment Limitation........................................... 29
Subsidies.................................................... 42
CSP Contracts....................................................39, 40
CSREES Budget Proposals.......................................... 17
Deficit Reduction................................................ 16
Department Management............................................ 15
Ethanol Production............................................... 46
Executive Bonuses................................................ 49
Farm:
Income....................................................... 19
Program......................................................
Cuts..................................................... 24
Spending................................................. 13
Spending..................................................... 44
Federal Formula Funds............................................ 79
Food Aid Programs................................................ 33
Food:
And Agriculture Defense Initiative...........................12, 51
Assistance................................................... 14
Safety....................................................... 13
Personnel................................................ 75
User Fees................................................ 74
GAO Homeland Security Report..................................... 49
Hatch Act Funding Cut............................................ 71
HMSA Enforcement................................................. 62
Humane Activity Tracking......................................... 58
International Food Aid........................................... 77
Japan Trade...................................................... 68
Livestock:
And Meat Marketing Study..................................... 64
Study........................................................ 41
Low Pathogenic Avian Influenza (Bird Flu)........................ 44
Madcow Disease (BSE)............................................. 22
National Animal Disease Center................................... 34
National:
Animal:
Disease Center, Ames, Iowa............................... 35
Identification........................................... 45
School Lunch Program......................................... 75
Veterinary Medical Service Act............................... 69
Need............................................................. 38
Nonfat Dry Milk.................................................. 19
Northern Great Plains Regional Authority.........................71, 77
Packer Concentration............................................. 40
Points for Consideration......................................... 39
Raising Farm Income.............................................. 30
Reducing the Federal Deficit..................................... 34
Research......................................................... 14
Resource Conservation and Development............................ 78
Councils..................................................... 70
Rural:
Business Investment Program.................................. 77
Community Advancement Program................................ 47
Development.................................................. 14
Funding for Rural Empowerment Zones and Other Grant
Programs............................................... 69
Safe School Food Act............................................. 75
Scope............................................................ 37
Single Food Safety Agency........................................ 74
Soybean Rust.....................................................47, 56
Special Supplemental Program for Women, Infants, and Children
(WIC).......................................................... 45
Sun Grant Initiative............................................. 78
Timeline for Major Steps for Livestock and Meat Market Study..... 64
Trade............................................................ 13
Deficit...................................................... 26
Status--Japan................................................ 46
USDA Employee Retirements........................................ 46
User Fees........................................................18, 56
Value-added Agriculture.......................................... 31
Veterinarian Shortages........................................... 21
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